Rail Vikas Nigam Limited has informed the Exchange about Transcript of Analysts/Institutional Investor Meet/Con. Call
RVNL/SECY/STEX/2022
18th November, 2022
BSE Limited 1st Floor, New Trade Wing, Rotunda Building, Phiroze Jeejeebhoy Towers, Dalal Street Fort, Mumbai-400001
National Stock Exchange of India Ltd. Exchange Plaza, C-1, Block G, Bandra Kurla Complex, Bandra (E), Mumbai – 400051
Scrip Code: 542649
Scrip Code: RVNL
Sub:
Transcript of Conference Call with Investors / Analysts
/Institutions
Ref:
Regulation 30 of the SEBI (LODR) Regulations, 2015
Dear Sir/Madam,
We write further to our letter of even no. dated 15.11.2022 regarding intimation of the Audio Recording of Conference Call with Investor/Analyst/Institutions. The Transcript of the said Concall (held on 14.11.2022) is enclosed herewith and is also available on Company’s website at www.rvnl.org.
Path: RVNL Website > https://rvnl.org/investor > Investor > Board Meetings, Board Committees & General Disclosure > General Disclosures
You are requested to take the same on your records.
Thanking you,
Yours faithfully, For Rail Vikas Nigam Limited
(Kalpana Dubey) Company Secretary & Compliance Officer
“Rail Vikas Nigam Limited Earnings Conference Call”
November 14, 2022
MANAGEMENT: MR. RAJESH PRASAD – DIRECTOR (OPERATIONS),
RAIL VIKAS NIGAM LIMITED MR. SANJEEB KUMAR – DIRECTOR (FINANCE), RAIL VIKAS NIGAM LIMITED
Page 1 of 16
Rail Vikas Nigam Limited November 14,2022
Moderator:
Ladies and Gentlemen, Good day and welcome to the Rail Vikas Nigam Limited Earnings
Conference call. As a reminder, all participant lines will be in the listen-only mode and there
will be an opportunity for you to ask questions later in the conference. Should you need
assistance during the conference call, please signal an operator by pressing ‘*’ and then ‘0’ on
your touchtone phone. Please also note that this conference is being recorded. I now hand it over
to Mr. Vishal Periwal. Thank you and over to you, Sir.
Vishal Periwal:
Thanks Chris and Good afternoon everyone and good afternoon to RVNL management and first
of all thanks to the management for giving us this opportunity to host their Quarter 2 FY23
Earnings Call. From the management team we have with us Mr. Rajesh Prasad ji – Director
(Operations), RVNL, Mr. Sanjeeb Kumar ji – Director (Finance), RVNL. As usual we will have
a brief comment from the management on the gone by quarter and then we will open the lines
for Q&A. Yes, Sir, Over to you.
Rajesh Prasad:
So, if you see the performance of this particular company we had a turnover of 19,381 crores in
FY21-22 this is excluding GST and for the first time we had crossed the mark of 1,000 crores in
PAT that is the profit after tax and we had done the commissioning to the extent of 1,020 for the
first time we cross the 1,000 route kilometers. So, what I wanted to say is that FY21-22 we had
all-time high in physical as well as financial performance and then we have started FY22-23 in
a very big manner. In first quarter we had a jump of turnover by 20% and then in Q2 this jump
has again by 21% with respect to the turnover of Q2 of FY21-22. The profit after tax also
increase from 551 crores to 750 odd crores that is an increase of 37%. The PAT also increase
from 433 to 580 crore and then the commissioning the physical part I always connect both are
linked.
So, physically the commissioning part has increased and this year we have commission more
than 488 kilometers and last year it was around 250 kilometers. Now, if you see the gross margin
by turnover the ratio in first quarter in FY21-22 was 5.49% which has increased to 5.9%. So,
there is an increase in the gross margin also.
Now, if we want to highlight a few things which has happened in last three months or so:
First thing is that CARE had done the rating exercised and they have rated RVNL AAA with
outlook stable so this is number one. Number two the administrative ministry that is ministry of
railway has approved RVNL to Navratna status. You must be aware that we are having the Mini
Ratna status since September 2013 then for the first time we are in the process of getting an
overseas assignment of more than 1,500 crores.
We are going to increase our footprint in the metro construction in Chennai and Surat. For the
first time we have bagged two orders for about 500 crores for development of some canal in
Ahmedabad. We are already working in the HAM model, NHIDCL model and I am also happy
to announce that we have participated in expression interest of a project by Exim Bank for
construction of 10 kilometers of metro in Mauritius and we have been shortlisted in that. So,
Page 2 of 16
Rail Vikas Nigam Limited November 14,2022
overall we have started bidding in the market and we have participated in more than 40,000
crores of project and we have backed or have become L1 in projects worth 8,200 crores plus.
So, what I wanted to say you is that in terms of physical performance, in terms of financial
performance there is an upward trend and see the key strength of this particular company has
been the flexibility and the focused approach. We are flexible that is why we could change our
mode from assignment to the market and then we have started bidding in the market, we open
the BD cell that is the business development cell, procurement cell, we opened the legal cell then
we have tried to strengthen the design cell.
So, a lot of activities have taken place and we have signed large number of MoU in the past and
see this particular company is basically under Ministry of Railways and we are fully committed
to the vision of the Honorable Prime Minister and Honorable Railway Minister and the parents
we are the children. So, parents want their children to stand independently and grow and today
being the Children Day I must say that the soul of our company is healed by remaining happy
and patient and that is why you see us always smiling and performing.
So, thank you very much and we are open for the questions and answers.
Moderator:
Thank you very much. We will now begin the question-and-answer session. Our first question
is from Ranodeep Sen MAS Capital. Please go ahead.
Ranodeep Sen:
Sir, in FY22 as you rightly said we had seen a physical construction of 1,020 kilometers of
railway line, so will we seeing in FY23 that number being overtaken in the backdrop that as on
date we are at 488 kilometers?
Rajesh Prasad:
We had commissioned 1,020 kilometers to be precise enough and till date we have commission
more than 488 kilometers and last year up to this period it was around 250 kilometers or 260
kilometers. So, if you compare with respect to the previous financial year yes we are on the
upward trend this year we should cross this 1,000 kilometer again, but subsequently there could
be a downward trend because we are getting the assignments from the market which are not the
typical railway project, but this financial FY22-23 we are definitely going to touch this 1,020
kilometers we must exceed that.
Ranodeep Sen:
My next question sir was on the I think you mentioned about some huge opportunity in the
Kyrgyzstan railway project worth 20,000 crores, sir can you throw some light on that project?
Rajesh Prasad:
See RVNL had earlier signed an MoU with government of Kyrgyzstan and basically we have
identified four number of such projects and this is about 1,000 kilometers and first project is
around 225 kilometers, second project is 180 kilometers and there is a ring railway and then
some reconstruction of the existing track. So, all together there are four projects and we are
working on this and total length of the project is 1,000 kilometers and costing again the DPR
etcetera has been prepared it is around 20,000 crores and in time to come we can see that this
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project is moving and we are happy to again announce that this project will be on nomination
basis. So, this is again a very plus point and we will have the footprint overseas.
Rail Vikas Nigam Limited November 14,2022
Moderator:
Thank you. The next question is from Jimit Tanna Voyager Capital. Please go ahead.
Jimit Tanna:
So, I wanted to ask about the update on Char Dham project because as per previous quarter MOR
was yet to sanction the project, so can you shed light on that?
Rajesh Prasad:
See the role and responsibility in Char Dham project given to RVNL was for the preparation of
the feasibility, studies and the DPR which we have already done. The project is yet to be
sanctioned, the ministry is yet to decide through what basis and through what procedure they
would like to get it executed, but since we have got a expertise and experience of undertaking
the project in the hilly terrain we are confident that whatever maybe the model we will be one
of the players who will be considering very actively and executing this project this is number
one. Number two we are executing this Karnaprayag-Rishikesh project. This is a 125-kilometer-
long project out of which more than 100 kilometers is tunnel and the longest tunnel is 15 Km
that particular project we are going to conclude and commission by December 2024 and Char
Dham project, the Kedarnath and Badrinath they all will be extended from this particular line.
So, already you can understand that some part work has started in form of some other projects.
We have got the expertise of working in the hilly terrain and since we have also prepared the
DPR and we are involved right from the beginning. We are comfortable in executing the project
only thing is that the Ministry of Railway has to sanction the project and then they will have to
decide how they will execute it.
Jimit Tanna:
So, one more question so you have been declared a successful bidder in international project in
Maldives for the development of UTF Harbor what kind of margins can we expect from this
project?
Rajesh Prasad:
So, first let me explain about this particular project what is the background and how we have got
it. The Ministry of Railway stopped giving the projects on a nomination basis then we
approached Ministry of Railways for a request to be made from their side to Ministry of External
Affairs and in December 2021 Ministry of Railway issued an office memorandum we call it OM
and strongly recommended RVNL stating that the rating of this company is excellent for the last
11 years. It is number one PSU for the year 2019-20, it is contributing more than 35% and they
advise Ministry of External Affair that whenever there is a query or you want to execute any
project of importance you should consider RVNL. So, then they called expression of interest
and then we qualified in this COI then subsequently based on the QCBS project we have become
the L1 bidder. The name of the project is the development of UTF Harbour Line project. UTF
basically stands for Uthuru Thilafalhu Island. It is about 15 kilometers from Male. See in
Maldives there are about 1,200 number of Island out of which 186 Islands are developed. This
Island is about 150 or maybe 100 meter which is required to be developed to 15 hectares. This
is a project which will be used by the MNF that is the Maldives National Force and the scope
basically comprises of the Marine works buildings, infrastructure, equipment and the project is
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Rail Vikas Nigam Limited November 14,2022
to be completed in two years. It is a very challenging project and some of the figures which if I
tell then you can understand and visualize the dredging is required to be made to the extent of
14 lakh MQ then the huge construction material the requirement of cement is more than 42,000
metric ton, steel 15,000 metric ton and RVNL for the first time shall be executing project
overseas and that also a mega project. Now, coming back to your question about the margin see
our first interest was to grab one project basically we want to make footprint in the overseas
project and that to non-railway project. We are getting success in that, we have kept adequate
margin, but since altogether it is a new kind of project, new area new challenges would be there.
So, at this moment we are not sure how much margin we will be getting, but we are 100% sure
that it will bring us to the next level and we will certainly earn some good margins from the
project.
Jimit Tanna:
Congratulation on a Navratna status?
Rajesh Prasad:
Navratna I will again explain this has been administratively approved by Ministry of Railways.
The proposal is with the department of public enterprises. They are working on this and then
once it is declared and once it is considered and approved then it will be notified.
Moderator:
Thank you very much. The next question is Hardik Jain of Whitestone Financial Advisors.
Please go ahead.
Hardik Jain:
Sir you have mentioned that we have already bagged 8,200 crores of orders in first half is it
right?
Rajesh Prasad:
Yeah what I have said is that till date we have participated in bidding for about 40,000 crores
plus out of which we have bagged or we have become L1 to the extent of 4,000 crores.
Hardik Jain:
4,000 or 8,000?
Rajesh Prasad:
Sorry 8,000 crore. 4,000 crore figure was Q1 after this Q2 it has become 8,200 crores plus.
Hardik Jain:
In your results in the foot note you have mentioned that we are waving some charges for KRCL,
so in this Krishnapatnam Railway Company has said that we have entitled for departmental
charges of 5% of total cost work and we have received representation from KRCL for waiver of
this charges, so if we wave this charges what amount will have to be reversed from the receivable
that we have already booked?
Rajesh Prasad:
We have not calculated that but see basically the model the revenue stream of Ministry of
Railway they have let down certain revenue stream and then as per the construction agreement
we are having different kind of models for the different SPV. So, most of the SPVs are basically
representing and then we have asked that any of the model which is basically convenient to you
whether it is a Ministry of Railway model to RVNL or any other SPV then we can consider that.
So, earlier they had made a proposal that the 5% departmental charges in addition to the other
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charges it should not be considered. So, we have not been charging that and it is a matter to be
discussed by the board of directors and then accordingly we will communicate.
Rail Vikas Nigam Limited November 14,2022
Hardik Jain:
And what is the outstanding amount due from KRCL as of today sir?
Rajesh Prasad:
The figure is available with me it is approximately 809 crores is the construction cost and then
611 is the interest so it becomes 1,421 crores.
Hardik Jain:
And if we decide to reverse any of this charges so out of this 1,400 crore some amount will be
reversed and that will hit our P&L also, right?
Sanjeeb Kumar:
So far they have not billed for this 5%.
Hardik Jain:
Ok, we have not already billed for it so we will not bill it so it is not going to impact the numbers?
Sanjeeb Kumar:
Yes, it will not impact the numbers.
Hardik Jain:
Sir when I see in the balance sheet sir our current liabilities have reduced from 4,500 crore to
1,000 crores and simultaneously our cash and bank balance put together has been reduced from
6,700 to 2,600 crore so basically the advances that we would have received from our customers
would be consumed for the project, so what is the payment status right now, should we expect
fresh advances for the projects that we have in our hand because current liabilities have come
down from 4,500 to 1,000 now?
Sanjeeb Kumar:
No, there will be no further advances because we followed the reimbursement system. So, at the
beginning of the year we had some advance, but there will be no further advances till this year.
Hardik Jain:
So current liabilities you mean to say we will remain at this level and even the cash and bank
balance will remain at what level it is?
Sanjeeb Kumar:
Almost this level.
Moderator:
Thank you. The next question is from Deepak Mehta from Bank of India Mutual Fund. Please
go ahead.
Deepak Mehta:
My question is regarding the shift in the Indian railways ordering process from nomination basis
to tender basis, how will competitive intensity changed from both private as well as public
players and how will our margins plan out from here on?
Rajesh Prasad:
Just try to be slightly louder because the last part we could not hear from you.
Deepak Mehta:
So, with the shift from nomination basis to tendering basis, how will competitive intensity
changed from both private as well as public players and how will our margin get impacted due
to this?
Page 6 of 16
Rajesh Prasad:
So, first part is the nomination to the bidding. See this railway infrastructure projects are
Rail Vikas Nigam Limited November 14,2022
complicated, complex and it requires a lot of integration and interface. RVNL has been pioneer
in this. We had executed more than 120 projects for the Ministry of Railways and we were
involved right from the concept to commissioning what we call it the full project lifecycle. We
were very confident and we have delivered more than 35% of the railway infrastructure project.
So, what I wanted to tell you is that the contribution of RVNL were tremendous in developing
the railway infrastructures in the country. Now, there is a shift and there is a shift by Ministry of
Railways that they are not going to give us a nomination they will be calling this, but at the same
time there is also a shift in RVNL approach we have gone into the market and we have decided
that we will not remain limited to the Ministry of Railways. We are basically trying business in
NHAI road sector, HAM model then the marine works, overseas project, metro construction.
However, basically we are creating a large number of verticals in all kinds of infrastructures we
are working. So, what I wanted to tell you is that since now it is going to be a mix basket and
the margin of course will change and with the passage of time there is a likelihood that the
margin will increase. As I said in the beginning that we are not only in the process of opening
the bidding cell that is the business development cell, but also the procurements cell by having
the procurement cell we can increase the margins of basically procurement of material like steel
and cement then we wanted to have a legal cell, we wanted to strengthened the design cell just
to tackle the EPC contract and EPC tender. So, there is a shift yes there is no doubt about it and
some astonishing figures are coming like 8,200 crores which I am mentioning out of 8,200 crores
the railway projects are only of about 500 crores and rest are either metro or the road sector or
the overseas marine works or some other kind of and municipality in Ahmadabad. So, things are
changing in both the fronts and we are pretty sure see the Ministry of Railway is having a huge
plan if you have gone through the National Rail Plan what they are planning to have is that by
the year 2030 they want to have all kinds of infrastructures in place to cater the demand of 2050.
See the model share of railway is around 26%, 27% and by the year 2050 they want to make it
45%. The reason for this is that we will have the greener and then safer and then environmental
friendly transportation system and it will lead to the growth of the country. So, overall what I
wanted to conclude is that the margin is again going to change with the passage of having some
experience it will increase and regarding the Ministry of Railways project we are very keen
because we have got the expertise of execution of the railway project only in the past. So, we
want to remain associated with the railway project. We will participate in the railway projects,
but we do not know how many projects we will get regarding the competition with the private
players. See the private players requires a lot of technical expertise which I do not think the
private players are having, it requires a lot of interface. If you are commissioning a double line,
then it is to be integrated with the existing yard and without closing the operations. So, the
projects are complicated and complex we have got the expertise and private players whether
they will get success, they will not get success only the change will change, but we are confident
that in time to come we will have sufficient number of orders in railway sector as well as in non-
railway sector and with the passage of time and with the kind of experience we gain we are going
to have margins available.
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Deepak Mehta:
Just one more question what will be our approximate market share in the line of work which we
are doing for example in double lining what will be our market share in Indian railways?
Rajesh Prasad:
See we have got an order book of around 55,000 crores and out of 55,000 crores if you see the
Rail Vikas Nigam Limited November 14,2022
double line figure will be around maybe around 20% to 25%. The new line will be around 55%,
the metro projects will be around 12% turnkey projects and the gauge conversion and the railway
electrification basically scope in the sales have gone down because the railway electrification is
getting over in next one year time, gauge conversion is mostly completed and the turnkey project
since we are not getting on the nomination basis we have already completed 15 works so this is
the breakup of the 55,000 or 50,000 crore plus which we are having from the Ministry of
Railways and this is the breakup of basically projects in terms of the double line, new line MTP,
turnkey projects, gauge conversion and railway electrification.
Deepak Mehta:
Sir my question was slightly different what will be our market share in the Indian railways
CAPEX for example if Rs. 100 is spent on double gauging then how much is done by us?
Rajesh Prasad:
See till FY21-22 and maybe in FY22-23 we will be basically doing a contribution of 35% in
terms of commissioning and may be slightly more in terms of CAPEX in these particular infra
projects, but FY22-23 or maybe after FY23-24 things will change because we have to compete
in railways to get the projects number one and we will not remain limited to only the Indian
railways we will be executing so many projects in some many other sectors with so many
verticals and even overseas.
Moderator:
Thank you. The next question is from Ash Shah of Elara Capital. Please go ahead.
Ash Shah:
So, can you just give me the order book position as of Q2 FY23 exact point if you can?
Rajesh Prasad:
See I said we have got the three kinds of models. One model is the project which has been given
on nomination basis by Ministry of Railways or by some other government so this will be around
50,000 crores and in FY22-23 we have got zero, but again we have signed an MoU with
Government of Kyrgyzstan and their we are expecting an order of 20,000 crores in time to come.
We have got the second model that is bidding from the market till date we are having 8,000
crores of new work, new projects which we have backed from the market. We are eyeing another
6,000 to 7,000 crores by March 2022 and SPV model the third model is the SPV model where
we have got around 1,000 crores during this FY22-23 and we are expecting an order of another
3,000 crores in the SPV model. So, if you see the orders at the end of FY22-23 after having the
turnover the order book will remain same around 55,000 crores plus and if we get the order from
the Kazakhstan then it will become much more than that and see the target of RVNL is to have
1 lakh crores of orders all the time. If you are having a turnover of 20,000 crores plus so we want
to maintain basically order book of 1 lakh crore and in time to come we should be able to achieve
that.
Page 8 of 16
Ash Shah:
And second question would be would you maintain your FY23 guidance of 15% to 20% revenue
growth and the 21,000 crore plus revenue and bottom line of 1,100 crore plus?
Rajesh Prasad:
Yeah in FY22-23 we are going to achieve this and the numbers are astonishing as I said. If you
Rail Vikas Nigam Limited November 14,2022
see the number of Q2 we had a turnover of 9,500 plus crores and last year it was 7, 890 crores.
So, there is an increase of 21% I am talking about the top line. Last year we had a turnover of
19,381 crores without GST. If you add GST then it will become around 21,500 or 22,000 crores.
So, the way things are moving see we are up by 21% the financial turnover. So, in time to come
we are certainly going to basically surpass the turnover of 19,381 crores. So, the top line of
21,000 crore plus looks an easy task and in terms of the physical delivery we are much ahead of
the performance basically we had the performance in FY21-22 so we are again going to
commission or achieve the performance of FY21-22 in FY22-23. In terms of the physical as well
as in terms of the financial we are going to have all time high.
Ash Shah:
And last question would be could you just give us some update on the Krishnapatnam JV
arbitration which was I think it was going to come in CY22 any of that and that how much
monthly payments are we receiving from them particular JV?
Rajesh Prasad:
So, let me explain it like this that first of all the Krishnapatnam the project was a sanction project
of Ministry of Railways in PPP model and whatever money we have spent was for the purpose
of project execution. We roughly had a 2,400 crores out of which we have received a 1,600
crore. Now, the trade receivable which we are talking somebody asked in the beginning is 809
crores plus 611 crores interest so 1,420 crores. So, if you see the performance of this particular
company this has made a turnaround in terms of the traffic and there is an increase of traffic by
71% and you tried to understand and appreciate that it is the all-time high and for the first time
we have started making profit and we have commissioned two more stations that is
Brahmanapalli and Velikallu these were required in order to have more and more traffic in
Krishnapatnam. We are also constructing a bypass line that is also likely to be commissioned in
December 2022. So, if you see the earning part there is a substantial increase in the earning of
KRCL we were in loss in first 6 months in FY21-22 which has now become a profit. So, if you
see the financial figures KRCL increased from minus 36 crores to plus 23 crores and RVNL
share increase from minus 18 crores to plus 12 crores. So, what I wanted to tell you is that there
is a continuous increase in the traffic in KRCL and regarding the payment, regarding the
arbitration part yes I will tell you some of the dates in connection with the arbitration. See the
arbitration proceedings started on 24th January 2020 and the pleading completed in January
2022. As per the arbitration proceedings and act the amendment it is required to be completed
in one-year time, one year after completion of the pleading, but in between what happened is
that because of the COVID and its impact a grace period has been given from 25th March 2022
to 28 February 2022. So, as such officially the proceedings and award should be over by 28
February. They have already conducted the cross examination of the claimants and the
respondent’s cross examinations are also over. Ministry of Railway had filed few applications
Page 9 of 16
which are being basically resolved and the main hearing will start and we are hopeful that by
this time lying in FY22-23 we should get the judgment.
Rail Vikas Nigam Limited November 14,2022
Ash Shah:
And could you just give the amount I mean how much is for the arbitration how much have we
filed for it?
Rajesh Prasad:
How much you want to know the money spending with the arbitration.
Ash Shah:
No not for the money spending the money that we will receive if the arbitration is in our favor,
how much money will be basically from KRCL?
Rajesh Prasad:
We will be getting straightaway that 809 crores which has been spent in the project along with
the interest because it is a money which has been used in the project implementation and one
more thing which I wanted to tell all the investors that this particular company has already
resulted into 14,000 crores plus of revenue for Ministry of Railways without any additional
investment and when the project was in the execution stage it used to be discussed in the Pragati
portal there was a lot of stress to commission the project and the project has been completed and
commissioned 100% overall interest of the country also.
Moderator:
Thank you very much. The next question is Shubham Shukla of Voyager Capital. Please go
ahead.
Shubham Shukla:
Let me first quote public relation finance advisor what he said in investor call June 2022 around
2,500 to 3,000 crores is a real estate cash balance required for this business. Right now, as on
Q2 2022 this year it is expanding around 3,600 crore, is it allowing that cash in hand is heading
towards downwards, are we expecting the new challenge in a short period of time maintaining
the minimum required balance?
Sanjeeb Kumar:
No, we have the minimum required balance we keep getting our system is such that we work for
the railways and every month we get the reimbursements so cash balances are not allowed.
Shubham Shukla:
So, I have one more question so how revenue from execution work to segregate it like which
segment in execution work brings a most benefit to the firm?
Rajesh Prasad:
Your voice is not at all clear to me you please tell again.
Shubham Shukla:
How revenue from execution work is segregated which segments in execution works bring most
business to the firm
Sanjeeb Kumar:
Actually our revenue model as you must be aware is on the railway work that we get we have a
management fee system that is for the total execution of the projects which gets around 8.5%
management fee. So, irrespective of whether we do new line or doubling or gauge conversion
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this will be in the range of 8.5 to 8.75 and national projects would be 9.25%. So, our profitability
would not go up and down depending on what kind of work we are executing.
Rail Vikas Nigam Limited November 14,2022
Shubham Shukla:
Sir I wanted to ask you like which segment in execution work has done most business which
brings business to the firm like this has a highest weightage in the business?
Rajesh Prasad:
Justify if I have understood correctly you are asking that which segment will have more
challenges or which segment will more profit this is the basically the aim of your questions.
Shubham Shukla:
Which segments bring most orders bring more in the cost?
Rajesh Prasad:
See our expertise have been the railway sector and the metro sector only and in time to come we
would like to concentrate on this, but in order to expand our business we thought to bid in the
road sector the consultancy tender, consultancy works and also the marine works and then we
also thought that we should enter into the water ways, we are trying to basically make footage
have the footprints in all kinds of segment and in time to come you can see that yes things are
happening The marine work in Maldives which we discussed is just an example of that.
Moderator:
Thank you very much. The next question is from Riken Gopani of Capri Global. Please go ahead.
Riken Gopani:
Sir, I have two questions the first question being for whatever bidding has happened you said
you have bid for 40,000 crores worth of projects in the first 6 months if you can help understand
what is it that what is the proportion of railways orders in this and whether let us say it is similar
kind of orders were bid last year, what was our market share and whether we have been able to
maintain the market share even at the competitive bidding space with railways itself?
Rajesh Prasad:
We started bidding about a year back maybe slightly more than that and the 40,000 crores plus
is the cumulative figure. So, maybe some will be in the previous financial year, but more than
90% will be during this financial year FY22-23 we have got the basically orders or we have
become L1 that is around 8,200 crores so that makes around 20% of the strike rate. Coming back
to your question that what is the percentage of the railway segment we want to remain connected
with the Ministry of Railways, we want to remain very active executor, railway infrastructure
executor, but unfortunately we have out of 8,200 crores it is 500 crores only project which is
railway project and that too it is in the North East frontier railway for construction of tunnel. See
we have got the expertise in the tunnels we are executing the longest tunnel in Rishikesh-
Karnaprayag so that is the tunnel project which we have backed from the market for the North
East Frontier Railway. So, the percentage out of 8,200 crores the railway part is only around 500
crores.
Riken Gopani:
So, just one clarification here is it because railways has not ordered as much during the first half
which is causing this or there has been a lot of private companies which have won orders because
of which our number is lower this year from railways?
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Rajesh Prasad:
It would be slightly difficult to answer the point, but what I will say is that Ministry of Railway
has got huge plan for the station redevelopment they have got 200 stations. Recently they have
sanctioned 10,000 crores for 3 number of stations development. Similarly in the double line
gauge conversion there is plenty of works are coming up and we are actively thinking to
participate in some of the tenders in the contracts and in time to come you will also see that we
get large number of orders from Ministry of Railways also, but at this moment yeah we have got
only around only one project costing around 500 crores, but in time to come you will see that
the figures are changing and maybe we will have more orders from Ministry of Railways.
Riken Gopani:
And just one question related to that given the inflow which we are having from non railways
and the outlook for railways ordering also for the going forward period we have seen a very
strong compounding growth that our company has delivered over the last 5 years, 7 years do you
see your growth rates at least maintaining those kind of historical bids or how do you expect
FY24 and beyond for the next three years or so in terms of growth outlook for the revenue?
Rajesh Prasad:
See presently we are having a growth rate of 25%. Now, if you see the turnover of the last three
years FY19-20 which was 14,530 crores I am talking about the turnover and 2021 was affected
by the COVID wave 1 21-22 was again affected by wave 2 and these two financial years we had
the economic slowdown, but we exceeded all the physical performance and the financial targets
in FY2021 then again we surpass in FY21-21. So, this generated confidence that during the
COVID year when the period when the entire world was struggling and we could achieve our
target then we could survive, we could sustain and we can maintain the growth rate. So, let us
first see the FY22-23. FY22-23 we are certainly going to cross this 21,000 crore plus mark. So,
the growth rate of 20%, 25% we will maintain. Regarding this 23-24 the way we have been
working, the way we are now getting the orders from the market may be it can go down or it can
go up, but efforts will be there to maintain the same kind of growth rate and as I said in the
beginning that we are eyeing for an order of 1 lakh crore. The idea behind having the order of 1
lakh crores all the time is to maintain this growth rate and we are pretty confident that in time to
come we will be having this kind of growth rate to be continued and we will remain pioneer in
building all kinds of infrastructures in the country.
Moderator:
Thank you sir. The next question is from Prithvi Raj of Unifi Capital. Please go ahead.
Prithvi Raj:
Sir, I just have one question see thing now is the company has been focusing on a domestic
markets and now the focus seems to be on the international markets see what kind of project
level risk that you expect in international market and how are we equipped to manage this risk?
Rajesh Prasad:
Last question you please tell me again?
Prithvi Raj:
So, how are the position to manage some country level risk in these international projects?
Rajesh Prasad:
See for the international project our focus was to remain confined to the railway infrastructure,
metro and some project of importance by the Exim Bank or Ministry of External Affairs. So, we
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have got the expertise of the railway infrastructure. So, if we are getting the projects in the
railway infrastructure there will not be a problem. Second is the metro we are executing metro
projects in Kolkata, Indore we are likely to get the orders from Chennai and Surat and then we
have also undertaken MTP projects in Hyderabad. So, with the kind of exposure and expertise
which we are having we are also very confident in the metro projects and in the expression of
interest called by Exim Bank for the Mauritius metro we have been shortlisted so that is the plus
point. So, the railway infrastructure, the metro construction overseas we are comfortable then
the third segment is the MEA or Exim Bank projects in Maldives we are getting one project
costing more than 1,500 crore. See our strength has been the project management skill and we
have got a pool of around 800 plus 1,000 contractual engineers and we have got Pan India
presence. We have got exposure of all kinds of project, we are involved in the full project life
cycle right from the concept to the preparation of DPR, design, execution and then defect
liability. So, we are pretty confident that in time to come we will have the international projects
executed in a very professional manner, we are in touch with so many other government
departments overseas and as I said in the beginning and office memorandum was issued in
December 2021 by Ministry of Railways to Ministry of External Affairs and that they
recommended that whenever there is a project they should be strongly consider us. So,
everything is moving in the direction which we want to have and for the international project we
wanted to have the footprint which we are getting and we will make sure that these projects are
completed with the full satisfaction we want to showcase that Ministry of External Affairs or to
the Government of India that we are really very professional and we will definitely complete
and we will meet the expectation of such government agencies.
Prithvi Raj:
Sir just a follow up on this just as you said there is any delay in the international project, will
there be any impact for our balance sheet?
Rajesh Prasad:
Yeah this may impact see in the beginning we may not have that kind of margin, but at the end
may be after gaining some experience will margins will increase. See as I said in the beginning
that we are in the process of opening a procurement cell. The procurement cell will basically
procure the material whether it is cement, steel, whether it is India or the overseas. So, whenever
you are executing the project if you control this procurement part then you are having slightly
improved margins available then large number of EPC contracts are now being awarded. The
beauty of this EPC is that we can do the value addition in the design part and the kind of expertise
and exposure which we have got we will definitely do the value additions thereby saving in the
project. So, what I wanted to tell you that we have got the exposure, we have got the expertise
and we can always do the value addition and we can always have the margins available in time
to come.
Moderator:
Thank you. Our next question is from Venkatesh Subramanian for LogicTree Investment
Advisers Private Limited. Please go ahead.
Venkatesh Subramanian: Sir, most of the questions are answered, but just a little bit of clarity on just two things one is
you mentioned about the Kyrgyzstan order I think it is like a pioneering order for you, what is
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the value that you mentioned an second question is you said that at any point of time you would
like to have a significant order book in the range of 1 lakh crore plus aim for a 20% CAGR
growth over the next few years. So, the current 55,000 crore orders when it is completed you are
basically aiming to keep replenishing the order at the range of 20,000 to 25,000 croers every
year to keep the score board ticking, is my understanding right?
Rajesh Prasad:
So, let me first explain you asked about Kyrgyzstan. See we had signed an MoU about a year
back and there were four projects which were identified and the total number of kilometers
involved in those projects was around 1,000 kilometer, costing around in terms of Indian rupees
20,000 crores. We have to get the DPR and before projects basically I do not remember the
names of the projects. One project was of 225-kilometer, second project was 180 kilometer and
the third project was for some ring railway and the fourth project was reconstruction. So, if you
see and this will again impact RVNL in a very big manner because it is somehow like a
nomination work only so this is about Kazakhstan. Now, regarding basically order book see
what I had said is that we have got order of about 55,000 crore plus. We are getting orders from
the market, we will get some orders from the SPV also. So, what we want to have is that at all
times we should have a 1 lakh crore in order to have the same kind of growth rate. So, this is the
idea behind having this 1 lakh crore order all the times and see it is very difficult to change the
model earlier we were in a CAPEX arm or executing arm of Ministry of Railways contributing
more than 35% of the railway infrastructure I think one year time we have changed our model.
The key strength of RVNL has always been I always keep on saying that the proven track record
which imparts confidence is number one. Number two we have got a very focused approach.
Number three flexibility and it is this flexible approach that we have changed from one model
to another model. We have not only survived; we have not only exceeded the targets physical
and financial during the COVID years and the period when the economy was slowdown. So,
these were the reasons because of which we survived and we excelled 19-20 it was number one
in the country not amongst the railways, all the PSUs it was number one. So, we are eyeing for
best these are the targets which we are setting for ourselves and if we achieve this 1 lakh crore
of this order book we are very confident that in time to come we will have the same kind of
growth rate and see I will tell something about one more project. There is a company called
NHLML that is the National Highways Logistics Management Limited. It is a subsidy of the
National NHAI. They are suppose to make the Multi Modal Logistics Path that is we call MMLP.
These are the world class logistics aggregation and the disaggregation points and they have
identified 35 locations and for this the project is specific, SPVs are required to be made and the
role of RVNL will be participation in the SPV, participation in design, planning, DPR, feasibility
and the track execution path. Two days back you must have seen a news item where the Reliance
to develop a Multi Model Logistics Park as being the highest leaders. This will be for 45 years
for managing, operating and the maintaining this logistic path. This is near Coimbatore in
Chennai, the total length is about 10.4 kilometers, project cost is 1,423 crores and in that
particular SPV the total equity will be around 600 crores and RVNL share will be 26%. So, what
I want to tell you is this is another model where in time you will see the footprints of RVNL
spreading all over the country at 35 locations.
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Moderator:
Thank you. Ladies and gentlemen due to the paucity of time we will only be able to take two
more questions the next question is Hardik Jain from Whitestone Financial Advisors Private
Limited. Please go ahead.
Hardik Jain:
If you can share us of various SPVs, what is the profitability for the 6 months and what is the
amount of investment RVNL has in equity and debt in various SPVs?
Rajesh Prasad:
I do not have all the figures, but briefly I will tell you that the equity participation varies from
30% to 50%. It cannot be more than 50%, it cannot be less than 26% as per the policy guidelines
issued in December 2012. In Kutch Railway we have got a share of 50%, in KRCL 49.76%, in
ASRL 32.70%, in BDRCL it is 35.46%, in HPRCL 30%. We have already commissioned four
number of SPV, fifth SPV ASRL it is again a matter of price that we are going to commission
in FY22-23 it will be a game change in transportation in Odisha and East Coast Railway, what
exactly we will be doing is that it will improve the transportation of coal from Talcher area to
Sukinda and Basavani. Iron ore from Basavani to Angul and Sukinda and then minerals from
the Dhamra port to Kalinganagar. So, what I am saying is that this is one of the challenging thing
which is happening. Yesterday one of the station which is basically connecting station in East
Coast Railway Baghuapalli was commissioned. So, this SPVs are working. Now coming back
to basically the performance in the first 6 months see in FY21-22 we have an improvement of
around 20% in Kutch Rail, KRCL and BDRCL, but in FY22-23 in first 6 months there was an
improvement of 103% in BDRCL, the total number of rakes in first 7 months 50321023,
Krishnapatnam it increased from 1,800 to 3,090 rakes increase of 71% and there was an all time
high of 543 racks in July 22 and as I said we have commissioned two more stations as per the
requirement of South Central Railway these SPVs are performing exceedingly well and if you
see the performance in terms of the loading and in terms of the earning the increase in the KRCL
is around 86% in terms of the million terms and a portion earning maybe around 100% and if
you see the KRCL last financial year there was a loss of 36 crore and in first 6 months it is now
profit of 23.5 crores. So, the profit of RVNL is approximately since we have got a pair of 46.76
it is around 12 crores. Similarly, BDRCL there was a turnaround we had a loss of 0.5 crore which
has resulted into 39 crores of profit and in RVNL share it is now 14 crores profit. So, what I
wanted to tell you is that if you see the performance of the SPVs overall there is a remarkable
improvement in FY22-23 with respect to FY21-22.
Moderator:
Thank you. The last question is from Sahaj he is an Individual Investor. Please go ahead.
Sahaj:
Sir, I had one question when I am seeing standalone and consolidated figures I see the revenues
and expenses are same, but we get the share from JV, so it maybe some accounting concept
anywhere?
Sanjeeb Kumar:
In consolidated we have JV in which we are not it is not a subsidiary we have up to 50% or less
as a share. So, there the only take our portion of their profits.
Moderator:
Thank you very much.
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Rajesh Prasad:
Very good evening and close this because I have got another Investors meet and if you are having
any other question then you can mail it to the Company Secretary and then we will see what best
we can do and then we will also send the answer.
Moderator:
Thank you very much sir. Ladies and gentlemen that then concludes today’s conference call and
on behalf of Rail Vikas Nigam Limited that concludes this conference. Thank you for joining us
and you may now disconnect the lines.
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