Garden Reach Shipbuilder is confident of more than doubling the export component in its orderbook to 10% in the next one year, and is exploring plans to set up a greenfield shipyard in the coming years.
"...as on date, just about 4% of GRSE’s order book is coming from exports. Our total order book is Rs 23,877 crore, and just about Rs 970 crore is coming from exports," retired Commodore and CMD of GRSE, PR Hari said in the earnings call for December quarter, adding that the company has plans to invest and revitalize one of its facilities, to seek more export orders. GRSE said most of the European nations have started to look at India as a destination of commercial shipbuilding.
GRSE said exports and ship repair offer better margins and the company is hoping to expand its presence in both the categories. "The revenue generated from ship repair is very, very modest, but we expect substantial growth in the next 3 to 5 years," GRSE's PR Hari said. The shipyard company was not present in the ship repair segment till very recently, but forayed here given the rising orders for refit and repairs. It projects to double the revenue from ship repair in a year or so.
"...a few orders have come from Navy. Coast Guard do not have any dedicated repair organization. So, 100% of the Coast Guard orders will go to one of us, us,
Cochin Shipyard, L&T and some of the private players," said the chairman.
On exports, the company is very upbeat on future orderflow. "...on a conservative basis, we'll be looking at a two-fold increase within one year, and at least a four-fold increase from the current value in the next four years," retired Commodore PR Hari said, adding that export orders ensure global recognition along with better margins.
The current orders with GRSE are spread across 40 naval platforms, and 95% of them are from the shipbuilding segment, a category where the shipyard company has increased its annual capacity to 24 ships this year.
The rising demand for shipbuilding has meant that GRSE is stretched on its shipyard capacities, and is considering a greenfield facility over 3-5 years. "...if you really want to expand to a global shipyard where we can construct vessels of, let us say, 300 meters length commercial vessels, then you need areas. It is with that, intent, we are likely to go out. Discussions only are at this stage. Maybe next year, when we meet, maybe I'll be able to give you some good news on that," PR Hari said.
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The Request For Proposal (RFP) for the proposed P-17 Bravo - a class of stealth, guided-missile frigates - is expected to come out by the end of the year, said GRSE. Based on that, the shipbuilder is expecting a final list of L1, L2 bidders by mid next year. GRSE will be closely monitoring this upcoming project, and the L1 shipyard will get an order of around Rs 40,000 crore while the L2 shipyard will get an order of Rs 30,000 crore for construction. The management is extremely confident of bagging this order.
Shares of Garden Reach Shipbuilders are down nearly 19% so far this year, and over last one year, they are higher by 63%. The company has a market capitalisation of over Rs 15,000 crore, relatively smaller in size compared to Mazagon Dock and Cochin Shipyard.
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