Key takeaways of the call

Unexecuted order book as of now was Rs 26544 crore and of which the order book of ship building division was Rs 25281 crore and that of other engineering division was Rs 1263 crore.

Of the shipbuilding order book ‘Project 17Alpha', which is an order to build 3 advanced stealth frigatesaccounts Rs 19256 crore. Order for building of four large survey vessels was about Rs 2435 crore, which was won in competitive bidding process in Oct 2018 from MoD. The first ship is to be delivered by Oct 2021 with a project completion time of 54 months.

The Keel for the first survey vessel was laid on in Nov 2019. The company has outsourced building the second vessel to L&T Kattupalli. The company will lay Keel for the third ship in next 2-3 months.

The company has till date delivered 105 vessels for Indian Navy & Coast Guard. The company was to hand over 3 ships in Q4FY20 and of which one was on March 26, 2020. But due to COVID lockdown that could not be done in March 2020 but that handover was done once the operations of the company began in Jun 2020.

Delivery of first ship in Proj 17Alpha is scheduled in 2023, second on 2024 and third on 2025.

Of ‘Project 17Alpha' the production/building of first ship is going on at good speed and the company laid keel for the second one. The production of third vessel is in progress. So the revenue recognition of first ship on P17Alpha will touch its peak in FY22. Similarly the contribution of survey vessel order will also increase.

Of FY20 revenue of RS 1433 crore about Rs 1250 crore came from shipbuilding division and Rs 183 crore came from other engineering works. Of the shipbuilding revenue P17Alpha contributed Rs 754 crore and Survey Vessel contributed about Rs 75 crore.

Revenue recognition in Project 17Alpha in FY21 will be better than FY20. FY22 will be even better with first ship construction touching peak in FY22.

The COVID-19 has mostly impacted the physical performance of the company. However, during the lockdown period, the Company continued with its design, planning and commercial activities. As shipbuilding is of long construction period and a catch-up plan is being finalized to cover-up the delay occurred on physical performance during the lockdown period. Considering suspension of operation during COVID led lockdown, FY21 performance is not expected to be bad than FY20. Expect FY21 to be equally good to that of FY20.

The company has expected booking of revenue to the tune of Rs 80-90 crore from delivery of FPV on March 26, 2020. But the delay in delivery has pushed back that revenue to Q1FY21. Further the loss of production also delayed delivery of some engineering products. The complete financial implications on the business operations due to COVID-19 lockdown are yet to be ascertained.

The company has commenced operations in 2 units from 8^th of June 2020. The company has commenced two other production units with restrictions. The company employs 60-70% of workforce in 2 shifts. Return of contract workers will take another 2 months.

Of the five fast patrol vessel order from Indian Coast Guard the company has delivered four FPVs and the fifth one if for a friendly foreign country for which the agreement is yet to be signed.

The order tender pipeline is good. The company has submitted many RFQs to Ministry of Defence. It normally takes at least 12 months from bid opening to contract signing. The company submitted RFQ for 2 nos for multipurpose vessels for Indian Navy. It has also submitted RFQs for 6 nos of NGPVs.

Planned capex for FY21 at Rs 52 crore. The company is not expects any delay in completion of capex and hope to catch up the delay.