Ladies and gentlemen, good day, and welcome to Mazagon Dock Shipbuilders Limited Q1 FY25 Earnings Conference Call, hosted by Nirmal Bang Equities Private Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation conclude. Should you need assistance during the conference call, please signal an operator by pressing Star, then Zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Jyoti Gupta from Nirmal Bang Equities. Thank you, and over to you, ma'am. Thank you, Manav. Hello, everyone. On behalf of Nirmal Bang Institutional Equities, I welcome you all to the Q1 FY25 Earnings Conference Call with Mazagon Dock Shipbuilders Limited management. We have with us Sri Sanjeev Singhal, Chairman and Managing Director, Additional Charge, and Director of Finance, Sri Biju George, Director, Shipbuilding, Commander Vasudev Puranik (Retd), Director, Corporate Planning and Personnel, and Director, Submarine and Heavy Engineering, Additional Charge. Without further ado, I request Sri Singhal, Sanjeev Singhal, to start with the opening comments, after which we can open the floor for questions and answers. Thank you, and over to you, sir. Very good afternoon and welcome to all the participants. This is from Mazagon Dock Shipbuilders, Sanjeev Singhal. The results have already been declared today afternoon. I believe that the investors should be happy with the concerned company has been performing strongly and consistently, and we believe going ahead to continue with a similar kind of a performance, improving upon quarter to quarter. With this brief introduction, maybe we can start the question answer session. Sir, should we begin the question and answer session? Yeah, please. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press Star and One on their touchtone telephone. If you wish to remove yourself from the question queue, you may press Star and Two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Amit Dixit from ICICI Securities. Please go ahead. Yes, sir. Good evening, everyone, and thanks for the opportunity. Congratulations, sir, for a good set of numbers. I have three questions. The first one is, if you could let us know the status of P-75 and P-75I. There were media reports indicating that P-75I, we were successful in the field trials, while in the other bidder, there were some observations. So just wanted your comment on that, and when do we expect this to be closed? That is the first question I have. We don't have any comments with respect to the media reports. As far as the status of the project is concerned, with respect to P-75 additional Scorpene submarines, we have already submitted the prices. Two rounds of assessment by the costing committee have happened. I believe that the costing committee is close to finalizing their recommendations, and with that, the further processes should start with respect to order placement and formalities once the prices are considered to be in acceptable range. With respect to P-75I, the trials are concerned. Hello, sorry to interrupt. Your voice got break in between. TKMS proposal, these field evaluation trials have been considered. Sorry, sir, we were unable to hear you actually. So can you please repeat it? We were unable to hear you, sir, from the beginning, P-75I, when you said. In that case, do we reconnect the line? Sure, sir. I will reconnect your line. Now you are audible. Ladies and gentlemen, please be patient while we reconnect the management. Ladies and gentlemen, the management is back with us. Over to you, sir. Yeah, with regard to, should I start with P-75 again? No, sir, P-75I. P-75 we heard loud and clear. P-75I, with regard to P-75I, the information available with us is that the field evaluation trials with respect to the proposal of MDL and TKMS combined, they have been found to be successful. So this evaluation is done. So now we are waiting for the next phase for, technical discussions, if any, from the naval side. Okay. Okay, sir. The second question is with respect to the margins. We've seen margins are pretty high in this quarter. So, were there some LD refunds in this quarter? No, we, there was no LD refund per se, as far as this quarter is concerned, although there are two more submarines for which we expect LD refund. They are at different stages of discussions, so maybe in the coming quarters, those LD refunds should be coming in. As far as this quarter is concerned, there was no LD refund, but yes, with regard to our destroyer deliveries, the second destroyer is also close to the completion of the D-448 liability. So whatever provisions were catered for, for the second destroyer as well as for the first destroyer. First destroyer, the warranty period is already done. And for the second destroyer also, because we are now close to completing our D-448 liabilities. So whatever provisions were required or they were catered for, so now they are being released. Okay. Whatever excess provisions have been there. Okay. Okay, okay. Okay, sir. That is helpful. So the third question is on P-76 project. Any light you can share on this? Are we involved in developing this with DRDO, or any color if you can shed on this, sir? Right now, nothing to share. Okay. All right, sir. Thank you, and all the best. Thank you. A reminder to all participants, you may press star and one to ask questions. The next question is from the line of Kriti Tripathi from NVS Brokerage. Please go ahead. Ask Sunil to be ready. Hello, Kriti Tripathi. Hello? Hello. Yes, sir. Yeah, this is Nalin Shah, NVS Brokerage. Okay, sir. Please go ahead with the questions. Yeah. At the outset, I would like to congratulate the management for, I would say, bumper performance this time, and we are very happy to see this performance. Particularly, the margins have improved, you know, I mean, dramatically from 16%-26%. So now, in the beginning, sir, you have already said that we continue, we see the similar performance throughout the year. So can we assume that what is the kind of trend which was there in the previous, full year, FY 2024, can we assume the similar trend to be in FY 2025 and the similar margins to be maintained? That is one. Secondly, what is the total book size, order book size today, and how much it is implementable before March 2025? Yeah. With respect to the margins and, moving forward, how does it continue? We expect, in case there are no surprises and there are no liabilities, because, these are long gestation period orders, executable over 10-15 years. They have long period post-delivery and commissioning also, where the liabilities with the company continue. With respect to, the first ship, the warranty period, which was delivered in 2021, the warranty period, et cetera, got- Hello? Hello. Am I audible? We are losing the connection. Am I audible right now? Yes, you are audible right now. Yes, yes, yes. Okay. With respect to the second ship also, we are now close to completing our D-448 liabilities. So, the similar position would be with respect to third ship and the fourth ship when we deliver it. So there is a very long period post-delivery also. So this is a period where the liabilities can accrue or arise. So in case there are no surprises, no major liabilities accrue- Mm-hmm. We expect that a similar kind of performance, what we registered last year, this should continue. Okay. This is with regard to the performance. With regard to your second query, regarding the order book. The order book, as of today- Yes. I'm talking as on thirtieth of June, it is slightly dated. As on today, the order book is INR 40,400 odd crore. Okay. As far as the revenue for the current year is concerned, we are targeting maybe some increase over next year, over previous year. Still to firm up the numbers. As we move ahead, the clarity would be available maybe after Q2 Okay, okay. But margins, you feel that continue to be maintained like Q1? For the existing projects, in case there are no surprises, we believe a similar kind of a position should be there. Okay, okay. Thank you very much, sir, and once again, my heartiest congratulations on a wonderful performance. Thank you. Thank you. A reminder to all participants, you may press star and one to ask questions. The next question is along the line of Jayesh, our shareholder. Please go ahead. Thank you. Thank you for this opportunity, sir. Just, I had one question. What would be the order book of your 47% associate company, Goa Shipyard Limited? What will be the value of works unexecuted for GSL? Can you give us that number also? I didn't find it in the presentation. Although Goa Shipyard happens to be our associate company, that we are holding around 47% of the equity, we do not any kind of a management. It is a pure investment, and we are concerned with the dividend only. Beyond that, we do not entertain any queries with regard to Goa Shipyard. Sure, sir. For accounting purposes, whatever profit is there, it impacts my net worth and, the profit, whatever proportionate share is there, that is added to our profit in consolidated. Sure, sir. Thank you so much, sir. Thank you. Before we move on to the next question, a reminder to all participants, you may press Star and one to ask questions.... You may press star and one to ask questions. The next question is from the line of Praveen Desai, an individual investor. Please go ahead. Yeah. Good evening, sir, and congratulations for good result, set of result. Sir, my request is to split up the share value, because it's now a high share value, so everybody cannot take part in that, and the liquidity can also increase. And one more thing, when we get the Navratna status, you didn't elaborate much thing of about that thing, sir. We were eager to hear something from you regarding that. So please elaborate something on that. To how far we are progressing and what's what how far our status has been advantageous to us, like that. Thank you very much. As far as splitting of shares is concerned, being a government company, this decision is taken by Department of Investment and Public Asset Management, DIPAM. So whatever is their decision in this regard or any other issue, that as a company, we'll be abiding by that. So we don't have any information as of now. With regard to Navratna, as a corporate governance abiding citizen, as a company, we had intimated this information immediately when we were conferred the Navratna status. As a Navratna company, it provides a significant advantage to the company, as significantly higher powers are available with the board. CapEx decisions can be taken without any kind of a restriction or without any reference to the ministry, which facilitates quicker decisions with respect to joint ventures and collaborations also. Compared to the, as a non-Navratna company and a Navratna company, we can collaborate up to a significantly higher financial exposure, up to INR 1,000 crore for each collaboration or JV. So there are certain advantages as well as the customers are concerned, particularly the foreign customers. They are also a company with a tag of Navratna has a better standing or a rating with respect to servicing of the orders. So these are the few advantages which we believe would be accruing to MDL as the time passes by. Thank you very much for the explanation, and I wish you all the best in future, sir. Thank you. Thank you. A reminder to all participants, you may press star and one to ask questions. The next question is from the line of Gagan Thareja from ASK Investment Managers. Please go ahead. Yes, good evening. I hope I'm audible? Yes, yes, please go ahead. Sir, the provision right back that you indicated, can you give the value for that? How much is the magnitude of the provision right back? So these provision write-backs are, actually, this is a for shipbuilding industry, this is a different accounting altogether. There are no provisions per se created. It is the estimated cost to completion. The difference between the order value and the estimated cost to completion is taken as... for an accounting period. So depending upon what kind of a cost to completion is technically estimated, to what kind of expenses may be there, the cost to completion fluctuates on each assessment date, on a quarterly basis or a yearly basis. So depending upon the, in case the cost to completion is coming down, it raises our profits. So a better happens as we come close to the completion of the project or completion of a milestone. Like in case of a delivered project, the milestone would be completion of deferred corporate liabilities, completion of warranty periods, completion of all pending issues. So certain costs are considered while calculating the cost to completion towards these milestones. In case I do not incur those costs, they add to our profit. I hope I have been able to explain you. Yeah, I understand conceptually what you're trying to indicate, sir. Sir, there would not be an amount which has been kept separately as a provision. I get your point, sir. It's just that I'm trying to assess, even from that standpoint, you know, when you say that the final cost landed up being lower than the estimated cost- Yeah. -to what extent was the difference? You know, if the magnitude can be enumerated, you know, it would be- On different dates, the cost to completion would be different. It fluctuates every quarter. So we don't have the numbers immediately available with me with respect to what was the CTC last quarter and what is the CTC now. And this CTC could be different. This could be on the positive side or a negative side for next quarter, depending upon what liabilities actually accrue. But if that is the case, then ideally, you should be having a huge volatility in your, I mean, if not huge, you should definitely be having volatility in your quarter-to-quarter margins. That really wouldn't have been the case if I go at least in the recent past, right? Some volatility would be, would be there. At the same time, in case the liabilities do not accrue in a quarter, then just for a very crude example, if I am keeping INR 100 for one full year, and in the Q1, no liability accrues, maybe I can reduce it to 70, 75... for the after the completion of the quarter. Maybe after two quarters, I can bring it down to INR 50, INR 60. Okay. This is just for an example. This is a crude example, of course, but this is an assessment, yes, for the balance period, what kind of a liability can accrue? Correct. Correct. It may turn out to be correct, may not turn out to be correct. Right. But, I mean, you indicated that for, you know, for platforms which are close to delivery, you have a fairly accurate idea of, you know, the difference between your original estimates and your final- Our direct building will intervene. See, one is delivery. Delivery, of course, is a milestone, but our liabilities do not end at delivery. Yeah, I- Delivery date into the warranty period. Now, this ship is having number of systems, hundreds of systems, which is having electronic components, which are complex, which are having imported components, which are integrated across those systems. So we do not know how these are going to behave during the warranty period. So, and, in our experience, different ships have behaved in different manner. In one particular ship, it may be X requiring attention, and another ship, Y, is getting disturbed and requires attention. So we are unable to predict in a fair manner, where the liabilities would arise and what would be the nature of guarantees which we need to service to the customer. So at delivery, of course, the major our yard efforts would come to a close, but the liabilities would be there, which involves cost, and therefore, we need to cater for that. And as progressively we move to completion of the guarantee period, whatever has been provisioned, as CMD mentioned, that will be released, as the project. If the same is not utilized. Not utilized. Right. If we refer back to the 1, 2 call, I think you indicated that, you know, there are three to four platforms up for delivery this year. And in fact, some of these platforms, the deliveries are going to happen prior to the scheduled date, right? So 2 questions there. You know, 1, cumulatively, these deliveries, to your estimate, add up to what value for this financial year? 2, in case, you know, you manage to deliver them before the scheduled or stipulated date, obviously, your costs are lower, and therefore, there's a beneficial impact on margins. Over and above, you know, this provisioning or, you know, this difference between estimated costs and realized costs. And also, you have, you know, pertaining to the submarines, two, or two more submarines, I think you for which you negotiated for the extra cost incurred and which has been approved. So between all of these three, there's... To me, it would seem there's a very sizable, you know, sort of positive possibility of increment in margins. And so on these two aspects, one, the total value of orders for delivery in FY 25. Two, between these three, the impact on margins, if you could clarify. As the question with respect to impact on margins is concerned, it is not the projections are not performed in such granularity. As far as deliveries are concerned, yes, we are targeting three deliveries, one for destroyer, which we plan before the contextual delivery schedule. One frigate, which we are targeting to meet the delivery schedule, because this is the first frigate of the project, so this is the first of the class. There are challenges, but we are targeting that we should be able to meet the contextual delivery timelines. The third is the sixth submarine, the last submarine of the project, which for unavoidable reasons has been lingering for some time. So we expect these three deliveries to happen. There are so many variables involved, the projections which you are looking and the granularity which you are desiring, that is not feasible. So, Sir, I am simply... I'm not stating that this is what will happen. I'm stating, or rather, all I'm saying is that this is the fact that there is a possible hypothetical case where the deliveries will be met as per your anticipated- We don't work on hypothetical assumptions. Whatever is the status, this will be available to you in next quarter. Right. 30 June numbers are there. 30 September numbers, if the deliveries are happening, 30 September numbers will be there. We'll be coming to the investors every quarter. If I- As on that date. If I recall correctly, I think last quarter you had indicated the possibility of delivering even two frigates. This year. Yeah, yeah. Do you stand by that, as, Yeah, for this, for this frigate also, our target date is February. Right. It could be a touch and go situation, if everything goes well, because there are... It has not reached to that stage. So in the Q3, we have to pass an important milestone, which is the basin trials. If that happens, we are confident of delivering in Q4. Right. So given, given that, is it not reasonable to surmise that growth, sales growth itself should push up from what we have seen in Q1? ... I'm not looking for values, but it would seem to me to be a very reasonable surmise that top line growth should push up and push up well in the balanced quarters. We have indicated that we are looking for top line higher than last year. Numbers that we are not assigning right now. All right, sir. The final one, sir, on order pipeline, if you could discuss what's, you know, what RFPs are there in the pipeline, you know, over the next three years or three to five years time frame? We'll be bidding for eight Next Generation Corvettes, so that's first one, where we are bidding. That we submit this. Secondly, other projects are on different stage. Maybe it's considering a number of projects that went on into the AoN stage. We'll be able to comment on that only after the AoN comes and where all we have the potential to participate. Next, destroyers, Next Generation Frigates, et cetera. In parallel, we are also bidding for some export orders. Yeah, so, as of now, these are the things I can mention. And with respect to submarines, I have already elaborated three number additional submarines, what is the status, and six number P-75I submarines, what is the status? I have already elaborated that. With respect to Next Generation Destroyers and next generation frigate, there is a requirement likely to take some time before it forms up. Right. Thank you, sir. I'll, I'll get back in the queue if I have more questions. Thanks for taking my questions. Thank you. We have our next question from the line of Rajesh from Arihant Capital. Please go ahead. Oh, yeah. Good evening, and congratulations to the Mazagon team. And thankfully, my questions have already been answered by the previous, you know, person who yielded his questions. Similar questions I have. So thank you so much, and congratulations again. Wish you all a Happy Independence Day tomorrow. Thank you. Thank you. We have a follow-up question from the line of Nalin Shah from NVS Brokerage. Please go ahead. Nalin, sir? Mr. Nalin? As there is no response, we'll move on to the next question. The next question is from the line of VK Vishnu, an individual investor. Please go ahead. Good evening, sir. First of all, accept my heartiest congratulations for giving wonderful results. Thank you. Results are simply out of this world. My second statement would be that I want to convey my gratitude to you. I am a retired civil servant, and I invested heavily in your company when it was at about INR 250. Your company, your management, has simply changed my life. I would request you to give, to explain one thing. Earlier, one question was raised about division of shares or about bonus of share, bonus, issue of bonus share. Have you given some proposal to ministry for the dividing the shares or for issuing bonus shares, or if not, would you like to do it now? Thank you very much. No, this is an area which I've already clarified, which is taken care by Department of Investment and Public Asset Management, DIPAM, and there is no requirement of any kind of a proposal from our side. The complete set of information is shared with DIPAM on a regular basis, so they are fully aware of what is the status of the company. Whatever decision the government intends to take, that would be conveyed to us, and whatever procedural formalities are required, we'll process that. Okay. Thank you. Thank you very much, and congratulations. Thank you. Thank you. We have our next question from the line of Praveen Desai, an individual investor. Please go ahead. Yes, sir. Thank you. I got the answer regarding splitting of the shares that I wanted to convey you, that you can also convey on our behalf to the government, your committee management, and convey on our part that shareholder were asking for splitting up the share, because now the share value is INR 5,500. So split up value, if it is as bonus 5, then also it become INR 1,000. So it is a high value stock. So if but you told that it is not in our hand to recommend them, they manage themselves. There, so I got the answer, and thank you very much, Singhal Sir, and best of luck to you, everybody. Thank you. Thank you very much. Thank you. We have our next question from the line of Jayesh, an individual investor. Please go ahead. Thanks, thanks, sir. This is actually a follow-up question. Sir, our profitability has been very good, and then is likely to continue to remain so.... Our dividend policy has been in mind with what government companies typically what is specified typically for government companies in terms of 5, 25% of the PAT number, plus or minus a certain percentage. Any thought now increasing the dividend payout ratio, given that our profitability in this year has been quite, quite good compared to other you know previous years? In fact, we are looking for substantial effects and infrastructure augmentation. So, I believe that investors, also the growth of the company, should be more important than distribution of profits by way of dividends. Right. In any case, considering the share market price today, our dividend the company declares would be in terms of percentage terms. It would be a paltry amount. So we have significant plans with respect to infrastructure augmentation. We will be focusing, like, focus on that. No, absolutely, sir. First, capital allocation should be towards growth and only then for dividend. So yeah, I mean, my you know question was that, okay, is... What, what would be that number that you would be looking at, for, let us say, infrastructure augmentation in terms of, capital commitment out of your current profits? Currently, we are expecting a expenditure of INR 4,000-INR 5,000 crore over the next 4-5 years. Okay. Recently, incurred around INR 800 in acquisition of land on long-term lease basis and settlement of our existing long-term lease. So approximately INR 800 has already been spent, and now this land and in our land is to be developed. Whatever infrastructure constraints are there, we are targeting to address those. Sure. Perfect, sir. I think that's the right approach. Thank you. My question is done. Thank you. We have our next question from the line of Gagan Thareja from ASK Investment Managers. Please go ahead. Yeah, thanks, thanks for taking my question, sir. I think you indicated this, this year you have three deliveries, possibly four. For 26, is it possible to give it some broad brush, what could be the possible deliveries? Yeah. In 2026, we are planning to deliver the third frigate. And then we have- If second is not happening this year, then second and third. Second. In case second is not happening this financial year, in the financial year 2025-26, we'll have to deliver two frigates. Then we have also one delivery in financial year 2026 for the merchant ship. So then there is also delivery of the fast patrol vessel. So there will be. These are the four deliveries that will be there. On Fast Patrol Vessel, how many will you be delivering in 2026? Yeah. We are expecting one delivery. one-two frigates and, two, two frigates, one merchant vessel. One merchant vessel. Yeah. And, uh- one, yeah, one fast patrol vessel. And one fast patrol vessel. All right. And in terms of, in terms of margins, you know, while 2024 and 2025 would have the benefit of, you know, the submarine, cost escalation being provided to you, that go away in 2026. So on a normal normative basis, you know, what should we think of as, as broadly a sustainable kind of operating margins for, for you beyond FY 2025? As far as our normal sustainable margins are concerned, these orders are on nomination basis, where the margins are around 8%. However, whatever efficiencies have incurred, because these are long duration projects, so, during execution, whatever R&D has been done, whatever processes have been developed, whatever efficiencies have been incurred, they have a smoothing effect or a positive effect on the profits. And in case the deliveries are happening prior to the schedule, that also has a positive impact on the profits. So moving ahead, these contracts, which were awarded to us, the frigates contract was also awarded to us in 2015. So I don't see a structural change in the contracts, as and when the new contracts are awarded, then maybe we can take an assessment or a relook, with regard to the margins corresponding to those contracts. Right now, we continue to execute the projects, which were awarded long back. When you say 8%, which margin are you referring to? PAT, PBT or OPM? 8% is the PBT. PBT margin. But, but you've been well above that number for quite some time now. So- I have already given the explanation also, why the margins are high. 8% is at the time of the signing of the contract, based on the estimated cost duly vetted by the costing committee and assessed by the customer as well as us. So on the way, during execution, if any efficiencies are there, they add to our profits. If any procedures are changed, new procedures are developed, new R&D takes place, which brings down our cost, so those benefits accrue to the company. So that's what. So is 12% a sustainable margin or, you know, you move from 12%-15% perhaps? That is a new process. We would not be assigning numbers. All right. Okay, sir. And what would be the execution timeline for this approximately INR 40,000 crore order book that you have currently? As deliveries are concerned, deliveries should be by end of 2026. But, as explained by our team, here does not end on delivery. Approximately 1.5-2 years, it continues, the activities continue. And in what- whatever fresh projects are coming, those executions will take, take over. So based on repair, you know, basically the spares that you will supply, plus some of the warranties that you have to issue, which, you know, which you discussed last quarter also, could be 15 plus whatever, five, 20-odd%. So if I knock out that much, are you saying that by end of FY 2026 or FY 2027, whichever it is- FY 2027. the entire order book, this entire order book has to be executed barring this 20% price? Yeah, existing order book. Yeah, yeah. That's, that's what I'm saying. Yeah. Yeah. So if I knock out 20%, that's INR 32,000 crore. You're saying that is by and large a number which should be executed between 25 and 27. Plus whatever you can do from the intake that happens- Yeah. during this time. Yeah. Yeah. Okay, sir. I, I understand. Thank you, sir. I'll get back in touch. Thank you. Thank you. We have our next question from the line of Jyoti Gupta from Nirmal Bang Equities. Please go ahead. Thank you, sir, for the opportunity. My question is, while we see the revenues going up, of course, based on the contracted value, we should also see increase in the raw material consumption. And do you see any changes on the procurement of base and depot spares as well? Because, while it seems much lower than the last four quarters, I believe next three quarters, one is, of course, what is, what could be the component of imported material versus indigenization, indigenous products? Could that be one of the reasons why the procurement cost is actually coming down? Or, or is it that the the inventory levels are already maintained and you don't have to incur any further expenses? Yeah, so- Hello? Hello? Hello? I can't hear you, sir. Can you, sir? Ladies and gentlemen, we have the management line disconnected with us. Please stay connected while we reconnect them. Ladies and gentlemen, thank you for patiently waiting. We have the management back with us. Over to you, sir. Yes, please continue. Yeah, I asked the question that based on the revenues that you see build up, it will only grow from here. Obviously, it has to be commensurate with the raw material consumption as well and the procurement of Base and Depot Spares. So, will even that go up? If it does, then by what proportion are you seeing that going up? And will that have a material impact on the raw material cost? Second is, the raw, the component of imported items versus imported products versus indigenization, what is the proportion of that? Yeah. So, over a period of time, we have achieved indigenization component of 75+. So remaining 20%-25% is the import content in capital warships. So, so that is the answer to your first question. For the second question, as I said, we most of the procurement has already been done. All major high-value procurement has been done. And only base and depot spares, which has to be handed over to the navy delivery, during delivery, as well as, beyond the delivery during the, to fulfill the warranty obligations, that has to be spent additionally. Okay. So will that have a material impact on the raw material cost? No. And what is that 22% of imported cost? What is it, what is it in terms of value? I mean, what is the proportion of the 22% versus 78%? What is this 22% you are asking about? The 22%, you, you said you've become indigenized, 78% of the items are indigenized. What would be that in terms of value? Hello? Yeah, yeah. So for the project as a whole around INR 12,000-13,000 crore? Yeah, 12 to- Yeah, yeah. INR 12,000-13,000 crore will be the import content. For the project as a whole? Project as a whole. For destroyers project? ... Okay. And what is the percentage of that to the overall products? That 22% is equal to INR 12,000-INR 13,000 crore. Okay, I got it. Okay. Thank you. Yeah. Thank you. We have our next question from the line of Darshit, chartered accountant. Please go ahead. Hello, am I audible? Yes, please, continue. Yes. Good evening, sir, and very congratulations for posting the set of numbers, quite impressive. And thank you for giving me an opportunity to ask the question. My question is with regard to page 75, P-75I order from Indian Navy. Wanted to know the total cost of order if the order gets finalized today, and what will be the allocation between MDL and TKMS from this portion? This is a collaboration agreement. We are not discussing the details with respect to the collaboration agreement. I'm sorry. Okay. Sir, what would be the cost of project, cost of order of if the order gets finalized today? AoN value, AoN value as of 2018 is INR 43,000 crore. We have submitted our bid. As and when it is evaluated and discussed, the numbers would be out, and we'll be declaring it to the market. All right, sir. Thank you. I'm done with my question. Thank you. Thank you. We have our next question from the line of VK Vishnu, an individual investor. Please go ahead. My query is, just now you said that, you are getting these different work from ministry on nomination basis. You manufacture submarines, frigates, destroyers, whether it is this nomination system is applicable to all these items, or it is applicable only to certain type of items? What I said was the current orders, the current large orders, which are under execution, these are on nomination. I did not say that we continue to get orders on nomination. As of now, I don't see, the nomination era moving ahead. We have received orders during last year, around, 21 vessels from Coast Guard, some export orders. None of these orders are on nomination basis. From Ministry of Defense? From Ministry of Defence, yes, but not on nomination. All these are competitive orders. Okay. The large orders, the frigates order, the destroyers order, the submarine order, which were awarded to us in 2005, 2011, 2015, these orders were on Nomination Basis, as there was no other player, no other shipyard capable of manufacturing these items. Even as on date, as far as destroyers are concerned, as far as submarines are concerned, no other Indian shipyard has a proven track record of constructing these platforms. For these items, it's still nomination system will be followed? No, I am not saying that. Okay. That means, that clarity is still not there. They may go for nomination, they may go for tender also. Yes. Okay, thank you very much. And another question, are we going for nuclear-powered submarines? Is there any proposal, any scope for that? Currently, no. Currently, no. We are focusing on conventional submarines. Right, right. Have capacity to build 11 submarines simultaneously. Right now, I am vying for two orders, which together would be 9 submarines, apart from the- Right ... medium refit and life certification, which is already continuing, and we expect more to come in future. Okay, okay. Thank you. Thank you very much, and all the best. Thank you. Thank you. We have a follow-up question from the line of Jyoti Gupta from Nirmal Bang Equities. Please go ahead. Sir, our employee costs have come down substantially from 15% average to something like 9.5%, which is on FY 2024. Do we assume for that to remain 9.5 for the subsequent years, or do we expect it to increase over the next 2 years, given the size of the orders that we are getting? In absolute numbers, whatever our wage bill is there- As a percentage of sales, sir. As a percentage of sales. Percentage of sales, in case the sales are going up, this percentage would come down, because we don't intend to increase the manpower in a substantial manner. Okay. So are we seeing any reduction in the count as well? No, there is no layoff. Whatever happens in an organic manner, natural separation, that would continue. Okay. Thank you, sir. Thank you. We have another follow-up question from the line of Gagan Thareja from ASK Investment Managers. Please go ahead. Yes, thanks. So there's a very sizable capacity expansion plan that you have for the year mark for the next 4-5 years, INR 5,000 crore, compared to what your gross stock today is, while it may be a depreciated gross stock. So in terms of the incremental capacity, can you give us some idea of, you know, what in, in percentage terms of your current capacity, how much more incremental capacity gets added from this CapEx? Yeah. Currently, we have, like, an installed capacity for handling 10 capital warships and 11 submarines. Now, the facility which we are augmenting, infrastructure augmentation, in two places. One is adjacent to our existing facility here in Dockyard, as well as in Naval Yard. We are planning for bigger dry docks, where we will be able to build as well as repair bigger. Capacity will get augmented, because primarily it is graving dock that is coming. So in terms of building capacity, if we can minimize the dock occupancy period, more vessels can turn out. And if it is a repair refit, so there also, on the time of refits, we can accommodate larger ships, which is drawing of the ships as well. So but to put a specific number in terms of number of ships, at this point in time, it is slightly premature. We'll be appointing a consultant, and the consultant will study and optimize the infrastructure and come out with the correct numbers. Is it possible to give a fixed asset turnover ratio on this investment? You know, a minimum fixed asset turnover ratio? Our ratio, we expect that, a similar ratio we would be maintaining with the additional investment also. With respect to a number, I would like to clarify, like, right now, if I can, handle 10 ships, they are of a certain size. So with the increased infrastructure, tomorrow, also, if I handle 10 ships, they would be of a much larger dimensions. It opens new markets for us. There are. We have a Master Ship Repair Agreement with the U.S. Navy. However, majority of their vessels, we are not in a position to take because of the infrastructure constraints. So we expect with the augmentation of infrastructure, such constraints would be removed. Much larger and better markets would be available and open to MDL. So the number, if you are looking the capacity increase in terms of number, that would not be possible to assign. Yes, asset turnover ratio, we expect going ahead, we continue to maintain a similar kind of asset turnover ratio, what we are maintaining now. Assume that ship repair as a proportion of sales over the next four-five years can increase very sizably for you? Not very sizably. We are... That is not our target area. Okay, all right. And in terms of working capital, how should we, I mean, think of, you know, inventory and receivable days on a sustainable basis going ahead? And is it also, you know, subject to, how, you know, order inflow happens? So if in day sales, you could give some idea of what should be sustainable working capital for you. Definitely dependent on the order profile and the customer profile, and the payment terms. So, as of now, I can only say with respect to the orders which are available in hand, we don't see any change in next three years. All right. You know, you've been indicating, when you bid for a project, you budget for certain costs, and over a period of time, with efficiencies, you manage to improve your margins. But I think this is, you know- Able to improve. Yeah, I get your point. My question is that this is something that the MoD is also well aware of. Do they not ask for their pound of flesh from you for, you know, because they realize that when you are reasonably conservative and for a period of time, you build your efficiency. So, I mean, once they've seen that, would they not come back and say that, "You know, you need to come down on your bids for certain other projects in the pipeline, which are, which follow up? For future projects, definitely, yes, because our numbers are available with them also. But at the same time, we are also not static. We are also learning each day. So, it's not that the learning is complete or, beyond this, the efficiencies are not feasible. Going ahead, in case I perform my job more efficiently tomorrow, again, there would be opportunities and possibility of better margins. Right. And in terms of the margin profile of submarines versus ships, is there any notable difference? That would depend upon the order structure. Yeah, I... Somehow, it still continues to remain sort of nomination. So it would depend upon the order structure. Finally, what is the order structure? What is the variable cost component? What is the fixed cost component? I'm also looking at it from the point of view that submarines might have a lesser indigenous content and perhaps a higher degree of imported components. Does that in any case impact margin? Definitely, yes. Right. And, you know, even there between P-75 and P-75I, 75, this will be your second project. You know, you've learned from the first one. It's also something you're doing completely by yourself. So would margin structures or profitability be different between 75 and 75I? I don't see much of a difference, because 75 continues to be on nomination basis, where the margins would be on cost plus, so they would be by and large fixed. However, submarines provide us a different business profile altogether, because a submarine has a working life of around 30 years, and with the medium refits and life certification, we can add another 10-12 years. So, the total from starting from the project execution till end of life, it is a 50-year cycle. And Navy is seriously looking at running all maintenance cycles and all refit cycles through MDL. Considering that, we have already executed six Scorpene submarines, sixth one is under execution, and three more are coming. So, this gives me a continuous business cycle over a very long horizon. Right. Which is the case with respect to building. As a major substantial refits with respect to ships, they are handled by the Navy themselves. Yes. Because they have the dedicated naval dockyards, that is where the Right. So, so what you're saying is that submarines give you the advantage of a, a very recurring revenue stream with the mid-life upgrades, subsequently? Very well, it will, for a long period of time. For a long period of time, right. And generally, after submarine is commissioned, when does it come in for a refit? Is it 4-5 years after commissioning? Yeah. I mean, typically, they have some refit cycles wherein there are some short refits, but the long refits generally are put after... Like, I can give an example that, the first Scorpene submarine, which we delivered in 2017, we expect the refit proposal in 2025. And the refits, you know, as a proportion of the original order value, are how much, in terms of order size, typically? It goes boat by boat, so it would be, especially the long ones, which we are discussing, would be around one third. One third. Okay, so one third of the original order value. But between 25-30. Like, we have delivered five submarines between 2017 and 2022. 2017 we delivered, 2018 we delivered, 2019 and 2022. So these would be sequentially coming, starting from 25. And they would- We expect with a gap of 12-18 months, one submarine should be coming to us for refit. How much time does it take? About 2 to 2.5 years. About 2 to 2.5 years, so there would be overlap with respect to refit available with us. We believe that the second refit cycle of the first submarine would start. Refits have a higher margin profile, perhaps because they are more in the nature of a repair and overhaul, or am I wrong in that inference? Refits are negotiated prices, so this can have higher, this can have lower, depending upon the assessment and negotiation at that point of time. Great. Thanks for taking my questions. I'll get back in with you. Thanks. Thank you. Yeah, I think we've already crossed the time. Yes, sir. As there are no further questions, I would now like to hand the conference over to Ms. Jyoti Gupta from Nirmal Bang Equities, for closing comments. ... That concludes the conference. Thank you for joining us, and you may now disconnect the lines. Thank you for joining us, and you may now disconnect your lines.