RITES Limited (RITES) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. I am Rituja, moderator for this conference. Welcome to the conference call of RITES Limited, arranged by Concept Investor Relations to discuss the Q4 and FY '21 results. We have with us today Shri Rajeev Mehrotra, Chairman and Managing Director; Shri Bibhu Prasad Nayak, Director of Finance; and Shri Parmod Narang, Chief Financial Officer. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand over the floor to Shri Rajeev Mehrotra, Chairman and Managing Director. Thank you, and over to you, sir.

Thank you, Rituja. Good afternoon to all of you. I'm Rajeev Mehrotra, CMD of RITES Limited and happy to welcome you to Investor Conference Call of RITES Limited on Financial Results for FY '21 and the Fourth Quarter of FY '21. Hope all of you are keeping safe, along with your families during these tough times. I have with me our Director of Finance, Shri B.P. Nayak; and Chief Financial Officer, Mr. Parmod Narang. RITES Limited is the Miniratna (Category-I) Schedule 'A' public enterprise and a leading player in the transport consultancy and engineering sector in India, having diversified services and geographical reach. RITES Limited is the only export arm of Indian Railways for providing rolling stock overseas other than to Thailand, Malaysia and Indonesia. I hope you all have been able to access the financial results presentation and press release uploaded on our website as well as the stock exchanges yesterday. Let me begin with the safe harbor statement. The presentation, which we have uploaded on our website yesterday and the discussion during the call today, may have some forward-looking statements. These statements are considering the environment we see as of today and, obviously, carrying a risk in terms of uncertainty, because of which the actual results could be different, and we do not undertake to update those statements periodically. Now I'm going to talk about the highlights of company's results of FY '21 and Q4 FY '21, and then we can open the forum for questions and answers. FY '21 has been an unprecedented year for the company and has thrown a lot of challenges before us. But with gradual normalcy -- gradually, normalcy returning in the business environment, our revenues also picked up with every quarter, and most of the parameters of our business had come back to pre-COVID levels in Q4 FY '21. Now I will briefly talk about the consolidated full year results. And as you all know, almost 97% of our income is coming from the stand-alone numbers as a part of the consolidation. So whatever I'm talking about consolidated numbers is relevant to stand-alone also. The company's total revenue on consolidated basis stands at INR 2,005 crores as against INR 2,735 crores in FY '20. Company's revenue from operations stands at INR 1,860 crores as compared to INR 2,474 crores in FY '20. All-in revenue mainly due to decrease in exports by INR 448 crores in FY '21. But if you exclude the exports, the decrease in operating income is about 8.7%. The disruptions in supply chain and restrictions imposed due to pandemic affected the operations and also INR 100 crores fall in other income has been there as compared to FY '20. EBITDA and PAT stands at INR 505 crores and INR 444 crores against INR 668 crores and INR 633 crores of previous year. EBITDA and PAT margins sustained at 27.2% and 22.2%, respectively. Despite fall in revenue, timely cost control measures helped the company sustaining these margins. The earnings per share stands at INR 17.54 for FY '21 as compared to last year's INR 24.64. Now coming to Q4 FY '21 performance on a stand-alone basis. Q4 FY '21 results surpassed the Q4 FY '20, that is Y-o-Y, but were not enough to make up for shortfalls in the first 3 quarters we faced. Q4 FY '21 total revenue is up by 6.1% to INR 632 crores as against INR 596 crores in Q4 FY '20. The operating revenue, excluding other income, was up by 12% and stands at INR 619 crores as against INR 553 crores in Q4 FY '20, and the growth from Q3 FY '21 to Q4 FY '21 was 42.7%. During the quarter, export started for cape gauge locomotives to Mozambique and coaches to Sri Lanka. And as a result, exports have shown a Y-o-Y growth of 54.5%. However, revenue from some consignments, which were actually ready for shipments, is going to spill over to Q1 FY '22. 30 coaches remained at the port, Chennai port, which were ready for shipment on 31st March due to nonavailability of ships on FOB contract basis. So the buyer was to send the [ ship ]. EBITDA and PAT, up by 17.3% and 2.4%, respectively, and stand at INR 172 crores and INR 135 crores, respectively. EBITDA and PAT are sustained at 27.8% and 21.3%, respectively, as a result of near normalcy in operations during Q4 FY '21. Now coming to segment-wise discussion. Consultancy remains the highest income-generating segment for the company, with 54% of the stand-alone income coming from this segment. Company generated a revenue of INR 972 crores against INR 1,066 crores in FY '20, with sustained gross margin of 44.2% during the year. Focus on international projects has led consultancy income from abroad showing 18.8% growth during FY '21. However, less procurement by certain clients impacted the quality assurance income during the year. Q4 FY '21 has shown slight growth of 2.8% during the quarter. Now leasing. Company's leasing business recorded income of INR 108 crores in FY '21 against INR 120 crores in FY '21 -- I'm sorry, I will repeat -- read this again. Company's leasing business recorded income of INR 108 crores in FY '21 against INR 120 crores in FY '20. Leasing business margin has remained healthy at 35.6% during the year and 38.4% during Q4 FY '21. Revenue from leasing business moderated due to reduced requirement of locos in H1. Exports. Exports revenue during the FY '21 stands at INR 93 crores against INR 541 crores during FY '20. Gross margins in exports stands at 19% against 22.7% in FY '20. This moderation in margins is attributable to lower exports during the year. Remaining export orders are under manufacturing, and most of the shipments are expected to be exported during FY '22. Turnkey construction. Revenue from turnkey construction project stands at INR 624 crores in FY '21 against INR 673 crores in FY '20. Gross margins from turnkey segments were maintained, and it stands at 3.8% against 3.4% in FY '20. Revenue in Q4 FY '21 has increased by 16.4% to INR 198 crores with execution reaching pre-COVID levels. Now coming to our subsidiaries and joint ventures. Performance of our subsidiary, Railway Energy Management Company Limited, got impacted due to less traction power requirement during the lockdown. And revenue for FY '21 stands at INR 69 crores against INR 81 crores in the previous financial year. However, revenue from power generation within this total revenue improved by 46.9% and reached INR 16.5 crores during FY '21. In FY '21, our wagon manufacturing joint venture, SRBWIPL, revenue and profit stands at INR 161 crores and INR 2.5 crores, respectively, against INR 265 crores and INR 15.5 crores, respectively, in FY '20. And our joint venture, IRSDC, revenue and profit stands at INR 39 crores and INR 5 crores, respectively, against INR 50 crores and INR 5 crores, respectively, in FY '20. Order book. Company's consolidated order book now stands at INR 6,277 crores as on 31st March '21, with new or extension of orders secured to the extent of INR 2,061 crores during the year. This order book gives us revenue visibility for almost next 2 to 3 years. We have sufficient order book in hand and shall exploit the various upcoming opportunities in the infrastructure sector in India as well as abroad, which will help us in future business growth. Dividend. Final dividend of INR 4 per share has been recommended by the Board of Directors, with total going up to INR 13 per share as dividend attributable to FY '21. This will have a dividend payout of 73.6% of PAT for the year FY '21. That's all from my side. We are now open for questions and answers. Thank you very much for your kind attention.

[Operator Instructions] The first question is from the line of Rohit Natarajan from Antique Stockbroking.

Sir, my first question is on the consultancy segment. We have close to INR 25 billion of order backlog. What is the kind of execution you can see in this particular year? Also, could you touch upon this order inflow part, especially on this consultancy? What is the order you receive in this particular fiscal?

Well, as we said, the order book for consultancy as of 31st March was INR 2,525 crores. And the delivery part, you can say, spill over to about 2 years on average. So this is a combination of certain PMC works for rail connectivity projects of power companies or coal companies. This also has consultancy income from metro projects, which has spanned from 2 to 3 years, 4 years. So that is the profile of the consultancy as on 31st March '21. Inflow in Q1, consultancy -- I'm sorry, Q4 -- I'm so sorry, Q4, net on consultancy was INR 326 crores.

Sir, I'm talking about the inflow for the FY '22 part, how much are we targeting, the new non-railway revenue -- non-railway consultancy orders, especially?

Look, it's very difficult to give a growth prediction because the way we have seen last full year. There were disruptions. There were disruptions in field works being done. Until Diwali almost hardly, any project was able to come to the construction. Hoping that the recovery remains up from now onwards. And it is safe to believe that we can see about 10% to 15% growth over what has been done in FY '21. There are orders, but we need environment to actually execute. And if that is there [indiscernible] the railways has a very high CapEx plan of INR 2 lakhs, INR 15,000 crores for the current year. And the orders have started just being released. Last week only, we got 1 order for electrification. We emerged L1 there. So I hope that there will be some more additions as we go into year. Almost [indiscernible] I think wait. That is a player of the time line.

Sure, sure, sir. Sure. And my second question is more on the export front. We have INR 13 billion of order backlog in exports. What is the delivery schedule this particular fiscal year?

I'm sorry, there was a disruption. Can you repeat your last sentence, Rohit?

So what is the delivery schedule for exports in this particular fiscal? What are we targeting? What revenue numbers are we targeting in exports for FY '22?

Contractually, the entire INR 1,333 crores of order book will be completed in FY '22. But in case of say, for example, in locos, there were just 2% items, which were imported, 2% of the value. But that delayed the shipments in March by 2, 3 months. And again, further delays, we are now shipping 2 locos. These are already underway to -- on the way to Mumbai port. So this type of supply chain disruption, if does not happen, I see no reason to worry about the delivery of this entire INR 1,333 crores in FY '22. These are all under pipeline, manufacturing.

Okay, sir. Sir, one more question on this export front itself. We saw the Q4 margins was a little bit on the higher front, EBIT margins for exports. Do you see that kind of sustainability in those margins in the remaining part of the order backlog?

Well, this will depend upon what equipment has gone. So within the export market also, the margins for different products would vary. But as we indicated, normally, this could vary between 15% to 25% [indiscernible] the upper side of [indiscernible]

Next question is from the line of Vineet Gala from Monarch Network Capital.

Sir, continuation to the previous question asked on the export part. A large part of our -- like, the entire part of our order book is due for execution in business. So sir, I wanted to understand from your perspective, what is the visibility in terms of the new order inflow in this segment? And also, what would be the book-to-bill in this particular segment? How would you look at this?

The visibility is very difficult to say, but the fact that we have started a new stream of, say, products for cape gauge market. We have inquiries coming from a couple of countries, but it's very preliminary. So it will take time to build up on those contracts. Typically, such contracts may take up to maybe 1 year to actually shape up and then come out. So right now, yes, there are certain discussions going on, but at this stage, we are not ready to give any quantitative, say, number for this. But the fact that now we are able to supply broad gauge, meter gauge, we are able to supply cape gauge, the possibilities have actually increased for taking it forward.

Fair enough, sir. Sir, so can you please articulate on the thought process in terms of maintaining our order book mix given that most of the recent bid wins are in the turnkey segment, while -- in our export segment and also in the consultancy part of the business, we don't have the same kind of order wins tailwinds. So sir, what is your thought process? And how do you look at this order book mix over the next 1 to 2 years?

These products are different by nature, like an export order would be significantly coming, but not in a very repetitive way. Similarly, turnkey, when there is a tender like INR 1,700 crores, we emerged L1. It does not happen on a routine basis, whereas consultancy contracts are keep -- they keep coming from different segments gradually throughout the year. So the size is different. The exports, turnkey contracts are very large, but very few are coming in during the year. The consultancy and leasing, they happen throughout the year. Something or the other is going on every month. So that way it is very difficult to say that -- what final shape would emerge at the end of the year. But as we said, company would focus to remain a consulting company predominantly. Almost 50% revenue you can expect to be coming from consulting part, followed by exports this year. Exports could be higher -- would be higher because the production is in the pipeline. This year, we will see execution of turnkey 1 -- still over from last year, 1 doubling project. Also, some electrification projects, which we got sometime in February, March, the tenders for this are under award. So hopefully, by third quarter of this year, revenue from that will also start. Turnkey would remain, say, around 20% to 25%. Exports this year might be slightly higher, maybe 30%. Then the balance is on leasing and energy management businesses. I hope I answered...

Yes, sir. Sir, my -- like in -- so the vein which our mix will work over the next couple of years will have an impact on our margins. So from that perspective, apart from FY '22, how do you look at the margins basically in FY '23 and so on?

See, despite challenges in this year, we try to maintain margins. So the mix is very important to maintain the margins. So the consulting, if it is higher in the basket, the margin headroom would be safer for the company. As we have seen this year, we've got 54% -- of course, slightly reduced number compared to FY '20, but 54% was significant to keep the margin -- overall margin profile of the company intact. Going forward, I think till '23, I don't see any major shift in the existing business mix.

Perfect. Sir, last question on my side. What would be the breakup in our consultancy order book vis-a-vis the quick moving parts, which is operational maintenance and QA and the second part, which is there is -- the conversion is slightly had -- for the rail and road entrant. So what would be that mix?

In the consultancy, order book of about INR 25 crores. We can take QA orders to the order of about INR 350 crores. So that's a quick moving within the basket and the orders further detailing I have is -- 1 second. So if I can bifurcate the order book into -- consulting order book into 6 key streams. The airport orders are INR 186 crores, which is 7.4%; highway, INR 381 crores, 15.1%; ports, INR 86 crores, 3.4%; quality assurance, INR 84 crores, 3.3%; railways, INR 1,062 crores, 42%; urban transport, that is [ micro ] INR 212 crores, 8.4%; others, INR 514 crores, 20%. So this is the profile of consultancy order book. And the leader here is railways and then followed by highways.

The next question is from the line of Chintan Sheth from Sameeksha Capital.

Congrats for a decent print despite the challenge. Sir, 3 questions. One is on consultancy first. For the fourth quarter, we are seeing margin contraction...

Sorry to interrupt you, Mr. Chintan Sheth, your voice is echoing. It is not clearly audible.

I was also about to say this.

Now, is it audible?

I think it's better. Keep the mic slightly away.

Sure. So sir, point is on the consultancy part. For the fourth quarter, we are seeing margin compression Y-o-Y to be higher despite our revenue and employee cost, which is a large part of cost base for consultancy remaining the same. So any one-off or any additional costs which we bear this quarter, which resulted into margin compression? And how should we look at going forward? That is one. Second is on other income, which you mentioned that other income has been lower this year. And particularly in 4Q, our other income has been quite significantly lower compared to last year and last quarter as well. So any reason for that? And lastly, on the inventory part, we mentioned in the notes to accounts that INR 89 crores of finished inventory was sitting in our inventory for the year. But overall inventory, it's INR 286 crores versus negligible historically. So what is the remaining inventory buildup of? And how should we look at it? That is all.

Let me start from the last point. Possibly, I could not fully get your first question. So let me start with the last point. The inventory, we tried to ship these orders as early as possible. If you recall, one of my previous discussions with you all, I said this year, we'll try to push the exports to INR 400 crores. That was the target for FY '21. Now because of some subassemblies, some import contents not being able to reach the production units in time, now these 30 coaches were ready for shipment. We could actually take them to port, but then the remaining part could not happen on 31st because the ship, which the buyer was to send, was, again -- there was disruption in shipping lines during March. So this has remained at the port. So we have taken this in the inventory, about INR 106 -- or maybe INR 104 crores of revenue of the shipment would actually be recognized in Q1. 30 coaches, we are going to recognize in Q1 as being shipped out.

Okay. And but still, sir, the inventory number looks very bulky, INR 200 crores. So what if I remove this number and INR 80-odd crores, which you had mentioned in the results, still results in to another INR 100 crores of inventory. So I'm just trying to understand why.

Yes. Another 30 coaches were under manufacturing at Chennai, but could not be taken to port because the port doesn't have the capacity to hold that many coaches. So that's also a part of the -- it's a very normal situation because in March, the supply -- I'm sorry, the shipping lines were disrupted for various reasons. And this needs a good back capacity to carry coaches.

So largely because of the exports finished -- unfinished inventory, which is lying with our sites?

Yes. But a lot of this would be pushed out maybe in June and in July because, again, in April and May, like 1 or 2 countries where we are going to export are still under lockdown. So it's because they would not be able to unload. So with all those logistics being tied up, then only exports are being shipped out. So there's no problem with the manufacturing now, but the logistics actually emerged as a challenge. Replying to your second part, the annual other income shortfall is led by one item, which is INR 91 crores income we recognized in FY '20. This was in settlement with the client overseas. So that was a pure income because we had already provided for this earlier. Now this FY '20 income was not there in '21. So this was a major gap. Other factor was that there is a reduction in interest rates. So whatever surplus money was earnings went down. Now coming to quarter 4 specifically. The impact, as compared to Q4 FY '20, 3 main reasons: exchange rate, INR 17 crores; interest INR 7 crores; and income tax refund was there in FY '20 Q4. So this INR 29 crores explains the difference between that time to here.

Okay. And on the consultancy, if I -- should I repeat my query?

I'm sorry, I lost the track of your first question. It's better to go one by one.

Yes. Sure, sure. The company [indiscernible] quarter. So we have done a commendable job to bring the revenue back to the pre-COVID level of Q4. And if we look at the quarter to quarter, fourth quarter to this fourth quarter, our employee cost has been remained the same, INR 130 crores to INR 136 crores, but our margin has declined from 50 to 40. So I'm just trying to understand what went into that, yes. And how should we look going forward on the margin part?

A key impact was actually felt in the consulting business segment was only quality assurance business. Certainly, in Q1, Q2, there was significant reduction. Now this continued till March because certain clients did not place the orders or did not want the supply to take place. So the fixed cost of quality assurance team remained, but the revenue did not come. So this impacted, I think, about INR 12 crore was because of this only. The INR 12 crores down margin was only because of this QA additional cost continuing. And now coming to employee costs, we focused on the cost management since beginning last year. We reduced, to date, 66 numbers of employees. Never done in RITES -- in the past, but then looking at the ground realities, we kept working on this. A combination of steps were taken. So I think we will try to maintain the margins as we see. And if the competition emerges later, then it's a different thing. We will take a view on each project to be bid in the future. But I don't see any threat or a major underlying change to the margin profile in business.

Right. So will we continue around bearing this QA part and our margins will look much better than the reported number?

Yes.

The next question is from the line of from Shreyans Mehta from Equirus Securities.

Sir, my question pertains to the export segment. So sir, could you let us know that probably in Q4, how much amount could we have lost because of this nonshipment of the exports?

Okay. In terms of billing amount?

Yes.

INR 105 crores of invoice could not be raised because the shipment, as per the contract, could not be generated. But another 30 coaches remained under -- almost finished stage in ICF and the port -- unless the first lot is cleared, the second would not be permitted to be parked at port. So we are in a situation where despite the production picking up, the shipments could not happen. And all these, we are trying to push in Q4. 2 locos are already, as I said, on the way to Mumbai port would be shipped possibly next week. For 30 coaches also, ship has been sent by the client. So Q4 should see a reasonable disposal of what could not be done in March.

So Q4 or 1Q?

I misread, Q1. Q1 will see spillover of Q4 being settled. Extremely sorry, yes.

Right. So 1Q, can we expect in terms of exports around INR 300-odd crores in terms of revenues?

Looks likely, yes. If second lot of ship is also received for this next 30 coaches, yes. If not, then maybe 10, 15 days here and there.

Okay. Okay. Great. Great. Great. Sir, second, my question is again pertaining to the exports. Basically, I just wanted to understand your thought process, given that INR 1,300-odd crores would be totally finished probably by this year-end. So which areas or which countries are we targeting now? And where do we foresee this order book? Or how would we at least replace this entire order book?

Well, the fact is that there is a slowdown, if I can say, in processing of such capital purchases in several countries. But till we actually submit a price/bid, we would not like to share that number. But yes, we are going to bid for a project very soon, one order very soon. There are inquiries from 2, 3 countries about the DEMUs, diesel multiple units, but that is very preliminary. So if I can say that readiness, yes, we are getting ready to bid for 250 coaches maybe next month.

Okay. Sir, any quantification in terms of numbers?

Nay, we will just stay at that. And otherwise, it will become too much of a forward-looking numbers without even getting the [ number ] or any confirmation, yes.

Got it. Got it. Got it. And sir, if I'm not wrong, probably, we were also planning to enter into Ghana and African countries. So what's the status of that?

We have not been able to send our teams actually. At least 3, 4 countries, we need to send our people to take up the discussions further. And these countries are actually creating infrastructure. So definitely, there are candidates for purchasing or whether they buy from India or from anywhere else, all that is we have to emerge. But yes, Ghana is a possible candidate.

Got it. Got it. Got it. Sir, the other question pertains to our CapEx guidance and how much of the CapEx have you done for this year? And what's the plan for FY '22?

FY '22, we have just approved INR 28 crores of CapEx for purchase of 5 locomotives. We are going to place order now. We are building a lab/com office complex in Kolkata and a similar facility on a smaller scale in Lucknow. We have made 1 lab ready in Faridabad. So put together, if you see the investments in locos and further loco requirement would be around INR 150 crores to INR 175 crores. And then our INR 200 crores equity, as we have already informed that we might take up investment in REMC for solar power required by railways. So put together around INR 350 crores to maybe INR 400 crores is what we have in hand. Similar amount, we will be needing for working capital. And your first question is how much was spent in FY '21? The amount is INR 80 crores net addition in CapEx FY '21.

Okay. Okay. Okay. Sure, sure. And sir, last 2 questions. One on -- if I just do a math of the indicative breakup, which we had given in terms of growth we are expecting, the INR 1,300 crores in exports and stuff. So roughly, we are looking at roughly a rare topping of INR 3,000 crores to INR 3,200-odd crores for FY '22. Are we on track on that? Probably do you think because that's a growth of almost 80-odd percent year-over-year?

It's very visible that with this order book and with a major statement that exports would be shipped out, this definitely could be much better. But we'll wait for the normalcy. And we would not like to comment, at this stage, a number on the outlook, but it is definitely going to be better than what we have done or maybe better than FY '20.

Got it. Got it. Got it. And sir, my last question pertains to the turnkey segment. Now probably we are hitting that 4% mark. So can we surpass that and can we move towards the 5% or 5.5% mark in the turkey in terms of EBIT margins?

No, that's unlikely. We have been -- if you see our previous guidance, we have been saying the margins could be 2.5% to maybe 3%, 3.5%. So we have brought it to 3.8% with the economies, the travel costs are down, the employee numbers have been reduced. But beyond that, it looks unlikely. Maybe touching even 4% looks unlikely.

Got it. So it would be in the similar range?

Yes. I think 3.5% to 3.75% is a safer realistic assessment.

The next question is from the line of Dixit Doshi from Whitestone.

Firstly, on the export side. So you mentioned that if the second lot is also got exported in next 15 days, we can do around INR 300 crores kind of revenue in Q1 itself. So if that doesn't go, then it will be around INR 100 crores?

No. Then also this would be around INR 60, maybe INR 170 crores, INR 180 crores is definitely there. Because these locos are on the way to Mumbai, 2 locos is already out. Then the 30 coaches are already on being boarded. The 30 next lot being shipped out by June looks slightly unlikely. Because, again, there's a lockdown there. There was a lockdown in Chennai for a long time. So even if the ships had come, they would not have been able to upload.

Okay. Now in terms of -- so let's say, by end of Q3 last year, our order book was around INR 1,400 crores. And that time, our assumption was that we'll do around INR 500 crores to INR 550 crores exports in Q4, and then the remaining INR 700 crores, INR 800 crores kind of export will happen in H2 of FY '22. Now this INR 500 crores -- out of this INR 560 crores, almost INR 450 crores got moved to H1 of this year. But we are likely to do the similar H2, INR 700 crores, INR 800 crores kind of -- I mean do you feel, let's say, if there is no, like, third wave and there is no another lockdown, then it is very much possible to execute that INR 1,300 crore entire in this year itself?

Absolutely right. If there is no disruption further. Because the entire supply requirement has been ordered and this is under manufacturing now. So 2 locos are already underway, 2 more would be done in July. So if there's no disruption in logistics or lockdowns, I'm very confident that we'll have to ship out the entire INR 1,333 crores of orders.

Okay. Okay. And 1 last question from my side, sir. In turnkey, you mentioned that there is INR 1,700 crores of order where we became L1, which is not included in the order book. So can you just mention that how much was the total tender size where we got INR 1,700 crores L1?

Okay. Just give me a minute, let me take this number. See, this normally comes as a package of 6, 7, 8 projects and we give rate suitable based on the location. Because if we are present there, my team is there, my office is there. We -- so based on that, we have taken -- the question is how many more were there. I think about 6, 7 projects were there. We have 2 packages and 8 projects were there. Yes, I've seen that list. Yes, there were 8 projects, on which we know...

So in terms of -- let's say, in terms of rupees, so we got around INR 1,700 crores kind of orders, right? So can we say that the total tenders for the -- those was around INR 5,000 crores, INR 7,000 crores kind of tenders were there?

Total was INR 1,700 crores, and we got all. 100%, we have got it, sir. INR 1,700 crores.

All the 8, you're saying?

All the 8, put together INR 1,700 crores.

Okay. Okay.

Given L1 and all.

Okay. What he says that in this category, these projects are doable by us, all the 8 packages. And we have emerged L1 put together for these packages. And there is reason to expect more such packages, especially on the doubling and third line.

Yes. So my question was, sir, let me frame it this way. So I assume that since last year, so the railways are going on bidding among the PSUs, right? And You, IRCON, RVNL, all those companies have started bidding for the project rather than the nomination bids. So in this building, we got INR 1,700 crores of electrification. So do you say that entire order is won by us and there was no order given to IRCON, RVNL? Is that understanding right?

Yes. The most advanced. If there is any difficulty in any of the locations, then maybe we can decide to pick up 4, 5 or 6. Like last time, when we informed INR 800 crores, there were about 5 sections of rail lines, which were given to us put together. So that is how these are sections, put together, 8. And we are L1. Right now, there's no plan to give up, but we will see as negotiations proceed. So we've not signed the agreement. We have emerged L1. Let me qualify this. We emerged L1. We have not yet signed the agreement. But this was a significant development, we thought we must share with the market.

The next question is from the line of Kunal Sheth from B&K Securities.

If things go well, the consultancy will be able to do about 10% to 15% growth over '21 or '20, sir?

Sorry, if I heard your question right, you are saying the growth in consultancy, are you looking over '20 or over '21?

Yes, that's right.

No, no. FY '21 is a fractured year. So if we at all talk growth would be on FY '21 -- sorry, again, '20, FY '20.

So if things go well, we can grow at least 10% over FY '20 is what we are referring to, right?

Yes, yes. Because my optimism is coming from the order book as also the CapEx plan of railways, INR 215,000 crores. So there will be a lot of incremental QA order, plus within this CapEx, whatever more we can get as a consultancy would...

Sure, sir. So my next question is that only in this, we have also assumed that quality assurance revenue will also be normalized, right?

Yes. Normalized and incremental was because highest CapEx budget railways is carrying this year. There's no reason pessimistic that QA would not happen.

Okay, sir. And sir, would it be possible to give us some sense of what is the kind of pipeline you have for the consultancy segment?

I think the we indicated 10% growth actually consumes all our thoughts on this issue. We are going to bid for metro projects. We are looking for some extensions, which is normal for any consulting company. So beyond that, quantifying any number at this stage would not be correct on my part. And I think the guidance of about 10% increase should, for the time being, suffice, in my view.

The next question is from the line of Sarika Thorat from Union Mutual Fund.

I have 2 questions. Firstly, the media articles are suggesting that there is a station development happening for the Delhi and Mumbai railway station, key state railway station . So -- and the amount is quite high, around INR 10,000 crore each, like that. So will we be bidding for these projects? And what would be the percentage of the engineering work we will be getting in this kind of a project? I want just a qualitative data, not quantitative. And secondly, the update on the solar railway project, actually. I mean because we were actually in the bidding process last time you have mentioned. So what is the update there? I wanted to know.

To my knowledge, the New Delhi station, I'm not too sure about the Mumbai station they are saying, but these are coming on composite package basis and not consultancy or PMC separately. The bidder who has to develop the properties will have to bring the engineering partner later. So at this stage, we do not see any role to give a bid for development of this project at our own. So a railway station, at this stage, it's difficult to say what role we will be able to take. And we are not in a position to bid for such projects on development basis. That's not our mandate. Now coming to the solar part, we did float 3 tenders as we discussed some time back. The first one was on the railway land by developers. Second was through REMC. And third was, again, on railway land, but perilous to the tracks. What happened during this process, lot of suggestions came that why don't you subgroup the land in a particular way, so that the evacuation cost is minimized and then we are able to offer. And the bids actually did not come in that much number as perceived because of these queries remaining unanswered at the investor sense. So we decided to drop it there, change the conditions and rebid. So you will see this being put to rebidding this month. And our information to you that we may invest up to INR 200 crores through REMC in equity, still remains valid.

Okay. So that INR 200 crore would be done in this year or next year?

No, I don't think whole can be done in this year, no, no, no. This might be -- may be 2 years, half, half.

The next question is from the line of [ Garima Mithani ], an Individual Investor.

Sir, regarding your [indiscernible] business, so I just wanted to know, in a normal operation, what do you -- what would be the revenue in the current year and the PAT, if you can just highlight if not for COVID, sir? And do you think this business, over a period of time, can contribute close to around INR 100 crores to your revenue?

Well, first of all, comment on last year's operations. Since April, most of the rail operations were either shut down or on a very minimum scale. So the power offtake was significantly reduced. We are handling around 1,450 megawatts of power being purchased under open access. So this came down to less than 1/3. Now this continued for time till almost Diwali except some traffic. This situation has changed in March, but not fully normal. So that's one scenario that once the rail operations normalize, they have capacity of 2,000 megawatts requirement, of which we believe around 75% to 80% can be managed by us because other states have not given open access permission. [Technical Difficulty]

Hello?

Sorry to interrupt. The line of the management connected, please stay connected while we reconnect. Ladies and gentlemen, thank you for patiently holding. The management line is reconnected with us. Thank you, and over to you, sir.

Sorry for the disruption, I do not know what happened. We thought our lines are intact. So [ Garima ], I lost the point.

Basically regarding our subsidiary REMC, which is -- where you talked power for the reboot.

Okay.

Sir, if I see your revenue for last year, you would have previous year '19-'20, you've done INR 81 crores of revenue and the PAT is close to INR 35 crores on that business. So there's a normal operation of the business. Do you think this revenue could be a substantial contribution going ahead for next 2 to 3 years? That's what I wanted to know. And secondly, sir, you have a -- and secondly, you have consultancy part in this business. So just break up the revenue of the business, how it is and how do you do it? These are my questions, sir.

Okay. Most of the business in REMC is on consulting, which is our fee income per unit basis for the power purchase for railways. And there is generation, I think, about INR 16 crores per year is the generation coming from windmills in [indiscernible] bay. So except INR 17 -- INR 16 crores, INR 17 crores, the entire revenue is consulting. Now what is the size of this basket in near future? That's the question. And I will try to answer it from the plan, which has been made public that by December '23, railways want to electrify their tracks completely. And also keeping in view that DFC would be operational by then, it is estimated that the load would at least be minimum 4,000 megawatts. Right now, we're at 2,000, and of 2,000, we are handling about 75%. So if even 4,000, we handle 75%, so we would be handling something around 3,000 megawatts of power, which is more than double definitely of what we are doing now. But that is a very conservative possibility in the next 2 to 2.5 years. Beyond that, if there are more lines added with electrification, if there are more coal lines, more power lines and then maybe semi-high speed projects, which they're looking at, this can increase. And I think in about next 3 to 4 years, maybe this will reach around 30,000 megawatts.

Okay. And sir, any ballpark of revenue you can give us? I'm not quoting you for it, but what our revenue at -- what if we get it at INR 4,000 crores, what will be the revenue for this?

So this can go between 2 to 2.5x safely.

Okay. And the same PAT margin, which are they -- currently, have we enjoying or it will be...

Maybe margins wouldn't be improved because we are not going to add fixed cost proportionately.

Okay. And sir, my second question is in terms of consultancy business. After this award in the turnkey, so your turnkey side of the business, if you get it, if you sign the memorandum, will be much heavier compared to the consultancy part of the business. So how do you see that going ahead in terms of next 2 to 3 years, sir?

That would be -- the turnkey contracts do not come in smaller numbers and on rupee. So they have come maybe just bundled at a time. But consultancy, yes, we are exploring possibilities for submitting bids for metro projects and projects outside India also. So the increase in consultancy would be there, but may not perfectly match with the volume, which you are seeing in the turnkey. Because this has come just maybe as a backlog also. So there is a backlog of doubling in third line projects, once they come, maybe by September, something should come there also.

Okay. And sir, any update on the leasing business? If you can just what is -- how do you see that going ahead?

Leasing has started actually picking up. Once the normalcy started in January to March, we actually added 5 more leasing contracts. So yesterday, Board has approved 5 more locomotive purchases. So I see this is steadily going as it was doing almost 10% year-on-year basis. This is -- that possibility remains intact.

Okay. Sir, just last question, if I can. Is it safe to assume, sir, we'll maintain the same dividend payout going at, which we maintained over the last 2, 3 years, whichever?

I think the 2-year story should give you confidence about this issue, but I cannot comment.

Next question is from the line of Harshit Kapadia from Elara Capital.

Congratulations for good set of numbers under this challenging time, Rajeev and the team. I believe, sir, your stint at RITES has been phenomenal and RITES has achieved a lot more heights under you even just [ in your ] and congratulations for that and along with your team as well. I have some questions for you. So if you can highlight -- in some of the calls earlier as well as on some of the interviews, you had mentioned that you are already developing some workforce standard gauge network as well. So can you highlight are you talking to some countries for export as an opportunity for even standard gauge coaches or locomotives? Is that something, which is already in talks with? That would be really helpful. And along with that, on the export front, you were bidding for some projects in the Southeast Asian countries. So has that project been presently on hold? Scrapped? What is the status? Because that was a large project that we were eyeing. That would be helpful. I'll follow up with more questions.

So if I can answer standard gauge point first. We were, so far, maybe till 2, 3 years back. We're trying to sell what we used to manufacture. But then customization was not a priority and possibly maybe a different quality was not all that pressed. But having worked closely with the clients and the experiment with DEMU for Sri Lanka, it was a completely different profile product, went very well. Based on that, we started getting inquiries from other countries also. We were tracking cape gauge market. But as we got success in cape gauge product launch, we also have started working on 1 locomotive on a standard gauge. So I think by this year-end, we should be having a prototype. Because unless you have a product, unless you see a car before you, you won't buy it. So it's necessary to first develop a product and then market it. We succeeded with the cape gauge experimentation. We are going to repeat this for a standard gauge, and standard gauge market is much deeper than all this put together. So there is definitely interest. I would not like to name any country because we have not yet informed any exchange about this. But the standard gauge, yes, we are developing this.

And it will also be wise to understand, would the costing be lower compared to your other competitors just on a normal basis, sir, without getting deep into numbers?

Cost has to be competitive. There are competitors -- without naming any country, yes, there are competitors. And we are able to compete. We will definitely be competitive. And gauge businesses is either you buy a ready-made bougie from outside or you develop indigenously. Rest of the things are not very different. So whether it is a locomotive or whether it is a coach, once you are able to successfully develop a bougie or buy it from outside for launching the product, then experiment with the new customers. And there is response. We have been talking to countries. Then only we have taken this step forward.

Okay, sir. Okay. And on the Southeast Asia export orders, sir, which you were already working on?

That order is not yet out for submitting price bids.

Okay. Okay. But it is the hold -- order is on hold. It's not scrapped, right? So there could be some...

No, no, no. We're all struggling with the COVID-related disruptions. Therefore, I said, hopefully by July, I think we should be looking at price submissions there.

Okay. So my next question is on the inflow side. You had given some sense on the growth in terms of order inflows. Now would that also mean, since you only highlighted 10% to 15% kind of a growth, would it mean that large projects like bullet train, semi high-speed trains, the upgradation of Mumbai and Bangalore network, possibly may shift to FY '23 and possibly government is right now looking only towards major as in projects, which are more smaller size and fast to do? Is that a correct understanding, sir?

No. I think I'll say that the government is ready with its plans, CapEx plans. Also the metro companies or states, which are developing, they are ready, but certain disruption or the type of disruptions we have had would not be helpful for any sector, whether it is manufacturing or transportation or exports. So I think for the time being, we all should actually wait and see how the vaccination picks up and are we able to control the wave 3 so-called feared wave 3 by September, October. Then only all the new business stocks actually would hold ground. Sometime back, I was confident of proceeding with 1 or 2 major orders and then suddenly, we find in April that we are locked down. So I would not guess the inflows, but potential is all around, yes, why not? Not only in India, but outside India where we are working.

And sir, presently...

I mean, whether it is Africa or Southeast Asia, people are suffering because of COVID.

But in India, sir, starting from June, as things come back to normalcy for you? Or we are still in net like 50%, 60% utilization level as we are still yet to catch up?

No, no, this is not normal. No, no. Even the government guideline on the attendance is that not more than 50% below certain levels should be called to office. So we are following this path in a very, very careful manner. So the project sites are still impacted. The land acquisition is impacted. But hopefully, maybe once the vaccination drive actually starts picking up, hopefully, by August, September, it would be possible to see the impact on the ground. But right now, it's not competitive.

And question on, sir, turnkey construction. What I heard is INR 1,700 crores worth of order you have received as L1. And if I add close to INR 2,200 crores of orders, so you are almost close to INR 4,000 crores worth of order, if I add both of them together. So is it possible to understand that because government wants to make electrification complete by 2023, they are pushing these projects on a faster basis and, hence, for a short period of time, right, we see turnkey construction revenue increasing significantly, not in FY '22, but possibly in FY '23, '24, given the size that it has in terms of order book?

I partly agree with you, Mr. Harshit. When you were saying that electrification projects are on priority, absolutely right, because the entire route is to be electrified by December '22. But once this electrification is over, no new projects will come is not correct, actually. The sector is going to see investments and more capacity additions. When the new lines are done, the new electrification would also carry on. So we are not just on electrification only, we have done doubling. We have completed our electrification projects last year completely. So what orders came in February, we are executing now.

My question was, would RITES' share in turnkey construction increase more than 30% of its sales? Because earlier, what we were targeting is we should not grow more than 30% of our sales as a percentage of sales for turnkey construction in any year because we want to remain a consultancy company? But since your order book has now increased to INR 4,000 crores, hello?

Yes, yes. I'm getting you. I'm trying to...

So now since your order book has now increased to INR 4,000 crores, so is it visible to see that maybe in FY '23, '24, the percentage from turnkey construction may increase beyond 30% to, let's say, 35%? Would that be a fair assumption?

That's not as a policy that we will do 30% or 40%. But if these projects, like this year, FY '22, exports will possibly have a very good jump for reasons already discussed. Similarly, if the turnkey contracts are taken out, these contracts are not given every month, maybe 1 lot in a year or 2 lots in a year. Last year, we got only 1 lot. Now this lot has come now. The documentation, design, tender itself will take 6 months to 8 months. So what we are seeing today is actually going to generate revenue maybe somewhere in March '22 or '22, '23 only. So nothing to worry that we have become a whole log of turnkey company. But it is important to build up the orders in hand, so that people can position their focus, manpower, everything in time.

Okay. And sir, last question from my side. If you can -- this is a bookkeeping question. If you can highlight the quality assurance revenue number for FY '21 within the consultancy bracket.

This is INR 298 crores. FY '21, you are asking full year?

Yes. Yes, sir, FY '21.

INR 298 crores. Because I think about 10% -- FY '20 is worth INR 367. This is almost down by 20%.

20% down. Okay, yes.

Pardon me, the CapEx is higher this year, so we might make up on it for 2020.

The next question is from the line of from Ramesh Bhojwani from Mehta, Vakil and Company Limited.

First and foremost, it is so heartening and encouraging to see that despite having your hand in so many projects and so many consultancies, you have come out again on top with flying colors. My one similar thought, which is in my mind, which I would like to share with you. The existing railway infrastructure, if it can be supplemented and complemented, can we not increase the speed of the railways by 25% to 50% rather than wait for new lines of high-speed trains and semi high-speed trains? That was my question.

I think this is a very, very intelligent observation because if you have a network already available, we should not rush through high technology and high investment part of it. Therefore, if you notice, the railway is declaring, from time to time, that our average speed for fast goods -- fast trains trend was 25%, which has actually gone up to 50%. And so they are consistently working on the obstructions, restrictions, the signaling part of it and the electrification. All this has increased the utilization for existing tract. And there is a program, all these trunk routes that is Delhi Mumbai, Delhi, Kolkata. And then followed by other routes, they are going to increase it to 160 kilometers speed. Once that happens, you will see a lot of increase in the passenger as well as the goods trains. And when the traffic goes to DFC also, then we have further easing out on the existing. So you are right that instead of actually doing a greenfield investment, better to utilize your key routes first with electrification, with better signaling, with better quality of rails and better maintenance techniques. And that's, I think, what exactly the railways are doing now.

The next question is from the line of Umang Shah from AMSEC Life PMS.

Great set of numbers, sir. Sir, internally, do you perceive the Indian railways reducing consultancy margins as a risk for the long term.

See in long term, every business has a risk because you do not know how many players can come in. And as we have opened up economy, so people are actually coming, tying up with us, people are coming and tying up with others also, but this cannot happen overnight. What we have done in 47 years cannot be repeated by anybody just overnight. So we are not threatened. Rather, whenever there is a possibility, we are tying up with experts required in metro sector, high-speed segment metros and then airports also. So it is an opportunity also, it is a threat also. It will depend how we use it.

Sure, sir. And sir, about the IIT Delhi design project that you won in the last quarter. Sir, are we also looking for such orders in the private sector?

There's no restriction in going to private sector, but this came on a tender basis and this is very close to our operating area. So we thought what we can deliver with minimum cost, possibly nobody would be able to do. So we gave best considered prices, and we got it. And private sector yes, we are ready to do if such a requirement is there in private sector. We work with MEA, we work with the universities, we work with the defense on all such miscellaneous institutional projects.

Right, sir. Right, and the last question, sir, if I could. Sir, is there any internal conversation about the financial health of the Indian Railways itself and that leading to the slowdown in spending in the next 5 years? Because the debt burden has been significantly increasing?

Well, I will not comment on the health of railways because they have their own ways of managing this. But if you look at the abnormal situations, they have failed. Suddenly, they had to stop operations and freight was disrupted and the costs were fixed. So I think within that, they have managed it well. Once the economy picks up, despite the disruptions, the fat volume is record. They have taken 5:01 PM fat last year. So they are also trying the -- there's no fear of, say, death trap. If you do not invest in this infrastructure, the cumulative cost on the economy is still higher. So I don't think that should vary. Rather, if you notice, if you notice the last 5, 6 years, almost every year, the CapEx has been increased by 15%, 20%, when you have the confidence that you can mop up.

The next question is from the line of Krishna Parikh from Ashima Limited.

My question has already been answered. So I have no more questions.

We'll move to the next question, which is from the line of Lokesh Manik from Vallum Capital.

My question was on the turnkey part of the business. Just for clarification, our role in the entire project would be for consultation and supervision and the EPC part would be outsourced to a subcontractor. In that event, who bears the execution on the performance risk? Would that come on us, the project execution risk?

That's a very, very important question. And let me clarify this, that our role is almost again like a consultant only plus to concentrate, design, get it approved, put it to tender, select a party and the risk is borne by the party. The entire EPC risk of time overrun is borne by them.

So the selection of party done by the railways or that is done by us?

We do that. We do that. Therefore, we have been able to accelerate the growth of -- the results you are seeing that 6,000, 7,000 kilometers of kilometers of route kilometers of electrification. This is happening because a lot of agencies are putting their efforts. We are doing other electrification, are doing railways, directly, they are doing, so that is the outcome you can see.

Okay. Okay. And sir, if I understand correctly, this is a very attractive business that we have and margins are high, actually, similar to the consulting business we are recognizing the entire project cost on the revenue part, which is why the 3.5% looks particularly low. But if you calculate on your 8.5% of the consultation fee, then it comes up to about 30%. Is that my understanding correct? Because we are taking on the entirety over partial revenue.

Absolutely right. The margin within the fee quoted is actually structured accordingly, yes, absolutely right.

So do we have any plans to maybe go aggressive on this business from given that this is a working capital-light model compared to a consultancy business? Again, that is a portend, and we don't want to divert too much from that. But a turnkey is very attractive for us to step on the pedal and probably hire more manpower and employees trying to cater to that side of the business given the attractiveness of the business.

Yes, you're absolutely right. Without much of incremental manpower or manpower cost being added, the initial projects we have been able to handle -- but we do not intend to hold -- become a turnkey construction company because there are other companies in this sector, which are doing these jobs in India. But definitely prepared us as a complete solution provider. If today, I have to give a bid somewhere from concept to commissioning of a railway system, we have earned that capability now. Also, you see in the last 2, 3 years, we just delivered all the electrification projects given to us, all the doubling projects given to us, except a small portion of the turnkey, which possibly was delayed because of the technical requirements in a particular junction. All these projects have been delivered without much incremental manpower cost being added to the company. So initially, people had apprehensions about what you are doing from consulting, you are going to construction. But actually, the same set of people are doing this work for other clients. They slightly earn more for the company with this business. And I think we are happy that it has yielded positive results for the company without exposing us to construction or financial risk.

That's fair enough, sir, but we are -- any which way is not in the turnkey here. We are only in the consulting part. So I don't think it would be right to brand us as an EPC company. But then at the other end, it's also so attractive that we should be looking at going aggressive and not -- maybe with the existing manpower and probably with even more manpower or opening up more offices where these projects are coming up, again, coming back to the attractiveness of the business compared to the rest 3 businesses that we are doing.

I think we felt that we have capacity to handle a little more. So after completing the jobs in last year, then getting about INR 800 crores order sometime in February, I think we got. So we gave again offers for some more business, not at the cost of our core businesses.

Definitely not, sir. This can be an incremental even.

There is scope to actually leverage it further within the employee strength. And you see, we have reduced manpower by about 8%, still adding incremental business. So the productivity is being up consistently.

Right, right. So -- and if I look at our growth on an overall basis, is it fair to approximate that with the CapEx of the government and the railway sector. If the railway CapEx and the central government CapEx is growing at say, 10%, we can expect at least 10%? With that correlation, we'll [ be ] at 1:1?

I think, permit me to very guardedly answer my question but...

Very broadly, sir. Very broadly, nothing specific. I'm not going to hold you to it.

As per the new guidelines, something which is not declared, but given the public -- publicly available information, this national -- it's National Infrastructure Pipeline, NIP. Certainly, the basket of projects has been increased even in this budget. So within that, you see opportunities coming from railway sector, highways, airports, ports, power. We are into all these segments. So there is buoyancy on the -- of course, once the normalcy returns, you will see things moving fast because we need to solve the unemployment issue as well. So a company like RITES, I'm sure will not be sitting back and not getting those incremental business.

Right, right. Sir, just last one, if I can squeeze in. On the project value basis of both consultancy and turnkey and project not on the sale, what would be a market share approximately in this CapEx program of the government and including the ranges? Very broad idea in terms of our market share.

It's very, very difficult because the market share itself is very difficult to determine.

Okay. So INR 1,000 crores consultancy revenue would be approximately INR 10,000 crores project value. Is that fair enough?

20 to 25x.

Okay. 20 to 25x.

So if I'm commenting on my income and multiplied by the multiplier effect on the project value, you are absolutely right. Possibly, we are one of the biggest consulting fee income booking company, but I do not have more data to elaborate upon this. But I think 20 to 25x is the value we have to deliver to earn this money. So consulting income looks small, but then a lot of efforts go into it.

No, that's fair because in the past, you mentioned that about 8% to 10% of the project cost is usually the consultancy revenue part of the entire project. Yes, that's how I derived.

So I think I'm not going to think about next couple of years because the government says they will double and triple the investments. NIP is just identified and approved. So let us hope for normalcy to return on the COVID front.

The next question is from the line of from Shreyans Mehta from Equirus Securities.

Sir, my question pertains to REMCL. So just wanted to know what is the investment as on date in REMCL?

This would be around INR 105 crores total equity.

INR 105 crores. Okay. Okay...

So railways and RITES together [Foreign Language] INR 105 crores. and this is 51%.

So this would be around INR 50 crores, INR 55-odd crores.

INR 50 crores, INR 51 crores. But initially, we invested less because we recently gave on bonus. My colleague says that this is including bonus figure. So you can say that is the investment, right now?

Got it. Got it. And sir, once you do this INR 200 crore-odd investment, where do we see this top line, say, probably a year down the line or 2 years down the line?

Okay. Okay. Okay. See, there will be 2 types of revenues going in. One is on the return of investment for this 200 megawatts, which is being done by us on ownership basis. So that we are likely to get that CERC formula, say, roughly about 15%, 16% of ROE. So that is 1 set of business. The second set of -- and the bigger pie would be getting a fee, which is right now indicated to be 5% per unit for power generated by others, but consumed by railways on our generated on railway lines. And this should give about -- ballpark would be around maybe INR 40 crores to INR 50 crores of incremental business put together.

INR 40. Okay. So sir, I just wanted to -- I mean I'm just trying to understand from an investor's perspective, I mean, will it be our value operative? Because currently at INR 50 crores, INR 55-odd crores, we are doing a top line of INR 100-odd crores. And once we do a INR 200 crore investment, Again, on that, probably we'll be doing roughly around INR 60 crores, INR 80-odd crores. So I'm just trying to -- am I right in my understanding?

No, sir. No, no, no. You possibly missed 1 important explanation I did. That we applied, I think, 75% of the installed capacity. The capacity itself will be more than doubled and likely to be touching around 5,000 megawatts in 2 to 3 years down the line, including the DFC. So if you are handling that, you are already 2.5x up from here and then you added this. We're comfortable, possibly number them, what is discussed.

Got it Got it. So I think probably I will take it off-line. Got it. Got it.

We'll definitely take it off-line. Absolutely, no problem.

The next question is from the line of Chintan Sheth from Sameeksha Capital.

Sir, on the CapEx front, you mentioned INR 28 crores for the locos for 5 new locos and the remaining INR 140 crores, INR 150-odd crores you mentioned will be spread over a couple of years or this year is, sir, when you'd be spending?

Chintan, can you place your mic little away. Let me tell you again that INR 28 crores has been sanctioned by Board yesterday for 5 in-service locomotives, and that's not the end of it. We're going to -- we already have indicated to the market that we intend to buy 10. So maybe there will be one more spell of purchases a little later. But since now the old locomotives are available at very attractive price, a clear idea of going for extensive new investment is not needed. I mean there's a change in circumstances completely. And we are getting very delivery. So very soon, we'll be able to get these 5 locomotives. And then possibly, again, next slot would also be in-service locomotives as we call them.

Right, right. It will be already in front of us, but we should be -- we'll be exceeding that?

Now remaining CapEx, I said there would be requirements. We already have started 1 building block with a laboratory in Kolkata, and we intend to do this in our UP region also at Lucknow, where about INR 120 crores would be spent in 2 years.

In 2 years, right so...

In 2 years.

Sorry to interrupt you, Mr. Chintan Sheth, there is a lot of disturbance from your line. We cannot hear you clearly.

Yes, there's problem, Chintan I think...

Sorry. Is it better now, sir?

Yes, yes, yes.

So I'm asking how many locos right now, we are -- which has been -- we have been leased out currently as far as of March of '21?

66 or 67 we already leased.

As there are no further questions, I would now like to hand over the call to the management for the closing comments.

Thank you, ladies and gentlemen, for a very patient hearing and very interactive discussion with the management. We have had a very turbulent year for everybody. And we tried to optimize on whatever resources we have quarter-over-quarter, and we were optimistic that normalcy would return soon, and we will catch up. But then this got delayed till maybe Diwali, the things were not moving. In March, we thought we are out of this and then suddenly, we are caught in April again. Hopefully, I pray that situation normalizes, the company's strength is intact, our order book is intact. This sector gives optimism in India as well as outside India. And I'm sure my colleagues would continue to seize more opportunities and deliver professionally. I also would like to share one important event with you, that I started my journey with this company in 2007 as Director of Finance. And I'm due to retire this month on 30th June. I have been a part of major changes in this company from expanding to different markets to getting listed. And then today, we are seeing attaining, attempting higher growth. So I'm sure my successors would continue with the same zeal or maybe with more zeal in the times to come as the opportunities will be many more times. This success would not have been possible without your unwavering support and confidence in the company. I'm grateful to you about the same. Best wishes from my side. Goodbye and take care of all of you. Thank you.

Thank you for all being a part of the conference call. If you need any further information or clarification, please mail at [email protected]. Ladies and gentlemen, this concludes your conference for today. Thank you for using Chorus Conference Call Service. You may now disconnect your lines. Thank you, and have a pleasant day.