RITES Limited (RITES) Earnings Call Transcript & Summary

I'm Kritika, moderator for RITES Limited Q1 FY '20 Earnings Conference Call hosted by DAM Capital Advisors Limited. I would now like to hand over the floor to Mr. Mohit Kumar from DAM Capital. Thank you, and over to you, sir.

Thank you, Kritika. On behalf of DAM Capital, we welcome you all to the Q1 FY '23 earnings call of RITES Limited. We have with us Sri Rahul Mithal, Chairman and Managing Director; Sri Gopi Sureshkumar Varadarajan Director of Projects: Sri Anil Vij Director Technical; Sri Bibhu Prasad Nayak, Director, Finance. Without much delay, I'll hand over the call to CMD sir to take over the proceedings. Thank you.

Let me begin with the customary safe harbor statement. The presentation press release which we have uploaded on our website yesterday and discussions during the call today may have some forward-looking statements. These statements are considering the environment we see as of today and obviously carry 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. So let me give you a brief overview of the performance of Q1. You must have already seen the details as we put out. It's an exciting time for us here at team RITES. We are surging ahead the Q1 results show that we continue to be on the path of a V-shaped recovery as I said which is in sync with the rebound of the economy. The key takeaways have been that the Q1 of this year has been the highest ever operating revenue of Q1 ever. Not only that it's the highest ever core EBITDA of Q1, highest-ever profit of Q1, and the highest ever EPS of Q1. It's also a growth as you see, a 70% year-on-year growth of revenue. It's 85% year-on-year growth on profit. And we have already declared a first interim dividend of INR 4 per share. So this has been possible due to a continued momentum coming across all our sectors of revenue and also some very disciplined execution at the ground level as also some very closely monitored cost-cutting measures. Further on the business development front, there has been a very encouraging trend. We have got 90 orders in Q1 itself totaling to about INR 700 crores. And the order book has jumped by about INR 250 crores from 31st March to 30th June. So with those brief opening comments I hand over the floor. Go ahead. I'm open for questions.

First question comes from Rohit Natarajan from Antique.

Sir, my first question is on the export potential. We understand that earlier you were looking at some international projects. But due to Covid things weren't really moving at the pace what you decide. But now it's back to normalization. So are we looking at some big ticket numbers over there? If you are looking, what exactly is the time line for conversion of the 2 orders? And what exactly will be the tentative margin profile that you would be building in?

So as you understand, there are 2 parts of our international revenue. One is international consultancy and one is Expotech that is export of rolling stock. So coming first to international consultancy, as I pointed out after the last quarter that in FY '21, '22 we did an all-time high of INR 100 crores in international consultancy which was more than the average about INR 60-odd crores in the previous years. And we have started bidding very aggressively in the last few months in a number of international consultancy leads. And in fact, that has started giving us results itself already in the first quarter. So in fact to name 1 or 2 of big orders, which we have received an international consultancy, we have received a PMC for the Ghana railways for about INR 97 crores. We have received construction supervision order for Guana highways for about INR 25 crores. So these are some of the examples where our aggressive outreach in the international consultancy area has started giving results. Not only that, it has started converting into revenue. So the international consultancy in Q1 has given us INR 45 crores as against a total of INR 100 crores in the last FY. So as you see that there a jump in that and we will continue to focus in this area. The second portion is the export Expotech of rolling stock. As you correctly mentioned that in the last 2, 2.5 years we did not get any fresh orders of export of rolling stock. And the 2 live orders, which we got about 2, 2.5 years back, they were in the process of delivery. That is the Mozambique and the Sri Lanka orders. And as I have been mentioning at the beginning of this FY also that at the beginning of this FY we had a balance of about INR 400 crores against these 2 orders. And we were expecting that by end of Q2, Q3, this orders will complete. So all efforts are now on to get some finite concrete orders across a number of leads. And we are quite confident that down the coming months we will be able to get some big orders in Expotech it has a lead time. So it will take some months to get [ suctified ] into revenue. So I'm expecting some Expotech revenue to start maturing against new orders by early Q1 next year.

Sir, any tentative number or any near-term like prospective number that you would?

So that will be speculative because these as I said, we are following up on a number of leads to convert them into orders. And as soon as they suctified the order we'll be informing you. Right now they're all work in progress. But as I said definitely some orders are expected to mature in the coming quarters.

Just to touch upon the same subject itself. Now that given we have seen an inflationary pressures.

You can come back for a follow-up question later.

Next question comes from Shreyans Mehta from Equirus.

Sir, congratulations on a very strong set of numbers. Sir, 2 questions from my side. One in terms of the consultancy in turnkey, we've seen that we are almost back to the pre-Covid levels. In fact, better than the pre-Covid levels. So are this in terms of revenue and margins sustainable?

We have made all our efforts as I mentioned, at the end of FY '21, '22, that our target for '21, '22 was to come back to pre-Covid levels. And you correctly said we surpassed it by about 8% both in top and bottom line. Even in Q1 we have as I said done much better than the pre-Covid levels. Margins have been very good in Q1. But I think since as you correctly appreciate our revenue is a mix of 4 streams. And each one of them is a wide range of margins. While in turnkey the margins are very low. And in Expotech and in the QA and international consultancy and consultancy in general, the margins are higher. So while the mix [indiscernible] from quarter-to-quarter and there may be a variation in the margins quarter-to-quarter. But yes, our efforts are to keep on a healthy mix of the 4 streams so that the margins are sustained at an appreciable level.

We're having a question from Harshit Kapadia from Elara Capital.

Extremely good set of numbers coming back to pre-Covid levels. All [indiscernible] the management for this performance. What is the order into pipeline that you look in the consultancy space both domestic and international. You highlighted something on the national side but what other geographies are we looking apart from Ghana, if you can share? And looking on the turnkey because the order inflow was [indiscernible] Q1 what projects are we looking in terms of railway side, which can be? And a follow-up question is, what is the quality assurance revenue within the consultancy domestic number?

So as far as order book is concerned we got as I mentioned orders for about INR 700 crores in Q1. Our current order book stands at about INR 5,100 crores plus. And the breakup is about 2,500 in consultancy, about 2,100 in turnkey. The balance in export tax for the Mozambique is about INR 350 crores, and the balance is the other leasing, etc. So to answer your specific question in terms of targeting which areas so there are 2, 3 points. In each of these segments, in consultancy we have been targeting besides domestic consultancy across sectors, whether it is highways or ports or airports, tunnels, bridges, railways, QA. We have been targeting aggressively international consultancy in all whether it is metros, whether it is railways, whether it is highways, we have been targeting that continuously. And as I said that showed results in Q1 of INR 45 crores revenue. In terms of Expotech for international orders, we have been as I mentioned in reply to the previous question, we are targeting both African as well as Southeast Asian countries. And we are aiming for them to mature into some orders by the latter part of this year. In turnkey, we have an order book of about INR 2,100 crores. In terms of railways turnkey, we have been targeting getting more and more works. Railways has changed over to the EPC mode. We are now already participating, targeting a number of railway tenders, bids and coming months will show how that pans out. Besides the turnkey in the railway infra we are also looking at opportunities in the turnkey in certain building segment, in certain metro segment. So going forward we are targeting the turnkey in domestic in a number of areas as also growing in international consultancy and international Expotech. The QA has been showing a healthy trend. The QA revenue has been INR 89 crores in quarter 1 which is as against INR 60 crores in the last Quarter 1 of '21, '22.

Next question comes from Gaurav [indiscernible] Next question comes from Venkatesh Subramanian from LogicTree.

So I have 2 questions. So the question is apart from the 4 streams of revenue that you mentioned one of the important areas that we have been talking about in the last few quarters has been our REMCL, which is the renewable energy division. And I think you had some big plans for this. And can you throw us some light on what kind of the opportunity is? What is our focus? What kind of top line can we expect from that particular division in 2, 3 years, sir?

So REMCL has been doing well. In fact, the Quarter 1 results have shown a growth vis-a-vis Quarter 1 of '21, '22. It's been a growth in both top line and bottom line, INR 27 crores top line, INR 14 crores bottom line. It has taken a number of initiatives not only. Traditional work of doing the car purchase for Indian railways that has been growing. It has also floated a number of tenders for solar power. Our windmill plant at Jaisalmer that has shown an all-time high in terms of the availability, in terms of the output, in terms of the revenue. So REMCL has been showing a lot of growth. And I foresee it playing more and more role in the renewable sector also besides doing the traditional work of power purchase for the Indian railways.

So the size of the opportunity over there in our plants envisaged, if I remember some [indiscernible] about 4, 5 quarters back, the top line that division can generate say in 2 years' time, it was a very significant number that was mentioned, sir. Can you share with us what kind of vision you have say 2, 3 years down the line in terms of top line for that particular division REMCL?

You see REMCL we have been trying to garner more and more opportunities in development of solar power and that has to fructify. And we've had various rounds of trying to get into that. And now also we have floated 2 tenders for developing solar power in a big way both on the developer mode. So going forward as we find their finality, I think then you will see a dramatic jump in the top line and the bottom line as against the normal sustained growth. Because that will be the tipping point for seeing vertical growth. And I think the coming quarters because as I said these are developmental tenders, these are early on. So there are product based on the stakeholders interaction we are trying to find the best solution which is a win-win situation for both us and the stakeholders. So I think going forward, you see more finite larger growth in the bottom and top lines of REMCL.

If everything goes well sir, can there be a INR 1,000 crore top line [indiscernible]?

I wouldn't like to speculate a number. But I said as the vision is very clear to go in a big way forward. As these mature into finite orders and finite things the coming months we will be informing you and I'll be sharing more light as it fructify into finite orders.

Next question comes from Viraj Mithani from Jupiter Financial.

My question is regarding that you mentioned about smart city in the last forward. Any color on that in terms of revenue growth there?

Yes. So we have been getting a lot of good orders, good work being done by us in urban engineering. The urban engineering vertical has been doing work in important cities as you must be reading also it was not in the public domain. We were doing a lot of work in the Chandigarh Tri-City consultancy. We have been doing work in the development of the plan for the mobility plan for Guwahati. We have been doing the logistics plan for Leh, Kargil area. And these are just a few of the examples. We have recently got something [indiscernible] therefore for the Rajasthan road-based development of their plan for the bus for the Jaipur city. So we are doing a lot of work in development of the concepts of the urban engineering coupled with the sustainability aspect of development of these urban engineering plan as well as IT-enabled applications as the underlying current for development of these smart city plans.

Sir, can you give some color in terms of numbers right now? We are doing some growth prospects and the profitability on this vertical.

So these are all part of my consultancy revenue which you see has shown a big growth in terms of the revenue. The domestic revenue itself has gone up to 149. The total consultancy revenue including QA is INR 283 crores for Q1 which is a very big jump. Considering our past trends have been a total of about INR 800 crores to INR 900 crores annually. We have managed to reach INR 283 crores in Q1 itself. So these are all contributing. These are all consultancy projects which we are contributing to my consultancy work.

Is it fair to assume, sir, we can have this particular vertical [indiscernible] we can have some double-digit growth out here in terms of top line and bottoming?

I think that's for you to say. I would like to just speculate on numbers. I just aiming at getting an overall growth in this sector in a big way.

Next question comes from [ Nikhil Aviankar from DAM Capital ].

I just had one question. How do you see the railway infra order prospect? And if you can quantify it for us?

So our order book as I mentioned today turnkey is about INR 2,100 crores which is primarily all the railway turnkey projects. And going forward as I mentioned for the last few months, railways has moved over from the cost plus to the EPC mode. And we have bid for a number of tenders both in whether it is the station development, whether it is new line, RE, doubling and electrical works. So we are bidding in a number of cases and these have been recent tenders in the past few months. We are also going to bid in a number of tenders in the coming months in the railway infra growth turnkey segment. So going forward as these get finalized we look forward definitely to some of these maturing into finite orders.

Sir, any specific number for the order?

So as I mentioned, we have bid in a number of tenders already and are continuing to bid in the coming months. These are just been started by the railways in the last few months on the EPC mode. As they mature into orders only then we can be able to give you a number.

Next question comes from Vishal Periwal from IDBI Capital.

2 questions from my side. One, you mentioned quality assurance continues to remain strong and there is a railway sector. Most of the projects are on orders that we get on bidding. So quality assurance is a nomination or it's on bidding that we get?

The railway portion of quality assurance has primarily about 60% roughly on about nomination. And going forward, you must be aware that railways has also started now looking on UI they're floated in UI and we've also gone ahead in that. So I think with our credentials and our experience in the QA business things like have been doing for a large number of years both for railway rolling stock as well as railway lines. I mean we'll continue to go ahead in this line of business.

One question, if I may ask. I think we have started on pretty strong footing in Quarter 1 in terms of growth rate and revenue EBITDA. How exactly we are targeting for the full year basis? Any consol number on the segment, if you can just give color?

So I wouldn't like to give you any kind of speculative figures. But one thing which I can say, as you see the growth which has happened in FY '21, '22 as a composite total year as well as a trend which has been shown in Q1 and going forward with a solid order book and execution we will continue to maintain these levels of growth. Yes, the margin as I said, quarter-to-quarter may have a variation depending on the mix of the revenue streams. But normally considering that Q1 should be round about 15. That's the normal thumb rule that Q1 is roughly about 15% to 20% of the total top and bottom line. So seeing our performance on top and bottom line for Q1, we will be aiming to aim at the entire year in those lines.

Next question comes from Rohan Samant from Multi-Act.

Sir, you made a comment that the turnkey business bidding is shifting from cost plus to EPC. Could you just elaborate on that? Like how does it change from an economics point of view for us?

So traditionally you see turnkey or the model which railways had been following for many years was the cost-plus model, right? So in that the variation in terms of cost or time that used to add on. The standard model for any PMC consultant doing railway work was on a percentage of the cost plus of the basic cost. Now a policy decision has been taken by railways a few months back. The subsequent tenders all across the sectors of railways whether it is the civil infra work or the station development work or the electrical works, they are now coming in the EPC mode where they are on a fixed cost and a total cost of the work except certain fixed price variation clauses. So obviously, the importance of timely delivery, timely execution, disciplined execution, more control on the cost and time overrun that becomes all the more critical and we are geared up for that. And that's why as you see we have already as I mentioned in an answer to a previous question, that disciplined execution has been very priority area for us in the last few months which has helped us improve our margin also in Q1. So that going forward will be a key element for the EPC tenders which we have bid which has in the coming months will get finalized. And we are hoping to get some orders out of the bids that we have made.

Next question comes from Sanjay Doshi from Nippon India Mutual Fund.

Congratulations to you and the team for a very good first quarter and I'd limit myself to just one question and which is with respect to our export business. If you can just highlight how many customers or projects are we actively in discussion even if you don't want to give any numbers. But how many projects or countries or customers are we actively in discussion for export business?

So as I mentioned in export, one is export of rolling stock and one is international consultancy. We are following up and we have bid also in a number of customers both in the African continent, in the Southeast Asian area. So whether it is in the highway business, whether it is in the railway business, whether it is in the metro business. So that is in consultancy. And in export of rolling stock also we are pitching for a number of African countries as well as Southeast Asian countries.

Next question comes from [ Jainam Shah from Equal Securities Limited ].

Sir, my question mainly relates to some booking ratio. So the first thing is the we have guided for CapEx of around INR 150 crores for FY '23 and for like near to medium term. So are we on the guidance? And what kind of CapEx we have already incurred for this 1Q?

Yes. So our Q1 CapEx has been INR 46 crores and the past trend as I mentioned in my previous interactions also like '21, '22, our CapEx was 139%. We are aiming to be in that range somewhere between INR 100 crores to INR 150 crores. That's our aim. And INR 46 crores has been the CapEx for the Quarter 1. Our CapEx plans are on track and we will be in that range.

The cash balance of our own funds for June quarter would be how much? Like we have around INR 670 crores for March.

769 in the director plan the total cash balance. 769 in is my cash balance.

This is our own fund, not the client funded?

Yes, this is our own fund.

Next question comes from Chintan Sheth from Sameeksha Capital.

Congrats on a good set of numbers. Sir, on exports, I think this quarter there will be a spill over to next, right? Or we can expect the execution to be in third quarter for rolling stock?

So we have a balance of about INR 360 crores of Expotech order book out of which about INR 250 crores is based on the shipment. Balance about INR 100 crores is the recurring monthly revenue for our operation and maintenance. So there's INR 250 crores between Q2 and Q3 we are aiming to get it matured. Some portion will be come in Q3.

And sir, on consultancy we see a very strong recovery in execution. And even the order book has improved sharply. You pointed out a few areas in terms of where it is coming from. But this run rate of INR 250 crores is what you feel that will be sustainable going forward given the order book we have?

Yes, our order book has been healthy and we are continuing to get orders in consultancy both domestic and international. And we are aiming to maintain this rate of QA revenue. There may be a dip in a few quarters here and there in terms of revenue realization. But in terms of the multi-sectoral orders that we are getting as well as the leads that we have as well as the bids in pipeline that we have, the overall consultancy including QA is definitely going to be a healthy revenue stream.

Next question comes from Uttam Srimal from Axis Securities Limited. Next question comes from Arafat Saiyed from Reliance Securities.

My question is on metro projects. I just want to understand what kind of opportunity you are looking in India for metro project? And your scope and contribution in that segment?

So Metro, we are doing consultancy across number of cities which we have done, which we are doing also. The Ahmedabad metro, we are doing something in the Bangalore Metro, we are doing DPR in the JNK Metro. So there are true projects which we are doing and we will continue to do that, whether it is the PFR, the DDC, the PMC. We will continue and we are confident that metro consultancy both domestic. Domestic in any case will continue to be a key focus area of ours. We're also doing as you know the Mauritius metro which is still on. So I think our metro sector both domestic and international will continue to remain a key focus area of our revenue.

Next question comes from Anuj Jain from [indiscernible] Capital.

I have one question regarding the locomotive exports. We understand that we were in the advance talks with national railways of Zimbabwe for a big order. Is there any further update on that, sir?

So we are in constant touch with them. We've had a number of deliberations and meetings and it's work in progress. And the Zimbabwe is also Cape gauge which is similar to the gauge in Mozambique. It's a neighboring country. Mozambique was a very good experience for RITES in collaboration with Indian Railways where this fleet was developed both locomotives and DMUs and it has been successfully sent there. The balance portion is also as I mentioned about INR 250-odd crores> It will be sent in the coming quarters and has received a lot of positive response from Mozambique. So there are a number of countries in Africa, there are about 11 countries in Africa. And so we will continue to target each of those countries going forward in the coming months. And we are sure that as they fructify into finite orders we would be keeping you informed.

Next question comes from Parimal Mithani an individual investor.

Sir, I have just 2 questions. One is in terms of the railway JV, what is the status on that? And secondly, sir, are you going to bid separately now with the JV closed and [indiscernible]

No. So IRSDC which the JV closed that is under the process of formal closure. As we've already made a disclosure in our balance sheet also and also which is the same the progress vis-a-vis the last quarter when we had made this disclosure. The process is on and it will lead to its finality in the coming months. The railways has already started coming out as I mentioned in a reply to a previous question in a number of station development projects in an EPC mode. We have already bid for a number of them and we will be bidding for them going forward in a number of upcoming tenders in the EPC more for station development. So this continues to be an area where we will continue to focus in the coming months.

Next question comes from Kunal Sheth from B&K.

Congratulations on a great set of numbers. My question is pertaining to the consultancy segment. I just wanted to quickly get your views on where do you think the share of consultancy business would be? I mean will it be similar 3 years out? And within the consultancy segment do you believe that the share of international consultancy could go up meaningfully over the next 3 years?

So as I mentioned at the end of last quarter and beginning of this financial year that international consultancy is going to be a very major focus area of ours. And I gave you some details in a reply to a previous question that this has started fructifying into finite areas, finite orders. As I mentioned the Ghana order and railways and the Guana order in highways. And these efforts have started paying results. The international as I mentioned, the international consultancy in Quarter 1 gave us a revenue of INR 45 crores as against the total FY 21, 22 of INR 104 crores. So as you see the international consultancy is growing. We will continue to keep this as a focus area of ours and I foresee that this will continue to grow. Notwithstanding that, the domestic consultancy also has got a very healthy order book and we are continuing to pitch for a number of domestic consultancy projects across sectors. So both consultancy which includes the domestic and international will continue to grow and will remain a key growth area of us. In consultancy we've been targeting multi-sectoral growth and new areas also as I mentioned, city planning, urban engineering planning, IT-enabled applications, sustainability and ERC vertical we've been working on that. That's work in progress. That's going to show more growth, more finite contribution to my consultancy revenue. Operation and maintenance we've been getting orders. We are growing in that area contributing to our consultancy revenue whether it is operation and maintenance. Besides the conventional railway assets operation and maintenance we're also looking at operation and maintenance of metros, RRTS, LRTS. So the consultancy revenue stream will remain a focus area of ours.

So would it be right to assume that the overall share of consultancy in the total revenue would be higher 3 years out what it is today?

It is quite a high substantial contribution right now itself. And this has due to the trend. In terms of the mix we will continue that it will remain one of the key revenue streams for us. In terms of the total pie as I said, the total pie will keep on. We are aiming to increase it further both in domestic and international.

We are having the call up questions from Harshit Kapadia from Elara Capital.

Sir, you mentioned now that the turnkey is moving from [indiscernible] to EPC mode. So just wanted to check the working capital here now will be driven by [indiscernible] Railway has been doing it that's one point. And second, you also mentioned that you'd be also moving forward with project as well. So here, it will be all financed by us. How do you try to do the tie up in terms of working capital in to the project?

In EPC or also the working capital same. That won't change. I mean basically the mode change is basically in terms of time and cost overrun. So as I mentioned that requires more disciplined execution. So the working capital requirement which has been the trend for our past too has not been a major critical factor for us. So that would remain in the coming. Whether it is the railway EPC mode or whether it is the other areas of turnkey that we are looking at.

And given that you start moving to the margin will be now much better? Can we look at more than 5x in margins over between 3% to 4% given your aggressive bidding or the current bidding?

No, turnkey never gives us about 3 plus margin. This is still a depressed margin much lower than that. And the turnkey whether the mode change will not really affect dramatically upwards it won't lower the margin much in vis-a-vis the total margin trend which has been there in the turnkey sector. It just makes it more as I said requiring more disciplined execution so that there's a focus on not allowing time and cost overrun because if that happens then the margins would start taking a hit.

Next follow-up question comes from Venkatesh Subramanian from LogicTree.

My question one is on we had a 24% stake in Indian Station Development Corporation. What is the growth opportunity there, sir? And the second question is, as far as the observed rights I think you've got a great workforce. But in this kind of transport infrastructure segment and you have about 1,400 engineers with the backup team as well. As a PSU and as a government company I'm sure that there will be people who will be trying to attract talent from you. What is it that you do to retain it? Can you throw us some little light on the work culture that keeps employees motivated to be in RITES?

So coming specifically to IRSDC. IRSDC has been closed now. We are at INR 48 crore investment in that. And the disclosure and I mentioned also some time back that is in the process of getting wound up. The JV shareholders will get their due stake in the coming months as per due process. I also mentioned that the railways has started coming out individually zone-wise number of station development tenders in the EPC mode which we have bid and we'll continue to build so that this will remain an area of work for us. Second and I'm glad you asked this question. That's a very interesting question. I mean I wish that this question is asked more by some more people. And I normally answer only one question at a time but I'm definitely going to answer this question right away, the second question. You see that is the beauty about RITES. RITES has got about 2,800 people and it has got a mix of young and old. It has got a mix of youth and experience. It has got a mix of people across genders, across experience, across states, across qualifications and across multi-sectoral experience. So you could be having a PhD in Geotech or you could be having an MBA in HR, you could be having an MBA finance. You could be having an MTech in industrial engineering, in building engineering, so those things like that. So that is a richness of the HR force of RITES. And I think what attracts them and what continues to keep them in doing more and more projects is the kind of thrill and the kind of excitement which they get in doing the best of the project. So you name any projects which has got its been in the media. Let us say, in the last 2 months and RITES has been a part of it. And traditionally, we've done the best of the projects. In Atal Tunnel, the Bogibeel Bridge, the metros, international metros. So mention any project which was inaugurated the big project in the last few months. To give you an example, recently, the Bundelkhand Expressway was inaugurated by the Honorable PM. RITES has been a part of it. In Delhi the RTR flyover portion of it the part of it was recently inaugurated. We have been a part of it. So that is the kind of skill that is the kind of thrill which my people get here and that is what continues to attract more and more young people as well as senior people to continue to join RITES.

So that's a very passionate response from you. I mean I'm really thrilled to be a shareholder. And more importantly, sir, so it's not the money because I'm sure the private sector obviously intends of paying more, etc. It's the work satisfaction that they delay out of working at RITES?

Exactly. You've hit the nail on the head and that is what it continues as I said to attract people. I see people constantly applying whenever we floater we can see, whenever we're looking for people for a specific project-based contracts. We have people having the highest qualification and experience wanting to be a part of brand RITES.

So you have 1,400 engineers its basically -- you give a great degree of autonomy, empower people to make decisions because there's a lot of intellectual stuff that's going on. Isn't it?

Yes. We have 10 different verticals that people are working both within the vertical and also coordinating across verticals for various projects.

Next question comes from Viraj Mithani from JP Financial.

If I were to ask you vision of next 5 years of RITES, which segment would be the leading segment in terms of growth revenue? I mean just a thought process is now [indiscernible] the thought process because we are part of the industry. What's happening there?

Yes, for sure. You see we are very clear. RITES is primarily a consultancy organization. That is our core strength. That's our inherent strength. That's our DNA. And that is what we will continue to be in the coming years. Whether it is in the domestic sector, whether it is the international sector, multisectoral. We already have very strong verticals across various sectors. We are also continuously tapping on new sector as I mentioned sustainability. We've started a vertical focused on sustainability and ESG compliances, consultancy. So urban engineering is a very important area. So primarily, the point that I'm trying to reiterate that consultancy would remain the core focus. Yes, of course, as you have been seeing in the past 3, 4 years as we have graduated also into growth in the turnkey we would continue to target turnkey in the range of about 20%, 25% of the pie. And that would still remain one of the key areas. And of course, export of rolling stock has always been a key element of our revenue. Going forward what would definitely be our aim that export of rolling stock currently sees a sinusoidal wave because they have lead time of 2 to 3 years after we get an order. So if you analyze the export revenue for last 3 years, it shows a sinusoidal wave materialization. So our aim will be to have a number of export orders so that the revenue materialization in the export stream continues to be on a steady basis rather than [indiscernible] sinusoidal wave. So that's the broad vision going forward.

It's fair to assume that the major part would be consultancy going forward and that would be the core of the company. Then the rest would be the other sectors leading to the growth. Is it fair to assume that?

No, of course as I mentioned to reiterate, we are a consultancy organization that's our inherent DNA. And we will continue to be a consultancy organization. And I mentioned also the contribution of turnkey in our pie which is going to remain broadly going forward.

We're having a follow-up question from [ Nikhil Aviankar from DAM Capital ].

Sir, I just wanted to know what is the prospect of domestic metro orders in the coming 6 months or a year?

Well as I mentioned, we are doing already metro a lot of consultancy work in a number of cities and we are continuing to bid and partner with a number of partners that has a bid for a number of upcoming metro consultancy both domestic and international. And I'm sure that this trend of metro being a focus area whether for [ PFR, VPR, GDCs, PNCs, GC ] they will continue to remain in the coming months. And as they mature into more and more orders we would be keeping you apprised. But nevertheless, the bottom line notwithstanding the major fact being that metro consultancy for domestic, not only domestic international also, will remain a steady stream of revenue in the coming months.

Next question comes from [ Parimal Mithani ], an individual investor.

And sir, just a follow-up question in terms of whether a JV called SAIL RITES Bengal Wagon. Can you just throw color what's the status there and how are we performing there?

Yes. In fact SAIL RITES after a little setback in '21, '22 vis-a-vis the earlier FY has again bounced back with a very good set of numbers. The Q1 has shown a revenue from INR 26 crores which is against INR 7 crores of Q1 of '21, '22. It has shown a profit of INR 0.5 crores as against a loss of INR 0.2 crores in Q1 '21, '22. So going forward we have already received [indiscernible] in HL wagons in March 22. We have already started working on it. The production is planned for at least about 1,000-plus wagons in this year and we would see a good growth, good set of numbers for the entire FY.

And sir if you can throw a comment on how would this JV be over a period of time? Any idea on that?

So this JV has tremendous scope. It has got a beautiful plant. It has got very good collaboration with SAIL. It's got very good scope of further growth taking on more orders, both in domestic as well as aiming for some bidding for some international wagon orders. So going forward I see this JV of SAIL and RITES both SAIL and RITES are committed to making this JV grow. And we've had various rounds of deliberation and we are looking at seeing this JV give a very good growth prospects both in top and bottom lines in the coming months.

We are having a follow-up question from Venkatesh Subramanian from LogicTree.

This is a quick follow-up on the previous question from Parimal which is on the SAIL RITES. You mentioned the production of wagon is set to increase. Did you mention that we could probably do 1,000-odd numbers in the current year in terms of production?

Yes, I did it.

That is set to grow in the future possibly, yes?

Definitely. There's a lot of scope there and we are aiming to get more and more orders. Our team has geared up post Covid. All things are going up there. The production lines are fully functional. SAIL and RITES are in close coordination for supply of the steel. And I think it's definitely showing and the figures themselves show. And going forward these orders which we have received, we are aiming to make them fructify into finite deliveries in the coming year.

Next follow up question comes from Viraj Mithani from Jupiter Financial.

My question is do we have any play in high-speed grade?

In terms of what kind of play? I didn't get your question. We've been doing some consultancy, we have been doing and as the opportunities come up we will be open for more. I didn't understand what's your specific question.

[indiscernible] especially projects like bullet train and the [indiscernible] high speed rail corridor. So there's a lot of plan by the government. I mean do we have any type of consultancy, PNC. Do you have any business, anything in that area?

We have done at various stages of the high-speed rail. At the projects at various stages we have given some inputs. And as this shapes out at whatever stage opportunities would be there for inputs or consultancy, we would definitely be looking at it.

Now I hand over the floor to the management for closing comments.

So thank you for the good response from all of you. And as I mentioned in my opening remarks and also in my detailed answers to the questions we see the trend going forward. We will continue to strive to not only maintain this trajectory but build on it in the coming months. We see very finite growth prospects and we are committed to maintaining our levels of performance as seen in the past few quarters. Thank you.

Ladies and gentlemen, this concludes your conference for today.