RITES Limited (RITES) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to the RITES Limited Q2 FY '23 Results Conference Call hosted by Elara Securities Private Limited. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Harshit Kapadia from Elara Securities Private Limited. Thank you, and over to you, sir.

Thank you, [ Lizen ]. Good morning, everyone. On behalf of Elara Securities, we welcome you all for the Q2 FY '23 and H1 FY '23 Conference Call of RITES Limited. I take this opportunity to welcome the management of RITES Limited, repesenting Shri Rahul Mithal, Chairman and Managing Director; Shri AK Singh, Director Projects; Shri BP Nayak,Director Finance; and Shri Joshit Sikidar, Company Secretary. We will begin the call with a brief overview by the management, followed by a Q&A session. I'll now hand over the call to Rahul for his opening remarks. Over to you, sir.

Good morning, everybody, and welcome to the call. I'll begin with the safe harbor statement. The presentation, which we 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. Let me begin with a few opening comments. The Q2 results were as per our projections and our outlook that we started the financial year with. We saw a good sequential growth and there was a good growth vis-a-vis H1 of last year. There was a challenge in terms of the dip in the export revenue because as we had said in the early on, the balance part of the export orders were evening out and new orders were in the pipeline. However, with the very combined efforts of all our verticals, we made good that shortfall by increased turnkey revenue as well as maintain the margin, which was a tough challenge by concentrating on key consultancy, high-margin areas. So all in all, it's been a good growth both sequentially as well as year-on-year, and it reiterates the firm belief in our core strength that even if one particular stream of revenue is temporarily in 1 quarter, we have the wherewithal and the inherent strength to be able to make up both the top line and bottom line from our other streams of revenue. With those opening remarks, I leave the floor open for all questions.

Ladies and gentlemen, we will now begin with the question-and-answer session. [Operator Instructions] Ladies and gentlemen, we will wait for a moment for the question.[Operator Instructions]. The first question is from the line of [ Puna ] from [ Pogo Advisors ].

My first question would be on the order books. So if we see the order book currently we are at INR 5,000 crores. And if we see the Q2, we have been at INR 5,200. It must be said that it must be realized something on the order book. But as the CapEx of the runway going on, so where do we stand on the exit point if you can tell us to? And the second is keeps of which specific segment will be start contributing more on the order book side, as we are saying the Turnkey would be a better project mix, but also consultant is going up this trends. So how has been going so far? And yes, so that's my first question.

Right. So as you correctly said, our current order book is INR 5,000 crores with the broad breakup of consultancy about INR 2,400 crores, Turnkey about INR 2,000 crores. The balance export from the current order is INR 300 crores and leasing and subsidiaries total up to balance about INR 300 crores. So with this broad breakup, as I mentioned in my opening comments, going forward in these 2 quarters, the balance export would definitely get over and the -- we are making all efforts try and get the next export order as soon as possible to minimize the gap in the coming quarters from revenue realization from the export of rolling off stream. Having said that, as we did in Q2, we have a strong order book in Turnkey also, and there are a number of orders which we are getting in turnkey or will get also we are aiming for that so that we are able to tackle the shortfall in 1 stream from increased revenue on the turnkey stream.

But the caution in majority is moving out the not losing but to see completing the export, and we would be contributing more of the size. So are we seeing the margin going somehow, some dips in the margins because Turnkey has almost let say 3.5% to 4% of the margin. Compared to export of 22%. So like how we are transiting the margins going forward?

Yes. So as you correctly said, and you can see that in Q2. Again, as I mentioned, because the turnkey has much lesser margins vis-a-vis the export, so the challenge on margins would remain. However, as we did in Q2 also we focus and picked up some key consultancy projects, which are higher-margin projects to try and make good the shortfall in margin vis-a-vis turnkey vis-a-vis exports. So that will be the going forward for a few quarters and we are able to again start getting revenue realization from the export -- future export orders.

And.

You can come back in queue for your next question.

The next question is from the line of Venkatesh Subramanian from Logic Tree Investment Advisors Private Limited.

2 questions. One is after the completion of the current order book, which I presume can happen over a 2.5 years. If you can just give you a guideline on this INR 5,000 crore execution time frame. And during which course, what kind of growth can we assume in terms of the order book being replenished. So if we take FY -- so 3 years down the line, if you have to maintain a growth rate what kind of order book visibility can you give us, sir?

So to put your question in perspective, we are seeing an order book of INR 5,000, which, as I said, has a breakup of Turnkey of about 2,000. And moving forward, again, as I have been reiterating in the past also, we are primarily a consultancy company, and we will remain so. However, having said that, about 25% of our turnover would be from key turnkey projects also. So to keep that in mind and seeing an overall top line and bottom line growth of a steady double-digit we will have a balance between the turnkey and the consultancy order books so that we are able to maintain the top line and bottom line growth, as I have mentioned.

So which means that this current order book of INR 5,000 crore gets executed in the next couple of years or something, what do you expect that over the next years, we will be having order replenishment coming in, which will be equal or higher to the current order book, sir.

Definitely, we are already pitching in all our various streams of revenue, and I see a substantial order book across, we would do it diligently and carefully balance between the streams of revenue so that we maintain our overall bottom line and margins.

Okay. So to factor in over a 3- to 5-year period, sir, is it reasonable to expect 15% growth from a top line.

I think you can come back in the queue I've answered my questions.

The next question is from the line of Rohit Natarajan from Antique's Stockbroking.

So my question is confined to export orders. I want to understand that you're looking at $100 million kind of individual packages in Africa or maybe some other countries like that? what is the quantum of -- what is that number that you are targeting in terms of export order? And even if you win this order, it is highly unlikely that the work can begin in 12 months? Or are you that the understanding right? Or is there any short-term quick to execute kind of orders that you are looking for?

So very correctly, Rohit, when we started this financial year, we had an order book balance of export for about INR 450 crores out of which we had -- we have executed in H1 about INR 150 crores. And as I had mentioned earlier also that these orders were about 2 years old pre-cohort and no orders, fresh orders could be generated during the cohort time. Our efforts are on in the last few months across various target countries to be able to get an order. But as you again correctly said, from the time we get an order and the time that it manifests in revenue because by the time it gets manufactured and shipped, it's a good 12 to 18 months. So our effort is to reduce this time gap or quarter gap between these orders finishing and the revenue generation from the fresh orders. So I would foresee definitely a gap of about 2 to 3 quarters between the fresh revenue coming up and this revenue finishing in this stream. only in specifically in the export stream.

Yes. In terms of order inflow number, order inflow target?

So right now, that is speculative. As I said, we are targeting 3, 4 countries, and we are quite confident that somewhere down the line as soon as possible. The effort is to minimize the gap as much as possible. As I mentioned, it could be 2, 3 quarters gap. Our effort is to reduce this to maybe 1 or 2 quarters so that as we transition rather than a sinusoidal curve, which should be as much as a flat or a growth curve in terms of export revenue.

The next question is from the line of Shreyans Mehta from Equiris.

So my first question pertains to our turnkey segment. We are seeing to the amount of revenue bookings this quarter. So just wanted to understand, in terms of the quarterly run rate, is more the run rate we should look forward in third quarter and fourth quarter? Or we are still at those initial sales and there could be some healthier ramp-up in coming quarters.

No. Now the turnkey -- all our projects are in full swing. And as you see the sequential growth in Turnkey between quarter 1 and quarter 2 itself, there is quite a substantial growth of about 30%. And the current trend of Q2 Turnkey would remain. In fact, we would be pushing it more in the coming 2, 3 quarters, as I said, to be able to as much balance out the drop in exports stream revenue for the next 2, 3 quarters.

Got it.Sure. And sir, my second question is pertaining to the balance sheet.

Sorry to interrupt. Mr. Mehta, may we request that you return to the question queue.

But I'm going to only with the only 1 question.

We are restricting questions to 1 for participant. Thank you. The next question is from the line of Viraj from Jupiter Financial.

Yes. And can you give me the breakup of your margins in the order book, as I see the confidence in turnkey are more or less equal. And your comments on REMCL also is just INR 100 crores, it'd nice just throw some light on it.

No, I didn't get your point regarding margin and consultancy and turnkey being similar.

My point, my question is the margins on the -- all the segments of the order book consistency, export and turnkey. And REMCL is not growing as it is INR 100 crores, but what I read in the railways somewhere that they are planning some huge solar these things. So are we benefited by it? That is what my question was.

So margins are in the various segments. The margins have been good. In fact, the consultancy margins have been in the range of about 30% plus the inspection and QA and consultancy combined have been in the range of 40% plus. Exports have been our steady about 22%, 23%. And turnkeys have been in the range of about 3.5% to 4%. So these are the trend of margins. As I said, the mix of revenue has been the focus has been to try and buffer the drop in export by concentrating on high margin areas. As far as REMCL is concerned, REMCL is focusing on the growth pattern would be seen as these initiatives in the solar area fructify in the coming quarters. They are work in progress. And as they mature into finite revenue generators, you would see some growth in the further upward growth in the REMCL contribution to the revenue.

So over next 3 years, i think REMCL can be big for next 5 years because of the boost towards renewable, we can expect some huge top line coming from. Is it fair to think, that's what matters?

REMCL would definitely see some growth. The quantum of growth, we would -- I would not like to speculate, but we are definitely REMCL is the nominated entity for doing all renewable work for Indian railway and we are exploring a number of areas in this field as the coming quarters as they mature into finite orders, we would be seeing the actual amount of growth which we can see in this sector.

Okay. So I'll come back in the queue. Thank you.

Right. Right.

[Operator Instructions] The next question is from the line of [ Jan Shah ] from [ Corani Advisors ].

Just wanted to know the turnkey order book completion, like if we paid the INR 1,900 crores of order. So what is the activated date of completion? Is it 2 years, 3 years?

You see normally turnkey vary anything 2 to 4 years because of some of them having issues of land acquisitions, some of them. But on an average, I would say, good turnkey projects take about 2, 2.5 years and some of them take anything from 3.5 to 4 years. So median time for turnkey project is anywhere between 3 years approximately.

Okay. Okay. Got it.

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

Sir, a few clarifications on the balance sheet side. One, in terms of more details, which are roughly around INR 700-odd cores have moved to around INR 840-odd crores. So is it pertaining to the export orders. And secondly, what the CWIP has gone up from INR 60-odd crores to INR 76-odd crores. So what's the reason that and lastly, on the CapEx guidance for the year?

I think you asked 3 questions in one, but just to quickly tell you, as far as concerned at the temporary sport. In fact, the good news is that all our export orders, the debtors, most of them are getting cleared. Sri Lanka, which had an outstanding of about INR 118 crores have received recently. So the bulk of it is even all the reports are on also to reduce the balance quantity from Mozambique. So that's not a worry at all. The better temporarily is a temporary growth. Further, the -- I think the second question you asked, I don't recall it.

CWIP.

I didn't get your question again.

So sir, CWIP as on March was INR 58-odd crores, which has now moved up.

So that is basically the building project, which is there. It has contributed temporarily to growth in CWIP. As far as CapEx is concerned, CapEx we are in the range of about normally always remain about INR 125 crores to INR 150 crores. And we would be maintaining that trend to -- we have already done as of now, INR 79 crores in H1. So I think we would be on track to maintain about INR 150-odd crores.

Got it.

The next question is from the line of Kunal from BNK Securities.

My question is pertaining to if you can give some sense about the pipeline in the domestic market, especially on the consultancy side. And also, if you are sharing any guidance on order inflow for the current year?

So as far as the pipeline and consultancy is concerned, we have been pitching and getting a lot of orders. In fact, in quarter 2 itself, we got a total of 70 orders worth about total 70 orders, most of them consultancy, more 60 plus our consultancy totaling to about INR 400-odd crores -- sorry, the total 70 orders totaling to about INR 440 crores and out of 70, about 60-plus consultancy orders. And including the recent one which we got for Ahmedabad Metro Phase 2 also. So going forward, across sector, whether it is the consultancy in metros or buildings or highways or smart cities, we have a number of orders in pipeline. In Turnkey, also, we have been pitching to maintain a healthy mix in our top line of about 25% for various key projects in Turnkey and one most recent order, which we declared to the exchange also which we've got the Bangalore Metro turnkey order, which our share is about INR 250 crores. So in terms of the total order, whether in consultancy or in turnkey, the trend is good enough, and we hope to build up on it further in the coming quarters.

And sir, any guidance that you are sharing for the current year?

So we see a growth pattern as you see in sequential growth as well as year-on-year growth if you see H1. That's a good double-digit growth and I think we are on track to be able to be able to maintain that, if not better.

Sure.

The next question is from the line of Rohit Natarajan from Antique Stockbroking.

That's Rohit Natarajan, so if you could touch upon the REMCL part. There are 2 segments. One is the trading model and the ownership model is part of the solar assets portfolio that you have. Could you give us some color on it where exactly is the incremental addition going to happen in that vertical?

No, we hardly have any ownership model in solar. We don't have any ownership model in solar. The REMCL is very clear as per the plan for last about more than a year or 2, that all future developments in REMCL in the renewable, whether it is solar or wind or any renewable energies in the developer mode. So basically, REMCL gets revenue as the -- not as the turnkey revenue per se doesn't own any asset, except one that has the windmill at Jaisalmer, which is about few words old. Moving forward, also, REMCL would be not investing any CapEx in owning any asset in any renewable form of energy.

Okay. That's largely clear. If I may squeeze in 1 more question.

Sorry to interrupt, Mr. Natarajan. The next question is from the line of Viraj from Jupiter Financial.

Sir, my question is we've been basically a consultancy company. But when I see today, the order book we are like more or less equal on turnkey in 2013. So what is our sense going forward? I understand this is tough for the management our export order being low. But if you can give some sense going forward in terms of consultancy growth, domestic intermanagement. Some current on that would be helpful.

You see consultancy, the time frame of execution of consultancy orders is much, much lesser compared to turnkey orders. And I mentioned some time back that turnkey orders normally have an average of about 3 years plus for execution. So at any stage of time, the order of breakup would show more comparable or maybe it should ideally be more also turnkey order book will gradually grow aiming to make it grow. So in terms of value breakup of the order book, the turnkey orders will always be more than the consultancy. But having said that, moving forward, we have been maintaining that we are a consultancy company and would remain so our contribution in consultancy to our top line would always be in the range of about 50% plus. And we would maintain that turnkey would be in the range of 25%. On a pan-out basis, except maybe quarter-on-quarter where some variations take place due to variations in the revenue inflow. But on an average basis, it's year-on-year, that's our way moving forward.

And the margins in turnkey is low. So what are the chances of loss being suffered by our business something obviously cure on loss front or?

I already clarified that sometime back that margins in turnkey are always much lower and the margins are always taken care of by and taking and concentrating on the execution of high-margin consultancy order that is what has seen that in spite of export area, which is a good margin revenue stream between the in Q2 our margins have been steady. We have a core EBITDA margin of 25% plus, both in Q1, Q2, and we are maintaining that even if you see comparison year-on-year.

[Operator Instructions]. The next question is from the line of [ Parimal Yates ] from Credential Investments.

Can you hear me?

Yes, sure, go ahead.

I just wanted to know, can you give me the quality assurance number for H1 as well as compared to last year.

Yes. The QA revenue is 187 vis-a-vis EUR 144 last year, which is a growth of about 30%.

The next question is from the line of [ Pasha ] from [ Cogrudson ] Advisors.

Yes. So it will be a more basic on aspect side portion. So on a railway CapEx side, what are we -- like what are we seeing? Are we in the mid-cycle or been in the completion cycle or what? Because I think on a electric conversion from the diesel conversion, we have seen a great work, and we have almost completed that part. So on railway CapEx side, specifically for double days and all other things, what are we seeing on specifically for our company and on a sector level?

So railway CapEx is -- can broadly be the turnkey revenue can be broadly broken into 3 different parts. One is the electrification work. One is broadly the new line and other related doubling and other related infra work and the third is station development work. So the new line and the electrification work, as you correctly said, is moving very fast and somewhere by next year, latter part of next financial year, we should be -- the IR is also targeting most of the electrification. So we should be seeing that pattern. The new line and doubling work currently orders which we have are still are moving fast and we are in the good stage of execution. We are also -- because this is a continuous evolving area, new tenders and new work opportunities are coming up, which we have been bidding. And in station development I mean we recently got an order again just recently for column station, which is about INR 160 crores. So these are just as a contract and the project is just about to begin. As you see, there's a mix among the 3 streams of various stages. So this inflow from rail infra was in turnkey would continue, and we are targeting to see a growth in this also, as we bid for more station development as well as the new line doubling books that are coming up.

Okay. Should I squeeze in 1 question or I'll come back in the queue.

Sir, we would request you to come back in the question queue. The next question is from the line of Harshit Kapadia.

Just 1 question on the quality assurance part of it though the revenue growth has been around 30%, but when you kind of CapEx on for the first half of the financial year almost doubled. So do you expect the run rate for the quality assurance in the next half should be a much faster rate, maybe upwards of 50%, 60%. That is how we should interpret or it will still remain at this 30% or 40% level?

No, you're talking of the turnkey growth of 30%. I think you meant turnkey other than the quality assurance, right?

No, because you -- so when you get a coalition in where you do a lot of inspection work as more orders are driven to be on that.

Okay. So in terms of quality assurance, the growth in Q1, Q2, the H1 vis-a-vis H1 last year, has seen a good growth. But moving forward, there is, as I mentioned in a few calls earlier, that there is a positive decision by Indian Railways now, to go in for a panel of A agencies. So as that gets panned out in the coming quarters and then it would be clear how is the percentage of work which gets divided between the agencies, which are panel. Having said that, so maybe the percentage of our QA revenue from IR as a client would reduce to that extent, but we do a lot of QA work for non-IR clients also across various sectors. And overall QA revenue, we are targeting that it remains we are able to absorb that drop in IR revenue and maintain the same levels or in fact, going forward to increase further.

Understood, sir. Okay. I joined the question.

The next question from the line of Viraj from Jupiter Financial.

Sir, my question is on the Turnkey business. Having so margins, what are the risk we run in big support of nonexecution commodity prices going up. So can you give us some color on that, like the risk we run in this business?

So yes, Turnkey has risks in terms of the timely execution cost and time overruns more so with the latest policy of IR of coming the EPC tenders, for example, the latest order, which we got for colon station turnkey, that's an EPC mode. So the focus or the requirement of timely completion, both without time and cost overrun so as to be able to maintain the originally envisage margin is very, very crucial. So yes, the care actually taken more so moving forward as we get more turnkey orders in the EPC mode because that would be the mode of tendering now for all IR. EPC IR turnkey orders. So yes, we focus on timely execution and keeping a check so that the escalation that we envisage while taking the orders are -- if the time overrun takes place, then obviously, it results in more chances of cost overrun.

Are we in for that, sir, being a consultancy company, are we equipped to have this business?

We have been doing turnkey for about 5 years now. And we are taking turnkey as a mix of our consultancy business, as I mentioned, about 25% out of our total revenue mix. And we take them on a selective basis. Both in terms of business selective choosing as well as strategic choice, and we are more than equipped for the contracts that we take to execute them timely.

How are we pleased again so.

The next question is from the line of Rohit Natarajan from Antique Stockbroking.

Sir, my question is related to market share of your consultancy segment? How was it in the past? How is it going to be in the future? And also help us understand within consultancy, the QA and non-QA portion?

You see the -- we operate in consultancy in about 8 different sectors. The Air Force, highways, buildings, metros, smart cities. So to be able to give you individual figures in terms of market share, that's a very -- that tough proposition. But yes, that we can definitely say that our consultancy business, both domestic and international overall is seeing a healthy growth. There have been challenges in certain sectors of consultancy where like highways where more and more smaller consultancy firms are coming and the undercutting in margins have been going on. So are maintaining a certain level of consultancy and we don't like to go beyond compromising beyond a certain level in terms of the quality of consultancy, the quality of deployment of resources that we do for our consultancy order. so yes, so there has been in certain areas, there has been a depth in terms of the quantum of order that we are taking. However, in certain areas, which are our niche areas of consultancy, for example, metros or in terms of smart city planning in terms of city mobility plans or logistic plans, we have been getting more and more orders on a competitive basis.

Can I have a follow-up on last question. Sorry to interrupt, Mr...

You can come back in the queue, please?

Sure.

The next question is from the line of [ Parimal Atish ] from Credential Investments.

I just wanted to know in terms of REMCL. Currently, if you can give a figure of what percentage of railway electric machine is handled? And what -- is there any capacity that we can cater to currently.

REMCL is handling about 70% plus of the traction requirements of Indian Railways. And we all efforts are to increase this further across states individual negotiations are on from various states so that the AM is to reach 100%.

The next question is from the line of Harshit Kapadia.

Just one clarification. Since you mentioned part of your QA business will be now divided between you as well as other 4 firm. Would margin be also do you think could may be reduced or it will remain the same?

No. Definitely, in terms of since there would be a competitive price but between the 4 and paneled agencies. So yes, the margins both top line share as well as the margins would also take a hit in terms of the IR QA business. But as I said, we are already working on a number of non-IR clients, which we have traditionally. We are working to expand them and also explore opportunities for QA internationally in railway systems as well as non-railway systems, considering our legacy of more than 40 years of QA to be able to take care of both the bottom line and top line in terms of this bend from the IR and the client.

Thanks for the clarification.

[Operator Instructions] The next question is from the line of Viraj from Jupiter Financial.

Sir, my question is, how are we placed in the turnkey business against our other competitors like RVNL and ALCON, if you can give some color on that? Hello?

Ladies and gentlemen, we have lost the line for the management. Please stay connected while we try to read in the audio connection. [Technical Difficulty] Ladies and gentlemen, thank you for patiently holding. We now have the line for the management reconnected. Over to you, sir.

Yes. Sorry, we got disconnected. Yes, next question, please.

Mr. Viraj.

Yes, Sir, my question was how are we placed again or the other government companies like in turnkey business like RVNL and ALCON So they also do more of the same line of business what we do now.

So in terms of turnkey, yes, the turnkey is being done similarly by other sister PSUs but as we said, our core strength is that we do consultancy primarily across various sectors more than about 8 sectors. And that's our core strength which is a bulk of our revenue.

Yes, but my question is regarding Turnkey, how we will be placed against them. I understand that.

I don't understand in terms of how we place. We do similar work and we win contracts in Turnkey on a competitive basis. The Turnkey nature of course, is obviously similar, whether it is station development or led electrification or building work or it is new line doubling the Turnkey nature of our case similar. We get orders and competitive mode, not only from other railway sister in the PSUs, but across other competitors also.

So more or less, we do the same kind of work at a.

Mr. Viraj, may we request. The next question is from the line of Rohit Natarajan from Antique Stockbroking.[Operator Instructions]

Sir, a big picture question. Like within next 5 years, where do you want? How do you want to see this execution being driven by? Like will it be consultants, either it be exports or will it be turnkey. Help us understand the big picture in terms of numbers, how -- what is the management thinking about.

Yes. I'm glad you asked this question. We are clear as of now and moving forward year-on-year and in the next 5 years also as you are. That our core strength is consultancy in the key areas, about 8 different areas, as I mentioned. Some of them are niche strength where we have both domestically and internationally, we have a strength, domain strength legacy, and we will continue to work on that, whether it is the, as I said, the metros or the smart cities, the bridge engineering channel engineering. I mean, these are areas where we have core competence, we are very few both PSUs as well as private entities can match that and we win contracts in them on a competitive tender mode basis. So we will remain, we will continue to leverage that and grow in that. Turnkey, as I mentioned, a good -- is an important element because it is required for our top line also and to buffer some time, as you saw in this quarter, drops in export tech revenue. We would target a healthy mix of turnkey aiming in a range of about 25% of our top line and export of rolling stock is a very good traditional area, a stream of business, which RITES has been doing for 30-plus years. We have a lot of confidence in a number of clients not only in traditional clients in Southeast Asia and Africa, but we are also exploring other possible clients in Latin America and Central Asia. So we will continue to target export. It's a good high-margin business, which we have experienced work in commissioning and operation and maintenance of the exported rolling stock. So that will also continue to be a major part of at least 20%, 25% of our revenue stream.

Appreciate this answer, sir. Just in terms of numbers, we want to.

Sorry for the interruption, Mr. Natarajan. The next question is from the line of [ Prasad Gopal ] from Spark Asia Pac Managers.

During last call, you mentioned you're aiming for INR 250 crores of export dollar to mature in Q2 and Q3. Now Q2 export numbers are low. So is it fair to expect majority of dollar book to be mature in Q3.

Yes. So I mentioned at the beginning of the year also that the year started with about 450 balance export order book. And till Q2, we are done by 150 million. So the balance 300, out of that about 200 odd is the export order for the balance sheet is which is maturing primarily into Q3 with some partly maybe spill over to Q4. And the balance, about 100 out of 300 is for the regular operation and maintenance work of the exported rolling stock, which will continue to keep coming on a monthly basis.

The next question is from the line of [ Ankur Samwal ] an individual investor.

So we have a joint venture with sale regarding vacant manufacturing of goal. What are the future prospects of the same company? And are we also interested into making passenger valance.

We have a joint venture, as you correctly said, with sale at [ Colt ]. It's a very good facility, state-of-the-art, which has a lot of capacity. We are not, as of now, we feel that there is a lot of scope to leverage the existing capacity itself for more wage manufacturer, both for IR as a client as well as looking at export bagels from this facility. We are working on that. So that this facility can export margins also so that we can directly use this rather than sourcing the wagons from another source. Maybe yes, your suggestion is also a due course of time since the facility is there, and it's a very good infrastructure facility. We could look at exploring using it for some kind of in the stock also.

[Operator Instructions] The next question is from the line of Venkatesh Subramanian from Logic Tree Investment Advice Private Limited.

A bit of a follow-up on the previous question, sir. One is in terms of growth rates, if I go back like 6 to 7 quarters before in one of the calls, key questions that was asked was [indiscernible] we take a top line company of 7 you're talking about $1 billion top line over 4 to 5-year period there. Do you think that means the growth rate of broadly 18% to 20% of a period of time. Again, it gets into the big picture. Can you give us a guidance? Is there something like a vision that we can aspire for considering that you're on a supreme agency you are in a Consulting segments and India's infrastructure go through, you're going to be huge. Would that be kind of a number too far-fetched or something realistic?

You see I'm glad you asked this question so that it clarifies clearly our core strength and the way we are moving forward. So you must appreciate that consultancy orders are much lesser in terms of their value vis-a-vis turnkey order. So to grow from a current level of about INR 2,500, INR 2,600 to INR 7,000 in about 4 to 5 years, the whole complexion would have to be primarily shifted more towards turnkey which then is, as I broadly mentioned in our broad vision and strategy, Turnkey would be limited to about 25% odd of our total business mix. We are primarily a consultancy agency, and we would look at watching the bottom line carefully also rather than just aspiring to be INR 7,000 crores, INR 8,000 by taking turnkey order and sacrificing our margins. Our focus has been, as you compare whether it is quarter-to-quarter or year-on-year or H1 to H1 has been a very important focus on maintaining our profit margins and operating margins also. So that has to be a balance between the top line and the bottom line moving forward.

I'll join the queue.

[Operator Instructions] The next question is from the line of [ Parimal Dishman ] from Credential Investments.

I just wanted to know, in terms of losing business, can you give us, what do you think will be in the next 3 to 4 years because we really talk about that business.

So leasing business is a good revenue and a good source of both revenue and margins for us. And in fact, we have been continuously getting orders from new clients also in the leasing area, both in the operation and maintenance of the rolling stock that we lease and we recently got an order of INR 6 crores or more of easing of locomotive and operation and maintenance order of the lease rolling stock of about INR 19 crore. So we are -- we have about 65-plus locomotives, which we lease and which we operate and maintain. Besides that, we do operation and maintenance of locomotives and wagons owned by the siding owners also -- so this is a good stream, and we will continue to see a healthy growth in it, both in the top line as well as the bottom line.

And sir, how do you see the...

Sorry to interrupt Mr. Mithani. We have participants waiting in the queue. The next question is from the line of [ Prashant Gopal ] from Spark Pack Managers.

What will be the quantum of QA revenue from Indian railways or the share of the Indian railways also the share of QA the total will be helpful.

So you see to give a specific number of the QA revenue client-wise would not be fair. But yes, it is a substantial amount varies from quarter-to-quarter. But yes, it's a substantial amount. And as I mentioned sometime back that with this in the coming quarters, this drop in the QA revenue from 1 client from IR, both in terms of the top line and bottom line of IR as a client for QA revenue we will be able to -- we are aiming to work on it to get more than make up for it from our other non-IR clients, which is also quite substantial.

The next question is from the line of Venkatesh Subramanian from Logic Tree Investment Advisors Private Limited.

So my question is on REMCL. This is a kind of claw back to 2021 transit. What we -- at that time, what was the note that was broadly the transit was. REMCL could grow to be a top line of about INR 350 crores in some time and based on a particular kind of a sharing model where I think 70 % of unit generated will go to RITES. If you can just let us know what could be the dose we confirm the revenue model on REMCL there are very bright prospects that were indicated saying this company could be quite large going forward. Some sort of a vision would help them.

No, I think maybe at a stage, which we are talking about is maybe it could be based on the assessment a few years back that maybe REMCL would work more on the CapEx asset model, which, as I said, sometime back in the last year or so, a conscious decision has been taken that REMCL will work on the developer model for all developments in the renewable energy arena, whether it is solar or wind. So the -- with that, the growth in top line, which is in the range of 100 plus right now expected in the range of 100 plus right now to grow suddenly to 350 in a year or 2 or so, that doesn't seem probable. It will be growing on a good, yes, since it's more and more electrification in the Indian Railways and targeting in targeting by next year, complete electrification and also growth in traffic, as we see in the coming -- in the last few quarters, IR traffic has been a good growth, both in passenger and freight. So with that, the requirement of electric traction energy for IR is growing and then REMCL will see a good growth catering to the IR traction requirements.

The next question is from the line of Viraj from Jupiter Financial.

Sir, my question is, is there any news on the OFS by the item to us. That's not my question because there was some press slipping about it in fee for some time also.

I would not be the right person to answer it. I think the [ PAM ] would be the right agency to answer your question.

The next question is from the line of [ Ankur Samba ] an individual investor.

Sir, after your joining of the company, the company has seen a memorandum of understanding with many marquee institutes of India and other countries. What is the thought process behind the same.

I'm glad you asked this question. The key reason for this, and we are constantly working on it across whether it is the academic institutions like IoT or whether it is key business top leading business companies like TCS or other key PSUs, we have been working on it so that we can complement our in-house strengths with their expertise and be able to give a solution to the client in various areas. For example, our right sustainability vertical is working to work on areas such as clean air program and the solid base management. So we are looking at tie-ups and MOUs with various important institutions. So these are the kind of strategy which we have been following, and we will continue to work on this so that we can bring the best to the client in whatever the lack in certain areas, we can complement that with the expertise of the partner who we partner with.

Ladies and gentlemen, that is the last question. I now hand the conference over to Mr. Harshit Kapadia for his closing comments.

Thank you, [ Lizen ]. We would like to thank -- would like to thank the management of RITES Limited Shri Rahul Mithal, Chairman and Managing Director along with his team for giving us an opportunity to host this call. We would also like to thank our investors and analysts for this attending this call.

Thank you, Harshit and the team for this opportunity for us to interact with our stakeholders and investors. We reiterate, as I said in the beginning that we have the core strength and our USP that we can target one stream, if one stream did set a certain time, our multi-sectoral presence ensures that we are able to protect both our top line and bottom line by suitable realignment from other schemes of traffic from other streams of revenue. And with this strength, we feel that moving forward, we will leverage this sequential as well as year-on-year growth. We are on track for this financial year as a whole. Our 2 recent aggressive endeavor in rights with is targeting more of international consultancy and right sustainability, targeting new areas of sustainable pollution control and other sustainable initiatives. This we forsee giving us more contribution to both of our top and bottom line. And our dividend, which we have declared a second interim dividend of INR 4.5 which makes our cumulative dividend at INR 8.5 is also on track vis-a-vis the total 17, which we declared as a dividend last year. So all does show that our company is on track for the entire financial year, and I can only reassure all our investors that we will continue to leverage our inherent strengths and our expertise to take the company forward.

Thank you. Ladies and gentlemen, on behalf of Elara Securities, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.

Thank you.