RITES Ltd is looking to bid for high-margin consultancy businesses in India and overseas, even as it expects export orders for rolling stock from Mozambique and Zimbabwe to materialise by this fiscal-end.
In case of Zimbabwe, the order book is expected to cover 9 locomotives and 315 wagons, while for Mozambique it is 10 locomotives and 300 wagons. RITES emerged as the lowest bidder in Mozambique; but the orders will be added to RITES’s books following fund approvals in the respective countries. The value of these export orders could be to the tune of ₹1,000 crore.
According to Rahul Mithal, Chairman and Managing Director, RITES, there “will be an aggressive push” towards exports “to cover the lost ground during two years of Covid”. “We are also tapping other Southeast Asian markets and African markets for export orders,” he told businessline.
The company’s profit after tax (PAT) decreased by 26 per cent to ₹96 crore in Q1FY24, as against ₹129 crore in the year-ago period. The company’s operating revenue, was ₹504 crore, down 13 per cent y-o-y.
Mithal explained that the fall in revenues and net profit in Q1FY24 (April–June) was mainly on account of Railways reducing rates for quality assurance and inspection tenders. The new rates, he said, was on an average one-fifth of the earlier rates. Orders from Railways are around 60 per cent of the segment (quality assurance and inspection tenders).
Impact of lower revenue from Railways inspection order was about ₹15 crore on topline and around ₹10 crore on the profits. Impact is also expected in coming quarter numbers.
Push for Consultancy Business
“To counter this drop, we will be pushing the consultancy business, both in India and overseas,” he said.
Bids for overseas consultancy services have been placed across countries like Bangladesh, Nepal, LatAm, Africa, and elsewhere. International consultancy accounts for 12 per cent of consultancy business.
The company won 70 projects, worth ₹300 crore in Q1, of which 60-odd were in consultancy work. The aim will be to take consultancy business up to 50 per cent of its order book.
The order book was ₹5,700 crore as on June 30. “The target would be to maintain EBITDA margins at 29.6 per cent and PAT at 21–22 per cent,” Mithal said.