Recovering from an order dry-up and change in market conditions, Gurgaon-based Rites is looking to bid aggressively in global export and consultancy tenders and run with a volume-led approach, its chairman and managing director (CMD) Rahul Mithal said.
Rites is a railway consultancy public sector undertaking (PSU) under the aegis of the Ministry of Railways.
“We started the year with two huge challenges – the export order book, where no new orders had happened, and the opening up of Indian Railways quality assurance works to four players.
"We bid aggressively and got two export orders through global tenders which were non-LOC and non-EXIM Bank funded, so there was fully open competition,” Mithal told Business Standard in an interview.
Calling FY24 a consolidation year, Mithal said that the focus this financial year will be to ensure an “appreciable” growth in its earnings and profit, not wanting to speculate on numbers.
The company’s current order book stands at Rs 5,690 crore, where turnkey projects account for 44 per cent and consultancy projects account for 46 per cent.
The state-owned firm’s operating revenue in FY24 decreased by 6.7 per cent to Rs 2,453 crore, and its profit after tax fell by 13.3 per cent to Rs 495 crore.
The PSU expects its exports revenue to pick up from the second half of FY25, while its quality assurance revenue is expected to slightly moderate during FY25.
The state-owned corporation's largest and third-largest segments have suffered hits in the previous financial year.
Its revenues from consultancy services have fallen by 1.9 per cent while export revenue fell by 66 per cent in FY24.
Nomination accounts for 54 per cent of the company’s current order book, and competition accounts for the rest.
Mithal hopes to increase the company’s capabilities in the competitive space, on the back of emerging the lowest bidder in a global tender floated by Bangladesh Railways for a Rs 900 crore contract.
In the consultancy space, the company has had to build its capacities in various infrastructure segments, which Mithal says were earlier limited to the Indian Railways, which was its captive consumer for decades for inspection and quality assurance work.
Mithal said that Rites will aim to increase the share of competitive contracts even further going forward, which can then reflect in its earnings.
Over the past two quarters, Rites has bagged orders at the pace of one a day, which, according to Mithal, will continue going forward.
On the possibility of exporting Vande Bharat trains, the CMD said that the firm is awaiting capacity building to ensure that countries make substantial orders for the indigenous train.
The PSU had in 2022 announced its plans to export the trains on a large scale.
“The product is very good, but it’s about getting a breakthrough.
"Once the standard gauge version is developed, we’ll have a much wider market to attack. Considering the cost and quality of Vande Bharat, it is only a matter of time,” Mithal said.
“A lot of stress is being given by the Indian Railways to the development of the standard gauge version.
"We’re working in close collaboration to ensure the work is as fast as possible,” he added.
