RITES Limited (NSE: RITES) Q2 2025 Earnings Call dated Nov. 07, 2024
Corporate Participants:
Rahul Mithal — RITES Limited
Analysts:
Shreyans Mehta — Analyst
Vinamra Hirawat — Analyst
Manan Poladia — Analyst
Parimal Mithani — Analyst
Unidentified Participant
Viraj Mithani — Analyst
Uttam Kumar — Analyst
Namrata Hirawat — Analyst
Harshit Kapadia — Analyst
Presentation:
Operator
Good morning, ladies and gentlemen. I’m Steve, moderator for this conference. Welcome to the conference call of RITES Limited to discuss its Q2 FY ’25 results.
We have with us today, Shri Rahul Mithal, Chairman and Managing Director; Shri Arun Kumar Singh, Director, Projects; Dr. Deepak Tripathi, Director, Technical; and Shri Krishna Gopal Agarwal, Director of Finance.
At this moment, all participants are in a listen-only mode. Later on we will conduct a question-and-answer session. [Operator Instructions] Please note, this conference is being recorded. And in the interest of time and fairness to all participants, you are requested to restrict yourself to one question per participant. Time permits, you may come back in the question queue.
I would like to hand over the floor to Shri Rahul Mithal, Chairman and Managing Director, RITES Limited. Thank you, and over to you, sir.
Rahul Mithal — RITES Limited
Good morning, everyone. I begin with the safe harbor statement. The presentation and the press release, which we uploaded on our website and exchanges yesterday and discussions during the call today may have some forward-looking statements. These statements consider the environment we see as of today and obviously, carry a risk in terms of uncertainty because of which the actual results could be materially different, and we do not undertake to update those statements periodically.
To begin with, let me give you a brief overview of the quarter 2, and then we leave the floor open for questions. Quarter 2 has been a tough quarter. In terms of the execution, some of our projects in different geographies were impacted due to various reasons, as you are aware of many infrastructure projects across various geographies being acted in this quarter.
We are consolidating and our focus has to be and will be in the coming quarters to continue increasing the execution and the sequential trend in terms of revenue, about 11% to 12% from quarter 1 to quarter 2. That is what we will consolidate upon in the coming quarters so that the effort is to be able to reach as close as possible on an FY basis, as close as possible to the previous FY.
In terms of the order inflows, we are quite aggressively moving forward in maintaining our track record of being a one-order-a-day company. And this quarter itself, we got 90-plus orders totaling to about INR700-plus crores. And this in 1 quarter was, in fact, equal to the more, in fact, much more than even the entire H1 of previous FY. So you need to keep consolidating our order book and also, we will continue to focus on increased execution in the balanced quarters of this FY.
With these broad opening comments, I leave the floor open for questions.
Questions and Answers:
Operator
Thank you. Now we begin the question-and-answer session. [Operator Instructions] In the interest of time and fairness to all participants, you are requested to restrict yourself to one question per participant. Time permits, you may join back in the question queue. The first question is from the line of Shreyans Mehta from Equirus. Please go ahead.
Shreyans Mehta
Yeah, thanks for the opportunity. My first question is as far as the margins are concerned. So if you see, sir, after a long period of time, the margins have actually come down below 20. So just wanted to understand, are there any one-offs during the quarter? And secondly, in terms of how should we see the margin trajectory going forward? That’s the first question.
Rahul Mithal
So good morning. So in terms of margin, if you see we are in the range of about just below 20% EBITDA margins, and PAT margins about 15% on a consolidated basis. We will continue to try and improve as execution improves in Q3, Q4. There will be a slight uptick in the margin, but we will remain in this range. If you see H1 also or in overall, our margins — our EBITDA margin on a consol is about 21% and PAT margin is 16%. So in the range of about 20%, 21% would be the range that is the range of EBITDA and about 15% to 16% of PAT margin moving forward even on an FY basis.
Shreyans Mehta
Got it. Got it. Sir, second question is, as far as our export orders are concerned, at what’s…
Rahul Mithal
Come back in the queue, please?
Shreyans Mehta
Okay.
Rahul Mithal
Thank you.
Operator
Thank you. The next question is from the line of Vinamra Hirawat from JM Financial. Please go ahead.
Vinamra Hirawat
Hi, sir, am I audible?
Rahul Mithal
Yes, go ahead, Vinamra.
Vinamra Hirawat
So I wonder what is the ratio of the order book where the share of nomination and competition orders will stabilize. We’re currently at around two-third and one-third. Where do you see this stabilizing? And are we seeing further margin pressure as nomination orders go up in any of the segments moving forward? Yeah, Vinamra, the ratio which you see in the order book is the ratio of the order book. If you see the fresh intake of orders, the ratio of competitive is even higher. It’s now in the range of about 70-odd percent plus and this trend is only increasing from quarter-to-quarter. I see this only increasing. It will always remain, I think, 70% plus in terms of competitive on an average out basis and slowly increase. In terms of margin, yes, because of this and continuously trying to get more orders also, there will be a stress on margin. But I foresee, as I told to the previous caller, that on an average out basis, I see EBITDA margins hovering around about 20-odd percent and PAT margins hovering around about 15-odd percent on a consol basis. Got it. Got it. Just another question. Looking a little further out, maybe in FY ’27 further. I want to know how the export scenario looks. Do we still see…
Rahul Mithal
Come back in a queue for the second question, please. Thank you. The next question is from the line of Raj from Jupiter Financial. Please go ahead.
Manan Poladia
Yeah, morning, sir. My question is about exports only. Can you give some color how you’ve been panning out? I understand we got three orders so far and the execution timeline, that’s better.
Rahul Mithal
Good morning, Raj. So we started breaking that high test of about 3 to 4 years of no export order. We got the first order of about INR300 crores in Q4. Second order was INR900 crores in Q1. In Q2, we got another order from South Africa about INR35 crores and in Q2 — in Q3 also in the one month or so, which has happened, we’ve got another order of about INR50-odd crores from South Africa. So we are trying and breaking that gap. We are continuously now getting orders. The average timeline and some of these are locomotive and some of them are coach orders like the Bangladesh INR900 crores plus is a coach order. They have a finite timeline.
What we are definitely expecting is that the first revenues from these orders will start coming in by Q1 of next FY and most of these orders will generate a substantial revenue if you see the entire next FY. The effort of trying to continuously keep on now getting orders, at least our aspiration is to get 1 export order at least one every quarter and then by next FY, the existing orders start generating revenue.
Manan Poladia
And sir, regarding export only, how is the Bangladesh export panning out because of the geological uncertainty there?
Rahul Mithal
So it is an EIB-funded project, so there is no problem in terms of the funding. All necessary approvals, paper work was in place. The design approvals are going on for the prototype. The setback was temporary for a month or so. So it has — the timeline is by about two months, three months. So what we were aiming to somehow slip through some coaches by Q4 or early Q1 may slide by a few months, but it’s on track.
Manan Poladia
Okay, sir. Okay. Thank you, sir. I’ll come back in the queue. Thank you. The next question is from the line of Parimal Mithani from Credential Investments. Please go ahead.
Parimal Mithani
Sir, thank you, and good morning.
Manan Poladia
Yeah, good morning, Parimal. So, I just wanted to know the reason for quality assurance business is due to the competitive nature or how do you look at in and can explain that.
Rahul Mithal
Yes. I’m glad you asked, Parimal. You see, we were doing quality assurance for the good margin, high revenue source of revenue for us for last nearly five decades and more than two-third of this was from Indian Railways as a client, and this was on a nomination basis with a good margin. Early last year, the work was divided for the first time through an open tender between four players. So the volume went down by 30%, came down to about 30%, and the rates came down to about 20% of the rates. So you can see a double hit. And these orders against the new contract, the inspection call started hitting in by latter part of the last FY and now that is the new rates. So that’s why this has given us a hit.
Having said that, parallelly, last year itself, from early last year, we started diversifying in a lot of number of other clients in the QA business. And if you compare from last year within one year, what used to be about 60% plus or two-third IR as a client, in this Q2, it is down to about — this become reversible. 40% is IR as a client and 60% plus as non-IR client.
So we have taken work across a number of non-IR clients, both domestic and international. We got our first order from Sri Lanka. So with this, in the coming quarters, our aim is to come back at least in terms of the total revenue from the stream to the pre-early last year levels, pre-this tender.
Parimal Mithani
Okay. And sir, just follow-up on that.
Rahul Mithal
Yeah, go ahead.
Unidentified Participant
Sorry to interrupt, sir. The current participant has been disconnected. The next question is from the line of Marat Poladia.
Please go ahead.
Unidentified Participant
Hi, sir, am I audible?
Rahul Mithal
Yeah, go ahead.
Unidentified Participant
Sir, just a question. Since you said that our split of business from IR to outside business has swayed, is that also something that has a bearing on the margins? Were we getting better pricing for the railway business that we’re not now getting within the outside business that we’re trying to do?
Rahul Mithal
Yes. So one, I’m specifically talking of the QS stream of my business, right? We do a lot of other work for IR also. This is QS stream, the inspection stream of the new, which, as I said, was about two-third IR and one-third non-IR. And obviously, now that we are diversifying and have been doing it in the last year or so, taking orders across non-IR, the margins have taken comparatively a huge hit the rates have also gone down substantially. And if you analyze that, that is one of the main hits if you compare Y-o-Y. All other streams of revenue, whether it is project consultancy, leasing, turnkey, etc, have been steadily growing. They have reached all-time highs, in fact, in some quarters. The hit has been due to contribution or different contribution from this particular stream of revenue. And as I mentioned to one of the earlier callers, the export revenue, which has not been there for last few quarters, which is expected to pick up by next FY.
Unidentified Participant
Right, sir. I understand that. Just a second question on the REMC.
Operator
I’m sorry to interrupt, sir. Please come back in the question queue for further question. The next question is from the line of Shreyans Mehta from Equirus. Please go ahead.
Shreyans Mehta
Yeah. Thanks for the opportunity. So sir, coming to FY ’25, as you said, probably export orders traction should start from FY ’26. So how should one look at FY ’25 in terms of revenues given that export orders wouldn’t be there?
And second follow-up would be once the export orders start trickling in, will the working capital cycle be similar to what we had earlier or would there be any changes?
Rahul Mithal
So I didn’t get your follow-up when the export orders keep coming up, I didn’t get that start.
Shreyans Mehta
When the export orders start contributing, say, FY ’26 onwards, will the working capital cycle remain the same as we had earlier? How will the working capital cycle go?
Rahul Mithal
So in terms of FY ’25, as I said at the outset, the focus now normally, Q3, Q4 gives the best execution for infrastructure projects. The aim is to really step on the gas and execute all our infrastructure projects. We’ve got a huge order book now, and we are growing not only in the order book. But as I said, the focus has to the increased execution, both in the consultancy as well as the turnkey so that become as closer to possible as the previous FY.
And as far as the export revenue will definitely start coming in by early next FY. And this large order book, which is we are now about INR1,300-odd crores of export orders, plus some orders will come up also. In terms of that, they will start generating revenue in next FY. The working capital requirement for exports has been hardly any. That’s still our traditional model, which we have been doing export of rolling stock traditionally. So working capital requirement is hardly — has been minimal, and it will remain in that range.
Operator
Got it, sir. Got it. That’s it from my side. Thank you very much. Thank you. The next question is from the line of Vinamra Hirawat from JM Financial. Please go ahead.
Vinamra Hirawat
Hi, sir, my question is regarding execution and sales. So can we know why execution has been low across multiple geographies like you said in the introduction? Is there anything other than than monsoon? And any possibility of our sales having been impacted due to lower government spending than expected in the first half of this fiscal year?
Rahul Mithal
I don’t think there is any substantial reason except the reason that you point in terms of infrastructure, there have been certain geographies which were definitely impacted due to the rains, etc.
But if you see Q1 to Q2 sequentially, we have tried to step on it, and there has been about 11% to 12% growth in the operating revenue. But yes, if you compare Y-o-Y, it is definitely lower, about 7% or lower. So we need to — and as I said, in Q3, Q4, we will be able to definitely the visibility is quite clear in terms of execution at the ground level. There doesn’t seem to have any major finite substantial reason why they should not get the projects, the execution level should not improve into Q3, Q4.
Vinamra Hirawat
So it’s not because of lower government spending, it’s more because of just monsoon in certain geographies?
Rahul Mithal
No, not at all. We have got all our — we have about 600-plus orders of consultancy and turnkey across totaling to the INR6,580 crores and this definitely is — these are just in terms of — you see the factor, which you saw in across certain geographies across the country.
And so I don’t see any problem at all in stepping up and seeing at least minimum, we’ve already seen Q1 to Q2 about 11%, 12% growth. I see in terms of execution, even a bigger substantial execution growth moving sequentially.
Vinamra Hirawat
Okay. Thank you.
Operator
Thank you. The next question is from the line of Viraj from Jupiter Financial. Please go ahead.
Viraj Mithani
Yes, sir,, my question is on the export order only. So you said setting INR1,300 crores of the export order, what period of time, sir, once you start from FY ’25?
Rahul Mithal
You see, Viraj, normally, locomotives take about on average 18 months and coaches about 15-odd months. These orders are locomotives and coaches, and the coaches one for Bangladesh got affected by about, let’s say, three months to four months. So putting that timeframe of about 18-odd months, these orders are already in our kitty. I think next FY, we have a bright chance of executing a substantial chunk. Our aim would be to, I would say, rather than putting a specific percentage, but the INR1,300-odd crores, we would like to execute a substantial chunk of it in the coming FY.
Viraj Mithani
And sir, a follow-up on that, the margins on the export orders would be a range of 25% EBITDA and 20% PAT, this is to export orders?
Rahul Mithal
No. In fact, this is definitely, in fact, maybe I’ve explained that earlier when we’ve got these orders for the first time breaking higher test of about three years to four years, most or nearly all the export orders which we have got in the last four decades to five decades have been through the line of credit through EginBank vendors, which were primarily more or less on a kind of a nomination mode. The line of credit has completely become dry for export of rolling stock in the last three years to four years.
All these orders, which we are getting, are non-line of credit orders through a competitive global tender in more the — it is like I said, the Bangladesh order is an EIB-funded tender, where there was huge competition across the countries. So, obviously, those levels of margins are in no way possible moving forward in the export stream. The margins will definitely be better than the turnkey segment, but definitely not in a range of the traditional export 25%-odd margins.
Viraj Mithani
So what would be the margin thing, in that case, would be, in what range would you give some indicative range?
Rahul Mithal
They would — it’s pretty much they see each of these have been built at different margins. And the aim would be to execute and quicker so that we get margins even better than what we’ve bid at. So it will be very difficult right now to peg one figure, each one of them has different levels of margins. But for sure, I mean, in terms of very clear clarity, they are definitely well below 25-odd percent.
Viraj Mithani
Okay, sir. Thank you.
Operator
Thank you. The next question is from the line of Parimal Matthani from Credential Investments. Please go ahead.
Parimal Mithani
Sir, in terms of follow-up to the quality assurance business. You launched this thing called Vistar. So how does it help in terms of — can you explain that, sir? And is it going to be margin accretive to us?
Rahul Mithal
Yeah, I’m glad, Parimal, you asked this question. This is a very important initiative from us for getting cutting-edge technology across our areas. And QA being a very important area, this is basically the use of AI for inspections of failed at our sale Bela plant.
And this is a very good start. First of all, it improves the quality of inspection. It’s a very important safety-related aspect. And these are early days. It is to get in this technology to first improve the quality and then be able to use this technology not only in rail but other safety items that we inspect. And then that is the time when we’ll be able to capitalize on this, both in domestic and international market that AI-based inspection so that they start generating more and more profitable orders. Right now, these are early days, a very good initiative of try and have a breakthrough in using AI for this safety item inspection.
Parimal Mithani
Okay, sir. Thank you, sir. I’ll come in the queue.
Operator
Thank you. The next question is from the line of Manan Poladia from MKP Securities. Please go ahead.
Manan Poladia
Sir, my second question was on the RMC business. You had said that we are putting out tenders for the 700 megawatt, I think, plant. I was just wondering if there is any update on that. And if you could also tell me how we are thinking of the RMC business for, say, the next 3 to 5 years going forward, what sort of capacities are we looking at?
Rahul Mithal
So in terms of the RMC business, there has been — it has been performing well, as you would have lean it has been successfully growing and giving profits. It’s giving a dividend of about INR20-odd crores profit in this quarter, also giving good dividend to rights and I — the tender for the — we finalized 1 tender for INR900 crores — 900 megawatts. The 600 megawatts is also finalized. The PPA is being done. As of now, the 695 is being reviewed.
Manan Poladia
Okay. Understood, sir.
Operator
Thank you. The next question is from the line of Uttam Kumar from Axis Securities. Please go ahead.
Uttam Kumar
Yeah. Yes, sir. Good morning and thanks for the opportunity. Sir, what is our current status of of margin on order that we got around of INR500 crores. Any update on that?
Rahul Mithal
Yeah, Yes. So the Zimbabwe, as you would be recalling, the Zimbabwe was an agreement signed last year. It is about INR800-odd crores. And we did not — it’s about INR700-odd crores. We did not enter it into our order book considering that this was a clause in the agreement, that it was subject to funding from the [Indecipherable] Bank.
We have been continuously having deliberations with the NRZ and [Indecipherable] Bank. We are quite hopeful that things the way it has been moving forward. They have had some basic in-principal approvals in place. However, we are stepping cautiously. We don’t want to expose — take any liability until the clear funding letter comes from [Indecipherable]. But the way things are moving, I am hopeful that this should mature in the coming months.
Uttam Kumar
Okay, thanks a lot.
Operator
Thank you. The next question is from the line of Gaurav, an individual Investor. Please go ahead.
Unidentified Participant
Hello, am I audible?
Rahul Mithal
Yes, got it. Go ahead. I can hear you.
Unidentified Participant
Hi, sir. Thank you for taking my question. My question was on the export front. Like you said, a major chunk of the order will be executed during this year. So what number can we expect at the end of the fiscal year? And how do you see it going forward?
Rahul Mithal
So as I said, Gaurav, our order book of export as it stands about INR1,300-odd crores and we expect that this will start catching revenue by early next FY because the export stream of revenue only when a sizable lot is manufactured and it’s shipped out and we get the bill of leading we recognize the revenue.
So the recognition of revenue will start sometime early next FY. And considering an average lead time of about 18-odd months, 18 months to 20-plus months for the manufacture of locomotives and export and approaches also, I see that the INR1,300 crores, if you calculate backward would, as I said, substantial amount would get booked in the next FY.
Unidentified Participant
Okay. Thank you, sir. Thank you so much. I’ll get back in the queue.
Operator
Thank you. The next question is from the line of Vishal from Antique Stock Broking. Please go ahead.
Unidentified Participant
Yes, sir. Thanks for the opportunity. One question on the margins for the team. So quarterly we have seen the margins at a level, which is [Indecipherable].
Rahul Mithal
I can’t hear you clearly. I lost you.
Unidentified Participant
Yeah, is this better now?
Rahul Mithal
Yeah. Yeah, go ahead.
Unidentified Participant
Yeah. So on the margin front, for a turnkey segment, on a quarterly basis, we are seeing roughly clocking in roughly like one point to 1% odd. So is that fair to say probably like this is kind of a new run rate for turnkey for us, a turnkey business for us?
Rahul Mithal
You see, yes, turnkey business by itself over around about 2% to 3% margin. This one has been substantially lower because most of these projects are now many of them are the final execution stages, especially the IR part projects that we were doing like electrification, et cetera. So at the latter stage, where the execution is there and most of the material has come and the revenue has been booked so margin go down. But then normally, on an overall basis, certain key projects would hover around about 2%-odd or 2% to 3% maximum.
Unidentified Participant
Okay. So this first half run rate of 1%, 1.1%, I mean, is it expected to move up to roughly maybe 2%, maybe like 3%. Is that fair to understand?
Rahul Mithal
As the older lot of turnkey projects finish and the new orders that we have get, as they start their execution, and there is some overlap also of some of the earlier projects coming into Q3, Q4, it will definitely creep up slowly. And on an average basis, if you see turnkey projects, they were over around about 2%-odd.
Unidentified Participant
Right. So if I may ask one more. I think you did mention your order book has 63% on a competitive bidding. So on a segment-wise, I mean, like how exactly will share where we have a nomination, where exactly it’s a full order book is competitive bidding, so between turnkey export and consultancy?
Rahul Mithal
See, again, as I mentioned, 63% is the current order book. The fresh orders are all about 70% plus on competitive bidding. As I mentioned to 1 of the previous callers, all the exports are all in competitive the consultancy also is hugely on a competitive basis. So they average out on about 80% of these are competitive basis.
Where we may be still getting some orders on nomination is in our leasing business where traditionally, there have been some clients who continue old PSCs where we’ve been working some. But that’s also opening up, and there is now about 50%, 60% competitive. So on an average, it is — fresh orders are all about 70%, 75% on a competitive basis.
Unidentified Participant
Sure, sir. Yeah. That’s all from my side and thank you for all the answers. Thank you.
Operator
Thank you. The next question is from the line of Namrata Hirawat from JM Financial. Please go ahead.
Namrata Hirawat
So sir, your breaking your export orders hiatus. It’s been great news. I want to know how exports order inflows will look two years, thre years down the line. Are we going to see close to INR1,000 crore order inflows like TAV this year or with our push on competitive orders, can it even go higher in a couple of years, our order inflows than it has been this year, which is the first year we’ve broken our export hiatus?
Rahul Mithal
Thank you. I’m glad you asked this question, a very favorite area of mine because it’s required a huge lot of effort to do a lot of business reengineering to be able to compete in the global market and get orders for the first time in five decades on a global tender basis.
And having broken that and now tested blood, we are moving forward and trying to get orders whether big or small in every quarter. So subsequent to that, we got some orders INR30 crores, INR40 crores from two orders from South Africa and these were four in-service diesel locomotors, which have to be modified to their guage and exported. There’s a huge potential in that for a large number of in-service locomotives lying within railways, where we are looking for markets to export them.
And with now in the hand of how to market intelligence for global tenders, I definitely see this picking up again because we have re-engineered the way we are tackling the export business and not only waiting for the line of credit opportunities, which have hardly come in the last three years to four years. There has been no line of credit export offloading stock opportunities. So I’ve seen it growing on a steady basis in the coming years.
Namrata Hirawat
Got it. And as you said, you expect margins to be around 20% in the pricing, right?
Rahul Mithal
I didn’t mention any margin for export. I mentioned an overall margin that we are aiming that the current levels of EBITDA of around 20-odd percent and PAT around 15-odd percent. We — that’s our aspirational targets and we hope that even though with the changed business scenario and the extreme levels of competition, which within one year, the fresh orders, we used to get about a year itself has changed from about 50-50 to about 70% plus on a competitive basis on overall across my vertical. So that’s the level of margin that we are aiming that we should be able to aim to secure.
Namrata Hirawat
Got it. Thank you.
Operator
Thank you. The next question is from the line of Viraj from Jupiter Financial. Please go ahead.
Viraj Mithani
Yes, sir, with all these agreements and export orders all coming in, what would the FY ’26 look like? Any guidance in that would be?
Rahul Mithal
You see the — this year was that is and will be the toughest year for us as we had said at the beginning of the FY. It’s a year of consolidation. We are trying to increase and improve the execution in Q3, Q4 to come as close as possible on an FY basis to the previous FY. With — as you correctly said with the export stream contributing in FY ’26, I definitely see a double-digit healthy growth, vis-a-vis, the current FY in the next FY.
Viraj Mithani
You mean in terms of revenue, right, top line with double-digit growth?
Rahul Mithal
Yeah, definitely, in terms of top-line because that’s — as you see, the order book from export itself will contribute a substantial amount with literally a zero contribution in this FY in terms of export. So that itself and other streams have been continuously growing. Project consultancy has been growing. Turkey has been growing. So in terms of FY ’26, we should see a substantial healthy growth, vis-a-vis, FY ’25.
Viraj Mithani
And sir, color on EPI, this would be forward.
Rahul Mithal
Viraj, I request you to come back in the queue for the next question.
Operator
The next question is from the line of Harshit Kapadia from Elara Capital. Please go ahead.
Harshit Kapadia
Hello. Hi, good morning, and thanks for the opportunity. I know, sir, we are having some difficult times at this point in time, and I think you are doing a very good job feeling through this difficult time. Just a question from my side. Is the worst over as far as quality assurance is concerned, as far as in terms of growth? And if you can also give a number for the quarter in terms of what is the quality assurance number compared to Y-o-Y last year?
Rahul Mithal
Yeah, good morning, Harshit. Thank you for understanding the tough fight, which our entire team was giving. And I think whether it is in quality assurance or export or in terms of all our streams of business, the — it is only upwards now, which we have been aiming at the beginning of this FY.
Sequentially, as you see, we’ve been growing about 11%, 12%. And that definitely, we will sequential growth will be higher as we move on to Q3 and Q4. In terms of quality assurance, this was quite a substantial business. It’s part of our consultancy revenue. So it’s not fair for me to break it down separately and be able to give you the figures.
But our internal analysis shows that the worst in quality assurance is over. In terms of the fact that the new regime of orders as per the revised rates from Indian Railways has kicked from the latter part of last FY. So the last two quarters, three quarters, which revenue from IR, we are getting as per the new rates.
Parallelly, all our efforts last year of diversifying into non-IR clients, we are set the balance. And as I said, two-thirds plus now is non-IR clients in terms of our revenue as well as order book and, vis-a-vis, last — early last year where it was the reverse.
So our effort is that the levels of QA revenue, which you are seeing, which has now come, this will only increase now. We are getting — we’ve got our first revenue international QA way from Sri Lanka. Our revenue from PM Vishkarma, revenue from Gem and a number of non-IR across states, whether it is [Indecipherable], whether it is solar energy, whether it is various other infra from various municipal corporations, which we are doing process and product inspection, this will — is only adding and the QA revenue is also on an upward swing now starting from this quarter itself.
Harshit Kapadia
That’s great to know, sir. I have few more questions. I’ll join in the question queue.
Rahul Mithal
Thank you.
Operator
Thank you. The next question is from the line of Parimal Mithani from Credential Investments. Please go ahead.
Parimal Mithani
Sir, thanks for the opportunity. So is it fair to assume that what the work has to be done is over with in terms of quality assurances, exports, and other line-of-business and the traction ahead is going to be more, especially in exports, sir?
Rahul Mithal
Yes, for sure, Parimal. And I’m not saying it only just to in here. It is in terms of number at this peak. The worst in export is in terms of the number that we have now about INR1,300-odd crores of order book, which are the first of these was received in Q4, which is already now about seven months, eight months — sorry, about 10 months old.
So these have will and considering even the most conservative lead time of delivery from 18 months plus, these will start generating, these orders will start generating in the coming FY. So — and the strike rate of getting export orders is not only one order, which was in Q4, which was the first order after a gap of about three years to four years. The orders we have been flowing in.
So as far as export is concerned, as I said, definitely, the numbers speak for itself. The worst is over. In terms of revenue realization, yes, they will start generating revenue only next FY. In terms of QA, as I explained to Harshit just now in terms of diversification of the order book, that effort has borne fruit in the last about three quarters to four quarters and these new non-IR orders have started generating revenues. And in Q3, Q4 onwards, the QA contribution is only go on increasing. Yes, obviously, not at the levels of margin, which have been there traditionally for four decades to five decades. But in terms of total volume, this is not only an upward trend in the coming quarters.
Parimal Mithani
And sir, just a follow-up. In terms of exports, if we get the Zimbabwe order, it would be at INR2,000 crores by the end of the year, right, if you get to that entire thing?
Rahul Mithal
See, the value of that was about USD60-odd million. So let’s see in terms of when — as I said to one of the callers that we are pursuing, it is moving on the right track. But we will only add it to our order book when the clear funding letter comes from [Indecipherable] Bank, which we seem to be making a headway. But it is moving. Hopefully, in the next few quarters, it should mature.
Parimal Mithani
Sir, thank you, and all the best, sir.
Rahul Mithal
Thank you.
Operator
Thank you. The next question is from the line of Vivek Rathi, an Individual Investor. Please go ahead.
Unidentified Participant
Hello, sir. Thank you for taking my question. So just looking at the presentation, I see the consultancy, as you mentioned also in the turnover, the conversation, that it has gone down revenue. But I see more steep fall in profit compared to revenue. I think revenue is somewhere down around 7.4%, but profit seems to be down around 20-odd percent. Is this because, as you said, non-IR consultancy revenue is less as we got compared to last few decades? Is there any other reason?
Rahul Mithal
No, very correct. You see, consultancy has been the shown in the presentation. So the terms of contribution from Indian Railways as a client, both in terms of value as well as in terms of margin. As I said, it got divided between four players. So that went — our revenue came down to 30% from what it was about a year back from IR. The rates came down to 20% of what was the earlier rate. So that’s a double hit in terms of revenue as well as rates. And the deployment for inspection across the country for the various orders remains the — more or less the same. So that’s why I hit on the bottom line also from this stream of business.
However, as I said, having said that we have managed to generate a large number of non-IR clients in our first international order also on QA. So to that extent, that has been the hit in the consultancy, both in the top line and the profitability in the — if you see the overall consultancy figure.
Unidentified Participant
Yeah. Thank you. Just a follow-up. So, I mean, as you said going in the right direction. So do you have any timeline or an expectation where the margin, where we were to the previous figures or that is not really currently we can foresee?
Rahul Mithal
So not only in QA, but in overall, because of the various factors, which I pointed out like the huge increase in competitive bidding, both domestic, including our export competitive global tenders, the current levels of EBITDA of about 20-odd percent and PAT margins of about 15-odd percent, that is the realistic levels of margin, which are — which we see a visibility, which is what we aim for.
Unidentified Participant
Okay, thanks. Thanks a lot.
Operator
Thank you. The next question is from the line of Namrata Hirawat from JM Financial. Please go ahead.
Namrata Hirawat
Sir, you spoke about AI-based quality assurance, which can increase our consultancy revenues going forward. Is this a USP that we have or are our competitors also getting into this? And if they aren’t yet in AI-based QA, is there anything stopping them in the future? So like do we have a moat of any sort? Any color on this?
Rahul Mithal
Yeah. You see, Namrata, AI is a technology which every entity is using in various facets. There are a couple — a large number of our competitors in the QA business and I’m sure they will and are working on AI. We gave a lot of importance and as the first mover advantage started applying this for inspections of rail, which is one of the more safety-related products. So at our inspection with the Silvinit plant, we have introduced this and the experience that we gave, we already wanting to extend this to other products and key safety processes and products and I think this early mover advantage will give us advantage. But I’m sure others will definitely offer it. There is a competition in that.
But AI-based inspection, coupled with our technical experience of four decades to five decades of these, whether it is rails or wheels or many such safety products, this definitely gives us an edge in terms of QA business as a whole in terms of our USP.
Namrata Hirawat
Got it. Thank you.
Operator
Thank you. The next question is from the line of Viraj from Jupiter Financial. Please go ahead.
Viraj Mithani
Yes, sir. My question is about this MOU with STR Rail. Any color on that in terms of like what is it for this EMC corridor or any color on that would be helpful.
Rahul Mithal
Yes, Viraj. So STR Rail is now in the last few years is very aggressively expanding not only the rail network in UAE, but across the Middle East, whether it is Jordan, Qatar, Oman, et cetera. It’s comparatively a young organization. But in the last few years, it is expanding and executing a large number of not only across UAE, but cross-border rail in a project.
So this was a very good, important strategic breakthrough for us. We’ve entered into an MOU with them for about five years for rail infra projects, not only for consultancy not only in UAE, but across the Middle East, as well as they expand in other geographies also. So I see a huge potential for leveraging this MOU in the coming months.
Viraj Mithani
This is in the field of customers, not exports, right?
Rahul Mithal
Yes. This is consultancy for — so it’s an overarching MOU, which covers all areas of our expertise, whether it is consultancy in rail infra network, whether it is export of rolling stock as their requirement increases because they are expanding. Their rail network is very young. It is for passenger. There is hardly any rail network for freight now. They have started connecting their key ports for container movement in a big way. So requirement of rolling stock for both the UAE as well as other geographies is also an opportunity which is covered in this MOU.
Viraj Mithani
Okay. Thank you and all the best, sir.
Rahul Mithal
Thank you.
Operator
The next question is from the line of Harshit Kapadia from Elara Capital. Please go ahead.
Harshit Kapadia
Hi, thanks for the opportunity. Sir, just to check, we had — you tied up with BML for the Bahrain Metro project, where we were going to do the consultancy part. Any update on that, sir? Where are we in that particular stage? No. I think there’s some factual error in that. We didn’t tie up with the BML for Bahrain Metro. We have done a consultancy for Bahrain Metro. We have an MOU with for BML for various metro rolling stock projects. We are working closely with them, exploring various opportunities across other geographies. Okay. And sorry to harp you on this margin question. But if you look at even the last few quarters, when your quality assurance business was falling, but domestic consultancy margin business was above 50%. But in this quarter, it went down below 35%. So is there any projects on the consultancy side, on the domestic side, which is also moving towards a lower margin? Is that a correct understanding or maybe this quarter, some one-off from next quarter will again may rise to 40% plus?
Rahul Mithal
No. Consultancy, all streams of revenue, whether it is a consultancy, whether it is export and QA, whether it is a turnkey, the fact of the matter is at every quarter, the percentage of bids, which we are getting on a competitive basis is increasing steadily. It is now inching up nearly up to 75%, 70% plus. And even this balance about 25% of orders that you are getting on nomination from erstwhile clients. Even they at — for every nomination order, there is a huge amount of revisit of the style agreements for lower rates and lower.
So that’s why — and as I said at the outset, we are maintaining a rate of one order a day. There’s a huge inflow of orders in quarter two itself. And even the one month of quarter three, we have got orders of INR650 crores already in one month in this quarter three. So for — we have to keep on expanding the order book, yes. the margins of, even in consultancy of 40% plus on a competitive mode is definitely not possible to be maintained.
Hello. Hello, Harshit.
Harshit Kapadia
Sorry, thanks for the answer. Just on the employee cost…
Rahul Mithal
I think you’ll come back in the queue.
Harshit Kapadia
No problems. Yeah, sure, sure. Okay.
Operator
Thank you. The next question is from the line of Vik Rathi, an Individual Investor. Please go ahead.
Unidentified Participant
Okay. Thank you, again So just follow-up, sir, on my last question. I mean, you said there are no this consultancy we reminded among four different entities. So who are the other ones, sir? I mean, are now the new competitors, right because previously, it was a nomination basis, now there’s four other ones, sir.
Rahul Mithal
Yes. So it was guided to a tendering process between three other players, four players. But other players are TUV, Intertech, and Bureau Veritas.
Unidentified Participant
Can you repeat it, sorry?
Rahul Mithal
There are four players now in the QA business for Indian Railways. Besides RITES, which has got 30% of the total pie, it is PUV, Bureau Veritas, and Intratec.
Unidentified Participant
Okay, sir. Thank you.
Rahul Mithal
Thank you. The next question is from the line of Harshit Kapadia from Elara Capital. Please go ahead.
Harshit Kapadia
Yeah, hi. Thanks for taking my question again. Sir, just you have recently got an order from DMRC for INR35 crores for retrofitting of this O&M business. Can you just elaborate on what is this order and what is our scope and any more future orders expected?
Rahul Mithal
Yes. So see, we are — our expertise in design and export of rolling stock. So we have a very strong rolling stock vertical, which has been customizing, designing, rolling stock over the years for various clients and that’s why we leveraged this expertise and experience as DMRC was looking for retrofitment of its first coaches, which were the earlier for 20-year-old coaches, which came in early 2000. These are about 22 rakes, about 176-odd coaches, which require now midlife refurbishment for upgradation to the latest, whether it is in terms of technology, latest in terms of the interiors, and all over.
So that is a very good potential for us. And we have got this through a competitive mode and in partnership with the expertise entities who have certain areas of expertise in the total pie. So our share in this act is about INR36-odd crores. And we see this as a good opportunity because DMRC being one of the older metro systems, more of their rolling stock will require this mid-life rehab in the coming years and definitely moving forward, other metro systems across India.
Harshit Kapadia
Understood, sir. And secondly, on employee cost, we have seen a rise…
Rahul Mithal
Can you come back in the queue, please?
Harshit Kapadia
Yes, sure. Sure.
Rahul Mithal
So if there is no one else, then Harshit, you can come? Operator, is there anyone else or if there’s…
Operator
There’s no one else.
Rahul Mithal
So Harshit can come back in. You were asking a follow-up question.
Harshit Kapadia
Yeah, so.
Rahul Mithal
Go ahead, Harshit.
Harshit Kapadia
So basically, on your employee cost, we have seen a rise. Would that be correct to say that since you’re getting more consultancy orders or one order per day, you are increasing your headcount? And if you can also highlight which areas are these employees being added to within the four verticals or five verticals that you have?
Rahul Mithal
Yes. I’m glad again you asked this question, Harshit. A very strong strategic goal that we have taken that in spite of the tough pressures on top-line and bottom-line because we are expanding our order book very aggressively, there is a certain time this time that you’re holding on.
And you need to build up your strength to be able to execute the fresh orders. So if you compare within a year itself, we have inducted about 300 plus people. And besides the superannuation, about 100-odd people, a net addition, and employee strength has been about net 200. So this 200 strength, we have increased, obviously, increasing the employee cost even though there has been, as I said, challenges on the top line and the margins.
So these are all the engineers, graduate, postgraduates with areas of specialization ranging from design, from architecture, from town planning, etc and these are primarily very carefully identified based on the order visibility and the future visibility of orders that we have in our order book.
Harshit Kapadia
Understood. Understood, sir. Thanks for answering the question, sir. Wishing you all the best.
Rahul Mithal
Thank you. Thank you, Harshit.
Operator
Thank you. As there are no further questions, I would now like to hand the conference over to the management for their closing comments.
Rahul Mithal
So thank you all. And as I said at the outset, the focus on the H2 is to step on the gas to increase the execution to the maximum, to come as close as possible to the previous FY levels. And then definitely on this platform have a — see a sizable and appreciable growth in the coming FY.
We — the trend of fresh order inflows is encouraging. As I said in the quarter three itself, within a month, we have got orders up to INR600 crores plus and this is being possible by our increased partnerships, collaboration diversification, both domestic and international. So in the last few months, we signed an MOU with FTR Rail domestically, arrangements and MOUs in NHAI, NBC NMDC, DMRC, SAIL, across the board.
So with that, we definitely see we are confident that we will continue to leverage our strength for expanding our order book on a steady basis. And currently, the order book at INR6,580 crores has a visibility of about two and a half-odd years. Our aim would be in the coming quarters and the next FY, even with the increased execution, to keep on expanding the order book and aiming to have an order book of at least a three-year visibility. So that’s, in a nutshell, the way forward received. Thank you.
Operator
Thank you all for being part of the conference call. If you need any further information or clarification, please e-mail at investor.rites.com.
[Operator Closing Comments]
Rahul Mithal
Thank you.