RITES Limited (RITES) Q4 FY23 Earnings Concall Transcript

RITES Limited (NSE:RITES) Q4 FY23 Earnings Concall dated May. 19, 2023.

Corporate Participants:

Rahul Mithal — Chairman & Managing Director

Analysts:

Harshit Kapadia — Elara Securities Private Limited — Analyst

Shreyans Mehta — Equirus Securities — Analyst

Yash Gupta — Thinksight Advisory — Analyst

Rohit Natarajan — Antique Stock Broking Limited — Analyst

Sanjay Doshi — Nippon India Mutual Fund — Analyst

Gautam V — Private Investor — Analyst

Ankur Sanwal — Private Investor — Analyst

Pranay Khandelwal — Alpha Invesco — Analyst

Vishal Periwal — IDBI Capital — Analyst

Dixit Doshi — Whitestone Financial Advisors — Analyst

Uttam Kumar Srimal — Axis Securities Limited — Analyst

Naysar Parikh — Native Capital — Analyst

Parimal Mithani — Credential Investments — Analyst

Viraj Mithani — Jupiter Financial — Analyst

Prasanth Gopal — Spark Asia Impact Managers — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Q4 FY ’23 Earnings Conference call of RITES Limited, hosted by Elara Securities Private Limited. [Operator Instructions]

I now hand the conference over to Mr. Harshit Kapadia from Elara Securities Private Limited. Thank you, and over to you, Mr. Kapadia.

Harshit Kapadia — Elara Securities Private Limited — Analyst

Thank you, Michelle. Good morning, everyone. On behalf of Elara Securities, we welcome you all for the Q4 FY ’23 and FY ’23 conference call of RITES Limited. I take this opportunity to welcome the management of RITES Limited represented by Shri. Rahul Mithal, Chairman and Managing Director; Shri. B P Nayak, Director Finance; Shri. A K Singh, Director Projects; and Shri. Deepak Tripathi, Director Technical. We will begin the call with a brief overview by the management, followed by Q&A session.

I’ll now hand over the call to Rahul sir for his opening remarks. Over to you, sir.

Rahul Mithal — Chairman & Managing Director

Morning, everybody. Let me begin with the Safe Harbor statement. The presentation, which we uploaded on our website yesterday and all 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 different and we do not undertake to update those statements periodically.

So here at the outset also introduce the latest addition to our Board, Dr. Deepak Tripathi, our Director Technical. He is from the 1990 batch of Indian Railways service of mechanical engineers. He got a wide experience across various portfolios in the railways, in Konkan Railway and then he is a graduate in mechanical engineering with doctorate and post graduation from NITIE, specializing in operation, quality and lead management. So we have a full functional Board of Directors of the functional Board here.

Let me at the outset break-down the numbers for in brief before take the questions. As you see, the revenue quarter-on-quarter if you compare has been down by about 11%. If you see FY to FY, it’s been flat. Primarily the export of rolling stock has been the reason for this. There is about a 70% to 80% drop in the contribution of this stream of revenue and this being a high topline, high bottom-line contributor, the key point is that in spite of this drop, let’s see where the profits and the margins have gone. So my Consultancy stream of revenue has seen an all-time high highest-ever Consultancy revenue of about INR1,189 crores, which is about an 18% jump year-on year. And further to this, the International Consultancy, which I’ve been saying in the previous interactions, under the RITES Videsh initiative saw a 50% jump year-on year, which is a high-margin contributor. So because of this, in spite of about 70% to 80% drop in the contribution from the export of rolling stock stream of revenue, the profits have gone up, the EBITDA has gone up by about 6% to 7%, and the margins also have gone up on an average by about 1%. So the core EBITDA margins are gone up by about 1%, our sales in the range of about 27%, the PAT margins have also gone up by about more than 1%. So we are about 21%. So moving forward, this is the building up on this core Consultancy stream of revenue and getting more export of rolling stock orders in the coming FY.

So those are the opening backdrop and I’m open to questions now.

Questions and Answers:

Operator

Thank you very much, sir. [Operator Instructions] The first question is from the line of Shreyans Mehta from Equirus. Please go ahead.

Shreyans Mehta — Equirus Securities — Analyst

Yeah. Congratulations for a strong operating performance. Sir, first question from my side is primarily what is the revenue growth that we are targeting for this year? And also in terms of exports, when can we see traction in the export orders?

Rahul Mithal — Chairman & Managing Director

So, the first part of your question — morning — is regarding the growth. You see we are — we have been reiterating we our a bottom-line growth-driven company. We will definitely target growth over the previous year’s performance. You have seen a growth of about 6% to 7% in our bottom-line. And that has been in spite of such a muted contribution from export of rolling stock. So with this trend of growth in the Consultancy stream, which is a good margin area, we would build-up in this growth in the profit line bottom-line and by latter part of the year this contribution from export of rolling stock should also add to this. So it will only — we are aiming to better this growth of 6% to 7% in the bottom-line.

As far as finite orders from export of rolling stock is concerned, we are in very close now to in a number of prospective clients. You’ll see there is a lot of pent-up demand in a number of prospective clients across Africa and Southeast Asia for export of rolling stocks. However, post-COVID, they are taking some time to get the funding mechanisms in place, because the economy is also recovering, but the stage at which we are in now, we are very confident that very soon aiming to at least maybe in this quarter itself, try and get some finite orders. So that by latter part of this FY the revenue from these orders start contributing.

Shreyans Mehta — Equirus Securities — Analyst

Got it. Sir, and if you could quantify the order size or indicative order size for export?

Operator

Sorry to interrupt, sir. Mr. Mehta, I would request you to please rejoin the queue, sir.

Shreyans Mehta — Equirus Securities — Analyst

Sure. I have a couple more of questions. Thank you.

Operator

Thanks.

Shreyans Mehta — Equirus Securities — Analyst

I’ll join back the queue.

Operator

The next question is from the line of Yash Gupta from Thinksight Advisory. Please go ahead.

Yash Gupta — Thinksight Advisory — Analyst

Yeah. Good morning, everyone. So, sir, this quarter we have seen a margin dip across all our verticals, whether it’s Consultancy, Export or leasing in. So how you are looking at this and what are the trajectory we can expect going-forward?

Rahul Mithal — Chairman & Managing Director

So, I think — no, Yash, let me correct you. There has been an improvement in margins in all my streams of revenue. In fact, if you see the Consultancy itself, year-on-year also and that is the key point, my Consultancy, there is an improvement of about 3% in the margin. There is an improvement in the turnkey, which is in any case a low margin area, that also has improved from about 3% to 4%. My QA, which is also an important area has also improved in margin. So except the contribution from export of rolling stock, there has been an improvement in margin from my all other streams of revenue. And that’s the very reason why you see a growth in the improvement in the margins by about 1%, 1.5%, whereas the EBITDA margin, which is in the range of about 27% now or the PAT margins which are in the range of about 21% now.

Yash Gupta — Thinksight Advisory — Analyst

Okay. Thank you.

Operator

Thank you. The next question is from the line of Rohit Natarajan from Antique Stock Broking. Please go ahead.

Rohit Natarajan — Antique Stock Broking Limited — Analyst

Yeah. Thank you. Thank you for this opportunity. Sir, my question is on — to continue on the earlier point that you made on the export orders. Can you give us a timeline as in before what time will you be looking at these export order inflows to flow in? And B part of the question will be, will it not have the spillover effect in FY ’25 too?

Rahul Mithal — Chairman & Managing Director

Yes, for sure. You see, first part regarding the timeline, we are aiming to get it as early as possible. Our expectation is maybe very soon, maybe in this quarter itself. I mean, till we have a finite order in hand it will not be correct for me to speculate. However, as I very clearly reiterated that we are in very advanced negotiations with a number of prospective clients and I’m sure that we should be able to convert it into a finite order very soon. And export of rolling stock by its very nature are long-lead orders. They take some time for manufacture and then shipment and the revenue starts maturing only when the shipment happens. So the aim is to get some orders in this first quarter itself, so that by latter part of FY the revenue starts coming in from these orders and they will definitely spillover to the next FY. And the aim is that this gap of about two 2, 2.5 years unfortunately because of the COVID period where there were no fresh orders has resulted in the gap in contribution from this stream of revenue. So moving forward, we are aiming to have a mix of a number of rolling stock export orders, so that there is a steady stream of revenue contribution which continues starting from latter part of this FY.

Rohit Natarajan — Antique Stock Broking Limited — Analyst

Thank you, sir. I will join back in the queue.

Operator

Thank you. The next question is from the line of Sanjay Doshi from Nippon India Mutual Fund. Please go ahead.

Sanjay Doshi — Nippon India Mutual Fund — Analyst

Good morning, management team and congratulation on a very robust year, despite all the challenges that you keep on highlighting. Sir, my only question is on the overseas Consultancy business, which is getting very strong traction now in the last 12 months that we have seen. If you can just help us appreciate what has been right — doing it right to be able to make good of this opportunity. And if you can help us understand this opportunity from a three-year, five-year perspective. Thank you.

Rahul Mithal — Chairman & Managing Director

Thank you so much. In fact, you asked a question very close to our heart of our entire Company. We have made very aggressive forays under the RITES Videsh initiative in the last FY across areas of Consultancy, across continents. And as post-COVID, the world has opened up, we have been getting orders and leads and revenue realization across sectors. So whether it is a highway project in Guyana, the Metro in Mauritius, we are doing a rail infra and a highway project in Bangladesh, a ICT project, airport project. So across that we are — that has made it possible to see a 50% growth in the International Consultancy revenue. Moving forward, we are confident that this trend will continue, the kind of traction, the kind of mileage and the kind of leads we are getting across countries, we are sure that we will be able to capitalize and build up on this trend. And you’ll see in this FY and moving forward also this is going to continue to grow.

Sanjay Doshi — Nippon India Mutual Fund — Analyst

Thank you very much and all the best, sir. Thank you.

Rahul Mithal — Chairman & Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Gautam V, an Individual Investor. Please go ahead.

Gautam V — Private Investor — Analyst

Good morning, sir. Congratulations on the good results. Earlier there were some thought process around expanding the project portfolio for the export business. I believe you were targeting new countries with different gauge of railways. Could you please throw some light on the [Indecipherable] in that space?

Rahul Mithal — Chairman & Managing Director

Yes. In fact, that is our core focus area. You see just before COVID we got this very interesting order of export of rolling stock to Mozambique, locomotives, coaches and DMUs and this was a Cape Gauge order, which is unique, it is 1067 MM, little more than the meter gauge. And there are about 11 countries in Africa, neighboring countries across Africa which have this gauge. So with this order — as this order matured and we did the shipment in the last ’21-’22 and part of it in ’22-’23, this has got lot of mileage and that is the reason why a number of countries in Africa have reached out to us to get similar kind of stock in Cape Gauge. We are more than equipped for it. And this is what, as I said, we have been targeting very aggressively. These countries are getting their funding mechanisms in place. As I said, post-COVID, they’re taking time, a little time to recover. But, as I said, I’m confident that we should be able to translate this into orders very soon.

Gautam V — Private Investor — Analyst

Understood, sir. Thank you.

Operator

Thank you. We have the next question from the line of Ankur Sanwal, an Individual Investor. Please go ahead.

Ankur Sanwal — Private Investor — Analyst

Sir, my answer — question got answered by Mr. Sanjay bhai. Thank you, sir.

Operator

Thank you. The next question is from the line of Pranay Khandelwal from Alpha Invesco. Please go ahead.

Pranay Khandelwal — Alpha Invesco — Analyst

Thanks for the opportunity. I wanted to ask, last quarter you had guided that there will be some non-railway orders in the QA business. So can you just give us a breakup of what it was last year and this year?

Rahul Mithal — Chairman & Managing Director

See, on an average we have both kinds of clients, whether this is IR, Indian Railways as a client and non-Indian Railways as a client across various sectors. So as I said, this — and as I said in the last interaction, as the Indian Railways stream of revenue has now opened up two, three other players, our aim is to continue to tap more and more further clients, so that the overall stream of revenue from the stream remains intact. And this quarter itself, you would have seen that there is a growth in this stream of revenue, there is a contribution of growth in about 10% growth. So this has been possible, because in spite of the competition from Indian Railways as a client, we have been able to tap a number of non-Indian Railway clients also. And this is a trend that is going to continue. So that overall, you should be able to see a steady stream of revenue from the QA sector.

Pranay Khandelwal — Alpha Invesco — Analyst

Thank you.

Operator

Thank you. The next question is from the line of Vishal Periwal from IDBI Capital. Please go ahead.

Vishal Periwal — IDBI Capital — Analyst

Yes, sir. Thanks a lot for the opportunity. And one question on the Consultancy side. We have order book of like INR27-odd billion. What is your export side contribution in this? And if you have the same number for FY ’22 also.

Rahul Mithal — Chairman & Managing Director

Yes. Morning, Vishal. So you correctly said, the out of the total INR5,870 crores order book, the turnkey is about INR2,850 crores, the Consultancy is about INR2,700 crores, export is only about INR100 crores balance, export of rolling stock, and leasing is INR150 crores, and balance at about INR100 crores is RMCA.

Vishal Periwal — IDBI Capital — Analyst

[Speech Overlap] In consultancy, because there is a line item in Consultancy, revenue line item of domestic and export. So within this order book cost INR27-odd billion, what is the export side order book of Consultancy.

Rahul Mithal — Chairman & Managing Director

No, export is a separate. Export line item is for export of rolling stock, that is INR100 crores. We — the market, the revenue streams and export of rolling stock. Consultancy is INR2,700 crores, which includes all sectors, whether some of them are the domestic, some are International Consultancy, which is the total Consultancy pie. Export of rolling stock is over and above INR2,700 crores, which is pure export of rolling stock, which is INR100 crores balance.

Vishal Periwal — IDBI Capital — Analyst

Okay. If I may ask one last question, so I think the pie of this export side consultancy has increased in this year to around 13%-odd. So that looks like there is a benefit of operating leverage in this particular line item. Can you guide like how this number could be in FY ’24 or ’25, maybe a ballpark will be helpful sir.

Rahul Mithal — Chairman & Managing Director

So, you see INR1,189 crores is the total revenue from my Consultancy stream, which is a growth of about 18%. Out of that INR1,189 crores, there is an International Consultancy element also. This is non-export of rolling stock, pure International Consultancy, which has seen a growth of about 50%. So that is what I had mentioned sometime back that this is an area moving forward this trend is definitely going to continue, because within the Consultancy pie itself, between domestic consultancy an International Consultancy, International Consultancy gives me slightly better margin. So the overall and that is the reason why in the overall consultancy pie, the margins have gone up by about 3%, that is primarily that in spite of competition in the domestic sector of consultancy because of my growth in International Consultancy, I have been able to have a growth in margins of about 3%.

Vishal Periwal — IDBI Capital — Analyst

Sure, sir. Thank you.

Operator

Thank you. The next question is from the line of Dixit Doshi from Whitestone Financial Advisors. Please go ahead.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Yeah. Thanks for the opportunity. In terms of Consultancy, if I see the consolidated numbers, the revenue is slightly higher, I think, approx INR1,300 crore. And there our margins are almost at 50%. So do you feel that such margins are sustainable?

And secondly, on the export of rolling stock business, so I understand that you cannot guide for any exact numbers for the future orders, but let’s say, in FY ’23 we did INR300 crore topline, a year before that was almost INR1,000 crore. So can it be like INR400 crores, INR500 crores consistently every year, let’s see, once the cycle of starts?

Rahul Mithal — Chairman & Managing Director

Yes, very correct. In fact, you’ve got the complete right details and you’ve hit the nail on the head. In fact, Consultancy, the total Consultancy is INR1,190 crores, INR1,189 crores, which includes domestic consultancy, International Consultancy, it includes the QA, the inspection QA wing also. So this has overall seen a growth of about 18%. Yes, this has seen very good margins and that has been primarily because, as I said, some growth and a good growth in our International Consultancy, there was a good growth in our QA business. So moving forward, while the stress on margins due to conventional areas of domestic consultancy will be there, but — and that was there in the last FY also, but in spite of that, the Consultancy itself saw a good growth in margins, not only numbers, but also growth in margin. So moving forward, our focus in Consultancy would be, as far as domestic sector is concerned to focus more and more on high-margin skilled areas of Consultancy, which is our core niche strength, it’s metros, bridges, tunnels, urban engineering, city planning. And in terms of International Consultancy, to grow further aggressively, so that overall you see a growth in the margins of Consultancy also or at least be able to sustain margins to the extent possible, if not grow, but at least grow in terms of the topline and bottom-line in consultancy.

As far as export of rolling stock is concerned, you made a very good assessment of the kind of steady basis revenue on an annual basis, which we are aiming at. As you see, INR966 crores was in ’21-’22 and about INR300 crores in ’22-’23, which is primarily these two orders of Mozambique and Sri Lanka. So going by the past trend and the past few years that RITES has been exporting rolling stock to countries and the average size of the orders that we get, plus the lead time that it takes to manufacture and export them, I think a fair enough assessment or it is a target on a steady basis of about INR400 crores to INR500 crores on an annual basis would be a good target to aim at.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Okay. That’s it from my side. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Uttam Kumar Srimal from Axis Securities Limited. Please go ahead.

Uttam Kumar Srimal — Axis Securities Limited — Analyst

Yeah. Thanks for the opportunity, sir. Sir, last year we did a turnkey revenue of around INR915 crores. So what kind of revenue growth we are expecting in turnkey this year?

Rahul Mithal — Chairman & Managing Director

So you see turnkey has grown quite a lot, as you see, from the numbers. And that has primarily happened because of the 70%, 80% drop in the revenue contribution from export of rolling stock. So the topline has been — that’s why the overall revenue is about flat on an year-on-year basis, and that’s basically because of a substantial growth in the contribution from the turnkey segment. However, having said that, as we have been very clearly saying that we are a consultancy company, our key focus continues to be on the high-margin consultancy area. Moving forward, as we mature, some export of rolling stock orders mature, the contribution of the turnkey segment to our overall revenue is going to gradually taper off. So our main focus will and has been and will remain on consultancy, as well as export of rolling stock.

Uttam Kumar Srimal — Axis Securities Limited — Analyst

Okay, sir. Thanks a lot.

Operator

Thank you. The next question is from the line of Naysar Parikh from Native Capital. Please go ahead. Mr. Parikh, I have unmuted your line. Kindly proceed with your question.

Naysar Parikh — Native Capital — Analyst

Yeah. Sorry. Hi. Can you — am I audible?

Rahul Mithal — Chairman & Managing Director

Yes, go ahead please.

Naysar Parikh — Native Capital — Analyst

Yeah. Hi. Good morning. I just want to ask on the Consultancy side, right. The order book that we have, can you give a split out of that how much is nomination versus competition base that we won? Overall, it seems like it’s 50-50, but is it different on the Consultancy side.

Rahul Mithal — Chairman & Managing Director

So, you see, the trend has been that in the last year all my clients across sectors, across states, across PSUs, across private entities, across the Indian Railways as a client has now started moving on a monthly or a quarterly basis from nomination to the competitive basis. And you put it correctly that overall, in fact, it has now moved to about 50% on competitive basis. So it would be very difficult to — because we operate in about eight, nine key sectors, about 10 sectors across various sectors. So every sector has a different percentage of the competitive versus nomination. For example, in the Metro sector, I would say, it is all 100% on competitive basis, zero on nomination. So it is primarily varies from sector to sector in — recently, we have got a number of projects on ropeways, in the DPRs for the port connectivities, for the IMS from NHLML, all these are all on competitive bidding basis. So this is again 100 to zero. Yes, there are certain clients like some PSUs or certain states which gives some orders maybe in rail connectivity, rail infra on nomination basis, but the extent of variation from sector to sector is very large.

Naysar Parikh — Native Capital — Analyst

Right. Got it. And now that INR2,700 crore order book that you have, out of that how much is executable in this year FY ’24 and how much beyond? And secondly, I think this was asked earlier, but what is the mix between — how much what percentage is international in this INR2,700 crores?

Rahul Mithal — Chairman & Managing Director

So, first part of your question, you see, the Consultancy as you would appreciate, by its very nature has orders varying from timelines of about three to six months to orders varying from about three to four years. So that’s a wide mix depending on the nature of the order. You could be doing a PFR or a DPR, which you have to do in three to six months, you could be doing PMC or general consultancy of a capex infra project, which will last in construction for about three years. So it’s — the range varies were very large. So two points, one that INR1,189 crores saw was the Consultancy revenue, an 18% growth year-on-year. So this year also, this is a trend that we are aiming at, from a mix of the short lead, medium lead and long lead orders. And in terms of International Consultancy, the revenue growth which you saw in 50% growth year-on-year, that trend would definitely aim to be continued in this FY from this INR3,700 crores pie.

Uttam Kumar Srimal — Axis Securities Limited — Analyst

Got it. Got it. So broadly looking at 18% overall growth and within that 50% [Phonetic] for international right?

Rahul Mithal — Chairman & Managing Director

Yes.

Naysar Parikh — Native Capital — Analyst

Okay. And last question on the margin side.

Operator

Mr. Parikh, I’m sorry to interrupt, sir. Sir, I would request you to kindly rejoin the queue.

Naysar Parikh — Native Capital — Analyst

Okay, sure. Thank you.

Operator

Thank you, sir. The next question is from the line of Rohit Natarajan from Antique Stock Broking. Please go ahead.

Rohit Natarajan — Antique Stock Broking Limited — Analyst

Thank you for this opportunity again. Sir, if you could guide us, what is the initial feel about export EBIT margins that you’re currently negotiating with? I’m given to understand, I mean, the last in the last calls you have indicated somewhere like 15% to 20%, but historically we have clocked even much higher number. Is there any translation gains you expect or something of that sort?

Rahul Mithal — Chairman & Managing Director

Now, if you’re talking about, export of rolling stock, traditionally —

Rohit Natarajan — Antique Stock Broking Limited — Analyst

Export of rolling stock and EBIT margins both that.

Rahul Mithal — Chairman & Managing Director

Yes. So export of rolling stock margins have been traditionally, over the last four, five years that if you see our stream-wise margins analysis, export of rolling stock has been in the range of about 20%-odd. Now, these would vary from order to order and not be possible for me to reveal the negotiations of the margins on each individual orders. I mean, they would vary from order to order, but yes, that has been the trend of margins and that is what would be the aim. However, as I mentioned, with every passing year, this sector is also becoming more and more competitive and post-COVID all the prospective client countries in Africa and Southeast Asia, they are also a little cash trapped. So they are also looking at trying to optimize the order values because of their funding issues. So obviously, these margins will also be difficult to sustain, but yes, they have been traditionally in the range of about 20%-odd.

Rohit Natarajan — Antique Stock Broking Limited — Analyst

Thank you, sir. That’s it from my side. Wish you all the best.

Rahul Mithal — Chairman & Managing Director

Thank you.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Gautam V, an Individual Investor. Please go ahead.

Gautam V — Private Investor — Analyst

Just wanted to understand the longer-term perspective. So have there any newer business verticals or new products which are being developed? Like earlier the previous Chairman had mentioned also some like thought process around getting in the road constructions, etc. Maybe that is not going forward. But if there are any other plans on business expansion, if you could please share some thought process for a three-year to five-year view, that will be great.

Rahul Mithal — Chairman & Managing Director

Right. So coming to your second part of the question first, we are not a construction company and we will not foray into any kind of major diversification or any kind of even aggressive growth in being a construction company. We are a consultancy company. And as you have seen in the results of this year also, that has been the growth area. As I said, about 18% growth in the Consultancy revenue. And that is what has made it possible for the margins also to not only remain secure, but grow and also the PAT to grow from over 6% to 7% in spite of muted contribution from export of rolling stock. So having said that, the consultancy, both domestic and international across sectors will remain our focus area. And as far as diversification is concerned, one very decides tapping on the new areas of — we announced in the budget last year and this year you see Jal Jeevan Mission. Now, that’s another very important area, which was announced that is large budget allocation for that. We recently got an order from the Rajasthan Jal Jeevan Mission about INR148 crores. And we hope to be able to capitalize on this and we are aiming to try and tap opportunities across states. Another very major area, which I have been mentioning in my past few interactions was that last year we formed a new vertical called sustainability. And we were very confident that by latter part of the year, we would be able to tap the various opportunities across states and get some orders. And we are very happy that within a short period of less than a year, this newly formed vertical, we have been able to get orders from the Ministry of Housing and Urban Development as a consultant for the solid waste management and used water management, we have been able to get orders in Bangalore for air pollution and solid waste management. So and there’s lot of potential across states in sustainability. So that’s an area which is a new age area, it has lot of scope that we are going to aggressively further grow in.

Gautam V — Private Investor — Analyst

Understood, sir. Sir, just one thing, on the cash balances, could you please throw some idea on what the balance looks like and what your plan is for the utilization of cash?

Rahul Mithal — Chairman & Managing Director

See, we have got a cash balance of about INR800 crores. And we are a low capex Company. Our capex has been in the range traditionally of about INR100-odd crores. This year also, we are aiming for about INR100-odd crores. So moving forward, we don’t see any major capex investment and that’s the very reason we like to give back what we earned to our investors. And as you see with the final instalment recommended by Board for about INR6 per share makes it a total of INR20.5 a share, which is about 92.8% of our profit we are giving back to the shareholders as a dividend. So that’s going to be the trend that we are aiming for in the coming years also.

Gautam V — Private Investor — Analyst

How much of this is the working capital requirement?

Rahul Mithal — Chairman & Managing Director

Our working capital requirements are very minimal, as I said, and we are a debt-free company, very minimal working capital requirement and a very low cash.

Gautam V — Private Investor — Analyst

Sure, sir. Thank you.

Operator

Thank you. The next question is from the line of Ankur Sanwal, an Individual Investor. Please go ahead.

Ankur Sanwal — Private Investor — Analyst

Sir, what is the potential of Q&A works in country like India and for company like RITES?

Rahul Mithal — Chairman & Managing Director

It is a tremendous potential. I’m glad you asked this question. Recently, we have been certified as an ISA company also, which is — we are the only, maybe the second company in India and the only PSU to have an ISA certification that further add to our bouquet of services. We have been in this business for more than 40, 45 years now. And we have been doing QA across sectors, whether it is the rail sector, whether it is the private clients, whether it is structure, civil engineering, electrical engineering. So that’s the wide bouquet of services that we offer under our QA vertical. And with this recent additional certification that we’ve got, I’m sure that this QA business in spite of increased competition, is only going to grow.

Ankur Sanwal — Private Investor — Analyst

Sir, just one suggestion. Apart from dividend, if we can also think of buyback with the amount of cash we are generating and that will be good for Company in the long-term. Thank you, sir.

Rahul Mithal — Chairman & Managing Director

Yeah. Thank you. Your suggestion is noted. We’ll definitely look at it in the coming FY, if possible. Thank you.

Operator

Thank you. The next question is from the line of Parimal Mithani from Credential Investments. Please go ahead.

Parimal Mithani — Credential Investments — Analyst

Yeah. Good morning, sir. Thanks for the opportunity. Sir, I just wanted to know, can you give a breakup of the quality insurance for the entire year, how much were the part of the Consultancy and the breakup in the order book also.

Rahul Mithal — Chairman & Managing Director

You see, as far as order book is concerned, QA is a part of a — it’s a rolling order book. So it will not be — it’s a constant order that you keep getting and we ensure that it’s a rolling order book. In terms of contribution to the total consultancy, it was about INR390-odd crores, which is a all-time high also in terms of contributing to the Consultancy stream. And that is like a — it has gone up big way in contributing both in terms of the topline and bottom-line for the Consultancy stream of our revenue.

Parimal Mithani — Credential Investments — Analyst

It is fair to assume that this [Technical Issues] business is doubled at the time of listing to now, sir?

Rahul Mithal — Chairman & Managing Director

It’s seen a steady growth. I would not say doubled, but yes, it’s seen a steady growth.

Parimal Mithani — Credential Investments — Analyst

Okay. And sir, last question is, you founded a company called Elicius Energy Private Limited. Can you tell what is this company about, sir?

Rahul Mithal — Chairman & Managing Director

No, it’s not found a company, it’s an investment for us. You’re talking about Elicius, right?

Parimal Mithani — Credential Investments — Analyst

Yeah, sir.

Rahul Mithal — Chairman & Managing Director

So, it’s an investment for a start-up with IIT Madras for doing some research work as an incubator. So we encourage R&D work. So this is in for studies in drone technology, in renewables and basically research in that area.

Parimal Mithani — Credential Investments — Analyst

Okay, sir. Thank you, sir. Thanks.

Operator

Thank you. [Operator Instructions] The next question is from the line of Viraj Mithani from Jupiter Financial. Please go ahead.

Viraj Mithani — Jupiter Financial — Analyst

Good morning, sir, and congratulations on a good number. Sir, my question is with export of rolling stock coming back and other sectors firing for us. Would it be fair to assume we’ll have a double-digit topline growth and the bottom-line would be maintained at the same level in years to come?

Rahul Mithal — Chairman & Managing Director

I’m glad you asked this question. You see, I would put it reverse. As you correctly said, all other sectors firing for us and all my streams of revenue has seen a growth year-on year. And in spite of muted contribution, as I said, from one stream, you saw 6% to 7% growth in the bottom-line. So, we will aim to improve this trend of growth in the bottom-line more and let’s aspire for a double-digit growth in the bottom-line, that would be our aspiration, our vision and our target.

Viraj Mithani — Jupiter Financial — Analyst

Okay. Sir, means our bottom-line should improve over days to come, that’s what is the aim of the management?

Rahul Mithal — Chairman & Managing Director

That’s what our vision is, our aim is and our aspiration is.

Viraj Mithani — Jupiter Financial — Analyst

Okay, sir. Thank you, sir. Thank you so much.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Harshit Kapadia from Elara Securities. Please go ahead.

Harshit Kapadia — Elara Securities Private Limited — Analyst

Thanks for the opportunity and congrats for a very good performance on Consultancy. Few questions from my side, sir. Just on the REMCL, we are already seeing electrification being now touching 84%, probably in few — in the next year it will touch 100%. So where are we in terms of REMCL getting more business from the Indian Railways. So out of three gigawatt, which was estimated, how much of electrification we have done from REMCL point of view?

And connected to this, is the DFC expected to be operational in next one-and-half years’ time? So are we also going to get the REMCL and the electrification for DFC as well? Any color on this would be helpful.

Rahul Mithal — Chairman & Managing Director

So, REMCL I must say has performed tremendously well in this FY. And it has further contributed to the overall performance of RITES as a consolidated performance. You see REMCL for the first time had major landmarks in this FY. It became a debt-free company. It capitalized in the growth of the electrification in Indian Railways and the growth in traffic post-COVID. It for the first time crossed the INR100 crore bar of revenue. It has made a revenue of INR117 crores. It has a profit of 59% — INR59 crores, which is a growth of 31%. It for the first time gave the highest-ever dividend to its shareholders that as Indian Railways and RITES. It has given a total it has recommended with its final dividend of INR3 per share, an initial of INR2.5 a share. It would total up to about INR58 crores of dividend, which is about 98% of its PAT. It is distributing it as dividend to its shareholders. So, REMCL has seen a tremendous performance in this year. It’s a PAT margins of 50%-plus and you correctly said, with this electrification reaching its complete nearly 100% in this FY and also DFC coming up, REMCL can only grow and we are targeting more aggressive growth in this. Further, today, it’s catering to about 70%-odd of the overall requirement of traction energy for Indian Railway. And there are about seven states, which are still not on the open access, the effort is to be able to get these states for the open access, so that we are able to increase even further besides the growth in electrification and traffic in Indian Railways more and more open access, which will increase the revenue of REMCL further.

Harshit Kapadia — Elara Securities Private Limited — Analyst

Fair enough, sir. I’ll join the question queue.

Rahul Mithal — Chairman & Managing Director

Thank you.

Harshit Kapadia — Elara Securities Private Limited — Analyst

Thank you.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Harshit Kapadia from Elara Securities. Please go ahead.

Harshit Kapadia — Elara Securities Private Limited — Analyst

Thank you once again. Sir, just a bookkeeping question. What is the QA revenue for the entire FY ’23, sir?

Rahul Mithal — Chairman & Managing Director

The QA revenue has been INR393 crores, which is a jump of about 20% from the previous FY.

Harshit Kapadia — Elara Securities Private Limited — Analyst

Okay. And what is the rail and non-rail share within this INR393 crores?

Rahul Mithal — Chairman & Managing Director

It’s roughly about two-third, on-third; two-third rail and one-third non-rail.

Harshit Kapadia — Elara Securities Private Limited — Analyst

Okay. And I’ll join the question queue, sir. Thank you.

Operator

Thank you. The next question is from the line of Gautam V, an Individual Investor. Please go ahead.

Gautam V — Private Investor — Analyst

Sir, just wanted to understand the JV of IRSDC. Could you please share an update on that?

Rahul Mithal — Chairman & Managing Director

So, yeah, good afternoon, Gautam. So in ’21-’22, latter part of ’21-’22, a decision was taken to close IRSDC and post that the process has started and it is following the due necessary procedures. And I’m sure that our expectation is that by end of this FY, we are expecting that all necessary formalities would have taken place for its final closure.

Gautam V — Private Investor — Analyst

Is there any capital which will come back to RITES as a part of the closure?

Rahul Mithal — Chairman & Managing Director

No. No capital will come back, but there is no — we don’t foresee any major adverse impact also on its closure.

Gautam V — Private Investor — Analyst

Understood. Thank you.

Operator

Thank you. We have the next question from the line of Harshit Kapadia from Elara Securities. Please go ahead.

Harshit Kapadia — Elara Securities Private Limited — Analyst

Yeah. Thanks, sir. So, just wanted to get a color on the Consultancy within the domestic landscape. If you can highlight some of the projects where — or some of the large projects where you are eyeing Consultancy across your infrastructure segment that would be helpful, so that we can track how things are happening. That’s the first part.

Rahul Mithal — Chairman & Managing Director

So, you see, we have two, three — our aim — and let me put it this way. Our aim in domestic, we have about 10 different areas where we do domestic consultancy across all areas of infrastructure. Now, in this, there are certain areas where over a period of time because of a large number of even small players coming up, the competition has become, I would use the word very, very stiff and margins have become very tight. So maybe sectors like highway consultancy, building consultancy. So while we are still getting a lot of orders in that, however, our focus is also to get more and more orders parallely in the high-margin consultancy areas. And those are where our strength, core strength, where there are good players to compete with. And then if you win a contract in competitive bidding, you get a cold topline and bottom-line. So whether it is the metros or whether it is the city planning or whether it is DPR for connectivity, DPRs or PMC for connectivity type of work, now, as I said, we are getting a lot of work in roadways, which is again a very core strength of ours, we are getting a lot of work in city plans and IMS, this is integrated model stations. So these are the areas which are traditionally core strength. And this is where we will continue to aim at. So that and rail infra — rail infra connectivity across as more and more coal fields and mines and are growing aggressively steel plants more orders in rail connectivity. We have got some recent orders from Jal Jeevan, as I mentioned. We got some orders in Kerala about INR84 crores on the non-transport sector, all infra consultancy there. We have got an order in Northeast from Assam Health Department for doing their project management consultancy for construction of 12 hospitals. So these are areas which are relying on our core strength and that’s the area, which we are going to work on and we’ve recently got an order from Hyderabad Metro general consultancy. So this is where we are going to target aggressively besides taking orders in the conventional areas of consultancy also, including new areas of sustainability, which I mentioned sometime back.

Harshit Kapadia — Elara Securities Private Limited — Analyst

Fair enough, sir. Wishing you all the best. I’ll join the queue.

Rahul Mithal — Chairman & Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Prasanth Gopal from Spark Asia Impact Managers. Please go ahead.

Prasanth Gopal — Spark Asia Impact Managers — Analyst

Hi, sir. Could you give some color on the leasing business on the margins there?

Rahul Mithal — Chairman & Managing Director

Yes. So leasing is a good traditional business of ours, which gives us good margins of about 30%-plus. And in leasing, we have — we own about 65 old diesel locomotives of ours, which we operate, we provide wet lease to a number of sidings. We run actually mini railway system for them, whether it’s coal sidings or steel plants or power plant. We also operate and maintain the rolling stock which is owned by some of the clients like these coal plants or power plants. We also maintain and operate, run their mini railway. So that’s a good business. It has seen a steady growth. There is lot of — it’s a good margin business. It contributes also to our topline about 5% of our topline. It gives us good margins of about 30%-plus. So we see this as a good steady stream of business. And as these number of private players are also coming up in mines and in steel plants and power plant, we are getting orders from them also in this sector.

Prasanth Gopal — Spark Asia Impact Managers — Analyst

Thank you, sir.

Operator

Thank you. The next question is from the line of Viraj Mithani from Jupiter Financial. Please go ahead.

Viraj Mithani — Jupiter Financial — Analyst

Hi, sir. Can you give me some sense of your numbers in the sustainable revenue, sustainability vertical? Like what will be the numbers were done and then, some sense would be helpful.

Rahul Mithal — Chairman & Managing Director

Yes. So as I mentioned, this was a newly formed vertical sometime early last financial year itself. And by latter part of this FY, we started getting some orders. For example, the Maua [Phonetic] order, which we’ve got for being the consultant for solid waste management and used water management, that’s about INR12 order. We have got an order from Bangalore for solid waste management, that’s about INR4 crores, INR4.5 crores order. So these are very — these are — and that’s the size of a normal consultancy order, they are in the range of about INR4 crores to INR5 crores to INR10 crores. So moving forward, we see, as I said, in a short time of about eight, 10 months of this vertical, we’ve already started converting them into orders and then we are tapping a number of states and prospective clients to grow in this. And this is now will start contributing these two orders which have come recently in the last two, three months itself will now start contributing revenue from this first quarter itself for this FY.

Viraj Mithani — Jupiter Financial — Analyst

Would it be fair to assume that the margins in this kind of pertinency is higher than the normal level, if you have some better margins?

Rahul Mithal — Chairman & Managing Director

That would be too premature right now to give a generalization. This would depend on order-to-order, client-to-client and maybe as we get more orders and the revenue starts coming in, it would be a better assessment. But, yes, these are good margin area, because these are core niche strength areas and we — very few players have the kind of capability and strength that we have and that’s the very reason we formed this vertical. We were doing a consultancy in this for the last 30, 40 years. Only thing the skill was distributed across my other infrastructure vertical. So if we were doing a highway, where we were doing some sustainability part of that, we were doing a building where there was a green building element to it, we were doing a metro work there was a EIA, SIA and green building element associated with that. So this we as a conscious measure to tap this avenue, we form pooled in this resources and the skill of an experience so far and formed a standalone vertical, which could get more finite standalone orders and that’s been the trend in the last two, three months to be able to get these orders.

Viraj Mithani — Jupiter Financial — Analyst

Thank you, sir.

Operator

Thank you. [Operator Instructions] The next question is from the line of Harshit Kapadia from Elara Securities. Please go ahead.

Harshit Kapadia — Elara Securities Private Limited — Analyst

Yeah. Thank you for the opportunity. Sir, just one question on the turnkey construction. We have seen that the segment is now being open to private players as well. So how has been the bidding? Have you seen more aggression coming in or what’s your understanding on how the competition is faring? Earlier, only it was railway companies were competing.

Rahul Mithal — Chairman & Managing Director

Yes, very true. As you correctly said, for all railway construction projects also whether it is station development or new line doubling works, all infra works of rail infra also, it has been opened up to lot of competition. Yes, it was — sometime back, it was some particular projects of railways were being limited to bidding between the railway PSU than some other non-railway PSU. And in the last FY it has been all sectors of construction for rail infra also has been opened up to all private players also. So yes, it is definitely more competitive and we, as I said, as a strategy, we are limiting our exposure to this turnkey business to a very limited amount. And we take that strategically based on certain clients and certain sectors, whether it is from rail infra, like a metro depot in Bangalore or the IIT Delhi building, which we got an order from IIT Delhi. So we pick and choose and stagger them, so that we have a limited exposure to this low-margin business.

Harshit Kapadia — Elara Securities Private Limited — Analyst

Understood, sir. And wishing you all the best, sir. Thank you.

Rahul Mithal — Chairman & Managing Director

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Ankur Sanwal, an Individual Investor. Please go ahead.

Ankur Sanwal — Private Investor — Analyst

Sir, what are the margins we are seeing in Q&A business?

Rahul Mithal — Chairman & Managing Director

So, the overall margins are and part of the consultancy revenue, right. So we the consultancy revenue are about 35%, 36% margin, 30%-plus margins are there, which has contribution from domestic QA non-QA, International. So we look at margins on the overall consultancy stream, which is in the range of about 30%, 35%, 36%.

Ankur Sanwal — Private Investor — Analyst

Thank you, sir.

Operator

Thank you. The next question is from the line of Parimal Mithani from Credential Investments. Please go ahead.

Parimal Mithani — Credential Investments — Analyst

Yeah, sir. Thank you once again. Sir, I just wanted to know in your consultancy order book for the entire year. Can you give a breakup between domestic and international, sir, if you don’t mind.

Rahul Mithal — Chairman & Managing Director

No. As I said, the orders, the consultancy order book is at a total of INR2,700 crores. And this is a fluctuating — some of the orders are QA in that, some of them are domestic, some of them are international. The growth in the international revenue is about 50% and the orders which are part of this will ensure that this trend continues in international consultancy.

Parimal Mithani — Credential Investments — Analyst

Okay. Thank you.

Operator

Thank you. Ladies and gentlemen, as that was the last question for today, I would now like to hand the conference over to Mr. Harshit Kapadia for closing comments. Over to you.

Harshit Kapadia — Elara Securities Private Limited — Analyst

Thank you, Michelle. We would like to thank Shri. Rahul Mithal, Chairman and Managing Director; Shri. A K Singh, Director Projects; Shri. B P Nayak, Director Finance; and Shri. Deepak Tripathi, Director Technical for giving us an opportunity to host this call. We also would like to thank all investors and analysts for joining for this call.

Any closing remarks, Rahul, sir, you want to share with investors?

Rahul Mithal — Chairman & Managing Director

Yes. I would just like to reiterate that the performance in our Consultancy wing, whether it is an all-time high revenue of domestic an all-time high revenue of International Consultancy, the orders receiving consultancy orders of about 200 fresh consultancy orders in this FY, all these underscore the fact and come out very aggressively and make a very strong statement that this is our core business. We are a premier consultancy company, that’s our niche area of operations. And we will continue to grow in this and tap all possible domestic and international opportunities, including the niche and growth areas of diversification areas like sustainability etc, so that we can raise the bar further in every FY. Thank you.

Operator

[Operator Closing Remarks]