Focus on exports, diversification to boost revenue growth: RITES CMD

Business Standard

17-05-2025

Proactive efforts to secure export orders for rolling stock and diversify the client base have helped improve our revenue outlook for the coming years, RITES Ltd Chairman and Managing Director Rahul Mithal said.
A Navratna public sector undertaking and leading transport and engineering consultancy company, RITES this week reported a 4.3 per cent decline in its consolidated operating revenue in the March quarter to Rs 615 crore compared to Rs 643 crore in the year-ago quarter. Net profit rose by 3.4 per cent year-on-year to Rs 141 crore in the quarter.
Mithal told PTI that the company's rolling stock export business was impacted due to a lack of fresh orders from many of its erstwhile African and South Asian clients during the pandemic and post-pandemic periods.
He added that the Quality Assurance segment also faced challenges as Indian Railways fixed four entities, for the first time, for the Quality Assurance work through an open tendering process, impacting both the volume and margins substantially.
However, according to him, the export outlook improved after nearly three years when we secured an export order from Mozambique for the supply of 10 locomotives - the first such order won through global competitive bidding -- driven by sustained and focused outreach to prospective countries.
"The aggressive outreach has also helped us in securing one export order in each quarter during FY25. As on March 31, 2025, RITES' export order book stands at Rs 1,360 crore. As an export order takes at least 15-24 months to materialise (from receipt of the order to conversion in revenue), you will see the impact on revenue from FY26," Mithal said.
The major export orders as of March 31, 2025, with RITES are Bangladesh order for 200 passenger coaches at Rs 900 crore, Mozambique's order for 10 locomotives at Rs 300 crore and South Africa's orders (three orders each for 3 locomotives) at approx. Rs 150 crore.
So far as QA business is concerned, according to Mithal, the company brought in a significant change in its approach to address the challenge arising from a policy shift involving the inclusion of three additional players for the QA services of Railways -- TuV India Pvt. Ltd, Bureau Veritas India Pvt. Ltd. and Intertek India Pvt. Ltd.
He stated that RITES started diversifying its QA client base into new areas such as renewables (solar), PM Vishwakarma Yojana, power transmission & distribution, states' Jal Jeevan Mission & Public Health Engineering Departments, vendor assessment (GeM), Independent Safety Assessment and international business among others, thus having a big chunk of multi-sectoral business.
"From the outset of FY25, we emphasised the execution of domestic consultancy projects, especially the high-margin consultancy projects, which helped us in limiting the dip in operating revenue and profits YoY," Mithal said.
"Further by way of aggressive outreach, we also consolidated our order book by maintaining the trend of 'one order a day company', securing more than 500 orders worth Rs 5,500 crore in the year and ending the year with an all-time high order book of Rs 8,877 crore," he added.
Outlining the way forward for the coming year, Mithal said, "This twin-pronged focused business strategy of improved execution and aggressive order inflows has given us the platform to aim for an all-time high revenue in FY26. We will also continue to maintain our strike rate of 1 order a day and get further export orders.