Knowledge Marine & Engineering Works Ltd announces FY 2021-22 results

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Knowledge Marine & Engineering Works Ltd. “KMEW” , engaged in the business of owning and operating Marine Crafts, dredging, repair and maintenance / refits of Marine Crafts and Marine Infrastructure, announced its financial results for the full year ending 31st March 2022.

Consolidated Financial Highlights for the Year (FY22 vs. FY21):

  • Total Income of Rs. 61.6 crores, a growth of 83.6%
  • Gross Profit of Rs. 38.8 crores compared to Rs. 17.4 crores; Gross Margin improved by over 1,000 basis points to 62.9%
  • EBITDA of Rs. 32.9 crores compared to Rs. 13.3 crores; EBITDA Margin improved by over 1,300 basis points to 53.4%
  • Net Profit of Rs. 20.9 crores compared to Rs. 6.8 crores; Net Profit Margin improved by over 1,700 basis points to 33.9%
  • Net Debt of Rs. 3.8 crores compared to Rs. 5.4 crores in March 2021; Net Debt / EBITDA of 0.12x compared to 0.41x
  • Total Cash Flow from Operations (CFO) of Rs. 34.6 crores with EBITDA to CFO conversion of 105%

Business Highlights:

  • Myanmar Project Update: The project commenced in January 2022. The project includes capital dredging to be completed by November 2022, followed by maintenance dredging for a period of 2 years starting December 2022. As of March 2022, over 25% of the capital dredging work is completed. The contract is worth Rs. 118 crores, of which around Rs. 18 crores were recognized in FY2022, Rs. 60 crores will be billed in FY2023 and balance in the following 2 years.
  • FY22 Dredging Completed: 1.5 million cubic meters (River Pearl 2, River Pearl 4 and River Pearl 8).
  • Order Book: Rs. 182 crores as of 31st March 2022
  • Average Tenure: Contract tenure greater than 3 years
  • Recent Contract Wins: Secured 3 new contracts valued at Rs. 128 crores, including Myanmar Project. The other two contract are from Port Trust (Vishakhapatnam and Kandla) and will commence from January 2023 for a period of 5 years.
  • Vessels Utilization: River Pearl 1, 2, 3 and 4 demonstrated 100% uptime in their respective contracts. River Pearl 5, 06 and 7 were successfully constructed and deployed at respective sites for commercial operations for a period of 5 years. Also acquired River Pearl 8 (1,700 Cubic Trailing Suction Hopper Dredger) and upgraded it at a cost of Rs. 15 crores, and deployed at Myanmar project. Currently River Pearl 9 & 10 are under construction and will be deployed at Vishakhapatnam and Kandla port.
  • Strengthening of Team: Appointed Capt. Biswas as Non-Executive Director on the Board. Capt. Sanjeev Dutt and Chief Engineer Jeba Kumar joined the operational and technical team, respectively. Company also started a hydrographic survey division under the leadership of Kolla Suresh Babu Ex-Indian Navy.

During the year, the company delivered Revenues of Rs. 61.1 crores, registering a robust growth of 83.6% on y-o-y basis. EBITDA was Rs. 32.9 crores as compared to Rs. 13.3 in FY21 with EBITDA margins improving to 53.4% in FY22, up by over 1,300 bps. The margin improvement was primarily driven by improved realizations, higher operational efficiencies and our fundamental ability to pass through any increase in fuel costs. Net profit almost tripled to Rs. 20.9 crores compared to last year. We continue to generate strong cash flows of Rs. 34.6 crores and EBITDA to CFO was 105%, which reflects strong cash flow conversion.

In addition to Myanmar project, we have also secured two more contracts worth of Rs. 11 crores from Port Trusts (Vishakhapatnam and Kandla) which is expected to commence from January 2023. To service the new contracts, we have started construction of new vessels; River Pearl 9 and River Pearl 10. All our vessels are certified by the statutory bodies and have adequate insurance to cover against any risk.

The Company continues to maintain a strong order book of Rs. 182 crores with average tenure of more than 3 years and we have already participated in 4 new tenders worth of Rs. 200 crores. We have significant visibility into our future free cash flow, which allows us to continue to manage debt levels effectively. The senior management remain fully committed to ensure timely execution of the ongoing projects and capitalize on the growing opportunities arising from the increased government push on improving port infrastructure and connectivity. We are excited going into the next fiscal year and remain confident of delivering accelerated profitable growth and enhance wealth for all stakeholders.”