RITES Ltd, the export arm of Indian Railways, is set to resume its high-stakes rolling stock exports to Bangladesh next fiscal, signalling a potential recovery from the political unrest that had recently plagued the neighbouring nation. The Navratna PSU is also witnessing an uptick - albeit a slow recovery in export orders coming in mostly from African nations including South Africa.

According to Rahul Mithal, Chairman and Managing Director, RITES Ltd, a sequential improvement in project execution is happening in India and work has picked up pace. The H2 (October–March) is expected to be better as compared to H1.

Orders on track

Export orders are coming back on-track slowly, with at least one such overseas order coming in each quarter, after a near four-year-hiatus.

The Bangladesh project, for supply of 200 passenger coaches at a cost of ₹915 crore, is back on track and work on developing the prototypes are underway. The project is funded by the European Investment Bank with a 36 month-odd delivery timeline.

“There was some delay of two–three months in working on prototypes for the Bangladesh order given the political situation there. But things are back on track now. There are nine different coach types that we are working on. And our aim is to start the first set of exports to Bangladesh by early next fiscal and revenue realisation will happen FY26 onwards,” Mithal told businessline

Similarly, the company has bagged rolling stock orders for conversion of in-diesel locomotives to cape-gauge enabled ones (1,067 mm) in South Africa. Redesigning of existing locomotives into cape-gauged ones are being worked out. These would be in-diesel locomotives, previously manufactured in India, currently not in use post electrification of railway tracks. Revenue realisation for most of these orders are expected in FY26 onwards.

“The first trial orders from South Africa are of six locomotives where existing diesel ones will be converted. If trial runs are successful, we are expecting more orders and better access across 12–13 more African nations, around that nation. In fact, our footprint in African continent gets cemented,” he explained.

According to Mithal, discussions are also underway for supplies to the National Railways of Zimbabwe, a rolling stock order of ₹650 crore. However, approvals are awaited from the African Export Import Bank. “The project is on track. And we have held on to the price. So, once clearances come in from the government, then we will go ahead with the supplies. Although there is no clear time frameon the approvals yet. So we are yet to add it to our order book size,” Mithal said.

“Overall we do see some improvement in export markets now. And we are competing on contracts rather than relying on nomination,” he added.

In H1FY25, competitive bidding accounted for nearly 70 per cent of RITES’ new orders and nomination projects accounted for the remaining 30 per cent. This is a near reversal from some five-six quarters back when competitive bidding to nomination was around 40-60.

Maintaining Margins

Pitching in for competitive bidding has also helped the company work on high-margin contracts. In fact, RITES also is vying for international consultancy contracts with it setting up an office in the Middle East.

“Over the coming quarters, we expect the international project consultancy business, RITES Videsh, to start picking up in West Asia, and also across adjoining geographies,” Mithal said.

For Q2, the consultancy business had margins at 29.6 per cent, while leasing segment had margins of 31.9 per cent.

“We hope to maintain EBITDA margins at around 20 per cent, with FY25 being targeted as year-of-consolidation,” he added.

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