RITES goes green with new vertical

State-run railway engineering and consulting company RITES Ltd has launched a new vertical to provide consultancy support to companies looking to enter electric, hydrogen or renewable fuel-based mobility operations.

The state-run company is also exploring consulting and certification services in South-east Asia, Africa and Latin America as also rolling stock export options in neighbouring countries to boost its export revenue which had fallen to mere ₹1 crore by the end of the September quarter.

“We have just formed a new green mobility vertical that has come into existence on 1 November. This will provide consultancy in all areas of green mobility—EVs, hydrogen etc. We will consolidate in this vertical in the coming months and quarter so that it starts generating revenue for us in the coming fiscal,” RITES chairman and managing director Rahul Mithal said in an interview.

RITES had already launched a sustainability vertical at the beginning of the year which has started getting orders in solid waste management, Swachh Bharat Mission (from the ministry of housing and urban development) and clean air programme. Mithal said RITES will continue to build this vertical and expects more orders in the coming months.

Mithal said RITES’ export order book which had dried up in the covid years and remains thin at the end of the second quarter is set to see a major jump in the coming months as the company closes in on contracts worth ₹1,500 crore to supply locomotives and wagons to Mozambique and Bangladesh.

The state-run company has emerged as the lowest-cost bidder in a global tender for supplying 200 railway coaches to Bangladesh and 10 diesel locos and 300 wagons to Mozambique. Mithal said that apart from these two big orders, Sri Lanka, which is witnessing an economic recovery, has also reached out to RITES for supplying rolling stock.

RITES has exported coaches and locos to the island-nation in the past, but exports stopped after the country went into an economic crisis. The company is also exploring consulting opportunities related to projects and rolling stock in Nepal and Latin American countries, especially Chile, that share a broad-gauge railway system similar to India’s.

RITES, which reported a 21.5% fall in net profit to ₹110.17 crore in the September quarter, against ₹ 140.20 crore in the year-ago quarter, is looking at high-margin exports to boost revenue.

“The company’s revenue and profit fell in the quarter as export orders fell sharply and Indian Railways reduced rates on quality assurance and inspection services to a fifth,” Mithal said. “If we see in this quarter by comparing y-o-y, then in exports, last year’s Q2 revenue was about ₹78 crore and in this quarter this year it has fallen to just ₹1 crore. The revenue from inspection business has also fallen from ₹100 crore to ₹75 crore in Q2 this year. So, both these elements gave us a hit of about ₹100 crore,” Mithal said.

He said RITES has now formulated a three-pronged strategy of raising its project consultancy revenue which has been its core strength. In this the plan is to raise the order rate from 0.85 orders a day to one per day by the beginning of the next financial year.

“The second action plan is to increase our inspection fee clients to diversify and get more non-Indian railway clients, other clients, private clients and come back as earliest possible to same levels of revenue. And lastly, we would also look at new markets for exports of rolling stock,” Mithal said.

Armed with international certification for its production inspection business, RITES is also trying to tap global opportunities and getting into inspection of metro systems with already interest shown by various metro projects in the country including DMRC.