Yes both Hbl n kernex cannt fulfil it. So in that case extension should be the only scenario. Atleast they have approval, so no point cancelling unfulfilled part and retender. Hbl n kernex will have major pie till new approvals
While your comment makes sense, but unfortunately govt babus tend to treat the text of the contracts as if its carved in stone. While a proactive officer can move the wheels of govt machinery to get the contract modified, the process is long and one can easily be accused of trying to favour certain companies. This is not worth the effort for many govt officers and so I think the extension may not be given.
I am copy pasting an image, which was originally posted here - HBL Power: Signs of change - #186 by faltooinvestor
The CLW tender had similar clause on the end date.
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Kernex in their PPT has mentioned the peak capacity at 450 Kavach units/ month:
So even if partial order gets cancelled, they can do around 350 cr sales (450 * 0.80) at peak capacity in Q3 this year, asumming they got roughly one month of time after approval. Conservatively, we can assume they will do around 250-300 cr sales from Loco Kavach alone.
Also it is safe to assume that trackside execution should be negligible in Q3 as the main focus is on Loco orders, as HBL had also mentioned in the AGM.
Overall, ~275 cr sales in Q3 could be a fair guess in my opinion, which is not bad and infact, would be their best ever quarter.
The question is.. what next?
My understanding is that by the end of Q3, the new tenders (CLW, ICF) should get finalized, followed by fresh orders for the OEMs. It remains to be seen, what slice of the cake will Kernex get?
Till then, happy volatility. :)
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The CLW order is not just for supply of KAVACH units but also for installation and commissioning.
There are the following steps involved in installation and commissioning:
- CLW first has to make the loco unit available at the designated railway shed for installation
- Some metal cutting and welding work has to be undertaken for installation of onboard KAVACH equipment (RFID scanner underneath the loco, brake control unit, communication equipment, driver interface etc).
- Post installation the locomotive will undergo certain tests on the trial track inside the shed. This will require a loco pilot to be present.
- Commissioning: I have no idea what steps are involved in commissioning. I am guessing that the Railways have come up with some Acceptance Testing Procedure (ATP) to certify whether the installed equipment is functioning as expected. But one can imagine that officers will be required for inspection and their sign-off will be required.
So the revenue from this order does not depend only the manufacturing capacity of the company but also on the timely allocation of locomotives, shed space and manpower (loco pilot, inspection officers) by Railways.
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What are your views on Quadrant Future Tek?
Thanks for the clarification.
I was aware of the installation and commissioning part, but I wasn’t sure how the revenue recognition is handled.
My assumption was that revenue is recognized once the equipment is supplied to the customer (i.e., once invoicing is done).
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if CWL order get cancelled then Kernex would do less than 50 cr in 3rd qtr as per one person who talked to CS recently. So more clarity would come by current month end.
If we take relative growth in share price from current price, which do you think will do better Mighty HBL or low base Kernex ?
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Yes very well put. Kernex CS clarified that due to no shed availability not much revenue so far. So if CWL order get cancelled kernex would do very less in 3rd qtr.
HBL is certainly better in terms of execition but which company do you feel can grow better relatively from current base ? I feel Kernex has more scope to grow in terms of price rise in 1 year time frame.
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Thank you. Yes agree to that. More than efficiency India babu work culture in Govt departments is deep rooted.
I have not studied Kernex and I hold HBL. Apologies if this is already answered in the thread. Why was Kernex struggling till 2023? Is kavach the only reason for the operational turnaround? If yes, what will happen after kavach?
Kavach is just starting, it is a 3-4 year theme minimum for Kernex. After that since Kernex is R&D and EMS company they would use their resource for defence and other related projects as pointed out in AGM. In these 3-4 years kernex will work for future as well. What is important is technical skillset and execution capabilities. Skillset we have seen as its only among 3 OEM to have kavach 4.0 license and execution needs to be seen in coming year.
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Some people are raising concern about Problem with locoshades and allotting trains for fitment to Kernex. Any particular reason ?
Why HBL posted such spectacular execution and Kernex fails to get locoshades for fitment ? Why is it so ?
Somebody having deep understanding of how this execution work could throw some light.
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