Knowledge Marine - Positioned to Double Revenue with No CapEx

Dear ValuePickr members, I’m Tejas Venkatesan, an 18 year old student who’s passionate about investing. This is the first thread I’m writing about a company I found recently, and would appreciate your views and thoughts. Would highly appreciate any feedback on my research method. Thanks.


Knowledge Marine Engineering Works is primarily engaged in the business of owning, chartering/ hiring along with manning, operation and technical maintenance of marine crafts and repairs/ maintenance of marine crafts and marine infrastructure and allied works in India.

They started in 2013 as a repair and refit company based out of Mumbai and after 2 years they began owning and operating small crafts. Their revenue streams include dredging, carrying out repair & refit services of naval & merchant ships; Conducting hydrographic & magnetometer surveys; Providing technical solutions for maintenance and operations of vessels. Most of these are services provided at ports. The company has an order book of 250 crores and is expected to complete 125-130 crores of that in FY23. Dredging contracts have EBITDA margins of 50% and the company keeps a threshold of 40%.


Removal of sediments and debris from the bottom of oceans and harbours to create navigable waterways for shipping traffic at ports. Can be done to remove pollutants and underwater excavation to mine minerals as well. It can also be done for dams and rivers to remove sediments. It is classified into capital and maintenance dredging: Capital dredging- first time it’s done. When ports want to increase their depth to bring in larger vessels, they do capital dredging. Maintenance dredging- Done after capital dredging has been done as soil and silt get deposited over time.

Growth Plans-
Ship Building
They have set up a JV with Synergy shipyard in Goa, this is the shipyard where they usually place orders for the ships they use in-house for the past 3-4 years. They feel there is a larger market opportunity and hence are going to build ships for the external market as well. This is expected to materialize in the next 3-6 months and will be a 50:50 venture. KMEW will bring orders for the shipyard which already exists so capex will be zero. They expect to earn 20% profit margins from this segment.

Shipping Harbours
They have mostly been dredging at ports. They had made bids for developing fishing harbours in Gujarat. A day after mentioning this in their concall, they were awarded a contract for Capital Dredging at Mangrol Fishing Harbour Phase III Part B by DCI worth 67.85 Cr plus GST. This is in rock dredging which is a new segment for KMEW. They have partnered with Sahara Dredgers for this project and hence will have no upfront capex costs.

Cutter Suction Dredgers-
They are forming a JV with a company that owns 4-5 CSD which are ready to deploy. This will fetch orders for inland waterways and be operational in the next 6 months. Again, the partner company already has the dredgers and KMEW will deploy them by getting orders from the government. In comparison, dredging corporation of India (listed company) has only 2 CSDs but Adani ports has 16.



Scrapping yard-

They are doing a JV through which they tie up with a scrap yard that already exists in which they will bring in vessels to scrap and eventually buy parts and sell them at a higher price or use them in shipbuilding processes as they have in the past.

The management has set a goal of reaching 500 Cr of revenue by 2025 in their latest concall.

Lower Capex costs-
They have a team of 40 marine engineers that can repair ships with ease. Therefore, their capex costs, i.e. cost of adding to their fleet is much lower than their competition. For their Myanmar contract of 117 Cr, the capex was 5.5 Cr to buy a scrapped vessel and they spent 15Cr to develop the vessel. The vessel for the contract is River Pearl 8. For similar contracts, competitors would normally spend 100 Cr to make a similar dredger.

More efficient with time= better margins-
Dredging Corporation of India’s vessels go into repair or dry dock or conversion or upgrade facilities for around 6 months. KMEW does the same within three to four weeks. Therefore, their vessels continue working.

More downtime at DCI (from KMEW concall)
“They have a usual period of downtime every month of more than five days, five to six days, we find time during the day and night, we have a different staff, different set of crews which do our regular preventive maintenance, breakdown maintenance, so we have lesser down time as compared to them. Our employees, we have about 10 employees carrying out all the operations, they have more than 80 employees carrying out the same operations, so their overheads are much higher than us, so these are the reasons for which their margins are low.”

Young fleet-
Except for the Trailing Suction Hopper Dredger all our marine crafts are new and of make younger than 2016. This means better technology, lower maintenance costs, and downtime.

Compared to DCI:
Most of their dredgers are built before 2000, others are before 2016. Their average age is 20 years. DCI has 88% of market share in maintenance dredging in the domestic market.
From Dredging Corporation of India FY2021 AR.

This page shows dredgers owned by Adani ports:
Dredging and Reclamation Solutions - Adani Ports and SEZ Ltd.
They range from being made in 2007 to 2019 so are a bit older than KMEW’s but are European so may have better build quality and be operational for longer.

Great financial returns-

Example- they bought River Pearl 4 (Trailing Suction Hopper Dredger) for 16.5Cr and it is working on a 5-year contract worth 87 Crores. Their dredging contracts normally have 50% EBITDA margins. The lifeline of a vessel is around 15-20 years so the same dredger could get more contracts as well. They claim the payback period on their fleet is usually 2 years.

New Dredging Guidelines 2021- “Sizeable dredging opportunities”: Views of DCI’s Dr George Yesu Vedha Victor - Indian Infrastructure

The Dredging Guidelines, 2021 envisage dredging to the tune of 3 billion cubic metres (bcm) (1.6 bcm capital dredging and 2.4 billion cum maintenance dredging) over the next 10 years. Currently, only 120 million cum annual dredging is being carried out at major ports and dockyards in the country.

Any dredging project under 200Cr has to be awarded to a domestic company.

Very few dredging companies bid for orders below 100 crores in India. The work requires a lot of skill and knowhow and this has allowed them to have a hit rate of over 50% on projects they place bids for.

India has 12 major and 205 notified minor and intermediate ports. Under the National Perspective Plan for Sagarmala, six new mega ports will be developed in the country. The government has envisioned a total of 189 projects for the modernisation of ports involving an investment of Rs 1.42 trillion (US$ 22 billion) by the year 2035. It is expected that by 2025, cargo traffic at Indian ports will be approximately 2500 MMTPA while the current cargo handling capacity of Indian ports is only 1500 MMTPA. A roadmap has been prepared for increasing the Indian port capacity to 3300+ MMTPA by 2025 to cater to the growing traffic. This includes port operational efficiency improvement, capacity expansion of existing ports and new port development.

They are a relatively small and new company in this space, this may hinder them from getting larger contracts. While some contracts are long-term in nature, revenue would tend to be lumpy and it may be hard to forecast sales growth.

Revenue is linked to the government. It is a B2G business and receivables could become higher. In the past they have had no such problems, however in larger contracts they may face them.

There is competition from Adani ports which has a fully owned subsidiary called Shanti Dredgers that has a fleet of 23 dredgers. Though most of their operations seem to be projects at Adani ports itself, KMEW claims that they have recently started bidding for other large contracts. If Adani slows down the expansion at their ports, they may start bidding more with these dredgers and take market share and reduce contract prices.

Their Myanmar contract was exceptional- it is the second large contract (above 100Cr) they have received and is around 118 Cr. The company may not be able to get large contracts like Myanmar in the future.

By expanding using many JVs, they may face management issues.

Dredging Corporation of India has painted a very negative picture of the domestic dredging industry in their MDA in FY21 Annual Report-

The company has an order book of 250 Cr and expects around half of it to be completed in FY 23. In this year, they will also incur negligible capex as all of their growth plans will be conducted through joint ventures. Therefore, revenue would be around 125 Cr and they estimate margins to fall by around 5% as future contracts may not be as profitable as Myanmar. An estimate for FY 23 PAT could be 41.9 Cr which is a forward P/E of 12

Past: The numbers in screener have few errors as compared to their own annual report. I have used data from their annual reports as found on their website.

They have grown their fleet from zero in 2016 to 10 in 2022 which explains negative FCF.
They state that the reason for the degrowth in sales in 2019 is that the company switched its clients from private to government segment.

Rough DCF estimate-

In a base case scenario with medium to slow growth after this year, the company seems fairly valued. Any increases in receivables would harm FCFs but the company has not had such problems in the past.

I believe that any further upsides from their new JVs or fulfilling half their order book this year would result in the stock performing extremely well. Moreover, the domestic dredging and ports services space is expected to do well in line with upgradation of ports and waterways. The management seems financially adept, hungry for growth and is communicating openly with shareholders.

I request @sahil_vi, @Worldlywiseinvestors, @basumallick, @ayushmit, @Tar and any other members to please share your views on the company and ways to improve my research method and build conviction in investment ideas.

(Disclosure- Tracking, have not invested yet as it trades in lots of 750 shares, so need to be sure when I buy)


Mumbai, India, August 18, 2022: Knowledge Marine & Engineering Works Ltd. “KMEW”
(BSE: 543273), engaged in the business of owning and operating Marine Crafts, dredging,
repair and maintenance I refits of Marine Crafts and Marine Infrastructure.
KMEW is delighted to inform that it has signed a sale agreement with MIs Abnco Vie Win Ent
Pvt Ltd for purchase of a new vessel “Self Propelled Hopper Barge M.V. Abnco VI”. The
vessel is acquired at a total cost of Rs. 3.50 crores. The said vessel is 2017 built and has a
hopper capacity of 886 cubics.
The said vessel will be deployed in Mangrol and other fishing harbour for the Capital Dredging
Commenting on the said acquisition, Mr. Sujay Kewalramani, CEO of KMEW said~
“This acquisition is being made through internal accruals.

The addition will be the 11th to our existing fleet and will give sufficient strength to explore
emerging dredging opportunities and will broaden our project horizon.”


Thanks for the great summary of the company it was very helpful in understanding the company better. I was reading the Annual letter of the company to understand the business better – I needed some help from the community to understand the following questions.


  1. Revenue growth the company had in FY22 is this related to Mayanmar only or is this combination of multiple factors?
  2. One of the key skills the company claim is a top-notch maintenance team - which keeps downtime extremely low. This helps a company to have high availability of its ships. Companies’ low asset price strategy to purchase scrap ships and refurbish them with this team to back them up according to me adds key people risk to know how to handle. How company retains the people in the team? What stops another company to have a similar team? As the company grows how this team will be expanded? What stops big companies to hire this maintenance team? FY21 - 73, FY22 - 87 permanent employees.
  3. In Note R of FY22 - insurance amount is reduced – company expanded with international presence why the risk of operation is getting reduced? Is COVID the only reason?
  4. ANNEXURE-A- Part A: Why do its subsidiaries have such fluctuation in numbers on Taxation provision and even profit before taxation with turnover seen as more stable?
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Press release from KMEW on new vessel Acquisition

Fishing Harbour proposal with Gujarat Gov is approved?

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Any one attended the AGM? pls share the notes. Thanks

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Anybody tracking this now? A lot of things have occurred since the last message posted. Ashish Kacholia and Group entering. Winning orders until their Bahrain Business which won 360 cr worth of orders for next 5 years and their investor call where the CFO is extremely bullish while their CEO remains conservative (both being Husband-Wife) and the management’s trend to understate and overdelivering continues. Share also tripled in last 1 year.

Till the point it received Bahrain orders it was very overvalued and at CMP I Still feel it is overvalued. Any views on discounting the future income and getting valuations based on that?

Disc: Now holding a very small quantity. Sold major chunk in October 2022 and Jan 2023. Holding the current quantity since June 2021.

just be wary of investing in this, if the valuations are rock bottom then its ok, otherwise stay away.No rocket science in this, tenders are highly competitive, everyone tries to buy a cheap asset to get outsized returns and can be easily replicated. Something that worked once may not work all times.I have generally observed port trust tender returns are sub par and you can make outsized returns only if you do something outside the rule book.

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The govt vision is clear. Company margins are extremely good. If India is aiming to be a product export based economy, the maritime sector has to be invigorated. With MNC conglomorates taking huge bets by strategic investments in India, prospects of auto/EV exports, UK FTA, Australia will result in huge cargo volumes. Some interesting topics for connecting the dots.

what is the relevance of export/import related investments to Knowledge marine line of business? pls elaborate.

@sameernics pl go through the investor presentation to understand the kind of boats, their order book to understand the expanding scope of operations. It will be too much to put everything here.

For basic understanding of dredging- What is Dredging - History, Importance And Effects

As number of ships increases the repair opportunity for them will become huge(one of their business segment). Do’t miss the cheapest labour advantage India will have over next few years to draw business from other countries.

The sand mining contract from Bahrain is a significant achievement. Waste to Wealth is playing in all sectors.

Indian ports are working towards the development of the basic infrastructure such as mechanization and the creation of more berths and deepening of channels, which will offer strong demand for the dredging operations.
The development of greenfield ports would also propel the demand for dredging in India. As per the Ministry of Shipping (MoS), in the next few years, most of the key ports would increase their capacity to accommodate bigger ships. Apart from these, the increasing need for new developments from Navy, offshore exploration, and national waterways, the scope of the Indian dredging industry seems vast. Take cue from the numbers of Mazagon, Cochin Shipyard for the growth in order book.

Something very intersting I learnt from Ray Dalio from his book Principles for the Changing World Order. As we as a country increase our merchandise exports, we will have to have a bigger naval fleet for our SLOCs.

If we see the order pipeline of Cochin Shipyard it will give a fair idea of what’s coming ahead.

From latest investor presentation released today.

Rs 84,000 Cr in RFI stage.

Any idea why the company hasn’t rescheduled its concall?
Did anyone checked with the company regarding the spurt up in receivables as well as payables?

Dropped them mail, yet to get response.

Company is organizing investor call on coming Friday

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Technically a neat reversal after retest of breakout level


A very big development as it will open lot of avenues in India itself under ‘Waste to Wealth’

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Gujarat to Develop 10 New Major Ports in the Next 25 Years.


Massive expansion of shipping fleet and port infrastructure on the cards. Centre eyes 10x expansion in domestically flagged Ships - The Economic Times

This document gives out the shipping statistics of India - ISS 2022 _31032023.pdf (5.8 MB)

Those who missed my previous post on the subject please read these-