Knowledge Marine and Engineering Works in FY26: Margins, Order Book Visibility, and the Cost of Building Capacity

Knowledge Marine and Engineering Works Limited (KMEW) closed FY26 with a step-up in scale and profitability, backed by stronger execution and a growing pipeline of long-tenure contracts. On a consolidated basis, revenue from operations rose to Rs 256.28 crore in FY26 from Rs 200.70 crore in FY25. EBITDA expanded to Rs 96.75 crore with an EBITDA margin of 38 percent. Profit after tax (PAT) increased to Rs 79.11 crore and the presentation reports a PAT margin of 31 percent.

The company positions itself as an integrated maritime solutions platform with operations across dredging, chartering of port ancillary crafts, and shipbuilding. The FY26 story is not only about growth in the P and L. It is also about asset creation and contract visibility that extends 7 to 15 years, especially in charter and hire and in the Green Tug Transition Program (GTTP).

What drove operations in FY26

KMEW discloses an operational revenue mix in the presentation. Dredging services contributed Rs 184.31 crore, ancillary services contributed Rs 18.71 crore, and shipbuilding contributed Rs 53.26 crore. This split highlights that dredging remains the core revenue driver, while shipbuilding has become a meaningful contributor.

On execution, the company highlights dredging work at Paradip Port where it used its Self-Propelled Grab Hopper Dredger River Pearl 2 for capital dredging and grab dredging. It also executed maintenance dredging at Puducherry Port using its Trailing Suction Hopper Dredger River Pearl 18.

A key operational talking point is the JNPA rock dredging contract. The presentation describes it as technically complex, involving ultra-hard rock, controlled blasting, high-precision drilling, and execution depths up to 16 meters. KMEW also commissioned River Pearl 47, described as India’s largest and deepest Indian-flag self-propelled backhoe dredger, with dredging depth of 4 to 30 meters. The company’s narrative is that higher capability unlocks higher-value opportunities in India’s port infrastructure build-out.

Financial summary

The tonnage tax impact and profitability profile

A major feature of the presentation is the shift to the tonnage tax regime. The company claims a 90 percent plus reduction in tax rates and states that no corporate tax is applicable on the income generated from dredging and chartering services under the regime.

This shows up clearly in the FY26 consolidated profit and loss statement. For FY26, profit before tax is reported at Rs 78.75 crore and tax is reported at minus Rs 0.35 crore, compared with a tax expense of Rs 12.60 crore in FY25. The company frames this as improved earnings visibility and capital efficiency, with the ability to reinvest into fleet expansion.

Margins also remain strong in a year where depreciation and finance costs increased. Depreciation rose to Rs 18.67 crore in FY26 from Rs 11.43 crore in FY25, and finance costs rose to Rs 14.91 crore from Rs 9.79 crore. Despite these higher costs, PAT expanded sharply, implying that operating scale, improved mix, and tax changes played a significant role.

Order book: long-tenure visibility across segments

KMEW’s presentation provides a detailed order book summary. Total contract value awarded is Rs 1,644.89 crore, with balance unexecuted contract value of Rs 1,395.43 crore (excluding GST). The awarded value is split across dredging, charter and hire, and shipbuilding.

Charter and hire is the largest component of the order book by awarded value, and it includes multi-year contracts with major port authorities. The most important visibility comes from two 15-year GTTP contracts that are scheduled to start in FY28, as per the order book tables.

The shipbuilding order book is largely linked to Inland Waterways Authority of India (IWAI), including dredger ancillary units and cutter suction dredgers, plus an order for hybrid survey vessels from Synergy Shipbuilders N Dock Works Limited.

Asset build-out, balance sheet changes, and cash flow reality

The company’s balance sheet expanded materially in FY26, reflecting capital deployment and funds raised. Total assets increased to Rs 820.08 crore at 31 March 2026 from Rs 394.05 crore at 31 March 2025. Property, plant and equipment rose to Rs 210.66 crore from Rs 159.27 crore, and capital work in progress increased to Rs 99.16 crore from Rs 50.15 crore.

A notable line item is other financial assets under non-current assets, which increased to Rs 342.95 crore at 31 March 2026 from Rs 68.17 crore at 31 March 2025. The presentation does not provide a breakdown of this item.

Liquidity, however, improved on reported cash balances. Cash and cash equivalents increased to Rs 73.62 crore from Rs 31.17 crore.

The cash flow statement makes the investment intensity clear. Net cash from operating activities in FY26 was Rs 74.34 crore. Cash flow from investing activities was negative Rs 379.14 crore, while cash flow from financing activities was positive Rs 347.25 crore. This pattern indicates the company is in an expansion phase where investing outflows are being funded largely through financing.

Borrowings also changed in composition. Non-current borrowings remained broadly stable at Rs 108.29 crore versus Rs 107.50 crore, but current borrowings increased to Rs 113.77 crore from Rs 25.98 crore. Investors typically track this closely because it can reflect working capital needs, timing of capex payments, or short-term funding for under-construction assets.

Strategy context: dredging cycle, GTTP, and shipbuilding expansion

KMEW anchors its strategy to India’s multi-decade maritime investment cycle. The presentation references Maritime Amrit Kaal Vision 2047 and a policy-led push into ports, inland waterways, green maritime infrastructure, and clean tug fleets.

The Green Tug Transition Program is presented as a phased transition across 2024 to 2040, moving ports toward compliant green tugs and phasing out traditional tugs. KMEW lists two awarded 15-year GTTP contracts, and also states it is actively bidding for more.

On shipbuilding, the company highlights the acquisition of Knowledge Shipyard and the acquisition of 15 acres of land at Saphale near the upcoming Vadahvan Port. It also lists ongoing construction projects including work boats, accommodation boats, cutter suction dredgers, and 60-ton bollard pull GTTP tugs.

Takeaways from FY26

KMEW’s FY26 presentation shows a business scaling rapidly with strong consolidated profitability, a large order book, and increasing positioning in long-tenure charter contracts and policy-supported green tug deployment. Revenue grew meaningfully, and the company’s reported tax profile changed sharply in FY26, supporting higher PAT.

At the same time, the company is clearly in an asset creation phase. Investing cash outflows are large relative to operating cash flows, and current borrowings increased sharply year-on-year. The company’s ability to convert its order book into stable operating cash flows, while maintaining balance sheet discipline, will remain central to how the next phase of growth plays out.