Knowledge Marine & Engineering Works Limited (KMEW) is an integrated marine engineering company with operations spanning three primary verticals: dredging, chartering of port ancillary crafts, and shipbuilding and repair. The company owns and operates a diverse fleet of 45 vessels, including 16 dredgers, hopper barges, support vessels, and various port crafts like survey boats, patrol boats, and tugs. KMEW's core dredging operations focus significantly on inland waterways and shallow draft areas, a niche that differentiates it from larger players. The chartering division provides essential marine crafts to major Indian ports on a long-term basis. The shipbuilding vertical supports both internal fleet expansion and external contracts, with a growing focus on specialized, high-value vessels such as green tugs. This synergistic business model allows KMEW to capture value across the marine infrastructure lifecycle, from vessel construction to long-term operational contracts.

Official Website: http://www.kmew.in/

• Q3 FY26 Performance:

• Revenue: Stood at INR 90 crores, marking a 79% quarter-on-quarter growth and a 56% year-on-year increase. Management has indicated this performance level can be considered a new benchmark for the company.

• Profitability: EBITDA was INR 38.54 crores with a strong margin of 43%. Profit After Tax (PAT) was INR 32.89 crores, resulting in a PAT margin of 34%. This reflects significant improvement in operating leverage and efficiency.

• Taxation:

• The company has been accepted into the tonnage tax scheme.

• This new tax structure will be applicable from Q3 FY26 onwards and is expected to reduce the effective tax rate to less than 1% of turnover, significantly boosting net profitability compared to the previous corporate tax regime.

• Balance Sheet & Working Capital:

• As of the reporting date, total debt outstanding is INR 166 crores against fixed assets of INR 207 crores and capital work in progress of INR 36 crores.

• Receivable days currently range from 45 to 60 days. Management expects this to normalize and decrease to a range of 30 to 45 days going forward.

The company delivered a historically strong quarter with significant revenue growth and margin expansion, which is expected to be sustained, further supported by a new, highly favorable tax structure.

• Strategic Asset Acquisition: The company follows a prudent model of identifying specific vessels and entering soft agreements with owners before bidding for a contract. This de-risks the execution process and ensures asset availability upon winning a project, a strategy that has proven successful for over a decade.

• Integrated Business Model: KMEW operates across dredging, chartering, and shipbuilding. This creates powerful internal synergies, such as building green tugs in its own shipyard for long-term charter contracts it has secured, thereby capturing a larger portion of the value chain.

• Niche Market Focus: The company specializes in smaller dredgers suitable for inland waterways and shallow drafts. This strategic focus places it in a segment with high growth potential, where larger competitors like the Dredging Corporation of India (DCI) do not currently operate.

KMEW's distinct approach of de-risked asset acquisition, a synergistic business model, and a strategic focus on the high-growth inland dredging niche provides it with a clear operational advantage.

• Inland Waterway Dredging: The government's plan to make 20 additional national waterways navigable is a major catalyst. The market size for river dredging is projected to expand from approximately INR 1,500 crores to INR 5,000 crores as these projects become operational.

• Port Dredging: The annual market for maintenance and capital dredging in India's major and minor ports is estimated to be over INR 4,500 crores. KMEW currently has a market share of less than 2% in the overall dredging market, indicating a substantial runway for growth.

• Port Ancillary Crafts: India's 12 major ports require a fleet of 550-600 ancillary vessels. With an average vessel life of 20 years, approximately 15 to 30 charter contracts come up for renewal annually, providing a consistent stream of opportunities.

The marine engineering sector is poised for significant expansion, driven by massive government-led infrastructure projects in national waterways and port modernization, creating a robust demand environment for KMEW's services.

• Robust Order Book: The company's current order book stands at a strong INR 1,500 crores, diversified across its business segments:

• Dredging: INR 409 crores

• Charter Hire: INR 863 crores (includes long-term green tug contracts)

• Shipbuilding: INR 230 crores

• Strong Bid Pipeline: The pipeline of potential new orders is over INR 3,000 crores, indicating high visibility for future growth. The pipeline is broken down into dredging (INR 1,400 crores), chartering (INR 1,000 crores), and shipbuilding (INR 704 crores).

• Major Contract Wins:

• Secured a landmark INR 700 crores, 15-year contract for constructing and chartering green tugs for major ports.

• Won orders worth over INR 230 crores from the Inland Waterways Authority of India (IWAI) for the supply of various boats.

• Awarded a specialized, technically demanding capital dredging contract at JNPT port valued at INR 50 crores.

KMEW is in a high-growth phase, supported by a substantial and diversified order book, a massive bid pipeline, and recent large-scale, long-term contract wins that provide strong revenue visibility.

• Green Tug Market: The company is strategically positioned to capitalize on the modernization of port fleets. It is actively bidding on tenders for green tugs from major ports like Paradip, Cochin, Mumbai, and Kolkata, which represents a significant, emerging market.

• River Cruise Services: KMEW is expanding its small craft operations vertical by foraying into river cruise services. The company will leverage its core competency in vessel operations while outsourcing the hospitality component, allowing for a low-risk entry into this tourism-linked sector.

• Continued DCI Subcontracting: As DCI focuses its investments on very large vessels for deep-sea port dredging, the need for subcontracting shallow draft and smaller-scale work to specialists like KMEW is expected to continue, providing a stable revenue stream.

The company is capitalizing on clear opportunities in sustainable marine solutions like green tugs, expanding into adjacent markets like river cruises, and reinforcing its position as a key partner for larger industry players.

• Fleet Utilization: The company's entire fleet of 45 vessels is 100% utilized. Dredgers operate for 270-300 days a year, while port ancillary crafts are deployed 365 days a year, indicating peak operational efficiency and strong demand for its assets.

• Capital Raise: A recent fundraise of INR 285 crores was successfully completed through a preferential issue.

• Capital Allocation:

• INR 183 crores is allocated for capital expenditure, primarily for fleet expansion, to be deployed over the next three years.

• INR 30 crores is earmarked for working capital requirements.

• INR 71 crores is designated for General Corporate Purposes, providing flexibility for future capex or working capital needs.

• Shipyard Capex: A dedicated investment of approximately INR 100 crores (funded by a mix of debt and equity) is planned for developing its shipyard. This facility will be capable of building tugs and other vessels up to 100 meters and is projected to generate a top line of INR 500-700 crores within three years.

With its fleet operating at maximum capacity, KMEW is strategically deploying freshly raised capital towards significant fleet and shipyard expansion to meet the growing demand and scale its operations.

• Fleet and Shipyard Expansion: The primary focus is on deploying the INR 285 crores of raised capital to expand the vessel fleet and invest INR 100 crores to build a shipyard capable of constructing green tugs and other specialized crafts.

• Dominance in Green Tugs: The company plans to actively participate in all upcoming green tug tenders across India's major ports, aiming to establish a leading position in this sustainable marine segment.

• Recommencing International Operations: KMEW is actively seeking a suitable vessel to restart its operations in Bahrain. The plan is to acquire an asset at a favorable price to ensure the project's profitability.

The company's future is anchored in aggressive, funded expansion of its fleet and shipbuilding capabilities, with a clear strategic intent to lead the green tug market and resume its international presence.

• Q3 FY26 Margins: The company reported exceptional profitability with an EBITDA margin of 43% and a Profit After Tax (PAT) margin of 34%.

• Profitability Drivers: The margin expansion is attributed to scaling efficiencies from expansion initiatives, improved operating leverage, and strong market demand.

• Future Margin Outlook: The shift to the tonnage tax scheme, which reduces the tax outgo to less than 1% of turnover, is expected to provide a significant and sustainable boost to net profit margins going forward.

KMEW has demonstrated strong operational efficiency with high EBITDA margins, and its net margins are set to expand further due to a highly advantageous new tax regime.

• Dredging Corporation of India (DCI): Management does not view DCI as a direct competitor at present. DCI is investing in very large dredgers for deep-draft ports, whereas KMEW's fleet is tailored for shallow-draft and inland waterways. There is currently no overlap in the asset classes being operated or procured by the two companies.

• Market Capacity: The demand for dredging and marine services in India is substantial enough to accommodate multiple players. The government's focus on expanding waterways creates a large enough market for both KMEW, DCI, and other new entrants to coexist and grow.

KMEW operates in a distinct niche from its largest domestic peer, DCI, and the overall market demand is robust enough to support multiple players, mitigating direct competitive pressures.

• Share Split: To enhance liquidity and encourage retail investor participation, the company's shares were subdivided from a face value of INR 10 to INR 5, effective December 22, 2025.

• Bahrain Operations Update: Operations in Bahrain are temporarily on hold. The vessel deployed there was strategically relocated to India to capitalize on higher-revenue domestic contracts. The company intends to resume Bahrain operations once a suitable, cost-effective replacement vessel is acquired from the international market.

• Green Tug Technology Partnership: For the construction of its green tugs, KMEW has partnered with a specialized designer for vessel modeling and specifications. The company will manage the in-house assembly while procuring key components from various expert suppliers.

The company has taken shareholder-friendly measures like a share split and is strategically managing its international assets while securing the technical expertise required for its entry into the high-tech green tug market.