In a significant development for the Indian railway sector, the KERNEX-KEC Consortium has been awarded a substantial contract for implementing the KAVACH project by West Central Railways, Bhopal. The project, valued at Rs. 151.41 crore (including GST), marks another step forward in enhancing railway safety and efficiency.

Project Details

The Letter of Acceptance (LOA) issued to the KERNEX-KEC Consortium outlines the following key aspects of the project:

• Scope: Provision of KAVACH, an indigenous Automatic Train Protection (ATP) system, on UHF backbone along with Optical Fiber Cable (OFC) with route diversity.
• Location: The project covers Itarsi-Khandwa, Bina-Ruthiyai, and associated sections of Bhopal Division, West Central Railway.
• Timeline: The contract stipulates a completion period of 600 days from the date of the LOA.

KAVACH System

KAVACH, which means 'armor' in Hindi, is an indigenously developed ATP system designed to enhance safety in train operations. This technology is a crucial component of Indian Railways' modernization efforts, aimed at preventing train collisions and ensuring safer rail travel.

Financial Implications

The acceptance of this bid significantly contributes to Kernex Microsystems 's order book. According to the company's disclosure:

• The cumulative KAVACH orders received by Kernex Microsystems, along with consortium and JV partners, now total Rs. 3,136.53 crore (including GST).
• This latest contract accounts for approximately 4.83% of the total KAVACH orders received.

Contract Nature and Compliance

As per the regulatory filing, Kernex Microsystems has confirmed that:

• The contract is domestic in nature.
• There is no involvement of any promoter group interest.
• The project does not fall under related party transactions.

This transparency in disclosure aligns with the Securities and Exchange Board of India (SEBI) regulations.

The successful acquisition of this contract by the KERNEX-KEC Consortium underscores the growing emphasis on railway safety and the increasing adoption of indigenous technology in India's railway infrastructure. As the project unfolds, it is expected to contribute significantly to the enhancement of rail safety measures in the West Central Railways network.

Kernex Microsystems (India) Limited, a leading provider of safety systems and software services for railways, has reported a strong financial performance for the first quarter. The company's consolidated results showcase significant growth in revenue and profitability, reflecting its strengthened market position and operational efficiency.

Financial Highlights

• Revenue Surge: Kernex Microsystems reported a consolidated revenue from operations of Rs 5,592.99 crore for Q1, compared to Rs 2,867.69 crore in the same quarter last year, marking a substantial year-over-year growth of 95.00%.

• Profit Boost: The company's consolidated net profit more than doubled, reaching Rs 741.21 crore, up from Rs 356.86 crore in the corresponding quarter of the previous year, representing an impressive 107.70% increase.

• EBITDA Growth: Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) saw a significant rise to Rs 129.40 crore, compared to Rs 50.90 crore in the same period last year, indicating improved operational efficiency.

• Margin Improvement: The EBITDA margin expanded to 22.49% from 16.95% year-over-year, showcasing the company's ability to enhance profitability while scaling operations.

Operational Performance

Kernex Microsystems' strong financial results can be attributed to its focus on operational excellence and strategic initiatives. The company's core business in railway safety systems and software services continues to drive growth, supported by increasing demand in the sector.

Management Commentary

Sreelakshmi Manthena, Managing Director of Kernex Microsystems, stated, "We are pleased to report a robust start to the fiscal year with our Q1 results demonstrating strong growth across key financial metrics. The significant increase in revenue and profitability reflects the growing demand for our railway safety solutions and our team's ability to execute projects efficiently."

Corporate Governance

The company's board of directors, in their meeting, approved the unaudited financial results for Q1. Additionally, they made key appointments to strengthen corporate governance:

• M/s. M P R & Associates, Cost Accountants, were appointed as Cost Auditors.
• Mr. D. S. Rao, Practicing Company Secretary, was appointed as Secretarial Auditor for a term of five consecutive years.

These appointments are subject to shareholder approval at the upcoming Annual General Meeting.

Kernex Microsystems' strong Q1 performance underscores its position as a key player in the railway safety systems market. As the company continues to focus on innovation and operational efficiency, it appears well-positioned for sustained growth in the coming quarters.