“It’s not the strongest of the species that survives, nor the most intelligent, but the most responsive to change,” Commodore (Retd.) P.R. Hari quotes Charles Darwin as he encapsulates the philosophy of Garden Reach Shipbuilders & Engineers Ltd (GRSE).

The Kolkata-based defence shipyard, which traces its genesis back to 1884, has embodied this evolutionary principle in its transformation from a conventional warship builder for the Indian Navy into what its chairman and MD describes as “a modern, competitive player” with global aspirations. “GRSE’s transformation from a conventional defence PSU (DPSU) warship builder to an agile, innovation-led shipbuilder is driven by a vision to achieve global recognition, technological excellence, and sustainability,” Hari tells Fortune India.

The DPSU’s goals align with the ‘Make in India’ initiative and reducing dependency on imported components. “GRSE has developed robust in-house capabilities to design and build advanced warships, reducing its reliance on foreign technology. It has achieved over 90% [of] indigenous content in recent deliveries,” Hari says, adding that the company has invested in modern facilities to boost production efficiency and capacity.

With more than 93% of its revenue coming from warships, GRSE has built a formidable reputation as a key defence player in India.

With an eye on the coveted ‘Navratna’ PSU status by 2030, the company is getting ready to navigate deeper, more competitive waters in the maritime defence sector. “The roadmap for GRSE 2.0 reflects a strategic pivot towards diversification into commercial shipbuilding while retaining our core expertise in warship building, and integrating emerging technologies such as AI, automation, and smart naval systems,” Hari said during an analysts’ and brokers’ meeting on February 13.

A strong order book of 10 key projects worth ₹23,877 crore (as on December 31, 2024) across 40 platforms is all a part of the plan to take the Schedule ‘A’ shipyard CPSE to the next level in a competitive international market that is dominated by the likes of China, South Korea, and Japan. The aim is to capitalise on India’s lower labour costs and strategic location to compete with Asian ship-building giants.

“India’s contribution to global commercial shipbuilding has dwindled to less than 1% (from 3.5% in 2007). GRSE aims to reverse this trend through strategic partnerships, infrastructure development, and a focus on high-value commercial vessels,” says Hari. No wonder, the company is laying a solid groundwork to capture a larger share of the global commercial shipbuilding market. It is building an Ocean Research Vessel for the National Centre for Polar & Ocean Research (NCPOR), and patrol boats for Bangladesh, thus demonstrating the DPSU’s capability to handle complex, non-naval projects.

In the pipeline is a plan to establish a new greenfield shipyard dedicated to commercial vessels in the next five years. The facility will enhance GRSE’s capacity to compete in the global commercial market that requires larger vessels such as megamax containerships with capacities exceeding 20,000 TEU (20-ft equivalent unit.)

GRSE has eyes on the navy’s Next Generation Corvette (NGC) project. The company aims to be the L1 (lowest) bidder in the mega ₹36,000-crore project to procure eight NGCs. “The RFP (request for proposal) has been issued, and bids have been submitted. We expect the price bid to open in a couple of months,” he had said during the meeting in February.

Four bidders — Goa Shipyard, Larsen & Toubro Shipbuilding, Mazagon Dock Shipbuilders, and GRSE — are in the fray for the project to procure the small naval vessels that detect and counteract submarine threats. The chairman & MD is confident that GRSE will secure the project that will not only give it a competitive edge but also a financial boost. After all, the company has built nine corvettes — both missile surface and anti-submarine warfare (ASW) — that are currently deployed by the navy.

Another big project on the anvil is the P-17 Bravo stealth frigates (warships with advanced weaponry and surveillance systems). The P-17 Bravo stealth frigates, which will have major technical upgrades, including a weapon sensor package, are expected to be the most advanced such warships manufactured in India to date. It is described as a follow-on project to the P-17 Alpha or Nilgiri-class frigates.

Three shipyards, including GRSE, are in the fray for the advanced frigates project worth ₹70,000 crore. “Each ship would be around ₹10,000 crore. So, the L1 shipyard would get four ships, and the L2 would get three ships,” the CMD says as he expects the DPSU’s experience in building ‘Dunagiri’, the second P-17A advanced frigate, to come in handy for the project. The lowest bidder shipyard is expected to get around ₹40,000 crore from the project, while the L2 will get around ₹30,000 crore.

Exports is the next big opportunity for GRSE, according to Hari. Ever since becoming the first shipyard in the country to export warships — GRSE delivered its first warship, CGS Barracuda, to Mauritius in 2014 — the PSU has grabbed international recognition for its advanced naval engineering, cost-effectiveness, and timely execution.

“Our order value book is ₹23,977 crore, and about ₹970 crore (around 4%) is from exports. We are pulsing the system,” the chairman & MD says, adding that the company is aiming for a two-fold increase in exports within a year, and at least a four-fold rise in the next four years.

The defence PSU has signed a deal with German firm Carsten Rehder to construct eight multi-purpose vessels, with an order value of around $108 million. The company also recently signed an MoU with Rolls-Royce for the production and localisation of the high-speed, high-power MTU Series 4000 marine engines.

Currently, GRSE is executing 10 projects, including four big-ticket ones. The P-17 Alpha frigate project is successfully undergoing basin trials. The company aims to deliver three P-17 Alpha ships by August 2026, and the first ship by August this year.

The other large four-ship survey vessel project for the navy will be completed this year, with only the last two deliveries remaining. It is executing a 16-ship ASW Shallow Water Craft project with Cochin Shipyard. GRSE will build eight of the 16 vessels. It is also building new-generation offshore patrol vessels for the navy. The four-ship project signed in March 2023 is slated to be completed by 2028–29.

The company’s financials reflect its bold bets. Hari joined GRSE in 2022 after which its revenue surged from ₹2,561 crore in FY23 to ₹3,593 crore in FY24. The profit also rose from ₹228 crore to ₹357 crore during the same period. The streak looks to continue in FY25 as in the nine months ending December 31, 2024, GRSE’s revenue has already touched the ₹3,434-crore mark with a profit of ₹283 crore. No wonder that it is No. 2 on Fortune India’s 100 Emerging Stars list.

“We will be able to maintain a CAGR between 20% and 25% over five years and maintain PAT margins above 8%,” Hari says.

So, what does it take to lead a strategic defence player like GRSE? An equal weightage on financial and non-financial metrics that reflect operational excellence and stakeholder trust, says Hari. “GRSE builds accountability through structured governance, project management key performance indicators (KPIs), technology-driven monitoring, and a culture of ownership, ensuring timely delivery and adherence to global quality benchmarks,” he adds.

For him, the proportion of ships delivered without defects or rework, high-quality yield, regular audits for quality, safety, and regulatory compliance, and feedback from clients like the Indian Navy or international buyers on timeliness, quality, and post-delivery support is a critical success metric.