Q1 framed Israel-Iran shock + AI/ML posture.

The first one is with respect to order inflow that we have witnessed in this Q1 in this quarter. If I compare it with Q1 FY2 and Q1 FY2 the order inflow has been pretty lean. Just wanted to understand the reasons for that, whether you see a more structural component to it or it is just, the timing of the orders. Just wanted to get a little bit more understanding on that and also QRSAM order which seems to have been delayed? That is my first question, sir.

So, let me tell you, last year, you may be knowing that we were supposed to get orders by 31st March, but one or two orders we got in the week of April. So, that is why we could not meet our actually previous year target, but our first quarter orders were very good, but actually, that was more of a spillover of the January to March quarter. This year, it was more structured. So, whatsoever we were going to get by January to March, actually we got actually INR2,000 to INR3,000 more, I can tell you, because we thought around INR25,000, but we finally landed in around INR30,000 plus. So, that is why there was no backlog per se. Actually, one or two orders were taken from this year first quarter also. So, this year whatsoever we have received, INR307 plus crores it is what was we planned, that only. So, as such, there is nothing to worry. We are definitely going to meet the guidance given about the order inflow for this year. And QRSAM, we told we were highly optimistic to get it by March, but procedural delays we knew, that is why we told it may go to Q1-Q2, maximum by September we will get and I am still sticking to that. Just CCS only is waiting for all of us and hopefully, when CCS meets, I think they will clear QRSAM. Our side all inputs, every activity is over from all of our side. So, we are just waiting for the CCS approval and that time we will get the good news about QRSAM.

Sir, and while we don't publish the balance sheet or cash flow with first quarter, any color you can give on the payments or receivables? Has there been an improvement versus fourth quarter? That would be one. And secondly, on margins, if you can give any color on so this quarter there has been a YoY decline, any particular thing that you'd like to highlight there? Is this just product mix or are there any one-offs as well?

As far as the receivables are concerned, the number of days as on 30th June, it is around 140 days. It was 176 days as on 31st March. So, it is at 140 days as on 30th June. So, it has improved over March. So, receivables are good. Cash flows are good. There is not much concern on those front. As far as margins are concerned, as we have already told, current year EBITDA margin guidance we have given of 28%, we remain at that. Quarter-on-quarter, there could be variations because of the composition of product mix. So, due to that, there are some variations, but otherwise, the current year EBITDA guidance whatever we have given, we maintain that. So, there is no particular cause of concern for the margin on the quarterly basis. We don't have to go by that. Overall on a yearly basis, we maintain the EBITDA margin of 28% which we have given already.

Sir, just to clarify, the margin mix, it's due to product mix and not due to input cost pressure. So, just to clarify that. So, you're saying this is due to product mix variation.

We are telling it is due to product mix variation, not due to input cost.

Sir, regarding the order book that you're sitting on today, could you help us understand the broad split across categories, say Naval versus Air versus say Land-based systems? And incrementally in terms of order inflows over the next few years, excluding QRSAM, which of these segments do you expect to be the key growth drivers?

Let me tell you, Army, Navy, Air Force, more or less it is similar. So, 30%, 30%, 30% out of the total 100% which we are having, so 90% is from defence. So, roughly 30%, 30%, 30% is Army, Navy, Air Force. And order inflow also are more or less in the same line only. QRSAM actually is Army and Air Force combined order. But there are Air Force related also some big ticket, Navy also some big ticket items will be there. So, again in the year, this INR55,000 also, more or less it will be evenly distributed across Army, Navy, Air Force. So, as such, there is equal priority, I should say, or equal confidence of all the three forces in this. As on today, the major order as per order book, the main components are Electronic Fuze for Army, LRSAM for Navy, LCA LRUs for Air Force, BMP2 upgrade again for Army, Ashwini Radar for Air Force, and EW suite Mi17 V5 again for Air Force, MPR Arudhra Air Force. So, like that, these all major order book is again spreaded across all the three services.

Understood. And as a follow-up to that, would the margin profile differ meaningfully across these segments or is profitability largely product-specific irrespective of the segment? And just if I can continue with my second question, what was the what were the key products executed during this quarter, some which you would attribute for the margin decline this time?

Okay. We cannot extrapolate that because of this product margin was less or more as such because again we are giving you only a glimpse of some top 8-10 projects, not the details because detailed projects are so many. So, firstly, this margin spread across Army, Navy, Air Force is uniform because overall we are having across Army and Air Force separately some subsystems, and system of systems type of projects. So, it is not that in particular one segment or Army we have less margin or Navy more margin, it is not like that. It is spreaded across type of solutions and our solutions are spreaded across various varieties. The major orders executed in this quarter were LRSAM, MPR Arudhra, Lynx U2, upgradation of periscope, BSF project some supplies, EON51 systems, Akash some supplies, Himshakti system some supplies, Fuzes and Receivers. So, again, this is only like 10 important projects, but overall projects are many more. So, again, correlating that this particular project has less margin or this has more margin is not correct to estimate because of the total spread across number of projects which we execute even in a quarter also.

Understood. And just the last question from my side, sir, on the counter-drone ecosystem, could you share some thoughts on BEL's role today? Which systems or products are we currently involved in and what components or subsystems do we supply? Here the private sector also appears to account for a sizeable share of the opportunity of the overall market. Could you share your perspective on which players are doing well in terms of innovation and product development and which areas within the counter-drone market remain relatively untapped today and where do you see opportunities for BEL to expand its presence or say gain market share?

Firstly, let me tell you, drone and counter-drone, this market is growing like anything because you might have seen in the recent conflicts also, the real threats and real deterrence, most of them are centering around drone and counter-drone solutions. So, the market is growing exponentially where there is an opportunity for big companies like BEL, mid-sized companies private sector like Zen Technologies, so many other companies are there, and startups. So, there is growth prospectors for all of us. So, we need not worry or need not eat the pie of other fellow. So, everyone has some unique solutions. What we are more focused is large high-power laser-based or microwave-based DEW solution integrated D4 solutions. Means real with hard kill. So, more of hard kill based, more complex systems we are more focusing on. But it doesn't mean that we are not working on drone killing drone or EW jammer itself killing or bringing down the drone. So, we are having also some products which we called D2, some products D3, and some products real D4 variety. D4 means this will have hard kill also. So, hard kill, soft kill, only detect and then use some other conventional way of neutralizing, this total complex solution we are more focused. Again I am stressing, we are more focused on this hard kill based large systems more. But other players are there and especially startups are there for the D2 type of systems and different, different innovative solutions. But there is a requirement of all type of solutions for drone and counter-drone. So, we don't foresee a challenge and definitely we have put our own CRLs, Central Research Laboratories and PDICs to look into some more innovative solutions either themselves or collaborating with some startups. So, good startup ecosystem also we are tapping now and a few orders, although right now small, we have taken jointly with startups and we are going in a big way for these type of small, small innovative products also.

Recent reports suggest that Adani Defence will be the electronics system integration partner to DRDO for the Netra 2. Will we have no role to play over here? Which are the other areas and platforms where we will be competing with this credible competition going forward?

Just explaining about this particular Netra 2 project, so this project I think bidding was done maybe one and a half years back roughly. We also participated in the bid, but unfortunately, we were not L1. So, it's part of the competition. So, in some program, somebody will be competitor, somebody will be L1, somebody will be L2. So, in this particular program, Adani became L1 and they are the system integrator for this program. But of course, subsystem level modules or capabilities of BEL will be made use of by DRDO as well as with Adani. So, our strength of subsystems like Radar, EW, or Data Links and so many subsystems are there in this Netra program. So, those subsystem level expertise DRDO as well as Adani will tap our thing, but of course, the SI role in this one we missed. We were not L1 and Adani became L1. So, it is part of life, some program as SI we will be L1, some program we may not be L1. But our subsystem strength or our in-house strength of developing these subsystems, that will definitely give us a good business down the line.

Sir, would like to know on recent Astra Mark has been opened for the private players. So, how you see that as a trend for the missile programs, so many programs are coming up? So, how we see the private participation opening up in the missile programs especially?

Definitely this question you should ask more from a private fellow than from a public sector like BEL who is today not established player in missiles, although we are also aspiring or entering into this missile domain. So, definitely we are right now seeing from the other side like the private fellow is seeing, we also are seeing. The issue is this particular domain, as you again know, during recent conflicts and last two, three years you have seen how important the missiles are for any war scenario. So, quantity and quality both matters here. So, definitely to keep pace of search requirement, there is scope of so many players other than BDL for this particular search requirement to be met. So, where BEL and other private fellows also are pitching in. In two, three programs, we are actually collaborating with private fellows and then we have got some orders as DcPP partner. So, as such, this particular domain is very, very important and role is there again for BDL, BEL, and private companies. So, all of us have a role to play for meeting the search requirement. But let me again assure you, in most of these missile programs, the major electronics today we are the leader because that electronics is more complex complicated than a radar or others where we have so many subsystem and expertise for customized solution. So, that will give us enough future businesses.

Sir, my first question would be with regards to the P&L. So, while we've seen a quite a commendable 13% YoY growth in revenue, at the same time our other expenses have actually declined by roughly 20%. So, just wanted to understand, are there any sizeable provision reversals that have taken place here or what is the reason for this decline in other expenses?

During the previous year, the provisions relating to the liquidated damages during this current quarter April to June of '22 was on the higher side based on the delivery schedule of those contracts which were executed during the previous year. Due to which current year that is not there. So, that is the difference where the other expenses have come down.

Sir, second question with regards to the counter-UAV discussion that happened a bit earlier on the call. You mentioned that BEL would be looking more towards the directed energy weapons, both laser-based and microwave-based. So, sir, could you please provide some color as to when should we expect a prototype in its most earliest phases being developed by BEL and by when do you expect commercial sales from this product to begin?

No, let me tell you, we have got enough orders already in last three years for this 2 kilowatt laser-based DEW solution and which we have most of that, something like 80% of those orders already we have supplied also. Of course, microwave DEW based solutions right now still under evaluations, although we have the prototype ready. These prototype we had made jointly with DRDO. But parallelly also we have started some customized configurations especially for export purposes. So, in export also we are getting very good leads, we have given very good demos to some of the countries and they have shown very keen interest on this high-power laser or microwave-based DEW solution. So, we have our own in-house strengths to make customized different, different products for the basic design, but the basic design originally came from DRDO for us, they were our real development gurus. So, but today we have the capability to customize them or to come out with different versions, upgrades, upgrade on range, upgrade on higher power laser etcetera. So, there are a series of product versions we call it. So, they are already pipelined and a one or two we have given demonstrations also to our end user as well as to our some of the external countries, export countries who have shown some interest. So, as and when this order, confirmed order comes, I will again let you know.

Sir, my first question is on your order book, sir. Sir, you currently have INR72,000 crore worth of order book. Can you help us with the order book breakup for like 10 major orders that are there? So, what would be the quantum of these orders?

Certainly, certainly. So, the main orders are Fuzes, of course, largest order book consists of Fuzes because Fuzes requirement is for eight years, so more we have to supply. And then we have LRSAM orders, then LCA Mark 1 and Mark 1A LRUs for this 83 and 97 aircraft. Then this BMP2 upgrade, then Ashwini Radar, then EW suite for Mi17 V5, then MPR Arudhra. So, these are the top seven projects which are there in our order book as on 1st July. These seven, eight projects are around INR20,000 crore out of INR6,000 crore. So, but overall we have so many small, small projects consisting of 400, 500 line items minimum. So, these are the top seven items which consist of around INR20,000 crore plus of order book today for me.

Sir, for the order pipeline that you have suggested for INR55,000 crore, if we consider excluding QRSAM, which would be the major orders which are currently gaining traction in expected on the expected lines?

As I told last time also, Shatrughat and Samaghat we may get in another months timeline. So, biggest is that after QRSAM. Then as I told NGC or P75I, one of these two definitely we may go through, maybe both of them we can go through because government has to give approval. Again, they are waiting for CCS approval only, but we are confident out of that, as I told last time, at least 100% probability of having at least one of them and more than 50% probability of getting both of them. So, that's why in these two programs are another major subsystems are there in these two programs for which we may get a big order. Of course, HAMMER project also, we are going to get in this financial year and Shakti Phase 4 project. So, these are also a few more major projects which we are expecting orders in this financial year. Put together, I told now, total INR55,000 crore, out of that INR30,000 roughly will be QRSAM, then around INR15,000 plus is these platform orders, and remaining will be the other base orders of smaller quantities, support, services, or AMCs, all this put together remaining.

Sir, my question is on the likely impact of pay commission provisions on company's margins over next years. So, when will these provisions start, in which quarter, and what will be the likely quantum and the impact on the margin?

See, current year January '27, current financial year from January '27 onwards the wage revision is due. So, for the current year, the provisions will be made for months period, January to March '27. This is for the current year. Next year, of course, it will be depending on settlement, things settle or not, again if it is settled, it's fine, otherwise it's full provision. As far as the impact is concerned, because the turnover will be increasing year-on-year, as we have already told that we are projecting a good growth in the coming years, we expect the employee cost to turnover to be in the range of around 12% even in the coming years also, which is now also 12% last year. In the coming years also, we expect it to be in the range of 12% employee cost to turnover percentage since the turnover will also be growing in good scale.

Okay, sir. So, despite the pay commission provisions being implemented, you don't anticipate any change in employee cost to the revenue ratio over next years broadly?

You are right. Since the employee, since the turnover will be increasing in that scale, so the impact of the employee cost whatsoever increases happen after the wage revision will be absorbed by the turnover increase and the overall percentage we expect to be around 12% itself.

Sir, my first question pertains to while we are very confident on maintaining the margins in FY, do our supply chain contracts shield us from any material cost inflation in FY28'29 as well or those probably would come at a later stage in terms of contracting?

No, we are not foreseeing any change because of material clause inflation. The thing is, as I told earlier also, we are in the continuous state of indigenization drive and that will indirectly compensate for this type of material cost escalations or any other issues which can come in near future. We are actually increasing our investment on indigenization in a much more larger scale and we are reflecting in our MoU with government also. So, these extra efforts which we are putting, again let me assure you, will make us safe from margins or escalations which may happen in future. We are taking these type of proactive steps to control that.

Noted, sir. So, what would be our annual apex and what percent of that would go for indigenization?

Let me tell you, apex we keep outside of indigenization. Indigenization we generally consume if at all our R&D budgets. And that definitely we are going to increase. Our main apex is for infrastructure for our what we call production-related activities, capacity enhancement for that. That as we have given you guidance, INR1,200 plus we are investing under apex which will take care of our production and other type of investments. And this indigenization comes from our R&D budget. And we are anyway we had given guidance also, more than INR2,200 crore R&D budget we have allocated for this year for all type of niche technology development, indigenization, and other collaborative R&Ds.

Noted, sir. Sir, lastly, any update on AMCA program?

Definitely AMCA program we and L&T are really working together and more or less we have arrived at our internal pricing and all type of sub-module related clarity has happened. We had apex level meetings, which means two senior level meetings also happened and I think one more meeting we will finalize everything so that we are ready to submit our RFP response at the earliest. Now I think the date is shifted by two months. So, 27th August 2026 is the date of RFP submission. So, actually, it was shifted by two months. So, 27th August. So, it is there right now the RFP submission date.

I just wanted to understand that, delay in Tejas which we expected somewhere, four Tejas to be delivered the fully loaded ones by August. Apparently, there is no visibility as of now even today. So, the subsequent six which were supposed to come apart from this four in the upcoming months. Now, if the four doesn't get delivered, then any further don't you think there'll be delays in terms of requirements or supplier requirements for the remaining six Tejas for, so will that not impact your revenue or your margins on that front? Because you mentioned LRU.

Let me again clarify, we are only selling these LRUs to HAL and these LRUs are around 11 types of main LRUs related to LCA and then some other EW related additional LRUs which they take time to time. So, these LRUs are electronic modules which are separately tested as per the approved procedures and then we supply them to HAL. Let me assure you, we have given much more than what they really want to them. So, they already have enough numbers of electronics LRUs as per the contract delivery schedule we have given them and that is available with them. So, let me again assure you, no Tejas will be delayed because of LRUs being supplied by BEL late. That much will not happen, I can assure you, we have given enough, enough quantities to them to make. Right now as per the reports from public and media, the main bottleneck is still the engines. So, which HAL will tell you better when they are getting engines and when they are supplying the Tejas aircraft. But LRUs point of view, we have given enough numbers to them.

No, but I wanted to understand that while you have already supplied more than that is required, will that not affect the pipeline for the further ones because if the current status that is a status quo, What might happen to the Tejas going forward? To LRU going forward could actually become come to a standstill. That was my point.

Okay, your point understood. Sometimes generally these electronic modules are separately tested and they can be kept as a stock also. But in case, in case HAL tells us to go slow, we need not make then those modules. We will have the material with us, but we can make the module and test the module based on their supply timelines. As on today, they have not indicated any slowness to us. So, we are going ahead with our planned capacity and planned planning for this program. So, as such, there is no issue, but in case they tell, it may if at all affect by few hundred crores here and there for us. So, maybe INR200, INR300 crore turnover maybe shifted by few months for me. But that definitely when we are planning for INR0,000 crore INR300 crore is less than 1% and these type of business level so-called changes or schedules plans etcetera. They are part of life and we can definitely absorb these type of less than 1% significance for us type of delivery schedule related negative challenges, I should say.

We have received LRSAM contract for around 92 billion in FY19, but still a sizeable portion is still unexecuted in order backlog. So, are there any reasons behind this that why it has still not been executed?

You are referring to LRSAM. So, LRSAM delivery schedule itself was spreaded over last year very small quantity and this year only major of the quantity is for this particular one will be there. So, as per schedule only we are going. Nothing to worry, nothing delays are there in this program for us. The leftover activity is around INR3,000 plus crore total we have to supply and out of that majority we will supply this year, maybe some few hundred crore will go to next financial year. But it is as per the delivery schedule only. So, nothing worrying thing in LRSAM program as of now we are seeing.

And another follow-up question is regarding QRSAM. So, that will also have a similar execution timeline of seven to eight years in the future?

No, no. The first order is seven to eight years spreaded because it is having FOPM, then FOPM evaluations, and then only the bulk production will start. So, next order whenever we may get, definitely if it is of the similar quantities, we can supply in three to four years.

Sir, one last question is regarding, you know, the delays in ordering of NGC, QRSAM, all these programs. So, is there any risk of, you know, lower than expected revenue growth in FY25 in case because of the delays in these ordering?

No. Let me tell you, financial year '2 per se let us say, these both programs are not constituting in our delivery. These are in our order acquisition target of this year and something will spill over to next year. But they are not in my execution plan for next year. In my execution plan is whatsoever order I already have got and some other smaller orders, so many smaller base orders as we told now, they keep coming for us. So, those orders will have generally 12 to 18 months type of delivery schedule. So, those orders will keep my next year also. This year and next year is mainly depending on those type of orders. These large platform orders, they will start giving me big turnover after two years, not immediately.

Sir, just wanted to understand because you've guided earlier for 21% to 23% EBITDA margin. So, for the following quarters, we'll require closer to 23% EBITDA margin on an average basis. Is that really achievable, sir, going forward for the coming quarters?

Definitely yes. We have variability of 2% to 31% EBITDA margins based on the product mix in quarter-quarter etcetera but at the year end, let me again assure you, we will cross 28%.

And sir, over the years, you had earlier alluded also that you want to increase the R&D spend to closer to 8%. So, on a longer-term basis, on a two to three year basis, this kind of margins is sustainable because R&D expenses currently at 6% to 2% contribution further to R&D expenditure, will it take a hit on the EBITDA margins going forward on a longer-term basis? This is slightly two to three year basis.

No, no, no. There only is the real tricks. More you invest in R&D, likely chance of more EBITDA is there because you are making niche technology, you are developing something, you are doing more indigenization. So, I don't foresee that 6.5% or 6.8% right now to increase to 8% will hit on margins. Actually, I feel it may finally make my EBITDA margins more sustainable although my product mix may here and there change. So, this are based on previous experience of ours in last 15 years we have seen. We are continuously increasing our R&D expenditure and with R&D expenditure, we have seen the returns are coming in different, different forms. One is self-sufficiency in technology and of course, indigenization, more indigenization gives us more EBITDA margins.

Which are the international markets or partnerships and product segments, you know, offer the best opportunity for you to increase your export revenue and reduce, you know, your dependence on the Indian defence budget cycle?

Almost all products and technologies which we are right now delivering to our Indian customers, there is a huge demand of that in international market also. But the main, main products where we are seeing are Radios. You might have seen last year we have received largest order of around INR2,000 crore worth next generation software defined radios, Satcom solutions, and then D4 type of solutions. We have increased our TR module type of build to print type of a market because for airborne segment especially. Because there whatsoever our quality and our infrastructure is there, we are increasing our presence in that type of a high professional grade airborne modules. So, that also will be at module level and system level as I told about mainly about communication, our WLR type of a weapon systems. So, those type of things there is a long list. We are very, very confident that we are going to give you much more better export-related figures than what we are currently having.

Sir, my second question is, you've indicated your plan to increase exports to about 10% and I think you also talked about increasing R&D. I want to know which are the specific areas that you're directing your incremental R&D spend. This will help us understand the direction that BEL is taking.

Let me tell you, again, because we are in defense electronics domain, each and every area is important for us because each and every area has some technological upgradation, like example of AI. The AI is not limited to only Army or Navy or Air Force or only to Radar or laser systems. AI as a technology is required across all domains. So, we are spending our R&D also across all domains. Of course, slightly more increase in R&D is on some of the big platforms type of projects for us, means large equipments like some of the Radar, Sonar, EW, that type of a program. In a mission mode also we have taken a few more projects. But overall, I can tell you, we are spending evenly across subsystem, systems, and equipment and on indigenization drive for subsystem module level. So, as such, we are spreading all our R&D efforts in all directions including diversification into civilian domain like Rail, Metro, Aviation sector, so like that also we are doing, Space. So, diversifying into this new areas and consolidating our strengths in present areas by infusing newer and newer technology. So, there only this whole of majority of the R&D funds will go.

Sir, my last question is on your employee cost that you talked about. Now, when it goes for incremental agreement that will be there, this will be valid for how much time period and typically what is the last time the hike that was taken?

Last time the hike was in January 2017. That was for a 10-year period. So, the next hike is in 2027 January 1st. That is how I told that for the current year, for one quarter the impact will be there. As far as the hike is concerned, how much will be the hike, we cannot tell at this time what will be the hike because for that there are certain committees which are set up at government level and then they guide us. But broadly taking into account certain parameters of what we got last time and what we may get this time, that is how I predict. We had estimated that the employee cost to turnover could remain in the range of 12% in the coming year and coming years also in the next year also. Because the scale in turnover will be increasing by that time, so even if the employee cost 3 months provision is there in the current year, even next year either provision or full settlement may happen, but overall impact on the employee cost to turnover percentage may not be significant.

Hi sir, thanks for the opportunity. Just wanted to ask about your 15% revenue growth guidance for this year. So, given that you've done 20% in the first quarter itself, are we on track or likely beating this 15% revenue growth? Could it be higher?

Definitely, as I told last year also, target is 15%. Last month we may surprise you by maybe 0.5%, 1%, 1.5%. I don't know how much more we can have, but our balanced plan is 15% and I am confident we will reach 15%. Quarter-quarter there are variation from previous year to this year, so that are generally there in all our defense-related projects. So, as such, we are confident to meet or exceed 15% guidance.

And just secondly, if you could so you mentioned some of these programs that you expected in FY27, you know, Shatrughat, Samaghat, Shakti Phase 4, HAMMER. Could you quantify some of these products these programs that how much what are the potential order sizes for some of these? And if you could go a bit deeper into the HAMMER program that you have signed up with Safran and what is that overall market potential there?

So, we are only talking about the first order, immediate first order which we may get in this financial year for these 3 programs. Because subsequently there will be definitely many more orders for all the 3. So, for Shatrughat and Samaghat, I think I told you around INR9,000 plus crores, we may get from Shatrughat and Samaghat. And about Shakti, it will be around INR2,000. And about HAMMER also it is around INR2,500 plus. So, these three orders we are going to get in this financial year itself. And subsequent their repeat orders there is a good potential for them to have repeat orders, but repeat orders definitely will come after two plus years only. Because this execution itself will take around two years. So, beyond that only the repeat order will come once we supply major quantities of present orders then only.

And just lastly, the way you have given that the LRSAM you expect around 2,100 billion delivery worth of deliveries in FY, which are some of the other programs that you're expecting to contribute to your FY revenues if you could quantify them?

Definitely we had done our planning and recently we have finished our roll-on plan meeting also reaffirming how much for which, which program we may get. So, Akash Army we are going to generate revenue more than INR1,000, around INR1,200. D29 EW systems, MPR Arudhra, BMP2 upgrade, LCA LRUs, so these are around INR500 INR1,000 each one of them will give to us. So, overall, in this our INR0,000 plus journey, these are the six, seven important projects which will fetch me these types of turnovers.

Sir, my question is regarding raw material cost which has shot up very sharply sequentially and over year over year also. Of course, it may be due to product mix, but it is has increased by almost 8% to 10% sequentially and year over year. So, is that due to any commodity price inflation or is that any one-off there or product mix and how do you take any corrective action for that?

Let me again assure you, which was told earlier also, it is mainly because of product mix only. The thing is traditionally also because of our product mix; our material cost varies from 50% to 59%. Typically, it was around 55%, but based on the product mix, sometime it drifts drop-down by 3% to 4%, sometime it increases by 3% to 4%. So, that is the so-called healthy sign for our business of operations. So, right now we are not foreseeing any pressure from this RMC. We have analysed thoroughly this particular one and based on the product mix only, the final conclusion was it was because of product mix, it was not because of some pressure because of raw material related consumption or input cost suddenly increase etcetera. If it will be there, definitely we will share with you the first.

And sir, what is our export pipeline and where do you see our exports two to three years down the line?

As I told you, export we are having great leads right now. But leads to getting the order sometime takes a little bit more time. So, presently I am having around USD465 million order book with me. But the leads which we are pursuing is at least four to five times more than that. And the leads we may get it, that I can't directly predict, but definitely this year we have given our internal guidance of around USD300 million we should definitely fetch out of the leads which we are having. That is spreaded across again some 15 to 20 important products. So, we are confident to slowly and slowly increase our presence in export market because as you also remember and I told earlier, we want to finally aim at 10% of our revenues through export. So, we are working systematically to see that we reach that goal in next five years.