On order inflow guidance for upcoming year - excluding QRSAM, what can be the order inflow that you're looking at in FY27?
This data anyway, I will tell in my closing remarks about the guidance for this year.
On the DAC approvals last year almost INR6 lakh crores, and this year we have seen almost INR30,000 crores of base orders - is there a possibility of base orders being a step-up next year as these approvals come into orders?
Definitely, that anyway I will tell in my closing remarks, what we are looking at for this year and beyond. So please wait for the closing remarks.
On exports - the share of export orders in backlog seems to be increasing. What is driving that? And on operating cash flow improvement, is it driven by increase in advances?
The order book is healthy from export point of view. We have around USD96 million order book for this year and subsequent year. Some of the orders are to be executed in 2 to 3 years. That's why once I will give guidance about this year, I will tell what is executable in this order book in this financial year. No, over the year, cash flow has been more or less good, as you can see from the cash balance at the year-end. Advances as of the year end is around INR12,500 crores from the customers.
Your order book has not grown this year - it has been flat for some time, because your annual order inflows are very similar to your revenue number. How long can you maintain this 15% plus kind of revenue growth? Or do we come down to a lower level of 12%, 13% over medium term?
every year we get some fixed set of orders. And every 3 to 4 years, we get some projects. And that big ticket projects will take us with a good healthy position of the order book and execution and a good growth rate. like this year, QRSAM, definitely, we are going to get now anytime soon. And after 2 or 3 years, we again have 1 or 2 big ticket items in pipeline, which are more than INR20,000 crores, INR25,000 crores type. There will not be any downtrend. We have we are highly optimistic for the next 5 years, at least where our main, main leads are, and we are confident we will have higher trajectory only, not at all a lower trajectory.
On Project Kusha - India is preparing for maiden firing trial of Project Kusha's air defense interceptor by late July. Could you give some color around that and what is our role and what kind of order we could get for this prototype?
this program is spearheaded by DRDO. We are one of the largest Development-cum-Production Partner for them. So as such, this question is more relevant to DRDO. Of course, when we are their DcPP partner, we know whatever portion we are developing for them. So those portions, various radars, various control centers, communication systems, they are in very, very advanced stage of delivery or prototype realization. I can only tell about what portion I am driving directly. But the total program and trial directive and which missile to be tested first and in what configuration, these all are decided by DRDO. I am only answerable for these subsystems right now.
On the constantly improving gross profit margins - we are almost at 49%. There is substantial improvement in the gross profit margin over past 2 to 3 years. What is your sense on the gross profit margin for F'27?
Again, I will tell you at the end, although I know the answer for many of this, because unnecessarily I did not want to repeat that. So definitely, I will tell all these points at the end. But let me again tell you this profit margins are because of mix of products. product mix year-on-year slightly vary. And based on that, some variations will be there. So that we predict at the start of the year. And generally, we are up to the mark of what we predict. this year also we have done the prediction. And that predicted value, I will tell you in my closing remarks.
On capacity utilization and capex requirement - where do we stand in terms of capacity utilization, the pace of growth, how much was the capex this year and what is the guidance for capex for F'27?
if we have to have a good growth, we should have a good investment plan also. it is not only the project, it is the capacity also has to be augmented. And that is a continuous journey in BEL. Last year, I think we had INR900 crores capital expenditure was booked. This year, anyway, I will tell you at the end, it will be definitely much more than that. But we have much more bigger plans for the next 3 years. Some big projects at Palasamudram, at Chitrakoot, and Vellore facility, they are in pipeline for us in addition to our Ghaziabad and Bangalore. Large investments are planned to upgrade the facilities for diversified products.
Currently where do we stand on capacity - 70%, 80% or how much from current capacity is still possible for 1 more year, 2 more years?
it is nothing like that this present capacity for 1 year or 2 years, etcetera, because we have, again, a mix of products. Something we produce in-house at component level, till module and system level. And some of the projects we are doing only system integration capability. system integration related projects require much less infrastructure, much more skills. At component or subcomponent level, it requires a great capital infrastructure also specialized infrastructure. As such, we are not seeing any choking for us for next few years, maybe 3 to 5 years. But we are continuously adding so that we don't face this type of choking for next 10 to 15 years also.
On the Uttam radar program - are the quantities and scope finalized by HAL? When do you think supplies from our end could begin?
the question should be asked from HAL more, because it is HAL and DRDO. LRDE is the DRDO partner who is original designer of Uttam radar. And HAL is the system integrator of Uttam radar to LCA. the question should be asked to them when and what stage these tests are. As far as I know, they were in the very, very last stage of testing and clearing this radar for LCA. But exactly, I don't know. As and when they finalize, they will issue RFPs for the subsystem or components to us. As per my recall, as of now, I have not received any inquiry from them for this program.
On operating cash flow to EBITDA ratio - EBITDA in FY26 was about INR8,000 crores and cash flow from operations was about INR1,490-odd crores, conversion ratio of about 19%. In FY25 this was about 6.8%. Cumulative over 4 years it is about 33%. Capital goods peers have better conversions. Your comments?
See, overall, breakup of the operating cash flow item-wise has been given, the statement which has been uploaded on the stock exchanges. All the details of each individual items have already been given. So that way, all I can say is the current cash position is reasonably okay for us to sustain the plans which we have got for the future.
On net working capital and customer advances - that number as percentage of sales or number of days has been coming off from past 2 years. How do we see it going forward from the new orders likely to come, particularly bigger orders like QRSAM?
the contract for QRSAM is under finalization. we'd not like to comment much on that as to what are the terms and prices because that is under finalization. The overall advances, as I told you, is around INR12,500 crores as on 31st March '26. as far as the operating cash is concerned and cash flow is concerned, as I told, it is good for us to sustain the expansion plans, what we are contemplating in the coming years.
On margins - these are record high at about 29%-odd and you have consistently outperformed what you have guided. Starting Q4FY27 we might see some increase in provisioning due to commission changes. Do you expect these kind of margins to be sustainable? Is there any dilution expected and could increased employee cost have a hand in this?
When we give guidance, we take care of all the parameters. So just at the end now another few minutes, when we will give guidance to you for this year, definitely, we have taken care of all the parameters, including wage revision of our employees, which is due in 1/1/27. on the last quarter, we may expect a little bit more wage expenses. But taking into consideration that our indigenization, our all product mix of this year, based on that only, we have arrived at the guidance, which I'm going to tell you very shortly.
With strong cash generation, how is BEL thinking about capital allocation? Is it through higher dividends, acquisitions, technology investments or inorganic expansion?
we should work on all the parameters if we have to grow with double-digit growth for next 5 to 10 years. we have our own defense plan. We have a Strategic Planning Group, headed by a General Manager, who plans all these things and well supported by our corporate finance group. And they come out with these plans where to do this allocation and which area to invest more for the next few years to come. And it is definitely a logical mix of various parameters for various portfolios, which you have mentioned. So that is our internal plan, which we generally don't come out. But let me again assure you, we take care of from all fronts so that our growth is consistent.
On new orders in defense electronics centered around new age technologies like quantum computing and drones - how is BEL developing capabilities for that? Is it through cultivating startups, working with the existing ecosystem of subcontractors, or in-house? And what kind of capex would this involve?
these cutting-edge technologies, they have to develop it in part of all the collaboration partners. partners for us are DRDO, startups, academia and our in-house itself. this drone electronics or drone technology or quantum technologies, whether it is QKD or quantum-safe communication, etcetera, we are working on all these 4 pillars of development. we have done a good hands-on on these technologies and a few POCs are also given to our defense users. we have totally geared up to tap all these technologies through all these 4 spectrums of working.
Will working with so many stakeholders for these new technologies impact our margins going ahead? And what is the capex/infrastructure built by BEL for these new technologies?
Firstly, let me tell you, margins should be better only when new technologies comes in because new technology means more value addition. whenever this technology goes to field, definitely, there will be more value addition from us. margins will be on the higher side only for that. We have developed a good infrastructure because these technologies require a good computing infrastructure - whether it's CPU or GPUs. We have invested heavily of the order of minimum 100-plus crores in last 2 years and at least around 100 crores to 200 crores worth of investments are in different stages of approval. The building/testing/integration infrastructure is much less compared to compute infrastructure. We are creating compute infrastructure at 3 to 4 places including CRL Ghaziabad, CRL Bangalore, DTC, Unmanned Systems, Network and Cyber Security SBU and Palasamudram facilities. We are going to create one separate high-performance computing infrastructure very soon.
On semiconductors - what part of our total COGS is semiconductors and with the recent increase in semiconductor prices, are we able to pass it on or do we have to absorb it?
all semiconductors right now are imported because still in India, that infrastructure is just coming up. semiconductor per se is around 17% to 19% of our material cost. VoP, we can say Value of Production. per se, semiconductor cost increase, if at all, it increases, it affects only this portion only. So overall, on the margin, it may not affect us that much. And of course, we are in the process of indigenizing some of the technology itself. And that way, we will compensate for this price offset.
On the submarine program (P75I) being finalized with Mazagaon Dockyard with value of closer to INR90,000 crores - what kind of flow-through orders can BEL expect?
Definitely, in all submarine program or ship-based program, major electronics comes from BEL. In these programs, especially this P75I program, there will be some foreign component also, because the foreign partner is working with MDL and indirectly is working with us also. some foreign component with good indigenous content will be there. But there are some components which are homegrown and which will be inducted as part of this. So, I can tell you more than 50% to 60% of electronics in this program will be from BEL. We are in very, very advanced stage of discussion with MDL and with this foreign partner of MDL for that program. there are around 6 subsystems we call as part of the submarine program - Communication Suite, Navigation Complex System, Combat Weapon Control System, Combat Information System, Torpedo Fire Control System, Missile Fire Control System. these all subsystems will be part of our BEL kitty.
On per ship cost or per submarine level, how much of electronics could be the percentage cost of total submarine value, roughly?
I can't tell you exactly, but around 25% to 30% typically comes to electronics portion generally. But in this particular one, because there is a foreign element also, it is not totally homegrown or in-house. So that's why the ratio may slightly vary 5% plus/minus on this number.
On QRSAM program - where are we in terms of finalization? Last call you mentioned by March or June end. Any update? And once we get the program, how soon can we expect execution to start and will margins be similar to existing business?
as I told last time also, we were actually hopeful that by last year, last quarter itself, we may get or else the first quarter of this year. we are still fully optimistic that before June end, we may get this order. There is only 5% to 10% chance that it may slip to July. All formalities, technical CMCs etc. are over now in the process of necessary approvals at various stage in ministries. Worst case, it may slip by 1 more month. Once we sign the program within 18 months, we are supposed to give the first of production model. After that, only the real bulk supplies will start. Regarding margins, it is too early to say. But definitely, it will be similar orders only. May not have too much change, but exact quantification, we will come to know once we sign that contract with our Tier 1 and Tier 2 suppliers.
On other expenses for the quarter being up about 36% year-on-year - any one-off provisioning during the quarter? And were total provisions for full year FY26 similar to FY25?
These are basically regular provisions due to increase in operations. For example, performance warranty as the turnover increases, we need to provide more for the performance warranty and certain other expenditure, which are in line with the scale of operations also. There are some, of course, LD-related expenditure also in this. So overall, based on scale of operations, this expenditure has increased. No, FY26 definitely has not increased. It's almost similar only on the similar pattern.
On the existing order book - can you help us with the breakup of your existing order book in terms of project-wise and the time line to execute the current order book?
the order book of around INR74,000 crores mainly consist of some big ticket few items - The electronic fuses, the LRFM, the LCA Mark 1/Mark 1A LRUs for Tejas, BMP-II upgrade, spare services and miscellaneous items, Ashwini radar then EW Suite for Mi-17 V5. these are the major projects which we are going to execute in next 2 to 3 years. The electronic fuse is for another 7 years more. BMP-II upgrade also is for another 2 years. Remaining are 1, 1.5 years.
Is it possible to quantify some of the items in the order book?
Electronic fuses around INR4,300 crores still left for us for next 7 years. LRSAM around INR3,500 crores, LCA around INR3,200 crores, BMP-II upgrade around INR2,800 crores, Ashwini, around INR2,460 crores, Mi-17 V5around INR2,200 crores spare services, miscellaneous, again around INR2,500 crores. These are some of the major items which are to be executed in '26 and beyond.
On other income - it seems to have come off. What could explain that for this quarter?
During the year, the average interest rates have been less. Average yield from the bank has been less. That is the major reason for the other income decrease. Foreign exchange impact is also there. Other income reduction is on account of these 2 average interest rate reduction and foreign exchange variations.
In addition to QRSAM, could you talk about a few more larger projects in excess of INR50 billion or INR30 billion order size, which would come to the company over next 2 years?
NGC, there are some so many subsystems of NGC, Next Generation Corvette program, which definitely will come this year. And a few may spill over to next year also, a few subsystems. But at least 50% of the subsystems we are hoping to get this year only in NGC program. The Shatrughat and Samghat EW solutions, we are hoping very, very soon. P-75I has a lot many 6 subcomponents within that. We are going to get some order for that this year. HAMMER program, we are expecting very soon. Shakti Phase IV, we are expecting very soon. MF-X radar for naval ships also we are expecting very soon. these are some of the big-ticket items, which we are going to get mostly in this year itself. A few may spill over to next year. That is '26, '27 and slightly beyond '27, '28, this mix of the projects.
On data center - we had the ambition to target the government data center business. What's our order pipeline for this business? And are we seeing any success?
Data center business, already there are so many players. we wanted to give some unique solution. uniqueness comes from 2 fronts. One is from security point of view to give a more cyber safe solution that we have taken a few leads where we are adding cybersecurity components of ours. But otherwise, the server and other components are COTS. So that is one set of target customers for us, where we have got some few hundred crores projects only right now. But a big chunk is waiting for us where we wanted to give totally indigenous total data center solution with hardware and software stake also and cybersecurity components, all are homegrown, a few from our own company and a few from our Indian development partner, C-DAC. we are in a very, very advanced stages of discussions with them. once we click on that, that orders we are expecting of the tune of INR2,000 crores to INR10,000 crores, somewhere in between. The first order will be from the right now, maybe a few hundred crores we already have, but if good leads are there, we may expect around INR1,000 crores to INR5,000 crores type of business from the first segment of business.
On status on the AMCA project - we are hearing land has been finalized for that INR15,000 crores project. Any status from your side in terms of RFPs and any other development?
we are one of the 3 selected bidders for receiving the RFP. Pre-RFP related meetings already happened. So now we are expecting mostly this month and next month, the formal RFP will be received by us as a consortium partner, BEL and L&T. L&T was our lead bidder. L&T will receive the RFP mostly anytime in the next 15 days to 1.5 months. And then we will start responding to the RFP. Regarding development and the land acquired, etcetera, that is done by DRDO because again, we will be the DcPP partner only for the 5 number prototype. But the program is being run by ADA, Aeronautical Development Agency. we start investing on our own infrastructure once we receive RFP, and once we are selected as the selected bidder, then of course, our investment on capital will increase.
My question has been answered.
(no answer provided - question was withdrawn)
On pricing in nomination-based contracts - when the new PBT norms were announced by MOD back in FY'20, it was expected margins would come under pressure. On contrary, margins for the whole defense ecosystem have expanded. What has enabled this performance?
As I told last year also, again, I am telling you it is the indigenization, indigenization of critical technology, indigenization of modules, system, subsystems. That has definitely helped all of us for that. And that's why we are putting all our efforts in increasing this indigenization score for all of us. by our own in-house efforts, we have created even a separate indigenization cell in BEL to closely monitor our own development as well as the development done by our MSME and other start-up and other partners. We are closely monitoring and supporting our ecosystem partners to increase this indigenization. The more faster we do indigenization, the more profitable all of us will be. it is only and only indigenization, which has really helped all of us.
When we indigenize a subsystem, that is known by DRDO and MOD. Why is the Ministry of Defense not cutting down on the price?
The role of MOD is to support the industry and to create the good environment of this Atmanirbharta or indigenization. So definitely, they should not cut the root itself. When they do benchmarking of the price, there are various methods of benchmarking. With that and then we do subsequent optimization and indigenization, that can be flowed back by us for our profit, which we will eventually do with these profits. This profit will again flow back in the capital or in the R&D. this cycle don't want us to break. They are actually supporting us to do more indigenization or more Atmanirbharta and the policy allows that to happen.
On the net working capital cycle at end of FY26 - it seems to have increased sharply as compared to FY25. Receivable days have also gone up by about 30-odd days. Could you speak about the variances?
Current ratio is around 1.97 as compared to 1.76. You are right that receivables have gone up in the current year as compared to last year. There were some constraints from the customer side during the previous year, which money was subsequently received in April and May. So that is the reason why at the year-end, the number appears to be higher than last year. But this amount what was to be received in the previous year has since been received in the current year.
What is the more sustainable level of receivable cycle - 130, 140 days of sales?
It has been in the constant around 140 to 150 days for the past 4, 5 years. I think it should be around that level only.
On the current supply chain environment - are you witnessing any disruption in sourcing or availability of critical components? And key countries/regions, especially Middle East, from which you import - any impact on execution timelines or margins near-term?
the supply chain per se is definitely slightly affected, especially the Middle East crisis. some of the subcomponents for major designs, major programs like LRSAM, etcetera, were coming from Middle East. So definitely, there was a delay of around 1, 1.5 months for us. And that's why we wanted to achieve slightly better revenues. There was a minor setback, but that setback was only for a few months. So overall, I am not seeing any major impact for us for our turnover revenues, etcetera. Very, very few semiconductor comes from Middle East, actually some detectors and other high-end detectors, etcetera. Otherwise, major semiconductor ICs, etcetera, comes from Europe or U.S. type of sources or from Taiwan. we are not per se affected that much when we see yearly targets.
You highlighted indigenization as a key lever for margin expansion. What will be the current level of indigenization across product portfolio? And going forward, scope to further increase localization and any bottlenecks?
Indigenous content, as you know nowadays, Government of India policy itself is minimum 60% in all our new projects. we are of the order of 80% to 85% mostly in our indigenous content for various programs. Our homegrown products or our DRDO driven products, sometimes that is even 90% also. Some other programs where still we are depending on TOT, which we have taken a few years back, we are around 55%, 60%, 65%. But overall, it will be more than 80%. The main limitation which we are foreseeing is the semiconductors only because otherwise module subsystems level, enough infrastructure in India has been created. semiconductor, it will take at least a few more years before the semiconductor ICs will start getting from India itself. next 2 to 3 years, between 80% to 85% on an average indigenous content will be there for our products.
Any incremental opportunities on the non-defense side or international markets/exports to materialize over next 12 to 18 months?
both of these areas are very, very important for us to maintain this double-digit growth. nondefense right now, it is 8% to 10%. We wanted to steadily increase it to 15% to 20%. the same thing is about exports, which is 4% to 5% right now over a period of time, but that period of time is around 4 to 5 years. We want to increase it to more than 10% of our turnover. But in near future of next 1, 1.5 years, the increase will be maybe 1% or 2%, not more. But definitely, on the increasing side only, both fronts, nondefense as well as exports are increasing.
On the advances from the incremental order inflow - order inflows have been fairly good in last couple of years but customer advances are not moving in line with those. How do we look at this?
It depends on the various payment terms of every contract. Every contract is different, and it depends on the payment terms which are initiated in the contract. there are contracts where there are advances stage payments, whereas there are some other contracts where the terms are a little different. So it is that way. It's a mix of both the contracts. When we do our costing, we take care of this parameter also. What is the advances or schedule of payment for every program we take based on that. nothing is alarming as such for us.
On the bigger export opportunities - can they materialize in next 1 to 2 years on bigger platforms, or it will be smaller type of export orders that you have been doing? And how long for big tickets to materialize?
smaller orders, once we were there that the repeat business is there for those orders. But some other items also we are working right now. communication equipment was one such project where last year itself, we have got very good order and opportunity especially SDRs and satellite communication systems. those type of large order are expected. after Ops Sindoor, we have got very good leads for truncated C4I solutions also, customized C4I solutions for various countries. they are also system-oriented solutions. one of the lead was materialized last year, just in the month of March. That way this year also, there are 1 or 2 big ticket items are there. in exports, the real challenge is to acquire an order because there are so many geopolitical situations, complications, etcetera. until we receive an order for us, it is a lead only. We don't really can't predict this I will get by such time. Much more certainty, I can tell you about our own indigenous program or our own Indian programs. But in export, that type of certainty is not there.
On the P-75 order - electronic systems make up 25% to 30% of project cost, and since you have foreign players, BEL's share would be around 50% to 60%, which means anywhere between 15% to 18% of overall project size should come to us. Is that correct?
Macro level, you are right, but micro level when we will go to individual line item, it will be minor plus/minus can be there. But definitely, it is a big order for us. some of the items are coming from the foreign partners. So that partner related work share. whatsoever your prediction of calculation is more or less right. However, there is a small surprise element because some of the foreign component items, how much and what module we will indigenize in that because some of the things they may indigenize from some other Indian partner also, So that nitty-gritty of those foreign component still has to be finalized with them. So that's why this prediction may go by a few percent here and there.
Once the submarine order is received, any idea as to how long would the execution cycle be?
it is a of the order of 5 years, if I am not wrong roughly. Because again there are six submarines. there is definitely a submarine development plan timeline that will be decided by MDL. I don't foresee any challenge for us per se for making those electronic items. But that depends upon the submarine development time, manufacturing time. Based on that only they will expect my delivery schedule to align with them. So that's why I will align with their delivery schedule. We don't have any capacity or other limitation for the program as such.
On new products under development, especially the directed energy weapon system - if you could elaborate a bit on what BEL is doing and how you are working with DRDO?
we started working with DRDO in this program. Our CRL Bangalore was doing something on their own also jointly with IISc and our own internal strength. But the majority of this DEW development, we are depending largely on DRDO, the CHESS is there for the laser-based DEW and MTRDC for microwave-based DEW. we are their largest development production partner for most of the DEW programs. However, we have also started indigenizing some of the critical subsystems of these programs on our own. we are supplying to users some of the DEW as part of our D4 projects, etcetera. some of the large DEW programs, we are their DcPP partner, and we are supplying to them these modules based on the design done by them.
Over the next 5 years, you would be looking at top 2 to 3 technology platforms or products where you think you can materially change the revenue and profitability profile?
it's not 2 or 3. We have at least 8 to 10 different high-end technology-driven programs where we are investing at least INR200-plus crores on each one of those technology programs. they are covering almost all major areas where BEL is right now a leader. to continue to be a leader, we have to do good investment in those product technologies. So that is there in our technology road map plan. That plan we formally don't disclose, but in various technological forums, indirectly, we mentioned that to all of you.