Refused to commit on mig 29 radar supply.
- Strategic order rationale segment — answer hedged.
- Amca consortium rationale share — answer hedged.
- Shared aperture rfi super — answer hedged.
On the strategic order that was executed - it seems it was a short-term order executed quickly. Do you expect to participate in more such orders? Will you bid in Radar, EW, or other segments? It is margin dilutive but revenue accretive.
See, I can't discuss much on the strategic order. That's why it's called a strategic order. But we took this contract because there is a large potential for multiple such contracts. What we need to say from our side is that the product has been executed very well. Customers are happy on the performance of the product. And there are two things to take away from this product. One is there is a future potential. I can't explain the potential at the present moment due to the nature of the contract. And -- but there is a future potential. Point two, this is the first time the company has taken such a large contract, which involves power systems, building, construction, mechanical systems, design of something like 140 tons of material as a payload, which can be moved. This is a whole -- it's a very complex mechanical -- electromechanical system. Electronics also is state-of-the-art world-class. As regards future such contracts, similar contracts, et cetera, obviously, when something happens when we believe it is strategic and gives a technology perspective as well as revenue growth and bottom line future growth, we will obviously participate, but it's a competitive environment. We may or may not be able to get all these contracts. But yes, Data Patterns wants to grow in this line of business, complete systems. So we are working both on the radars and EW and other areas of avionics as well. So we do take up strategic contracts in all areas of applications, not necessarily only the radars.
On the consortium for AMCA with BEML and Bharat Forge - what is the rationale for participating with these 2 partners? What is your scope and the share you will get out of total value of AMCA?
As you said, it's a bit too early. It's an RFI response. And after RFI shortlisting takes place, an RFP happens and then the contract goes to somebody. It is only one company which gets the contract. So it's very early for me to comment on it. But why are we in this is because Bharat Forge is a large Indian company. There's a lot of capability building complete systems and well-positioned for growth. And they are also similar to us in the sense they do want to do everything in India. So that makes us -- in terms of alignment, it is very good. Second area is that our focus has been in avionics, and we do state-of-the-art avionics in the country. As a matter of fact, the more -- what we do, nobody else in India does in terms of avionics range. So we have the cockpit solutions. We have radars, we have electronic warfare. We have a whole lot of other systems which can go into any Fighter aircraft. So we can add value in all of them. And there's also electronic integration, which is necessary as part of this. Exactly what role what each one would play will have to be decided based on how the overall thing pans out. But I think it's a good fit.
DRDO recently came out with an RFI for shared-aperture antennas merging radars, EWs and communications. How is Data Patterns going ahead with that? Also on jammer pods for the Super Sukhoi - is it possible by Data Patterns?
Regarding first one, RFI, I'm not clear exactly which one you're referring to. What is shared-aperture radar I'm not very clear about that. I'm not aware of particular requirement you are talking. So I'm not able to comment on it. As regard the jammer pod, yes, we have developed the pod for the Super Sukhoi and that testing is happening in-house. We've already offered this to Air Force. The Air Force team also addressing this and understanding what we've done. So the process is on at the present moment. That's all I can say. I don't know what else you want me to say because I think we need requirement specification. So pod is developed. We will use QIP funds and develop the system. It's just not the pod, but also the complete EW suite for the Super Sukhoi. Pod is part of it. So yes, it is under evaluation and further development along with reps from Air Force.
On news about radars for MiG-29 - are you going to be supplying some of it?
See, these are all -- a lot of things comes in the newspaper and article comes. I can't comment on so many articles that's coming. Where the origination of the article, I really don't know. We have developed our own radars for -- which can fit into MiG-29 as well as Su-30 and such similar fighter aircrafts. We have a program running internally funded, and we are building the products. These are all in advanced stage of development. But how it will pan out, where it really go is really we can't comment on it because there's a lot of -- this is based on Air Force and Navy requirements.
How are the order wins expected in H2 and beyond? Any large or high-value platform expected since guidance is INR1,000 crores in H2 and INR2,000 to INR3,000 crores in 18 to 24 months?
I don't want to talk about specific future contracts on an open line. I should say, yes, there are more orders expected as you go along in H2. And that is why the guidance of what has been given. We expect some more contracts to happen in the next 3 to 4 months' time. That has to happen. And regarding the rest of the year -- beyond that, I think at the present moment, I don't want to comment. We will consolidate for the year now and understand what the order book is going to be like next year, what new pipeline we are looking at next year. And then that will come on the earnings call probably post this year. We will give you some guidance. But we don't have any particular guidance beyond that at the present moment.
What percentage of INR667 crores of receivables would be realized in H2? Do I increase my revenue guidance from INR850 crores to INR1,000 crores this year and margins close to 40%? Was the strategic INR180 crore contract margin sub-20%?
Okay. The exact percentage of collectibles, I really don't have an answer off the top. A large portion of the collectibles will be collected in the next H2 is what we think, whatever is collectible. Exact numbers, I don't know we want to give, but then yes, most of it will be collected during H2. That is to answer question one. Question two, we remain with the guidance given earlier. I don't want to -- obviously, there will be slightly upward movement on the revenue guidance because there is this contract which is executed. But on the bottom line guidance, we remain whatever we've told earlier. We don't want to modify at the present moment. And regarding exactly what we got in this contract, we are not in a liberty to say exact margin and all that in an open call. So you would understand that it is not practical for me to say this.
Disclosures show INR200 crores of execution for DRDO this quarter - is it safe to assume 75% would be towards this large order? Also, on the order book of INR640 crores, could you mention three or five large orders priced in this and their values?
I don't have the list of orders on hand with me to answer this. And I don't know whether specific contract price I want to really share it. We normally don't put it on website all that because of this reason that we calculate, and we don't do this week to week when the order comes, we don't push it. We don't share such information. The large contracts, I mentioned also, there's some large contract from BrahMos and one from ECIL. I also mentioned that in the part of the opening remarks itself. So then there are a number of other contracts which we have and some more are expected. We have quoted, negotiations will happen. Some more contracts are also expected in the next 3 to 4 months' time.
On the disclosed INR550 crores of orders negotiated but not confirmed - should we expect these to get confirmed in coming month or 2? With these confirming, total order inflows would stand at INR900 crores. Are we well poised to cross INR1,500 crore mark for FY26?
No. We expect in the next 2, 3 months, during the rest of the year, we should have -- they sometimes takes time. And so the contract once we negotiate it takes a few months or sometimes 2 months. So there are MOD contracts which is taking some time. Some -- for some or other reason, it's getting postponed. So we expect, yes, in the next 2, 3 months, we should get the contracts. Yes, we have -- we expect more than that contracts in the next few months.
On AMCA - if the final contract goes to the L&T-BEL consortium, is there a probability that the avionics portion may flow back to Data Patterns? And what is the broad timeline for AMCA program?
We believe -- we hope so. We don't know because the initial RFP is still unpublished. So until we know the RFP and what really comes, it's only RFI now. So I can't comment on what is really planned on delivery in the first 5 prototypes, what avionics is planned and how they are asking us to see the so-called partners or RFI responses to buy and integrate it. It is all not visible at the present. I even don't know whether they are planning, what they're planning. The RFP is not out, so we do not know. I believe they want to place the contracts early. It's in less than a year, maybe 6 months is what they're saying. So we need to wait and watch how the process goes.
On the strategic contract - if we normalize this, if we get repeated orders within this category, what would be the actual normalized margins for this type of strategic contract if taken at a regular rate?
This has to be negotiated with the customer. I think you had asked that question to him, not me. As and when the requirement comes, the inquiry comes, we quote and the negotiation happens. So it's a very -- the question today is not answerable by any of us. It will be happened only when it really happens. So we believe we stand a chance because the contract size will be larger. And so maybe we should be able to get a reasonable margin. But exactly what it is, I have no idea at the present moment.
Any update on BrahMos Seeker? We were expecting it to get some trial contract in this quarter.
Yes, the negotiations are completed. So the contract has to come, and we are already in advanced stage of product development. So yes, we are very keen to see that, that contract comes and quickly deliver because there is likelihood of production orders in this. So we are -- there's a high focus on these contracts.
On export orders - you mentioned an export order from a European region. Any other region opening up or showing traction?
Yes, there are other interested customers. So we have -- they're going to Europe, specifically for addressing the requirement in Europe and outside Europe also in South America and things like that. So there are active -- we're making active proposes in all these areas. Second is we also have -- this is what we expect on TPAR which I have told you. We also are looking at other contracts, which is from the U.K., which we have regular order, which we're executing. We expect the increase in that volume business also. Third, we're also looking at co-development of worldwide requirements in certain areas of radar and EW. So with some large foreign multinationals. That also is in the play. So that not only we develop for India, we also want to develop for the world in some areas where we have competency. We're also looking at export market very seriously now, and we're going to put a team for export and see how we can build an export market for ourselves.
This quarter you mentioned it's the first fully developed radar on the export side by Data Patterns. How does it change your export market potential? Can you get more inquiries because of this?
Yes. That is what I answered in the last question also on capital. See, one is doing a part of the system for some OEM that is based on OEM's actual requirements and they keep ordering the parts, which is already developed for them. But the other one is when you build a full system, there are requirements outside India, so we can address that requirement also. So this is the second way of doing it. Actually, mostly large systems are only exported outside, not parts of it. It gives a larger opening for us to actually build products for the rest of the world. So the focus should be there as we go along. But we started with subsystems and now we have gone into systems. As and when the products are ready here in India, we'll also look at export markets outside of India also. But this -- of course, the TPAR order came originally to exports. So we modified the existing position of radar. We did for airports and Navy in India, a complete redesign for a transportable application. India doesn't have this. But now that we've got the European contracts and some other contracts, maybe India will look at it als o go along, but to answer your question, yes, there will be opening of more orders, hopefully, because these products will work well, delivered works well, then I think this is a gradual way of getting into exports as we go along. And these are complex systems. So there's not much competition worldwide for these kind of systems.
On working capital - we are still in cash conversion cycle of 345 days. What are the key initiatives to reduce this and what is the target for next 2 to 3 years?
See, what happens is we're doing a lot of development contracts. This takes a longer time for cash conversion once we deliver and test, we have integration and things like that in testing, field testing. So take a longer time to really achieve the cash conversion cycle. So once we move from larger development contracts to production orders is yet to happen, something happens, but it's not the way we ought to happen. We need to have a lot of order book where we can do quarter-to-quarter sales. And then production orders get you what maybe a few months collectible, et cetera. Unless that happens, cycle will not change so drastically. Going ahead, I think gradually, it will from 345 days, it will come to 270 days and then maybe go down further depending on the kind of contracts we get, nature of contracts, but in all of these contracts, there is a lot of advance given by the customer. So that goes towards funding of the contracts really. And we still remain a debt-free company.
Considering the customer advance, what is the cash conversion cycle for us?
Yes. If you exclude it, it will be around 310 to 315 days such thing at current position. But going forward, the new contracts that we are expecting are expected to have more advances, then obviously, the cash conversion cycle is expected to net off that advances. Cash conversion cycle will be better than what you see as a number now.
On the strategic order - from a margin standpoint, would it be safe to assume that ex of this project, EBITDA margins for the current quarter would have been in the guided range of 35% to 40%?
Yes, definitely.
On new products currently in development that may launch in next 6 to 12 months - can you put some color on this area?
We're working on radars on a number of them actually, various kinds of radars. One is airborne fire control radars, then there are ground radars for detection and even detection as well as fire control. We're also looking at EW programs for airborne podded and unpodded versions and also for detection -- drone detection on the ground, we have advanced products in drone detection and passive as well as other products, which are also jamer drones. Already we participated in a number of trials, products maturing very well. And out of which already we've got 1 or 2 orders from MOD. So this also will get executed in the coming year. So there are a number of products in those areas where we are addressing the requirements of our country. We're also doing some communication systems. This is also in advanced stage of development. Fourth, there is a lot of glass cockpit and a whole lot of other things for avionics is also under development. So there's a variety of programs and products which we are doing. And overall, if you look at the landscape, it will be in products in radar, EW, avionics, ESM, electronic intelligence and such similar requirement and also drone detection and jamming.
All these products are for both India and export opportunity, right? And what is the expected TAM for all those programs?
Not all of them, some are only for India with specific programs, which is we can't export all so. But some of them are generic. See, we have a standard approach ever since inception, been doing building blocks because once the building blocks are ready, it is easier to develop future systems like modifications, add and subtract, we can get a full system up. So address the market. Second is 0 1 kind of tender markets, it's also risky to develop products. So if we can use building blocks, then we derisk ourselves in the development area. So the building blocks itself can be configured for various applications, which also are exportable. For TAM, that is about INR15,000 crores to INR20,000 crores. TAM is large. So that is how the development happens. Competition is not only India, it comes from abroad also. There are mature products abroad, which is also -- do a work share and offered in India. India actually imports more than 70%, 80% of our requirements.
On the AMC contracts which are 31% of the order book - can you explain the nature of these contracts, particularly with respect to BrahMos? Will this require any further capex from our side?
See, we have delivered BrahMos fire control systems, groundworks launches, airborne launches, the test systems for BrahMos missiles done this from 2006, we've been delivering the systems, some of them in 2013 or '18. So I think what we've got here is mostly ground systems. We have a maintenance contract where we have to keep the uptime guarantee and deliver it. We already have people distributed our service engineers around India, take care of immediate response and satisfy the customers quite happy. And in continuation, we've got some contracts for the next 5 years. No.
In the presentation, you are estimating INR1,000 crores inflow for the remaining part of the year. Can you tell us the breakup between production, development and AMC side?
That is including the INR552 crores of contracts already negotiated to come which we are expecting to come. And most of it is all product related. Something may be development and something may be production contracts, but not on AMC not service basically. There is going to be a production contract. If it happens, a sizable contract should happen. But for the next 2 to 3 months, we should know. We're expecting more orders to happen. I can only say that. And whatever the guidance we have given, we will accomplish and exceed the guidance contracts.