Concall — clean across the call.

What is the expected growth rate of the ROH business? How much discretion do you have in managing ROH to compensate for manufacturing weakness given induction plans and timelines? And does the Rs.50,000 crore pipeline include ROH?

ROH growth rate expected at 10% to 12% on a year-to-year basis — this has been the trend and we expect it to continue. On discretion: within delivery schedules for ROH and spares, to the extent we can expedite activities (ROH cycle times 6-18 months), we are doing that to maintain growth targets. Orders placed well in advance and supply chain managed accordingly. The Rs.50,000 crore pipeline is EXCLUSIVE of repair and overhaul activity. ROH accretion is expected to be Rs.15,000 crore minimum year-on-year on average. The earlier ROH guidance of 5-6% growth has been revised up to 10-12% for this year and next year. Once manufacturing picks up after that, ROH will grow in absolute terms but its ratio will come down.

Can you share separately the EBITDA margins for ROH and manufacturing? And what is the ratio of ROH to manufacturing expected for FY23 and FY24?

We will not exactly differentiate between manufacturing and ROH margins publicly because within ROH, there are different margin levels for different platforms and the product mix changes quarterly. Guidance remains 26-27% average EBITDA margin overall. For FY23 and FY24 the ratio of ROH to manufacturing will be approximately 60:40 (manufacturing 40%, ROH 60%), because LCA Mark 1A deliveries start only in Q4 FY24. From FY25 onwards, the ratio will improve towards 50:50 and beyond as manufacturing picks up.

We recently started an integrated cryogenic engine manufacturing facility at Bengaluru. How big is this opportunity and when do we expect supply? And on exports — what is the status of the Malaysian and Brazil/Argentina opportunities?

The cryogenic engine facility is taken primarily for strategic reasons — to establish HAL's footprint in engine technology for rockets and ISRO programs. Business potential in near term is limited; it will contribute as PSLV and GSLV launches increase. E.P. Jayadeva: We are integrating the whole cryogenic manufacturing facility at Aerospace Division Bangalore, working closely with ISRO. Productionizing work is largely complete; we expect to deliver cryogenic engines from next financial year onwards. On exports: We are aggressively pursuing leads from Malaysia, Argentina, Philippines. Post-Def Expo, Argentina visited our facilities showing interest in helicopters and LCA. Malaysian contract has challenges due to recent elections and political changes. We are pursuing breakthrough order and expect some conclusion in next few months. These export orders depend on many non-commercial factors.

What are the major development orders we will receive and what are the margins on them? And for LCH 140, LUH 170, NUH 60 numbers — what is the pacing per year from FY23-25?

Development orders are design and development activities. E.P. Jayadeva: LCA Mark 1A has completed first flight in June 2022 with all new engineering systems and AESA radar; flight testing continues 1-1.5 years then production and delivery from 2024. HTT-40 flight certification obtained, customer-specific work ongoing. LCA Mark 2 CDR completed with IAF participation — production of prototypes to start. IMRH initial configuration studies ongoing as HAL-funded project. Margins on development orders: approximately 10% on labor effort invested. Budget allocated: approximately Rs.1,600-1,700 crore per annum for development orders once contracts are signed. On helicopter order pacing: contract conclusion takes 1-2 years once AON is approved. But we start procurement of materials proactively. Capacity is not a constraint — Bangalore facility handles 30 helicopters, Tumkuru facility adds another 30 (total 60 helicopters), any combination of ALH/LCH/LUH. We prefer all in one single order for better vendor bargaining, but customer decides. LUH 12 numbers LOI already received — contract conclusion imminent and deliveries expected in current financial year if concluded in next 1-2 months.

How does the ROH business model work in terms of margins and contracting? What fleets are coming for ROH in next 3-4 years? And on HTT-40: with the Rs.7,000 crore order concluded, when does revenue start flowing in?

ROH business model: prices are verified and profitability fixed for the base year through a pricing policy mechanism with the customer, with escalation parameters decided subsequently. Government pays 10% profit on cost for ROH (versus 7.5% for manufacturing). But through materials planning, outsourcing, and indigenization, HAL generates operating margins of 16-17% in ROH activity and expects this to keep growing. Major ROH fleet contributors: Sukhoi-30 aircraft (doing 20 numbers overhaul now, targeting increase), AL-31FP engines (~75 numbers, targeting 105), ALH helicopters, Hawk, Jaguar, Mirage upgrades, accessories and avionics. HTT-40: Contract being concluded; engine procurement orders being placed. Delivery expected to commence from October 2025 at an average of 20 aircraft per year. All 70 numbers to be liquidated in approximately 3.5 years. Beyond that, another 36 numbers also expected, which with 20/year could be done in additional 1.5-2 years. So 100+ HTT-40 in approximately 5-year total timeframe.

How is cash balance expected to trend going forward? Can you give an update on indigenization efforts and benefits? And what is the status of Navy ALH / UHM?

Cash balance: Currently Rs.16,000 crore. After releasing payments towards procurement, year-end expected around Rs.14,000-15,000 crore (March 2023). We are also pursuing additional milestone payments and advances. E.P. Jayadeva on indigenization: Approximately 400 LRUs are in indigenization program including mechanical systems, avionics, and other components. Earlier foreign stock supplies are being addressed through indigenous development. Spend on development offset by savings over longer ROH cycle. On Navy ALH / UHM: Major requirement was blade folding mechanism — demonstrated as company-funded project, already flying on helicopter, certification upcoming. By the time Navy order comes (under discussion at MoD level), other UHM requirements will also be integrated. Development and first aircraft delivery expected in approximately 36 months (3-year timeframe) — currently called UHM (Utility Helicopter Maritime).

What are the delivery targets for FY23 (platforms, fixed wing and helicopter)? What do deliveries look like for FY24? And for Sukhoi engines, what revenue can 12-13 engines generate next year?

FY23 delivery targets: LCA FOC 2 numbers + trainers 4 numbers = 6 LCA total; ALH 9 numbers; LCH 9 numbers (balance from 15). Total approximately 24-25 platforms. Plus engines (6 AL-31FP remaining worth Rs.300-400 crore) and Cheetal. FY24 outlook: LCA Mark 1A 3 numbers (as per contract schedule for 83 LCA program); LCA trainers 4 numbers balance. Additional ALH 25 numbers order — if received, portion delivered next year. Sukhoi 12 order — if received, portion delivered. LUH 12 numbers LOI — portion delivered. Expected 25+ if all orders materialize; we are already provisioning materials in advance without waiting for contracts. For AL-31FP 240 engines: If order concluded (expected before March 31), first year ~12-13 engines. At approximately Rs.100 crore per engine that is Rs.1,300-1,500 crore from the engine contract. At peak of 30/year over 8 years, order fully liquidated. ROH: H1 FY23 ROH revenues already up ~30% as 20 Su-30 overhauled (target increase), AL-31FP engines ~75 numbers (target 105), and ALH ROH increasing. Sukhoi number being explored for increase from 20 to 22-23.

On AL-31FP 240 engines: when does revenue start booking and what is the execution schedule? Similarly for RD-33 — order timeline? And for LUH 4 numbers in FY23 — are we on track?

AL-31FP 240 engines: RFP has been issued, bid to be submitted within 2 days. Negotiations will start immediately; order expected to be concluded before March 31. Deliveries to commence from next financial year (FY24), starting with 12-13 engines in year 1 then ramping to peak of 30 per annum over the 8-year contract lifecycle. RD-33 (80 engines): Order expected in next financial year (FY24) only, not current year. Delivery at 20 engines per annum over 4-5 year timeframe. LUH: If contract is concluded in next 1-2 months, 4 numbers can be delivered in current year. Manufacturing has started and aircraft getting ready; operating on LOI only which is causing delay in formal revenue booking.

On capacity: how are we placed for LCA and other platforms once Tejas deliveries scale up? What is the CAPEX plan? And on civil aviation, what is the status of Dornier and other civil opportunities?

LCA capacity: Two lines established in Bangalore, sufficient to scale to 16 numbers. Plus 4 private sector companies given structure work packages (wings, fuselage components). In next 2 years capacity can scale to 20-24 numbers. LCA 83 program starts at 3 in FY24, then 16/year — capacity is not a constraint. Future additional orders can also be met with private sector participation. Helicopter capacity: 60 numbers total (30 Bangalore + 30 Tumkuru), any combination of ALH/LCH/LUH. Nashik division: Su-30 line not active; if 12 additional Sukhoi order comes, can execute in 1-year timeframe. That facility will then become available for other platforms. CAPEX: Approximately Rs.1,700 crore guidance for current year (mentioned from last call). Civil aviation/Dornier: Civilly certified, 2 aircraft leased to airline operating in Northeast — flying quite well. Building 6 Dornier for production. As and when orders come, can deliver quickly.

Revenue breakdown of products vs services for H1 FY23 and H1 FY22? And should we expect a similar H1-to-H2 revenue surge this year as we saw last year?

H1 FY23: ROH revenue Rs.4,800 crore (+29% vs H1 FY22 Rs.3,700 crore). Manufacturing/products revenue Rs.1,600 crore (flat vs H1 FY22 Rs.1,600 crore). For H2: Last year's large H2 (Rs.17,500 crore) was partly due to FY22 H1 being muted by COVID lockdowns. This year the spread is more even than last year. The balance of the 7-8% full year revenue target will be achieved in H2 FY23 through platform deliveries (LCA, ALH, LCH) and continued ROH ramp.

For full year FY23, should we expect to exceed last year EPS or PAT by 10-15%? What is the profit growth guidance?

We will maintain profitability of last year and show some growth. Profit growth of not less than 4-5% is what we are expecting. Note that last year's EPS had a one-time income tax refund component that inflated it, so the comparison base is elevated. On an operating PAT basis, growth should be around 4-5%.

For Su-30 manufacturing, do we need specific approval from Russians before procurement? What is the status of ROH international opportunities given geopolitics? And on IMRH: was SPV route not pursued — is ADA involved?

Su-30 manufacturing: No specific approval needed from Russians — there is a general agreement entered at program inception that remains valid. Supplementary agreements cover additional requirements; license fee is part of the per-aircraft price. No additional approvals required. ROH international: No direct leads yet. Interest has been shown from countries operating Su-30 fleets (e.g., Malaysia) who cannot source directly from Russians; HAL is in discussions with Russians about servicing third-country Su-30 fleets. This is evolving. IMRH: Exclusively HAL-designed and HAL-developed — ADA has no role. SPV route is being evaluated; no conclusion on model yet as it depends on private sector interest. AMCA is in early discussions about private industry collaboration for productionizing but that is preliminary.

After Def Expo, are there new export conversations emerging? And on UAVs and drones — given competitive intensity, what is HAL's medium-term game plan?

Exports post-Def Expo: More countries are enquiring, especially about LCA and helicopters. Argentina team visited our facilities showing interest in both. Malaysia remains challenging due to political changes. We are aggressively following up and expect breakthrough order in coming months, after which we expect order flow from other countries to follow. Leads from Philippines, Argentina, Malaysia being actively pursued. E.P. Jayadeva on UAV: HAL is developing a 200 kg rotary UAV. Also participating in MALE program — TAPAS (ADE program), building prototypes for flight testing, then certification and productionization. Also in talks with IAI for HALE and MALE UAVs. CATS program involves CATS Alpha, Wingman, Hunter — an integrated combat system, not standalone drones. It also includes high-altitude pseudo-satellites and optionally manned aircraft. Development progressing at HAL and private industries. HAL is NOT in the commodity drone market — that is price sensitive and highly competitive. HAL targets UCAV/combat aerial vehicles only. CATS is an integrated program where HAL currently has no domestic competition.