AXISCADES Technologies Limited (532395) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the AXISCADES Technologies Limited Strategic Business Update Conference Call hosted by Orient Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sumeet Khaitan from Orient Capital. Thank you, and over to you, Mr. Khaitan.

Thank you, Nirav. Good evening, everyone. I welcome you all on the AXISCADES Technologies Strategic Business Update conference call. Today on the call, the leadership team of the company will take you through the business update, post which we shall open the forum for question-and-answer session. Before we begin the call, I would like to mention that this conference call may contain some forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. The actual results may differ materially. These statements are not guaranteeing the future performance of the company and involve risks and uncertainties that are difficult to predict. With this, I now hand over the call to Mr. Shashidhar S.K., Group CFO, AXISCADES. Thank you, and over to you, sir.

Good evening, everyone. It's my great pleasure to welcome you all to this call, where we will discuss the strategic restructuring of the AXISCADES defense-focused subsidiary, namely Mistral Solutions and AXISCADES Aerospace & Technologies. We have spoken at length on the synergies between Mistral and our various engineering service verticals earlier on our investor calls and investor meets. A number of investors and analysts have been asking us for a special briefing on Mistral and ACAT with focus on defense, which is what we are aiming to do today. For your information, we have already shared a press release on this topic, which is available on the stock exchanges for your reference. It's my pleasure and privilege to welcome on this call, Dr. Sampath Ravinarayanan, our Lead Director and Chief Mentor. He will take us through the rationale behind this restructuring and share insights into the opportunities outlook and strategy for these entities. Our Group CEO, Mr. Arun Krishnamurthi, has traveled to Europe on business and is unable to join the call today. We also have with us Ms. Sangeeta Tripathi, our Head of Investor Relations on the call. Before I hand over the floor to Dr. S.R.N, as we respectfully address him, I will take a moment to formally introduce him to all of you. Dr. S.R.N is a pioneer, renowned leader and a technocrat in the Indian aerospace and defense industry. His illustrious career spans more than 4 decades, during which time he has contributed immensely to government policies, foreign partnerships, large deal wins and also their seamless execution. He pioneered and implemented the concept of private participation and defense programs in India when such a concept was unheard of in this country. Dr. S.R.N established Airbus Engineering in India as a Founder Director. Dr. S.R.N was also one of the youngest professionals to serve on the Board of Directors of both Air India and Indian Airlines. He also served as the Chairman of the FICCI Defense Task Force. Dr. S.R.N has played a pivotal role in the acquisition and execution of several large contracts for AXISCADES. These include the Airbus Fuselage Development Center and the Mirage 2000 midlife extension program awarded by Thales of a total contract value of USD 100 million, which was one of the largest defense offset programs during its time. During his leadership of AXISCADES between 2008 and 2014 as a CEO, Chairman of the Board, AXISCADES made consistent and significant progress in business performance, which was reflected in the market valuation. Dr. S.R.N is also the recipient of very many industry awards, including CEO of the Year Award. In recognition of his remarkable contributions to the industry, Dr. S.R.N was awarded an honorary Doctor of Philosophy by the National Institute of Technology, Kurukshetra in 2020. With his extensive knowledge, expertise and robust relationships across the entire ecosystem of Indian government agencies, foreign OEMs and the private sector, Dr. SRN's contribution will be invaluable as we work towards expanding our domestic and global presence and enhancing our technological capabilities in this sector. Please join me in welcoming Dr. S.R.N Dr. S.R.N, I request you to kindly walk us through your views and vision for Mistral and ACAT. Following your remarks, we'll open the floor for questions.

Thank you, Shashi. Good evening, everyone. Thank you for attending this call. I'm Dr. Sampath Ravinarayanan. I took over as Lead Director and Chief Mentor less than 6 weeks ago, to be precise from October 25. The mandate given to me was take Mistral and ACAT to the next level, overall Defense business to the next level, and integrate Mistral and ACAT seamlessly. So I would like to call it as providing a sustainable growth on steroids, want to grow fast in a short time, in a sustainable way. So with that in mind, we had to revamp the leadership because we have to let go of the legacy mindset, have to have -- the leadership team should have a shared vision, focus and the team that should mutually trust each other, respect and work with each other in sync for this accelerated growth, okay? If I am the coach, sitting with me are my playing 11. So first of all, these 11 are my core leadership team, and they are all not outsiders. They are fully picked up from AXIS-Mistral ecosystem. Everyone here is part of AXIS at least served 5 years in AXIS or Mistral. So that is what. So there is no outsider because that also helps for a faster understanding and growth that I just want to tell you. So let me just introduce Murali here. Murali Krishnan would be our new CEO and -- Mistral CEO. And Mr. Murali used to work in AXISCADES with me about -- between 2009 and '16. He built a complete Caterpillar account from scratch to about $20 million, $22 million. And he built the Chennai and Hyderabad facilities. And also he's an extremely good leader and wartime general. And currently, he's working for a big company just -- and he's handling about 4,000 people in a major activity that with a P&L of about $200 million. So Murali is going to be our nodal point for the future, and he will take care of the Investor Relationships along the CFO in this. So he's going to be the single point contact and Murali is going to be the go-to person, okay? So along with me, we have Sharadhi Babu, who is a veteran of AXISCADES. Joined in 2008, have been in various positions and was with me in winning the Airbus deal, signing the fuselage -- Airbus Fuselage deal and also Mirage upgradation program. And also he's doing the direct D2D, the direct-to-defense programs and so on. And right now, he's handling various other activities, especially to the foreign OEMs and direct to defense. And Mani, who is going to be the CTO. Mani has implemented the Mirage 2000. Mirage 2000, by far, not only that time it was the biggest program, one of the most successful programs in Indian defense, especially midlife upgrade. As you all might know, the upgraded Mirage were used in the Pulwama attack successfully. So it's one of the few programs, which not only was upgraded well in time but also was used and proved with merit. And Mani was a Program Leader and a Program Manager for the Mirage upgrade. And he has been -- I'm associated with him for the last 34 years, and Mani is an extremely good technology person. So here, the veterans of Mistral. Selva almost -- Selva and Ramanan are there. They are the core pillars of Mistral. Selva is there almost from the -- since inception, both of them are there, providing the products and solutions, respectively. They have been here for a long time, and they built this team, built everything technically for Mistral. So they are going to be here driving the core business of Mistral. So also with me, Vijay Bharat, who is running currently the Mistral's Defense division as Head of Defense division, along with me -- along with him is Sunil. Sunil is an excellent marketing business development person, defense-focused, is Mistral's top business development person. So they will form a team for Mistral part of Defense business, okay? Along with me also, so we have Satish Rao. He's from Bay Area, basically he's handling the chip-to-product strategy for me for the whole thing, which we have elaborated in our note to you previously. And Gopal Kamath, who is taking care of the core semiconductor business. So there is a lot of synergy. Other 2 here are wing commander, Vivek, who is going to drive the drone that is anti-drone products and Manjunath, who is going to do the test benches and drone systems. And two other important people who are going to support in everything along with Shashi. He is our CFO. And Suresh has been a veteran of AXISCADES. We worked together for a long time. And Suresh has been in the -- understands defense domain very well for our CFO. He's been associated with ACAT for a long time. So he will be the Mistral combined CFO. And the mandate for Dinesh Krishnamurthy, who is sitting here. Dinesh is again a chartered accountant and a finance person but he has got a specific mandate from me to integrate the Mistral and ACAT on or before March 31, completely seamlessly. Also move certain activities from here to Electronic City and so on. So he will be taking care of the integration and other -- and also we are planning certain other new activities, he'll be doing that. So this is my team. And these are all -- we have got specific tasks. So before that, I'll tell you that, as I told, we just -- it is 6 weeks since I took over. So I've done to follow a lot of things in the past 6 weeks. So specifically on 6 different areas. I'll just go through what all I have done. So then you will find out the rationale behind what we have done, what we have so far been doing. So mainly first major activity. Each category -- subcategory of 3 activities at least, not more than that, so there will be totally 6 activities and 3 sub activities totaling to 18 activities I've done since the last 6 weeks. The first one is to evolve a clear unmanned combat focus for us. So you might know already that we are the first and only supplier to have given the anti-drone systems to Ministry of Defense. And already 75 have been delivered, and December 27, we are planning to deliver another 27. With that, we will be the only company who have delivered more than 100 anti-drone systems to Indian defense, which has already been deployed. Customer is extremely happy. So these are all portable with smart jammers. So we can go up in the value chain. Defense wants much more in the unmanned combat. Basically, they want added value in each of the anti-drone systems, which include spoofers, directed energy weapons and the EW class RF detections and 3D radars, et cetera, et cetera. So it's going to get bigger and bigger in terms of value. So being the first mover and probably at this point of time, we are the market leaders. We want to maintain that if possible and want to grow. We are targeting a significant portion of defense spend on the anti-drone system in the next couple of years. That is our first major strategy within the unmanned. Second is developing the drones. As you know, Mistral has developed a fantastic midsized drone between 30 kgs to -- which can carry up to payload of 30 kg to 70, 80 kgs, and meet the defense requirements of high altitude. It has not been certified yet. Our focus is to get it certified ASAP. And then both we need CEMILAC certification and DGCA certification and totally find a way to assemble them and supply to Indian defense. It is a competitive area. There are quite a few players already moved in but we feel our product is good, and we can get a sizable share in this market, especially for the defense logistics. And also, it can be used for the combat also at some point of time and we will probably redesign for that also. So Murali here, our CEO, because of his vast experience in mechanical and system integration, he will drive this project and also take care of the business development of drone programs, okay? In the previous anti-drone, as usual, Babu and his team will take care of the anti-drone program. As far as one more thing, the third thing in the drones and third thing in the unmanned is, drone controller we have built. We built according to us, probably one of the world-class -- world's best drone controller, which can handle up to 16 motors, and it is very comprehensive. So this drone controller is now going to be used as a first responder. In first responder drone, a company, which we can call it as a Tesla of drones, basically, an American company. So it has to be -- it is going to be deployed as a first responder drone. So this is going to be a feather in the cap that gives us an endorsement of what this product can do. Apart from that, this product is going to be used in the world's largest supply chain and logistics company in the world. And so this drone controller is one thing, which we are trying to build our focus on. Maybe we are going to use it as a separate -- sell it as a separate product across the world, and we are going to get it NATO certified, and that is one of the focus again and sell it across the world to various OEMs. In fact, Indian OEMs are also showing some interest in this. So this is one. So in summary, we are having -- in an unmanned combat, we are having anti-drones and drone controllers. So 2 of this will be -- mainly will handle between Babu and the new CEO, Murali, okay? Then the next focus, this is first, the second one. Second one is traditionally, during my time, a lot of things we did, our total success came from foreign OEMs, less from the Indian side, like Thales, MBDA, and that time, DCNS, we had several accounts of foreign OEMs whom we work with, large contracts, large offsets and so on. Of course, those offsets were totally fulfilled. So there were no new offsets coming in. So one of the tasks I did, as soon as I came, is to focus on the foreign OEMs, met them individually and asked for the work. Now I can -- I'm happy to say, as far as weapon systems are concerned for the new Rafale, marine Rafale, we could be the offset -- preferred offset partner for the weapon system, weapon package. So we have already, I think, have a handshake on that, but we have to get it signed, moment the Rafale -- new marine Rafale is signed. And another thing is on the avionics. Previously, we worked with avionics. So we are trying to see the same company will work with us as an offset partner again for the marine Rafale. And also, as you know, there's a large, one good submarine program is going on. We earlier partnered with them. Currently, we are in the process of renewing our partnership. Again, as I say, we are not there. We have not signed anything yet but again, we are well known to them. We say that probably it's for us to lose that, so we are trying to focus on and get that. So again, in the OEMs, we have a 3-pronged that is Rafale package, submarine, and avionics. So we are working on the 3 world's major companies trying to get that. One company, we are fairly comfortable. Other 2, we are not well within the reach, okay? Just I want to tell you, at least we are making the attempt. Next, third one, we are focusing on new programs. So my passion is, of course, missiles and apart from the aircraft and military aircraft and so on, that missiles, basically, we are not into any major program so far. Actually, the major program is shifted. From the past, you would have heard so and so missiles there and so on. Now the government is rethinking the missile strategy after the 2 wars: Russian war and Israel war. So missile focus has been shifted right now. Right now the hottest program is a different program, okay? So I don't want to name it. We are trying to be part of that program, okay? It is the largest missile program at this point of time. So we had the program director and his team visiting us and probably they were happy to what they saw, so we are trying to get a sizable program -- sizable project in that, okay, at this point of time. So this is a new program we are going to add. I'm very confident about this program. Second is another missile program. You all will know about one of the famous programs but it goes through an upgradation. So we are going to be -- we want to be part of upgradation. We have certain value -- compelling value to that program. So we offered that. We'll see what happens. The third one is, of course, ground systems, we are not there. With the advent of Murali coming in, with this mechanical expertise, system expertise, we are pitching hard for certain important ground systems, a huge amount of ground systems, which has huge value in each missile program. So these are the 3. Again, I'll repeat in the new programs, all our missile programs, one is the largest missile program in India. Another is an upgrade of the existing missile program. Another is ground system for key programs. So these are the 3 things. And again, this will be driven by Murali, all the 3 will be driven by Murali because he's Hyderabad -- originally he's from -- now he's from Hyderabad, and he knows the ecosystem very well, plus a lot of things, these things are mechanical biased, so he'll be able to do it much better, okay? Then the fourth one. Fourth one is our product focus. As I said, one of my goals of restructuring is product focus because we want to be a nonlinear company. We want to be a global company. We want to have a scalable quality. These are all the basic mantras we have when we are trying to redefine this company. So product focus, we already have 3 fantastic products. Direction finder, you might know. You would have heard about in various discussions before. We have a very, very successful direction finder product. At this point of time, it goes into every major program, airborne program. But what excites me is the second, which is direct RF, which we are doing with one of the large major chip manufacturer in the world. We are making and it's very successful. The direct RF eliminates few stages in the radar signal processing. That means it will make it lighter, better and real estate will be small, then it will be lighter and it will be cost effective. We don't see a reason why defense would not -- defense would definitely use it for upgradation of their existing -- their legacy systems plus probably include this technology in every future RF program. That's what we think. It could be a killer product in the future if it is done right, and the product will be unveiled in January. We are having our hopes on that particular product, direct RF. Then there is, of course, our product X-Band Radar, which is primarily used in the submarine and marine systems. And we have successfully demonstrated that with the Indian defense, and we are hoping to get a bigger pie, both with India and foreign OEMs. We are pitching it. Currently, as we speak, we are in the discussion stage. As I again say, nothing is sure. We are all in the discussion stage. I'm just giving you a picture of what all we are trying to do, attempt, okay? What is going to be our focus, which are the areas we are going to be focused. The next one, that is the fifth one, focusing, again, 3 things in that is, as you know, we have a strong relationship with Airbus. I had a -- I have a strong relationship with Airbus because Airbus Engineering was started by me here. And Airbus, I had almost like 20-plus years -- 30-plus years of relationship with them. So quickly, in Airbus, we have major programs running in India but we are not there in any part of it. One is, as you all know, it is C295 and which is going to be transportation aircraft, we are not there. Then other thing is MRTT, multi-roll transportation tanker, which is going to be 330 based, which is there and we are not there, okay? And maybe it's still time to be there. And I, of course, 319 based. So we are not in any of the Airbus military programs at this point of time. And so we are trying to work with the Airbus top management, why not try to see whether we can find a way to get into these military programs, get some pie in that, okay, some portion of that pie in that. I've already met the people and voiced my request. So we have to see. Again, we are in a very, very preliminary stage. I don't -- I cannot assure but at least we are making attempt in these directions, okay? Sixth, we are -- space. We want to get into department of space. Again, what I like about this defense and aerospace is, they stretch their technology to the limits, okay? That means if you are able to make a product for these 2, you can make it for anything. Space is even more, okay, even more difficult. So that is why we just want to get into the space. We have -- our space presence is almost negligible or almost not there. We don't -- I don't think they have built anything for the space in the recent times. So we ourselves cannot do it on our own. So we tied up with one of the exiting companies, all of you would know, new chip in the block, Agnikul. So we are trying with Agnikul, having an MOU with them and approaching the ISRO and other space agencies for 2 major things, NGLV, new generation launch vehicle and Bharatiya Space Station. So we want to add value to them significantly. And there could be opportunities in 3D additive manufacturing and designing of certain subsystem blocks, et cetera. Then there is also chances for electronics-based algorithms and advanced systems and for the guidance and navigation that product we will be able to make. The third one is AI-based anomaly detection in the launching. So we are working with specific requests for space. This is my sixth with certain request, and we are pleased to say that we are at least in the -- ISRO Chairman has agreed to talk to us and listen to us what we have to offer. That is where we are. We are just in the meeting stage at this point of time. I just want to say we are absolutely in a nascent stage. Nothing is here. So I would say these are the 18 initiatives have been launched by me in 6 different categories and -- so at this point of time. And here, I want to tell you, you all know that you have been part of various investor briefing in the past and maybe every 3 months once you are listening to them, maybe 10, 15 days back, you listened to them. So currently, you know in and out what are their goals, financial goals, targets, their current programs, et cetera, et cetera. So I want to reassure you everything is intact. Whatever has been promised until now, whatever the commitments made on the existing programs, not only will be met, it will be even more than -- marginally more than what we want. So we are working hard to do that. The team here, Selva, Ramanan and Vijay Bharat and Sunil, along with Brigadier -- that is along with wing commander, Vivek and Manju, their job, this is job of this 6 to deliver you that complete whatever our -- we call it as a core, our core activity will remain intact and the growth activity is what I was talking about. So all the core will be delivered without anything -- not even a penny less, okay? We'll probably give a better result if possible. That is what we are planning to. So the growth, what I talked about, the 18 items are on the top of the core. So that is what I'm talking about. So this will be -- and let me move to the C2P strategy, that is chip to product. That is Mistral's nondefense activity or our group's nondefense activity. See, I always believe one of the reasons -- rationale behind, as Shashi said, a lot of good words about me. Certain bad things, he didn't tell. I lost everything in defense in 1998 because of the sanctions. 1998, May 12th, was a black day in my life, 11th was Pokhran, 12 sanctions was announced. I lost almost everything. Every single defense order was canceled. 6 years, I was running from pillar to post to just save me, to save myself and the company. So basically, I don't want to put everything on defense. Even when we started AXISCADES, I said, first, I will focus on commercial aerospace, then we'll do defense. We are anyway as a person passionate about defense. We are -- I want to reiterate, we are a defense-first company, whether it is AXISCADES as a group or Mistral. We are a defense-first company. There is no doubt about it. But do you want to put all our eggs in defense basket? No. We want to have 60 robust, 2/3 in defense and about 1/3 in other activities, not only because once, for my growth, we are talking about nonlinear, scalable, but also global. We want to have a global presence. We want to have knowledge from outside the world because we want to bring in a lot of things, what we have to learn. We have to have several other verticals for us to learn and then use it in the defense, so we need that. We need a strong global presence and 40% of our activities will come from these. And because we are -- we have an extremely good team in the semiconductors area, chip-to-product area, we have a clear strategy. You would have heard about what we did in defense. I just want to add, there are 6 verticals again in the chip-to-product apart from defense and aerospace, then we have automotive, health care, consumer, industrial and hyperscalers. Defense, we already mentioned to you, defense, we are already doing. The company we are talking about, we are doing for drone controllers is an American company, it is a Homeland Security company, you can categorize in the defense category. Such products can be used in the Indian market also. So we are learning from them. Probably we will implement. But the more exciting news come from the other 5 activities. One is automotive. We are working with the world's larger intelligent -- automotive intelligence company for autonomous driving. It's going to be a big thing. They are already working with the world's largest automotive company, so we are going to be Tier 2, Tier 3 for them. We are not going to be -- we are the Tier 2, Tier 3 for them, okay, already. So -- and also, we are working with one of the exciting automotive company for the same group of customers for autonomous driving, then SDVs and so on. So this is in the automotive side. We really have a good starting point. As far as health care is concerned, we are trying to -- we are now doing protein synthesizer using our chip-to-product along with AI-based analysis, et cetera. And also, we are doing something for the kneecap surgery, et cetera. So from this to that, we have a good product range in the health care, which we can develop the -- our strategy. And consumer electronics, consumer products, C2P, we are doing wearables, and we are also doing one exciting project, for example, is [ KidCo, ] we are doing, where it's kids product. It's more of a product, it will teach kids in the -- with using AI. So that product is developed on the board and et cetera. And then we are putting the AI SLM and all on the top of it. Of course, industrial, we are extremely good in sensor fusion. So with that, we are trying to develop a few products for industrial industry, especially MES, manufacturing execution system, automated data collection, et cetera. And that has been very successful so far. We have an anchor customer to start with. We've been doing that. Hyperscalers, I just want to tell you, we are working with -- currently, we have engaged with the topmost logistics company in the world, topmost vehicle -- that is automobile company in the world, the best and biggest automobile company in the world. Topmost biggest tech company in the world, topmost and biggest semiconductor company in the world, okay? These 4, not only are top most in their category, if you will take top most companies, these are the 4 top companies in the whole world, okay? So we are pleased to say we are engaged with all of them and 3 of them directly, 1 of them indirectly, okay, through Tier 1. The other 3, we have a direct PO from them. We are MSAs, and we are working directly with them. So we are trying to build on that. So with the focus in mind, we are shifting the center of gravity of C2P to U.S. Basically, it will be driven out of U.S. We'll have a small team there and driving the offshore thing here. That's the strategy. So we are planning to grow. We don't know whether we can grow as fast as the Defense business but we are going to put all our energy to grow and be there. That's what we are going to do. You may think I'm talking about a lot of things. I'm not spreading too thin. If you carefully listen, we are only talking about 2 areas: Defense and semiconductors, our core areas as always. And we are only talking about 6 of the core expertises. What are they? RF, we are very, very good RF in RF. We consider -- we are among the best in India for RF and RF activities. Second is probably we are one of the best in handling mixed signals. We can handle analog, digital RF, everything together. That is one of our forte. Third is sensor fusion. We can handle multiple sensors. Sensor fusion comes very, very handy when you deal with multiple sensor in a new AI environment in new robotics are auto driven and those kind of things. We are extremely good and poised. Then we are very good in ruggedization. We are -- especially because we are very defense-focused. We can ruggedize any product and do that. And finally, that we are very good in the chip level post silicon, whatever it is validation, verification and take the chip to the product and then product to the customers. So if you look at it, our major focus, how are we going to scale up? That is a big question. Because currently, we are working with major 3 or 4 silicon manufacturers. We want to scale up with a number of others. Last 2 weeks, we have been meeting the world's some of the largest silicon manufacturers, and we are already trying to talk to them, maybe we can start getting some pilots from them. Apart from that, we are trying to climb the value chain. So far, our chip-to-product strategy, we take a chip and then make a board out of it, okay, and for different purposes, pretty much a hardware job. Then apart from that, we used to add sometimes the embedded and system software and so on. Right now we are trying to add the SLMs that is small language module, make it AI-ready, okay, AI compatible. So we are going to climb all the way to the value chain. Other than that, earlier, we used to do only 1 prototype or 2 prototype and be with that. But we were never handholding the end customer. Right now our plan is to go all the way, basically whole 9 yards, basically. Right now we'll build the board, add software. Then we will make the prototype ready fully, and then we will go through the validation and certification, then we'll do the batch production. That's what we plan to do. So we will go all the way so that until the customer raises money, the small guys, for example, in the -- the example, I don't know whether I can talk about it or not. So basically, we are planning to at least attempting to do things. Okay? So this is what we are planning. So we are trying to increase our engagement vertically and horizontally and on to multiply this. So this is the total plan. And in this mission, the person who are helping me are, of course, Satish Rao and then Gopal Kamath, who is sitting here. They have done an excellent job in that. And Mani is here, our CTO, is going to be focused -- totally razor-sharp focused on the growth areas. He's going to build the SLM team, software team. He's going to support the back end for whatever they want, a complete growth strategy. A complete C2P strategy will be driven by Mani, apart from trying to sort of get the technical -- fill the gaps in the technical parts and then adding more the team strength, et cetera. So that's what Mani's role and activity is going to be. So everybody has a defined role and we found a lot of common things and synergy. And as I said, others, they already defined the roles for Dinesh and Suresh. Suresh will drive the P&L, drive -- we ensure that whatever we commit is happening and so on. So this is what I wanted to say. And -- okay. So -- and one more thing, we want to sort of have. This is synergy between ACAT and Mistral. Now we are talking about ACTL and this combined entity. So that there should be a synergy between ACTL, our parent company and Mistral-ACAT. So it has to be dovetailed properly. In order to do that, we are bringing a new COO for the ACTL. ACTL is AXISCADES' parent company. So this COO is a veteran of aerospace, well known, and he has delivered everything and the customers love him. The big aerospace company like him a lot. So he will be a fantastic addition to the team. It will be really -- he can make a difference once he joins. So he will be added to the team. Also, we are excited to have him because he understands, he has worked with us. And so we can work with him a lot, and he will understand the synergy and build the synergy. Example, I'll tell you what is. So ACTL has a lot of experience with Airbus, Airbus standards, et cetera. But same aircraft is being used. A319, they understand, but the same is used as Airbus. So if we get the program, it has to be implemented in ACTL. Another thing I'm talking about, for example, I'm just giving an example. If we are going to do a big ground system, which has antenna mounted on the top of a huge structure, et cetera, it requires a lot of analysis, et cetera, and that ACTL will do. So we are trying to have somebody who will understand our requirements who are extremely strong, knowledgeable, sharp, smart and has a -- commands respect, mostly commands respect from all major OEMs abroad. And because as we said that we don't -- we are not looking at very, very -- we are a long-term people, but we are not -- we want somebody who can deliver also in short term, also in medium term. So this person can do that, okay? Apart from that, this new introduction, we are also trying to revamp the Board. This one we are already doing. The reason is we want every Board member to be a brand ambassador. We want them to be our salesperson in a way. So they have to really pick up and call somebody, here is the company I want you to work with. He should be that much connected in the industry. He should also -- his name should evoke some respect and acknowledgment from the customer and the people we are going to. He should be at least among the 360 degrees. Either he should be known to the customer or his name should invoke respect to the future employees. Okay, this guy is there in the Board, I want to join this company. So like that. So I want to subcontract anybody, even for the investors. Today, the focus only is based on the investors but I don't want -- we want to have the other 2 segments, which is customers and employees also should be inspired by the Board. So we are looking at Mistral, we are trying to do it that way, whatever we can get. And I don't know, probably ACTL must do the same thing, in my opinion, okay? So this is what it is. Thank you for listening. Now everything is -- so I'll hand it over to Shashi.

Thank you, Dr. S.R.N So we will now open the floor for questions.

[Operator Instructions] First question is from the line of [ Rahul Jain ] from RJ Advisors.

So just wanted to know like how will Defense and AI go together.

Mr. Jain, I will tell you a few facts. Today, world's largest defense company is not Lockheed Martin or Northrop or Boeing. It is Palantir, which is an AI company, okay? Just beaten Lockheed as the largest defense company and contractor. India 2022 unveiled a -- Indian Defense unveiled an AI plan. Today, it's an intelligent warfare, no long dog fight, man-to-man combat. So it's more of an intelligent warfare, especially what has happened after the Israeli war and so on. So much focus is on AI. For example, every EW system is now changed as an AI-based system. So it has to -- now moving to AI. Every major, if you want to kill a drone, okay, if you want an anti-drone system, it is totally AI-based today because today, it is going to be fitted with AI-based recognition systems, advanced 3D radars, which are AI-based and EW class RF detection, which will be AI-based and director energy -- directed energy weapons, which will be AI-based. If you look at the new combat system, it will have a lot of AI. So we want to be AI ready. We want to learn. We want to implement that. So we are one of the -- proud to say, we have a clear advantage in AI because we are already doing in the automotive and other sectors, we would like to implement the AI into this. So we are AI-ready. We are implementing them, and already started implementing into our programs.

Okay. And my second question is like what will be the investment outlay required? And how are you going to fund the same?

Yes, it's a very good question. See, basically, one thing, I'll say, the biggest challenge I'm facing here in Mistral-ACAT is that lack of manufacturing, okay? We are purely -- we are taken as an engineering side and all. Mistral has been doing product solutions for a long time using subcontractors. Because until now it doesn't matter because it didn't matter to the defense because whether you have manufacturing skills or you have anything or you have a PCB assembly stations or anything, they don't care as long as you have the knowledge, you design and you can implement, you can integrate the system, you can prove the system, that's what defense wanted. But today being the competition, there is no -- too much of competition. They are trying to filter out the companies, which does not have the manufacturing. So one of the excuse of filtering out. In fact, we are missing out on a few big opportunities. That's why we could not get into major DCPPs for lack of manufacturing. So one thing I want to correct immediately, we want to make an investment, either acquiring a defense class manufacturing company or we want to build it from the scratch. Building, there is no time. So one of my immediate tasks, I've entrusted with the team, of course, with Mani and Dinesh, is to make sure that, along with our CFO, to identify. We already identified a few players and then get something if possible in the next quarter or so. So that is something, which immediately that is an investment we require. Second investment, of course, as I told, that software, we need to build a strong AI-focused software team for defense and all. We identified about -- in fact, defense website lists some of the priorities in AI for defense, very elaborately. And they have mentioned a lot of nondefense also but 100-plus items they mentioned. They have just mentioned like alloy development through AI. IoBT, Internet of Battle Things, which is going to be AI-based. They have predictive maintenance of gunfire using AI. They mentioned AI-based target identification, then swarm drone AI. So they have given a list of things, which they are going to -- want people to focus on. Many of our competition, currently, they are very busy. They are not focused. So we thought we would set up the team, what the direction MOD is giving. So in this line, we want to set up a huge AI excellence -- center of excellence, that would feed into defense, upgrade all our defense programs with AI capability. So that is one of the things. It requires a lot of investment. That is the second one. Third, we want to upgrade our U.S. operations. We want to have an onshore operations so that we want to be close to the customers. So we want to keep it. So that also will require another expansion. So these are the 3 major ticket items for me -- for us to consider. So this really requires certain investment. We'll approach you at appropriate time when there is investment is required.

[Operator Instructions] Next question is from the line of Darshan Shah from [ M&A Associates. ]

You mentioned to the previous participant that manufacturing may be one of your key challenges. I just wanted to understand what may be some other key challenges that you foresee in your strategy to take Mistral to the new level?

See, one major challenge is competition is extremely strong, extremely strong than 10 years back, okay? You know the competition. Competition field is strong. It is like an IPL team. Anybody can win on a given day. There are a lot of these things. In fact, we precisely have 8 players whom we consider as among -- along with us, who we consider as competition. So that is one thing. So we need to tweak our strategies. We need to sort of avoid direct conflicts, go to the areas where we play to our strengths. That's what I would say, and play more to the home pitch basically, right? Home Advantage, which is our anti-drone, our RF. So we are trying to do that to, sort of, we are not shying away from the competition to just win and there is no point in unnecessarily fighting and losing. So we are looking at certain strength areas. Whatever I mentioned here is strong areas where we are either #1 or #2 or maximum #3. We are trying to avoid the areas where we cannot -- we are not immediately at that level. So that is one big area, so competition is a big challenge. And of course, second, I just feel that is one major challenge we have to see. And of course, the facility and infrastructure and investment and those things. I'll just put these 2 are the main key things basically.

So I think going on to your competition, I think this was around my second question also where you mentioned in your speech that you -- despite competition, you see strong prospects in your defense logistics. And also, I think, a lot more companies in the recent transcript that one of the companies has also announced that it's also getting into anti-drone business. So what sets AXISCADES and your experience apart with your current competition? So any 4 or 5 qualitative metrics, if you can just help us, that will be much better, sir.

So one that's -- see, one is, as you know, now defense is -- the anti-drones are mostly emergency purchases. When you go to emergency purchases, they limit to somebody who has already proven, "Been there, done that." So we have a huge advantage because we are the "Been there, done that." So competition can aspire but we are already there. They are -- so that we -- that is there, already there. So that means what does it mean? We'll definitely get -- if only 3 people have to get an RFP in a particular program, we'll be one among them, okay? The other 2 can be anybody. But first way will be us because we have the proven track record, and we are -- so if it is for us to lose. If we are 1 among the 3 and not even able to get 33%, I should not be in this job, okay? So -- and that's what is my optimism. And I'm not saying, no arrogance but at least we are there. In some place, we are in a pole position. And that is -- fortunately for us, that is something is the grow area, it is hyper-growing area and there is a lot of demand and an emergency purchase, EP area. EP area is something, not an open tender, where it goes only for a limited handful of people. So we are happy to be in that club. That's the optimism I have. And of course, I'm backed by a fantastic team and front product range. One more thing, maybe I'll go a little technical, okay? The anti-drone systems today are looking at various other things. As I said, currently, they are only making it as a portable and non-portable. Now they are wanting it as a vehicle weapon mounted, then air and chip mounted, even drone mounted. So if you look at it, where it is being mounted is one differentiation where we are already there. We can do things with air and chip and drone, we are already there. And vehicle mounting, we are talking about ground systems, the similar programs we are talking about; there, we have a certain differentiators. And the future anti-drone system will be based on a strong RF knowledge because it's all about jamming. It is all about identifying through RF, advanced RF detections. So 3D radars will be required. We already have certain things. Some EW class RF detections will be required and location finding will be required. Spoofers will be required. As I said, you need AI to do the directed-energy defense. Not only we are doing soft kills, we should do hot kills. When it goes to hot kill, there will be a lot of AI required. So go very technically. So we are trying to gear up to meet the challenge. Either way, we should be definitely among the top 3 in terms of technology, market placement, et cetera, at this point of time. We should not allow any other to overtake us. That is the biggest challenge. Okay.

Next question is from the line of Sanjay Kumar from iThought PMS.

First, excellent articulation of your vision. Appreciate it for the detailed explanation. But it was more about the future. We were worried about the near term and a bit of medium term. So I have some questions around it. Given the leadership changes or the transition, if you were to put it that way, are there any changes to our existing pipeline of INR 4,000 crores to INR 5,000 crores kind of design wins that we have won so far, be it awaiting production or be it under development? And what would be the impact of the transition with the large PSUs, given defense is a people-first, relationship-based business more than capabilities. So any impacts to approvals for any of the programs that we are already part of? Or simply, is the INR 4,000 crores, INR 5,000 crores design wins number still intact?

You asked for a change. Yes, there is a change. It's upward change. It's going to be better. Let me tell you everything, every single projection is intact. There is absolutely no collateral damage, absolutely no collateral damage. Q3, we'll meet or exceed the number. Q4 we'll meet or exceed the number. I'm not supposed to -- Shashi told me -- warned me not to give anything because you asked me, I just want to make sure you understand that. Absolutely, there is nothing. You mentioned that there is, yes, relationship based. There are certain relationships they cannot, and we have much better relationships, okay? So we've also built every kind of relationships and it seems as we have taken this. And we have discussed with our customer before making these decisions. We have to be -- because I'm answerable to the Board, answerable to my investors before making every decision. Even I want to change a small local level engineering person or a lower -- and I'll talk about mid-level engineering person, I'll think twice. When we are going to make sweeping changes, I need to take our customer into confidence, meet all of them, talk to them, find out. And I will assure you absolutely there is no collateral damage. If at all, there is increase. The morale is better, customers are generally happy because we are directly connecting to them. No offense to the people. But what I am saying is we have a -- working as a team, things are much better. And the PSUs, you mentioned about DRDOs have equal connects and much better connects, I would say. And don't -- please be assured that everything will be delivered. The old programs, as I reiterated they are intact, and we are actually trying to increase the number of programs and also value per program. So we are on track to do that. In fact, I can say since this decision has been taken, October 25 and the team, our Defense teams, led by Sunil, Vijay and also Mani met at least 4 Director Generals of Defense, DGs, which handles different departments. They were very happy to receive and provide us all the support. In fact, one of the lab now wants to give some kind of TOT, which never they gave before. And our major POC customer, couple of them are extremely happy, they are trying to sort of work more engagements with us. So everything is intact. I'll reassure you, there is not a single offset in this whole thing, okay? And you will see that in the results, Q3 and Q4, okay, right?

Got it. That gives confidence. Just an extension in the Q2 call, Shashi and Arun sir, announced our ambition of 60% revenue from Defense business over the next, say, 18 months. That implies that our Defense revenues will double from the current levels in the next 18 months. I'm just trying to develop confidence if this is possible? Or is there any delay in those targets? Can we get to 60% revenue from Defense in the 18 months? Or should we look at a much longer time period?

See, I really -- I'll put this way, basically. And currently, our Aerospace and Defense as a group put together, we are at more than 60% or more. That will -- Aerospace and Defense put together will go to 66% and so on. Capabilities, everything is same, similar. And Defense, will it increase? Yes. Will increase in a big way, more than robust. I can assure the target for me, I've given to myself, it should be much more than the industry average. Okay. That is what I'm telling to myself. Okay. So I don't know the ratio because we are talking about -- not about me, it can happen in 3 different ways. One is ACTL, I don't want to undermine ACTL performance because ACTL also will perform, what if they perform much better than this, then my 60%, that is a moving target for me. So what I would say is independently of what you are asking, Defense will have one of the best growth years for AXISCADES, Mistral, ACAT in the next 2 years. That I can assure you in the history of our company. And it would be, if you see our competition and our peers, I want to be more than the average, much more than the average. These are the 2 goals I've given, it should exceed ourselves, exceed the competition. Let me put it this way. Okay?

Got it. And I have 2 program specific questions, sir. First on...

Sir, sir, sir, only one request to me because I don't want to see -- I'm little uncomfortable on program specific. So what we are trying to do is to help you, we are going to open a [email protected], okay, mistralsolutions.com for the query because we need to reveal -- I don't want to be revealing too much about the program information. Actually, there a lot of things have been done. What happens is once we say that the competition goes there and tries through this thing and so on. So what I want you to do is, I really respect you and then want to give you whatever it is. You are an investor, you have every right to know what we are doing. So at the same time, without anything, I don't want it to be -- because these are all recorded and thrown in the public domain. I just don't want to do that. So please write to us on [email protected], we'll give that -- our coordination will do that. We will give a detailed reply with program-specific information to you. Anybody, please, listening, please come to us. We will tell you exactly what we are doing in the program specific. You are free to us, keep it confidential. It will be only to you. Okay. Of course, we need to get the person's background before we answer that. It should not be some customer or competition posting -- our competition posing and asking the question. So we need to do some scrutiny and do this. Kindly put up with us, but we definitely want to answer you. We value you and definitely we'll do that, okay? And we'll do it quickly. I have assigned all the respective team leads, whomever it will be, just go to them, and they will answer it comprehensively.

Next question is from the line of Darshil Jhaveri from Crown Capital Partners.

Sir firstly, thank you so much for explaining everything in such details. Hope I'm audible, sir?

Yes. You are.

Yes. So just wanted to know like now we've I think we are very bullish on our defense. So just wanted to know like in Q2, our margins had suffered a bit comparatively. So just wanted to know going ahead, how do we see H2, right? Like we wanted to get like around INR 150 crores, INR 160 crores of EBITDA. So what will be our target for H2 as well as FY '26, sir?

Yes. So essentially, the Q2 margins were a bit compressed. The reason being that our automotive vertical, which essentially is the result of the acquisition, which we made in Germany and their relationship with Volkswagen has taken a degrowth. And that's the reason why there was a bit of a compression in EBITDA margins. And the automotive vertical will continue to be a kind of a tepid growth or a bit of an -- I would say, undergrowth sector in this year. And with respect to the H2 numbers, you see what happened in H1 with respect to the production of -- the production revenues of Defense was around INR 78 crores. So a majority of the production revenues with respect to defense is going to come in H2. And that's how we are able to bridge the gap as far as revenue and margins are concerned. Usually, H2, is a growth sector -- I would say, half year for us.

Okay. So sir, we've given, I think the guidance outlook of INR 160 crores, INR 170 crores earlier for EBITDA for this year. And next year, around INR 160 crores, INR 180 crores PAT. So will we be able to achieve that? Or how would we look at it, sir?

Yes, we have given that guidance and we hope and we are working towards, I would say, meeting the guidance. But with respect to the, I would say, as I said, the automotive vertical, which is -- which came as a surprise in terms of how it degrew. Perhaps it may move by the year but we are sticking to the guidance.

See, I will just add something because Shashi may not like that. But in this year, that is H1, H2, whatever Shashi said, I can only say Defense portion that is Mistral plus ACAT, whatever guidelines Shashi has given, we'll try to honor, okay, definitely. And whatever guidelines he's given for the next year, our overall -- for the overall we'll try to honor, basically. We'll not try to honor. We have planned to honor. We have honored -- meet that and exceed, okay. I don't know the numbers, but you mentioned it. So I believe that in our internal strategy it is reachable. So I don't want to get into this, but basically, I would like to say, you can be rest assured. We can -- we are in the right path.

Okay. Okay. Fair enough, sir. And just like wanted to know, like in terms of defense, what margins do we typically have, like if it's going to constitute like around 60% of our business. So we can see a lot of leveraging of growth, right? So I just wanted to know what margins do we have? And because there might be some competition heating up, can we maintain those margins?

See, there are 3 aspects, I would say, to the margin. One is which states, what is our costing, what is our BOM, bill of material or what is that? Is it our product or which is a product we buy from outside. Wherever our product is used, for example, direct RF or direction finders or this X-Band Radar, their margins will be very high, normally much higher, okay? It can be something very big because you already have the product IPs are factored in. So we are to sort of leverage the technical edge we have. Okay. There the margins will be quite high. And also, it's a differentiator, competition won't come in, so we will not be able to face much competition and so on in these cases. And whereas if there is -- so the same thing holds good further, the new areas, emergency procurement areas where there is a lesser amount of field, there is also competition. Of course, majority of the items will be highly competitive. We need to sort of see the field and ensure that because winning is everything. So we'd like to rather win that and so on. So overall, it will be healthy.

See there are 2 aspects which have been repeating on the earnings call. You see there is a prototype production which happens, which is essential for us to get into future programs. And that is a highly competitive area, and usually do about anywhere between INR 78 crores to INR 90 crores of prototype revenues, which essentially is taken at a loss. The reason being, at that point in time, our only objective is to get into the program, which will kind of play out over 5 to 6 years. Now the other one is with respect to the production revenues which result out of the entire prototype certified, I would say, pipeline, as somebody talked about which is about INR 4,000 crores, INR 5,000 crores. If you look at that, that comes at a high margin upwards of 24%. And that is where the -- which is -- the production revenues are gathering pace. If you look at FY '23, the total production revenues were INR 38 crores, and the prototype revenues were INR 109 crores. And if you look at FY '24, the total production revenue went up from INR 38 crores to INR 112 crores, which came at about 24% to 25%, I would say, EBITDA margin. And if you look at H1 of this financial year, in the very first half year, we have done about INR 78 crores in production revenue, which again came at an EBITDA margin of upwards of 25%. So going forward, the blend between prototype and production revenue, the production revenue is going to gather pace, which is going to kind of improve the blended revenue. At the same time, we cannot stop the prototype, I would say, production to that kind of achieve altogether because it is the one, which feeds into the future order pipeline for us. So going forward because of the fact that the blend between prototype and production revenues are changing and production revenue is gathering pace, the blended margins will keep on increasing.

Another one thing I want to add is the biggest EBITDA are the profit earners in the Defense systems are the OEMs, okay? Nobody to beat OEMs. There is no competition, nothing -- always the reference prices are for foreign prices. So in the past, we had major margins through the OEMs. One challenge is to increase our engagement with the OEMs. So we are working on all the all-pronged as I said. We are also engaging with the OEMs and see how the profitability can be increased, not because of anything that gives a leverage to get R&D -- allocated R&D budgets are more and more programs. So as Shashi rightly said, we keep the blended above certain targets. But the major profit earners are I'll say, number one is the OEMs followed by the proven production orders. Then the R&D order. And one more could be the TOT converter, that also we are working on.

[Operator Instructions] The next question is from the line of Aman Vij from Astute Investment Management.

Yes. So sir, I understand you are -- you don't want to talk about program wise, all those things. But I just wanted to understand a broad number, which is in terms of order inflows. So that is an important metric that all companies share irrespective of whether they are in any segment or another. So if you can talk about what kind of order inflows are we expecting for FY '25 and '26?

Shashi, can you talk about already projected for FY '23?

If you look at our Q2 earnings call, we talked about the order inflows of INR 121 crores as our total order booking for Q2. And we sit on an order book -- confirmed order book for INR 450-odd crores, which is going to get executed between this year and next year. And more orders are getting booked as we speak.

And I can add to this. I can add to this is in the -- this may not factored the anti-drone.

The new orders, which are getting...

Orders in hand.

These are orders in hand.

Orders in hand. The new anti-drones are not added. If you add that, you can safely assume at least a 30% over and above this. Just I would say, even that is a very safe assumption to have.

So just to again kind of I would say, give a flavor to the numbers, we started the quarter on the 1st of July at INR 322 crores. The order inflows for Q2 was INR 121 crores, and then we executed about INR 66 crores of those orders, and we are sitting on an order book of around INR 377 crores as of 30th September.

Yes, sir. So those numbers you had shared in the call also. So I was looking for a number in terms of order inflows expected for the remaining of this year and for FY '26 because you would broadly have understanding in terms of programs and timelines and all those things. So for example, 2 of our big peers, everybody may have shared this. In terms of range is also okay. The order inflows expected for the remaining year and for next year. This is the question.

Okay. So let me answer this. Okay. We are having 3 low-hanging items at this point of time. One, of course, I have been repeatedly telling about anti-drones. The addressable market is about currently for -- up to FY '26 is about INR 900 crores, okay? That is what we have visibility of. This include the new repeat orders of what we already have, possibility are similar. I will -- it's not repeat, let's not assume so. There is a possibility of similar order upgradation for the existing thing. That is almost very low-hanging for us because we already delivered. So they're looking for upgrade, and we should be the first choice. And there are new programs, which is coming in. So currently, as of now today, my estimated market are visibility numbers for the anti-drone system are INR 900 crores. I would say filtering out everything there are 3 very serious competition, including us, that is we are 3 in the field. Maximum 3 will get to quote. So it is -- if you are fair to assume that we get 1/3 of this looking at a INR 300 crore order book for the FY '26 to be implemented on anti-drone alone, okay? So this is my thing, I don't know because, as I said, I don't want to talk too much about the numbers but because you are insisting. But I have -- we have -- that doesn't mean that we didn't -- we have calculated. We are going through every day with our team. So this is our number as far as anti-drone is concerned. As far as Marine Rafale is concerned, you know 26 Marine Rafales are being done, offset obligations are there. Offsets have to be fulfilled about in a matter of maximum 3 years. So we are looking at the total Defense package plus this, that should be, and we are looking at about at least about INR 30 crores per year on the minimum on the OEM side. Again, there is -- as I said, there is a moonshot item, which is submarines, which comes through. This will change the numbers drastically. And on the large, that is one more low-hanging fruit, new program, which is not listed in the past. We are also looking at sizable numbers. So what I would say is, you know the numbers in the past, what has been given to you. I would say there will be an addition of -- I'm saying overall, addition of about 50% minimum on those numbers for FY '26.

So as we explained, the quantum of production revenues and the production orders are as a direct result of the certified prototypes, which we have won over the last 6 to 7 years, which is INR 5,000 crores. And the pace at which it is getting sweated out and getting into order book has kind of risen. As I told you, last year, the total value of production orders from these order pipeline was INR 112 crores. It may be the various radar sub systems which we are supplying and various telemetry and sonar systems, which are supplying. And this year, the same value of production would be actually double that of what happened last year. So this particular order pipeline is now getting sweated and is resulting in production orders, and it's going to gather pace. Apart from whatever on top of this in terms of what Dr. S.R.N just now explained.

So we are...

Sorry, sir. Go ahead.

No. No. Just, A component, B component, C core components, which Shashi already gave you numbers and all, is going to be efforts of what we are doing right now. And I explained both the numbers you can add it together.

[Operator Instructions] The next question is from the line of Dhruv Shah from Ambika Fincap.

And sir, really detailed overview on the defense side. Sir, I have a question on the semiconductor. You rightly mentioned about the 2 large U.S.-based manufacturers. So how I see it is, we haven't scratched the surface, and you rightly mentioned that we don't only want to be focused on defense. So can you just elaborate on the opportunity size on the semiconductor side of Mistral?

It's very huge at this point of time. And what we are seeing is currently, I think, as the old numbers are there to speak. We are doing about roughly around $15 million roughly on the semiconductor side. And we are -- we have a chance to double it in the next year, if we do things properly. So -- and we are doing it in 2 ways. First, we are working only with about 4 major semiconductor manufacturers at this point of time. One contributes for the 80% of our 70%, and other Qualcomm we are doing only with -- mostly with TI and Qualcomm. That is the 2 major semiconductor players we are working with. And there are -- we have just started putting our foot in NVIDIA and we are also trying to work with some other players. Now of course, with other major player, with Intel we are working with. So there are 4 we are currently working with. And biggest advantage for us, we are already established, we have references. We are well known in the market. I would probably say unlike Defense, there is no competition here. We are extremely well known. We are -- our main competition is kind of a major say me-too company that is the companies, which provide semiconductor into also one of the services. It could be HCL, it could be Tata Elxsi, it could be KPIT. I don't want to name names, but say, but these -- some of them are niche, some of them are large companies, which also have semiconductor practice. So -- but so here we are having a niche and we have a unique advantage. So we have -- we want -- one of the things we want to do is have a hyper growth in these segments. In order to do that, we need to add more semiconductor players, companies, chip companies to start working with us. So we met about 4 of them in the last 10 days, along with my colleague, Satish Ram, who is from Fremont and along with Gopal Kamath, who's sitting out of Dallas, Texas and he is in the Bay area. We are working a robust strategy to take it forward and have a hyper growth on this. So, a, increasing the more engagement with the semiconductor companies. B, adding more verticals to that. C, kind of climbing the -- it's a cube. Climbing the value chain by focusing sharply on AI-based services, GenAI especially with large SLM and LLM and so on and so forth. So we do believe strongly we have a good chance or path to grow it to almost double. At least we are looking at a good growth, reasonably very high growth we are looking at. Of course, it needs the investment, it needs development center here for the software. It needs the onshore center at somewhere in the U.S. So there is always time taken for all these things. But I'm saying that with all these things, we are a niche player. This is a very important thing. So we are working to improve this. Thank you.

The next question is from line of Kiran from [ Table Tree ].

This is a brilliant call explaining a lot of stuff. Sir, one of my fundamental doubt is, I mean, from whatever I'm hearing and maybe I've got it wrong, but basically chips to product and the defense, INR 5,000 crore order book, all these strong foundations were laid by the Mistral team, including the leadership. So if you could just explain -- I mean, it seems like we have -- we are delivering more in the next 2 years. And given your push, I'm sure there's a faster delivery, more programs and more value per program. But if you could just tell me a few, couple of reasons why the leadership got changed because that was one of the prime reasons why we brought them in, in the first place. And we've been in AXISCADES for very long. So just trying to understand if your disconnect between what happened 5 years back or 3 years back and what has it happened now?

See, as we speak, see, first is, I'll say that Mistral, I think the acquisition process got completed in 2022...

'22, December.

December. And then there was -- main person was running, was already left and by that time. And we were in the second -- the next group came in. If you say, yes, I appreciate Mistral, a lot of strong points, lot of the people are extremely good, one of the best I worked with. I really appreciate the team building is superb. And some of the core areas, the work is very unique. It is very -- I'm very proud to say Mistralist. And the person who left in the beginning, who was the main founder and the visionary, he has already left. It is about 9 months back or 1 year. So since then, there is a vacuum, which is -- there are people who are executing it we felt they lack the same drive ambition. Moreover, all of them are, I'd say, there is no need of because most of the top ownership, I'll put it that way, there is no fire in the belly because most of them are in terms of financials, they're extremely secured and well off, I would say. I may be wrong, but to have a drive, you need -- you have to have a need. There is no need, there is no magic drive. There was a big lag in that drive, okay? And as you know, there was a bitter battle in trying to sort of take this thing and so on, legal cases took place in the past. That also left some kind of a kind of bad blood or misunderstanding between little bit of the team level. So all these things led to -- if you cannot like it's a conflicting and these kind of things I felt. And anyway, the whole arrangement was that once anybody takes over, they would like to put their own team and run it. It's fair thing. So I would -- when I came here, I just -- even otherwise, we should have done it much before, okay? So they should have handled. So we think there is no animosity basically we felt that we want to have a smooth transfer and we should have our way. And moreover, the strategy, I would say that the chip to product strategy is our strategy. It is not before. Though there were elements of the strategy put together as a focus and strategy and try to expand this purely ours basically and go put it on the high-growth part, finding the synergies, make things better is us. And also, we come with a more larger defense background. So we can leverage that base. And I would say, I really appreciate, especially the founders, the key founder contribution to making Mistral. I'll say key takeaways, I would try to put it on the card. We've done an excellent job in, first of all human resources. We have probably, arguably one of the best team in place. And second thing is probably a good relationships with OEMs and others. But having said that, Defense growing and the focus and so on, I'll put it this way, very this thing, Mistral was made for selling to another. This was not going to be a public company. They always wanted to sell and exit. Okay. So Mistral is designed for sell and exit. [Technical Difficulty]

Ladies and gentlemen, please stay connected. The line for the management dropped. Participants, please stay connected while we rejoin the management back to the call. Ladies and gentlemen, thank you for your patience. We have the line for the management reconnected.

Sure, sir. So understood, sir. Mistral was made for selling is where the argument ended.

Yes, go on. You see, essentially, the company completed the acquisition of Mistral in December of 2022. So at that point in time, the promoters actually requested us to part ways. But it was a project-based company. We wanted to first look at I would say -- understand the various projects, which are going on. Of course, the second line of Mistral, below the promoters, all the senior executives are extremely, extremely prudent in terms of every single step of the way as for the execution of these programs are concerned. But the time came where, I would say, after close to about 1.5 years, 2 years of we taking over the company, we thought that we should have a different set of mindset to drive the enormous growth opportunities that what we have as what was explained by Dr. S.R.N earlier.

Got it, sir. Sir, then I have a question, not related to the first question, sir. Our INR 5,000 crore order book is primarily like 60% or 70% is on the Sukhoi and the Tejas programs. And Tejas programs, we started with 24th aircraft, then it became the 37. Now we are nearing the 51st aircraft. Sukhoi, obviously, we have not yet got the approvals and the RFPs has not kicked off. So I'm just trying to understand, outside of these 2 programs, are we seeing a large delta because Sukhoi and Tejas probably is about INR 5,000 -- INR 4,000 crores or INR 5,000 crores order book or order pipeline. So if Tejas continues to get delayed and Sukhoi obviously keeps getting delayed as well then what is our -- is there -- anti-drone is a solution to our order pipeline?

Yes, it's not a solution. It is definitely a new program, new big one. So currently, Sunil, can you explain on what the order build and how you would like to go about and how we're going to increase the core activities. Sunil is with me. Again, he's been there for a long time. He was the main Chief Marketing person for Mistral earlier and now. So he is the person who is responsible for all these order books. Sunil will explain.

Yes. So we...

Sir, sorry to interrupt you. Sunil sir, sorry to interrupt you. Sir, there is a slight static from the line. Let me disconnect and reconnect the line, please. [Technical Difficulty] Ladies and gentlemen, thank you for your patience. We have the line for the management reconnected. Sunil sir, you may proceed.

Yes. So essentially, Sunil, the question is, there are 2 programs, which predominantly make up this order pipeline of around INR 5,000 crores, which is about 130 LCA program and about 250 Sukhoi program. The question is, if these get delayed, are we still confident of achieving the numbers? And what is that which we foresee for these order pipeline?

So, that is the end?

Yes, yes.

So there are new programs, which we have been working on like AWACS Mark II and QRSAM. So these will fill in -- few of them -- I mean, most of the numbers, which have been projected. So should I add, basically, yes, because, of course, I believe in AWACS. But I would say the 3 programs I talked about -- because we are talking about the anti-drone are all direct to defense because we are working with MoD. So they are very different kind of progress. These are all through DRDO and PSU. So I'll categorize in a different category. Most of the pipeline in the past we have given, all the INR 4,500 crores, INR 5,000 crores are being driven through the DRDO/PSUs. So in that, you are right because totally towards aircraft. The 2 aircraft programs and Sukhoi and -- Sukhoi upgrade and the LCA that is. But that is why we are trying to mitigate the risk not by anti-drones but through the DRDO/PSU process that is working on large missile program. According to me, the business missile program, which is going to happen or happening now is a different program, which I can share with you if you -- if you have e-mail ID and so on. You all might know, we are very much trying to get into part of this. We will have few wins in that. We already have been considered in that. So that should really not only back up for any drop in these 2 or delay in these 2, not only compensate that help us to exceed because these are all post these 2 works. This particular missile program is very urgently required. This is an accelerated program. We are proud to say, we are very much part of it. And we have a good value in that, leverage in that. So we are going to sort of -- that will more than compensate if there is any delay. So I can send the program details Mr. Kiran directly to you on an IQ because this is something -- a big program, which is happening, which has been kind of marked today. For the today's effect, so the other missile programs have taken a back seat, and this program has now most of the funds are going towards this and we are very much part of it.

[Operator Instructions] Next question is from the line of Rupesh Tatiya from Intelsense Capital.

My first question, sir, is over, let's say, next 6 months and then FY '26, can you list the programs from which you are expected to receive the order? I know Mistral team is on the call. And I mean, where are we on [ LLTR SV ] what kind of one of your competitor is expecting that they will receive an order for radar. So where -- if you can give indication where are we on that? Then Adani, I think, has been declared L1 for Netra system. So where are we on order for that, then I think X-Band radar, Bharat Electronics has received an order for INR 800 crores X-Band radar. So if you can -- I mean, both of your listed competitors give some sense of 3 or 4 programs for which they are likely to receive the order. So if you can talk about this, what are you going to receive in FY '25? And what are you going to receive in FY '26?

See, sir, I will do it in 2 parts. One, I'll send you a mail with the details. Definitely, I'm going to do. But for the benefit of the other people, I'm just going to say the major -- my feeling is, if you look at, as I said, I'm breaking the difference into 2 parts. One is the DRDO/PSU part, which is development based. Another part is the integration in bigger parts is the direct to defense part. So in these 2 parts, my number one, I would say, if I say 2026, it will be -- my #1 this thing will be the new addition. I would say, first would be definitely our drone, that is definitely our anti-drone program, that will be my -- our major program, topmost. Second will be the new missile program I'm talking about. That will be the #2 program, okay? In terms of market share, in terms of value, in terms of absolute value, these 2 are new programs, not factored in so far. This is a lot of work is coming from our side, the new team, et cetera, is going to be there. The third one is already that LLTR, MPR and DF, all these activities will be growing and that will also be playing a major part. Even if Adani brings for example, in AWACS everyone, they have to buy from us. Because as per the rule as per this thing, we are the designated seller for that particular product. No matter who becomes a lead integrator, who wins this, we are the subsystem manufacturer notified. So they should get it from us, even they have a product impact, okay? So this basically whoever wins the final product, which consortium doesn't matter. We are the designated subsystem manufactures for that. And so all the subsystems will be sold intact, so the numbers will be intact. As far as these 3 products that is for the program, the LLTR, MPR and all other products also. Added to that, I would say the one large difference is the DF. DF is a new program, and DF is a focus right now. Whatever comes out of the DF will also be that. So if I could say, the third major win, apart from anti-drone, apart from the new missile program, possibly, if we can get it right, the submarine systems. And the new submarine systems, if we get it right. So this will be my top 3. The top 3 will be new, the rest will be legacy, okay? Okay. That's the plan. And so anything you want to it, that's it. LLTR we are expecting around INR 120 crores sort of orders in the Q1 -- Q4 or Q1 of next year.

Okay. Okay, sir. And then I have maybe few technical questions. So one, sir is this submarine. So there is this Samudrika Electronic Warfare program, which is like an umbrella program for all electronic warfare. And then there are, I think, 7 programs within that. Shakti, Nayan, Tushar, and then there are some other Sarang and all that. So are you -- I mean, are you present in all of them. I have only probably heard of Nayan in the past, but are you present in all of these electronic warfare program? And what -- do you supply direction finding or some other products? This is one question. And then the other question, sir, is in counter drone systems, whatever the active and passive radars that are used, do you manufacture them? Does the ACAT manufacture them in-house or within AXISCADES Group or they are procured externally? Because I think this is -- I think my understanding is this is one of the competitive advantage on if you can produce the radar on the quality of the radar. I think it's one of the competitive advantage. So that is another part. And then the final one, sir, is I think in LCA, Tejas Mark 2, the AESA radar, I think, is moving from gallium arsenide to gallium nitride. Do we have the gallium nitride technology? And would we be part of the LCA Mark 2 program also. So these 3 kind of like technical questions, if you can address.

Mr. Rupesh, my name...

[Technical Difficulty]

Mr. Rupesh, I don't know where we lost the line but I'll repeat for your convenience. My name is Ramanan, and I will be taking the first and third question. I will have to pass on your second question. To the first question that you asked, under the umbrella of Samudrika, we are now supplying into the program called Nayan. And the other programs that we are aware of and which we have prototyped and we have succeeded are the Sarvadhari and the Nikash. The Sarvadhari and the Nikash are programs, which are airborne programs, again, but for the Navy. We have prototype and we have succeeded. As and when that goes into production, we will again be in the reckoning. There is another part, which is called as the -- Shakti, the Shakti. And we have also won that program, and we have prototyped it successfully. And we should be looking at -- we should be looking at production coming in June for that. So per se, in the direction finding side, we are in the Shakti. We are in the Nayan, Sarvadhari and Nikash. Now there was another question that you posted, and that was on the LCA side. On the LCA side, we specialize in GaN-based RF amplifiers. So we will be continuing with that, and that shall be the one which should be offered for the LCA market. That is our understanding, and that is understanding of our customers also. If there's anything different, we are not aware of that yet. With respect to the drone, anti-drone related question that you had, sorry, what was that? Was it the anti-drone question that you had asked, was your second question on anti-drones?

Yes. Yes.

I request Babu to...

On the anti-drone radar question, right now, we are working with -- we are working with partner for the radar. And in the future versions, we are going to -- as you know, we have a very deep radar capability. So we are going to have our own radar. Already, we are on the way to TOT and also we'll have our own radar, integrated into future programs.

Thank you very much. Ladies and gentlemen, in the interest of time, we will take that as the last question. Rupesh, I'll request you to get in touch with the management offline. With this, I now hand the conference over to Ms. Sangeeta Tripathi from AXISCADES for closing comments.

Thank you. Thank you, Dr. S.R.N and Shashidhar sir, for your time and efforts. Thanking all the participants for your thoughtful questions and key interest in our business and the company's development. On behalf of AXISCADES, I sincerely appreciate your time and engagement during this update and discussion. If any of your questions remain unanswered, please feel free to reach out to me directly. Also thanking our Investor Relations Agency, Orient Capital for organizing this call. You may now disconnect the line. Thank you.

Thank you very much. On behalf of AXISCADES Technologies Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.

Thank you.