Data Patterns (India) Limited (DATAPATTNS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Data Patterns India Limited Q4 FY '24 Earnings Conference Call, hosted by Go India Advisors. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Monali Jain from Go India Advisors. Thank you, and over to Ms. Jain.

All right. Thank you, [indiscernible] Financial Officer. We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore viewed in conjunction with the risks [indiscernible].

Excuse me, we're unable to hear anything.

We'll hand it over to the management right now. Sir, you can go ahead.

Yes. We couldn't hear anything what Monali says. Anyway, thanks, Monali. Good morning, ladies and gentlemen. Am I audible?

Yes, sir, your voice is audible. You can go ahead.

Okay. Thank you for joining us today for the Q4 and FY '24 earnings call. I hope you had the opportunity to review the earnings presentation available on both the stock exchanges and on our website. Before Venkata presents the financial results, I'd like to provide a brief overview of some important updates and key highlights for this quarter and the financial year. FY '24 has been another successful year for Data Patterns. Over the past 3 decades, we have strategically advanced the value chain by developing complete systems using reusable building blocks and leveraging on our existing competencies. This strategy has facilitated our expansion in a small way into new geographical markets, including Europe and East Asia, where we have successfully competed with foreign OEMs. Our sustained investment in products and technology has positioned us at the forefront in our field. Over the years, our strong R&D capabilities has enabled us to undertake significant product development. We have successfully developed and delivered 9 precision approach radars to the Ministry of Defense for the Air Force and Indian Navy requirements, delivered command and allied systems as well as self-protection suites for land, mobile and reconnaissance aircraft [indiscernible]. Data Patterns has an order book of about INR 1,083 crores at the end of FY '23, '24, which has grown 17% year-on-year and a CAGR of 30% between 2021 and 2024. Our diversified order book with significant contributions to radar at 64% and avionics at 21% highlights our strategic positioning. While Venkat will discuss the results in detail, I just want to touch upon the financial performance for the year. In FY '24, our revenue from operations witnessed a 15% growth. EBITDA demonstrated a growth of 29% over FY '23. EBITDA margins during the year stood at 43%. The broader context of our performance is shared by the significant transformation underway in India's defense sector. The government's initiatives, such as Aatmanirbhar Bharat and Make in India, coupled with increased capital outlay are driving this change. These developments provide an excellent platform for companies like us to capitalize on substantial domestic opportunities in Defense sector. Keeping the sectoral tailwinds in mind, we are committed to sustaining a revenue growth of 20% to 25%. As part of this product development initiatives, Data Patterns is developing complete systems in radar, electronic warfare systems and communication systems in line with in-house commit competencies, meeting international standards. These products are expected to bring in revenue growth over the next 3 years post trials. For FY '24, the Board has recommended a dividend of INR 6.5 per share at 325% and equity share of INR 2 each, which is subject to approval in the ensuing AGM. We are committed to maximizing value to our shareholders. At this point, I will pass the floor to Venkat for his comments.

Thank you, sir. Good morning, ladies and gentlemen. We are happy to present our annual financial highlights for Q4 and financial year '23, '24. Let us look at an overview of our financial results. For financial year 2024, our revenue from operations increased by 15% year-on-year, reaching INR 520 crores. We maintained a robust gross margin of 68%. Development contracts contributed to 42% of our revenue mix, with the production at 54% and service at 5%, showcasing growth across all 3 categories. EBITDA of INR 220 crores witnessed a notable year-on-year growth of 29%, with an EBITDA margin of 43%. Profit before tax stood at INR 242 crores, while profit after tax surged by 47% year-on-year to INR 182 crores. In quarter 4 of FY '24, revenue was flat at INR 182 crore. We had a better quarter-on-quarter performance in financial year '23, '24, with Q4 contributing to 35% of the yearly revenue as against 41% in the last financial year. Profit before tax stood at INR 95 crores, while profit after tax witnessed a 28% growth, reaching to INR 71 crores. We continue to be a debt free company. Our receivable days came down by 28 days, while inventory days increased by 32 days due to advanced procurement of materials for contracts deliverable in FY '24, '25 and '25, '26. As of March 31, 2024, we hold over INR 745 crores in cash and cash equivalents and liquid investments, underscoring our financial strength and liquidity. Overall, we delivered a strong performance in Q4 and financial year '24 and are confident of a steady growth momentum for the year ahead. We will endeavor to bring down the working capital days and sustain a margin of about 35 to 40 percentage. With this, we will now proceed to Q&A session. Thank you.

[Operator Instructions] The first question comes from the line of Jyoti Gupta with Nirmal Bang.

Congratulations for a good set of numbers, something which I'd anticipated. Two things that I would like to understand in terms of revenues, what is going to be the percentage in domestic and exports? What's going to be the contribution of exports coming from the revenue side ballpark maybe in the next 2 years? What do you anticipate? Second is, do you expect inventory days to go down from 187 in FY '25? Third is, there is a steep decline in your raw material costs. Could you give some flavor on what are the key reasons for this decline in raw material costs?

Okay. Let me take this question, last one first. There is no steep decline in raw material costs. Our margins varied with the contracts we execute. It's -- the gross margin varies with contract to contract. We had a good set of contracts where there's a lot of IP of ours. So the margins have -- last financial year, the margins were better than the previous financial year. And most of the orders being single vendor, we had the margin available with us. So it's not necessarily the raw materials have gone up. That is why our margins have gone up. Second is on the export and domestic. The opportunity in India is very, very high, okay? And we are trying to now go in to Make in India solutions against traditionally importing weapon systems and defense equipment from abroad. So this has opened up a lot of opportunities in India. The growth story has to be more in India today. And later, you have to look at exports. Having said that, so the large part of the business is going to be Indian and the growth is going to be here. We have order book of more than INR 70 crores from export orders, which we won against contracts, some are single vendors, some are open competition for products designed and developed in India. These are our offset contracts. This has been developed by us with local IP. So we expect that these will be exported probably in the course of this year. So if you look at -- that is going to be there. The third question you wanted to know whether working -- inventory will go down. It all depends on the mix of contracts, which we get. We had some large contracts which we have bought inventory and inventory gone up from last year to this year because the holding inventory for execution for some of the contracts this year as well as next year. So inventory has gone up. So this is going to be more towards the kind of contracts expecting rather than our forecast for inventory days. This business has larger inventory days, inventory turnover ratio will be low in Defense business because it's capital-accruing business, plus there's a lot of acceptance criteria before the consignment gets shipped. So there's a lot of interaction over with the third-party agencies. So inventory days becomes slightly longer. But our interest is to reduce working capital days -- net working capital days, which we're working towards. So next 2, 3 years, you will see a substantial decrease in terms of net working capital days going ahead.

Next question comes from the line of Abhishek Sundar from Naredi Investments Travel Limited.

Am I audible?

Yes. Bit louder, please?

Yes, yes. Okay. Sir, my question, currently, what is our order pipeline today? And out of which how much is L1 order? And what is our success rate?

Presently, we have about INR 1,000 odd crores order book on hand as of today. And out of which, I think, about INR 360 crores to INR 400 crores have been in L1 business. I think I'm not very sure exactly line wise. I don't have it in my mind. I know our 2 large contracts with the L1 business. So I'm saying around 35% to 40% could be L1 business. The rest are all mostly single vendor business as an order on-hand situation. On the order pipeline, which you talked about, we're looking at a pipeline of more INR 2,000 crores. But those pipelines when you predict to the market is all based on previously delivered orders or single vendor contracts expected. We don't talk about pipeline with respect to competitor business because competition go either way, whether it's a 0 or 1, you may also lose the business. So I'm not predicting or forecasting the numbers they give to you are based on only Data Patterns products and single vendor, or repeat business, production business, from whatever we've delivered earlier to the DRDO.

So sir, how much order we'll get in FY '25, order inflow in FY '25?

We expect another INR 1,000 crores order intake during the course of this financial year.

Next question comes from the line of Dipen Vakil from Research Analyst.

Congratulations on great margins. So my first question is on the lineup, sir, you won a significant order from Bharat Electronics in this quarter. So can you give some more light as to for what platform of product that pertains to?

I'm not very sure whether this Bharat Electronics order will come this quarter or next quarter. We're expecting some contracts with BEL, but it has still not happened. There's been a delay in that contract. Hopefully, we expect that in the next 2 quarters, we should get the order. But I think it's a bit preemptive now, we don't want to -- the contracts are still not in our hand. I don't think it is appropriate to talk about the contract or the platform. Maybe once the contract is -- we get the contract, maybe it's the right time to talk about it.

Apologies, sir, because I asked that question because it was already there in the major order received in 4Q, right? Sir, my second question is on your R&D plans. So you plan to...

Sorry, sorry. One second, there's one more order already received for last year. I was thinking you're talking about this year. Last year, we received an order. This is for a program called Arudhra, where it's a radar, 8 radars were delivered by BEL. We won some contracts as part of that order.

Okay. Okay. Sir, second question is on research and development expenditure and CapEx. So sir, you foresee you will be incurring around INR 150 crores in the next 2 years. So can you give us some guidance in terms of where we will be investing that and what are the new products and development that we are focusing on in the next couple of years?

Okay. See, our CapEx trend is going to be 2 levels. One is in factory building and infrastructure, which is going to be spent in the next 2 years, because expecting the larger contracts to happen, we have created an infrastructure to deliver on those contracts. We already bought land nearly about INR 4.5 crores -- 4.5 acres of land, right next to us. So we expect to build some more factory infrastructure in the next 2 years and also some test infrastructure for the ensuing contracts to deliver. So that infrastructure will happen, maybe INR 100-plus crores will be spent over the next 2 years on this. We are making estimates internally and getting board approvals before that is spent. The other thing which we talked about is product development. We have raised money last 23 March for product development during QIP. So that already we have started spending money on certain areas of operation. The main areas we spend is going on to radars into EW, Electronic Warfare suite and communication equipment. The 3 areas where money is being presently spent. A lot of development work has already happened. So the next 3 to 6 months' time, some of the products will start coming out, and we'll start undertaking trials with the customer to see that acceptance is there. So this is the first area of investment we're making and that will be around another INR 100 crores plus we'll be spending on these areas of development.

Got it. Sir, just a small follow-up, sir, what would be our R&D expenditure as a percentage of revenue for this year for FY '24?

Maybe around -- as you know -- see, this is -- this is development expenses. We're not -- we've taken a separate fund available from market for this. And so -- but maybe if you look at 20%, 25%, maybe about 20% to 25% of our overall revenue, we will be doing actually product development this year and it will be going to the next few years like this.

Next question comes from the line of Hardik Rawat with IIFL Securities.

Firstly, I wanted to understand what sort of -- you mentioned that you're looking at about INR 1,000 crores worth of inflows in FY '25. I wanted to understand within this the Arudhra -- Arudhra execution, what should be the value of that and -- of inflow from the Arudhra program? And what would be the execution time lines for the same?

No, this Arudhra, already we have received the order as of last year, and that will be executed over the next 3 years as per schedule given by Bharat Electronics. But that is not part of the future expected orders this year.

All right. Another, I had a couple of questions with regards to the balance sheet. So there's a sharp jump in the other current liabilities, which has led to a substantial improvement in your net working capital cycle. Can you please explain what this jump is, how -- what is the reason behind this jump?

Venkat, you want to answer this?

Yes. Other current liabilities basically is because of advances received from -- against contracts from customers, last year, it was around INR 190 crore, it has gone up by almost INR 100 crores. That is reflected in the other current liabilities increase in the balance sheet. It's advances from the customers for 2 contracts, actually, we have got additional advances, that is what is reflecting the increase.

Understood. And -- okay. Also, like you mentioned that you have an order pipeline of INR 2,000 crores for FY '25. Is that correct, right?

The pipeline is not -- just FY '25 or FY '26. It's a pipeline, yes. For FY '24, '25, we expect the new order intake around INR 1,000 crores.

Understood. And sir, just wanted to understand, lastly, your guidance in terms of revenue margins and net working capital cycle for FY '25?

We expect to grow the business 20% to 25% in terms of revenue and with EBITDA margin of around 40% -- 35% to 40%. And bottom line growth is probably about 30%. And as far as the working capital days is concerned, can you give some numbers?

We expect -- we are working towards reducing the working capital day. And actually, this year also FY '24, if you see, receivable days have come down by almost 30 days. But still, the net cash conversion cycle is high because of the inventory. Inventory is expected to be high only, but we will -- over the next couple of years we will reduce the number of -- I mean, cash conversion cycle days to about 270 to 280 days. That will happen over a couple of years only. For -- say for '24, '25, it largely depends on the inventory days.

Next question comes from the line of Parvati Rai with Equentis Wealth.

So with respect to the outlook given on revenue, where -- while you mentioned that revenue growth of 20% to 25% for this year and on a sustained basis, the slide also states a 25% plus CAGR over the next couple of years. I want to understand, last quarter as well, we gave a revenue outlook of 20%, 25% and prior to that just 25%, but came in at almost 15% Y-o-Y. So what exactly should we kind of look even for going forward years, should we take it at 20%, 25%? Or would it be 25-plus percent CAGR that we are speaking of?

See, last year also predicted about 20% of growth. But we could not -- our original plan, internal plan is about 540 plus. We achieved doing 520. This is because 2 contracts, products are ready to dispatch, but inspection is getting delayed from customers. So it's still the inspection, one is finished. The other one is still to start. So we were actually close to guidance, but we could not do that because of third-party interactions. Those are products in ready. Second is, however, we are able to keep the bottom line growth because the particular contracts at better margins to do this. And of course, this is also predicted by us in our budget to our Board. Coming to your second question is, this is the reason why the prediction was slightly lower. Actually, we achieved lower than prediction. So the bottom line was in line with expectation. When we say 20%, 25%, I think we should be able to achieve this maybe even more than that, probably we can do it depending on how the delivery happens this year because it's a complex delivery. A lot of development is there. So that is why we are giving a range in case we are able to go through the process. It's not just a company which is involved here, third-party inspections are there and the customer is development-oriented. So they're likely to be ups and downs in this on quarter-on-quarter. So it's -- so that is where we're giving the range. But I think we should -- we will be able to achieve whatever we are telling you now. 20%, 25%, 25% plus we should be able to do it.

Okay. And on the margins...

We have an order on hand and some of the orders -- expected orders also we started advance work to see that we deliver on time with the customer expectations. So I think we should be very near guidance is what we think.

Okay. Okay. And with respect to the margin outlook as well. So while this quarter saw a very good margin at 50% plus. So what I am looking at is how sustained is that? While 40% is something that you have guided for overall in your PPT, while you gave your starting commentary, it was -- outlook was given at 35 to 40. So I'm just trying to understand where does that sustain margin lie. I mean from that lumpiness that we saw during quarter 4 on the higher side of 50-plus, would that be repeated during the year sometime? And what brings in that? I mean while you did mention that it was the IP and not more of the raw material which was in that expansion, could you just help explain that? Because while 35% to 40% is something that you put in your opening comment, the slide presentation does have a 40% plus sustained margin. So should we expect the upside that we saw during this quarter, again sometime during the year or how frequently given that IP is now being leveraged?

I don't understand the question, the last part...

So basically, on the operating margin, you did mention that when somebody did question that the raw material cost was one of the reasons for an improvement in margins. So you did mention that it was not exactly the raw material cost, but also the company's own IP that was used. So I just wanted more clarity around that on how it helped improve margins and going forward I mean should we expect more margin expansion as the company uses the IP products?

See, what really happens, if it's our product developed completely in-house and we sell it typically, the margins which we have been reflecting on our various years in the P&L, which you've seen in the last 3 years. What happens sometimes is a mix of contracts. It's not just our products, we also take some integration as far as overall deliverable in which case then when you buy products and integrate, obviously, it's not our margin, it's an integrated margin of the overall system. So the margin tends to come down. So it's a question of the contracts we take. And depending on that, the margin varies. So coming back to the question of this year, what we do, why we think 35%, 40%, a range is basically because the kind of revenue, which projects will get executed during the course of the year, that may vary. That is why we've given a range. But if it's only our products, it will be around 40%. But when you increase -- I mean, you try to integrate systems, it comes lower. So cumulatively, it comes to 35% to 40%. So we are likely to do a better revenue, higher revenue. And if the range is -- then -- the margins are sometimes lesser, that's why I have given a range. But we're closer to 40% is what we expect.

Okay. Okay. So one last question. Primarily, with respect to the order inflows that you spoke, so you did kind of putting at around INR 1,000 crores for the full year of FY '25. So quarter 3, we did mention about INR 5 billion to INR 6 billion over the next couple of quarters, of which we did say in Q4 around INR 300 crores. So I want to understand of the INR 1,000 crore order inflows that we are talking, would that be spread out across the year? Or are we expecting in Q1 and Q2 of the rates that we spoke in the last quarter, a major chunk of it, at least 50% out of that during the first half? I just want to understand how the inflow would be based during the first part of the year.

This will be spread through the year because the inquiry, some have come, some have to come. So there may be delays in the inquiry and negotiations and final order happens. So I can't give you a quarter-to-quarter estimate at the present moment. In our own thinking, in our budget, we expect to not ship more than 10% to 15% of the incoming order book for this year execution. So it's all meant for next year and year after next execution. So order inflow will happen over the year. I can't clearly specify exact quarter it will happen, though we have an indication, but it's not better to commit on that right now.

Next question comes from the line of Gagan Thareja with ASK Investment Managers.

I hope I'm audible?

Yes.

Sir, the first question is around the guidance that you've given. Your top line guidance, you've indicated of 20% to 25% margins, outer limit of 40%, which is lower than what you have done this year. And yet, I think you indicated a profit guidance of 30%. So I'm just sort of trying to reconcile if the margins year-on-year are going to be slightly lower than what we have been in '24, then why would the profit guidance be 30% for a sales guidance of 20% to 25%?

See, this depends on revenue growth, operating costs and overall margin and also the kind of products, which we ship this year. So that is why I've given you the approximate guidance numbers. I think we should retain guidance -- we want to retain the guidance of, trying to somehow make the bottom line growth as important to our office, our operations. So our focus is there and focuses on margins. So there are some contracts we have taken up, which probably has lesser margins. The revenue growth may be higher than what we've suggested. We managed to ship those revenue. But our mind is on the bottom line growth. So that is why we're giving you this and not given a complete every segment correct representation, which is a mix of contracts, mix of deliverables, so I've given you growth numbers accordingly.

So what you're suggesting is that either the top line can be more than what you're currently guiding?

Can be more, can be more. We want to retain our guidance for the bottom line. So it can be more. So it depends on how the year proceeds. So that is why we've given you a typical number range.

Okay. And you also somewhere in your PPT indicated that share of DRDO contracts will come down in revenue contribution and that of MoD will keep going down. Is it possible?

I don't think so. I think I made it in the CNBC interview this morning. Maybe you listened to it, maybe you're one of the listeners I don't know. What I've asked this question was brought in a very broad kind of perspective. There's a lot of dependency on DRDO contracts. Even today, we do a lot of DRDO business. And that is another contract which you get, based on which repeat contract comes from Bharat Electronics or HAL or the PSUs. So this is how the line of business has been going except some few contracts like precision approach radar, we directly got a contract bidding openly in MoD tenders. What we did tell the CNBC interview here is that going ahead, we will do, continue to engage with DRDO for our programs, and we are very -- this is where we learned our business. We learned our competencies, we'll continue to engage with them, and try to do more with DRDO. But having said that, if you have to scale the company a few thousand crores, it has to necessarily come from a market which is MoD driven. MoD driven market is very large. So we need to address that market. We have to get the growth which we are planning to, especially considering that the competency the company has built over so many years. And also that we have taken money to do product development for the market, actively developing products. So these have to finally go to MoD sales. So we are trying to engage MoD in a large level to see whether we can have products where the inquiries are coming in, where now most companies work with collaborations. We've tried to work with in-house IP so that is where the development mode financing is coming into picture. Going ahead 3, 5 years, I think scaling will happen with the MoD business. That's what I said.

Right. I'm just trying to understand from a margin and working capital perspective, are the MoD orders going to be different in the constitution compared to the DRDO orders?

It again depends on whether the MoD contract is purely designed -- 100% designed, developed by us or it also involves vehicles and other subsystems, generator sets, UPS, antennas, buildings. If these were to come into picture, there will be integration costs also attached to it and the kind of contract, the margins will vary. It will be -- if it was only our contracts with IP, then we compete with foreign vendors. So the margins tend to be higher. Again, this is all -- this can't be clearly told year-to-year contract [indiscernible] because you have to build against very many companies and consortiums, and we have to get a lower score and yet be there. So there will be a mix of both. I don't think it is a clearcut answer. What is the important thing is we want to scale the business multifold in the coming years, and we want to be profitable in the coming years going ahead. So we want to see that sustained bottom line growth is happening over the many years. This is the idea. Obviously, some contracts, the margin levels have come down because there is competition, and we are integrating. So that we are to be very clear about. But these are all contribution margin pricing, which we need to do as long as we're able to handle the overheads and ship the consignment, that's what we look at. The size of the business is very, very large. So our -- the focus is going to be to build products to address the size of business. That is going to be the -- and not that we will not make any bottom line, that is not the kind of business we're looking at.

No, I appreciate that. My -- from the working capital standpoint, my question was simply that while looking at...

I think I have explained to you on that. See, we also get advance against every contract. And in MoD contract, typically, what happens is, it is not a contract which is one-off shipment. There is going to be during the course of a few years, there were multiple products. Their shipments happen for various stages of the overall cycle of production on the overall project's life cycle or the program cycle. So there is cash inflow coming in together and we have advance also ahead. So we should be able to manage the working capital with nonfund limits, bank guarantee limits which we will do that. I don't think we'll be very hard pressed for working capital going ahead. We're not generating a lot of cash ourselves. I don't think we are particularly worried whole line. Of course, we need to do the conversion cycle, reduce net working capital, we have to bring it down, and this is mostly happening not in MoD contracts or production contracts, it happens more towards development contracts, acceptance and so many other things happen. So as long as the production contracts become larger in the size of -- in the overall percentage which we have, the working capital cycle will come down. So we expect it to come down going ahead, not go up as a percentage of the contract.

Optimally, how much should it come down by? I mean, what could be a stable, sustainable working capital in days sales?

I think Venkata just said the next 2 years we will come to expect over 280 days. And going ahead, we'll probably with the nature of contract and business, we'll try to bring it down consciously.

Okay. And sir, on the BrahMos seeker, what's the status of developing because the order pipeline for BrahMos as a company is fairly large, more than INR 30,000 crores. And between you and I think Electronic Corporation of India, the seekers have to be supplied. Is the qualification for that already done from your side?

They're yet to fly it as a missile. That is getting postponed for various reasons. So as and when they complete the trials, we should get the contracts. So today, we're not projecting the contract in internal, maybe it will happen during the course of this year.

Is this for the BrahMos NG or is this for the current version of BrahMos?

BrahMos NG is still not a product which has been launched, it will be for the current BrahMos.

Okay. And what could be the possible time line for making the approval?

I'm not able to comment. You could ask BrahMos that. It's wrong on my part to comment on that. They have to do the field trials and then come back to us. But they are showing urgency and maybe 3, 4 months because next month it starts raining, they won't do the trials. So maybe after rains comes down, immediately the plans will happen. In the meantime, we're talking about some orders for preproduction. So this all has to happen. Hopefully, during the course of this year, this should convert is what we're hoping, but we can't say for sure.

Right. And HAL now has clearly indicated that LCA Mark 1A, 16 per year sort of assembly and delivery is already scheduled and with the Nashik facility coming on stream towards the second half of this financial year, probably 24 a year. So from that perspective, what -- you perhaps get some visibility. Over and above that, they also indicated that for the next 3 years, they have a pipeline of almost INR 1,60,000 crores between helicopters and aircrafts. I'm presuming that from an avionic standpoint, you are very much there to participate in both the platforms, fixed wing and rotary. Could you give some idea? I mean, does this visibility coming from HAL give you some sort of a line of sight for the next 3, 4 years on work related to that?

It's a bit too early for us to comment on it. These are internal programs and projections of HAL, unless we get indicative RFQs from them, time lines on delivery and whatever we are developing in some of the aircrafts, which are you're talking about, I won't be able to comment. We've taken a very small percentage, very small contract value compared to the numbers you're talking about for this year were reported. So the contract once it comes, we'll deliver probably this year depending on their schedule. The rest of the things, the inquiries have not come. So as and when it happens, we will be able take it. We're not projecting it in this year's order intake.

I get that point, sir. My question is that from -- if HAL gives the visibility of 5, 7 years.

They have not given us any visibility for us to comment on it.

They're talking on their investor call, so I'm presuming that there is a good -- I'm just trying to understand and assess what could your opportunity size from that...

We can't comment on it because we don't have any visibility there. So we don't want to comment and then get into another call, which says why this didn't happen. So better -- I'm only commenting on what I have knowledge base about and what may happen tomorrow, we will be very glad to obviously participate, we're looking forward to such requirements, but at the present moment we can't comment because trials are all in some of the aircrafts, and after trial completion and acceptance and then how Air Force and HAL view this then only contracts can be happening. So it is a bit premature for me to comment on those things.

Next question comes from the line of Abhishek Poddar with HDFC Mutual Funds.

Sir, regarding the margins, sorry, one question on this. We have about 40% from development contracts and 50% was from production. Would the margin be very different in these contracts? And also, as your production contracts would increase as revenues increase over the next 2, 3, 4 years, would we see a mix on the margins because of that happening? And the reason I'm asking this question is because when you comp -- peers are there, their margins are much lower when their production is a major part of their revenue mix.

Okay. So this question I have answered many times. See, what happens is margins are not depending on the development of production contracts, especially when it comes with DRDO-driven programs. remains static irrespective of what it is. What really makes the difference in margins is what is the competitive scenario and at what cost we got the product, is it L1 business, et cetera. Some portion of the L1 business, obviously, the margins become lower because we buy, integrate some of them to make the systems. Some of the other contracts which we have developed, everything in-house, our margin becomes higher. It depends on how much we contribute towards the product on the final delivery. So that is how the margins vary. It has nothing to do with the development or production. And that's one end. That's not also true when you look at other perspective. Suppose MoD business comes and we are competing with so many people, we need to compete and get contracts. So obviously, sometimes margins will suffer. But again quoting INR 50 crore contract, INR 20 crore contract, INR 150 crores contract in DRDO. The contract size is INR 1,500 crores, INR 2,000 crores, INR 3,000 crores, INR 1,000 crores kind of contracts in MoD. So obviously, we may not be able to keep the same kind of margin percentage because a lot of bought out comes and integration happens. The margin comes down there. But overall revenue will substantially go up, kick up multiple times higher. So this is the business to be in. In those businesses, what we plan to do is wherever electronics is coming into picture, if we can develop the electronics in-house with our own IP rather than relying on foreign IP and foreign products and do manufacturing alone for them, our margins then become necessarily higher and once the margin is necessarily higher, it also gives us the leverage to see if we can be competitive in reducing margins, can I quote be a level-one business. So this has been a leverage for me to win more contracts and also support the products over the next 20 years of life cycle support, with local support is not going to costly support from foreign OEMs. This is the name of the game as I see it. Each people will work out differently. A lot of companies who don't have a local IP depend on foreign contract -- OEMs to provide IP. So it becomes costlier. Then -- but still they will win the order because the margins can be very, very low, they win orders. So this is a game which is being played. Today, India doesn't develop full systems. We are one of the few companies who are trying to say why didn't we develop few systems here in India rather than having collaborations. So this is how it goes. Our future what we're looking at is develop products ahead of time, build the products in-house. See that when the new inquiry comes in make one, make two, or buy and sell whatever opportunities come from MoD, can you position our products with IP and product tested here to give us better winnability and scale the business substantively? That is the game which we're trying to play.

Understood, sir. So sir, regarding the order book that we have and the pipeline of INR 2,000 crores that you mentioned, should we assume that the system integration contract and what can be margin dilutive, those are very limited in those?

For the contract on hand, there is 1 -- 2 contracts where there is a lot of system integration or bought -- building -- land and building, all of this coming into picture, some -- 1 or 2 contracts, the margins are lower. But rest of the contracts are our exact development on IP developed by us. So it remains same as what we've been doing all along, going ahead in the next INR 1,000 crores, we have talked about, these are not contracts which is going in for multiple vendors and mix of contracts and integration is not there. So there, the margins are likely to remain what we've been doing in the last so many years.

Understood, sir. And just one more question on the BrahMos seeker. Sir ECL's product was tested in 2018 and ours is yet to be tested, this confidence that we have that we should be getting the orders is based upon the product quality or what assessment is that, sir, if you can give some more color on this?

Our product quality is very good. It is just that they have not taken any fight trials for a long time for various reasons. The moment they take flight trials and passes the trials, we should get an order. This is what they have been telling us, but I have no control on when they will test it. So we are also impatient waiting like you when the trials will get conducted.

So we have...

Once -- one difference is our seeker whatever you say, like I've always told you is that we designed everything in-house. The gimbal is designed by us. The motor controller is defined by us. The mechanical substance is designed by us. The transmitter is designed by us, the signal processor is designed by us, the up-down corner is designed by us. Everything is designed in-house. We don't buy it. So obviously, the quality is in our control.

Next question comes from the line of Renu Baid with IIFL Securities.

Two quick questions from my side. First, just wanted to pick a bit of how you are inputs in terms of -- again, in terms of guidance, sorry, for this. You mentioned about 50 -- 20%, 25% revenue guidance and 30% margin -- profit guidance despite dip in operating margins. So is it that you're expecting a sharp jump below EBITDA when it comes either in terms of other income or sharp shrinkage in the finance cost, any big change in the tax share that you're expecting? Just trying to understand the math behind this.

There's no very elaborate maths. We kept the guidance conservative in terms of revenue, That's all I can say because depending on the mix of deliveries we do. We don't expect a substantial increase in other income because it remains whatever it is. Maybe a marginal increase may be there. We don't know. It depends on the cash flow during the course of the year. We done our budgets, we think it will be remaining around similar or slightly more is what we expect. And operating costs also, we have done the budget and they are cleared by board, so we have an idea what the costs are. The idea is to keep the revenue growth -- the bottom line growth. So we will try to deliver some products to see that the bottom line growth continues to happen. So that is all there is. Maybe topline may also go up, but we don't want to give guidance on that because numbers are getting multiplied by market. So we don't want to give the multiplication and then fall flat later.

Sure. Secondly, if we look at the backlog -- closing backlog, especially the production orders, now we are nearly back to INR 500 crores kind of order book. As of know, we are nearly INR 480 crores kind of inflows this year. So of these INR 480 crores, INR 490 crores of order backlog for production orders, what proportion should be executable in fiscal '25. The fact that you mentioned that Arudhra would be over 2.5, 3 years based on BEL's execution schedule.

Yes, I think a large portion will get executed in the coming year on production contracts. I don't want to give a percentage, but it will be above 60%, 70% will get executed this year, and some of the development contracts will get executed this year is what we're thinking. We're also putting a small portion of the new orders coming in this year to be executed this year, and that is our budget internally being made.

Sure. And in terms of investment in CapEx, how are we looking at spend for fiscal '25, '26 in terms of expanding capacity, capabilities for new projects?

Over the next 2 years, we have planned to spend some INR 100-plus crores on CapEx, and so it all depends on when we start the CapEx purchase order and how long the buildings and other things, equipment come in. So whether everything will get spent this year or it will mostly go to next year is something you have to, the committees are working on, working on the proposal for the Board to clear. But over the next 2 years' time, we should be able to spend that because we need the infrastructure for the future growth to put in, so we bought the land already for this. So construction will start, and some contracts will be placed over the next 3, 4 months, to see that infrastructure is getting created. This is 1 quarter the CapEx we do. The other is our development. We continue to develop products. There also will be a larger part of the spend will happen this year over last year.

Got it. Got it. And lastly, within the INR 2,000 crores order pipeline that you have highlighted, are there any notable large projects or orders which you would want to highlight and that -- which could be helpful for us to track in terms of progress in terms of investments and awarding?

So this is a bit too early for us to say. Let this happen, let it all come up to the open and then we will implement. But...

Yes, any input in terms of where are these large projects like Ashwini, LLTR, et cetera, which -- where we were betting a reasonably large part of the pie. Where are they in terms of pipeline, is it a part of the pipeline or still not in the foreseeable future the way the end markets have behaved?

It is part of the pipeline only. It's not part of the INR 1,000 crores, I'm talking about revenue or order intake this year. The inquiries have come, we will all be quoting, and we do not know who will get the order and what percentage we'll get. So we'll wait and watch the next few months, see what happens.

Next question comes from the line of CA Garvit Goyal with Nvest Analysis Advisors LLP.

Am I audible, sir?

Yes.

Just 2 questions. One is on the industry perspective. So are you people witnessing any kind of potential risks on the supply chain or demand side that could lead to a slowdown in near to medium term? Additionally, is there any emerging competition that might be capturing the market share or thereby impacting our order flows?

We don't see any supply changes recently. We have no problem in getting material, so we don't see that. So that's not the problem. The second thing is you're saying there is a risk from challenge...

Emerging competition or any demand slowdown?

So the competition has always been there. But I'm not seeing any particular risk, which has to be considered. Obviously, obvious risks are always there because the products we are trying to develop is already available abroad. So people do tie up and bring the products here. So that risk has always been there and continues to be there. The other risk is our revenue, what are the contracts we get with DRDO, competition, this is always there, these risks continue to be there. So the idea is, what we're trying to do is, try and be -- we build ahead of time to see that we meet requirements early and do an early mover kind of an advantage we have. Since we're developing in-house everything, we're trying to invest ahead of time and build the product to address the competitive risk, which you're talking about.

And any demand slowdown expected or in the near to medium term?

No, no. Demand is fairly high. We are looking at a number of opportunities going ahead, a number of opportunities. It all depends on how we build products and whether we are competitive and the opportunity arises. So this is how -- and the other thing is build bandwidth internally to the office to see that we address the opportunity. So we are seized of those issues, and we're addressing them presently.

And sir, regarding the utilization of QIP funds. So could you provide an update on the current status, specifically like how much of the QIP funds have been spent so far? And when can we expect the launch of any significant new products financed by these funds?

See, on the development, as we have recorded in the balance sheet also, you will see over INR 40-odd crores has been spent over the last year, but largely out of INR 40-odd crores, INR 30-odd crores will be materials procured for the products, and the people cost is about INR 7 crores to INR 8 crores, INR 10 crores is something people cost, the overhead cost will be there for the development. We will continue to spend a large portion of the development funds this year. And the products, at least physical products will start coming out in the next 6 to 10 months will start coming out. And then we have to go through trials, flight trials, ground trails, whatever trials are necessary, and pass the trials. We are not able to clearly determine the timeline for trials because it's a multiagency system that government has to get involved in all the trials. So we're trying to see how best to address that and how quickly we should be able to do it. And that's going to be a work in process. But our end development, we will finish. But further, the product we had to spend money on actual trials. And then only the contracts can happen. So -- but we are confident that products will meet the requirement, and it's world-class today's generation products we're designing. So second to none world class products we are designing. So hopefully customers like it and allow us to do the trials and take it further.

Fine sir. And sir, you mentioned INR 40 crores is spent already out of I think INR 500 crores we have raised. So what is the expected time line for fuller utilization of these ones?

See INR 500 crores comes in various things, working capital, we've given a lot of classifications, the development funds at QIP time is INR 160-odd crores. This is development fund which we have taken. Of course, the rest of the money is also available for development because it's all available as cash in our office today. So we are a bit -- we're keeping the money now, looking at opportunities and spending it. As the market turns, a lot of the areas where the market requirements are large and which we can address, so we're trying to deploy that money to address the market requirement without actually spending all the money and then see the markets are moving slowly. So we are taking a cautious outlook how to do this. Wherever we think there's immediate opportunities as it is unaddressed by anybody in the market, we're trying to invest money there and see that the unaddressed market is addressed by us. So this becomes easier and also is a world-class product for them. So we are doing that effort in-house. And I think it's next 2, 3 years kind of a program. And the idea is to be able to get some orders for the products against development we do today. We want to keep the development money in rotation. So we can continue to do further investment going ahead to scale the company to INR 8,000 crores turnover. This is what our intent is. So let us see how it goes. But we have the money now, so we are quite carefully spending it.

Sir, last question is on derisking from the defense sector. Like last time, you mentioned about some negotiations happening on other industries other than the defense. So how do you look at it? How do you see the other industries' contribution to our top line say in next 3 to 5 years down the line?

No, I didn't understand the question. What is that? I didn't understand the question. Can you repeat, please?

We have lost the line. [Operator Instructions] Next question comes on the line of Justin Jadhav with Sahasrar Capital.

Am I audible?

Yes.

So basically, my question was pretty much answered but I just want some clarity from you. This question is regarding your competition. So based on your competition, your EBITDA margins are around 40 and others are slightly on the lower end. Sir I wanted to understand, since you are saying that you will maintain these margins, is it because of the IP we have developed in-house and the products we are making in-house and integrating them as well. That's why we have a higher margin compared to other competition?

There are 2 reasons for it. One, we started development of products ahead of competition many years back. So we have built, as -- see with DRDO, we do parts of the product. Over a period of time, we have started building a large part of the product for DRDO, and they are designed in-house. There are other things made, it all part of the product. So we may -- we are probably getting repeat business from whatever we did 7, 8 years back and that has started coming in and kicking in, so that's automatic. And second, we never develop -- the development costs, we never recovered from all those products. So we invested in the last 15, 18 years, we've been investing on product development and competing with foreign OEMs and selling those products in India, absorbing the costs. So we've been doing incremental development with our own money, and we've written off all the development costs as part of revenue expenses. We never capitalized it all through our life of Data Patterns. So maybe those are all kicking in now and we get repeat orders and numbers are coming, and our cost model is different because we don't -- these are supported by and integrated by others, since we're not buying anything, maybe the bottom line is better. We don't know. Maybe that could be a reason. The second reason is probably some of the requirements are urgent and some customers feel that we are in a position to deliver against the urgency and meet the requirement. So we get a lot of signal vendor orders. So other people have to design and develop. We probably have a design in-house. So maybe we get a lot more similar vendor orders than other companies. And here again since we have done a building block kind of a development all through our life, we tend to use the building block rather than redesign from scratch and those are tested. So the time lines to deliver are far faster. So this could be a second reason. I can't exactly comment on other people's business, and it's not right on my part to do that because I don't know the strategies what they employ. But what we are doing is what we think is right for our business.

Makes sense. One more follow-up question regarding this. So as we eventually will -- currently also, we are into system, we supply our complete system. So as and when -- when will we see the complete system will command a higher margin?

No. Again, that can't be said. There's no zero -- answer to this question. It depends on what the complete system is. If it is going to be lot more vehicles, you understand, no, I really don't know. See what we're trying to do is maximize Indian content or in-house content in a contract. If we do this, I have a better P win a competitive situation. This is all I'm saying. So we're trying to put our money and build this and so we can scale the business. See India doesn't have products. We rely on DRDO today for building products. They are the only design agency in India. So rest of us in the private sector are doing collaboration with foreign OEMs to bring the product here and then do a work share. So when you do a work share, obviously, you have to share our own margins also, right? So what we are trying to do, the opportunities are now very big opportunities. If we can address our core share of the opportunities in Indian systems designed in-house, I have better P win and hopefully we'll have a better bottom line. This is one may not go with the other, but the scale has to happen, the scale happening, we will all grow because the requirements are so large. We are looking at least 5 year growth. We're not looking at a quarter-to-quarter.

Sorry, one follow-up question regarding the market size per se. Regarding just the radar systems, which you are providing, how big of a market do you see growing -- or growing up to in the next 4, 5 years or 3 to 4 years, wherever as far as you have visibility?

See, market size is very large, but it's not addressed by us everywhere because when you make close-in weapon systems, for example, LRD, L&T gets an order. The radar gets imported, something comes part of weapon. So in big systems, when an integrated system comes, radar becomes a portion of the integrated system, and it's not accessible to us because we don't have the weapon. So what really happens in all this -- when India starts collaborating in-house in India, ecosystems start developing in -- when we combine our strings together and address the opportunities, then you can say the market is bigger for us. So not all opportunities on radars are addressable directly by us. It still comes from abroad either in technology transfer or joint production or something of the sort. What I am seeing on addressable buyers in the next 4, 5, 6 years, is the upwards of INR 20,000 crores, so which we can address. So we are working towards that. That is the first thing we're doing, building our own products. Second, we are also doing the product development, which is not even addressed by us, get the products out, then maybe we can collaborate with the OEMs in India to see why are we importing this when India can offer a solution, look at an ecosystem we built here. So it's a very long-term play strategy. It depends -- we're starting from scratch in India now. So the hope -- the field is really open. It depends, it can be competitive, build world-class products, meet customer requirements within time lines. And we have something going, and we need to collaborate in India also. So we look at all opportunities. Now it's a long-term game. And that is why we need the bottom line to scale the business, because we need money to scale, we're going to put a lot of money in development, we are looking at a 3-, 5-year kind of a horizon for whatever we are trying to do. We're not looking at a year-on-year horizon at all.

[Operator Instructions] Next question comes from the line of Manish Kumar, an individual investor.

Am I audible, sir?

Yes.

So most of my questions have already been answered, so I'll just skip them. I have one last residual question. And this is in terms of the human resource employee cost, which is what I'm looking at on a quarterly basis, and I'm looking at employee cost as a percentage of the expense that we have. So what I saw is...

I'm not able to hear you clearly.

Is it clear now? Is it clear now?

Yes, yes. Talk a bit slowly so that I can put the pieces together.

Sure, sir. All right. So my question is in terms of the employee cost as a percentage of the expense that you have quarter-on-quarter, that is the context. So what I saw is that there's a very peculiar pattern, right? This is always -- the percentage number, which is employee cost as a percentage expense, there is always the highest in quarter 1, and it gradually reduces through quarter 2, 3 and 4. And this has been a constant phenomenon during the last 3 years. So I just could not put my head around as to why this is so cyclical, the employee cost as it happened for almost last 3 years, every quarter, quarter 1 to quarter 4. So if you could give some insights on that.

You are commenting on employee costs as a percentage of revenue?

Expense -- percentage of expense.

See, what happens is ours -- traditionally government business is a year-end business. If you looked at 2017, '18 balance sheet P&L, you would have seen that almost 80% goes to last quarter and first 3 quarters we used to make loss -- cash loss. it is very difficult, managed it to see that our quarterly revenue is also managed properly, and we went public once we knew that there will be some reasonableless in our quarterly work and then contract -- on-hand contracts are there, which we can deliver on a quarter-on-quarter basis. So the employee costs though are not varying so much on a quarter-to-quarter, on a percentage of revenue, it will be higher in the first quarter, going down the second, and accordingly last quarter, the last quarter tends to be the largest revenue quarter for us. This also, last year, we managed to contain it, bring down the last quarter to only 35%, 40% as against 50%, 55% which was there previous year. So that is the ratio you're seeing. And another maybe we have increment cost coming in April, so maybe that pushes up the accrued through the year, we're recruiting a number of fresh engineers and even lateral recruits through the year, we have recruited -- our size of -- number of employees is going up substantially about 20% year-on-year because we are building competency for tomorrow and all the people we are building and training where they can do large systems tomorrow at various levels. So we are continuously recruiting. So that also could be, I don't know exactly what the numbers are, but I think this is what is happening.

Right. So my concern was that, are we -- I was thinking that -- I know I might be totally wrong on that. Maybe we are hiring only for specific projects and then the projects are getting over, maybe we're having people leave the organization. In that case, my concern was that how we are retaining the knowledge and the expertise that we have built over the years. In one of the slides, I saw that some of the core team members have stuck in the organization for almost two decades. So I was trying to relate this in the employee cost in the later quarters is because of any churn which is happening, looks like the answer is no. Can you please confirm that?

We're managing our employees very well. Of course, there is a -- people leave because they get very well trained in Data Patterns, so they go and join multinational. We are aware of that because the training levels here is very, very, very high. We're unable to get lateral recruits, we recruit from college directly. Our CTO has started from college 35 years back, most of the people who are 20-year plus for all state employees of the company from directly college. So we take a lot of people from direct college and train them at all walks of life, for testing, development, software, hardware, mechanical, everything. So -- but that is not the reason, we're not losing very many people compared to maybe multinationals and other IT, I think our attrition ratio is far, far lower. And also, we have some 100 people as shareholders in the company.

Next question comes from the line of Vishal, an individual investor.

Am I audible?

Yes.

Sir, first, I would like to place my congratulations for you for such a good set of numbers and the value addition, the value creation you have been doing to shareholders. And my question was, if I look 5 years ago, our Data Pattern figures. So -- then -- can we assume because at that time, if I compare that time to current times, what we have achieved today is the profits are of current times. So can we -- are we looking forward to repeat the same feat maybe in next 5 years or earlier or even earlier also?

Vishal, that is our intent [indiscernible] we are going to do it.

And sir, can you throw some light on what could be our general execution rate and percentage as a percentage of the order backlog?

See I would not comment on that because it depends on -- see it's not only left to me to execute the contracts. Also the time lines, the customer wants execution done, okay? More often than not, we find that in the production contract, we can execute in 1 or 2 years everything, even if you give me INR 1,500 crores contract, I'll execute it. As long as already development is carried out, all I have to do is set up a line and I can execute it. So we have all the competency, we have in place machinery, automated test equipment, we built our own automated test equipment for production line systems. We do everything in-house. Since the process definition is our line is defined by us. Electronic copper manufacturing, EMS line, we have 2 lines in the office already. We have end test in the office. So everything we have in-house. So we can execute. But what happens is, customers don't want everything scheduled overnight, give you a quarter-to-quarter turn over. So then we have to stick to it. Second area where the concern is where when large development happens, then the development cycle takes the time. You can't execute a development program in 3 months and 6 months because not only do we design and produce, there certification agencies get involved, flight safety and flight certification takes time, documentation and process. So that really limits us, not just the capacity what we have in terms of delivery. We have finite capacity of development. But on production, we can increase capacity very fast.

So you say we cannot lay any specific percentage, on the completion percentage...

We have a percentage. We have. For example, we say INR 1,000 crores, what we can do INR 2,000 crores, how can we deliver? But we are matching. That is what we're doing is, we are trying to enhance our capacity in terms of infrastructure, we are creating additional infrastructure because we think we need to scale 3 years from now. Our order will happen 2 years from now where if I go for external testing, I may have a delay in delivery. So we're creating the test standards and equipment in our office. We get large contracts for integration, I may not have factory space. So enhancing factory space to see that in anticipation of contracts happening 2 years from now, we are starting investing ahead. We are also expecting growth, substantial scaling happening in next 3 to 5 years. So our competency building, manpower building, management bandwidths, everything on a top to bottom level, we are scaling our competencies and bandwidths. We have very, very active HR team, which is looking at all skill development from bottom to top and mandatory training programs to do this. So a whole lot of things are happening to see that we are not caught wrong footed when we scale. And we expect the scale because the market size is so big. So we are very bullish on the market, and our competence to deliver on the market. So we are actually investing ahead of time, not only in product development but also for delivery and manpower.

[Operator Instructions] The next question comes from the line of Devansh Agarwal, an individual investor.

Can you hear me?

Yes, I can hear you.

Okay. Sir, one very specific question. With respect to Arudhra radars, in some press publications it was mentioned that BEL got the order of INR 2,800 crores for Arudhra radar. However, in our -- in our presentation, it showed around INR 180 crores of order for Arudhra or something. Is it not possible to directly take the order from MoD or why is there a difference between the quantum? This is what I'm trying to understand.

These are all at the traditional way. The DRDO has its own investment money and they develop radars required by Air Force later. And they have finished the development about 7, 8 years back, and demonstrated to MoD and Air Force and it is approved. Then the transfer technology went to Bharat Electronics as a nominated partner. See the process in India all along is that once development gets done, it is transferred to production agencies, which is BEL, BDL, HAL, et cetera. And as and when the services want to contract, more products, they then get the revenue approval from MoD and once approved thing comes in they place a single vendor order on these PSUs. And during the development if people like us have done the product development for parts and subsystems, the transfer of technology agreement which BEL signs includes our name. So the idea is to see that, that has been qualified. So they will back-to-back place the order on us. So whatever we have designed for that part. So that is way the whole business is done. Today, it continues to happen like this where DRDO has developed products. But in MoD tenders, this is open to all of us. We are free to do whatever we want. We build the full systems. So this comes in various kinds of categories, make one, make two and other categories, in the MoD tenders. We're also participating in those categories of tenders, where we can build our own system, our own radars. Not only us a lot of companies in India have started saying, let us do this and look at the opportunity ourselves either by themselves or in collaboration with foreign vendors. This is happening. So as more and more of this starts happening then we start building the whole system ourselves. So this is the way it's going today.

Got it. Got it. And the second question, sir, sorry, [indiscernible]. You saw on your presentation that there's an increased focus on the offset. Is there any action going on? The reason I'm coming from is recently Azad has announced some kind of offset with Rolls Royce and it saw great momentum in the markets at least.

No, we've never -- I don't think where in our presentation we talked offsets. We are not in the offset game. We build our IP. We have not done any manufacturing for any foreign OEMs today, and they are not really an offset partner. We do have partnerships with various companies, but that is our product development rather than offset. The offset is a low value, low-margin proposition normally to do manufacturing alone in India. We didn't want to get into this long back, though we had a capability to do it because our focus in IP development will go. So I mean we tend to build products rather than focus on offset. So we've not, mainly recipients are very large offsets.

Next question comes from the line of Arnab Bhattacharjee, an individual investor.

Just wanted to know about any R&D feats you are able to achieve in this year. We will [indiscernible]

We are not able to hear you. Your voice is breaking. Hello, hello.

Just give me a moment, sir. Mr. Bhattacharjee, please go ahead with your question. Mr. Bhattacharjee, can you hear me?

Yes. Sir, I believe that when it comes to radars, it's a very complex process and it took us a lot of technical knowledge. So just wanted to understand how our R&D team is doing. If you can give us, share any success story that we had in the recent past, how do you plan on upskilling for the new development goals that we receive, do you have collaboration with foreign universities, foreign businesses?

We started building radar components and parts with DRDO over the last 20 years or 18 years. Then we started building upgrade programs to get the competency of IP and software and domain other than just electronics. We started contributing towards upgrades of radars for ISRO, for the tracking radars. We've delivered about 6, and 6 tracking radars upgrades for them, are operational more than 10, 15 years with Sriharikota and in Trivandrum. So this is where we started learning. Then we started building our own surveillance radar, again, open tender with ISRO. ISRO allows us to build a full radar. So we started learning outside and doing very modern systems with DRDO on the subsystem levels. But the domain, et cetera, we started doing outside. So we started actually porting non-defense radars where we learnt our competencies, and those are installed, and working for 7, 8 years now. So when opportunity came with the MoD tenders for a precision approach radar, we decided why don't we develop the radar from scratch, and we were lucky that we could demonstrate the radar in 18 months from scratch. We won the contract of about INR 380 crores, INR 250 crores to be delivered in 3 -- 2.5 years, which we delivered last year, last quarter, we delivered the full system. So hopefully, we expect some more orders if it all it happens with customer requests, hopefully, we get more. So this has been a long journey in putting products. We have our domain team who continuously engage in development of radars, participating in MEC2 programs in MoD. We have a couple of export contracts for radars which we're developing for one European country as well as a South Asian country. We've got some few radars orders, which we're developing, probably execute this. This is our IP and our radar. So we are investing continuously in radar development and IP development. Not only in radars, but also in electronic warfare. We are fortunate to work with DRDO for many years now and learned with them and built products for them. And in the process, learned domain competencies and capabilities so that we can address the future requirements of India on the EW program which is also exportable. So it has been a continuous journey. It's not an overnight thing, and we don't have foreign collaboration. It's all India, DRDO, what we've done, ISRO, and other areas where we have studied books, go, implement, study, fail, correct, learn, it's been a process.

Thank you. Ladies and gentlemen, we have reached the end of question-and-answer session. I would now like to hand the conference over to the management for closing comments.

Thank you, everyone, for attending this conference, and thank you for all the very interesting questions about our company. We are interested in building -- scaling the organization as we go along. It's been a long journey for Data Patterns. It's more -- it's not a start-up, though we behave like a start-up within the organization. We've built up scale, competencies over many areas, process, infrastructure, all of them are done. The markets have opened up largely. So we are developing products for addressing the market to increase our total addressable market. We are in line with whatever we are doing. We are in -- our products are under development. We expect that we'll scale the next 3 to 5 years, you need to substantially scale the organization. We're building infrastructure to meet that expectations, and the government is very motivated to do more in India and that is the right kind of the right thing for us because we've always been saying Made in India with pride. So we hope to do a lot more and scale the business. If you have any further questions, kindly address the questions to Go India. We'll be free to, we'll be very glad to answer those questions. Thank you very much. Thank you for the call. Thanks.

Thank you. On behalf of Go India Advisors, that concludes this conference. Thank you for joining us. You may now disconnect your lines.