DCX Systems Limited (DCXINDIA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q4 and FY '25 Earnings Conference Call of DCX Systems Limited. Please note that this conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference call is recorded. I now hand the conference over to Dr. Raghavendra Rao, Chairman and Managing Director of DCX Systems Limited. Thank you, and over to you, sir.

Thank you. Good evening, everyone. Namaste and welcome to our Q4 Financial Year '25 Earnings Conference Call. Along with me today is our CFO, Mr. Diwakaraiah; Mr. Shiva Kumar, VP, Operations; Mr. Prasanna, Senior DGM, Finance and Accounts; Mr. Manjunath, Senior Manager, HR and Corporate Affairs; and our IR team, Adfactors. This year has been filled with several significant developments and key milestones. We continue to strengthen our consolidated order book, about INR 2,855 crores as on 31st March 2025. Further, I wish to highlight that DCX, our subsidiary, Raneal, continues to be debt-free from last 2 quarters. Also, I wish to convey that recent Government of India has introduced RoDTEP scheme, including our SEZ from 1st June 2025. This will benefit DCX in improving the profitability margin. I would like to highlight that Indian defense industry has proved its capability in battlefield, the recent fight against terrorism, which made many parts of the world looking at India for its defense needs. This shows the importance of the defense and aerospace sector in the ongoing geopolitical situation. In light of this, DCX is focused to develop manufacturing and supply technology advanced product to the Indian defense forces and our global customers. Now, I invite Mr. Shiva Kumar, VP Operations, to highlight the key development of the company in the last 6 months. Shiva, over to you.

Thank you, sir. Namaste and good afternoon to all. I would like to highlight a few key developments of DCX in the recent past. DCX has received several new orders in the last 6 months, out of which the most notable ones include the 2 orders from Lockheed Martin Global, USA, which is a leading name in the defense and aerospace industry with a total order value of about INR 840 crores. Further, the next being, an order from ELTA Systems Israel for manufacturing and supply of Close-In Weapon System Module Assemblies, which is worth about INR 483 crores. And these achievements clearly reflect our strong growth trajectory and the robust demand we continue to experience. This is truly gratifying to see DCX is increasingly recognized as a preferred partner by leading global players for the delivery of mission-critical products. We attribute this success to our unwavering commitment to quality, on-time delivery and production excellence. Now, I would like to highlight some of the other major developments in the past 6 months. As you are all aware, DCX has entered into a joint venture agreement with ELTA Systems Israel to engage in the development and manufacturing supply of airborne maritime radar systems, fire control radar systems and other radar systems for both airborne and land-based applications under the initiatives of Government of India's Make in India. Now the proposed shareholding in this JV company will be ELTA Group owning about 63% and DCX owning the 37%. Another important milestone, which DCX achieved is the establishment of a new Domestic Tariff Area unit, both by DCX and its subsidiary, Raneal Advanced Systems. And this has been set up keeping in view of the increasing domestic requirements under Make In India initiatives. This facility will support manufacturing activities and the commercial production is expected to commence in the near few months. Now with these updates, I would like -- now like to hand over the floor to our CFO, Mr. Diwakaraiah, to walk us through the company's financial performance. Before that, I would like to also highlight that recently, our subsidiary Raneal also received defense industrial license from MoD for manufacturing the highest classified project, the top secret project where -- which comes under Category A classification. This is also a great milestone and feather in the cap of Raneal. Thank you all, and over to you, Diwakaraiah sir.

Thank you. Thank you very much, Dr. Rao, sir. And thank you, Shiva Kumar. Good evening, everybody. We appreciate you joining us today as we present a detailed overview of our financial and operational performance for the fourth quarter and full year ended 31st March 2025 on a consolidation basis. Coming to quarter 4 FY '25, the revenue for the quarter stood at INR 549.96 crores and EBIT stood at INR 30.01 crores in quarter 4 FY '25 vis-à-vis INR 51.91 crores in quarter 4 FY '24. This is down by 42% on a year-on-year basis. Accordingly, the EBIT margin for the quarter decreased to 5.46% as compared to 6.96% in quarter 4 FY '24. Profit after tax, PAT, for the quarter decreased by 37.18% to INR 20.7 crores in quarter 4 FY '25 from INR 32.95 crores in quarter 4 FY '24, which led to a decrease in PAT margin by 66 basis points. In FY '25 versus FY '24, the operational revenue stood at INR 1,083.67 crores in FY '25 and EBIT stood at INR 71.27 crores in FY '25, which led to a decrease of 216 basis points in EBIT margin for the year to 6.58% as compared to 8.74% in FY '24. Profit after tax for the year is at INR 38.88 crores compared to INR 75.78 crores in the same period of last financial year, year-on-year decrease of 48.69%. PAT margin is down by 173 basis points. Before I conclude and hand over the mic back to Dr. Rao, I would like to draw your attention to the following 2 very important takeaways from the operations of financial year '25 versus financial year '24. As you all would have noticed, the cash flow from operations for the period ending 31st March 2025 was recorded at INR 443.5 crores compared to INR 0.7 crores, which is INR 70 lakhs for the previous financial year. This was possible only due to improved operations during the period under review. The company continues to be a net debt-free company for the consecutive reporting period during the year, which was possible by prudent financial management and operations excellence reported during the period. These are the 2 very important points, which I would like to highlight. And thank you. Now -- we now invite you to share any questions, feedback or insights as we open the floor for discussion. Now, I am passing on the mic to Dr. Rao for his closing remarks. To you, sir, Dr. Rao.

Yes. I think we can take the questions and at end of this thing, we can have a closing remarks. If anybody have questions, we can answer them.

[Operator Instructions] The first question is from the line of Dipen Vakil from PhillipCapital.

And congratulations on robust order wins in last 6 months. Sir, my first question is again on the lines of the order pipeline and the order wins, sir. Post the recent Operation Sindoor, and even have you witnessed any increased inquiries which are coming from the likes of ELTA Systems or other partners for the DCX Systems? And what kind of order pipeline are you looking at for FY '26?

Basically, as I mentioned, this is the biggest landmark for Indian defense companies where we have proven our product has been designed well, and it is usable successfully -- it has been proven. You all know the stories. Now defense requirement, of course, this recent -- activities happened very recently. Of course, there are a lot of requirement, not only from India, we are getting big, big inquiry, big companies are contacting because of the quality product what India delivered to the Indian defense companies today. And we are having a huge hope and huge inquiries from the various countries. And of course, it is through existing partner and various locations. And looks very promised for DCX and well organized and our product, what we are manufacturing with my partners and other associate what we are doing and it is a very, very key product what we are doing in the defined systems where we have a lot of requirement and inquiries are coming. And we are -- of course, this has been started very recently, and we are participating -- almost their requirement is about 50%, 60% what we are able to get an inquiry, we are able to bid and give a technical support, give a demo and give -- many things happening, but looks very promising and shows India's capabilities today. And I don't know the existing -- regarding Operation Sindoor -- successful Operation Sindoor had given a really big exposure for Indian defense companies because the proven products. Now, existing fact -- either going back to the regular business, order pipeline -- normally, I never disclosed until we received the PO. We never disclosed what value -- until I get a confirmed PO from customer, I never disclosed the volume, but very -- looks very promising, and I'm thrilled and getting the inquiries and neutralizing is happening. And definitely, we are in a good position in upcoming days. I hope I answered your question.

Got it, sir. Sir, so right now, your current outstanding order book, what will be the execution period for the current outstanding order book? And what kind of guidance would you like to give along with EBITDA margin guidance that you would like to give for FY '26?

This present order book can be, in my view, in the current situation because of the -- it is not like previously for a long lead time and other things. It will be around 2 years, maximum 2 years in getting -- this is a delivery schedule. Of course, customer wants early because we have a constraint in all recent POs. We need to -- see, it is not like the only supply chain, it has to be go under the made-to-order parts and get the parts in license part. There are a lot of constraints and qualification tests. In my view, in the schedule-wise, we are able to complete this in 2 years, this INR 2008 plus INR 500 crores, whatever we are, we are able to complete. And definitely, there is -- I cannot give you the exact figure. There is an improvement in the EBITDA margin also all these new POs compared to the earlier one.

And any guidance on revenue part?

Sorry, sir, I couldn't be able to -- normally until we proven papers, until we sign it up, we'll not be able to provide, and that is not my practice.

The next question is from the line of Shikhar from Vivog Commercial Limited.

Mr. Ragha Rao, you have done a turnover of INR 1,000 -- you have done a turnover of INR 1,000 crores in March '25 and you made an operating profit of INR 5 crores. Is this the business model -- what kind of business model do we have this? Because not even 1% EBITDA margin you have in the business after doing a turnover of INR 1,000 crores, I have not seen any number where any of the balance sheet -- 4,000 listed companies are available. I have never seen a company which does Hi-Tech product and make a profit of INR 5 crore operating. And what kind of business we are into? Can you elaborate?

See, one thing it is -- I will tell you the main reason, DCX works with a different method with the customers. Now, in highlighting this thing, there are -- this is all a high duty -- heavy-duty PO and there is a -- suppose I get a PO today, okay? Then it will get executed minimum take 1.5 years to 2 years, okay? There is a class in the PO what we received from the customer, almost 90% of my customers, there is a BOM guarantee class, okay? This BOM guarantee -- what is this BOM guarantee class? See, we finalize the price today for a raw material. Major my expenditure goes with the raw material. Today, I finalized the price for -- let us take in the Bill of Materials, we calculated $100 for each product. And this will be when -- after 1 year, we keep on releasing PA, buy the part lead time, everything, it has gone up to $110. So customer is not going to amend the PO of $10 immediately. Now, I need to buy $110 PO, get all the material, then do the reconciliation in the financial year. This is a practice. I will get back this money, the $10, whatever I spend extra, I will get back this money into my account in the end of financial year. This is the practice. Because this is all heavy -- so if you're going to do keep on amendment in for a 7,000, 8,000 line item component -- so other than that, amending a PO, they don't have any job. So there is an understanding between the customer and between a supplier. So this money what we spend -- on the extra we spend, we account it and we do the consolidation in the year-end, take back the money, then definitely our margin gets improved. This is the practice.

Okay. So now I come to know that you are having a -- you claim your extra cost of your raw material and it comes subsequently. Is that correct?

Yes.

Yes.

So for 2023, 2024, you must have raised a lot of -- because your EBITDA margins have been like this only from last so many years. Operating profits are so low. So where has that money gone? Why is it not reflected in 2025 accounts for a money received in 2022 or outstanding of '22 or '21 or '24? Where is it getting then? Where is that money?

Okay. Now your question, I really -- I didn't understand in the finance language. Prasanna, you understand what they're talking?

Yes, sir. Yes. So, sir is asking what about the 2020, '21, the turnover, there also we should have some BOM guarantee. That should be reflected in the financial now. So the current year...

See what I want to know, Dr. Ranga Rao, you have made -- you have been running your business last 4 years, what I see. Now I want to know how much money you have made in 4 years and how much money you have raised through the capital? If you have not raised the money through capital, you wouldn't have -- so what you have -- you are showing profit is only your other income because of money you have raised from the shareholders at INR 400 or INR 450 or whatever price, and that is only a financial profit you're showing and your loan diabetes is nil and your interest, you're not paying. So you are not doing any business for making money. You are doing business only by raising the money and that is all interest income you have generated. By doing INR 1,000 crore turnover, INR 800 crores, INR 1,500 crore turnover last year, '24. In this year, INR 1,400 crores also when we discussed, you said that in the subsequent year, you will get that money. Now in '25 also, the accounts are reflecting same. So what is the accumulated amount which you have to receive as of '25, is it INR 500 crores or INR 200 crores or INR 100 crores, for which you have raised the debit notes, how much you have to receive because you are not reflecting the true fair view of your accounts.

Okay. Now, it is not raised invoice yet for us, no money what we spend extra money. There is a process. There is a -- once the closure will be done every year in the March, it is not subsequent amount in the last 2, 3 years. So now whatever -- let us say, we had one long-term PO of 4 years PO, that PO has been closed from our side, we executed. Then there is an engineering cost, Bill of Material warranty, OJT task, engineering cost, it has to be calculated and submitted to the customer, then we'll get the money back.

Okay. When will you -- so how much is money which you need to claim?

No, that has to be -- that we are already. My team is -- well due to war situation, they couldn't travel to Israel. Last March -- also we're supposed to get the right bill by this March. This last -- this year also, due to the various reasons because project got closed only last month, we have to reconsideration. My team went given the consolidation report, then it has to be approved by finance. Once that is approved by their customer -- 2, 3 customers has to approve, not only for customer, it has to be consolidated. Then most likely maybe in the next quarter, maybe in this quarter, maybe we're going to close...

Sir, Ranga Rao, this reply, we have been hearing from you from last many con calls. So we don't buy this argument. Listen to me first. Listen to me now. If you have done so many customers, so you should by now know because you are not doing any business according to us. You are not doing -- you are doing some business, but this is just buying some raw material and supplying them, but it is not reflected in the true fair view of your accounts. As your shareholder, know what company is doing? How much my company is making money?

Once I have to get approved from the customer, then only I can declare that.

So, but you must have got that approved. You must have got that approved. No, no. I've never seen a balance sheet. I have been investing from 1983, last 40, 50 years, and I've studied more than 4,000 balance sheets, but I've never seen a balance sheet like this into Hi-Tech business. In a Hi-Tech business, a client like L&T and foreign clients, you have a business model which -- by which you don't show any profit and money is being paid. Shareholders' money is being used to do your business and there is no money on it. Even if you had utilized that money 5% on a bank FD, that would have generated more money than by doing this business and doing these people -- because I don't understand any of your business, which -- who is your competitor? What kind of business you are into? When we try to ask to Mr. Shiva Kumar, try to understand the operations, he does not know. He does not -- these people don't come on the line. I tried talking to you many times to understand your business, but you people don't give time to shareholders. I want to visit your factory, but you don't give -- so how do we work?

No, no, no. We definitely respect...

How do we work? You ask your -- now you have so many people on the con call. Ask anybody who has understood your business. Because you have been giving same con call, same conference call, you read your conferences call and you make out anything -- can you make out anything out of it? And there is nothing -- there is no business model.

If you allow me to speak, I will tell you a few words.

Please tell me, sir.

Now, I'm not aware you tried to reach me. I'm hearing your name first time and...

No, I have called Mr. Shiva Kumar and...

Sorry to interrupt you, sir, but we request you to rejoin the queue for follow-up questions.

One second, I will finish the talk. Please, we'll talk separately. I'm available. Any time, you can visit or I can come to Bombay. I will make you my business understand, explain you not in this call. It will take time. I need to write and show some presentations, then you'll understand. I'm very much available on the call. We'll definitely connect back to you.

We'll take our next question from the line of [ Darshil Jhaveri ] from Crown Capital.

Hopefully, I'm audible.

Yes, yes.

Please go ahead.

Sir, my some questions will be somewhat related to previous participant's question. So I just wanted to understand what is the margin that we get in our business. Because as you are saying, there is money that we are supposed to be claiming. So could you just quantify how much money is that? Because right now, on INR 1,000 crores, we've essentially not made any profit in terms of operating income. Whatever other income we have gotten is from assuming the INR 1,000 crores that we have in bank with us. So number one question, what is the money that we have left to claim? And secondly, is it getting reflected in our trade receivables? Because some part should be getting reflected in our trade receivables, right, sir? And going forward, like what do we see our FY '26? Because I think for FY '25, we were hoping to do the revenue that we did in FY '24, nor has the revenue come nor has the operating profit come. At least a technologically company like us should be doing -- who's doing so much research would be -- have double-digit margin. Forget about double-digit margin, we've not even cracked 5% margin in this current year. So I would really love for you to just explain these points, sir.

See, already, I mentioned until there is a money to be collected from the customer side, until they given, of course, we need to give -- we need to get a good amount of money until they say, suppose I said INR 100, I will get. I will get INR 50. This will not be correct on my part to tell you the wrong figures. Once it is approved, we are on top priority and working on it to get back the money. I cannot tell you the exact amount to how much I'm getting back today. Please allow us a month's time. Maybe we are in the process of closing everything and there are many processes to be taken place because it is not a small money we are talking, okay? Please allow me on that. Secondly, we are not a product-owned company for your kind information. We want to become a product company. We are in the process of becoming a product company. We are a build-to-print company, okay? And customers gives everything to us. They will give advance money. They will give you test equipment, they will give technology, they will give assembly instruction. We buy the component, assemble the PCB, do the cabling, do the system integration, export it and do. And I am -- completely understand, don't please compare with the OEMs, the product-owned company, which they have taken 20 years to develop a product, okay? This is a build-to-print company. And we are in the aerospace and defense. Everybody here at aerospace and defense have 30%, 40% margins. It is not. We are just 10 years old company. We started growing. We need time to grow, become a product, okay? That is happening. Otherwise, there are 2 JVs not happening. And our margins, it will not go up like 20% or 30% in current situation and improvement, we are working continuously on getting our profitability hike. But current situation, you are seeing the balance sheet and you will not be able to give the figures, what is the bond guarantee? That class, I cannot avoid. I need to accept the class. This business model is like that. It has to be spent, then climb back. And this once it is not in receivable in books because we have not raised the invoice until they give a clearance, then I need to raise the invoice, then only it will come on to the receivable books. Please allow us time. We have tried to work out -- conclude the bond guarantee cost, get back the money and start doing it. So it is not like I'm telling you from tomorrow, I'll do next year, I'll do 15 double-digit margin, which is not easy in our business because everything is secured here. And you are telling about you are earning only the FD money, FD money. It is not completely on the IPO money or QIP money. There are other income, our money and the customer advance. Other money also -- interest also part of the parcel, but maybe it is not appearing in the balance sheet sitting on other income. There are indirectly benefit to the advanced money which customer pays, where my finance is going to take care of the earning more profit to the company. This is the schedule. And it is not simple to understand, as rightly said, somebody in the previous call, my business model, it is not easy to understand. It took me to take about a year to explain to some of the key investors. And I don't mind explaining to individually where we are planning to come to Mumbai or you guys can come here, I can give you the complete presentation, how my business works, how I am doing the business, how I'm improving the margins. What is my plan? Definitely, I can explain to that.

Sir, I understand that. And I'm not trying to say that why the money is claim. I understand that's the business practice. I think that everyone understands. But if -- it would be really helpful, there could be some quantification to it, right, sir, because just from an investor's perspective, we are seeing -- I understand, okay, there were 5% margin and Q4 is supposed to be one of the best quarters for us historically. And in that, we do not see a margin. So that just raises a question. So in terms of a financial statement, it should get reflected somewhere, right, even if in our notes to accounts or even in a presentation because that money, as you said, is rightfully ours, right? Even if we have to claim it, we might not get full of it. Out of the INR 100 that you extra spend, we might get INR 50 or maybe even INR 35, but at least a portion of it is rightfully ours. So we need to know -- at least the investor as a whole, the community will at least appreciate if that's mentioned, how much it is so that we can -- you could even put a line of adjusted EBITDA that okay, if this much money is to be claimed and that would give us a truer picture of the financials. Because on the looks of it, it just comes off that our operations are not generating profit, which is what me and the previous partners or a lot of investors are looking at, sir. So I would really appreciate if you could just release a press release or maybe after the call, just inform the investor that this is the money that we are left to be claimed. I'm sure you would be having the record of it. And the number 2 question, maybe it is an accounting question, maybe the CFO, sir, can help us if this money we are not showing in this year budget, this money is just expensed out right now when it comes next year or maybe next to next year, where is it reflected? Is it reflected in the revenue? Because if it is reflected in the revenue, then how much of the current year revenue is comprising of our expenses of last year? That is also supposed to be clarified.

Prasanna?

Yes, sir.

On first question, I will tell you what is the possibility, why we are not -- the possibility to mention somewhere in the note, I will check. But again, I'm not comfortable. Suppose INR 100, I suppose to get, I will get INR 35, maybe it will go into INR 60 or INR 30. I don't want anyway you'll check the possibility of that. And suppose Prasanna, this variation of -- BOM variations coming on the operation income only, right, because we purchased...

Yes, it is operational income only.

So the current INR 1,000 crores, does it have any last year's income?

No.

No.

So only this current year, we are not supposed to claim?

Yes, 1.5 years, we need to reconciliate and claim for the short.

Okay. Okay, sir. And just on a last question on my note.

Sir, sorry, sorry. Sir, but we request you to rejoin the queue for follow-up question. We have other participants waiting for their turn. The next question is from the line of Aditya Trivedi from Nepean Capital.

Yes, so for NIART Systems, what is the current status of product qualification for the radar-based safety systems in Indian Railways? And has any pilot testing or prototype approval been achieved? And what is the anticipated time line for certification and the first commercial order?

NIART is -- as you know, we have already received a five-number order. It is deployed from last 1.5 years, trials are going on, and they asked for some more modification in the last 7 months. We already deployed 2 system with what is the requirement from the RDSO side and deployed in the one diesel loco and giving performance. And all the tests are passed. Only one last test that too 50% is through because of the one fog test because fog range is not much in the Lucknow site for when we do the last December fog test. That is a -- one fog test is pending that hopefully is going to complete in this upcoming fog season. And as on today, we have completed all the tasks, what is the requirement and what is the complete requirement modification required for the railway, which RDSO we have done it. And we have -- final test is spending that only the product is ready, we need to have a fog season to come and do the final test and take the certificate. This is the trials. Upcoming program, it is the upgradation of railway for only -- not on the CapEx side and the upgradation of electronics. There are a good amount of money allocated by Government of India Railway. And we are expecting the tender very shortly. We are working on that. Till now, it is no date and what is the quantity or when the tender comes, we don't have idea, but we are closely monitoring on this. And we participated in the -- just in Metro in the last system. And there are a lot of -- of course, the international exhibition last happened last week in Delhi and RDSO team, railway senior Board member team, also some of the foreign company have come and see our demo and everything. They are very happy. We are also working with some other global companies for the good requirement of these systems, maybe about 240 systems we are working for other country. And we just received a specification which our product is getting matched, most likely we're going to submit our proposal to them by end of this month or first week of this month. In fact, it is happening directly and my Israel team is handling with other countries. And they come and saw the demo in Alstom, what we have done and they saw the demo in Israel. They are happy about the product. Again, the same spec can be matched their requirement also. I think 250 number set they are looking, which we are submitting proposals. That is a recent development happened in the last 10 days back. This is the update on that.

Okay. And if you could just highlight both from a domestic and export perspective for the locomotive business, what is the total addressable market and what is the EBITDA margin profile of the opportunity?

The market is -- India is big. As you know, about nearly 15,000 locos of what we have it in India. So we don't know what is the -- in my view, whatever we heard from the other sources and other things, Government of India is very serious on the railway safety. And we expect it to get -- overall in next 5 years, about 5,000 to 6,000 locos to be deployed our product. And it is -- in my view, it will take some months to get the -- not 5,000, 6,000 at a time inquiry, maybe small bulk order comes. And in overall of 5 years, we are expecting to 5,000 to 6,000 loco to be installed our product, which we are confident. That's the reason we put a lot of effort in the -- money, effort and the demo has been success. And other country, we have a total in visibility in the next 3 years about 1,750 units for other country. So overall looks, India is a big market. We are a bigger size of locos. And we are working on that. But presently, the price, very competitive price what we are working. And, as I mentioned, this is -- our own product got a very good PBT margin in this and looks to be very promising.

[Operator Instructions] The next question is from the line of Vidit Shah from Spark Capital.

So my first question is on the process that we follow when we quote pricing to our customers. If you could just help us understand what sort of margins that you'll look at, even a range will do and specific margins. Because I understand it will be different by different products and customers. But what sort of range of margins do you all look at when quoting prices to customers for particular POs that we are receiving?

As you know, we are doing 4 vertical of business. One is the cable business where I cannot say exactly the normal typical, of course, how do I put it? In margins, it is an open call and is recorded everybody, my competitor can listen and understand my casting. But still, there are 4 verticals. Cable is a double-digit margin, what we quoted and the PCB about within a 10% -- PCB assembly within a 10% then go to the system integration, the value brought on the -- normally, our casting works on the -- based on the Bill of Material complexity of the product. It will range from -- it will go to 5% to 12% sometimes. And also the fitting may be -- just because we are doing for the fitting electronic inspection casting, it may be about a -- range of about 7% to 8%. This is what is calculated. I cannot tell you exactly, that depends. See, today, I cannot tell you my cost is this much. See, some of the models got complex assembly, some of the models got special test requirements. Some of them are environmental test. That depends on the product, what customer comes with me. Based on that, my margin, assembly cost, loading and the complexity of the delivery, everything matters, any special licenses, special chemical test should be done. That depends. Normally, typically, cable, I can say it will go on a double digit and go this system integration about 8% to 10%. That depends. And I cannot say this is a product is my fixed no, because I do multiple programs different customers. And of course, we are -- how we improve our margin, that is number one, to capture more customers and do more value addition and less work to the customer where they can give us the PO and go. And also there is a Make In India program and 50% individual content to be buy in India. So this is all possibility to improve our market.

Okay, sir. Understood. Could you help us quantify the amount of external sales Raneal has done in FY '25?

Sorry?

What is the external sale that Raneal has done in FY '25, not the captive consumption by the parent, but how much of Raneal's business has been selling PCB as to external customers?

Maybe I'm not sure, maybe about -- around INR 350 crores to INR 380 crores. I do not have an exact figure with me, about INR 380 crores.

So we have won an order from Lockheed in Raneal of about INR 380 crores. That has been fully given and satisfied?

There is some small pending amount, but 90% is completed.

Okay. Sir, just one last bookkeeping question is we've seen an increase in intangible assets and other current liabilities by about INR 270 crores to INR 300 crores. If you could just help us understand what has led to this increase in both these balance sheet items?

Yes. Sir, I'll take this question. Prasanna here. Whatever you've seen in the balance sheet, that INR 280 crores intangible that belongs to NIART. That is -- their intangible property of NIART for whatever that R&D has done from their end for this product that has been capitalized as an intangible and it is it in the balance sheet.

Okay. And what about the other current liabilities? That has gone up from INR 32 crores to INR 385 crores as well.

This consolidated balance sheet contains the details of 3 companies, which has closing -- I mean, month-end payables, trade payables, salaries, other expenditures and statutory dues, all these are compressing to current liabilities.

And trade payables, isn't it in line.

Yes, sorry, trade payables are shown separately, sorry. So it's a month -- sorry, it's year-end expenditures like employee benefit expenditure, gratuity and EL provisions, all these provisions, which are current liabilities -- are under current liabilities.

Okay. But sir, that would be the same last year as well, right? So that -- like if the line was INR 32 crores last year, why has that increased to INR 385 crores at the end of March '25?

No, no, no. Last year, it was not there because the NIART was incorporated -- I mean, start operation from May 2024. And Raneal has started its operation from September 2024.

Okay. So are we saying we have INR 380 crores of payable because of expenses in these 2 subsidiaries?

Yes, of course, it has DCX and its 2 subsidiaries.

The next question is from the line of Mohit Bansal from Sama Partners. As the line from the current participant is not reachable, I will move to the next question. The next question is from the line of Sunil Kabra from Capsight Advisors.

I just wanted to know that as you said, the locomotive product business for 5,000, 6,000 locos going forward, are we looking at on the railway safety side, which is very high today in terms of allocation by the railway towards the TCAS? Are we looking at some opportunity of our products?

Yes, yes, safety system only. Yes, you are right.

So as you rightly said that you are not a product company right now. So is there -- can you throw some light on the TCAS product which is underway under your R&D or somewhere in your company?

NIART -- okay. See, NIART basically is a product company, does radar-based obstacle detection system. It is -- 4 years back, ELTA started this Israeli company. And they are -- ELTA is a fifth largest in the world, expert in the radar company. They use the technology of radar and optics and their algorithms and use their technology. They have developed this product for railway safety, which we are taken by about 51% -- 50.1% majority there, investing about $25 million, and we are a partner for this. This company does completely on the railway security. This will go into obstacle reduction system. This is 100% OEM product. This has to be -- it has got its own mileage. And in the -- as on today, in our knowledge, world doesn't have this product to meet this requirement. So this is a product company what we are having it today.

The next question is from the line of Mohit Bansal from Sama Partners.

Hello, am I audible?

Yes, sir.

Sir, my first question is regarding the recently announced JV on radar with ELTA. Sir, any guidance on CapEx and when you're planning to go live on that?

The JV, what we have signed with the ELTA -- ELTA Systems Israel to manufacture and develop and supply to the armed forces. One is airborne radars, ground radar, Counter UA system and many types of -- related to radar and sensor what we are planning to manufacture in India. This already -- product is not a newly developed product. It is almost -- it is proven in the worldwide, this product. And now we have started this JV -- signed the JV, and we have a start target to achieve this JV company within 11 months to start this operation in this company. We are in the process of setting up a plan, finalizing the CapEx and everything. And 11 months is the target to achieve this operation to be started in this JV company. So it is -- again, it's a product company.

But have you finalized the number, sir, in terms of what CapEx you're going to put up and how you're going to finance?

No. Actually, in the company, we are putting our capital as a cash. And we'll have a total -- of course, there are CapEx requirements like buildings, plant, equipments and many things. Still, we are under finalization. Most likely, it will be in the next 10 days, we'll have a finalized numbers because there are many test equipment. We are working with the supplier to price negotiation is going on. And this will be about INR 200 -- totally INR 200 crores -- not INR 200, INR 150 -- okay, exact number, we came to know only in the next 10 to 15 days. CapEx we are putting the building CapEx, test equipment, there are certain key equipments to be bought. Still another 10, 15 days, we'll finalize with the supplier, whom to buy, what is the final price and this is the situation. By 11 months now, we'll want to go live on this new JV company.

Okay. So will we get an update on the exchange in terms of when you finalize these numbers?

I don't know whether it's the exchange. Okay. We'll -- we can have maybe next quarter conference or I don't know whether it's related to this thing, but we'll definitely going to inform you what is the CapEx and other things, yes, definitely.

Okay. Sir, one last question on NIART side, sir. What I wanted to understand was that the NIART technology that we have, the use case is only for railways or it can be used for other manned and unmanned vehicles?

So presently, what we have developed is only -- railway only. And there are multiple uses, but we don't want to think of now. We want to concentrate railway business because this is a big business opportunity. This radar can be used in multiple areas, but presently, we are concentrating only on the railway safety.

The next question is from the line of Abhishek Jain from Investwell.

Hello, can you hear me?

Yes.

So the thing is that can you tell me what kind of CapEx we are looking for joint venture with ELTA for the radar system and all, and what kind of target opportunities there in the kind of revenue and operating margin that we are expecting for the next 5 years?

CapEx, it is under negotiation with the supplier. We got a CapEx list. It will later be finalized. Anyway, it is just 1 month that this development is taking place, and we have a complete list of what all that to be purchased. And still we are not aware of the -- that's what I explained in the previous call -- previous person asked the question. I'm yet to finalize the CapEx. There are CapEx, of course, requirement, the list has come, we are working with the supplier to get the quote and prepare it. And we'll let you know once it is finalized, maybe in another 15 days, we came to know what is the CapEx investment on this.

Kind of any time -- what I am saying that, sir, there is any part of business planning we have, much of...

Abhishek, I'm not able to hear you properly -- I'm not able to hear you properly.

Okay. What I'm saying is that we have done some business planning before getting into the joint venture, so any tentative figures you could have provided, would have good. What kind of investments you are looking into kind of approximation type of?

Opportunity, it is in the billions, okay? Because today, the business plan and the projection and the type of inquiry we are getting for a finished product with the technology. Of course, the product company, which ELTA developed last 25, 30 years back, that is completely transfer of technology take place and started. And it is a big market, of course, in India itself and the export market for some other countries also possible. And figures looks very mindblowing on -- this runs in billions. But we have to start up a plant in 11 months. There are many opportunities coming to this JV.

Alright, sir. No issues. And what kind of CapEx that we are looking in our company -- in basic company, basic DCX Systems?

That's what I said, CapEx was still has to be finalized. We are working with suppliers and yet to finalize the prices and what all the equipment to buy, and it will take some more time to finalize the CapEx. I will let you know very shortly.

No, you are saying this thing about the joint venture that we are getting into with ELTA. I'm talking about the DCX Systems. Do we need any more capacity, CapEx?

Okay. Sorry, I thought JV only. Prasanna, what is the CapEx?

Sir, as of now, we are not foreseeing any CapEx for this year. But if the new projects or if we award -- there is any new project and project demands, generally we'll go in for the CapEx. Other than the small yearly CapEx of some INR 10 lakhs to INR 25 lakhs towards replacement of computers or worn-out machinery, we do not foresee any CapEx in DCX for this year.

And sir...

Sorry to interrupt you, but we request you to rejoin the queue for follow-up questions. The next question is from the line of Shashi Prasad from Invest Ventures.

You announced in the earlier con call that we are to sign the partnership deed with Aerospace Services India for the MRO business in Delhi. What is the status of the MRO business at present for DCX Systems?

Yes, yes. As you say, we signed the MoU with ASI for their partner for electronic assemblies and other things. And of course, there is -- they have some requirement, recently got it. It has to pass through us. Still, there is a lot of process to be done at my customer end, they are working on it. And it is -- compared to last year, it is moving a little bit faster now because the MR was required very urgently. We are part of that business. And of course, I have not received any input from them. This is the feedback I got, and this business is going to start shortly.

My second question is that this ASI and ELTA Systems has participated with Bharat Dynamics Limited and BEL and they have got a very big orders of around INR 2,200 crores and INR 1,500 crores-or-so. Are we a part of it -- are we expecting orders -- a follow-up order from them?

Yes, yes, we are definitely part of that. Already I executed this order through BEL for the LRSM. And if the BEL got an order and when the -- only India is supplier for their complete electronic model for them. If they get the order, definitely, I will get back to that order.

They have already got the order...

Sorry to interrupt you, but we request you to rejoin the queue for follow-up questions. [Operator Instructions] The next question is from the line of Jash Bhurjee, who is an individual investor.

So you mentioned the intangible assets are INR 220-odd crores for NIART, but we are not expecting any revenue from NIART in the next 1 or 2 years minimum, right?

Yes, 1 year at least. You can say it's an R&D company, the product has been mature now. And until we get -- it will take revenue -- proper revenue in my view, next year it should start.

Okay. So -- but don't you think onboarding such a huge asset on our books without any revenue -- significant revenue recognition immediately is not good for the company?

I will take this question. Sir, this company is incorporated in Israel. And as per IFRS and as per IND AS also, we have to recognize this as an asset, and this has been recognized as per approved accounting principles.

[Operator Instructions] The next question is from the line of Venkat, an individual investor.

Sorry, I was speaking on mute. Sir, my question is, so what's the time line -- that we have to get the pending amount from the Israel, right? Israel said some 2, 3 customers, right? Is they didn't made an ETA? ETA means what is the target and deadlines to receive that money back? So whatever they are starting with 2 questions no, what is the deadline for that time line?

In my view, months' time -- 1, 1.5 months' time, it has to be reconciled, it is an old PO. We need to -- it's a 4 years old PO project got closed, and there are a lot of reconciliation to be take place. And we are -- of course, we submitted, there are questions, there are answers, there are proofs that has been given from our side. And it will -- in my view, it will take in 1, 1.5 months max for our things to get settled there.

So it will reflect in our Q1 results, sir -- '26 Q1 results or that.

That's what I want to push -- I want to push for Q1 results. In fact, we'll definitely -- that is my target. So, we need to see.

We'll take our next question from the line of Sahib Singh Choudhary, an individual investor.

Sir, my question is regarding operating margin. Somebody earlier asked the same question. This year, operating margin is almost 0. Last year, it was 6%. But in the question of low margin, you have responded that there are certain costs which to be recovered from the customer. And until and unless it is confirmed from the customer end, you will not account for the same. But if I look into your last year conference, same question was raised about your decreasing in the operating margin, and you have responded the same reply that there is certain costs you have to recover from the customer and until this is confirmed, you have not accounted for. My question is that -- do you have recovered any amount during the financial year '24, '25 related to previous year? Over to you, sir.

No, no. We have not accounted or we have not accounted any BOM guarantee in 2023, '24.

This recovery within a year, then how this recovery is reliable and we can expect that money ever will be realized or will be settled if any amount with the customers you are not able to settle in a year, then how we expect that this amount will be recovered in future?

See, there are amount to be settled in 2 ways. One is in the -- PO is ongoing PO 3 years -- starting from 3 years to ongoing PO, we used to get settlement. When the PO is getting settled in the 3 years, there is a -- maybe first year, there is a small variation. Second year, maybe not there. Third year, more variation. So until all this accumulated and go with the end program. That's what I mentioned in the same call. Until 1 project -- major project in 2, 3 customers got closed, the old PO got closed. We need to recalculate everything and given a report. Maybe in 1 year -- last 3 years, you're mentioning that no claim. No, there are claims came, again, increase, not a repeated order, same thing has been done. The whole cycle takes place. Now every year used to claim because we are able to unclaim the major amount in the last year due to that, the PO is getting exacted for this recent year. So this all -- it is a matter of -- see not only component variation. Maybe I spend more on NRE, more on special equipment, more on testing equipment, more on timing. It has to be calculated, given them for approval. So maybe some of the program, it will get settled in the every financial year. Now some of the program is getting -- PO get closed, then it will be settled in the 1 year, 1.5 years like that. So of course, what we are looking for this amount is 2, 3 customers. It is a long-term PO, large PO we're supposed to get settled. That's the reason for this year, we are -- last year and this year, it is taking a little time. And this will go anyway. This has been submitted. And not only this thing, there is a COVID has come, we couldn't be able to travel, then war started, we couldn't be able to travel and got closed. All the reasons got delayed. So we are -- now everything settled even from our side, once customer approves, we'll get back our money.

Ladies and gentlemen, in the interest of time, we'll take this as our last question. Please get in touch with the IR for further queries. I now hand the conference over to Dr. Raghavendra Rao for closing comments. Over to you, sir. Please go ahead.

Thank you. I want to sincerely thank our team, investors, partner and all stakeholders for their unwavering support and cooperation. We truly appreciate your presence and involvement. For any additional questions, please do not hesitate to contact our Compliance Officer, Mr. Gurumurthy; and our Corporate Affairs in-charge, Mr. Manjunath and Adfactors for any query. Again, I'm telling you we are here to answer your questions. Please don't hesitate and we are very much reachable and Mr. Gurumurthy and Mr. Manjunath are available. Please contact them for any query, and we are ready to answer whatever you want. We welcome to our factory also, sit with us, understand our business. And I want you to be clarity on my business. We don't mind spending time with you and give more explanation. And this is what I want to conclude my opening -- closing remarks. Thank you.

Thank you. On behalf of DCX Systems Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

Thank you.