Zen Technologies Limited (533339) Earnings Call Transcript & Summary

Good day, everyone, and welcome to Zen Technologies Limited Q4 FY '26 Earnings Conference Call. [Operator Instructions]. And this session is being recorded. The management is with us today to share the update on the quarter. Once the remarks conclude, we will open the floor for questions. I would like to remind you all that everything said in this call reflects any outlook for the future, which can be construed as a forward-looking statement and must be viewed in conjunction with the risks and uncertainties that the company faces. Please note that this conference is being recorded. I now request Mr. Abhishek Mehra to lead the discussion. Over to you.

Good everyone, and thank you for joining this Q4 and FY '26 Earnings Conference Call of Zen Technologies Limited. The results and investor update have been e-mailed to you and are also available on the stock exchanges. In case anyone does not have a copy of the same, please do write to us, and we'll be happy to send it over to you. To take us through the results of the quarter and answer your questions, we have with us today Mr. Ashok Atluri, Chairman and Managing Director; Mr. Hari [indiscernible] Chalat, Chief Financial Officer; and Mr. Abhilasha Atluri, Investor Relations. We'll be starting the call with a brief overview of the performance, which will be followed by the Q&A session. So that said, I'll now hand over the call to Mr. Ashok Atluri. Over to you, sir.

Good morning, everyone. I just want to recap on the current products that we have and talk about the future products that we are going to launch. The main point here is that there is an offset event happening in [ Prayagraj ], as we speak and our products are being introduced there. And I'm really excited about what's happened in the product space. The results, I'll leave it to Hari to make the presentation and feel the question with respect to that. So I'll just start the share here and --

Yes, we can see that.

Yes. So very broadly that what has happened in the past a few months is that -- there are 2 areas that we are focused on, which is anti-drone systems and the simulators, both have gained so much of prominence in the wars that have happened. The first thing you [indiscernible] system without not much argument in the sense the Iran, Israel-Iran war [indiscernible] was completely drone-based our missile based and whoever could for every rupee get the maximum mileage won the war actually. So we can see that while they were launching $30,000 [ started ] drones, they were being countered by $3 million interceptor missiles. So a complete missile map for completely mixed up. So one takeaway from that was that anti-drone systems are playing a big growth. But in addition to just pure software jamming, hard skill options have to be there. And in hard [ kill], the ideal situation is for the $30,000 attack that happens, can you stop it with a lesser amount, maybe 20,000 or even 1/3 of the private 10,000? Can you really utilize the [indiscernible]? So that was what the thing was. But coming back to what Zen has been doing, we have been doing anti-drone systems. We have introduced hard kill options. And we have -- and we see that -- but currently post set focus has almost 2x minimum 2x from what we are originally projecting. So what is the impact that you have on our turnover and all they did not get known, but we see that 2 to 3 years from now, the mainstay is going to be the anti-drone systems. And second, what has happened is that, again, because of the war, the sudden nonexistence of wars [indiscernible] [ 5 to 20 and 2020 ] to now [ Arminas], Azerbaijan, Ukraine, Russia, is really around all these works have really changed the dynamics very, very well. So what has happened in essence is that the companies are now scrambling for preparing forward. This is not the question of if you will be attacked, if you are [ perceived], we'll be attacked as well, the general theory. So how will you make yourself really unbeatable is by making yourself trained -- properly trained and then buying the right [indiscernible]. So what have so -- and in this direction, we have [indiscernible] started doing a lot of efforts. But one of the biggest things that has happened in terms of our development efforts in the last few years versus last few months is that AI has taken a major role into our development cycle. So yes, it takes 2 places. One is at the level of the process base, where are the process? Are you using software, developing software using AI? And secondly that embedded level, are your products then are the simulator your anti-drone system, [indiscernible]. So these are the 2 areas that we have been focusing on. One thing that happened was that because of the extraordinary productivity increase, we have suddenly released a lot of bandwidth in our companies. So one of the companies that did extremely well is both [indiscernible] and now under [indiscernible], and they have started developing really interesting products. So -- and the bandwidth, we are now able to take more products and holistically address the market that is come. One of the products that they have developed is a hypersecurity fleet. So this is actually a physical speed that are integrated, which can be integrated at control and command center can integrate into ships. It can be increased even into airplanes, where the attack happens through hacking, which can driven. And there are -- typically, there are 6 layers of fire, 6-player, one is awareness and training layer, monitoring and intelligence, protection and prevention, encryption and data [indiscernible], on threat perception, investigation and response. And finally, the quantum of post-quantum readiness, which is required because of the encryption that is required. And this is -- and in all the cases, there are 0 foreign dependencies and it's a proper example of [indiscernible]. So this is something that is happening. And the other thing is that the -- with the second thing that we have started doing is, of course, anti-drone simulator. So we have been actually supplying the anginal system for a long time. Now anti-drone simulator has also been developed by -- and this is a really advanced trading platform because we really cannot block the rear [indiscernible] system for training. These actual anti-drone systems do have built in training technology, but we are requested by the customer that this is a separate activity. And so we have created an anti-drone simulator. Again, we think -- this is a major product to teach people to detect, track and utilize your threats very realistic virtual environment. It could be a single drone threat or a [indiscernible] attack drone, right? And also, can you have a mission-based tactical exercise? This does enable that. So scenarios can be considered to [indiscernible] threat level. So this is actually before the war happens, the war can be simulated and drones can be activated and stopped from attacking the thing. Again, the current -- even the anti-drone system that has that is there, it's complete AI powered, again, a lot of AI in that -- so we -- especially when we compare our thing is 15-plus kilometers, detection rate. Of course, if you network, it will grow indefinitely. It can be [indiscernible] kilometers. We're talking about each individual system. And in the frequency dominant, one of the biggest challenges that we have, we are seeing worldwide is a catch-up game that the other vendors are playing with them. So initially, now recently, we have been supplying 400 megahertz to 6 [ gigas ] but that's outdated. Now we know that the bad actors are actually making growth at 100 megahertz. They're making it 10 megahertz or 10 giga they're making at 12 gigahertz. So what we have done is we have preemptively made the product with wider frequency dominance, 70 megahertz to 12 gigahertz. And again, our utilization capabilities are extraordinary with RF jamming, [ GLSs ] jamming, [ RCW ] results that we have already included. Air [ defendants ] integration has already been both [ L7 and 23 ]. So this product is way ahead of the -- what are they available in the market worldwide. Again, completely [indiscernible] ourselves is also indigenized and with the range of 20 kilometers and detect smaller loans much, much earlier than what competition would do. So the latest launch, this is again being launched today at [indiscernible], and we are very happy with what is being done. This is actually future proof at this point in time, and we think that this is a lot of market in the -- not only in India but worldwide. Another product that's being launched today is [indiscernible] is an unmanned ground vehicle UV that is capable of both the comparable of combat logistics and casualty vacations. I had a pair -- it goes at a speed of 50 kilometers per hour. The range is up to 100 kilometers. We have already integrated various governance system, [ MMG, LMG Direct fire, AGS indirect fire ], all of them and [ tried ] on this, and they have the function very, very well. The [ records absorbed ] very well. The operating mode is you can manually operate it or you can just -- on autonomous, give it pass, go there, do this and come kind of situation [ can ] all the way to autonomous there which have [indiscernible] for better control. Individuals continued more than 85%. And you commercially, we are planning to launch in this financial year FY '27. Of course, these are the other things that can be used as combat, logistics or casualty valuation. And this is a command and control center that you see you're very, very interactive and state-of-art -- another product that has been launched in collaboration with AI curing is our associate company is that this is a unique [ 30mm ], the ammunition, we have an ammunition license, in addition to the recently granted we license, we also ammunition license. So we are building this ammunition which is RF-based programming. It has refragmentation and tungsten ball as core. And we have seen that we have actually tried it out and describe everything in a 10 by 10-meter area, and this can also be used as a anti-drone firing [ ping ] 1 hour, 30 mm [indiscernible]. So this is -- and again, when you use this ammunition, you don't have to modify the actual weapon. So you can use the regular weapon system and put these ammunition into that. Again, and finally -- and one more thing that is happening is the [ CIS ]. This is a gunman by developed in collaboration with [indiscernible] systems. There -- this can be used by naval forces. And in addition to the weapon system, it also has the shorter missile range and the built-in radar. So some of the smaller targets where people don't want to spend the RFG detection and jamming, but I want to just to have a hard [ sell ] option, we feel [indiscernible] pollution, which would actually at a much lower price point can be pushed to the armed forces. So again, as I was saying, one of the biggest thing that I'm really excited about is it can be actually make a drone and interceptor drone that is costing much cheaper than the [ 30,000 ] the [indiscernible] that cost? And can it affect -- the biggest challenge is these drones come at 180 kilometers. This child grows us 180 and now the recent ones we here are doing 300 and the next one probably would be crossing even that. So given these speed it's very, very difficult to actually realize a drone that can fly at a speed of 300 kilometers. So how do you exactly address this challenge of stopping 30,000 grown with much, much cheaper attack [indiscernible] with much, much cheaper solution. I'm very, very happy and very, very proud to announce that we have just come up with [indiscernible]. This is actually much, much cheaper than [indiscernible] we think 10,000 is a very, very good entry plan for this. And we are launching [ Hyperstrike ], which is having a speed of 400 kilometers per hour. It's a 5-minute rider and strike thing. So it is -- it can go usually [ 20 ] kilometers plus and hit the target. And even if it leases, it can be maneuvered physically, one thing is it has the AI [indiscernible] will still but at the same time, the manual override is there which can be changed and it can hit the target. Again, the proximity variant payload is about 200 grams, AI-enabled tracking and guidance and 4 kg airframe and mass products market. So very, very -- so we think that's we should be doing about -- with the production will start in the financial year of this, and we expect that even the capacity is about 5,000 per shift per month, but we think we can easily increase to [ INR 15,000 ] and we can scale it up if the demand goes up. So this is a very, very exciting thing, and there is a small video that it is a video that I'll just share with you. [Presentation]

So first -- last slide. And with this, of course, as usual, the -- again, the key contribution for this the hyper-speed propulsion system has been supplied by vector techniques and extremely [indiscernible] again. So we -- actually, from the focus on then creating great products, which continues to be -- which continues to happen. Now we are almost in a position of facilitator having great set of companies working together and facilitating them to unleash their creativity to serve the needs of our clients in an armed forces and [indiscernible]. So that is what we have been able to do very is. I'm very, very excited for the next 3 to 4 years. We think the government is moving very positively. The new DAP that the [indiscernible] [ PAT ] that we saw was very gratifying. The whole focus in the [ DAT ] has been [ IGD ], and they have been taking [ indigenously ] designed, developed by manufactured -- there was some attempt to say that if even foreign tax, if it is brought should be used on par with Indian [indiscernible] is developed. So their voices prevail, and I hope that will not be allowed because when you develop a product after 4, 5 years of hard work, that's the capability development. It is not a product, but we should just get somebody from a [ TOP ] you say and you try to equate it with the [ IDM], that is dangerous because what will happen is [indiscernible] actually developed vital on verge of commercialization. If foreign counterpart and what you'll tell if and I want to fill this technology, take this technology from me and fill that in capability. So the next version onwards, [ Indian ] [indiscernible] will be forced to come to us. So we have to distinguish between corn design, develop and India as some are in manufactured even if the IP, the company is given the IP so-called IP [indiscernible] versus indigenously designed indigenously developed [ indigenously ] manufactured. So I think that we were smart enough to see the fall in that the distinction and I think government will be doing. But I think after 2026, the [indiscernible], the complete those will be ruled by companies that have designed and developed products -- and I think [indiscernible] is giving for our friend. So we are hoping that for indigenous comp because there are companies that have developed the product along with the DR deal. So what are the differences [indiscernible] actually finance the development. Now compare that with the company that is actually self-funding the innovation and R&D. So we are saying the privately self-funded, independent R&D companies, innovation [indiscernible] company, should we actually be treated much better than people who are just taking developed or developing with [indiscernible] that we call it? So if that happens, that should happen and but anyway, we can distinctly see companies that are putting in their money that ultimate [indiscernible] in the [indiscernible] in the game, and they are saying that, listen, we want to develop this product. We don't want any funding. But if we click you buy. So the only thing for those companies is [indiscernible] order. If that is tracked by the [indiscernible] government, which we think is the main then they are going to really push the IGD agenda. I think that will change will be a hallmark here not for the actual innovators in defense industry but also for the Indian armed forces which will unleash the power of Indian arm for lean industry, not only into India, but all worldwide. So with that, thank you so much, and I will hand it over to Mr. Hari [ haran ] for the presentation on the financial results.

Thank you, sir. Good morning, and on welcome to all. Thank you for joining us on our Q4 FY '26 earnings call. Following [indiscernible] as remarks on the business and the way forward, I will take you through our financial performance for the quarter and for the year ended 31st March 2026. Let me begin with the consolidated performance for the quarter. Consolidated revenues for Q4 FY '26 stood at INR 170.1 crores, broadly in line with [ INR 170.8 ] crores we put in [indiscernible] FY '26. And lower by 45.2% year-on-year compared to the INR 325 crores in Q4 FY '25. As I've indicated to the year, the revenue trajectory in FY '27 has been impacted by the timing of order inflows with the bulk of the orders we received for the past several months. So [indiscernible] gives execution from FY '27 onwards. Operational EBITDA for the quarter stood at INR 51 crores, which makes an operating EBITDA margin of 28.6%, lower by approximately 900 basis points sequentially and [ 90 ] basis points year-on-year. Profit after tax for the quarter stood at INR 27.2 crores, as a percentage of revenues, stood at 26.5%. I would like to spend a moment on the 5 specific factors that have gained on the margin profile for this quarter since the quarter-on-quarter and year-on-year movements are wider than the underlying business [indiscernible]. First, our Q4 [indiscernible] basis lower against the prior year comparable in Q4 FY '25, having strong execution regarding a higher base. So it's a significant portion of our cost base, most at the stand-alone level and across the group in nature. This lower revenue base translates into margin compression, particularly on the year-on-year comparison. Second, we recognize year-end performance incentives for certain employees during the quarter. This has resulted in an incremental employee cost of approximately INR 5 crores sequentially. Third, we have updated our warranty positioning percentages, particularly for anti-drone system products supplied in FY '25. Based on the actual experience data with more actual data now available on warranty utilization for this product, we have revised our provisioning estimate upward, resulting in approximately [ INR 30.1 crores ] of incremental warranty expense in the quarter. Fourth, we incurred approximately INR 2.7 crores of cost supply expenses in the quarter [indiscernible] to an export in FY '26. The [indiscernible] installation support in engagement of external consultants in the customer geography. Fifth, R&D expenses for the quarter were higher by approximately INR 3.3 crores sequentially, reflect investments into our future product portfolio. And as we have indicated in earlier interactions, we expect to make higher investments in R&D going forward, which will be reflected in an elevated cost base. Along the other 4 factors mentioned earlier, which are largely onetime or period specific in nature, this is a structural [indiscernible] that we will continue. [indiscernible] impacted made on the quarterly margins, our long-term guidance of 25% operational EBITDA and 25% PAT margins remain intact. Now coming to the consolidated performance for the full year. Consolidated via FY stood at INR 27.7 crores, lower 9.2% as against INR 970.6 crores in FY '25. Operation for the year to date INR 247.2 crores at a margin [indiscernible], lower by approximately 240 basis points year-on-year. Profit after tax for the year stood at INR 217.9 crores. PAT as a percentage of revenues stood at 31.7%. Now coming to the order book. The consolidated order book sold at INR 1,326 crores as on 31st March 2026. The stand-alone order book as it enters market at INR 1,226 crores. Majority of the order book is scheduled for execution from FY '27 onwards and provides clear end visibility for the next financial year. Working capital days as of 31st March 2026 was 196 days compared to 194 days at the end of Q3 FY '26. I would like to draw your attention to our not improvement in our DSO position. Our day sales outstanding at the end of FY '26 stood at approximately 119 days compared to 161 days as at December 2025. An improvement of 42 days. The increase of working capital day is primarily due to higher inventory days and advantage to suppliers, which is required for the projects which are currently being executed for deliveries. The liquidity position of the group continues to remain strong. Cash and [indiscernible] balances aggregated to INR 1,308 crores as of 31st March 2026. The group remains debt free. This is a [indiscernible] of financial performance for the quarter and the year. We can now take questions.

[Operator Instructions] We'll take our first question from [indiscernible].

My first question is how much of the INR 1336 crore order book, which we have, will convert into FY '27 revenue and by when will this happen in FY '27?

So most of the order book that we have for INR 1336 crores other than the product, which will be dispatched in FY '27 is 1,000 crores. The balance INR [ 326 ] crores is basically AMT revenue. And the [indiscernible] set over the period of the AMC contract. So out of the total order book, INR 1,000 crores is expected to be executed -- and most of the execution is going to -- the delivery is going to happen in Q2 and Q3 of FY '27.

Okay. So most likely we'll recognize the entire order book into revenue.

Yes.

Okay. My second question, sir, is what is the sustainability of new orders in FY '27 across the new and legacy product portfolio?

So I think the orders will be accelerated now. We expect the both the segment, the simulation segment and the [indiscernible] to really increase in the size of orders. As I said, that the demand, which we were expecting has far exceeded the estimate. The reality is much, much, much larger than what we had expected. So you don't know the sustainability of the order is not only -- not only sustainable, there's going to be a significant increase in the orders that we'll be received during this year, the financial year '27.

Sir, can you give some kind of a ballpark how much increase would be compared to FY '26?

So we stick to the prediction of our projection of INR 4,000 crores turnover in FY '27 and '28 put together. So we are very comfortable with those figures now.

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

[indiscernible]. So we speaking to have INR 400 crore revenue price. So by maximizing that means in [indiscernible], we'll be roughly doing around of INR 3,000 crore for that, we would be at least INR 3,000 crores? We do [ 4,000 million ] orders booked by this year. Is that fair to that -- very honestly, sir, we've been trying to -- I think in previous positive guidance that maybe we'll do 1,500 crores, 2,000 crores orders in hand. We are near by that. But -- it's still to reach 3,000 crores, it's still quite far number. So what do you -- how [indiscernible] 3,000 crores in [indiscernible] -- so what we are seeing is relatively?

We will be doing 4,000 crores. So you are right in the sense will be by the year-end, we'll be having a INR 3,000 crore order book to achieve it even if you were to route [indiscernible] FY '28. I think that should be the case if -- based on what we have been talking to you -- but again, what I would like to say is in terms of execution, we should be able to execute a stimulative the both [indiscernible] the years. Will the order book stand at 37 crores at any point in time, I think it's reasonable to expect that, yes, it should the order book should [indiscernible] time.

Okay. Fair enough, enough. -- so just on , I think we have some to be fought recently. I thought you missed the start of the call in -- so we all, I think, a new segment in aviation the [indiscernible]. So are these -- are the guidance including these or as a complete new segment [indiscernible] steps?

So part of the sales might be -- it might include part of the sales of the [ armed ] license that we are expecting. But it will not be very significant to really contribute meaningfully to this [indiscernible] in the first 2 years. But I think third year onwards, they will start contributing very significantly.

And just last question from my end so right now, because a lot of geopolitical hectare systems are required a lot of core [indiscernible]. How is our technology catching up the people, like if you would compare ourselves to like all over the world, how would you raise us like maybe top 10 or 3? Because why I'm asking that because the technology is advancing so much -- what are the possibilities of export orders because domestic, as we know, government is not enough [indiscernible] it going to take some time, there is going to be multiple routes, maybe it get delayed even further. But exports in something [indiscernible] of requirements due to the multiple also how we -- how the -- how are our products placed and what can we expect out of exports in the coming years?

I think we have figure factored exports also in this, and we personally think that the simulator market is showing a lot of hope, especially with related to drone-related -- anti-drone related simulation. And of course, the naval formulation is big thanks to our most [indiscernible] at everybody wants to know how to navigate difficult cases, how to handle mines, all these things, you really can't practice [indiscernible] are on a simulator. How do you handle mine, do you clean mines, clear mines, et cetera. So similar to market is really becoming an -- as I said, everyone -- if you are to pursue this week, you have the next market. So how do you look strongly by having a very, very well trained force. [indiscernible]. So this is what we are getting there on the inquiries in coming into [indiscernible] also. And of course, in [indiscernible], I really don't want to talk so much about it because this was a system that was used effectively in operation in lore,and we think that it's a proven product and what we have today is much, much more advanced than what you gave to the armed forces [indiscernible] them. It's a high evolved system. And I think it's definitely in the top 3 in the world, if not the top. So when we go to the execution that we consult other vendors and we talk to the customers, they are actually quite surprised that India actually have ability to detect and jam from 70 megahertz all the way up to 12 gigahertz. That's a huge range for any product. So yes, I think the export market is going to play a major role, and we are expecting a lot of export orders.

So by then, the way we get some model motion Q3, Q4. So can we have order to before that? Or do you expect orders to be back at [indiscernible]?

No, I think -- so the pipeline will be very large, but I don't want to touch that. But I think as we sold last year also we are expecting some modest quarter our orders are very near. I think when they come, our your confidence or [indiscernible] code about the targets that we have been talking about. I guess otherwise, the pipeline for both the formulators and the [indiscernible] system is very, very large. I mean it's running into thousands of crores -- that's it for [indiscernible].

We'll take our next question from the line of [indiscernible] of Goldman Sachs.

[indiscernible] compensation for a good order inflow and pipeline that we have. A couple of questions on from a more conceptual perspective. Now while we all talk about DDM and the focus of government on reorganization, but if you look at the current [indiscernible], they have been at a record level this year. But the foreign component [indiscernible] component, and I'm not counting [indiscernible] here, [indiscernible] is a different thing altogether. [indiscernible] has gone up quite high, and it seems the view among sources at least as for the channel acts that they would like to go for a listing patch rather than waiting for indigenized kind of system that might take their time. So in that context, order inflow or orders in the near term, there's just a risk that they might be more towards the foreign guys. So what is your thought on that?

I mean I don't actually see more further in the wake [indiscernible] that whoever comes in the [indiscernible] the trader or come to the [indiscernible] proposal, and he says, who had [indiscernible] that proposal? You have to -- you will know that -- and similarly, I think in Indian armed forces, whenever anybody is actually teaching a solution lesser, especially available in India are likely to be available in India, they actually takes us. So we need to be very, very careful and we are -- and by the way, the whole political system, the whole bureau classic system and the majority of the political majority of the [indiscernible] critic majority of the forces are completely online with getting indices. One of the questions they say the pitch the nets, listen, you have to have the best equipment in the world to win awards. But remember, this is the exact situation that we -- this is -- today, it's 20 years back, even the exact situation that we always say that we'll buy it from outside, we not develop it in-house, and we were completely unprepared for -- now the situation is -- and the country that said, listen, I'm not going to buy anything from foreign countries. Even if a product is 60% of the bell for our world's best product, I will go with the -- my country's product and he shows that [indiscernible]. So they have been on record. And there are basis Israel compared to India today, which have been following the follow policy of only [indiscernible] equipment. I think that sense is there within the government that we need to buy as you [indiscernible] as possible. And -- but again, we don't have a sale. We don't have [indiscernible] which, even though I have my own reservations, whether they are the right kind of expenditure at this point in time. But we don't have them. So going for them with the foreign vendors is all right. But there are a lot of things. And again, to your question about the allocation of funds because the very large kept [indiscernible] happened, but in the ground, I can actually see they're actually saying that we have to buy buying to take where they say, okay, if the [indiscernible], they have 10 vendors, then they okay 3 vendors take the products. So the -- I think the consolidation sales happening in the next 2 to 5 years, where some companies will really be emerged winners that Google so the Amazon of the different players that will benefit from focus on [indiscernible], yes. I don't know whether I answered your question, Amit, but if I haven't please highlight it.

No, absolutely, and thanks for invoking [indiscernible]. I remember quite some time. The second question is on the [indiscernible] that you showed in the beginning of the presentation, drone quite, I would say, impressive. And given the use case is very, very use in the Indian market and the specifications that you highlighted, I think they are ahead of your peers at least what I have steady. So what kind of -- I'm not talking about 1 year, 2 years, I'm talking about the use case in particular, let us say, 5 years, what kind of opportunity do we see in India? And part b of the question is on naval simulation that you highlighted in the presentation. So what type of solutions we are developing over there. These are a and b.

Very frankly, if that is the thing that we are doing, the point here is that while we are developing a company who's developing a better [indiscernible] or something like that. But we have a version that will address the future, things also are in the works in addition to the 400 kilometers and [indiscernible] that we have created. Now this interceptive drone has AI vision compute power on the round. It can go autonomously go after [indiscernible] most of [indiscernible] 80 kilometers. This could even if it misses go back at last out of existence, the interceptor -- we think that if look as they are, the world is a very, very dammit, but if the things look at this may be the largest product in our portfolio 2 years from now, the biggest product in our portfolio. [ Intercepter ] drone, okay? And as we're evolving the future versions of that, this could not only the [indiscernible], but worldwide, this may be the most sought-after product. Again, the kind of research that is going on in the absolute edge of physics and reality. So if we are able to crack it, absolutely, there is nobody in the world who will be able to achieve what we have achieved. So I think it's a very, very big good deal you caught on to it, but the [ infrastructure ] drone iconic speed with AI compute edge and our complete autonomy is going to be a very big thing for us. So yes -- so still your question of second [indiscernible] [ simulation ] how [ level invasion ] is really big for us. And we are thinking that -- the government is -- the Indian government is really, really focused on -- now a lot of people just focus on the borders the Chinese border and the Pakistani border. But then you just deliver or just have a map in front of you and move it around or just about -- as you move it upside down, you will see the see such a huge part of India, and it's where we have built of anything. And this is where the actual trades are now being based. So what are we going to do about it? So I think the training for that is going to be very, very major. And thanks to the top plans that we are seeing, India will have a larger role to play as we go ahead. So we see in the naval [indiscernible], also, we have started putting in effort and started offering complete full fledge some [indiscernible] centers and there is a lot of positive response in this regard, not only in India, but you have [indiscernible] or subsea 100% subsidiary has a lot of action in South America and Europe. So we are trying to push those solutions through them. I think , I think this is going to be quite a large contributor of revenues as we go ahead.

Thanks indeed. And I think I will finish taking one-on-one because this is like outside of the [indiscernible] of this call within the interest of time. So I will ask in one of these exciting products.

But just for the knowledge of everyone because these products are being demonstrated [ Prayaga], they are on display so you can have when a look there.

We'll take our next question from Dipen Vakil of PhillipCapital.

Sir, my first question is regarding your arms cities that you have received. So can you tell us the scope for Zen technology in this arm manufacturing as to whether we are getting into the ammunition production or whether it is more about the product that you [indiscernible] are in display right now? So what kind of new products we are expecting from the -- and basically from the [ arms ] manufacturing license?

So yes. So you think is that, again, we have been focused on the anti-drone segment by itself. But what is happening is -- we build a remote control detonation as an expansion of our [ hard kill ] option offerings to the customers, but what you saw was that the products by themselves are having a lot of markets, given the remote [indiscernible], they say, we don't want you anti-drones, we want this thing may be integrated with the [ RADAR ] kind of thing. So those are in the kind of pollution that some of the -- especially the vendors linked and budgets are asking for. So an interesting thing was that when we saw in the -- which we educated much earlier was that the [ 12.7 20 and then 30 ] [indiscernible], especially, the new -- the reference system that we used to bring down the drones. And then we had applied 2 years back the license, which usually came in now and in the meantime, we have been developing doing some hardware -- some hardware work also on creating this [indiscernible]. So yes, the weapon systems will be launched during the [indiscernible] something launching this year, next year, I think the majority of them will be launched. So these deals are a very big market. But again, as you have probably guessed it, the bigger the market in this is the actual ammunition. So we [indiscernible] we have developed for 30, that is the most preferred caliber reason for bringing down the drones. The 30mm is actually a smart ammunition the airbus capability when we detect something from drone and decided. It does the blast [indiscernible] meters worth of drones anywhere in that radio will be completely described. So I think just ammunition is also a very big market -- but we are going after a smart [indiscernible], not the dumb ammunition, where the I think we're addicted to margin, so we have to have a reasonable margins to do this kind of thing. So yes, I think both arms and ammunition will be a big market for us, and we look forward to making a dent in that market.

Sir, second question is on the line of the order [indiscernible] of quarter. And so basically, you told us about that INR 4,000 crores of turnover cumulative in FY '27 and '28. So one thing I want to understand is that what is your conversion rate in terms of from order into execution because if it is something like 1 year, then potentially all this INR 3,000 crores of order wins has to be won in FY '27. So that is one thing that I want to understand. And also, what was the bottomneck which led to the delay in the terms of ordering because as you mentioned rightly mentioned, ADS and simulations are right now something which are widely required and the requirement is only increasing going [indiscernible]. So any indication as to what led to the bottleneck into flow ordering activity from the government side as well?