Zen Technologies Limited (ZENA) Q3 FY2026 Earnings Call Transcript & Summary

Good day, everyone, and welcome to Zen Technologies Limited Q3 Earnings Conference Call. [Operator Instructions] This session is being recorded. The management is with us today to share their update on the quarter. Once their remarks conclude, we will open the floor for questions. I would like to remind you all that everything said in this call that reflects any outlook for the future, which can be construed as a forward-looking statement must be viewed in conjunction with the risk and uncertainty 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.

Welcome, everyone, and thank you for joining this Q3 FY '26 earnings conference call of Zen Technologies Limited. The results and investor updates are 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 Haran Chalat, Chief Financial Officer; and Ms. Abhilasha Atluri, Investor Relations. With that said, I'll now hand over the call to Mr. Hari Haran Chalat. Over to you, sir.

Good evening, and a warm welcome to all. Thank you for joining us on our Q3 FY '26 earnings call. It's my pleasure to take you through our financial performance for the quarter. Zen has delivered a resilient performance for the quarter, reporting a 16.8% growth in consolidated revenue and a healthy profit after tax growth of 30.6% despite headwinds in terms of the timing of the order inflows of the last 9 months. The profitability for the quarter is driven by favorable product mix and a continued focus on cost discipline. Consolidated revenues for the quarter stood at INR 177.8 crores, which is a growth of 16.8% year-on-year and 2.4% sequentially. Operational EBITDA for the quarter stood at INR 66.8 crores, reflecting a year-on-year growth of 51.1% and a sequential increase of 3.2%. Operational EBITDA margin stood at 37.6%, higher by 870 basis points year-on-year and 30 basis points quarter-on-quarter. The quarter-on-quarter growth in profitability was partially offset by higher employee benefit expenses, which was driven by the recognition of salary areas following the completion of our annual appraisal cycle across the group. increased ESOP expenses on account of fresh employee stock grants and a onetime impact arising from the implementation of the new labor codes. As a result, the profit after tax for the quarter stood at INR 55.7 crores. Profit after tax as a percentage of revenues was at 31.3%. Now coming to the year-to-date consolidated performance. Revenues for the 9 months FY '26 was at INR 509.6 crores, a decrease of 21.4% year-on-year. Operational EBITDA stood at INR 196.2 crores, a decrease of INR 39.3 crores or 16.7% year-on-year. Operational EBITDA margin was at 38.5%, which was higher by 220 basis points year-on-year. The consolidated profit after tax stood at INR 170.68 crores, which is lower than the same period last financial year by 8% Profit after tax as a percentage of revenues was at 33.5%. Now coming to the order book. As disclosed in the investor presentation, Zen has received orders aggregating to INR 931 crores in the past 4 months. The consolidated order book position as at 31st December 2025 was INR 1,082 crores and as on 31st January 2026 was INR 1,427 crores. The liquidity position of the group continues to remain strong with around INR 1,188 crores available in cash and cash equivalents and a net debt position of 0 as at 31st December 2025. This is the brief highlights of our financial performance up to Q3. We can now take questions. Thank you.

[Operator Instructions] I will take our first question from the line of [ Raj Mohan Vikundaraman ], who is a professional adviser.

Am I audible?

Please go ahead with your question.

Congratulations on the order wins for the last quarter. They were pretty heartening in terms of the visibility that you had given us. My first question is based on your expectation of executing INR 6,000 crores in 3 years, most of which would happen in FY '27 and '28, you had indicated to having capacities to execute up to INR 2,000 crores annually currently. In FY '28, when you look at the math, based on your execution plans, you would have to execute in excess of INR 2,000 crores annually. Could you give an overview of how do you see capacity expansions happening in terms of annual revenue executability post expansion? Like currently, it is INR 2,000 crores. So post the expansion, what would be the capacity in terms of annual execution, then the CapEx involved and the time frame?

Thank you, Raj, for asking the question. And just to recap what we have been saying that for FY '26, '27, '28, we had indicated that we would be able to do a turnover of INR 6,000 crores. And based on that, the question from Rajmon is, if you were to execute whatever is the execution, will you be -- do you have the capacity to execute the remaining INR 5,000-plus crores -- so at this point in time, we are revisiting our order book and the future. And what we have said is that this year, if we were not to take this as the base year, but the last year as the base year and you assume that 50% growth in the next 2 years, even though it would be about INR 3,300 crores or so, but we expect about INR 4,000 crores of execution. We're actually scaling down our targets at this point in time. And with respect to the INR 4,000 crores that we are -- the new target that we have set for ourselves, we do think that even if we were to execute some part in the FY '27 and the major part in FY '25, we do have the supply chain to take the order book and execute the order book. So yes, to your question that we already have scaled up with our supply chain that this INR 4,000 crores kind of ability. But what if the orders are much larger, I think as we go into the next year, we are building additional capacity. We are investing in both machinery and plant and of course, even product R&D facility we are investing. So that should create a good pipeline and also enable us to execute the orders if the FY '28 becomes very large.

Mr. [indiscernible], please unmute your microphone.

Yes. So Mr. Atluri, based on your answer of INR 4,000 crores that you expected to execute over the next 2 years, can one presume that around INR 1,500 crores would be what we would achieve in FY '27 and say, another INR 2,500 crores in FY '28. And you would be able to have the capability to execute over INR 2,000 crores, that is INR 2,500 crores in FY '28?

Yes, that's right. I think I wouldn't give the exact figures between the 2 years. But yes, I think you are right on the care that between the 2 years, we should be executing. And if it were to exceed INR 2,000 crores, we should be able to execute. We should not have any operational challenges in delivering on the order book.

Okay. My second question is, again, a strategic perspective from someone who is sitting at a vantage point. When we look at anti-drone and simulators in general, with nuances like hard kill, combat training zones, naval air simulators, et cetera. Could you give a top-level view of what kind of budgets India has been historically running on? And how much growth over that one can expect over the next 3 to 5 years?

So in the case of training simulators, they have -- the training have preparedness, thanks to the current situation world over, at least 6, 7 years back, nobody would think about war happening. And then in 2020, the Armentherbaijan happened, then Ukraine-Russia happened. Now I believe there are some 20 wars going on. And one war, which people could never imagine is between Thailand and Cambodia. So everyone is -- I don't know, everyone is fighting or itching to fight, but suddenly, preparedness has become very, very valid. And in that case, in Indian scenario also, Indian government is really, really going to scaling up and they are allocating large funds for the training budget. And of course, there are also and with respect to the anti-drone systems, we have seen -- as you see more than this INR 300 crores worth of upgrade orders, operational requirements are immediately required and then there's a hard kill requirement has come. I think this will be almost on an emergency basis, the procurement will keep going on. So to your question, I think not only in India, but worldwide, both these segments, the training segment and the anti-drone segments are scaling up. And to your question, how much funds are being allocated, that's a figure that the government has not shared with us. So -- but we think this is much, much more than what we are estimating for what Zen will be getting the orders for. So it's a much larger figure. I would say that's running into thousands of crores. So yes, I think there is -- to your question, whether there are enough allocation happening for what Zen is planning, the answer is yes.

Can I squeeze in one last question?

Please go ahead.

Yes. Generally, when you look at this Alawi acquisition that recently happened and then synergies with, say, [ AR IPL, ] which you previously acquired, what is the outlook on naval and hence associated simulation, assuming -- is it basically as a combination, NBM and ARPL, are they carrying you into a different dimension of sort? So objectively, when we look at the combined, can it evolve into, say, INR 500 crore entity over the next 3 years or 4 years or whatever?

So one thing is that in the training segment, one of the order we executed, we got was something called this combat training node for INR 100-plus crores. And that's actually a breakthrough thing that we have been trying to market for almost a decade, telling to everybody that this is how integrated training between various arms of the Army is carried out. So this is a very, very big thing in the sense that it is the first order that we got. And this is -- this will become a showcase not only for India but worldwide. And we personally think they will sell in tens of, if not hundreds of -- in hundreds -- so this is only for the Army. A similar thing for the Navy is also on the way that we are creating a completely full-fledged integrated naval training center. And with -- and NA actually had 2 of the very, very crucial simulators that we were trying to build ourselves. One is called the tactical trainer, second is the submarine simulator. Both of them have been developed and delivered. So that -- then they are very, very complex simulator. And as we are speaking, the [ Nassim ] simulator for tactical trainers and submarine are having a huge demand in the overseas market. In fact, we were in ISEC in U.S., that's the world's largest simulation exhibition. And there was almost -- there a lot of interest in this [ NIA ] simulator that you are saying. And so what is the synergy being unlocked? [ -- by ] the combination of NO and ARI is that the gentleman who is heading NO Kamarluwala, he has become the Chief Technology Officer across all the naval effort and Air Force effort. So Kamurluwala, even though he's a naval officer, he is an aviator. So he's -- in addition to doing the efforts with respect to naval simulator and complete set, he's also building Air Force simulators. So I think -- to your question, whether it will be fine. We already are, I think, crossing INR 200 crores or something like that. But I think INR 500 crores will be a very conservative estimate in 3 years. It will be very, very conservative. And we are very, very -- I mean, happy that these -- both the acquisitions are very, very synergistic. Thanks for the question, Raj.

We'll take our next question from the line of Balakrishna of Oman Investment Advisors.

I hope I'm audible.

Yes, please.

Yes. So Mr. Ashok, sir, regarding this guidance of INR 4,000 crores in the coming 2 years. So how do you plan to achieve by introducing some new other products or some acquisitions as we are sitting with approximately INR 1,000 crores of cash. So we had done a lot of acquisition in the past. So how this will shape up?

So the visibility for the INR 4,000 crores, we have a strong -- I mean, the way we are looking at is that we were saying that the order book would be about INR 1,500 crores to INR 2,000 crores by the year -- by this financial year, and we still are very hopeful that it will happen. Maybe there will be a slight spillover, but the way we are seeing things, I think that looks very likely. So the INR 4,000 crores looks reasonably -- we look reasonably confident at this point in time, and we are hoping that it exceeds that by a far larger number. And with respect to the -- are there any future acquisitions since we are sitting on almost INR 1,100-plus crores of cash. The answer is yes, we are looking very aggressively for investments. And not only in India, but overseas, we are talking to various companies. And again, if you see this and EU, the FTA with EU is a very, very big deal for India, and it's a bigger deal for Zen Technologies because we know the simulator that we have are absolutely world-class. The anti-drone system that we are talking about are also very, very highly advanced and the amount of R&D that we are doing currently in both these segments is staggering. And if we are able to actually pull it off, we get a proper access and we are able to tie up with the EU partners, this thing would be very, very big. I mean, I think we look forward, this is a fantastic move that Government of India has done and companies like Zen will benefit tremendously from it. So yes, we are also -- and this will -- because we have the gun powder to actually go and expand our marketing efforts into Europe. This also gives us opportunity to buy companies which have deep technologies, which can be used both to sell overseas as well as back in India.

Good to hear that. So regarding the order book execution, so we have completed that order within the -- before the time line. So the existing order book also, so we can expect maybe as it is a 12 months time line, but still maybe we can expect it to be executed in 6 to 9 months' time frame?

Yes, I think most of it should be executed within the time line. And we think that with respect to the -- so the annual maintenance contracts don't get executed. The complete order book will not get executed. So if you see that we'll be differentiating between the equipment and the actual AMCs and the AMCs. Annual maintenance contracts are typically between 4 to 5 years of execution. So on an average, they may get probably absorbed in 3 years. So with this, yes, I think otherwise, typically, we should execute most of the order book by -- within 18 months.

Lastly, sir, any new products other than the ADS and our simulation one. So we are talking about Naval also. So do you see any other big product like ADS that is in or in pipeline? And also about Naval products futuristic how big it could be? We can say that it could be near to equal to ADS or any -- can you throw some light on any upcoming products or new products which are getting matured?

So to your question, is there any big blockbuster product like ADS? The answer is no, that's too big a product. So -- but your question, are we launching some new products? I think there are going to be very, very interesting launches in the next, I would say, 1 year. So I think -- but I don't want to preempt my team by saying what they are going to be. But I think some of them will really literally blow people away, and we expect them to be launched in the next few months. So keep tuned in. So again, the thing is Zen is not a company that's trying to go and tie up with people and getting the technology and manufacture here. We don't believe in that. Actually, we don't think that we should be manufacturing COLI or assemblers for -- we don't want to be a [ Foxconn. ] We want to be an Apple. So how do we actually create new products. The extreme R&D that is going on is again not to create a me-too product, but absolutely cutting-edge world-first product. That's what we are putting an effort for. So yes, to answer your question, yes, there will be new launches, but it's to -- I cannot reveal at this point in time.

We'll take our next question from the line of Sanjeev Zarbade of Antique Stock Broking.

Yes. Am I audible?

Yes, please.

I was -- my question was regarding the simulator order that we were expecting for quite some time. That was part of the nonemergency ordering process and probably that was the reason it has been kind of delayed. So I was -- I needed an update about when -- what -- where are we in terms of that ordering status?

A long time back, I had given an example of Anguliimala in one of my annual reports. Have you heard about Angulimala? I don't know. Very quickly, I'll recap the story. Angulimala was a famous decor who used to kill people and he was waiting for and he had Anguliala. -- he would cut the thumb and put a garland of that around his neck. That is Angul Mala. And -- but then one day, Buddha was passing through. And he decided to kill Buddha because he was the last person to complete his garland. And when he started running after Buda, he ran very fast. No matter how fast he ran, Buddha was almost one step ahead of him. And -- but Buda was walking. So I think we are having the same feeling here in this -- in the simulator order with regular budget, where we are running very fast behind it, but it's maintaining equal distance from us. But again, to be fair, on the lighter side. But to be fair that I think we expect, again, between -- without holding us responsible, things are moving in that direction, and we expect by before -- in all probability before March, it may come, but it may spill over to the next first quarter, but looks like things look like that by before March, the order may be placed on us. Yes. And so that's with the simulator order. But again, this delay was caused by the operational crisis the government faced, but I think that's been resolved now. Things are moving a little faster than they were before.

Yes, sir. My second question was on the kind of situation we faced in the first half. wherein we had a weak order book to start with in FY '26, and that led to muted first half. So what are we doing from our side to derisk our financials from this kind of volatility in order book?

So the thing is that as of now, we have an order book and it's building fast. So I think in the immediate future, there is no crisis. But to your question in future, what are we trying to do is one thing is we are really ramping up our export efforts so that even if the Indian orders get delayed, we start keep getting the export orders. And we are hoping that the new defense acquisition process to 2026 is going to be released very soon. I think that the draft will be released any time. And that will enable us to execute or get orders in a faster time procurement cycle. That I think will actually kind of the export market and the faster cycle and the emergency procurement, we expect them to continue for some time. All put together, I think we will probably not create a situation where our order book has depleted. I think you are very right in the sense, Sanjiv, that your question is you are never -- none of our investors doubt our capability to execute the order book. But if the order book itself depletes, what can we do? -- that's a very sticky position to be and we hope we will not get to that position again.

Right, sir. And what would be the AMC portion in our order book?

The AMC portion as at 31st January out of the total order book of INR 1,427 crores is INR 338 crores.

We'll take our next question from the line of Vikash Singh from ICICI Securities.

Am I audible, sir?

Yes, please go ahead.

Yes. So sir, my first question pertains to our revenue target vis-a-vis the order book. In order to get that INR 2,000 crores or INR 3,000 crores kind of the range, we would have -- need to have a running order book of INR 2,000 crores. Currently, we are at INR 1,000 crores. So just wanted to understand which are the new segment or pockets which you are targeting and a little bit on the confidence level of to get this in the next 8 or 10 months to get the order book to almost INR 2,000 crores, INR 2,500 crores despite being INR 1,000 crores to INR 1,500 crores of the execution targets as well. So it seems to be a little bit tall figure. So I just wanted to understand which segments are actually new to us, which we are targeting? And what are our thought process or confidence level on the same?

Yes. So Vikash, thanks for the question. So your question is that we have an order book of about INR 1,400 crores. And out of that, about INR 1,100 crores is equipment and INR 300 crores is plus -- how will we execute INR 1,500 crores is that question. So I think the order book position will improve, I think, pretty soon to about what we are saying about the simulator, et cetera, orders. It should go to INR 2,000 crores, and we should be -- you should be able to see that next year, we should be -- if we execute as per the time line, we should hit the target that we are envisaging for the next year. Our thing is how do we -- the order book should -- by the next financial year-end, the order book should again should be around INR 2,500 crores to INR 3,000 crores to actually hit the complete target of INR 4,000 crores. So we'll have to wait and see for that. But as of now, for the next year, things look very bright for us.

Yes. So just let me just slightly rephrase this question. Out of this INR 2,000 crores of execution, what portion do you think would be coming from the simulation, which is your previous business where you are on top? And what portion do you think from the new segment like electronic warfare, drone component because that is where the growth path is for you incrementally. So if you could just highlight that.

So I think we will continue to be a little heavy on simulators as of now, given the order book that we have, we'll have a little heavy on simulator expectation. But again, the growth that may come from anti-drone system will be much, much higher and the way the government is going and the way we have been able to get the orders. Again, a lot of people are claiming that they have got the orders and all that, but the centralized orders into which they are heavy screening goes and actual capabilities are seen, especially the track record of the company is seen. And as our investors know, the Zen simulators were actually tested at an operational crisis level. So given this -- that's why we got an upgrade order, and we also got a new order and also we got an order for Akil. Now this is a combination that's not there at all. So given these things that -- and the actual threat which the nations are facing, including India from drones, this is absolutely -- you are right on track that this will actually grow. But as of now, what we see immediately is that this is the simulators are also very, very large.

Noted, sir. Sir, my second question pertains to our stand-alone versus subsidiary performance. So if I see that our stand-alone performance is obviously because of bond of order was down, while subsidiaries was going up. Just wanted to understand that since subsidiaries margins are less right now, so what is our thought process on the incremental margins coming from subsidiary bringing out the total consolidated margin targets for FY '27, '28?

Yes. So Vikash, most of our subsidiaries, the acquisition that we made for ARI, we are still in the process of integrating it into our operations. So ARI on a stand-alone basis delivers currently around 25% as PAT. Our target is once the complete integration of ARI is done with the operations, it will average closer to what Zen averages in the long term. And so most probably the small dip in the consolidated performance that you are seeing currently would go away once the complete integration with ARI is done.

And by when we are expecting this?

So most probably, you would see that coming in, in FY '27 itself, the impact of the integration with ARI.

Okay. And for this electronic warfare and drone business, given the competition is hitting up there, our long-term assessment is would the margins would match our current or usually logically, it should be on a lower side, right? So how should we look at the margins there once you achieve your targeted level of production and sales?

So I think the anti-drone system margins have been lower historically than simulators because that's a new product we got into and there was competition at that point in time. But as we see that the gap between us and the competition is growing every day as we add more and more features. It started with just a soft kill, but then we added spoofing, now we have added the hard kill. And now as we go ahead, we are adding a lot of other things. Again, as I was saying that there are new products coming out in this regard. So I think -- but very frankly, as you see your inclusion may be right that there will be margin pressure on us. But will we be able to maintain the predicted 25 PAT margin at a consolidated level, I think we feel confident about.

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

Hello. Am I audible?

Yes, please.

Yes. So first of all, congratulations on great set of order wins. So my question is, first is, sir, you mentioned about the emergency procurement orders coming back after the previous ranches. So anything where we are participating or any order pipeline in near term, which could further boost our orders?

So yes, with respect to simulator order, we are expecting some order, Dipen. I think probably -- again, I was thinking by March, but we never know the pace of the government and their compulsions. So based on that, the order book should improve significantly in the next couple of months. And after that, we know that a lot of very large inquiries are coming for the anti-drone systems and even training equipment. So I think, yes, the pipeline is very, very strong.

Sir, you also mentioned about opportunities opening up from the export area. So what kind of contribution can we see, say, starting, say, maybe from FY '27 onwards? I understand that it will be like a marginal start, but what kind of a contribution can we expect from like geographies like U.S. where you have presence and also now EU or Middle East opening up? So what kind of contribution can we expect from your export region?

So we definitely can see a lot of -- we actually can visualize some orders coming from Middle East, Africa and Southeast Asia. And again, I don't want to put a number, but I think it may be anywhere between 20% to 30% of our total turnover. So yes, especially for FY '28, I would say. So those things are really being negotiated. And fortunately, our standing in the international market is very good as a country. And they like companies that have the IP control because, again, they are also worried like many other countries that what backdoor software is there, what kind of -- nobody would believe a company in a country like China to their software. But in our case, we have -- India has that standing that morally, we are not a company -- not a country that let down any of our allies. But again, we have seen that if you don't own the IP, pages can become bombs, nuclear reactors can be compromised. So it's a big challenge. So for the export market, we think it's going to be a very big number, especially in FY '28.

Noted, sir. Sir, now just a small bookkeeping question. Sir, can you help us with the order book split between simulators, antitrone and overall export orders in the order book?

Yes.

So as at 31st January, the total order book is INR 1,427 crores. Out of that, the anti-drone system and simulators are equally distributed 50%, 50%. And between domestic and exports, our domestic -- it's more heavily inclined towards domestic. So domestic is around 93% and the exports will be around 7%.

We'll take our next question from Ashish Soni of the Family Office.

First question, I think initially, you were thinking that it will be INR 5,000 crores order book in the next 2 years. So what changed because it got decreased? What are the factors, if you can just [indiscernible].

So one thing is that the order book, Ashish, that we were expecting a lot of orders to come in the area of simulators and the regular procurement had it gone on and the pace at which it had gone, our order book would have been very, very high. So we probably would have still been able to say that we are on with the target. So what changed is the pace at which government was processing the orders. The orders got delayed in the procurement. And that's why this year got hit. And next year also, we had to readjust the base here to the previous year. So I think that is the reason we had to reduce the thing. But again, as we are being cautious here, we hope that we are wrong in this case, and we do much more than what has been projected.

And second question is on the thing you wanted to set up a manufacturing in U.S. for -- especially to cater to NATO countries. And now with this sort of FDA getting a green signal, would it be better that if we try to export from India? Is it a possibility for at least for the European Union countries? And now with all these tensions across with U.S. and NATO going on. So just can you throw light on the U.S. as well as this part, if at all, you can explore?

So yes, I think, Ashish, you got the thing right. Your intuition is right in the sense that we -- the U.S. thing is not going as fast as possible. We have built a team there, and we are interacting with them and trying to -- we have technologies that they want. They came saw and they said we are very keen on this. So we are complying with their a lot of regulations. They are highly regulated defense economy, so we are getting ourselves registered with the appropriate authorities. But the EU FDA came as a fresh breath of air for us -- and we are actually talking to consultants and all this just declared a couple of weeks back. So we really, really are now looking at the EU as probably the base from which we can operate for the NATO. And -- but again, U.S. market is very huge. I mean it's not a market to s at. So U.S. efforts are going on at this point in time. But if things work out better for us in the EU market, which we will be in the next couple of months, we have a clarity, we would like to set up there. And again, we also are looking at targets in the EU market, which we can acquire and enhance our bouquet of offerings.

My last question, Israel, I think [ Matas ] said that they want to trust only India, U.S. and Germany for their supplies or weapons. So do you think any possibility for us to work with Israel specifically in this area based on the statement, which came recently, I think last week from their Prime Minister?

So we have never worked with Israel. We never did any deal until now, we have never done anything with them. And let us see if there is any opportunity that presents us. It's not that we don't like to deal with Israel, but we are a company that is focused on creating our IP. I think Israeli companies like people who want to do manufacturing, but are not technically capable, but we are not -- we may not fit their idea of an ideal partner because we want to really make India Atmanirbar in the proper sense, not just manufacturing facility, but creating the IP, owning the IP and working on creating next generation of [indiscernible].

We have Amit Dixit of Goldman Sachs with this question.

A couple of questions from my side. A few quarters back, we introduced 3 or 4 products like [ Barber, Praast, ] et cetera. So just wanted to get an idea because of the focus of the government on AI-driven platforms, and there are a few players who are thinking of putting up such facilities, and we have a head start. So first of all, if you could elaborate on the opportunity that you see overall in this space? And how far we have progressed on the development of these products? That is the first question.

These products are managed by our associate company, AI T. They have a Trio, Abhishek, Kumar and Tushar, who manage the company. And very frankly, we think what they have created absolutely marvelous. And to your question, where are they -- when I said that we got the hard kill order for included anti-drone system shooting down the drones, it is their product that was part of the solution. So we have started selling their products. And we think that they are also on the verge of getting a lot of orders. So by the next FY '27, you will see they will make a meaningful contribution to our overall revenues and profits.

Okay. That's nice to know because at that time, it was supposed to be a next vertical for us in terms of earnings apart from anti-drone and simulator. The second question is essentially on European FDA, and you mentioned in your prepared remarks that you see opportunities over there. So is it possible at this stage? I know it's still very early, but if you can highlight some of the platform stroke products that we would be kind of targeting in that region because some of the companies, particularly in Radar Electronics who have their own IP, they have got a head start over there. So just wanted to understand from your perspective because you are also an IP-driven company. So what kind of opportunities you essentially see over there? And I'm talking about medium term here, I mean, not something quarterly basis or something like that.

So medium term, when you are talking about, I'm assuming at least 2 to 3 years is what would be qualifying there. I think, yes, we are -- again, people -- the Europeans also love the fact that IP is owned, they can -- the technology is completely owned by India, and they want to deal with us. And they -- so we think that the technologies that are anti-drone system and simulators, which are our mainstay, both have a huge market in Europe. And one thing very interesting is that the Europe at present in the -- is perceiving Russia as the biggest threat. So when they want to really prepare with Europe versus Russia kind of situation, we have -- India owns Russian equipment and the simulators that we have are mostly Russian equipment simulator. So they actually can do a full-fledged war gaming with our simulators and their simulator. And again, we can make simulators for their -- because the engines underlying them are -- have the same physics, different tanks, but we can moderate them, change, modify them. So now if they want to try out how will our simulation work against Russian equipment, we are there. We are exactly the exact fit for them for the future needs. So I think in addition to the anti-drone system, even simulator market is going to be very huge. And we are going -- coming up with offers that they may like where we don't mind doing a service-based offering also there. So I think, yes, to your question, they would love to have an IP-owned solution there rather than somebody just pushing someone else's solution.

We'll take our next question from Jatin Jadhav of Susara Capital.

Am I audible now?

Yes, please.

Most of my questions have been answered. But I still have a few out of curiosity. Can you describe in an unclassified or a nontechnical term, how Zen Technologies counter US suite is designed to detect, track and classify threats under the presence of, let's say, an enemy electronic warfare situation. I'm basically highlighting the Venezuela situation, wherein the enemy was doing electronic warfare on our system. So how does Zen plan to counter that or our counter US system?

So the -- what we understand is that there was a huge and shock kind of a thing, which was sent and they not only neutralize the systems, but it also neutralize the people, the bleeding ears, et cetera. So if such a thing is done -- was done to us, probably most of the electronics in India would also have been frozen. But now that we are aware of it, we are building capabilities that these kind of things do not damage us. And we are also -- I think in India, we are also developing similar products, which if they -- if we are -- we can also retaliate with equal or more force disabling their situation. But again, what we have been doing is we started with the basic range of the commercial drones neutralization. And -- but most of the companies are stuck even now. They're still utilizing only commercial drones frequencies. But Zen has gone beyond that. We started with wide band. We said the commercial will not do. noncommercial also need to be jammed. So we started between 40 and 6 gigahertz. Today, we have gone from 100 or even 70 megahertz all the way up to 12 and 18 gigahertz. So it's almost becoming band agnostic. We are not caring where it is coming from, but we will be able to jam them. So where capabilities are being built. And I think if [ a visa like a ] situation happens, we should come out on tops if it were to happen now.

My next question is, how does the system distinguish between genuine and deceptive inputs as false radar tracks, RF signature? Do we employ multiple sensor fusion and then basically figure out where the real target is? Or how do we do it?

So the thing is because, again, whether it's an urban area, there is a lot of noise, there are a lot of false alarms. So -- but we have, over a period of time, done a lot of AI-based programming, and we are able to suppress false alarms and the actual alarms are being shown. So the drone threats, if they are fake, they are completely ignored. And so that person -- because otherwise, if too many false alarms are there, they kind of become in to that and we stop noticing them. So what -- the only way to do it is actually based on the operational feedback, keep improving the algorithm so that the false alarms are suppressed and genuine the signal is actually recognized and communicated to the operator.

Got it. Got it. Just one small question. Since we have a very good capability of developing virtual environments for various kind of products, can we somehow use that capability to generate an environment which is infused with a lot of electronic warfare zones probably for simulating our own drones, our own missiles, how they act in that particular terrain or in that situation. Is it possible?

Yes, yes. So the complete -- it's called a war gaming kind of environment where people are fighting war with each other, and typically, it may be just map based, but most of the time, some what we are enabled is we are saying don't just play on the map, but actually have simulated tanks being moved, artificial AI tanks being moved with actual tanks, integrated them with the actual tanks. So yes, this is absolutely possible, and this is a solution. The combat training node is a step in that direction that we have offered. And that's absolutely the #1 in the world in terms of what we are offering. And that's going to scale up now. And most of the countries are going to ask this question that is your virtual simulator integrated with live simulation and war gaming simulation. So yes, we are absolutely there, and that is what we think will drive our future growth.

We have Mehul Panjwani of 40 Cents with his question.

It's really heartening to see that is going to be the biggest beneficiary, quite a good beneficiary from the EU deal. So my question is that since we are going to work with the EU closely, would that impact our U.S. opportunities?

No, not at all, Mehul. I think as somebody else pointed out, would we be operating from -- for NATO from U.S. or from EU, we are very agnostic. So with this FDA coming through, it has completely changed absolutely new opportunity for us. And I think we are being more openly embraced by the EU as a country than U.S. at this point in time. So there's no -- in fact, this additional incremental opportunity that has come, the overlap may be executed from either U.S. or from EU, but it's absolutely a positive development.

Okay, sir. And sir, my second question is that in the last call -- last conference call, we had mentioned that there would be orders of INR 650 crores, which will definitely come in H2. And in our opening remarks and various responses to the questions, I understand that we are talking about orders of about 1,200 crores. So maybe I'm missing something here. So if you can just clarify. I think [ we have got ] [indiscernible].

So we have bought -- yes. No, we have got the orders, Mehul, I think more than -- as promised or a little more than what we have promised we have got. Only order somebody as someone raised that what happened to your regular order of a simulator. That was the only thing that did not come through. But as I was saying that we should be getting by that. But otherwise, whatever we have said in earlier calls have already been delivered almost INR 600-plus crores of -- recently, we got this anti-drone system upgrade, new orders, hard kill. And then we also got some simulator -- combat training node as order, then we also got tank simulators again as an order. So I think we have -- I think -- I mean, if you go through the order releases that we have done, and we were -- now we are at INR 1,400 crores. The total order book position is INR 1,427 crores. And so I think that's a reasonable buildup. I'm not something to really celebrate over. But I think from what we were 3 months back to now, it's a very good buildup.

Right, sir. And sir, how long will it take to execute these orders worth INR 1,400 crores?

So yes. So I think what we have seen that out of that equipment is about INR 1,100 crores. So most of the equipment orders should be executed in the next 18 months.

Okay. So our -- when will our numbers of the top line start getting impacted from which quarter onwards?

No, no. I'll not say, but next year will be definitely much, much better than I think we should record the highest turnover in company's history next year. I think it will be a very big year.

We'll take our next question from Brian Botta, who is an individual investor.

Congrats on a great set of numbers. My first question is, how big are the orders in size expected from exports? Like what are the size that we are looking for? Like how big are they going to be compared to Indian orders? And the second question is, what happened with the Orlando Export simulators? Like did we get any -- like did they show any interest or anything from our simulators?

So what was your first question? Your first question was a little bit export orders? What was it?

Yes. I was -- my question is like what are the size of those orders like that we are expecting? Like we got like INR 300 crores and INR 400 crore order from Indian like MOD. So what sizes are there from exports?

Yes. Okay. So the first question is that we have got all kind of orders. We have got INR 320 crores. So typically, in the case of Indian orders that we have got, INR 300 crores is typically the limit within which the decisions can be done at a more reasonable level as the order size increases, goes to INR 1,000 crores, INR 2,000 crores, the approval levels keep going up and they are longer cycles. So that's why during the emergency procurement, any INR 300 crores less than order, all the typical size were about INR 300 crores or less. So we got them. But export, there is no such a constraint. I mean, it could be INR 400 crores, INR 500 crores, INR 1,000 crores. But the kind of orders that we are pursuing are in the range from INR 100 crores to INR 800 crores. So we could get any of those orders at that point in time. And with respect to the Orlando Expo, this is called the International Exhibition for simulation and training. It's ISC. We call it ISEC for short. It's based in Orlando and comes the weekend after Thanksgiving, typically the last week of November or first week of December. So we went there. We saw a lot of military -- American military people coming and they were very excited, especially with our Deal simulator, they said this is something that they really want. So we have got a lot of inquiries from there. And we have -- as you know, ARI already has a huge network even in South America. So a lot of people even from South America had come and they've seen this simulator that we have. So I think we expect orders even from the -- thanks to our presence there. But again, it will be non-U.S. orders that we are expecting faster -- the U.S. orders, again, as I said, there are a lot of regulatory registrations, et cetera, process that we need to do before we actually become eligible for the orders. I think we may get EU orders faster than U.S. orders, but let us wait and see how the EU plays out.

Ladies and gentlemen, that was the last question for today. I now hand over the call to Ashok sir for his closing remarks. Over to you, sir.

Thank you, [ Salil. ] Hello, fellow shareholders and investors. Actually, this year, as we have been saying, it's going to be pretty muted. And it's maybe 20% to 25% less than the next year, but we hope that we will be more than compensating it during the next year. And -- but there have been very positive developments. Government has been giving our emergency orders. They have been giving new product orders like for the combat training node that we were talking about that has been going almost for a decade, but now they really want it. And what we think is with the Indian government taking there will be huge demand overseas also because that becomes a reference site for us. And Indian government is very, very open to allied countries to show that. So we think that combat training node is a big, big win for us. And of course, anti-drone system, the R&D is going very, very hard. We are trying to meet the operational needs. Again, typically, we say that we are not building for an RFP or we are not worried about the RFP. We actually want India to win wars. So what is the product that we need to have to handle the actual threat. So that way, anti-drone systems are also working very, very in the right direction. Again, the EU FTA was a very big deal. And I think we should be getting a lot of benefit out of it. I'm very excited, and I'm going to Europe. And I think in the next earnings call, there will be something -- something interesting about EU. And one thing I want to also refer is that the simulators that Zen has actually saves thousands of crores of rupees. And it is very environmentally friendly in the sense that you don't have to fire actual ammunition, you don't have to take the tanks on to the -- for the actual exercise, but you get more feedback, more competent skill building happening when you use the simulators. And what has happened and because of this, we also got a very interesting thing for the investors would be we got an ESG score of 67. I mean, last year, I think we were 41. We have suddenly gone to 67. So this would -- this is a Dow Jones Sustainability Index score. I think this is a big plus for us, and that will get some investors in the sustainability sector onto into Zen. But again, this is just the beginning. The Company Secretary Sah had done this job single-handedly. So we expect to really, really aim at a very, very high score in this so that people who are into sustainability can actually see a rare intersection between defense companies doing sustainability work. So ESG is one thing that we are very excited about. And again, very briefly, I want to touch upon the budget. The budget was INR 7.85 lakh crores, and I think it was a huge budget. And the commitment to spend 75% of it on domestic procurement was very good. But again, our always thing is will it be Indian labeled foreign goods or it will be actually designed, developed and made in India stuff. So this is where government can actually play by setting an example that pretenders and fakers will not get the orders, the actual IP developers will get the orders. So that would be one very big thing if it happens. Otherwise, -- it is strategic dependence with the Indian label will continue, and we'll never get strategic autonomy. That is one thing that will be missing. So our hope is that money actually flows back to complete the design rather than just get somebody else's technology and assembled in India. So these were the main points that I had in mind. And one final thing was that there is a research development and innovation fund that the government of India has floated for INR 1 lakh crores. Out of that, they want to spend INR 20,000 crores every year on to deep tech and defense is one of the areas that the RBI fund will be using. So this is something -- some area where companies like Zen will be taking help from the government of India to actually do long term. I mean the fund the government is talking about is actually a 50-year fund, but they will be giving to the Indian companies, maybe 10 to 12 years kind of thing. This actually companies that have -- that actually do R&D have a long-term scope and are willing to put in their money. So the government is willing to -- that fund is willing to put in 50%. We put in 50% or we raise it from somewhere and put in 50%. We can really go for very, very important technologies for years -- for a 5-year, 7-year, even 10-year development. And again, how should we approach this is very simple. What are the technologies 5 or 7 years from now, we think will be very important in war and then trying to identify the Pareto within them and then double down on the Pareto. So that's the approach that Zen will be doing. And I think very frankly, again, every time I come, I say one thing, I've never been more excited, and I want to repeat that. I've never been more excited. And I think India version 2 is going to happen in a rapid way in the coming couple of years. Thank you so much for your time.

Thank you. On behalf of Zen Technologies Limited, that concludes today's conference call. Thank you for joining us, and you may now click on the Leave icon to exit the meeting. Thank you all for your participation.