Astra Micro Wave Products Ltd

NSE:ASTRAMICRO

Earnings Call Transcript 2024-Q4

[Operator]

Ladies and gentlemen, good day, and welcome to Astra Microwave Products Limited Q4 FY '24 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinion and expectation 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 is being recorded. I now hand the conference over to Mr. S.G. Reddy, Managing Director. Thank you, and over to you, sir.

[S. Reddy, executive]

Thank you, and good evening, everyone. A warm welcome to all the participants to the post-result earnings call of our company. I am with my colleagues, Mr. M.V. Reddy, and Mr. Atim Kabra, and SGA, our Investor Relations operators. The result and investor's presentation for Q4 and FY '24 are uploaded on our company website and stock exchanges. I hope you had a chance to look at it.

I'm delighted to share with you that the FY '24 has been an excellent year for our company as we have grown exponentially multiple in parameters including financial performance, developing capabilities and improving quality of our product mix. We have registered our highest ever financial performance across all metrics, revenue, EBITDA [indiscernible]. We have also witnessed good margin expansion driven by improvement in the product mix. This performance is in line with our expectations and guidance.

Recently, we also entered into a cooperative agreement with [ Teledyne E2v Hirel ] in order to provide semi conductor services to support the Aerospace, Defense and [ reliable ] electronics market. This agreement will pave the way for numerous new possibilities for us in the future. Coming to our order book as on 31st March 2024 at a stand-alone level, we have about INR 1,956 crores of orders in hand, and our order win continues to be healthy. We have booked about INR 472 orders in Q4, out of which close to INR 446 crores of orders are from defense.

Within the defense segment, a good number of orders are booked in radars, EW segment, followed by metrology and hydrology and the little bit from exports. Subsystems for [ RAD ] radar and the [indiscernible] receivers building significant products for which above different products are received. Overall, our order book CapEx of 88% of defense markets, which are largely BTS, which command higher margins and 12% of exports is largely suppressed to Indian UOUs, which carry reasonably good margin, unlike our offset basic export ordearnings release.

In terms of various parameters, which are only shared through website and all, we have recorded a good improvement in percentage terms across all parameters. I request all of you to go through the website to know more details about that.

R&D is our corner stone of our growth. And this year, we have spent close to about INR 38 crores in R&D which was focused mainly on radar systems, critical subsystems for radar, seekers, SSPA and EW subsystems. As we are aware, Astra incorporated a subsidiary company to undertake a sales-related business. This company has started recruiting personal and setting up basic infrastructure for tablet integration at its Bangalore facility. The subject is to get qualified for satellite integration and launch -- launching business. And -- in this endeavor, it is preparing itself to launch its own basic satellite in the next 2 to 3 years. .

It will be making use of [ transfer of ] technology, which was taken under ToT. For JV company, ARC, it was a breakout year, which we have been waiting for a long time, and its bottom line has improved in a big way. For the last year, it is bagging closed about INR 386 crores of orders, and has a healthy order book of about INR 456 crores at end of the year. There is potential to bag big orders in the coming years to the extent of INR 900 crores, and will record at least about 10% to 15% year-on-year growth in the next few years with a PBT of around 10% to 15%.

As you are aware, AESA owns 50% of this JV company and has earned about INR 12 crores of profit with share from the JV company for the year gone by. The ARC ManTech radio, which is on the development at the [ JVC and the MCMC ] basis is due for final technical trials in the next couple of months on the company's gearing up for same.

And lastly, for the coming years, we are targeting order book in the range of INR 1,200 crores to INR 1,300 crores and the top line in the range of about INR 1,000 crores to [indiscernible] crores while maintaining the existing profit margins. We'll continue to grow our capabilities strategically and achieve our targets step by step. Major business updates, potential business opportunities and the strategies to be followed to achieve the same will be shared by my colleagues.

Now I will hand over to Mr. M.V. Reddy, then later on to Mr. Atim Kabra. Thank you.

[Maram Reddy, executive]

Good evening, everyone. As Mr. S.G.A has mentioned, last quarter, performance was remarkably well and cost or the guidance given in both order book as well as sales. The overall performance in year FY '24 was a part with big volume given in the beginning of the year. We have booked INR 472 crores in Q4, which constitutes almost 95% in the different sectors of the domestic market. We have had INR 350 crores from the Radar segment, which is our main focus area for the last few years, INR [ 842 ] crores from [ AW ] and INR 18 crores from the Defense Communication segment. We also booked INR 26 crores from the Space and Metallurgy sector. In the last quarter, we have booked INR 27 crores development orders from DRDO Labs and [ rest all ] from the production in the nature. Overall, we have booked INR 1,325 crores in FY '24, resulting stand-alone order book of INR 1,956 crores brought out for the financial year FY '25.

Ladies and gentlemen, it gives me immense pleasure to inform you our [ debt ] with few orders which will be booked in April '24, that is in the current financial year, we have reached a landmark of INR 2,000 crore order book for the first time, and we have a bright visibility to book INR 1,200 crores to INR 1,300 crores for FY '25. [ Majority of them are the ] production in nature from the domestic segment.

In the first quarter itself, we have a plan to book INR 300 crores. With regard to sales, we have tougher figures mentioned in the last quarter earnings call, and we could successfully execute development contracts, which we missed out in Q3.

Going forward, we have geared up to reach INR 1,000 crores [indiscernible], milestone FY '25. First quarter, we have planned to book sales of INR 180 crore. With strong R&D capabilities built over 3 decades, we have delivered products with cutting-edge technology and more are in pipeline. To name a few, we are the first company to deliver AAAU for Uttam, [indiscernible], high-frequency bands, digital active [indiscernible] subsystems, digital multichannel [indiscernible] for [ main applications ], et cetera. We have also successfully executed [indiscernible] of , which is one of the major orders which we booked last 3,4 years. And also DWS in various frequency band in '24.

And other development of critical new technologies like photonics radar subsystems and subsystems for submarine communication and systems like APS radar are in advantage of completion. As I said and S.G.A has mentioned, our JV company ARC demonstrated splendid performance in FY '24. I'll not repeat the figures, what we did in the FY '24, but even FY '25 looks more promising. We have INR 900 core fresh orders, which are in pipeline. And hopefully, these are contracts which materialize in the next 2 quarters of FY '25.

Now in terms of sales, we have a plan to book sales of $40 million, which is about INR 330 crores in FY '25. Going forward, we have a very good visibility to maintain sustainable growth with the opportunities emerging in the demain of our operation. With this brief note, now I hand over to Mr. Atim Kabra to share is thoughts. We would be happy to answer your questions. Thank you.

[Atim Kabra, executive]

Good evening, and thanks, everyone, for the opportunity to speak to you again, and convey and share with you our vision at Astra. But before I start, I wish to thank our entire team under the able guidance of S.G. Reddy and M.V. Reddy for their hard work. And yes, we are indeed excited by this set of opportunities that we see and excited to partner with the Defense Labs and the Defense PSUs under whose tutelage, we have blossomed and have reached the stage where we are developing new exciting products and have emerged with systems-level entity with systems integration capabilities.

And we just spoke about a few of our products which we have developed in-house, and they form the cornerstone around which we are delivering our margins and our growth story. Number are numbers. But I think what is being conveyed across is that the opportunity set is huge and companies like Astra and it's not limited to us, but the defense sector itself, are fairly well placed to capitalize on this extremely large opportunity.

I read a report recently, it speaks about the share of defense capital outlay is expected to increase to 37% of the total defense budget in FY '30 as compared to 26% in FY '24. And that is a cumulative capital outlay of USD 186 billion over FY '24 to '30. I think this is a large opportunity space that we need to attack and are operating in.

So suffice to say that over the next 2 years, based on the orders in hand and the visibility thereof. We are fairly confident of delivering CAGR growth in sales of around 18% to 22%. With a better CAGR growth in our profitability numbers as higher sales slow down disproportionately to the bottom line in case of limited increase in fixed cost base. So I'm fairly confident that S.G and M.V will meet these forecasts quite handily. But I want to talk to you more about our broader vision which will position us firmly on a path towards sustainable and predictable growth over the next decade.

And Astra will become a much, much larger entity than what it is today. So what we have tried to do is put a framework around our various growth initiatives, some of which I have touched upon in my earlier conversations with you and which encapsulate our various efforts which are targeted towards building a much larger and much more capable Astra. And the framework also puts our various initiatives in a structured format.

We call this our LEAP strategy, L-E-A-P. Astra's LEAP strategy. To reiterate, the LEAP framework is in addition to our 20% on an average targeted organic growth strategy. This is in addition to this. It seeks to capitalize on the significant IP, which has been created in the company over the last 3 decades. It acknowledges the tremendous contribution by various Defense Labs and Defense PSUs in helping us help create and imbibe various technologies, and it seeks to build on our vision to create high-tech products, which are made in India, but for a global market not only for the domestic market.

We seek to capitalize on the reusable building blocks and the library of products and technologies, which have been created over time in-house. The framework if I may say, seeks to capitalize on our sustained investment in R&D over decades and products? And Astra if you see is in the IT enhancement and IT encashment business with tailwinds in our favor, we have grappled with putting together various pieces of growth for a sustainable growth path. And as and when these initiatives bear fruits, they will add to our organic growth, leading to enhanced sales and margins.

So in the LEAP framework, L stands for lean and learn, lean and learn implies we are looking at Astra as a collaborative platform. We collaborate with Defense Labs, with Defense PSUs, start-ups, early-stage companies and various academic institutions to increase our IP base in the shortest possible time, while adding to our IP-driven product capabilities, acknowledging the fact that IP is built across companies, institutions, labs, educational institutions. And we seek to synthesize the various elements of these IPs and put them together for more relevant products in the shortest period of time.

It is tied around our capabilities to deliver -- our proven capabilities to deliver. And our technological base, which can invite the new tech, provide them a framework to create newer sales products, newer sales and newer sales channels. E in the LEAP framework denotes our commitment to adjacencies and expansion, E is expansion, expansion into areas which can be significant in themselves, and where the future lies in our assessment and where our current set of capabilities can be deployed to make a meaningful impact going forward.

Because Astra you know, is already a significant player in the space sector, and we see immense opportunities for expansion in the space sector. We will be one of the major companies, major players out there ranging from space-grade components, subsystems to designing satellites, to satellite bus as well as payloads. I think we will be able to deliver our first satellite -- sizable size satellite maybe in the next 12 to 15 months. This activity is being co-ordinated by both our Banglore as well as Hyderabad facilities. And a lot of folks with significant experience have been onboarded for this initiative.

Similarly, we have spoken about our MMIC capabilities being one of our core sense. And after looking around, we have zeroed in on MMIC expansion. S.G. Reddy just spoke to you about the [ Teledyne ] to [indiscernible] collaboration, wherein we are seeking to provide semiconductor services, which will support various domains like aerospace, defense and high-reliability electronics markets over the next few years. As a collaboration unfolds, it will provide us a capability to market its product globally while developing its MMIC portfolio. Similar such initiatives are being thought about as we speak.

Another pillar of our LEAP strategy A, revolves around accretiveness, where we have a clear focus on ROE enhancement and sales, profitability and margin enhancement. You have already seen a very steady uptick in our return on equity. And this is something which is one of the key parameters which we focus on. Working capital efficiency accretiveness is something on which S.G. Reddy spends a lot of its time on as ours is a receivables heavy business. We are well aware that the holy grail lies in free cash flow generation significantly, and we are working towards that.

Lastly, the P in the LEAP strategy signifies our vision of delivering high-tech products to the market, which blend our core capabilities with a systems integration approach. These products will be IP-driven and provide solutions to address various market needs. I'm glad to report that we have recently bagged order for Precision Approach Radars also. And we are super excited by our anti-drone capability set, which is being introduced in our product format. We are working on multiple other products, which will be addressed towards the global market, and I refer to a few of them in our earlier conversations.

So as mentioned earlier, these initiatives are centered around the framework, which will add about 20% odd average organic growth rate. And we put them separately as the framework spells the vision that we stand for, for an overarching umbrella that we operate. Lastly, I need to emphasize that we are constantly reevaluating and reassessing our various initiatives and trying propel them in a direction, which make us cost competitive and gear towards timely delivery of products.

We will not hesitate to add projects or products or put them on a back bench, if they are not delivering or where we'll not be cost competitive with finished products. On a positive note, as shareholders of Astra, we not only have ownership interest in Astra, but also another profitable company with a marquee partner, namely ARC where Astra owns 50% equity interest, and it's sitting on a nice significant order book, which M.V. Reddy alluded to.

It's profitable and has the product range, which has the potential to even hopefully, over shadow Astra over a period of time. So we will have ownership interest in Astra and owner interest in ARC, combined, it's a well interesting combination. We are very, very thankful for our JV partners for reposing space enough.

Our shareholders are already seeing a positive impact on the consolidated bottom line through this initiative. We'll touch upon the order books which S.G has already mentioned earlier. So a lot to do and a lot of exploratory initiatives are underway in multiple areas. Ranging from AI, machine learning, GPS capability enhancements, et cetera, to better our products and meet the requirements clearly brought out between the conflict -- because of the conflicts which are raising around the world.

I can go on, but I have already taken a lot of your time. And if you have patience, let's address them in the Q&A session to the best of our abilities. Thank you.

[Operator]

[Operator Instructions] First question is from the line of Amit Dixit from ICICI Securities.

[Amit Dixit, analyst]

I have a couple of questions. The first one is actually around working capital. So this year, if you see there is a significant buildup of receivables as well as inventory. So is it a one-off factor? Or is it due to some development work that we are taking for? And what will be the guidance for working capital days going ahead?

[S. Reddy, executive]

Yes, Amit, complete your questions. You said a couple of questions.

[Amit Dixit, analyst]

Yes. The second question is on this Teledyne collaboration. Is it possible to provide some more details at this stage? While you have mentioned it will provide semiconductor services and I hope it will adopt into MMIC. But for which platform specifically and how much incremental revenue and strong profitability it can generate?

[S. Reddy, executive]

Okay. I'll take the first question. Probably second question, Mr. Atim can take it. Regarding the receivables which are shooting up, it is largely because of the [ pounching ] of the sales towards end of the year. Q4 We did close to about INR 270 crores of business are in excess of that, I think INR 300 crores. Yes.

So the entire sale of Q4, essentially will be sitting in the balance sheet, which is close to about INR 354 crores. That is one of the big factors for the higher receivables appear in the balance sheet. Working capital days, as you know very well, we keep discussing about this almost every day. We are trying our best. We would like to bring it down to [ 40 ] days kind of things. But unfortunately, as of today, it is slightly on a higher side.

In addition to that, as the nature of industries is such that the company will be forced to maintain inventories for the project duration cycle and not only because of a niche nature of the semiconductor devices, which are required and also because of the project duration itself, which runs close to about 2 to 3 years kind of thing. So these are the cumulative factors, which are making us to have higher inventories and the receivables I already explained to you why it is that.

[Atim Kabra, executive]

Yes. I'll take the Teledyne part. So Amit, Teledyne is more a testament to our MMIC capabilities, which you are very well aware, is one of the cornerstone pillars around which Astra has developed it's capability set. We started our MMIC initiative in 2005, 2006 and various developments and abilities which we have generated through that, have brought us on to a very strong platform.

We are actually joined by a fairly tight confidentiality agreement. So we will not be able to talk specifics about the Teledyne deal. But I can tell you that from our MMIC division's perspective, the whole idea of entering into such a collaboration is to scale up our business in a meaningful manner over the next 2 to 3 years, so that it moves the needle for everyone, for us also and for Teledyne also. I don't think a large company such as Teledyne would enter into a formal agreement unless they can see that there is potential to move the medium dramatically.

We are undertaking specific initiatives to get this going, which have already started. But I think we would like to let the numbers speak to themselves over a period of time on how the collaboration pans out. So it's going to be -- if it's -- I hope that it would be a really long-term collaboration, which will put us on a global map.

[Amit Dixit, analyst]

Okay. That is helpful. One more last question, if I can squeeze one. Is that we have kept our guidance for cumulative revenue at INR 7,000-odd crores not till FY '28 impact despite a good performance this year and the next year guidance is also quite good. And we expect growth in revenue. And of course, with [indiscernible] and beyond INR [ 1,440 cores, we will have also ] coming in. So don't you think the INR 7,000 crores is a tad conservative at this stage?

[Atim Kabra, executive]

But will we rather not be conservative. Well you know us, we like to be conservative. If I -- actually, I can put it this way, that the opportunity set is really huge, right? But we are comfortable giving you guidance for a year or 2 as the story unfolds, right? In the long term, we have already mentioned the multiple initiatives which we are working on, which hopefully will lead to an expansion in the [ TAM itself and time ] everything should increase significantly. But as and when visibility comes in very clearly, we will love to increase the numbers. Our idea is what we tell you, we'd like to achieve that.

[Operator]

[Operator Instructions] Next question is from the line of Bhavik Shah from MK Ventures.

[Bhavik Shah, analyst]

So first, can you just reiterate the guidance which you gave because there were some disturbance. What kind -- what is the revenue PBT order book and order inflow guidance we are seeing for FY '25?

[S. Reddy, executive]

No, you mean you miss it our interact everything.

[Bhavik Shah, analyst]

I was there. Did I hear NR 1,000 to INR 1,100 crores revenue? I'm just curious, there was some disturbance.

[S. Reddy, executive]

So for the order book, our guidance is INR 1,200 crores, INR 1,300 crores. That is a stand-alone order book.

[Bhavik Shah, analyst]

In terms of inflow guidance? Is the INR 1,200 crores, INR 1,300 crores is the inflow guidance? It's the order inflow expecting in FY '25?

[S. Reddy, executive]

Yes. Yes. Order inflow. In terms of the revenue guidance, it is INR 1,000 crores to INR 1,100 crores.

[Bhavik Shah, analyst]

And so in terms of PBT margin?

[S. Reddy, executive]

We should be able to maintain the current PBT levels with a slight on the positive side.

[Bhavik Shah, analyst]

Okay. So current PBT level. When we say we are seeing about 18% to 22% CAGR growth in revenue over next years. So sir, if I calculate like my revenue guidance is on -- it should be around INR 1,100 crores only. Like are we seeing any one-offs happening so that we are giving the INR 1,000 crores range also?

[Maram Reddy, executive]

Sometimes numbers don't turn out the -- your -- the other products -- product delivery gets delayed, client picks up the products a little bit later. So we want to make sure that there is enough flexibility in the system. But as I said, 18% to 22%, growth rate is the targeted number.

[Bhavik Shah, analyst]

Okay, Okay. Astra and [ ARC ] JV was supposed to turn positive by this year, if I recall that. Actually in the cash flow statement, I can see a INR 12 crore loss? So what is that? So it's the operating loss or is the one-off loss ?

[Maram Reddy, executive]

Again, Bhavesh, I didn't get your question.

[Bhavik Shah, analyst]

Astra and [ ARC ] JV. In the tax flow statement, we can see a INR 12 crore share of loss from there. Is it a normal operational loss or have we written off something, so that's a one-off loss?

[Maram Reddy, executive]

INR 12 crore loss?

[Bhavik Shah, analyst]

In the cash flow statement, you can see share from -- loss from joint ventures.

[S. Reddy, executive]

No it is share of profit from the joint venture, we got INR 12 crores of share of profit from the joint venture.

[Bhavik Shah, analyst]

Profit, and stronger to expend from this -- so the JV has turned profitable, right?

[Maram Reddy, executive]

It is a share of profit.

[Bhavik Shah, analyst]

Yes, so it's sort of a one-off, right? It's profitable because Aelius turned profitable right?

[Atim Kabra, executive]

Yes, please.

[Maram Reddy, executive]

It turn profitable. It has delivered a pretax profit of about close to INR 30 crores and the post-tax profit of about INR 24 crores.

[Bhavik Shah, analyst]

Okay, sir. Okay. We did see some borrowings have shot up during the long-term and short-term borrowing, and short-term during the March balance sheet. Similar side, we can see CapEx, some kind sit there in the balance sheet. But can you throw some light what CapEx are we doing in that CapEx and for that CapEx how do we think can grow?

[S. Reddy, executive]

The CapEx, which is a normal testing equipment and other things which are required to support our existing activities interest. Basically about close to about INR 40 crores is the CapEx incurred by the company in terms of these test equipments. Short-term borrowings are largely for the working capital instead of [ awarding ] our cash credit, we go for a working demand loan, which is gratified as the short-term borrowing in the balance sheet.

[Maram Reddy, executive]

Our term loan just to clarify is less than INR 15 crores, if I'm not wrong.

[S. Reddy, executive]

Our long-term loan is about INR 15 crores.

[Operator]

Next question is from the line of Ketan Gandhi from Gandhi Securities.

[Ketan Gandhi, analyst]

I think you achieved what you said in the heartly congratulation. I have just one question on upgrade of Sukhoi radar supposed to be [ again ] based. Recently, some article says they have floated a tender for EW for the Sukhoi. Are we taking any role there? And if yes, can you sure, I mean, share some update on that?

[Maram Reddy, executive]

Ketan, the first thing is on the radar front, the DRDO is to come out with the final configuration of the radar specific upgrade. And as far as EW, you are right. There were the [indiscernible] being floated by DRDO for [indiscernible]. And we are examining that and we will take a decision very soon as we just floated only a couple of days back.

[Ketan Gandhi, analyst]

So do you find any competition there? I mean is there any player other than us for EW.

[Maram Reddy, executive]

Yes, no. I mean there are a few companies who are working in the EW. So obviously, we will have competition in that.

[Ketan Gandhi, analyst]

Okay. And any feeler from the DRDO or government side regarding gain with Radar for Sukhoi, whether they are going for it or it will take some time?

[Maram Reddy, executive]

No, they are discussing, I think, as I said, final configuration is -- had to be decided. Once we have finalized that, I think probably we will complete information about that.

[Operator]

Next question is from the line of Col Sarjeet Yadav from Mount Intra Finance Private Limited.

[Col Sarjeet Yadav, analyst]

I'm audible?

[Maram Reddy, executive]

Yes, please.

[Col Sarjeet Yadav, analyst]

Congratulations on a very good set of numbers, sir. Sir, I just want to know in the guidance you have given. Can you just give us some color on what are the products we are looking for [indiscernible] further in your INR 200 crores to [ INR 400 crores ] order books we are expecting?

[Maram Reddy, executive]

In terms of order book, we have many production orders in Radar segment, the [indiscernible] a major contract we have received in last year. But some leftover contracts we just received only last month. And then we are also expecting orders for [indiscernible]. That is the advanced production of controlled acquisition product for Airforce, this is, again, we are expecting [indiscernible]. Then we have the program, DR-118, in which we have -- we took L1 in that EW receiver. So there that also we are expecting.

And Mr. Atim had mentioned, we have just received one contract for the application of [indiscernible]. Apart from that, we are expecting a few orders from production nature. That is a [ CRMM ] that is AWC Mack I and also DWS from IMD and other users. And we have orders, which are in pipeline for EW production from [indiscernible] that is for the programs called Lion Shakti and [indiscernible]. Yes, these are a few orders which we are in -- they are in the pipeline. And there are many other tenders, which, in fact, are coming out, which we'll be competing with others. Whatever the programs I mentioned that these are all actually with the single tender and one or two are which we won in mix tender. In all this, I think we are confident of booking orders of close to INR 1,200 crores to INR 1,300 crores.

[Col Sarjeet Yadav, analyst]

Okay. Sir, one more question. In Space segment, I saw revenue of about INR 15 crores. So can you imagine what kind of product are you supplying in the space segment?

[S. Reddy, executive]

Yes. We have orders from ISRO for subsystems of Radar Imaging Satellite. Some of them have been supplied last year and left over, we are going to complete it in the next 2 quarters.

[Operator]

[Operator Instructions] Next question is from the line of [ Mina Bansal ], who is an individual investor.

[Unknown Shareholder]

I have one question that your raw material cost in Q3 was 53.48%. Retail now increased to 62.6%. So any particular reason for that. And if I go back to September quarter and December quarter there, it was 57% and 53%.

[S. Reddy, executive]

So the raw material cost for this quarter is about..

[Unknown Shareholder]

62.60%.

[S. Reddy, executive]

I cannot get into the specifics. But in general, the raw material consumption depending on the product mix. It is quite possible that some of the products that we have executed in Q4 has higher raw material costs, and that is the only reason why it would have gone up. Beyond that, there is no specific reason.

[Operator]

Next question is from the line of [ Yuk Modi ] from AB Capital.

[Unknown Analyst]

My question was on the export side. Can you please elaborate on what are we doing on export side that will improve our margins on orders?

[Atim Kabra, executive]

So on the export front, we have been discussing with a couple of OEMs, couple of playing with BTS products and a few products which we have taken up development, which are in almost advanced stage of completion. I think in next 2 quarters, probably we will be in a position to demonstrate these prototypes to those OEMs. Once we have access in this than I think probably we can expect a good number of orders. I do not want to reveal more details about that as this is in a very initial stage.

Apart from that, the offset business, we are likely to get a couple of more contracts but not in the same scale like we used to get, maybe in a small point. But otherwise, small value. The rest are like we are trying to participate in few tenders for the systems, what we develop like Doppler Weather Radar and all. We have participated in some expression of interest as well as in RFIs. So probably in a year or 2, I think we will be in a position to supply these systems to the global market.

[Operator]

Next question is from the line of [ Manoj from KY Advisors ].

[Unknown Analyst]

Just a qualitative question. There was one of the companies in Defense was saying that the government is taking a lot of interest for exports and one of the -- so government called one of the company saying that do you need any help from us or you [ down ] the numbers in exports is XYZ? Do you -- can you grow faster or you need help form us or something. Can you share any kind of change in government interaction ceiling in the last 1 or 2 years?

[S. Reddy, executive]

Yes. You are right. Government is encouraging companies to export. But as you know, I mean, you basically -- systems that end -- which can meet end applications, we have a lot of potential to export to begin with. And yes, companies who have built the systems, they will have opportunity to export to the southeast nation as well as the Africa market. We also gone through -- we have seen a good number of opportunities that are coming for us also. But it takes time. Export market is not so easy to tap it, and we need to establish ourselves and then we need to sell. So it may take a few year's time. But yes, this is a good beginning. And government, they are encouraging in the sense they're participating. They are taking industry together to the many forums and on like being introduced by the government to all the industries. And then I think indirectly, it's supporting companies like us to get to be directly to the OEMs.

[Unknown Analyst]

Right. Sir, for the Indian procurement, have things substantially changed in the last year or so, like the speed of approvals, et cetera?

[S. Reddy, executive]

Sorry, we didn't hear your question. Can you repeat, please?

[Unknown Analyst]

Asking for the Indian defense procurement, have things changed substantially in the last 6 months or year or so from the government?

[S. Reddy, executive]

Yes. See, as you know, like we have been seeing many opportunities for the companies like us to participate directly in the MoD business. If you look at the history of our company many years, we have been supplying subsystems to DRDO and ISRO. And then we were getting these production orders from the PSU center. MoD has given opportunity for companies like us to build the system and to participate directly. The category of MiG-1 and MiG-2. And we can build a system and then we can supply to directly to the arm forces. So this is what the change happened in the last 2 years. And that is really giving us the motivation and also give strength to the companies who have the core technology that can build a complete system and gain the markets.

[Unknown Analyst]

Okay. Versus, we had to go via the DRDO, et cetera, or with the government companies now we can do it on our own? Faster?

[S. Reddy, executive]

Yes, yes. Towards that, we are building a few systems, and we are supplying -- we are planning to supply directly to the services. Like I stated in last earning call, we received PFO for couple of Radar Systems, which are in development phase. And so once we complete, we can be in competition with the other major players.

[Unknown Analyst]

Versus earlier it seemed to take a few years now that will be -- that will be shorter and faster?

[S. Reddy, executive]

To some extent. Yes. But anyway this development of system takes time. But today, having got the technology available in the companies, we can build up in a much faster pace.

[Operator]

[Operator Instructions] Next question is from the line of Jasmeen Kaur from Fortune Investments Advisers.

[Jasmeen Kaur, analyst]

Sir, my question is actually on the receivables, again, there was an earlier participant who did ask, but I want to understand this a little better. Even if you are saying that because of Q4, I mean, probably that entire additional would probably be sitting in receivables. But still, despite that, the receivables increase seems to be quite high. So sir, if you can just give us a little bit more detail on the nature of these receivables. And when do you expect them to be realized and whether this is a sustained kind of a thing or we will see better receivable days going forward? And also, if you can also tell us a little bit on the aging of these receivables? How old -- what percentage of it are like in the 30-day bucket or 30 to 50 bucket? So in that manner, we will be able to understand better.

[S. Reddy, executive]

Yes. Aging may be a problem. I don't have the data, but I will throw some more light on why the receivables are fairly high. Apart from whatever I said earlier, the other reason could be like we have delivered 2 major projects in the last year. Cumulatively, those 2 orders will come to close to about INR 170 crores, INR 180 crores. Both these programs are under the final approval. It is called Right Approval that take some time -- aside approval. So this is sitting there in the balance sheet for the last 8 months or so.

Probably these are the 2 factors, which is delivering up the receivables. We assume that and this other factor is deferred receivables. There are 2 categories of deferred receivables, one, what we have supplied in [indiscernible] department as a part of the vendor [indiscernible] sales upfront. The remaining 60% is accrued over the year, which covers. So these are the other two elements which we have to consider for the proper analysis of the receivables.

[Jasmeen Kaur, analyst]

Okay. Sir, do you see your short-term borrowings increasing further in the current quarter, if these are probably the receivables have still not realized. And can we see an increase in the borrowings in this quarter?

[S. Reddy, executive]

Yes, I think so. Maybe up to INR 40 crores to INR 50 crores, we may have to go for an additional borrowing. But as of today, it is around just around INR 200 crores, so whatever you are seeing in the balance sheet. The update number is -- but maybe in the next 1 or 2 months, it may slightly go up.

[Operator]

Next question is from the line of Jyoti Gupta from [indiscernible] Bank.

[Unknown Analyst]

I have 2,3 questions. One is what is the variation in margins in the products sold in the export market versus domestic? Of course, the contribution of domestic market, which would almost be twice in what it will be exported to other countries.

Second is the key projects, which is outlined on your presentation on Page 15. One is the land placing units we supplied to CAT, [indiscernible] radar, which means you would there be some process which will be on a recurring basis and some which would be come after a certain gestation. So one, is the LRUs which are there, is this a recurring -- would be recurring nature?

Second is the we added Array Antenna, the AAU for Uttam AESA and LCA MK 1A for aircraft. Will the revenue stream start coming from FY '26 because that's what Atim said that they will be the first lot of, I think, 8 units would be commissioned or with the also delivered in FY '26. So how should we look at these orders in terms of -- because, let's say, you're making 10 projects. Now not all 10 projects will start giving you revenue. They will all have certain time lines. How should we look at these projects over a period of time?

[S. Reddy, executive]

Yes. Ms. Jyoti Gupta, the second part of the question I'll answer regarding this recurring business. Yes, the programs, what are being given in that sheet, like [indiscernible] systems and as well as AESA, we do get repeat orders, but it takes some time.The gestation period is a bit longer, maybe after a few years, we'll get the repeat orders. And as far as the Uttam AAAU for LCA Mark 1A is concerned, yes, we are expecting linkages stages production in next 2 quarters. And probably the revenues start flowing from FY '26 onwards.

[Unknown Analyst]

Okay. Great. And what about the other one, the some modules for NAYAN and Shakti project?

[S. Reddy, executive]

Yes. These are all production orders. And we have already supplied -- we have been supplying rather for the last few years. And we're likely to get more orders in future based on the orders which then received.

[Unknown Analyst]

Okay. The first question was in terms of the margins. Of course, I think it will be difficult to answer, but could you see some sort of percentage variation in the domestic -- from domestic [ un-soled ] because my understanding is your margins from domestic sales would be higher than what you would be actually getting from supply abroad?

[S. Reddy, executive]

Yes. Definitely, the margins for the products which we have been supplying to the foreign OEMs, all these years were basically we were focusing on offsite business where margins were very low. As compared to the domestic, which we supply against the build to spec, which where we build our own IP in those products. The margins are significantly high as compared to the exports. But as just now I mentioned that we are focusing to develop a few products and as well as systems for the global market will be our own IP which definitely will have a better margin as compared to what we got increase in terms.

[Unknown Analyst]

Okay. And currently, how many IPs do we have? Because last time when I visited your Hyderabad plant, I like 2 products immensely because it had a lot of meaning in terms of civil infrastructure. One was a product which replaceable to a bird hit and the other one was a clutter in this orbit. What is the progress in those 2 projects?

[S. Reddy, executive]

You are talking about the Wind Profiler Radars?

[Unknown Analyst]

Yes.

[S. Reddy, executive]

Yes. So that is in development. As I said, we are developing that radar. We have already supplied few Wind Profiler Radars to various users like [ AGM ] and also [indiscernible]. And among the services, we got PSO for development of this, and we are in competition, and we are actively developing this particular radar.

[Operator]

Ladies and gentleman, we'll take this as a last question for the day. I would now like to hand the conference over to the management for the closing comments.

[S. Reddy, executive]

Yes. Thank you very much for your time and speaking to us. I look forward to meet you and you talk to you again at the end of Q1. Thank you very much.

[Atim Kabra, executive]

Thank you.

[Operator]

On behalf of Astra Microwave Products Limited, that concludes this conference. Thank you all for joining us and you may now disconnect your lines.