Ladies and gentlemen, good day and welcome to Astra Microwave Products Limited Q2 FY 25 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on belief, 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. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on the touch-tone phone. 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.
Thank you, Yusuf. Good morning, everyone. A warm welcome to all of you to the board's results call of our company. I am with my colleagues, Mr. M.V. Reddy and Mr. Atim Kabra, and SGA, our investor relations advisors. The results and investors' presentation for Q2 FY 25 are already uploaded on the company website and stock exchanges. I hope you had a chance to look at it. In terms of the highlights, I'm happy to share with you in continuation of the defense start for the financial year. We were able to deliver good performance for Q2 also. In terms of particulars, the top line at the consolidated level is about INR 230 crores, which is a year-on-year growth of about 21%. This performance is in line with our expectations.
On the profitability front, we continue to maintain our EBITDA margins at the sustainable level at a rate of around 21%. This improved profitability is largely because of the product mix, which is skewed more towards domestic, as we have shared with you in our recent calls. In terms of the composition of the sales, the local defense production has contributed to 80% of the top line, followed by exports up to 12%, and the rest of the things came from space and meteorology sectors. In terms of general business development, I wish to inform you that during the quarter, we have signed an MoU with Premier Explosives Limited for a strategic alliance to develop and sell multiple products jointly, and a JV agreement was signed with Manjeera Digital Systems to establish a new entity focused on manufacturing NavIC chips and GNSS products using NavIC chips.
This joint venture is going to be owned equally by both the parties. We believe that both these developments should help the company to explore new opportunities by broadening our offerings and strengthen our overall capabilities. In terms of the order book, as of September 24, at consolidated level, it is around INR 2,269 crores, whereas standalone number is about INR 2,097 crores, and our order wins continue to be healthy. In Q2 FY 25, for standalone, we received new orders for over INR 230 crores, which is mainly from the domestic defense and meteorology segments. In terms of the breakup of these new orders received in Q2, INR 73 crores came from radars, INR 71 crores from EW segment, INR 77 crores from meteorology, and the rest from space and exports.
Overall, our order book comprises of 98% of domestic orders, which are largely BTS, that is built to spec, and 2% of export orders, which are a mix of BTP and BTS. Our consolidated order book consists of INR 117 crores worth of service orders, which are typically margin-accretive. Further details on order wins and business trends will be shared by Mr. M.V. Reddy. For the current financial year, we maintain our target, which was given previously, with an order book range in the range of about INR 1,200-1,300 crores, and a top line in the range of INR 1,000-1,100 crores, with a PBT margin of 17%-18%. Our joint venture company has done well during the quarter, recording close to about INR 100 crores of sales, and has reached about INR 162 crores of sales for the six-month period, with a PBT of INR 8 crores.
It is expected to reach close to about INR 275 crores of sales for the year, with a PBT range in the range of about 8%. It has an outstanding order book of about INR 282 crores at the end of Q2, and is expected to book further orders in the range of about INR 200 crores for the rest of the year. Our wholly owned subsidiaries are doing well, and they are expected to report profits at the end of the year.
With this, I will hand over to Mr. M. V. Reddy, Joint MD, and later on to Mr. Atim Kabra to share their thoughts. Thank you.
Thank you. Good morning, everyone. As we review Q2 and H1 of FY 25, we have been seeing a high positive trend, especially considering the fact of orders booked in the first half of the year and also the opportunities emerging out in the business domain.
We have a robust order book of INR 2,000 crores as of date and seeing a good visibility of good trajectory in all verticals of business segments, which are of our main focus area. As planned, we bagged good development and production orders in Radar and electronic warfare domain in the second quarter. Out of INR 232 crores order booked, 85% are from the domestic segment, which constitutes 15% of development contract and balance of production in nature from DPSUs and IMD. We are hopeful of booking orders of around INR 550-600 crores more in the second half of FY 25. Few orders which we booked in the second quarter, like one is that C-Band Doppler Weather Radar , which we booked from IMD, and also we have received a few development contracts from DRDO, and also production orders like Naval subsystems and all from BEL.
On the sales front, we have picked up momentum and significant improvement as we have seen as compared to Q1 of FY 25, and we don't foresee any major challenges to meet our guidance of INR 1,000 crores for the current financial year. Regarding our joint venture ARC, which I as Mr. Reddy has covered, although there was a slight dip in the revenue in the last quarter as compared to what we had to indicate as due to prevailing geopolitical situation, but we are confident of making overall revenue being planned for the current financial year. With the order book of INR 283 crores and expected to book INR 200 crores plus more in the next two quarters, ARC is expected to book revenue of INR 275 crores for the FY 25.
We would like to reiterate that going forward, we have a good visibility to maintain sustainable growth with the opportunities emerging in the domain of our operations. With this brief note, now I hand over to Mr. Atim Kabra to share his thoughts. He will be happy to answer your questions. Thank you.
Hi, good morning, sir. And I'm happy to be back again sharing the direction as well as strategy for Astra. As you know, strategizing is a continuous process, which we keep fine-tuning as we go along. And the idea today is to share with you broadly the kind of things which have kept us busy over the last six months and also put in place a strategic framework for you to think of whenever you think of Astra. A 30-year-plus company needs a little bit of a new injection of thoughts, especially when the macro environment in which it operates changes dynamically. The challenges of running a 1,000-crore company are markedly different from running a 100-crore company, and even more different when you are aiming for a 2,000-crore to a 3,000-crore turnover target over years.
So everything in the company needs to be relooked at right from the IPs which we monetize, and which are the core building blocks which need to be recurring for revenue creation year after year. Same way, the systems and processes within the company, and more importantly, our human resources, which make us today what we are, need to be relooked at and nurtured. So we started this year with a focus on our core assets, which is our people, and the policies which define us, and the way we operate, the way the environment in which the functioning of HR happens. We brought in an external Big Four consultant to look at our policies and our practices, and thereafter, we brought in a very senior HR head to implement a new set of policies framework that shall serve our needs as we grow substantially.
In this era where we are looking at complete systems as the basic building blocks of recurring revenue, a multidisciplinary approach is practical, and it implies a very strong coordinated move between teams which have multiple skill sets, which have to work together to deliver on the complete systems which Astra is now delivering. Our team bandwidth has widened and is widening and will widen with time, with senior management induction and induction of folks at a middle level. And the team and the board have been very active in identifying the next set of leaders within the company. We are empowering them and incentivizing them to dream big and deliver value to our esteemed shareholders.
I'm personally very happy at the unified vision that the entire top management has bought into and implemented across the board, across the company with a single mindset and a focused mindset and a common objective, and all this under the leadership of our Managing Director, S. G. Reddy, and Mr. M.V. Reddy. And at the same time, they put in a lot of effort into identifying folks who are unable to keep pace with the fast-moving changes being implemented across the company. And there is a need to create a mutual dialogue with them wherein we offer them the assistance needed to shape up in the current circumstances or move on where the skill is better matched with the job so that the employee accountability concept is well established, and everybody is contributing without any slack towards the growth objectives.
So while we add more people, we are also looking at how do we rationalize the work for our existing workforce. So as we prepare Astra for the future, we need to clearly lay out and define a few broad areas of operations. And yes, I will repeat that the private sector involvement in the capital equipment procurement in the defense industry is in its infancy, with less than, I believe, less than 20% of the total capital outlay of the entire defense sector, but, for a few estimates, is right now being met by the private sector combined. So the Indian industry is just about moving from subsistence to a systems-level player where we can compete with our own products and our own place in the world.
This is due to the amazing groundwork and the ecosystem which has been created by DRDO's and the HAL's of the world and the various labs. While industry has grasped the policy-level clarity at the government level and is responding with products, and it's not only us. You've seen folks like Zen, Paras, and the like responding to the needs of the industry with various IP-driven innovations and solutions. In my mind, this is the beginning of a multi-decade opportunity. I remember the advent of the Indian IT industry two, two and a half decades back, and then followed by BPO. Over a period of time, India caught up and carved a niche of its own. Connected with our framework, with our leap framework, we have been fairly busy enhancing the IP base.
Given that we are in the IP enhancement and attachment business, there are gaps which were identified in our product portfolio. We have been filling them up assiduously. Our capabilities have been extended in the areas of ground-penetrating radars, synthetic aperture radars, EOs for satellites, specific passive radars, and jammers to complement our active radars, counter-drone systems, NavIC, which is needed to system on chips, displays, MMIC chips in a partnership mode, and multiple such capabilities are being identified and added to our overall portfolio to create a value-added and cashable IP bank. At the same time, we are also very focused on the increased borrowing as well as a higher interest output on account of higher receivables outstanding number of days. I can assure you that the entire board is sized up on this matter.
And our expectation is that as our learnings from the move into systems, multiple systems which Astra has been delivering now are absorbed and lessons across the board are diffused, accumulated within the company, you will see a dramatically different receivables profile from this market itself, as we are expecting quite significant injection of cash into the company as the receivables are liquidated during the second half of FY 25. So summing up, this has been, I would say, a steady quarter, and we hope to deliver on our guidance with strong upside potential built in from our various initiatives, and the building blocks which we are putting in place will provide us a nice platform to deliver an upward trajectory in sales and profits with a neat balance sheet also in the times to come.
We'll address your questions and clear your questions on NavIC, etc., as we go along into the question-answer session. With this, I hand it back. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question is from the line of Amit Dixit from ICICI Securities. Please go ahead.
Yeah, good morning, everyone, and thanks for the opportunity. Congratulations for a steady quarter despite the geopolitical challenges that we have seen. I have three questions. The first one is essentially on slide number 29, and in a prepared remark, you mentioned about the MOU with Premier Explosives, JV with Manjeera, and it is also mentioned that we are going ahead in anti-drone systems. And also, if you can get point by point that, okay, for MOU with Premier, when do we expect to fructify? What kind of opportunities are there in terms of products that we see? And similarly for NavIC, it has been going on for a while. So what kind of potential do we see, and when it will start going in? Anti-drone, again, something very special. So how are we different from our peers in this? So that is my first question.
Shall I illustrate all three questions, or do you want to answer them by them?
Yeah, please go ahead, I think. Amit.
Yeah. So the second question is, I think also, I mean, alluded to the receivables, particularly we have seen swelling up. And this is not a problem with you in particular. This is a problem we have seen with all the different companies so far, receivables swelling up. So do you see a larger malaise in government not giving money, or is it because of that revenue would have been bunched up towards the end of the quarter? And what are the sustainable kind of receivable days that we are going to see? The third question is essentially that INR 550-600 crores of order inflow that we expect in H2. So what are the key platforms that we are going to see that these orders coming from? How much from BEL, IMD, etc.? So these are the three questions, sir.
Yeah, I think we'll answer the first question of that joint venture of Premier and then Manjeera. Then the other questions, I can answer. Yeah, that is good.
Sure. Well, we are in the—I mean, we are in the warfare business, right? And we are looking at creating products. And our approach has changed dramatically from delivering subcomponents and subsystems to delivering complete solutions, right? So when we are delivering complete solutions, we need to, in a war for wars, right, and for battlefields, we need to put in the explosive parts in quite a few of our products. It's a licensed business and a specialized business. Towards that extent, Premier Explosives Limited is in that business, and it's very well placed. We have a good relationship with the company. And therefore, an MOU has been established from the point of view of new products and new systems which have been developed.
Let's say, I think there's not a specific example which I'm giving you to us, and we want to keep our products a little bit under wraps till they are out. But if we are looking at new kind of rockets coming in or guided rockets coming in, and if they are supplying, let's say, rockets without a navigation system, right, can we give some direction to those rockets by putting in some different electronics? It's a very obvious thing which comes to the mind. Same way, if we are looking to provide hard kill capabilities into our anti-drone systems, right?
Chances are that if we can incorporate products from Premier into the overall system which is being made, then we are able to provide a complete solution to the armed forces to not only neutralize the drones whose signature is verified and mapped, but also take out the rogue drones which come in, and they have to be taken out in a kinetic manner. So those are the kind of things which we are looking at with Premier, where the complete solution which requires explosives is being created along with them. On the NavIC portion, which you asked me, right, just three days back or two days back, the Times of India carried a report that the government said they are launching seven new navigation satellites.
You are very well aware of the circumstances in which our navigational satellites were launched during Kargil war, okay, or the concept was finalized and formed during the Kargil war. We need to be, as a nation, we need to be probably self-reliant in the area of GPS equivalent coordinates or in the coordinate business. Russia, the BeiDou, GLONASS, GPS, and NavIC. The interesting part about our product is that it is soft-coded, which implies that we can code in not only Indian navigational satellites, but also the other navigational satellites. Whichever product or whichever system is giving you the best coordinates can be taken in. There's no denial of service on account of, let's say, inadequate coverage by the satellites.
In terms of the potential, I think in one of the conference calls we had all discussed, right, okay, every missile for that matter, right, if it's a GPS lock or GPS equivalent lock, you'll have a NavIC equivalent lock. You have BeiDou, GLONASS ready who mentioned GNSS systems. We are talking of mapping. We are talking of a whole lot of civilian applications for NavIC. So anything which you think of from the point of view of GPS is a potential market for NavIC. It is massive. Now, at this point in time, our understanding is that a lot of chips are imported, and the landed cost of those imported chips is fairly cheap because, as you are aware, the cost of producing the chips is directly proportional or is inversely proportional to the quantum in which they are made.
So therefore, GPS chips, which are made in massive numbers, tend to cost less. So it is expected that there will be some sort of government guidance which will come in, which will level the playing field. And even if it but at the same time, we are looking to kind of make sure that the product is within the specified cost ranges to make it competitive. On the anti-drone systems, which you mentioned, I can only speak to you about our system. This is a global product with combined active radar with a passive radar with a complete power source and a C2, which effectively comes in three versions. We will have a short-range version of about half a kilometer.
We will have a medium-range version, which is, by the way, variable, which will have a two-kilometer odd range, and an omnidirectional anti-drone system which can be five kilometers plus unit. So these are the few product parameters which are there. Well, we have done some IP acquisition in this area. I will share it with you. We will be the global production partner for this joint IP which we have now for the anti-drone system in the configuration which I spoke to you about. So that's our product range, and I think M.V. Reddy can answer the receivables question. We'll move on to the next one.
Yeah. Amit, your other question, I think it's a technology of counter-drone, as Mr. Amit mentioned. So we have used a different anti-drone technology to get extended range. And also, we did the cost optimization so that to increase our percentage of wins in the competitive tenders. So as of now, we have almost 12 cases that are active in that many almost six cases are in RFI response stage and a few of them in RFP stage. And in one particular case where we have participated, we have submitted the proposal and TEC is going on. I think we will be conducting the first demo in December next month in the field. So this is progressing well. And as Mr. Amit mentioned, we are going with the soft-kill option for all these cases. Wherever hard-kill are there, we are collaborating with the other OEM who has that hard-kill technology.
We are confining ourselves to supply only radar for those programs. These are all as far as the counter-drone guys concerned. Your other question regarding next two quarter order book, which I mentioned around INR 50-600 crores space, in that I just give you a breakup of segment-wise. One is that from radar area, we are expecting around INR 350-370 crores. In EW, around INR 50-60 crores. In telemetry and missile communications, around INR 100-120 crores. In meteorology, around INR 50-60 crores. Other segment are put together around INR 30-40 crores. This is a broad segment-wise classification as far as the order book is concerned, which we are planning to book in the second half of the financial year. I hope we have answered all your questions.
Yeah, I think LG needs to answer the receivables.
Yeah, the receivables. Yeah, receivables, yes, as of today, they are fairly high compared to the normal standards. This is largely because of two projects where our side is involved in. Both are systems-related projects, totaling to close to about INR 170 crores kind of thing. They are in the final stage of completion, maybe in about three to six months' time. These two projects are likely to be delivered completely, which will bring our receivables to the normal levels. It has nothing to do with the bunching of sales towards the end of the quarter. It is more to do with the kind of the nature of products that have been delivered by the company. Up to the components and subsystems level, the realizations are fairly within control. Within about 90-120 days, the realizations are happening.
But wherever there is a systems delivery, it is taking time because the obligation is to complete the site approval test at the customer end, which invariably takes a good amount of time.
Okay. I hope that answered the questions, Amit. Yeah, that is very helpful, sir. Thank you and all the best.
Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please restrict your questions to two or four participants. If you have any follow-up questions, please rejoin the queue. Next question is from the line of Ketan Gandhi from Gandhi Securities. Please proceed.
Hi sir, congratulations on good growth number. I have two questions. Can you have any update on Manpack SDR?
Yeah, we are going for the final test in the month of December.
When can outcome be known?
I think the trials are planned, I think, to complete before January or so. So we are hopeful of getting the report maybe sometime in February. The chances of opening the commercial bid by March should happen, but it's all like it all depends on how fast they conduct these trials and all. But we're still hopeful of getting the result by March.
Sure. Sir, our GAETEC laboratory successfully developed, indigenously developed silicon carbide wafer that is SiC and GaN-based, HEMT-based MMIC technology up to X-Band application, up to 150 watt, and MMIC circuits up to 40 watt for up to X-Band frequencies. So do we have any role in this, or it is only GAETEC DRDO Lab for somebody else?
Actually, this foundry is open for even commercial use in the sense that we approached GAETEC recently, and we started uploading our designs also. Since the foundry was not upgraded till last year, we were using the foundries outside India. But now, since GAETEC has upgraded both the GaAs and GaN foundry and as well as have come up with this SiC. So we are planning to develop a few designs through GAETEC foundry, and our design team is interacting with GAETEC.
Okay then. That's very helpful. All the best. Thank you so much.
Thank you. Next question is from the line of Sarjeet Yadav from Mount Intra Finance. Please proceed.
Hi, thank you, and congratulations for the decent numbers. I have two questions. Firstly, regarding the Manjeera and Premier Explosives JV, you gave a very detailed overview. I just want to understand in case you can tell us what is the potential of these two JVs and what timeline do we expect some commercials coming from this, and second question is around the subsidiary of the JVs. What kind of products currently they are doing and what revenue do we expect? It is not very clear from the financial documents.
Yeah, I think.
All pages are clear, yeah? Yeah. Well, new products are being developed, and there's one system which Astra is developing for which between us and Premier and one more entity, we have almost 95% of what is required already there, okay? Now, once we integrate this and our teams were actually there last week, if I'm not wrong, or this week, and once we integrate these products into a viable shape with a common command C2 command and control center, I think the first prototype should be ready in about five to six months. I'm talking of where we are collaborating with HAL specifically, and thereafter, trials, positioning it across for a global market the way we see it, so we are not looking at creating products which are solely going to be dependent on Indian procurement. We should be able to sell them across the world.
But in terms of actual dates for realizing commercials out of it, I would hesitate to put a timeline onto it, honestly, because there's a lot of work which is involved. The JV was signed and announced just a few weeks back, right? So that's one. This product which we are talking about is an external product which should minimize interactions with the existing electronics, etc. So that would make it fairly fast enough to be adopted. But still, the prototype is being under development. Ideas are being exchanged. Designs are being exchanged. So that's the timeline. I don't know which specific JV you are referring to in your other subsequent question that you asked. Which JVs are you referring to for which you are thinking?
Astra Rafael .
Astra Rafael. Engaged?
Yeah, Astra Rafael is engaged in design and development and production of software-defined radios. All the revenues which are achieved by the company as of now pertains to these products. Going forward, it is likely to add an electro-optics product line also, along with the manpack version of software-defined radios, about which we have discussed a few minutes back with other investors. If you ask me, in simple terms, essentially, it is engaged in software-defined radios and the electro-optics products. These are the two products which the JV is engaged in.
Okay, sir. Thank you. That's very helpful, sir. Thank you very much.
Thank you. Before we move to the next question, a reminder to the participants to ask a question. You may press star and one. Next question is from the line of Omkar Chitnis from Trade Brains . Please go ahead.
One, sir, thank you for the opportunity. You mentioned in FY 24 annual report that we are in the advanced stages of development of technology in photonics, radar, and submarine communication. Can you provide update on that for commercialization?
Yeah, photonics radar. Almost it is final test is going on. Probably we'll be in a position to deliver this system to DRDO by December, before December 31st. This is what we are planning. And the other one is you asked about the NSTL, which is the submarine electronics, right?
Yes, sir.
Submarine electronics also, we made a prototype for demonstrated to NSTL, and they were very happy to see the performance. We are going ahead with the to complete the total quantity. That other also, we are in a position to complete it mostly by January or February. By this year end, both the projects will be executed.
Okay, sir, understood. Sir, previously provided an export guidance of 22%-23% for FY 25. Are you maintaining this target, or is there any change in that?
In terms of the percentage, I'm not really sure. But as of now, most of our exports are deemed exports. That is, we are supplying to the domestic EOUs, which is again largely our joint venture company. And also the Bharat Electronics, and there's another company called DCX in Bangalore. So these are the three entities for whom we are supplying under the EOU concept.
Okay. And my last question was, can you provide update on the telemetry missile, which was export order of INR 140 crores, which was planned for this financial year? Any update on that?
Telemetry missile? We don't have any such order.
Telemetry missiles.
Telemetry missile under that category, we manufacture subsystems, not systems. These subsystems we have been developing for DRDO, and for the production, we are supplying to Bharat Dynamics Limited.
Okay. The last.
And the export order probably you were talking about is which BDL is expecting order for Akash missile. And for that, we have subsystems in place, and we are hopeful of getting this particular contract before March or maybe the first quarter of the next year as the BDL is yet to finalize this particular contract.
Okay, sir. Thank you very much, sir.
Thank you.
Thank you. Next question is from the line of Rupesh Tatiya from Intelsense Capital. Please go ahead.
Hello sir, am I audible?
Yep.
Okay. So my first question is on radar. So can you give update on three radar programs? Where are we with respect to order receipt? First is Ashwini LLTR radar. Second one is Uttam. And third one is X-Band multifunction radar for which Bharat Electronics recently received an INR 850 crore contract. So these three radar programs, if you can give an update from your side.
Yeah, the Ashwini as a system, I think the commercial bits have been opened. I think maybe I think all of you are aware, BDL has been declared as L1. And so in that subsystems, we have to see how it goes about the execution in the BDL. So that's the one. And Uttam, yeah, we have inquiry on hand now for quantities. So exact quantity and value, I can probably be in the position to give you by next earnings call. But inquiry is on hand now. And third, the one you were talking about, X-band program, we are in discussions with BDL for the quantity which we have developed. So that, I think we will be expecting an inquiry from BDL soon.
So for these three programs, sir, can you give some indicative potential value and timelines?
Yeah, actually, this in fact, Uttam, we have taken some quantity order by March. And in that, I think it would be around, as I mentioned, overall, if the orders which if we combine these programs, some of the orders like put together, it should be around INR 350-370 crores. In that, we have not considered any program which is in a competitive. So these are all only which we are single party to execute, or we are the only one qualified supplier. Those cases only we have considered, and it is amounting to INR 350-370 crores orders which we are planning to book before March 25.
Okay. Okay, sir. And then the second question, sir, is this airborne electronic warfare system, Netra 2, where private sector player was declared L1. So are we working with them? Do we expect some order for Netra 2?
Yeah, actually, we are also working with the DRDO for that program. And we are there as a subsystem supplier for Bharat Dynamics in EW. And we are awaiting further formal inquiries in Netra 2 segment .
So, that orders also we will receive by March 25, or it will?
I think materials will get materialized only in the first quarter of the next year.
Can you give some indicative range of what is the potential in this one?
Yes, there's a good potential, like the overall quantity. But how much they will take it in the phase I, all depends on the budget being allocated. So I think it's too early to comment on that. Maybe after a couple of months, we will have more clarity on this.
Okay. Okay, sir. Thank you for answering my questions.
Thank you. Participant, if you wish to join the question queue, you may press star and one. Next question is from the line of Vipul Kumar Amichand Shah from Sumangal Investments. Please proceed.
Hi sir, thanks for the opportunity. So what will be the investment in these two JV, one with the Premier Explosives and another one? What will be the amount we'll be investing in?
We're not looking at any substantial investments in the JV with Premier. It's more on the technical handholding and working together. Then each of us contributing whatever we can. Maybe we'll go with the commercials, etc., after we go there.
My second question relates to inventories. So inventories have increased substantially. So, can you attribute any specific reason for the rise in inventories this quarter?
See, most of the inventory, if you look at it, out of INR 534 crores, which is there as inventory, almost 50% of that is in the WIP that is work in progress. We believe that as we have sent the process of deliveries in Q3 and Q4, this WIP will be converted into the sales. And therefore, the inventory should come back to the normal levels by the end of the financial year.
Okay, sir. Thank you and all the best.
Thank you. Next follow-up question is from the line of Rupesh Tatiya from Intelsense Capital. Please go ahead.
Thank you for the follow-up opportunity, sir. One question is there is this delay in GE's engine delivery. So how are you seeing any impact on ordering of Uttam radars? That is one. And then Sukhoi upgrade program, when do you see commercial supplies to start for Sukhoi program?
Yeah, my first question is on the Uttam, as I mentioned. We have now inquiry on hand. So we are hopeful of getting the first order maybe by March 25. And on the other hand, the delivery, though there was some issue, I understand they are too late to cope with the thing. I think more likely the issues got resolved. So I don't think we'll have any effect on the overall schedule. And as I said, as far as the radar is concerned, they will go ahead as being planned as they need to get these indigenously manufactured. So lead time of components and all these things, they will be considering that. So with all this, I think I don't see any major issue in placing orders on subsystem manufacturers. The second contract, which was mentioned, Sukhoi 30 upgrades, yes, as I said, they drafted them also.
DRDO is working out on the configuration. I think it appears that they finalize the configuration soon. We will be getting the tender inquiries. It's going in a competitive mode. We have to wait and see how it goes about it. The program is on, and DRDO is working on this.
Okay. Okay, sir. Thank you. And then the second question is on counter-drone systems. In counter-drone systems, what kind of opportunity do you see? What kind of revenue we can expect in two to three years? And because it looks to me a little bit competitive field, so can you maybe give some color on the margins?
Actually, here the differentiators between other existing competitors to us, we have got the indigenously developed technology, total right from the components, subsystems to the system. We have everything in-house developed. So we have definitely an advantage over others. And the second is, as well as the business potential, yes, definitely it's a competitive field. We have just started bidding these tenders, and we'll come to know how it goes about it. But we are sure of at least to win at least 30%-35% of the overall market available. So it's difficult to mention any numbers as such now because there are many programs in this. Few of them are with laser kill, wherein we, as I said, we are collaborating with other OEMs. And in few cases where soft kill, we are going ahead as a lead integrator and supplier.
So these are programs out there. But definitely, the business size should be at least to start with for the next year. We are hopeful of getting at least contracts worth of minimum INR 200-250 crore range of orders. This is what actually we are targeted now. But by March, I think we'll be in a position to give you exact numbers by how many orders we can book it for the next financial year.
Let the numbers speak for themselves. Right? How many people have demonstrated with indigenous technology complete counter-drone system? Right? You guys are in the market. You guys got to figure that out. So we'd rather let the numbers speak. Indigenous radars, indigenous jammers, active radars, plus passive radars. Okay? I don't think as of right now, it is as competitive as you think. There's a lot of overseas products masquerading as made in India. Let's see how it pans out over time.
Okay. So then the influence from that is the margin would still be okay. It would be close to company average.
We'll let the numbers speak for themselves when it comes in. We don't know what the others are going to bid, right?
Okay, and then the final question, sir, is on any update on Atulya fire control radar?
In which?
Yeah, actually, we are waiting for, I think BDL is working on that. We are a component supplier in this particular program. We are expecting a few orders for this particular radar maybe in the next couple of quarters.
Okay. Okay. Thank you, sir.
Thank you.
Thank you. As there are no further questions from the participant, I would now like to hand the conference over to the management for the closing comments.
Thank you, ladies and gentlemen, for your participation. I look forward to talking to you again at the end of the day. Thank you very much.
Thank you very much.
Thank you, everybody. Thanks.
Thank you. On behalf of Astra Microwave Products Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.