Ladies and gentlemen, good day and a warm welcome to Zen Technologies Limited Q3 FY 2025 Earnings Conference Call. Please note all participants' lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the management's opening remarks. Please note that this conference is being recorded. I now hand over the conference to Abhishek Mehra, TIL Advisors Private Limited. Over to you.
Thank you, Swapnil. Welcome everyone, and thank you for joining this Q3 FY 2025 earnings conference call of Zen Technologies Limited. The results and investor updates have been emailed to you and are also available on the stock exchanges. In case anyone does not have a copy of the same, please do write to us, and we'll be happy to send it over to you. Today, we'll start the call with a brief overview of the performance, which would be followed by the Q&A session. As a disclaimer, I would like to remind you that everything said in this call, reflecting any outlook for the future, which can be construed as a forward-looking statement, must be viewed in conjunction with the risks and uncertainties that the company faces. These risks and uncertainties are included, but not limited to what we've mentioned in our annual reports.
With that said, I'll now hand over the call to Teena Virmani from Motilal Oswal. Over to you, Teena.
Yeah, thanks, Abhishek. We welcome the management team of Zen Technologies for Q3 FY 25 Results Conference Call We have with us Mr. Ashok Atluri, Chairman and Managing Director, Mr. Afzal Malkani, CFO, Ms. Shilpa, Director of Finance. So over to you, sir, for your opening remarks, and then we will open the floor for questions and answers.
Good afternoon, everyone, and thank you for joining. Both existing shareholders, past and potential shareholders. Very briefly, I would like to reiterate that the earnings for the year are on track. We don't see any change in our target of INR 900 crores for the year. I think we still feel very confident that we'll achieve that. On the downside, we expected orders that would have started trickling down from December onwards. And we said the end of the Q3 and the Q4 will start getting the orders that have not materialized as expected. And, you know, we think that the orders will start coming during this quarter, and they will most likely spill into the first quarter and probably a little later into the Q2.
So ,you know, all the domestic orders worth almost INR 800 crores are in this pipeline, and we think by that before the Q2, we should be having it on our order book. And this excludes the export order, which will be separately accounted for. So, you know, I think we have some visibility on these orders, and we are ramping up our execution capability so that most of the orders that we receive are executed within the same year, the same financial year. So,you know, that was on the news that wasn't that encouraging. But the good news is that our estimate of the size of the market that Zen can address has grown tremendously over the past few months. That means the prediction that we had made for the average growth of 50% CAGR over the next three years right now seems achievable.
When I mean achievable, in the sense that even if we were to fall short in the FY 26, the 27, 28 figures look very, very encouraging, and we expect to more than cover any deficiency which may arise in FY 26. And our expectation, of course, is that government will accelerate the procurement process and place orders on the industry sooner than later. And you know As we are very extremely transparent, we'll update you on the orders as soon as we receive it. You know, on the other news, President Trump's ascension is great news for India. We should use this opportunity. Again, my stance has been very clear. We should use this opportunity to ask for technologies that will help us win the war, and they should be willing to sell it rather than outdated white elephants like F-35. A lot of people are talking about F-35.
I'm quite surprised that there are some people who are actually recommending buying it. And the smartest person in Mr. Trump's team, Elon Musk, has said a lot about F-35. One of the few remarks that he has made is, "F-35 fighter jets are obsolete in an era dominated by drones. They have design flaws." What he actually said was, "Broken at the requirements level and are an expensive and complex jack of all trades and master of none and have the worst military value for money mystery." So with all this, we should be very, very careful what we use our money, taxpayers' money, in buying, and there should be only technologies that will help us win the war. And as you will look, what have we got into? What are the technologies we have in the new acquisitions? What are we doing?
You'll be very happy to know that we are going in that direction. So, you know, having said that, again, we think that government should insist on having private tie-ups with private sector companies, which can absorb the future technologies, and they can actually help us co-develop for the next generation of technologies. We should not aim to be just manufacturing pulleys or a value chain partner kind of thing, which is typically a lot of people say, but we should be actually co-creating great products with them for the world market. So that should be our agenda, and I hope the message is taken by the Indian government. So now I'm switching to the acquisitions that we have done. Our philosophy when looking to acquire any company is this: if we buy something, if we invest in this company, can they create some absolutely world-class products or not?
If the answer comes no, that even by investing and waiting for time, they cannot create world-class products. They cannot attain global leadership, we let go of that investment. So in this thing, I think we have been able to really identify some great companies, and I'm very, very happy that the acquisitions went through. Again, I'm very, very conscious of the fact that 10%-25% only work. Almost 75%-90% of the mergers and acquisitions fail. I'm very aware of that. So I'm hoping that I'm an exception, but I'll be very, very open to the questions that you will ask in this regard. About our largest acquisition to date, it's ARI. ARI is, very frankly, He's a very good friend of me. I had a long relationship with him.
In fact, we have been talking on and off about it for the past two years that we would like to acquire Zen. But finally, Shravan agreed to do it. And again, I very much respect the work and achievement Shravan and his entire team of talented professionals have done. And what they have created is very, very complementary. I would say that like Zen is in the army simulation market, ARI is the leader in naval simulation, in the marine simulation market. The majority of their income comes from marine. Now, very quickly, the difference between marine and naval simulators is this: the fields are marine is typically commercial, naval is typically armed forces. But one thing which is very significant is the majority of the revenues for ARI have been coming from marine simulation, and naval simulation has been a little less.
So I think that they took a conscious decision that they'll focus on the commercial sector rather than the government sector because of various issues that they have had. So I think ARI is a great company, and the DNA required to be number one company in the world in naval simulation and marine simulation is there in that. And fortunately, you know, Shravan was able to professionalize to such an extent that you know the team led by Partha Sanyal and his extremely talented team almost ran the operation independently and very competently. So I think fortunately, Shravan will continue to be on board and will give us strategic inputs, including opportunities for further acquisition as Partha will continue to lead the team. I will talk about Vector Technics. And the last company I'll not talk about.
I'm a little concerned that the whole of the time should not be taken in the presentation, but we should give time to interact with the shareholders. So I'll keep my presentations not so long, but try to keep it brief so that I can answer your questions. The third company, Bairava Robotics, I'll probably take up in the next one. But Vector Technics, again, this was a company that came to our mind, that came to us on our radar a few years back, but then for some reason, it did not happen. But recently, I don't know whether you have heard about the story about the Jataka tale, about the Brahmin who's taking the goat on his shoulders, and some thieves decide there are many versions of it, but I'm telling one of the versions. Three thieves decide to take him off to steal the goat from him.
And the first guy says, "Panditji, you are having..." So they go to the guy who's carrying the goat, Panditji, goat on his shoulder, and say, "Panditji, why are you carrying the dog on your shoulder?" And he says, "Are you mad? This is not a dog. This is a goat." He says, "Are you sure? Because it looks like it sure looks like a dog to me." He says, "You are definitely mad." And he's very confident, a little confident chicken. But a few steps later, the second guy again repeats. The second thief comes and says, "Panditji, what are you doing? You are carrying a dog on your thing." So this guy actually starts suspecting. He's a dog. And by the... he says, "Are you sure? No, this is not a dog. This is definitely a goat." And this is the confident shaken .
By the time the third guy says, "Why are you carrying a dog?" This guy actually throws the goat and runs away, and the thieves take it. So why am I explaining this story? For a long time, Zen was being said as a drone company, drone company, drone company. But we said we have been saying that, "No, we are not a drone company. We are an anti-drone company." But now the reality is that we are becoming a drone company.
And you know Vector Technics is a company that we are investing in. It is our first step towards becoming a drone company, thanks to all the investors saying that, "Are you equating us with a drone company?" And the reason why we recently started talking to a few drone companies in which we wanted to invest, again, our criteria has been very, very simple that we don't want companies that do get Chinese parts. And we recently saw some news articles also in which Chinese parts were found. And the danger of having Chinese parts is that when the war happens, your drones can be completely disabled by the Chinese. So we have to be very, very cautious about getting any parts. So government acting very harshly on people who have Chinese parts in the drones, I think, is very, very justified.
We see that DJ I don't fly in the border areas because they're denied the flight. Again, we have also seen that when the Israel war happened, Israel was able to actually use the pager technology to kill so many of the Hamas targets.So are we..., Strangely, India still continues to import these electric cars from China. These electric cars can become absolute weapons when the time of war comes because the software is given by them. The software can be updated to be very, very restrictive on Indian traffic and Indian roads. But anyway, the whole point is that we should be very cautious of a neighbor who has time and again backstabbed us. Coming back to the thing, when we started approaching the drone companies, almost everybody said, "Listen, we are indigenizing.
And the technology that we are using to indigenize is from a company called Vector Technics." And in a strange coincidence around that time, Vector Technics approached us for investment. And we immediately lapped up, and almost it was a completely cordial tie-up, and it happened very, very fast. That's one of the things that we will do. We'll definitely do. If we like you, there will not be a one-year due diligence and all that you know who are , by which time typically the people who need the funds actually die. So we'll act very fast. In fact, this is also an open invitation to any of the shareholders who directly or indirectly know some companies that are looking for investments in the related segment that Zen is exploring. But having said that, I'm just inviting Prithvi and Karna. Both are here.
I'm inviting Prithvi to come and briefly explain about the products and what they have done about this. So after he explains, they will be around here. If you want some additional questions, they'll say, "So what is so really so cutting-edge?" It blew my mind away. It blew the mind of very, very technical people we know. But Prithvi, please come and you can explain.
Hi, good afternoon, everyone. And thank you for the opportunity. So we are very thankful for Zen. We've been in this space since past five years, putting our brains together for research and development. And we have been struggling to find the right investor, let me put it that way. So when we approached Zen, a couple of years back, we had just one product, and we were not market-ready at that given point of time.
Given the last two years, we had a very good success in capturing the right markets, both domestically as well as internationally. So what we are at our core, we are a motion control company. So we did our research into motion control that is into two different segments. One is a brushless DC motor technology for UAVs and robotics. And the second one is IC engine-based propulsion for drones. So I'll show you some of our products. This is our motor, which can be repurposed either as a commercial drone motor or a defense drone motor or even a man-carrying drone motor. And it can be used as a robotic motor as well. Similarly, we have part of the core electronics of a drone. If I need to do it in simple terms, this is almost similar to a motherboard of a PC.
So it powers up with the batteries, and it also gives distribution to the other sensors, payloads, as well as propulsion. So this is also a key part of our drones. I'll show very briefly our second revision. It's a four-cylinder UAV aircraft engine for UAVs. This is extending the range of the drones which are currently operating. It can be used as a regular commercial aircraft as well as high altitude. So we had designed very strategically that it can be modular. Our patented technology can make the same engine as a two-stroke, four-cylinder engine, two-cylinder engine, and a six-cylinder engine. I'll just show you quickly how a two-cylinder smaller engine looks like. So if you see our vertical integration of the technology, it's the same motors that we develop, which we repurpose as generators.
So on board, it can generate power, and you don't need big batteries to carry, or you don't need very, very big batteries to go for extra long range. The engine on board an aircraft can deliver that power. It can be a redundant power supply for all the electronics as well. Having said that, there is one more final trick up our sleeve, which is our counter-rotating motor. So these are our counter-rotating motors. What it does is we have a patented license technology with 13 patents globally. It increases the efficiency by 30%, and it can change the game of UAVs within a long span. So our small technology can propel a drone 30% longer, faster, and can be a beautiful alternative for a regular standard motor and increase the flight times up to 30%.
So this we are currently exporting, and we are very soon launching in India as well. So having said that, with the opportunities that we had from Zen, so far we have about five different product lines. We are going to scale up all of those product lines into about 23 different product lines. We'll be targeting markets both domestically as well as internationally. We have distribution channels across Japan, U.S., and U.K. We are expanding into Middle East and Europe this year. And we are looking for bright talent to expand. And thanks to Zen for investing and trusting in us for such a big expansion that we never dreamt of that will happen so quickly. Thank you sir.
The rule is that whenever somebody speaks so smoothly, you should be very, very careful. So the actual technical guy is not Prithvi. The actual technical guy is Karna. So he's not very articulate. So that's the plus point that we have here. So yeah. So overall, I think we are very, very excited with the acquisition that we have done. And one thing, even in recent Aero India, we launched a product called Vyom Kavach ( Shield in the Sky). Now, this is one of the most advanced anti-drone systems in the world now. It has four layers of protection. The first layer starts with just the jamming soft kill. And then the second level is typically the kamikaze drones. The third is the missile attacks. And finally, the fourth is a Gatling gun or regular gun that can be used to destroy swarm drones.
So this has been developed specifically for swarm drones. And we are evolving our products at a furious pace to keep with the requirements of the country. So I think overall, most of the points have been covered by me. And I will hand it over to Mr. Afzal Malkani, our CFO, for presentation on the figures so that he gives a good perspective on the figures. After that, we'll open for Q&A so that we can have a proper interaction.
Yeah. So thank you, sir. So good evening, everyone, and welcome to the earnings conference call for Q3 and nine months ended 31st December 2024. As you just heard from our CMD, Mr. Ashok Atluri, he would like to report that we have delivered reasonably good performance for Q3 FY25 and nine months FY25. Additionally, we are well positioned to continue our growth momentum. Let's begin with a quick update on standalone performance for the Q3 FY25. Our revenue from operations was INR 141.52 crores compared to INR 98.08 crores in Q3 FY24.
The growth in percentage terms is 44%. Our EBITDA for the Q3 FY25 increased to INR 58.68 crores compared to INR 48.40 crores in Q3 FY24. In percentage terms, EBITDA is 35.90% of the revenue. The growth in percentage terms is 21%. Our profit after tax has increased to INR 38.62 crores compared to INR 31.66 crores in the same period last year. Profit after tax in percentage terms is 27% compared to 32% in Q3 FY24. The growth in percentage terms is 22%. So now coming on to the breakdown of our total revenue of INR 141.52 crores, INR 130.82 crores were contributed by the sale of equipment, while INR 10.70 crores came from our AMC business. Coming on to the 9-month performance for 31st December 2024, our revenue from operations was INR 637.17 crores compared to INR 295.56 crores in nine-month FY24.
The growth in percentage terms is 116%. Our EBITDA for the nine-month FY25 increased to INR 252.77 crores compared to INR 143.76 crores in nine-month FY24. In percentage terms, EBITDA is 37.69% of the revenue compared to 46.95% in nine-month FY24. The growth in percentage terms is 75.82%. Our profit after tax has increased to INR 178.03 crores compared to INR 96.20 crores in the same period last year. Profit after tax in percentage terms is 27.94% compared to 32.61% in nine-month FY24. The growth in percentage terms is 85%. Now, coming on to the balance sheet part, then Zen remains focused on maintaining strong liquidity and leveraging its asset-light business model to ensure sustained growth and value creation for our stakeholders. With that, we conclude our opening remarks, and we would like to open the floor for the question and answers. Thank you.
Thank you. Ladies and gentlemen, we will now begin with the Q&A session. Anyone who wishes to ask a question may click on the raise hand icon at the bottom of your screen. We request participants to restrict their question to two and then return to the queue for more questions. To rejoin the queue, you may click the raise hand icon again. Now, we will take our first question from Mr. Lokesh Sabharwal. Mr. Sabharwal, please unmute your microphone.
Yes, can you hear me?
Yes, we can hear you.
Please go ahead.
Thank you so much for giving me the opportunity, sir. Mr. Ashok Atluri, I have been a big fan of yours. Invested in your company for over two years now. I have basic two questions. So what is the current order pipeline, and by when do you expect it to start coming on papers? Because as of now, we can see it's around INR 116 crores, and you had projected around INR 1,200 crores for next financial year. So how would you be able to achieve that? And second is, the profit margin has been very good in your company in the recent years. And after the acquisition, what do you think that the profit margin would be when the revenue of the existing company starts coming in?
Okay. Thanks, Lokesh. Thanks for asking, and thanks being a co-owner with me for Zen Technologies. Really appreciate that. The first question is, in the order pipeline, again, we had indicated that we'll get about INR 1,200 crores during the year. But we have about INR 800 crores in the pipeline at this point in time. And we expect that most of the results should come out by Q1. If not Q1, then Q2 definitely. So that's the 800.
We are not factoring the exports. That's a little iffy thing, but there is a large order coming in if it happens that there are large orders there. And with respect to the profit margin post-acquisition, acquisition margins are not as big as we have, but we expect them to improve. Again, very typically, I want to say that when ARI has the marine simulators, and Zen is saying that we will move to naval simulators, what does it mean? Basically, marine simulators, for example, the bridge simulator, the engine simulator, all those simulators are similar in both the cases. There are some simulators that are mutually exclusive, but most of the it's almost a superset of naval simulators are a superset of marine simulators. Most of the case, again, there are exceptions.
So here, what happens is, why is the naval simulator the different kind of different from these two hand-launched? One thing missing is the weapon simulators that are required to make them actually naval simulators. So with the marine simulation leadership that ARI has, under the leadership of what they have developed with Shravanji, and the simulator that we have, the naval, the weapon simulator, if you combine them, they make perfect naval simulators. So this is an absolute synergy-creating opportunity. So we are very, very excited about this. And I think the margin profile, once we integrate both the companies, will continue to remain the same and maybe better in some cases.
Thank you, sir. Thank you so much.
Thank you. We will have our next question from Mr. Dipen Vakil.
Hi, sir. Congratulations on a decent quarter and congratulations on acquisitions. Sir, my first question is on the lines of, sir, we have early on guided that we'll be on track to do a revenue of close to around INR 900 crores. So are we still on track with the same guidance, or is there any material change? Because we have already passed on with even the first half of Q4. So would you like to state the same guidance for this year?
Yeah, Dipen, yeah, we are confident that we'll be able to achieve INR 900 crores. And again, thanks for saying that it's a decent quarter. Not everybody is saying that. But actually, in Q1, I said, please don't go on quarter on quarter because somebody said, you are very heavy, you will do INR 1,000 crores. I said, no, don't go on quarter on quarter. But just for, as we said, INR 900 crores, we are very confident whatever is the gap, we will be able to fill that gap to hit the INR 900 crore target in this quarter.
So now next on, sir, you mentioned that the pipeline is of close to around INR 800 crores, which will get fulfilled likely by, say, first half of next year. But sir, can you give us a little bit more about the ordering environment that is there currently? Because your equipment orders are now currently at 0.4 times the sales. So how do you think that the ordering will happen in, say, next 15 days? Are there any advanced talks that are happening when it comes to orders?
So again, even after 30 years of experience, very frankly, Dipen, what has happened is I projected a very, very conservative figure and said that actually the team had said that we'll start getting orders much, much earlier, but we took a very conservative approach and said we'll start getting from December, but even that proved to be very optimistic, and still, the orders are ready to come, but to be very fair with you, some orders are at a very advanced stage, and they may happen in this quarter itself, but again, I don't want to give any figures on that, Dipen. I hope you understand that, but we are at an advanced stage.
Yeah. Thank you. Got it, sir. We are very positive on it. All the best for both quarter and FY26.
Thank you, Dipen. Thank you. FY27 and 28 too.
Thank you so much, sir. Our next question will be from Sandeep Agarwal from Kohinoor Investments. Please unmute your microphone and go ahead with your question. Mr. Agarwal, please unmute your microphone. Are you able to hear me, sir?
Yes, we can hear you. Hello, Ashok sir. We have taken over this company, ARI, where the revenues are around INR 92 crores. Can we get to know what is the EBITDA margin in that company?
Afzal, would you be able to show? So am I audible? Yes, sir.
So currently, in the current year, ARI will achieve a revenue of more than INR 100 crores. And EBITDA will be around in the range of 18%-19%. And PAT would be around 13%-14% in the current financial year.
Okay. And we are attending to a lot of exhibitions and fairs. We don't get any clients giving us orders on the same quarter because we have been waiting for three quarters and no orders have come in. We don't get orders when we are exhibiting in fairs?
Not really, Sandeep. I think it's a little complex process. Even for the Indian government has its own long process, but even foreign delegations that visit, these are all visits to actually explore what are the technologies available for acquisition in India. When they come here, they look at it, and then they tell us that these are the technologies that we are interested in. In some cases, where they're already in touch with us, they come and say, "Listen, these are the things that we will be placing order in the coming couple of quarters." Yeah, but we typically don't get any orders because they are government orders. They are extremely process-driven. The orders come after they come, go back, float a tender, etc.
Okay, and like what Donald Trump is coming out with a lot of news, like we might have to do defense deals, the Indian government might have to do defense deals with the U.S. government. So we're buying more of defense equipments from the U.S. Will that affect our performance in any way?
Yeah, so in the sense that we do anti-drone systems, and I think we do very much better than most of the companies, including American companies. So the Indian government will be very, very cautious. I think they will be using technologies that are not available in India. They will not buy something that's already available in India. That doesn't make sense at all. And even when they buy it, that would be only to build ourselves into a winning war, not just to oblige President Trump. I think we are at a very good spot. And definitely, there are technologies that America has that can help us become a stronger nation. So Zen doesn't see any threat at all from this.
In fact, we think that our opening of office in the U.S. was very opportune. And with all the setup, we had recently taken permission to invest in the U.S. We are going there. As we speak, we are identifying the place with the new Trump administration in place. We are identifying where we will be setting up our factory. And I think the U.S. will contribute significantly from FY27 onwards. I'm very sure about that. So I think that's good news for people who are setting up manufacturing facilities in the US, that they'll be able to take advantage of President Trump's bargaining tactics.
Thank you. Congratulations for the future.
Thank you, Sandeep. Thank you so much.
Thank you. Our next question is coming in from Ms. Smita Mohta from Credent Asset Management. Ms. Mohta, please unmute your microphone.
Yeah. Am I audible, sir? Yes, we can hear you. Okay. So two questions. You sound very optimistic about the business moving forward. Still, I wanted to ask two questions. One was, as a DNA, you have changed from being anti-drone to drone, and you sound very optimistic about this joint venture, whatever you are doing. Looking at the financials, which the order book is showing us, and the last two quarters' growth that we are seeing, that has gone up for a toss and making us think that actually 25 and 26 will be a bit muted, and 27, 28 will be forthcoming. How do you like this drone system addition that you are doing to your wallet as a product mix? Will it benefit you more or the company that is coming more, which will be taking your market also for the product sale of them?
Smita, thanks for the question. Your first question was the movement from anti-drone to drone. The anti-drone system, very frankly, I think we are in a very, very good space in anti-drone systems. I think the ones we are supplying are extraordinary and absolutely world-class.
The second question, why are we getting into drone systems? This is a very, very cold-blooded decision that we took. In fact, we avoided getting into drone space for a very long time because we were thinking we will get world-class technologies at some point in time. But what we have seen is even now, the products being supplied to the Indian Armed Forces still have Chinese parts. They're really not cutting edge. Again, I don't know why this has happened, but the actual drones that are being developed are really, really lacking in world-class position. So we deliberate. Again, anti-drone is one part of the total equation. If you don't have cutting-edge drones, you just can't win a war. So we think that we can really, really again, we are not trying to reinvent the ground up.
What we are trying to get is the smartest and the best and the deepest player, deep tech players in this segment, and getting them together to develop the world's most advanced drone systems. It is, again, as we always do, we are not focusing only on Indian Armed Forces because we don't want to give something to Indian Armed Forces just to satisfy the RFQ requirement, but we want to give them absolutely world-class product that is absolutely leading in the world, so this is what I have in mind. And this is the reason we're getting into drone systems because without drones, absolutely cutting-edge drones, we cannot win a war, and what we have seen till now is pathetic, and we are very, very unhappy with what the drone ecosystem has delivered.
So we are hoping that we will fulfill the gap that is there to ensure that we are not found wanting when any conflict happens in the future between India and any other country. Smita, you're on mute.
So basically, sir, I wanted to know that are we benefiting with an increase in this, or is the company which is coming new, which will benefit? Because currently, we don't know if we will be having that drone orders from the government.
So yeah. So yeah, Smita, actually, I'm a little amused by the question. The thing is, when two people get together, there is a synergy produced. It's not that one guy is benefiting, the other guy is losing. It's not a fixed pie. It's a fixed pie. It's actually the pie is growing extraordinarily big. It's multiplying. And I think both of us will benefit significantly from this. Most importantly, the customer will get absolutely cutting-edge technology from this collaboration. So I don't think there is anybody who's taking advantage or getting something while the other guy is losing. I don't think in that way at all. I hope, Smita, you're getting my point.
Yes, sir. Just wanted to end my query with one last question. That is, have seen your shareholding going down? So with so much of optimism in the company, why is the promoter shareholding going down?
Smita, very frankly, we have always had the same shareholding for a very, very long time. And only in recent times, we have sold 1% of the holding, not much. Me and my co-founder and my brother, we sold 1% each. Take some money for various reasons. Again, we have been very, very conservative. And so very little has been taken off the table.
The majority of the holding continues to be in the family's name. There is no sale other than one sale that has happened. We don't even intend to dilute any further. So that was actually announced at that point in time. We don't intend to dilute any further in the near future or even the late future.
Ms. Mohta, please unmute your connection.
Yeah. Thank you, sir. Thanks for the question. All the best.
Thank you. We will have our next question from Ashish Soni, Family Office. Mr. Ashish, please unmute your microphone.
Yeah. So from this acquisition, how much revenue you are seeing in the next two to three years scaling up and what margins? Because drone seems to be a commoditized business to me, at least. You said, I think what I heard, he has an IP and all. But will we get good margins in drone business also?
Again, the competition was like everybody was getting parts from China. And when you get everybody, it's everybody gets parts from China. I mean, again, there are some players who are really, really who do Indian production or don't include any Chinese part. But typically, when everybody is getting from the same source and just assembling and selling, then the war becomes very, very difficult to win. But in this case, what we are bringing, we are bringing a whole new level of technology. It's a different technology, different level of indigenization that is happening. So I think with these kinds of indigenization and the different technologies, the counter-rotary technology and the engine being completely indigenized, specifically for the drone companies, we think we are not only going to supply to India, but this will become an absolute manufacturing hub for the world. So we will be exporting a lot from here to other foreign countries.
And I'm not talking about Africa or Middle East. I'm talking about North America and Europe. So that's where a lot of exports will happen. And I think my personal belief is that the margin profile will improve after this collaboration starts happening in turnover. So with respect to the turnover, I don't have. I will just defer it. We have some figures which are very, very conservative, which are like INR 50 crores, INR 100 crores kind of thing. But I think in the long term, this will be significantly high. I would say wait till FY28 or something. I think it's going to be really, really mind-blowing. The figure that we'll get will kind of compete with what we are doing in anti-drone and simulator space.
And you seem to be more optimistic on the U.S. business. And you were there in airshow also. So I just want to understand qualitatively how much revenue or are you having firm discussion in terms of orders with the customers? What is your optimism coming from, at least for the U.S. business when you set up a manufacturing plant? Because last quarter, you were optimistic. Right now, also you're optimistic. So give qualitative color what is happening and how much revenue scale-up, at least from U.S. business, you can do manufacturing from U.S. in FY27?
FY27, what is happening at this point in time, there are many foreign companies, foreign countries that are actually asking us for these products. And they would prefer that we do the manufacturing in U.S. and made in U.S. branch. And especially with the new administration in place, they are saying that we are under pressure to buy from the current administration. So they would love to buy the product that we have rather mostly from U.S. at this point in time. And these markets, typically, they're easy to service from U.S. That would include the South America and North America market. And typically, some customers are there who will not buy from India, and they prefer to buy from their own allies. That is, for example, the NATO forces. So NATO allies are some other market that we are looking at from U.S.
So given these are the kind of things. So again, I will not put a figure on this because, again, this will be too premature. And at this point in time, it's actually not very, very clear. The numbers are very large. But I think as we go into FY next year and mid next year, we should be able to give a good color to the FY27 figures.
And lastly, any guidance on FY26? Because you said your order book is getting shifted, but you are still hopeful. But guidance-wise, do you think you'll meet the 50% CAGR expectation for FY26?
So yeah, so FY26, if there is any shortage, given the current situation, we think there will be some shortage. We are very sure that that will be filled up in FY27.
So you are saying it will just move into FY27, but your overall guidance will remain the same?
Absolutely. Again, I probably use this figure. It's going to be average CAGR of 50%. I will still stick by that, stand by that estimate.
Okay. Thanks and all the best.
Thank you, Ashish. Thank you.
Thank you so much. Our next question is coming in from Neel Mehta from ICICI Securities. Please go ahead.
Hi, sir. Am I audible? Yes. Yeah. A very hearty congratulations on a good quarter. Just wanted to ask you a few questions. Our revenue guidance was INR 1,400 crores. With these acquisitions, is it still staying at INR 1,400, or are we revising it upwards? I understand that the order book has come at a delay. So it might be a spillover effect to 26, 27. But for 26, are we still on INR 1,400?
No, we will be revising that, Neel, as we speak. As the orders come in during the Q4 and Q1, we will get a very clear picture. And I think by end of Q1, we'll be able to do it. But again, if there is any shortfall, we are reasonably sure that FY 2027 and 2028 will more than make up the shortfall. And we still stand by the average CAGR of 50% for the next three years.
And sir, the new acquisition that we have had in the new simulation area, how many patents do they have already?
So they don't have any patent. They have applied for the patents. I think they applied for a few patents. The patents are yet to be granted. So that's the profile. Again, we expect a lot. Again, they have generated an extraordinary amount of IP, but they have not been very aggressive in asserting that IP. But as we speak, they have started the process. And I think at least 10 patents will definitely be coming out, if not more than that.
Okay. And sir, the new acquisitions that you've had, what would their order book tendering number come up to?
So I would say, I think for the new two companies, they are just starting. They have just developed the deep tech, but they haven't sold much. But in the case of ARI, I think at least INR 100 crores will be the addition that we will have without the naval simulators coming into place. Once naval simulators start coming into place, that will really, really, I think, double, triple, or something. Again, I personally feel that, again, one of the things is that in India, we are so obsessed with the two borders. On the east side, we have a friendly neighbor. On the west side, we have a large friendly neighbor. So we are just obsessed on those two borders.
Just imagine, turn the map upside down. You see the whole Indian Ocean completely open, and India standing there as a small triangle there. So this is what is opening up for India. Indian Ocean is going to be the future of all our issues and conflicts and dominance that are required. If we are able to establish ourselves in Indian Ocean, then we are through. We are absolutely the world power. And for that, we require a tremendous amount of training on the latest technologies. And this is exactly what ARI's collaboration is bringing. Our collaboration is getting the weapons onto the ships and bringing the absolutely latest naval training systems. I think the INR 100 crores that they are auditing is not the thing, but the few hundreds of crores which the collaboration will get will be the key in getting to the next level.
Okay. If I may just swoop in the last one, if we are going under acquisitions, I understand it will take time to ramp them up. For at least the next one quarter or the next two quarters, a hypothetical guesstimate on EBITDA margins, somewhere between 40%-50% we were standing at, where would these acquisitions take us to?
Acquisition at the EBITDA margins, I think if we should be able to maintain at 35%, that's our target. So 35% EBITDA and 25% PAT is something that we feel that we should maintain if we are an extreme IP value-add company. So if we fall below that, I mean that I think we are doing something wrong. So we are very conscious about that. And PAT, again, PAT 25%, EBITDA 35% is our target.
Okay. So thank you so much. All the best.
Thank you, Neel. Appreciate it.
Thank you. We'll have our next question coming in from Abhishek Shah from Ambit. Please go ahead.
Hi. Good evening, sir. So just one thing. For the last year or the last few quarters, tank simulators was also a pretty significant part. Both tank and battlefield training simulation was a pretty significant part of our revenue. And we've not spoken much about that. Also, the first three quarters of the year, order flow has been also quite weak, as we've discussed on the call. So anything from the Indian government in terms of this segment? Is it saturated? What are we thinking about that part of our business going forward?
Okay. The first three orders, again, Abhishek, we were, in fact, we have been telling that the order typically comes towards the Q4. And we have been guiding that it will start towards the end of the Q3 and come in the Q4. And we were conscious that the order flow may not happen in the first three quarters. So that is about, even though our team was saying that the orders may come through, but we were conscious about that. With respect to tank simulators and battlefield simulators, there is a lot of demand at this point in time. Some of the orders that we are talking in the order book position include the tank simulator.
Now, battlefield simulator, I don't know what that means, but we have combat training centers. That's the complete training on the battles. Those simulators have a very huge demand. And they are a complex combination of all the simulators. That is actually very few companies in the world can do that. In fact, I don't think of any company that can do in the world the kind of all the equipment simulators put together, working in sync to trying to simulate the war is something that Zen can do very well. I don't know of any other company that can do it.
So yes, these are the two very big opportunities. And we expect these to come. Again, one of these will actually blow our minds away. And they would be an absolute black swan positive event. So we hope it may happen in FY27, if not in FY26. That will be a very, very large order when and if it happens.
Sir, so any impact of the elections in terms of the order flow that you think has had any impact?
Yeah. Yeah. I think that has had an impact, Abhishek, even though I would like to say that there wasn't any impact. But we saw that orders slowed down because the government was working at a little slower pace than they would have worked. But I think those issues are getting resolved as we speak. They are catching up, even though we would love for them to do it at a faster pace. Because remember that government placing few orders can really rejuvenate the whole capital market for defense. And this is the cheapest kind of funds the Indian government can get for the defense market. So I wish they get the message and they really, really start giving the orders and rejuvenate the defense sector very soon.
Thank you so much, sir, and good luck.
Thank you, Abhishek. I appreciate it.
Thank you. The next question is coming in from Ashutosh Garud from Ambit Wealth. Please unmute your microphone.
Yes. Yes, we can hear you. So we wanted to understand as far as FY26 revenues are concerned. So we at the start of the quarter.
Sorry, to interrupt. We are not able to hear you clearly.
Am I audible now? There is an echo. Just a second. Is it better? Yes. Is it better now?
Yeah.
What I was asking that at the start of FY25, we had an order book of around INR 1,400 crores, and we are now about to deliver INR 900 crores offline. Now, entering at the end of FY25, start of FY26, we are having a lesser order book unless we get some orders in the last one and a half months. Would it be fair to say that the growth as far as FY26 is concerned is very well been slashed? And the 50% growth rate that you are mentioning would be fairly back-ended as far as that growth is concerned?
I think until we get them again, I think we feel that there should be growth. It may not be flattish. But again, what I have been saying from the beginning, that whatever is the deficit in FY26, we will make it in FY27, 28, more than make it. And we still stand by the statement that we made that the average CAGR of 50% will be achieved. And I understand your concern that our order book is less than the order book which was in the end of FY24. So we are concerned about that. But the fact is that the orders have been a little slow in coming. But again, we see that government is moving very fast, and order position will become a little better by end of Q1. And we will keep you updated about it.
But overall, we have been never more optimistic about the Indian defense industry, placing orders on the defense industry. They are acting very fast. They are creating the budgets which are required for them. And they want to buy from Indian players, notwithstanding the fear that President Trump is pushing Prime Minister Modi. Prime Minister Modi is not a guy to be pushed around. He will definitely do. He may act with all the decency and diplomacy that's required, but he will completely act in the interest of the country. I don't know if any other leader would do that. But so we think that the orders will come to Indian companies and in large numbers as we speak.
Thank you. Thank you. Thank you so much.
We'll have our next question from Mr. Manan Vora from Walfort PMS.
Yes. Thank you for the opportunity. Can you hear me?
Yes, we can hear you.
Okay. Great. Sir, my first question is on, can you please update us on the Goa facility? Last quarter, you said that we were at the blueprint stage. Now, where are we?
So we are waiting for the permission from the Government of Goa. And we were supposed to start the construction as we speak by February 15. But I think there is some delay in giving the permissions. But the moment the permission comes, we have the blueprint, everything ready, we'll start the construction. We hope to operationalize it probably before the end of this calendar year.
Okay. Got it. So the next question would be that last call, you had said that we might have around INR 1,100-INR 1,300 crores kind of an order. But you are now saying that the pipeline is of INR 800 crores.
That's for only for domestic orders, yeah.
Okay. So earlier, when you had mentioned INR 1,200-INR 1,300, that was including international?
Oh, yeah. Yeah. I'm assuming that I meant the total order book would be about inflow would be about INR 1,200 crores. So yes, I had assumed that it included exports also, yeah.
Okay. Got it. Okay. Got it. Then, sir, two more questions. One would be, can you please also give us the margin profile for Vector? I know it's very small as of now, but still some margin, or are we lost in that company?
No, no, no, no. So the thing is, listen, this is at R&D position now. I think we will start the sales starting next year. I think in six months or so, we should start getting the sales. The margin profile, in no case, can be less than 25% PAT. I think the amount of value they will be bringing, the amount of uniqueness that they are bringing to the products, and the amount of power per rupee that they will be giving to the customer will be extraordinary.
That if they were to buy, even at current market prices, the same thing, the margin profile will be very, very good. Again, all companies that add IP, they're not just buying and assembling. That create deep IP, they can demand, and they do get margins the way Zen is getting. So I think there will be good, there will be a good margin profile. They'll definitely not dilute our margin profile. If they fail to improve the margin profile, I would be very surprised.
Okay. Got it. Sir, I asked because in the press release, I can read that it did around one crore something of turnover in 24, which is why I just asked.
So that means this is just that experimental product that they sold to somebody. So it's not a, it's actually they could have been given away something like that. The actual commercialization of the products will happen in the next year.
Okay. Got it.
So even as you see it's going to be very large. I think the orders will increase by FY 2027 and 2028. They're going to be a very, very large business for us, yeah.
Got it. So just a follow-up question. Sir, even as you said that we don't look for anything which is below 25%. But one of the participants asked about ARI, and Ashok Sir said that they are doing PAT of 13%-14%. Then how do we look at that?
Okay. First of all, what I mean, we don't acquire companies based on PAT profile. We invest in companies based on their uniqueness and the value they bring to the customer. That means they should be unique within the potential to become a global leader. So once these uniqueness and deep technology is available, the margin profile automatically has to be very good. Because it's not a commodity product, it is a deep IP research product, that means the profile will be good.
So that is right. But the 25% will come automatically if these things are fulfilled. So at present, the profile is at 13% or so. But when we mix our weapon simulator with the commercial simulator, marine simulator, what I said was that the profile will improve to at least 25%. So when we start going to enable simulators, I think the profile will be much, much better than what is there in the commercial marine segment.
Okay. Understood. And sir, my last question would be that, sir, even as we are now going into drones that you said, so who would be your competitors in the listed space? Like Optiemus could be one or something because they are also doing. So what do you think? How would you compare yourself with someone who's listed?
So I will not compare myself with anybody who's listed. We want to create a market in which we want to absolutely help the Indian government become unbeatable, the Indian Armed Forces become unbeatable. So for example, that the counter-rotary technology that is there, it is 30% more efficient. It is very responsive. So what it can deliver is something unfathomable. Can we create swarm drones, underground, underwater swarm drones? Can we create? So, there are multiple applications as we speak. And again, we will help. This is the two things.
One is the drones that we may create ourselves, which will not be done by this company. This company, the dedicated ecosystem supporter, ecosystem supplier, the engines, the counter rotary technology, etc. So they will be doing that. And they will be absolutely. I think they will be number one in the world without exception. So we will be trying to look at some companies that can use these technologies and other technologies to create the drone. So we are not into drone. What I'm saying is we are on the way to become, probably on the way to become a drone company sometime in the future.
Okay. Okay. Got it. That's it. Thank you so much.
Thank you. We will now take the last question for today from Mr. Abhay Jain from Hem Securities. Mr. Jain, please unmute your microphone and go ahead with your question.
Hello? Yes. Yeah. Am I audible? Yes, we can hear you. Okay. Thank you for the opportunity. Ashok ji, we have been really optimistic about Zen. And that is partly because of your optimism about the market. So considering that there have been really big statements by our honorable Minister Rajnath Singh about calling 2025 as the year of reforms. And we have been hearing good things about Defense Acquisition Council as well, DAC as well. But that is not getting realized into orders or maybe, and this is not about Zen. This is about all other companies as well. There has been a slowdown. So is the opportunity real or how big is it for Zen for the next three to five-year horizon? Even if it is getting shifted maybe from one quarter to the other, it's okay.
We understand that it might be due to elections and all. But is the opportunity really that big? And how much are we trying to achieve out of the total addressable market present for anti-drone simulators, both of these businesses combined as on today? And sorry, just one last line that when he talks about year of defense, I mean year of reforms for defense, he's also indicating about technologically advanced combat-ready force. So they are focusing a lot of technology. So I'm pretty sure we must be one of the front runners in getting a pie out of that. Is our understanding correct? And what are your comments on that? Thank you.
I think you are very much on track, Abhay. The fact is the market is really, really big. I really don't want to tell because that will sound obscene in this forum. What we have seen is in the last few months, the market size has been increasing both for simulators and for anti-drone systems only for India. When we say that we will grow at a CAGR of 50%, it's actually we are saying that in a very, very conservative manner. To your question, why is the order slowed? I think the orders have slowed when I think there are some bad players in the industry in the sense that if you supply products that don't work in the border, like Chinese things, or there is some kind of reservation.
There is some disappointment by the armed forces that we have let them down. I think that's the overall feeling, but companies like Zen, there are some very great like Avantel, Solar. These are the companies that are really, really doing something which is very, very unique, and we think that we will overcome the negative impression being created by these assemblers and importers, and we think that when he says the year of reform, this exactly means that we need to weed out the bad players so that the good players can flourish.
And the good players, especially those, not the manufacturing coolies who say we are part of the value chain of some big company, not those guys. We are really talking about the innovators and the IP creators and people who do deep R&D. That's what Mr. Rajnath Singh was referring to when he said that this is a year of reforms for getting high-tech technology into the armed forces. I think your intuition is absolutely right on that point.
Okay. Okay. Nice to hear that from you.
Thanks, Abhay. And Swapnil, if you don't mind, can we extend it by 10, 15 minutes if there is somebody there? It's 5:37 P.M. Let us do till 5:45 P.M. if you don't mind.
Sure, Ashok sir. Thank you so much.
If they are in the queue, some people are in the queue.
Yes. We will announce the next participant's name. We'll wait for a moment while the question queue assembles. We have the next question coming in from Jatin Jadhav from Sahasrar Capital.
Hello. Am I audible?
Yes, we can hear you.
First of all, thank you so much for extending the time. So I have two questions. First, on the anti-drone system, which is the Vyom Kavach, which you are talking about, which has four layers. So based on my research, I've heard a lot of companies making claims that they have the best, they have the best, X, Y, Z. You for sure must have been hearing them as well. So in detail and in a very crisp manner, could you explain what are these four layers and how are we so different? Because as far as my research goes, one of the most effective ways of countering any drone or a swarm of drones is basically EMP directional weapons. So that's the first question.
Sir, and second, I want to understand since you've acquired ARI. I do believe it's a very good strategy of acquiring someone in the naval simulation sphere. When will we see some good traction going there? Can we easily manufacture a destroyer simulator, an aircraft carrier simulator, or the subsystems of an aircraft or a destroyer? Are we targeting those or a whole simulator system for those? Thank you.
With respect to the Vyom Kavach, again, very frankly, we have been hearing these claims about companies that have been very active in the space of anti-drone systems. And when I meet investors, they keep saying, "Ashok, these companies, they have developed this." Again, in 2023, about more than a year back, there were two tenders floated by the Indian Armed Forces. Now, there were only two or three companies that came to the trials. There were 20 companies that came to the pre-bidding meeting, and there were six companies that put in the bid. But who came to the trial? The question is, we will not discuss what I have, what you have.
The final proof of the pudding is, are you actually getting your equipment for trial or not? And then who got qualified in 2023? There were two tenders floated by the Indian Armed Forces. In both the tenders, Zen was the resultant single vendor situation. So that is what. So if there are any other companies that were there in 2023 with better technology, they did a fantastic job of hiding the technology from the Indian Armed Forces. But so we will wait. So I'm not saying that they will definitely, there is no better technology. But the proof is when the tenders are floated, please get your equipment there and show to the Indian Armed Forces. And again, the Indian Armed Forces are saying they're IDDM, that they are going to go through your software code. They're going to see the software.
They're going to see your Gerber file for the electronic PCBs that you have done. They see how you have designed the thing. Then they're going to see your SolidWorks, exploded views of the product, the CAD profiles, everything. They're going to do deep search. If you are just going to come and pimp for somebody, resell somebody's product, they're not going to accept it. And even then, our confidence is, even if you're reselling, you don't have a better product than us. So this is based on our experience at the ground level. So that is why, having said that, again, in the case of this multiple-layer thing, we are aware of the EMP technology. But as we think that when you actually, how do we create an anti-drone system that can effectively destroy only the enemy's drones?
Now, what we are doing is when we are talking about the four layers, the first layer is our software, soft kill, where we send the soft kill signals to disable the ground communication and do everything, deny the GPS signal, etc. And only the drones that are able to pass that stage come to the next one in which we actually send kamikaze drones to go and destroy them. Now, if I had an EMP activate at that point in time, it will destroy both my drones and the competitor's drones. But I can be smart enough to use the anti-drone technology, the soft kill technology in such a way that my drones are not impacted, but the other drones get completely impacted. So the third stage is, of course, we use missiles. Again, these missiles are something that we'll buy from third party and integrate into it.
The fourth are the actual weapons that we are currently, we are in the process of manufacturing, licensing, etc., which can be integrated at the final stage. But in the final stage, we can also integrate existing weapons like L70 there for the air defense that we have done already. We can use any existing weapon that is there. But in case they want something very versatile weapon like a 12.7 cannon or a 20 gun or a Gatling gun, we can incorporate. We are planning to offer that and give it as a standard offering choice to the customer.
Sir, regarding that, doesn't it make more sense to add an EMP directional weapon in the second? Because I'm saying because there's a company in the United States who've deployed Leonidas, which essentially is a directed energy weapon, which is, I think, deployed in Afghanistan also. So according to them, their logic is, let's quadrant off six, seven kilometers of entire airspace where no drone, any drone of whatever size might come through. And then the air and space where we see our drones also flying or let's say enemy drones might also, there we can have a more hard kill, let's say Gatling guns or send kamikaze drones. So that's where the question rose up.
The technical person, Karna, can you just very quickly reply to the technical question?
Ye ah. Hi.
Hello, sir.
So very good question. And you have done your homework well.
Thank you so much.
So the first thing is directed energy weapons are very fun to hear, and they need very good tracking. They need good visibility, that is, weather conditions. And they can be obscured with smoke and other systems that are deployed in that area to dissipate. The directed energy is basically light, microwave, and such stuff, which can be dissipated very easily, so they are research in progress.
Zen is also doing some directed energy experiments in-house along with CHESS. It is our DRDO's very own directed energy unit, so yeah, as these things become viable, there are very good news clippings that are coming out for their companies, but rail gun is one, directed energy is one, EMP is one. They are on the horizon, but not yet completely proven, so a mix of all is what Zen is doing, and let's hope that works out.
Got it. Got it. Yes, yes, so it cleared my doubt. Thank you so much.
I hope you have noticed both of them are bald. So unless they are bald, we are not acquiring those companies. So I think we'll go with the question and answer. Let us go till 6:00 P.M. Are there still people waiting, Swapnil, in the queue?
Yes, Ashok sir. We have.
Swapnil, let us go till 6:00 P.M. if you don't mind, yeah?
No problem, sir.
Thank you so much. I appreciate that.
Our next question is coming in from Mr. Arman Nahar from Blue Sky Capital. Mr. Arman, please go ahead.
Yeah. Am I audible? Yes, we can hear you. Yeah, yeah. First of all, sir, thanks a lot for again extending. And second thing, with your word, because most of the companies, the way we hear you, that gives us the conviction that you are not just working for the company, but you are working for our country. The way you passionately tell about that we want to give a quality product for our Indian Armed Forces, that brings in not just goosebumps, but yeah, a feel-good factor that we are associated with you. Third thing, practically to be around like order book, as we have said that it might get into Q1 or Q2, the company we acquired, is that INR 800 crore pipeline we are talking about, those companies' acquired order book is also included in that? And what's their pipeline?
No, they are not included in this, Arman. Arman, thank you so much. Really appreciate. We love to have people who love the country as shareholders. We want to make money also for you. Yeah, coming back to this, we think there is an order book for them, but it's not very large. It's probably around INR 100 crores or so. So it's not very large. But again, when we actually add more products, when we add more, mix our technology, I think the order book, we will be exposing ourselves to, again, I mean, the more I dig into it, the whole world is moving towards this blue ocean security.
They want more security there. They are thinking various ways. And we see that in the Philippines and all this nasty behavior that's going on, I think this is really, really becoming a big opportunity. And it was very opportune that we are able to get this great company that Shravan had built over the past two and a half decades. Yeah, I think this is a, but again, the order book is not so significant. It's only INR 100 crores. But we expect to collaborate with them and improve it significantly.
Okay, okay, okay. Thanks a lot. That's it from my side.
Thank you so much.
Thank you. Our next question is coming in from Mr. Rudresh Kalyani from Kalyani Group. Please go ahead with your question.
Good evening, sir. Am I audible?
Yes, we can hear you.
Yeah. On the one hand, you told that we have increased the manpower. But when we see the P&L statement, sequentially, the manpower cost has come down by somewhere around 7.5%. So what's the reason?
So yeah, Rudresh, so you are right that in the last quarter, it was INR 14 crore. And in this quarter, it is around INR 12.10 crore. But if you see, in the current quarter, there is a reduction in turnover by almost 70%-80% compared to Q2. In Q2, our turnover was around INR 241 crores. And in this quarter, it is INR 141 crore. So against this 70%-80% reduction in turnover, there are some reductions in the contractual employees to the extent of INR 2 crore. Otherwise, our employee cost remains the same only.
Okay. And one more thing is our other income has increased exponentially. So what's the reason?
So other income, if you see, we raised the INR 1,000 crore in the month of August, on 22 August 2024. So that is an interest income at the rate of 7.5% on a quarterly basis. So if you see in Q3, our EBITDA was around 58.68%. This was around, it is around 35%. If we reduce this other income, in other income is INR 22 crore, out of which INR 19 crore is the interest income. If we deduct this INR 19 crore, then also our EBITDA is coming around at INR 39 crore.
So there is a reduction of around 8% in EBITDA. But this 8%, as I explained to you, there is an increase in expense actually in compared to Q2. If you see, our manufacturing cost, employee benefit cost, and administrative and other cost was 23% in the last quarter, 15% in last quarter, Q2. And in this quarter, Q3, it is 23%. So there is a delta of 8%. So that's why this total EBITDA has come down to 8%. So it is 10.27%. But again, if we add the other income, it is coming at 35%. So this is in absolute numbers, overheads are remained the same. But if you calculate the percentage of expense on turnover of INR 240 crore, then it is coming to 15%.
In Q3, if we consider the same overhead on the basis of percentage of INR 141 crores, it is coming at around 23%. So there is an increase of 8% in the expense. But again, this 8% is compensated by the increase in the other income in the form of interest income. But again, what we say is that if we compare, we generally give the guidance for the full year. If we compare the margin for nine months, then also in nine months, our turnover was INR 637 crores. Again, this we have achieved the EBITDA of around INR 252 crore rupees. This is again 37.94%. And even if we deduct this interest income for this nine months, it is INR 29 crore rupees. If we deduct this INR 29 crore rupees from INR 252 crore rupees, then it comes at INR 223.72 crore rupees.
If we apply the percentage on INR 223.72 crore divided by 637, then also EBITDA is coming exactly 35%. This is operational EBITDA. So on a nine-month basis, everything is on track only on that. And even in Q3, it is only due to the reason that our turnover is below average. Again, in Q4, our turnover will increase. Our EBITDA will again increase. So overall, we will be at the end of the year, we will be more than 35% EBITDA and 25% profit after tax.
Okay, thank you. And my last question is, see, we talked about the CR tech. So can that tech be sold as a model for the other drone guys to increase their efficiency?
No, no. So that is the only purpose of that. We will be selling it as a, so Vector will be focusing on selling these subunits to support the drone ecosystem in India, so they are completely focused on that. They will not be doing any drones by itself. They'll be supporting, so drone is another acquisition that we are negotiating with somebody at this point in time. But that's a different discussion altogether, but this will be the drone support, drone ecosystem supporter for India. And there will be a lot of exports to both the most advanced countries in the world from India to the target countries.
Yeah. See, you talked about Bhairava Robotics, but you didn't tell anything about that. So since we are not into manufacturing, what is the use of this?
What is your question? I didn't understand.
No, no, no. I meant that robots are meant for the automation.
Just to Rudresh, I am giving more time for Q&A. In fact, Bhairava, and I didn't want to go talking about product. Otherwise, we would have exhausted the whole hour discussing that. So Bhairava, I will talk about them in the next call, earnings call. Definitely, we'll go deep into it, show what they are doing. Okay? Rudresh, thanks.
Thank you. We'll take our next question from Mr. Gopalakrishnan Subramanian from Uttaransh Investments. Please go ahead with your question.
Yeah. Excellent afternoon to the team. Excellent evening to the team. Hope you are able to hear me.
Yes, Gopal, we can. Please go ahead.
Yeah. Fantastic. Now, sir, one thing I see that there is a performance deterioration in the trailing 12-month period when I compare it with the three-year period. In the three years, sales growth has been 100%, whereas profit growth was 257%. Whereas in the trailing 12-month period, sales growth is 100%, but profit growth is only 92%. That is, the profit growth is trailing the sales growth percentage. Any specific reason for that? That is point number one.
Point number two is this promoter holding. Somebody raised that point. Actually, when I observe, when compared to March 2023 till date, the promoter holding has come down from 60% to 49%. There is an 11% reduction in promoter holding. When I see there is a cash of INR 1,100 crores in the books, I'm not able to understand why promoter holding has to go down when there is so much cash in the books.
The second thing is, again, between March 23 and now, in addition to sales by the promoters, I think we sold about 40 lakh shares in all. The core promoter, me and my brother, sold 1% each. Other promoters sold 2%. So there was a 4% drop. But the reason why it has dropped by 11% is there was a QIP done for raising these INR 1,000 crores. So that caused the dilution in the overall share capital increase, and that caused the dilution to dilution, and that has resulted in the promoter's equity coming to 49%. Okay, okay. The other question is Mr. Afzal will answer.
Yeah, yeah. So Gopal, you are asking about the growth, right? So growth, at the beginning of the year in Q1, we gave a guidance of around INR 900 crore. Again, say last year, FY24 turnover of INR 430 crore. So we already gave a guidance for a growth of 110% considering that. So I think that it is, I think, a good growth, 110% considering the current environment. And considering total nine months, we are on track.
So we request you to look at it for the whole year turnover. And as we mentioned earlier also, that currently we have achieved INR 637 crore in nine months. First, in H1, it was INR 494 crore. In Q3, it was INR 141 crore. There is some deferment of shipment in Q4, but that will be made up in Q4. And we are on track, and we will achieve our guidance of around INR 900 crore we gave at the beginning of the year.
No, no, no, no. My question was different. I'm talking about sales growth and profit growth. See, the sales growth in the three-year period, 100%. Profit growth, 257%. Whereas in the trailing 12-month period, the sales growth is 100%, but profit growth is 92%. That is, the profit growth is trailing the sales growth. You understand my point? I'm not talking about your growth and guidance and all that. No, no, no. I'm only talking about the variance between sales. See, sales growth, if it's 100%, profit growth has to be more than that. Right?
Yeah, Gopal, very briefly, this is the result of the product mix. When we have simulators, we have very good margins, actually. But in the case of anti-drone system, we bid very aggressively because we perceive some competition is there, and that's an entry strategy that we have done. So whenever we have drones as a turnover factor, our profit doesn't grow as much as the sales growth. So that is what the difference is.
Okay, okay. Now, I have actually some more questions. Since there is no time, who should I address those questions to? So maybe I'll send a mail. Maybe I can get an answer.
Please send it to cfo@zentechnologies.com. He will get back to our investors at zentechnologies.com. We'll respond immediately on that.
No, no, no. Because I don't want to, I know the time is limited. You already extended the time. I thank you very much for that. I was wondering. I was keeping anxiously waiting for my opportunity. So thank you for that.
Yeah. Okay, Gopal.
Thanks, Gopal.
Thank you. We will take that as the last question for today. I will now hand it over back to the management for closing the questions.
Last one question, please, Swapnil. Please take somebody.
Okay, Ashok sir.
Yeah, please, please.
We'll take the question from Mr. Deepak Sharma, who is an individual investor. Please go ahead.
Thank you, sir. So thank you very much for the opportunity. Just my one question. Despite having a very good order book of INR 900+ crore in the Q2, we have executed only the INR 150-something figure. So what is the reason behind what is the gap?
So the thing is that out of the 900, we have almost about 300 are these annual maintenance contracts. So this is the September 30th figure you are giving. I'm very sure about that. So September 30th, so we have executed. So out of that, if you take the 300, we have about INR 600 crore that we need to execute. So we think that out of that, we have executed INR 150. And in the Q4, we'll fill up the gap, whatever is there to execute the INR 900 crore thing.
And whatever is remaining will be executed in Q1 and Q2. The whole thing will be executed. Yeah.
So I'm summing up that within the next two quarters, means Q4, Q1, and the Q2 of next year, you will complete this remaining, I think, INR 850 crore something order book, right?
No, no, no. Out of the, if you remove INR 300 crore, maybe a little INR 250-INR 300 crore of AMC INR 600 crore is remaining. Out of that INR 150 crore we have executed, you are saying, INR 450 crore will be remaining. So that INR 450 crore, we will execute in these three quarters in addition to the new orders that we are getting.
Okay, okay, okay. Thank you. Thank you.
Ashok sir, you can continue for the closing remarks.
Yeah. So I think there may be still a lot of, by the way, I love interacting with my co-owners of the company, and I think this is a very, very sacred time. I'm sorry if some of you have not been able to answer your question. Again, please address them to investors@zentechnologies.com. All will get answered without exception. Our CFO at zen-technologies.com will be promptly replying to them. And I look forward. I have never been more optimistic about the defense sector as such. I think the next three years will blow our minds away. And let us support the Indian government in achieving their objectives of becoming absolutely unbeatable in the world. And we thank you again for the fantastic support that you have given to us. I appreciate it. Thank you so much. Thank you. On behalf of Zen Technologies Limited, that concludes today's conference call.
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