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00:00Amit, I reckon that at the moment, we want to start by talking about the latest that you have.
00:07And, you know, we've seen you raise another 135 crores via your QIP.
00:12What are you going to use this this fundraise for?
00:15And what are the working capital requirements at the moment?
00:18And are there more funds, such fundraisers on the table?
00:23So firstly, thank you for inviting me on your show.
00:27It has always been a pleasure to talk to you.
00:30What this QIP fundraise has been is, as you rightly thank you for showing the clip before this particular interview.
00:39The space programs are going to go in a much, much different trajectory than what they are today.
00:46So and when when it comes to space surveillance and we've been listening to certain news that happened in the last couple of days prior,
00:56the space programs, surveillance based space programs.
01:00And I needless to tell you that Paras Defence is right in the thick of it.
01:04So looking at the kind of opportunities that we have in front of us, be it space programs, be it our RF and microwave domain or be it our Controp Paras JV.
01:15Any one of these will require a good amount of working capital.
01:19It assures you a good amount of healthy growth.
01:22And I think all of this put together, we wanted to be ready for the opportunities that are in store for us.
01:28Hi Amit, Anushi joining in here. You've mentioned about one of your associate companies, which is Controp Paras Technologies Pvt. Ltd.
01:36In fact, you also had an order win from L&T, which is about 305 crore.
01:40I want to understand from you, so talk to us about this order win.
01:44What does this mean for the company?
01:46And also want to understand why was this award, why didn't you bid directly for this award?
01:50And why was it through an associate that we are seeing this order win for the company?
01:54So firstly, I would like to tell you what the product is.
01:58The product is an electro-optic infrared camera, if I would call it in a simpler way.
02:03This is a technology which is very, very critical in its own domain.
02:08India does not have this at the level that Controp delivers to the world.
02:12Controp is one of the world's leading companies when it comes to these kind of EOIR pods.
02:18And the reason for partnering with Controp was to bring this technology to our country.
02:24Now, when we are saying this, a lot of components which go into these kind of systems are manufactured by Paras themselves.
02:31Now, by partnering with Controp, who was initially our customer earlier,
02:36now brings us to a level where most of the components which go inside this particular camera will be manufactured within Paras.
02:46And Paras will be able to deliver more than 50 percent indigenous content in line with Make in India
02:53for this particular critical technology which is required for the Indian defense.
02:57Now, this particular program which L&T has won for CIWS, the camera will be a platform EOIR system.
03:06And then subsequently, the same system can be deployed across various platforms.
03:12All right. Well, moving on, Amit, I also want to understand, considering your order flow,
03:19well, we also understand that you have, well, given a rough guidance of around 25 to 30 percent in terms of your top-line growth
03:26over the next few years, over the next two to three years.
03:29Considering your order flow, considering the many steps India is taking,
03:34I'm sure you also have a lot of traction from your clients abroad as well.
03:39Have you considered upping your indication of what you may achieve with respect to revenues over the next few years?
03:48As you must be aware that I'm in a silent period.
03:52I cannot give you absolute figures, but yes, you are right.
03:56Our projections will turn out to be very, very conservative for this year and the coming years as we can envisage.
04:03Okay, Amit, that's fair that for now, the guidance remains at the 30 percent mark that you've mentioned.
04:09But I want to also talk about the profitability.
04:12We've seen the margins. In fact, if you take Q1 in consideration, 28 to 29 percent was your margin,
04:19and you aim for better profitability going forward.
04:22Want to understand what will lead to this kind of margins that you're looking at forward?
04:26And can we see this 28 to 29 percent as a new sustainable range going forward for FY25 and the new term picture as well?
04:34The first answer to your last question is yes, it will be the new normal and better from there.
04:41What is increasing and influencing our profits is our domain optics and optonic systems is doing much,
04:48much better and has good visibility, good funnel and good opportunity in not just in defense,
04:54but like we discussed in space as well. This is a drastic influencer when it comes to profitability.
05:01This is one. Secondly, the company is making a paradigm shift from a component manufacturer to a subsystem manufacturer
05:08and now to a complete system manufacturer. So when we are doing complete systems,
05:13what we are doing is we are manufacturing a lot of those components which are going inside our own systems,
05:18manufactured in-house, which increases the profitability of the end product.
05:22So all of this put together, yes, we are looking at a better profitable business in the coming future.
05:28Amit, going forward as well, do you think that the mix of optics and optronics to defense could change
05:37or do you think that the 70-30 mix could continue going forward?
05:41So it's a, what do you say, chicken and egg story. The defense engineering gives us a much faster turnaround time.
05:50It gives us reach into almost all the programs that are there in the defense sector.
05:55But optics and optronics systems, what it does is it one takes us into tier one because of, say,
06:02a submarine periscope and these kind of products. It also is our step into space.
06:07So why paras defense in space is because we deliver optics and optical assemblies for space application.
06:14Now, today, we are in the process of already delivering space-borne cameras.
06:20So you can see the surveillance requirements.
06:23The space surveillance requirements of the country will largely be catered by us in collaboration with ESO.
06:30So you can imagine that the optics and optronics systems will grow.
06:35But defense engineering, because of the opportunity size that it is there in front of us, they will grow as well.
06:42There will be slight skew where optics and optronics systems may be about 55-60% and defense engineering may be about 40-45%.
06:51So 55-60 is the mix that we are looking for the optics and optronics system.
06:56But now coming to your order book, firstly, I want to understand what is the current updated order book value that one should look at.
07:02If you take FY24 in account, that stood at roughly around 630 crores.
07:06So from there on, is it at a similar level? And also in order pipeline and opportunity terms,
07:12where are we seeing more of these opportunities from in terms of geographies also and in terms of segments also,
07:17if you can break that down for us.
07:19So like I mentioned to you, I won't be able to give you absolute figures,
07:22but I think if you put the math together, the order book has only been bettering from the last figures that you have.
07:30The product mix, if I have to mention, these will be optics and optronics systems largely to cover about more than 50%
07:39and defense engineering will also cover about 45 plus percent.
07:43In the segments, in the application areas, if you want to say that it is a mix of both land space as well as naval applications,
07:52we are looking at how we can improve our foothold in the avionics sector, avionics as well as aerospace sector.
07:59And we would want to become one of those companies who would be putting EOIR or camera systems onto UAVs and drones.
08:08So that's the kind of growth we are looking at.
08:11Currently, all of this comes from our existing segments of optics, optronics systems and defense engineering.
08:19Amit, that's fair to understand where you're looking at the order opportunities coming in from.
08:23But you know, in your business vision, you've also mentioned that you aim to be the number one anti-drone company of India.
08:29And amongst the top five in the drone companies in India, I want to understand where do you currently stand at,
08:35what's the positioning like, what's the kind of market share you hold and what is the growth like for the future in this area that you're looking at?
08:43Maybe I also wanted you to ask me this question.
08:46Yes, the anti-drone system is a very, very critical and very complex technology segment.
08:53And Paras is very proud that we are doing very, very significant and very important work in this area.
09:00Today, if I have to say there are segmentations, there are the first line of defense and second line of defense.
09:07So first line of defense, there are all the big companies who are doing a lot of good work in the anti-drone segment.
09:12The second line of defense is where Paras is and Paras is doing substantial work.
09:18Starting from next month onwards, we'll be rolling out products which not only can be used by defense,
09:24but also all the security personnels and everybody who has industrial security requirements can use products designed,
09:32developed and manufactured in India by Paras anti-drone.
09:36Now, the opportunity size with Paras anti-drone is humongous.
09:39And we have kind of tagged the code by doing everything indigenous and controlling the cost.
09:45So we can not just be ready for the world, but we are also cost effective when it comes to solutions being done for the armed forces.
09:53Now, this is on the anti-drone side. On the drone side, yes, we are being very, very selective.
09:57The low hanging fruits being agricultural drones, we are there.
10:00Then we are looking at some drone opportunities other than other than that, say cargo drones and things like that.
10:05So we will be looking at drones very selective way because this particular space has become very, very crowded.
10:12A lot of competition, a lot of good companies are also pitching in.
10:16And we kind of want to be a differentiator if we are into any particular segment.
10:22And hence, we would be selective when it comes to what kind of drones, drone technologies.
10:27Right. OK. Well, Amit, we leave it at that.
10:31Thank you so much for joining us and taking us through all that that we've spoken about.
10:35It certainly has been another very insightful conversation.