Astra Microwave Products Limited (NSE:ASTRAMICRO) Q2 FY23 Earnings Concall dated Nov. 11, 2022
Corporate Participants:
S. Gurunatha Reddy — Managing Director
Maram Venkateshwar Reddy — Joint Managing Director
Analysts:
Raj Rishi — Individual Investor — Analyst
Zia Varma — MR Securities — Analyst
Abhishek Dave — Bright Securities — Analyst
Akshay Kothari — Envision Capital — Analyst
Prabir Adhikary — Ratnabali Group — Analyst
Bhavik Shah — MK Ventures — Analyst
Amit Dixit — ICSI securities — Analyst
Vignesh Iyer — Sequent Investments — Analyst
Alisha Mahawla — Envision Capital Services Private Limited — Analyst
Akshay Kothari — Envision Capital Services Private Limited — Analyst
Santanu Chatterjee — Mount Intra Finance Private Limited — Analyst
Daksh Bora — Arihant capital — Analyst
Ketan Gandhi — Gandhi Securities — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Q2 FY ’23 Earnings Conference Call of Astra Microwave Products Limited. This conference call may contain forward-looking statements about the Company, which are based on beliefs, opinions and expectations of the Company as on the date of this call. These statements are not the guarantees of future performance of the Company 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. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. S.G. Reddy, Managing Director. Thank you, and over to you, sir.
S. Gurunatha Reddy — Managing Director
Thank you, and good afternoon to everyone. A warm welcome to all the participants to the post results earning call of our Company. I’m with my colleague, Mr. M.V. Reddy; and SGA, our Investor Relations Advisors. The results of the Company and investors presentation for Q2 FY ’23 are uploaded on our Company website and stock exchange. I hope you had a chance to look at it.
I’m happy to inform you that we have reported a very good performance for Q2 and H1 F ’23, and our margins have improved substantially. Before we discuss further about the performance and recent developments, let me give you an update on ongoing projects and activities.
Few radars, like PPTR for DRDO, is at an advanced stage of completion. We expect to deliver this in the last quarter of the current financial year. In the previous quarter, we had completed the first contract of 10 numbers of Doppler Weather Radar for IMD. We have participated for tenders for the next requirement for C- and X-band DWR for IMD, and we are pleased to inform you that we have emerged as successful bidder in C-band case.
Orders for first Avalanche Radar is under the field acceptance stage as of now. We have taken new development work with the DRDO on submarine antenna front. The timeline for this is 12 months, and we should be able to complete this development portion. The size of this radar is about INR9 crores for one system. And we have completed supply of subsystems for DRDO’s long-range radar, that is LRR. As far as the subsystems are concerned, we have been working in various programs. A few of them are in the development stage and few are in the production phase.
Regarding the performance in this quarter, I’m happy to update you that we have reported an excellent performance for Q2 and H1, with our margin profile improving substantially, which was driven mainly by domestic business. Due to our efforts, our business mix is evolving, and we have been focusing on increasing our domestic business. Self-reliance in defense has been the foundation of India’s new defense production policy. Atmanirbhar Bharat Abhiyan has created growth horizons for the Indian defense companies, and this is giving a clear push to our domestic business.
Further, we will continue our focus on Build to Specifications, that is BTS opportunities for domestic as well as global customers, and we believe that with a higher focus on BTS, we can sustain our healthy margins. Order book of INR1,850 crores as on 30th September 2022 echoes these trends. Of the total order book, 68% of the orders are domestic orders and the rest 32% are export orders. Major part of our order book is executable in the next 12 months to 38 months period.
In the quarter gone by, we have successfully executed sales for about [Phonetic] INR178 crores, defense contributing for about 63% and the rest from the exports, space and metrology. Within the defense, Radar and EW segments are the major contributors.
Coming to specific numbers in the standalone performance for Q2 FY ’23, the revenue stood at about INR179 crores — INR170.9 crores for Q2 as against INR176.8 crores for Q1. That is a de-growth of 3.4% year-on-year. For half year, year-on-year growth is about 12%.
Gross margins have almost doubled from 20.6% to about 40.4%. This shift is largely due to an account of lower exports and higher contribution of domestic sales. For the half year, the year-on-year growth is about 51%. EBITDA margins have multi-fold increase from INR10.6 crores to about INR40.5 crores, with margins improving from 6% to 24%. For half year, the margins have moved up to 20% from 11%.
The Company reported profit after tax of about INR22.6 crores as against INR2.9 crores, with margin growing up to 13% from 2%. For the half year, it has improved to 10% from 4%. In terms of the exports and domestic, domestic is about 72% and exports is about 28%, and for the half year, the respective numbers are 77% and 33%.
Capital expenditure incurred during the period is about INR9.5 crores. It is largely for new equipment like testing equipment, etc. Our net debt as of 30th of September stood at about INR80 crores.
For coming quarter, we expect to do sales of about INR200 plus crores. Within this, defense is likely to contribute about 70% and the rest will be from exports, space and metrology sectors.
Before I open the floor for Q&A, I would like to emphasize that over the next five years to eight years, the business outlook is very strong, and we see close to about INR15,000 crores to INR18,000 crores of prospects in the area of our domain expertise. We have adequate infrastructure and capital equipment to do annual revenues close to about INR2,000 crores.
With this, I open the floor for question and answers. Thank you.
Questions and Answers:
Operator
Thank you very much, sir. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Our first question is from the line of Ketan Gandhi from Gandhi Securities. Please go ahead.
Ketan Gandhi — Gandhi Securities — Analyst
Yeah. Sir, what did you said in the last comment? Next quarter turnover or next half turnover? Did you mention anything?
S. Gurunatha Reddy — Managing Director
Sorry, I didn’t get your question. Next half year? What I have stated is for the next quarter. That is for Q3, we are likely to do about INR200 plus crores.
Ketan Gandhi — Gandhi Securities — Analyst
Okay. Okay. Yeah. Sir, can you speak something about AATRU for ASPJ? Where we are in terms of the development and when can we see the product coming into the production?
Maram Venkateshwar Reddy — Joint Managing Director
Yeah. We have already — hello, this is M.V. Reddy here. And we have delivered the AATRU for the first quarter, and those AATRUs are being fitted in the aircraft. I think it’s going on the flight test. And the second order is under the execution. In fact, we are going to deliver first unit by end of December.
Ketan Gandhi — Gandhi Securities — Analyst
And sir, this will be fitted into LCA Mk1, Mk2 or all the LCA and other aircraft also?
S. Gurunatha Reddy — Managing Director
All the LCA, Mk1 and as well as Mk2.
Ketan Gandhi — Gandhi Securities — Analyst
Okay. Sir, any development on man portable SDR from our JV? Because I believe we had received a proto order of 36 or 32 units and field trials was going on. So, any update on that?
S. Gurunatha Reddy — Managing Director
Yeah, we are almost nearing completion stage. I think we — in the next couple of months, we’ll be able to demonstrate this. I think we are getting ready for the NCNC.
Ketan Gandhi — Gandhi Securities — Analyst
Okay. And sir, how many players are in the list for this, apart from us?
S. Gurunatha Reddy — Managing Director
Exact number, I don’t know, but I think more than 10 numbers — 10 companies are there.
Ketan Gandhi — Gandhi Securities — Analyst
More than 10 companies, okay. Sir, can you explain the TeraHertz Proximity Sensor? Is it in the D-band? And where we are in terms of the development?
Maram Venkateshwar Reddy — Joint Managing Director
Yeah, it’s in the development. I think mostly by December we should be in a position to deliver prototypes.
Ketan Gandhi — Gandhi Securities — Analyst
It is in the D-band, right?
S. Gurunatha Reddy — Managing Director
Yeah, that’s right.
Ketan Gandhi — Gandhi Securities — Analyst
Okay. And sir, which — in the presentation, you have mentioned about the bidding for the whole radar system. Is it Doppler Radar or defense-related radar?
S. Gurunatha Reddy — Managing Director
We have both a Doppler Weather Radar as well as the military radar. The one which we have mentioned is Doppler Weather Radar we have executed in X-band, and we completed the first order. And in the next tender, we bid for both C as well as X-band, and we are successfully like — we become L1 in C-band and unfortunately we are not in X-band in the second order, we were L2. So we are getting C-band order in the second tender. And as well as the other military radar, which in fact we have mentioned in the PPT are for DRDO. That is getting ready. Most probably by March, we can supply this and commission in DRDO.
Ketan Gandhi — Gandhi Securities — Analyst
Right. And sir, my last question is, next year can we expect turnover in the north of INR1,000 crores?
S. Gurunatha Reddy — Managing Director
Yeah, that’s what we are targeting.
Ketan Gandhi — Gandhi Securities — Analyst
Thank you, sir. That’s all from my side.
Operator
Thank you very much. Our next question is from the line of Raj Rishi, an Individual Investor. Please go ahead.
Raj Rishi — Individual Investor — Analyst
Yeah. Hi, hello.
Operator
Yes, Mr. Rishi. Please go ahead.
Raj Rishi — Individual Investor — Analyst
Yeah. Am I audible?
Operator
Yes, sir, you are.
Raj Rishi — Individual Investor — Analyst
Yeah, hi. Just wanted to find out what’s your competitive edge, because in the kind of opportunity which is perceived, lot of players are coming in, right, Indian and foreigners also. So what’s the edge which Astra Micro had?
S. Gurunatha Reddy — Managing Director
Yeah. Basically if you look at the technology where we operate, we are first one to enter into this and we have the maximum technology in control. For example, you take an [Indecipherable] radar, wherein it is not only the TR module. Today, there are many companies entered into this business. But no company has the main components of a TR module like we have our own MMICs, which being used in the TR module. And with that, we can play around with TR module and then can offer a multifunctional chipset and also we can offer advanced version of TR module with different power range and that is how actually we have a competitive edge over others. And apart from that, yes, we do have RF technology in other areas. With that, we could successfully design the systems, which are more RF-intensive based.
Raj Rishi — Individual Investor — Analyst
Okay. Okay, sir. Thanks a lot.
Operator
Thank you very much. [Operator Instructions] The next question is from the line of Zia Varma[Phonetic] from MR Securities. Please go ahead.
Zia Varma — MR Securities — Analyst
Hi, sir. Thank you for the opportunity. I have two questions. Firstly, you mentioned about peakiest opportunity in domestic and international market. I’m curious to understand more on this front, especially for exports market. Can you throw some light on that part?
S. Gurunatha Reddy — Managing Director
Well, we are discussing with some U.S. companies as well as Israeli companies for BTS market. We are in the field of subsystems and also recently we have won discussions with one of the — a major U.S. company to develop system that is — I don’t want to give more details, as is it to take final shape, but these are something which offer — there are opportunities come in our way. And by seeing our technological strength, they have been giving us these design services to us to develop jointly in some few cases and to develop based on their spec so that we can have contracts for global market.
Zia Varma — MR Securities — Analyst
Right. And secondly, sir, the new orders that you received this quarter, how much of those orders are BTS versus BTP orders? Can you give some broad estimates?
S. Gurunatha Reddy — Managing Director
Yeah. Majority of them are BTS, because that won’t be — in domestic, we don’t have any BTP orders as such, only the exports order only we take under BTP category. So if you see the order book in Q2, whatever we book, overall [Indecipherable] of INR42 crores we have booked in this. I think it’s only about INR6 crores only we have booked for the export front, but the rest all are domestic. But of course in this one case where we booked from BEL, that is of course it is under BTP category, that is about INR200 crores. The rest all are in BTS.
Zia Varma — MR Securities — Analyst
Okay. All right, sir. Thank you. That helps. Thank you, and all the best.
Operator
Thank you very much. [Operator Instructions] Our next question is from the line of Abhishek Dave from Bright Securities. Please go ahead.
Abhishek Dave — Bright Securities — Analyst
Hello?
S. Gurunatha Reddy — Managing Director
Yeah.
Abhishek Dave — Bright Securities — Analyst
Hello, am I audible?
Operator
Yes, you are, Mr. Dave.
Abhishek Dave — Bright Securities — Analyst
Hi, thank you for the opportunity. Congratulations on the good set of numbers. I wanted to know more about our space business. Can you give a little brief about it? How it is growing? And are the margins better over year compared to defense business?
S. Gurunatha Reddy — Managing Director
The space business, we have order backlog close to INR200 crores where margins are reasonably good as compared to defense. And only thing is that the cycle time, like, its more as compared to defense. Yeah. Going forward, as you know, in space, the government took initiative to transform to the — like, they introduce reforms and the clarity we know — we don’t have full clarity about going forward on the satellites, but at least in the strategic satellites what we understand that ISRO is still going to build the satellites, in that we continue to be part of the ISRO.
And as far as the communications satellites, yes, it all depends on how the other industries and also we get up to meet this particular demand. Even in our case also we are looking to build some payloads for the communication as well as for the strategic applications. Yes, going forward, business-wise, yes, it is lucrative, but only thing is, it takes some time for us to get into this.
Abhishek Dave — Bright Securities — Analyst
Okay. Thank you for the opportunity. That was from my end.
Operator
Thank you very much. Our next question is from the line of Akshay Kothari from Envision Capital. Please go ahead.
Akshay Kothari — Envision Capital — Analyst
Thanks for the opportunity. Sir, I wanted to know the current working capital. So I can see cash flow from operations have been negative. So what — any major — because inventories, trade receivables are increased and decreased in contract liabilities. So, is it because of execution and…
S. Gurunatha Reddy — Managing Director
Yeah. See, the major liabilities which were there are near or pertaining to the advances received for the export sales, where the sales are getting executed, the advances are coming down and hence those liabilities are getting reduced. But otherwise, the working capital position as of today, we have a net liability of about INR80 crores, excluding my cash at bank.
Generally the working capital or the inventory builds up towards the end of second quarter, because we see substantial billing happening in the latter half of the year. That is one reason. The other reason specific to this present year is that there is one radar program which we are executing where these revenues are likely to happen only in the next year, it is SDR radar, that is shipborne radar. So, for that, a significant amount of raw material procurement is happening presently and most of the work that is being done with reference to that project is sitting as work in progress as an inventory. That is another one.
Then thirdly, during the second quarter, there was one significant billing, which has got slipped into the third quarter, where the entire work in progress on the raw material pertaining to that program is sitting here in books of accounts. Of course, that was executed in the month of October. So these are the three or four reasons why the working capital is slightly higher for this balance sheet date.
Akshay Kothari — Envision Capital — Analyst
Okay. Understood. Sir, regarding the contract — with leasing contract liabilities, since we have received around INR300 plus crores of new orders, won’t we have received some sort of advances for lease customers?
S. Gurunatha Reddy — Managing Director
No. Generally for the domestic orders, as explained earlier, most of the billing — most of the order booking whatever has happened up to now, either from the domestic front. And we don’t get much of advances from the domestic part of booking, unless it is a R&D work order. Therefore, we have not received significant advances in the current financial year.
Akshay Kothari — Envision Capital — Analyst
Okay. Sir, secondly on the — what was the reason for lower export order execution in this quarter?
S. Gurunatha Reddy — Managing Director
So that is expected only. That is what we are telling. Slowly, the export revenues will taper off. But whatever execution that we do as per the purchase order terms that is going on, but whatever is done is as per the terms of the purchase order.
Akshay Kothari — Envision Capital — Analyst
Okay. So, unlike what we have in domestic business, your export business will be quarter on quarter flat it seems, right? Because our export order book is increasing.
Maram Venkateshwar Reddy — Joint Managing Director
No, I don’t think it is increasing. It is — I don’t think we have had a much of export order book happened in the last one year. And this is expected only.
Akshay Kothari — Envision Capital — Analyst
No, I’m talking on the quarter-on-quarter that was —
Maram Venkateshwar Reddy — Joint Managing Director
Yeah. Actually, last two quarters also we hardly have any export orders. See, basically, last quarter because of short shipment of few components, we couldn’t do as we expected. We are short of INR15 crores to INR20 crores in last quarter.
Akshay Kothari — Envision Capital — Analyst
Okay. And sir, any update on Astra Rafael Comsys JV, which we have? So is that JV — what is the order book currently? How are you — have you did any loss on that front?
S. Gurunatha Reddy — Managing Director
Yeah. Astra Rafael, as of today, it is — there is a book loss because its production deliveries are yet to happen. Probably by the end of this financial year, it should be improving. Deliveries have just commenced from the month of October. Confident by the end of the next financial year, it will turn unprofitable.
Akshay Kothari — Envision Capital — Analyst
The order book would be around in Astra Rafael?
S. Gurunatha Reddy — Managing Director
Order book in Astra Rafael, don’t have that number immediately, probably we will come back to you on that. I don’t have that number with me. Will come back. And apart from this execution of the orders on hand, it is also participating in man-powered version of SDR radar, under the NCNC basis, that is no cost, no commitment basis. As we explained to somebody else before you, this product is getting ready for demonstration by this calendar year-end.
Akshay Kothari — Envision Capital — Analyst
Okay. And any — sir, any — your views, any updates from the recently happened expo[Phonetic], any MOUs, any significant traction which we have received over there?
S. Gurunatha Reddy — Managing Director
Yeah. We have new technology transfer from DRDO for ground penetrating radar. Apart from that, we had a fruitful discussions with [Indecipherable] through their Indian sales office and they are expected to enter into some kind of a partnership agreement for few products that I think probably, in due course of time we will reveal that. Otherwise, yes, it was a good show. It was fully focused on the Indian companies and the products. So, we had opportunity to interact with all services business and then also we discussed about the potential systems what we can do and also what we can address the — their requirement. All in all it was a good show.
Akshay Kothari — Envision Capital — Analyst
Okay, that’s good. Sir, lastly, there was a recent run away [Phonetic] in this quarter. That declassification of promoter. So just wanted to have more clarity on who is the current promoter is there anyone or — and how are things getting managed, whether it’s through some board — Board is taking any decisions, how’s it going?
S. Gurunatha Reddy — Managing Director
See, the declassification of the promoters is a continuation of the existing [Technical Issues] as informed ourselves, most of the promoters have taken a backseat in terms of day-to-day operations. Therefore, people who are not active, they would like to get declassified, that is a reason why the action was taken. But otherwise the Founder, Mr. Chitrakar, he continues to be an active promoter in the company. And that is a status as of today.
Akshay Kothari — Envision Capital — Analyst
Okay. Thanks a lot and all the best.
S. Gurunatha Reddy — Managing Director
Thank you.
Operator
Thank you. Next question is from the line of Prabir from Ratnabali. Please go ahead.
Prabir Adhikary — Ratnabali Group — Analyst
Thank you, sir, for providing me this opportunity.
Operator
Sorry to interrupt, please use your handset while asking the question, sir.
Prabir Adhikary — Ratnabali Group — Analyst
Yeah. Am I audible right now?
Operator
You are.
Prabir Adhikary — Ratnabali Group — Analyst
Okay. Sir, I have a couple of questions. Like, first of all, the first time it hasn’t mentioned about the service order out of the total order book. So, please tell us something about it? What is this about?
S. Gurunatha Reddy — Managing Director
See the service orders pertains to our weather metrology products, the metrology products as a part of the purchase terms, they carry a warranty maintenance for a period of five years from the date of installation and commissioning. So, whatever the orders we have disclosed as a part of service order, the entire amount pertains to weather related products.
Prabir Adhikary — Ratnabali Group — Analyst
Okay. Sir, this quarter, you have booked an order inflow of around INR340 crores. So — where defense is roughly INR330 crores. So, can you please tell us from which segment of defense it has come?
S. Gurunatha Reddy — Managing Director
Current order book — from the present order book break up?
Maram Venkateshwar Reddy — Joint Managing Director
[Speech Overlap] You mean the order book of Q2?
S. Gurunatha Reddy — Managing Director
Yeah.
Prabir Adhikary — Ratnabali Group — Analyst
No order inflow — order inflow it has received around INR340 crores. Our of that INR330 crores, defense.
Maram Venkateshwar Reddy — Joint Managing Director
Okay. Okay, that from radar segment we booked closer to INR243 crores and in EW electronic — that is electronic warfare segment we booked INR80 crores worth of orders. And in missile electronics, close to INR5 crores, and in metrology and space put together, about INR10 crores we have booked.
Prabir Adhikary — Ratnabali Group — Analyst
Okay. Sir, this long range multifunction radar, that is the ship borne radar, so can you tell us like what is the cost of this kind of radar and what is the potential of it for the company?
S. Gurunatha Reddy — Managing Director
I cannot mention the cost of this, but the potential is definitely, we have good potential as it’s the first radar what being built by DRDO and to be supplied to Indian Navy. Once it is successful, definitely we’ll have multiple numbers in next seven to eight years’ time.
Prabir Adhikary — Ratnabali Group — Analyst
Okay. Recently government has come out with a make-to-order for Manpack SDR. So how our company will participate or whether participant or not?
S. Gurunatha Reddy — Managing Director
We are participating through our JV that is the Astra Rafael Comsys. As I mentioned, we are getting ready for demonstration.
Prabir Adhikary — Ratnabali Group — Analyst
Okay, and sir as far as your presentation, latest presentation, you have mentioned that NAVIC module which — will have an immense scope of application going ahead. So, can you give us a sense that how big the opportunity can be for our company?
S. Gurunatha Reddy — Managing Director
Yes, the market is very huge and we are developing this — we have developed the baseband chip of NAVIC receiver and we are trying to build this NAVIC receivers. Once — you know currently it is in the qualification stage. Once we get qualified, I think you know, we build the total receiver to be supplied for applications like vehicle tracking unit and many other applications. As far as the market size is concerned, you know, we have a huge market potential for this.
Prabir Adhikary — Ratnabali Group — Analyst
Okay. My last question is, what is your current employee strength?
S. Gurunatha Reddy — Managing Director
We are about 1,450 employees we have.
Prabir Adhikary — Ratnabali Group — Analyst
Okay, that’s all from my side. Thank you sir.
Operator
Thank you very much. [Operator Instructions] Our next question is from the line of Bhavik Shah from MK ventures. Please go ahead.
Bhavik Shah — MK Ventures — Analyst
Hello sir. Congratulations on a good set of numbers. Sir, I want to understand first, what is the development on the electro optics and anti-drone front? Is there any update?
S. Gurunatha Reddy — Managing Director
Yeah, electro optics we are addressing through our JV, that is Astra Rafael Comsys. So we just, in the last quarter itself, we signed this agreement with our partner and we are trying to address RFPs through this technology being developed by Rafael initially. And going forward we would like to set up the design house for this electro optics in our joint venture. And as far as anti-drone is concerned, as I mentioned in previous earning calls also, we are developing radar with basic DRDO technology and refining it to suit the user requirement. It is getting ready I think mostly by January or February I think we should be in a position to demonstrate that.
Bhavik Shah — MK Ventures — Analyst
Okay, Okay, and sir, on the SDR fronts, we are invested around INR30 crores if I’m not wrong. So what kind of revenue potential we see there? Hello?
S. Gurunatha Reddy — Managing Director
I think our investment in a JV is about INR20 crores as of today. Overall, the JV has about INR40 crores as an equity. Presently, the JV is executing the SDR order under the offset requirements of Rafael Israel. But going forward like, right now it is ready, it is getting a product ready for the Manpack SDR under NCNC program. Almost more than six to seven companies are competing for this. In case if we are the winners, there is a huge potential for this product line. The numbers or the revenue numbers or opportunities are really huge. But otherwise it’s — my main focus is going to be SDRs and electro optics business.
Bhavik Shah — MK Ventures — Analyst
Okay. Okay. And sir, you guided for an INR210 crore revenue in Q3. So, which leaves us around INR300 crores for Q4, if you go by the previous guidance of INR850 crores. So sir, is that even like achievable or it would be difficult?
S. Gurunatha Reddy — Managing Director
No, I don’t think we have given any number in earlier con calls.
Maram Venkateshwar Reddy — Joint Managing Director
Yeah, actually if you take overall INR850 crore what we have given originally, in for Q3, we are planning to book revenue of INR200 crores plus and in Q4, we are trying to do as much as possible. I think, we will have a better clarity by I think next, I think another couple of months. Most likely, you know we are trying to touch this figure. But in case if we miss out maybe some 5% kind of cases, probably may miss out because of few components which are expected in last quarter are getting delayed, because of that our production of some kind of 5% may get affected. But today, you know, it’s too early to say that I think maybe another couple of months we’ll be in a position to tell how much we can do in Q4.
Bhavik Shah — MK Ventures — Analyst
Okay sir. Okay. Thank you so much and all the best.
Operator
Thank you very much. Our next question is from the line of Amit Dixit from ICSI securities. Please go ahead.
Amit Dixit — ICSI securities — Analyst
Yeah. Good evening, everyone, and thanks for the opportunity. Congratulations for a good set of numbers. I have a couple of questions. The first one is, if I look at your gross margin, it has remained quite lumpy, increasing meaningfully in this quarter perhaps because of lower share of exports. However, in subsequent slides you have quantified that you know you would like the ideal share of export to be 30% and domestic 70%. So, just wondering what kind of gross margin you are looking at because now we are expanding meaningfully. You hinted at INR1,000 crores of revenue aspiration. So, what is the corresponding gross margin aspiration and if you can let us know what kind of gross margin you make separately between domestic and exports?
S. Gurunatha Reddy — Managing Director
We said very repeatedly the export business is a BTP, build-to-print, therefore the gross margins are around 8% to 10%, whereas the domestic even though we cannot really standardize what could be the — but you are asking me what is your ideal expectations. Our expectations are about 30% to 40% kind of gross margins we expect as we go forward.
Amit Dixit — ICSI securities — Analyst
Okay, wonderful sir. And next question is one the — on Slide 31 where you have highlighted the business potential, the long term business potential in 2028. So, just wanted to understand if category wise, you know, you can mention whether you know there’s some PSU also involved in this if there would be something on nomination basis to PSU. I mean, what is our realistic market share we can expect out of this business potential of INR14,500-odd-crores?
S. Gurunatha Reddy — Managing Director
I think we have given that breakup in last earning call. But anyway in that I just mentioned like you know, we have given about INR8,000 crores with 100% probability in that INR14,000 crores to INR15,000 crores. Major chunk of business we are expecting from radar segment. It is about close to INR5,000 crores and EW is around INR2,000 crores and missile and telemetry put together INR1,000 crores. This is what broad categorization of whatever we have given the — we have mentioned in the previous call. For next six years we have mentioned about INR8,000 crores we can book with 100% probability.
Amit Dixit — ICSI securities — Analyst
Okay, that is very helpful. Thank you and all the best.
S. Gurunatha Reddy — Managing Director
Thank you.
Operator
Thank you. Our Next question is from the line of Vignesh Iyer from Sequent Investments. Please go ahead.
Vignesh Iyer — Sequent Investments — Analyst
Hello sir. I just wanted to know about in H2, that you have estimates of booking around INR200 crores, INR210 crores for the quarter three and around maybe INR280 crores — as you know INR270 crores, INR280 crores, in quarter four. I just wondering, what kind of margin profile are you looking for? Would we be seeing something similar to what is in Q2?
S. Gurunatha Reddy — Managing Director
More or less it will be similar to what is achieved in Q2. There may be a slight correction downwards, but more or less it should be on the same lines.
Vignesh Iyer — Sequent Investments — Analyst
Okay, and what would be the mix of domestic and export in H2?
S. Gurunatha Reddy — Managing Director
In the Q2, the domestic is going to be close to about 80%, 80% to 85%, and the balance will be exports.
Vignesh Iyer — Sequent Investments — Analyst
In H2, right?
S. Gurunatha Reddy — Managing Director
In Q2 yeah [Speech Overlap]. In H2, specifically Q2 I gave the number and Q3 also, Q4 also more or less similar kinds of numbers will be there.
Vignesh Iyer — Sequent Investments — Analyst
Okay. So the two are — it’s most of 85% to 85% and 15% and we expect it to be more or less at a similar rate, right.
S. Gurunatha Reddy — Managing Director
Right, right. Yeah.
Vignesh Iyer — Sequent Investments — Analyst
Okay, fine. Fine. Thank you sir. That’s all from me.
Operator
Thank you. Our next question is from the line of Alisha Mahawla from Envision Capital. Please go ahead. Alisha Mahawla, your line has been unmuted, please go ahead with your question.
Alisha Mahawla — Envision Capital Services Private Limited — Analyst
Hi, good evening, sir. Thank you for the opportunity. My question is also with respect to margins, like the earlier participants. Sir, did you say our sustainable gross margin is more in the line of 30% to 40%?
S. Gurunatha Reddy — Managing Director
Yeah.
Alisha Mahawla — Envision Capital Services Private Limited — Analyst
Okay. So — okay sure. And INR1,004 revenue aspiration is for FY23 or FY24?
S. Gurunatha Reddy — Managing Director
Sorry, what is the number you said?
Alisha Mahawla — Envision Capital Services Private Limited — Analyst
The INR1,004 crores revenue aspiration that you called out?
S. Gurunatha Reddy — Managing Director
Yeah, ’23-’24 is aspiration. Yeah.
Alisha Mahawla — Envision Capital Services Private Limited — Analyst
Okay. So in FY24. Thank you. So, all my other questions have been answered. Thank you.
S. Gurunatha Reddy — Managing Director
Yeah, thank you.
Operator
Thank you very much. [Operator Instructions] Our next question is from the line of Raj Rishi, Private Investor. Please go ahead.
Raj Rishi — Individual Investor — Analyst
Yeah. Hi. Just wanted to understand like, generally, we don’t see this kind of low promoter holding in you know this size of a company. So, any comments as to how come the promoter stake in this company is so low and you know any issues regards operations or prospects?
S. Gurunatha Reddy — Managing Director
There are no issues regarding operations and prospects. In fact, with the low promoters we are seeing, for the last five years, how the company has grown. But historically, this company has a low promoter stake, because of the other — the company was promoted by technocrats within a very low financial asset. So, historically yes, it has a low promoter streak.
Raj Rishi — Individual Investor — Analyst
Understood, okay. Okay, thanks a lot.
S. Gurunatha Reddy — Managing Director
Yeah.
Operator
Thank you. Our next question is from the line of Akshay Kothari from Envision capital. Please go ahead.
Akshay Kothari — Envision Capital Services Private Limited — Analyst
Yeah, thanks for the opportunity. So currently we have 1,450 employees. So in order to fulfil our orders, would there be any need to increase this employee count?
S. Gurunatha Reddy — Managing Director
Yes, definitely. As we go — as we grow in the top line, additions are required. But we have a significant amount of existing employee force to take care of immediate growth needs.
Akshay Kothari — Envision Capital Services Private Limited — Analyst
Okay. And the borrowings are increased from — significantly I think they are around INR150 crores plus levels and — so, in order to get more orders, would our borrowings keep on increasing or what is the plan?
S. Gurunatha Reddy — Managing Director
Most of the borrowings are working capital borrowings. Therefore, as we grow, I think our working capital requirements will be going up. So, there will be — incremental increase will be there in the working capital borrowings. But we don’t have significant long-term borrowings.
Akshay Kothari — Envision Capital Services Private Limited — Analyst
Yeah, I understand, but in order to grow on the domestic front as we are envisaging. So of course, there’s likely funding plan would be through boring right?
S. Gurunatha Reddy — Managing Director
Yeah, yes.
Akshay Kothari — Envision Capital Services Private Limited — Analyst
Okay. And sir, any specific dividend policy we are having?
S. Gurunatha Reddy — Managing Director
Yeah, we have a policy of paying 20% to 25% — in the range of 20% to 25% of the profit after tax of the company.
Akshay Kothari — Envision Capital Services Private Limited — Analyst
Okay. And sir lastly, you mentioned that we have INR2,000 crores — the stress [Phonetic] capacity to generate revenue of around INR2,000 crore. So, just wanted to know that, since — what actually led — what was the driving factor for this capacity expansion. And post that, what things were — whether it was something related to market which is very strong, we went into the export markets, it’s been gone. So, what exactly was the reason for the decline in revenues and what actually happened in the past?
S. Gurunatha Reddy — Managing Director
Yeah. See, what we have mentioned is a basic infrastructure available with a company. When we say basic infrastructure, land, buildings and the capital equipment that is required and to go forward the incremental additions that is required will be only in terms of adding little bit more of capital equipment and having the right manpower. So, our intent of making that statement is that we have the basic infrastructure ready to do business up to INR2,000 crores. Nothing has gone wrong in terms of forecast, what was made by the company.
Akshay Kothari — Envision Capital Services Private Limited — Analyst
Okay, I understand it. Thanks a lot sir.
Operator
Thank you, [Operator Instructions] We have a question from the line of Santanu Chatterjee from Mount Intra Finance Private Limited. Please go ahead.
Santanu Chatterjee — Mount Intra Finance Private Limited — Analyst
Thank you sir, for this opportunity. Sir, any guidance on the order book can be received during FY23?
S. Gurunatha Reddy — Managing Director
Guidance in order book for FY23 [Speech Overlap] I think — yeah, as on today the prospects are like you know, we are likely to book close to INR1,000 crores, but details I think I can share only in the next con call.
Santanu Chatterjee — Mount Intra Finance Private Limited — Analyst
Okay, okay. Thank you.
Maram Venkateshwar Reddy — Joint Managing Director
You’re talking about FY24, right.
Santanu Chatterjee — Mount Intra Finance Private Limited — Analyst
I’m talking about for the rest of the year sir, for FY23 and FY24.
S. Gurunatha Reddy — Managing Director
Okay. No, this year yeah, for Q3 and Q4, we are likely to book close to INR300 crores.
Santanu Chatterjee — Mount Intra Finance Private Limited — Analyst
INR300 crores over and above that INR1,800 crore plus order book, right.
S. Gurunatha Reddy — Managing Director
Yes, yes.
Santanu Chatterjee — Mount Intra Finance Private Limited — Analyst
And next year as we are saying that next year you are expecting more or less INR1,000 crore order books?
S. Gurunatha Reddy — Managing Director
Yeah, that’s what prospects we have to book INR1,000 crores but details I can share you in the next con call.
Santanu Chatterjee — Mount Intra Finance Private Limited — Analyst
Okay sir, and what is the total amount of capex for FY23, sir?
S. Gurunatha Reddy — Managing Director
The capex FY23, see, overall we have projected about INR50 crores capex for ’21-’22 and ’22-’23. I think in the previous year, we did about INR25 crores or so. And the balance we are doing it in the current financial year.
Santanu Chatterjee — Mount Intra Finance Private Limited — Analyst
Okay, thank you, sir. Thank you.
S. Gurunatha Reddy — Managing Director
Thank you.
Operator
Thank you very much. Our next question is from the line of Daksh Bora [Phonetic] from Arihant capital. Please go ahead.
Daksh Bora — Arihant capital — Analyst
Hi, thank you for taking my question. I’m sorry I joined late. Just wanted to know that the next year’s order book net you have to INR1,000 crores, if I’m not wrong, sir the margins for that, how would we see?
S. Gurunatha Reddy — Managing Director
See, we have mentioned, we will get into the details in the next quarter. Probably at that point of time, we should be able to throw some light on the margins also.
Daksh Bora — Arihant capital — Analyst
Okay, okay. Okay, I’ll get back in line if I have any other questions. Thank you
Operator
Thank you. [Operator Instructions] Our next question is from the line of Raj Rishi, Individual investor. Please go ahead.
Raj Rishi — Individual Investor — Analyst
Yeah. You mentioned the capacity, you can go up to INR2,000 crores turnover, right.
S. Gurunatha Reddy — Managing Director
Yeah.
Raj Rishi — Individual Investor — Analyst
So, any like sort of vision as to which — how many years you think you can target that kind of revenue? Just if you have some internal vision on that?
S. Gurunatha Reddy — Managing Director
Our vision at the earliest, maybe three to four years from the next financial year we’d like to reach there.
Raj Rishi — Individual Investor — Analyst
Okay. Okay, thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments.
S. Gurunatha Reddy — Managing Director
Yeah. Thank you for everyone for joining the call. We hope we have been able to answer your queries satisfactorily. For any further information, request you to get in touch with the SGA, our investor relations advisors. Thank you very much and hope to see you again at the end of third quarter. Thank you.
Maram Venkateshwar Reddy — Joint Managing Director
Thank you.
Operator
[Operator Closing Remarks]