Hindustan Aeronautics Limited (HAL) Q2 FY23 Earnings Concall Transcript

Hindustan Aeronautics Limited (NSE:HAL) Q2 FY23 Earnings Concall dated Nov. 15, 2022

Corporate Participants:

C.B. Ananthakrishnan — Director Finance and CFO

Jayadeva E.P. — Director Operation

Analysts:

Harshit Kapadia — Elara Securities Private Limited — Analyst

Kiran Sebastian — Franklin Templeton — Analyst

Amit Dixit — ICICI Securities — Analyst

Bharat Sheth — Quest Investment Advisors — Analyst

Abhishek Poddar — HDFC Mutual Fund — Analyst

Mihir Manohar — Carnelian Asset Management — Analyst

Unidentified Participant — — Analyst

Jonas Bhutta — Aditya Birla Mutual Fund — Analyst

Harshit Patel — Equirus Securities — Analyst

Amit Bhinde — Morgan Stanley — Analyst

Sriram Kapoor — Prabhudas Lilladher — Analyst

Venkatesh Subramaniam — LogicTree Investment Advisors — Analyst

Yellapu Santosh — Asian Market Securities — Analyst

Dhruv Maheshwari — Premji Invest — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Hindustan Aeronautics Limited Q2 FY23 Earnings Conference Call, hosted by Elara Securities Private Limited. 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. Harshit Kapadia from Elara Securities Private Limited. Thank you, and over to you, sir.

Harshit Kapadia — Elara Securities Private Limited — Analyst

Thank you, Faizan. Good evening, everyone. On behalf of Elara Securities, we welcome you all for the Q2 FY23 and H1 FY23 conference call of Hindustan Aeronautics Limited. I take this opportunity to welcome the management of Hindustan Aeronautics Limited, represent by C.B. Ananthakrishnan, Director Finance and CFO, with an additional charge of Chairman and Managing Director; Jayadeva E. P., Director Operations, along with their team. We will begin the call with a brief overview by the management followed by Q&A session.

I’ll now hand over the call to Mr. Ananthakrishnan sir for his opening remarks. Over to you, sir.

C.B. Ananthakrishnan — Director Finance and CFO

Yeah. Good evening to all of you and warm welcome. I mean, I am thankful to Mr. Harshit Kapadia and Elara Securities for arranging this call — this investors’ call immediately after our financial results for the last quarter has been announced. At the outset, it gives me immense pleasure interacting with you immediately after our Q2 results, which was published on 11th November.

As you are aware, last two few years have been challenging time for all of us. On the one hand, we had to deal with the COVID — unprecedented COVID pandemic situation and the other — on the other hand we had the changing geopolitical scenario due to the Ukraine war, resulting in certain supply chain disruptions and a new world order. Amidst these challenging times, we remain focused on our core competencies and continue to deliver the products and services required by our armed forces without affecting their operations.

Today. I have with me for this investors’ call, Mr Jayadeva, who is the Director Operations to answer to any of your technical queries; and with him also are ED Planning, Mr. Krishna; and our GM Finance, Mr. Senapaty; and Mr. Bansal who is the Joint Company Secretary who is coordinating this call.

As you are aware, during our interactions last year in financial year ’21-’22, there were concerns in respect of revenue for the current financial year 2022-23, because many of the manufacturing contracts were getting concluded and, more or less, it was all left to only the repair and overhaul activity to take care. Many of the platform sales have all been completed last year and only — not much work left over.

However, we did maintain that we will try to make good the gap and then see that the revenue shortfall which is arising on account of conclusion of manufacturing contracts will be made good by the repair and overhaul sales and for the supply of spare. And we were very happy that we are rather successful in doing that in the last half year. All this has resulted in our overall growth rate for the first half of the last financial year, in spite of the manufacturing platforms getting over or not much could be delivered in the first half of the financial year. The first half of the year has been quite encouraging results as you all know.

On the revenue front, we have achieved a growth of 22% when compared to the corresponding period of the previous year. In terms of broad activity wise business breakdown, while manufacturing — I mean, activity, business was maintained at more or less previous year’s level. There is an increase in the ROH segment, repair and overhaul segment, which has helped us to maintain this growth. The growth in the repair and overhaul activity is in line with our plan, as we are to achieve the current year revenue as well.

Development revenue, which is nothing but the design and development sales as we call it, grew by almost 69% owing to the LCA Mark-1A development activities which are on track, which is also very important for us for commencing the deliveries from 2023 and ’24 onwards. As far as the profitability is concerned, during the first half year — first half year ending for the financial year 2022-23, as you would have all observed, there has been an increase in the EBITDA margins from 32 — 33% — approximately 32% to 33% of our revenue as against 25%, which we maintained — which we have been maintaining in the previous years.

Some of the major factors which is something which is abnormal for this current half year, I thought, probably, I should bring it to your notice. One is that because of the improved cash flow situation, which has resulted in maintaining our cash balance at INR14,000 crore-plus, we could earn an interest income, which is almost double that of last year, almost to the tune of around INR160 crores to INR170 crores. That was one major reason why the margins have grown up.

And the second major activity, as you all know, we always maintain a healthy margin in our repair and overhaul activity as compared to our margin — I mean, manufacturing activity, but we try to, I mean, make good the shortfall in the manufacturing activity through the repair and overhaul activity. So, for the last half year, since the ROH activity has been quite substantial, as you know that it is almost 75% of our revenue has been generated through the repair and overhaul activity, the margins have also been improving over there. And that is another reason why there has been an increase in the margin. Of course, in the second half of the financial year, when we when we start supplying the manufacturing — I mean, platforms under the manufacturing contracts, where margins — we will still be able to maintain the margins at around 26% to 27% on an yearly average.

Another reason could be that the liquidated damages, because most of our deliveries were all scheduled on the ROH business segment, the LD which we were otherwise paying to the — liquidated damages which we were paying to the customers on account of delays in supply of platforms has not been — has been reduced to drastically almost INR80 crores to INR85 crores. And similarly, because of ROH activity having a warranty of only one year as compared to two years for manufacturing contract, the expenditure on warranty also has come down. All this has all contributed to the improvement in the EBITDA margins to almost 33%. But — I mean, on an average for the full financial year, it will be maintained at 26% to 27%, as we have been maintaining in the past.

Another area of importance which I should bring it to your notice is on the material consumption. You may all be wondering the material consumption has also been produced in that — compared to the previous year. The major reason for that is that since the ROH activity has increased, the material consumption proportionate in the ROH activity is relatively less, which is the reason why it has come down. But, again, once when we start supplying the manufacturing platforms, material consumption rates will be maintained.

The most important and most interesting point which you would all like to know is on the order book. As we have been maintaining in the last few quarters, our order book position even in the current quarter is quite comfortable. In spite of all the liquidation which has been happening on the revenue front, we still maintain a healthy order book of almost INR84,000 crores. I mean, the accretion of almost INR10,000 crores of contracts which has been concluded in the last half year, the most important being two things, one is on the Polar Satellite Launch Vehicle PSLV, which we have concluded with the — which we have concluded with the NewSpace India Limited at a value of almost INR860 crores.

Why I’m making a special mention about is, this is one new segment which we have been successful in getting the contract working in consortia with L&T. We have backed this order amidst competition, and this is what — I mean, this has been a big good opening for HAL for the — for getting more and more under — in the satellite launch vehicles.

Similarly, as you are all aware, the price contract negotiations for that HTT-40 70 numbers which has been concluded and which has also been announced in the recent DefExpo will also add to our order book of our — by almost INR6,500 crores. In respect of price negotiations for the new contracts of 25 advanced helicopters and six Dornier-228 aircrafts have already been completed. And similarly, for the 12 numbers of LUH, Light Utility helicopters; and 12 additional Sukhoi-30 engines are in advanced stages. The RFP for 240 AL-31FP engine and 80 numbers of RD-33 engines have been received and we are in the process of submitting the bids.

Incidentally, we are also happy to inform that today we have received an LOI, letter of intent, for nine numbers of helicopters to be supplied to Indian Coast Guard, which will also add up to our order book position. The aggregate value of all these contracts is expected to be around INR50,000 crores, which should all materialize since it is all they are in the advanced stages. We expect it to get materialized in the next six months to one year timeframe. Added to that, there are also further orders in the pipeline with the LCH1 40 numbers plus with LUH, Light Utility Helicopter, another 170 numbers; and another naval utility helicopters for almost 60 numbers also we will — we are likely to get the RFP in the near future.

All this should provide further impetus to the growth momentum of the company in the years to come. These platforms will have significant business potential and is expected to materialize in the next two- to five-Year time span. This value is expected to be almost close to INR70,000 crores, subject to the negotiations which we love to have with the customers and any scope increase our changes in scope which will have to be accommodated. As far as the development front, design and development area, we are also working on platforms which you all know, LCA Mark-2, for which recent sanction from CCS has been received by ADA, and the workshare arrangement between HAL and ADA is likely to be finalized. And once it is done, the design and development activity will commence in full swing. And we also expect the production during — we will also be associated once it is commercialized and production teams are put in place.

Similarly, on the Twin Engine Deck Based Fighter for the similar LCA for the Navy program, then of course of the ANCA as we call it IMRH and the CATS program, which we have all been telling in the past will also — I mean, we are also progressing with the design and development for each of these things. These will all contribute to the development sales in the coming years, but major portion is what we expect the revenue to come through for our manufacturing orders which has been highlighted — I mean, which I brought — which I told you in the — I mean, earlier.

Similarly, as you are aware, we have also declared a dividend in the current quarter of INR20 per share, which accounts for almost 200% of our face value, because we anticipate the profits for the current year also should be as what was been predicted, and we will be comfortable paying the dividend for the investors who have reposed the confidence in the company the way we have been paying in the past and probably we look forward to — better reverse in the days to come.

To sum up, I mean, just with the sort of order book position, with the business potentials which we have and the continued development of indigenous platforms, we are confident of meeting the expectations of all our stakeholders, both our customers as well as, our investors. I think with these few words, I would open up now the forum for further clarifications and questions, if any. Thank you.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions].

First question is from the line of Kiran Sebastian from Franklin Templeton. Please go ahead.

Kiran Sebastian — Franklin Templeton — Analyst

Yeah, yeah. Thanks for the opportunity. Can you please, give us some color on the expected growth rate of the ROH business. Secondly, you mentioned that when the OE business is weak, you are able to compensate with ROH business. How much discretion do you have in this front? Because I would assume some of the fleet will be used — underused and there is a certain timeline to follow, right, for doing the ROH work. So, how much discretion do you have in terms of managing that? And the third is the clarification. Your INR50,000-crore pipeline, does it also include the ROH part, which is roughly around INR20,000 crores or is not including that?

C.B. Ananthakrishnan — Director Finance and CFO

Yeah. Thank you. As far as the growth rate for ROH is concerned, we expect the growth rate to be somewhere around 12% to 15% on a year-to-year basis. So, this has been the trend in the past and we expect the trend to be maintained in the current year as well. You are asking — the second question was, how are we going to substitute this — I mean, fill the gap with respect to manufacturing sales with the ROH activity and what is the discretion which is available? Basically, we talk about ROH and supply of spare. Supply of spare is that as far as both ROH repair and overhaul activity, there is an induction plan and the deliveries will have to be made in the — within a defined timeframe.

And similarly for the supply of spares, there is also a delivery schedule which is available. We have got the discretion to the extent that within the delivery schedule to the extent possible for us to expedite the activities, both ROH as well as repair — the supply of spare to the extent we can expedite it within the delivery times — timeline for which orders are pending, we will be in a position to do that.

So, since we have already completed placement of orders well in advance and we expect the deliveries to happen and similarly the ROH activity as well since the induction for the subsequent years, because there is a cycle time of raising from 6 months to 18 months, wherever it is possible and wherever we could expediate it, we’re doing that so that the revenue from these activities — the activity is completed and revenue from these activities are generated.

Whatever we are committing now to make good the — to maintain the growth rate and to meet the target is all well within that, we have planned for that and we are also working out the supply chain so that we will not be put into any difficulties in meeting our target clients. So that is with reference to making good manufacturing shortfall through ROH facilities.

And the INR50,000-crore pipeline — order pipeline which we are talking about is exclusive of the repair and overhaul activity, which we expect on an average around INR15,000 crores to be the minimum attrition year-on-year. So that will be added to this — revenue — the order book position. I hope that that makes — that clarifies your questions.

Kiran Sebastian — Franklin Templeton — Analyst

Yeah, yeah. And, sir, on the ROH, earlier the guidance used to be about five to six percentage growth going forward, although historically the growth has been much higher. So, now, you are saying that the next two-three years will see 10 to 12 percentage growth in ROH revenue, right?

C.B. Ananthakrishnan — Director Finance and CFO

Yeah, yeah. 10% to 12% in the ROH growth. This year and next year, once we start our — I mean, these manufacturing platforms when it comes through that in the next year, the ratio between the manufacturing and ROH will — there will be improvement in the manufacturing activity and ROH activity will come down. But ROH as a growth perspective, it will be 10% to 12%.

Kiran Sebastian — Franklin Templeton — Analyst

Got it, sir. Thank you.

Operator

Thank you. The next question is from the line of Amit Dixit from ICICI Securities. Please go ahead.

Amit Dixit — ICICI Securities — Analyst

Yeah. Hi. Good evening, everyone. Thanks for taking my question, sir. And congratulations for a good performance. I have couple of questions. The first one is on essentially the related EBITDA margins of ROH and manufacturing. So, if we see EBITDA margins have been helped in this half year because of increasing proportion of ROH and [Inaudible]. Is it possible to share with us completely the EBITDA margin that you typically get in ROH and manufacturing?

C.B. Ananthakrishnan — Director Finance and CFO

No. I mean, because that is something which we will — on an average, we will reach — I mean, EBITDA margin of around 26% to 27% with these ratios. But this — we will not be exactly be able to, because, again, in ROH there are different levels of margins for different platforms. So, it again depends on the mix of — product mix, which are the sales mix, which is happening in the respective quarter, the margins are likely to change. So, we may not be exactly be able to differentiate between manufacturing contracts and ROH contract, because — I mean, we would like to reiterate that we’ll weight in an average margin of 26% to 27%.

Amit Dixit — ICICI Securities — Analyst

Okay, sir. The second question is essentially I would like to pick your brain further on this ROH and manufacturing. So, the manufacturing due to come from third quarter or possibly fourth quarter. By end of this year, what is — what is the percentage of manufacturing you see versus ROH, and what it would be like By FY24-end, let us say?

C.B. Ananthakrishnan — Director Finance and CFO

Yeah. You know even earlier we have been maintaining that for the two years, that is for ’22-’23 and for the financial year ’23-‘ 24. The ratio of ROH activity will be more than the manufacturing activity, because major contracts like LCA we will start delivering from 24 end — towards ’24 — towards the financial year — last quarter of 24, we will start delivering and it will pick up in ’24-’25 onwards. So, for the current year, we expect the ROH — manufacturing contract revenue should be in the ratio of 40% to 60%. That is, manufacturing should be 40 and ROH should be 60. And we expect the ratio to be maintained in the next year as well. And from the subsequent years, the ratio will improve as manufacturing will keep — I mean, we expect 50-50 ratio, and it will — which will go beyond 50 also.

Amit Dixit — ICICI Securities — Analyst

Just a clarification, sir. So, that means in FY23 and FY24, your margins — EBITDA margins would remain relatively higher, provisions relatively lower because of higher component of ROH. It is the correct understanding?

C.B. Ananthakrishnan — Director Finance and CFO

No. That is not. We will — definitely, that because of this ROH being there, it will be there. But we are also trying to see how to improve — maintain the margins in the manufacturing contracts as well in the subsequent year. But, again, our guidance would be that 26%-27% of EBITDA margin should be the target which we are working on.

Amit Dixit — ICICI Securities — Analyst

Okay. Okay, sir. Great. Thank you, and all the best.

Operator

Thank you. The next question is from the line of Bharat Sheth from Quest Investment Advisors. Please go ahead.

Bharat Sheth — Quest Investment Advisors — Analyst

Hi, sir. Thanks for the opportunity. On business development side, recently we started integrated cryogenic engine manufacturing facility in Bengaluru. So, how big this opportunity and what are kind of — when do we expect, I mean, to supply all this material?

C.B. Ananthakrishnan — Director Finance and CFO

No. Yeah — yeah it is — that cryogenic engine facilities which we have commenced, we will be starting our operations into that in the current financial year. But as far as the opportunities in business, as a business segment, it is taken more for strategic reasons right now, because we wanted to get ourselves our footprint being there in the engine technology for rockets. So that is one major reason where we wanted to expand ourselves. But business potential as such, it may not contribute much to our present revenue. But in the days to come in future, we expect it once order picks up and when PSLV and GSLV rocket — I mean, when we get a better share, we will be able to improve that. But right now, it is taken more for our technological capabilities and to prove ourselves and to have a footprint on the ISRO.

And production, I think we are working closely with ISRO now. So, we are — at HAL, now, we are integrating the whole of the cryogenic manufacturing facility, which was earlier distributed over different work centers. Now, we are doing at HAL as integrated facility at Aerospace division in Bangalore. So, we are closely working with ISRO for productionizing. Most of the productionizing work we have completed. The balance work is expected to be completed this year. So, we should be in a position to deliver this cryogenic engines from the next year onwards — next financial year onwards.

Bharat Sheth — Quest Investment Advisors — Analyst

Thanks. And, sir, second question on the export side we were talking — so, what stage, I mean, whether Malaysia or Brazil status of our development, I mean, getting order. So — and when do we expect those things to really materialize?

C.B. Ananthakrishnan — Director Finance and CFO

See exports is something which we have started in an aggressive way in the recent past, where we are — as you know that Malaysia contract also — we have bidded for the Malaysian contracts and interested. And we have got the lease from Argentina as well as from Philippines, and we are pursuing that very vigorously. But, in fact, we are not very — we will not be able to commit anything as to when it will get concluded. But we are pursuing our efforts to see that we are getting the order so that we are competing in a very favorable environment. And will get one breakthrough order, after which we will be in a position to continue with the other countries as well.

But, definitely, there are challenges, and in fact, we understand even with Malaysia contract, there are certain difficulties and challenges which we are facing. We are not — we will have to wait and see as to how it gets confirmed. Because that recently the elections also have been announced. So, with the changing political landscape, the evolving things we will have to wait and see. Like that, if it is export order for the defense supplies dependent on so much of other factors other than Europe, commercial aspects only. So, we will not be able to commit ourselves now, but our efforts to get one breakthrough order is continuing and we are sure that at some point of time in the next few months we should be able to conclude some — at least one contract.

Bharat Sheth — Quest Investment Advisors — Analyst

Okay. Thank you very much, sir. And all the best.

Operator

Thank you. The next question is from the line of Abhishek Poddar from HDFC Mutual Fund. Please go ahead.

Abhishek Poddar — HDFC Mutual Fund — Analyst

Thank you for taking my question, sir. And congratulations on a very good quarter. Sir, could you give some understanding on the development orders of which are the major ones that we are going to receive and how the margins are on those development orders?

C.B. Ananthakrishnan — Director Finance and CFO

Development orders? No. Development orders, we are little — more of a design and development activity which we are getting. Now, at present — right now, we are working on — I mean, advanced stages of development is our HTT-40 and LCA Mark-1A. And that both of them will be productionized shortly. So, Mark-1A, first — the first aircraft which has been upgraded with all the [Inaudible] systems and AESA radars has undergone the first leg during June of this year, and we will continue to the flight testing during the next course of one-one and a half years, and then it should be ready for deployment and production and delivery some time in 2024.

Similarly, HTT-40 also is already — flight certification is already obtained, and we are working on other customer-specific customer requirements, like moving [Inaudible] in the TPAs, like that small development efforts are going on. But that’s — it will be in times by the time we get the order and in the — within the cycle time for the first [Inaudible] we will be ready to launch that also.

On the — next on the development front is — next one is LCA Mark-2 which closely we are working with ADA. And here — that is critical design review has already been completed with the participation of our major customer, that is [IAA]. So, with this completion of CGI — it is as good as good to go for launch of production of prototypes. And, we’ll be working on that production of prototypes we’ll be working. But after that production of our prototypes, naturally, the next follow-on will be flight testing and certification of the system.

In addition to that, we have launched initial design of IMRH as a HAL-funded projects we are carrying on, that is 12-tonne multi-level helicopter. So that also, initial configuration studies, all those things are going on. Then, we are also working on a rotary UAV, that is unmanned aerial vehicle of helicopter type, about 200 kg we are working. So, these are the major development programs, which is going on.

[Speech Overlap] margins — your second part of the question was on margins for this development order. Margins we get around 10% on the labor efforts. Whatever that design labor, which we are putting, we will get 10% of that.

Abhishek Poddar — HDFC Mutual Fund — Analyst

Understood, sir. Sir, in terms of value, how much budget will be allocated by the government and how much order value would be received for these three orders?

C.B. Ananthakrishnan — Director Finance and CFO

But that will — that will again depend on the budget allocation and from the CCS sanction. So we — I mean, we will — on an average, it will be around the INR1,600 crores to INR1,700 crores per annum.

Abhishek Poddar — HDFC Mutual Fund — Analyst

Okay. So that will be booking in our revenues from hereon?

C.B. Ananthakrishnan — Director Finance and CFO

Yeah. It will.

Abhishek Poddar — HDFC Mutual Fund — Analyst

Understood. And sir, regarding this large order for LUH and LCH you mentioned about 170, 140 and NUH of 60. Sir, how would the pacing of this order will be — how many per year would you expect to receive from ’23, ’24, ’25.

C.B. Ananthakrishnan — Director Finance and CFO

So, once this contract — I mean, RFP — the process for contract initiation has started, then it will take at least — you know that the contract conclusion will take not less than one year to two years at least. I mean, it ranges from one to two years. But what we are trying to — once the contract is getting concluded — in fact, in majority of the contract once we get visibility of the contract, like AOL has been approved or an RFP has been issued, we will start planning for the procurement of materials and start productionizing it, so that we will be in time to deliver this items the movement the contract is signed. And we will also scheduled the deliveries accordingly, so that the — we will not say that after T0, we’ll not take it as a contract date, and after that, 18 months will be the minimum time which will be required. That we are trying to avoid by — I mean, planning well in advance once we get some visibility of the contract.

But on the capability — capacity part of it, we are today,as far as your helicopters are concerned, we have also, as you all know that we have started our Tumkuru facility also, which can cater to an additional 30 numbers to start with apart from others 30 numbers from our existing facility. So, almost 60 helicopters will be in a position to deliver irrespective of whether it is advanced light helicopter or LCH or LUH any combination. Once we get a — I mean, order it is there and when the deliveries are scheduled, we can ramp up the production. I mean, capacities are available, we need to plan and start producing, so that we can deliver at 60 aircrafts at a maximum. So, this is on the — I mean, helicopters we will not — we will not have any difficulties. We will be able to deliver that with 60 numbers on an average.

Abhishek Poddar — HDFC Mutual Fund — Analyst

And that’s good. Sir, this will be one large order or it’ll be many orders of — so, the total number of order units have mentioned is 370. So, will that be a one order of 370 or it could be many orders of — which will combine to 370?

C.B. Ananthakrishnan — Director Finance and CFO

We have conveyed our sort of interest to see that why we should get one order with the customer and with the ministry, so that we will get the benefit of visibility, which we can have a better bargain with our vendor — with our supplier. So, we have to wait and see as to whether — because it is ultimately the other factors of — I mean, the customer comfort and then budget availability, how it is to be phased in, and then it all depends on the customer. But our efforts would be to get all these things in one single order.

Abhishek Poddar — HDFC Mutual Fund — Analyst

Okay. Understood, Sir. Thank you. All the best, sir.

Operator

Thank you. Ladies and gentlemen in order to ensure that the management is able to address questions from all participants in the conference please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the question queue.

The next question is from the line of Mihir Manohar from Carnelian Asset Management. Please go ahead.

Mihir Manohar — Carnelian Asset Management — Analyst

Yeah. Hi. Thanks for giving the opportunity. And congratulations on a good set of numbers. Sir, I wanted to understand on the ROH side of the business. I mean, how does margins work on the ROH side? I mean, are they contracted? I mean. are they nominated? I just wanted to understand how does the business model work here. And you mentioned about INR15,000 crores kind of revenue, which could be there on the ROH side. So, I mean which fleet of airplanes is coming and what is the potential business here in the next three to four years, specifically from which kind of — what fleet of planes or what fleet of helicopters are going to come in in the next three to four years on the ROH side?

And my second question was on HTT-40 trainer aircraft. I mean, the INR7,000 crores order that we have got. So, at what stage is that particular order currently and when should one expect revenue to flow in from that particular order?

C.B. Ananthakrishnan — Director Finance and CFO

Yeah. This — the ROH business model what you are referring to, we have got is –I mean, it is a very well-proven model which we have already working up — working or rather we have an arrangement — working arrangement with the customer. That is, we have got a pricing policy mechanism, where the prices are all verified and the profitability is itself for the base year and subsequently with the parameters — financial parameters escalation and all the other parameters, it is decided. So, we know for sure that for during the pricing period what is going to be the price.

As of today, the profit of 7.5% on cost is getting paid. But — sorry, 10%. I’m sorry. Manufacturing contract is 7.5%. For repair and overhaul activity, it is 10%. But because of our proven experience and the way we can plan our material, we are able to generate an operating margin of not less than 16% to 17% in our ROH activity all through, and we expect these margins to keep growing. And basically because of — one is that material planning and the second one is also more of outsourcing and [Inaudible] and that is how we are able to maintain the operating margin at around 16% to 17%.

And the second part of your question on the fleet service — I mean, what is the constitution of fleet. Major fleet towards this ROH program generated from the [Sukhoi] aircrafts, which is the — which we have been increasing the number and which also contributes substantially to the ROH revenue. Besides, we have also got the helicopter fleet of ALH. We also have this half which has started coming and [Speech Overlap] mirage upgrades and whole lot of engines for the — all these platforms and the accessories and avionics. So, all-in-all, it is the multiple platform, multiple engine and multiple segments of accessories and avionics, which generate this ROH order.

The second part of your question on the INR7,000 crores HTT. You’re talking about HTT?

Mihir Manohar — Carnelian Asset Management — Analyst

HTT-40.

C.B. Ananthakrishnan — Director Finance and CFO

Yeah. HTT-40, as you know that the contract is getting concluded. We have already started placing the order for the engines and we have also started — we are planning to go ahead without our material procurement. So, ideally, it should be somewhere in October 2025 should be — the deliveries should start commencing from. So, on an average, we expect almost 20 helicopters — 20 aircrafts of HTT-40 to be delivered. Which means that, in three and a half years’ time, we should be able to liquidate the 70 number. And beyond that, if we can get another 36 numbers, which we also expect to come through, if it happens, then we’ll be able to deliver those also in the next one and a half to two years. Which means on a total timeframe of almost five years, we should be able to deliver 100 plus numbers under HTT-40.

Mihir Manohar — Carnelian Asset Management — Analyst

Sure, sir. Got it. Thank you very much for taking the questions, sir. Thank you.

Operator

Thank you. The next question is from the line of Aditya from Securities Investment Management. Please go ahead.

Unidentified Participant — — Analyst

Yeah. Hi, sir. Thanks for the opportunity. Sir, few questions from my side. Sir, how do you see the cash balance going forward? Do you think that the INR16,000 crores cash balance sustainable or this will start reducing as we start executing on orders?

Second question is, if you could talk about indigenization efforts [Speech Overlap].

Operator

Mr. Aditya, please use the handset. There is an echo coming from your line.

Unidentified Participant — — Analyst

Am I audible now? Hello.

Operator

Yeah. Please go ahead.

Unidentified Participant — — Analyst

Yeah, Second question is, if you could talk about indigenization efforts, and how HAL has benefited in terms of execution timelines or margins or any other criteria.

And third is, if you could provide any update on the Navy ALH. Where does it currently — what part — what stage of testing is it in, how long before you can start commercializing it?

C.B. Ananthakrishnan — Director Finance and CFO

Yeah. The first question on the cash balance. You know, we have now — as of now, we are comfortable in cash balance. We are having a balance of almost INR16,000 crores, which we expect at the year end also should be somewhere around INR14,000 to INR15,000 crores after liquidating some of the — I mean, sorry, after releasing some of the payments towards procurement. But notwithstanding that, in case we are also trying to get some more milestone payments and advances. So, on an average, we should be able to maintain around INR15,000 crores for 31st March 2023. So, that will be on the cash balance.

And the indigenization — on the indigenization front, we have taken up indigenization of most of the LRUs which were earlier being imported. And we are also addressing most of obsolescence where foreign supplier has stopped supplies of items and spare parts, those things also we have started indigenizing. And this thing — though we spent initially for development of these systems and then spares, we do — we do spend some development funds. But over a longer ROH cycle, we would be making good of this indigenization efforts. And we have taken up nearly around — around 300 — around 400 LRUs are currently in the indigenization range. That includes all mechanical systems, avionics, several other LRUs.

And then coming to your Navy ALH. We have already — one of the major requirements of the Navy ALH has been the blade folding mechanism. So, we already demonstrated this as a company-funded project, we have taken up and then we already demonstrated and it is already flying on the helicopter. And then, we should be able to certify this shortly. By the time we get the orders from Navy which is under discussion at [Inaudible] level, we should be able to integrate most of the other requirements also on to this Navy ALH. It’s called — by the way, it is called, UHM now, Utility Helicopter-Maritime. So, we are on right track on this and we should be able to finished this around — in a three-year timeframe, the development and the first set of delivery can happen by about 36 months.

Mihir Manohar — Carnelian Asset Management — Analyst

So, thank you. That was it from my side.

Operator

Thank you the next question is from the line of Jonas Bhutta from Aditya Birla Mutual Fund. Please go ahead.

Jonas Bhutta — Aditya Birla Mutual Fund — Analyst

Good evening, sir.

C.B. Ananthakrishnan — Director Finance and CFO

Good evening, Jonas.

Jonas Bhutta — Aditya Birla Mutual Fund — Analyst

Sir, couple of questions. Firstly, if you can share what our targets are for the current year in terms of deliveries of aircrafts, both fixed-wing and helicopters for the current year.

C.B. Ananthakrishnan — Director Finance and CFO

Yeah. LCA, you know that is a major program, which we are expecting to deliver the balance in the — trainers, it is eight numbers are there. And for the other — the normal — for that FOC aircraft two numbers is there. So, we’re going to — we’re going to complete the the fighter version of the FOC order during this year, and then the first trainer will be delivered this year.

Jonas Bhutta — Aditya Birla Mutual Fund — Analyst

So, out of eight, one trainer will go this year and FOC two units. So…

C.B. Ananthakrishnan — Director Finance and CFO

No. We are talking about FOC of two and trainer four numbers.

Jonas Bhutta — Aditya Birla Mutual Fund — Analyst

Okay. Got it.

C.B. Ananthakrishnan — Director Finance and CFO

And this is from the LCA front. And as far as ALH is concerned, we are left with the nine ALH, which we’ll be delivering in the current year. Nine numbers of ALH, six numbers of LCA, and LCH will be the balance nine numbers out of that 15 we’ll be able to deliver. Of course, Cheetal is there and then engines are there, AL-31FP engine. So platforms as such, it is only LCA six numbers, ALH nine numbers and LCH nine numbers.

Jonas Bhutta — Aditya Birla Mutual Fund — Analyst

Okay. Sir, roughly 24, 25 numbers within that [Speech Overlap].

C.B. Ananthakrishnan — Director Finance and CFO

24, 25 numbers. Yes.

Jonas Bhutta — Aditya Birla Mutual Fund — Analyst

And so, how will this look next year, sir? Because — will LCA Mark-1A sort of start showing up here. And so, should we expect this number closer to 30 or do you think it’ll be around this 24, 25?

C.B. Ananthakrishnan — Director Finance and CFO

Which — you’re talking about ’23-’24?

Jonas Bhutta — Aditya Birla Mutual Fund — Analyst

Yeah, sir. Next year. Yeah, sir.

C.B. Ananthakrishnan — Director Finance and CFO

Yeah. Next year, you know that they out of that 83 Mark-1A LCA program, we will be delivering three numbers as per the schedule. And apart from that, we are also targeting LCA Mark — that balance trainers of four numbers should get delivered. And also — we are also working out, as you know, that ALH — additional ALH order we should be getting 25 numbers. If we can get that, that will also — we will try to — portion of it will get delivered next year. Similarly, on the Sukhoi — 12 Sukhoi also we are trying to get that additional order. If that happens, we should be able to deliver a portion of that.

And also that LUH program, which — for which the orders will get concluded. Because that 12 numbers of LOE we have already received, so that number also should get delivered next year. So all-in-all, next year also we should be in a position to deliver all these platforms, which will total up to 25 plus if all this order materializes. We are preparing ourselves. We are not waiting for the order to get concluded. We have started provisioning of materials, and we will also try to convince our manufacturing activities.

Jonas Bhutta — Aditya Birla Mutual Fund — Analyst

So, in case Su-30 gets delayed, will there be a material impact or we’re not expecting — we’re expecting only one or two Sukhois?

C.B. Ananthakrishnan — Director Finance and CFO

Yeah. We expect that Su-30 should get — I mean, if the order if it gets materialized. Otherwise, with whatever that shortfall and whatever the gap will be there in the manufacturing contract, we will try to make good through the repair and overhaul activity.

Jonas Bhutta — Aditya Birla Mutual Fund — Analyst

Got it.

C.B. Ananthakrishnan — Director Finance and CFO

And engines also. Engines, we are expecting that our 240 AL-31FP engines also should get concluded. It means that will be able to make good with that.

Jonas Bhutta — Aditya Birla Mutual Fund — Analyst

Okay. So, this year how much would be engine revenues, ’22-’23?

C.B. Ananthakrishnan — Director Finance and CFO

Only six engines of AL-31FP is left, which means almost INR300 to INR400 crores.

Jonas Bhutta — Aditya Birla Mutual Fund — Analyst

Okay. So, next year if you do 200, that should be almost INR1,500 to INR2,000 crores. Is that correct, or more? No. Sorry. If you get the 200 number order for the Su-30 engines, how much can you execute next year?

C.B. Ananthakrishnan — Director Finance and CFO

We are estimating around — 12 to 13 numbers will get executed next year.

Jonas Bhutta — Aditya Birla Mutual Fund — Analyst

12 to 13? So that’s about INR100 crores a piece, right?

C.B. Ananthakrishnan — Director Finance and CFO

Yeah. Approximately.

Jonas Bhutta — Aditya Birla Mutual Fund — Analyst

INR1,300 to INR1,500 crores, somewhere?

C.B. Ananthakrishnan — Director Finance and CFO

Yeah.

Jonas Bhutta — Aditya Birla Mutual Fund — Analyst

Sure. Sir, on the ROH side, sir, last year you got — ’21-’22 you got some very large order inflows, almost INR21,000 crores. A large part of that seems to be getting executed in the current year already. So, our first half ROH revenues are almost up 30%. So, when you guide for the 10% to 12% sustainable growth, what is the base assumption on Su-30, sir? So, have you already touched 20 number Su-30?

C.B. Ananthakrishnan — Director Finance and CFO

Yeah. We have already touched 20 number Su-30 there. We can — we can also — we are also looking at ways and means to improve that 20 numbers, so that the — what is being done at the [BRBs], whether we would be able to take up and do that. So, that is one major revenue contributor, which will come through. And apart from that, the AL-31FP engines also today we are doing around 75 number. Our target is working at around 105. So, which means that the 30 engines accretion also will be there which will also generate some additional ROH revenue.

And on the other hand, the helicopter side also, the ALHs have started coming and LCH also — I’m sorry. ALH we’ll try to increase the numbers. We are trying to — I mean, we are planning to increase the number. Because once the Tumkuru factory becomes fully operational, we will be able to shift our manufacturing activities over there, so that the repair and overhaul activity at our helicopter factory can increase.

So, these all-in-all, we will be able to maintain the — we are targeting — also the — on the [RMSO] side, that is that repair and maintenance with supply order — [Inaudible] order also we are trying to get some additional orders. All of this would mean that we will be able to maintain the growth rate at around 10% — 10% to 12%.

Jonas Bhutta — Aditya Birla Mutual Fund — Analyst

Got it, got it. Fine, sir. This is really helpful. And thank you, and all the very best.

Operator

Thank you. The next question is from the line of Harshit Patel from Equirus Securities. Please go ahead.

Harshit Patel — Equirus Securities — Analyst

Hi, sir. Thank you very much for the opportunity. Sir, my first question is on a clarification of this AL-31FP engines. You mentioned that we might be getting the order probably one year down the line for this 240 numbers. So, sir, how soon we are going booking the revenues? I believe you mentioned that we will start on a few numbers initially. So, if you can give us the execution schedule of this 240 units, how long will it take us to execute entire order?

C.B. Ananthakrishnan — Director Finance and CFO

Yeah. Because now that the RFP has been issued and we have to respond to the RFP. I think sometime in December first week — No. Yeah. In the next two days, we’ll have to submit the bid. So which means that the negotiations will start and we expect the order to get concluded before 31st March. That is what our expectation is. We do not know for any delays from the customer’s side. We expect it to, if everything goes well, it should get completed in the current financial year. And we should start delivering from the next financial year.

As I’ve told, it will start — I mean, the first year will be something less, because it’ll be somewhere around 12 to 13 numbers only. But subsequent years, once the orders are being placed and we start manufacturing the engines at our [Inaudible], we should be able to reach a peak load of around 30 numbers on an average. So with 30 numbers per annum, we should be able to liquidate in eight year. This is what the schedule which has been given to the customer.

Harshit Patel — Equirus Securities — Analyst

Understood. Sir, similarly on the RD-33 front, how would the schedule — how would the schedule look like?

C.B. Ananthakrishnan — Director Finance and CFO

RD-33 total it is 80 numbers. On an average, again, it will be around 200 — RD-33 also we should be able to complete it in four- to five-year timeframe.

Harshit Patel — Equirus Securities — Analyst

And the order you expect to receive in this financial year or it will spill over into the first half of…

C.B. Ananthakrishnan — Director Finance and CFO

For RD-33, we may not be able to get — next financial year only.

Harshit Patel — Equirus Securities — Analyst

Understood. Sir, my second question would be on Light Utility Helicopters. I think in the last call you had mentioned that we will be delivering or booking the revenues for four units in FY23 only and eight will be delivered in the next financial year, that is FY24. So, how are we looking at it at the moment? So, are we on track or the entire execution has shifted to next year only?

C.B. Ananthakrishnan — Director Finance and CFO

No. We — yes, we were planning and, in fact, we are getting ready to deliver. We have started our — I mean, commenced our manufacturing activities and the aircrafts are getting ready. So, if only the contract gets concluded the earlier, we will be in a position to deliver it in the current financial year as what we have promised four numbers. But because there are some delays in the — I mean, the contract getting executed because we are operating on an LOI, that is a letter of intent. So, if the contract gets through in the next one or two months, then we should be able to book those four numbers in the current financial year.

Operator

Thank you, Mr. Patel, may we request that you return to the question queue for follow-up questions.

Thank you. The next question is from the line of Amit Bhinde from Morgan Stanley. Please go ahead.

Amit Bhinde — Morgan Stanley — Analyst

Yeah, sir. I wanted to understand on your capacity.

Operator

Sir, your audio is very low, please increase your volume.

Amit Bhinde — Morgan Stanley — Analyst

Can you — is it audible — am I audible now?

Operator

Yes, sir. Please go ahead.

Amit Bhinde — Morgan Stanley — Analyst

Yeah. Okay. Great, Sir. I wanted to understand on the capacity front how are we placed? Because once the deliveries of Tejas and other aircraft start, so right now, as you mentioned that including Tumkur we have 60 units facility for helicopters. For other aircrafts, how is the capacity, please? And what was the CapEx plan? I understand you — in the last call, you had guided around INR1,700 crores. So, how is the timeline once you start investing, how much time does it take to establish a facility and how does the — how does the things work over there?

C.B. Ananthakrishnan — Director Finance and CFO

As far as the capacity is concerned, for the LCA program, we have got sufficient capacity. Today, we have got capacity to scale up up to 16 numbers. We have got the second line also established. So, they are — I mean, added to this, we also have developed the private — I mean, another four companies with whom we have given the structure. So that will be in addition to another eight aircrafts. So, all-in all, we should be able to scale up our capacity to up to 22 to 24 numbers in the next two years. Once we start delivering 83 LCA to start with 12 numbers, and subsequently as per the delivery schedule, it is 60 numbers per annum. So, we should be able to meet those capacities.

And any further orders on LCA also, we should be able to meet that with the participation from the private industry on the work packages which has been given and the supply chain which we have already developed and established it. Added to that with our capacity being there for another eight numbers second line which we are — we have already established, we should be able to scale it up. So, capacity will never be a constraint as far as the LCA program is concerned. Helicopters, as I’ve told you already, another 60 numbers — up to 60 numbers, we are already well-equipped to handle those things.

And you know that the Nasik division also on the HTT-40. Apart from the aircraft division, we have also got our Nasik division facilities, where the Su-30 program is not there as of now. Even if that additional order of 12 number comes, we should be able to execute it in one year timeframe. And subsequently that facility will become available for our other platforms. So, all-in-all, the capacity will never be a constraint. We will be able to take additional orders whenever — as and when it comes.

Amit Bhinde — Morgan Stanley — Analyst

Right. Got it, sir. And on the civil aviation part, where we were looking at getting some orders. How are things working over there? Is there any major progress on…

C.B. Ananthakrishnan — Director Finance and CFO

Civil aviation, you’re talking ALH? Which one you are talking about? MRO?

Amit Bhinde — Morgan Stanley — Analyst

No, no. Civil aviation Dornier and in Hindustan Aircraft that we were looking at to get some orders?

C.B. Ananthakrishnan — Director Finance and CFO

No. Dornier, yes, it has been civil certified and it is also — we have also listed out to one of the airlines for operating in the Northeast region, two numbers have been leased out and it is operating quite well. Depending on its performance and the feedback which we get business prospects will also come through. So, as of now, we are — I mean, we are — we have started working on six numbers of aircraft. We have started producing on Dornier. But this — I mean, as and when the order comes, we should be able to deliver that. But as of now, the two aircrafts which we have leased out is flying quite well.

Operator

Thank you. Mr. Bhinde, may we request that you return to the question queue for follow-up questions.

We’ll take the next question from the line of Sriram Kapoor from Prabhudas Lilladher. Please go ahead.

Sriram Kapoor — Prabhudas Lilladher — Analyst

Hi. Thanks for the opportunity. I just had a bookkeeping question. Would you be able to provide the numbers of your revenues from products and revenues from services for H1 this year as well as H1 last year?

C.B. Ananthakrishnan — Director Finance and CFO

H1? I don’t know whether [Technical Issues]. Yeah. We’ll get back to you. We are having the data. We just [Inaudible].

Sriram Kapoor — Prabhudas Lilladher — Analyst

Okay. Sure. No worries. We can — I can follow up on that. And my next question would be, so as we saw last year…

C.B. Ananthakrishnan — Director Finance and CFO

I got the numbers. If I can just clarify that so that the issues will get sorted out. For the last year, the repair and overhaul revenue was somewhere around INR3,700 crores. And the current year, the revenue has gone up to INR4,800 crores. So almost a 29% increase in the revenue as compared to the corresponding period last half year.

Sriram Kapoor — Prabhudas Lilladher — Analyst

Okay. And give the same number for the products as well, products side?

C.B. Ananthakrishnan — Director Finance and CFO

Products, it was INR1,600 crores of manufacture last year. And this time, it remains more or less at INR1,600 crores. It is more or less flat. It maybe for some INR15 to INR20 crores it has gone up in the first half.

Sriram Kapoor — Prabhudas Lilladher — Analyst

Okay. Understood. Thank you so much for that. And my next question would be, so as we saw last year, the — a large chunk of our FY22 revenues came in H2. So, are we — was that kind of normal abnormally increase from H1 to H2 or you’re expecting a similar jump in revenues in H2 this year? So, if I’m right reading, last year, H1 we had about INR7,100 crore revenue. But overall, in FY20, we’re INR24,600. So, I mean, that INR17,500 crores came in H2 last year. So, are we expecting a similar jump in H1 to H2 this year?

C.B. Ananthakrishnan — Director Finance and CFO

Yeah, yeah. See, normally what happens is that, in fact, in last year one of the reasons for muted H1 also is because of the lockdown, which has happened in the first quarter of the last financial year. But we could make good that in the second quarter and the H1 was relatively stabilized — more or less stabilized, but the second half year for ’22 — ’21-’22 has been — we are able to completely make good the shortfalls in the first half year. This year, we have — it has been evenly — more or less — the split more or less even.

So, we expect the target what we have told for the current year, the balance of the target will be achieved in the second half of the current financial year, which means that we have given a target revenue guidance of almost 7% to 8% growth in the full financial year. Other than what we have achieve, the balance will get achieved in the second half of the financial year.

Sriram Kapoor — Prabhudas Lilladher — Analyst

Thank you. Mr. Kapoor, may we request that you return to the question queue for follow-on questions.

We’ll take the next question from the line of Venkatesh Subramaniam from LogicTree Investment Advisors. Please go ahead.

Venkatesh Subramaniam — LogicTree Investment Advisors — Analyst

Thank you, sir. It’s kind of a continuation of the earlier question. The guidance for FY23, sir, while — it’s actually been a very pleasant surprise on the operating profits as well. So, in terms of operating profit and net profit for the financial year ’23, can we say that we would be able to exceed last year’s EPS or PAT by, say, about 10%-15%. If that’ll be a decent guidance?

C.B. Ananthakrishnan — Director Finance and CFO

We may not be able to commit the growth what we will be able to achieve, but we are striving to show some growth as compared to the last financial year as on the profit front. We have — in fact, last financial year we also had, as far as the EPS is concerned, the earnings per — what is the number? Yeah. EPS has gone up one reason was because we had some — in the refund of income tax orders which was settled in last year, so that is one reason why the EPS has gone up. But on the profitability as a whole, we’ll be able to maintain the profitability of last year and also show some growth. We are expecting a growth of not less than 4% to 5%.

Venkatesh Subramaniam — LogicTree Investment Advisors — Analyst

On the profitability front? Yes. Okay. Thank you, sir.

Operator

Thank you. The next question is from the line of Yellapu Santosh from Asian Market Securities. Please go ahead.

Yellapu Santosh — Asian Market Securities — Analyst

Sir, thank you for the opportunity. One small clarification. For manufacturing of Su-30 aircrafts, do we need an approval or license — manufacturing approval from the Russians before we can start production or take pursuit of procurement of the RM and other key subsystems?

C.B. Ananthakrishnan — Director Finance and CFO

So, we don’t need any specific approval because there is a general agreement which has been entered with the Russians for the Su-30 program right at the beginning of the program. General agreement still it is in — it’s still valid. So, we — all the procurements it is getting extended as per the general agreements. And so, we don’t foresee any specific approvals from the Russians for these programs. For any additional requirements, we can always — we have — as we callI it as a supplementary agreement, which we call it, we get it signed and we start getting delivered the kits or the raw materials from the Russians, and we will be able to manufacture.

Of course, the license fee which has been there, we will have to, on an aircraft basis, that is all part of the price. So, we don’t foresee any other approvals — I mean, required.

Yellapu Santosh — Asian Market Securities — Analyst

Okay. Sir, two questions from me. First, the what is the status of the ROH international opportunities with the current scenario — geopolitical scenario, do we see any large opportunities coming up on our way, one? And second thing, for the IMRH and AMCA, the design and developmental works were supposed to be implemented through the SPV route. In one of the presentations I heard you saying that, where the SPV route will — SPV partners along with ADA will have some role. So, what has changed now that for IMRH it is — there is no SPV partner who’d be spending or working at D&E part, but we are doing it. And does ADA has any role in this IMRH program at this moment?

C.B. Ananthakrishnan — Director Finance and CFO

Yeah. Just to answer your second question first. As far as this IMRH program is concerned, it is HAL designed and developed program, so ADA has no role in this. It is exclusively HAL only. And for the two programs which you are talking about the SPV route, yes, IMRH also we are looking at SPV route. We are working on that. We are not — I mean, rather come out to any conclusion on the model. We’ll have to see the interest which is being expressed by the private partner to go through these SPV route. Depending on that, we will be in a position to take a final call on the model as such.

As far as the AMCA is concerned, it is at the very preliminary stage. Yes, there has been some talks of collaborating with the private industry for the productionizing program. We will have to wait and see as to how it will get evolved. But as of now, both the — wherever opportunities exist and wherever the private industry is willing to cooperate — collaborate with HAL and start working on the programs, we are open to that. We will be in a position to take them along.

So the other part — first question what you’re asking on the repair and overhaul leads. Whether we have got any leads from any of these foreign countries in the light of the geopolitical situation, so far, we have not got the leads as such, but definitely there has been some interest shown for the Su-30 fleets in Malaysia and in other places where they are not in a position to source it directly from the Russians, whether HAL will be able to take care of the requirements of the Su-30 fleet elsewhere.

We are also in talks with the Russians, because ultimately, there the Russians will also have to concur to that, because it is directly under their license agreement. So, if we are — they are willing to — when we had expressed our desire and when the leads which we have got, they are also — Russians are also willing to part with them — I mean, rather give permission for HAL to work on. We will have to see how it gets evolved in the days to come. Thank you. Mr. Santosh, may we request that you return to the question queue for follow-up questions.

Operator

We’ll take the next question from the line of Dhruv Maheshwari from Premji Invest. Please go ahead.

Dhruv Maheshwari — Premji Invest — Analyst

Hi, sir. Thank you for the opportunity. Sir, two questions from my side. One is just on the export side, and especially, after the defense expo, are you seeing any sort of new conversations and opportunities that are sort of evolving? And the second one on the UAV side, especially during [Inaudible], everybody sort of building out capabilities there and this could be a fairly competitive market. So, from an HAL perspective what is the game plan from our medium-term perspective?

C.B. Ananthakrishnan — Director Finance and CFO

Yeah. On the exports, yes, definitely, we have already been maintaining that we have leads from these two-three countries and — I mean, some more countries are also started getting — I mean, inquiring about our products, especially LCA. But Argentina as the team has come over that — after the Defexpo, the Argentina team has come over here to see our facilities on — especially on the helicopter segment. And also, we have — I mean, they’ve also shown some interest on the LCA as well.

But the Malaysian thing which I have already indicated to you, there are some challenges which are emerging in the recent past. And the changes in the political situation there will also have an impact on the program. So, we will have to wait and watch whether we are — whether what will be HAL’s Tejas position over there. So, this will be the — we are aggressively following up our expo strategy and trying to have some sort of a breakthrough order. we will have to wait and see as to how it gets evolved in the days to come.

And as far as the…

Jayadeva E.P. — Director Operation

On the UAV front, we are developing as we told — informed earlier, we are developing on rotary UAV of 200 kg class. In addition to that, we are also participating in MALE program of ADE, that is called TAPAS. So, we are building the prototypes for that, and then, flight testing will shortly commence. And thereafter, the certification we plan to undertake the production — the plan to productionize it. And then, depending on the order book position what we are going to get from our [Inaudible] we’ll be supplying to them.

In — okay. In addition to this TAPAS, we are also in talks with IAI for HALE and MALE classified UAVs. And also for Rustom, also we are working on — working with them. In addition to that, we are — we are into a big project on CATS where lot of UAVs will be playing — taking part in this CATS program. For example, you have Wingman Alpha — CATS Alpha, Wingman, you must have seen all this on our the DefExpo. And in addition to that, we also have high-altitude pseudo-satellite also forming part of this. And an optionally manned aircraft also will be forming part of this. And we are progressing quite satisfactorily on the development front on this, both at HAL as well as at private industries.

Dhruv Maheshwari — Premji Invest — Analyst

But, sir, do you think that this will be a fairly competitive market, because while it’s appreciated what the programs that HAL is taking up, it is also seems that everybody seems to be doing it. So, do you think that sort of also have the long-term ability to sort of succeeded this business?

C.B. Ananthakrishnan — Director Finance and CFO

Yeah. See, CATS is not a standalone program. It has got a whole lot of — it’s integrated program. It is not just one UAV or — I mean, it’s not just one MALE UAV or something like that. It’s got a whole lot of place into that, in the sense, CATS, Wingman, than Hunter. So, it’s a integrated thing. And in India. I don’t think we have much of a — I mean, people who already launched this program in addition to HAL. So, we are the only people right now working on this. Then, our major defense partner is — I mean, services is also getting involved in this. They are also showing interest and then they’re closely watching our development cycle and then they’re also getting involved slowly. So, as of now, we don’t foresee any competition in this from the Indian soil as an integrated program.

Jayadeva E.P. — Director Operation

Sir, just to add to clarity, if you’re looking at drones, we are not into the business of drones, we are there only the competition and the many number of players are there. We are only looking at combat aired vehicles, which HAL only has initiated the program as of now. So, we don’t foresee any competition, because it is a standalone program of HAL and it involves much of defense-related combat capabilities, which we don’t foresee any major competition from that. This is a program, which is much, much bigger than the normal drones program, where we are not competing at all.

Operator

Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Harshit Kapadia for closing comments.

Harshit Kapadia — Elara Securities Private Limited — Analyst

Thanks, Faizan. We would like to thank Shri. C.B. Ananthakrishnan, Director Finance, CFO, with an additional charge of Chairman and Managing Director; Shri Jayadeva E.P., Director Operation for giving us an opportunity to host this call. And along with — and also would like to thank all investors and participants, analysts for joining for this call.

Any closing remarks, sir, you maybe want to share with investors?

C.B. Ananthakrishnan — Director Finance and CFO

Yeah. What — yeah. Thank you. Thank you for this opportunity. And it has been a good discussion, wherein we could clarify most of our position. Probably, I hope that it has been to the satisfaction of the investors. But one thing I can tell is that that HAL is looking for lot of growth opportunities. And with recent Atmanirbhar and that self-reliance and the changes in the geopolitical situation, we are quite aware of all the opportunities which are available in defense industry scenario. And at the same time, we are also looking at the space which is to be looked into by the private sector. So, wherever opportunities are there for us to collaborate with the private sector, we will collaborate to take things forward in the right direction.

But all-in-all, I can say that there is the potential for business, and HAL having been there in the business for the last seven decades and with some of the major programs coming through, once it is always getting converted into contracts and once it is all getting converted from the design and development stage to professionalization stage, we will be able to — I mean, we’ll continue to be where we are and we will able to further grow at a much faster rate once these programs materialize and we start delivering of the aircraft.

And our objective is to see that we reached the double-digit growth by 2024-25 once we start delivering the platforms, so that we get into the next phase. Although we have been trying to stabilize our ourselves, the next the — I mean, our target is to see that the growth is multiplied, so that the investments will also — their wealth gets maximized. Thank you.

Operator

Thank you. Ladies and gentlemen, on behalf of Elara Securities Private Limited, that concludes this conference call. Thank you for joining us. And you may now disconnect your lines.

C.B. Ananthakrishnan — Director Finance and CFO

Thank you.