Hindustan Aeronautics Ltd (HAL) Q4 FY21 Earnings Concall Transcript

Hindustan Aeronautics Ltd (NSE:HAL) Q4 FY21 Earnings concall dated Jun. 29, 2021.

Corporate Participants:

Abhijit Mitra — Investor Relations

R. Madhavan — Chairman and Managing Director

C.B. Ananthakrishnan — Director Finance and Chief Financial Officer

Analysts:

Bhagyesh Kagalkar — HDFC Mutual Fund — Analyst

Jonas Bhutta — Phillip Capital — Analyst

Venkatesh Subramanian — LogicTree Capital Advisors — Analyst

Bhavin Vithlani — SBI Mutual Fund — Analyst

Harshit Patel — Equirus Securities — Analyst

Urmil Shah — Haitong Securities — Analyst

Abhijit Mitra — ICICI Securities — Analyst

Sachin Maniar — InCred Research — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Q4 FY Results Conference Call of Hindustan Aeronautics Limited, hosted by ICICI Securities Limited. [Operator Instructions] And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions].

I now hand the conference over to Mr. Abhijit Mitra from ICICI Securities. Thank you, and over to you, sir.

Abhijit Mitra — Investor Relations

Yes, thanks operator. And good afternoon to all the participants, who are joining in. We have Hindustan Aeronautics Limited management with us today to discuss Q4 and fiscal year ’21 results. From the management side, we have Mr. R. Madhavan, Chairman and Managing Director; Mr. C.B. Ananthakrishnan, Director of Finance and CFO; and Mr. M.S. Velpari, Director, Operations. So without further ado, I hand it over to Mr. Madhavan for his opening remarks. Over to you, sir.

R. Madhavan — Chairman and Managing Director

Good afternoon to everybody who has joined us on this call. And thank you for joining us, that’s today to discuss our financial results for the fourth quarter and for financials for the 2021. Today, we will take through — take you through our financials and achievements in a short while from now and later on we can have the question-and-answer session this after that.

As already told I have got Director of Finance and CFO Mr. Ananthakrishnan and then with me and also Mr. Velpari was the Director of Operations. Yesterday, our Board meeting — we had a Board meeting where we finalized the results for the year 2021 and for the first [Phonetic] quarter and at the same is available with our — in our website, as well as we have filed with the stock exchange.

The year has posed significant challenges, as well as we had great opportunities and the company has successfully come out of the pandemic situation of last year and ended the year in a positive note.

On the projects front during the year, the company has achieved many milestones, which will help the company in repositioning itself to meet the growing requirements of the Indian Armed Forces. HAL produce FOC standard LCA aircrafts and two of them we produce from a second line that we have made operational now. The initial operational players from the Indian Army has been received for the Light Utility Helicopter. The tail boom folding operation of ALH has been demonstrated and is now under flight trails. And this will be a opportunity for us to enter the naval requirements. The first upgraded ALH MK III for civil has been produced and is being used for — of training certification. And the performance-based logistics, which is a new thing for us, they have started this maintenance activity with Indian Coast Guard and the helicopters are already in service with them.

And the biggest cryogenic propellant tank ever fabricated for ISRO was delivered to ISRO on 28th November. So these are the — basically on the company’s projects, as far as financials are concerned, the revenue has grown 6.1% as we could have seen from our results and a three-year CAGR of 7.11%, the PAT has grown by 13.76% and three-year CAGR is 17.62% and the EBITDA is around 25% and with the growth of 8.02% over the previous year, and the EPS also has grown by around 14% to 96.68% and CAGR of 20% during the last three years.

The cash flow, which was a point of concern during our last financial — analyst meet has now improved. We were able to collect a record INR34,476 crores as against around INR18,000 crores previous year and we have now become cash positive to the extent of INR7,100 crores. And this also includes around $5,900 crores of advance received against the new 83 LCA orders. The order book position also has improved. Now it is standing at INR80,139 crores as against INR52,900 crores previous year. We expected it to grow past INR1 lakh crores, but because of the COVID reasons the — some of the orders could not be placed by the Ministry in time, we hope that will come out very soon.

And we — as I told the cash balance position is good and we hope that this year also, though, if there is no third wave we’ll continue to maintain the growth path and this year also we have sufficient workload as of now and we are also getting up to make good, whatever we had lost in the first quarter.

Ananthakrishnan, [Indecipherable]

C.B. Ananthakrishnan — Director Finance and Chief Financial Officer

Good afternoon. I’m Ananthakrishnan [Technical Issues] our Chairman has already summed up the highlights of the last financial year 2021. I would also not like to get again into these details of the financial parameters, since it is already available to you. Only thing which as of today, we can really — what the issues of concern, which were there in the last year, I would like to highlight a few concerns, which were there, then and which is not there anymore now.

One of the — I mean, during the last year when we had this analyst meet when — during this part of the time we have our order book position was a little bit of concern, because the [Technical Issues] was getting delayed and similarly the most critical issue was that the first quarter results were not quite, I mean, because of the lockdown, we were not well prepared as to how it will go on, there were lot of uncertainty. And the most critical issue was on the cash flow front, because the cash flow situation was not improving to the extent that desire. And so we have difficulties continuing in the cash flow front. So today, all of these concerns are, I mean, addressed and today we are sitting in a much better situation.

Now on the COVID pandemic situation even though the last — first quarter of last year we had a setback, we could recover in the second quarter and then subsequently in the third and fourth quarter we could post a surplus growth. And this year, yes, similar situation has been there in the first quarter. But having had experience of the last year first quarter and the first pandemic wave, we are well prepared and well equipped to handle the current year as well.

Now, the most important thing is that on the financial parameters on the payment — performance of the financials, we had — we have been consistent in our growth, I will not say it is a very robust growth, but consistently we have been performing in a year-on-year and the most critical issue we — I mean, most important issue, which I would like to highlight is on the profit after tax. Profit after tax, we had almost grown by around 13% in the current financial year and the earnings per share also has gone up to the equivalent extent. So these two are considered the growth rate is — first time we are achieving a double-digit growth rate as far as PAT is concerned and the EPS is concerned. So this is a good indicator for the things to come in the future.

And most important is that the cash flow situation, which was a matter of concern last year is no more a concern for us. In fact, the customer had really helped, I mean, helped us to come out of the cash flow problems, they had given a sufficient budget allocation all the backlogs have been cleared, the receivables, which were somewhere around INR11,000 crores at the beginning of the year, today it stands at around INR5,800 crores, so a very drastic reduction on the receivables. Not only that there were certain — the advances, which were due to us for the future product, because HAL being — we manufacture products with the long lead time. So we need to get milestone payments that were not coming through, but today that advances and milestone payments also have been cleared and all the sustainable, the company not only to receive the — I mean, bring down the receivables, but also to put our self in a much better cash position to take care of the future operations.

So from borrowing, as you are aware that last year our borrowings are somewhere around INR5,800 crore cash credit and today the borrowing it is no more worrying, we are a zero debt company as of 31st March and we have a cash surplus of around INR7,000 crores. In fact that the incidents of interest financing costs also has come down from INR270 crores around that figure last year and to INR202 crores in the current financial year, that is on the payment to the banks for the borrowings, which we had done up to December. Since the last quarter, the situation has improved, we have started getting the collections improving in the last quarter of the — last financial year 2021 and that has helped us to not only reduce the interest cost almost INR20 crores in the last quarter — fourth quarter. But also to overall interest to restrict to around INR202 crores and also make us a cash surplus company of 71 — I mean INR7,100 crores.

So all this added to this — we have also taken as you are aware that we have been discussing in the last two financial years after our listing, whenever we had the Analyst call issues of concern relating to our costs. One was on the manpower cost, the other one was on the inventory, the third one was on the overhead expenditure. All the three parameters, we have introduced — I mean, since January 2009 certain austerity measures and that has really given us good results. On the manpower cost, which was somewhere around 23%, 23%, 24% two to three years back. Our target has been to consistently see that what improvement we can show in the manpower, because it was much above the industry average of 16%.

Today, we are inching towards industry average and last year the manpower cost has been dropped to 19%. So which means at a 4% reduction over a period of two years, we feel that — that is — and it has given us lot of confidence that we will be in a position to achieve further reduction on the manpower cost. Similarly in respect of your overhead expenditure various austerity measures, we could save almost INR200 crores from INR1,400 crores two years back, it has come down to now almost INR1,200 crores in the current year. So the reduction in overhead expenditure it’s almost, I mean, INR200 crores, which will directly add to our profit. So this is one of the results of our austerity measures, which we have taken in the recent past.

More important is on the inventory front. Inventory we were, I mean, always holding an inventory of close to INR20,000 crores, in fact it was somewhere around INR24,000 crores, almost 440 days of inventory we were holding in 2017-’18, which has been steadily coming down and the current year we could bring down inventory levels to INR16,500, which is almost 270 days. We feel that more or less this is the optimal level of inventory, maybe another 30 days we could target, because of the long lead items, which we’ll have to procure from the foreign OEMs.

So this being the case, the future outlook also as far as our CMD has recapitulated, it is — it looks quite, I mean, positive for us, some more orders have to come because of the pandemic certain orders could not be concluded in the last year. These orders are likely to come in the current year. The order book positioning we expect it to improve in the current year as well to a very healthy order book at the end of the current financial year. So like what — with some of these orders, which has materialized at 70, and I mean [Indecipherable] 40 and then additional supplies [Phonetic] and things like that are there, which, I mean, probably we will get more visibility in that yet to come.

So this broadly sums up the financials of the company, as our financials and the outlook of the company for the current, I mean, past performance and the — for the future current year as well. I think that sums up and maybe…

R. Madhavan — Chairman and Managing Director

Maybe after this we can start taking the questions.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Bhagyesh Kagalkar from HDFC Mutual Fund. Please go ahead.

Bhagyesh Kagalkar — HDFC Mutual Fund — Analyst

Sir my question is regarding the orders that you anticipate you already mentioned them 15 Su-30. But interesting you also mentioned that you have — you intend to participate in the Naval or Light Utility Helicopter project also you’ve prepared for that. What is the timeline for that project sir with the order?

And the second question is regarding the execution for this year and next year, the revenue guidance, because we understand that there are lot of disruption on Bangalore side also, due to the unfortunate COVID wave. So can you throw more highlight on that?

R. Madhavan — Chairman and Managing Director

See your question is in two parts. Your first question is regarding the anticipated orders, as we just now mentioned there were two that he has just mentioned, that is one regarding the STT [Phonetic] 40 for ’17 numbers, that is the basic trainer. And one regarding the Su-30 additional order for 12 numbers along with certain modifications. So, including — included into the new order. This two has been 12, there is others in the line that is regarding LUH that is 12 numbers, we are expecting anytime now, because we have starting to work on it already. And we also expect an order for 25 ALHs from army that is likely to be in the process now. So these two are also there.

On top of that more than that is order that is required to be placed on us to keep the Su-30 line on regarding engines. So we expect a large order on engines and both Su-30 that is the Indian name is number is AL-31FP and also for our RD-33, which is required for the MiG-29 fleet. So these are the two orders on the Indian front that we expect. Though this year there will — because we have to — we are planning to supply the balance of the old orders regarding LCA and of course the orders on your helicopters that is from course that, the Navy and also from Army. So this will be the major suppliers this year.

And the Indian front also will be supplying the engines, which has balance available with us for the Su-30 project. So this will be our major line of activity this year. And we expect that it will go as planned, unless, of course, there is another third wave or something like that, we cannot predict that one, but otherwise we hope that everything goes as planned, and our growth will be similar or in similar lines as what it used was there for the last couple of years.

The second question, what you asked was the effect of the pandemic. Yes, we had a problem this year beginning also just like last year. So the first quarter will be little bit a problematic issue for us. But then if asset grows without any more interruptions, we will be able to make good whatever we have lost this year in the beginning. So there should not be an issue. And of course again that — the — our supply chain lines are getting opened up progressively. And we hope that will continue to be held good till that time. And our vendors are also up and about supplying us the material that is required for us to build the aircrafts.

Bhagyesh Kagalkar — HDFC Mutual Fund — Analyst

Okay, sir. And when do you expect in light of all these circumstances of COVID. The forced LCA MKI from the 83, 84 year talk, when can it get delivered?

R. Madhavan — Chairman and Managing Director

As per the contract, it is to be delivered in the — in March, the first two numbers are in March 24, and we will continue to maintain that date.

Bhagyesh Kagalkar — HDFC Mutual Fund — Analyst

Okay. You will maintain. Okay, thanks, sir. All the best from my side. Thanks.

Operator

Thank you. The next question is from the line of Jonas Bhutta from Phillip Capital. Please go ahead.

Jonas Bhutta — Phillip Capital — Analyst

Good afternoon, sir. And congratulations on a great set of numbers. Couple of questions, firstly a bookkeeping question, sir. If you can give us a breakup of the order book like you have given in the presentation for revenues, a similar breakup for order book would be great, sir. Between manufacturing, ROH, development and exports?

R. Madhavan — Chairman and Managing Director

Yes just one minute. I’ll give you the exact numbers, so just let me read it for you, wait. Yes, see the order book position if you look at it is 83 LCA that we got it during the Aero Show last year — this February. That is for INR36,270 crores, the LCA existing order balance of the existing order is INR4,900 crores, ALH 36 numbers balance of which is INR10,000 crores pending with us. Su-30 balance about INR377 crores is there. AL31FP, the engine part of it is INR1,700 crores. IJT we have a balance order of INR5,490 crores, 17 [Indecipherable] MLU that is mid-life upgrade is for INR1,000 crores is with us and Jaguar Darin upgrade is also available with us for INR2,100 crores.

Then there are smaller numbers that is Mirage upgrade for INR780 crores and Aerospace Structures, which is around INR1,000 crores, then we also provide engines for the Navy. So — and for the shipyards that is LM2500, that is — there is an order pending of eight quantities for INR700 crores. Dornier, we have got one order for INR360 crores and others, which are all — your — like Ethel’s and others we have got another INR600 — INR700 crores worth of it. Other than that we have a yearly, our RMSO [Phonetic] orders that is your MRO order for around INR7,500 crores and an export order of INR104 crores. So this all put together makes it to INR80,639 crores.

Jonas Bhutta — Phillip Capital — Analyst

So, sir just summing up everything the manufacturing order book is roughly INR65,500 crores, is that fair?

R. Madhavan — Chairman and Managing Director

Yes, that’s true.

Jonas Bhutta — Phillip Capital — Analyst

And the MRO — the ROH order book would be INR7,500 or — because it was almost INR14,000 last year, so…

R. Madhavan — Chairman and Managing Director

Yes, it is because — it will be along with that there is spares also that we supply. So between RMSO and spares put together this year also it will be INR14,500 crores plus. And then there is a design development orders on us that is around INR1,400 crores.

Jonas Bhutta — Phillip Capital — Analyst

Understood, understood. Sir my second question was in terms of the sales mix that you plan to have in the next two years, which is FY ’22 and ’23. A, if you can tell us, what will be the impact of that sales mix on the material margin? So what we’ve seen in FY ’21 is our material margins have come down a lot, compared to the FY ’20 level, despite the share of ROH and spares actually going up in our sale. Most likely, this is going to be the case even in ’22, ’23, where ROH continues to grow and manufacturing largely remains flat. So how should we look at the gross margin, so material margins of the company over the next two years, sir?

R. Madhavan — Chairman and Managing Director

See the ROH sales to your new aircraft sales will continue to be in the same fraction as it is today. So that is — will be that in ’22, ’23, this will change only in ’24 onwards, because that’s when this new orders coming into picture, that is the delivery start against the new order is only on ’23, ’24 onwards. So this one year, it will be — the margin — this one will be same and I don’t think there will be any change in the margins that we have already projected to you.

C.B. Ananthakrishnan — Director Finance and Chief Financial Officer

Yeah, Jonas, this is Ananthakrishnan. As far as the — yeah — this is — as far as the material consumption is concerned, I think you have been comparing it with the current year, which is at around 48%. More or less it will be mix of ROH and this will continue. The manufacturing orders and the ROH will continue to be the same and the material we expect it to be depending on what will be the ratio, it will be somewhere between 45% to 48%, which should be the material consumption. That ratio will continue to remain. We will vary by only 2% to 3%.

Jonas Bhutta — Phillip Capital — Analyst

Understood. And the employee expense, sir, you closed closer to INR4,300 crores in ’21. Is there a — and that’s a decline on a YoY basis by about 6%?

R. Madhavan — Chairman and Managing Director

Yeah, 0.5% CAGR is there on that. 0.53%.

Jonas Bhutta — Phillip Capital — Analyst

Right, so how should we model for going forward as in, was there some bit of one-offness in FY ’21 where employee costs are artificially looking low or you think that this INR4,300 crores is the kind of run rate we should look for even going forward in ’22, ’23 or do you expect some hike in that?

R. Madhavan — Chairman and Managing Director

As far as the employee cost is concerned, what has been there in the financial statements of INR4,290 crores, almost INR4,300 crores, but this has got an one-time adjustment. In fact, we have given it as a disclosure. There has been a sort of dispute which has been going on between the — on the methodology of pay fixation between HAL and the C&AG. That is that government auditor. Now that we have been taking it up with our Ministry also, but the Ministry has given a directive recently so for which we need to provide.

That has accounted for a reduction in the salaries and wages which taking into account to be passed for fixation, if at all it is getting rectified, subject to again our Board approving it, refer [Phonetic] the recovery. There has got an one-time element of around INR190 crores into that. So if you are going to factor that, our normal salary should be in the range of around INR4,450 crores and this will be the trend which will be taken up in the future with some escalations of around 3% to 4% for the current financial year.

Operator

Sorry to interrupt, may I request Mr. Bhutta to please rejoin the queue. We have participants waiting for their turn. Thank you. The next question is from the line of Venkatesh Subramanian from LogicTree Capital Advisors. Please go ahead.

Venkatesh Subramanian — LogicTree Capital Advisors — Analyst

Sir, I have a couple of questions, one is with respect to the orders that you are expecting, is it possible to quantify that sir, because you mentioned that what kind of order prospects do you expect to get in the next financial year, one. And the second question is the current order book of INR80,000 crore. What would be the execution timeframe, sir, for that?

R. Madhavan — Chairman and Managing Director

See, if you take expected orders that we are saying, first of all for the 15 LCH, it will be around INR2,600 crores and for 12 Su-30s that we are expecting is around INR10,000 crores and for 70 HTT-40s around INR7,000 crores and for the engines that is around 73 [Phonetic] numbers we expect around INR6,000 crores in that order and for the engines for the MiG-29s, it will be around INR2,500 crores. These are the major ones that we are looking at it.

As far as the timeline for execution is concerned, regarding 83 LCA, it starts from three years from the date of signing the contract, which was February ’21 and it was put in place in March ’21. So we are supposed to start the first order deliveries from March ’24 onwards starting with two numbers, then eight numbers and it ramps up to 16 numbers. So that is how it is going to be. The order will be closed out six years from the date of the first delivery.

Venkatesh Subramanian — LogicTree Capital Advisors — Analyst

Okay and just wanted to congratulate you on your excellent cash flow turnaround, sir. It is amazing. So FY ’22, if the year goes normal, what do you expect the cash reserves position to be at the end of FY ’22 sir in a normalized scenario?

R. Madhavan — Chairman and Managing Director

We expect at the best that it will continue to be a positive this one for us. There won’t be — we will try to get our dues this year also. I don’t see anything against that as of now.

C.B. Ananthakrishnan — Director Finance and Chief Financial Officer

And the cash balance — as the cash surplus is expected to be more or less around the same level around INR7,000 crores, around INR7,000 crores to INR8,000 crores.

R. Madhavan — Chairman and Managing Director

That INR7,000 crores to INR8,000 [Phonetic] crores, after payment of dividends and everything else.

C.B. Ananthakrishnan — Director Finance and Chief Financial Officer

[Speech Overlap] The net cash flow at the end of the financial year is expected to have a cash surplus of around INR7,000 crores to INR8,000 crores.

Venkatesh Subramanian — LogicTree Capital Advisors — Analyst

All right, sir. Thank you very much sir.

Operator

Thank you. The next question is from the line of Bhavin Vithlani from SBI Mutual Fund. Please go ahead.

Bhavin Vithlani — SBI Mutual Fund — Analyst

See at the outset, congratulations for great performance especially on the balance sheet. My question is on the helicopter. So if you could help us understand what is the pending order of ALH? What is the pipeline of ALH that you see over the medium-term, four to five years. Which are the other large opportunities in the helicopter and what is the status of the new helicopter complex that you are building in Tumakuru?

R. Madhavan — Chairman and Managing Director

Yeah, I would give those data. We have already concluding the LCH LSP contract, the order potential is there for LSP after finishing LSP for the series production, which will be about 147 additional numbers and we have also told you regarding the HTT-40 for which there is an initial order potential of 70 which could be followed by another 36. This will be in the pipeline. And then coming to LUH. We have received a LOA for 12 numbers that has a order potential for about totally 187 numbers. Two on the platform — rotary platform side and two on the fixed platform. Fixed platform one is HTT. The second one is topping up of 12 numbers of Su-30 which should be immediate. These are the four platform-wise immediate order potential.

Apart from that, the earlier remark of engines because engines gets mandatorily replaced after certain hours of flying. That will give us a good potential both AL-31FP engine for Su-30 and RD-33 engine. These are the immediate visibility for the order potential of engines, fixed wing and rotary wing. Apart from this, we had maybe slightly if you look at the farther — with more foresight, we also have in our radar LCA Mark 2 and AMCA which will be slightly very long-term one along with our own rotary platform which will be higher margin. This could be the next set of tranche of business after finishing this first set of business.

Bhavin Vithlani — SBI Mutual Fund — Analyst

And what is the potential for ALH. What could be the additional potential of ALH orders?

R. Madhavan — Chairman and Managing Director

ALH order, after completing the present Army order, we expect some more to come, somewhere around 20, 25 — 25 numbers there and further orders from the other customers are also likely to come. In fact, we are also entering the civil version of the ALH, so we expect certain orders to be placed on the civil version and we are also looking at the export orders for ALH Mark 3 specifically and we are following that up now. So these are the orders likely to come on ALH. Derivatives of the same is basically looking at it is LCH, which will be our platform for the future along with LUH. So one is a Light Utility Helicopter which is 3.5 tonnes category and the other one LCH, which is a weaponized version of it is that will be around 147 as we said. We are looking at those two areas that is — will be the drivers for future.

As far as you asked one more question regarding the Tumakuru facility, it is already coming up. In fact, we have already flown the first aircraft from there last December and we are expecting that the LUH production will start from there in the coming year, that is in 2022 with the start of the first two helicopters being delivered from there somewhere around August. The project is going on fine and the Phase 1 is already completed and the Phase II and Phase III of the project is going on there and we expect that by August 2022, we should be able to start the production line from that, from Tumakuru.

Bhavin Vithlani — SBI Mutual Fund — Analyst

Yeah, thank you so much for taking my questions.

Operator

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

Harshit Patel — Equirus Securities — Analyst

Thank you very much sir for the opportunity. Sir, my first question was on the LCA Tejas FOC execution. So sir, could you tell us what is the remaining portion of that contract as to how many numbers are still to be delivered. So will it be completed in FY ’22 and also as a follow-up, will we be able to complete all the LCA trainers also in FY ’23?

R. Madhavan — Chairman and Managing Director

Yes, you are correct because we have got six more to deliver. In fact, we couldn’t deliver all of them because the pandemic affecting us in the last bit of the last year. So it is ready already and some six more that we have to deliver this year. With that, the FOC part of it will be over and there will be a pending order for eight numbers of trainers with us. Trainers, the design is just now frozen and this one is — your design is getting converted now. We will be supplying that during ’22, ’23. So that will close all the previous 40 — order for 40 with us and then this is in line with our plan because we don’t want the line to be left empty. So we are spreading it out so that from ’23, ’24 onwards when the 83 LCA comes, the line will be still valid for us.

Harshit Patel — Equirus Securities — Analyst

Sure, understood, sir. Sir, my second question was actually on our design and development pipeline. So, earlier you had mentioned that, just a couple of quarters ago, that there is a huge pipeline in terms of design and development orders. So where do we stand on that? So actually our overall FY ’21 order intake as you mentioned around INR1,400 crores was quite lower than what we had earlier expected. So sir, how are we progressing on that particular front?

R. Madhavan — Chairman and Managing Director

No, it is — I won’t say that it is lower because this year also we have reached the same number and we will be having — that will go up little bit with the new projects coming in. So as we told you, the new projects that we have on the design board is basically the IMRH which is a huge project for us, where the design component itself is around INR10,000 crores covering all Army, Navy and Air Force put together.

So that’s around INR9,600 crores to be precise. So that will be there. On top of that the LCA Mark 2, which is basically another design, but it is being executed within our company that is through ARDC, that is Aircraft Research and Development wing for us. They are doing it as well as for AMCA, for which the design is going to start next year. And also there is one more called TEDBF, that is for the Navy. So these are on the fixed wing side that is going to come.

Other than that, we also have design projects for 200 kg rotary UAV and also there are two design projects for the engines, which is concurrently going on now. So the design projects, there are quite a few design projects on the anvil. So we expect that this INR1,400 crores that we generally spend on the R&D front will continue to be there with a slight growth in this.

Harshit Patel — Equirus Securities — Analyst

Understood. If I could just squeeze in a small question. So, sir, you had earlier mentioned that there is a Sukhoi-30 upgradation program going on. So it was earlier to be finalized in FY ’22. So sir, is there any update on the same. That would be my last question.

R. Madhavan — Chairman and Managing Director

Yeah, it is going on now also. Because of the pandemic, we couldn’t get the Russians onboard in time, but it is going on. So this year we expect that it will be finalized and the actual work on that will start.

Harshit Patel — Equirus Securities — Analyst

So these are different from the 12 new manufacturing numbers that we are expecting. Am I right or [Speech Overlap].

R. Madhavan — Chairman and Managing Director

It will be different. The 12 numbers also have certain upgrades included into it, but the thing is that these upgrades are different from this one and that will be different from this 12 Su-30s that are on order. This is a top-up order based on the previous supplies that we have made to them.

Harshit Patel — Equirus Securities — Analyst

So it will be applicable to all the 250 units that we have supplied till now? Around 250.

R. Madhavan — Chairman and Managing Director

That depends on the Air Force’s call on that. So we expect a large portion of it to be covered, but not necessarily all 250 of them.

Harshit Patel — Equirus Securities — Analyst

Understood, sir. Thank you very much for taking my questions.

R. Madhavan — Chairman and Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Urmil Shah from Haitong Securities. Please go ahead.

Urmil Shah — Haitong Securities — Analyst

Yeah, thank you for the opportunity. Sir, just wanted to understand you know in the existing order which you would have got, in the current scenario where there has been a significant up curve [Phonetic] in input prices. Has that impacted the increase in input prices in this year and how should we see it for next couple of years.

R. Madhavan — Chairman and Managing Director

Let me take as a case only the 83 LCA order, which is the biggest one of the lot. So based on that, you can decide on the others. We did have a very tight pricing for the LCA at INR309 crores per piece. So we had to reduce the input costs to the extent that we meet this as well as make a decent profit out of it. So we are looking at reducing the input costs especially since the volume is big. So we are now negotiating with all the suppliers for a reduction in the costs. We have been achieving good success rate in that.

In fact, we are just now concluding the engine part of it, which we managed to get at a very reasonable price as compared to what we were expected to get in that. So as the procurement of material goes up, we will include this condition that the procurement prices should be less than what we have procured earlier because of the increase in the volumes. So we are getting that results now. So we don’t expect that material costs will be an issue as far as the supply of this 83 LCA is concerned.

C.B. Ananthakrishnan — Director Finance and Chief Financial Officer

Just to add to what our CMD has told, the input cost rises, which you have been flagging may not be really make an impact for HAL because ours is all the foreign procurement for which already contracts have been signed, LTBAs that is a Long-Term Business Agreements have been executed. So for all the pending order book position what we have shown the parameters have all been where — I mean more or less finalized with the vendors and it has been continuing for the last few I mean for the period — for the pricing period for which we have also entered into a contract with our customer.

So as far as our input costs are concerned on the — except for the exchange rate variation, the other escalation parameters have already been flagged and has already been factored and so we don’t feel any impact on the input cost as well. And in respect of future orders, we are also trying to negotiate with the vendors as what our CMD was telling. We will get a very good bargain. So the pressure from the margins will be much — I mean it will improve and then we expect it to conclude at a very reasonable cost.

Urmil Shah — Haitong Securities — Analyst

Sure, sure. Sir, just last thing, you explained a little bit. I want to clarify it. As regards the Q1 also seeing some impact as in the previous quarter and we are looking at recouping it. So we should be able to maintain the 7% to 8% CAGR which has been there as regards revenue growth in the previous three years or because of the improvement in the non-LCA order book, they should be a relatively higher growth this year.

R. Madhavan — Chairman and Managing Director

No, we expect a same growth rate as CAGR of around 7% to 8% only this year also and we do have still that task on hand to recoup what we are losing in the first quarter. So that being said, so we — don’t expect that to grow this year anything further than that, so we expect that the revenue from operations will continue to grow at approximately the rate that we have earlier given as a guidance.

One more thing that we have to just inform from this one is that the operating profit to revenue, since the new policy from the MOD regarding the profitability is now slowly being circulated inside our system now. With that also, you have seen that the operating profit has improved from 16% to 17%. This is one of the points which was flagged last financial meet that will it improve. So we said very categorically that it will not really affect us, but if you look at it, it is now increasing, it has increased to 17% and we will be able to — or we are hoping to maintain at least this profit margin.

Urmil Shah — Haitong Securities — Analyst

Sure sir, thank you so much.

Operator

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

Abhijit Mitra — ICICI Securities — Analyst

Yeah, hi. Just to sort of fill up for some of the questions that have come through. I think some comment which has been sought on Naval LCA, the progress on that. And second also some commentary on CATS especially given the latest moves that we are seeing in J&K and and also the status of the HAL Dynamatic and IAI JV. What kind of activities have been currently taking up at that JV. So I think this three subject topics which can be touched upon would be great.

R. Madhavan — Chairman and Managing Director

Yeah, let us start with the helicopters for Navy. Though the RFA has not yet come in for us.

C.B. Ananthakrishnan — Director Finance and Chief Financial Officer

You had asked about LCA Navy or helicopter version of —

Abhijit Mitra — ICICI Securities — Analyst

We asked actually if you can address both of them if possible.

R. Madhavan — Chairman and Managing Director

Okay, fine. So the thing is that for the Navy operations, one of the requirements is that the external dimensions are to be controlled and as far as ALH is concerned, it’s a much bigger machine at around 6.5 tonnes. So to bring it in line with that though, we have proven it in the course that aircraft without any type of holding other than the existing blade folding. They still want that height and the width to be reduced. So what we have now proving out is how to fold the tail boom. So it can be folded in on itself so that the back tail rotor comes down.

So we are now matching the requirements as far as the height is required, the length is required and we are also having a twin-folding mechanism for the rotor blades — main rotor blades. These are projects on their own. We are trying to prove that we can do that job and be ready when it is so required. The requirement from Navy is yet to come in for us. So we are keeping our fingers crossed, when it comes, we’ll be in a position to meet the requirements — that is meet the RFP requirements. So that’s how we are planning to do it and it is being done at our own costs that development of this folding versions of the ALH.

Second part is as far as the TEDBF or the Navy fixed wing is concerned, it is basically a design project with DRDO. Of course, the inputs are given from HAL and the design, many of the detailed designs are done by us, but that project is yet to start. It’s on the verge of or DPR stage now. So when it starts, that will be basically a design done by the DRDO with contributions from HAL. So that will be on the Navy on the ALH.

The second thing that you asked was regarding the — that was regarding?

Abhijit Mitra — ICICI Securities — Analyst

CATS.

R. Madhavan — Chairman and Managing Director

IAI —

Abhijit Mitra — ICICI Securities — Analyst

Yeah, CATS.

R. Madhavan — Chairman and Managing Director

Oh, CATS project is going on with of course money being spent by HAL only. It is our own internal development project and basically the alpha is being designed. There are four components to it. The Warrior is — that is another UAV which is also being designed by us. So these two are going on. There is a third one, which is called HAPS that is High Altitude Pseudo Satellite that is a UAV which operates at around 70,000 plus feet. That project is also going on. So as told earlier, it is all in line and we are having a five-year timeframe for making the whole thing. So we are meeting that requirement.

And third one is there is an IIT JV also on this. There are, IIT is involved in this, NAL is involved in this and we are also doing and also there is a start-up involved in this project. So it’s a fully Atmanirbhar project if you want to call it that. So all within the country and various academia as well as start-ups, private industry, and HAL, all put together we are doing it.

As far as the — you mentioned about the JV with the Dynamatic, us and Israeli Aerospace that is IAI is concerned, that of course was regarding Heron 2, but at the same time, we had another two MoUs, one for Heron TP and as well as one with Elta, sorry Elbit for the rotary wing ones. That is progressing well. Again, it has been stopped because of pandemic. So we couldn’t get into the nitty gritty of it because neither the Israelis could come here nor we could go there. So once this clears, I think we should be able to do that quicker. That is regarding Heron TP.

Abhijit Mitra — ICICI Securities — Analyst

Okay, great. Any risk you see with [Indecipherable].

R. Madhavan — Chairman and Managing Director

Your question was not clear, can you kindly reframe or clarify.

Abhijit Mitra — ICICI Securities — Analyst

Yeah, I just tried to explain it in one sentence. Essentially what I was trying to understand that is any trend or discussions that you see emerging which prioritizes purchases of drones given the emerging current circumstances over fixed-wing platforms. Is there any trend that you’re seeing?

R. Madhavan — Chairman and Managing Director

No, there is no such trend that we are seeing as of now.

Abhijit Mitra — ICICI Securities — Analyst

Okay, okay, great. That’s all from my side. Thank you.

Operator

Thank you. The next question is from the line of Sachin Maniar from InCred Research. Please go ahead.

Sachin Maniar — InCred Research — Analyst

Hi, sir. Congratulations for good numbers, sir. Sir my first question is on the execution of 44 aircraft we have done in FY ’21. Can you give a rough breakup how much we have done in Sukhoi, LCA, and ALH and what is the similar numbers we are expecting to execute in FY ’22. That’s my first question.

R. Madhavan — Chairman and Managing Director

Yeah, last year we did about 44 numbers of both aircraft fixed-wing as well as helicopters. Fixed wing, as you are aware, Su-30 went about four numbers, which was the last of the lot that we had to supply. And we had in LCA, six numbers and the Dornier four which with all the three fixed wing put together was 14 and the balance were towards the rotary wing platforms, which is ALH, LCH and Chetak’s. These were the constituents which is 14 plus 20, 14 of fixed wing and 20 of rotary wing. That was what was the composition. This year as you are aware, the Su-30 contract has got over.

The fixed wing would have — the bulk it has to come from LCA. So LCA as we earlier said there would be 10 numbers of LCA on the FOC version, which has to be supplied which will be supplied this year and a few Dorniers would be there and balance more number of rotary platforms would be there. We are planning to maintain the same numbers around that. Our numbers cannot be more, but it will be near that, but we would making it up for the spare supplies and other RMSO supplies which are pending, we would be doing it more. So the numbers would be around the same.

Sachin Maniar — InCred Research — Analyst

Sir, my second question was on ROH itself. So we have already done INR125 [Phonetic] billion of revenues on ROH. So we have very strong growth in last few years in ROH and so on this base, can you see the growth on ROH because the order backlog is still at INR145 [Phonetic] billion. So in the meantime, since you have said that the overall aircraft would be same, ROH would be moderate. So 6% to 7% growth it’s like difficult next FY ’22, FY ’23 till the LCA 1A kicks in from ’24, ’25.

R. Madhavan — Chairman and Managing Director

See, it depends because this year we have no issues as far as the growth is concerned. Next year definitely because the new orders will be in the pipeline, but not deliverable. So there will be a problem with as far as the platforms are concerned. So to avoid a drop in revenue next year, what we are doing is to gear up the other sources of revenue. Basically the engines and if we can conclude the Su-30 orders this year, then some supplies from the Su-30 is also expected next year.

We’ll also have the LCA trainer orders pending for next year and we also have the balance of the — your rotary wing, that is your helicopter orders pending with this. So we don’t expect a sharp drop, but we do — will have a problem as far as getting growth is concerned. I should be very pragmatic in that saying that it should — but we will be able to meet the requirements. The growth definitely will start coming in from ’23, ’24 onwards when the 83 LCA kicks in as well as the orders for the LUH and LCH kicks in. So these are the two growth drivers for us from ’23, ’24 onwards. So ’22, ’23, yes, we do have a this one — but we have sufficient ways and means to meet the revenue target.

Sachin Maniar — InCred Research — Analyst

Sure and sir, my last question is on the debtor side, which is almost 90 days of sales. What would be the normalized rate we should look for going. Is it this 90 days has been normalized or do you think it could go slightly higher than this level?

R. Madhavan — Chairman and Managing Director

You are talking about receivables?

Sachin Maniar — InCred Research — Analyst

Receivables, yes.

R. Madhavan — Chairman and Managing Director

It is at par. In fact if you look at 90 days it’s par for us. So coming down below that is not expected much. Maybe maximum that we can go down is about 70, 75 days, not beyond that, but it should be hovering around this 90 to 100 days.

C.B. Ananthakrishnan — Director Finance and Chief Financial Officer

The reason for this 90 days is that normally from the time we deliver an aircraft or a rotable or a repair and overall work is done till the time we get the documentation done and when we get the money — amount getting cleared from our payment authorities, normally it is a 90-day cycle, so the 90 days is the most optimal level. We expect it to maintain it at this level. It may not go up substantially, but definitely coming down, it’s going to be not very — I mean we feel that it may probably come down a few days here or there, but 90 days, you should take it as optimal level.

Sachin Maniar — InCred Research — Analyst

Thanks a lot, sir. That’s it from my side. Thank you.

Operator

Thank you. The next question is from the line of Jonas Bhutta from Phillip Capital. Please go ahead.

Jonas Bhutta — Phillip Capital — Analyst

Thank you, sir. For the opportunity again. Two questions. Firstly, sir, just coming back to Bhavin’s earlier question, sir on the potential in the overall long-term potential in helicopters. So around two, three years back when we last met, at that time, you had mentioned that ALH has a total opportunity size of almost 350, 400 numbers where we have supplied only 150-odd-ish.

So has that changed in any way as in this is the long-term prospects. There is nothing in terms of whether it is in the pipeline currently or not. And the other one was LUH. So while again, LUH you are saying that only 187 numbers, but again, this was a program that was being looked at as a replacement for Cheetal and Cheetah helicopters, which in the fleet today are more than 600 numbers, sir. So again, just wanted to understand whether there has been a change in strategy from the client where these numbers now look smaller in terms of opportunity.

R. Madhavan — Chairman and Managing Director

No, let me get your numbers correct because the numbers slightly get variance. We said 350 numbers for ALH. We have already completed 300 delivered. So 50 odd is what we initially said. It is actually going to be more than that now. So we initially gave a figure of 350. We prefer to have I think —

Operator

Sorry to interrupt. The management line got disconnected. Please stay connected while I reconnect them. [Technical Issues] Ladies and gentlemen, the management line is reconnected back. Thank you for patiently holding. Thank you and over to you, sir.

R. Madhavan — Chairman and Managing Director

Thank you. So regarding the last question, can I continue from where I left off.

Jonas Bhutta — Phillip Capital — Analyst

Yes, sir.

R. Madhavan — Chairman and Managing Director

Yeah, so as far as ALH is concerned, as I told you, we have already completed on 300 and we expect it to be slightly more than 350 as of now. So it will be definitely what we have projected was correct there. Second thing regarding LCH, sorry, LUH that was what you were asking. The present fleet of Chetak, Cheetah is around 400. It’s not 600. So around 400 which is to be replaced by two-pronged strategy what this initially it was designed was around 200 from LUH and around 200 by Kamov, two to six [Phonetic]. So it depends on how much is ordered on Kamov.

The LUH numbers may or may not — may increase a bit more than that. This is a initial estimate that we have done. This didn’t include the requirements of Navy because some was basically for Army and Air Force. So Navy has not been included. Coast Guard has not been included. Other miscellaneous requirements against LUH has not been included. So we expect the LUH line to continue for a long time to come, not limited to 200 numbers that we’re talking about now. So this is regarding the LUH and of course the Kamov project, the Russians have yet to finalize the deal along with us, with MOD. So once that kicks in so that will also be another 200 helicopters, which will also be done through from our facilities at Tumakuru.

LCH requirements, what we projected was around 150 and it continues to be 150 as of now also and that being a very specific platform, we don’t expect it to grow like LUH or ALH. The ALH fleet has been a very successful design and project for us. So that is still continuing strong, but we are looking at as I told in a previous question that we are looking at the future to be — we move forward with LCH, LUH and of course IMRH. The 325 or 350 numbers that you had earlier told was actually I think was related to IMRH.

IMRH, 325 is the number that we projected at the beginning of the project. So it continues to be the same. It might increase because now Navy has joined in the project. So Navy’s requirement has not been taken into account. So that will increase. Now, IMRH will be done in two different platforms, one for Army because the requirement of the cabin changes. So one for Army and Air Force and one for Navy. So these two platforms will be concurrently developed with the basic structure and transmission assemblies and all being common. So this is what — where it stands for, IMRH that is a 10 tonne to 12 tonne category one.

Jonas Bhutta — Phillip Capital — Analyst

Understood. Sir, my second question was on the ROH. So we were again one of the main reasons why we were seeing very strong growth in ROH revenues was because we were — every year the number of Sukhoi’s that we were overhauling were increasing. However, there was going to be somewhere where we would have plateaued I think 17 numbers or 20 numbers a year. A) Has that number been arrived at in FY ’21 or will it be arrived at in ’22 and if yes, then from where further growth in ROH is expected as in this level of growth of 8%, 10% every year, can that still be projected beyond ’22 sir. That’s my final question. Thank you.

R. Madhavan — Chairman and Managing Director

Yeah, the requirement of ROH depends on the number of platforms which is supported by HAL. It’s not only Su-30. So Su-30 as it is — we are increasing the numbers from 15 to 17 and this year it will 20, it will plateau not this year or next year, it will plateau somewhere around ’24, ’25. It will continue to grow till that time. So that is on Su-30, but at the same time, the other platforms also will start coming in for repair overhaul, which is now presently being delivered.

So that means we will have more of ROH activities as far as LCA is concerned and also as far as the helicopters are concerned because here the numbers are increasing. So as you keep delivering it. They do come in for a repair overall cycle and also for inspection cycles. So the ROH activities continuously will keep growing. So we don’t see any plateau as far as the totality of the ROH orders are concerned. It might come down for one of the platforms, but it will increase for the other platforms.

Jonas Bhutta — Phillip Capital — Analyst

Understood, sir. Thank you, sir and all the very best.

R. Madhavan — Chairman and Managing Director

Thank you.

Operator

Thank you. Ladies and gentlemen, as this was the last question for today, I would now like to hand the conference over to the management for closing comments.

R. Madhavan — Chairman and Managing Director

I’d like to thank everybody for joining and take an active part in today’s video con on our financials. As we said that this year we had a good numbers as far as the financials are concerned, we have a lot of projects going on and lot of projects coming in, in the future and we hope that we have another analyst meet and we will be able to give you a better picture next year. Thank you for joining us.

C.B. Ananthakrishnan — Director Finance and Chief Financial Officer

Thank you.

Operator

[Operator Closing Remarks]