Zen Technologies Ltd (NSE: ZENTEC) Q1 2026 Earnings Call dated Jul. 28, 2025
Corporate Participants:
Unidentified Speaker
Ashok Atluri — Chairman and Managing Director
Analysts:
Unidentified Participant
Jai Chauhan — Analyst
Amit Dixit — Analyst
Presentation:
operator
[Starts Abruptly] Of Zen Technologies Ltd. The results and investor presentation have been uploaded on the Stock Exchange to take you through the results of this quarter and answer your questions. We have with us today Mr. Ashok Athlouri, Chairman and Managing Director, Mr. Afzal Malkani, Chief Financial Officer and Mr. Bilasha Athlouri, Investor Relations Officer. We will be starting the call with a brief overview of the performance which will be followed by the Q and A session. I would like to remind you all that everything said in this call that reflects any outlook for the future which can be construed as a forward looking statement, must be viewed in conjunction with the risks and uncertainty that the company faces.
With that said, I’ll hand over the call to Mr. Ashok Athlori for the opening remarks.
Ashok Atluri — Chairman and Managing Director
Good morning fellow investors and friends. So this quarter has you know just to come to the brass tracks, this quarter has been kind of disappointing even for us and we expected you know, a little better than what we have done and around I think 60 crores or so, you know because of some design changes asked by the, our end user, because of the evolving reality of war we had to accommodate this changes in specifications and our execution has spilled over for that particular product into, into Q2. And so we expect that it will be reflected in the Q2.
But, but overall our feeling is that the government is very serious. And again the, you know, while operation Sindur has hastened some purchases, the regular purchases like simulators, you know, they took a little back backstage kind of thing. And so, but again we do feel that the simulator that we said by H1 we should have another 650 crores. We still feel that orders will come through by, by end of September. But the reality is that the regular procurements were kind of little slowed down because of the new emergency procurement happening after post operations. So and one thing, you know my bright spot in the whole thing if we can say that is that subsidiary Ari, you know, has been performing well and we feel that this year they will ask almost 170 crores of top line to our, to our turnover.
That’s that will be 100% subsidiary by the end of year. Now we hold 76% but it’s transitioning and the UTS will again at least add 80 crores even if you were to take out our cross transactions. So another expectation was the EBITA and PAT were in line with our expectations and what we had indicated to the customers. But so this is the overall picture and I’ll just quickly run a request absolute to run through the financials and then I’ll continue from there. Abdul, can you take over please?
Unidentified Speaker
Yeah, sure sir. So, good morning everyone. So, as our CMD Mr. Ashok Atluri has mentioned that in Q1FY26, FY26 results reflects temporary execution timing adjustments with the quarter subdued revenue and profitability largely attributable to the deferral of a significant amount of worth of equipment shipment to Q2FY26. Despite this softness, the consolidated performance was supported by the strong contributions from our subsidiaries UTS and aripl. And now coming on to the results, let’s begin with a quick update on standalone performance. For the Q1FY26. Our revenue from operation was Rupees 111 crores compared to Rupees 253 crores in Q1FY25.
The degrowth in percentage terms is around 55%. Our operational EBITDA for the Q1FY26 decreased to Rupees 38.05 crores compared to Rupees 103.20 crores in Q1FY25. Though our total EBITDA is more than 40%. But operational EBITDA is reduced to 34.26% compared to 40.64% in Q1FY25. Our profit after tax has decreased to Rupees 37.12 crore compared to Rupees 74 crore in the same period last year. And profit after tax in percentage terms is still 33.44% compared to 29.20% in Q1FY25. So here there is an increase of around 4% out of our total revenues of 111 crores. 101 crores were contributed by the sell of equipment while rupees 9.78 crores came from our AMC business.
Now coming on to the consolidated performance, our consolidated performance is much better than standalone performance. So our revenue from operation was rupees 158 crore crores compared to rupees 254 crores in Q1FY25. The degrowth in percentage terms is 38%. Our operational EBITDA for the Q1FY26 decreased to rupees 64.70 crores compared to rupees 111.35 crores in Q1FY25. In percentage terms, operational EBITDA is 40.90%. It is above our benchmark of 35% compared to 43% in Q1FY25 Our consolidated profit after tax has decreased to rupees 47.75 crores compared to 76.81 crores in the same period last year. Profit after tax in percentage terms is 30% compared to 30% in Q1 FY25.
The same. With that, we conclude our opening remarks and we would now like to open the floor for question and answer.
Questions and Answers:
operator
Thank you very much sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may click on the raise hand icon from the participant tab on your screen. We request our participants to please limit your questions to two per participant. Time permitting. You may come back in the queue for a follow up question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question is from Jay Chauhan from Trinetra Asset Management. Please go ahead.
Jai Chauhan
Hello, I’m audible.
operator
Yes sir. Please go ahead.
Jai Chauhan
Yeah, good morning and thank you for the opportunity. So I just have one question. Given Zen’s dominant position in anti drone systems with IIT DM qualification and successful field testing during operations in like, how do you see the competitive mode evolving as more players enter this space and what specific technological differentiation will maintain, you know, Zen leadership in the next three to five years?
Ashok Atluri
The one thing that I should have again in 2023 there were open open tenders, IDDM category from Indian Air Force and the other tender from Indian Armed army. And in both the cases we were the resultant single vendor. And again at that point in time there was no other player who was able to demonstrate what the government of India needed in terms of wideband requirement. Now typically wideband, you know most of the anti drone system that have been developed in the country, they are meant to handle commercial frequencies and not non commercial frequencies. What Zen had done much earlier, I didn’t a lot of R D investment in, in anti drone system to expand the scope to be band independent.
You know, just it doesn’t matter which band the company, commercial or military or any other band, we should be able to detect and jam it. That was a mandate that we had given because as, as Zen technology we always said that you know, it’s not just winning RFPs but winning wars for the country is important. And fortunately at that point they did go for wideband because most of the customers were going only for commercial band. The Indian armed forces did go for wideband and they bought it. So what we see is even recently, very recently, a couple of months back, there was a demonstration of this system and indigenous system and still to the best of, we did not come across any company that has indigenously designed and developed wide band.
So they are trying to cheat. In terms of wideband. You know what they are saying is that one of the guy was saying that listen, we are doing wideband. I said what do you mean by wideband? And they said in the wideband we do 902.4 and 5.8 gigahertz. That no, in the wideband you have to do anything from 100 MHz to 6 GHz or 8 GHz or whatever the condition. So they’re trying to play around with the word wideband. Wideband means anything. And to my, to the best of my knowledge, none of these companies have that.
So we stand, we still stand a good chance if they really go for this kind of the product with what is actually been used and will be used in future, we stand a good chance. There are a lot of people who are coming and saying, and by the way, when the last time the RFP was called, there are 12 people who came for the pre bid but only two came to the actual trial. So a lot of claimants were there Even then in 23 and 25 they are still increased. But we will have to see who will actually come to the trial getting their equipment because government of India is very, very serious and you know they are if somebody gets foreign technology or some pretended technology and tries to sneakily qualify it as indigenous, the government will really, really go after them.
And in 23 also, and during the pre bid meeting a lot of people asked how are you going to verify that the technology is IDTM indigenously designed, developed and manufactured. So the officers there was very, very clear, listen, we are going to go through your soft code, your software code and you have to explain us the each and major blocks in that we may dig deep wherever we want. Then you’ll compile in front of us the whole software and then you will run the anti drone system in front of us and electronic all the PCBs, designs, the Gerber files, everything we’ve taken.
And we also want a GitHub, the version control system that you have in place which when was it started? What are the different versions? Similarly for mechanical engineering, cad drawings exploded, SolidWorks views simulations which you have done. So I think with all these strict checks in place, Xen has a very, very good chance of getting substantial anti drone system orders. So I think yeah, that’s the confidence we have. But only as things open up we expect the tenders to come up pretty soon and you know, we’ll see who are the participants. But again they have to physically demonstrate it and prove that it’s indigenously designed, developed and manufactured.
I hope I’ve answered your question. J.
Jai Chauhan
Yes sir. Understood, Understood. And sir, the core competency that you mentioned is this product patented.
Ashok Atluri
Yeah. So you know what we do is in terms of patent, there is, there is the technologies that can be easily copied and done. You know, we look at the product and you say listen, this can be easily patent, this can be easily copied. You get an intuitive idea about it. Those kind of IP is typically patented by us. But when the IP is extremely cutting edge like you know, where, where the algorithms are very, very hard fought complex, we don’t patent that because you know we don’t want anybody, any foreign country to copy that and create that product.
So yeah, so the, some parts are patented but some parts are not patented due to the sensitivity in them. Yeah, but as you said, yeah, it is patented.
operator
Thank you. Our next question is from CA Garvit Goyal of seven Islands pms. Please go ahead.
Unidentified Participant
Hi, am I audible?
operator
Yes sir.
Unidentified Participant
Hi, good morning sir. First question is on the execution side like you mentioned some of our contracts are deferring to Q2. So I want to understand here like when you mentioned when you are writing in the PPT like me this year is going to be a muted year. So what does that mean? Like is it, is it in line with the above 25.
Ashok Atluri
Yeah. So you know very frankly that will all depend on the order book that we have by Q2, end of Q2 and we, we are not able to put a real figure onto this. Whether it will be as much as a little less or a little more. But yeah, but we are not able to put a figure on that. But again you know as they have been saying on many occasions that you know that our, our confidence of the overall revenue for the next three years including this year, next second, FY 26, 27, 28, we still feel very confident that we can achieve the 6,000 plus crore target.
But for this your to your question that we are not able to give the exact figure for this year at this point in time.
Unidentified Participant
Okay.
Unidentified Participant
And you mentioned in the PPT like we are expecting a significant orders in next couple of months. Right. So what is the execution timeline for the existing order book and along with the orders that we are looking to get?
Ashok Atluri
So you know the, the whatever orders that we are planning to get by Q2 our intention is to execute it within the Same year. So that is what the preparation is going on. And you know again there is, there is kind of, you know, because of the internal policy of the company, we don’t buy the raw material in advance till we get the order, especially government orders. And we, even though it has happened but we have seen companies going down who have preemptively bought, bought raw material in anticipation of orders because the order never came through and these companies went bankrupt.
So you know, so we are being cautious in the sense but everything non related to actual procurement, getting the drawings ready, every discussion with the our vendors, making them ready for taking the orders from us. All that work is being done. And so you know our anticipation is if these orders come, can we how much of it can be executed in the next two quarters? Q3 and Q4. Our ambition would be to execute all of it. But I think some of will get into the Q1 of the next year.
Unidentified Participant
Understood. And just to follow up on your reply, you mentioned about raw material procurement. Are we facing any challenges in the terms of uses of any rare earth medical rare earth metals which is currently restricted by China?
Ashok Atluri
Yeah. So you know we don’t have any such problem in the, in our products till now and our raw material are clear as of now. So you know Chinese banning has not impacted us. But again, again you know once we place the orders I think most of our products are electronic based and you know with China dependent is almost zero. So we will not be having any impact on that except our subsidiary Vector Techniques. I think they may be having some impact on there because of the rare, rare, you know the magnets that you were talking about.
But they are also working on creating alternate sources at this point in time. But for Zen’s order book or order execution it should not pose any problem.
Unidentified Participant
Understood sir.
Unidentified Participant
I don’t back the queue sir. Thank you very much and all the best for the future.
Ashok Atluri
Thank you.
operator
Thank you. Our next question is from Dipane Vakil of Philip Capital. Please go ahead.
Unidentified Participant
Hi. Thank you for the opportunity. So my first question is. So you’re in your presentation you have mentioned that out of 750 crores of water books, 600 crores is from your code business which we believe consists of simulators and ads. So can you give us a breakup as to how much of it is simulator ads? And amongst the rest of 150 crores. What. What would be the breakup?
Ashok Atluri
So sorry, this is the order that we are expecting in the Q2 you’re talking about or.
Unidentified Participant
No, no, no. So current order book Your current order book.
Ashok Atluri
So yeah, so in that I would say about. So you. If you take out the AMC out of that. That’s, that’s about you know, 200 and some crores. The actual anti drone systems is 64 and the training simulation is about 292 I think. Yeah.
Unidentified Participant
Got it sir.
Ashok Atluri
Yeah, yeah. Two hundred and eighty two. Two hundred and eighty two crores is training simulators and antenna system about 64.
Unidentified Participant
Yeah, got it. So, and now I wanted to understand a little bit more on your order wins. So you are expecting 650 crores of order wins in next two months. So are those on the advanced stages of negotiation and or there’s a bigger pipeline which is at play and from which you’re expecting 60 crores because this also excludes the emergency procurement as per your opening remarks.
Ashok Atluri
That’s right.
Unidentified Participant
So yeah. So I wanted to understand a little bit more on to the ordering. So which segment I are this purely from simulators or even the anti drone system as a part of that?
Ashok Atluri
So this is purely simulators and you know, so I, I’ll tell you where we are is that you know, we are the only the last man standing as of now. So we think that because that so the, the likelihood of order is coming is almost certain. There is no, we don’t think there is anything in that. It is only when will they actually sign and give the order to us. So there is no other competitor in this at this point in time. So we expect that the order will come through. But again, you know, as I said earlier because of the, the emergency procurement this was a little slowed down or probably you know by now we would have got it.
But otherwise. Yeah, to your question, it was all simulator related and we are already the only person who has qualified. And so the. So our expectation is that we’ll get the order for sure.
Unidentified Participant
Got it sir. So, and just a small follow up on the previous participants question. What would be the lead time for you from the time you win the order to start commencing on the deliveries? Because since you mentioned that you will be executing most of the products in the same year itself. So I just wanted to understand the lead time from winning the order to execution.
Ashok Atluri
Typically the lead times is around four months for simulators but antidote system little larger can go up to six months or a little more than that because of the electronic and certain components that need to be ordered. But otherwise yeah, the lead time for the maximum lead time for any raw material is typically four months and for simulators and six months for Anti drone systems.
Unidentified Participant
Got it. Sir, thank you so much for answering my question. And all the best for your 6000 crore target.
Ashok Atluri
Thanks Deepen, I appreciate that.
operator
Thank you. Our next question is from Akshay Patel from AK Investments. Please go ahead.
Unidentified Participant
Hello sir. Am I audible?
Ashok Atluri
Yes, please.
Unidentified Participant
Yeah, thanks for the opportunity, sir. Sir, my first question is that despite the fact that we are the single vendor for government of India and currently for the past one year we have not got significant order inflow. So what might be the reason for the same?
Ashok Atluri
So you know one thing is that the simulators are in the process, they are being processed and the orders, actually orders have been very, very slow. They have been reduced to a trickle. We think that the cycle has slowed down a bit. You know I think intuition says that and even the fact say that, that these were orders that we should have probably got a little earlier. And again as I said that, you know, government has some emergency things to do. So the regular procurement is a little on the slow track. But again, you know this should have happened much, much earlier, much earlier to even Operation Sindur and we should have had a very good order book position.
The execution should have started by now. But again we understand in the case of Antitrone systems, we understand that it’s a very, very evolving field. And as we speak government is making changes to the specs because now they have been proven in war and the kind of threats they actually happen and the ability of the country to have this technology in house because everything that’s happening is evolving. You know, earlier we used to think soft kill is enough because all the drones are controlled from ground, sorry from ground to, you know, to the drone. There is always a control going on.
And then we did the soft jamming where you can, you can block the frequencies by using jammers. But you know, then the, you know the drone guys came up with another thing called autonomous drone that could go just by, you know, by the gps. They don’t need any ground control. They would be pre programmed with the destination and they could go and you know, then we came up with spoofers, you know where we can spoof. And actually drone is in India, you can spoof that it is in some other other country, maybe in China or something like that and it would get lost and you know, then the to come over the spoofing they came up with AI based technology like vision based technology with waypoints, etc.
And now we are actually saying that to ensure that the waypoint is eliminated we have to use hard kill techniques like Shooting it down using various weapon systems etc. So this cat and mouse goes up. That’s why it’s very essential that when government buys this product they buy from an Indian IP ownership company because in any upgrade of this software level and all that can be done very, very fast if it is indigenously designed and developed. So just imagine if you buy it from a foreign country, they’re going to ask for an arm and leg.
They’ll say and for all you know they’ll say listen I can’t upgrade your product so what do you do? You go and buy new products. But in, in India, you know I think we, we have a very open architecture where these evolving threats are accommodated very easily and they are upgraded, you know, everything, even if it’s a hard get upgrade, we are talking to them at, at a reasonable price, we upgrade them. So that’s why I think this is very essential that the, you know, the company, the country goes on the same path as the IDDM procurement.
So yeah, so, so because of these changes that were happening the order flow wasn’t, they’re not, they’re still finalizing I think but thanks to the operation the actual threat is now crystallized, the specs are finalized and when they come out with this I think significant orders will come in for even anti drone systems.
Unidentified Participant
Yes, thanks for the in elaborate answer. And so can we assume, can you assume that there is no scarcity of the demand but just order has been delayed by some time because of some geopolitical issues? And if your answer is yes then can we assume that after this first half order order inflow will pick up and for the next year we will have good amount of inflow and also we have previously talked that in from FY27 we will also receive some order inflow from us as well because we have set up in us as well.
So what is, can you put some light on this?
Ashok Atluri
So, so your first question was Yes, I think H2 will have significant order inflow, there’s no doubt about that. And we expect the order inflow considerably for anti drone systems in addition to simulators and we are expecting, you know, we hope that we win as many as possible out of that. With respect to the USA thing I think USA very interesting developments are happening as we speak. We as you know we acquired this company called Ari. They have a full fledged setup in you know of a network of dealers in America, in South America and you know, other countries.
So we are interacting with, in fact they also have in Japan, Far east also they’re pretty strong. So we are talking with their vendors who are actually already engaged with the armed forces there are to push our products, you know, from us and even from India. So we expect that, you know, by in FY27 there will be significant orders coming in and we will be able to supply to not only the US but South America also through the US contact.
operator
Mr. Patel, may we request you to return to the queue? There are several participants waiting for their turn. We now move to our next question. That’s from Darshal Zaveri from Crown Capital. Please go ahead.
Unidentified Participant
Hello. Good morning, sir. Hopefully I’m audible.
Ashok Atluri
Yes, please.
Unidentified Participant
Yeah, hi.
Unidentified Participant
Hi sir.
Unidentified Participant
So a lot of my questions are nearly answered. So I just wanted to know like in terms of order flow, so you’re already in negotiations and those parts are delayed, but what about the emergency procurement? Are, is there a sizable opportunity available there also? And what would be the timeline for us out there as well?
Ashok Atluri
So, you know, with the government require, if they issue the RFP and repeat, typically they will have to procure, finish the procurement by March, even though there have been cases where they have extended it to June and September. But typically the mandate is that, you know, please complete the placing of the orders by before March. And, and most of the case, most of the time it so happened that this they are able to complete the order placement is sometimes in, even in Q3 they issue the thing and within 45 days they try to complete it.
There have been cases like that. So our confidence is that all the orders should flow in before will be concluded before March end and whatever orders they then get, you know, will be should they should be placed by them. So did you place, did you ask any other question other than this?
Unidentified Participant
No. One more question I have is regarding our export opportunity. Like I think last year was very good for our export and this year we have 100 crores in I think our order book for export. So yeah, I understand Indian government has been a bit slow, but what about other places? Because I think drones right now are the in thing where every country wants them.
Unidentified Participant
Right.
Unidentified Participant
So. And it’s a big threat also to every country. So how are we placed in, you know, being able to get a newer market in export? Are there any plans? So like how can you just, you know, elaborate a bit more on the export opportunity and what, how, what is our role in that, sir?
Ashok Atluri
So exports in domino. We have been getting a lot of inquiries and lot of visits in the past few months and especially after operations indoor, you know, the government of India has been doing a considerable job and there are. We are getting inquiries for antidote systems also. And we think that H2 we should be get the second half. We should be getting some orders in export. But FY27 will be a significant year for in terms of exports. So yes, exports will start coming in H2 is what our feeling is and they will be in both for simulators and for anti drone systems.
But a big year for us will be FY27 for in terms of exports.
Unidentified Participant
So could we quantify which all countries are there and is there some qualification required, you know like or we have this qualifications like any like in general farmers, US FDA or something like that. Like we have for any country that you know we have qualified to be able to provide to these. And what all countries are we targeting to expose to sir?
Ashok Atluri
So you know we, we will I’ll broadly speak in terms of regions. We talk about Africa, we talk about Middle east and we talk about CIS countries and we also now looking at Southeast Asia. So these are the major regions that you know for obvious reasons. You know the some countries don’t like being named if the negotiation is going on or something like that. Again, there is a secrecy involved in that in the sense that you know, if we, if they know that we buy we are buying simulators for this this product, they will know we have this equipment.
And if they know that we have this equipment, they’ll also be able to assess that this is the strength of our equipment. Even though you know, most of the times, you know the Wikipedia gives a good rate but they expect us not to reveal it. So so we we honor that. So we never name the countries. And so we think that yeah in these four regions will be significant orders will be coming. Of course, the US and the South America market and the NATO countries will be will be something that next year we expect some orders to come through in that region also.
operator
Thank you. Our next question is from Amit Dixit of Goldman Sachs. Please go ahead.
Amit Dixit
Am I audible?
operator
Yes, sir.
Amit Dixit
Yeah, good morning and thanks for the opportunity. A couple of questions from my side. The first one is that recently Defense Secretary has been on air mentioning that simulate simulate sectors are the way forward for expediting the procurement of defense equipment and part of reforms in dap. Are we seeing some traction from the government? Some feelers. I know these are early days but still are there some feelers that you know in long term there would be an enhanced use of simulators in various platforms including Air and Navy. That is my first question.
Ashok Atluri
Yeah, so yeah, I think there is no doubt about that. In fact if you go a little earlier in the 21st of September, it’s in the government on government website the government issued a framework for simulation policy. So you know, in the simulation framework they very clearly said, you know, you have to start moving all the training onto the and also you know where procurement, if you know, simulated procure, simulated equipment can be done then we should simulate the equipment and go ahead faster with the procurement cycle. So I think there is no doubt about that.
And we have seen that growth in front from 21. If you see 22, 23, 24, 25, we have really, really grown significant 60, 160, 430 to 9, 930 crores. So the growth has been significant for us and we expect that thing to continue Again as I keep cautioning our investors that the quarter and quarter growth and even sometime year on year may not happen. But overall the trajectory is set that the government is going to increase more and more. And I, I, I personally think maybe we have done 78% of the simulation market till now.
There is another 92 to 93 per person that still needs to be bought in terms of simulator. So there is a long, you know, playing game, long game still there for both antid and simulators. And of course you know, antidote system you are asking for simulators. I think there’s a huge still market pending to be tapped there.
Amit Dixit
So the second question is on the recent acquisition that we have done for the company in UAVs and loitering munitions. Now while it dovetails nicely with our or complements our existing offering in ads. But what is the use case over there? I mean what kind of UAVs loitering munition market we are trying to enter and how much time it will take us to commercialize that particular product. And if you can highlight some of the products that we are actively looking at in this particular domain.
Ashok Atluri
So you know again just to go back in a little in time, you know, in 24 we, we looked at the field in 2018 we wanted to get into drones and but we saw there were so many players there and we thought, you know, listen, I think this is a winner’s curse. Even if they win, you’ll never make money in drones. And we moved to anti drone systems and there again, you know, there was, nobody was working on that. As we say sometimes the signal silence is the signal. So we went into that and that paid off well.
But in terms of drones, I know in 2024 when we looked government was blacklisting companies for using Chinese parts. And we think what’s. Why was the R and D not done? Why was this not done? And we consciously took a decision that we have to get into this field. And then when we started looking around into the ecosystem, almost everybody said, Ashok, these parts are not available except from a company like a company called Vector Technics who are actually supplying, but their supply is on and off. But in a strange coincidence, a week later Vector approached us for investment and we looked into them, we saw their capabilities and we said we’ll go ahead and invest.
So now these guys are actually. So our intention was to get into drone system to accelerate the indigenization of complete systems. So when we got. So now we are firmly into the ecosystem of drones. Now we were looking at what are the other things that we will do the government of India will need in case of a war. So we were looking at loitering munitions and Tisa has a proven track record. They’ve executed order with the drdo. So they have the technology, they have the product. But again we are doing some very, very high end again.
Again as I say that we do not want to sell to the Indian government that is just doing well, but should be. We aim to become world global number one in that. So we are investing a lot of money now as we speak and we, we expect that in a year and a half the loitering nation version should be ready for full fledged demonstration and you know, competition with other players in the field. And we obviously expected to do better than others in terms of specs, etc. Yeah.
Amit Dixit
So sir, what kind of drones we are looking at? We are looking at Kam Kazi drones.
Ashok Atluri
Kamikaze drones. At this point in time, only kamikaze drones. Yeah.
Amit Dixit
Okay, got it. Thank you so much sir and all the best.
Ashok Atluri
Thank you so much.
operator
Thank you. Our next question is a follow up from Garvit Goel of Seven Islands bms. Please go ahead.
Unidentified Participant
Hi, thanks for the follow up. Regarding the emergency procurements which are happening now due to which regular procurements are delayed. So at the same time we are saying we will get some orders in future in emergency procurement. So I’m not understanding why did not we get these orders as emergency procurements are currently happening, right?
Ashok Atluri
No. So they have just started Garbit and it’s not that they have placed, finished, exhausted all the funds. We expect that orders will continue Q2, Q3, even Q3 the order will continue and typically they have to close the placing the Orders by March of the year. So I think if they have played their place for very few emergency procurement till now. But the real emergency procurement has to go in a, in a big way. It will be starting in the next few weeks.
operator
Thank you. We’ll take a next question from Sanjeev Zarbade of Antique Stockbroking. Please go ahead.
Unidentified Participant
Yeah, thank you sir, for taking my question. Sir, could you give us an idea about what kind of opportunity is there for us in the emergency procurement plan of the government?
Ashok Atluri
Our expectation is, you know, the emergency procurement will happen in the field of anti drone systems. Significantly, I think there is one thing and it will all they would prefer anti drone system with hard kill capability. So Zen has been able to. And you know, typically hard kill, unmanned hard kill would be better in the sense that, you know, you don’t want people to be actually holding a weapon and firing because you become a target very easily. People detect where you are. So you should be able to shoot and scoot they call it. You know, you shoot from your weapon and then you move from there.
So we have this remote control weapon station which are easily loadable onto the vehicles and we have tested them with most of the vehicles that the government of India is using and they’re working perfectly well that, you know, the anonymously, you know, I mean remotely you give the coordinates of the drone, it can show through the anti drone system, it is able to point and shoot them down. So I think this hard, the soft kill and hard kill system of anti drone system is where the big market is going to be. And I think they’ll form part of the anti, the emergency procurement.
And I think there we stand a good chance of getting some others.
Unidentified Participant
Yeah, but would it be, would you be able to quantify the overall.
Ashok Atluri
In fact, we really, in fact, we do not know how much of procurement will be going on this field. So till we get the till tenders come out, we are, you know, we’ll be able to compute our likelihood and then maybe come up with the favor.
Unidentified Participant
Okay, answer my question regarding the other expenditure which has fallen very sharply on a quarter and quarter basis. So are there some expenditure that we book in the fourth quarter largely?
Ashok Atluri
Yeah, I think I, I’ll leave this question for Abdul.
Unidentified Speaker
Yeah, sure. So reason for reduction in the other expense, if you see in percentage terms it is 7.35% in Q1FY26 and in Q1FY25 it was 5.5%. So in percentage terms it has not reduced. So most of the other expense are Semi variable in nature. So other expense has reduced from 14.10 crores to 8.16 crores. In last quarter it was on a higher side, significantly on higher. So the reasons are in the Last quarter in Q4 there was a substantial amount of professional charges and incentives which was variable in nature and linked with the revenue. And also last year consumptions of stores and spare parts was on a higher side.
Last year there were some exceptional one off expense like impairment of investments, return of advances, provision of expected credit loss, provision for the warranty charges. So These are the five to six reasons due to which in Q4 it was on a higher side. But compared to Q1 FY25 it is in the same level only.
operator
Thank you. Our next question is from Aditya Muna from yes, securities. Please go ahead. Mr. Mona, could you please unmute your microphone and ask your question?
Unidentified Participant
Hi, I’m audible.
operator
Yes.
Unidentified Participant
Yes. So my question one was regarding the translation of order book towards execution in Q2. Currently our order book is about 750 crores. Out of that what are we expecting to be executed in Q2? FY26? Second question was towards the order book one is the 650 crores of orders that we expecting in the next two months. Other than that for H2 what is our order intake that we expecting and the execution timeline for that? Hello.
Ashok Atluri
Yeah. So Aditya. So on question of Q2 we won’t be able to give the specific guidance on a quarter on that. And order wise, as we discussed we are expecting around 650 crores by September for the simulators order.
Unidentified Participant
Okay. Yes.
Unidentified Participant
Yeah.
Unidentified Participant
Other than other than the 650 crores.
Unidentified Participant
In September order is there any other.
Unidentified Participant
Orders that we also expecting in H2?
Ashok Atluri
No. As we mentioned apart from this, this antidote system that is under the emergency procurement that we don’t know whether it can happen or not by September.
Unidentified Participant
Okay. Okay. Okay. And for FY27, what is our order expectation? Is it something that’s going to be much larger than FY26? And.
Ashok Atluri
I think this will be larger than.
Ashok Atluri
Hello.
Ashok Atluri
One second.
Unidentified Participant
Yes.
operator
So we are not able to hear you.
Ashok Atluri
FY27. We expect the orders to be much, much larger than what we are done in FY26. This will be significantly. Again you know we. We have to accommodate what we are projecting. That by implication when we are saying 6,000 crores we do expect 27 and 28 be very very large years compared to 26.
Unidentified Participant
Okay, that’ll be all. Thanks.
operator
Yeah, thank you. Our next Question is from Jatin Jadha from Sahasrara Capital. Please go ahead.
Unidentified Participant
Hello. Am I audible?
operator
Yes,
Unidentified Participant
actually all my questions have been answered. I just had a small suggestion sir. So there’s a company called in US called Duality AI and I’ve been to your facility and I’ve seen how beautiful simulator softw you make. So what their product is essentially they make a digital twin of the environment and use that to generate synthetic data for test training and testing AI models for counter drone. And as well as they use it as a simulators for the FPV drone pilots also. So this perfectly fits in Zen Technologies foray and while doing research a lot of US military, what do you call the bases have given them order.
So it does two things. It gives you training data to train AI models also and it gives you a simulation platform also for your FPV and kamikaze drones. So it’s something you could look into sir. That’s pretty much it. From my side. I had no particular question. They all have been answered.
Ashok Atluri
Thank you so much. I just noted it down Duality AI and you just send an email also just to give more information. But we definitely love these suggestions from our investors. I think we are looking out much beyond what others are doing. I will definitely try to track on this. But again just to you know get everybody up to date, we are extremely focused on AI at this point in time and we have launched a program within the company called transforming Zen into an AI native company where you know, everywhere, just not the products, just not the R D but across operations, across finance, across IT infrastructure, across logistics, everywhere AI is being used and everyone is getting post and you know the results are some, some of the results, you know something which used to take weeks is being done in you know, a few seconds, if not a few minutes, if not seconds.
So things are really, really exciting on the front of AI and everybody is in a learning mode at this point in time. And I think you will see the benefits of AI find the tech in terms of not only the just the product and building LLM within our simulators which are learning and becoming better as customers interact with them. But across board, across finance and I think this, it’ll be a, this is a very, very exciting time since then and, and we as zenith are very, very hypercharged. But thanks, we really appreciate these inputs. You know we can always, these are give us ideas sometime.
We can also not only get the idea but also collaborate with these kind of companies. Appreciate it.
Unidentified Participant
Thank you so much.
Unidentified Participant
Thank you.
Unidentified Participant
Just I Had a question.
Unidentified Participant
So where should I ma the details.
Unidentified Participant
On the comp IR investors at Zen Technologies.
Unidentified Participant
All right, thank you so much sir. All the best.
operator
Thank you. We’ll take our next question from Harshit Kaparia of Alara Capital. Please go ahead.
Unidentified Participant
Yeah, hi, good morning. So just few questions from my side. So you mentioned in the start of the call some orders got, some revenues got differed because of which you were not able to meet your target. I probably have missed it. Can you quantify that value? And secondly is this that you’ve already done the production and the customer has not taken that delivery of that. That’s the reason why it got you know deferred. Or is it that you are expecting some orders to come in and you will execute and then it was supposed to deliver?
Ashok Atluri
Orders have been executed. Almost, almost executed by, by this time as we speak. And the delay in the order execution was because of the change specs from the customer. So they were there, they were changed. They were changing till the last moment and we had to accommodate that. So it was the revenue deferred not the order revenue actually revenue recognition. So now we’ll be recognized it in Q2, whatever we have deferred in Q1.
Unidentified Participant
So what can you quantify that number sir?
Ashok Atluri
A little more than the between 60 to 70 crores is my estimate on that.
Unidentified Participant
Okay. Secondly sir, on the 650 crore simulator order, what kind of simulator orders you are expecting sir in this particular quarter?
Ashok Atluri
So these, these are army based simulators and I don’t want to mention the product for obvious reasons but you know, but they’re, they’re army, they’re not navy or air force but mostly army simulators.
Unidentified Participant
Okay, any, any particular area in army you can specify that. Guns, tanks or anything, any color you can provide.
Ashok Atluri
You know I think as the orders come across, you know, you know these are little sensitive things Harshit and you know sometimes like it. So you know let us, let us try to get the orders in hand and then check with them and then announce it.
Unidentified Participant
Fair enough sir. This was from my side. I wishing you all the best. Thank you.
Unidentified Participant
Thank you. Appreciate that. Thank you so much.
operator
Thank you. Our next question is from Nirmal Ravat Singh from Access Max Life. Please go ahead.
Unidentified Participant
Sir. Good morning. Am I audible?
Ashok Atluri
Yeah, now you are.
Unidentified Participant
Yeah, I’m an individual investor, not Axis. Sorry, we are not entertaining individual investors. I am joking. Yeah, go ahead. Yeah, so my question was on kamikaze drone.
Ashok Atluri
Okay.
Unidentified Participant
And there was this article in 80.
Unidentified Participant
About a startup from BITS Hyderabad.
Unidentified Participant
Two guys you know they, they made.
Unidentified Participant
Kamikaze drone and they followed sold it to our Indian army.
Unidentified Participant
So my question was that we also.
Unidentified Participant
Have got order on kamikaze drone or not?
Ashok Atluri
No, so we didn’t get the order. So you know this was our DRDO project that Tisa, our acquisition had done. They had executed for drdo so that has to be productionized and you know then offered to the, you know, the, the end user who bought it from them and to other in Indian, Indian ecos, other Indian users and overseas also. But, but we, we haven’t sold anything to the end user till now. Now it’s in R D stage at this point in time.
Unidentified Participant
Yeah, but even we have seen the article, we’re pretty excited if, if they have achieved what they have said, which looks very, very exciting actually.
Ashok Atluri
Yeah, yes, definitely you could consider collaborating them. Yeah, definitely. You know one thing again very frankly Nirmal, what we want to do is if there are companies that have a better product than us and you know, they have a head head, we would definitely want to collaborate with them. We don’t want to offer something that is second, you know, second grade or which is not the best in the world. At least best in India. That is the minimum criteria. So definitely, you know, if bits have, they have a product that is better than us, we would love to collaborate.
And you know, it’s quite surprising because Vector is the only guys who do the indigenous components in India. They are also not aware of these guys. So you know, we need to really, where did they get the components from etc. But if they have achieved this, quite significant and we would love to collaborate with the best in the field.
Unidentified Participant
Yes sir, that’s my question. Thank you.
Ashok Atluri
Thank you.
operator
Thank you. Our next question is from Manish Gupta of Equinox Investment Advisors. Please go ahead. Mr. Manish Gupta, could you please unmute and ask your question?
Unidentified Participant
Am I audible now?
operator
Yes,
Unidentified Participant
yes sir. Thank you very much for taking my question, sir. With wars evolving more towards drones and anti drones, particularly hard kill. So does Zen have the capability and technology for hard kill? Sir, this is my first question.
Ashok Atluri
Yeah, so you know we were, you know there was again there was a kind of semi trial where they called all the capable companies in the in India for demonstrations. Army had called and we were the only company that actually took Hard Kill System with guns and all that to that particular a trial that was maybe they called it a demonstration or something but they called in, they called it actually trials.
And so yes, we are not only having anti drone heart kill system we are demonstrating it to our end users and this capability is very deep with us and it is being at various commands. They have seen the product, the remote control weapons station with surveillance and they have really appreciated it. And I think, and, and I think Heart Kill is an area that we are really focusing on. As you, as we go into the next few quarters you will see some very good announcements in this area that you know, these are the new products that again these are all in consultation with the customers.
Customers have been saying that we want this and so we are going and accommodating their request. The Heart Kill is one area we really want to dominate by offering the best in the world. So to your question, yes, Zen is in a big way into Hard Kill and, and I think that will be a significant area of investment in the coming few quarters for us.
Unidentified Participant
All right, so just as a follow up sir, in coming years and quarters, what do you feel more optimistic about in terms of, you know, contribution to top line? Whether it’s going to be stimulators or it’s going to be NT drone systems.
Ashok Atluri
So I personally think that you know the, in anti drone systems will keep catching up, will, will keep increasing. And so you know it may go as much as you know, 40 or even 50 of the simulator. So, so I would say in a hard kill, when we say antidote system we, we are trying to add other, also, other things also like you know, the hard kill system including surveillance, everything, the camera, the electronic optics. So when we start adding the non simulator revenues which would include all these and even robotic automated systems, I think they will become a significant part compared to simulators.
So I would like to classify not a simulator antenna system but simulators and non simulators. I think they may become as big as 50, 50.
Unidentified Participant
All right. And Mr. Second question is pretty layman kind of a thing. I mean compared to some advanced countries like Israel’s Iron Dome and you know, we read them in media how efficient they were. So where does India and particularly Zen stand in this kind of capability?
Ashok Atluri
So, so you know, the feedback that we have got from our end users has very, very positive, very encouraging in the sense that you know, they were able to thwart all kind of drone attacks and they, they, we have so many testimonials saying that the products work extraordinarily and the, and you know, we are very grateful that these products have been developed by an Indian company with completely indigenous technology.
We got a lot of testimonials like that. And again, again they also commended how focused and Committed. Our staff were, you know, they were, they were there helping them, you know, trying to, wherever there were gaps, our guys were trying to help them. So I think overall it’s, it’s been a very, very good experience. And to your question, we definitely think we are in the top two or three in the world. It’s not that we are, we are number one at this point in time, but that’s our objective. How do we become number one? And we definitely need to improve the hard kill game where you know, we try to integrate as we go ahead.
That’s again I said hard kill is the area of focus for us. How do we include the missiles and other higher technologies to bring down the drones when we once we detect them and especially that they are now becoming AI based drones where they are doing vision based attacks, etc. So given all this, yes, I think we are not there, but we’ll definitely be there in the next, maybe one or one, one and a half year. We should be there at the top of the game.
operator
Thank you. We’d like to just update participants that we’ll be closing the call in the next five minutes. We’ll take a next question from Manan Vandoor of Walford pms. Please go ahead. Could you please unmute your microphone sir and ask your question. As there’s no response, we’ll move to our next participant. That’s Krishna Doshi from Ashika Institutional Equities. Please go ahead.
Unidentified Participant
Thank you for the opportunity, sir. Since we’ve already mentioned the NATO countries in our con call today, I just wanted an update as to how much of an opportunity are we seeing from that side now that we know that NATO is planning this massive rearmament plan. So what kind of opportunities are we seeing there? Is it possible to quantify and also it will be more inclined towards which segment of us.
Ashok Atluri
So one thing is NATO countries, the definitely simulator is a big thing in the sense that the training is in, the requirements have gone up. And one thing, one hard reality that I see to all the NATO countries is that even if, even though Ukraine has been really given world’s latest equipment and you know, in terms of whatever you say, there’s a tank, tanks, the, you know, the missiles, the handheld missiles, everything they were given but still they did not stand a chance against Russia which predominantly using very old equipment and you know, the realization is that, you know, because of training and, and we feel that because of that there is a lot of focus on simulators as a requirement to take on any formidable enemy in the future.
So yes, that is there. The second is even anti drone systems and drones also. You know, as we speak our subsidiary Vector is talking about exporting to both America and Europe and very very big names at that. So I think the opportunity is there. And of course anti drone systems. Anti drone system is something that we will be pushing a lot. And again once we expose it to their environment we’ll get a real time feedback. And I think our agility and speed of of customizing the product to their needs is much, you know, much quicker than any of the competition that we have.
I think it will be an overall holistic approach. All our products will be pushed in in the NATO and US market and South America also.
operator
Thank you. We’ll take a next question from Hitesh Chaudhary of ULJK Financial Services. Please go ahead.
Unidentified Participant
Thank you for giving me opportunity, ma’.
Unidentified Participant
Am.
Unidentified Participant
Actually I was saying on the operational side the margins are fluctuating. So can you give light on which segment is fluctuating? This EBITDA margin, is it from anti drone system or training simulators?
Ashok Atluri
I let Abzal answer that.
Unidentified Speaker
So if you see the EBITDA margin, operational EBITDA margin is around 34.27% on a standalone basis. And overall EBITDA margin is around 52%. So if we exclude the other income that it is coming around 34.27%. Our guidance is around 35%. As we guided earlier in the simulators the EBITDA margin is little bit on higher side and Antidron system is a little bit on a lower side. But on an average it is 35%. So in this quarter also we achieved around 34.27%. Almost near to 35% EBITDA. And on consolidation basis. Yes. This time EBITDA margin itself is around 40%.
Due to the good contribution from our both the subsidiaries ARIPL as well as ups. Thank you sir.
Unidentified Participant
That’s it from my side.
operator
Thank you. Our next question is from Nikhil Purohit from Fident Asset Management. Please go ahead.
Unidentified Participant
Yeah, thanks for the opportunity. My first question is just a follow up on an early participants question. So in the existing order books N50 crores what are the timelines for execution and how much like is executable by this year.
Unidentified Participant
So you’re on mute.
Ashok Atluri
Yeah, Abdul will give it has the AMC component also. So I’ll let him answer.
Unidentified Speaker
So if you see out of total order book position is around 754 crore rupees. Out of which 148 crore is for the subsidiaries. For this Zen standalone basis it is around 605 crore rupees out of which AMC is around 260 crore rupees. If we deduct this 260 from 606 crores then total equipment order is around 346 crores. This is purely equipment orders only. So this will be executed in the by at least a Q3. Maybe most of the equipment orders will be executed in Q2 but yeah few months orders will be spillover to Q3 also.
Unidentified Participant
Okay, and what order book are we targeting by year end for our subsidiaries? Like if you could, if you could also give a breakup for the order book of these subsidiaries and any throw some light on numbers like Revenue EBITDA pad for ARI or unistring TiSA FY26.
Unidentified Speaker
Yeah whatever is this standalone numbers in this year you can add 250crore rupees in the consolidation as a top line maybe from the ARIPL 170 and another is from the other subsidiaries around 80 crore rupees after obviously it will be more than 250 but there will be a indus effect which will be knocked off. So after knocking of this effect in the at the consolidated level you can add 250 crore rupees revenue from the subsidiaries and EBITDA. This will be in line with 35% and as per the Zen’s benchmark and profitability will be also 25% as per the benchmark of this Zen and we have seen this in Q1 also they have achieved the same.
Unidentified Participant
Yeah, got it, got it. Just one last question. What will be the capex for FY26?
Unidentified Speaker
In FY26 there is no significant maybe 40 to 50 crore rupees. Capex will be there.
Unidentified Participant
Okay, got it. Those are my questions. Thanks.
operator
Thank you ladies and gentlemen, that was the last question for today. I hand the call back to Mr. Ashokat Lahori for closing comments.
Ashok Atluri
Thank you fellow investors. I really appreciate the interaction and we expect again this year we expect it to be muted but next two years I, I think we are very very hopeful that they’re going to be very exciting. As a, as a further update thanks to somebody bringing up the AI part we are really really working and getting AI into our products, our operations, everything and that will start yielding results significantly results in the next few months and we will probably keep you updated on that too. And thank you so much for the interaction and looking forward to the next earnings call with you.
Thank you.
operator
Thank you very much on behalf of Zen Technologies limited. That concludes today’s conference. Thank you for joining us. And you may now click on the leave icon to exit the meeting. Thank you for your participation.