Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Zen Technologies Ltd (NSE: ZENTEC) Q4 2026 Earnings Call dated May. 04, 2026
Corporate Participants:
Ashok Atluri — Chairman and Managing Director
Unidentified Speaker
Unidentified Speaker
Hari Haran Chalat — Chief Financial Officer
Analysts:
Abhishek Mehra — Analyst
Mehul Panjwani — Analyst
Unidentified Participant
Amit Dixit — Analyst
Dipen Vakil — Analyst
Vikas Singh — Analyst
Unidentified Participant
Unidentified Participant
Harshit Kapadia — Analyst
Presentation:
Operator
Any outlook for the future which can be construed as a forward looking statement and must be viewed in conjunction with the risk and uncertainty that the company faces. Please note that this conference is being recorded. I now request Mr. Abhishek Mehra to lead the discussion. Over to you.
Abhishek Mehra — Analyst
Welcome everyone and thank you for joining this Q4 in FY26 earnings conference call of Zen Technologies Limited the results and investor updates have been emailed to you and are also available on the stock exchanges. In case anyone does not have a copy of the same, please do write to us and we’ll be happy to send it over to you to take us through the results of the quarter and answer your questions. We have with us today Mr. Ashok Atluri, Chairman and Managing Director, Mr. Hari Haranchalat, Chief Financial Officer and Ms.
Abhilasha Atluri, Investor Relations. We’ll be starting the call with a brief overview of the performance which will be followed by the Q and A session. With that said, I’ll now hand over the call to Mr. Ashok Atluri. Over to you sir.
Ashok Atluri — Chairman and Managing Director
Good morning everyone. I just want to do a recap on the current products that we have and talk about the future products that we are going to launch. The main point here is that there is a North Tech event happening in Prayagraj as we speak and our products are being introduced there and I’m very excited about what’s happened in the product space. The result, you know, I’ll leave it to Hari to, you know, make the presentation and field the questions with respect to that. So I’ll just start the share here and.
Can you see that?
Operator
Yes sir, we can see that.
Ashok Atluri — Chairman and Managing Director
Yeah. So very, very broadly you know, that what has happened in the past, you know, few months is that the two areas that we were focused on, which is anti drone systems and the simulators, both have gained so much of prominence in the, in the war, recent wars that have happened. The first thing is anti drone system without, you know, without much, you know, argument in that sense. The Iran, Israel, Iran war that was fought was completely drone based, our missile based and whoever could for every rupee get the maximum mileage won the war actually.
So, you know, we can see that while they were launching $30,000 Shahid drones, they were being countered by 3 million dollar, you know, interceptor missiles. So complete missile math was completely mixed up. So one takeaway from that was, you know, that antidrone systems are playing a big role. But in addition to just pure software jamming, hard kill options have to be there. And in Hard kill. The ideal situation is for every $30,000 attack that happens, can you stop it with a lesser amount, maybe 20,000 or even 1/3 of the price at 10,000, can you really neutralize the shahed drones?
So that was what the thing was. But coming back to what Zen has been doing, we have been doing anti drone systems. We have introduced hard kill options and we see that currently post the Israel the focus has almost 2x minimum 2x from what we are originally projecting. So what is the impact it will have on our turnover? And all that is not yet known. But we see that two to three years from now the mainstay is going to be the anti drone systems. And second, what has happened is that again, you know, because of the war, the sudden non existence of wars prior to 222 and 2020 to now, Armenia, Azerbaijan, Ukraine, Russia, Israel, Iran, all these wars have really changed the dynamics very, very well.
So what has happened in essence is that the companies are now scrambling for preparing for war. It’s not the question of if you will be attacked, if you are perceived weak, you will be attacked, is the general theory. So how do you make yourself really unbeatable is by, you know, making yourself trained, properly trained and then, you know, buying the right kind of equipment. So what happened? So, and you know, in this direction we have started doing a lot of efforts. But one of the biggest change that has happened in terms of our development efforts in the last few years versus last few months is that the AI has taken a major role into our development cycle.
So agent AI takes two places. One is at the level of the, you know, process based, where are the processes? Are you using software, develop, developing software, using AI. And secondly that the embedded level are your products themselves, are the simulators, are your anti drone system themselves AI native or not? So these are the two areas that we have been focusing on. One thing that happened was that, you know, because of these extraordinary increase, we have suddenly, you know, released lot of bandwidth in our companies.
So one of the company that did extremely well is, you know, you know, both Ari and Nave under Commodore Aluvalya and they have started developing really interesting products. So and with the bandwidth we are now able to take more products and holistically address the market that has come. One of the products that they have developed is a cyber security suite. So this is actually a physical speed that is integrated which can be integrated at control and command center. It can be integrated into ships, it can be integrated into, even into aeroplanes where if the attack happens through Hacking this can prevent.
And typically there are six layers. Six layers. One is the awareness and training layer. Monitoring and intelligence protection and prevention, Encryption and data sovereignty, Threat perception, investigation and response. And finally the quantum post quantum readiness which is required because of the encryption that is required. And this is in all the cases there are zero foreign dependencies. And you know it’s a proper example of a atmanirbhar Bharat. So this is something that is happening and the other thing is that you know this with the.
The second thing that we have started doing is of course the anti drone simulator. So we have been actually supplying the antidrone system for a long time now. Antidone simulator has also been developed by Ari and this is a very advanced training platform because we really cannot block the actual antidrone system for training. These actual antitrust do have built in training methodology. But we are requested by the customer that this is a separate activity. And so we have created an antitrune simulator.
Again we think this is a major product. You know it will teach people to detect, track and utilize aerial threats. Very realistic virtual environment. It could be a single drone threat or a swarm attack drone. And also can you have a mission based tactical exercise. This does enable that. So you know of course scenarios can be configured with adjustable threat levels. So this is actually before the war happened. The war can be simulated and you know drones can be activated and stop from attacking the thing.
Again the current, even the anti drone system that has that is there is completely heavily AI powered. Again a lot of AI in that. So especially when we compare our thing is 15 plus kilometers detection range. Of course if you network it goes indefinitely. It can be 4,000 or even 40,000 km. We are talking about each individual system and you know, frequency dominance is one of the biggest challenges that we have we are seeing worldwide is that a catch up game that the other vendors are playing with Zen.
So initially now recently we have been supplying for you know, 400 megahertz to 6 gigahertz but that’s outdated now we know that you know the bad actors are actually making drones at 100 megahertz, they’re making at 10 megahertz or 10 gigahertz, they’re making at 12 gigahertz. So the, so what we have done is we have preemptively made the product with wider frequency dominance with 70 MHz to 12 GHz. And again our neutralization capabilities are extraordinary. You know with RF jamming, gnss jamming rcws guns that we have already included air Defense guns integration has already been both L70 and Z23.
So this product is way ahead of you know, the. What are they available in the market worldwide? Again completely. Radar itself is also indigenized and with a range of 20km and detects smaller drones much much earlier than what competition would do. So the latest launch that is again being launched today at Prayagraj and we are very happy with what is being done. This is actually future proof at this point in time and we think that this will a lot of market not only in India but worldwide. Another product that’s being launched today is Rishabh.
Now Rishabh is a unmanned ground vehicle UGV that is capable of combat logistics and casualty evacuation. It has a payload of 100, 150 kilos. It goes at a speed of 50 km per hour. The range is up to 100 km. We have already integrated various weapon systems. MMG, LMG, direct fire, AGS, indirect fire. All of them and tried on this and they, they are, they function very very well. The recoil is absorbed very well. Your operating mode is you know you can, you know you can, you can man manually operate it or you know you can just on autonomous, give a task, give a task, go there, do this and come kind of situation can be done.
All the autonomous it has Ackerman steering for better control and reliability. Indigenous content is more than 85%. And you know commercially we are planning to launch it in this financial year FY27. And of course you know these are the other things can be used as combat logistics or casualty evacuation. And this is a command and control center that you see a very, very interactive and state of the art. Another product that has been launched in collaboration with AI. Turing is our associate company is that you know this is, this is a unique 30mm ammunition.
This is, we have ammunition license in addition to the recently granted weapon license. We also ammunition license. So we are building this ammunition which is you know, RF based programming. It has pre fragmentation and tungsten ball as the core. And you know we have seen that we have actually tried it out and it destroys everything within a 10 by 10 meter area. And you know this can also be used as a anti drone firing thing on our 30mm cannon. So this is, this is. And again when you use this, this ammunition you don’t have to modify the actual weapon.
So you can use the regular weapon system and put these ammunition into that again finally you know, and one more thing that is happening is the ciws this is a gun missile system again by AI. Developed in collaboration. The AI systems they are, they are, this can be used by naval forces and in addition to the weapon system it also has the shorter missile range and a built in radar. So some of the smaller targets where you know, people don’t want to spend the rfdd, the detection and the jamming, but want to just to have a hard kill option.
This built in radar is a self contained solution which will actually at a much lower price point can be pushed to the armed forces. So you know, so again I, as I was saying, one of the biggest thing that I’m really excited about is you know, can we actually make a drone and interceptor drone that is you know costing much cheaper than the 30,000, you know, the shahed drone that cost and can it effectively? The biggest challenge is you know these drones come at 180 kilometer. This Shahed drone does 180 and now the recent ones we hear are doing 300 and the next ones probably would be crossing even that.
So given these speeds of, you know, it is very, very difficult to actually realize a drone that can fly at speed of 300km. So how do you exactly address this challenge of you know, stopping 30,000 drone with much much cheaper attack shahid drone with much much deeper solution. So you know, I’m very, very happy and very very proud to announce that we have just come up with similar with this solution that is actually much, much cheaper than shy drone. We think at $10,000 is a very, very good entry point for this.
And we are launching Hyper Strike which is having a speed of 400 kilometers per hour. It’s a five minute loiter and strike thing. So it can go easily 20 kilometers plus and hit the target. And even if it misses, it can be maneuvered physically. One thing is it have the AI built in but at the same time a manual override is there which can be chased and it can hit the target again. The proximity variant payload is about 200 grams. AI enabled tracking and guidance and 4 kg airframe and mass production arch very, very.
So you know, we think that we should be doing about, you know, the production will start in this financial year of this and we expect that, you know, even the capacity is about 5,000 per shift per month. But you know, we think we can easily increase to 15,000 and you know we can scale it up if the demand goes up. So this is a very, very excitement thing. And there’s a small video that, a teaser video that I’ll just share with you.
Unidentified Speaker
To create a common founded drone squabbling
Unidentified Speaker
The drones are believed to be used for target designation.
Ashok Atluri — Chairman and Managing Director
It. So so this was the last slide and with this, you know, of course as usual the again the key contribution for this the high speed propulsion system has been supplied by Vector Techniques, an extremely competent team Again. So you know we actually from the focus on Zen creating great products which which continues to be have we continues to happen. Now we are almost in a position of facilitator having great set of companies working together and you know, and facilitating them to, you know, unleash their creativity to serve the needs of, you know, our clients, the Indian armed forces and Indian allies.
So that is what we have been able to do. Very and very, very excited for the next three to four years. We think the government is moving very positively. The new DAP that is that draft DAP that we saw was very gratifying. The whole focus in the DAP has been iddm. They have been saying indigenously designed, developed and manufactured. There was some attempt to say that if even foreign tech if it is bought should be used on par with Indian IP develop. So the wiser voices prevail and I hope that will not be allowed because when you develop a product after four or five years of hard work, that’s a capability development, it is not a product.
But if you just get somebody after you know, from a T as a tot you say and you try to equate it with the iddm, that is dangerous because you know what will happen is simply if a company is actually developed a capability and is on verge of commercialization, a foreign counterpart can what he’ll say, listen, I want to kill this technology, take this technology from me and kill that Indian capability so that you know, next version onwards Indian armed forces that will be forced to come to us. So we have to distinguish between foreign design developed and Indian assembled or Indian manufactured.
Even if the IP the company is, you know, given the ip, so called IP transfer has happened versus indigenously designed, indigenously developed and indigenously manufactured. So Indian manufactured. So I think that we were smart enough to see the folly in that the distinction and we I think government will be doing. But I think after 2026 the roost the complete rules will be ruled by companies that have designed and developed products. And you know, I think they may be giving preference we are hoping that for indigenous private companies.
So there are companies that have developed the product along with drdo. So what are the differences? DRDO actually finances the development. Now compare that with a company that is actually self funding the innovation and R and D. So you know we are saying that privately self funded independent R and D companies, you know, innovation and R and D companies should be actually be treated much, much better than people who are just taking develop co developing with DRDO and that we call it. So if that happens, that should happen and but anyway we can distinctly see companies that are putting in their money, that’s the ultimate skin in the game.
And they are saying that listen, we are, we want to develop this product, we don’t want any funding but if we click you buy it. So the only thing for those companies is quicker orders. If that is cracked by the Indian government, which we think is the main point in 2026, that they are going to really push the IDDM agenda. I think that will change. 2026 will be a hallmark year not for the actual innovators in defense industry but also for the Indian armed forces which will unleash the power of Indian armed forces, Indian industry not only into India but all worldwide.
So with that I thank you so much and I will hand it over to Mr. Har Hari Haran for the presentation on the on the financial results.
Hari Haran Chalat — Chief Financial Officer
Thank you sir. Good morning and warm welcome to all. Thank you for joining us on our Q4FY26 earnings call. Following Mr. Ashok’s remarks on the business and the way forward, I will take you through our financial performance for the quarter and for the year ended 31st March 2026. Let me begin with the consolidated performance for the quarter. Consolidated revenues for Q4FY26 stood at 178.1 crores, broadly in line with the rupees 177.8 crores reported in Q3FY26 and lower by 45.2% year on year compared to the 325 crores in Q4FY25.
As I have indicated through the year, the revenue trajectory in FY26 has been impacted by the timing of order inflows, with the bulk of the orders received over the past several months scheduled for execution from FY27 onwards. Operational EBITDA for the quarter stood at 51 crores, which translates to an operational EBITDA margin of 28.6%, lower by approximately 900 basis points sequentially and 1390 basis points year on year. Profit after tax for the quarter stood at 47.2 crores PAT as a percentage of revenues stood at 26.5%.
I would like to spend a moment on the five specific factors that have weighed on the margins profile for this quarter since the quarter on quarter and year on year movements are wider than the underlying business run rate would suggest. First, our Q4 revenue base is lower against the prior year Comparable with Q4FY25 having strong execution resulting in a higher base. Since a significant portion of our cost base both at the standalone level and across the group is fixed in nature, this lower revenue base translates into margin compression particularly on the year on year comparison.
Second, we recognized year end performance incentives for certain employees during the quarter. This has resulted in an incremental employee cost of approximately 5 crores sequentially. Third, we have updated our warranty provisioning percentages particularly for anti drone system products supplied in FY25 based on the actual expense data. With more actual data now available on warranty utilization for these products, we have revised our provisioning estimates upward Resulting in approximately 3.1 crores of incremental warranty expense in the quarter.
We incurred approximately 2.7 crores of post supply expenses during the quarter per needed to an export order delivered in FY26. These costs include on ground installation, support, logistics and engagement of external consultants in the customer’s geography. Fifth, R&D expenses for the quarter were higher by approximately 3.3 crores sequentially. These reflect investments into our future product portfolio and as we have indicated in earlier interactions, we expect to make higher investments in R and D going forward which will be reflected in an elevated cost base.
Unlike the other four factors mentioned earlier which are largely one time or period specific in nature, this is a structural commitment that we will continue. While these factors are weighed in on the quarterly margins, our long term guidance of 35% operational EBITDA and 25% PAC margins remain intact. Now coming to the consolidated performance for the full year, Consolidated revenues for FY26 stood at 687.7 crores lower by 29.4% as against 973.6 crores in FY25. Operational EBITDA for the year stood at 247.2 crores at a margin of 35.95% lower by approximately 240 basis points year on year.
Profit after tax for the year stood at Rs 217.9 crores. Pact as a percentage of revenues stood at 31.7%. Now coming to the order book the consolidated order book stood at 1,336 crores as on 31st March 2026. The standalone order book as at 31st March 2026 stood at 1,222.6 crores. Majority of this order book is scheduled for execution from FY27 onwards and provides clear revenue visibility for the next financial year. Working capital days as of 31st March 2026 is 196 days compared to 194 days as at end of Q3.
FY26. I would like to draw your attention to a notable improvement in our DSO position are days sales outstanding at the end of FY26 stood at approximately 119 days compared to 161 days at 31 December 2025 an improvement of 42 days. The increase in the working capital days is primarily due to higher inventory days and advances to suppliers which is required for the projects which are currently being executed. For deliveries in FY27, the liquidity portion of the group continues to remain strong. Cash and bank balances aggregated to 1308 crores as of 31st March 2026, the group remains debt free.
This is the brief on our financial performance for the quarter and the year. We can now take questions. Thank you.
Questions and Answers:
Operator
Thank you so much. Ladies and gentlemen. We will now begin with the question and answer session. Anyone who wishes to ask a question may click on the raise and icon from the participants tab on your screen. We request participants to restrict two questions and then return to the queue for more questions. To rejoin the queue, you may click raise and icon again. We will wait for a few minutes until the question queue assembles. We’ll take our first question from Meol Panjwani of 40 cents. Mayul, please go ahead with your question.
Mehul Panjwani
Hello sir. Thank you so much for the opportunity and elaborate walkthrough of the products. My first question is how much of the 1336 crore order book which we have will convert into FY27 revenue and by when will it happen in FY27?
Hari Haran Chalat
Thank you for your question, Mr. Mel. So most of the order book that we have of 1336. Out of that the product which will be dispatched in Fi27 is around thousand crores. The balance 326 crores is basically AMC revenue. And AMC revenue gets spread over a period of the AMC contract. So out of the total order book 1000crores is expected to be executed. And most of the execution is going to the deliveries is going to happen in Q2 and Q3 of FY27.
Mehul Panjwani
Okay. So most likely we recognize the entire order book into revenue.
Hari Haran Chalat
Yes.
Mehul Panjwani
Okay. My second question sir is what is the sustainability of new orders in FY27 across the new and legacy product portfolio.
Ashok Atluri
So I, I think the, the orders will be accelerated. Now we expect the both the segment, the simulation segment and the antidote segment to really increase in the size of the orders. You know, as I said that the demand which we were expecting has far exceeded the the estimate. The reality is much, much, much larger than what we had expected. So sustainability of the order is not only, you know, not only sustainable. There’s going to be a significant increase in the orders that will be received during this year.
Financial year 27.
Mehul Panjwani
Sir, can you give some kind of a ballpark how much increase will be compared to FY26.
Ashok Atluri
So you, so we, we stick to that prediction of you know, our projection of 4000 crores turnover in FY27 and 28 put together. So we are very comfortable with those figures now.
Mehul Panjwani
Okay sir. Okay. Thank you so much and wish you the very best.
Ashok Atluri
Thank you. Me.
Operator
Thank you so much. We’ll take our next question from Darw of Crown Capital. Daril, please unmute. Yes.
Unidentified Participant
Yeah, yeah. Good morning sir. Thank you so much for taking my question sir. So just you know, a bit in regards to the previous participant question only. So we are sticking to the 4000 cor revenue guidance. So by mathematically that means in FY28 we’ll be roughly doing around 3000 crores. And for that we would need at least 3000 cr. 4000 maybe order book by this year. Is that fair to. So that’s what we are targeting this year. Because very honestly sir, we’ve been trying to, you know, I think in previous calls we’ve guided that maybe we’ll do 1500, 2000 crores orders in hand.
We are nearby that. But it’s still to reach 3000 crores is still a quite far number. So what do you. So how confident are we that we’ll get 3,000 crores in this year?
Ashok Atluri
You know, so what we are saying is, you know cumulatively we will doing, we will be doing 4000 crores. So you know, for if you are right in the sense will we be by the year end will we be having a 3,000 crore order book to, you know, achieve it? Even if you were to do 2500 in FY28. I think that should be the case if you know, based on what we have been talking to you. But again, you know what I would like to say is in terms of execution we should be able to execute 4000 crores cumulative in over the both the years.
Will the order book stand at 3000 crores at any point in time I think it is reasonable to expect that. Yes it should the order book should touch 3000 quote at some point in time.
Unidentified Participant
Okay, fair enough, fair enough. I also just wanted to know like I think we also went to. We got recently I Sorry I missed the start of the call. I joined in a bit late. So we got I think a new segment in ammunitions and everything. So I are these are the guidance including these or that’s a complete new segment where you know revenues can touch you.
Ashok Atluri
So you know part of the you know the sales might be. It might include part of the sales of the you know arms licenses that we are expecting but it will not be very significant to you know really contribute meaningfully to to these figures till the in the first two years. But I think third year onwards they’ll start contributing very significantly.
Unidentified Participant
Just last question from my end. So right now like because lot of geopolitical anti drone systems are you know are required a lot of forefront. So is how is our technology you know catching up with people. Like if you would, if I would compare ourselves to like all over the world how would you rate us? Like maybe top 10, top 15? Because why I’m asking that because the technology is advancing so much. What are the possibilities of export orders? Because domestic as we know government is not in our hands right.
Like it’s going to take some time. There is going to be multiple rounds. Maybe it gets delayed even further. But exports is something you know we could you know because there’s a lot of requirement due to the multiple wars. So how do we how the how are our products placed and what can we expect out of exports in the coming years.
Ashok Atluri
So I, I I think we have figure you know factored exports also in this and you know we, we personally think that the simulator market is you know is showing lot of u hope especially with related to drone related anti drone related simulation and of course the naval simulation is big thanks to you know hormones, trade. Everybody wants to know how to navigate difficult places, how to handle mines. All these things you really can’t practice unless you are on a simulator. How do you handle mines? How do you clean mines?
Clear minds etc. So the simulator market is really becoming and as I said everyone if you are perceived as weak you are the next target. So how do you look strong by having a very very well trained force. The simulator is. Yeah so this is what we are getting based on the inquiries, incoming inquiries also and of course in antidote system. I really don’t want to tell much about it because this was a system that was used effectively in Operation Sindur and you know we think that it’s a proven product and what we have today is much, much more advanced than what you gave to the armed forces then it’s a highly evolved system and I think it’s definitely in the top three in the world if not, you know, the absolute top.
So when we go to the exhibition then we consult other vendors and we talk to the customers. They’re actually quite surprised that India actually has the ability to detect and jam from 70 MHz all the way up to 12 GHz. That’s a huge range for any product. So yes I think export market is going to play a major role and we are expecting a lot of export orders here
Unidentified Participant
By when will we get some order like our execution mostly going to be Q3, Q4. So can we have order flows before that or do we expect orders to also be back ended sir? No, no,
Ashok Atluri
I think so. You know the you know pipeline would be very large but I don’t want to touch that. But you know I think as you know I, I we told last year also that you know we are expecting some orders in the first quarter though the orders are very near. I think when they come our confidence, your confidence, you know and our confidence will go up about the targets that we have been talking about. But yes the otherwise the pipelines, pipeline for both the simulators and the antidrone system is very, very large.
I mean it’s running into few thousands of crores.
Unidentified Participant
That’s it for myself. Thank you so much.
Ashok Atluri
Thanks Darshan,
Operator
Thank you so much. We’ll take our next question from the line of Amit Dixit of Gold Med Sats. Amit, please unmute your microphone.
Amit Dixit
Yeah hi, good morning everyone and thanks for the opportunity sir. Congratulations for a good order inflow and pipeline that we have. A couple of questions are one from a more conceptual perspective. Now while we all talk about IDDM and the focus of government on indigenization but if you look at the current aons they have been at a record label this year but you know the foreign component, foreign procurement component and I’m not counting Rafael here, Rafael is a different thing altogether, has gone up quite high and it seems the view among armed forces at least as per our channel checks is that they would like to go for instant patch up rather than you know, waiting for indigenized kind of systems that might take their time.
So in that context order inflow or orders in the near term, you know there’s just a risk that they might be more, you know, towards for the foreign guys. So what is your thought on that?
Ashok Atluri
I mean, you know, you know, I don’t know if you have seen Godfather. You know, in the Godfather, Don Vito Corleone tells Michael Corleone that, you know, whoever comes with this bar is the traitor. Whoever comes with the Barini proposal. And he says, whoever brings that proposal, you know, you have to, you will know that he is the traitor. And you know, similarly, I think in Indian armed forces, you know, whenever anybody is actually pitching a solution that’s especially available in India and likely to be available in India, they’re actually traitors.
So we need to be very, very careful. And we are the, and by the way, the whole political system, the whole bureaucratic system and the, you know, majority, majority of the political majority of the bureaucratic majority of the armed forces are completely online with getting indigenous. You know, one of the questions they say, the pitch they make is, listen, you, you have to have the best equipment in the world to win a war. But remember, this is the exact situation that we, this is the Today, 20 years back, we were in that exact situation that we’ll always say that we’ll buy it from outside, will not develop it in house, and we were completely unprepared for wars.
Now the situation, now the situation is, and you know, the country that said, listen, I’m not going to buy anything from foreign countries, even if a product is 60% of the world’s best product, I will go with the, my, my country’s product. And which was that country? That was Israel. So he, they have been on record and where are, where is Israel compared to India today which have been following the policy of only indigenous equipment. So, you know, that I think that sense is there within the government that, you know, we need to buy as much Indian as possible.
And you know, but again, you know, we don’t have a ra. We don’t have Predator, which even though I have my own reservations whether they are the right kind of expenditure at this point in time, but we don’t have them. So going for them with the foreign vendors is all right, but there are a lot of things. And again to your question about the allocation of funds because the very last ticket items, those have happened, but in the ground I can actually see they’re actually saying that we have to buy by Indian IDDM and they’re willing to take risks where, you know, they say, okay, if they let us give orders to their 10 vendors, they’ll say, okay.
Three vendors take these orders. So they’re actually, I think there will be a consolidation phase happening in the next three to five years where some companies will really be emerge as winners. The Googles or the, you know, Amazons of the defense world that will benefit from focus on indigenous R and D. Yeah, I don’t know whether I answered your question, Amit, but if I haven’t, please highlight it.
Amit Dixit
No, sir. Absolutely. And thanks for invoking Godfather. I remember after quite some time. Yeah. The second question is essentially on the product that you showed in the beginning of the presentation. Drone, quite, I would say impressive. And given the use case is very, very huge in the Indian market and the specifications that you highlighted, I think they are ahead of your peers, at least what I have studied. So you know, what kind of, I mean, I’m not talking about one year, two year, I’m talking about the use case in particular that let us say five is what kind of, you know, opportunity do we see in India?
And part B of the question is on naval simulation that you highlighted in the presentation. So what kind of solutions we are developing over there? These are, this is A and B. You can handle these.
Ashok Atluri
So you know, you know, very frankly, if you know that the thing that we are doing, you know, the point here is that, you know, while we are developing this, there is somebody who’s developing a better, you know, Shahed or something like that. But we have a version that will address the future things also as we in the works, in addition to the 400km interceptor drone that we have created now, this interceptor drone has AI vision, compute power on the drone. It can go autonomously, go after, you know, shahid drones.
Most of shahed drones are 180km. This could even if it misses, go back, tap, you know, blast it out of existence, the intercepted drone. So we think that if things look as they are, the world is a very, very dynamic place, Amit. But if things look as this may be the largest product in our portfolio two years from now. The biggest product in our portfolio, the interceptor drone. And as we are evolving future versions of that, this could not only be the Indian armed forces, but worldwide. This may be the most sought after product.
Again, the kind of research that is going on is on the absolute edge of physics and reality. So if we are able to crack it, this will be absolutely nobody in the world will be able to achieve what we have achieved. So I think it’s a very, very big good view. You caught it, caught on to it. But the interceptor drone with 400 kilometer speed with AI compute edge and complete autonomous is going to be a very big thing for us. So yeah, so your question of a second naval simulation, how naval simulation is really big for us.
And we are thinking that the government is, you know, the Indian government is really, really focused on, you know, now, you know, a lot of people just focus on the two borders, you know, the, the Chinese border and the Pakistani border. But when you just reverse, you know, just, just have a map in front of you and move it around, you know, just about as you move it upside down, you will see the sea is such a huge part of India and it is where we have built everything and this is where the actual threats are now being built.
So what are we going to do about it? So I think the training for that is going to be very, very major. And thanks to the choke point that we are seeing, India will have a larger role to play as we go ahead. So we see in the naval simulation also we have started putting in effort and started offering complete, full fledged combat, naval combat training centers. And there is a lot of positive response in this regard. Not only in India, but you know, Ari, or 100% subsidiary has a lot of connection in South America and Europe.
So we are trying to push those solutions through them, I think. And you know, I think this is going to be quite a large contributor of revenues as we go ahead.
Amit Dixit
No, sir, thanks. Thanks indeed. And I think I will connect with you one on one because this is like outside the domain of this call within the interest of time. So I will connect with you one on one on these exciting products. Thank you and all the best.
Ashok Atluri
Sure. Thank you so much. But just for the knowledge of everyone, you know, these products are being demonstrated at Prayagra. They are on display. So you can have go and have a look there. Yes, thank you so much.
Operator
Thank you. We’ll take our next question from Deepen Vakil of Philip Capital. Depend. Please go ahead.
Dipen Vakil
Hi sir, good morning and thank you for this opportunity. So my first question is regarding your arms license that you have received. So can you tell us the scope for Zen technology in this arms manufacturing as to whether we are getting into the ammunition production or whether it is more about the product that you recently just displayed right now as to what kind of new product we are expecting from this arms and basically from this arms manufacturing license?
Ashok Atluri
Yeah. So you know, the thing is that again we have been focused on the anti drones segment by itself, but what is happening is we built the remote control weapon station as an, you know, as a Expansion of our hard kill option offering to the customers. But what we saw was that, you know, the product by themselves are having a lot of market. You know, the anti remote control weapon station, they say we don’t want your anti drone solution. We want this thing maybe integrated with the radar kind of thing.
So those are the kind of solution that some of the, you know, especially the vendors with limited budgets are asking for. So an interesting thing was that, you know when we saw in the, which we anticipated much earlier was that the, these, the 12.7 20mm, 30mm especially this will be the weapon system that will be used to bring down the drones. And then we had applied two years back, the licenses which fortunately came in now. And you know, in the meantime we have been developing, doing some work, hardware, some hardware work also on creating these weapon systems.
So yes, the weapon systems will be launched during the, you know, one, you know, something will be launched during this year, next year. I think the majority of them will be launched. So these are very big market. But again, as you have probably guessed it, the bigger, bigger market in this is the actual ammunition. So we, the ammunition that we have developed for 30mm, that is the most preferred caliber weapon for bringing down the drones. The 30mm is actually a smart, you know, ammunition. The Airbus capability when it detects something some drones decided it does the blast and 10, but 10 by 10 meters worth of, you know, if drones anywhere in that radius will be completely destroyed.
So I think yes, ammunition is also a very big market. But we are going after smart ammunition, not the dumb ammunition where again you, we are addicted to margin. So we have to have reasonable margins to do this kind of thing. So yes, I think both arms and the ammunition will be a big market for us and we look forward to making a dent in that market.
Dipen Vakil
Got it sir, thank you so much for that clarification. So second question is on, on the line of the order inflow, the kind of order inflow. So basically you told us about that 4,000 crore of turnover cumulative in FY2728. So one thing I want to understand is that what is your conversion rate in terms of from order win to execution? Because if it is something like one year, then potentially all this 3,000 crore of order wins has to be won in FY27. So that is one thing that I want to understand. And also what was the bottleneck which led to the delay in the terms of ordering?
Because as you mentioned rightly mentioned, ATS and simulation are right now something which are widely required and the requirement is only increasing going ahead. So any, any indication as to what led to the bottleneck into slow ordering activity from the government side as well?
Ashok Atluri
You ask two questions. One is you know, when are we going to get the order? Say will it be during the year so that we get a comfort that you know there will be some significant part of the fourth and crore executed during the current year? I think yeah, that is the answer is. The short answer is we expect the orders to come in. You know in fact this first quarter should be a good quarter but not later than second quarter. I think you should hear some good news in the first quarter which will give you comfort about the current year.
And then yes as we go towards the end of the year you will get the visibility for the second year also. But again I’m a big picture person. Try to look at the very large especially for long term. We keep adding the arms, the ammunition, the interceptor drones, you know the cyber, cyber security Suraksha that we are calling. So all these things are coming in. I think they’re going to be big. So yeah. So to your question, what are the bottleneck that caused the orders not to come in at this point?
You know again we. I have touched upon this earlier which is the, the simulator orders that were supposed to come, they got delayed because. Because of the, the operation. You know that happened. The crisis operations in the government went slow on the regular procurement and really acc. Emergency procurement of the anti drone systems and all the placed order. So those orders did come to us. You know that kind of helped us build up our order book position. But the things that we were prepared for, the actual simulators and all that, they got a little bummed, you know, little delayed because of that.
And we again we. Those are the orders we think that we should be getting very soon.
Dipen Vakil
Got it sir. Got it. Thank you so much for answering my questions. Thank
Ashok Atluri
You Deepen. Thank you.
Operator
Thank you. We’ll take our next question from Vikas Singh of ICICI securities because please go ahead.
Vikas Singh
Thank you for the opportunity sir. Just wanted to understand as we are translating into form a software only to now a mix of a hardware as well where usually the margin profile is slightly lower. So how should we look at RFY 2728 margins going forward as more and more hardware related product gets added on.
Ashok Atluri
So because you know we are primarily, you know there is on in all our products and all our simulators hardware is a major part of it. Only thing is that we used to outsource our hardware. So we used to design develop and prototype it and then for the actual manufacturing, for the non critical items, we have always outsourced it, we have never developed it because you know, we would finally assemble it at our location, quality tested and dispatched to the customer. So hardware has been essential part of the all our product simulator, for example, a tank simulator, the whole of the tank has to be replicated up to millimeter accuracy.
So there is a lot of hardware work. So we continue to have hardware, we have hardware and so software is also there. Of course now developing the software has become much easier. So I think the margins will continue as long as we are actually providing lot of value to the customer. And you know, in the sense when I say value they’ll definitely want to be the. They want need for number one, they need the product number one, they want to be the cheapest in the world. So typically for our product we have mostly competition from foreign companies.
So we ensure that you know, we are the best priced value for money deal for them. And if that, if that at this point in time I don’t see any threat to our margin, you know, prediction of 25% PAT and 35% EBITDA margins. I think we’re very comfortable with the 35% target and I think for this next couple of years that margin profile should continue.
Vikas Singh
Notice that also give us some, you know, insight into your working capital. Since now you are going into an ammunition department as well where we see that the you know, working capital runs into over a year or so. How should we look at our capital requirement and the fundings?
Ashok Atluri
So you know that the ammunition and arms, they are little away for us. I think the next year will be the earliest year where we’ll have to start putting the working capital on that. But overall working capital, you know, I’ll let Hari answer that question on you know, how are we managing the working capital and if there is a future increased need for working capital, how do we plan to address it? Harry will address that.
Hari Haran Chalat
So currently our working Capital is on 196 days even with the manufacturing license like Ashok sir had mentioned, the plan is that we will stick to our existing manufacturing model wherein we outsource most of the production and then be an assembler. Only the critical components that we need for these arms will be manufactured in house. But in the long term we still expect our working capital cycle to be around what we have guided of 140 to 150 days. If there are major orders to be executed like it is the case right now where we are Seeing inventory build up for the executions which happen in next 12 months.
The working capital days will slightly increase like it is the case right now. But otherwise it should be comfortably around 140 to 150 days.
Vikas Singh
Noted, sir. That’s all for my side and all the.
Operator
Thank you. We’ll take our next question from Mohit Lohia of DAM Capital. Mohit, please go ahead.
Unidentified Participant
Yeah. Hi. Thanks for the opportunity. So if you can just talk about performance at subsidiaries level and also the guidance.
Hari Haran Chalat
So subsidiaries currently as you see the standard. The open consolidated revenue is 688 crores. The standalone is 423. So the subsidies have contributed to 60 crores in the current year. Majority of that revenue is coming from two of our subsidiaries which is UTS and Ari. Ari, as you would be aware, we acquired. We acquired in fi end of FY25. So the full year consolidation happened in this year. So Ari has contributed around 131 crores to the top line. And the net pat margin of ARI is on 30.3%. UTS has contributed the remaining and other subsidies have contributed around 10 crores.
UTS margins are pat margins around 26.5% for the full year. From a guidance point of view we think in FY27, UTS and ARI together they would be doing around 365 crores of revenue.
Unidentified Participant
Enter on margin. Front
Hari Haran Chalat
Margins will remain the same region. Like the current margins which I have mentioned, AR and UTS. UTS will be at around 2627-30%. And UTS will be similarly close to 30 31%.
Unidentified Participant
Oh sure sir. Thank you. That’s it from my side.
Operator
Thank you. We have Pret. Jain of Motil Oswald with this question. Pre. Please unmute your microphone. Yes.
Unidentified Participant
Hi. Yes. Thank you for the opportunity. My first question is regarding the order book of subsidiaries. So can you please tell us what was the opening and closing order book of Both ARI and UTS? 526.
Hari Haran Chalat
So as at 31st March 2026. ARI had around 70 crores in order book. And UTS had around 50 crores in 35 crores in order book. That’s the closing order book for the year.
Unidentified Participant
And what was the opening order book for? The same
Hari Haran Chalat
Opening order book for both UTS and ARI together. UTS was 110 and ARI was around 90 crores.
Unidentified Participant
Okay, got it. And what kind of order inflow visibility do we have for these two entities for let’s say next two years.
Hari Haran Chalat
So Preet, like I mentioned in the earlier conversation we expect both of them together to do around 365 crores of revenue in next 12 months. That’s the, that’s the target. Beyond that I think we. We’ve guided that ari would. In FY28 we’re expecting air to do around 300 crores and UTs would be anywhere between 150 to 200 crores.
Unidentified Participant
Okay. Okay, got it. That’s all from my side. Thank you.
Hari Haran Chalat
Thank you.
Operator
Thank you so much. We are taking a next question from Harshit Kapadia of LR Capital. Harshit, please go ahead with your question.
Harshit Kapadia
Yeah. Hi, good morning and thanks for the opportunity and you know, good order inflows in Q4. I just wanted to check with you sir. So where are we in terms of stage for the hard kill antidrone system clearance? Has we, have the user trials been done and are we expecting orders for the hard kill as well? Then secondary there was the post the Operation Sindhur. We were expecting the additional orders to come for our interround system. Have we got this in FY26 or are we expecting things to come in FY27?
Ashok Atluri
Yeah. So to your. Hi, the. The hard kill orders we already received, we have started receiving them. We have got about 40 crores worth. Earlier also we are supplied with article of, you know the L70 we have supplied and now recently also two more orders have been received. So yes article orders we have started getting in and with respect to, you know, after the operations in the year because of that the orders were accelerated because then we got some feedback that you know these are the things that need to be improved and based on the actual inputs that we got.
And we got orders to both repeat orders as well as orders to you know, upgrade the existing systems. And these were the orders received very, very fast. And the work is being done as we speak on those orders that we have received, you know due to the lessons from Operation Sindhur.
Harshit Kapadia
And sir, at the start of the call you mentioned that you have already bid out for some few thousand crores of order inflow. First of all can you quantify a number here and is this all on nomination or all competitive? So how much of is a win rate that we can expect? If you can give some clarity in terms of the order pipeline giving more confidence to investors on where are we in terms of, you know, let’s say a 3,000 crore, 4,000 crore is where we are in terms of bidding pipeline. That would be of great help
Ashok Atluri
In terms of bidding. We are at I would say probably in the region of about 1500 crores or so. But the other you know there may be you know, you know single vendor tenders and all that. When we add that up that that could be another couple of thousand crores. So. Yeah. So you know altogether it’s much, much larger where we know there may be a regular tender may be floated which may take a longer time, something like 18 months. But overall the pipeline is running into few thousands of crores.
Harshit Kapadia
And how much of the split will be between counter drone system and simulator within the pipeline? Sir.
Ashok Atluri
So we think you know when we look at the split at this point in time the, the it does look favorable to antidrone system. Probably 55, 45 kind of thing.
Harshit Kapadia
Okay. And lastly on the ammunition part so, so you will develop a product, it will go for testing and then you will start supplying. Is that how the process would be? And it will long according to you for this 30mm ammunition that you plan to. Yeah.
Ashok Atluri
So next year we should be. We should have started manufacturing and supplying it.
Harshit Kapadia
Okay. So you don’t require a lot of certifications or those kind of approvals for this particular. So
Ashok Atluri
We are you know we are actually as we speak the you know the, the testing is going on. The certifying agency is also pip in the loop about it. So yeah, so yeah I think by next, next financial year definitely we should be man started manufacturing it. Yeah, I mean you, you the nightmare. Somebody did say that you know it is. It’s much more complex than you can imagine. But we think that two year period should be sufficient for us to get everything in order.
Harshit Kapadia
And lastly any acquisition that you plan to do on the simulator side maybe to complete the portfolio of simulator. Is there any one thing on cards for this financial year?
Ashok Atluri
So harshit we have identified, you know so just the background is that we have been anti diversification for almost 25 years of our life. We were doing nothing but we are just doing army simulators. But then we got into this field because everybody was talking about drones but nobody sensed the danger the drones represent. So we had a four to five year lead over competing companies and when we started doing the R D. So yes I think we have the thing but somewhere in the last couple of years we have started thinking thinking that we should focus on Pareto Technologies technologies.
Three or four years from now will become very important and that will be. And those will determine you know Pareto is basically 20% of the technology that determines 80% of the war. For example in, in the Israel Iran war. We know that the Shahed was the winner, you know. Absolutely. And as you know that this is recursive. The Pareto is recursive. The 20% of 20% of 20% is 0.8% can determine the result of 80 of 80 of 80, which is 51.2%. So this actually happens. So we are trying to look at what are those key technologies which we can actually have a head start and try to get into.
So in addition to not only simulator, but we are looking at those companies again. We can supply the capital, but we don’t have the bandwidth or the technical intelligence to do the thing. And one thing we do, we because we are so familiar with the whole ecosystem, we can guide them in the right way by putting in the resources. And typically what we have seen in the smaller companies is they are dispersed over too many opportunities and you know, they’re existing. So guys are killing them saying, you know, what is what’s going to the next quarter turnover.
Zen comes in there and he says, listen, let us stop all the, you know, 15 projects. You’re doing. The 16th one looks interesting. Let us put in all our resources and create a world class technology there. That is where we are trying to, you know, we are looking at. So to your question, to a long question, short, short answer is that yeah, we are looking at acquisitions. We are looking in both simulation Antidon systems, but some, some Pareto technologies for the future, if we find is very important, we’ll be acquiring those companies too.
Harshit Kapadia
Okay, sir. Yeah. Wishing you all the best, sir. Thank you. Thank
Ashok Atluri
You Har. Thank you.
Operator
Thank you so much. Ladies and gentlemen, due to paucity of time, we will take that as the last question for today. I now hand over the call to Ashok sir for his closing remarks. Over to you, sir.
Ashok Atluri
Yeah. Thank you. Thank you. And you know, again, you know, one of the favorite songs of, you know, yesteryear’s was. So that’s. That that’s actually not my favorite song. I don’t like that song in a way, you know, why should my soldiers give Kurbani? Why should my soldiers die? You know, whenever even a single soldier dies, a part of us dies. Part of me dies. I think all of us feel that why should we let our soldiers die? So I don’t like the song in the sense Qurbani. Somebody has to give. Let the opposite sides give the Qurbani.
Why should we become give the Qurbani? So you know, I don’t like that, you know, even once of a soldier dies. So how do we enable a complete defense system where you know, there is less of human life. How do we automate it? How do you create more robots? How do you automate? The thing is what I am saying, you know, somebody, if, if Shahid comes to our border, we. Our responsibility and promise to Shahid is that we’ll make it Shahid. So, you know, so I think that is, with that is the kind of confidence, whether it is soldier or a drone, which should not enter our system and with minimum, minimum, minimum damage at our side.
So with that objective in mind, with that target in mind, I would like to thank you so much for staying with Zen as investors and I think the long term story is very, very strong and very, very intact. I look forward to more interactions with you and again through the key investors. Please come and see what is happening in Hyderabad. Interact. I coordinate with our CFO Hari and I will look at what’s happening in the cutting edge of reality. Thank you so much.
Operator
Thank you on behalf of Zen Technologies limited. That concludes today’s conference call. Thank you for joining us and you may now click on the leave icon to exit the meeting. Thank you all for your participation.