Thank you very much. We will now begin the question-and-answer session. We have our first question from the line of Jonas Bhutta from Birla Mutual Funds.

Firstly, from a bookkeeping side, if you can help us understand what transpired in the 4th Quarter in terms of gross margins, basically material margins, given that they've come upwards of 60%, 63% to be more precise. What drove these margins because typica lly were more in the 58 kind of band, 57-58 kind of band, what transpired here if you can help us with that?

As far as the gross margins is concerned, as we have disclosed in our results as well, the Change Order 3 with respect to the pricing of IOC contract that is LCA initial operational clearance, we were to supply 20 numbers to the Indian Air Force which we have completed the supplies as well. So, there have been some contractual changes and scope changes have been made and the contract provided for certain elements of cost to be claimed at a later date as and when it materializes. So, we had gone that price fixation redone and because of which the IOC contract Change Order 3 which was pending for quite some time, it has been finalized in the last quarter of the last financial year ‘23-24. And that has resulted in alm ost 1,500 crores of additional revenue which is reflected in our last quarter results. And thi s has substantially increased the margin. And that is one major reason why the margins have gone up in the last quarter and which has also been reflected in the total full year as well.

Because if I remove as in if I adjust that from our top line, t hen also we are getting like a 63% gross margin. So, this 1,900 crores of change inventory that is , is that the pending deliveries of the two LCA Mark 1A prototypes or something that we….?

No, that has nothing to do with the change in deliveries, it's nothing to do. It is an accounting adjustment as far as the inventory which is being used, inventory which has been built in the last year. That is a WIP which is being utilized which is drawn now and which is getting included in the current year revenue. That has nothing to do with the pendi ng deliveries. All the deliveries which have been delivered in the current financial year have al ready been recognized in the revenue and pending deliveries have not been recognized. Probab ly apart from this Change Order 3, the other area is that last year the depreciation and amortization, there is almost a reduction of 400 crores between last year and the current finan cial year. This reduction is an account of the HTT-40 which was there in t he last year that amortization which is not there in the current year. So that is another reas on. And of course, there is also an impairment loss which has happened in Sukhoi in the last financial year which is not there in the current financial year. These two expenditures add up to almost 900 crores which has also helped us to improve the margin in the current financial year as compared to the previous year.

Broadly I can tell, these aircraft deliveries it is all on LCA and ALH and Dornier. We have already indicated that LCA we have delivered close to some 5 ai rcrafts of LCA and 6 numbers of ALH. Apart from that engine, RD-33 engines some 15 numbers we have delivered. Now then the two export of Dorniers. This is also added to the revenue. These are the platform deliveries which has happened. But the major portion is on the repair and overhaul, which is almost 20,000 crores which forms a bulk of almost 68% of our total revenue ha s emanated from repair and overhaul.

Lastly, while you have said when you expect the NUH to come through but just a slightly more granular understanding on the status of the program. Because if you are going to start doing R&D today with a 2,000 crores investment, do you think that it will sort of show up in terms of commercial order by FY27? And the second project on which I wan ted clarity was the Su-30 engine AL-31 FP. That order has been pending for quite some tim e. Any particular update on that? Those are my questions.

As far as the Su-30 engines are concerned, it has already been from our side the CNC has been over. We expect the order to materialize because it is in advan ced stages of finalization. We expect the orders to get materialized in the next 1 to 2 months timeframe it should happen and there is nothing which is left from our side. So, it is the process which is happening. So, we will be able to get it done. And the UHM program is in the developme ntal stage. We are confident that in the next 2 years we will be able to convert it into a commercial contract and start executing the deliveries. Director, Operations can add to that.

UHM program is for the Navy. It's a naval maritime version of the ALH. So, in additi on to existing ALH features, we are also bringing in new features like blade folding and assisted track and landing onto the ships. So, these are the major things which UHM will support now. So, we are in advanced stage of proving all these new features on the helicopter and we are on track for this also to be flight tested and completed during the next 2 y ears. So, we are good to go by production runs from 26 onwards. In fact, we would also like to start this in advance like we did in other programs. But we can expect deliveries from ‘26-27 onwards.

We have our next question from the line of Abhishek Poddar from HDFC Mutual fund.

First regarding the LCA Mark 1, if you could give some underst anding that we currently have 83 number of orders and there is an expectation of 97 orders more, how will the production ramp up happen here in next 3-4 years including both the orders?

We have got 83 numbers. The delivery timeline, peak delivery ra te at which we will have to deliver for this 83 contract is 16 aircrafts. So, at present in our LCA division and the aircraft division at Bangalore, we have got the capacity to produce 16 numbers. We wanted to augment the capacity to 24 numbers because we want to expedite the deli very of this 83 Mark 1A and anticipating further orders which is also I think you are aware that another 97 also is likely to come. So, for the 16 aircrafts is not sufficient. We want to au gment the capacity to 24. That is the reason why we have started establishing the third line in Nashik. The activity has started last year sometime in September, and the jigs are all getting installed today and the third line is likely to become operational from October of the current financial yea r. So, this year probably we wanted to have at least one aircraft rolled out from our Nashik division to start with. And from next year onwards Nashik division also will be equipped to prod uce another 8 aircraft. So, depending on the requirement we will be able to expedite the de livery beyond 16. But 16 will be the minimum as per the contracted delivery schedule. But we would like to expand our capacity to see that this 83 Mar k 1A contract is getting liquid ated a year in advance of the contracted delivery schedule, so that we can take up the subsequent 97 at a much faster rate. And we will be able to complete the entire 97+83 latest by 2032-33.

How much will be in ‘25, this year?

In the current year as per the contract, we are supposed to del iver 16 numbers and this is what we plan. Even though some challenges are there, we are trying a ll our efforts to see that the 16 numbers are getting delivered.

16+1 at Nashik, so 17 maybe this year?

No, we would keep it at the 16 numbers is what we have. Nashik, we are making efforts to see that it happens.

The second question if I look at the order pipeline and the current order book and we have LCA and there is LCH and there is a RD engine and then there is AL-31 and Sukhoi and HTT-40. So, all these 5-6 are very large programs. Would you expect the bunching of these manufacturing to start in ‘26 or ‘27? How do we see that ramp up happening? My q uestion was that we have 6-7 large programs, so LCA, LCH, ALH, HTT-40, probably LUH and there are two engine programs RD-33 and AL-31 FP engines. So, this 7-8 programs, would we sta rt seeing a bunching above the manufacturing happening in ‘26 or ‘27 Because all the programs will be in the manufacturing stage by that time.

But not bunching really because we have got the facilities crea ted for each of these platforms separately. So, we will be in a position to independently manufacture all of those. So, it will all happen between this next 2-to-3-year timeframe. But since we ha ve got independent capacities available at different locations, it will not really be bunching. They will be able to independently handle and start manufacturing and delivering the product. Like for instance, helicopter complex is capable of producing up to 30 helicopters in Bangalore only, then the Tumakuru facility is also ready for manufacture of another 30. As far as the LCA is concerned, the two facilities at Bangalore is capable of producing 16, third line is getting cre ated at Nashik. And in Nashik we are also creating a line for HTT-40 apart from the LCA and the Sukhoi line. So HTT-40 also will get produced from Nashik and the engine programs already w e have got the capacities at our Koraput division for AL-31 FP engine. So, we will be able to fully utilize that capacity. So, all in all of these programs we are having independent faciliti es where they can generate these products and the quantities which are required.

All these facilities by ‘27 should start producing all these platforms together?

Yes. Like for instance AL-31 FP engines already we are producin g and supplying to the Indian Air Force. Then as far as ALH is concerned, again helicopters w e have been continuously producing and we are supplying it to the Air Force to the vario us Defence customers. LCA, we have started supplying to the Indian Air Force. So HTT-40 will start commencement of deliveries from September ‘25 onward. From next year that is FY 25-26 HTT-40 should start getting delivered. So, we will all be delivering. It will all be in phases. It is as per the contracted delivery schedules. We keep delivering those things.

One last question. If I look at the EBITDA margins, in ‘22, it was 23% and last year it was 27% in ‘23. And this year if I take off the one-off item for LCA, t hen it is about 28%-29%. How should we think about these EBITDA margins for next 2-3 years?

Broadly what we expect the EBITDA margins should on the most op timistic note it could be somewhere—around 32% to 33%. And at the minimum level it should be not less than 29% because broadly our operating profit ranges between 18% to 20%. The depreciation and amortization is approximately around the 5% to 7% range and the interest income may add up to another 6%. So, this would m ean that it should be somewhere around 30%-31% should be our EBITDA margin.

So, after adding 6% interest income it will be 32%-33%, excluding that will be 26%-27%?

Yes, without interest income it should be somewhere around 26%-27% and with interest income it should be around 33%.

We have our next question from the line of Deepesh Agarwal from UTI AMC.

My first question is with this 97 Mk-1 order possibly by end o f FY25, would there be any change in the requirement of Tejas Mk-2 in the future? Would there be any cannibalization?

This 97 is being procured in the Mark 1A configuration. So, thi s will not have any impact on Mark 2. Mark 2 is under development now. So IAF has got the ran ge to accommodate more aircraft. That's what we feel. And we don't see this Mark 1A cu tting into Mark 2 or vice versa. So, it will not happen that way because the Mark-2, it's a diff erent weight category aircraft and the roles are slightly different. So IAF can accommodate both. We don't see each other cutting into other prospects.

So, is it fair to understand, it would be in view of MMRCA not going through the ramping upon the Mark 1A?

As far as HAL is concerned, we are getting these orders and our sort of views ends with that. Whether MMRCA will be there or not it is for IAF to answer.

On the Super Sukhoi program when do you expect the order inflow for the Super Sukhoi and how would be the execution timelines on this?

Sukhai upgrade, now the case has been initiated and we will be also participating in the program. In fact, HAL will be the lead age ncy to integrate the Sukhoi up grade program with the indigenized Indian industry. So, the program will now pick up s peed and then we have already started the discussions with the various stakeholders. And prob ably in the next 6 months timeframe we should be able to have some contractual clarity on this thing. AON has already been approved for that. That is that acceptance of necessity ha s already been approved. So, it should get converted into the contract shortly, once we get mor e clarity and more discussions happen. And the contract negotiations will commence thereafter once we submit the quote and then we will be able to finalize it. But this is going on in th e right way and we expect things to materialize within the next 1-year timeframe.

On the ROH front, what kind of growth should we expect going ahead?

ROH, we expect the growth to be consistent in line with the pas t and it should be somewhere between 8% to 9% growth should be there in ROH activities.

We have our next question from the line of Gagan Thareja from ASK Investment Managers.

My first question is around the potential for sales growth ava ilable given that you have almost 90,000 crores of order book which you think next year starting with more like 1,20,000 crores of order book. Given the delivery schedules of various platforms, is it reasonable to assume that an early double-digit sort of revenue growth is consistently possible for the next 3-4 years?

Yes, that is what we are confident of. With the current order b ook positions and with orders in the pipeline and with new orders likely to materialize in the 2 to 3 years’ timeframe, we will be able to show a consistent double-digit growth. In fact, all these orders we will be in a position to execute up to 2032. With the current visibility of orders, we will have our workload full for 2032 and we can consistently maintain this double-digit growth without any problem.

Also, while in the last 2-3 years the share of ROH in your total revenues has kept on going up. I think last year it was more than 70% while now it stands at 68%. Now from here on the share of platform-based revenue will increase and does this change there fore in sales mix? First of all, how much will this sales mix cha nge by and secondly consequentl y what sort of margin implications does that have?

It's like a cycle. Always in this industry certain contracts wi ll get signed for the platform deliveries in a particular period and then subsequently once th e delivery happens the ROH activity will pick up. Again, the manufacturing contracts will keep coming and it will be going on like that. Today with the sort of contracts what the deliveries of platforms which we have got, we will start executing those from the current financial year. For instance, this 83 Mark 1A will get major portion of it will start getting executed from the current financial year. And this along with the other helicopters and then the trainer aircraft the manufacturing proportion of sales will keep increasing and the proportion of ROH sales will keep comin g down. But not in absolute terms. Absolute terms ROH also will keep growing at 8% to 9% growth and manufacturing will grow at a much faster rate basically because of the execution of the contracts which has all been signed in the past.

Perhaps in 3 years’ time, what could be revenue mix look like?

Mix will be probably in the ratio of 60 to 40. 60 will be the R OH activity, 40 should be the manufacturing activity.

The media articles have stated that LCA Mark 2 prototypes are supposed to come on stream by FY25. Actually, according to ADA it supposed to have started co ming in FY22 itself. But now the timeline seems to keep on getting postponed. You have indic ated it is going to FY27 when you supply the prototypes. Can you clarify, is it going to be p rototype supplied by FY27 or by FY25?

At HAL we have started the manufacture of prototype now. So, th e initial structural assembly has already commenced at HAL. So, we are planning to get the full aircraft ready by around later part of ’25, so aircraft will be rolled out sometime or will be ready for flight sometime in ‘26, around March ‘26.

What is the dry empty weight of LCA Mark 1A? Is it 6,500 kgs or less than 6,500 kgs?

It is around 7 tons approximately.

7 tons?

That is higher than perhaps a Gripen which is a bigger aircraft . So, I was wondering with so much composites why is the weight you claimed is larger than that.

I am sorry to interrupt but this is certain technical specific ation which we can discuss not on this forum, we will discuss separately.

We have our next question from the line of Amit Dixit from ICICI Securities.

I have two questions. The first one is, you indicated a short while back that the target for us to deliver 16 LCA Mark 1A in this financial year. Now given that w e have not delivered such a quantity in the past. So, is there any critical equipment/system-subsystem on which this delivery is contingent or we have everything lined up for these 16 aircrafts?

Yes, there are certain supply side challenges are there as far as this 16 numbers delivery is concerned but we are working on that. Some of the major LRUs we have to get that because of the geopolitical situation there have been some concerns, but w e are working on that. We are confident that we will be able t o get the LRUs well in time for the deliveries which we are planning for the current financial year in respect of LCA Mark 1A.

The second question is essentially on progressive indigenization. So, as we move from initial 83 numbers to 97 numbers possibly later on, what is the kind of indigenization that we are going to see? It is reported in media articles that from 42 nd aircraft maybe we will be fitting the Uttam AESA radar. And so, if you could just highlight what would be t he major milestones for indigenization and in the end what kind of indigenous percentage you would see?

Yeah. As you rightly said after the first 41st aircraft we are planning to integrate our indigenous Uttam radar onto the LCA Mark 1A program and also the Rakshak Kavach that is EW electronic warfare suite. So, with that considerably our indigenous conten t in LCA Mark 1A will go up. And in addition to that there are other so many LRUs also which compared to Mark 1 we are also indigenous, a number of them like the actuators like side controls actuators and other actuators. So definitely the indigenous content what you can see in Mark 1A will be higher than Mark 1.

Any idea what we will end up with, at the end of let us say 18 0th aircrafts? Just number would do.

I'll just quickly answer that. It should be in the range of around 65%, should be above 65%.

There was a news flow that HAL would be working with Airbus in c o m m e r c i a l M R O opportunity. If you are in a position to give some more details i n t e r m s o f t i m e l i n e , s c o p e , addressable market size, margins that would be great.

We are trying to enter into civil MRO business at our Nashik fa cility. We already started this activity at Nashik and we also entered into some sort of a working arrangement with Airbus for the Airbus 320 aircraft. So, it will take shape in a bigger way in years to come. We have started now and it's going to take off and we are going to augment this in the coming years.

So, anything definitely happening in FY25 or 26 on this arrangement?

Yes, it will happen. Already we entered into a contract with them. It will happen.

We have our next question from the line of Lavina Quadros from Jefferies.

Just two questions. One is on Defence. Firstly, how much was e xports as a percentage of your sales in FY24? And any color you can share on the Defence exports the government is planning to take it from 20,000 crores to 60,000? I would believe that HAL would have a very big role to play in this. So, any comments you would like to give there?

Exports as of date the numbers are not so great. We are there i n export of close to 311 crores, which is approximately very negligible percentage 1% or around 1%-1.5%. But this initiative of export has gone in, we have really taken it up only in the last 2 to 3 years. Before that we were contented with the Defence requirements were there. We are tryi ng to focus on the Defence requirement. Now that we have taken it on a full-scale basis wi th various aggressively in the export market and with the range of indigenous product profile which we have got today because earlier were in licensed production, not much of indigenous pro ducts were available today. Today we have got a range of platforms where we will be able to offer to the various countries. So, the leads which we are getti ng today is quite impressive. S o, there have been lot of interest being shown by various countries, especially on the helicopter side ALH and on the LCH. So, we are in discussions with various countries. As you are aware we are in the discussions with Philippines, we are in discussions with Argentina, we are in discussions with Nigeria, we are in discussions with Egypt. So, there are quite a few countries whi ch have expressed and we are confident that we will be able to get through some order in the current financial year. This has been something which we are also very eagerly waiting and we ex pect that we will get at least one breakthrough order with the current financial year. We expe ct that this sector to grow, we will be able to globally become c ompetitive in the next 2-to-3- year timeframe and offer our products successfully to the various countries.

My first question is pertaining to the deal that got signed be tween HAL and GE regarding F414 engine. I just wanted to understand, what kind of technology transfer that GE is kind of coming along with HAL and how can it help in terms of indigenously dev eloping our fighter jet own version in future?

This MoU which has been signed and the contract which will get signed between HAL and GE is with respect to the transfer of technology to the extent of 80% of the GE 414 engine. So, under TOT we will be manufacturing the engines in India 80% and 20% will be sourced directly from GE. At this point of time, we will be able to share this much of information and onto the specific technologies which we are still working out with GE and we will probably be able to get it cleared and more clarity will emerge when we sign the contract. And moreover, it is also a classified information which we are not be able to publicly share.

Regarding engines, do we see any major export opportunity, whet her it is related to fighter jet engine or helicopter engine as we have also got signed MoU with Safran as well?

At present, what we have signed the MoU with Safran for the IMR H project and with the GE for the GE 414 for LCA Mark 2, it is basically for our own cons umption. But as and when the export opportunity arises, we will be in a position to make tho se exports as well. Our Safran especially the engines, it is jointly developed along with HAL. So, we will be able to do the export because IPR will remain within the country and as far as GE engines are concerned, we will have to get the case-to-case basis. We will have to get the permission from GE and then we will be able to export if there is a need. But at present we ar e working out for our domestic requirements only.

We have our next question from the line of Harshit Patel from Equirus Securities.

My first question is on the Lig ht Utility Helicopters. Could y ou share an update on the limited series units that were manufacturing against the Letter of Inte nt? Have we already started booking the revenues on this? Also, when do you see the bulk order materializing and how would the execution schedule look like?

The LUH facility has been created and we are the process of man ufacturing. We have almost eight aircrafts have already been manufactured. We are expecting the first 12 numbers of limited series to be received from the Defence, Army and IAF. CNC and all the other activities are over. It is under process of getting the contract getting concluded for the initial 12 numbers for which we expect the deliveries also to happen in the current financial year. As far as the bigger orders are concerned, once and as and when these executions happen for this limited series production of 12 number and subsequently based on the expectation, they wi ll come out with the changes or further scope change if anything is required or further as an improvement and then we will be able to get the bigger order size. But that will also happen. We expect it to happen in the next 2- year timeframe. It should be with the AON and the activity should get initiated.

Secondly on the Sukhoi-30 engines, you mentioned that we will v ery soon receive the final order. So, will the production start as soon as we will receive the order or there will be some gestation as to T+12, T+18 something like that?

No. In fact, since this AON has already been approved and RFP a nd other things have been initiated a year back, we have taken certain proactive action o f placing the order with the Russians, not waiting for the contract to be signed. So, contract signing, once it happens we will be in a position to by then we will get the supply of these engines and we will be able to deliver it in the current financial year, that is FY24-25, we should be in a position to deliver. We are not waiting for the supply order to be placed with the Russians for the manufacture of this kit, for the contract with the customers to be signed. We have already placed the kit order and once we get that we will start manufacturing and start delivering it to the Indian customers.

Just last one bookkeeping question on the developmental front. So, could you tell us the quantum of revenues and the orders which we have done in Financial Year ‘24 on the developmental programs? That will be my last question.

Development sales for the last financial year, it was somewhere around 1,500 crores. Out of 30,000 crores it was somewhere around 1,500 crores. which would come to roughly around the 5% of the total revenue.

And developmental orders, what was the quantum last year?

Developmental orders. We need to check that. Outstanding developmental orders is somewhere around 900 crores.

We have our next question from the line of Girish from MS.

Just one request, we don't hear from you often, so if you coul d spare more time, we respect your time. But if you could do at least 6 monthly calls. I had two q uestions. Firstly, on the manufacturing side, I know it is going to be lumpy because different platforms get into execution at different points of time. Can you help us with what could be the revenue growth that we should expect for this year? And then maybe, is it like 15% and then i t steps up to 20%-25%? If you could help us because ROH as you rightly said, will be lower than double digits, so just wanted to understand that one? And secondly on the GE platform bit, ju st wanted to understand that whether there will be a onetime payment that HAL will make it w ill be capitalized or it will be something like expensed out as you pay some royalty for this TOT arrangement if you can help with that?

As far as your second question is concerned, it is little prema ture at this point of time since we haven't started our commercial discussions as yet with GE. So, we would like get to know what is the sort of compensation which they will be looking for, onl y when we start discussing with them the commercial offer. So that will be there happening in the next 6 months timeframe and after that we'll get more clarity on that. So as of now we will not be able to tell much on that. As far as the manufacturing growth is concerned, now that with the orders getting executed, the manufacturing growth definitely it has to be around 15% to 18% growth has to be there every year. And the repair and overall growth of around 9% to 10% growth, we will be able to sustain our growth what we have shown in the current financial year of 13% on an average, both manufacturing and repair and overhaul put together, we will be able to sustain that growth.

We have our next question from the line of Amit Mahavir from UBS.

The 470-480 billion orderly intake guidance does not include t h e M R O o r d e r s , r i g h t ? M y understanding is correct.

Yes. The MRO orders, can you just clarify what is it?

The 470,00 crores orders guidance for FY25 is only for those 3-4 platforms that you mentioned that does not include the MRO orders?

Yes, you're right. Absolutely right. The repair and overhaul order accretion will be on an average 20,000 crores per annum.

And the second part is sir do you think Mark 1A 97 is possible by the 4th Quarter of fiscal ‘25 or you think the paperwork and the process will basically take it only to ‘26 first half something like that?

The way things are moving, I think we should be in a position t o conclude the contract by the current financial year that is before the 31st March ‘25.

The EBITDA margin guidance of 26%-27% that you have issued does not include any provision reversals or provision change if any? That's the only understanding.

We are only talking about the operating margin plus depreciatio n and amortization. And of course, interest income

No, there will not be any substa ntial reversals which will have a major impact on the EBITDA margin. There will be normal reversal which are happening year- on-year and that will only be continuing but no major reversal will be there.

Thank you, sir. That would be the last question for today. I wo uld now like to hand the conference over to Mr. Harshit Kapadia for closing comments. Over to you sir.

Thank you Manav. We would like to thank the management Shri. C .B. Ananthakrishnan; Director (Finance) CFO with additional in charge Chairman, Managing Director, Shri. Jayadeva: Director (Operation) for giving us an opportunity to host this call. We also like to thank all investors and analysts for joining this call. Any closing remark Anantha sir that you would want to share?

Thank you for this opportunity. In fact, as somebody was pointi ng out we would also be happy to have this analyst call at least once in a quarter. We will see how to figure out that and we will try to have the discussion and keep all the investors updated o f what is happening in the company. One thing which I can tell you is that HAL is today a very consistent growth profile. With the sort of policies which have been initiated by the government and with Atmanirbhar and the need for becoming self-reliant, I feel the question is that there is not going to be any dearth of orders. And we are also conscious of the fact that we also n eed to execute those orders and we are taking all round initiatives to see that these orders ar e also getting executed within the given timeline. So, which would mean that the growth and the pe rformance with the company has been reflecting in the last 2 to 3 years, will keep continu ing and keep improving year-on- year. I am confident that the sort of all the stakeholders, we will be able to satisfy, whether it be the shareholders, investors of the company or whether it be the customers or whether it be our partners in the programs, we will be able to really keep all the stakeholders in a very happy frame of mind. I wish you all happy investing in HAL and the company will always keep up to your trust and confidence which you have on us. Thank you.

Thank you, sir. On behalf of Elara Securities Private Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.