DCX Systems' Growth Plans For FY25 | NDTV Profit
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00:00We are joined in by the Chairman and the Managing Director, Mr. H.S. Raghavendra Rao.
00:06Hello and welcome to the show, Mr. Rao.
00:09Namaste Anushi.
00:11So, Mr. Rao, talk to us about this order win that we are looking at from L&T.
00:16Quite a sizable order considering the order book that you've come out with in FY24.
00:20Rs. 1250 crore. Talk to us about this, the execution period and more.
00:28Firstly, thanks for inviting me on this show.
00:32And what we received, this order is Rs. 1250 crore.
00:36And we need to complete this within three years of the time.
00:40And we just received, we are working the modality to execute this program as quick as possible.
00:46Of course, this is one of the prestigious order which we received from the L&T.
00:51It is the first PO we received from the L&T till now.
00:55We started a company and we started working with L&T for the last 6-7 months.
01:01We got this PO recently on this.
01:04And this is one of the prestigious programs for DCX.
01:08And we have a proper execution plan and just we received the order.
01:13We are working towards the execution plan and the perfect line to match the customer delivery time.
01:19This is, of course, the Make in India program.
01:22And it is a very big moment for DCX.
01:26And till now from last 13-14 years, the single largest PO which DCX received is maximum.
01:34This earlier days was a foreign customer about 900 crore.
01:37And this is the first biggest PO for DCX for the single PO of Rs. 1250.
01:42And we are very happy to announce this in this moment.
01:48Sure, Mr. Rao. I will stick to the order book now.
01:51So, over the quarters, there has been a considerable reduction that we are seeing.
01:571500 crore at the end of Q1 of last fiscal to about 800 crore at the end of FY24.
02:04Can you describe what is leading to this reduction?
02:07And now considering this large order size that we have recorded here,
02:11what is the target order book that we are targeting for FY25?
02:16See, as you know, we are an aerospace and defense company.
02:21Normally, we will not expect PO to add every month or quarterly.
02:27Now you see the single largest PO which is received is at one shot is Rs. 1250 crore.
02:34And last year what we have order book and we are executed in the March, we completed.
02:39Then we had about 800 crore backlog of March 31st.
02:44Then the cable order has come about 32 crores.
02:48And now we added currently our order book about nearly 2000 crore.
02:53And this is the scenario of defense.
02:55We get maximally when we get a big order, we get and keep on working that.
03:00And also the pipeline, what we are expecting is the very good pipeline,
03:05which we are almost closing in the couple of weeks or couple of months.
03:11We expect very good, healthy pipeline order.
03:14And our POs comes in the large value.
03:17Okay.
03:18And especially on the system integration, the electronic module and those things.
03:22And it is not like every month we are adding a PO with this thing.
03:27In the defense sector, it is very, very normal case where the defense company get a PO
03:34in the every day or every month.
03:37We will get a PO in the big POs in the about four to five times in the year.
03:41So the company is focused to increase order book.
03:44I'm not seeing any challenges because we improved our customer base.
03:49And now we are added last year, two years, three years back,
03:53we added Bharat Electronics in the domestic area.
03:56And now we added L&T.
03:57Now in the international level, we added Lockheed Martin.
04:00Now apart from the many Israeli clients like Rafael, Elbe, Delta, IA, a whole group.
04:06And we have a good customer base now.
04:09We expected to get more pipeline order, which we are already working.
04:14It's a matter of time we expect a big pipeline order.
04:17It's a very healthy order.
04:19And that also is in a good size of the business we are expecting the POs.
04:24Sure, Mr. Rao.
04:25That was informative to get a sense of how the order pipeline is going to look further.
04:30But now also what I'm looking at the financial parameters.
04:33So you've seen a significant surge in your revenues in the last couple of years.
04:38But if I look at the margin side, the margins have remained in the 5% to 6%.
04:43In fact, in FY24, we also saw some dip in the margins.
04:46I want to understand here what's leading to this moderation in margins that we are seeing.
04:51And also now can we expect it on a better stance with the backward integration with Rania on guards now?
04:59Okay.
05:00See, margin improvement, of course, we started in the last five years in the single-digit margin.
05:06And majority depend on the one or two big customer.
05:10That's the reason once we enhanced our customer base, the margin get definitely improved.
05:16And also, rightly said, Renewal Advanced System are only 100% own subsidiary.
05:22Now let us assume I buy the raw material like a PCB assembly outside.
05:27Now we have our own integration.
05:29That is whole plan is to improve our margin and adding more customer into Kitty and domestic or international level.
05:37The project-based and the work what we deliver, that all definitely going to improve our margin.
05:44That is our major motto to improve our bottom line.
05:46And also in that action, we have taken three things steps here.
05:50One is to add more customer.
05:53Second is to add our own backward integration to in-house PCB assembly captive business.
05:58And third is we are going to increase the major double-digit margin on the cable and wire harness business.
06:06We are improving the – we have a lot of opportunity in cable and wire harness on the data cable.
06:13Along with that, we are going to add optic facility which is already on.
06:18In that, definitely company is working towards to improve bottom line, to improve the margins and take different step in the upcoming days.
06:27Apart from that, we are entering to the railway business on the railway security which we are just last six, seven months we signed the joint venture with Delta.
06:38Where we are concentrating on the global technology for railway security.
06:43Keeping all these companies very focused on the – become a product company on the railway with the Delta JV what we have.
06:52And looking of this scenario, definitely there is a big margin growth we are expecting.
06:59Also, the revenue portion will get improved.
07:02This is what company is fully focused and we are getting result also in that.
07:06And we are working towards on that to improve our margin on the top line and as far as the bottom line.
07:12Sure, Mr. Rao, you mentioned about the railway security.
07:16Now, you also formed a JV with NAYAT over here.
07:19I want to understand what is the status on the orders that we are looking from this segment.
07:24And what is the kind of opportunity and scale that we are looking ahead in next two, three years?
07:31See, this technology what we signed is a global technology.
07:35And of course, last four, five years before I joined for the JV.
07:40And Delta worked on the technology demo, on the field trials and taken many things.
07:48They got a couple of PO on the small prototype PO to prove on the program, which is already done.
07:55Now, we are waiting for the big tender to happen.
07:58Not only for India, we are expecting, there is a big RFQ will be expected shortly.
08:04Where I am seeing good to go in this business, including India.
08:08You know, India is very concentrating to upgrade the safety system.
08:12There are 30,000, 38,000 crore has been upgraded technology our railway minister announced.
08:18And it has been very intact.
08:20And this system is a very standalone system, is a global technology.
08:23Presently, this technology is available with only with us in global level.
08:27So, we expect a huge business coming out.
08:31As on today, we are working towards the RFQ and the give a demo.
08:37We are already proven many demonstration in the international market, Indian market.
08:43It is going well as per the plan.
08:45And we expected to participate in the upcoming tenders in the international level.
08:50Sure, Mr. Rao.
08:52Thank you so much once again for joining in.
08:55And giving us such a detailed perspective on the company, on its outlook going forward.