Astra Microwave Products Ltd Management Discussions

Managements Discussion and Analysis Report

Managements Discussion and Analysis

Overview

Astra Microwave Products Limited (AMPL) is one of Indias leading strategic electronics companies, with core competencies spanning radar systems, electronic warfare, telemetry, satellite communications, and defence electronics. Over the years, the Company has evolved from a specialised RF and microwave component manufacturer into a trusted systems integrator, contributing to several of Indias most advanced indigenous defence and aerospace programmes.

This transformation has been driven by sustained investments in research and development, advanced manufacturing capabilities, state-of-the-art testing infrastructure, and indigenous intellectual property. Today, AMPL occupies a strategically significant position within Indias defence technology ecosystem and is well aligned with the Governments vision of Atmanirbhar Bharat and the increasing emphasis on self-reliance in critical defence technologies.

Through continuous innovation, technology leadership, and long-standing partnerships with DRDO, ISRO, the Armed Forces, Defence Public Sector Undertakings, and global defence companies, the Company continues to strengthen its position as a key contributor to Indias strategic and national security programmes.

A. Financial Analysis:

The financial statements have been prepared in accordance with the provisions of the Companies Act, 2013, the applicable Indian Accounting Standards (Ind AS), and other relevant statutory requirements.

Management is responsible for the integrity, objectivity, and completeness of these financial statements. The financial statements present a true and fair view of the Companys financial position, financial performance, changes in equity, and cash flows for the year, and reflect the substance of transactions undertaken during the reporting period.

Outlook for the Future

The Companys long-term growth prospects continue to be supported by several favourable structural trends in the domestic and global defence and aerospace sectors.

Rising Defence Expenditure.

Indias defence budget for FY2026, at Rs. 6.81 lakh crore, is the highest ever, with nearly 68% of the capital procurement allocation earmarked for domestic industry.

Continued emphasis on indigenous procurement is expected to generate sustained demand for radar systems, electronic warfare solutions, communication systems, surveillance equipment, and other strategic electronics manufactured by the Company.

Atmanirbhar Bharat and Indigenous Procurement

Government initiatives under Atmanirbhar Bharat, supported by Positive Indigenisation Lists and procurement under the Indigenous Design, Development and Manufacture (IDDM) category, continue to accelerate the replacement of imports with domestically developed technologies. As a company possessing significant indigenous intellectual property and advanced design capabilities, Astra is well positioned to benefit from these initiatives.

Radar and Electronic Warfare Modernisation

The Indian Armed Forces are undertaking extensive modernisation of their radar, electronic warfare, surveillance, and counter-drone capabilities. The Companys established presence across multiple indigenous AESA radar programmes and electronic warfare platforms positions it favourably to participate in these long-term modernisation initiatives.

Increasing Role of the Private Sector

The Governments policy initiatives, including the Strategic Partnership Model and various "Make" categories, are encouraging greater participation by private industry in the design, development, and manufacture of complex defence systems. Astras progression as a Development- cum-Production Partner (DcPP) reflects this evolving policy framework and strengthens its role in future strategic programmes.

Defence Export Opportunities

Indias defence exports have grown significantly over the past few years and are targeted to reach Rs. 50,000 crore by 2029. With an expanding portfolio comprising radar systems, electronic warfare solutions, telemetry products, and software-defined radios, the Company is well positioned to leverage emerging opportunities in international defence markets.

Space Sector Growth

Indias rapidly expanding space ecosystem presents attractive opportunities for the Company. Supported by a long-standing relationship with ISRO spanning more than two decades and the establishment of Astra Space Technologies, the Company is well positioned to participate in both commercial and strategic space programmes.

Counter-Drone Solutions

The increasing deployment of unmanned aerial systems (UAS) has significantly enhanced the need for advanced counter-drone technologies across defence and homeland security applications. The Companys Drishti family of radar systems is designed to address this growing global market.

Network-Centric Warfare

Modern defence operations increasingly rely on secure, software-defined, and interoperable communication systems. Astra Rafael Comsys advanced Software Defined Radio (SDR) capabilities position the Group to support Indias transition towards network-centric warfare and next-generation battlefield communications.

Joint Ventures and Subsidiaries

The Companys joint ventures and subsidiaries continue to strengthen its technology portfolio, enhance execution capabilities, and expand its presence across strategic business segments.

Astra Rafael Comsys (ARC)

Astra Rafael Comsys (ARC), the Companys joint venture, concluded FY2026 with an order book of approximately Rs. 622 crore and continued to secure significant orders from Defence Public Sector

Undertakings and the Ministry of Defence.

The joint venture is expected to achieve revenues exceeding Rs. 600 crore during FY2027. Although profitability during FY2026 was impacted by provisions relating to foreign exchange fluctuations, operating performance is expected to improve during the coming year, supported by higher execution and an improved product mix.

Wholly Owned Subsidiaries

The Companys wholly owned subsidiaries continued to perform satisfactorily while supporting the Groups strategic objectives and captive business requirements. These subsidiaries are expected to play an increasingly important role in expanding the Companys capabilities in high-growth technology domains.

Other Key Business Developments

During the year, the Board of Directors approved the proposed demerger of the Companys Space, Meteorology, and Hydrology business into a separate entity. The necessary application has been filed with the Stock Exchanges for obtaining the requisite regulatory approvals.

The proposed restructuring is intended to provide greater strategic focus and operational flexibility for each business. The demerger is expected to enable dedicated management teams to pursue sector-specific growth opportunities, strengthen governance and accountability, simplify the Groups corporate structure, and create distinct investment propositions for shareholders.

In addition, the proposed structure is expected to improve capital allocation, enhance operational efficiency, and position both businesses to capitalise on emerging opportunities in their respective markets over the medium to long term.

B. Operational Performance

FY2026 was a landmark year for the Company, marked by strong operational and financial performance, continued technology advancement, and significant progress in strengthening its product portfolio.

During the year, the Company recorded its highest-ever Revenue, EBITDA, and Profit After Tax, reflecting robust execution across key programmes and sustained demand for its products and solutions. Profitability improved during the year, supported by a favourable product mix and improved operational efficiencies.

The Companys continued investments in research and development, manufacturing capabilities, quality systems, and technology innovation have strengthened its competitive position and enhanced its ability to address emerging opportunities in the defence, aerospace, space, and strategic electronics sectors.

The overall financial and operational performance during FY2026 was in line with the Companys strategic objectives and managements expectations.

C. Sales and Order Book

The Company delivered a healthy operational performance during FY2026, supported by strong execution across key programmes and a well-diversified business portfolio.

Sector-wise Sales:

	FY 2025-26		FY 2024-25
	Rs. Lakhs	%	Rs. Lakhs	%
Defense	83,748	72	84,146	80
Space	10,975	10	5,848	6
Metrology/Civil Telecom/Others	4,584	4I	3,437	3
Exports(including deemed exports)	16,228	14	10,959	11
Other Operating Revenue	32	-	33	-
Total	1,15,567	100	1,04,423	100

The Defence segment continued to be the Companys primary revenue contributor, accounting for approximately 72% of total operating revenue during FY2026. The Space business registered robust growth, reflecting increased execution of satellite and strategic space programmes. Export revenues also recorded healthy growth, supported by increasing international acceptance of the Companys products and solutions.

The diversified revenue mix across defence, space, exports, and civilian applications demonstrates the Companys ability to leverage opportunities across multiple strategic sectors while maintaining its core focus on defence electronics.

Order Book

The Company maintained strong order inflows during FY2026, resulting in a healthy order book that provides good revenue visibility over the medium term.

During the year, the Company secured fresh orders aggregating Rs. 1,336 crore, reflecting sustained demand across its core business segments. As at 31 March 2026, the standalone order book stood at Rs. 2,141 crore, representing approximately two times the Companys FY2026 revenue.

The current order book is expected to be executed over the next 12 to 30 months, providing a strong foundation for future revenue growth.

Order inflows during the year were predominantly driven by the domestic defence sector, with significant contributions from radar systems, electronic warfare solutions, missile electronics, meteorological systems, and hydrology projects.

Order Book Position

Sector	Rs. In Lakhs
Defence/Public Sector Products	1,42,476
Space	18,706
Meteorological & Other Products	35,005
Exports	17,934
Total	2,14,121

The diversified order book, supported by participation in several strategic defence programmes, provides enhanced business visibility and reinforces the Companys confidence in sustaining long-term growth.

D. Research & Development:

Research and Development (R&D) continues to be the cornerstone of the Companys long-term growth strategy and technological leadership.

During FY2026, the Company invested approximately Rs. 58 crore in research and development, with a continued focus on strengthening its indigenous design and engineering capabilities across advanced defence technologies.

R&D activities during the year were primarily directed towards:

• Advanced radar systems

• Critical radar subsystems

• Missile seekers

• Solid State Power Amplifiers (SSPAs)

• Electronic Warfare (EW) subsystems

• Next-generation RF and microwave technologies

These investments are expected to enhance the Companys intellectual property portfolio, strengthen its competitive advantage, and support its participation in future indigenous and export-oriented defence programmes.

The Company remains committed to sustained investments in innovation and technology development to address evolving customer requirements and reinforce its leadership position in strategic electronics.

E. Expansion Plans

To support future growth and enhance manufacturing and testing capabilities, the Company has planned a capital expenditure programme of approximately Rs. 75 crore during FY2027.

The proposed investment is primarily intended for the acquisition of advanced RF and microwave test equipment, specialised testing infrastructure, and other critical manufacturing assets required to support current and future programmes.

The planned capital expenditure will be funded through a prudent mix of internal accruals and term borrowings, while maintaining a disciplined approach to capital allocation and financial management.

These investments are expected to enhance operational efficiency, expand production capacity, strengthen quality assurance capabilities, and support the Companys longterm growth objectives.

F. Risks & Concerns

The Company operates in the strategic defence and aerospace sector, where business performance is influenced by programme execution timelines, customer procurement decisions, technological advancements, and Government policies.

A significant portion of the Companys revenue is derived from defence programmes sponsored by the Ministry of Defence, DRDO, Defence Public Sector Undertakings, and other Government agencies. Consequently, the timing and scale of order placements are influenced by Government procurement processes, budgetary allocations, and strategic priorities.

While the Company has consistently demonstrated strong capabilities in product development, programme execution, and technology delivery, commercialisation and revenue recognition are dependent upon customer procurement schedules, which may result in variations in quarterly or annual revenues.

In addition, the Company continues to monitor and manage risks arising from:

• Changes in Government procurement policies and defence spending priorities.

• Delays in programme approvals, customer acceptance, or contract execution.

• Supply chain disruptions affecting the availability of specialised electronic components and critical raw materials.

• Rapid technological developments requiring continuous investment in research and innovation.

• Foreign exchange fluctuations impacting import costs and international business operations.

• Cybersecurity and information security risks associated with advanced defence technologies.

The Company has established robust project management, risk mitigation, quality assurance, cybersecurity, and internal control frameworks to monitor these risks and minimise their potential impact on business performance. Management continues to review the risk environment on an ongoing basis and implements appropriate mitigation measures to support sustainable growth.

B. Financial Condition:

1. Share Capital

At present, the company has only one class of shares- equity shares of Rs.2 each, par value. The paid up capital as on 31^st March, 2026 is Rs. 18.99 cr.

2. Reserves and Surplus

The change in reserves and surplus represents the profits made during the year after making provisions for taxation.

3. Loan Funds

Following are the details of secured loans maintained during the year.

Particulars	As of March 31 (Amount Rs.)
	2026	2025
Working capital loans:
Open cash credit including WCDL
Sanctioned amount	765,00,00,000	435,00,00,000
Outstanding amount	199,93,27,646	359,24,82,786

 

Particulars	As of March 31 (Amount Rs.)
	2026	2025
Long Term Loans:
Outstanding at the beginning of the year	58,34,76,987	21,01,31,129
Additions during year	47,50,56,000	48,16,56,632
Repaid during the year	19,37,27,000	10,83,10,774
Amount outstanding at the end of the year	85,88,88,850	58,34,76,987
Vehicle Loan:
Outstanding at the beginning of the year	-	-
Additions during year	63,00,000	-
Repaid during the year	3,83,034	-
Amount outstanding at the end of the year	59,16,966	-

4. Deferred tax

The deferred tax liability pertains to difference in the depreciation claimed in the books and tax purposes.

5. Fixed Assets

Particulars	As of March 31 (Amount Rs.)
	2026	2025
Original cost
Land	23,95,56,494	23,95,56,494
Buildings	95,19,62,796	94,46,79,736
Plant & Machinery	317,04,09,364	257,41,32,699
Electrical Installation	6,42,62,483	6,31,24,392
Air Conditioners	7,45,98,993	6,86,18,864
Office Equipment	4,95,56,915	4,85,30,627
Furniture and Fixtures	12,56,14,101	12,05,89,883
Software	19,72,47,555	15,16,30,000
Computers	30,58,30,688	20,88,89,000
Vehicles	1,89,88,170	1,18,10,175
Solar Power Generating System	6,69,18,781	6,69,18,781
Capital work-in-progress	9,25,03,874	-
Less: Accumulated Depreciation	264,74,60,000	222,30,42,000
Net Block	261,74,86,340	227,54,38,651
Net Fixed Assets	261,74,86,340	227,54,38,651
Depreciation as % of total revenue	3.67	3.29
Accumulated depreciation as a % of gross block	49.41	49.41

The Company added assets worth Rs.77 crores to the gross block during the year. A Significant portion of the additions under plant and machinery and software relates to the procurement of advanced test equipment and software tools. These additions have directly and indirectly enhanced the companys productivity and operational efficiency.

6. Investments

Investments represent amount invested in equity share capital of wholly owned subsidiary companies, Joint Venture Companies and Associates.

Particulars	As At 31.03.2026	As At 31.03.2025
Investments carried at cost	Rs.	Rs.
i) Equity instruments of subsidiaries (unquoted):	6,89,87,980	6,89,87,980
1. Astra Defence Technology Private Limited Formerly known as Bhavyabhanu Electronics Private Limited
49,75,998(2025: 49,75,998) equity share of INR 10/- each fully paid up
Deemed investment in Astra Defence Technologies Private Limited (formerly known as Bhavyabhanu Electronics Private Limited) on account of corporate guarantee	4,07,92,000	3,71,17,500
2. Aelius Semiconductors Pte. Ltd, Singapore 111,700 (2025 : 111,700) equity shares of SGD 10 each fully paid up	5,52,41,674	5,52,41,674
3. Astra Private Limited (Formerly known as Astra Foundation)	-	99,900
Nil (2025 : 9,990) equity shares of INR 10/- each fully paid up
4. Astra Space Technologies Private Limited	10,00,000	10,00,000
5,00,000 (2025: 99,999) equity shares of INR 2/- each fully paid up
ii) Equity Instruments of Joint Venture (unquoted):	20,00,00,000	20,00,00,000
1. Astra Rafael Comsys Private Limited
2,00,00,000 (2025:2,00,00,000) equity shares of INR 10/- each fully paid up
Deemed investment in Astra Rafael Comsys Private Limited on account of corporate guarantee	1,60,98,780	1,12,23,630
2. Navictronics Private Limited	9,14,00,000	2,00,000
91,40,000(2025:20,000) equity shares of INR 10/- each fully paid up
iii) Other Investments	18,08,184	-
Fermionic Design Private Limited
1760 (2025: Nil) equity shares of INR 10/- per each share fully paid up
iv) Investments carried at FVTPL
i) Equity Instruments of Associate (unquoted):	188	188
Janyu Technologies Private Limited
1 (2025:1) equity share of INR 10 each fully paid up
ii) Preference Shares of Associate (unquoted)	53,74,111	53,74,111
Janyu Technologies Private Limited
28,599 (2025: 28,599) Series E compulsorily convertible preference shares of INR 10/- each fully paid up
Total	48,07,02,917	37,92,44,983

7. Sundry Debtors.

The Companys trade receivables stood at Rs. 693 crore as at the end of the financial year, compared to Rs. 783 crore in the previous year. As a percentage of annual revenue, receivables reduced significantly to 60% from 74.96% in the previous year. Consequently, receivable days improved to 219 days from 274 days, reflecting enhanced working capital management.

The receivable position, however, should be viewed in the context of the Companys business cycle, wherein revenue recognition is significantly skewed towards the last quarter of the financial year. During the year, more than Rs. 480 crore of sales were recorded in the fourth quarter, resulting in a relatively lower year-end receivables balance.

The Company closely monitors the quality and recoverability of receivables through a robust monthly review mechanism. Trade receivables identified as irrecoverable are written off based on the recommendations of the Management Review Committee and in accordance with the Companys policy. In addition, the Company recognizes impairment provisions under the Expected Credit Loss (ECL) model to adequately provide for potential credit losses on long-outstanding receivables, even where such balances are not considered irrecoverable.

8. Cash and cash equivalents

The company is operating with multiple banks and the surplus funds if any are parked with them or with their associates. For meeting certain statutory requirements, the company is maintaining current accounts with couple of other nationalized banks. The companys cash and cash equivalents are as follows.

Particulars	2026	2025
Cash and cash equivalents as a % of total assets	8.39	1.16
Cash and cash equivalents as a % of revenues	14.24	2.03

9. Loans and Advances

The advances paid for supplies, services and expenses represent the amount paid to both domestic and foreign vendors for supply of materials and services. The advances also include un-availed GST both on capital goods and raw materials.

The amount of income-tax paid represents the advance tax and TDS deducted less provision for tax.

10. Current liabilities

Sundry creditors for capital works, supplies represent the amount due at the end of the year for the capital goods and raw material supplied. Sundry creditors for services and expenses represent the amount due and payable for various expenses including the accrued salaries and other benefits of the employees.

Advances from customers represent the amount received as per the terms of purchase orders from the Defence and Space establishments and on export orders.

11. Provisions

Provisions represent provisions made for taxation, gratuity, leave encashment etc., Taxation provisions are shown net of advance tax for the years for which the assessments are pending.

The provision for gratuity and leave encashment is provided on the basis of actuarial valuation at the end of the financial year.

C. Others

Human Resources

The Company regards its human resources as its most valuable asset and recognizes that employee satisfaction and engagement are critical to sustained organizational success. The Company remains committed to enhancing the quality of work life, fostering employee development, and aligning individual aspirations with organizational objectives.

To promote a vibrant, collaborative, and performance- driven work culture, the Company continues to implement various human resource initiatives. A comprehensive online HR portal facilitates seamless interaction between employees and the HR function and provides access to a wide range of services, including leave management, performance appraisal processes, training and development programs, and other employee- related services.

These digital initiatives have enhanced operational efficiency, transparency, and employee experience across the organization.

The Company continues to maintain cordial and productive employee relations, supported by a culture of mutual trust, respect, and collaboration.

Internal Control Systems and Their Adequacy

The Company is committed to maintaining a robust and effective internal control framework commensurate with the size, nature, and complexity of its operations. All major business processes are integrated through the SAP ERP platform, enabling accurate, reliable, and timely generation of financial and operational information, safeguarding of assets, and compliance with applicable laws, regulations, and internal policies.

The Company operates within a well-defined budgeting framework and has established an effective Management Information System (MIS) that enables periodic monitoring and review of operational and financial performance against approved plans. The organizational structure clearly defines roles, responsibilities, authority levels, and operating procedures, thereby ensuring efficient conduct of business activities and effective risk management.

The internal audit function is carried out by M/s. Kirtane & Pandit LLP, Chartered Accountants, who independently evaluate the adequacy and effectiveness of the Companys internal control systems and processes. The scope of internal audit covers all significant operational, financial, and compliance areas, with unrestricted access to records, assets, and personnel necessary for the effective discharge of their responsibilities.

The Audit Committee of the Board periodically reviews the internal audit reports, evaluates the adequacy of corrective actions taken by the management, and recommends the adoption of best practices to further strengthen the Companys governance and control environment.

	For and on behalf of the Board of Directors
	S. Gurunatha Reddy	Dr. M. V. Reddy
Place: Hyderabad	Managing Director	Joint Managing Director
Date: 10.08.2026	DIN:00003828	DIN: 00421401