Astra sees big bucks in offset clause

Hyderabad-based Astra Microwave Products Limited is set to receive its first offset order from Israel-based Elta Systems in a month, said B Malla Reddy, managing director of the company.

The order, valued at Rs 50 crore, involves manufacturing some components for the Israeli firm’s radar products. The manufacturing of these components will commence from April 2009. Astra is engaged in the manufacture of microwave components and subsystems for wireless communications used in defence, space and civilian applications.

Under the offset clause, all foreign vendors are mandated to source one-third of the price of all defence equipment worth over Rs 300 crore from India. Elta Systems had been awarded a contract worth Rs 900 crore for supplying radars to the Indian defence industry. Under this, it had signed contracts with two Indian firms for purchase of components and Astra Microwave is one of them.

Astra is also in talks with four major European radar manufacturers for supplying subsystems and other products. “We have already received requests for proposals and are working on a few sample orders. However, the process, including evaluation of the products by the overseas firms, requires at least one and a half years. We expect to obtain sizeable export orders from them from FY11,” Reddy told Business Standard.

It has delivered a sample order to an Italian electronic warfare systems manufacturer and expects a bulk order for supply of digital instantaneous frequency measurement (DIFM) subsystems worth about $1.5 million (Rs 7.5 crore) in the next six to eight months, execution of which will go beyond next year. “In all, we expect our export revenues to be in the range of Rs 30 crore to Rs 35 crore in FY11,” he said.

The company currently caters only the Indian market and is executing a Rs 40-crore order from the Space Application Centre (Ahmedabad), which envisages manufacture of transmit/receive modules for the Indian Space Research Organisation (Isro)’s remote sensing satellite. The order is likely to be completed by December 2008.

Astra Microwave, which has three manufacturing facilities – two at the Anrich Industrial Estate in Bollaram here and one abutting the Srisailam Highway near the Hyderabad international airport – is setting up a fourth facility in the vicinity of the third plant. The new unit, coming up on 20 acres at an outlay of Rs 35 crore, will go on stream by April 2009, Reddy said.

The company posted revenues of Rs 123 crore in the last financial year. It expects to close the current fiscal with revenues of about Rs 130 crore on the back of the Rs 95-crore orders that it has on hand, to be executed during the current fiscal. These include an Isro order for radar wind profilers and a Rs 25.5-crore order from the Indian Meteorological Department for supply of remote unmanned automatic weather stations in 550 locations across the country.

The scrip of the 17-year-old company, which raised Rs 2.7 crore through an IPO in 1994, is currently trading at about Rs 36 per share of Rs 2 on the BSE and NSE.