High R&D spend, exports to NATO, forex for India: Zen Tech chief Ashok Atluri’s art of war

Zen Technologies has carved a niche in the defence sector by maintaining a laser-sharp focus on simulators for nearly 25 years. According to Ashok Atluri, Chairman and Managing Director of Zen Technologies, this choice was driven by a clear philosophy: “Don’t enter a market unless you see a path to global leadership.” He emphasized that the company is committed to building globally competitive products, aligning with the belief that merely selling ‘Make in India’ products is not enough if they do not meet international standards. In an exclusive interaction with Outlook Business at Aero India 2025, Atluri shared how the company ventured into anti-drone systems, recognizing a gap in the market when drones were emerging as potential threats.

Your stock price recently saw a large drop. Are you concerned?

I wouldn’t want to comment on the stock market price as such. However, we are more excited today than we were 2-3 years ago. We believe the next 3-5 years will see phenomenal growth in the defense industry. Players who are deeply invested in R&D and intellectual property (IP) will benefit tremendously from the government's Atmanirbhar Bharat policies. We have applied for more than 160 global and Indian patents, out of which over 80 have been granted. Being a deep IP player, we are confident that companies like ZEN will benefit significantly from the ongoing government initiatives. In fact, our company has delivered phenomenal returns. If you had invested Rs 1 lakh during the IPO in 2000, it would be worth about Rs 16 crore today, even after the recent stock fall. We have given 1600 times returns, which is quite remarkable.

Do you see your company diversifying into other markets?

We primarily deal with the police and central police organizations and have no intention of entering the civilian sector. We have been in this market for 31 years and know it very well. Therefore, we will not be diversifying in that sense.

What about international expansion?

Currently, almost 30-40% of our turnover comes from exports, and we are actively focusing on expanding internationally. We have recently opened an office in the US and are in the process of setting up a manufacturing facility there, with board approval secured. The US government's emphasis on IP ownership aligns with our strength in self-funded R&D, making it an opportune market for us. From the US, we aim to enter the South American and NATO markets as well.

How do you compare the Indian and international markets?

The Indian market is poised for tremendous growth. However, our focus is on increasing revenue from international markets to earn foreign exchange and invest more in R&D for product upgrades. With the current diplomatic relations, the government is actively pushing exports, and we see significant potential in the international market.

Do you have any new products lined up for launch?

Yes, we are working on several new products, including loitering munitions drones, the Yonkamach, Shield in the Sky, and a new 12.7 mm weapon system for both the Navy and helicopter platforms, as well as tanks. These products have significant potential for the next two to three years.

You hold an 80-90% market share in army simulators. Are you planning to expand in other segments?

Yes, we are dominant in army simulators, and we aim to maintain our leadership by continuously creating value for our customers. We are also planning to expand into naval and air force simulators, where we intend to achieve the same leadership as in the army segment.

Which international regions are you targeting for expansion?

We are primarily focused on North America, Africa, the Middle East, and CIS countries. Additionally, we are exploring opportunities in Southeast Asia to further expand our international footprint.

 With advancements in AI and technology, how is your company adapting?

We are using AI extensively in product development, operational processes, and customer training. Our vast training data helps reduce training cycles and enhance the overall value chain delivery system. AI is a powerful tool for us to improve not only our products but also our service efficiency.

How do you view competition in the industry?

Competition is inevitable, but we have built deep capabilities over 31 years. Our in-house development process allows us to create simulators in 6 to 12 months, whereas competitors may take 3 to 5 times longer. We continuously evolve our products based on customer needs and have a dedicated team for long-term support, which startups often lack. We welcome competition as it ultimately benefits the customer, and we are confident in maintaining our leadership through our commitment and expertise.