Ideaforge
Related party transactions: Pg 22 and 315
Listing date: July 7, 2023
Estb 2007, one of the oldest drone companies in india. Filed 30 patents.
We are the pioneer and the pre-eminent market leader in the Indian unmanned aircraft systems
(“UAS”) market, with a market share of approximately 50% in Fiscal 2022 (Source: 1Lattice Report).
Product portfolio : (a) hardware, which primarily includes UAVs, payloads, batteries, chargers and
communication system, (b) software and embedded sub-systems, which includes the GCS software
and autopilot sub-system, and (c)solutions. We primarily cater to customers with applications for
surveillance, mapping and surveying.
History of drone regulations:
Private use of drones banned in 2014. Drone policy, 2018 legalised it again. Drone Rules 2021 further
liberalised it, aiming to make india global drone hub by 2030, drone as a service encouraged. PLI
scheme launched 2021. Import regularised Feb 2022, complete drones import banned &
components allowed generally, exceptions exist.
Purpose of IPO: (Total IPO proceeds is Rs. 225 crores)
1. Repayment/prepayment of certain indebtedness: 50 cr
2. Funding working capital gap: 135 cr
3. Investment in product development: 40 cr
4. General corporate purposes: 1 cr
Future growth outlook: The global drone industry is estimated to be US$ 21.1 billion in 2022. CAGR
of 19% over 2018-2022 and expected CAGR of 20% to approximately US$ 91.3 billion by 2030
(Source: 1Lattice Report). As of 2022, the potential market size for the Indian drone industry was
approximately US$ 2.71 billion India aims to position itself as a global drone hub by 2030 (Source:
1Lattice Report)
Promoters: Ankit Mehta, Rahul Singh and Ashish Bhat, all IIT Mumbai graduates.
Group Person Pre-offer share
capital
Promoter Ankit Mehta 9.39
Promoter Ashish Bhat (also the 9.03
Promoter
Selling Shareholder)
Promoter Rahul Singh 9.12
Promoter group Sujata Vemuri (also a 2.7
Selling
Shareholder)
Promoter group Ravi Bhagavatula 2.7
Major shareholders:
1. Florintree Enterprise with 11.7% holding
2. Celesta Capital II Mauritius with 11.28% holding
2020-21 2021-22 2022-23 (in cr) 2023-24
Revenue 34 159 186 314
Profit -146 44 32 45
EPS -ve 13.8 (different on 8.55 (different on 10.56
screener) screener)
Cash flows from -ve 66 -53
operations
Order book (>95% 136 310 192
orders from
government)
Net working capital 512 121 301
in days
Inventory days 246 112 205
Debtor (i.e., trade 250 46 113
receivables) days
Creditor (i.e., trade 50 17 27
payables)
Days
Order book at Q3 2023-24 was 175 crores, Q1 FY2025 at 54 crores (to be exhausted by next quarter)
(L1 pipeline 300cr)
No revenue growth forecast given order book bleak and uncertain.
Import: We partially import certain of our components such as carbon fibre tubes, landing gear,
propellors, motors and antennas required for manufacturing UAVs. Expense on imports is 15, 26 and
47 crores in fiscal year 2021,22 and 2023 respectively.
Borrowings : Our external borrowings as on April 30, 2023 was ₹ 129 crores.
Risks :
1. Significant working capital gap. Lengthy working capital cycle.
2. Tech risk: our AI based image intelligence features which are equipped in our UAVs help in
‘people detection’ and ‘target tracking’ and certain UAVs also have ‘motion detection’
feature that helps in surveillance. Risk of hacking.
3. Regulatory risk: Change in PLI policy, DGCA approvals rejection, taxation disputes. : Income
tax case: 6.9 crores. A first information report has been lodged against our Company and
Ankit Mehta, Promoter, Whole-Time Director and CEO of our Company in relation to an
explosion of the battery of one of our UAVs
4. High attrition percentage: 23% in 2021, 24.5% in 2022 and 15% in 2023.
5. Single development centre: at Navi Mumbai with 116 employees as on May 31, 2023.
Government measures:
1. In Feb 2022, DGFT banned import of UAV
2. PLI scheme in September 2021 for drone and drone components by Ministry of Civil
Aviation. Received 17 crores prior to IPO from PLI.
3. rebate of taxes / duties on inputs under Remission of Duties and Taxes
4. rebate on inputs under Remission of duties and taxes on Exported Products (“RoDTEP”)
scheme at the applicable rates
Applications of drone use:
Major use in defense, logistics and enterprise, in that order. Drones have three main applications in
defence: (i) Intelligence, surveillance, target acquisition, and reconnaissance (ISTAR) (ii) Combat (iii)
Logistical support
civil industries such as health, agriculture, GIS, construction, real estate, etc. for surveying and
mapping of land, delivery of supplies, medical or otherwise, cinematography, photography,
inspection of refineries, pipelines, power transmission and turbine inspection. Potential major
sectors for enterprise use include GIS, construction, mining, agriculture, oil and gas, utilities, public
safety and counter drone.
Competition: 278 registered drone companies as on 31march2023. Includes Asteria(Reliance
subsidiary), Adani Defense, Garuda, Droneacharya,
customers: nothing that stands out. Mostly govt depts
manufacturing facility pics: nothing that stands out.
2022 Won the largest mini-VTOL UAV contract against global competitors from Russia, Israel, France,
Ukraine, and other countries
transactions between the Group and related parties: NIL
Order pipeline: no clear answer, in concall after concall.
Launch of Daas (Drone as a service) .
