ideaForge, the Indian drone major that once started at IIT Bombay’s premises, has come a long way as the drone market and the space tech sector in India have evolved over decades.
The company got listed on the Indian stock exchange last year and was said to be among the most successful Initial Public Offering (IPO) listings of 2023, which got subscribed to by almost 106x in June 2023.
The company’s recently released financials for the March quarter of the financial year 2023-2024 saw a 30 percent decline in its consolidated profit after tax (PAT) to Rs 10.3 crore. Sales of the company rose 164.61 per cent to Rs 102.30 crore in the quarter ended March 2024 as against Rs 38.66 crore during the previous quarter ended March 2023.
Chief financial officer, Vipul Joshi in an exclusive interaction with Outlook Business shared that the company is constantly delving into new arrays and segments and hence quarter was a combination of execution and building phases. He also talked about the state of drone start-ups and space technology policy in India.
Edited excerpts:
It has almost been a year since you were listed. The company’s losses have been widening, and expenses have also increased. How does this affect the future of the company?
I would say that the losses have increased, but if you look at our absolute number perspective from last year to this year, they have actually grown from a top line to a percentage from the top line. We have been able to improve many of our collections and make certain efficiencies.
However, a lot of our expenses rose during the IPO due to several product launches. Amortization expenses are also coming to the books, which is part of how all that capitalization of the products will keep coming. Our gross margins should have been 45 to 50 per cent but are at 25 to 30 percent, but we are constantly delivering better results and putting in the expenses there, which will show up in the financials over time.
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From which sector are you getting the maximum demand currently? How has the order scenario from the government side been?
57 per cent of our revenue came from defense in the last quarter, as we have declared as well. Defense has always been our focus, and we are also focusing on the civil pie; currently, 31 per Pcent of revenue comes from there.
The overall distribution will always stay between which customer has what kind of depth of deployment and possibility of purchase powers. There is more deployment at the unit and battalion levels due to the potential for the deployment of drones, and their size of procurement will always be different from that of a civil customer. However, there are a lot of efforts from our side to also bring in or increase the buy on the civil side of things, and that's the reason for our foray or efforts to venture into international markets.
Where are you right now when it comes to expanding your business internationally?
We opened a subsidiary in September 2022 in the United States. However, that is in a very nascent stage. But since last quarter, we have been able to now start to demonstrate our products in the US market. We are also getting a good response on our product portfolio because what we launched in the US market was a very class-leading product of a 90-minute system in a quadcopter range. The support we are getting in that market is also immense, but it's something that the US market has not really experienced so far because they've become used to more manual flying, and hence our products begin to differentiate. We will continue to experiment internationally.
How conducive do you think policymaking is currently towards space technology, and what is the investment scenario like?
It has been the vision of the government and the Prime Minister himself to make India a drone hub by 2030. The drone industry, or, so to speak, the space industry, has also evolved in every right forum; whether it is from parliamentary conversations or the finance minister's speech, there's a boost towards promoting the industry.
Launching the PLI scheme at the right time has been a great change. People accept that this must be taken as part of the overall ecosystem rather than looking at a singular item. There is a lot of sentiment to support this industry from the private investor side because everybody sees that there's huge potential because of the areas of deployment of this overall technology, and the usage is huge. It will be more visible in the years to come.
What are your expectations in terms of the business and market performance after June 4th, since you’re also a listed company?
Of course, we have not predicted, but the momentum and the sentiment seem positive for the market and the drone sector as well. Once the incoming government comes into power with full stability, we are hoping for another upbeat cycle and to hear about the expansion of the conversations and the government projects we are undergoing.
