IGI Logo

Drone Destination

• Drone Destination is coming out with a 100% book building; initial public offering (IPO) of 68,00,000 shares of Rs 10 each in a price band Rs 62-65 per equity share.
• The issue will open for subscription on July 7, 2023 and will close on July 11, 2023.
• The shares will be listed on NSE Emerge.
• The face value of the share is Rs 10 and is priced 6.20 times of its face value on the lower side and 6.50 times on the higher side.
• Book running lead manager to the issue is Narnolia Financial Services.
• Compliance Officer for the issue is Ayushi Gupta.

Profile of the company

The company is engaged in the business of trading, operations, manufacturing, repair, renting services and training on various type of Drones including Multirotor, Fixed Wing, Hybrid UAV, e-VTOL, UAS, SUAV, RPV, RPAS, UWV, UGV etc. Drone Destination, together with its sister company, Hubblefly Technologies, a DGCA-approved manufacturer, is a DGCA-authorized Remote Pilot Training Organization that has developed an integrated drone eco-system built around drone manufacturing, certified training, services, and rent a drone.

The company is a DGCA-authorized Remote Pilot Training Organisation (RPTO) offering Certified training programs at multiple locations pan-India. After due completion of the course, the RPTO generates a Remote Pilot Certificate (RPC) from DGCA’s Digital Sky Platform for a particular Class & Category of Drone. The RPC is valid for a maximum period of 10 years under the Drone Rules, 2021. Further, in Oct 2020, Indira Gandhi Rashtriya Uran Akademi (IGRUA) entered into an agreement with Drone Destination for providing DGCA-certified Drone Training. IGRUA & Drone Destination are imparting training at seven of its DGCA-Authorised Drone Training Bases in Gurugram, Bangalore, Gwalior, Kangra, Coimbatore, Madurai and Bhopal. The company is headquartered at New Delhi and is backed by a well-experienced team of Aviation & Drone Experts with an experience of many years. Drone Destination’s flagship manufacturing and training headquarters at sprawling complex in Manesar, Gurugram.

Proceed is being used for:

• Meeting out the expenses for purchase of new drones.
• Meeting out the expenses for purchase of vehicle.
• Meeting out the Capital expenditure requirement.
• Meeting out the Working capital requirements.
• Meeting out the General corporate purposes.
• Meeting out the Issue expenses.

Industry overview

The Indian drone industry has witnessed a rapid growth in recent years, driven by the increasing demand for drones across a range of sectors, including agriculture, infrastructure, public safety, and defence. The GoI is actively promoting the growth of this industry by introducing policies and initiatives to encourage innovation and entrepreneurship in this field. The Civil Aviation Ministry estimates that the Indian drone market shall reach an estimated turnover of Rs 120 to 150 billion by 2026.

The drone manufacturing industry in India is still in its nascent stages, with a relatively small number of companies currently involved in the production of drones. However, the industry is growing rapidly in recent years, driven by the increasing demand for drone across various sectors such as agriculture, energy & utilities, construction, public safety, and defence. The Indian drone market potential is expected to grow to $23 billion by 2030.

The union government is significantly strengthening the drone industry by liberalising the Drone Rules in 2021 and announcing Drone Shakti in the Budget 2022. The government aims to facilitate and promote drones as a service through startups. Drone makers and service providers have already been ramping up their product offerings and hiring to meet a spurt in demand that is envisioned to accelerate in line with the government's Production Linked Incentive (PLI) scheme, planned to further bring down drone prices. The Drone Shakti scheme and the Rs 120 crore PLI scheme for drone and drone components will help increase domestic manufacturing and create employment. The fundamental aim of the industry is to generate a supplier ecosystem for the industry in India.

Pros and strengths

Fleet of owned assets: It has a fleet of owned assets including drones and its parts, base stations, and service delivery vehicles along with certified drone pilots on the company payroll. Unlike other service players with several third-party dependencies and high down time in instances of failure of drones, non-availability of pilots or other operational gaps, it has maximum level of control over its supply chain and hence have been able to achieve one of the fastest turn-around times in the market for drone service and training operations.

Backed by Hubblefly Technologies: Drone Destination is supported exclusively by Hubblefly Technologies, a DGCA-authorised Drone Manufacturing company with a current capacity to manufacture many drones. Hubblefly’s OEM support ensures availability of drones for all verticals with pro-active after sales support, giving its Service vertical a unique advantage in terms of maintenance and uptime of drones. The drones are available to Drone Destination at most competitive prices. 

Experienced management team: The Company’s founder and promoter has a vast prior experience in the aviation industry, and have in-depth insights and knowledge about the drone eco-system in the country. It has a strong management team with more than 350 years of combined work experience, that has demonstrated its ability to develop and execute a focused strategy to grow its business and optimize costs through technology initiatives. Such extensive experience has enabled it to strengthen its market position and deliver consistent financial performance, meeting long-term objective of sustainable growth of its business.

Risks and concerns

Working capital requirement: Its business requires significant amount of working capital and major portion of its working capital is utilized towards purchasing of drones and employee benefit expenses. In its business, working capital is often required to finance the drones and their spares and stores. In the event, it is unable to source the required amount of working capital, it might not be able to efficiently satisfy the demand of its clients in a timely manner or at all. Even if it is able to source the required amount of funds, it cannot assure that such funds would be sufficient to meet its cost estimates and that any increase in the expenses will not affect the price of its products.

Highly dependent on group company: It is dependent on its group company i.e., Hubblefly Technologies. The group company may import certain components for manufacturing drones and it may not be able get its delivery timely, if the raw material for manufacturing drones become scarce or unavailable or any hindrance arises which affect global supply chain. If any such situation arises in future, this would materially affect its ongoing operations and business and may not be able to achieve its goals as planned.  

Drone industry is in nascent stage: The drone industry is currently considered in a nascent stage, because it is a relatively new and emerging industry that has not yet achieved widespread adoption across all sectors of the economy. The adoption of drones for commercial and consumer purposes is still in the early stages, and there are many challenges that need to be addressed before they can become mainstream. The main reasons are, it is at a very early stage of development, the cost of drones is very high to afford and there still exists regulatory and legal issues.

Outlook

Drone Destination is engaged in the business of trading, operations, manufacturing, repair, renting services and training on various type of Drones including Multirotor, Fixed Wing, Hybrid UAV, e-VTOL, UAS, SUAV, RPV, RPAS, UWV, UGV etc. The company is headquartered at New Delhi and is backed by a well-experienced team of Aviation & Drone Experts with an experience of many years. Drone Destination’s flagship manufacturing and training headquarters at sprawling complex in Manesar, Gurugram. On the concern side, the adoption of drones for commercial and consumer purposes is still in the early stages, and there are many challenges that need to be addressed before they can become mainstream. The adoption of drones for commercial and consumer purposes is still in the early stages, and there are many challenges that need to be addressed before they can become mainstream

The issue has been offered in a price band of Rs 62-65 per equity share. The aggregate size of the offer is Rs 42.16 crore to Rs 44.20 crore based on lower and upper price band respectively. On performance front, the company’s total Income for the period ended March 31, 2023, stood at Rs 1,20,773.22 thousand whereas in Financial Year 2021-22 it stood at Rs 25,715.79 thousand representing an increase of 369.65%. Restated profit after tax increased significantly by Rs 22,345.80 thousand from Rs 2,073.20 thousand in FY ended March 31, 2022 to Rs 24,419 thousand for the FY ended March 31, 2023. Going forward, the company intends to increase its awareness to the maximum extent to the youth, by organizing campaigns, conducting demos and trials for various stakeholders, elucidating the diverse benefits and usage of drones, and addressing concerns around safety and security, so adopters of this new technology can make informed decisions about effective utilization of the drone technology. Increased adoption will push high-growth in the industry and subsequently create many large-scale employment and entrepreneurship opportunities.