Drone Destination Ltd

It is our pleasure to present the Annual report of the Company “Drone Destination Limited” for the financial year 2023-24.

Drone sector is a sunrise sector in India with potential to significantly impact multiple, spheres of our lives, including defence, surveillance, agriculture, mapping, mining, infra, disaster management, healthcare, photography, and many more such areas. The government of India, with the help of a robust policy and launch of drone power schemes and initiatives, has played an anchor role in pushing for adoption of drones over the last few years. Some of these initiatives include the new liberalized drone rules that were revealed and launched on 25^th of August 2021 that abolished the erstwhile lengthy regulatory process that was involved to do drone operations in the country

With the new rules, ease of doing business has given an impetus to the drone sector. Another radical change that happened, which was a great positive for the industry, was the opening up of Indian skies for drone flying with the help of release of new airspace maps on government's digital sky platform. In this newly published map, almost 90% of the Indian airspace has been designated as a green zone, wherein local drone operators owning legal drones can fly drones freely without any other prior permissions.

This increases the adoption of the whole sector significantly. Then the government has also introduced PLI schemes for drone and drone component manufacturers. Since February of 2022, DGFT has banned import of drones to promote localization of drone manufacturing in India.

There are several Drone Shakti initiatives which have been rolled out by the government of India. Some of these large-scale schemes include the Svamitva scheme for mapping in of more than 660,000 villages in our country using drones and providing landowners with right of ownership via digital property cards. Another large scheme is the SMAM or Submission on Agricultural Mechanization scheme, which has earmarked a budget for providing 40% to 100% subsidy in purchase of agriculture drone and its associated training up to an amount of rupees 10 lakhs per drone to push for drone adoption in digital agriculture.

There are several other government PSUs like NHAI, Coal India, who have mandated use of drones to improve operational efficiency and security. On the Agriculture front, Ministry of Agriculture has also released SOPs for application and spray of agrochemicals and fertilizers using drones. More recently, the government of India has also launched the Namo Drone Didi scheme to empower 15,000 women from self-help groups and provide them with drones and drone training.

And lastly, the requirement of passport to become a legal and certified drone pilot has been abolished to include or create a more inclusive environment for drone training in the country. Now, anyone who is a class 10th pass and above 18 years of age with an Aadhaar card and a valid secondary ID proof, which could be a DL, voter ID, ration card or passport is now eligible to become a drone pilot. So, speaking about the Company, Drone Destination Limited (“Drone Destination”) has been fortunate to be part of a growing startup ecosystem over the last few years.

Our Story. After an incorporation in middle of 2019, we started out India's first and exclusive drone training centre in February 2021 at our Gurgaon facility with our partner IGRUA, Indira Gandhi Rashtriya Uran Akademi, which is the largest and the only flight training organization under Ministry of Civil Aviation. Within the next 12 months, we expanded to five locations and many times opened the first drone training center in different states like Karnataka, Gujarat, HP and MP. Once the new drone rules came in, private players like us were also authorized to open our own drone training schools and Drone Destination received its first independent authorization to open an RPTO or remote pilot training organization in January of 2022 at our Gurgaon facility and later expanded to three new locations in Chandigarh, IFFCO, Phulpur and IIT, Patna.

We currently operate 12 DGCA certified training centers including those with our partners and have certified more than 4,000 drone pilots till date. In 2022, Drone Destination also made its foray into the drone services division and took active participation in a much-acclaimed PM Svamitva Yojana along with two GIS partners in the state of UP and Gujarat.

Later in the same year, we also started working with more GIS partners and undertook work for large-scale drone mapping in the state of Karnataka. So far, we have mapped close to 800,000 hectares of area in this year. Our service division has also undertaken some other small-scale surveillance and monitoring projects for the government of Bihar and other state departments. In November 2022, Drone Destination also became NSDC's first drone training partner.

The last year has been an eventful year for us at the Company as we officially listed ourselves in public market in July 2023. In comparison to FY22-23, our revenue has multiplied by 2.7 times, our EBITDA has almost tripled, and our PAT has also multiplied by 2.76 times.

We have been an active participant in the Namo Drone Didi scheme and trained more than 600 Namo Drone DiDis nominated by our new client base, which includes certain new fertilizer and agrochemical companies such as IFFCO, KRIBHCO, Chambal, IPL, Indorama, etc.

Drone Destination also won and executed its first independent drone survey project from the Andhra Pradesh Land Record Department, mapping more than 1.4 lakh hectares in the state of Andhra Pradesh. In November of 2023, we forayed into our agri-spray services business and quickly executed one of the largest drone spray demo project, doing more than 28,000 drone demos for IFFCO within the span of about 90 days under the Viksit Bharat Sankalp Yatra. Beginning of 2024, we also started our drone sales and service division. Drone Destination, as we speak today, stands on a high growth trajectory and aims to scale its integrated service and training network to India.

Going forward, we see good traction in all three broad divisions that we are working towards, which is training, services, and drone sales & repairs.

FY24 AT A GLANCE

We had a fairly decent last year. Our revenues grew from INR 12.07 crores to INR 32.62 crores, showing a year-on-year growth of 170%. Our EBITDA grew from INR 4.7 crores to INR 13.86 crores. We also achieved a growth in EBITDA as a percentage of our revenue from 39% to 44%, and also a year-on-year growth of 195%.

Our PAT grew from INR 2.56 crores to INR 7.08 crores. Here again, we achieved an increase in PAT as a percentage of revenue from 21% to 22%, and a year-on-year growth of 176%.

Coming on the cost side, we have been able to manage our expenses pretty well. Whilst the revenue has increased by 170%, the expenses, except depreciation, have grown only by 153% year-on-year. The employee expenses as a percentage of total expenses has reduced from 32% to 28%, showing some improved productivity of the employee. As we are expanding, our fixed assets have grown up from INR 5.32 crores to INR 15.35 crores. Due to increase in our fixed asset base, our depreciation has gone up from INR 1.23 crores to INR 4 crores.

During the year, our drone fleet has grown by 4.4 times. Our stock in trade is now increasing as we have started stocking for our drone sales and service activity. In terms of activity-wise performance, the service revenue has grown from about INR 5.85 crores to INR 15.78 crores, with a multiplier of 2.7x. Contribution of drone services to the revenue mix continues to be above 50%, as in the last year, with an operating margin of over 50%. Our training revenue has also grown 2.26x, from INR 6.21 crores to INR 14.04 crores. Contribution of training revenue to total revenue is marginally down on account of faster growth in other activities.

The operating margin from training activity is just around -- below 50%. We now have about INR 2 crores revenue from drone sales also this year, contributing to about 6% of our total revenue. The operating margins from these activities are likely to stay around 15%-18%. In terms of some key financial parameters, we continue to be an almost zero-debt company. Our trade receivable cycle is also reducing. Our trade receivable turnover ratio has improved from 3.49% to 2.48%.

Our return on capital employed is 15%, which is a very healthy sign. Our EPS during current year was 3.42.

Overall, the company's financial performance for the year ended March 31st is very strong, with a substantial growth in both revenue and profit, indicating effective business strategies and operational efficiency.

We are thankful to all our employees and stakeholders who have been unwavering supporters throughout our expanding business. We strive to deliver continuous innovative business solutions in the field of unmanned aerial products and services to the entire ecosystem, accentuating efficiency, empowerment, education, and recreation. I look forward to your good wishes as we embark on the growing delightful journey of novelty, expansion and excellence.