Meet the high-flyer in India’s drones club

Ankit Mehta, ideaForge’s co-founder and CEO. The company has filed for more than 30 patents and has deployed over 1,500 systems so far.
Ankit Mehta, ideaForge’s co-founder and CEO. The company has filed for more than 30 patents and has deployed over 1,500 systems so far.


ideaForge has quickly become the biggest pure-play company in India’s nascent drone manufacturing industry

Bengaluru: In the 2009 Bollywood movie 3 Idiots, Aamir Khan, who plays an engineering student named Rancho, guides a drone with four rotors to the window of a classmate’s hostel room and catches him unguarded… and unclad. The drone, technically known as an unmanned aerial vehicle or UAV, was an early vertical take-off and landing (VTOL) prototype manufactured by Mumbai-based startup ideaForge Technology.

The company has come a long way in the years since and is now India’s largest drone startup. It had an eye-popping initial public offering (IPO) in June, which was oversubscribed 106 times, with a 93% listing day gain on the BSE on 7 July. In the three months or so since the listing, however, the stock has been sliding steadily—ideaForge shares ended trading at 864 on 3 October, still above their IPO price of 672 per share, but well below the euphoric 52-week high of 1,344.

While extreme market swings sometimes make it hard to ascertain the true value of a company, ideaForge’s management is confident about what the future holds, as are analysts. Today, ideaForge is sitting tight with an overall order book of around 190 crore and is profitable. For the full year ended March, its revenue stood at 186 crore on a profit after tax (PAT) of 32 crore. Revenue for the April-June 2023 quarter stood at 97.1 crore as compared to 38.7 crore in the previous quarter, while its PAT stood at about 19 crore. In comparison, the only other listed drone company, DroneAcharya Aerial Innovations, posted revenue of 18.57 crore and a PAT of 3.43 crore.

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Graphic:' Mint

In its Q1FY24 presentation to investors, the company cited a report by management consulting firm 1Lattice that listed tailwinds that would boost the performance of the indigenous drone industry. Those tailwinds include the February 2022 ban on import of drones except those used for R&D, defence and security; national security concerns that would boost local drone makers; a favourable ecosystem created by industry-friendly government policies, including the production-linked incentive scheme, and a favourable export policy.

Indeed, according to policy think tank NITI Aayog, India’s UAV market is set to expand to $50 billion over the next 15 years as drones are projected to substitute 80% of operations currently carried out by manned aircraft. The drone manufacturing potential in India could be worth $4.2 billion by 2025, growing to $23 billion by 2030, according to an August 2022 EY-FICCI report titled, ‘Making India the drone hub of the world’.

Widespread application

On average, drones made at ideaForge’s 21,000 sq. ft, 600-person capacity plant in Navi Mumbai, take off “every five minutes for surveillance or mapping applications", says Ankit Mehta, the company’s co-founder and CEO.

The company’s drones are not only used by the armed forces but also for civilian purposes such as agriculture, construction, mining, oil and gas, power transmission, and search-and-rescue operations during earthquakes and floods.

For instance, the Indian Army uses ideaForge’s high-altitude UAVs to monitor the Line of Actual Control, and those with VTOL capabilities for surveillance purposes. In 2016, for instance, ideaForge UAVs were able to reveal the precise locations of terrorists who attacked Pampore, a town close to Srinagar. On the civilian front, ideaForge UAVs were used during the earthquake in Kathmandu, Nepal, and other locations to aid in search and rescue activities.

The company has filed for more than 30 patents, deployed over 1,500 systems, and trained over 3,200 pilots in governmental organizations and the defence forces, as of FY23. Apart from riding on the company’s intellectual property, Mehta wants to build a tactical category drone that can fly longer, and also look at a middle-mile logistics drone that can probably carry more than 100kg and travel over 100km.

ideaForge is also building solutions for drones-as-a-service. The ‘pay-per-use’ model will help customers reduce their initial investment and increase adoption. Meanwhile, the company has started tapping international markets. “We have opened a subsidiary in the US, and we are building the capability to do demonstrations there," says Mehta.

When passion pays off

Mehta was interested in building products right since childhood, but drones were the last thing on his mind when he opted for mechanical engineering at the Indian Institute of Technology (IIT), Bombay. From the very first year there, Mehta started implementing his “own ideas". For instance, he set out building hand crank chargers for electronic mobile devices. “The idea was to help people in rural areas to survive with off-grid gadgets. It was something for which I had filed a patent when I was in college," Mehta recollects. However, since he would fall short of funds when building prototypes, he would approach faculty members for small sums of money. “They would oblige by giving me some money from their existing budgets. If they did not have the money, I would simply approach another faculty member," he says.

The hopping continued until Mehta began working on various projects for IIT Bombay’s incubation cell, the Society for Innovation and Entrepreneurship (SINE), and even “invited other students to showcase their ideas". Thus, he met Rahul Singh and Ashish Bhat, who would become co-founders of his company. Both were two years junior to Mehta but the trio bonded well, much like the characters in 3 Idiots, due to their common love of “building new stuff" and participating in robotics competitions.

Singh even dreamt up the ambitious idea of building a hovercraft (a vehicle that moves over land or water) and using it on the Powai lake adjacent to the IIT campus. “Instead, we ended up building a quadcopter (also known as a quadrotor), which we thought was novel in the world of aviation, only to realize it was something invented several decades back," says Mehta with a chortle.

After graduating in 2005, Mehta, Singh and Bhat continued building drone prototypes and participating in robotics competitions. The trio finally decided to set up ideaForge in 2007, and got it incubated at SINE.

In 2008, Mehta managed to rope in his childhood friend, Vipul Joshi, as the fourth co-founder. That year, militants attacked the Taj Hotel in Mumbai, spreading panic and terror across the city. “When we heard news of the naval helicopters looking into the 3rd and 4th floor of the Taj Hotel, we felt our drones could have been leveraged in a situation like that, maybe even more effectively," he recollects. It was a defining moment for Mehta. “That’s what motivated us to actually convert our fun projects into something concrete."

A year later, ideaForge demonstrated India’s first quadcopter drone at the government’s Defence Exhibition Organisation. In 2010, Bhat won the award for ‘best autonomous hovering vehicle’ and received a mention in the Massachusetts Institute of Technology (MIT)’s Technology Review list of ‘innovators under 35’, for developing the world’s smallest and lightest autopilot for drones, weighing just 10 grams. Autopilot systems allow drones to operate without the need for manual remote control.

Not an easy bet

ideaForge has several marquee venture and private equity investors, including Qualcomm Asia, Infosys, Celesta Capital, and Florintree Advisors, backed by former Blackstone India head Mathew Cyriac, which is the single largest shareholder in the company. While Celesta Capital made a part exit when ideaForge listed this July, Florintree remains fully invested with an 11% stake.

But way back in 2009, not many were willing to invest in a company that made hardware, especially one that was garnering almost all of its revenue from defence contracts. Besides, India had banned drones for personal use in 2014, stunting the growth of the sector.

“We struggled a lot, almost till 2015," recalls Mehta. The company’s fortunes changed for the better as they started getting “some big orders and bigger opportunities". It was then that they secured “some early investments, which were more like pre-series A rounds". This gave Mehta the confidence to reach out to bigger investors, including Celesta Capital, where Mehta and his co-founders met people who had hardware industry experience and had scaled large businesses by leveraging hardware.

However, Nicholas Brathwaite, founder and managing partner at Celesta Capital, recounts that he initially did not share the founders’ enthusiasm. He was also not impressed with the drone that ideaForge had developed. But later, Brathwaite was impressed with the passion, commitment, and high intelligence quotient of the founders. “Also, some components they made were pretty impressive, like the autopilot. And they had a roadmap that was pretty impressive," he says.

“We knew that the team was young and lacked the experience of building or managing a business. We also knew it would probably take some time for the drone market to develop in India. I remember going to board meetings and terming their revenue predictions as ‘too aggressive’. But when you invest in a company in deeptech, you have to be committed to building a business. That takes time," Brathwaite adds. The fact that Celesta Capital was also betting on India helped Brathwaite take the final leap.

Lending wings

Buoyed by investor money, ideaForge developed the first hybrid VTOL drone with fixed wings in India in 2017. A year later, it also demoed 5G-enabled UAVs at the Indian Mobile Congress. But the pandemic slowed the growth of all drone companies, impacting the supply chain for imported parts—drone makers still import 30-60% of their electronic components.

Post covid-19, things began looking up and the government’s liberalized rules in 2021 gave a fillip to the sector. Additionally, the government’s production-linked incentive (PLI) scheme aims to incentivize Indian drone and drone component manufacturing companies and make India a global drone hub by 2030.

“It (ideaForge) has built a strong foundation on the basis of its industry leading design and technology capabilities and vertically-integrated operations, enabling it to secure numerous contracts for defence and homeland applications, among them being a $20 million contract with the Indian Army for its SWITCH 1.0 UAVs, which it delivered on time in November 2021," said a 9 June report by 1Lattice. SWITCH UAVs are used for surveillance and security operations.

“The defence sector will account for almost 50% of the number of drones to be potentially deployed in India by the end of this decade, amounting to a total market of around 1 trillion," says Arun Nagarajan, a partner at EY India. “The commercial market, including security and surveillance, will amount to another 1 trillion in market value," he adds.

Growing competition

There are 333 drone startups in India, according to a 16 June note by Tracxn. These include Garuda Aerospace, General Aeronautics, Tata Advanced Systems, Adani Defence & Aerospace, Skylark Drones, and Skye Air Mobility. ideaForge, however, is the largest pure-play drone maker, and much bigger than the other drone startups in terms of revenue.

However, ideaForge also has to compete with bigger public sector companies, including Bharat Electronics Ltd (BEL) and Hindustan Aeronautics Ltd (HAL), for defence contracts. Besides, there are multinational companies such as Lockheed Martin Corporation and Autel Robotics Corp, according to iLattice.

According to Mehta, ideaForge generated about 70% of its revenue from the defence sector last year, with the remaining 30% coming from enterprises. In its April-June earnings call on 9 August, ideaForge’s management said that 96% of its revenue came from defence, while 4% was from the civilian sector. Hence, a decline in government budgets, reduction in orders, termination of existing contracts, delays in existing contracts or change in government policies could easily impact its operations and margins.

“We’ll continue to serve the defence market," says Mehta. “However, we believe that the potential in the civil market getting unlocked will allow faster growth on that side."

He added that despite being public sector units, companies such as HAL and BEL had no distinct advantage since “they too have to bid for tenders".

Shouvik Das contributed to the article.

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