Optiemus Infracom: Margin Outlook For Drone Segment | NDTV Profit
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00:00Welcome to NDTV Prophet.
00:11My name is Rucha Somaiya and today we are going to discuss something about Optimus Infracom.
00:17Now today we have with us Mr. Ashok Gupta, the chairman of Optimus Infracom.
00:22Welcome to the show sir and thank you for joining us.
00:25Thank you madam.
00:27Let me tell you about...
00:28Should I continue?
00:29Sure sir.
00:30So let me move ahead with a brief explanation about the company.
00:34So the company is primarily engaged into manufacturing and marketing of mobile and telecom products
00:40in India.
00:41But the company has recently launched a range of drones in the agriculture and mapping category.
00:47So can you tell us something more about this particular segment that you have recently
00:52launched?
00:53In fact, agri-drones are the need of power as per our honourable Prime Minister's vision
01:03to make farmers' lives more prosperous and to increase the yield.
01:08This is one of the most required things as of now.
01:12You can see since last so many years, farmers are trying to get more yield, more prosperity
01:22and technology in agriculture area by drones are the most required thing as of now, which
01:29can help the country, which can help farmers to improve their yield and which will be in
01:39terms benefit their prosperity.
01:42So seeing this immense opportunity and to align with the honourable Prime Minister's
01:47vision, we enter into this area and now just two days back, we launched our first agri-drones,
01:57which is of a 10-litre capacity, which can do one acre of spray in just seven minutes.
02:07Apart from that, India is a very price sensitive market, to keep that affordability part in
02:14our mind, we launched a very aggressive price at 2.25 lakh as a starting price and most
02:24importantly, 65% of the components are in-house or through our ancillary partners.
02:33Why 65%?
02:35Local parts, kindly appreciate localisation is the key for any component which can make
02:43success and price sensitive.
02:46But more importantly, after-sales service will be only possible if we have local components
02:53to support the after-sales service.
02:56So this was the basic reason that we enter aggressively in this field and we hope that
03:04sooner or later, we can embark to a new journey to support the honourable Prime Minister Modi's
03:12vision to make farmer's life comfortable, prosperous and increase the yield.
03:19For that sir, so as you rightly mentioned, 2.25 lakh is the starting price for the components.
03:25I get that, so what kind of margin are you looking forward coming from this kind of drone?
03:31You see, when you are talking about margin, to be very specific, we are not looking just sales,
03:39we want to use drone as a service part.
03:43We want to go and launch in 2025, 5000 drones on ground which can support farmers for spraying
03:53nano-urea, pesticide, precision technology and farming and then crop insurance as well.
04:01So sales will be one part, but our focus will be to start with in 2025,
04:07the drone as a service in agri-area primarily.
04:14So you are likely to convert this into revenue by the end of 2025?
04:19Starting 2025 January, there are two crops, Rabi and Kharif.
04:23So we will start deploying 2025 January and till the end of 2025,
04:29we will be in position to deploy 5000 drones on ground with 1000 drones for backup.
04:36Because as I told you, after-sales service is most critical.
04:41To support that after-sales service, we can deploy 1000 additional drones with this concept.
04:51So for this, you had also mentioned about investing around 140 crore rupees in the
04:56project. So has that already been done and are we looking forward to some kind of margin dilution
05:02going ahead till the drones start getting converted into revenue?
05:08So ma'am, to be precise, we will start manufacturing drones by end of
05:16quarter four so that we can deploy drones in quarter one 2025.
05:22So the approximate investment in 6000 drones plus infrastructure and other things will be
05:29around 140 crore rupees and we will quite sure that in that next financial year,
05:36we will be able to generate around 600 to 900 crore based on crop,
05:44which we will do like floriculture, horticulture and rice and other things.
05:50So this is our plan and we are very much sure that we will achieve these things by our in-house
05:57expertise of R&D, manufacturing and distribution capabilities which we build over last 30 years.
06:06Right, so I got that. So just what kind of percentage of revenue will this drone segment be
06:13amongst the manufacturing? I see that it's around 49% of your revenue in the financial year
06:182023 and 61% of revenue in FY24. So what kind of percentage is this drone category possibly
06:28from the total revenue? You see OIL is a listed company, so we have different verticals. We have
06:34three PLIs in mobile, telecom and IT hardware. So these verticals will do separately working.
06:43The OUS Optimus unmanned system is a subsidiary of Optimus Infracom Limited. As of now, what
06:50revenue and what investment I am talking about, it is purely on the unmanned system
06:56with this service model. Okay, right. So talking more about the segmental business,
07:04I see that you have telecommunications and manufacturing split between 38 to 62%.
07:11Meanwhile, in the last financial year, it was almost around 50-50%. So do you plan to
07:17increasingly get revenue from the manufacturing segment and gradually decrease revenue from
07:23the original telecommunication segment? Is that kind of split that you're looking forward going ahead?
07:30Exactly, you are right. Every segment is a focus segment for us, like IT hardware, which PLI will
07:36start just now from March-April 2024. We are very strong working in the telecom space
07:44with some global customers and for local customers. So each and every segment will grow
07:50separately in this year and going forward. So I cannot give you the break up how we will grow in
07:59different areas. But as of now, my focus apart from EMS, from telecom or IT hardware,
08:07my focus is to support agri drone service by our expertise in this area and we will do certainly
08:17much better revenues from those areas because that is a service area. Sales is different,
08:23service is different. Sure sir. So as I read in the 4Q presentation, you also mentioned that you
08:29received first order for the quadcopter in the fourth quarter. So can you just tell us the deal
08:37size or the kind of margin that you are expecting to earn from this order? So you see, we just gave
08:44some four surveillance drones. So some Northeast state and they tried that. To be very honest,
08:54as of now, we are not looking higher margin. As I said, when we will focus on making India,
09:02our price will be very competitive. When I said defense area, almost all the drones
09:09and maximum electronic parts are made in our factory. I know we can compete with our capacity
09:17and capabilities of electronic manufacturing space. We will be able to provide very aggressive pricing,
09:25but surely quality will be there, no compromise. Sure sir, got that. So what kind of drone deals
09:36in particular can be in your pipeline? If you can tell us, if not quantification, the percentage
09:42of drone deals or any plans for the drone segment going ahead? So drone has right now
09:49majorly three segments. Actual in every part of our life is a country life, whether disaster
09:56management, mapping, whether defense, whether logistic, whether agriculture, there are so many
10:02verticals for which drone can be helpful. So our focus is as of now, one agreed drone service.
10:10And secondly, we are going for some RFQ for defense already in pipeline where we are going
10:17to shortly give trials. And if they approve that, we are ready to supply them quantities as per
10:24their requirements. So logistic policies is not ready as of now, but surely when the policy will
10:32be there, slight modification in agreed drones, like we can use them for logistic purpose with
10:39specific softwares. That might reduce our expenditure and aid margins may be going ahead, is that correct?
10:47If I've got that correct? Pardon? That might increase your margins going ahead if this
10:55thing comes into place, if I've got it correct? Actually, to be very honest, margin is based on
11:01economy of scale and localization, right? I am sure with drone industry, EMS industry has a
11:09different margin percentage, but drones with R&D in-house, localization in-house and distribution
11:17in-house will certainly give us more margin and profitability in coming time, sooner.
11:26Sure, sir. Thanks for the wonderful insight that you've given us on the company and the drone
11:30segment as well. So that is what we had from Ashok Gupta, Mr. Ashok Gupta,
11:35the Chairman of Optimus Infracom, and thank you for joining us on the show, sir.