Adani Group’s drone division explores revenue models similar to tractor industry

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Adani Group’s commercial drone division is exploring two revenue models – dealer-based and service-based – while focusing primarily on the agricultural sector, a senior conglomerate official said on Saturday.

In a dealer-based model, equipment is sold directly to the customer. In a service-based model, equipment is provided for various services for a fee in partnership with a local contractor or institution. The tractor industry uses these two sales models.

“We are exploring both models – the dealer-based model and the service-based model. Depending on the market response, we will make our decisions,” said Rangarajan Vijayaraghavan, Vice President, Strategy and Office of the President, Adani Group, to PTI in an interview, a day after the conglomerate announced the acquisition of a 50% stake in drone start-up General Aeronautics.

He said the Adani Group is considering several areas in the commercial drone sector and “one of the main areas of focus” is agriculture.

“This is in line with the Prime Minister’s vision to use drone technology to improve farmers’ livelihoods.

With our commitment to nation building, we have been deeply inspired by the Prime Minister’s vision and believe there is significant opportunity in the market,” he said.

In the service-based model, the Adani Group will provide drones for services such as pesticide spraying for a fee in partnership with a local contractor or institution, which in this case will be pesticide companies, he said. he mentioned.

He said the agricultural sector has a unique advantage when a drone is used – the combination of pesticide deployment as well as reduced water and labor requirements provides a cost and convenience to the farmer.

“We hope to be able to build on this (advantage) in the days to come,” he added.

The Adani group announced on Friday the acquisition of 50% of the capital of the start-up of agricultural drones General Aeronautics for an undisclosed amount.

General Aeronautics, based in Bengaluru, specializes in the development of robotic drones to offer technological services in crop protection, crop health monitoring, precision agriculture and yield monitoring using the artificial intelligence and data analysis.

Vijayaraghavan said General Aeronautics is dedicated to the production and services of agricultural drones.

“Production is the outright sale of the drone itself and services are basically charging revenue per acre in order to do the pesticide spraying,” he said.

With this acquisition, Adani Group hopes to help General Aeronautics expand rapidly in multiple geographies, as it has technology developed over years and market access nationwide, reaching millions of farmers. in the country, he noted.

While talking about the revenue models in the commercial drone industry, he said that many parallels can be seen in the evolution of the tractor industry in the past.

He talked about two revenue models in the tractor industry.

“The first is that you have the outright sale of tractors by original equipment manufacturers (OEMs), in which case the primary sales channel is through a dealership,” he said.

The second model is a service-based model where the company partners with a contractor or institution and offers the tractor by the hour or by the acre to the farmers.

“We expect the outright sales model (or dealer-based model) in the commercial drone industry to evolve over time,” Vijayaraghavan noted.

Under the service-based model, a drone company or local entrepreneur can offer a package of services to a farmer that includes not only spraying pesticides, but also the pesticide itself, maintenance of the drone, etc., he mentioned.

A service-based model also helps a company connect with farmers because it has the ability to engage with them at the issue level.

“You build a respect and bond with the farmer. In a very valuable way, you derive data from that to understand the effectiveness of drones, pesticides and how that has helped farmers’ bottom lines,” he added. .

The data is expected to become powerful on its own that it will help farmers looking for things like crop insurance or loans against production, he said.

Asked about the company’s manufacturing plans, he said the Adani Group already has manufacturing facilities in Hyderabad and Bengaluru which have been earmarked for military applications.

“With our stake in General Aeronautics, we plan to increase our manufacturing capabilities. They are, however, of different types. A military drone and an agricultural drone are not necessarily the same in terms of throughput. Agriculture is more mass production, military drones are much more niche,” he said.

However, the Adani group expects there will be cross-pollination of knowledge between the two, he added.

When asked if the manufacturing plants of the Adani Group – which currently manufacture military drones – will manufacture civilian drones, he replied: “They will not manufacture the (commercial) drones directly. We expect the partner company that it manufactures the (commercial) drones.”

However, there could be common components that could be made in these factories, he added.

He said Adani Group’s presence has been strong in the military drone business since 2016.

“We’ve also had a good track record of working with small and medium-sized enterprises (MSMEs) to help them grow in the military drone sector. We’re now looking to take the same skill set and apply it commercially. drone sector,” he added.

Vijayaraghavan said around 70-80% of the drone market has historically been for military applications.

“We expect the trend to reverse over the next five years, with 70% share going to civilian drones and the rest to military drones,” he said.

Published on

May 28, 2022

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