Affordable Robotic & Automation Ltd - Niche business

Affordable Robotic & Automation Ltd

Affordable Robotic & Automation Pvt Ltd (shortly ARAPL)
Incorporated in 2010, Pune based company engaged in the business of providing turnkey automation solution to automotive, semi-automotive and manufacturing industries.

Key business it operates in:

The Company programs and automates the functions of machines used in manufacturing process of the automobile industry.
The Company is also in the business of assembling and installing driver-friendly automatic multilevel car parking system. (their system elevates cars upto 30 levels/floors !!)
This system is preferred by high-rise residential complexes, shopping malls, and commercial buildings. It has a presence in Mumbai and Pune in automated car-parking business.
Further, in FY 2017-18, the Company has set-up a new line of business, Secondary Packaging, which is aimed at FMCG industries by way of providing automation service in container packaging of the final packed product.

Recently listed in June 2018, this is the objective of the IPO:

  1. Purchase of New Plant and Machinery
  2. Repayment of certain Long-Term Borrowings availed by the Company
  3. Funding the Working Capital requirements of the Company
  4. General Corporate Purposes

Results before the IPO:
image

One can observe that the revenues & profit has started growing significantly (but need to see if this growth sustains further as the increase in revenue & margins could be a common technique where they are “inflated and flashed” by the promoters to boost investor sentiments prior to going public)

Screener:
https://www.screener.in/company/541402/

Many videos on their business segments and promoter interviews are available on their website home page:

Video: Multilevel Car parking business:

Video: Automation Business using robotics:

Any mavericks invested:
Vijay Kedia is one of the top public shareholder having bought a massive ‘10.5% stake’ of the whole company.

Details of latest order book shared by company on 14-11-2018:

Pros:
-In niche business, robotic automation is the next big thing
-Operates across industries (as mentioned above - automobile,construction & FMCG)

Cons:
-Still a micro cap, a long way to go to realise its full potential
-Listed in BSE only

Disclosure:
NOT Invested. Yet. Fellow value pickers, please share thoughts.

Disclaimer:
I am not a SEBI registered analyst or a financial adviser. This post is not a recommendation or endorsement in any way. Please exercise caution before making an investment decision.

10 Likes

Looks like a interesting company there website is not working and idea? This looks a very capital intensive business where working capital will have to see if they can do well with that

@prabhatg1 The site could have been down at the time due to some maintenance, I dont know. It still works when I checked. Try again.

How does the car parking business work… Do they get paid for each parking or only get the costs once they have implemeted the parking…

@pradhansp do you still follow this company? With movement of labour, number of industries may switch to automation of some part of their work to minimize labour. Is this company geared to execute increased business and deliver bottom line? Any idea on management quality?

Disclosure - Not holding any share. Interested as sector looks promising.

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They are primarily Multi level lift manufacturing company - I see -ve impact on that. They haven’t proved themselves on anything else.

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Hi,
I wrote to the company regarding a few queries and have received the answers at length.
Greetings from Affordable Robotic and Automation Limited!!!

Thank your for being with us and motivating us to bring out better in the journey of success.

Below are the replies to your queries…

  1. How is the capacity utilization calculated? (Total orders for the year and pending orders for delivery)

Reply: At our existing plant we can go upto INR 130 CR which is the total capacity. As of today we have order in hand of INR 140 CR.

  1. Time taken for manufacturing automation machines in the automobile industry and multilevel car parking?Any waiting period for consumers?

Reply:- Yes, it depends upon the project size and time line given by customer, in automation it is around 4 to 6 months, while in car parking it is 9 to 12 month depending on customers site readiness.

  1. Sales are growing but the profits are not in line with it. The company is converting cash into materials required for operations which is more than required. Does the company put in efforts in mitigating the cost of operations in a better way to increase the bottom line?

Reply:- Earlier we used to do , some orders of only design in which no materials were involved hence the material price inflation and market competition are not much there, but to explore the market we need to give the turnkey solution to the customer in which we have to take full orders at competitive rates to survive and to increase market share. and the cost of material are seems to be high, but once we cover the optimum market share then we can have leaverage on the overhead, which would result in higher profit margins.

  1. Your thoughts on the sector being a capital intensive one and low-profit margins and dependence on loans. Your company is probably the leader in the pack and strange to see low-profit margins in a niche segment.

Reply:- It is there, but considering the developement happening in the country we can see, more exploration towards the automation for which we are in the market.

  1. Does the company see any intangible assets like patents, trademarks in the future.

Reply:- Yes in Future, we have that.

6.Trade receivables increasing year on year. Any thoughts on recovering them.

Reply:- Absolutely we must have, you might also know without receiving it will be difficult to run the show. as you know this is capital oriented product hence our deliveries are generallry in the last qtr only, hence that project runs for another 3 months at customer place for the installation and commisioning activities, because of that receivable figures during that period looks to be high, which being collected at later stage.

  1. Is the company looking at any long term contracts with major manufacturing companies in the near future?

Reply:- Yes we have.

8.Does the company foresee in reducing the unsecured loans taken by the promoters and other bodies?

Reply:- There is no any such unsecured loans as of now.

9.Happy to see that the company is investing actively in land for future expansions. Any information on what the land could be used for which the company keeps acquiring?

Reply:- There is no any such continous acquiring of lands, company had acquired land for the expansion of the business, as we told with the current unit company can go upto INR 130 CR. hence we had that expansion plan and bought the land for the factory set up, but due to the covid19 and market condition post that, we have deviated that plan till next fiscal half year.

  1. Thoughts on foraying into B2C products (Target products, if any).

Reply:- Yes, we have that thought and also products are under developement, will let all know further once the activity completed.

11.Does the company sees itself giving dividends in the future? If yes, then a small piece of advice for the company is to give bonus shares equivalent to the dividends.

Reply:- Will look into that and definately take your advice to the board.

12.In the 2020 Annual Report, the company had negative growth of 46% on multilevel parking, any thoughts on the decrease. The same year also saw an increase of 41% in automation. Any new customers added or repeat orders of existing customers.

Reply:- In car parking sector we need to deal with the real estate market, where the liquidity is not as fast as compared to automation. and in Automation the cycle of the completion is also quicker. So, we need to strategies as per the prevailing market situation and something that which we did.

13.Could you share the export destinations and the products it exported?

Reply:- Currently no exports are there, but we are working on that and will come up with that post fiscal year 2022.

14.Which segment do you see competition from to be most vulnerable to disruption?

Reply:- Both of the segment it is there, but more in Automation.

Hope, we have given answers to your queries upto your satisfaction.

We would be happy to answer more questions if you have please let us know.

Not a buy recommendation.
Request everyone to Please draw your own inferences.

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Multi level car parking commissioning in a narrow and the most crowded streets in visakhapatnam.

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The company seems interesting. Do they have any listed competitors in this space of robotics and automation?

Vijay Kedia has increased his holdings to almost 15% now through QIP but one thing seems really off to me, I was unable to find the details about the Independent Directors on any social platform
image

Do add if you know anything or their background.

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this is a very illliquid stock, seems like you can buy them only in lots of 1600 stocks, is it same for everyone?

The company posted decent results for H2 FY22. However, the contribution from subsidiaries (particularly warehousing automation subsidiary) was not significant. The company has organised a concall to discuss the results and future plans.

Affordable Robotic & Automation Ltd. (ARAPL) is a Pune, India based company, serving an
Automotive, Non-Automotive, General Industries & Government Sector also. The Company will
be hosting a conference call for investor and analyst community on Friday, June 17, 2022 at 12
p.m. to 01.00 p.m. (IST).
The call will be initiated with a brief management discussion on the Company, its product
categories, future plans and financial result for half year & year ended March 31, 2022 followed
by an interactive question and answer session. On behalf of the Company, the call will be
addressed by Mr. Milind Padole, Managing Director of the Company.
Details of the conference call are as below:
ARAPL is inviting you to a scheduled Zoom meeting.
Topic: ARAPL’s Conference Call with Investors and Analysts
Time: June 17, 2022 12:00 PM to 01:00 PM India
Join Zoom Meeting
Launch Meeting - Zoom
09
Meeting ID: 815 4134 4980
Passcode: 698096
You are requested to Join 10 minutes prior to avoid connectivity issues. We look forward to your
participation.

Compared to the capabilities and future prospects of the warehousing automation segment of the company, I find it highly undervalued.

Disclosure: Invested.

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Robotics in India has a fairly huge potential. Below from ABB’s earning call.

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Not sure if there is any material impact due to this.

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