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…
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.