C2C Advanced systems
About us:
We’re an Indian private sector company at the forefront of product development in mission-critical applications. Our expertise includes C4I systems, AI/ML-based big data analytics, and enterprise integration of real-time data from IIoT and embedded/FPGA designs. As the first Indian startup in the defense sector, we’ve delivered Combat Management Systems (CMS) for two Malaysian Naval Frigate Ships. With over 5 years of experience and 190 employees, we’ve delivered battle-proven systems globally. Our success in selling and executing our “Combat Management System” (CMS) to the Royal Malaysian Navy against global competition demonstrates our capabilities. This remains one of the most successful demonstrations of an intelligent platform from India. C2C Advanced Systems can re-engineer and revamp legacy Indian military systems to meet current warfare needs. As a pre-eminent domain-agnostic technology company focused on “Intelligent Platform,” we have a technological advantage and globally competitive offerings. Our expertise in architecture design, data acquisition, data analytics, and AI/ML has dual use in civilian applications. The rigorous military requirements allow us to innovate for the highest levels of performance.
What is CMS (Combat Management Systems)?
A warship’s CMS is the brain of its combat capability. The CMS continuously interacts with all the ship’s sensors and weapons – including radar, sonar, missiles, rockets and torpedoes – and assesses the threats that they detect. Then, the CMS suggests weapons to neutralise the threat; and it fires and controls those weapons.
In addition, the sophisticated CMS software collaborates with friendly warships’ command systems over a real time datalink. This develops a “common operating picture” for fleet operations.
C2C supplied CMS to Royal Malaysian Navy in 2019 competing against Biggies of Defense Sector
This small firm partnered with a Malaysian firm, Marine Crest Technologies, to wrest the tightly contested RMN contract from global competitors such as Thales of France, Saab of Sweden and UK-headquartered BAE Systems. RMN placed the order for the two CMSs and tactical datalink systems in April 2018, stipulating a delivery period of just nine months for the first system. Typically, developing a similar system in India takes about two years.
With C2C demonstrating the complete functionality of the CMS and datalink during “factory acceptance trials” in January 2019, and the system shipped to Malaysia the next month, C2C Systems became the only Indian entity to have developed a complete CMS, along with a tactical datalink. It is also the only Indian entity to have exported such a system.
What apart from CMS?
The Ministry of Defence has announced the Defence Acquisition Procedure which has come into effect from October 1, 2020. This procedure focuses on significantly boosting indigenous production and turning India into a global manufacturing hub of weapons and military platforms.
The ‘Second Positive Indigenisation List’ comprises complex systems, sensors, simulator, weapons and ammunition, such as Helicopters, Next Generation Corvettes, Air Borne Early Warning and Control (AEW&C) systems, Tank Engines, Medium Power Radar for Mountains, MRSAM Weapon Systems and many more such items to fulfil the requirements of the Indian armed forces. This second list is planned to be implemented progressively with effect from Dec. 2021 to Dec. 2025.
Some of the products listed in the Import Embargo List such as Corvettes, Air Borne Early Warning and Control (AEW&C) systems, Tank Engines, Medium Power Radar are manufactured by C2C. It will help them in coming future to secure more significant orders.
Products:
The products that the Company supplies are:
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Combat Management System
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C4I Systems
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Anti Drone Command and Control System
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Air Defence Sub-systems
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Integrated Platform Management Systems
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Integrated Vessel Management System
All the products are in the form of code which is supplied to the clients who use them on their equipment.
Object of the Issue:
Management:
Lakshmi Chandra: MD of the company. She is also a director in C2C innovations and PVR multimedia. She holds a Bachelors degree in Social Sciences
from the Madras University and a Masters degree in Business Administration from the Rutgers University, New Jersey, USA. She has 18 years of experience as a technology licensing specialist and has about 10 years’ experience as a digital design specialist.
Kuryidath Ramesh holds the position of Chief Technology Officer (CTO) at the company. He enlisted in the Indian Navy in 1986 as a Naval Cadet. After completing his Bachelor of Technology (B.Tech.) degree in 1990 from the Indian Naval Academy (INS Shivaji), Ramesh retired from the Navy in 2011 after serving for approximately 25 years. Additionally, he pursued an Executive Management Course for Armed Forces Officers from the Indian Institute of Management (IIM) Bangalore.
Throughout his tenure in the Indian Navy, Ramesh served in various ships and establishments. As an Electrical Officer, he was responsible for the maintenance and availability of all power and weapon systems aboard Naval vessels.
Murtaza Ali Soomar: a commerce graduate brings about 2 decades of entrepreneurial experience to his current strategic position within the company.He is also the company CFO.
Lakshmi Chandra, Maya Chandra and Murtaza Ali Soomar holds the stake in C2C innovations and PVR multimedia (related companies).
Related Party Transactions:
- As per the restated financial statements as on September 30, 2024 , the Company has availed total sum of 13 cr. as unsecured loans from promoters
- 8 cr sales out of 41 cr sales are to a group company named Realtime Techsolutions Private Limited in the previous FY but nothing so far in this FY.
- The company has given some advances to its group-related companies.
Valuations and Guidance:
Management is guiding for 200% CAGR growth for the next 3 years (Crazy. It means sales will grow 27x in the next 3 years. Hard to believe this.) Even if they achieve half of this, it can turn it into a midcap.
Management is confident of closing this year at 135 cr. sales with 30% NPM at 40 crores of Net Profit. You can assign a P/E ratio as per your understanding of Defence stocks.
| FY | Sales | Profit |
|---|---|---|
| 2022-23 | 8 | 2.88 |
| 2023-24 | 41.33 | 12.4 |
| 2024-25 (H1) | 43.25 | 9.73 |
| 2024-25 (Guidance) | 135 | 40 |
Risks:
- Client concentration: The top five customers contributed 89.59% of revenues for the year ended March 31, 2024, and 99.05% for the period ended September 30, 2024, based on restated financial statements. The top ten customers contributed 100% of the revenues for the year ended March 31, 2024, and 99.05% for the period ended September 30, 2024.
- High receivables: trade receivables days were 1,910 days and 4085 days for the financial years March 31, 2022, and March 31, 2023 and trade payable days were 7,811 days for the financial years March 31, 2022.
- Might have to raise additional capital from time to time to handle working capital
- As per the restated financial statements as on September 30, 2024 , the Company has availed total sum of 13 cr. as unsecured loans from promoters
- Outstanding receivables: 31 cr. of outstanding receivables of more than 6 months as of Sep 30, 2024 and total receivable of 74 cr.
- Group Company Realtime Tech Solutions Limited has defaulted for 1.42 cr. EPF payments.
- Complex holding structure via multiple promoter companies
Management Guidance on WC days: They are expecting it to come down from 240 days to 150-180 days. Developing CMS is a 1-year product delivery cycle. Hence, they don’t expect it to go down significantly.
As per the management no other company in India has a complete CMS (product category C4I system)
Unresolved Mystery: The whole purpose of the IPO is to fund their elongated working capital. But then why they have given money to their group companies? Maybe these issues will get resolved after going public.
Disclosure: Invested
Today’s Market cap: 1408 cr.
Sources:
Most of the questions are answered in this interview: https://www.youtube.com/watch?v=UCI9G_dy4eE
