Asian Electronics Limited (AEL) BUY

30th August, 2007 Investment Rationale

Key Data Immense global potential for plastic2power business
BSE Code 503940
AEL’s unique technology to convert waste plastic into energy (plastic2power)
NSE Code ASIANELEC
has a capability to address the global issue of waste plastic handling. As
Bloomberg Code ASEL IN
plastic’s are non biodegradable the world is looking for ways and means to
Sensex 15121
dispose off waste plastic efficiently. “plastic2power” is not only equipped to
CMP, Rs 807
dispose the plastic but is also converting it into energy. Globally more than
No.of Shares,mn (Diluted) 28.9
200 million tones per annum of waste plastic is generated which has a
Face Value 10.0 potential to generate more than 100,000 MW of power (4.8tpd of plastic = 1
Mcap,Rs mn 23369 MW/Hr) by using AEL’s technology.
Mcap,USD mn @ 41 570.0
52 week H/L 1140 / 415 Lower lead time vis-à-vis other power equipment manufacturers
15 day Avg. Daily Vol. BSE 28396Normally for a power equipment manufacturer it would take upwards of 24
months to setup a facility to manufacture power equipment. Whereas in case
of plastic2power AEL requires just ~6 months to set up a equipment
Share holding June'07 Post merger production facility with much lower capex and lesser lead time; which will
Promoters 33.5% 59% give the company immense commercial advantage compared with others.
Institutions 4.6%
Higher power demand augurs well for plastic2power business
FII's 25.0%
PCB's 14.6% By using equipment manufactured by AEL one can setup a 8MW power
Public 22.3% 41% generation plant in just 6 months compared with 18 - 24 months in case of
Total 100% 100% other mode of power generation plants. AEL under its plastic2power
business plans to setup a series of 8MW power generating plants. Along with
Shareholding >1% June'07 lower lead time the cost of generation would be as low as ~Rs 1.80/unit.
HSBC Fin. Ser. Middle East Ltd 5.0% Other than its economic benefits this business significantly contributes
Citigroup GLobal Mkt. Maur. 4.8% towards environment protection by reducing waste plastic. plastic2power
Aayu Investment Pvt. Ltd. 3.5% could be the preferred mode due to the need for rapid capacity addition in
Lehman Brother Asia Ltd 3.5% power generation due to deficit of power and increasing demand in the
Carlson Fund Eq. 3.0% country.
Merrill Lynch Cap. Mkts. Espana 2.7% Govt. thrust on efficient power consumption is a big opportunity for
Raymold Lighting pvt. Ltd. 2.7% the growth of AEL’s lighting business
Morgan Stalney & Co. Intl. Ltd. 2.6%
The recent energy bill states that that all premises & factories having a load
Arun B Shah 2.2%
> 500 kva must save 30% energy; to achieve this, they would buy
Arisaig Partners (Asia) Pte Ltd 1.9%
products/services only out of the ESCO concept. Rapid growth of structured
ABN Amro MF 1.6%
malls and larger residential complexes could be another demand driver for
MNR engineering Pvt. Ltd. 1.2%
the ESCO products. AEL being the pioneer in the industry is set to benefit
Laxmi Shivanand Mankekar 1.0%
most from the sector growth.
www.aelgroup.com Valuations
www.plastic2petrol.com
We estimate AEL’s revenue and profits to grow at CAGR of 87% and 133%
Karthik Ramakrishnan respectively, between FY07 and FY09F. We expect ROE to improve from
karthik@sunidhi.com 19% in FY07 to 34% in FY09F. At CMP of Rs 807 stock is trading at 13.8x
FY08F EPS of Rs 58.5 and 6.4x FY09F EPS of Rs 125.3. Given the huge
Amber Singhania
amber.s@sunidhi.com
potential in its plastic2power business, and inexpensive valuations; we
Phone: +91- 22- 6631 8636 initiate BUY recommendation on the stock.

B rief Financials R evenues grow th EB ITD A N et P rofit grow th EP S P .E EV / ROE

R sm % % R s. x EB ITD A , x %
FY05A 1041.1 25% 209.0 124.0 225% 14.6 55.3 33.1 12%
FY06A 1561.1 50% 331.2 256.0 106% 28.6 28.2 22.6 19%
FY07A 3674.5 135% 900.8 665.1 160% 47.8 16.9 13.4 19%
FY08F 6533.5 78% 2181.6 1692.2 154% 58.5 13.8 10.4 23%
FY09F 12815.9 96% 4612.3 3625.7 114% 125.3 6.4 5.2 34%
S ource : C om pany & S unidhi R esearch
 Asian Electronics Limited (AEL)

Company Background
Asian Electronics Limited (AEL) is involved in design, manufacturing and marketing of
Energy Efficient Products and specializing in lighting solutions. With its world-class
manufacturing facility at Nashik, Silvassa, Solan (HP) and Chennai, India, it is meeting
international standards of quality lighting solutions. AEL's nationwide presence and
strategic international partnerships is making its mark in the Lighting world. AEL has
recently added new high growth business segment i.e. manufacturing
equipment for converting waste plastic into hydrocarbon and in turn
producing power from it.

Merger of Green Hydrocarbon and US Instruments into AEL

Shah Group
(Promoter of AEL)
Organizational Structure
(Pre Merger)

Asian Operating Div. of Green Hydrocarbons Unique Waste

Electronics US Instruments (India) Private Mgmt Ltd.
Limited Private Limited Limited (75% Shah Group)
(34%) (100%) (80% Shah Group) (25% Zadgaonkars)
(License Holder) (20% Zadgaonkars) Patent Holder

Shah Group
(Promoter of AEL)

Organizational Structure
(Post Merger)

Asian Electronics Operating Div. of Unique Waste

Limited US Instruments Green Hydrocarbons Mgmt Ltd.
(~59% Shah Group) Private Limited (India) Private (75% Shah Group)
(~10% Zadgaonkars) (Merged with AEL) Limited (25% Zadgaonkars)
License Holder (Merged with AEL) Patent Holder

Equity Issuance:
For every 1 Equity Share of Re 1/- each of Green Hydrocarbons India Pvt Ltd,
will be entitled to 1 Equity Share of Rs 10/- each of the Company aggregating to
10,000,000 Shares. (Ten Million Shares)
For every 5 Equity Shares of Re 1/- each of U.S. Instruments Pvt Ltd., will be
entitled to 1 Equity Share of Rs 10/- each of the Company aggregating to
2,000,000 Shares. (Two Million Shares)
The promoters and associates of Green Hydrocarbons India Pvt Ltd and U.S.
Instruments Pvt Ltd will subscribe to 2,000,000 Equity Shares of the Company of
Rs 10/- each at a price of Rs 1000/- per Share aggregating to Rs 2bn. (Two
Million Shares)
As per the above information the fully diluted equity of AEL would go up to Rs
289mn (28.9mn Shares).
On the diluted equity of 289mn the promoter’s stake will go up from current
33.5% to ~59%.

Sunidhi Research Page 2 of 14


Lighting division is expected
to grow at 57% CAGR
between FY06 - FY09F
Innovative technology to
convert plastic into
power
License to use
technology, process,
catalyst
Multiple revenue streams
Sunidhi Research
Asian Electronics Limited (AEL)
Business Profile
Energy Services Company (ESCO)
ESCO represents a company engaged in developing, installing & financing comprehensive
performance based projects with the underlying objective of improving energy efficiency.
The ESCO will guarantee that savings would exceed the annual payments made to cover
the entire project cost. It’s a clear win-win situation as remuneration of an ESCO is
directly linked to the energy saving of its client. AEL, operating as an ESCO (approved by
World Bank) in the Indian market, estimated at Rs 20 bn.
Selling & leasing of lighting products:
AEL has been in the business of operating leases in high tension (HT) and low tension
(LT) switched capacitors for Automatic Load Monitoring Systems (ALMS), supplying to
Maharashtra and AP State Electricity Board on a 10 years lease. The company has exited
from manufacturing of capacitor business in 1998 but continues Capacitor ESCO
business, i.e. ALMS for supply and leasing and refocused to energy efficient, intelligent
lighting products, and manufactures across plants in Nashik, Silvassa, Solan (HP) and
Chennai.
AEL will continue to grow its lighting segment and energy saving fittings and fixtures that
the company is supplying. Visualizing the growing retail segment and scarcity of power
as an opportunity the company has entered into JV to supply energy saving lighting
solution to retail chains and malls.
Distributors and Customers
With more than 300 distributors/dealers, AEL caters to over 500 institutional customers
spread over all industry segments. Asian Raymold has supplied lighting solutions to Big
Bazaar, Pantaloon, Westside, Lifestyle, ABB, Athens Airport, German Railways, UK
Defense department and Post Office Dept. Malta.
Innovative product marketing
AEL has innovative plans to market its product in India on a deferred payment basis. In
Ahmedabad, it has offered efficiency improvement lights to subscribers, who will pay the
initial capital costs through the monthly electricity bills. Similar plan is being launched in
other states.
Plastic2power
AEL has acquired the technology from Prof. Mrs. Alka Zadgaonkar for converting waste
plastic into hydrocarbons and in turn to convert into power. AEL manufactures equipment
to set up plant to make plastic to power.
Unique waste management has the patents for the technology, process and catalyst
invented by Prof. Mrs. Alka Zadgaonkar. AEL has license to use the technology, process
and catalyst.
As this new segment is at initial stage AEL is only selling equipment at present whereas it
has few other possible revenue streams from this business which will be explored in
the future; such as
Taking up the operation of the plant on a production sharing basis.
Setting up a Joint Venture with the buyer of the equipment to operate on equity
sharing.
Page 3 of 14

Establishing base on global
scale through Joint
Ventures
Domestic tie up with oil
major
Sunidhi Research
Asian Electronics Limited (AEL)
JV with Cimelia
AEL has entered into a (50:50) JV agreement with Cimelia Resource Recovery Pte Ltd.
(part of $260mn Enviro-Hub listed in Singapore and a well established brand in global e-
waste management and recycling industry).The JV Company will establish a plant in
Singapore for this purpose and thereafter market its services and to sell similar plants to
Malaysia, Indonesia, Thailand, Hong Kong, Vietnam, Philippines, New Zealand and Brazil.
The company is planning to supply equipment for ~100MW in each of the above
mentioned 8 countries at the initial stage.
Other possible Ventures
Company is also in talks with major oil company to set up a JV for processing of refinery
heavy residue by Zadgaonkar’s process. This could open up a huge business opportunity
for AEL as the oil company generates ~7000tonnes of refinery heavy residue per day.
This business segment has a huge growth potential as it solves
Handling of disposable waste plastic & using it for productive purpose without
harming environment.
Setting up of a power plant (8MW) in only 6 months time period and Generate power
at efficient cost.
Page 4 of 14

Potential to supply
equipment for 100,000 MW
globally
Substantially lower lead
time to commission the
facility; can become
solution for energy deficit
in the country
8 MW power plants can be
set up in just 6 months;
can become solution for
energy deficit in the
country
45% of energy bill can be
saved by using ESCO
products
Sunidhi Research
Asian Electronics Limited (AEL)
Investment Rationale
Immense global potential for plastic2power business
Globally more than 200 million tonnes of waste plastics are generated annually (570,000
MT per day of which ~ 10000 MT/day in India), which is a matter of growing concern for
environment; as plastics are non biodegradable the world is looking for ways and means
to dispose off waste plastic efficiently. On the other hand the increasing economic
activity backed by higher GDP growth lead to higher demand of power worldwide.
AEL’s unique technology to convert waste plastic into energy “plastic2power” has a
capability to address the global issue of waste plastic handling. “plastic2power” is not
only equipped to dispose the plastic but is also converting it into energy.
The waste plastics generated in the world every day if converted into power; have a
potential to generate more than 100,000 MW of power (4.8tpd of plastic = 1 MW/Hr) by
using AEL’s technology.
Apart from plastic the process can also be used to convert refinery heavy residue into oil
and the trial run results shows that it gives much higher conversion compared with lower
percentage obtained by using current process. Due to the heavy volume of refinery
heavy residue generated, it can be of huge benefit for oil refineries if they get even a
smaller increase in the recovery.
Lower lead time vis-à-vis other power equipment manufacturers
Normally for a power equipment manufacturer it would take upwards of 24 months to
setup a facility to manufacture power equipment. Whereas in case of plastic2power AEL
requires just ~6 months to set up a equipment production facility with much lower capex
and lesser lead time; which will give the company immense commercial advantage
compared with others.
At present India has a total power generation capacity of ~134000MW of power and
facing a peak deficit of ~13%. The demand of power is growing at a faster rate than the
supply addition backed by the higher GDP and IIP growth. To sustain the robust
economic growth by achieving higher GDP and IIP growth; uninterrupted and adequate
supply of power is must. We expect AEL can play a vital role in this context.
Higher demand of power augurs well for AEL’s plastic2power business
AEL under its plastic2power business will sell equipment for power plants which is based
on a new technology which uses plastic as feed. It plans to sell equipment for a series of
8MW power generating plant and subsequently take up the operations and management
contract for the same. The biggest advantage of this technology is one can set up a 8
MW plant in just 6 months compared with the usual time of 18 - 24 months in case of
other mode of power generation. Along with lower lead time the cost of generation
would be as low as ~Rs 1.80/unit. Other than its economic benefits this business
significantly contributes towards environment protection by using waste plastic as raw
material and convert it 100% into value added product which is used to produce power.
Apart from selling equipment the company can add some other source of revenues to its
segment such as taking up operations and maintenance of the power plant etc. These
options can be explored from time to time.
Govt. thrust on efficient power consumption is a big opportunity for the
growth of ESCO
There is a huge business opportunity for Energy Service Companies (ESCO) in India. Due
to the huge supply deficit of power in India, conservation of power holds big importance.
The recent energy bill states that that all premises & factories having a load > 500 kva
must save 30% energy; to achieve this; they would buy products/services only out of the
ESCO concept. By using ESCO products consumers can save up to 45% on its energy
cost. ESCO industry in India is still at a nascent stage and AEL being the pioneer in the
industry is set to benefit most from the sector growth.
Page 5 of 14
 Asian Electronics Limited (AEL)

Strategic tie ups to drive future growth

Rapidly growing Indian retail, acceptance of structured malls provides an immense
potential for the energy services companies. AEL has recently entered into two JV
Joint ventures to fuel agreements with Future group companies enabling AEL to tap this opportunity.
future growth
AEL also has in place various strategic alliances/JVs, which help the company in making
its products available in the overseas market and also to exploit newer opportunity within
and outside the country.
Lighting div. of Asian Raymold Lighting Pvt. Ltd – Lighting division of Asian
Raymold Lighting Private Limited (Chennai) and which enabled Asian Electronics, to offer
elegant, efficient and high quality luminaries. This division has been merged with AEL.
Global Energy Management - A European company, having exclusive marketing &
sales right for AEL’s ‘Retrolux’ product range in Europe.
Valuations
After assuming that AEL will deliver equipment for 60MW in FY08F and 150MW in FY09F,
Revenue CAGR of 87% we estimate AEL’s revenue and profits to grow at CAGR of 87% and 133% respectively,
(FY07-FY09F) between FY07 and FY09F. Operating margins are expected improving to 36% in FY09F
from current 25% in FY07. We expect ROE to improve from 19% in FY07 to 34% in
FY09F. At CMP of Rs 807 stock is trading at 13.8x FY08F EPS of Rs 58.5 and 6.4x FY09F
PAT CAGR of 133% EPS of Rs 125.3.
(FY07-FY09F)
However we believe that due to huge power shortage, lower setup time and easy
scalability the company can deliver much higher volume (MW) resulting in better
ROE to grow from 19% earnings than estimated.
to 34% by FY09F Given the huge potential in its plastic2power business, immense growth potential in
retail, and inexpensive valuations; we initiate BUY recommendation on the stock.
Being the new technology and evolving business model we will review the
company’s performance quarterly to ensure the pace at which AEL is able to
tap the opportunity.

Risk and Concerns

Plastic2power business is based on the new technology currently not running on
the commercial scale, difficulty in scaling up the plant size may delay the
execution of the business.
Company is still on the finalization mode for the right business mix for
plastic2power business segment, any change in the business model compared
with our expected model would impact the future earnings estimates.
Innovation of any other similar or better technology/process could pose
competition to this business and may impact the future earning estimates.
Due to the new technology and limited public information, we have taken certain
assumption for the purpose of calculating cost, payback, working capital needs,
revenue model, Capital expenditure and funding. Any deviations on the actual
and our assumptions would impact the future earnings.
An unfavorable US$/INR move, rising prices of imported components may impact
the company’s business and in turn may impact the earning estimates.
Competition from the unorganized sector as well as new competition within
organized sector could adversely impact AEL’s performance.
As the business has immense potential, AEL may not be able to capture the full
potential of the business due to the size and other limitations in the short run.
The future earning estimates has been done by taking various assumptions
mentioned in the report any deviation between the actual and the assumptions
may impact the earning estimates.

Sunidhi Research Page 6 of 14

 Asian Electronics Limited (AEL)

Plastic2power

Prof. Mrs. Alka Umesh We met the management of AEL to know about this innovative technology. Later we
Zadgaonkar – The visited Nagpur, where the first plant has been setup and is now used as a research &
Inventor Development facility. We met Dr. Umesh Zadgaonkar the promoter of Unique Waste
Management Limited and discussed about the technology and invention.

Technology
Plastics have become an indispensable part in today’s world. Due to their light-weight,
Recognized in global durability, energy efficiency, coupled with a faster rate of production and design
forums with patented flexibility, these plastics are employed in entire gamut of industrial and domestic areas.
technology, process Plastics are non-biodegradable polymers of mostly containing carbon, hydrogen, and few
and catalyst other elements such as chlorine, nitrogen etc. Due to its non-biodegradable nature, the
plastic waste contributes significantly to the problem of Municipal Waste Management.
According to a nation wide survey, conducted in the year 2004, approximately 10,000
tones (ten thousand tones) of plastic waste were generated every day in India, and only
60% of it was recycled, balanced 40% was not possible to dispose off. So gradually it
goes on accumulating, thereby leading to serious disposal problems.

Prof. Mrs. Alka Umesh Zadgaonkar, Head of Department of Applied Chemistry at the
Nagpur based G.H. Raisoni College of Engineering invented an Environment friendly
catalytic process for disposal of waste plastic.
The invented process involves degradation waste plastic using `catalytic-additive’. Under
this process individual as well as mixed plastics were successfully converted in to fuels.
The products obtained in the process are Liquid hydrocarbons, Gas and residual Coke.
The heart of the technology is the Catalyst (Patented) which is being used into the
reactor and mixed with melted plastic to get the desired output.

Zadgaonkar’s Process: (Plastic 2 Hydrocarbon)

The waste plastic is sorted based on physical properties such as, hard, soft, films
etc. Size reduction of the sorted feed is carried out using crusher, cutter and
shredder.
The graded feed is mixed and fed to Melting Vessel through a pre heater feeder.
In Melting Vessel, the feed is heated to 175-250 0C.
The melted plastic then goes into reactor where the Catalytic Additive is mixed.
Post reaction the impurities such as hard metal, clay, sand, glass etc. settles in
the bottom of the reactor, and the processed plastic goes into condenser for
cooling off.
Once the outcome is cooled off it results into Liquid Hydrocarbon and LPG
(Higher Ethylene content) which in turn stored into separate storage devices and
can be used for generating power.

Sunidhi Research Page 7 of 14

 Asian Electronics Limited (AEL)

The process

Output Yield Data

The major process parameters and product yields are given in Table below. The evolved
No waste generated vapors are condensed to collect gas and liquid products.

The product yields Quantity (wt %)

Gas 10-20
Liquid hydrocarbons 60-80
Residue (coke) 7-10

Sunidhi Research Page 8 of 14

 Asian Electronics Limited (AEL)

Economies and working of the plant

Operating Effeciency 85%

1 Kg / Plastic (@ 85% PLF) 5.00 Kwh of power
1 MW plant (@85% PLF) 7.45 mn Kwh / annum
8 MW Plant (@85% PLF) 59.47 mn Kwh / annum
4.8 tonnes per day 1 MW/ hour
33 tonnes per day 8 MW/ hour
Sale Price Rs / Kwh 4.50 For a 8 MW Plant
Cost Rs / Kg Sales Value Rsm (8 MW) 267.61
Plastic Rs 3.50 EBITDA Rsm / 8 MW 160.56
Catalytic Additive 2.50
Labour costs 2.00 Capital Investments 8 MW Plant
Cost of generation 0.50
Misc. 0.50 Plant & Machinary, Rsm 480
Other Assets, Rsm 20
Cost Rs / Kg of plastic 9.00 Total Investment Rsm 500
Cost Rs / Kwh 1.80 Debt (70%) (@12.5%p.a) 350
EBITDA Rs / Kwh 2.70 Equity (30%) 150
Source : Sunidhi Research

Pay Back Calculation (Rsm)

Year 1 2 3 4 5 6
Value of assets 500 400 300 200 100 0
Depreciation @ 20% 100 100 100 100 100 0
Loan Amount 350 280 210 140 70 0
Loan Repayment for 5 years 70 70 70 70 70 0
Interest @12.5% p.a 44 35 26 18 9 0

EBITDA Rsm 161 161 161 161 161 161

Depreciation 100 100 100 100 100 0
Interest 44 35 26 18 9 0
PBT 17 26 34 43 52 161
Tax % @35% 6 9 12 15 18 56
PAT 11 17 22 28 34 104

Cash Profit 111 117 122 128 134 104

Loan Repayment 70 70 70 70 70 0
Cash Balance 41 87 140 198 261 366

Networth 161 177 200 228 261 366

ROE % 7% 9% 11% 12% 13% 29%

Total Liablity 441 387 340 298 261 366

Total Assets 441 387 340 298 261 366
Source : Sunidhi Research

Note: To calculate the pay back period we have not taken any tax benefits the power generation unit would entitle to. We have also
not considered the possibility to get carbon credits in the future. By considering these benefits the payback period will get substantially
reduce.

Sunidhi Research Page 9 of 14

 Asian Electronics Limited (AEL)

Competitive advantage

plastic2power compared with other mode of power generation

plastic2power Wind Thermal Hydel Nuclear
Energy Energy Energy Energy

Plant Load Factor (PLF) Above 85% 25% - 32% 70% 30% - 40% High
Continuous Supply Available Not Available Available Not Available Available
Gestation Period Below 6 Months 3 - 6 Months 4 Years 5 Years 8 Years
Capital Cost / MW Rs. 60mn Rs. 60mn Rs. 45mn Rs. 35mn High
Renewable Source Yes Yes No Yes No
Residual Waste None None High None High
Payback Period 5 Years* 7 Years 15 Years 10 Years > 10 Years
Source : Company & Sunidhi Research, * Payback is arrived without taking tax enefits and carbon credit income.

Sunidhi Research Page 10 of 14

 Asian Electronics Limited (AEL)

Valuations Summary FY04A FY05A FY06A FY07A FY08F FY09F

Revenues, Rsm 832.4 1041.1 1561.092 3674.5 6533.5 12815.9
growth, % 25% 50% 135% 78% 96%
EBITDA, Rsm 191.3 209.0 331.2 900.8 2181.6 4612.3
Net profit, Rsm 38.1 124.0 256.0 665.1 1692.2 3625.7
growth, % 225% 106% 160% 154% 114%
EPS, Rs 4.5 14.6 28.6 47.8 58.5 125.3
CEPS, Rs 15.7 23.7 38.0 54.3 63.5 131.9
P/E, x 180.1 55.3 28.2 16.9 13.8 6.4
P/Bv, x 6.1 6.5 5.3 3.2 3.1 2.2
EV/EBITDA, x 36.1 33.1 22.6 13.4 10.4 5.2
Mcap/Sales, x 28.1 22.4 15.0 6.4 3.6 1.8
Dividend Payout, % 40% 15% 10% 11% 10% 9%

Key Ratios FY04A FY05A FY06A FY07A FY08F FY09F

OPM % 23% 20% 21% 25% 33% 36%
NPM % 5% 12% 16% 18% 26% 28%
ROE % 3% 12% 19% 19% 23% 34%
ROA % 2% 6% 8% 13% 20% 25%
D/E x 0.6 0.8 1.2 0.5 0.1 0.3
Asset Turnover Ratio x 0.8 0.9 1.3 2.8 3.3 5.0

Growth Ratios FY05A FY06A FY07A FY08F FY09F

Income growth 25% 50% 135% 78% 96%
Operating Profit growth 9% 58% 172% 142% 111%
Earnings growth 225% 106% 160% 154% 114%
Source : Company & Sunidhi Research

Income Statement
Rsm FY04A FY05A FY06A FY07A FY08F FY09F

Revenues 832.4 1041.1 1561.1 3674.5 6533.5 12815.9

Inc/Dec in Stock 0.0 0.0 0.0 0.0 0.0 0.0

Raw Materials 199.5 397.0 764.0 1781.5 2482.7 4741.9
Manufacturing Expenses 72.9 96.4 146.0 195.2 708.6 1286.7
Employment Costs 41.3 64.8 64.3 138.8 180.5 252.6
Administrative expenses 327.4 273.9 255.7 658.2 980.0 1922.4
Operating Expenditure 641.1 832.1 1229.9 2773.6 4351.8 8203.6

Operating Income 191.3 209.0 331.2 900.8 2181.6 4612.3

Other Income 64.4 57.3 70.9 126.1 100.0 100.0

Gross Profits 255.7 266.3 402.0 1026.9 2281.6 4712.3

Finance and Interest Costs 85.5 76.1 92.5 166.3 144.0 255.0
Depreciation 95.7 77.4 84.0 90.1 146.8 191.8

Profit Before Tax 74.5 112.8 225.5 770.6 1990.8 4265.5

Tax 31.8 4.2 -26.0 104.4 298.6 639.8

Profit after Tax 42.7 108.6 251.5 666.2 1692.2 3625.7

Extraordinary items 4.6 -15.4 -4.5 1.1 0.0 0.0

Net Profit 38.1 124.0 256.0 665.1 1692.2 3625.7

Source : Company & Sunidhi Research

Sunidhi Research Page 11 of 14

 Asian Electronics Limited (AEL)

Balance Sheet
Rsm FY04A FY05A FY06A FY07A FY08F FY09F
Sources of Funds

Equity Share Capital 85.0 85.0 89.4 139.1 289.4 289.4

Reserves & Surplus 1035.2 954.6 1282.6 3394.8 7176.6 10472.3
Net Worth 1120.2 1039.6 1372.0 3533.9 7466.0 10761.7

Secured 614.1 832.4 974.6 1150.4 350.4 1350.4

Unsecured 24.5 14.0 613.3 499.7 399.7 2149.7
Loan Funds 638.6 846.4 1587.9 1650.1 750.1 3500.1

Deffered Tax Liabilty 116.4 111.9 64.1 64.2 64.1 64.1

Total Liability 1884.0 2006.7 3024.0 5248.3 8280.3 14326.0

Application of Funds

Gross Block 1085.2 1148 1180.3 1322.5 1957.2 2557.2

Less: Depreciation 430.3 504.5 585.3 674.5 821.3 1013.1
Less: Impairment 0.0 156.9 156.9 156.9 156.9 156.9
Net Block 654.9 486.6 438.1 491.1 979.0 1387.3
WIP 84.5 0.2 108.2 334.8 300.0 100.0
Net Fixed Assets 739.4 486.8 546.3 825.8 1279.0 1487.3

Investments 0.3 2.2 2.2 42.3 42.3 42.3

Current Assets
Inventories 345.3 465.0 675.8 1045.3 1969.0 4037.9
Debtors 477.4 572.2 957.2 3403.4 5012.0 9129.2
Cash and Bank 69.1 77.8 363.2 32.6 137.6 50.6
Loans and Advances 534.6 705.4 965.9 714.7 1342.5 2809.0

Current Liabilities 249.9 258.6 416.5 707.9 1432.0 3160.1

Provisions 32.2 44.1 70.1 108.6 70.1 70.1
Net Current Assets 1144.3 1517.7 2475.5 4379.5 6958.9 12796.4

Misc Expnses 0.0 0.0 0.0 0.7 0.0 0.0

Total Assets 1884.0 2006.7 3024.0 5248.3 8280.3 14326.0
Source : Company & Sunidhi Research

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 Asian Electronics Limited (AEL)

Cash flow statement

Rsm FY05A FY06A FY07A FY08F FY09F

Cash flow from operations 201.4 340.0 755.2 1,839.0 3,817.5

Cash for working capital (364.7) (672.4) (2,234.6) (2,474.5) (5,924.5)
Net operating cash flow- A (163.3) (332.4) (1,479.4) (635.5) (2,107.0)

Net purchase of fixed assets 21.5 (140.3) (368.7) (600.0) (400.0)

Net Purchase of investments (1.9) - (40.1) - -
Net cash flow from investing- B 19.6 (140.3) (408.8) (600.0) (400.0)

Proceeds from equity 0.0 92.3 1,571.4 2,404.9 (0.0)

Proceeds/Repayments from borrowings 170.7 691.8 62.4 (899.4) 2,750.0
Dividend payments (18.3) (26.0) (76.3) (165.0) (330.0)
Net cash flow from financing- C 152.4 758.1 1,557.6 1,340.5 2,420.0

Net cash flow (A+B+C) 8.7 285.4 (330.6) 105.0 (87.0)

Opening Cash 69.1 77.8 363.2 32.7 137.6

Closing Cash 77.8 363.2 32.7 137.6 50.6
Source : Company and Sunidhi Research

Assumptions

AEL is going to generate revenue under Plastic2power business only by selling

the equipment; however other revenue streams may also get added in future.
As the business is on the evolving stage we have considered sale of equipment
for 60MW in FY08F and 150MW in FY09F. However the company can deliver
much higher volume growth as shared with media by the company in past.
(800MW in 3 years: CNBC)
The company is in talks for various joint ventures and operating contracts. In the
absence of details we have not considered those business opportunity for our
working.
Our future projections are AEL’s standalone performance where we have not
considered any revenue coming from JV with Cimelia.

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 Asian Electronics Limited (AEL)

Quaterly Income Statement

Rsm Q1FY08 Q1FY07 YOY Q4FY07

Net Sales 839 537 56% 1502

Expenditure
Inc/Dec in stock 19 -5 51
Raw Materials 274 289 -5% 687
% to sales 35% 53% 49%
Staff Cost 41 24 74% 61
% to sales 5% 4% 4%
Other expenditure 113 114 -1% 258
% to sales 13% 21% 17%
Total Expenditure 448 423 6% 1057

EBITDA 391 115 241% 445

Other Income 7 16 13

Gross Profit 398 131 204% 458

Interest 51 32 40
Depreciation 25 21 25
PBT 322 78 315% 393
Tax 37 15 78
PAT 284 63 355% 316

Equity, Rsm 145 89 143

No of Shares,mn 15 9 14
EPS, Rs (Annu.) 78.3 28.0 88.0

OPM, % 46.6% 21.4% 29.6%

NPM, % 33.1% 8.7% 20.1%
TAX, % 11.5% 19.4% 19.8%
Source : Company & Sunidhi Research

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