Narsingh Equity - Aishwarya Telecom Ltd IPO Detailed Analysis

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·Aishwarya Telecom Ltd. (ATL) acquired the partnership firm named Advanced Electronics & Communications System & was incorporated as Aishwarya Telecom Pvt. Ltd. in 1995.It was converted into public company to the present in July 2005.
·ATL’s engaged in trading and manufacturing of test & measuring equipments for telecom industry. The product portfolio can be classified into three categories namely-
                          a) fiber optic cable testing equipments,
                          b) copper cable testing equipments,
                           c) data network testers.
·ATL manufactures products for telephone service providers, defence sector, railways, telecom equipment manufacturing companies and cable TV operators.
·ATL has wide range of products with telecom engineering center (TEC) approval for selling to public sector undertakings like BSNL, Railways, Railtel, MTNL, TCIL, GAIL, PUNCOM etc.
·ATL has a small R&D facility at Hyderabad, manufacturing units each at Dehradun and Yanam and three marketing offices at Delhi, Mumbai and Hyderabad.
·The company plans to expand into designing products for defence & educational sector & proposes to set up a corporate, marketing, administrative office and R&D centre and also a new production unit at Hyderabad.
·Post issue promoters & promoter’s group shareholding will reduce to 46% from existing 73%.

· To fund the capital expenditure for research & development of Main Frame OTDR in collaboration with IIT, Chennai.
· To fund the capital expenditure for research & development of ethernet traffic analyzers.
· To fund the cost of Global System for Mobile Communication (GSM)/ General Packet for Radio Service (GPRS)/Code Division Multiple Access (CDMA) analyzers for providing technical audit services to the mobile operators.
· To purchase land & construct building for new corporate, marketing, administrative and R&D office at Hyderabad.
· To purchase land & construction of building for a new production unit at Hyderabad.
· To meet additional working capital requirements for its operations.
·To meet issue related expenses and general corporate purpose.

·Company’s operating income increased at a CAGR of 53% from Rs.4 crores for FY03 to Rs.22 crores for FY07. For the nine months ended 31st December, 2007 operating income stood at Rs.22 crores.
·Net profit has increased at a CAGR of 94% from Rs.0.2 crores for FY03 to Rs.3 crores for FY07. For the nine months ended 31st December, 2007 its net profit stood at Rs.3 crores.
·NPM in FY07 has increased to 14% from 5.35% in FY03 due to increase in operating income. For the nine months ended 31st December, 2007 it stood at 14%.
·Staff cost to operating income has decreased to 4% in FY07 from 10% in FY03 due to efficiency in controlling staff cost. For the nine months ended 31st December, 2007 its staff cost stood at 3.9%.
·Debtors’ turnover ratio in FY07 was decreased to 2.3 times from 8.76 times in FY03.Collection period in FY07 was increased to 159 days from 42 days in FY03.
·Interest coverage ratio in FY07 was decreased to 7.3 times from 10.7 times in FY06 due to substantial increase in interest expenses.
·RONW of the company in FY07 was decreased to 33% in FY07 from 36% in FY05 due to issue of shares. Till 31st December, 2007 it stood at 19%.
·Book value per share in FY07 was increased to Rs.17.3 from Rs.12.8 in FY04.