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Artson Engineering
Set to become a Tata group company?
Once the Tata Projects take majority stake in the company, it can go places
| Artson Engineering |
| 522134 |
| Not listed |
| ART@IN |
| ARTS.BO |
| Rs 61 / Rs 17 |
| Rs 42(as on 18th April 2007) |
Artson Engineering (AEL) was established in the year 1978 by three technocrats. At the time of the establishment of the company, in 1978 the refineries had started using Bombay High Crude, which gave a waxy product called Low Sulphur Heavy Stock ( LSHS) , as residual fuel oil. LSHS has very high pour point. Artson did pioneering work and developed products and systems to convert the existing fuel firing systems of industry to make it suitable to use LSHS. AEL has successfully commissioned on turnkey basis more than hundred such fuel systems in the country. This led to AEL being one of the foremost companies in the country, specializing in petroleum storage and handling systems. This expertise was then expanded and AEL also executed overseas projects.
Niche engineering company focused on oil and gas sector
Artson offers multi-disciplinary design and construction services in mechanical, civil, electrical and instrumentation field. It also offers turnkey services in petroleum storage and handling systems, plant utilities, diesel powerhouse, energy conservation, waste heat recovery systems etc..
It also has a manufacturing unit, located at Nasik, Maharashtra. The unit is engaged in the manufacturing of Heat Exchangers, Fin Fan Coolers, Pressure Vessels, LPG Bottling Plant Equipments, Bullets and other Chemicals Process Equipments.
A few of Artson`s esteemed clients are IOCL, HPCL, IPCL, Lubrizol, L&T, Reliance Industries etc. The Company has also supplied equipments related to power projects to reputed clients like BHEL, NTPC, MSEB, Uri Civil, Enercon etc.
In future the company plans to focus on the construction methodology with particular emphasis on prefabrication. This will reduce site work as well as improve quality. It has also marked out the oil & gas, power and food processing sectors as its core competencies and has been pursuing enquiries for various infrastructure projects in these areas, from India and abroad.
Tatas to take majority stake to bring the company out of BIFR
The company is a BIFR company. Failure of Essar Refinery, Jamnagar was responsible for the sickness of the company. The company lost nearly Rs 17 crore because it could not recover payments for work done for this project.
However things are changing now. The package of BIFR on debt segment has been approved and as a result of which out of the total debt of Rs 40 crore, debt worth Rs 22 crore has been waived of. The remaining debt of Rs 18 crore has to be paid off in some 5 years without any interest.
Another BIFR proposal regarding the equity contribution in the company is pending. This proposal is basically a restructuring package wherein Tata Projects will be acquiring a controlling majority stake in the company. The company expects the same to be done before September 2007. Current promoters’ stake is just 13% and they are unlikely to bring in additional money.
While the company is technically capable, it is suffering due to working capital constraints. Hence it had to forego many orders. However, now it has already started working in association with Tata Projects, which will help it bag and execute many large orders.
Accumulated losses as on September 2006 stands at Rs 12.5 crore against equity of Rs 9.2 crore. Artson expects positive net worth by Sep’07 once the Tata Projects take a stake in the company.
Order book improving and will jump going forward
The order book of the company stood at Rs 42 crore as on October 2006 of which orders worth Rs 10 crore are currently in various stages of completion and orders worth Rs 25 crore are left over as on Mar’07. The current order book includes orders from Reliance worth Rs 20 crore.
AEL expects new orders worth Rs 25 crore to come from Enox, UAE soon. The domestic profit margin stands at around 10% while the project of Enox, UAE is worth PAT margin of 15%.
Artson Engineering and Tata Projects together have bid for contracts worth Rs 300 crore. The company gets the brand advantage of the Tata group along with working capital support. The company already has the technological capability, what it was lacking was the funding arrangements, which Tata Project will provide for. On the other side, Tata Projects will get the ready technology and experience to set up tanks and terminals abroad where margins are high.
Financials already showing encouraging trend
Already its on a strong turnaround path. For the quarter ended December 2006, its sales soared 194% to Rs 10.07 crore. OPM soared from 15.2% to 20.4%. Thus OP was up 294% to Rs 2.05 crore. PBT was up 371% to Rs 1.93 crore and PAT was up 366% to Rs 1.91 crore.
In FY 2007 (ending September 2007) we expect the company to register sales and net profit of Rs 35.25 crore and Rs 6.42 crore respectively (without considering any provisions for overdue debtors, which may be made at the year-end depending on outcome of various arbitration cases). On equity of Rs 9.23 crore and face value of Rs 10 per share, EPS works out to Rs 7.0. The share price trades at Rs 42. P/E works out to just 6.
| |
0309 (6) |
0409 (12) |
0509 (12) |
0609 (12) |
0709 (12P) |
| Net Sales |
4.19 |
3.52 |
13.53 |
13.86 |
35.25 |
| OPM (%) |
-76.4 |
-98.6 |
24.3 |
-6.8 |
20.0 |
| OP |
-3.20 |
-3.47 |
3.29 |
-0.94 |
7.05 |
| Other inc. |
0.09 |
0.22 |
0.86 |
0.24 |
0.19 |
| PBIDT |
-3.11 |
-3.25 |
4.15 |
-0.70 |
7.24 |
| Interest |
3.22 |
0.02 |
0.00 |
0.19 |
0.00 |
| PBDT |
-6.33 |
-3.27 |
4.15 |
-0.89 |
7.24 |
| Dep. |
0.34 |
0.61 |
0.54 |
0.50 |
0.49 |
| PBT |
-6.67 |
-3.88 |
3.61 |
-1.39 |
6.75 |
| EO |
|
|
-1.45 |
|
|
| PBT after EO |
-6.67 |
-3.88 |
2.16 |
-1.39 |
6.75 |
| Tax |
0.00 |
0.00 |
0.57 |
0.01 |
0.34 |
| PAT |
-6.67 |
-3.88 |
1.59 |
-1.40 |
6.42 |
| EPS* (Rs) |
-ve |
-ve |
2.9 |
-ve |
7.0 |
* Annualised on Current equity of Rs 9.23 crore; Face Value: Rs 10
(P): Projections
Figures in Rs crore
Source: Capitaline Corporate Databases |
| |
0612 (3) |
0512 (3) |
Var. (%) |
0609 (12) |
0509 (12) |
Var. (%) |
| Sales |
10.07 |
3.43 |
194 |
13.86 |
13.53 |
2 |
| OPM (%) |
20.4 |
15.2 |
|
-6.8 |
-26.7 |
|
| OP |
2.05 |
0.52 |
294 |
-0.94 |
-3.61 |
74 |
| Other inc. |
0.00 |
0.00 |
-- |
0.24 |
6.34 |
-96 |
| PBIDT |
2.05 |
0.52 |
294 |
-0.70 |
2.73 |
PL |
| Interest |
0.00 |
0.00 |
-- |
0.19 |
0.03 |
533 |
| PBDT |
2.05 |
0.52 |
294 |
-0.89 |
2.70 |
PL |
| Dep. |
0.12 |
0.11 |
9 |
0.50 |
0.54 |
-7 |
| PBT |
1.93 |
0.41 |
371 |
-1.39 |
2.16 |
PL |
| Tax |
0.02 |
0.00 |
100 |
0.01 |
0.57 |
-98 |
| PAT |
1.91 |
0.41 |
366 |
-1.40 |
1.59 |
PL |
| EPS* (Rs) |
8.3 |
1.8 |
|
- |
1.7 |
|
* Annualised on Current equity of Rs 9.23 crore; Face Value: Rs 10
(P): Projections
Figures in Rs crore
Source: Capitaline Corporate Databases |
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