Asian Electronics Ltd.(AEL) is into design, manufacturing and marketing of energy efficient products. It offers efficient and high quality luminaries for applications in the domestic, corporate, industrial, floodlighting, landscaping areas and for special applications as in clean rooms in the pharmaceutical industry.

Current Price – Rs.1028

Market Cap – Rs. 1475 Crs

EPS – Rs.47.87 for FY07 (Rs.28.13 for FY 06)

In early July, AEL acquired Green Hydrocarbons Pvt.Ltd and the operations division of US Intruments Pvt. Ltd. The company has also formed a joint venture with Cimelia Resource Recovery Pte.Ltd, a 100% subsidiary of Enviro Hub Ltd., listed on the Singapore Stock Exchange. What is AEL gameplan? Green Hydrocarbons is in the business of converting waste into energy. According to AEL, the conversion can be 100%. AEL expects that in the next two-three years it can generate 800 MW of energy from this process, which will add more than Rs.1000 crore of revenues. Cimelia deals with e-waste management. Spread over 200,000 sq. ft it is the largest e-waste management facility in Singapore with a capacity to recycle about 25000 tonnes of e-waste per annum. This JV will combine AEL’s plastic-to-fuel technology with the strong corporate brand name of Cimelia to sell this technology in eight eight countries from Far East Asia to Brazil.

This technology is not a pie in the sky. It has been developed by Prof Alka Zadgaonkar, head of Dept. of Applied Chemistry at the Nagpur based GH Raisoni College of Engineering. She has invented an environment friendly process for disposal of waste plastic by using ‘catalytic-additive’ which is different from the generally existing pyrolytic processes. The process yielded liquid hydrocarbons, gas and residual coke. This process was subsequently tested and enhanced by the R&D department of Indian Oil Corporation and applied on a commercial basis with funding from SBI. AEL is making machinery for this breakthrough project. The patented process has undergone rigorous testing to ensure zero emission. The process operates in a closed loop and is therefore 100% eco-friendly, causing no pollution in any form to the environment. The hydrocarbon generated is apparently very rich in calorific value. It has as much as 11000 kcal in liquid form and upto 25000 kcal in gaseous form, totaling approx. 13000-14000 kcal per kg of plastic. It can be used for generation of power or for transportation with modification. It can also be used for downstream operation in refineries or in the plastic industry. AEL has two JVs with Home Solutions (Future Group)

Meanwhile, AEL’s lighting business is doing very well. It had an order book of Rs.400 crore as the end of its March quarter. Its recent growth has been very strong with revenues growing at an average of 88% over the past fice quarters while operating profit grew by 78% over the same period. AEL’s operating margin is healthy 19%. For the year ended March 07, AEL’s turnover had jumped 140% and net profit was up over 165%.

Given the high price of oil and rising cost of all forms of energy, energy saving is a hot area. AEL is the only listed company focused on technology driven energy efficient products. And now, if this plastic to energy technology turns out to be viable on a larger commercial scale, the stock can go a long way.

ABN AMRO MF seems to be the most bullish on this stock.

For more visit http://www.aelgroup.com/ - http://www.aelgroup.com/

Source: Moneylife

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Comments welcome from TEDdies...I know us121 and kaizen are holding this stock..

Excerpts from CNBC-TV18’s exclusive interview with Suresh Shah:

Q: Where did the key growth driver come in for you?

A: We have just acquired a company, which is in the energy business. We were already in the energy business and this is now producing energy.

Previously, we were doing only energy saving; now we are producing energy and that is the driver.

Q: What was the cost of this acquisition that you did and by when will you completely integrate the company with yourself?

A: As far as cost of acquisition to Asian Electronics is concerned, the board has approved the acquisition subject to valuation and valuation has been given to independent agencies.

Q: Is this going to be funded by the USD 60 million that the board has approved, in terms of funding in April 2007, or are you going to raise some fresh funds to fund this?

A: We are going to do the stock swap. We do not know what the valuation is yet, but whatever the valuation is, Asian Electronics is acquiring the rights for this technology.

Q: What are the sales and profits of this company?

A: This is a start up company, which has a pilot operation and was producing diesel from plastic waste. Plastic waste is converted into green hydrocarbon and that is how we are converting it into plastic.

Plastic is made from hydrocarbons and here is the process whereby plastic is converted back to hydrocarbons. So, the cost of energy, which we produce, will be much less compared to normal diesel or normal petrol. 

Q: What does this amalgamation mean in terms of your results for the next financial year?

A: I cannot comment on the numbers yet but it will be quite substantially good for the next financial year.

Q: Would it be fair to imagine that you could possibly double your topline in FY08?

A: Probably or more than that.

Q: What is your current orderbook as it stands right now and in how long is that executable?

A: We have been talking to people for the current order book. This is a new technology and we have already sold about Rs 150 crore worth of products. Orders have been executed already.

Q: What is the total standing order that you will execute over the next 18-20 months?

A: We are looking at something like 800 megawatt in next three years. One megawatt is just like a windmill, one megawatt is about Rs 5-6 crore.

Q: How do you intend to go ahead and raise USD 60 million and how soon?

A: Instead of raising the money, we are buying this technology through the stock swap. That means we are acquiring this technology and are issuing Asian shares.

Devesh ji,

He holds exact 1% (1,50,000 shares) in AEL.

A PE-rerating could happen as it seems cheap at TTM. Thank you very much for the information Devesh ji, appreciate it really!

Devesh, interesting idea

But I will try to play devil’s advocate here  with few posers

What is the connection between Asian Electronics, Green Hydrocabons  and the inventor of the technology,Professor Alka Zadgaonkar of the Raisoni College of Engineering, Nagpur.  Infact she has floated her own company Unique Waste Plastic Management & Research Co. Pvt.  Ltd. Really the technology is with her and Asian Electronics is merely proposing to manufacture the equipments. The really work in the conversion is done by the catalytic additive which is known only to the inventor.

So moat in this case lies with the inventor and not Asian Electronics

Asian Electronics management also was not very forthcoming with the valuation for acquiring Green Hydrocarbons in the interview with CNBC.

The conversion is yielding  liquid hydrocarbons which can be used as a substitute forDiesel. The present proved commercial capacity of the conversion plant is only 5 MTof plastic waste. Looking at this, the figure of 800 MW is suspect, plus the revenue at5 to 6 crores per MW  that supposedly will accrue to Asian Electronics is also highly suspect. Keeping in mind that it is really catalytic additive which is key , most of the revenue should accrue to the inventor.

Also the conversion process itself will consume some amount of energy, so it appearsto me that is more of a solution for disposal of plastic waste ( which is great no doubt)rather than a panacea for energy shortage.

What is this Green Hydrocarbons, google search is leading me no to no company website but only to one  article which I will post here.

Plastic: Is it the new black gold?

By: Andre Lee     

 Imagine a process able to clear our environment of plastic wastes, creating jobs in waste management at the same time producing resources such as petrol. Mauritius is on its way to embarking on a similar project to turning plastic waste into petrol.

According to the report from the Ministry of environment, Mauritius produces some 120 tons of plastic wastes daily amounting to a total of 43,800 tons of waste every year of which only 4%, representing some 164 tons, are recycled. In 2006, the population’s consumption of non-biodegradable plastic products amounted to some 70 million Polyethylene Terephthalate (PET) bottles, 7 million PVC bottles, and 113 million plastic bags.

Now just imagine a process able to clear our environment of plastic wastes, creating jobs in waste management and collection and at the same time bringing useful resources such as petrol and gas, which can be beneficial to our economy. The Liquid Hydrocarbons pilot project proposed by the Green Hydrocarbons (Mtius) Ltd has the ambitious desire of turning our plastic wastes into hydrocarbon petrol.

The environment friendly project, realized with the collaboration of the initiators of the project in India, Unique Waste Plastic Management & Research CO. Pvt. Ltd., will enable Mauritius to get rid of its plastic wastes while at the same time providing resources such as petrol. The initiator of the project will bring all the technology and equipment necessary for the setting of the pilot plant while the government, in collaboration with Green Hydrocarbons Ltd., will provide the necessary location and licenses.

The ratio of the conversion of the plastic waste into petrol is one kilogram of plastic into the volume of 1000 cc of petrol. The pilot project will hence be converting some 2.5 tons of plastic wastes daily into some 25,000 liters of petrol and other by-products. This project is a green alternative to the palliative solutions that have been found so far to deal with plastic wastes. Land filling, incineration, recycling, gasification and blast furnace have shown their limits in the treatment of plastic wastes.

Recycling is unfortunately not a practical solution in that the cost of collection is quite high; there is a limited market for it, with an absence of marketing. Moreover, plastic can only be recycled three to four times, after that it loses its strength and can’t be recycled. The project realized with the collaboration of Indian partners is due to start in the course of the year 2007, once the EIA obtained.

Beginnings

The concepts of plastic conversion into hydrocarbons was elaborated by Professor Alka Zadgaonkar of the Raisoni College of Engineering, Nagpur in Indian, in the year 1995. While giving a lecture on Applied Chemistry, she came up with the idea of turning plastic back into hydrocarbons. She worked with a team on the formula and in 2004; they succeeded in turning 300mg of plastic into hydrocarbon liquids

Unique Waste Plastic Management & Research Co. Pvt. Ltd of India later launched a pilot project where some 5,000 tons of plastic wastes were converted everyday. The process was later extended to treat 25,000 tons daily in 2006 and the objective of the project is to treat some 450,000 tons. She asked for analysis by Indian Oil and made a number of recommendations for the use of the final products.

After about one year of operation, the project was realized with the help of loans. Representatives of the State Bank of India acknowledged that the project is already running on profit, thus proving the efficiency of the method. The world produces no less than 60% more plastic wastes than it did some ten years back with a production of 100 million tons every year. India produces 10,000 tons of plastic wastes everyday which 40% are recycled.

This project has enabled India to better manage the country’s plastic wastes while at the same time creating jobs. Actually India sells its hydrocarbon at 40% to 50% less than normal diesel. The technology is presently being exported to other regions such as Rajasthan and even to America; for instance, some hospitals are being operated using their own wastes.

The investments for the pilot project in Mauritius are estimated to around 100 to 300 millions Rupees. Land filling, incineration and recycling 4% are presently being used but they do not resolve the problem of environmental damage caused by plastic. The Waste to Compost project, will however give a new dimension to the processing of plastic in that hydrocarbon and the other by-products used as compost

André Lee is the Internet Marketing consultant, Advisors to Tour Operators and Ticketing Agents. More of his articles are available at http://mauritravel.com/ - http://mauritravel.com/ - http://mauritravel.com

Article Source: http://www.articlebiz.com/ - http://www.ArticleBiz.com

Link: http://www.articlebiz.com/article/69721-2-plastic-is-it-the-new-black-gold/

What is the connection between Asian Electronics, Green Hydrocabons  and the inventor of the technology,Professor Alka Zadgaonkar of the Raisoni College of Engineering, Nagpur.

It seems that Asian Electroncs has acquired the patented-waste plastic to fuel technology (uses the Alka Zadgaonkar process) in December 2006 going by this artice in DNA Money.

It does not mention the cost, I am surprised why would the inventor sell if the technologyhas so much potential. Are there any royalty payments ?

When the market has given an average return of 8.54% from January 2007 till date, a return of 124% is more than appealing. A case in point is Asian Electronics (AEL), which manufactures energy efficient lighting products. The stock delivered returns to the extent of 57.98% in the last one month itself.

Expectations of good results and developments that could place the company in the big league seem to be the reasons behind the dramatic rise in AEL’s stock.

On July 5, AEL reported its performance for quarter ended March 2007 (Q4) wherein revenues shot up 162.15% to Rs 150.21 crore. To an extent, the growth is also on account of the merger of the lighting division of Asian Raymond Lighting Pvt Ltd. Even otherwise, the performance is good, thanks to the lighting segment, which did very well and reported a 91% growth in revenues

Further, AEL is expanding its scope from lighting to other services in the energy space. It acquired the patented-waste plastic to fuel technology (uses the Alka Zadgaonkar process) in December 2006. The Zadgaonkar process is a unique technique by which plastic waste can be converted into hydrocarbons (fuel) for generating power or with some modification can be used in downstream operations in refinery or by the plastic industry.

AEL sold 24 MW plants in Q4, which contributed Rs 142 crore to revenues. Total expenditure for Q4 rose at a relatively slower pace by 108.83% and thus, operating profit margins were up 1,797 percentage points to 29.63%.

In April 2007, AEL announced the acquisition of Green Hydro Carbons Pvt Ltd, which is also in the business of converting waste to fuel and is the operational division of US Instruments Pvt Ltd.

AEL also announced a joint venture (JV) with a publicly-listed Singaporean company, Enviro-Hub. With this, AEL plans to take its waster-energy business offshore to 8 more countries along with Singapore. The JV, to be formed through Cimelia, a 100% subsidiary of Enviro-Hub, fits well with AEL’s innovative fuel technology. Cimelia has a good brand name in the recycling industry and e-waste management; its e-waste management business has a turnover of around Singapore $100 million.

Over a period of three years, the company expects to sell 800 MW plants. Girish Solanki, analyst, Angel Broking says, “Even if we assume that the company sells these plants at Rs 5 crore each. It means the total revenue will touch Rs 4,000 crore.” The company management, though, expects revenues to double in the next one year.

At Rs 1,001, the stock trades at 19.6 times its consolidated 2006-07 earnings. The company’s recent move to split the stock (2:1 ratio) will improve liquidity and, is seen as a positive move by markets.

Source : dnaindia.com

Another article from DNA Money, this one was

in Oct,2005

Now in Nagpur: Fuel from plastic waste

Jaideep Hardikar

Monday, October 24, 2005  01:01 IST

NAGPUR: Fuel from plastic waste is a reality — a commercial reality.  The Unique Waste Plastic Management and Research Company Pvt Ltd of Dr Alka and Umesh Zadgaonkar, is producing 5,000 litres of fuel from plastic trash and running a profitable business of selling it to industrial units in Butibori, outside the city.

Away from the public gaze and doubting Thomases after their public claims in 2003, the Zadgaonkars have been producing fuel from plastic waste since March this year. If they have not made a noise about it, it’s because they are drowning in business enquiries and expansion plans. By December, they want to expand capacity five-fold to 25 MT  of plastic waste (25,000 litres daily) — and ultimately grow it to 450 MT.

The couple set up the plant at the industrial estate here in 2004 with a Rs5.5 crore loan from the SBI. Industrial units in the area are running their captive power plants on this fuel and are happy with its pricing and performance. The Zadgaonkars’ fuel (it’s not yet been given a name) is priced at Rs30 per litre, Rs8 less than diesel.

Though it is not yet vehicle-ready, the fuel scores over petrol/diesel because it ignites  faster. Besides, several test reports by government and non-government institutions say it has smaller sulphur content and low reaction temperature. Above all, the Maharashtra Pollution Control Board has found that the conversion of plastic waste into fuel is non-polluting.

Engine output is nearly as much as produced by other fuels. A test drive on a Kinetic Honda gave a mileage of 44 km/ltr on plastic fuel as compared to 44.4km/ltr on petrol. It accelerated from 0 to 60 km in 18 secs against 22.5 secs on petrol.

“We can’t imagine a day without plastics. So why not convert it into something more useful?” asks Alka. And for the Maharashtra government, which has announced a near-impossible-to-implement ban on plastic, here’s a good reason to rethink the ban.  

Facts

*Zadgaonkars’ plant went into commercial production in March 2005

*Producing 5000 litres fuel from 5MT of waste daily

*Fuel has not yet been given a brand name

*Presently can be used for seven functions such as running gensets

*Can also run vehicles after more refining. Has better combustibility than petrol

*Bike did 0-60 in 18 secs on this fuel against 22 secs on petrol

The journey from lab to plant

2000: Dr Alka Zadgaonkar, an applied chemistry professor from Nagpur, invents a catalyst that can convert plastic waste into fuel in her lab.

2001: With husband Umesh, Alka files for national and international patents.

2003: Government of India invites Alka to demonstrate her invention in New Delhi. She does so successfully. Ties up with Indian Oil Corporation for further testing and fine tuning the product. But fresh from the Ramar Pillai con job (where he fooled the nation with his claims of extracting petrol from water), there is heavy scepticism about their claim.

2004: Zadgaonkars decide to drop out of limelight. Set up a plant for commercial production at Butibori industrial estate outside Nagpur with a Rs5.5 crore loan from SBI. Go about their job without attracting much attention from media or scientific tribe.

2005: By early March they start producing 5000 litres of fuel. Are selling it to about 30 units in the MIDC area for running captive power generators. The most critical stage of all inventions—commercial viability—is established.
Even SBI in its project review report praises the couple for running a profitable business. Now plans are underway to up production five times by December.

State govt takes note. Signs up with the couple to develop the market for the fuel through the Maharashtra Energy Development Agency. MEDA is flooded with enquiries from private energy firms within and outside country.

It seems that Asian Electroncs has acquired the patented-waste plastic to fuel technology (uses the Alka Zadgaonkar process) in December 2006 going by this artice in DNA Money.

It does not mention the cost, I am surprised why would the inventor sell if the technologyhas so much potential. Are there any royalty payments ?

According to the Company, as a result of a booming economy and rapidly increasing industrialization and commercialization, the lighting industry in India could grow handsomely at a CAGR of around 12% and touch US$ 6 billion in 2020. Also, it believes that the value of ESCO contracts over the next 15 years could be around US$ 4.5 billion.

There are wide variations in energy consumption among different units within the same industry using comparable technology. The energy savings potential in this sector is estimated to be 25% making it the sector having the maximum potential in the economy. Despite the large potential for energy efficiency investments having financially attractive returns, only a small fraction is actually being tapped. There is, thus, a need for concerted efforts, whether voluntary or otherwise, on energy, efficiency in the industrial sector.

Basant sir

Stock split and 45% dividend is great from the small company point of view.

No i have not invested in this one as of now but definitely planning to enter...It seems multibagger for me...

Keeping the waste-to-energy part aside, what do you think of its lighting business as a whole? What are its growth prospects in CAGR terms, for next 3-4 years? You done a research on that Devesh ji!

Asian Electronics has invested in two Joint Ventures with Pantaloon Retail

as per details given below:

1. The Company has formed a Joint Venture Company, viz., "Asian Retail Lighting Ltd" for lighting solutions for retail industry with Home Solution Retail India Ltd (HSRIL) (part of the Future Group), as joint promoters.

Core competence of the promoters in their respective fields & pooling of their resources is expected to provide greater synergy to the Joint Venture towards higher growth in the Retail Sector.

2. The Company has formed another Joint Venture Company, viz., "Home Lighting India Ltd" for Home Lighting Solutions with Home Solution Retail Ltd (HSRIL) (part of the Future Group) & Idiom Design & Consulting Ltd (Idiom), as joint promoters.

Core competence of the promoters in their respective fields & pooling of their resources is expected to provide greater synergy to the Joint Venture towards higher growth in the Home Lighting Segment through the proposed presence in Retail Malls & High Street Locations.

Thanks Devesh for your update , it clears some doubts but few still lingers.

I think scalability is an issue here. Whether they would be able to achieve the resultsby first  scaling up to 25 MT and then later to 450 MT is important. If they are able to put up a commercial scale plant of 450 MT , it would be stupendous. Key thing would be to watch for this scalability of technology.

A Typical diesel power generating plant of 1 MW would require approximately 250 litres of fuel  per hour per megawatt of generation translating in to requirement of5000 litres ( 5 MT ) per day i.e 5 MT capacity conversion plant will sustain 1 power plant of 1 MW capacity.  Hence the figure of  800MW still appears very curious for me as also the revenue figures  of  5 to 6 crores per MW.  This figure is typically the capital cost for constructing a power plant  while what we are  dealing here is fuel cost.

This new devlopment from plastic to hydrocarbon/energy product was doing round the corner past one year but I never dared to enter even at 250 level , because an analyst -freind of mine told me that wait for if thses development come true and if proven then it may be another Infosys after long time but sure to be and then buy even if you have to buy at 1000+ level,never mind it. The true time have arrived ,I feel so and that is the reason Mr.Manekar already there and keep on adding.Going to be a biggest winner on bourses soon.Thanks.

The rationale behind Asian Electronics of future growth was not only that it has made foray into PLASTIC TO HYDROCARBON but also it is going to be India's only company entering into FUEL CELL research area(not confirmed but sure the way it has aquired US instruments and others) where US alraedy doing lot of research into this new technology since many years back and that is where I am bullish about this company.If things goes ok (well , it may take some time and money too) for it , then according to my conviction it may be bigger than infosys because then concern about scalibility will disapear and this stock will be sought in biggies's portfolio.If more information please.Thanks.

As a small & honest investor I would like to disclose few stocks which grown in big-big sizes.

1. Infosys tech     I discovered in 1997 @ 395/= on 10 paid up only

Asian Electronics has reported a net profit of Rs 28.44 crore for the first quarter as against Rs 6.25 crore in the corresponding quarter of the previous year. Its net sales stood at Rs 83.85 crore versus Rs 53.72 crore.

http://www.moneycontrol.com/mccode/news/searchresult.php?search_str=Suresh%20Shah&datesel=2 - Suresh Shah , Chairman, Asian Electronics said that the total revenue is Rs 84 crore 50 lakh. Their operating profit margins are at 33%.

Excerpts from CNBC-TV18’s exclusive interview with Suresh Shah:

Q: We have your sales numbers at about Rs 83-84 crores, which is about 57% higher. Could you lay out the rest of the numbers as well?

A: Yes, our total revenue is Rs 84 crore 50 lakh. Our expenditure is Rs 44.75 crore, which gives us a gross profit of Rs 39.75 crore and our net profit is Rs 28.44 crore.

Q: What does that translate into in terms of operating profit margins?

A: Operating margin is about 33%. 

Q: How much of this contribution came from Green Hydrocarbons in this quarter?

A: From http://www.moneycontrol.com/mccode/news/searchresult.php?search_str=Green%20Hydrocarbons&datesel=2 - Green Hydrocarbons , we got a total of Rs 32.15 crore profit before tax from segmented results and including the http://www.moneycontrol.com/mccode/news/searchresult.php?search_str=Energy%20Service%20Company&datesel=2 - Energy Service Company , or http://www.moneycontrol.com/mccode/news/searchresult.php?search_str=ESCO&datesel=2 - ESCO , it is Rs 29 crores.

Q: You were planning to set up a power plant. Can you take us through what is the timetable and what can come up in FY08 itself?

A: We have not yet set up power plants. We are selling these plants to other people. So, right now, these people who are buying our machinery are setting it up.

Q: What will you do in terms of sales and profits for the entire year?

A: I will not be able to reveal that. I can tell you that we will do better.

Yes Corn prices are increasing b'cos of

1) Increased Demand for Ethanol

2) Corn as such being widely available as a "Healthy Food" - almost at all the malls / every commercial street in bangalore

Also, there was a debate if Montasa (hope am rite) demands an exposure as they are in corn production & also Agro tech foods link suggested corn prices going up hence inc. input cost

  So that aage kabhi confusion na ho...