Ador Powertron: Below Average

Score: Below Average

B. Krishnakumar

The company is raising cash through the proposed public offer to finance its expansion-cum-modernisation plan.

The existing promoter companies are also offering 80 lakh shares to the public. Considering that the company's performance in the recent years has remained almost stagnant and taking into account the mounting competition in the industry and from imports, investors may stay away from the proposed offer.

THE company was formed in 1995, by spinning off the industrial electronic and power control division of Advani Oerlikon. Ador Powertron makes high voltage rectifiers, battery charger and formation rectifier, high current rectifier and DC drives.

The products manufactured by the company find application in a host of industries such as engineering, battery, automobile and in other electrical applications. The existing shareholders of the company -- Ador Technologies, Ador Thermal and Ador Finance -- are offering eight lakh shares for sale to the public. The offer is priced at par. Besides, the company is making a public issue of 39 lakh shares to the public.

The offer from the present shareholders comes at a time when the company's performance has not been all that positive. For the period-ended March 2000, Ador Powertron reported a net loss of Rs 0.51 crore on a turnover of Rs 12 crore.

Meanwhile, Ador Powertron plans to enhance its infrastructural facility. It also intends to install new machinery. These projects would be funded through the proposed public offer of shares. Fundamentally, the company's performance the recent years has not been all that impressive. While the turnover has remained flat at around the Rs 11-12 crore range, the company reported a net loss of Rs 0.51 crore for 1999-2000 compared to a net profit of Rs 0.95 crore in 1997-98.

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The company operates in an industry characterised by high degree of competition. The relaxation of import norms has exposed the company to the threat from cheaper imports. Given the prospects of a further liberalisation of import norms, the company would find it operational environment getting tougher.

The impact of competitive pressure is already visible in the stagnant trend in turnover in the recent years. Given that the user industry is affected on account of slowdown in economic and industrial activity, the company is unlikely to report any significant improvement in performance in the near term. From an investment perspective, the other group companies such as Advani Oerlikon and J. B. Advani have not quite been fancied at the stock markets. Given such a situation, it would be better for the investors to avoid the initial public offering from Ador Powertron.

Industry class :Industrial Electronics

Instrument type :Public issue at par

Issue size :Rs 3.9 crore

Application Amount :Rs 10 per share

Issue opens :January 29

Earliest close :February 2

Lead managers :Brescon Corporate Advisors

Project cost :Rs 4.4 crore

Debt:Equity :--

Post issue equity :Rs 10 crore

Listing :Mumbai, Pune

Project location :Pune

Promoters :Advani Oerlikon