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ADJIA Technologies

• ADJIA Technologies has come out with an initial public offering (IPO) of 2,70,400 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 74 per equity share.

• The issue has opened on March 2, 2021 and will close on March 4, 2021.

• The shares will be listed on SME Platform of BSE.

• The share is priced 7.40 times higher to its face value of Rs 10.

• Book running lead manager to the issue is Shreni Shares.

• Compliance Officer for the issue is Harsh Singrodia.

Profile of the company

The company is engaged in the business of offering augmented reality and virtual reality related services to various customers electronically. It has built technology and solutions for multiple areas of the business which enables the company to increase efficiency. It provides dynamic pricing and sector specific approach. The company is also engaged in Software Consultancy services.

The company is solving a prime problem of its customers with providing augmented and virtual reality services. It is able to achieve this through a combination of its skills and strategic approach. It maintaines its service quality against the highest standards, are customer centric, deeply people focused, and follow ethical business practices and corporate governance standards overall. It draws its strength from an age-old tradition of quality services as the best strategy for sustained growth.

The company endeavors to satisfy customers by continuous improvement through process innovation and quality maintenance. It focuses on providing quality services to increase customer satisfaction and develop a positive brand image in the industry. It aims to grow its operations on PAN India basis and make its brand as a well-known one name in industry.

Proceed is being used for:

• Funding purchases of equipment.

• Marketing initiatives.

• General Corporate Purposes.

Industry overview

Augmented Reality (AR) and Virtual Reality (VR) have been around, in some form or the other, for over 5 decades now, but it’s only in the last 7-10 years that these technologies have really come into their own. Whether it’s the ability of VR to enable you to immerse yourself in a location you’ve never been to in ‘real-life’, or the ability of AR to enhance your real-world environment, these technologies are here to stay. With the evolution in hardware devices, especially mobile devices, as well as the growth in technology and platforms, AR and VR have finally come of age, even in India. In fact, the Indian VR market grew by a whopping 104.24% from 2013 to 2017 and is expected to reach an incredible $153 billion by 2020. Apart from the regular suspects like gaming and entertainment, this massive growth in AR/VR is coming from a relatively unexpected area. In the past few years, businesses have found AR/VR technology to be extremely useful in training and communication. This has spearheaded the application of AR/VR in a wide range of industries— automotive, manufacturing, medical, defence, aerospace, education, medicine, and retail. In fact, apart from the surge in demand for healthcare and the increase in defence spending, the demand for AR/VR products in training will be the biggest factor propelling the growth of the industry.

The augmented reality (AR) market is projected to grow from $15.3 billion in 2020 to $77.0 billion by 2025; it is expected to grow at a CAGR of 38.1% from 2020 to 2025. The virtual reality (VR) market is projected to grow from $6.1 billion in 2020 to $20.9 billion by 2025; it is expected to grow at a CAGR of 27.9% from 2020 to 2025. The increasing demand for AR devices and applications in healthcare, rising investments in AR market, and growing demand for AR in retail and e-commerce sectors due to COVID-19 are the key factors driving the AR market growth. The availability of affordable VR devices, growing adoption of HMDs in different industries, advancement of technologies and growing digitization, penetration of HMDs in gaming and entertainment sectors after COVID-19, and high investments in VR market are the key factors driving the VR market growth. The objective of the report is to define, describe, and forecast the augmented reality and virtual reality market based on technology, offering, device type, application, and region.

Pros and strengths

Quality assurance and standards: The company adopts stringent quality control process which is managed at every stage of its service to ensure the adherence to desired specifications and quality. Since, the company is dedicated towards quality services; it gets repetitive clients as it is capable of meeting their quality standards.

Skilled and dedicated manpower: The company’s team’s experience and their understanding of the industry enables it to continue to take advantage of both current and future market opportunities. It takes pride in relating its success to its employees, for their consistent efforts and dedication has brought it to where it is today. It also requires application of high levels of technology at key stages of design and manufacturing processes as an important part of the business procedure.

Strong customer relationship: The company constantly try to address its customer’s needs which help it to maintain a long-lasting working relationship with them and improve its customer retention strategy. Its existing relationship with its customers represents a competitive advantage in gaining new customers and increasing its business.

Risks and concerns

Limited operating history: Although the company was incorporated in 2015, it has a limited operating history upon which you can evaluate its business and prospects. It booked its revenues only in fiscal 2020 with a revenue of Rs 10.45 lakh and PAT of Rs 1.93 lakh. In particular, its management may have less experience in implementing its business plan and strategy compared to its more well-established competitors, including its strategy to increase its market share and build its brand name. In addition, it may face challenges in planning and forecasting accurately as a result of its limited historical data and inexperience in implementing and evaluating its business strategies. Its inability to successfully address these risks, difficulties and challenges as a result of its inexperience and limited operating history may have a negative impact on its ability to implement its strategic initiatives, which may have an adverse effect on its business, prospects, financial condition and results of operations.

Depends on top 5 customers for majority of revenues: The company’s top 5 customers contributed 80.07% of its revenues for the period ended November 26, 2020 based on restated financial statements. Further, its top 5 customers contributed 71.43% of its revenues for the year ended March 31, 2020 based on restated financial statements. However, its top customers may vary from period to period depending on the demand and thus the composition and revenue generated from these clients might change as it continues to add new customers in normal course of business. Since its business is concentrated among relatively few significant customers, it could experience a reduction in its results of operations, cash flows and liquidity if it loses one or more of these customers or the amount of business it obtains from them is reduced for any reason, including but not limited on account of any dispute or disqualification.

Dependent on third party service providers: The company uses third party equipment to render the output from the software. It significantly depends upon such service for providing the desired results to its clients. Decrease in quality of its service provider may affect the company’s reputation and results of operations. Though its business has not experienced any disruptions in the past, any future event may have an adverse effect on its business.

Outlook

ADJIA Technologies offers augmented reality and virtual reality related to customers electronically. It further offers software consultancy-related services to clients. The company provides VR AR 360 based products and services to customers across industries i.e. manufacturing, reality, marketing, e-commerce, education, real estate, hospitality, etc. The company’s team has the requisite experience to manage the current scale of business as well as the expansion plans for the future. Its ability to serve to the technologial advances in the industries across sectors with its new age products is its competitive strength. On the concern side, the company operates in the AR/VR industry based on technology which is constantly changing and is significantly governed and affected by scientific breakthroughs, developments, innovation, government policy and laws pertaining to information technology as well as intellectual property. Besides, the company’s ability to market and sell its products depends upon the recognition of its brand names and associated consumer goodwill. It has not yet applied trademark registration for the its Corporate Logo and Corporate Name.

The company is coming out with an IPO of 2,70,400 equity shares of Rs 10 each at a fixed price of Rs 74 per equity share to mobilize Rs 2 crore. On the performance front, the company started its operations in fiscal 2020 and hence the total income of the company was at Rs 10,45,343 as against no income in fiscal 2019. Profit/(Loss) after Tax for the fiscal 2020 was positive at Rs 3,38,601 due to initiation of business operations and revenue generation by the company against Profit/(Loss) after Tax of Rs (15,380) in fiscal 2019. The company is planning to expand its network and reaching new geographies. In respect of its present location, it is expanding its network by marketing. It has always aimed to maintain its relationship with its clients by satisfying their requirements. It aims to do this by leveraging its marketing skills and relationships and further enhancing customer satisfaction. It plans to increase its customers by meeting orders in hand on time, maintaining its customer relationship and renewing its relationship with existing clients.