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Kilburn Office Automation


Kilburn Office Automation is a distributor of office automation equipment.

It has tie-ups with leading suppliers in niche categories – document management, mailing and banking.  Revenues mainly comprised sales of paper copiers, coin vending machines and digital franking machines.  It also makes revenues on after-sales service for these products.   

The company reported about 12cr of net current assets in the last financial year but operated with a relatively high debt load of 18cr as at 30th September, 2011. 

The company reported, however, reported declining operating margins on stable revenues – reporting about 6cr in operating profits on revenues of about 55cr in the last financial year.  It reported net losses in the last twelve months as a result of high interest costs on its average debt load during the period. 

The primary risk the business faces is that of product obsolescence since they are heavily technology-based and vulnerable to better and cheaper alternatives.

The business model is based on distribution and hence, the company is dependent on its suppliers for products.  This exposes it to risks of revenue loss if suppliers cancel agreements and/or find other distributors.

The company is also exposed to strong competition including those from Chinese players and a weakening INR since it’s a net importer of products.

Further, the auditors have drawn attention to the doubtful recovery of loans and advances, which amounted to about 12cr (excluding advance tax payments).   This ought to enter into the investor’s calculations when considering a commitment in the company.

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