Investment Opportunity | Manufacturing of Vehicle Location Tracker (AIS 140 compliant)

Background:

After the Nirbhaya incident, Government of India came up with a number of projects & policies for women safety such as CCTV installation, video surveillance and a mandate to install panic switch & location tracking device on all public transport and commercial vehicles.

Automotive Industry Standard 140 (AIS 140) is a set of standards for vehicle tracking system and emergency request button.The ministry of Road Transport published the AIS 140 standards and the excecution is left to the Transport department of each state. Manufacturer has to submit a prototype to the transport department and get enlisted as an AIS-140 approved vendor to in order supply the location tracker to that particular state. The manufactured devices are then audited and if found to be compliant, the vendor is given a license to continue for one year.

The initial deadline for the device installation was 1 Apr 2018 but it has been extended. Given the way bureaucracy works, some incident may serve as a jolt to enforce it stringently. It is already mandatory for commercial vehicles in the state of Kerala and for mining vehicles in Andhra.

How is AIS-140 different from other GPS devices?

For a device to be AIS 140 certified, it should meet the following parameters:

• Tracking ability using Global Navigation Satellite System, the Indian Regional Navigation Satellite System and GAGAN, the Indian Satellite Based Augmentation System.
• At least one Emergency Button located inside the vehicle.
• Two different IP addresses. One set of data (PVT data) should be transferred to the first IP address for regulatory purpose and the second IP address exclusively for emergency request system.
• Internal battery. The device should have an internal battery backup to support 4 hours of normal operations.
• Accelerometer and gyroscope. The device should have a 3-axis accelerometer and 3-axis gyroscope for getting alerts on ECO driving (harsh braking, harsh acceleration, and rash turning.
• Embedded SIM: The device shall have an embedded SIM.
• Tamper-proof: The device shall be tamper proof and must be resistant to dust, temperature and water splashes (IP65 rated or more).
• Firmware updates Over The Air (FOTA) and configurable backup SMS facility in case of GPRS failure.

Source: Navixy

Company:

APM Kingstrack is the coming together of two companies: APM and Kingstrack. Kingstrack started as a software development company with expertise in location based services / tracking and logistics management and served to clients in the middle east and USA. APM had established a strong dealer network and had sold upwards of 2.5 lakhs speed governors (a speed limiting device).

When the founders of Kingstrack realized the huge opportunity with the mandate of AIS-140 location tracker (2.3 crore vehicles nationally), there was one major challenge: getting the manufactured device to the market. Since APM already had a strong and a growing dealer network (400+ dealers), both the companies decided to merge.

Streamlining the Manufacturing Process:

• Kingstrack started as a software development company but expanded to Hardware design for end to end manufacturing
• The semiconductor components are sourced directly from leading suppliers thus getting a good deal on price and shipment time
• Location tracker includes a SIM card which is sourced directly from Telecom companies

Production & Marketing:

• APM Kingstrack has 30+ in-house staff and can manufacture 1000 devices per day
• 400+ dealers across India
• Is a State government approved supplier of Location tracker in 6 States and have applied in 5 States

Track record:

• 12,000 AIS-140 devices and 10,000 + other GPS devices sold in the last financial year
• Achieved Turnover of 5.5 Cr despite Corona and semi-conductor shortage crisis

ESAF Due Diligence:

1. Visiting APM Kingstrack office
2. Visiting Manufacturing plant
3. Demo of the product
4. Financial Statement & Invoices
5. Verify the number of devices sold (invoices, gov dashboards)

Investment Proposal

Explanation:

1. Investment required to manufacture 1000 devices
2. The time to manufacture is 40-60 days. So annually 6-8 iterations possible.
3. The investment tenure is 1 year exclusive of incubation time. Incubation time is required at the start to order the components.
4. This is an exclusive investment opportunity through ESAF.
5. The return on investment mentioned is for the 25 lakhs. For the minimum share, the returns will be in the range of 1-2 lakhs.