In present days, all industrial systems are fully automated. Object sorting is one of the popular system for industrial applications. In past days humans are used for the object sorting but it was the time consuming process for large number of objects in industries. Replacement of human operators with robotic arm will reduce human efforts and also provides high accuracy & efficiency. Robotic arm operating using ARM7. Detection of shape is using image processing in MATLAB. Robotic arm is control by microcontroller with DC motor. This paper presents on object sorting base on shape of object using image processing. Image is captured by using camera, then image processing is perform for shape identification. This project deals with fully automatic industrial material handling system. The aim of this project is the separate out objects according to it’s shape.