OVERVIEW OF THE COMPANY
Hitech Corporation is a leading manufacturer of rigid plastic packaging solutions for a
variety of customer segments across multiple geographies. These include customers from
industries such as paints and coatings, agrochemicals, personal care, home care,
pharmaceuticals, food & beverage and oils & lubricants. While it operates in a
highly competitive space, its emphasis on sustainability, quality and innovation remains
unwavering. Hitech serves marquee customers and industry leaders in each industry segment
above.
With expertise in injection moulding, blow moulding, extrusion, the Company offers
varied products at large-scale production volumes, with the ability to scale up to meet
additional requirements at any of its 12 manufacturing locations across India.
The in-house Design and Development Centre provides innovative solutions and hand holds
the customer from design to delivery of the product. Hitech is committed to maintain
highest quality standards in its manufacturing processes which involves rigorous
inspections and testing, getting it "Right First Time" and resulting in delivery
of zero defect products to customers.
GLOBAL ECONOMY
The global GDP in FY 2023 was affected by geopolitical uncertainty caused by the
prolonged Russia-Ukraine war and resultant dislocations in supply chains, leading to
production disruptions and higher costs for businesses in various sectors. As a result,
the global GDP is estimated to have grown at a more subdued 3.4% in 2022, versus 5.9% in
the prior year. Analysts estimate that in the coming year, the slowdown in economic growth
will continue, however there might be a recovery in the second half of 2023 with lowering
of inflation rates.
INDIAN ECONOMY
India, despite of significant challenges in the global environment, was one of the
fastest growing economies in the world. Indias domestic growth prospects remain robust.
The Indian economy expanded at 7.2 percent in FY 2023, with capital expenditure being a
robust driver on the back of government infra push and private capex cycle. However due to
increased inflation in the Indian economy with increase in crude oil prices, interest rate
hikes were done by the Reserve Bank of India to control inflation. The weakening of the
Indian Rupee against the US dollar also added to the inflationary pressures.
The GDP growth forecast of India for FY 2024 is 6.5 percent with inflation being under
control, strong domestic demand and healthy consumption growth. Crude oil which drives the
polymer prices is also expected to be range bound without any major shocks on the supply
front.
BUSINESS SEGMENTS
Hitech has a robust business model serving the packaging needs of some of the most
promising sectors of the Indian economy. Given below is the outlook for the industries it
serves.
Paint Industry
The Indian Paint Industry is today worth over 62,000 crores. Both the decorative and
industrial paints and coatings segments are projected to grow at a healthy CAGR for the
next few years, on the back of rising discretionary incomes, trend of nuclear families and
house constructions, increased frequency of redecorating the houses, increase in
manufacturing activity and usage of construction chemicals such as waterproofing.
FMCG
FMCG market in India is projected to grow at a CAGR of 14.9% to USD 220 billion in the
next couple of years with the packaged food market growth upto USD 70 billion. This is
composed of several consumption driven segments such as foods and beverages, personal
care, home care, fabric care and so on. In each segment, a young population with rising
participation of women in the workforce and demographic changes have led to an increased
use of packaged foods/beverages and consumption of detergents/soaps/shampoos/fragrances
and so on. This is a secular and structural growth trend where needs for sustainable and
attractive packaging solutions play a big role in a brands marketing strategy and hence a
high involvement decision from the brand point of view. The scope to offer aesthetically,
technologically advanced and sustainable packaging solutions is immense in this segment.
Hitechs operational stature will allow it to meet the industrys rising packaging
standards and needs.
Agro Chemical
The India agrochemicals market is driven by the rising population within the country,
which has led to maintaining sufficiency in agricultural practices, further boosting the
use of Indian agrochemical products for farming activities. Packaging plays a crucial role
in the agriculture industry, as agrochemical products such as fertilizers and pesticides
are toxic. Hence, they need advanced packaging solutions, which can reduce the risk of
handling, storing, and transporting these chemical products. High demand for the pest
resistance across the globe and the advancement of biodegradable packaging solutions is
fuelling the growth of packaging market of agro chemicals. Recycling and environmental
concerns are vital challenges for this market. Hitech is set up to be not only
enterprising but also dexterous to resolve the packaging challenges that will come with
this expansion.
Lubricants
The India Industrial Lubricants Market is segmented by Product Type (Engine Oil,
Transmission and Hydraulic Fluid, Metalworking Fluid, etc.,) and End-user Industry (Power
Generation, Heavy Equipments etc). The global lubricant packaging market is estimated to
reach US$ 15.5 billion in 2029, exhibiting growth at CAGR of 5.2%. With the focus on clean
environment, there are opportunities in this segment to address the Diesel Exhaust Fluid
usage which is becoming commonplace with newer emission norms kicking in.
Hitech with its proven abilities, vast experience and customer centric focus is
confident of increasing its market share in the Lubricant packaging market gradually.
CAPITAL EXPENDITURE & EXPANSION PLANS
New projects using newer technologies with high volume demands are expected in the
fiscal year 2024. The corporate thrust will be on three major areas:
a. To improve our standards of operational excellence: Projects to improve
efficiency at various manufacturing facilities are ongoing and will be completed as per
plan. These include the systematic replacement of older machines with newer technology as
well as the augmentation of existing machinery to support newer products and customer
requirements. We will continue to concentrate on lowering our internal rejections and
obtaining Green Channel certifications across all our manufacturing facilities.
b. To strengthen our sustainability goals: We have challenged ourselves
to use greater quantities of not only recycled polymers but also natural materials,
without compromising on quality and durability of our products. We are determined to
reduce our carbon footprint by modernizing our fleet of machines that will be powered by
solar electricity.
c. To reinforce customer engagement: With the rapidly urbanizing population
having increased disposable income, the food & beverage and consumer goods industries
are seeing good momentum. We have reached out to newer markets like dairy, ice-creams,
construction chemicals and personal care to diversify our product portfolio and explore
new market areas. We have increased our focus on Research and Development to explore and
introduce innovative packaging solutions that minimise environmental impact. Evolving
preferences will lead to globalized supply chains and therefore we will have greater focus
on retail and bulk packaging with enabling technologies. We are very optimistic on these
growth industries and are determined to partner with them from the initial stage.
OPPORTUNITIES, RISKS AND THREATS
Our biggest strength is our Pan India presence by having 12 manufacturing facilities
across the country. The biggest opportunity for us is to take a lead in sustainable
packaging and we are working with experts from the industry and academia to offer the most
cost-effective alternatives to our customers. Industry 4.0 provides a leap in
manufacturing sector evolution, and Hitech will leverage this fully to modernize its fleet
of machines and improve operational efficiency. Hitech continues to focus on offering
innovative solutions to our customers for their unique needs which could be better
transportation and handling conditions, preventing counterfeiting, attractive labelling
and so on. We are also strengthening our Design & Development team by inducting
necessary software tools to offer new solutions to our customers. We aspire to be the
partner of choice for our customers unique requirements. General economic slowdown, that
impacts our customer segments, as well as fluctuating polymer prices pose the most direct
risks to us.
HUMAN RESOURCES
Every employee at Hitech is valued and respected for the myriad of contributions made.
To nurture this environment of open exchange, each employees wellbeing and continued
knowledge and skill enhancement is our topmost priority. We have several on-going training
programs at our manufacturing facilities and offices to enhance their learning and create
an inclusive environment that values different perspectives, experiences and backgrounds.
ENVIRONMENT, HEALTH AND SAFETY
Health and safety continues to be one of the most important values at Hitech. The
Company has a comprehensive approach to ensure that all employees, assets and the
environment are protected from harm. It has adopted a proactive approach to health and
safety management, which includes creating policies and procedures to promote safe working
practices and providing appropriate training to employees. The Company accords very high
priority to safety in all aspects of its operations and conducts regular fire and safety
audits at all its manufacturing facilities. The Company also ensures that it has the
right systems in place at all times to monitor performance and identify potential safety
risks thus mitigating any potential hazard.
RESEARCH & DEVELOPMENT
Hitechs Design and Development Centre, accredited by the Department of Scientific and
Industrial Research (DSIR) of the Government of India is at Sanaswadi. Mould design and
development remains at the forefront of Hitechs technological enterprise, including other
innovations ranging from low cost automation to process improvement complement its
holistic approach towards providing customer delight. Our Design and Development Centre is
working across several dimensions of creating better materials, using lesser materials
without impacting the performance, using more sustainable alternatives and so on.
INTERNAL CONTROL SYSTEMS
Hitechs internal control system is commensurate with the nature business, size and
complexity of its operations and is aligned with the requirement of the Companies Act,
2013. The management assessed the effectiveness of the Companys internal control over
financial reporting requirements and the Statutory Auditors of the Company have issued an
attestation report as required under section 143 of the Companies Act, 2013. The internal
audit plan is prepared each year covering all manufacturing facilities and includes
various aspects of our business like accounting and finance, procurement, IT processes
etc, we periodically review our risk management systems covering various business
processes to increase our profitability, efficiency and operational excellence.
FINANCIAL PERFORMANCE
The key highlights of our financial performance are given below.
Revenues and Profitability
| Particulars |
FY 2023 |
FY 2022 |
Change |
Remarks |
| Operating revenue ( in lakhs) |
55,867 |
58,845 |
5% |
Reduction was mainly due to reduction in tonnage and a fall in polymer prices as
compared to the previous year. |
| EBITDA ( in lakhs) |
7,592 |
8,659 |
12.5% |
As a percentage to sales the drop is 1.13% mainly because of increase in minimum
wages. |
| Net profit after tax ( in lakhs) |
2,832 |
3,739 |
24% |
The major drop is owing to lower exceptional income as compared to previous year ( 381
lakhs V/s 994 lakhs). As a percentage to sales, the drop is marginal. |
Exceptional Item this year includes profit of 368 lakhs on compulsory acquisition of
property at Naroli by the Gujarat government for bullet train project. This, profit on
sale of property being a non-recurring event has been considered as an exceptional item.
Financial Ratios:
| Ratios |
FY 2023 |
FY 2022 |
Remarks |
| Debtors Turnover Ratio (in days) |
26 |
27 |
Improved collection. |
| Inventory Turnover Ratio (on Cost of Goods Sold and in days) |
42 |
40.5 |
Marginal change. |
| Interest Coverage Ratio |
5.8 |
6.0 |
Improved owing to reduction in borrowings. |
| Current Ratio |
1.2 |
1.0 |
Improved working capital management. |
| Debt Equity ratio |
0.3 |
0.4 |
Improved because of repayment of borrowings. |
| Operating Margin Ratio |
9.2% |
11.3% |
Reduced mainly because of increase in minimum wages. |
| Net Profit Margin |
5.1% |
6.4% |
|
| Return on Net Worth (RONW) |
12.3% |
18.7% |
Reduced mainly because of lower sales and its cascading effect. |
| Return on Capital Employed (RoCE) |
16.3% |
18.9% |
|
CAUTIONARY STATEMENT
Statements in the Management Discussion and Analysis describing our objective,
projections, estimates and expectations may be "forward looking statements"
within the meaning of applicable securities laws and regulations. Actual results could
differ materially from those expressed or implied. Important factors that could make a
difference to our Company operations include, among others, economic conditions affecting
demand/supply and price conditions in the markets in which we operate, changes in
government regulations, tax laws and other statutes and incidental factors.
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