I. INDUSTRY STRUCTURE & DEVELOPMENT
The strong vision and dedication of the management & the employees and over six
decades of experience and expertise have positioned the Company as one of the largest
manufacturers of cotton ginning and pressing machineries. The Company is having
distinction of being the only company in the world with capabilities for manufacturing
cotton ginning machines for all the four major cotton ginning technologies being used in
the world.
Further, with the passage of time and to cope up with the growing industrial demand,
the Company has developed itself as a multi-product engineering company that is presently
working across the following industrial divisions:
Ginning Machinery Division
The ginning machinery division of the Company manufactures and supply machineries,
equipment, spare parts and other allied equipment related to cotton ginning and processing
units of all the four cotton ginning technologies i.e. single roller gins, double roller
gins, rotary knife roller gins (rotobar gins) and saw gins for different varieties of seed
cottons, under one roof.
The Continental Eagle Corporation (CEC) division that is a part of the ginning
machinery division manufactures & supplies all the products based on CEC, USA design
or improved designs thereof including Saw Gins, Rotobar, Delinting, Decorticating, Cotton
Cleaning, Cotton Conveying, Cotton Conditioning, Conveyors, Rotobar gin, spare-parts, high
capacity humidification systems, dryers, and all other equipment required to be fitted in
saw gin, rotobar gin based factories and delinting and decorticating factories.
The Company is expanding its footprints in the export market of these machineries.
Recently it has captured/tapped new geographical areas/countries like China, Paraguay, and
Mexico, among others. Thus, in the medium and long term, the Company expects to enhance
its export business for this division, contributing to its growth in a positive manner.
Infrastructure Division
The infrastructure division of the Company is engaged in the business of design,
fabrication, manufacture and erection of pre-engineered buildings, civil industrial
buildings, warehouses, K-houses, and solar module mounting structures, among others. This
division has in-house design and engineering capabilities to scale new frontiers of
technical excellence and is driven by its own sales, marketing, technical, and support
team.
The Company also provides customised solutions for pre-fabricated buildings, PEB
industrial shed, pre-engineered school buildings, pre-engineered warehouse structures,
agricultural warehouses, stadium, pre-engineered industrial sheds for pharmaceutical and
food processing units, among others. Over the period, it has successfully executed over
500 steel building projects (domestic and overseas). It is also executing EPC projects for
clients like Indian Oil Corporation Limited, Maharashtra State Warehousing Corporation,
Nuclear Fuel Complex and Maha-Metro projects, among others. Further, due to cost
effectiveness, speed of construction and flexibility in design, customers are getting more
inclined towards PEB buildings and structures rather than going for conventional civil
structures. Thus, there is a reasonably good scope for growth in this division.
Electrical Division
The Company has in place electrical panel division that manufactures & sells
electrical panels including power control centres, Motor Control Centres, APFC panels, LT
& HT panels, IMCC panels, drive panels, PLC & SCADA panels, AMF panels,
synchronisation panels, control panels, lighting panels, power distribution boards,
customised panels and panel cabinets. The Company also manufactures and supplies bus
truncking system, intelligent motor control centre and SVGR system for harmonic control,
among others. The said division of the Company has gained incredible reputation due to its
quality products and unique designs. Further, the said division has manufacturing/quality
certifications such as IEC 61439 Part 1 and 2, UL certification and IS 8623 certification.
Due to quality consciousness and timely delivery, the Company is gaining a good reputation
as an electrical panel manufacturer and expecting a reasonably good growth in this sector
in the medium and long term.
Heavy Engineering Division
The Company is also engaged in the manufacturing and supply of heavy equipment and
structural fabrication for various steel and power plants and provides other customised
fabricated structures, as per the clients requirement. The heavy equipment division (HED)
is capable enough to fulfil the customised fabrication/ structural requirements of any
original equipment manufacturer (OEM) belonging to sectors like steel, cement, mineral,
and power, among others. Further, the said division is also involved in the manufacturing
of its new product line of aerobridges and passenger boarding system. Due to the
availability of infrastructure and the Companys expertise in heavy fabrication and
designing, it expects a reasonably good growth in this sector in the medium and long term.
Fire Fighting Division
This division is carrying the business of designing and installation of firefighting
systems, including fire extinguishers, hydrant systems, sprinkle systems and fire
diversion systems, among others. With the increased compliances of the relevant laws for
fire safety, the demand in this Industry is expected to grow.
Other Products
The Company also manufactures various ancillary and other products such as specialty
conveyors, office furniture, steel doors, industrial fans and impellers, hydraulic
cylinders, ducting system, cutting of steel and other material on job-work basis and also
for the internal purposes. Further, the Company is putting its efforts in growing the
business of these products.
II. FINANCIAL OVERVIEW
(Rs. In Lakhs)
| Particulars |
Standalone |
Consolidated |
|
FY 2022-23 |
FY 2021-22 |
FY 2022-23 |
FY 2021-22 |
| Net Revenue (Including Other Income) |
48,880.39 |
42,491.90 |
54,851.07 |
45,018.82 |
| Operating Profit (PBIDT) |
9,217.56 |
5,946.08 |
10,649.58 |
6,524.18 |
| Profit Before Tax |
7,998.97 |
4,317.08 |
9,399.64 |
4,871.27 |
| Profit After Tax |
5,687.68 |
3,243.86 |
6,750.49 |
3,649.33 |
| Profit After Other Comprehensive Income |
5,668.65 |
3,316.68 |
6,731.46 |
3,722.15 |
| Earnings Per Share (Basic & Diluted) |
109.01 |
63.78 |
129.45 |
71.58 |
| Ratios on Standalone Basis |
FY 2022-23 |
FY 2021-22 |
| Operating Profit Margin (%) |
19 |
14 |
| Net Profit Margin (%) |
11.64 |
7.63 |
| Debt Equity Ratio (x) |
0.15 |
0.30 |
| Interest Coverage Ratio (x) |
2.06 |
1.32 |
| Return on Equity (%) |
26 |
19 |
| Current Ratio(x) |
1.96 |
1.94 |
III. OPPORTUNITIES AND THREATS
Opportunities
Diversification and Venturing into New Business Segment
The Company has expanded significantly by introducing a range of new products. One
notable addition is the diesel fire heater, designed to effectively reduce moisture
content in raw cotton. Another innovative product is the cotton seed dryer, specifically
created for reducing moisture in cotton seeds.
Additionally, the Company has successfully manufactured and supplied passenger boarding
bridges, an essential equipment at airports that enables passengers to board aircraft
seamlessly. These new product offerings are expected to contribute to the Companys growth
and have helped diversifying its presence in various markets.
Technology
The ginning machineries/equipment are manufactured under the Companys own developed
models / drawings and technology acquired from Continental Eagle Corporation, USA.
Further, the Company has technical collaboration with Central Institute for Research on
Cotton Technology (CIRCOT) that helps the Company in terms of continuous research and
innovation. With the continuous innovation, the Company is able to leverage better
position in the market over its competitors. In the other products also, the Company is
using the latest & innovative technologies as per the industrial norms, requirements
and prevailing practices.
The Company has supplied its machineries /equipment to various countries including
advanced countries such as USA, Greece, Australia apart from Uzbekistan, South Africa,
Brazil, Benin, Burkina Faso, Mali and many other countries. The Company has proven its
technological strength across the globe.
Threats
Technological Obsolescence
Technological progress can make certain technologies or manufacturing methods outdated.
It is therefore imperative for the Company to allocate resources for research and
development (R&D). This will enable them to keep up with technological advancements
and stay ahead in the market. To overcome this kind of threat, the Company is continuously
undertaking innovation, research and development practices.
Cotton Production
The cotton ginning business is dependent upon the condition of cotton production and
climate during the year. If cotton production is adversely affected, it may affect the
operation of the related division of the Company.
Fluctuating Cotton Prices
Cotton prices can be volatile due to various factors such as weather conditions,
international demand, and market dynamics. The price fluctuations may impact the
profitability of ginning and pressing business. The sudden changes in cotton prices can
create challenges for the business, affecting its revenue, operational costs, and overall
financial stability. As a result, ginning and pressing business needs to carefully monitor
market trends and adopt strategies to mitigate the risks posed by price volatility in
order to maintain their competitiveness and sustainability in the industry.
IV. RISK & CONCERNS
Certain risks are part of the business such as procurement risk, export risk, and
credit risk, among others. Considering the present situation and market outlook, there
does not seem to be any major risk, threat and concern for the business for the FY
2023-24. The Company has already initiated actions and developed various strategies to
identify and mitigate routine and exceptional risks that may potentially cause financial
or social dent to the Company.
The challenges ahead are to find out ways and means to reduce the energy consumption,
to bring down the processing costs and to further increase the productivity and efficiency
of the machines and workforce used for each level of operation and to scale up the sales
of diversified engineering products for continuous growth.
V. MATERIAL DEVELOPMENT IN HUMAN RESOURCES
The Company attributes its market success and dominance to its dedicated employees who
have effectively tackled challenges posed by evolving quality, customer, and global
expansion needs. Some of the key HR focus areas have been providing specialised training
like welding skills enhancement for over 56 employees, combating talent shortage through
tie-ups with institutes and induction programmes. In addition, they include comprehensive
talent management spanning recruitment via job portals, consultants, ads and fairs, based
on detailed role profiles, virtual/ personal interviews, job rotations, training, rewards
for outstanding work, industry-benchmarked compensation and more.
For gender inclusion, hiring, promotion, and compensation are based purely on
performance and expertise irrespective of gender. Women employees represent various
departments including the Board and their skills are honed through training programmes.
The Companys people-centric approach focussing on upskilling, motivation, and meritocracy
empowers its human capital to drive continued success.
Outlook
The Company is aggressively expanding its business activities to become a multi-product
engineering organisation, guided by its vision to lead the industry with innovation and
sustainable growth. It is further enhancing its export footprint for the machinery
division by entering new geographies.
In the medium to long term, the Company expects growing exports to boost overall
growth. In terms of infrastructure division, the Company anticipates reasonable growth
given the popularity of PEB and its strong reputation. The electrical division is also
gaining good market reputation as a quality panel manufacturer with timely delivery.
Further, the HED division is also entering into the new product line of passenger boarding
system & aerobridge. By leveraging its engineering excellence across divisions and
increasing exports and tapping growth opportunities, the Company aims to entrench its
leadership position as a diversified engineering entity serving diverse global markets.
Internal Control Systems and their Adequacy
The Company has established internal control systems that are suitable for its size and
nature of business. These systems and controls are implemented throughout the Company,
covering various financial and operational functions. The Internal Audit Department
conducts regular audits at different locations and functions based on a pre-defined audit
plan. Key observations from internal audits are carefully examined during Audit Committee
meetings, and necessary action is taken accordingly Some notable features of the internal
control systems are as follows:
1. Periodic review of systems and procedures to adapt to the Companys expanding
operations and increasing complexity
2. Implementation of measures to record and safeguard assets against losses or
unauthorised disposal
3. Regular physical verification of fixed assets and inventory
Environment Health and Safety
The Company has undertaken various effective measures to reduce carbon emissions. Some
of these include replacing all halogen lights with LEDs across locations, installing
variable frequency drives in lathe and hoist systems, and using energy-saving fans and
bulbs in plants and offices to optimise overall energy consumption. The Company has also
set up a sewage treatment plant to treat and recycle sewage water for gardening needs.
Alongside this, its main focus areas to reduce environmental impact include using solar
energy for clean power generation, maximising captive power consumption, and driving
plantation efforts. As the Company progresses in FY 2023-24, its sustainability priorities
will continue to include scaling up its usage of solar energy, increasing captive power
intake through renewable sources, and expanding its green footprint through tree
plantation drives. By continuously improving energy efficiency, recycling resources, and
adopting renewable energy, the Company aims to become future ready in green manufacturing.
Cautionary Statement
The Management Discussion and Analysis Report includes statements that pertain to the
Companys objectives, projections, estimates, and expectations. It is important to note
that these statements may be considered ‘forward-looking statements under applicable
laws and regulations. It should be understood that the actual results may differ from what
is either explicitly expressed or implied in these statements. Various factors can
significantly impact the Companys performance, such as economic developments within the
country, demand and supply conditions in the industry, changes in Government regulations
and tax laws, as well as other factors including litigation and industrial relations.
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