De Neers Tools Ltd Management Discussions

Global Hand Tools Sector

The global hand tools market size is estimated to be valued at USD 27.9 billion as of 2023. This market includes a wide range of tools such as hammers, pliers, screwdrivers, wrenches, and others used in various sectors.

The market size is expected to grow at a CAGR of 5.8% to USD 49.0 billion by 2033, driven by increasing demand across multiple industries such as construction, automotive, manufacturing and the rise of DIY culture.

Hand Tools Sector in India

Hand tools are tools such as spanners, pipe cutters, wrenches, pliers that are not powered by electricity. Hand Tools industry is majorly present in micro and small-scale sector and is one of the oldest industries in the country. The skilled labor for this industry is primarily present in the States like Punjab, Rajasthan and Maharashtra making them a hub of production of hand tools. The construction, automobile, aerospace and DIY sectors use hand tools for applications including drilling, hammering, sawing, and others. Hand tools are majorly used for cutting and sizing wood, tiles, stones, concrete etc. Construction and infrastructure segments are the largest contributors of overall hand tools demand.

The Indian hand tools market is estimated to be valued at USD 1.3 billion as of 2023 and is expected to grow to USD 2.6 billion by 2033. Thus, resulting in a CAGR of 7.2%. This projection takes into account the increasing demand from end-user industries, rising infrastructure projects, and export opportunities. Due to industrialization nationally and globally in recent years, the hand tools market grew manifold. Industries like defense, railways, agriculture, automobiles, and aerospace are expecting good quality products for ease of operation due to which demand for hand tools has seen sharp rise.

Favorable macro environment

As the fastest-growing economy in the world, Indias hand tools market is poised to outpace global growth rates, even surpassing that of neighboring China. Indias robust economic expansion, coupled with ambitious infrastructure projects and government initiatives like "Make in India" and the Smart Cities Mission, creates a fertile ground for rapid growth in the hand tools sector. Acknowledging the strong multiplier effect of building and improving infrastructure on economy, the Union Minister for Finance & Corporate Affairs, Smt Nirmala Sitharaman while presenting the Budget 2024-25 announced the provisioning of E 11,11,111 crore for capital expenditure. It will be 3.4 per cent of the countrys GDP. The Government is envisioning to maintain strong fiscal support for infrastructure over the next 5 years and it is well supported by the governments historic trend backing capital expenditures. This economic dynamism would support the growth in the hand tools market, benefiting from a combination of strong domestic demand, increasing industrialization, and booming infrastructure industry. Consequently, the Indian hand tools market is anticipated to grow at a CAGR of 7.2% from 2023 to 2023, surpassing the global average growth rate of 5.8%

Indian Hand Tools Industry Dynamics

Given that the hand tool industry in India is predominantly unorganized, with 80% of the sector falling under this category, the overall industry growth rate remains in single digits. However, the organized sector is expected to gain a larger market share from the unorganized sector. This shift is expected to result in the organized sector outpacing the growth of the overall hand tool industry in India. Several factors support this argument:

Implementation of Goods and Services Tax (GST): The introduction of GST has brought numerous unorganized businesses under the tax net, significantly reducing tax evasion. This has leveled the playing field, enabling organized players to compete more effectively.

Demonetization: The demonetization drive has disrupted cash-based transactions, which are prevalent in the unorganized sector and has encouraged the adoption of digital payments. This transition has facilitated greater transparency and formalization within the industry.

Shift Toward Quality Consciousness: The Indian market for hand tools is moving away from a price-sensitive approach and towards quality- consciousness, driven by industry or application-specific criteria. Both consumers and industries are increasingly prioritizing durability and precision over cost.

Expansion of Key Industries: The growth of sectors such as aviation, heavy engineering, automotive, gardening/horticulture, woodworking, and construction/infrastructure has spurred the demand for high-quality, specialty tools. This demand is predominantly met by the organized sector, further accelerating its growth.

These factors collectively are expected to contribute to the growth trajectory of the organized hand tools sector, which is expected to significantly outpace the overall industry growth rate in India. The structured and transparent operations of organized businesses, combined with an increasing focus on quality and specialized tools, positions the organized sector for substantial expansion and market dominance.

Driven by the extensive industry experience of our promoters, De Neers Tools Ltd. has grown remarkably since its inception. Beginning as a small setup in Delhi, our operations have expanded to cover multiple states across the country. This strategic expansion reflects our ability to adapt to market demand and our dedication to reaching a broader customer base.

Our hand tools are produced under our stringent quality parameters and rigorous supervision. We ensure that every product meets the highest standards of durability and performance. The production facilities are equipped with state-of-the-art technology and robust infrastructural capabilities. Thus, ensuring consistency and precision in the manufacturing processes.

Committed to operational excellence, our ISO 9001, 14001, and 45001 certifications validate our focus on quality, environmental stewardship, and employee safety. These standards underpin our position as a responsible industry leader.

ASSESSING OUR POSITION:

SWOT Analysis

At De Neers Tools, we recognize that a clear understanding of our market position is essential for sustainable growth. This SWOT analysis helps us assess our Strengths, Weaknesses, Opportunities, and Threats and hence, providing our stakeholders a transparent view of our current standing and future potential. It serves as a strategic compass, guiding our decisions as we navigate the evolving hand tools industry and pursue our vision of global leadership.

Strength

1. Diverse SKUs

We possess the industrys most extensive SKU selection, surpassing even our closest competitor whose offering is less than half as extensive.