Today's Top Gainer
Note:Top Gainer - Nifty 50 More
A. BUSINESS SEGMENT TEXTILES:
Industry Structure & Development:
The situation of the textile industry in India continues to be challenging, in line with the overall global economic situation.
There was no significant improvement in the textile export outlook for the country. Lack of trade agreements with various locations across the globe, especially EU nations, resulted in lack of growth of exports from the country. The textile business of the company has its strength in the export of fabrics made from open end spun yarns in the count range of 6s to 20s. Business could have been better during the year but for the intense pricing pressure from the unorganized sector in the country.
It was only towards the end of the last financial year that the industry was seen recovering after the implementation of GST in the previous year. The liquidity situation in the textile markets continued to be tight following the effects of demonetization and GST in the earlier years. Delayed payments from buyers and huge delays from the government in the payment of capital subsidy and interest subsidy on capital investments under TUFS scheme have added to the pressure on working capital across the industry The company continued its focus on innovative products, quality and services to the customer in order to compete in a market where the unorganized sector continues to play a major part due to its offering of goods at very competitive prices. This is mainly because of the low power cost that they are entitled to and also because of their low overheads. This has added to the pricing pressure on all products. Inspite of the tough environment, the companys textile business has been able to close the year 2018-19 with a growth of nearly 5% compared to the previous year, and like last year continues to be in a cash positive situation. This has been possible due to the focus on development of innovative products, optimizing utilization and productivity, and providing best possible services to the customer. These factors, along with timely investments in state-of-the-art machinery and equipment already done in the previous years, have been helpful in keeping the textile business in a reasonably healthy condition.
Strengths and Opportunities:
Our textile business has an integrated manufacturing facility for yarns and fabrics which helps serving unique customer requirements and strictly adhere to committed quality and delivery schedules. In addition, the business strives to serve large and small customers with the same level of service and quality. The company is perceived as a producer of quality goods and this goodwill is helpful in staying competitive in the domestic and export markets. The company also scores on the services being provided to the customer especially terms of timely delivery and after sales service. With a wide range of products in cotton, polyester cotton, viscose and lycra in greige and finished varieties, our textile business continue to be a one stop shop for discerning buyers.
The demographics and increasing purchasing power of the countrys population indicate a growth in the textile demand in the country which is a positive indication for the company. With the growing cost of manufacturing in
China, and the current trade war between the USA and China, it is expected that China will be vacating some market share in the global textile trade, which should be helpful to textile manufacturers in India.
Weaknesses and threats:
The presence of low cost unorganized manufacturing hubs in textiles continue to pose a challenge to us. Lack of liquidity in the markets and the lack of interest of banks to support any increase in working capital limits to textile businesses could prove a deterrent to our quest for growth during the year.
The global economic scenario continues to be dull and this could affect our export sales.
Inspite of the various challenges, we are confident of growth of our textile business. All efforts will be made to achieve this by developing innovative products, optimizing utilization and productivity and providing best services to all our stakeholders.
B. BUSINESS SEGMENT ENGINEERING:
Industry Structure and Development:
It has been another reasonably successful year for the Engineering business inspite of a tough business environment. We have been able to maintain our market share in the International markets and also taken first steps in two new business segments. The conditions in the domestic market was challenging during the year with no significant industries. Under these conditions it was imperative for our Engineering Division to take its first steps in two new segments, the brush roll and fabrication businesses, which contributed towards adding value to its portfolio and helped it grow.
Strengths and Opportunities:
The skills in designing and fabrication and focus on quality and services along with the strength of the ECK brand has enabled the business in developing and assembly of custom-built machines for demanding customers such as M/s ITC. These machines incorporate our rolls and allow for specialized applications that suit the customers unique needs. These achievements have resulted in the Engineering Division of HML becoming an integral part of customers operations, which in turn allow us to sustain
. long-term,efficient businessrelationships
Our premium hybrid roll continues to be the preferred roll of our discerning customers and has proved its many advantages over standard cotton rolls. This is an opportunity we should capitalize on for this segment.
The addition of brush rolls for the steel industry to our product list completes the list of requirements of major steel producers thus also adding to the bottom-line.
Weaknesses and threats: growth in the textile, steel and paper Standardization of goods and their quality control processes is a major challenge as most of our supplies are customized to customer requirements. Most of our roll supplies to the textile industry are meant for replacement in the processing lines where rolls are required without delay. Inventory management is a major challenge while servicing this segment. Moreover the textile industry is going through a phase of very tight liquidity conditions, resulting in long payment cycles for us.
The outlook of this business remains good especially considering our efforts to move into new segments and concentrate on design and manufacture of calendering machines, rather than just be a supplier of replacement rolls. Going forward we are very hopeful of increasing our sales in the international markets. These factors combined with our goodwill in the domestic and international markets should be helpful in increasing our sales and garnering a higher market share.