Hindustan Tin Works Ltd Management Discussions.
As per International Monetary Fund (IMF), after strong growth in 2017 and early 2018, global economic activity slowed notably in the second half of last year, reflecting a confluence of factors affecting major economies. Global growth is now projected to slow from 3.6 percent in 2018 to 3.3 percent in 2019, before returning to 3.6 percent in 2020. WTO economists also expect merchandise trade volume growth to fall to 2.6% in 2019 down from 3.0 percent in 2018. Trade growth could then rebound to 3.0 percent in 2020. However, this Is dependent on on easing of trade tensions.
During the financial year 2019, Indio emerged os the fastest growing major world economy despite increased global vulnerabilities, such os rising oil prices, escalated trade wars between global partners, and the US monetary shutdown. Indias economy gained momentum as a result of the stabilization of Goods and Services Tax (GST) and more investment by foreign investors. During the year, India climbed another 23 points in the World Banks ease of doing business index to the 77th position, for the first time. According to World Bank, Indias GDP growth is expected to accelerate moderately to 7.5 per cent in Financial Year 2020, driven by continued investment strengthening-particularly private improved export performance, and resilient consumption.
Your Company, was abie to achieve turnover of Rs. 336 Cores in the Previous year 2018-19 which is the highest ever of sales achieve through higher levels of customer engagement, production performance, cost reductions steps and efficient supply chain management.
OPPORTUNITIES & THREATS
Our Company is one of the leading and established Company in Metal packaging industry. We are keenly conscious of the emerging opportunities in the can-manufacturing sector in India as well as abroad and we shall endeavor to take benefit of every good opportunity in the very best interest of our members.
Following are the opportunity and threats of our Company;
1. Historical established performance.
2. Established customer profile and wide customer base.
3. Reputation for quality, well established brand.
4. Edge in raw material procurement.
5. Ability to expand and diversify.
6. Expansion in export market.
7. Professionally & technically qualified Human Resource.
8. Priority of the Government to promote Food Processing Industry.
9. Innovation and new product development.
10. Environmental concerns against plastic products THREATS
1. Global & Domestic competition
2. Lower recovery in Global Economy.
3. Volatility in exchange rate (with rupee depreciation).
4. Competition from unorganized sector.
5. Thin margin.
6. Development and innovation in alternate packaging materials
7. Uncertainly in availability of seasonal fruits & vegetables
8. Finance Cost
9. increased cost of inputs like Tinplate & Labour Cost.
10. US & Chino Trade War
11. Anti Dumping proceedings initiated by Indian Tinplate Producers.
PRODUCT WISE PERFORMANCE
The Company had been mainly focusing on food products and now gradually expanding its base in non food sector also. in addition Company is also developing new innovative products for domestic and global market
The outlook of the Company seems to be progressive. The management of the Company is engaged in the task of reducing overheads and other costs. Company has a vision to consolidate its position os leader in metal packaging segment
There is a trend towards alternate packaging which is cheaper as compared to metal packaging with shorter shelf life inspite of the fact that metal packaging has on edge over them in terms of shelf life, sustainability etc.
The main concern is the high inflation in the Indian economy resulting into increase in cost of various inputs particularly Tinplate, rising interest rotes and lower recovery in global economy. Further few export consignments were reportedly damaged in transit during the previous year. The consignments ore insured and under investigation by the insurer, the impact of which is yet to be ascertained on the Company. Since the financial implication is yet to be quantified, no provision is mode in the books.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The Company has adequate internal control systems commensurate with its size and complexity of operations. The Internal Control systems ore aimed at monitoring efficiency of operation, ensuring protection of resources, accuracy and promptness of financial reporting and compliance with statutes and regulations. All the vital internal control systems in the Company ore working satisfactorily. Our statutory and Internal Auditors hove not reported any serious departure in any of the internal control systems. The Audit Committee of the Company regularly reviews internal control systems of the Company and continuous improvements ore being mode in the some. Budgets ore prepared every year and the actual performance is compared to the budgeted performance. The variances ore reviewed on a monthly basis and corrective actions ore token accordingly.
FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE.
Inspite of fierce competition & extremely challenging domestic business environment, your Company delivers and achieves Rs. 33635.77 lakhs os against the previous years revenue from operations (net of GST) of Rs. 31452.15 lakhs i.e. Increase of Rs. 2183.62 lakhs (6.94%). The Export Soles has been decreased from Rs. 7380.97 lakhs in previous year to Rs. 6775.52 lakhs in current year i.e. Decrease of Rs. 605.45 lakhs (8.20%).
The Company has achieved total comprehensive income of Rs. 792.98 lakhs os against the previous year of Rs. 993.05 lakhs i.e. Decrease of Rs. 200.07 lakhs (20.14 %).
All the statutory compliance with respect to SEBI regulations, provisions of the Listing Regulations, 2015 with the Stock Exchanges, Income Tax Act, Goods and Services Tax Act, 2017, Companies Act, 2013 and oil other applicable Acts, and Rules & Regulations ore complied with.
HEALTH & SAFETY
The Company continuously focuses on the health and safety of all its workers and staff. Adequate safety measures have been taken at the plant for the prevention of accidents or other untoward incident. The necessary medical facilities are available for the workers and staff to maintain good health.
CORPORATE SOCIAL RESPONSIBILITY
The Company recognizes the fact that, beyond the day-to-day conduct of its business, as a responsible corporate citizen, it has to discharge its duties towards the larger society in which it operates.
The core areas identified by your Company and CSR Committee in order to improve the society are Promotion of education & skill development. Healthcare, Rural Development, Drinking Water Project and Clean Environment.
MATERIAL DEVELOPMENT IN HUMAN RESOURCES/INDUSTRIAL FUND
The Companys ability to deliver value products to clients depends largely on its ability to attract, train, motivate, empower and retain the best professionals. Annual performance appraisal system is already in place to evaluate the operational performance of each employee on the basis of predefined Key Responsibility Area. The Company has 471 permanent employees as on 31 st March, 2019.
Industrial relation front continued to be peaceful with no working day loss due to any activity.
DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREOF
|Interest Coverage Ratio||2.31||2.50|
|Debt Equity Ratio||0.92||1.16|
|Operating Profit Margin (%)||6.66||6.73|
|Net Profit Margin (%)||2.36||2.56|
DETAILS OF ANY CHANGE IN RETURN ON NET WORTH
The return on net worth is in line with return on sales except impact of reduction in profit due to reduction of other income on account of decrease in foreign exchange gain in FY 2018-19.
|Return on Net Worth (%)||5.49||5.95|
The statements in the "Management Discussion and Analysis Repart" section describes the Companys objectives, projections, estimates, expectations and predictions, which may be "forward looking statements" within the meaning of the applicable laws and regulations. The actual performance may differ materially from those expressed or implied, depending upon the economic and climatic conditions. Government policies and other incidental factors. Such statements represent intentions of the management and the efforts put in to realize certain goals. The success in realizing these depends on various factors both internal and external. Investors, therefore, are requested to make their own independent judgment before taking any investment decisions.