hittco tools ltd share price Management discussions


A. INDUSTRY STRUCTURE & DEVELOPMENTS

The Indian machine tools industry consists of about 1000 manufacturing units out of which approximately 400 units are under the organized category. Further, ten major Indian companies constitute almost 70 per cent of the total production. While the large, organized player caters to India heavy and medium industries, the small scales sector meets the demand of ancillary and other unites. The machine tools industry can be broadly classified into metal-cutting and metal cutting -forming tools, based on the type of operation. Metal cutting accounts 81 per cent of the total output of machine tools in India. Key metal cutting tools include turning centres, machining centres and grinding centres which account for nearly two -thirds of the total metal cutting production.

There lias been a growing need to adopt CNC- based machine tools in the end user segments to achieve precision and accuracy in the production process. Moreover, non- CNC machines consume more time and energy and are prone to considerable wear and tear in a short period. This demand for CNC- based machine is expected to aid the growth of the machine tools market in India over the next four years.

Metal fonning is dominated by presses, which account for 55 percent share. Based on technology, Machine tools can be classified into CNC (Computerized Numerically Controlled) and conventional tools. CNC machine tools, which are highly productive and cost effective comprising nearly 73 percent of machine tools. Of these, CNC turning centres, machining centres and grinding centres are the biggest segments, accounting for nearly 92 percent of the total CNC machine tools production in India. The increasing domestic demand which is not currently met by domestic production indicates the vast business potential available within the country for machine tools. Further Technavio market research analyst forecasts the production of machine tools in India to grow at a CAGR of 13% during the forecast period.

B. OPPORTUNITIES:

Expansions in strategic sectors, will fuel the demand for machine tools.

Global hub for manufacturing components.

Impetus being given by Government for growth in manufacturing sector.

Growth in power, nuclear power, aerospace to fuel demand for machine tools.

Tie -up with major player in the field and diversification to medical equipment manufacturing.

C. THREATS:

Increasing interest rates

Lowering of import duty.

Influx of second hand/reconditioned imported machines.

Surplus manpower & employee cost and shortage of skilled manpower in critical areas.

D. STRENGTH

Qualified & experienced engineers and technicians.

Focus group for strategic segments

Good infrastructure for manufacturing machine tools.

Strong brand image.

Country wide sales and serv ice network.

Wide variety - Conventional, CNC, Special purpose & metal forming machine.

Adaptability to change.

E. SEGMENT WISE PERFORMANCE

Your Company made after tax profit of Rs. 60.61 lakhs on a turnover of Rs. 700.67 lakhs and other income of Rs. 3.94 lakhs.

Drill Bits & Taps (in Lakhs)
Net Sales & Operating Revenue Rs. 700.67
Profit after Tax Rs. 60.61
Capital Employed Rs. 694.79

F. OUTLOOK FOR THE INDUSTRY

The domestic Drill Bits and Taps supply is going increase in the coming years. Your Company has plans to increase production of Drill Bits and Taps as well as Carbide Tools. Additionally, we are planning to expand our overseas marketing activities.

G. OUTLOOK FOR THE COMPANY

In your Companys future strategic growth plans, the core areas include further expansion of the capacities of machines. Its strategic plans are also directed towards meaningful utilization & redeployment of resources depending on the situations and full capacity utilization of existing operations with proactive financial management and with qualitative focus on human resource development.

H. RISKS & CONCERNS

The rising price of fuel oil and other input materials are a cause of concern for the industry. International disturbances caused by terrorist strikes and sudden unhealthy trends in the international scenario arising out of political uncertainty in the global context are a risk factor.

I. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUECY

Your Company has well established internal control systems commensurate with the size of the Company. Company lias entrusted the jobs of internal audit to well experienced employees of the Company. The internal audit reports are discussed by an independent committee constituted by the Board. Action is being taken to further strengthen internal control procedures in respect of inventory and management.

J. DISCUSSION ON FINANCIAL PEFORMANCE WITH RESPECTS TO OPERATIONAL PERFORMANCE

Details on financial performance with respect to operational perfonnance are given in the Directors Report

K MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT INCLUDING NUMBER OF PEOPLE EMPLOYED

Human Resources Development is the key for the success of any organization. Keeping this in mind and the targets set. functional and development training needs are identified from multiple sources, primarily the competency related needs, secondly, needs arising from organizational requirements and finally departmental/sectional imperatives. So, your Company has appointed in this year as many employees required for higher production.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
HITTCO TOOLS LIMITED
Sd/- Sd/-
(Surendra Bhunduri) (Madhu Bhandari)
Managing Director Director
DIN: 00727912 DIN: 00353298
Place: Bangalore
Date: 22/07/2023