GLOBAL ECONOMIC ENVIRONMENT
The future of Global Dairy Processing Equipment Market looks promising
on account of increase in demand for Processed Milk, Fresh Dairy Product etc. The Global
Dairy Processing Equipment Industry is also expected to grow in the range 4% to 6% during
the current financial year and sustain the same for the near future.
INDUSTRY STRUCTURE AND DEVELOPMENT
The food processing industry is of great significance as it provides
linkages between agriculture and industry. The Government of India has initiated several
steps in the past few years to accelerate this sector. Food processing has become an
integral part of the food supply chain in the global economy, and India has also seen
growth in this sector in the last few years. The sector contributes around 11% of
agricultural value-added and 9% of manufacturing value added.
OUTLOOK OF DAIRY MACHINERY INDUSTRY IN INDIA:
The dairy machinery industry in India is expected to grow at a CAGR of
10.06% from 2022 to 2032. This growth is being driven by a number of factors, including: v
Increasing milk production in India: India is the worlds largest milk producer, and
milk production is expected to continue to grow in the coming years. This will create a
demand for dairy machinery to process and package the increased milk production. v
Rising disposable incomes: As incomes rise in India, people are increasingly able to
afford to buy processed dairy products. This is creating a demand for new and innovative
dairy machinery that can produce high-quality, safe and affordable dairy products. v
Growing export market: India is a major exporter of dairy products, and the export market
is expected to grow in the coming years. This will create a demand for dairy machinery
that can meet the standards of international markets. v Government support: The
Indian government is providing support to the dairy industry through schemes such as the
National Dairy Development Board (NDDB). This support is helping to boost the growth of
the dairy industry and the demand for dairy machinery.
The dairy machinery industry in India is a sunrise industry with a lot
of potential for growth. The factors mentioned above are expected to drive the growth of
the industry in the coming years.
OPPORTUNITIES: Turnkey Projects
Analysis of competitors indicates that more than
50 % of the turnover is from the turnkey projects. Our unit is capable
of taking up turnkey projects for setting up of Dairy Plants up to the capacity of 50,000
liters per day.
During the year 2021, the company has received an order for setting up
of 30 Metric Ton per Day (MTPD) milk powder making plant from Indore Sahakari Dugdh Sangh
Maryadit, Indore, Madhya Pradesh. The order specifies that the set up should be able to
produce Whole Milk Powder (WMP), Skimmed Milk Powder (SMP) and Dairy Whitener. This
project will be completed by 30.09.2023. This is the biggest ever order received by this
unit. This is also the first major entry of the unit to Milk Powder segment. This segment
of Industry is estimated to be the size of Rs 400 Crores in the country.
CHALLENGE: High capital investment
Dairy processing manufacturers require high capital investments to
install various types of processing equipment. A project of milk processing plant of
capacity 3 LLPD requires around Rs. 25 Crores for the Machinery, another Rs.27 Crores for
Civil work at the Site and another Rs. 27 Crores to Rs. 30 Crores for fixtures etc. Thus
around Rs. 85 Crores to Rs.90 Crores is required. This installation incurs not only high
costs but also requires timely maintenance, which acts as a cost addition that affects the
operating margins of dairy processors. Moreover, high capital investment affects the
product cost steadily and this is not preferred by dairy product manufacturers. Due to
this the margins in Dairy Machinery is very low, ranging from 4% - 5%. Considering these
aspect Government of India has launched many initiatives like setting up Food Processing
fund. The Ministry of Food Processing Industries also has a scheme for extending credit
facility for individual manufacturing units of Dairy Machinery.
CONCERNS: Volatile Input Cost
Stainless steel is one of the major raw materials for the Dairy
Machinery as highly perishable product is being handled. The cost of stainless steel has
been very volatile in the market due to various reasons. Project works undertaken by the
company are fixed priced contracts, which may probably expose it to volatile raw material
prices including that of stainless steel. However, company at the time of placing bids,
consider the expected volatility in raw material prices to safeguard its margins.
The typical characteristic of the Dairy Machinery industry is that it
is cyclically associated with Capital goods sector but its fortunes are closely linked to
Dairy Industry. Thus, the debtor collection period is quite long here, in excess of 100
days and also the operating margin, PBDIT is less ranging from 4 to 5 %. Thus, any slight
volatile change in raw material or any other input cost hits the margin of the company
immediately.
RISK AND CONCERNS
Gaps in the supply chain are perhaps the biggest challenge faced by
this industry. Preprocessing losses occur due to lack of awareness and a dearth of storage
and pack-house facilities close to the production vicinity. The shortage of refrigerated
vehicles is reflected through losses occurring at the transport stage. The launch of the
Pradhan Mantri Kisan Sampada Yojana is aimed at bridging the infrastructure gap. In fact,
100% foreign direct investment in food processing units has been allowed.
SEGMENT WISE/PRODUCT WISE PERFORMANCE v Automatic Day date models:
Well- accepted in the market because of design aesthetics, but due to cost factor sales is
low. v Quartz: Very good market for quartz watches as the price range starts from
Rs. 650/- to Rs. 3500/-. v Hand wound Mechanical: Well-accepted in the market, but
due to unavailability of components production of hand wound mechanical watches are
limited.
RESEARCH & DEVELOPMENT v Planning to introduce Ladies watches
in quartz segment with latest design at different price ranges.
FINANCIAL PERFORMANCE
The turnover of the Company for the year 2022-23 was Rs 51.59 Crores
with net profit of Rs.7.06 Crore. Turnover increased from Rs.6.82 crore of the previous
year to Rs.43.55 Crore during current year in respect of Food Processing Machinery
Division, Aurangabad, which is mainly on account of project sale of Rs.36.80 crores during
the year 2022-23. The total borrowing by the Company as on 31.3.2023 was Rs 641.72 Crore
of Government of India Loan.
RATIO ANALYSIS
|
2022-23 |
2021-22 |
| Trade Receivables |
125 days |
67 days |
| Turnover |
|
|
| Inventory Turnover |
69 days |
243 days |
| Interest Coverage Ratio |
956.52% |
224.08% |
| Net Profit Margin (%) |
13.68% |
305% |
| Return on Net Worth |
1.63% |
8.99% |
Trade Receivables Turnover (in days) has increased due to increase in
trade receivable on account of powder project.
Inventory Turnover (in days) has decreased due to reduction in
inventory holding and increase in turnover due to powder project revenue.
EBIT has increased while there is negligible Interest during the year,
hence there is increase in interest coverage ratio.
Net profit decreased during the year on account of bad debts and
reversal of provision on investment in the previous year.
Reduction in return on Net worth is due to reduction in PAT on account
of bad debts and provision for tax and reversal of provision on investment in the previous
year.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has in place adequate systems of Internal control
commensurate with its size and nature of its operations. The salient features of internal
control systems are v Clear delegation of power with authority limits for incurring
capital and revenue expenditure. v Well laid down corporate policies for
accounting, reporting and Corporate Governance. v Safeguarding assets against
unauthorized use or losses or disposition, and ensuring that the transactions are
authorized, recorded and reported correctly. v Process for formulating and
reviewing annual and long term business plans have been laid down. v Detailed
Annual budget giving further break up of monthly targets under various heads. v
Continuous review of the performance by the Core Committee with reference to the budgets
on an ongoing basis. v Compliance with laws and regulations.
The Internal Audit Department of the Company along with the external
firms appointed for carrying out internal audits of Units / Divisions reviews, evaluates
and appraises the various systems, procedures / policies laid down by the Company and
suggests meaningful and useful improvements. Internal Audit Department coordinates with
the Units / Divisions of the company for ensuring coverage of all areas of operations in
order to bring a transparency in the whole spectrum of the Company. The Audit Committee
reviews the Audit Report submitted by the Internal Auditors. Suggestions for improvement
are considered and the Audit Committee follows up on the implementation of corrective
actions. The Audit Committee also meets the Companys Statutory Auditors to
ascertain, inter-alia, their views on the adequacy of internal control system in the
Company and keeps the Board of Directors informed of its major observations from time to
time.
HUMAN RESOURCES
As on 31.03.2023, the Company and its Subsidiaries had a total
workforce of 813 employees, comprising various categories of employees in manufacturing
plants and other offices in technical and other professional areas as detailed below.
COMPANY AND SUBSIDIARY WISE QUALIFICATION DETAILS AS ON 31.03.2023
Sl. No Company and |
IP as on |
Engineering Graduates |
Diploma Holders |
Professionals |
ITI/ NAC |
General Graduates/ |
Others |
Subsidiary |
31.03. 2023 |
|
|
HR |
Finance |
|
Post Graduates |
|
| 1 HMT Limited |
63 |
20 |
1 |
5 |
5 |
13 |
17 |
2 |
2 HMT Machine Tools Ltd |
731 |
145 |
117 |
7 |
15 |
315 |
48 |
84 |
| 3 HMT Watches Ltd |
- |
- |
- |
- |
- |
- |
- |
- |
| 4 HMT (International) Ltd |
19 |
13 |
1 |
1 |
3 |
0 |
1 |
0 |
Total |
813 |
178 |
119 |
13 |
23 |
328 |
66 |
86 |
The Company has taken suitable measures to bring down the Personnel
Costs by implementing several austerity measures, rationalization of surplus manpower in
the Company.
Statistics on the number of employees separated on availing the VR
Scheme in HMT and its Subsidiary Companies during the last four years is furnished below:
|
|
No. of employees opted for
VRS |
|
Sl. No Organization |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
Total |
| 1 HMT Limited |
- |
- |
- |
- |
- |
| 2 HMT Machine Tools Ltd. |
- |
- |
- |
- |
- |
| 3 HMT Watches Ltd. |
- |
- |
- |
- |
- |
| 4 HMT (International) Ltd. |
- |
- |
- |
- |
- |
Total |
- |
- |
- |
- |
- |
Surplus manpower in certain areas has been deployed under re-deployment
scheme by providing training and re-training to the employees and posting them at thrust
areas to meet the goals of the organization. The Company is trying its best to retain the
skilled and professionally qualified personnel to arrest attrition.
PERSONNEL AND INDUSTRIAL RELATIONS
The Personnel and Industrial Relations situation in the Company during
the year remained cordial.
|
For and on behalf of the Board of Directors |
| Place: Bengaluru |
(Pankaj Gupta) |
| Date: 06.09.2023 |
Chairman & Managing Director |
|
(Addl. Charge) |
|
DIN : 09716028 |
+91-9892691696
