Industry structure and developments:
ECONOMIC REVIEW
Global Economic Outlook
The world economy is projected to grow by 2.3 per cent in 2023 and
2.5 per cent in 2024, a slight uptick in the global growth forecast for 2023. In the
United States, resilient household spending has prompted upward revision of growth
forecast to 1.1 per cent in 2023. The European Unions economy driven by lower gas
prices and robust consumer spending is now projected to grow by 0.9 per cent. Chinas
growth this year is now forecast at 5.3 per cent as a result of COVID-19 related
restrictions being lifted.
Inflation has remained stubbornly high in many countries even as
international food and energy prices fell substantially in the past year. Average global
inflation is projected at 5.2 per cent in 2023, down from a two-decade high of 7.5 per
cent in 2022. While upward price pressures are expected to slowly ease, inflation in many
countries will remain well above central banks targets. Amid local supply
disruptions, high import costs and market imperfections, domestic food inflation is still
elevated in most developing countries, disproportionately affecting the poor, especially
women and children
Exceptionally strong labour markets are, however, making it harder for
central banks to tame inflation. The Federal Reserve, the European Central Bank and
central banks in other developed countries have continued to raise interest rates in 2023,
but at a slower pace than last year, which saw the most aggressive monetary tightening in
decades. The banking sector turmoil in the United States and Europe has added new
uncertainties and challenges for monetary policy. Although swift and decisive actions by
regulators helped contain financial stability risks, vulnerabilities in the global
financial architecture and the measures taken to contain them will likely dampen credit
and investment growth going forward.
Indian Economic
Our overall outlook for the Indian economy remains positive: It
expect investments to see a turnaround and thrust the economy into sustainable growth.
India will likely grow at a moderate pace of 6.0%–6.5% in FY 2023–24, as the
global economy continues to struggle. Growth in the next year will likely pick up as
investments kick start the virtuous circle of job creation, income, productivity, demand,
and exports supported by favorable demographics in the medium term.
It looks like the world has come out of the shadow of the pandemic and
has, in fact, learned to live with it. However, geopolitical crises, supply chain
reorientations, global inflation, and tight monetary policy conditions will weigh on the
outlook. We have delved into these challenges in detail in our previous outlooks.
Outlook Drum Closure
The Drum closure market is linked with Industrial Drums market. The
Industrial Drums Market was valued at USD
11.61 billion in 2021 and is expected to reach USD 15.90 billion by
2027, registering a CAGR of 5.23% over the forecasted period 2022-2027. The increase in
the overall demand for Industrial Drum from the Chemical and Fertilizers and Petroleum
Lubricant Industries, as well as the growing focus on strengthening Supply Chain
capabilities among the end-users, are the primary drivers for the industrial drums market.
Asia Pacific is expected to Witness a Significant Growth Rate. The
rapidly evolving industrial and manufacturing sector in the Asia-Pacific region is
expected to increase the usage of industrial drums as manufacturers are continuing to
expand their manufacturing bases to emerging economies like China, India, and Indonesia.
Large-scale palm oil exports from China and India may result in a major
increase in the demand for industrial drums in the region.
According to USDA Foreign Agricultural Service, the retail food
industry was the most valuable among other segments in the food industry in India.
Countries in the Asia Pacific, such as China and India, with strong
agricultural production rates, are improving their
export volume by implementing effective means of storage, transport,
and packaging solutions.
Scaffolding and formwork
Market Research Future (MRFR) expects the global scaffolding market
to grow at a CAGR of approximately 6.3% from 2020 to 2027 (forecast period).
Scaffolding is characterized as the erection, alteration or dismantling
of a temporary structure, specially erected to support a platform. Scaffolds are widely
used for working at heights, and it involves the risk for a scaffolder (person working on
a scaffold) to fall from an incomplete scaffold during the erection and dismantling of a
scaffold.
Scaffolding is a form of prefabricated construction that entails large
structures or components of construction built off- site, generally at factories to be
erected later on-site on a concrete foundation. Increasing FDI in construction in the Asia
Pacific region and supportive government regulations and policies are driving the
scaffolding market. The scaffolding market is constrained by factors such as fluctuating
raw material prices and slower economic growth, which impede market growth.
Textiles
The global textile market stood at a value of around USD 1002.4
billion in 2020. The market is further expected to grow at a CAGR of 4.5% in the forecast
period of 2023-2028 to attain a value of around USD 1305.4 billion by 2026.
The textile industry in the Asia Pacific is expected to witness a
significant growth, owing to the thriving fashion and clothing industry in countries like
India, China, and Vietnam, among others. Over the forecast period, the growing trade
agreements between various countries to support the textile sector is likely to aid the
market in the region. For instance, in India, 100% foreign direct investment (FDI) is
allowed in the textile sector. Further, the market is expected to be augmented by the
growing demand for medical textiles, especially after the COVID-19 pandemic.
BUSINESS OVERVIEW
The Company is a multi-product manufacturing company, which
manufactures high precision and sophisticated products, mainly for discerning worldwide
markets. The Company enjoys a significant position in business industries viz., Drum
Closures, Scaffolding systems & accessories, Engineering and Designing Services,
Cotton Yarn, Fabric and Garments.
The product line of the Company expands beyond Drum Closures into
scaffolding systems and accessories and 100% Cotton Yarn, Fabric and Garments.
The Company has diversified operations and manufacturing including,
vertically Integrated Textile division of manufacturing of Yarn, Fabric, and Garments. It
has facility of producing cotton yarn, m?lange yarn, also having facility of knitting,
dyeing and printing and garmenting.
The Cotton Yarn division uses the most modern equipment to manufacture
its product assuring world-class quality to its
customer. Technocraft is certified ISO 9001:2000 for its Cotton Yarn
division.
Drum Closure
Each steel drum requires one set of closure, a precision
engineering product so as to ensure that the liquid inside does not spill out. The Company
has designed and developed the next generation technology for manufacturing of drum
closures. It also manufactures all its gaskets and clamps and offers a full range of drum
closure products to its clients. With patented technology, there has been substantial
reduction in manufacturing costs, improvement in quality and this has helped catapult TIIL
to the second largest global manufacturer of steel drum closures.
Your Company is the second largest manufacturer of steel Drum Closures
and continues to enjoy a worldwide market share of about 36% (excluding China). The
Company produces a wide variety of closures and related equipment ranging from fully
automatic flange insertion systems to cap-sealing tools. The Company caters to all leading
steel drum manufacturing companies of the world.
Revenue from Operations stood at 535 Crores as compare to previous
year of 584 Crores. Profit Before Tax and
Finance Cost but after Depreciation stood at 163 Crores as compare to
200 Crores of previous year.
Out of the total revenue of drum division, approximately 89.02% of
revenue was generated from Export Sales.
Scaffoldings & Formwork
Scaffolding is a temporary structure used to support people and
material in the construction industries, real estate and any other large structures. It is
usually a modular system of metal pipes or tubes, although it can be from other materials
also.
The Company is a leading Indian manufacturer and distributor of
scaffoldings and formwork systems. The Company has been supplying scaffoldings to global
markets for over 20 years. During the Financial Year the company has increased its
domestic sale, as the Company has started supplying to various infra Projects.
Despite the volatile nature of construction and allied activities, the
Scaffolding & Formwork (S&F) market is thriving in India and one can expect
brighter times ahead.
With the government laying special emphasis on construction and
infrastructural development in the 12th Five Year Plan, opportunities abound in the Indian
Scaffolding and Formwork (S&F) Industry. With the demand rising in the wake of ongoing
and future projects, S&F manufacturers are keeping pace with the Construction
Industry.
The Company has strategically located state-of-the-art manufacturing
facilities with installed capacities of 40,000 MT in India. The Company is positioned as
an end-to-end solution provider owing to its well-integrated manufacturing capability. The
Company supplies its products to a diversified set of end markets including oil & gas,
power, refineries, petrochemical, infrastructure and commercial construction.
The Company is present in the premium segment of Scaffolding business.
Scaffolding segment is growing on the back of the strong demand from the international
infrastructure markets and also getting good response from infra projects in India.
The Companys Scaffolding segment comprises of Scaffolding and
Formwork business. Its major revenues accrue from overseas markets. The Company is also
started giving its scaffolding on renal basis; The Company is finding good scope and
margin in this growing business.
Formwork Business
Formwork is the term given to either temporary or permanent molds
into which concrete or similar materials are poured. Traditionally, formwork was built
using easy to produce timber and plywood, or moisture-resistant particleboard. Over a
period of time formwork is now made more of steels which are more durable and reusable.
Looking at Indian governments focus on rapid infrastructural
development across the country by constructing railways, roads, bridges, dams, airports,
power plants and many more, construction is now growing at a fast pace. Contractors have
started adapting newer technologies, faster systems, advanced concrete techniques and
better and established management tools.
Engineered Formwork Systems are built out of prefabricated modules with
a metal frame - usually of steel or aluminum
- and covered on the application (concrete) side with material having
the wanted surface structure (steel, aluminum, plastic, timber, etc)
The Company has entered into manufacturing of sophisticated engineered
Formwork systems for building, construction and infrastructure projects in India. The
Company has state-of-the-art manufacturing plant in India and is well placed to play a
larger role in the construction growth in India and overseas, with a network of offices at
Mumbai and overseas.
M?CH ONE
M?CH ONE is a very lightweight Formwork system made of high
quality Aluminum Extrusion with admirable strength to take on the site conditions. M?CH
ONE Aluminum forms is best suited for construction of residential units and mass housing
projects. It is fast, simple, adaptable and cost effective. It produces total quality work
which requires minimum maintenance and when durability is the prime consideration. The
system is designed for maximum repetitions with very stringent tolerances, well designed
edges to resist sight abuses. This system is most suitable for Indian condition as a
tailor made aluminum formwork for cast in-situ fully concrete structure. As per industry
reports, 80% of the total cost of scaffolding is attributed towards labor cost that is
involved in loading and unloading and erection and dismantling
of scaffolding. With M?CH PLUS we have made this cost more efficient
by making the entire system lighter without
compromising on the required strength
TEMPORARY LABOUR SHELTER
Turnkey solutions for corporations Workers are your frontline
fighters in the war against a possible economic crisis. Keeping your workforce safe will
ensure efficient productivity. Protect your work force through Technocrafts
effective solution for manufacturing units. Build low cost housing compatible with Govt.
of India Guidelines: Low Cost, Modular Two Levels, Optimum Space Utilization, Large
Capacity of Beds, Spacious Rooms for People, Quick Assembly Easy Dismantling and Lower
Space Requirement. Temporary On-site facility for 100 workers can be erected in 7 days.
Consolidated Revenue from Operations of scaffolding division increased
by 26 % from 707 Crores to 890 Crores. Consequently Profit before Tax and Finance Cost
but after Depreciation increased by 149% from 91 Crores to 227 Crores.
Textile (Fabric and Yarn)
The Company is having a yarn division having consolidated capacity
of around 55,000 spindles. New capacity expansions announced by the Company i.e. 31,000
spindles in Amravati in subsidiary company i.e. Technocraft Textiles Ltd, is under process
and 16,000 spindles in Murbad in subsidiary company Technocraft Specialty Yarns Ltd is on
hold.
The Company produces variety of products ranging from NE 20 to NE 40,
Carded and Combed varieties of Cotton Yarn. The Spinning mill is equipped with world-class
Swiss, Japanese, German, Spanish equipment. Currently, the Company exports approx. 24.19%
of garment products mainly in Europe, Asia, Latin American countries etc.
The Company manufactures premium quality active wear products and
provides superior service. Products are custom
knit, dyed, finished, cut, sewn, decorated, packaged and distributed.
Being part of a diverse group, the Company has access to the latest
trends in the European markets, thus enabling it to offer high quality products and latest
fashions with Indian prices in a very short lead-time.
Division has made significant structural changes. Companys Grey
Cotton Yarn operations are now based in Amravati which is cotton growing area and has cost
effective operations and has shown substantial improvements in revenue as well as profits.
In Murbad, company now produces only value added high margin products like Melange yarn
and fabric. These are also generating substantially better revenue and profit. Overall,
this division has now been re-engineered and all loss making products and locations has
been plugged.
Revenue from Operations of Textile (Fabric and Yarn) Division stood at
524 Crores as compared to 663 Crores of previous year. Loss before Tax and Finance
Cost but after Depreciation of Textile (Fabric and Yarn) Division stood 30 Crores as
compare to profit of 47 Crores.
Engineering & designing services through Subsidiary
Technosoft Engineering Projects Limited (‘Technosoft) is
a subsidiary of the Company. Technosoft is a global technology services company offering
broad-based engineering, designing and IT services using a variety of client-partnership
models for delivery. Technosofts client base spans various industry verticals
including heavy machinery, automotive, aerospace, manufacturing, oil & gas, high-tech,
telecom, healthcare and financial services. The companys client base is widely
spread globally including many clients from US, Canada, UK and Germany.
Technosoft has a strong team of over 450 engineers and designers
located worldwide. Its engineers and designers are equipped with state-of-the-art hardware
and software tools, including tools for 3-D modeling, Finite Element Analysis and process
simulation.
Technosoft operates in North America through its subsidiaries, which
provides general engineering & designing services Revenue from Operations increased by
25% from 136 Crores to 109 Crores. Profit before Tax and Finance Cost but
after Depreciation increased by 17% to 27 Crores as compare to 23
Crores of previous year.
Out of the total revenue of this division, approximately 95.38% of
revenue was generated from Export.
OPPORTUNITY & FUTURE PLAN
For an enterprise there is nothing more important than to find and
exploit new market opportunities. The Company is focusing in exploring new products in
scaffolding / formwork ‘Temporary Labour Shelter and ‘M?ch One are
the some examples of it. The Company has also started new spinning unit at Amravati.
The Government of India has set an ambitious target of increasing the
contribution of manufacturing output to 25 percent of Gross Domestic Product (GDP) by
2025.
The Government of India has taken several initiatives to promote a
healthy environment for the growth of manufacturing sector in the country. Likewise
Ministry of Heavy industries and Public Enterprises, in partnership with industry
associations, has announced creation of a start-up center and a technology fund for the
capital goods sector to provide technical, business and financial resources and services
to start-ups in the field of manufacturing and services.
Focus of the company is to consolidate and grow its position in each of
its core businesses which is Drum Closures, Scaffolding, Engineering & designing
Services and Textiles. The Company sees the Drum Closure division growing at same or
higher rate next year and this is certainly one of its core focus areas.
The Company is working strongly and increasing the sales and
profitability in China which is one of the main growing
markets for Drum Closures division. Drum Closure division is growing in
China.
Government initiatives such as RERA, Affordable housing, Smart Cities
etc. are expected to bring a transformational shift and boost growth of Indian real estate
industry, which will create tremendous growth in scaffolding. Awareness towards safety
will also generate more demand and growth for scaffolding business.
RISK & THREAT
Global Slowdown - More than 50% of TIILs revenue comes from
global markets. Any slowdown in economic activities in global markets in general and U.S.
market in particular may affect TIILs performance.
Foreign exchange - Being an export oriented company, the
Companys competitiveness, revenue growth & margins may be affected in case
Indian Rupee appreciates significantly against major global currencies in long run. In the
short run, volatility in foreign exchange markets may affect the Companys
profitability as it does not hedge its export receivables fully.
Commodity prices - Increase in commodity prices like steel &
cotton may affect the Companys performance in case it unable to pass the rise in
commodity prices to its customers.
Capital allocation – The Companys certain businesses
generate significant cash flows and The Companys cash & cash equivalents/ Bank
balance and current/financial investments were stood at 16906.64 Lakhs and 1203.77
Lakhs respectively as on March 31, 2023. TIILs management has plans to invest this
amount into various businesses and keep looking for inorganic growth opportunities.
Inorganic growth opportunities pursued in future may or may not generate economic returns
as desired due to various factors. However, management has narrowed down focus to
"engineering" area (considering managements background & expertise)
while pursuing inorganic growth opportunities and evaluating certain opportunities in
specialized drum closures/scaffolding segment and engineering services segment.
Market Share- any rise in competitive landscape in domestic or
international markets can lead to reduction in market
share and can affect profitability.
Financing: The Companys growth strategy is dependent on
the internal cash generation level and ability to draw external capital for growth
projects.
Considering the industry volatility, Technocraft continued its journey
of developing new markets and products and enhancing value added services to its customer.
The Company aims to address risks, opportunity and threat posed by the
business environment by developing appropriate risk mitigation measure.
The Management has also put in place effective measures to monitor the
Risk Management System and appropriate steps are taken to strengthen the existing business
practices and policies to the overcome the challenges.
Risk Management System is a way to try alternative solution as to
determine what works and what doesnt and testing
and refining assumptions.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
Internal Control System plays an integral role in the
Companys Success. It helps the management to monitor the effectiveness of the
controls in an ever-changing environment. Internal control and risk management are
critical in the process of setting and achieving operational, strategic, compliance and
reporting objectives.
The Companys internal control policies are in line with its size
and nature of operations and they provide assurance that all assets are safeguarded,
transactions are authorised, recorded and reported properly following all applicable
statutes and General Accepted Accounting Principles.
The Company has an Audit Committee, where all the members including the
Chairman are independent directors, in order to maintain objectivity. Internal Auditor of
the Company conducts audit in various functional areas. Audit planning and executions are
oriented towards assessing the state of internal controls, making them stronger and
addressing the risks in the functional areas of the Company. Internal Auditor, reports to
the Audit Committee its findings and observations. Audit Committee meets at regular
intervals to review audit issues and follow up on implementation of corrective actions.
Besides the above, the Company has also met the Internal Financial
Control requirements as per Companies Act, 2013 where policies and procedures have been
adopted by the Company for ensuring the orderly and efficient conduct of its business,
including adherence to Companys policies, the safeguarding of its assets, the
prevention and detection of frauds and errors, the accuracy and completeness of the
accounting records and the timely preparation of reliable financial information. Audit
Committee also seeks views of the statutory auditors on the adequacy of internal control
systems in the Company. In compliance with Section 143(3)(i) of the Act, the Statutory
Auditors have issued an unmodified report on the Internal Financial Controls over
Financial Reporting which forms a part of the Independent Auditors Report also
forming part of this Annual Report.
SEGMENT WISE FINANCIAL PERFORMANCE
The summarized segment-wise performance of the Company on
consolidated basis for the Financial Year 2022-23 is as follows:
( In Lakhs)
| Particulars |
Year Ended |
| 31.03.2023 |
31.03.2022 |
| Income from operations |
|
|
| a. Drum Closures Division |
53,477.86 |
58,391.04 |
| b. Scaffoldings Division |
88,944.21 |
70,732.13 |
| c. Yarn Division |
34,268.49 |
40,309.86 |
| d. Fabric Division |
18,145.59 |
25,938.54 |
| e. Engineering & Design |
13,621.95 |
10,857.26 |
| f. Others |
22.36 |
280.61 |
| Total |
208,480.46 |
2,06,509.44 |
| Less : Inter Segment Revenue |
10,027.27 |
15,398.94 |
| Total Income |
198,453.19 |
1,91,110.50 |
| Profit/(Loss) after Depreciation but Before
Finance Cost & Tax & Exceptional Items |
|
|
| a. Drum Closures Division |
16,251.79 |
20,005.91 |
| b. Scaffoldings Division |
22,724.68 |
9,128.55 |
| c. Yarn Division |
(1,769.08) |
5,011.51 |
| d. Fabric Division |
(1,244.11) |
(351.71) |
| Particulars |
Year Ended |
| 31.03.2023 |
31.03.2022 |
| e. Engineering & Design |
2,721.46 |
2,324.04 |
| f. Others |
(40.36) |
74.54 |
| Total |
38,644.38 |
36,193.14 |
| Less : |
|
|
| i. Finance Cost |
2,793.22 |
2,127.09 |
| ii. Other un-allocable expenditure net off
un-allocable income |
(326.37) |
(1467.67) |
| iii Share of Loss in Associate |
0.02 |
0.02 |
| Total Profit Before Tax from Continuing
Operations & Exceptional Items |
36,177.51 |
35,533.70 |
| Exceptional Items |
- |
473.65 |
| Total Profit Before Tax from Continuing
Operations but after Exceptional Items |
36,177.51 |
36,007.35 |
HUMAN RESOURCES AND INDUSTRIAL RELATIONS
The Company believes that a good Human Resource Policies are very
effective for supporting and building the desired organisation culture and to maintain the
same our company takes actions on the day-to-day activities of the organization.
The Company continues to focus on creating strong and long term
relationship with all employees as employee retention and development are among the
highest priorities of the Company.
The Company is working on enhancing its competencies to take care of
current and future business. Human Resource and Industrial Relations departments have
developed systems and policies on recruitment, performance management, learning and
development, and employee engagement.
The workers union of the Company has maintained healthy and cordial
industrial relations, and has been an equal partner in implementing Companys
policies and achieving stretched operational targets, year on year.
PERFORMANCE SNAPSHOT
The standalone financial highlights for FY 2022-23 are as follows:
( In Lakhs)
| Particulars |
FY 2022-23 |
FY 2021-22 |
Variance |
| Revenue from operations |
1,82,509.02 |
1,66,690.09 |
15,818.93 |
| Profit before Tax- Continued Operation |
24,775.56 |
29,233.80 |
(4,458.24) |
| Net Profit / (Loss) for the period from
Continuing & Discontinued Operations |
19,017.75 |
22,173.42 |
(3,155.67) |
Key Financial Ratios
| Ratios |
FY 2022-23 |
FY 2021-22 |
Change% |
| Debtors Turnover |
3.32 |
3.78 |
-12.32 |
| Inventory Turnover |
4.19 |
4.44 |
-5.70 |
| Interest Coverage Ratio |
14.38 |
21.90 |
-34.34 |
| Current Ratio |
1.72 |
2.26 |
-23.78 |
| Debt Equity Ratio |
0.44 |
0.31 |
41.06 |
| Operating Profit Margin % |
17.74 |
21.13 |
-16.03 |
| Net Profit Margin % |
10.42 |
13.30 |
-21.67 |
| Return on Net Worth % |
16.18 |
20.87 |
-22.49 |
Notes:
Interest Coverage Ratio decreased by 34.34% and debt equity Ratio
increased by 41.06 due increase in debt/ loan, which was borrowed for the capital
expenditure of new projects of the textile division.
CAUTIONARY STATEMENT
Statements made in Management Discussion and Analysis Report
describing the Companys objectives, estimates, expectations or predictions are
"Forward looking Statement" within the meaning of applicable laws and
regulations. They are based on certain assumptions and expectations of future events.
Actual results could differ from those expressed or implied. Important factors that could
make a difference to the Companys operation include global and Indian demand- supply
condition, raw material availability, trained manpower, changes in Government regulations,
tax regimes, economic development within India and the countries within which the Company
conducts business and other incidental factors.
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