Sunita Tools Ltd Management Discussions

Sunita Tools Limited has been in the Engineering and Mould base Industry for more than three and half decades providing one of its kind customized solutions to various industries with a vision to fulfill tomorrows requirements today. We manufacture Ground Plates, Mould Bases and Precision CNC Machining. Our products are a pre-requisite and act as food to the Manufacturing industries be it Automotive, Pharmaceutical, Electronics, Consumer Goods and most of the Manufacturing Sectors. Our products are mould base and machining parts which are industrial capital goods which undergoes stringent quality tests to meet industry standards before they are delivered to our clients. Our ability to produce customized quality products, compatible products, guidance throughout the design and manufacturing process, after sale technical support provides us significant competitive advantages. Our commitment to compatibility makes our products & services a flexible and versatile choice compared to others. We endeavor to promptly address any concerns of our business associates through significant senior management engagement.

Our strength lies in our ability to deliver customized, high-quality products, offer expert guidance throughout the design and manufacturing process, and provide comprehensive after-sales technical support. This commitment to compatibility and customer satisfaction sets us apart, making our products and services a flexible and dependable choice. We are dedicated to promptly addressing any concerns raised by our business associates through direct engagement with senior management, To strengthen our position to this we added 8 new state of the Art CNC machines or various sizes and capabilities.

We added

*Large CNC Horizontal Machining Centres largest in the Mouldbase Industry in India. *Large CNC Horizontal Surface Grinding Machines largest in Mouldbase Industry in India.

The above addition has made us ready to cater and garner maximum market share increase due to the CHINA +1 happening in India and across the globe.

In a strategic move to fortify and diversify its position in the Indian Engineering, Aerospace and Defence market, Sunita Tools Limited Defence and Aerospace Vertical announced significant diversification cum expansion project. It announced establishment of its new subsidiaries Sunita Leoquip Aerospace Private Limited dedicated to the manufacturing of defence and aerospace parts and components, Air Engineering parts, Precision Pumps and Compressor parts, And also Sunita Imperial Aerospace Private Limited dedicated to high precision machining of Aerospace and Defence and oil and gas components, This company has expertise in Machining Fighter jet cockpit frames, Base frames, various other parts needed in jet fighter and Missiles Projects, Base frames for SPM machines for the Aerospace Industry. These 2 subsidiary companies are expanding with new factory premises and machines to grow the business and tap the ever growing Aerospace and Defence market in India.

The newly established subsidiary is poised to forge strategic partnerships with leading defense and aerospace industry players, enabling collaborative innovation, knowledge sharing, and adherence to industry best practices. This expansion is expected to enhance our production capabilities, create new employment opportunities, and stimulate regional economic growth. Moreover, by leveraging our subsidiary for manufacturing operations, we are implementing a strategic approach to ensure seamless operational continuity and optimize efficiency, positioning Sunita Tools for sustained success.

Sunita Tools Limited Mouldbase, Defence and Aerospace Vertical has started to spread its wings across the globe, We have entered into marketing and business development tie up with agents in Saudi Arabia, Bahrain, Kuwait, UAE, USA to develop and explore these markets for our products and acquire new customers and orders.

INDUSTRY OVERVIEW:

Sunita Tools are expected to produce high-precision Mouldbases and Engineering components across varied industries including aerospace, electronics, Brown goods, Household and automotive due to which market demand is expected to showcase a robust growth over the forecast period. As product design is becoming highly complex, the demand for high-quality products manufactured and supplied within stipulated time rapidly further increases generating strong demand with cutting edge technology such as CNC machines. High-precision and large size machine tools enabled efficient production, enhanced quality products, and reduced material wastage.

Industrial automation and investment in smart and integrated tools are being done in order to achieve greater speed and higher efficiency for several applications such as cutting, boring and drilling. Such factors are showing prominent impact on the demand. CNC machines are modern data-driven tools that offer efficient and precision materials processing across several industries such as automotive and metal fabrication. CNC machines provide enhanced production capacity and high-precision parts along with enhanced personnel safety resulting in the largest revenue share in the market.

Source: https://www.fortunebusinessinsights.com/industry-reports/machine-tools-market-101693

GLOBAL ECONOMY

The global economy registered a decline in growth from 3.5% in 2022 to an estimated 3.1% in 2023. Asia is expected to contribute significantly to global growth in 2023-24, despite the weaker-than-expected recovery in China, sustained weakness in USA, rising energy costs in Europe, weak global consumer sentiment due to the Ukraine-Russia war, and the Red Sea crisis resulting in increased logistics costs. A tightening monetary policy translated into increased policy rates and interest rates for new loans.

Growth in advanced economies is estimated to decline from 2.6 percent in 2022 to 1.5 percent in 2023 and further, 1.4 percent in 2024 as policy tightening takes effect. Emerging market and developing countries are projected to report a modest decline in economic growth from 4.1 percent in 2022 to 4.0 percent in 2023 and 2024. Global inflation is projected to decline steadily from 8.7 percent in 2022 to 6.9 percent in 2023 and 5.8 percent in 2024 on account of a tighter monetary policy coupled with relatively lower international commodity prices. Core inflation is expected to decrease gradually, as inflation is not expected to return to its target until 2025 in most cases. The US Federal Reserve approved a much-anticipated interest rate hike that raising the benchmark borrowing costs to their highest in over 22 years.

INDIAN ECONOMY

The overall macro environment for India has been much better than many or most of the developed and the developing economies. There have been setbacks like continuation of regional conflicts with some parts of the world, and its consequent impacts on the respective currencies, interest rates, access to those markets and commodity prices which may have created some negative influences. However, as it seems today, the inherent strength of India economy coupled with the incentivization and promotion of industry by the Government has been a solid positive and the driver of the Indian economy and we expect the approach and the trend to continue.

This period is also a year of central elections for India and the outcome of the same would largely determine the continuation or speeding up of the economic drive. However, with a real GDP Projected to grow at 7.3% in FY 2023-24 and capital expenditure outlay increasing 11% to 11,11,111 crores at 3.4% of GDP and FDI inflows ever increasing, fiscal deficit at 5.1% of GDP, the trend seems to be in favour of and striving for optimum levels of growth. The direction of the Government as stated is to ensure upliftment of the poor, women, youth and farmer with a focus on development that is all-round, all-pervasive and all-inclusive. With such a self-adopted mandate the future looks promising and rewarding

OPPORTUNITIES

The need for superior quality products in market.

Global Market Expansion: Exploring new markets, partnerships, and export opportunities.

Constant upgradation of the technology enables us to emerge as a leader in this fast-paced environment. Consolidation/acquisitions/restructuring opens out opportunities for the business. Creating connected data-driven factories for real-time monitoring and optimization. Implementing advanced quality control methods, such as AI-powered inspection and predictive analytics.

THREATS:

Enhanced competition from both local and global players and the rise of disruptive business models in manufacturing industry and the emergence of new technology, the company runs the risk of obsolescence. A dependence on technology and third-party platforms exposes us to threats posed on the internet such as virus attacks leading to execution failures and disclosure of client information. Adapting to evolving industry standards, laws, and regulations. Risks of theft, counterfeiting, and unauthorized use of proprietary technologies. Intensifying competition from low-cost countries and emerging markets. Rapid technological advancements can render existing equipment and processes outdated.

OUTLOOK

Tooling, Moulds, Dies, Mouldbases, Jigs Fixtures is the "Astra & Shastra" (weapon) in the endeavour for India to become a formidable player in the field of global manufacturing.

This Toolings, Moulds, Mouldbases etc US$ 2.50 billion Industry supports the US$ 90 billion capital goods Industry of India which is the back bone of the manufacturing side of our US$ 3 trillion Indian Economy. India is posing as a creditable global alternative as manufacturing hub in its quest to breach US$ 5 billion GDP mark. To do this, tooling Industry would need to nearly double in 5 years.

Manufacturing sector that is full of promise.Turnover of the capital goods in engineering industry was estimated at US$ 92 billion in 2019 and is forecast to reach US$ 115.17 billion by 2025. Indias engineering R&D market will increase from US$ 36 billion in FY19 to US$ 63 billion by FY25. The export of engineering goods is expected to reach US$ 200 billion by 2030.

Aerospace and Defence Market of India is ever increasing with the Government focus of Make In India and only Made in India products, This market is supposedly over 500 billion on its own.

RISKS MANAGEMENT:

The Company, like any other enterprise, is exposed to business risk which can be internal risks as well as external risks. Any unexpected changes in regulatory framework pertaining to fiscal benefits and other related issues can affect our operations and profitability. The key factor in determining a Companys capacity to the Company to take risks and manage them effectively and efficiently. However, the Company is well aware of the above risks and as part of business strategy has put in a mechanism to ensure that they are mitigated with timely action.

The Company has an elaborate Risk Management Framework, which is designed to enable risks to be identified, assessed and mitigated appropriately. The Board of Directors of the Company has entrusted to oversee implementation/ monitoring of Risk Management Plan and Policy; and continually obtaining reasonable assurance from management that all known and emerging risks have been identified and mitigated or managed. In the opinion of the Board of Directors, none of these risks affect and/or threaten the existence of the Company.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of operations. The comprehensive system enables efficient operations, optimal resource utilization, safeguard of assets and compliance with applicable laws and regulations. These control measures strengthen the Company and protect it from loss or unauthorized use of assets by way of adequate checks and balances. The Company authorizes records and reports all transactions. The scope and authority of the Internal Audit function is well defined, and an independent firm of Chartered Accountants serves as the internal auditor to execute the internal audit function. The management and audit committee of the Board observe and then recommend corrective measures, based on such audits to improve operations.

REVIEW OF OPERATIONS:

The Total Income of the Company stood at 2628.00 lacs for the year ended March 31, 2024 as against 1417.33 lacs in the previous year. The Company made a net profit of 484.99 lacs for the year ended March 31, 2024 as compared to the net profit of 300.19 lacs in the previous year.

HUMAN RESOURCES:

The Company considers its Human Resources as the key to achieve its objectives. Keeping this in view, your Company takes utmost care to attract and retain quality employees. The employees are sufficiently empowered and such work environment propels them to achieve higher levels of performance. The unflinching commitment of the employees is the driving force behind the Companys vision. Your Company appreciates the spirit of its dedicated employees.

DETAILS ON SIGNIFICANT CHANGES

*As of the time we print this Annual Report the company is total LONG TERM DEBT FREE Company.

SAFE HARBOUR:

This document contains statements about expected future events, financial and operating results of the businesses, which are forward-looking. By their nature, forward-looking statements require the businesses to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that the assumptions, predictions and other forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause assumptions, actual future results and events to differ materially from those expressed in the forward-looking statements. Accordingly, this document is subject to the disclaimer and qualified in its entirely by the assumptions, qualifications and risk factors referred to in the managements discussion and analysis of Sunita Tools Limiteds Annual Report, FY2023-24