HMT Ltd

My Dear Shareholders,

It is an honour to present to you the Annual Report of HMT Limited for the year 2023-24. I take this opportunity to welcome you all on behalf of Board of Directors. This year has been marked with several shifts with respect to the market trends. However, considering the global standpoint, condition of the Indian economy and effect of various initiatives that impact the manufacturing sector, it is imperative that we work continuously towards overcoming the challenges.

Global Outlook:

Globally, the year began with the onslaughts of the ongoing geo-political issues, followed by a globally synchronised monetary policy tightening. Despite these gloomy events, the global scenario has witnessed a general growth of 3.2% year over year and the projected trends for the future years also suggest a stable growth for developing economies.

With the advancements in technology and continuous integration of AI based technologies, innovation and product development is the need of the hour. The global trends may be perceived as market opportunities, but they also present themselves as challenges which HMT Limited as a group may be tasked with in the future.

Despite the challenges we as a group need to hold true to our core strengths and be steadfast in our commitment to quality and customer satisfaction.

Indian Economy:

India has recorded an overall growth of 7.8% in GDP in the year 2023 and is projected to maintain a steady 6.5% growth in the coming years as per the World Economy Outlook, April 2024. Stemming from the industrial growth, Make-in-India initiative, FDI and domestic investment, government policies, Indian economy has demonstrated resilience and continued growth even when faced with global and domestic challenges. HMT takes pride and assures its support in the nation's economic growth.

Manufacturing impact on the future of Indian Economy:

Historically, it may be viewed that the manufacturing sector has played a significant role in the country's growth during the post-independence era. That said, in the recent past the contributions from the manufacturing sector to the GDP have been overshadowed by the contributions from the services sector.

However, the government of India envisions the contributions of the manufacturing sector to increase in times ahead. With the manufacturing sector contributing to 14% of the GVA, this sector is a vital cog in development of Indian economy and in its transformation from an agrarian economy to an industrial powerhouse.

Through various initiatives such as the Make in India initiative, Productivity Linked Incentive (PLI) Schemes, policy support and infrastructure & global supply chain developments, Government of India tasks itself with an objective to place India amongst the leaders in the manufacturing sector. The constant growth in capacity utilisation in the manufacturing sector over the past years is a testament to the government's efforts in this regard.

With renewed focus on the manufacturing sector, HMT has the potential to play a significant role in country's plans to give a boost to manufacturing sector. The company is taking measures to maximise utilisation of the policies in place and support by the government in order to expand its business.

Performance & Business Accomplishments

HMT Limited on a standalone basis, achieved a revenue of Rs. 47.91 crores from operations in the year 2023-2024 vis-a-vis Rs. 51.59 crores in the year 2022-2023. Despite the dip in the revenue from operations the company has witnessed a growth of 17% in the Profit Before Taxes during the year 20232024. HMT Limited recorded a PBT of Rs. 17.47 crores in the year 2023-2024 vis-a-vis Rs. 14.9 crores in the year 2022-2023.

HMT Group of Companies in the year 2023-2024 has recorded a revenue from operations of Rs. 163.39 crores vis-a-vis Rs. 203.8 crores in the year 2022-2023.

The growth in demand for dairy products and machinery in the dairy industry drives the desire of the company to expand its dairy machinery business. Further the contribution to turnover from sale of watches has witnessed an increase from 14% in the year 2022-2023 to 25% in the year 2023-2024. This demonstrates our ability to navigate through difficult times and emerge strong. Moving forward, product upgradation, collaborations, and turnkey projects are rudimentary for the company to maintain a strong foothold in the ever-growing market.

Initiatives at the Subsidiaries

The Subsidiaries of the Company undertook several initiatives during the year 2023-24.

Machine Tools Business

HMT Machine Tools Limited (HMT MTL) achieved sales of Rs. 99.70 crores in the year 2023-2024 in comparison to the Rs.142.24 crores sales achieved in the year 2022-2023. Net Profit figures remained negative (Rs.155) crores in the year 2023-2024 against the net loss of (Rs. 132) crores recorded in the year 2022-2023. Despite this, the Company is actively working towards strengthening its business and leveraging its strength to drive growth.

In this competitive world of manufacturing of complex machine tools where technology denial also plays a major role in crippling our growth, HMT MTL has designed and developed several import substitution machines over the years to provide flexible, accurate and cost-effective solutions to various strategic sectors. These machines are developed indigenously and priced at almost half the price of imported machines and are aligned with our Hon'ble Prime Minister's vision of 'ATMANIRBHAR BHARAT'.

The Company's growth strategies are multifaceted and formulated to enhance our market presence and expand our product offerings. One of the key areas is stocking General-Purpose Machines to ensure timely delivery to customers to meet the market requirement. In addition, the company is intensifying the efforts to strengthen sales, after-sales services and marketing through appointment of channel partners. The company aims to enhance customer satisfaction and expand its reach in the market. In line with the commitment to innovation, efforts for the development of new products have been intensified. By leveraging HMT MTL's manufacturing prowess and collaborating with academic institutions, the company is stretching its boundaries to the field of hi-tech machines. The Company's association with esteemed institutions like IIT BHU Varanasi and IISc, Bengaluru, serve as a testament to the company's dedication to fostering research and development of advanced technology. The company has also taken initiatives to expand its customer component manufacturing endeavours within crucial industries and sectors like railways, defence, and atomic energy.

Exports

HMT (International) Limited, has observed a steady increase in sales over the past two years. In 2023-24, HMT(I) achieved sales of Rs.17.59 crores, vis-a-vis Rs.14.15 crores in the year 2022-23. This growth trajectory is a testament to the brand value that HMT holds globally and the company's ability to adapt to global market dynamics. Similarly, the PBT figures have shown improvement, with Rs.4.81 crores recorded in 2023-24 vis-a-vis Rs.0.31 crores recorded in the year 2022-23.

The company has submitted offers/proposals for setting up of Demonstration cum Training centres, MSME Production centres, Industrial Training centres, etc. and has initiated for becoming a Nodal Agency to the Ministry of External Affairs (MEA), Government of India for implementing MEA funded turnkey projects such as Vocational Training / Skill Development centres as part of the Government of India's grant-inaid projects. These initiatives reflect the company's commitment to improve the performance of HMT group of companies and globally position the company as a leading player in the industry.

Future Outlook Dairy Machinery

The global dairy machinery market is projected to grow at a CAGR of around 5-7% over the coming years. The factors contributing to such robust growth include:

• The increasing demand for dairy products, particularly in emerging economies. With the rising population, urbanisation and income rise, there's a higher consumption of dairy products, which in turn boosts the need for advanced machinery to handle production efficiently.

• Innovations in dairy machinery, such as automation and smart technology, improved efficiency, reduced labour costs, and enhanced product quality which in turn shapes the future market. Modernisation of the dairy industry also entices newer investments from bigger parties leading to the increased demands.

• Economic conditions and Government support affect the investments in dairy machinery. With the global economic conditions poised to grow at a steady rate, and support from various government institutes in the form of subsidies and tax breaks the sustainable growth of the diary machinery industry is on the cards.

• Changing consumer preferences: 'A2' milk represents the fastest-growing segment in the dairy market. Its growth is driven by the increasing consumer belief regarding its enhanced digestibility and potential health benefits compared to standard milk.

Overall future-outlook for the dairy machinery industry is positive. The company looks forward to implement strategic initiatives to solidify and enhance its market presence. With a global trend pushing for healthier life choices, the company is in the process of diversifying its product range to include options that are both health-centric and convenience-oriented, such as probiotic drinks, high-protein yogurts and lactose-free products.

Within India also, the dairy machinery industry is set for a progressive growth in the coming years. Company is pursuing to utilise technologies to boost production efficiency and optimise supply chains to align their offerings with the changing consumer needs and remain relevant in the market.

Machine Tools

The global market is projected to grow at a CAGR of 5.41% from 2024 to 2031 and is estimated to reach a value of USD 145.82 billion by 2031. This growth will be driven by a number of factors, including:

• Industrial Automation and Technological

Advancements: Increasing adoption of automation and smart technologies in manufacturing processes is driving demand for advanced machine tools. Innovations such as CNC (Computer Numerical Control) machines, 3D printing and advanced robotics contribute to market growth by improving production efficiency and capabilities.

• Manufacturing Growth: Expansion in various manufacturing sectors including automotive, aerospace and electronics, supports the need for high-precision and high-performance machine tools.

• Emerging Markets: Growth in emerging economies, where industrialization and infrastructure development are accelerating, is a significant driver for the machine tools market.

• Investment in Modernization: Investment in modernizing existing manufacturing facilities and adopting new technologies, fuel demand for advanced machine tools.

As is the case with any industry, the machine tools industry is also subject to the disruptions fuelled by new technologies, such as Artificial Intelligence (AI) and the Internet of Things (IoT). These technologies are being used to develop smarter and more connected machine tools that can operate more efficiently and autonomously.

In India, the machine tools industry is also poised for a steady growth which is evident from the government's Make in India initiative, push for Atma Nirbhar Bharat and various PLI schemes. These initiatives are directed towards boosting domestic manufacturing and giving necessary support to domestic manufacturers. With the advent of newer technologies and demand for hi- tech machineries, the sector is witnessing a serious influx of investment in research and development by Indian machine tools companies.

The future of the machine tools industry is promising and HMT Machine Tools Limited is pursuing to tap the demand for machine tools. The company continues to work on developing indigenous substitutes for imported machines and make significant contributions to the Indian manufacturing scene. The Indian government hopes to have 25% of the economy's output from manufacturing by 2025 and HMT can be a name to reckon with in the industry.

Export Business

The Company is gearing up to increase its revenues in the coming years by taking up export of HMT's products and other engineering goods to newer destinations and to take up more turnkey projects in underdeveloped and developing countries. HMT(I)'s pending orders stands at Rs. 24 crores as on 30.06.2024.

Corporate Governance

The Company strives constantly in adopting and maintaining the highest standards of values and principles. The Company is complying with Government Guidelines on Corporate Governance framed by Department of Public Enterprises for CPSEs.

The Company will continue to strive for a consistent growth rate to match the expectations of stakeholders. While the company is committed to accelerate growth, it will persevere to achieve best standards of Corporate Governance and Ethical Business Practices with emphasis on transparency, accountability and professionalism in working, with the aim of enhancing long term economic value to all stakeholders and society at large.

Acknowledgement

I take this opportunity to express my sincere gratitude to the Hon'ble Minister for Heavy Industries and Steel, Hon'ble Minister of State for Heavy Industries & Steel, the Secretary (Heavy Industries), Additional Secretary & Financial Adviser, the Joint Secretary, Economic Adviser and other Officers in the Ministry of Heavy Industries as well as the Ministry of External Affairs for their immense support and guidance rendered towards the Company. I am also grateful to the officers in the Ministry of Finance, the Comptroller & Auditor General of India, the Statutory Auditors etc., for all their support for the smooth operations of the Company. I sincerely thank the State Governments concerned, Joint working Partners, Suppliers, Banks and Financial Institutions for their valuable assistance and support.

I would also like to express my sincere gratitude and appreciation to my esteemed colleagues on the Board and to all HMTians, for their unswerving commitment, confidence and continued support for maintaining cordial relations during the extremely challenging year.

I express my thanks to all our esteemed customers in India and abroad for their continued support and patronage and assure them of our commitment to meet their expectations.

I also thank all the other stakeholders for their valuable support, co-operation and for reposing continued confidence in the Company's performance. I am confident that with dedicated and committed resource of employees and valuable support of our esteemed shareholders, our Company will deliver its responsibilities and enhance value to its stakeholders. I thank you all for the continued faith in HMT and its management. I greet you and your family members and wish you all the best!