Technocraft Industries is a 50 years old company having presence in five main business industries viz., Drum Closures, Scaffolding systems, Cotton Yarn, Fabric, Garments and Engineering Services. Company has manufacturing facilities in India and China.

Technocraft Industries

Current market price on the date of publishing this report-: 915 Rs

Introduction

Incorporated in 1972 by two brothers Mr. S.K. Saraf and Mr. S.M. Saraf who are IIT Graduates & Technologists, had started with the aim of manufacturing high precision and sophisticated Drum Closures Products.

Technocraft concentrated on the local market until 1976. Despite the fact that India was not seen as a trustworthy export partner at the time, the corporation started a big export effort in 1977. In 1979, the government of India designated ‘Technocraft’ as an export house. Initially, ‘Technocraft’ dominated the Middle East export business. Technocraft gradually expanded throughout the United States and Europe. Customers in the United States and Europe were used to purchasing Drum Closures from the Company’s competitors in Europe and the United States, so on very short notice, Technocraft established several foreign subsidiary companies to facilitate stock flow to their customers in Europe and the United States.

Technocraft continued developing and increasing the production of Drum Closures until it became one of the world largest and most recognized suppliers of Drum Closures.

In 1994, Technocraft purchased a sick unit from SICOM called ‘Maharashtra Steel Tubes Ltd,’ which manufactured steel pipes. In the early years after purchase, starting output was 500 metric tonnes per month, and Europe was a significant importer of steel pipe at the time. Technocraft established an office in the United Kingdom (UK) in order to enter the European market. This was a watershed moment in the company’s growth strategy.

Technocraft ventured into the production of cotton yarn in 1997. The Unit was given 100% EOU status. The cotton yarn sector manufactures and exports high-quality 100% cotton ring spun yarn. The spinning mill has world-class Swiss, Japanese, and other equipment from NE 20 to NE 40. In all stages of yarn spinning, the cotton yarn sector uses highly skilled technical professionals. To meet its power needs, it also operates a captive power production unit in the yarn business.

The cotton yarn division has also forward integrated its operations by producing and exporting garments through its subsidiary Technocraft. The cotton yarn division is continually updating its capacity and enhancing its standards to suit the ever-increasing expectations of its clients.

As a group, Technocraft has been a prominent participant in the precision engineering industry, and it has completed a forward integration of Tube Division by providing high precision scaffolding systems for building construction.

Business Products

Closures

Each steel drum requires one set of closures, which is a precise engineering component that ensures the liquid within does not leak out. The Company conceived and developed next-generation drum closure production technology. It also produces all of its gaskets and clamps and provides a complete line of drum closure items to its customers. Patented technology has resulted in significant cost savings and quality improvements, propelling TIIL to the second biggest global manufacturer of steel drum closures.

Technocraft Industries is the world’s second biggest maker of steel Drum Closures, with a 36% global market share (excluding China). The company manufactures a wide range of closures and associated equipment, including completely automated flange insertion systems and cap-sealing tools. The company serves all of the world’s main steel drum manufacturers.

Tubes and Scaffolding

Scaffolding is a temporary structure used in the building, real estate, and other big constructions to support people and materials. It is often a modular system of metal pipes or tubes, although it can also be made of other materials. The company is a prominent manufacturer and distributor of scaffoldings and formwork systems in India. For over 20 years, the company has supplied scaffolding to global markets. During the fiscal year, the firm grew its domestic sales since it began providing several infrastructure projects. Despite the unpredictable nature of construction and related activities, the Scaffolding & Formwork (S&F) industry in India is growing, and better times are on the way.

The Company’s products are used in a wide range of end sectors, including oil and gas, electricity, refineries, petrochemical, infrastructure, and commercial building. The Company operates in the premium area of the Scaffolding industry as well. The scaffolding category is expanding as a result of strong demand from foreign infrastructure markets, as well as positive responses from infra projects in India. Scaffolding and Formwork are part of the Company’s Scaffolding sector. The majority of its revenue comes from international markets. The company has also begun to provide scaffolding on a monthly basis.

Formworks

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.

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)

In India, the company has begun producing complex designed Formwork systems for building, construction, and infrastructure projects. With a network of offices in Mumbai and abroad, the Company has a state-of-the-art manufacturing plant in India and is well positioned to play a greater part in the construction expansion in India and worldwide.

MÄCHONE

MCH ONE is an extremely lightweight Formwork system composed of high grade Aluminum Extrusion with exceptional strength to withstand site conditions. MCH ONE Aluminum shapes are ideal for the building of residential units and mass housing projects. s. It is quick, easy, versatile, and cost effective. e. It generates high-quality work that requires little maintenance and is ideal when longevity is a top priority.

Textile

Technocraft is a globally recognised brand name because of its consistent and high-quality yarn. In under a decade, the firm has increased its spinning mill capacity from 15000 to 87,000 spindles. Technocraft has been ISO 9001:2008 and Oeko-Tex certified for its superior quality. The corporation has a global presence in over 70 countries, with subsidiaries in England, Poland, Hungary, China, Australia, and the United States.

The company manufactures cotton yarn in grades ranging from NE 20 to NE 40, as well as carded and combed variants. The spinning mill is outfitted with top-of-the-line Swiss, Japanese, German, and Spanish machinery. Currently, the Company exports around 56% of its garment products, mostly to Europe, Asia, and Latin American countries.

The Company manufactures premium quality active wear products and provides superior service. Products are custom knit, dyed, finished, cut, sewn, decorated, packaged and distributed.

Products manufactured include

• 100% Cotton Ring Spun Raw-White Yarn in Counts Ne 20/1 to Ne 40/1 Super Carded and Super Combed for Knitting and Weaving end use.
• Compact Yarn (Suessen)
• Slub Yarn (AMSLER)
• Organic Yarn
• BCI Yarn

Fabrics and Garments

Using in-house spinning, Technocraft provides its clients with a strategic advantage of higher quality goods with faster lead times. Its fabrics include Single Jerseys Plain, Single Jerseys with Spandex / Lycra, Ribs with and without Spandex / Lycra, Interlocks, Piques (Single, Double, Honey Combs), 2 Thread / 3 Thread Fleece, Plaited & Variegated Structured fabrics, Feeder & Engineered stripe, etc. in 100% cotton and various blends like poly/cotton, CVC, Viscose, Poly/V

Body Size seamless textiles are supplied by the company for both underwear and active wear. These fabrics are available in Single Jersey, Pique, Ribs, and Interlock in a variety of weights and widths. Technocraft has been constantly producing new unique value added products with specific finishes like Enzyme Washing / Bio Finishing, Anti-Microbial Finish to meet the expanding demands of top end textile businesses.

Technocraft Garments is a top Mumbai-based totally integrated manufacturer of high quality active wear items that also delivers exceptional service, making it one of India’s leading textile and clothing manufacturers. Products are custom knit, dyed, finished, cut, sewed, decorated, packed, and delivered at the factory in Murbad, Dist. Thane, Maharashtra (90 km from Mumbai Airport and 50 km from Mumbai Sea Port).

Engineering & designing services

Technosoft is a worldwide technology services company that provides a wide range of engineering, design, and information technology services through a variety of client-partnership delivery models. Technosoft’s clientele includes heavy equipment, automotive, aerospace, manufacturing, oil and gas, high-tech, telecom, healthcare, and financial services. Many of the company’s clientele are from the United States, Canada, the United Kingdom, and Germany.

Technosoft has a large staff of over 300 engineers and designers stationed all over the world. Its engineers and designers have access to cutting-edge gear and software, such as tools for 3-D modelling, Finite Element Analysis, and process simulation.

Technosoft has companies in North America that provide general engineering and design services.

Buyback

The Board of Directors, at its meeting held on November 14, 2022 has approved the proposal for Buyback of up to 15,00,000 fully paid up equity shares having a face value of Rs. 10/- each (“Equity Shares”) at a price of Rs. 1,000/- per Equity Share (“Buyback Price”), on a proportionate basis, through the “tender offer” route.

In accordance with the applicable laws, the Notice is being sent by electronic mode only to those members whose names appeared in the Register of Members/List of Beneficial Owners maintained by the Company/Depositories respectively as at close of business hours on Friday, November 11, 2022, i.e., Cut-off date and who have registered their e-mail address with Company and/or Depository Participants.

We have observed over the years that after a company completes a share buyback, the price of the company’s shares remains stable for a period of time before beginning their upward trajectory. Because the company has just recently announced the repurchase, prospective investors may have to wait a little longer than normal if the company’s share price remains flat. Therefore one needs to be extremely patient while investing in this company.

Financials

For the year ended March 2022

• Net Sales stood at Rs 1911 crore in March 2022 up 47.5% from Rs.1295 crore in March 2021.
• EBITDA stood at Rs. 392 crore in March 2022 up 93% from Rs. 203 crore in March 2021.
• Net Profit stood at Rs. 274 crore in March 2022 up 104% from Rs. 134 crore in March 2021.
• Technocraft Ind EPS has increased to Rs. 109.31 in March 2022 from Rs. 53.19 in March 2021.

Drum Division

• Consolidated Revenue from Operations increased from ₹ 409.12 Crores to ₹ 583.91 Crores. Profit Before Tax and Finance Cost but after Depreciation also increased by 57.31 % from ₹ 127.17 Crores to ₹ 200.06 Crores.
• Out of the total revenue of drum division, approximately 89.90% of revenue was generated from Export Sales.

Textile and Fabric

• Revenue from Operations of Textile (Fabric and Yarn) Division increased from ₹ 422 Crores to ₹ 663 Crores. Profit Before Tax and Finance Cost but after Depreciation of Textile (Fabric and Yarn) Division increased substantially as compared from loss of ₹ 6.5 Crores to profit of ₹ 47 Crores.

Engineering Division

• Revenue from Operations increased from ₹ 114.76 Crores to ₹ 108.57 Crores. Profit Before Tax and Finance Cost but after Depreciation increased substantially to ₹ 23.24 Crores as compare to ₹ 19.92 Crores of previous year.
• Out of the total revenue of this division, approximately 95.38% of revenue was generated from Export.

For Q2FY23

• Consolidated revenue from Operation is increased by 8% on YOY Basis from ₹442 Crores to ₹ 476 Crores.
• EBIDTA increased by 4% on YOY Basis from ₹ 104 Crores at ₹ 109 Crores, inspite of challenging environment.
• Profit after Tax remain stable at ₹ 66 Crores.
• Drum Closure Division: Revenue from Operations slightly decreased from ₹ 145 Crores to ₹ 140 Crores. Profit Before Tax and Finance Cost but after Depreciation also reduced from ₹47 crores to ₹41 crores on YOY Basis.
• Scaffolding Division: Revenue from Operations increased from ₹ 140 Crores to ₹ 201 Crores. Profit Before Tax and Finance Cost but after Depreciation increased by 539% from ₹ 8 Crores (Q2 of FY22) to ₹ 50 Crores (Q2 of FY23).
• Textiles: Revenue from Operations of Textile (Fabric and Yarn) Division decreased from ₹ 165 Crores to ₹ 133 Crores amid challenging environment in Textile Segment. Loss Before Tax and Finance Cost but after Depreciation of Textile (Fabric and Yarn) Division was at ₹15 Crores (Q2 of FY23).
• Engineering Services: Revenue from Operations for Q2 of FY 2023 increased from ₹ 28 Crores to ₹33 Crores, (increase of 20%). Profit Before Tax and Finance Cost but after Depreciation increased from ₹ 7 Crores to ₹9 Crores.

Sectorial Outlook

Drum Closure

The global Steel Drums & IBCs Market is expected to hit a market value of US$ 16 Bn by 2022, and is expected to reach US$ 22.5 Bn expanding at a CAGR of 4.8% from 2022-2029. Increasing global trade and growing proclivity to invest in efficient transportation are supporting market growth, according to the authors of the report.

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).

Opportunities abound in the Indian Scaffolding and Formwork (S&F) Industry, with the government placing a specific emphasis on building and infrastructure development in the 12th Five Year Plan. S&F producers are keeping up with the Construction Industry as demand rises as a result of present and prospective projects.

Formworks

Looking at Indian government’s 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.

Textiles

The Indian textiles market is expected to be worth more than US$ 209 billion by 2029. India is the world’s largest producer of cotton. Production stood at 360.13 lakh bales for the crop year October 2021-September 2022. Domestic consumption for the 2021-22 crop years is estimated to be at 335 lakh bales. India’s home textile exports grew at a healthy rate of 9% in FY21 despite the pandemic. In the year 2020-21, 1.13 million tonnes of cotton yarn were exported from India.

Conclusion

Technocraft Industries is a 50-year-old corporation with negligible debt operates in five major business sectors: Drum Closures, Scaffolding Systems, Cotton Yarn, Fabric, Garments, and Engineering Services. The company is concentrating on developing innovative scaffolding and formwork products, such as ‘Temporary Labour Shelter’ and ‘Mäch One.’ In addition, the company has established a new spinning plant in Amravati. The Government of India has taken various measures to provide a favourable environment for the expansion of the country’s manufacturing industry. The company’s primary goal is to strengthen and expand its position in each of its major businesses. The Drum Closure segment, which is one of the company’s primary emphasis areas, is expected to grow at the same or greater rate next year. The growth rate for the current year stood at 43% over last year. Furthermore, government efforts like as RERA, affordable housing, and smart cities are projected to bring about a revolutionary shift and drive growth in the Indian real estate market, resulting in huge increase in scaffolding. Safety awareness will also increase demand and growth for the scaffolding industry.

Aside from that, the company has a cash balance of over 100 crores and investments of 420 crores in different subsidies, mutual funds, and so on. The company also enjoys constant operating margins in the 15-20% range. Thus, Technocraft Industries is worth exploring in the long run due to its growing revenues, steady debt, constant margins, and large cash and equivalents, as well as considerable investments.