Energy-Mission Machineries (India) Limited
Company
| Website 🔗 |  |
| Business Activity | Manufacture |
| Division | Machinery |
| Sub-class | Metal Forming Machines CNC, NC, and Conventional types |
| Location | Sanand, Gujarat |
| Establishment Year | 2011 |
Management
| Managing Director | Dineshkumar Shankarlal Chaudhary |
| Educational Qualifications | B.E. Mechanical |
| Experience | 28 years in the production of capital machineries |
| Annual Salary | ₹ 120 Lakhs |
| Total Number of Employees | 256 |
About
Energy-Mission Machineries (India) Limited (EMMIL) specializes in the design and manufacture of Computer Numerical Control (CNC), Numerical Control (NC), and conventional metal forming machines. The company’s in-house manufacturing capabilities allow for end-to-end production, encompassing design, development, and fabrication
Products and Services:
Energy-Mission Machineries (India) Limited offers a diverse range of over 600 metal-forming machine variants, catering to various industrial sectors. Their primary product categories include:
- Press Brake Machines: Available in CNC, NC, and conventional models, these machines bend sheet metal and plates into desired shapes.
- Shearing Machines: Cut metal sheets, plates, and plastics into specific shapes and sizes.
- Plate Rolling Machines: Bend and curve sheet metal and plates into cylinders, cones, and arcs.
- Iron Worker Machines: Multifunctional machines capable of cutting, punching, notching, and bending metal materials.
- Hydraulic Press Machines: Utilize hydraulic force for shaping, cutting, and deforming materials.
- Busbar Machines: Specialize in fabricating and modifying busbars for electrical and power distribution applications.
- Components and Spare Parts: The company also provides machinery tools and spare parts for after-sales support and services.
- Maintenance Services: Offered to customers for the upkeep and repair of their machines.
Clients:
- Automotive
- Steel
- Pre-engineered Building
- Furniture
- HVAC
- Agricultural Equipment
- Road Construction Equipment
- Elevators
- Food Processing Machinery
- Metalworking Workshops
The company’s customer base is spread across India and internationally, including the USA, Switzerland, and several Middle Eastern countries with 1657 machines supplied to over 1150 customers in the last three fiscal years and the nine months ending December 2023.
Manufacturing Process:
- Raw Material Preparation: Mild steel (MS) plates, the primary raw material, are procured, tested, and cut using CNC plasma machines.
- Machining: The cut MS plates undergo various machining processes like straightening, milling, drilling, and shaping to create precise components.
- Fabrication: Machine structures and frames are fabricated using fixtures, followed by quality checks at tack weld and final weld stages.
- Assembly: Quality-checked components are assembled, including the frame, hydraulic system, bending tools, backgauge system, and control panel.
- Quality Check: Assembled machines undergo rigorous quality control inspections and functional tests to ensure precision, accuracy, and safety.
- Packing and Dispatch: Machines that pass quality checks are packaged and dispatched with proper labelling and documentation.
- Installation and Customer Support: The company assists customers with installation, training, and troubleshooting, ensuring optimal machine performance.
Raw Materials and Suppliers:
Domestic Sourcing:
- MS Steel: Primarily sourced from Gujarat, Maharashtra, and West Bengal.
- Tools & Dies: Procured from Gujarat and Maharashtra.
- Hydraulic Components, Seals, Electrical and Control Panel Components, Bolts, Screws, Nuts, Paints, and Coatings: Mainly sourced from within Gujarat, indicating a preference for local suppliers for these materials.
International Sourcing:
- Press Brake Tools, Quick Release Clamps, and Crowning: Imported from China.
- Controllers and Laser Safety Equipment: Sourced from the Netherlands.
Marketing:
Sales and Marketing:
A team of 29 employees manages sales and marketing, supported by an after-sales service team of 22.
Participation in Exhibitions:
Energy-Mission Machineries (India) Limited participates in various domestic and international exhibitions to showcase its products. This indicates that the company utilizes these events as a platform to reach potential customers and establish new business relationships, possibly leading to direct sales or collaborations with distributors.
Other Key Aspects:
Manufacturing Capabilities:
Operations are centred at their Sanand, Gujarat facility, spanning over 18,234 square meters. This ISO 9001:2015 certified facility houses design, development, and manufacturing capabilities, with an annual production capacity of 900 machines
They have a strong presence in Gujarat and Maharashtra, contributing significantly to their domestic revenue.
Outsourcing:
Certain production processes, such as zinc plating and powder coating, are outsourced to third-party job workers.
Revenue – Category
Revenue – Region
Audit and Legal
Auditor’s Remarks:
The auditors provided a qualified opinion on the company’s financial statements. The auditors have certified that these qualifications do not impact the company’s financials.
Professional Tax:
The auditors observed that there were outstanding dues related to professional tax in each of the fiscal years mentioned above. The amounts were ₹206,322 for FY 2020-21 and FY 2021-22, and ₹359,290 for FY 2022-23.
FY 2021-22 and 2022-23:
The tax audit reports highlighted that proper stock records were not maintained, making it impossible to provide quantitative details of raw materials and work-in-progress. Additionally, the auditors mentioned that the company’s accounting software was not configured to generate reports on the breakup of total expenditure concerning entities registered or not registered under GST.
Company’s Response
Stock Records: The company is implementing an ERP system, which is expected to enable them to maintain and provide the necessary quantitative details of raw materials and work-in-progress to the auditors.
GST Records: The company has confirmed that it will maintain records as required under clause 44 of Form 3CD regarding payments to entities registered or not registered under the Goods and Service Tax Act 2017.
Non-Compliances and Other Issues:
Non-Compliance with Corporate Laws:
The company acknowledges certain discrepancies and non-compliances in its corporate records, such as clerical errors in filings and past instances of accepting advances from customers for over 365 days, which is not in line with the Companies Act, 2013.
Delay in Statutory Payments: There have been instances of delays in filing ESIC, PF, and GST returns, particularly during the COVID-19 period.
Contingent Liabilities:
As of December 31, 2023, Energy-Mission Machineries (India) Limited had contingent liabilities amounting to ₹40.52 Lakhs. These liabilities pertain to an income tax case that is currently under appeal.
Legal Cases:
Cases Filed by the Company
Consumer Complaint No. 210 of 2021:
The company filed a complaint against Punjab National Bank under the Consumer Protection Act, 2019, alleging delays and financial losses due to the delayed disbursement of a term loan. The company is seeking compensation of ₹97.78 lakhs for the alleged grievances.
Tax Proceedings against the Company:
Assessment Year 2022-23:
A demand notice was issued on April 29, 2023, for an outstanding amount of ₹45.78 lakhs (including interest of ₹5.27 lakhs) under Section 143(1) of the Income Tax Act, 1961.
Financial Year 2018-19:
A show cause notice was issued on December 28, 2023, for a GST demand of ₹288.95 lakhs for allegedly under-declaring tax. The company filed a reply requesting the authority to drop further proceedings. On April 3, 2024, the GST department issued an order declaring a demand amount of ₹27.73 lakhs. The company has yet to make the payment or appeal against this order.
SWOT Analysis
Strengths
| Diverse Product Portfolio: EMMIL offers over 600 variants of metal forming machines, catering to a wide range of industries and customer needs. This product diversity allows them to tap into various market segments and reduces reliance on any single product or industry. |
| In-house Manufacturing: The company’s in-house manufacturing facility enables better control over production processes, quality standards, and cost-effectiveness. This vertical integration can also lead to faster response times to market demands. |
| Strong Customer Base: EMMIL has a well-diversified customer base across various industries and geographies, both domestically and internationally. This reduces dependence on a few key clients and provides resilience against fluctuations in specific markets. |
| Focus on Quality: The company emphasizes quality control and has obtained ISO 9001:2015 certification for its manufacturing facility. This commitment to quality can enhance customer satisfaction and brand reputation. |
Weaknesses
| Dependence on Key Products and Markets: Despite product diversity, a significant portion of revenue comes from CNC press brake machines and sales in Gujarat and Maharashtra. Any decline in demand for this product or in these regions could impact the company’s performance. |
| No Long-Term Supplier Agreements: The absence of long-term agreements with raw material suppliers exposes the company to supply chain risks and price volatility. |
| Working Capital Intensity: The business requires significant working capital, primarily for inventory and trade receivables. This can strain cash flow and limit financial flexibility. |
| Underutilized Capacity: The company’s manufacturing capacity utilization has been below its potential in recent years. This underutilization can lead to operational inefficiencies and increased costs. |
Opportunities
| Growth in Infrastructure and Manufacturing: India’s focus on infrastructure development and the growth of the manufacturing sector presents significant opportunities for EMMIL to expand its customer base and increase sales. |
| Focus on Renewable Energy: The growing emphasis on renewable energy presents opportunities for the company to develop and market machines for the solar and wind energy sectors. |
| Technological Advancements: Investing in new technologies and automation can improve operational efficiency, reduce costs, and enhance product offerings. |
Threats
| Intense Competition: The metal forming machine industry is highly competitive, with both domestic and international players. EMMIL faces competition from larger and more established companies with greater resources. |
| Economic Slowdown: A slowdown in the Indian or global economy could adversely affect demand for the company’s products and impact its financial performance. |
| Raw Material Price Volatility: Fluctuations in raw material prices, especially MS steel, can impact the company’s profitability if it cannot pass on the increased costs to customers. |
Porter’s Five Forces1
| Threat of New Entrants | MODERATE |
| The industry has a moderate barrier to entry due to the requirement for technical expertise, capital investment in manufacturing facilities, and establishing a distribution network. However, the presence of smaller players and the absence of dominant market leaders suggest that new entrants with sufficient resources and capabilities could potentially enter the market. |
| Bargaining Power of Suppliers | MODERATE |
| The company relies on a few key suppliers for critical raw materials and components, and the absence of long-term contracts can expose it to price fluctuations and supply disruptions. However, the availability of alternative suppliers for certain materials and the company’s efforts to diversify its supplier base can moderate this power. |
| Bargaining Power of Buyers | MODERATE |
| Buyers in this industry, being primarily industrial manufacturers, likely have moderate bargaining power. While they can choose from various suppliers, the company’s diverse product range and focus on customized solutions can mitigate this power to some extent. |
| Threat of Substitute Products or Services | LOW |
| The threat of substitute products is relatively low. Metal-forming machines are essential for various industrial manufacturing processes, and there are limited direct substitutes for these machines. However, advancements in technology or the emergence of new manufacturing techniques could potentially pose a threat in the long run. |
| Rivalry Among Existing Competitors | HIGH |
| The industry is characterized by high competitive rivalry, with numerous players, including larger and more established companies. Competition is based on factors like product quality, technology, pricing, and after-sales service. |
Peer Comparison
The company’s performance on various financial and operational metrics compared to its peers is as follows:
| Metric | Energy-Mission Machineries (India) Limited | Macpower CNC Machines Limited | Jyoti CNC Automation Limited |
| Revenue from Operations (₹ in Crores) | 126 | 241 | 1,338 |
| Operating Profit Margin (%) | 15 | 15 | 22 |
| Return on Equity (ROE) (%) | 37.3 | 22.2 | 20.8 |
| Return on Capital Employed (ROCE) (%) | 32.5 | 29.7 | 21.2 |
| Debt to Equity Ratio | 0.94 | 0.00 | 0.22 |
Green Box
IPO Funds:
Funding Capital Expenditure for Civil Construction:
The company plans to expand its existing manufacturing unit in Sanand, Gujarat, by constructing an additional shed and utilizing unused floor space. This expansion will increase production capacity and also includes the construction of an administration building
Funding Capital Expenditure for New Plant and Machinery:
EMMIL intends to enhance its manufacturing capabilities by investing in new plants and machinery, including CNC machines, cranes, and a solar power plant.
Design & Development:
A dedicated team of 9 employees focuses on design and development, enabling the company to offer customized solutions and optimize production processes. Recent innovations include the launch of four-roll machines and the development of an automated material handling system.
Success of R&D Efforts:
- Launch of Four Roll Machines: EMMIL recently launched four-roll machines at IMTEX 2024 in Bangalore. This indicates their ability to introduce new products to the market, expanding their product portfolio and catering to evolving customer needs.
- Development of Automated Material Handling System: The company has also developed an automated material handling system that can be integrated with CNC machines. This innovation streamlines the production process, potentially improving efficiency and reducing costs.
Positive Operating Cash Flow:
EMMIL has consistently generated positive operating cash flow in the last 4 years. This consistent positive operating cash flow demonstrates the company’s ability to generate cash from its core operations, which is a crucial indicator of its financial health and sustainability. Sources and related content
Industry Outlook:
Infrastructure Development:
The Indian government’s significant investments in infrastructure projects, such as the National Infrastructure Pipeline (NIP), will drive demand for construction and engineering equipment. The construction equipment industry, in particular, is projected to grow at a CAGR of 8.9% until 2028.
Government Support:
Favourable policies like the ‘Make in India’ initiative, the establishment of Special Economic Zones (SEZs), and Production Linked Incentive (PLI) schemes are creating a conducive environment for the growth of the engineering and capital goods sector.
Amber Box
Cyclical Nature:
Energy-Mission Machineries (India) Limited is into the business of producing Capital Goods and the cyclical nature of the economy will have a more severe impact on the company’s financials during downturns.
Capacity Utilization:
As of December 31, 2023, Energy-Mission Machineries (India) Limited had a capacity utilization rate of 61.33%.
Red Box
Smaller Scale:
Compared to some of its listed peers, Energy-Mission Machineries (India) Limited operates on a smaller scale, which might limit its bargaining power with suppliers and customers.
Limited Geographic Presence:
While the company has a presence in multiple states and some international markets, its reach is not as extensive as some of its larger competitors. This could restrict its growth potential.
Limited Financial History:
As a relatively young company, Energy-Mission Machineries (India) Limited has a limited financial track record compared to its peers. This can make it challenging for investors to assess its long-term performance and stability.
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- The force value of “LOW” is considered good Click Porter’s Five Forces article for more information. ↩︎
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