1. OVERVIEW
The objective of this report is to convey the Managements perspective on the external
environment and steel industry, as well as strategy, operating and financial performance,
material developments in human resources and industrial relations, risks and opportunities
and internal control systems and their adequacy in the Company during FY 2022-23. This
should be read in conjunction with the Companys financial statements, the schedules and
notes thereto and other information included elsewhere in this Report and Annual Accounts
2022-23. The Companys financial statements have been prepared in accordance with Indian
Accounting Standards (Ind AS) complying with the requirements of the Companies Act,
2013, as amended and regulations issued by the Securities and Exchange Board of India
(SEBI) from time to time.
2. GLOBAL ECONOMY
The global economy is experiencing a number of turbulent challenges. Inflation higher
than seen in several decades, tightening financial conditions in most regions, Russias
invasion of Ukraine, and the lingering COVID-19 pandemic all weigh heavily on the outlook.
Normalization of monetary and fiscal policies that delivered unprecedented support during
the pandemic is cooling demand as policymakers aim to lower inflation back to target. But
a growing share of economies are in a growth slowdown or outright contraction. The global
economys future health rests critically on the successful calibration of monetary policy,
the course of the war in Ukraine, and the possibility of further pandemic-related
supply-side disruptions, for example, in China.
Global growth is forecast to slow from 6.0 percent in 2021 to 3.2 percent in 2022 and
2.7 percent in 2023. This is the weakest growth profile since 2001 except for the global
financial crisis and the acute phase of the COVID-19 pandemic and reflects significant
slowdowns for the largest economies: a US GDP contraction in the first half of 2022, a
euro area contraction in the second half of 2022, and prolonged COVID-19 outbreaks and
lockdowns in China with a growing property sector crisis. About a third of the world
economy faces two consecutive quarters of negative growth. Global inflation is forecast to
rise from 4.7 percent in 2021 to 8.8 percent in 2022 but to decline to 6.5 percent in 2023
and to 4.1 percent by 2024. Upside inflation surprises have been most widespread among
advanced economies, with greater variability in emerging markets and developing economies.
Risks to the outlook remain unusually large and to the downside. Monetary policy could
miscalculate the right stance to reduce inflation. Policy paths in the largest economies
could continue diverging, further increasing US dollar appreciation and cross-border
tensions. More energy and food price shocks might cause inflation to persist for longer.
Global tightening in financing conditions could trigger widespread emerging market debt
distress. Halting gas supplies by Russia could depress output in Europe. A resurgence of
COVID-19 or new global health scares might further stunt growth. A worsening of Chinas
property sector crisis could spill over to the domestic banking sector and weigh heavily
on the countrys growth, with negative cross-border effects. And geopolitical
fragmentation could impede trade and capital flows, further hindering climate policy
cooperation. The balance of risks is tilted firmly to the downside, with about a 25
percent chance of one-year-ahead global growth falling below 2.0 percent—in the 10th
percentile of global growth outturns since 1970.
Warding off these risks starts with monetary policy staying the course to restore price
stability. Front-loaded and aggressive monetary tightening is critical to avoid inflation
de-anchoring as a result of households and businesses basing their wage and price
expectations on their recent inflation experience. Fiscal policys priority is the
protection of vulnerable groups through targeted near-term support to alleviate the burden
of the cost-of-living crisis felt across the globe. But its overall stance should remain
sufficiently tight to keep monetary policy on target. Addressing growing government debt
distress caused by lower growth and higher borrowing costs requires a meaningful
improvement in debt resolution frameworks.
With tightening financial conditions, macro-prudential policies should remain on guard
against systemic risks. Intensifying structural reforms to improve productivity and
economic capacity would ease supply constraints and in doing so support monetary policy in
fighting inflation. Policies to fast-track the green energy transition will yield
long-term payoffs for energy security and the costs of ongoing climate change. As Chapter
3 shows, phasing in the right measures over the coming eight years will keep the
macroeconomic costs manageable. And last, successful multilateral cooperation will prevent
fragmentation that could reverse the gains in economic well-being from 30 years of
economic integration The global economy is reeling from the largest energy crisis since
the 1970s.
The energy shock has pushed up inflation to levels not seen for many decades and is
lowering economic growth all around the world. In the new OECD Economic Outlook, they are
now forecasting that world growth will decline to 2.2% in 2023 and bounce back to a
relatively modest 2.7% in 2024. Asia will be the main engine of growth in 2023 and 2024,
whereas Europe, North America, and South America will see very low growth. Higher
inflation and lower growth are the hefty prices that the global economy is paying for
Russias war of aggression against Ukraine. Although prices were already creeping up due
to the rapid rebound from the pandemic and related supply chain constraints, inflation
soared and became much more pervasive around the world following Russias invasion. As a
consequence of the unexpected surge in prices, real wages are falling in many countries,
slashing purchasing power. This is hurting people everywhere. If inflation is not
contained, these problems will only become worse. Thus, fighting inflation has to be our
top policy priority right now. Central banks around the world are increasing interest
rates to curb inflation and anchor inflation expectations in their respective economies.
This strategy is starting to pay off. For example, in Brazil, the central bank moved
swiftly, and inflation has started to come down in recent months. In the United States,
the latest data also seem to suggest some progress in the fight against inflation.
Nevertheless, monetary policy should continue to tighten in countries where inflation
remains high and broad-based. In the fight against rising prices, it is also essential
that fiscal policy works hand-in-hand with monetary policy. Fiscal choices that add to
inflationary pressures will result in even higher policy rates to control inflation. This
means that policy support to shield families and firms from the energy shock should be
targeted and temporary, protecting vulnerable households and firms without adding to
inflationary pressures and increasing public debt burdens. Governments have already done a
lot to ease the economic pain from high energy and food prices, including price caps,
price, and income subsidies, and reduced taxes.
However, since energy prices are likely to remain high and volatile for some time,
untargeted measures to keep prices down will become increasingly unaffordable, and could
discourage the needed energy savings. In most economies, amid the cost-of-living crisis,
the priority remains to achieve sustained disinflation. With tighter monetary conditions
and lower growth potentially affecting financial and debt stability, it is necessary to
deploy macro-prudential tools and strengthen debt restructuring frameworks. Accelerating
COVID-19 vaccinations in China would safeguard the recovery, with positive cross-border
spillovers.
Fiscal support should be better targeted at those most affected by elevated food and
energy prices, and broad-based fiscal relief measures should be withdrawn. Energy markets
remain among the significant downside risks around this outlook. Europe has gone a long
way to replenish its natural gas reserves and curb demand, but this winter in the Northern
Hemisphere will certainly be challenging. The situation might be even more complicated in
the winter of 2023-2024, as replenishing gas reserves might prove more difficult next
year. Higher gas prices, or outright gas supply disruptions, would entail significantly
weaker growth and higher inflation in Europe and the world in 2023 and 2024.
Rising interest rates will also pose many challenges and risks. Debt repayment will be
more expensive for firms, governments, and households who have variable rate debt
obligations or when taking on new debt. We are particularly concerned about low-income
countries, over half of which are already in (or at high risk of) debt distress and now
face tightening financial conditions. Currency depreciation vis-?-vis the US dollar in
many of these countries, and in emerging markets, adds to these risks. Russias war
against Ukraine is also aggravating global food insecurity by putting pressure on prices,
supplies, and food affordability. Some of the most vulnerable people around the globe face
the highest risk of food insecurity, and many governments lack the means to address this
problem. Keeping markets open and agricultural goods flowing, as well as providing
well-targeted aid, should be the utmost priority to avoid further food disruptions and
hunger in many of these countries.
3. OVERVIEW OF THE INDIAN ECONOMY
India is set to be the second-fastest growing economy in the G20 in FY 2022-23, despite
decelerating global demand and the tightening of monetary policy to manage inflationary
pressures. GDP growth will slow to 5.7% in FY 2023-24, as exports and domestic demand
growth moderate. Inflation will crimp private consumption but moderate at the end of the
projection period, helping, along with improved global conditions, to boost growth to 6.9%
in FY 2024-25, in line with the 20-year average (excluding the COVID-19 recession). After
a spike in 2022, the current account deficit will narrow as import price pressures abate.
High medium-term global uncertainty reinforces the importance of continued efforts to
raise potential output growth and resilience. Macroeconomic stability should be pursued
through monetary policy geared towards anchoring inflation expectations and fiscal policy
oriented towards debt control and targeting current and capital spending. Improvements in
the business climate, when combined with financial deepening and skills development, can
boost investment and infrastructure and create more and better jobs.
The strong recovery has slowed Economic growth has lost momentum over the summer, due
to a combination of erratic rainfall, which impacted sowing activities, and falling
purchasing power. Concerns over demand conditions are considerable in services and
infrastructure sectors, while consumers have become cautious regarding non-essential
spending due to higher prices for food and energy. Tighter financial market conditions are
weighing on the demand for capital goods, a leading indicator for aggregate investment.
Export growth remains well-oriented, especially for services, and the progressive entry
into force of comprehensive trade agreements with major partners is helping to improve
prospects.
Nonetheless, the monthly energy and food import bill keeps rising and the current
account deficit widened in the July-September quarter to 2.9% of GDP. Headline inflation
remains above 6% (the central banks upper bound of the tolerance band), mostly due to the
trend increase in the price of food (which in India accounts for a larger share of the
consumer basket than in any other G20 country). Unemployment estimates suggest improving
labour market conditions in both urban and rural areas, but there are few signs of a
wage-inflation spiral.
Recent Developments
Indias economy has demonstrated resilience despite a challenging external environment,
says the World Bank. While the deteriorating external environment will weigh on
Indias growth prospects, the economy is relatively well positioned to weather global
spillovers compared to most other emerging markets. Impact of a tightening global monetary
policy cycle, slowing global growth and elevated commodity prices will mean that the
Indian economy will experience lower growth in 2022-23 financial year compared to 2021-22.
Despite these challenges, the update expects India to register a strong GDP growth and
remain one of the fasted growing major economies in the world, due to robust domestic
demand. The World Bank has revised its 2022-23 GDP forecast upward to 6.9 percent from 6.5
percent (in October 2022), considering a strong outturn in India in the second quarter
(July-September) of the 2022-23 financial year.
"Indias economy has been remarkably resilient to the deteriorating external
environment, and strong macroeconomic fundamentals have placed it in good stead compared
to other emerging market economies," said Auguste Tano Kouame, World Banks
Country Director in India. "However, continued vigilance is required as adverse
global developments persist."
It forecasts that the Indian economy will grow at a slightly lower rate of 6.6 percent
in the 2023-24 fiscal year.
A challenging external environment will affect Indias economic outlook through
different channels. It states that rapid monetary policy tightening in advanced
economies has already resulted in large portfolio outflows and depreciation of the Indian
Rupee while high global commodity prices have led to a widening of the current account
deficit. However, it argues that Indias economy is relatively insulated from
global spillovers compared to other emerging markets. This is partly because India has a
large domestic market and is relatively less exposed to international trade flows. The
World Bank finds that while a 1 percentage point decline in growth in the US is associated
with a 0.4 percentage point decline in Indias growth, the effect is around 1.5 times
larger for other emerging economies. Analysis for growth spillovers from the EU and China
also yields similar results.
Indias external position has also improved considerably over the past decade. The
current-account deficit is adequately financed by improving foreign direct investment
inflows and a solid cushion of foreign exchange reserves (India has one of the largest
holdings of international reserves in the world).
Policy reforms and prudent regulatory measures have also played a key role in
developing resilience in the economy. Increased reliance on market borrowings has
improved the transparency and credibility of fiscal policy and the government has
diversified the investor base for government securities. The introduction of a formal
inflation-targeting framework during the past decade was an important step in lending
credibility to monetary policy decisions. While there are still some challenges in the
financial sector, the adoption of several regulatory and policy measures—including
the introduction of a new Insolvency and Bankruptcy Code and the creation of the new
National Reconstruction Company Limited—facilitated an improvement in financial
sector metrics over the past five years; these policy interventions are also
expected to help alleviate pressures related to non-performing loans. It notes that both
levers of macroeconomic policy – fiscal and monetary – have played a role in
managing the challenges that have emerged over the past year. The report notes that the
RBI withdrew accommodative monetary policy settings in a measured approach as it balanced
the need to rein in inflation while continuing to support economic growth. Fiscal policy
supported the central banks rate actions by cutting excise duty and other taxes on fuel
to moderate the impact of higher global oil prices on inflation. However, it also cautions
that there is a trade-off between trying to limit the adverse impact of global spillovers
on Indias growth and available policy space.
4 . EXTERNAL ENVIRONMENT
Global Economy
Global GDP growth is estimated to fall from 3.4% in 2022 to 2.8% in 2023. The
continuing Russia-Ukraine war along with central banks hiking rates to tame inflation
continues to weigh on economic activity. Growth in 2022 was dampened due to rapid spread
of COVID-19 variants in China and the ongoing war in Ukraine. The concerted sanctions on
Russia, which supplies around 10% of the worlds energy, lead to dampening growth and
further straining of supply chain. The war worsens the persistent inflation across
developed economies. However, the recent re-opening may lead to faster than expected
recovery in 2023. Growth rate in 2023 in USA is expected to be 1.6%, while the eurozone is
expected to remain strained at 0.8%. The energy shock, a result of the war in Ukraine,
continues to impact the economic activity in Europe. Chinas economy is set to rebound to
5.2% as mobility and industrial activity pick up after lifting of pandemic restrictions.
The contraction in real estate remains a major headwind. Long-term headwinds to growth
include a shrinking population and slowing productivity growth.
Economic Outlook
The factors that drove inflation in 2022 are already reversing. These include increase
in commodity prices, expansive fiscal and monetary policy, and supply chain disruptions.
Global inflation is expected to fall from 8.7% in 2022 to 7% in 2023 on the back of lower
commodity prices. Inflation has already peaked in the US and Europe in early 2023. It is
also declining in other major economies including Japan, China and India. In the US,
economic growth is expected to be slower in 2023 given the tightening monetary and fiscal
policy. Contrary to late 2022 estimates, US will avoid a recession due to declining energy
prices, strong employment growth, and easing of supply chain stress. Threat of recession
continuous to loom over Europe as wages and consumer spending has fallen significantly.
Elevated natural gas prices are fuelling inflation and driving down purchasing power. The
tightening of monetary policy by ECB and Bank of England along with energy shock resulting
from the Russia-Ukraine war will play a key impact on the growth potential.
Indian Economy
GDP growth rate in 2023 is expected to be 5.9%, lower than the 2022 growth of 6.8% due
to subdued external demand and tightening monetary policy. However, India will remain the
fastest growing major economy. Brent oil prices are expected to remain rangebound in 2023,
given the continuing war in Ukraine and sanctions imposed in response by the USA and
European Union. India meets nearly 80% of its oil needs through imports. High oil prices
will also have a trickledown effect on the prices paid by consumers for goods and
services. Persistent inflation resulted in RBI to increase the repo rate by 250 basis
points throughout FY2022-23. Further rate hikes are expected in the coming year, despite
no rate hike in the April Monetary Policy Committee meeting. Capital investment of close
to 3.3% of GDP is expected to crowd-in private investment, strengthen job creation and
demand, and raise Indias overall growth potential. Focus is expected in the energy
sector, with significant capital investments towards energy transition and green hydrogen
mission. Overall, the key steel consuming sectors are expected to perform well in
FY2023-24 supported by a rise in infrastructure spend by the Government and gradually
improving semiconductor supply. High CAPEX allocation 116th 251 in key steel consuming
sectors such as railways, national highways and housing is expected to drive steel
consumption.
5. STEEL INDUSTRY AND DEVELOPMENTS
Global Steel Industry
The recovery momentum of global economy after the pandemic has been affected by
persisting inflation, US monetary tightening, Chinas economic deceleration and continued
supply disruptions due to Russia-Ukraine war. High energy prices, rising interest rates,
and falling confidence have limited recovery of the steel demand after a dip in 2022.
However, positive factors like Chinas re-opening, Europes resilience during the energy
crisis and preliminary easing in supply chain bottleneck will lead to a Y-o-Y rise in
global steel demand by ~2.3% (~1,822 MnT) in 2023. The Chinese steel demand is expected to
grow by ~2% in 2023 after 3.5% decline in 2022. The growth may be attributed to base
effect and slight uptick in real estate after decline in 2022 due COVID-19 lockdowns,
slump in the property market and continued focus on sustainability. The European steel
demand is expected to fall further by 0.4% in 2023 after ~8% decline in 2022. Demand in
the USA is expected to grow moderately by ~1% in 2023 backed by relief in infrastructure
segment with 2021 Infrastructure Law and Inflation Reduction Act. The year witnessed very
high volatility in raw material, especially coking coal on account of the on-going
geopolitical concerns and supply chain bottlenecks impacting steel price across
geographies.
Demand Outlook
Demand in the US is expected to grow moderately by 1.3% in 2023 by relief in
infrastructure segment aided by recent legislations like 2021 Infrastructure Law and
Inflation Reduction Act. Recovery in Japan and South Korea may gain pace with
strengthening construction segment and easing supply chain and exports. Global steel
demand is expected to grow by 1.7% reaching 1,854 MnT driven by growth in Asia, Chinas
reopening, diversifying supply chains and Europes resilience. Demand in Europe is
expected to see a 5.6% rebound in 2024 after 4 consecutive years of Y-o-Y contraction in
the steel demand. Sustained inflation remains a downside risk, potentially keeping
interest rates high. Exports are expected to decline further with rise in protectionism
and slowdown in global demand. As Chinas population declines and moves to
consumption-driven growth, its contribution to global steel demand growth will lessen.
Outlook for India remains positive led by strong urban consumption and infrastructure
spending.
Indian Steel Industry
India remains the ‘bright spot for global steel demand. After growth of 8.2% in
2022, demand is expected to show healthy growth of 7.3% in 2023 backed by consumption led
demand. Having managed inflation well, the Indian economy is on a healthy growth track,
with a rising share of investment in GDP, appropriate budget allocations and expenditure
by the Government in the infrastructure segment. India also faced supply disruptions due
to raw material constraints and volatility of prices.
4. Outlook for Indian Steel Industry Indian steel demand is expected to be robust and
growing by 6.2% in FY2023-24 supported by strong GDP growth forecast, private consumption
and Government expenditure. Indias capital goods sector is also expected to benefit from
the momentum in infrastructure and investment in renewable energy. Automotive and consumer
durables are expected to maintain healthy growth driven by sustained growth in private
consumption. Integrated Steel Players will continue to add capacity in FY2023-24, and
utilisation levels are expected to remain healthy at ~80%. Net export position is expected
to strengthen with removal of export duty.
6. OUTLOOK FOR INDIAN STEEL INDUSTRY INDIAN STEEL INDUSTRY Introduction
One of the primary forces behind industrialization has been the use of metals. Steel
has traditionally occupied a top spot among metals. Steel production and consumption are
frequently seen as measures of a countrys economic development because it is both a raw
material and an intermediary product. Therefore, it would not be an exaggeration to argue
that the steel sector has always been at the forefront of industrial progress and that it
is the foundation of any economy. The Indian steel industry is classified into three
categories - major producers, main producers and secondary producers.
As of April 2022, India was the worlds second-largest producer of crude steel, with an
output of 10.14 MT. In FY22, the production of crude steel and finished steel stood at
133.596 MT and 120.01 MT, respectively. In April-Oct 2022, the production of crude steel
and finished steel stood at 71.56 MT and 68.17 MT respectively. The growth in the Indian
steel sector has been driven by the domestic availability of raw materials such as iron
ore and cost-effective labour. Consequently, the steel sector has been a major contributor
to Indias manufacturing output.
The Indian steel industry is modern, with state-of-the-art steel mills. It has always
strived for continuous modernisation of older plants and up-gradation to higher energy
efficiency levels. In the past 10–12 years, Indias steel sector has expanded
significantly. Production has increased by 75% since 2008, while domestic steel demand has
increased by almost 80%. The capacity for producing steel has grown concurrently, and the
rise has been largely organic.
In FY22, the production of crude steel and finished steel stood at 133.596 MT and
120.01 MT, respectively. The consumption of finished steel stood at 105.751 MT in FY22. In
April 2022, Indias finished steel consumption stood at 9.072 MT. In April-July 2022, the
production of crude steel and finished steel stood at 40.95 MT and 38.55 MT respectively.
In FY22, exports and imports of finished steel stood at 13.49 MT and 4.67 MT,
respectively. In FY22, Indias export rose by 25.1% YoY, compared with 2021. In FY21,
India exported 9.49 MT of finished steel. In July 2022 exports of finished steel stood at
3.80 lakh MT.
The annual production of steel is anticipated to exceed 300 million tonnes by
2030–2031. By 2030–31, crude steel production is projected to reach 255 million
tonnes at 85% capacity utilization achieving 230 million tonnes of finished steel
production, assuming a 10% yield loss or a 90% conversion ratio for the conversion of raw
steel to finished steel. With net exports of 24 million tonnes, consumption is expected to
reach 206 million tonnes by the years 2030–1931. As a result, it is anticipated that
per-person steel consumption will grow to 160 kg.
Investments
The steel industry and its associated mining and metallurgy sectors have seen major
investments and developments in the recent past.
According to the data released by the Department for Promotion of Industry and Internal
Trade (DPIIT), between April 2000-September 2022, Indian metallurgical industries
attracted FDI inflows of US$ 17.09 billion.
In FY22, demand for steel is expected to increase by 17% to 110 million tonnes, driven
by rising construction activities.
Government Initiatives
Some of the other recent Government initiatives in this sector are as follows:
• In October 2021, the government announced guidelines for the approved specialty
steel production-linked incentive (PLI) scheme.
• In October 2021, India and Russia signed an MoU to carry out R&D in the
steel sector and produce coking coal (used in steel making).
• In July 2021, the Union Cabinet approved the production-linked incentive (PLI)
scheme for specialty steel. The scheme is expected to attract investment worth ~Rs. 400
billion (US$ 5.37 billion) and expand specialty steel capacity by 25 million tonnes (MT),
to 42 MT in FY27, from 18 MT in FY21.
• In June 2021, Minister of Steel & Petroleum & Natural Gas, Mr.
Dharmendra Pradhan addressed the webinar on Making Eastern India a manufacturing hub with
respect to metallurgical industries, organised by the Indian Institute of Metals. In
2020, Mission Purvodaya was launched to accelerate the development of the eastern states
of India (Odisha, Jharkhand, Chhattisgarh, West Bengal and the northern part of Andhra
Pradesh) through the establishment of an integrated steel hub in Kolkata, West Bengal.
Eastern India has the potential to add >75% of the countrys incremental steel
capacity. It is expected that of the 300 MT capacity by 2030-31, >200 MT can come from
this region alone.
• In June 2021, JSW Steel, CSIR-National Chemical Lab (NCL), Scottish Development
International (SDI) and India H2 Alliance (IH2A) joined forces to commercialise hydrogen
in the steel and cement sectors.
• Under the Union Budget 2022-23, the government allocated Rs. 47 crore (US$ 6.2
million) to the Ministry of Steel. The budgets focus is on creating infrastructure and
manufacturing to propel the economy.
• In addition, enhanced outlays for key sectors such as defence services,
railways, roads, transport and highways would provide impetus to steel consumption.
• In January 2021, the Ministry of Steel, Government of India, signed a Memorandum
of Cooperation (MoC) with the Ministry of Economy, Trade and Industry, Government of
Japan, to boost the steel sector through joint activities under the framework of
India–Japan Steel Dialogue.
• The Union Cabinet, Government of India approved the National Steel Policy (NSP)
2017, as it intends to create a globally competitive steel industry in India. NSP 2017
envisage 300 million tonnes (MT) steelmaking capacity and 160 kgs per capita steel
consumption by 2030-31.
• The Ministry of Steel is facilitating the setting up of an industry driven Steel
Research and Technology Mission of India (SRTMI) in association with the public and
private sector steel companies to spearhead research and development activities in the
iron and steel industry at an initial corpus of Rs. 200 crore (US$ 30 million).
• The Government of India raised import duty on most steel items twice, each time
by 2.5% and imposed measures including anti-dumping and safeguard duties on iron and steel
items.
Road Ahead
The steel industry has emerged as a major focus area given the dependence of a diverse
range of sectors on its output as India works to become a manufacturing powerhouse through
policy initiatives like Make in India. With the industry accounting for about 2% of the
nations GDP, India ranks as the worlds second-largest producer of steel and is poised to
overtake China as the worlds second-largest consumer of steel. Both the industry and the
nations export manufacturing capacity have the potential to help India regain its
favourable steel trade balance. The National Steel Policy, 2017 envisage 300 million
tonnes of production capacity by 2030-31. The per capita consumption of steel has
increased from 57.6 kgs to 74.1 kgs during the last five years. The government has a fixed
objective of increasing rural consumption of steel from the current 19.6 kg/per capita to
38 kg/per capita by 2030-31. As per Indian Steel Association (ISA), steel demand will grow
by 7.2% in 2019-20 and 2020-21. Huge scope for growth is offered by Indias comparatively
low per capita steel consumption and the expected rise in consumption due to increased
infrastructure construction and the thriving automobile and railways sectors.
7. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Financial Controls (‘IFC) framework, commensurate
with the size, scale, and complexity of the Companys operations. The Board of Directors
of the Company is responsible for ensuring that IFC have been laid down by the Company and
that such controls are adequate and operating effectively. The internal control framework
has been designed to provide reasonable assurance with respect to recording and providing
reliable financial and operational information, complying with applicable laws,
safeguarding assets from unauthorised use, executing transactions with proper
authorization and ensuring compliance with corporate policies.
The Companys internal financial control framework is commensurate with the size and
operations of the business and is in line with the requirements of the Companies Act,
2013. The Company has laid down Standard Operating Procedures and policies to guide the
operations of each of its functions. Business heads are responsible to ensure compliance
with these policies and procedures. Robust and continuous internal monitoring mechanisms
ensure timely identification of risks and issues. The management, statutory auditors and
internal auditors have also carried out adequate due diligence of the control environment
of the Company through rigorous testing.
The Internal Audit team monitors and evaluates the efficacy and adequacy of internal
control systems in the Company, its compliance with operating systems, accounting
procedures, and policies at all locations of the Company and its subsidiaries. Based on
the report of internal audit function, process owners undertake corrective action(s) in
their respective area(s) and thereby strengthen the controls. Significant audit
observations and corrective action(s) thereon are presented to the Audit Committee. The
Audit Committee at its meetings, reviews the reports submitted by the Internal Auditor.
Also, the Audit Committee at frequent intervals has independent sessions with the
statutory auditor and the Management to discuss the adequacy and effectiveness of internal
financial controls.
8 . FINANCIAL PERFORMANCE
The Company had prepared its financial statements based on Indian Accounting Standard
(Ind AS). The financial statements were prepared under the historical cost convention on
an accrual basis. Figures of the previous years were reclassified/ regrouped to confirm
the presentation requirements under Ind AS and the requirements laid down under Schedule
III of the Companies Act, 2013. The Companys revenue in FY 2022-23 was Rs. 19,453.67
lakhs compare to Rs. 17,441.30 lakhs in the previous financial year. EBIDTA stood at Rs.
(2218.29) lakhs in FY 2022-2023 compared to Rs. 242.64 lakhs in the previous financial
year. The Company reported a post-tax loss of Rs. 2345.71 lakhs in FY 2022-2023 compared
to a post-tax loss of Rs. 353.09 lakhs in the previous financial year.
9. HUMAN RESOURCE
The Company recognizes the importance of human resources in realizing its growth
ambitions and believes in nurturing talent within the organization to take up leadership
positions. The Company believes in investing in people development and process
improvements, aligned with Companys vision and values. As of March 31, 2023, the Company
has 97 employees.
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
materially 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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