prabhav industries ltd Management discussions

INDUSTRY OVERVIEW:

The Iron and Steel Industry in India has been boosted because of easily available raw materials such as iron-ore and low-cost labor. The iron and steel Industry of India is one of the major contributors to the countrys manufacturing outputs. The aim of the Iron and Steel Industry in India has always been to update the older plants and degradation to higher levels of energy.

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.

India is the worlds second-largest producer of crude steel, with an output of 125.32 MT of crude steel and finished steel production of 121.29 MT in FY23. Indias steel production is estimated to grow 4-7% to 123-127 MT in FY24. 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 modernization of older plants and up-gradation to higher energy efficiency levels.

BUSINESS OVERVIEW:

The Company is into business of development of commercial, residential and infrastructure projects. The Company is exploring various options to improve margins of the Company, by having tight control on expenses & exploring various business activities. The Company has decided to take work on sub-contract basis, as the Capital & cost will be minimal& loss can also be eliminated because of any change in Government regulations. This will impact the profit margin, but at least the Company can sustain in the long run. The Company is also exploring low cost housing projects in Gujarat, which is easily saleable in the present scenario. Despite various adverse factors we firmly believe that Indian economic will grow and hence the growth of construction & infrastructure sector presents us with exciting opportunities like Indias long-term growth story remains intact notwithstanding declining grow thin the past year or two. This presents vast opportunities for us to grow our businesses in the medium to long term, though short-term pain remains a possibility. We further believe the policy liberalization and forward-looking regulatory changes will help markets grow in size. The Company has turnaround this year and it expect to keep this momentum. The growth in the sector is very good and Management expects better results in forth coming year.

STEEL INDUSTRY AND DEVELOPMENTS

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.

DEMAND & SUPPLY

Total global crude steel production for 2022 stood at 1.88 billion tons, falling 4.2% Y-o-Y from a record high in 2021 as tighter fiscal and monetary policy impacted global steel demand.

Chinese steel production mainly led the decrease as steel output fell for a second straight year, down 21 MT or ~2% to 1.01Bt. European steel mills had also been largely impacted by the shrinkage in steel demand, with EU27 steel production falling 16.5 MT or 10.4% Y-o-Y to 136 MT. Chinas iron ore imports for 2022 fell 1.5% Y-o-Y to 1.11 Bt, in line with the lower overall steel production. Chinas coking coal imports in contrast rose 16.6% Y-o-Y to 63.8 MT, following improved logistics from Mongolia after COVID-19 restrictions eased, while excess Russian coals were also being diverted to China at competitive prices. China had also continued an aggressive coal production regime through 2022 in effort to reduce import reliance. Chinese raw coal production hit a record high in December 2022 of 403 MT, with volumes for the full year estimated rising 11% from the year prior. China had also removed its unofficial ban for Australian coals at the end of 2022 with trade flow expected to pick up in 2023, subject to cost competitiveness for Chinese end-users. Meanwhile, Australian coking coal exports had fallen for its third consecutive year down by 4.5% Y-o-Y to 158.6 MT. A third consecutive La Nina year had also plagued eastern Australian miners with heavy rainfall and occasional flooding at the mines and ports. Queens land weather stations had reported approximately 40-45% higher rainfall for 2022 as compared to its 5-year trailing average.

GOALS

Short Term:

• Entry into Steel Recycling Business to create a formal circular economy for steel in India.

• Utilisation of higher scrap charge in the steel making process in India.

• Adoption of best available technologies and improvement in existing processes.

• Improving quality of raw material (iron ore and coking coal).

• Increase share of renewable energy in power mix.

Medium Term:

• Capacity addition in India using scrap Electric Arc Furnace (EAF) route

. • Shifting from metallurgical coal to cleaner fuel like natural gas/Coal Bed Methane

. • Up scaling pilots of CCU and Hydrogen based steel making.

• Piloting new technologies in partnership with academia on pilot projects which are at low Technology Readiness Level (TRL) stage.

Long Term:

• Scale up of HIsarna technology. • Adoption of DRI route capable to operating with present day and future reductants e.g., Natural gas/ Coal Bed Methane or Syngas from coal gasification or Hydrogen.

Date: 05/09/2023	By Order of the Board of Directors
Place: Surat	For Prabhav Industries Limited

Registered Office:

Office No. 348, Massimo Commercial Building, 3rd Floor, Althan Bhimrad Road, Bhimrad, Surat, Gujarat, 395017 CIN: L45200GJ1995PLC028373 Email: prabhavindltd@gmail.com Website: www.prabhavind.com

Sd/-	Sd/-
Antony Esak	Shivsharan
Managing Director Yulidra
DIN: 06837547	Director DIN: 06945632