sujana metal products ltd Management discussions

Pursuant to the Regulation 34 read with the Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 your Directors wish to report as follows:

a) Industry Structure and Developments

India was the worlds second-largest steel producer@ with production standing at 106.5 MT in 2018. The growth in the Indian steel sector has been driven by 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 very modern with state-of-the-art steel mills. It has always strived for continuous modernisation and up-gradation of older plants and higher energy efficiency levels. Indian steel industries are classified into three categories such as major producers, main producers and secondary producers. The Government has taken various steps to boost the sector including the introduction of National Steel Policy 2017 and allowing 100 per cent Foreign Direct Investment (FDI) in the steel sector under the automatic route. Between April 2000 and December 2018, inflow of US$ 11.18 billion has been witnessed in the metallurgical industries as Foreign Direct Investment (FDI). Indias per capita consumption of steel grew to 68.9 kgs, during 2017-18. National Steel Policy 2017 aims to increase the per capita steel consumption to 160 kgs by 2030-31.

b) . Opportunities & Threats :

India is being a very attractive destination for steel consumption, imports have grown by 4.5% whereas exports have fallen by 16 %. The consumption growth is tipped to be driven by expected 7.1% growth in domestic steel demand in calendar year 2019, the Indian Steel Association said adding that demand is likely to grow marginally in the next calendar year 2020 by 7.2%. For financial years 2019-20 and 2020-21, however, the forecast for steel demand growth is 7.2%. Consumption growth is expected to improve driven by measures for farmers, unorganized sector and government employees. Cumulatively, the Indian economy is likely to maintain above 7% growth in the next couple of years.

c) Risks and Concerns :

In accordance with regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, your Company has duly adopted steps for framing, implementing and monitoring the risk management plan and accordingly your Directors have put in place a critical risk management framework across the Company for identification and evaluation of all potential risks. Your Company is continuously evolving and improving systems and measures to take care of all the risk exigencies involved in the business. All inherent risks are identified, measured, monitored and regularly reported to the management. The management decides required measures to overcome these risks and ensures implementation of proper risk mitigation plans. The risk report and mitigation plans are presented to the Board of Directors periodically.

d) Outlook

World Steel Association(WSA) has projected Indian steel demand to grow by above 7% in 2019 and 2020 while globally, steel demand has been projected to grow by 4.1% in 201 9and 2020 respectively. As per WSA, Indian economy is expected to achieve faster growth starting in the second half of 2019. While the fiscal deficit might weigh on public investment to an extent, the wide range of continuing infrastructure projects is likely to support growth in steel demand above 7% in 2019 and 2020. With the commitment of the Government towards infrastructure development in the country, the demand of steel is expected to increase which in turn will provide a great opportunity for the manganese ore industry in the country as well.

As always, your Company looks forward to do well in the year ahead and is optimistic of its abilities to address the set of opportunities and challenges that the coming year will present.

e) Internal Control Systems and their adequacy:

Your Company has an effective Internal Control System to prevent fraud and misuse of Companys resources and protect shareholders interest. Your Company has an independent Internal Audit Department to monitor and review and focus on the compliances of various business processes. The internal audit report alongwith audit findings and tracking of process improvements & compliances is presented for review to the Audit Committee of Board of Directors.

f) Discussion on Financial Performance with respect to operational performance:

The operating performance of the Company has been discussed in Directors Report under the head ‘Financial Highlights & ‘Operations and Overall Performance in the current period.

g) Segment Wise Performance:

Since your Company operates only in one Segment, segment-wise or product- wise analysis of performance is not applicable.

h) Statutory Compliance:

The Company has complied with the various provisions of the Companies Act, 2013, the SEBI regulations, Listing Agreements and provisions of various statutes. Compliance certificates are obtained from various units of the Company and the Board is informed of the same at every Board meeting.

i) Material developments in Human Resources:

The Companys human resource policies and strategies seek to ensure a high level of motivation among employees so that they play a significant role in achieving the Companys goal. The Company has initiated various in-house training programs for skill advancement. The Company accords highest priority to ensure safety and protection of health of its employees which are essential to, and form an integral part of, every Hr development endeavor. .

There were no cases of sexual harassment of woman at work place. Also, there are no instances of child labour/forced labour/ involuntary labour and discriminatory employment during the year.

j) Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor, including:

Ratios	FY 2018-19	FY 2017-18	Reason for change
Debtor Turnover in days	331	154	Liquidity Crunch
Inventory Turnover	45871	51747	Recession
Interest Coverage Ratio	(476)	(316)	Due to Losses
Current Ratio	0.20	0.72	Regrouping of Loans
Debt Equity Ratio	(2.14)	(5.44)	Regrouping of Loans
Operating Profit Margin(%)	13.53%	(17.52%)	-
Net Profit Margin(%)	(194%)	(158.71%)	Provision for Bad Debts
Return on Net worth (%)	(78%)	(183%)	Losses

k) details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof:- given in the above table.

Cautionary Statement

Statements in this management discussion and analysis describing the Companys objectives, projections, estimates and expectations may be ‘forward looking statements within the meaning of applicable laws and regulations. Actual results may differ substantially or materially from those expressed or implied. Important developments that could affect the Companys operations include a downtrend in the industry - global or domestic or both, significant changes in political and economic environment in India, applicable statues, litigations, labour relations and interest costs.