AA Plus Tradelink Ltd Management Discussions

Industry Structure and Developments

We are currently engaged in the business of trading of products made of iron & steel, aluminium, graphite and other alloy products. We are a multi-product trading company with a diverse product portfolio. We are also in the business of supplying Epoxy Floor Coating, Industrial Epoxy Floor Coating, Epoxy Floor Coating Marine, PU Floor Coating, Epoxy Coating, Epoxy Primer, Epoxy High Build Coating, Epoxy Heat Resistance Coating. Further we intend to take the contracts from builders for the end to end supply and fitting of aluminium windows along with the glass..

India holds a fair advantage in production and conversion costs in steel and alumina. Its strategic location enables export opportunities to develop as well as fast-developing Asian markets. As of FY24, the number of reporting mines in India were estimated at 1,425, of which reporting mines for metallic minerals were estimated at 525 and non- metallic minerals at 720.

Minerals are precious natural resources that serve as essential raw materials for fundamental industries, so the growth of the mining industry is essential for the overall industrial development of a nation. The vast resources of numerous metallic and non-metallic minerals that India is endowed with serve as a foundation for the expansion and advancement of the nations mining industry. India is largely self-sufficient in metallic minerals including bauxite, chromites, iron ore, and lignite as well as mineral fuels like coal and lignite. The industry has the potential to significantly impact GDP growth, foreign exchange earnings, and give end-use industries like building, infrastructure, automotive, and electricity, among others, a competitive edge by obtaining essential raw materials at reasonable rates.

Rise in infrastructure development and automotive production are driving growth. Power and cement industries are also aiding growth for the sector. Demand for iron and steel is set to continue given the strong growth expectations for the residential and commercial building industry.

India is primarily a domestic demand-driven economy, with consumption and investments contributing to 70% of the economic activity. With an improvement in the economic scenario and the Indian economy recovering from the Covid-19 pandemic shock, several investments and developments have been made across various sectors of the economy. According to World Bank, India must continue to prioritise lowering inequality while also putting growth- oriented policies into place to boost the economy. In view of this, there have been some developments that have taken place in the recent past. Some of them are mentioned below.

As of September 21, 2022, Indias foreign exchange reserves stood at US$ 524,520 million.

The private equity-venture capital (PE-VC) sector investments stood at US$ 2 billion in September 2022.

Merchandise exports in September 2022 stood at US$ 32.62 billion.

PMI Services remained comfortably in the expansionary zone at 56.7 during April-September 2022

In September 2022, the gross Goods and Services Tax (GST) revenue collection stood at Rs. 147,686 crore (US$ 17.92 billion).

Between April 2000-June 2022, cumulative FDI equity inflows to India stood at US$ 604,996 million.

In August 2022, the overall IIP (Index of Industrial Production) stood at 131.3. The Indices of Industrial Production for the mining, manufacturing and electricity sectors stood at 99.6, 131.0 and 191.3, respectively, in August 2022.

According to data released by the Ministry of Statistics & Programme Implementation (MoSPI),

Indias Consumer Price Index (CPI) based retail inflation reached 7.41% in September 2022.

In FY 2022-23, (until October 28, 2022), Foreign Portfolio Investment (FPI) outflows stood at Rs. 58,762 crore (US$ 7.13 billion).

Opportunities

The Indian economy is likely to become the third largest economy by 2030, and the steel industry will play a pivotal role in this growth journey.

With large raw material reserves, strong base of technically skilled manpower and one of the fastest growing markets in the world, India has definite structural advantages for a successful steel industry. The National Steel Policy 2017 seeks to create a globally competitive steel industry in India with 300 million tonne steelmaking capacity and 158 kg per capita steel consumption by FY 2030-31. The growth in demand will come from traditional, as well as emerging consuming sectors focussing on changing needs of customers. Government-led investment in infrastructure, rapid urbanisation, rising preference for personal mobility, growth in capital goods sector, and government focus on making India

‘Aatmanirbhar are expected to stimulate steel demand in India. The acceleration of the rural economy is also emerging as a potential demand driver for steel. The Government has taken an objective of increasing rural per capita consumption of steel from current 19.6 kg to 38 kg by FY 2030-31. With a leadership position in key market segments, world-class production facilities, and cost leadership position, Tata Steel is well poised to benefit from this large opportunity.

Raw material price volatility is an integral part of operations: Steel prices have a strong correlation with commodity prices. Rising coal and iron prices are normally reflected in higher steel prices, which in effect act as a hedge against volatility.

Technological obsolescence : The significant efforts are being made on a continuous basis to align the existing technology with the latest technological innovations . technological progress can make certain technologies and manufacturing methods out dated . it is therefor imperative for the company to allocate resources for research and development . this will enable them to keep up with technological advancement and stay ahead in the market . to overcome this kind of threats, the company is continuously undertaking innovations, research and development practices .

Risk and concern

Every industry is exposed to certain business risks such as procurement risk, financial risks market risks etc., and the industry makes sincere efforts to address such risks from time to time, to protect its business from the consequences of these risks . however, considering the present situation and market outlook there dose not seem to be any major ,, threats and concern for the business for the financial year 2024- 2025 .

Outlook

The global economy will continue to grow but at a slow pace. much of the weakness is attributable to the weak economic development in china and Europe. However emerging economies will do better to the extent of 4% in 2025 and beyond.however the prime risk remain, namely a renewed uptick in consumer price inflation and increasing geopolitical risks .

Initiatives like Atmanirbhar Bharat and Make in India have also Spurred demand for the heavy engineering and other engineering products used in transportation and industrial application and generally facilitated higher institutional sales .

Internal Control mechanism

The companys internal mechanism is well documented . it is a common practice in the company to lay down well thought-out business plans for each other . from the annual business plan, detailed budget for revenue and the capex for each quarter are determined . the actual performance is reviewed in compairson with the budget and deviations, if any are address adequately . The company has an adequate internal control system commensurate to the size and volume of the business . the internal audit programme cover all the functions and activities of the company . A statutory compliance audit team is constituted to check compliances in all area and reports to the management .

Cautionary Statement

The management discussion and analysis report that pertains to the companys objectives, projections estimates and expectations . it is important to note that this statements may be considered Forward looking statement under applicable law and regulation . it should be understand that actual results may differ from what is either explicitly expressed or implied in this statements . Various Various factors can significantly impact the companys performance such as economic developments within the country, demand and supply conditions in the industry changes in government regulations and tax laws as well as other factors including litigations and industrial relations