Aditya Ispat Management Discussions


A. Overview

The following discussion and analysis is intended to convey the Managements perspective on the financial and operating performance of the Company at the end of Financial Year 2022-23. This Report should be read in conjunction with the Companys financial statements, the schedules and notes thereto and other information included elsewhere in the Report. The Companys financial statements have been prepared in accordance with Indian Accounting Standards (‘Ind AS) complying with the requirements of the Companies Act, 2013 and guidelines issued by the Securities and Exchange Board of India (‘SEBI).

This report is an integral part of the Directors Report. Aspects on industry structure and developments, outlook, risks, internal control systems and their adequacy, material developments in human resources and industrial relations have been covered in the Directors Report.

B. Economic Overview 1. 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.

The IMF expects global inflation to drop to 6.6% (from 8.8% in 2022) in CY 2023 and further to 4.3% in CY 2024, but still stay above the pre-pandemic levels of about 3.5%. In response, the pace and intensity of interest rate hikes by major central banks , interest rates are likely to remain higher for longer.

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 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

The Euro area averted a severe recession due to good energy management helped by a mild winter, and manufacturing and services are picking up. Wage-driven inflation and any banking crisis are risks to growth. Moreover, according to the International Energy Agency (IEA), possibilities of a further decline in delivery of Russian natural gas to the Euro area could further dampen growth, especially in the case of a lower availability of liquified natural gas (LNG), which accounted for majority of gas demand, and weather factors such as a dry summer and a cold winter in Q4.

The world economy needs a stabiliser, and Asia could very well be the sweet spot, with India and China in the forefront. China is expected to grow at 5.2% in CY 2023, while growth forecasts for India range between 5.9-6.5% for FY 2023-24. The global economy is sustaining the momentum gained in the Q1 of CY 2023 despite the still elevated yet moderating inflation, tighter financial conditions, banking sector stress, and lingering geopolitical conflicts.

2. Indian Economy

The Indian economy stayed on a steady growth path, demonstrating strong resilience to multiple headwinds stemming from elevated inflation and a volatile global macro environment. The Indian economy is estimated to have grown by 7.2% in FY 2022-231, driven by strong private consumption, steady manufacturing and normalisation of contact-intensive services sectors. Although inflation remained above the upper band of the RBIs comfort range of 4-6% for most part of FY 2022-23, it started easing during the third and fourth quarters, as the central bank hiked its policy rates by 250 basis points cumulatively to contain inflation. In April 2023, the RBI hit a pause to its rate hike cycle, and is widely expected to maintain it, if a benign inflationary environment persists.

The government cut customs duties and restricted exports to restrain inflation, while the RBI, like other central banks, raised repo rates and rolled back excess liquidity. With monetary tightening, the US dollar appreciated against several currencies, including the India rupee. However, the rupee has been one of the better-performing currencies worldwide, but the depreciation may have added to the domestic inflationary pressures, besides widening the CAD.

The government intends to kickstart a virtuous cycle of capex led by public expenditure. This will bring in a new wave of private investments, thus improving aggregate demand. Infrastructure spending of Rs. 111 lakh crore under the National Infrastructure Plan (NIP) and the National Monetisation Pipeline (NMP) involving Rs. 6 lakh crore is expected to be completed by FY 2024-25. A full recovery in aggregate demand is, however, dependent on a better recovery in private investments.

The India government has stressed on making India Atmanirbhar and has laid down various incentives and policies. The Union Budget 2023-24 proposed a 33% increase in infrastructure spending to Rs. 10 trillion, or 3.3% of GDP, with the highest ever capital outlay of Rs. 2.4 trillion for railways. It has also identified 100 critical transport infrastructure projects for last mile logistics and allocated ?75,000 crore towards it.

The Emergency Credit Line Guarantee Scheme (ECLGS), introduced as a part of the COVID-19 relief package, was extended to boost credit growth. To promote manufacturing and reduce Indias import dependence, the Indian government had launched its flagship programme, Production Linked Incentive Scheme (PLI), for which Rs. 8,083 crore was earmarked for FY 2023-242.

The Indian economy remains resilient and is a bright spot in the decelerating global economy. It is expected to grow 6.5% in FY 2023-243, primarily due to supportive domestic policies, easing inflation and robust consumption. The government has chosen an investment-led growth approach, which includes a well-planned medium-term fiscal consolidation and expenditure in 2023 to ensure macroeconomic stability. Capital expenditure efficiency, high-quality infrastructure spending, and process improvements are expected to increase transparency and drive growth. Expected rural recovery could provide the required tailwinds. Further, the outlook for residential real estate, auto sector, and renewables remains optimistic. Consumer and business confidence is expected to sustain going forward, as India continues on its high-growth trajectory to assert its strength in the global economic order

1 World Economic Outlook: IMF - April 2023


3 World Economic Outlook, International Monetary Fund, (IMF) January 202


Aditya Ispat Limited (Aditya) is one of the leading manufacturers of Bright Bars and Wire at Hyderabad and has produced 2915.45 Tons as compared to previous year production of 1887.48 Tons of Bright Bars and Wire. However this output is slated to grow with maximum production capacity utilization in the coming years.

i. Outlook - 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 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.

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.

ii. Outlook - Steel Industry in India.

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

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

India is the second-largest producer of crude steel in the world, with an output of 126.2 MnT in FY 2022-23. Crude steel production rose 5.0% year-over-year while finished steel consumption rose 13.3% to 119.9 MnT4 . The India government has set a target to increase crude steel production capacity from 160 MTPA in FY 2022-23 to 300 MTPA by FY 2030-31 under the National Steel Policy.

The Government of India has its sights squarely set on using infrastructure as the force multiplier to drive economic growth. In line with this strategy, the Government announced a series of programmes during FY 2021-22, which outlines a clear roadmap until 2047 to make India one of the top three economies globally, when the nation celebrates the centenary of its independence.

Policy support and key initiatives for steel demand Budget 2023-24 allocation

• 2.4 trillion capital outlay to redevelop railway stations and make them into a multi-modal transit facility

• 75,000 crore towards promoting transport infrastructure efficiency to ensure first and last-mile connectivity for ports, coal, steel, and food grain sectors

• 79,000 crore (up 66%) for the PM Awas Yojana Urban to address the urban housing shortage for lower strata of society

• Domestic production of specialty steel has been given a boost with an outlay of 6,322 crore under the PLI scheme. Seven applications from 30 companies have been selected under the scheme. This will attract committed investment of 42,500 crore with potential downstream capacity additions of 26 MTPA and generation of 70,000 employment opportunities.

4 Ministry of Steel.

The government announced a four-year National Monetisation Pipeline (NMP) worth 6 lakh crore across 12 key sectors to unlock capital for investing in infrastructure projects under the National Infrastructure Pipeline (NIP).

• The Vande Bharat train project expansion is on the cards, with a possible investment of 50,000 crore over the next three years. The National Highways network is proposed to be expanded by 25,000 kms, which is nearly double the cumulative length achieved in the past five years.

In FY 2022-23, the Indian auto sector witnessed healthy demand for passenger vehicles (PV) and commercial vehicles (CV) as chip availability corrected. The outlook for two-wheelers and tractors is improving. With large demand incentives for electric vehicles (EV) from both central and state governments, there is going to be a major shift towards EVs. Infrastructure boost and CapEx investments by the government augurs well for the MHCV and tractor segments going forward. The auto sector also stands to benefit from the PLI boost. However, the CV space is expected to grow slowly due to weak transporter profitability and delayed buying.

Under the Scrappage Policy 2022, the central and state governments offer a 25% tax rebate on road tax for vehicles purchased after scrapping older ones. Additionally, the government is actively working to establish scrapping facilities within 150km of every city in the country. As per the latest announcement, all central and state government vehicles over 15 years will be scrapped from April 1,2023. This will benefit automotive replacement demand and, in turn, drive steel consumption.

Many auto OEMs are trying to localise sourcing using India as an export base for auto parts



• The demand of Bright Steel Bars is increasing and the company has opportunity to expand its capacities.

• The Companys M.O.U/ Long term relation with the main steel producers R.I.N.L. Vishakhapatnam give an edge over manufacturers of other states.

• Demand can be increased by spreading the areas of operations into other parts of the South and Western States.


• The Company is facing competition from small players.

• The Company is facing demand crunch due to global recession in Steel Industry.


• The Company is mainly dependent for its raw material requirement on R.I.N.L (a public sector undertaking). The pricing and availability of raw material is completely dependent on government policies.

• The competition from the small players from the unorganized sector posed a threat to its margins.


The Company has adequate internal control procedures with all safeguards for protection of assets and that all transactions are authorized, reported and recorded properly. The internal control procedures stem from continuous perusal of records and procedures by the Internal Auditors and the Audit Committee of Directors, who meet regularly. There is adequate Budgetary control mechanism established and practiced by the Company. The Code of Conduct also plays an effective role in utilization of energies of people involved.


During the year 2022-23, the Company has posted a net turnover of Rs.5332.73 lakhs which is higher by 26.65% over last year (Rs. 4210.72 lakhs in the F.Y 2021-22).The engineering sector, automobile sector, electric fan sector were in the grip of slow down during the year. The net profit before tax has decrease to Rs.40.05 lakhs compared to previous years profit of Rs 51.83 Lakhs. The decrease was due to price volatity of raw material.


The Company has under its employment, 31 officers and workmen as on 31st March, 2023.

Increase in value of Human Capital through development of individual and collective skills and knowledge is essential to any Company for its growth. The Company lays great emphasis on building a motivated work force, which can participate constructively in the growth of the Company. Innovative ideas are regularly received from the officers and staff of the Company, many of which were implemented for improvement in areas of quality, cost savings and increased productivity.


Sales: The Company has generated sales revenue of Rs. 5332.73 lakhs from manufacturing and trading revenues which is higher than last fiscal. The engineering sector, automobile sector, electric fan sector was in the grip of slow down during the year. The net profit before tax has decreased to Rs.40.05 lakhs compared to previous years profit of Rs. 51.83 lakhs. The decrease was due to steep fall in prices of raw material due to government export policy in the First Half of the FY 2022-23

Property Plant & Equipment (PPE) : The Company has added PPE of Rs. 914.46 lakhs. The Gross block of Capital Assets stood at Rs.3055.56 lakhs as at 31st March 2023 against Rs. 2146.66 lakhs as at 31st March 2022, with Net block of Rs.2456.11 lakhs after depreciation compared to 1664.74 lakhs of the previous year.

Inventory: The inventory at the end of the current year stood at Rs. 723.66 lakhs against Rs719.67 lakhs at the end of previous year.

Trade Receivables : Trade Receivables at the end of the year stood at Rs.1956.88 lakhs against Rs.1742.81 lakhs at the end of previous year.


( Rs. in Lakhs)

PARTICULARS 2022-23 2021-22
Income from Operations 5332.73 4210.72
Other Income 12.03 9.62
Total Income 5344.76 4220.34
Profit before Interest, Depreciation and Tax 460.31 308.05
Profit Before Tax 40.05 51.83
Profit after Tax for the Current Year 30.72 39.86

Your Company continues to take steps to optimize costs of production which contributed to the profitability of the Company. The cost saving exercise is an ongoing one with emphasis on savings in energy consumption and cost,and reduction of wastes.


Balance Sheet:

• Net worth increased to Rs. 1076.77 lakhs as on 31st March 2023 compared to Rs. 1046.05 as on 31st March 2022.

• Long Term Borrowings for FY 2022-23 stood at Rs. 1475.88 lakhs compared to Rs. 1538.32 lakhs during FY 2021-22.

• Total Non-current Assets for FY 2022-23 stood at Rs. 2478.96 lakhs compared to Rs. 2551.65 lakhs in FY 2021-22.

• Current Assets as on 31st March 2023 stood at Rs. 2732.36 lakhs as compared to Rs. 2605.99 lakhs as on 31st March 2022.

• Current Liabilities stood at Rs. 2584.49 lakhs as on 31st March 2023 compared to Rs. 2504.16 lakhs as on 31st March 2022.

Profit and Loss Statement:

• Revenue from operations increased by 26.65% to Rs. 5332.73 lakhs as compared to Previous Year of Rs. 4210.72 lakhs.

• Total expenses for FY 2022-23 stood at Rs. 5304.71 lakhs as compared to Rs. 4168.51 for FY 2021-22.

• Depreciation and Amortization stood at Rs. 122.81 lakhs in FY 2022-23 compared to Rs. 71.81 lakhs in FY 2021-22.

• EBITDA increased to Rs. 460.31 lakhs in FY 2022-23 compared to Rs. 308.05 lakhs in FY 2021-22.

Key Financial Ratios:

Particulars 2022-23 2021-22 Change (%)
EBITDA/Turnover (%) 8.63 7.32 18
Debtors T urnover (days) 127 128 (1)
Inventory T urnover(days) 55 58 (4)
Interest Coverage Ratio (Times) 1.59 1.69 (6)
Debt-Equity (Times) 3.38 3.93 (1)
Current Ratio (Times) 1.06 1.04 2
Net Profit Margin (%) 1 0.55 0.89 (38)
Book Value Per Share (Rs.) 20.13 19.55 3
Earnings Per Share (Rs.) 0.55 0.70 (21)
Return on Net Worth (%) 2.75 3.59 (23)

1Due to intial year of commencement of Unit-II operation


The Managing Director makes a declaration at each Board Meeting regarding compliance with provisions of various statutes. The Company Secretary ensures compliance with the SEBI regulations and provisions of the Listing Agreement. The Compliance Officer ensures compliance with the guidelines on insider trading for prevention of the same.


Statement made in Management Discussion and Analysis report which seeks to describe the objectives, projections,estimates, predictions may be considered to be forward looking statements and are stated as required by applicable laws and regulations. Actual results could differ from those expressed or implied and are determined by many factors including global and domestic demand - supply conditions, process, raw materials availability, tax laws , governmental policies and other statutes which may affect actual results which may be different from what the Directors envisaged in terms of future performance and outlook.