Ankit Metal & Power Ltd Management Discussions.
The Global growth remained steady at 3.6 % in 2018 and growth is expected to remain steady for the coming years.
The Indias GDP growth for Financial year 2019-20 is expected to be 6%, boosted by conducive policy reforms and a credit rebound. The nation is currently experiencing a favourable phase of growth based on strong macro fundamentals of the economy, making growth prospects sustainable. India also has an opportunity to strengthen its recent economic gains by initiating more integration in the global value chain. Factors such as a young working population, improving business climate and renewed focus on export expansion would support this opportunity.
The growth in the Indian steel sector has been driven by domestic availability of raw materials such as iron ore and cost effective labour. Government of Indias focus on infrastructure and undertaking road projects is aiding the boost in demand for steel.
Stainless Steel Industry
Indias per capita consumption for stainless steel products is continue to be below the world average which may cause a massive unrealised potential for steel demand growth. There is an ongoing thrust for infrastructure development which will further boost the demand for stainless steel in the country. The growth in the Indian steel sector has been driven by domestic availability of raw materials such as iron ore and cost-effective labour. Moreover, growing urbanisation and disposable income will also enhance demand of stainless steel. Consequently, the steel sector has been a major contributor to Indias manufacturing output.
The Iron & Steel sector has been a major contributor to Indias manufacturing output which in turn depends on increase in automotive production and development. Rising investment in the infrastructure and real estate sectors and increase in number of construction activities are promising a slow but gradually demand for steel products.
Ankit Metal & Power Limited is one of the significant manufactures of Iron and Steel in eastern India. The Company currently operates at Jorehira, dist. Bankura in West Bengal and has an integrated management system that encompasses quality, environment and occupational health and safety certification.
Details of Significant change in Key Financial Ratio
The significant changes in the financial ratios of the Company, which are more than 25% as Compared to the previous year are summarised below:
|Rao||Financial Year 2018-19||Financial Year 2017-18||Change (%)||Reason for change|
|Operang Profit Margin (%)||(22.81)||(64.96)||64.89||Beer sales realisaon and cost control|
|Net Profit Margin (%)||(23.47)||(98.36)||76.14||Beer sales realisaon, decrease in finance cost and cost control|
|Interest Coverage Rao (X)||(33.76)||(1.94)||(1639.98)||Beer sales realisaon, decrease in finance cost and cost control|
|Debtors Turnover Rao (X)||2.65||0.91||190.94||Provisioning of debtors, increase in realisaon and turnover|
|Inventory Turnover Rao (X)||0.73||0.34||112.54||Lower stock level maintained and just-in- me approach|
Risk, Opportunities and Threats
The Company manufactures iron and steel. In the financial year 2018-19 the overall growth of iron and steel business was satisfactory with slower increase in demand. Though increase of demand in year under review was satisfactory, the business was severely impacted by the increase in cost of raw material and oversupply by China. The domestic consumption of steel is likely to increase in 2019-20 due to Government initiatives like Make in India, building Smart Cities; focus on sanitation facilities, and development in areas of roads and railways etc.
Further, the electrical energy is one of the major inputs in production of iron and steel and high power tariff is a great threat for the industry.
The Company has a Risk Management framework in place which is designed to identify, assess and monitor various risks related to key business and strategic objectives. All identified risks are categorised based on a matrix of likelihood of occurrence and impact thereof and a mitigation plan is worked out to extent possible.
The government has already initiated so many steps for the betterment of Indian economy and has also undertaken two large initiatives viz. putting more money into the rural economy especially after demonetisation and putting a renewed focus on infrastructure development and this would certainly enable the steel producers to survive and grow in the markets.
The business activity of the Company primarily falls within a single business segment-Iron and Steel. The Company also generates power from Captive Power Plant, which is entirely consumed in manufacturing of iron and steel without any sale to third parties.
Health, Safety and Environment
The Company is committed to conducting its activities in a manner that promotes the health and safety of its employees, assets and the public, as well as protection of the environment. The Companys Integrated Management System comprises of quality, environment and occupational health and safety certification. All the statutory requirements related to safety, health and environment are being complied with.
Requirements of environmental acts and regulations are complied with. Monitoring and analysis of water, stack emissions and ambient air quality etc., are undertaken periodically to verify whether the level of environmental parameters are maintained and are well within the specified limits.
Internal Controls Systems and their adequacy
The Company maintains adequate Internal Control Systems in all areas of operation. Services of Internal and External Auditors are utilised from time to time, as also in-house expertise and resources. The Company continuously upgrade these systems in line with the best available practices. An independent Audit Committee of the Board reviews the adequacy of Internal Control.
Some of the significant features of Internal Control Systems are:
Adequate documentation of policies, guidelines, authorities and approval procedures covering all important functions.
Deployment of an ERP system which covers most operations and is supported by a defined on-line authorisation protocol.
Ensuring complete compliance with laws, regulations, standards, and internal procedures and systems.
Ensuring the integrity of the accounting system; the properly authorised recording and reporting of all transactions.
Ensuring a reliability of all financial and operational information.
The Company has an Audit Committee with independent directors as members. The committee periodically reviews significant audit findings, adequacy of internal control and compliance with Accounting Standards, amongst others. The Internal Audit Reports are placed before the Audit Committee for consideration. The management duly considers and takes appropriate action on the recommendations made by the Statutory Auditors, Internal Auditors and the independent Audit Committee of the Board of Directors. The Company also takes quarterly compliance certificate in respect of various applicable laws from the concerned departmental heads and place the same before the board.
Industrial relations and Human Resources
Human Resource management is not only important but also a critical asset for a Companys growth. The Companys human capital comprises a prudent mix of youth and experience. The Company employs contract labour in its manufacturing facilities. The Company partners with its employees to ensure a highly engaged and motivated workforce dedicated to achieving the Companys goals. We ensure a safe work environment for all our women employees. We also promote gender equality. Abiding by the Sexual Harassment Policy, we have a Complaint Committee which addresses any complaint from women employees in this relation and take necessary action. The Policy is being reframed as per the provision of Sexual Harassment of Women at the Work Place (Prevention, Prohibition & Redressal) Act, 2013. During the year the Company has not received any complaints of sexual harassment. As on date of this report, the Company has 1,485 employees on its payroll.
Certain statements in the Management Discussion and Analysis Report describing the Companys objective and predictions may be "forward-looking statements" within the meaning of applicable laws and regulations. Actual results may vary significantly from the forward looking statements contained in this document due to various risks and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India, volatility in interest rates new regulations and government policies that may impact the Companys business as well as its ability to implement the strategy. The Company doesnt undertake to update the statements.