Ashnisha Industries Ltd Management Discussions.

INDUSTRIAL STRUCTURE AND DEVELOPMENT:

Steel industry in the country is coming out of the recession and the prospects are very bright for the steel sector in the country. Indias economic growth is contingent upon the growth of the Indian steel industry. Robust industrialization and increase in the population have led to the demand for housing, properties, and other commercial developments. On the same note, the government is striving to improve infrastructures like railway, road, and communication. Due to this rise in demand for steel for all these developments, Indias Steel Industry is not going down anytime soon. The growth in the Indian steel sector has been driven by domestic availability of raw materials such as iron ore and cost-effective labour. India was the third-largest steel producer in the world in 2016 and it is expected to become the second largest steel producer in the world by 2020.The Government has released the National Steel Policy, which has laid down the broad roadmap for encouraging long term growth for the Indian steel industry, both on demand and supply sides, by 2030-31. The Company is in business of trading of steel products, electronics goods. However Competition in the industry is perpetually escalating and management is taking steps to maintain in the budding high tech market.

OVERVIEW:

The Financial Statements have been prepared in compliance with the Indian Accounting Standards (IND-AS) issued by the Institute of Chartered Accountants of India (ICAI) which have been notified under the Companies (Indian Accounting Standards) Rules, 2015 (‘IND AS Rules), of the Companies Act, 2013. The management of the Company accepts responsibility for the integrity and objectivity of these financial statements have been made on a prudent and reasonable basis, in order that the financial statements reflect in a true and fair manner the form and substance of transactions, and reasonably present the Companys state of affairs and profit for the year.

OPPORTUNITY & THREATS:

Opportunities:

The National Steel Policy 2017 and Domestically Manufactured Iron & Steel Products Policy 2017, has led to huge growth in both production and consumption of steel. The per capita consumption has risen from 69 kgs in 2017-18 to 89 kgs in 2018-19. India has produced 103 Million Tonnes of steel in 2017-18 and will soon become the second largest producer of steel in the world. The capacity of steel production has increased from 138 Million Tonnes in 2017-18 to 158 Million Tonnes in 2018-19.The Government of Indias emphasis and commitment to building infrastructure, Make-in-India and Smart City Mission has led to the consumption of steel growing dramatically. These will generate a lot of opportunities for the Company which will ultimately lead to achieve the organisations set goals.

Threats:

In spite of clear signals of recovery today, it is important to keep in mind challenges of the past that plagued the industry. Over the past few years, the global steel industry has been reeling under the pressure of overcapacities, especially on account of those existing in China. With the growth in steel consumption slowing down in China in recent times, the Chinese steel producers have had no option but to rely on exports. This in turn has had an impact on high growth centres of steel consumption in "steel-non-mature" nations such as India. Additionally, depreciation of major currencies has led to a spurt in export by several countries like Russia and Ukraine. It was for these reasons that India saw an influx of imports beginning 2014-15 from several countries, including China.

The surge in imports impacted the sentiment of the domestic steel market, with declining capacity utilisation rates of both the primary and secondary steel players. Additionally, erosion of margins, coupled with sluggish demand growth, made the Indian steel investors wary of returns on their investment. However, the Government of India came out proactively to provide a level playing field to Indian companies through imposition of anti-dumping and safeguard duties as well as minimum import prices, wherever injury to the industry was noteworthy.

The Indian Steel Association has continued to highlight the long term distortions that high level of cheap imports bring into the domestic market. Under the new global circumstances that pervade the trade scenario, imposition of Quality Control Order(s) is a step in the right direction by the Ministry of Steel to control imports of seconds and defectives into India, which jeopardise the safety of the Indian end-consumer.

COMPETITION:

Competition in the market has strengthened and forced the players to adopt hostile marketing strategy and promotional campaigns to capture and protect their market shares, The Company has the plans to penetrate better in to world market, especially through the patrons retention and business enlargement in the regions which have not been tapped.

Sharp oscillation in value of the Indian Rupee and the increasing inventory prices have put strain on the effectiveness of the Company.

SEGMENT WISE AND PRODUCT WISE PERFORMANCE:

Details on segment wise performance of the Company is provided separately in Notes to Accounts.

RISK AND CONCERN:

The company has vigorous Risk Management framework that identifies and evaluates business risks and opportunities to guard the interest of stakeholders and shareholders with a view to achieve the business objective successfully. The Risk Management System in the company is a fundamental part of the broad planning, controlling and reporting systems. Risk assessment is undertaken based on probability of occurrence and possible impact on the operation of the company. It reviews, assesses the quality, integrity and effectiveness of the Risk Management plan and systems and ensures that the risk policies and strategies are effectively managed by the management.

However, the changes in the tax laws, Government policies and regulatory requirement might affect the companys business. Uncontrolled variation in price of input materials could impact the companys profitability to the extent that the same are not absorbed by the market through price increase and / or could have a negative impact on the demand in the market.

The company closely scrutinize the potential risks and opportunities that arise from Political, Economic & Regulatory environment, Technology Changes, Environment and Competition. We also countered the economic risks with proactive production planning, structural alteration and cost litheness.

INITIATIVES BY THE COMPANY:

The Company has taken the following initiatives:

Concentration on lessening of costs by undertaking precise exercise in diverse fields. Concentration on Operational Efficiency and tactical extension. Concentration in Increase of Shareholders affluence and revenue of the Company.

The Company is quite convinced that the overall productivity, profitability would improve in a sustainable manner, as an outcome of this strategy.

OUTLOOK:

In the recent years, the steel industry has seen crucial precariousness. The profit margins in the industry are under pressure. However, the Company has taken remedial measures. The Company is confident to meet the challenges with its strength in marketing network, its strategic planning, Research & Development, productivity improvement and cost reduction exercise. The market outlook is expected to progress, but with a sluggish growth.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Your Company places significant emphasis and efforts on the internal control systems. The Company has appointed an independent firm of Chartered Accountant for the same with such powers and responsibilities that are required to ensure the adequacy of the internal Control System.

HUMAN RESOURCE:

The Company recognizes the value and input of its employees and solemnly gratitude to create a responsive organization with emphasis on performance with responsibility and answerability. Continuous evaluation of the competencies of the personnel in line with job needs is carried out to aid higher levels of output and productivity. Developing skills and capabilities of workforce to improve manpower deployment and labour yield is a key thrust area of Human Resource Management (HRM) in the Company

HEALTH, SAFETY AND ENVIRONMENTAL PROTECTION:

Your Company has complied with all the applicable environmental laws and labour laws. The Company has been complying with the pertinent laws and has taking all essential measures to protect the environment. Various programmes have been taken to reduce environmental footprint and enhancement of operational efficiency have led to noteworthy augmentation in environmental parameters as well as techno-economic efficiency

CAUTIONARY STATEMENT

The statements in the "Management Discussion and Analysis Report" section portrays the Companys objectives, projections, estimates, expectations and predictions, which may be "forward looking statements" within the connotation of the applicable laws and regulations. The yearly results can be at variance materially from those expressed or implied, depending upon the economic and climatic conditions, Government policies and other supplementary factors.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL REPFORMANCE:

In terms of performance, FY 2018-19 has been a reasonable year. Company is focussed on the task on hand in terms of better reliability of operations and more focussed market efforts. Our financial performance reflected the pragmatic operational performance. Although the entity had incurred losses of 3.94 Lakhs, the company had earned Rs. 2.67 crores as revenue from operations. Cash and cash equivalents at the end of year stood at Rs. 12.49 Lakhs.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS

THEREFOR:

(i) Debtors Turnover ratio: lower by 72.64%

Explanation: Majorly due to credit policies of the company.

(ii) Debt Equity ratio: lower by 45.44%

Explanation: Majorly due to augmentation of trade payables.

DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS

FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF:

Even though the Company has rational retribution but due to adjustment of past years losses, your Company fall short to earn significant sum as return on Net Worth. Nevertheless, there was intensification in return on net worth by 99.94% in the financial year 2018-19 as the loss was diminished to some extent.

DISCLOSURE OF ACCOUNTING TREATMENT

The Financial statements have been prepared in compliance with the Indian Accounting Standards (Ind AS) issued by The Institute of Chartered Accountants of India (ICAI) which have been notified under the Companies (Indian Accounting Standards) Rules, 2015 (‘Ind AS Rules), of the Companies Act, 2013. The financial statements have been prepared on accrual basis under the historical cost convention.

For and on behalf of the Board

SD/- SD/-
Ashok Shah Shalin Shah
Managing Director Director
DIN: 02467830 DIN: 00297447

Place: Ahmedabad

Date: August 14, 2019