Ashoka Metcast Management Discussions


INDUSTRIAL STRUCTURE AND DEVELOPMENT:

The Company is basically in business of trading of steel products like TMT Bars. The growth in the Indian steel sector has been driven by the 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 and trading output.

OVERVIEW:

The growth prospects and steel industry outlook in India is favourable. Recent changes in export taxes and import duties on steel, complemented by the rising demand for affordable housing, infrastructure development and construction projects, has led to a pan-India need for steel metal. Moreover, the governments initiative to make India self-sufficient has made room for sustainable urban development, construction of proposed logistics parks and industrial corridors all adding to the meteoric demand for finished steel and steel as a raw material. The iron and steel industry naturally will play a dominant role in bringing progress.

OPPORTUNITY & THREATS:

Though the cost of iron-ore has been on the rise in recent years, it is still one of the most widely available resources domestically. In addition to that, considering that the production of steel is a capital- and labour- intensive process, labour is also available economically. This naturally has helped to balance steel production costs.

Industry-wide application: Steel and steel products have its uses across multiple industries shipbuilding, automotive, pharmaceutical, aviation, real estate, energy, home appliances, electronics etc. Whether its using corrugated sheets in roofing or using TMT bars in buildings for safety against natural disasters, the use of steel as a raw material is visible across all industries.

The availability of substitute materials is a major challenge faced by the TMT steel bar market. The growth of the global TMT steel bars market can negatively impact the availability of substitute materials in the construction industry during the forecast period.

COMPETITION:

Steel being a global industry, we face competition from various domestic and international manufacturers and traders. Competition emerges from small as well as big players in the steel industry. The organized players in the industry compete with each other by providing high quality, consistent and time bound products and value added services. We have a number of competitors offering products similar to us. We believe the principal elements of competition in our line of business are ready finance, consistent and quality products, prompt availability and strong relations with structural steel product market and especially TMT bars manufacturers & traders. We compete against our competitors by establishing ourselves as a knowledge-based trading and manufacturing company with cordial relations with various suppliers, which enables us to provide our customers with bulk quantities at reasonable rates to meet their requirements.

SEGMENT WISE AND PRODUCT WISE PERFORMANCE:

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

RISK AND CONCERN:

We operate a B2B model trading business vertical which is dependent on third party transportation providers for the delivery of our traded good and also for raw materials and other products. Accordingly, continuous increase in transportation costs or unavailability of transportation services for our products, as well the extent and reliability of Indian infrastructure is a major risk concern for the Company.

Further, the Company is involved in high volume-low margin business. To regularly grow our turnover and effectively execute our key business processes is the most important challenge for the Company.

Currently, the Companys major sales are in the state of Gujarat. Although investment in the steel industry in Gujarat has been encouraged, there can be no assurance that this will continue. Expanding geographically, gaining acceptance or being able to take advantage of any expansion opportunities outside our current markets, would be demanding.

The substitutes of the Companies products offer advantages such as corrosion, resistance, lightweight construction, and easier handling. In order to meet this demand, the TMT steel bar manufacturers may have to explore ways in which options for specialization can be provided. Thus, the availability of substitute materials might hamper the growth of the market focus during the forecast period.

INITIATIVES BY THE COMPANY:

Focus is laid on marketing and branding of the product. Management continuously endeavours to maintain the quality of the product traded and timely delivery of the product. The subsidiary of the Company i.e. Rhetan TMT Limited is engaged in the manufacturing of TMT Bars, which is a contributing factor to the overall improvement in the business performance of the Company.

OUTLOOK:

The profit margins in the industry are under pressure. 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 Company is setting an upward trend in terms of revenue generation and vouches to continue to do so by putting in place its best business strategies.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company continuously evolves in strengthening its internal control processes and has adopted adequate and appropriate policies and procedures including the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, safeguarding of its assets, prevention and detection of fraud and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial disclosures under the Companies Act, 2013.

HUMAN RESOURCES:

The Company believes that the unflinching commitment of the employees is the driving force behind the Companys vision. It considers its human resources as its biggest asset and believes in people at the heart of its human resource strategy which set the Company apart from Companys peers. It also believes in a culture of inclusion, trust, skill development, empowerment and development for its employees. With regular communication and sustained efforts, it is ensuring that employees are aligned on common objectives and goals of the business. At the end, your Company appreciates the spirit of its dedicated employees.

HEALTH, SAFETY AND ENVIRONMENTAL PROTECTION:

The people are the greatest asset, and their safety, health, and well-being is of utmost importance to us. The Company endeavors to provide a safe, conducive and productive work environment by undertaking various measures to ensure no injury or accident at the workplace. The Companys ethos of environment protection by development of environment friendly processes for effective usage of resources is based on the belief that nature is a precious endowment to humanity.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:

Particulars Standalone Consolidated
2022-23 2021-22 2022-23 2021-22
Debtors Turnover Ratio 0.86 - 1.93 3.29
Inventory Turnover Ratio - - 0.01 5.22
Interest coverage ratio 163.10 (117.08) 6.63 1.18
Current Ratio 1.65 3.59 4.77 2.37
Debt Equity Ratio 1.00 0.13 0.14 0.67
Operating Profit Margin 3.47 - 9.48 0.06
Net Profit Margin 3.41 - 6.39 0.03
Return on Networth 0.26 - 3.02 0.09
P/E Ratio 421.11 (64.33) 11.94 3.24

The significant positive change in the ratios is on account of increase in revenue, increase in operating profit, net profit, net profit margin and better Returns on Networth of the Company.

DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF:

The increase in Return of Networth is due to increase in shareholders equity during the year. A positive return on net worth shows the Company strength in generating profits on shareholders equity.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

Operational performance viz. total revenue was Rs. 268.03 Lakhs as compared to NIL revenue during the previous financial year and the Companys profit after tax was Rs. 9.14 Lakhs in the current financial year as compared to the loss of Rs. 9.72 Lakhs in the previous financial year. Cash and cash equivalents at the end of the year stood at Rs. 110.34 Lakhs. The performance of the Company is terms of overall revenue generation are phenomenal.

CAUTIONARY STATEMENT:

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

Place: Ahmedabad For and on behalf of the Board
Date: 11th August, 2023
Sd/- Sd/-
Ashok C. Shah Shalin A. Shah
Managing Director Director
DIN: 02467830 DIN: 00297447