Ashoka Metcast Ltd Management Discussions

> INDUSTRIAL STRUCTURE AND DEVELOPMENT:

The Company is basically in business of trading of steel products like TMT Bars. The steel sector has been a major contributor to Indias manufacturing and trading output. The term TMT bars has become the industry staple for constructing any structure, starting from bridges, flyovers, dams, hydel power plants, industrial structures, high-rise buildings, rapid transport systems, and more. The steel sector is not only vital to the global economy but also plays a critical role in the economic growth of any country. The industrys impact on the economy goes beyond its direct contributions to GDP. Steel is one of the most important and widely used materials in the world. It is used in construction, transportation, manufacturing, and many other industries. The production and consumption of steel have a significant multiplier effect on other sectors of the economy like infrastructure, transportation, automobiles etc. The demand for steel in India has been robust in the last one year, driven by the governments infrastructure projects and the support extended to the manufacturing sector. The stainless steel market in India has also witnessed growth in the last one year. The demand for stainless steel has been driven by the construction, automotive, and consumer goods industries. The growing awareness of the benefits of using stainless steel, such as durability and corrosion resistance, has also contributed to the growth of the market.

> OVERVIEW:

The following operating and financial reviews are intended to convey the Managements perspective on the financial and operating performance of the Company at the end of Financial Year 2023-24. The objective of this report is to convey the Managements perspective on the external environment and steel industry, as well as strategy, operating and financial performance, material developments in human resources and industrial relations, risks and opportunities, and internal control systems and their adequacy in the Company during the Financial Year 2023-24. This Report should be read in conjunction with the Companys financial statements, the schedules and notes thereto and other information included elsewhere in this Report. 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:

The growing demand for steel is notably driving the TMT steel bar market growth , although factors such as increasing iron ore prices may impede market growth. With the rising demand for steel in modern architectures, the growth of the global TMT steel bar market is expected to grow significantly in the forecast period. Advantages of TMT steel bar over other steel bar is another key factor that is expected to impact the thermo-mechanically treated (TMT) steel bars market positively in the forecast period. TMT steel bars have significantly higher tensile strength and are stronger. Furthermore, due to their non-twisted designs, TMT steel bars are less prone to surface defects, such as cracks or abrasion. In addition, these bars can withstand high heat (400-600C), which makes them a reliable option in terms of fire safety. Such factors will drive market growth in the coming years.

> COMPETITION:

Steel being a vast and global industry, we face competition from various domestic and international players. Though being dominated by the large conglomerates, the industry is also unorganized and fragmented with many small and medium sized companies and entities. Competition in our business is based on pricing, relationships with customers, product quality, customization and innovation.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. Certain of our competitors may have greater financial resources, technology, research and development capability, greater market penetration and operations in diversified geographies and product portfolios, which may allow our competitors to better respond to market trends.

> SEGMENT WISE AND PRODUCT WISE PERFORMANCE:

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

> RISK AND CONCERN:

Global economic uncertainties have affected Indias economy, Key risks synonymous to industry include the global recessionary trend, economic slowdown, increase in transport cost, increase in financial charges. The Company does not apprehend any inherent risk in the long run, with the exception of certain primary concerns that have afflicted the progress of our industry in general.

The Company is exposed to risks from market fluctuation of interest rate and stock market fluctuation of the share prices.

Risk Appetite is driven by the following:

• Health and safety of our employees and the communities in which we operate are our prime concern and our operating strategy is focused on the above objective.

• All business decisions are aligned to the Code of Conduct of Ashoka Metcast Limited. Management actions are focused on continuous improvement.

> 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.

Focus is laid on marketing and branding of the product. Management continuously endeavours to maintain the timely delivery of product. The Company is quite confident that the overall profitability would improve in a sustainable manner, as a result of this strategy.

> OUTLOOK:

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 has established a robust internal control framework to ensure the safeguarding of all assets against unauthorized use or disposition, and to ensure that transactions are promptly authorized, recorded, and reported. Aligned with the Companys risk management system, this framework is tailored to match the size, scale, and complexity of its operations. The internal controls, including financial controls, are well-defined, effective, and encompass all aspects of operations and functional areas. Throughout the year, these controls have persistently demonstrated effective operation.

The internal control framework is designed to provide reasonable assurance regarding:

• Recording and providing reliable financial and operational information.

• Ensuring compliance with applicable laws.

• Safeguarding assets from unauthorized use.

• Executing authorized transaction properly and maintaining compliance with corporate policies, minimizing errors.

• Upholding accuracy and completeness of accounting records.

• Undertaking timely preparation of reliable financial disclosures.

> HEALTH, SAFETY AND ENVIRONMENTAL PROTECTION:

Ashoka Metcast Limited Considers people as biggest assets. Safety, health, and well-being of employees utmost importance to us. The Company endeavours 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.

> MANPOWER DEVELOPMENT IN HR AND INDUSTRIAL RELATIONS:

Over the years Company has maintained consistency in its efforts in training and developing its human resource with a view to face the competition. Industrial relations were in order throughout the year and there was satisfactory cooperation between the management and the workers in working towards the overall objectives of the Company.

> DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:

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 Net worth 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 Net worth 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. 148.29 Lakhs as compared to Rs. 268.03 Lakhs revenue during the previous financial year and the Companys profit after tax was Rs. 92.32 Lakhs in the current financial year as compared to the profit of Rs. Rs. 9.14 Lakhs in the previous financial year. Cash and cash equivalents at the end of the year stood at Rs. 25.24 Lakhs. The performance of the Company is terms of overall revenue generation are phenomenal.

> CAUTIONARY STATEMENT:

Statements in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates and expectations may be termed as "forward looking statements" within the meaning of applicable Laws and Regulations. Actual results may differ materially from those either expressed or implied. The readers of this report are, therefore, advised to read the same with this caution. The Company assumes no responsibility to publicly modify or revise any forward looking statements on the basis of any future events or new information.