Bedmutha Industries Ltd Management Discussions.

Management Discussion and Analysis Report for the year under review,asper regulation 34 (2) of SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015 is presented as below.

Economic and Industry Overview

The World Bank in its latest Global Economic Prospects, projects Indias growth at 7.5 per cent in 2018 and 7.7 per cent in 2019. Observing that Indias growth is forecast to increase to 7.2 per cent in FY2017 and accelerate to 7.7 per cent by 2019, which is slightly below previous projections. In both the years, the forecast has been downgraded by 0.3 per cent and 0.1 percentage points compared to the January 2017 forecast.

Being a core sector, steel industry tracks the overall economic growth in the long term. Also, steel demand, being derived from other sectors like automobiles, consumer durables and infrastructure, its fortune is dependent on the growth of these user industries. The Indian steel sector enjoys advantages of domestic availability of raw materials and cheap labour. Iron ore is also available in abundant quantities. This provides major cost advantage to the domestic steel industry.

Indias steel sector posted a robust 11% growth in production in 2016-17 at 101.2 MT even as domestic consumption remained anaemic mainly due to poor offtake from the end-use segments like construction, automobiles and white goods sectors. Indias steel output grew by 7.4 per cent year-on-year in 2016, and is expected to reach an average annual growth of 8.9 per cent between 2017-2021.The steel output has been estimated to grow to 128.6 million tonnes (MT) in 2021 from 88.4 MTs in 2017 and the share in global output would rise to 7.7 per cent by 2021 from 5.4 per cent in 2017. The Rating Agency ICRA has recently observed that even as Indias steel consumption growth remained weak in the current fiscal due to continued weakness in the key end-user industries, 2017-18 points to a favourable demand outlook for the steel sector in the medium-term.

Indias steel imports contracted by 38.5 per cent in 11M FY17 on the back of various trade protection measures including anti-dumping duty , safeguard duty and minimum import price. This decline in steel imports has coincided with a strong growth in steel exports by domestic mills, supported by an improvement in the pricing scenario in international markets. With the new Government at the centre, we have been witnessing series of radical and transformational reforms - Demonetisation, Real Estate Regulator Bill (RERA), FDI relaxations, GST, Benami Transactions (Prohibition) Amendment Act, Change in Accounting standards IFRS - all coming in a row and in quick succession.


India was the worlds third-largest steel producer in 2016. The growth in the Indian steel sector has been driven by 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 output.

The Indian steel industry is very modern with state-of-the-art steel mills. It has always strived for continuous modernization and up-gradation of older plants and higher energy efficiency levels.

Indias crude steel production grew by 7.4 per cent year-on-year to 95.6 Million Tonnes (MT) in 2016. Total production of crude steel during February 2017 grew by 8.5 per cent year-on-year to 8.08 MT.

Indias steel exports grew 150.0 per cent year-on-year to 0.75 MT in February 2017, while steel imports declined 46 per cent year-on-year to 0.49 MT. Total consumption of finished steel grew by 3.4 per cent year-on-year to 76.22 MT during April 2016-February 2017. Driven by rising infrastructure development and growing demand for automotives, steel consumption is expected to reach 104 MT by 2017.

The Ministry of Steel is facilitating setting up of an industry-driven Steel Research and Technology Mission of India (SRTMI) in association with public and private sector steel companies to spearhead R&D activities in the iron and steel industry with an initial corpus of Rs 200 crore.

Business Environment

Overall business environment during the Financial Year 2016-17 has remained sluggish, the optimism that, the economy may show upheld from 3rd and 4th Quarter of FY 2016-17 was suddenly evaded due to decision of demonetization by the Central Government. The effect of the same lasted for both 3rd and 4th Quarter of F. Y. 2016-17 and is continuing in the current financial year i.e. 2017-18.

The business segment seems to be positive among the business community due to structural changes being brought by the present government but the same is not seen on the ground, hence the consumption by the end users is weak, the economy cannot really kick start unless private sector investment cycle starts.

Our companys operation is more particularly in Steel Wire Sector and Copper Sector, both these segments has larger application in infrastructure sector, and our countries focus is to grow the infrastructure, hence large potential in near future. The growth with margin in the production segment can be seem once the investment cycle in public sector and private sector starts.


The financial performance of the company shows weakness even after infusion of funds by the promoters during the year. The loss of the company has increased during the year as compared to the previous year. There are various reasons behind the increase in the loss; the Nardana plant has successfully started its production which has impact on the fixed cost and variable cost of the company. There is 48.09% increase in the manufacturing and operating cost of the company and 41.48% finance cost of the company. But the capacity utilization has not reach at the break-even point. As a mega project, the company has installed better quality machineries with high standards which need skilled employees to run the machineries and the same increased the employee cost of the company during the year. This will be mitigated as the capacity utilization increases, for which the company is making all the efforts.

Looking at the growth graph of revenue there is 38.33% increase in the revenue as compared to previous year. Also the company has good orders in hand and is able to fulfill its commitment in the near future with advanced machineries. Hopefully the revenue graph will rise year by year and the company will overcome from its weak financial structure in future with better capacity utilization.



Due to structural changes brought out by the present government, more particularly by introduction of GST (Goods & Service Tax). The whole Country has become one market, due to this sea change in taxation; our company sees seamless growth in the market for our products.

Our companies product namely Steel Wire, Wire Products, wire ropes & Copper products, has wide application in Infrastructure segment and same being the focus of our country for its growth, we see lot of opportunity for our products.


The risks which the Company may face are discussed as follows.

i) Health, Safety and Environment Risk:

The manufacture of steel wire involves processes that a repotentially hazardous if not executed with due care.The business of the Company are subject to numerous laws, regulations and contractual commitments relating to health, safety of the staffs and laborers and the environment in the country and the serules and regulations are becoming more stringent.A better safety performance, notonly enhances life and effective ness of human and capital assets, but also improves their availability and reduces losses due to safety incidents.

To minimize the risk of enhance the health and safety of employees, our company is adhering to ISO. 18000.

ii) T echnology Risk:

A key challenge before the Company is to ensure that its plants are equipped with updated technologie sin order to serve clients better and secure cost competitiveness.To that effect, the management of the Company has continued to gear up the improving existing process so as to advance the groupscost competitive position.

The management upgrades the machineries with the latest improvements to cope up with the market demand and for development of the existing products. The company improves its product line to the next level in the competitive market.

iii) Foreign Exchange Risk:

The Companys policy is to hedge all long-term foreign exchange risks as well as short-term exposures.

V olatility in the currency market scan adversely affect the out come of commercial transaction and cause trading uncertainties.Company has foreign exchange hedging policies in place to protect it strading and manufacturing margins against rapid and significant foreign exchange movement.

Our Company has part of our operations in the markets which are priced in directly or indirectly in US dollars. As are sult the functional currency for this portion of the businesses is dollar with are porting currency in INR. Consequently our Company is exposed to vary inglevels of foreign exchange risk when itentersin to transactions which are not denominated in INR,when foreign currency monetary assets and liabilities are translated at the reporting date and as a result of holding net investment in operations which are non-INR.

iv) Fin ancing Risk:

Our Company manages financial risks to maintain a prudent financing strategy, even when undertaking major investment, and therefore taking controlled risks in the area.

v) Interest Risk :

The Company is exposed to the interest rate fluctuations in both domestic and foreign currency borrowings. The rate of interest for rupee borrowing is fixed by banks and the rate is linked to prevailing US Dollar LIBOR for foreign currency borrowings.

vi) Liq uidity Risks :

The Company requires funds both for short term operational needs as well as for long term investment programs mainly in growth projects or acquisition for inorganic growth. The continued global financial uncertainty has significantly restricted the supply of credit in the market. Banks and financial institutions have also tightened lending norms. Company aims to minimize these risks by way of approaching the lending banks, with a corrective action plan, since sufficient cash flow are not generated by the company to repay the immediate repayment liabilities.

vii) Regulatory and Compliance Risk:

There are number of complex laws and regulations and multiple compliances to be complied with by the Company. Further, unstable political system and frequent changes in investment and economic policies are common and any unfore seen change can expose the Companysbusiness.This signifies the alignment of corporate performance objectives, while ensuring compliance with regulatory requirements.


Your Companys Technology function continues to support the Companys growth strategy with focus on new capabilities / technology development, development for substantially new products, feature enhancement of existing products and productivity improvement.


Your Company continues to be in fore front of leveraging relevant Information Technology trends to better facilitate the business and enhance the value proposition to its customers.


Steel industry and its associated mining and metallurgy sectors have seen a number of major investments and developments in the recent past. Despite temporary challenges, countrys long-term outlook for steel sector continues to be bright. Indias steel sector has now risen to be the third-largest producer of crude steel in the world and we expect the domestic steel demand to grow by about six per cent in FY17. Steel wire is sub-segment of steel Industry.

Steel wire finds its application in power segment, automobile, housing, agriculture etc. we expect growth in the above segment. Thus, steel wire industry too has to grow, but this all depends on the capital expenditure by public and private sector which is moving slowly on account of financial constrains in lending by the financial institution in immediate future.

For Bedmutha Industries Ltd.
K. R. Bedmutha
Date: 14thAugust 2017. DIN: 01724420
Place: Sinnar