birdhi chand pannalal agencies ltd Management discussions

A. The Global Economy

The year that was, has been eclipsed by the economic and social devastation brought about by the Covid-19 pandemic not just to India but the world. This pandemic has also exhibited how deeply interlinked the world is and that it may no longer be possible to be totally insulated. It is also known that no country can be totally insulated from the effects of an economic slowdown, recession or growth across the globe. The Global GDP growth in the calendar year 2019 was at 2.9% while in the previous calendar year it was 3.6%.

According to a World bank report the "Covid-19 pandemic has, with alarming speed, delivered a global economic shock of enormous magnitude, leading to steep recessions in many countries". However, this report is for the period April 2019-March 2020, bulk of the period which was before the virus spread to such destructive levels.

B. The Indian Economy

The national shutdown due to the spread of Covid-19 virus was from March 25, 2020, which was a week away from the end of the financial year 2019- 20. Indias GDP growth had already dipped to an 11 year low at 4.2% in the financial year 2019-20, mainly on account of the manufacturing and construction sectors.

According to the World Bank, in India, activity was constrained by insufficient credit availability and subdued private consumption. These two issues affected the manufacturing sector in a big way. The Indian manufacturing sector grew by a mere 0.03% in FY 2019-20 compared to 5.7% in the previous year speaks volumes in itself.

C. Risks and Concern

Steel consumption growth stalled in most economies in the later half of2018, and the 2017 recovery lost its momentum. Downside risks included increased trade frictions and a weakening global economy. 2019 started off well but due to local and global issues cropping up, looked very similar to 2018 in the worlds steel markets as momentum continued to slow from the supercharged year of 2017.The Global finished steel market in2020 is set to be weighed down by continuation of last years weaker end-consumption rates co-inciding with outbreak of COVID-19. Global steel consumption y-o-y growth for 2020 has been revised down to 1.1%from initial forecasts of 1.7% while Chinas steel consumption is expected to stay flat. These downward revisions are largely due to negative impact of COVID-19 along with weak downstream activities in construction and manufacturing sectors. Traditionally, slower growth in steel consumption has a negative impact on steel prices and this trend will continue in 2020.

D. Company Performance

The Companys overall operational performance has been average during the Financial Year 2019-20; it achieved sale and other income of Rs. 940.46 Lakhs as against last years Rs. 0.05 Lakhs. Profit/(Loss) before Tax stood at Rs. (1.90 Lakhs) as against last years Rs. (17.98) Lakhs. Net profit/(Loss) stood at Rs. (1.91 Lakhs) as against last years Rs. (17.98) Lakhs.

E. Internal Control Systems and their Adequacy

The Board of Directors of the Company and Audit Committee are responsible for ensuring that Internal Financial Controls have been laid down in the Company and that such controls are adequate and operating effectively. The Company has an IFC framework, commensurate with the size, scale and complexity of its operations. The framework has been designed to provide reasonable assurance with respect to recording and providing reliable financial and operational information, complying with applicable laws, safeguarding assets from unauthorized use, executing transactions with proper authorization and ensuring compliance with corporate policies.

F. Cautionary Statement

Statements in the Management Discussion and Analysis describing the Companys estimates and expectations may be ‘forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied.