Cosmic CRF Ltd Management Discussions

1. INDUSTRY STRUCTURE AND DEVELOPMENT:

India has the 4th largest railway system in the world, behind only US, Russia and China. India aims to become largest green railway network in the world. In its mission of 100% Electrification and becoming the largest green railway network in the world-6,577 RKMs has been achieved in Indian Railways history during calendar year 2023.

In addition to the focus on electrification, the Indian Railways has also been working on a number of other initiatives to modernize its infrastructure and improve efficiency. These include the adoption of new technologies such as high-speed rail and the implementation of measures to improve safety and security on trains.

400 new generation Vande Bharat Trains to be manufactured during the next three years. 100 PM Gati Shakti Cargo terminals for multimodal logistics to be developed during the next three years.

Overall, the Indian governments focus on the modernization and electrification of the countrys railway infrastructure is expected to have significant benefits in terms of reducing emissions, improving efficiency, and boosting economic growth.

The infrastructure sector plays a pivotal role in driving Indias economic growth and overall development. As the country continues on its path towards becoming a global economic powerhouse, the need for robust infrastructure becomes increasingly apparent. Private sector partnerships have emerged as crucial enablers in this endeavour, bringing in much-needed investment, innovation, and efficiency.

Our Company is primarily engaged in the business of manufacturing Cold Rolled Form, Engineering Solutions, Sheet, Piles and Railway Components which is required by leading Railway Wagon manufacturing companies including Indian Railways.

2. OPPORTUNITIES:

Government Initiatives to promote the infra and railway industries gives a sectoral tailwind to the industry. Cosmic CRF Limited (CCL) has acquired N.S. Engineering Projects Private Limited (NSEPPL) and building a capacity in such a way that the Company at large consolidated format shall continue to become a leading manufacturer of cold rolled form items in India and the global markets within the coming times.

It is expected that the Company will be able to garner 15-16% of market share of expected cold rolled form products 22,45,000 MT over a period of 3 years.

Out of 65,000 MT installed production capacity of NSEPPL, around 85% of capacity can be utilised. NSEPPL production portfolio include CRF section, Sheet Piles, High Mast, Octagonal Pole, Crash Barrier and other engineering products. This will help our Company to cater to the demand of various industries other than railways.

CRF sections can be used in following industries:

• Railway Coaches: Floor Panel (Trough Floor) in stainless steel, Sectional members (Sole Bar, Cant. Rail, Waist Rail, Longitudinal Beam, Light Rail, Roof Panel, Side Sill, Key Stone Plate etc.)

• Building Industry: Channels, C Purlins, Z Purlins, Sigma Purlins, Deck Sheets, Roofing Sheets

• Automobile Sector: Floor & Side Panels for LCVs & HCVs, various sectional members for LCVs & HCVs Doors

• Pollution Control Sector: Electro-static precipitators a) Collecting Electrodes b) Discharge electrodes, Structures for ESPs

• Road Safety Systems: Guardrails (W-Beam), Posts Spacers

• Sheet Piles: Cofferdams

3. THREATS:

Present Government initiatives promote the infra and railway industries. In case there is stable political environment in the country post elections results are declared then in coming years our Company do not foresee any threat in doing business.

4. SEGMENT-WISE PERFORMANCE:

The substantial part of the revenue of the Company is from Cold Rolled Form (CRF) produc?s. Details of financia! performance have been provided in the Directors Report.

5. OUTLOOK:

The Company is in continuous look out for organic and inorganic growth exploring sectors to help the company expand its wings for supplies in railway/defence/infra industries. There is healthy growth in the order book, with the present order book standing at around 504 crore and orders worth 119 Crore under discussion and expected to close in near term. The diversified order book into Railway and Infra will ensure that the company cater to both the growing sectors - railways & infra. NSEPPL acquisition will help the Company to increase its top line and gross margins due to in-house strength of galvanising. The acquisition will help the Company to achieve maximum operational efficiency, strengthen and expand product portfolio.

6. RISK MANAGEMENT:

Risk Management is an integral part of our Companys business strategy. A dedicated team is a part of the management processes governed by the senior management team. This team reviews compliance with risk policies, monitors risk tolerance limits, reviews and analyses risk exposure related to specific issues and provides oversight of risk across the organization. The team nurtures a healthy and independent risk management function to avoid any kind of misappropriations in the Company.

7. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Companys internal control system is designed to ensure operational efficiency, protection and conservation of resources, accuracy and promptness in financial reporting and compliance with laws and regulations. The internal control system is supported by an internal audit process for reviewing the adequacy and efficiency of the Companys internal controls, including its systems and processes and compliance with regulations and procedures. Internal Audit Reports are discussed with the Management and are reviewed by the Audit Committee of the Board which also reviews the adequacy and effectiveness of the internal controls in the Company. The Companys internal control system is commensurate with the size, nature and operations of the Company.

8. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

Share Capital:

During the Financial Year 2023-2024, the Company experienced significant developments in its share capital structure. Through an Initial Public Offer (IPO), the Company successfully raised 57,21,08,000 by issuing 18,22,000 Equity Shares at a face value of 10/- each, amounting to 1,82,20,000/- as Share Capital and Share Premium of 304/- per share aggregating to 55,38,88,000. The Equity Shares were listed on BSE-SME Board on June 30, 2023.

Further during the same Financial Year 2023-2024, the Company raised 84,98,16,000/- by issuing 12,76,000 Equity Shares of at a face value of 10/- each, amounting to 1,27,60,000/- as Share Capital and Share Premium of 656/- per share aggregating to 83,70,56,000/- to 15 allottees under Non-Promoters Category on preferential basis.

Reserves and Surplus:

The Reserves and Surplus of Company is 19,694.79 Lakhs as on period ended on March 31,2024, including Revaluation Reserve of 4,273.74 Lakhs.

Total Income:

The Company has earned total Income of 25,363.92 Lakhs for year ended on March 31,2024, as compared to 12,149.31 Lakhs during the Financial Year 2022-23.

9. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED:

Talent Management is a key people planning tool that provides an integrated means of identifying, selecting, developing and retaining top talent within our organization. Attrition has been managed well and has been below industry benchmarks.

The Company employed 37 Employees in the Financial Year 2023-2024.

The Company has kept a sharp focus on Employee Engagement. We follow 360-degree feedback to ensure the satisfaction of our people. We have a strong system of grievance handling too. No concern of our people goes without addressing. We strive for excellence in Human Resource management.

10. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREOF:

SL .No. Key Financial Ratios	31/03/2024	31/03/2023	% change
i. Debtors Turnover	Refer to Note: 31 of the Financial Statements for significant changes in key Financial Ratios along with detailed explanations.
ii. Inventory Turnover
iii. Interest Coverage Ratio
iv. Current Ratio
v. Debt Equity Ratio
vi. Operating Profit Margin (%)
vii. Net Profit Margin (%)

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

Return on Net Worth	2023-2024	2022-2023
(Profit After Tax/Net Worth)	6.07%	39.35%

Return on Net Worth is (33.28%) after comparing with previous Financial Year.

The Company have raised 84,98,16,000/- by issuing 12,76,000 Equity Shares to 15 allottees under Non- Promoters Category on preferential basis. The Allotment of Equity Shares completed on 4th March, 2024. The money raised through preferential issue for the purpose of acquisition of companies for inorganic growth of the Company. Since the money received in the last month of the Financial Year, the same could not utilised completely. Thus, it has no impact on profitability of the Company in the Financial Year ended 31st March, 2024.

Further during the Financial Year ended 31st March, 2024, the Company revalued its Fixed Assets including Land, Building, Plant & Equipment in order to bring it at Fair Value. As a result of revaluation of Fixed Assets, Revaluation Reserve of 4,273.74 Lakhs has been created. There was increase in Net Worth due to inclusion of Revaluation Reserve amounting to 4,273.74 Lakhs as compared to previous Financial Year 2022-2023. This has no impact on profitability of the Company.

Therefore, negative Return on Net Worth ratio (33.28%) after comparing with previous Financial Year has been seen.

Due to present efforts of the management for acquisition of companies for inorganic growth, the Company is positive about improve in profitability in upcoming Financial Year.

12. CAUTIONARY STATEMENT:

This report contains forward- looking statements based on the perceptions of the Company and the data and information available with the company. The company does not and cannot guarantee the accuracy of various assumptions underlying such statements and they reflect Companys current views of the future events and are subject to risks and uncertainties. Many factors like change in general economic conditions, amongst others, could cause actual results to be materially different.

	BY ORDER OF THE BOARD OF DIRECTORS FOR COSMIC CRF LIMITED
	Sd/-	Sd/-
	ADITYA VIKRAM BIRLA	PURVI BIRLA
PLACE: KOLKATA	MANAGING DIRECTOR	WHOLE-TIME DIRECTOR
DATE: MAY 15, 2024	DIN: 06613927	DIN: 02488423