foundry fuel products ltd Management discussions

The Companys performance during the year ended 31^st March, 2022 and the Managements views on future outlook are discussed below:

Cautionary Statement

Statements in the Management Discussion & Analysis covers the Companys expectations, projections, predictions, estimates and so on about the future of the Company are forward looking statements. The Companys actual results, performance or achievements could thus differ from those projected in any forward-looking statements. Since these are based on certain assumptions and expectations of future activities or events, the Company cannot guarantee the accuracy or realization of the same. The Company assumes no responsibility to publicly revise, change or adjust any such statements on the basis of subsequent developments, information or events. The Company disclaims any obligation to update these forward-looking statements, except as may be required by law.

The Indian economy has fully recovered to the pre-pandemic real GDP level of 2019-20, according to the provisional estimates of GDP released on May 31, 2022. Real GDP growth in FY 2021-22 stands at 8.7%, which is 1.5% higher than the real GDP in FY 2019-20. These figures are associated with stronger growth momentum, indicating increased economic demand. The investment rate in the fourth quarter increased to its highest level in the previous nine quarters. Moreover, capacity utilisation in the manufacturing sector rose in the fourth quarter, as against the third quarter, implying a build-up in demand, which is consistent with the growth objectives of the Indian economy.

India has emerged as the fastest-growing major economy in the world, and is expected to be one of the top three economic powers globally over the next 10-15 years, backed by its robust democracy and strong partnerships.

The Indian steel industry is modern, with state-of-the-art steel mills. It has always strived for continuous modernisation of older plants and up-gradation to higher energy efficiency levels. Metallurgical coke is a basic raw material used for the production of pig iron and steel. Hence, market trends across the steel industry directly reflect on the metallurgical coke market. The growing crude steel production across the globe is expected to drive the application of synthetic graphite in metallurgical applications. The COVID- 19 has presented a problematic situation for metallurgical coke in the country in the early 2020. However, the conditions got better now which concreted the probability of market recovery over the forecast period. The metallurgical coke market is expected to register a CAGR of around 3% during the forecast period. The iron and steel making segment dominated the market and is likely to grow during the forecast period.

The Company has exposure to variety of financial risks, i.e. credit risk, liquidity risk and market risk. The Company process and tracks and evaluates the levels of risk. As well as monitoring the risk itself, the discipline and tracks and evaluates the effectiveness of risk management strategies. The Company also strives for risk mitigation strategy and prepare for and lessen the effects of threats faced by a business. Comparable to risk reduction, risk mitigation takes steps to reduce the negative effects of threats and disasters on business continuity.

Your Companys businesses are subject to a variety of risks and uncertainties. Among those are price risk, production risk, risk from natural calamities, political risks etc. Your Company is not free while competing with the indigenous industries as well as with imported coal. Although the coke market is not doing well but your Companys working are below expectation due to shutdown of operation of factory since the year 2010, working capital shortage & carry forward losses of the previous years. In between these limiting factors your Company makes losses. Your Company presently is in a very critical position to revive & the same is continued since a decade. The Board of Directors of the Company during the previous years have streamlined and restructured its share capital base by both reduction of as well as increase in equity share capital by conversion of loans as per the BIFR Order. Your Company is looking for a turnaround so that the operations of the Company may be resumed.

The Companys internal control systems are commensurate with the nature, size and complexities of its business and ensure proper safeguarding of assets, maintaining proper accounting records and providing reliable financial statements.

Your Companys loss during the period under review stood at Rs. 20.74 Lakhs against loss of Rs. 27.13 Lakhs comparing with the previous year. Your promoters are taking positive steps for restarting of the operations.

The Company is planning to initiate the process of searching another project. The Company is also evaluating the option to sell or lease or transfer the entire business assets or undertaking comprising of all movable and immovable properties for which members have duly accorded their approval to the board. Further, in the opinion of the management, fixed assets are sufficiently and substantially depreciated / amortized and hence no adjustment would be required to its carrying value. For the purpose of payment to the trade liabilities, Company will be able to get sufficient funds from holding Company. Considering the same, accounts are prepared on going concern basis.