Garg Furnace Ltd Management Discussions.

A) BUSINESS REVIEW:

STEEL INDUSTRY GLOBAL PERSPECTIVE

The world economy has experienced subdued growth for another year in 2020. Underperformance in the world economy was observed across almost all regions and major economic groups. Most developed economies continued struggling against the lingering effects of the financial crisis, grappling in particular with the challenges of taking appropriate fiscal and monetary policy actions. A number of emerging economies, which had already experienced a notable slowdown in the past two years, encountered new headwinds during 2020 on both international and domestic fronts.

INDIAN OUTLOOK

Slow growth has been observed in the demand for steel products in India primarily due to near stagnant growth in steel consuming sectors like Infrastructure, housing, auto and consumer goods.

Overall, the future outlook for the steel sector could be positive .The steel prices will be competitive as the demand is likely to pick up depending upon revival in economic growth and the government measures to ease infrastructure investment rules. The demand for value added products like bright bar, spherodised annealing steel, normalized steel etc.will boost the demand in engineering and auto sector.

COMPANYS BUSINESS STRATEGY

Due to increased capacities among steel mills and slowdown in auto sector and other steel consuming sectors this year will also difficult .As a result of overall down scenario we face squeeze in margins. This Situation is likely to continue at least for the first half of year.

Companys future outlook

Your Company, however, believes in the future of high quality products. As the country is witnessing the slowdown in growth, the steel industry has slowed down. This is having a serious impact on business sentiments for steel industry, as a result this year the volume will be under stress and also margins for the first half of the year.

B) PRODUCTION AND SALES REVIEW

During the year under review, the company has produced 22224.18 Metric tons of Steel products. The operating receipts of the company has reduced to Rs. 9852.22 Crores from Rs.11183.05 Crores in the previous year.

C) INTERNAL CONTROL & SYSTEMS

The company has adequate internal control procedures commensurate with its size and nature of its business. These internal policies ensure efficient use and Protection of assets and resources. Compliance with policies, ensure reliability of financial and operational reports.

D) RISK AND CONCERNS

The Steel Industry witnesses cyclical price movements. The fortunes of the industry move up and down in time with the market trend of prices. This phenomenon has become more uncertain and unpredictable with the increased integration of domestic and global markets. The company has taken the cost cutting initiatives, enriching the product mix and strengthened its marketing to cope with the business trend.

E) HUMAN RESOURCE DEVELOPMENT/INDUSTRIAL RELATION

During the year, the company has employed 74 persons. The Industrial Relations remain cordial during the year. The company is continuing its efforts for improvement in the work culture wherein employees can contribute to their fullest potential.The management acknowledges the contribution of all employees in achieving better performance.