a) OVERVIEW:
The following operating and financial review is intended to convey the Managements
perspective on the financial and operating performance of the Company at the end of the
Financial Year 2022-23. This Report should be read in conjunction with the Companys
financial statements, the schedules and notes thereto and other information included
elsewhere in the Integrated Report. The Companys financial statements have been prepared
in accordance with the Indian Accounting Standards (Ind AS) complying with the
requirements of the Companies Act, 2013, as amended and regulations issued by the
Securities and Exchange Board of India (SEBI) from time to time.
This report is an integral part of the Boards Report. Aspects on industry structure
and developments, outlook, risks, internal control systems and their adequacy, material
developments in human resources and industrial relations have been covered in the Boards
Report and is incorporated herein by reference and forms an integral part of this report.
Your attention is also drawn to sections on Strategy, Risk and Opportunities forming part
of the Integrated Report. This section gives significant details on the performance of the
Company.
b) EXECUTIVE SUMMARY:
The total revenue (net) of the Company for the year ended 31st March 2023,
Increased by 520.85% and stood at ? 10.29 Lakhs as against ? 1.63 Lakhs in the previous
year. During the year the Company has incurred losses of ? 110.61 lakhs as against loss of
? 21.02 lakhs in the previous year. The year under review was adversely affected due to
stressed working capital and liquidity crunch thereby affecting the earning capacity of
the Company. The performance during the year was not satisfactory due to various reasons
beyond the control of the Management. The products in which the Company is dealing, is
facing cutthroat competition. At the same time, the costs have increased due to inflation
in the economy and devaluation of Rupee against the foreign currencies. Due to this, the
Company is currently facing liquidity mismatch wherein it is not generating enough cash
flows to meet its debt obligations on time. Further there is huge dumping of the products
from China and other countries which has resulted in the stiff competition and price
reduction which has resulted in lower capacity utilization.
Further the COVID-19s impact on our lives and economy has been earth shattering. The
restrictions have sent the global supply chain in disarray and have halted industrial
growth and have brought to the fore the importance of building domestic manufacturing
facilities.
c) INDUSTRY STRUCTURE AND DEVELOPMENTS:
Our Company is engaged in the business of manufacturing Bright Steel Bars and wires and
is in the market to sell domestically and in exports since 1974. The Quality control and
manufacturing process consist of in-house treatment and has standard quality name for more
than 2 decades. Due to financial constraints, the company has been depending on business
of processing steel on job work basis to maintain better economics. The Company also has
indulged in the special heat treatment job in order to establish future market of Hardened
& Tempered steel for exports as well as domestic, which will pave the path of revival
and reinstating the strength of the company. During the year under review, due to the
shortage of funds and financial crisis, Company was not able to perform and there was no
production. Company will soon bring the funds in the Company and start production.
GLOBAL ECONOMY:
The global economy enters 2023 in a weaker position than previously expected. As the
new Omicron COVID-19 variant spreads, countries have reimposed mobility restrictions.
Rising energy prices and supply disruptions have resulted in higher and more broad-based
inflation than anticipated, notably in the United States and many emerging market and
developing economies. Further, the ongoing retrenchment of Chinas real estate sector and
slower-than- expected recovery of private consumption and the ongoing tension between
Russia and Ukraine have limited the growth prospects.
GLOBAL STEEL INDUSTRY:
The global steel industry has partially recovered with increase in global steel
production by 7.3% during 2023, compared to 2022. This is primarily due to economies
opening up after wide scale vaccinations, gradual commencement of economic activity, and
significant change in retail consumer behaviour mainly in automotive and construction
sectors. Further, increase in raw material prices mainly concerning coking coal, iron ore
and oil & fuel have pushed the market prices of steel. Global crude steel production
reached at 1,885 MnT in 2022, which was lower by 77 MnT than 2021. While China continued
to be the largest global crude steel producer, there were moderate growth in steel
production in countries such as India, Japan, USA, Germany and Brazil, amongst others,
signifying normalcy in operations during the pandemic.
DOMESTIC MARKET: -
In FY 2022-23, the Indian economy witnessed a V-shaped recovery after experiencing a
technical recession for two consecutive quarters.
Majority of Bright Steel Bars and wires are used for making the various kinds of
components for Automotive industry, Machinery manufacturing industry, Dairy & food
processing industry, chemical and fertilizer industry, electronics and electrical
appliances industry along with computer industry. Due to global interaction and industrial
change in domestic market, various companies have invested especially in automobile
industry and electrical appliances industry along with computer industry. As your company
has been well versed with international business, quality specifications, end market
trends, which will be convenient and easy for the company to capture such trends.
We are seeing the domestic market recover. However, operations of our Company are not
running in full capacity due to lack of working capital and financial crisis and hence,
Company has stopped manufacturing for a period of time till the availability of funds.
Company is in process of raising funds from various investors and soon will start
production.
d) OPPORTUNITIES AND THREATS OPPORTUNITIES
> India continues to be the worlds second largest steel producer and consumer at an
aggregate level. The country has been witnessing increasing industry consolidation and
stronger integration across steel value chains of major producers. The call for India to
be self-reliant will be significantly supported by the use of steel as a customisable
building material across various conventional and value-added use cases. In FY 2022-23,
Indias steel sector witnessed an initial downturn, with government-mandated lockdowns
hampering production. However, towards the end of the second quarter, capacity utilisation
was restored in most plants. For Indian companies, the export scenario remained a key
enabler, helping in the offtake of their inventory at better prices. However, as domestic
prices were nearly on par with the global commodity movement, steelmakers refocused on the
domestic markets. Input prices remained elevated.
> The Company is engaged in the business since more than forty-six years and has
expertise for marketing and quality maintenance of international quality standards for
more than 2 decades
and enjoys the market share in developed countries like United States and European
market.
> So far, our governing administrations have been very proactive in taking all
possible measures to restrict the spread of this pandemic in our country. We are
optimistic that in the coming months and weeks we would be able to contain this threat. We
expect the demand to start picking up gradually and the economy settles down back to its
original pristine.
> We believe that with accurate indigenous refractory solutions, we can reduce
import dependency and provide Best of the Worlds solutions through Make in India to
our customers. We are keeping a close watch on customer refractory requirements to address
the critical areas in the Iron and Steel industry.
> Boding well for both exporters and domestic players in India, China has imposed
fresh tariffs for steel exports, to support its rising domestic steel consumption. This is
expected to create a sizeable vacuum and open up export opportunity for Indian players. It
would also reduce dumping and re-route steel to Indias domestic market, creating demand
for steel made in India.
e) THREATS
> As the major product of the company is made of Stainless Steel carrying high
nickel (metal) which is a sensitive item quoted in LME (London Metal Exchange), the
fluctuation may affect the business opportunities and its profitability.
> As companys major business is depending on exports the fluctuation in foreign
currency may also affect the profitability.
> As the Company is going through the financial crisis and have shortage of funds
and left with few machineries only which makes it difficult to do production on large
scale.
f) HUMAN RESOURCE
The Company takes pride in the commitment, competence and dedication shown by its
employees in all areas of business. The companys belief is that its people are the
primary source of its competitive advantage and consistently puts emphasis on Human
Resource Development, which remains vital and strategic to the company. The Company is
committed to nurturing, enhancing and retaining talent through Learning &
Organizational Development to support the organizations growth and its sustainability in
the long run. Cordial employee relations, in keeping with tradition, are being pursued
vigorously. Industrial relations have continued to be harmonious throughout the year. This
has been possible by creating a performance driven culture against the backdrop of care
and concern for all employees. Objective appraisal systems based on Key Result Areas
(KRAs) are in place.
The backbone of steel consumption is the push for infrastructure development and
generation of employment. Infrastructure development itself would consume steel. Higher
employment/ better wages would mean that consumers would spend on consumer durables,
automobiles etc. which would in turn further fuel the steel industry. This infrastructure
development has to center around rural India.
g) RETURN ON NET WORTH:
Return on Net worth during the previous and current financial year is negative due to
losses. Company has sold few of its machineries due to low in production and financial
losses. To repay the debts of the Company, it has sold few of its assets.
h) OUTLOOK FOR THE FUTURE
GFL expects the steel upcycle to continue in the near-to-medium term, GFL is committed
to serving the nation and has provided whatever support was necessary across the board.
Company is looking for the potential investors, through which company can generate funds
and again start the production of the Company on a large scale. From a business
standpoint, the Company remains bullish on the India opportunity, which is driven by
rising infrastructure projects, accelerated vaccination, policy continuity and a
government-led push for self-reliance. GFLs expansion and strategic divestments, and
other initiatives are directed at making the best
of this opportunity. The Company is also looking at export markets as a strong driver
and going forward.
i) INTERNAL CONTROL SYSTEMS
The Company has proper and adequate systems of Internal Control to ensure that all the
assets are safeguarded from loss, damage or disposition. Checks & balances are in
place to ensure that transactions are adequately authorised and recorded and that they are
reported correctly. The Board of Directors considers internal controls as adequate as it
regularly reviews the findings and recommendations of internal audit.
j) FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
During the previous year the major source of income consisted of exports / sales
whereas in the current year commission has been derived from the exports/sales passed onto
fellow industries to maintain the marketing strength of the company. During the year under
review the income was not generated through exports/sales as there was no production in
the Company due to the shortage of working capital and machineries were sold to pay the
debts. Company is looking for potential investors to bring funds in the Company. The
financial statements are prepared in accordance with Section 134 of the Companies Act,
2013 and accounting principles generally accepted in India, including Indian Accounting
Standards. The results of the operations are discussed in the Boards Report.
CAUTIONARY STATEMENT:
Statement in this Management Discussion and Analysis describing the Companys
objectives, projections, estimates, expectations or predictions may be
"forward-looking statements" within the meaning of applicable securities laws
and regulations. Actual results could differ materially from those expressed or implied
due to risk and uncertainties. Important factors that could make a difference to the
Companys operations include raw material availability and prices, cyclical demand and
pricing in the Companys principal markets, changes in Government regulations, tax
regimes, economic developments within India and the countries in which the Company
conducts business and other incidental factors.
For and on behalf of the Board of Directors For Grand Foundry Limited
|
Vijay Paul Kaushal |
Place: Mumbai |
Director/ Chief Executive officer |
Date: September 05, 2023 |
DIN: 10197853 |
+91-9892691696
