Grand Foundry Ltd Management Discussions.


The COVID-19 pandemic is inflicting high and rising human costs worldwide, and the necessary protection measures are severely impacting economic activity. As a result of the pandemic, the global economy is projected to contract sharply by -3 percent in 2020, much worse than during the 2008-09 financial crisis. In a baseline scenario--which assumes that the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound the global economy is projected to grow by 5.8 percent in 2021 as economic activity normalizes, helped by policy support. The advance economies are projected to grow by -6.1 percent in 2020 and 4.5 percent in 2021 whereas the EMDEs are projected to grow by -1.0 percent in 2020 and 6.6 percent in 2021. The risks for even more severe outcomes, however, are substantial.

Effective policies are essential to forestall the possibility of worse outcomes, and the necessary measures to reduce contagion and protect lives are an important investment in long-term human and economic health. Because the economic fallout is acute in specific sectors, policymakers will need to implement substantial targeted fiscal, monetary, and financial market measures to support affected households and businesses domestically. And internationally, strong multilateral cooperation is essential to overcome the effects of the pandemic, including to help financially constrained countries facing twin health and funding shocks, and for channelling aid to countries with weak health care systems.


The total revenue (net) of the Company for the year ended 31st March 2020, decreased by 71.37% and stood at Rs. 735.68 Lakhs as against Rs. 2570.49 in the previous year. During the year the Company has incurred losses of Rs. 204.26 lakhs as against loss of Rs. 233.14 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 lockdowns and 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.


To stop the pandemic on its vicious path, the nation has been put under extended lockdown. While steel industry has been barely able to function under such a constraints, absence of workers or logistical support are creating roadblock. In this issue we continue to seek important insights from the key players in this sector on how they are bravely facing up to the challenge..

During this pressing time when the whole world in under an economic shock and all industries are facing equally analogous issues, steel industry is no exception. The industry is facing turmoil in terms of raw materials availability, supply disruptions and demand fluctuations. There has been a drastic decline in the consumption pattern during this pandemic and every industry has faced the wrath of it.

We have our ears on the ground listening to all problems, pain areas and requirement our customers post lockdown and have already chalked out a contingency plan to help them return to normalcy in their production operations. The Lockdown has helped us buy some time from our busy schedule to ponder on improvement programs, technological up-gradation and also increased our appetite to take risks by accepting innovative home-grown solutions for age-old traditional problems.

Key challenges would be (a) availability of labour, since most of the work force has returned back to their home towns and are not expected back early; (b) continue normal working while maintaining "social distancing" since present working arrangement is not suitable for this. This will automatically reduce productivity leading to a strain on both top and bottom line; (c) fear of imposition of intermittent lock downs if Covid cases show a steep rise. This will greatly affect continuity in working and (d) Since our business is greatly dependent on air/train/road travel and since there seems to be no clarity on restart/regularization of this, it is bound to affect business.

The slowdown, further aggravated by the lockdown due to Covid-19 outbreak, has certainly had a negative impact on our company but we have coped to the extent possible. All work which could be carried out from home like engineering activities, coordination with customers on technological questions, have been done via VPN connectivity.


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 is been depending on business of processing steel on job work basis to maintain better economics and has successfully been able to achieve job work production. 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 re-instating the strength of the company.


COVID-19 pandemic severely disrupted domestic demand, in particular during the month of April. However, there is a recovery visible in the market.

We are seeing the domestic market recover and thats a reason why our operations are running are running at full capacity.

There has been a substantial change of steel requirement in the domestic as well as international market for the consumption of Bright Steel Bars and wires. 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. Various trial orders and sample approvals and certain bulk supplies have been established during the year to continue the pace with domestic market.


Global Steel Sector staring at increased downside risks in near-term following coronavirus outbreak, and Indian companies may face pricing pressures of about USD 30 a tonne in April-June this year, modest domestic steel prices impacting the operating margins of steel players.

The Company is well established for selling and marketing Stainless Steel Bright Bars internationally in most of the developing countries and has maintained their market share. In the international scenario for Stainless Steel Bright Bars business has been on the greater recessionary trend for few years due to which the company has to go through the constant survival problems. But, at the same time, due to long term standing in the market, the company has been able to maintain its market outside India for Stainless Bright Bars and capturing orders and executing the same with the various financial arrangements. Short term spurts of improved demand has been affecting the company to regain its position from time to time in the international market, but the consistent improvement has been lacking in the international market since long time. The company has still been able to remain in the market even with these trends as well recessionary trends. As known worldwide, Indian steel has faced a lot of antidumping suits for Bright Steel Bars from European Community, U.S.A., Canada, the company has successfully being able to fight such anti-dumping petition and retain reasonable supplies to these countries and struggle to retain its position even at low profitability.


> The Company is engaged in the business since more than forty-five 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.


> 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.


The Company has in the last few years developed various heat treatment processes and successfully supplied commercial lots of heat-treated bars to specific standards in the international market in American, German standards. The scope of business is huge and normal, as this product is utilized and acceptable for various applications in the Engineering industries including Petro Chemical, Oil & Natural gas and Automotive industries worldwide. The company is looking for better profitability business and this kind of supplies keeping the edge over the other competitors. Stringent quality standards and method of processing has been introduced to achieve better reliability and traceability for these kinds of products which is mandatory for extending marketing. The international players and competitors for such products are from Italy, Spain and Korea, but with such renowned and established competitors, the company has been able to stand in the international market, establishing its product range internationally.


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.


Return on Net worth during the previous and current financial year is negative due to losses.


The manufacturing facility of the company has been now fully in operation. The Company is currently earning income from outsourcing, manufacturing & marketing exports and earning commission income from the same & doing dedicated job processing for M/ s Sunflag Iron & Steel Ltd well-known Manufacturer of Alloy & Special Steel.


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.


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. 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.


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
Kiran Jangla
Place: Mumbai Managing Director
Date: November 24, 2020 DIN: 01246423