Gyscoal Alloys Ltd Management Discussions.

Scenario of Steel Industry: Global Steel Industry

World crude steel production stood at 1628.5 million tonnes during 2016, an increase of 0.8 per cent over 2015 based on provisional data released by the World Steel Association (world steel) During 2016, Chinese crude steel production reached 808.4 million tonnes, a growth of 1.2 per cent over 2015. China remained the largest crude steel producer in the world, accounting for 73 per cent of Asian and 49 per cent of world crude steel production during 2015. India was the 3rd largest crude steel producer during 2016 and recorded a production growth of 7.4 per cent over 2015.

Top 5 Steel producing Countries

Rank Country 2016(Mt) 2014(Mt) % 2015/2016
1 China 808.4 803.8 1.2
2 Japan 104.8 105.2 -0.3
3 India 95.60 89.6 7.4
4 United States 78.6 78.9 -0.3
5 Russia (a) 70.8 71.1 -0.1

In 2016, India retained its position as the fastest growing major steel economy in the world and our share in global steel production was 5.5 % in 2015, which has increased to 5.9 % in 2016. India would continue to lead the growth trend in world steel industry and is on its way to become worlds second largest steel producer. The gap between India and Japan was 16 million tonnes in 2015, which has come down to 9 million tonnes in 2016.

The global economic activity has begun to pick up with slow but steady recovery in investment, manufacturing and trade. World growth is expected to rise from 3.1% in 2016 to 3.5% in 2017 and further move up to 3.6% in 2018 according to the world economic output report by IMF, released in April 2017.

Steel Industry in India

India is currently the worlds 3rd largest producer of crude steel against its 8th position in 2003 and is expected to become the 2nd largest producer of crude steel in the world soon. India is the largest producer of direct reduced iron (DRI) or sponge iron in the world. The country is also the 3rd largest consumer of finished steel in the world preceded by China and the USA.

Capacity for domestic crude steel production expanded from 90.87 million tonnes per annum (mtpa) in 2011-12 to 121.97 mtpa in 2015-16, a CAGR growth of 9% during this five year period. Crude steel production grew at 5% annually (CAGR) from 74.29 mtpa in 2011-12 to 89.79 mtpa in 2015-16.

Indias per capita steel consumption of 61 kg is far below the global consumption average of 208 kg. The Government of India plans to embark on an ambitious plan to increase the per capita steel consumption to 160 kg by the year 2030. To achieve this ambitious target the Government will have to increase its expenditure in a variety of steel consuming sectors such as infrastructure, railways, defence, shipbuilding, and automobile thereby resulting in a significant increase in demand for steel in the country.

However, according to estimates by the Central Statistics Office (CSO), Indias GDP growth has moderated in FY 2016-17 to 7.1% from 7.9% recorded in the previous financial year. This happened largely owing to the demonetisation initiative that led to temporary de-circulation of money. The situation has largely normalised, following the Governments re-monetisation process.


The financial year 2016-17 has been a year marked with both excitement and challenges for the global as well as the Indian economy. Some of the events that took place during the course of this year could very well turn out to be the defining moments for the world economy at large. The sheer scale and swiftness with which the Indian Government demonetised almost 86% of the currency notes in circulation in November 2016 is one such event. and Consequently, GDP growth for the year is expected to be almost 1% lower at 6.7% than that in the previous year. Despite some decline in growth due to slowdown in manufacturing and demonetisation, India remained the fastest growing major economy with 7.1% yoy growth (forecasted).

India also saw passing of long awaited GST bill. GST has been implemented from 1st July, 2017 and will provide a huge fillip to industry as it simplifies the tax structure in the country.


Gyscoal Alloys Limited is engaged in the business of manufacturing of Stainless Steel and Mild Steel Long Products from scrap since 1999. The plant for the production activities & registered office of the Company is located at Ubkhal, Kukarwada, Vijapur – Taluka, Mehasana– District. The Corporate office of the company is situated at 2nd Floor, Mrudul Tower, Near Times of India, Ashram Road, Ahmedabad.

The Company has the capacity to manufacture all grades of Stainless Steel Products from 200 series to 400 series. The products are primarily used in the construction in chemical plants, Pharmaceutical plants, building construction, railways and other sectors for structural purpose. The Companys products adhere to high quality standards and it has got ISO 9001:2008 certification for "the manufacture and supply of stainless steel and mild steel based angles, channels, flats, round, square, bright, twisted bars, billets and ingots" adhering to IS 2062 & IS 1786" from BSI Management Systems. The Company has also been successful in producing goods according to needs and specifications of its domestic & foreign buyers.

During the financial year 2010-11, the Company entered the Capital Market with Initial Public Offer (IPO) aggregating to approximately Rs. 5467 lacs. The details of full Utilization of IPO proceeds forms part of Directors Report of the Company.


• During FY 2016-17, the Company recorded a total income of15756.43 lacs, of which income from the operations was 15715.21 lacs.

• During the year FY 2016-17, Earnings Before Interest, Depreciation,Tax and Amortization (EBIDTA) was 1433.64 lacs.

• During the year FY 2016-17, Depreciation was 920.15 lacs, Interest and Finance charges were 1439.26 lacs and Profit before Tax (PBT) was (925.77) lacs. And Profit After tax (PAT) was (825.63) lacs.

• Basic & diluted Earnings per Share (EPS) was (0.52).

• As on March 31,2017 the Net worth ofthe Company was 7127.87 lacs.



• Management depth and ability to manage client relationships.

• R & D capabilities to develop efficient and cost effective process at short notice having a State ofthe Art dedicated R & D Center.

• Multi-purpose and multi-production facilities having Quality Certifications.

• Enhanced presence in the market through clientele basis.


? The Company faces stiff competition from medium and larger well-established players. The Company is smaller in size compared to the market leaders. However with capital expenditure in the project of the company it intends to make it good and face competition more confidently.


Your company is mainly focusing on R & D and manpower and the intelligence. Apart from the risk on account of interest rate and regulatory changes, business of the company are exposed to certain operating business risks, which is mitigated by regular monitoring and corrective actions.


The Company believes that human resource is the most important assets of the organization. It is not shown in the corporate balance sheet, but influences appreciably the growth, progress, profits and the shareholders values. During the year your company continued its efforts aimed at improving the HR policies and processes to enhance its performance. The vision and mission of the company is to create culture and value system and behavioral skills to insure achievement of its short and long term objectives.

The Company as at year end has 84 employees on its role and continues to attract talent both from within and outside India to further its business interests. Industrial relations continue to be cordial.


Internal Financial Control that encompass the policies, processes and monitoring systems for assessing and mitigating operational, financial and compliance risks and control over related party transactions, substantially exist. Your Company has appropriate internal control system for business processes, with regards to eficiency of operations, financial reporting, compliance with applicable laws and regulations. In the Company, the Board of Directors is responsible for ensuring the adequacy and effective monitoring of internal financial controls. The Internal Audit Program is designed in consultation with the Statutory Auditors to ensure accuracy and reliability of accounting data and is monitored by the Audit Committee. Audit observations and recommendations are reported to the Audit Committee, which monitors the implementation of the said recommendations. The Companys internal audit team also carries out extensive audits throughout the year, across all functional areas.


Statement made in the Management Discussion & Analysis describing the companys objectives, projections, estimates, expectations may be "Forward-looking statements" within the meaning of applicable securities laws & regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand supply and price conditions in the markets in which the company operates changes in the government regulations, tax laws & other statutes & other incidental factors.