gyscoal alloys ltd Management discussions


Global economic review:

The global economy enters 2022 in weaker position than previously expected. As the new Omicron COVID- 19 variant spreads, countries have reimposed mobility restriction. Rising energy prices and supply disruption have resulted in higher and more broad- based inflation than anticipated, notably in the United States and many emerging market and developing economies. Global growth is projected to slow down from an estimated 6.1% in 2021 to 3.6% in 2022 - 0.8 percentage point lower than what was envisioned in the last World Economic Outlook (WEO) of January, 2022, largely reflecting forecast markdown in USA and China.

The global steel industry has partially received with increase in global production by 3.7% during 2021, compared to 2020. This is primarily due to economies opening up after wide scale vaccinations, gradual commencement of economy activity, and significant change in retail consumer behavior mainly in automotive and construction sector.

World crude steel production for the 64 countries reporting to the World Steel Association was 161.0 million tonnes (MT) in March, 2022, a 5.8% decrease compared to March, 2021.

Global crude steel production was 456.6 MT in the First three month of 2022, down by 6.8 % compared to the same period in 2021. Asia and Oceania produced 331.3 MT of Crude steel in the first quarter of 2022, a decrease of 7.8% on the first quarter of 2021. The EU (27) produced 36.8 MT of crude steel in the First quarter of 2022, down by 3.8% compared to the same quarter, 2021. North?s America crude steel production in the first three month of 2022 was 28.1 MT of crude steel the first quarter of 2022, a decrease of 8.5% on the first quarter of 2021.

China produced 88.3 MT in March, 2022, down 6.4% in March, 2021. India produced 10.9 MT, up 4.4% Japan produced 8.0 MT, down 4.3%. The United States produced 7.0 MT, Russia is estimated to have produced 6.6

MT, down 1.8% South Korea produced 5.7 MT, 6.1 % Germany produced 3.3 MT, down 11.8%. Turkey produced 3.3 MT, down 2.9%. Brazil is estimated to have produced 3.0 MT, up 5.4%. Iran is estimated to have produced 2.3 MT, down 6.1%.

F.Y. 2021-22: Review

Global economic growth remains volatile

The financial year 2021-22 started with volatility owing to widespread lockdowns across the globe induced by the second wave of COVID-19 infections and ended with rising geopolitical tensions between Russia and Ukraine. The FY 2021-22 began with the second wave hitting many parts of the world, which led to the global recovery losing pace. Impacted by the Delta variant, India?s growth was also temporarily dented in Q1 FY 2021-22. The severity of the second wave resulted in the state governments and central government diverting substantial funds towards healthcare. In the second quarter, with reduction in caseload, easing of restrictions and steady vaccination ramp up, there was a strong bounce back in economic activity. Similarly, Indian economy also witnessed revival with moderate growth in consumption and stable macro indicators backed by steady investment push from the Indian Government.

In the third-quarter of FY 2021-22, with the Omicron variant outbreak and consequent imposition of restrictions, economic activity was impacted. This combined with continuing supply chain disruptions, rising commodity prices and inflationary pressures, dragged the growth prospects of many economies. However, widening reach of vaccines, pent up demand and timely policy measures helped the Indian economy to withstand the challenges. However, with geopolitical tensions in February, global trade was impacted severely. Moreover, use of sanctions by many developed economies has given rise to a medium-term downward risk to global trade.

According to the International Monetary Fund?s April World Economic Outlook (WEO) global growth is expected to have grown at 6.1% in CY 2021, but going forward growth will be restrained owing to volatility and rising inflationary pressures across major economies.

On the domestic front, the Indian economy was on a steady footing despite global supply chain disruptions and looming uncertainty with possible resurgence of COVID-19 infections. Due to significant government investments, total consumption is estimated to have grown by 7% during the fiscal, and Gross Fixed Capital Formation has exceeded pre-pandemic levels on the back of ramped up public expenditure on infrastructure. According to the Economic Survey, India?s GDP grew by 8.7% in FY 2021-22 after contracting by 6.6% in FY 2020-21.

Declining Chinese steel output drags global steel production

In CY 2021, the global steel industry witnessed volatile trends emanating from unsteady raw material prices, supply chain disruptions and overall demand shifts. The global steel industry began CY 2021 on positive note with improved demand following accelerated pace of vaccination programmes in developed countries and gradual opening up of economies. The industry witnessed continued support from uptick in economic activity and improved business sentiment. Hence, in the first quarter, global steel production was at 488 million tonnes (Source: world steel), 10% higher as compared to the same period in CY 2020. As the year progressed, China, the biggest steel market, started witnessing a gradual slowdown. The progress of the economy was marked down slightly by a stronger than anticipated fiscal tightening, uncertainties in the property sector, surging coal prices and supply chain disruptions. In December, China?s crude steel production dropped by 6.8% y-o-y, dragging down global output by 3% (y-o-y). On the other hand, World- ex China reported a 2% growth in steel production on a y-o-y basis. However, for CY 2021, global steel production increased by 3.6%, y-o-y to reach 1911 MnT, mostly supported by enhanced output from World- ex China, while China?s production declined by 3% y-o-y and was at 1033 MnT.

Indian Economy and Steel Industry in India:

Steel is a champion industry with growing domestic demand and an opportunity to leverage the space vacated by Russia and Ukraine in the global market through exports. India remained a net importer of steel for several years. However, starting 2017 fuelled by larger-scale capex projects and the National Steel Policy, the country started contributing to the global steel markets more than ever, with nearly 18 MT steel exported in FY 2021-22. India is now reaching to build steel capacities that meet the domestic demand and at the same time can supply to the global markets. India is thus on its path to becoming an integral part of the global supply chain. In response to PLI scheme announced by government of India for specialty steel products, the steel industry is geared up to create capacity in this space.

The Indian steel industry also witnessed some volatility as at the start of FY 2021-22 as the domestic economic growth was temporarily dented in by the second wave of COVID-19. However, in the second quarter, with easing of COVID-19 restrictions and steady vaccination ramp-up, there was a strong bounce- back in economic activity. Hence, domestic crude steel production was 31% higher in H1 FY 2021-22 compared to the same period in FY 2020-21. Starting January 2022, even as the infections surged owing to new COVID-19 variant, economic activity was stable. The automobile sales of passenger and commercial vehicles were encouraging, and the construction and infrastructure sector witnessed steady investments owing to the government?s focus on public infrastructure. Hence, the domestic steel industry recorded consistent demand trend with steel prices remaining stable. During the year, the Indian steel industry witnessed a 16% (y-o-y) rise in crude steel production. In FY 2021-22, finished steel consumption stood at 105.8 MnT, with an 11.5% rise y-o-y. Total finished steel exports for the same period was at 13.49 MnT, a growth of 25.1% over previous year and imports were at 4.67 MnT, y-o-y decline of 1.7%. The Indian steel industry recorded crude steel production of 120.01 MT in FY 2021-22, despite pandemic-induced disruption in Q1 FY 2021-22. Steel production showed a solid recovery and domestic finished steel consumption continued to grow. Finished steel consumption surpassed pre-pandemic levels and was supported by the governments improved infrastructure investments. Domestic finished steel production rose 18.1% y-o-y to touch 113.6 Mt. Finished steel consumption stood at 105.8 MT, up 11.4% y-o-y driven by the government?s infrastructure spending and the resumption of the projects stalled due to pandemic.

Amidst the challenges brought by the COVID-19 pandemic leading to disruption in supply chain and surging inflation rate, the Indian Government introduced various policies to cushion the impact on the domestic economy and in specific vulnerable section of the society and the business sector. With the vaccination programme having covered the majority of the population, recovering economic momentum and the likely long term benefits of supply-side reforms in pipeline, the Indian economy is in good position to witness GDP growth of around 8.0%-8.5% in 2022-23. Despite the overall volatility arising out of new variants of COVID- 19, inflationary pressures and geopolitical tensions, the Company improved its average capacity utilization and recorded growth in steel and alloys production, saleable steel sale volumes and sales realisation.

India?s finished steel consumption is anticipated to increase to 230 MT by 2030-31 from 86.3 MT in FY 2022 (till January). As of October 2021, India was the world?s second largest producer of crude steel, with an output of 9.8 MT. The industry is witnessing consolidation of players, which has led to investment by entities from other sectors. The ongoing consolidation also presents an opportunity to global players to enter the Indian market. In October, 2021, the government announced guidelines for the approved specialty steel production linked incentive (PLI) scheme. Under the Union Budget 2022-23 the government allocated Rs. 47 crore to the Ministry of Steel. As of September, 2021 India was the world?s second largest producer of crude steel with an output of 9.5 MT. Easy availability of low cost manpower and presence of abundant iron ore reserves make India competitive in the global set up. India is home to fifth highest reserves of iron in the world.


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 Timers of India, Ashram Road, Ahmedabad.

The Company has the capacity of manufacture all grades of Stainless Steel Products from 200 series to 400 series. The products are primary used in the construction in chemical plants, Pharmaceutical plants, building construction, railways, and other sector for structural purpose. The company product?s adhere to high quality standards and it has got ISO 9001:2015 certification for the manufacture and supply of stainless steel and mild steel based angles, flats round, bright and ingots from TUV SUD. The company has also been successful in producing goods according to needs and specification of its domestic and foreign buyers.

Your company has got ISO 9001:2000 certification from BSI Management System and got ISO 9001:2008 certification for the manufacture and supply of stainless steel and mild steel based angles, flats, round, bright, twisted bars, billets and ingots adhering to IS 2062 & IS 1786 from BSI Management Systems.


The company is operating in only one segment i.e. S.S. Products. The company mainly manufacture SS Angles, SS Flats & SS Rounds and the % wise breakup of the products of the total turnover of the company is as under:-

S.S. FLAT BARS 7.31%
S.S. ROUND BARS 29.18%


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 efficiency 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.


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 49 employees on its role and continues to attract talent from within India to further its business interests. Industrial relations continue to be cordial.


Key Financial Ratio

Particulars 2021-22 2020-21
Return on Net worth (%) (145.54) (563.67)
Return on Capital Employed (%) -286.55 (703.30)
Basic EPS (after exceptional items) (0.35) (4.68)
Debtors Turnover 1.16 0.32
Inventory Turnover 1.53 1.07
Interest coverage ratio -19.10 (13.96)
Current ratio 1.02 0.46
Debt Equity ratio (2.77) (2.28)
Operating profit margin (%) (45.03) (672.53)
Net profit margin (%) (24.07) (577.61)

Details of significant changes in key financial ratios:

For the details of significant changes in key ratios refer notes on financials. Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Credit risk encompasses both, the direct risk of default and the risk of deterioration of credit worthiness. Credit risk arises primarily from financial assets such as trade receivables, cash and cash equivalent and other financial assets. In respect of trade receivables, credit risk is being managed by the company through credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to which the company grants credit terms in the normal course of business. The Company ensures that sales of products are made to customers with appropriate creditworthiness. All trade receivables are also reviewed and assessed for default on a regular basis. Credit risk arising from cash and cash equivalent and other financial assets is limited as the counterparties are banks and mainly Government companies respectively. The Company has analyses its trade receivables for agining analysis and grouped them accordingly and then applied year wise percentage to calculate the amount of Allowance for Credit Loss in respect of the same.

The return on net worth and profit margin improves as compared to last year as we had paid all credit facilities from financial institutions in financial year 2021-22 and we utilise remaining funds in best possible manner. The total losses is decreases from last year, our return on capital employed improves as compare to previous year 2020-21 and also management constantly evaluating the total expenses in order to cut the cost and use the resources in optimum manner. There is decreases in losses significantly from last year and also our sales increases so EPS improves as well. Inventory turnover ratio increases as there is increase in total sales. Interest coverage ratio of the current year is improved due to repayment of loan i.e. decrease in total borrowings. There is Improvement in working capital due to settlement of borrowings so current ratio increases. There is Improvement in debt equity ratio due to settlement of borrowings.


• Total Revenue:

Your company has recorded a total income of Rs. 2292.38 lakhs, out of which income from the operations was Rs. 2003.99 lakh during the current year as compared to the previous year total income of Rs. 1281.52 lakhs. Company has recorded positive revenue as compared to previous financial year.

• Expenditure:

During the year, total expenditure of your company has been decreased by 67.87% to Rs. 3,378 Lakhs in FY 2021-22 as against Rs. 10,517 Lakhs in during the previous FY 2020-21. During the current financial year your company has incurred operational expenses is of INR 2957.57 Lakhs. Expenditure in current year as Loan of SBI has been paid off.

• Employee benefit expenses:

During the year under review, the Employee benefit expenses increased by 21.34% from 216.31 Lakhs in FY 2020- 21 as compared to INR 262.48 Lakhs in the current financial year. The employee benefit expenses have been increased as employees joined the organization.

• Finance Cost:

The finance cost is significantly decreased from INR 6,17.33 Lakhs in FY 2020-21 to INR 54.03 Lakhs in FY 2021- 22 due to repayment of SBI Loan.

• Net Profit/ (Loss):

During the year your Company loss decreased by 92.54% to Rs. 551.69 Lakhs in F.Y. 2021-22 against previous year loss of Rs. 7,402.18 Lakhs. Net losses decreased due to increase in revenue from operation and reduction of expenses.

• Non-Current Assets:

The non-current assets have decreased by 19.16% from INR 5,386.17 Lakhs in FY 2020-21 to 4,354.47 in FY 2021-22.

• Current Assets:

The current assets have been decreased by 28.34% from INR 6,069.33 Lakhs in FY 2020-21 to INR 4,349.21 in FY 2021-22.

• Non-Current Liabilities:

The non-current liabilities have been increased by 137.76% from INR 3,192.36 Lakhs in FY 2020-21 to INR 7,590.16 Lakhs in FY 2021-22.

• Current Liability:

The current liabilities have been decreased by 67.92% from INR 13,278.02 Lakhs in FY 2020-21 to INR 4,259.27 Lakhs in FY 2021-22.


Certain statements made in this Report relating to the Company?s outlook, estimates, predictions etc. may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results may differ from such estimates, whether express or implied. Several factors that could make a difference to Company?s operations include climatic conditions and economic conditions affecting demand and supply, changes in Government regulation tax regimes, natural calamities, etc. over which the Company does not have any direct control.

For and on behalf of Board of Directors,
Gyscoal Alloys Limited
Date: July 30, 2022 Mona Shah
Place: Ahmedabad Director & Chairman