Impex Ferro Tech Ltd Management Discussions.



The year 2020 was an exceptional painful for the world economy due to outbreak of Covid-19 Virus and the resultants challenges to the public healthy, lock down and disruption of global supply chain. There was 3.3% of decline of global GDP for the year 2020. The IMF expects global growth to touch 6% in 2021 which may be then moderate to 4.4%. However due to various health measure taken the growth is expected to be in rapid phase in the upcoming years.

While China is forecasted to continue its rapid growth in 2021, Indias economy rebounded quickly from one of the worlds longest and most stringent lockdowns. The accelerating rollout of COVID-19 vaccines in many advanced economies has set the stage for rapid recovery in the second half of this year. While, the global economy is expected to recover to its pre-pandemic level of output in 2022, the emerging-market and developing economies like India is expected to take until 2023 to recover to the pre-pandemic level. Factors such as a young working population, improving business climate and renewed focus on export expansion would support this opportunity.


Ferro alloys are critical additives in the production of Iron & Steel and the fortune of Ferro Alloys Industry is directly linked with the growth of Iron & Steel Industry. The Company produces Ferro alloys.


The Indian ferro alloys production is gradually on increasing track in the year 2021-22 as compared to the year 2020-21 after the adverse effect of the COVID-19 pandemic. The Countrys export of annual ferro alloys is also showing a gradual increase. The socio-political relations with neighbouring countries is also expected to play an important part in the future for ferro alloys industry.

The demand for ferro alloys is expected to remain on increasing trend in the near future due to outbreak of COVID-19. Due to slowly revival of world economy, high demand of infrastructure projects are expected to raise demand for Stainless Steel and Ferro Chrome.

The industry is expected to see substantial consolidations which will drive market discipline and cut down inefficiencies in the production capacity. India holds a lot of promise with government initiatives easing mining operations for consolidated Ferro Alloys producers.


The steel sector has been a major contributor to Indias manufacturing output which in turn depends on increase in automotive production and the development of construction sector.

The proportion of use of ferro alloys depends upon the grade of stainless steel being produced which can be upto30% of the total input of production. The demand for ferro alloys is expected to increase gradually in future. Rising investment in the infrastructure and real estate sectors and increase in number of construction activities are promising a slow but gradually demand for stainless steel products.

Impex Ferro is the one of the significant manufactures ferro alloy in eastern India. The Company currently operates a manufacturing complex at Kalyaneshwari plant in West Bengal and has an integrated management system that encompasses quality, environment and occupational health and safety certification.


The significant changes in the financial ratios of the Company, which are more than 25% as Compared to the previous year are summarised below:

Ratio F.Y. 2020-21 F.Y. 2019-20 Change (%) Reason for change
Operating Profit Margin (%) (8.73) (50.24) 99.83 Increase in sales & decrease in cost of production
Net Profit Margin (%) (8.74) (47.34) 99.82 Increase in sales & decrease in cost of production
Current Ratio (X) 0.26 0.20 30.24 Decrease in trade receivables, Loans and Advances and increase in current borrowings
Interest Coverage Ratio (X) (263.18) (981.67) 73.19 Lower Interest cost & increase in sales realisation
Debtors Turnover Ratio (X) 19.52 5.45 258.17 Decrease in receivables & increase turnover
Inventory Turnover Ratio (X) 1.16 1.11 4.87 Stock level maintained and JustIn-Time approach


The Company manufactures Ferro Alloys. In financial year 2020-21, the overall growth of ferro alloys business was not satisfactory with slower increase in demand. Also, the effect of the COVID-19 pandemic has further put a halt on all production activities for almost four months. All construction sites and other areas of infrastructure was also put a halt and the country faced acute crisis of labour as most of them returned to their native places in view of the pandemic and lockdown being announced by the Government of India. The business was severely impacted by the increase in cost of raw material and over supply by China. The domestic consumption of steel is likely to increase in 2021-22 due to Government initiatives like Make in India, building Smart Cities, focus on sanitation facilities and development in areas of roads and railways etc.

The Government has already firmly taken incessant number of steps for the betterment of Indian economy and has also undertaken two large initiatives viz. putting more money into the rural economy especially after demonetisation and putting a renewed focus on infrastructure development and this would certainly enable the ferro alloys producers to survive and grow in the markets.

Further, the electrical energy is one of the major inputs in production of ferroalloys and high power tariff is a great threat for the ferro alloys industry. High power cost has already impacted us severely.

The Company has a Risk Management framework in place which is designed to identify, assess and monitor various risks related to key business and strategic objectives. All identified risks are categorised based on a matrix of likelihood of occurrence and impact thereof and a mitigation plan is worked out to extent possible

Government regulations, like reduction in import duties, anti-dumping duty and increase in power tariffs and shortage of power, may also affect the profitability of the Company, since 40% or more production costs account for power.


During the year under review the Company has produced 13865.74 MT of Ferro Alloys against 8913.88 MT of Ferro Alloys in previous year registering an increase of 55% over previous year.


The Company is committed to conducting its activities in a manner that promotes the health and safety of its employees, assets and the public, as well as protection of the environment. The Companys Integrated Management System comprises of quality, environment and occupational health and safety certification. New employees are being given intensive safety induction training and are being issued with "Safety Passports" related to their work area. All the statutory requirements related to safety, health and environment are being complied with.

Requirements of environmental acts and regulations are complied with. Monitoring and analysis of water, stack emissions and ambient air quality etc., are undertaken periodically to verify whether the level of environmental parameters are maintained and are well within the specified limits.


Your Company maintains adequate Internal Control Systems in all areas of operation. Services of Internal and External Auditors are utilized from time to time, as also in-house expertise and resources. The Company continuously upgrade these systems in line with the best available practices. An independent Audit Committee of the Board reviews the adequacy of Internal Control. Some significant features of Internal Control Systems are:

• Adequate documentation of policies, guidelines, authorities and approval procedures covering all important functions.

• Deployment of an ERP system which covers most operations and is supported by a defined on-line authorisation protocol.

• Ensuring complete compliance with laws, regulations, standards, and internal procedures and systems.

• Ensuring the integrity of the accounting system; the properly authorised recording and reporting of all transactions.

• Ensuring a reliability of all financial and operational information.

The Company has an Audit Committee with majority of independent directors as members. The committee periodically reviews significant audit findings, adequacy of internal control and compliance with Accounting Standards, amongst others. The Internal Audit Reports are placed before the Audit Committee for consideration. The management duly considers and takes appropriate action on the recommendations made by the Statutory Auditors, Internal Auditors and the independent Audit Committee of the Board of Directors. The Company also takes quarterly compliance certificate in respect of various applicable laws from the concerned departmental heads and place the same before the Board.


This has been dealt within the Boards Report.


Human Resource management is not only important but also a critical asset for a Companys growth. The Companys human capital comprises a prudent mix of youth and experience. The Company employs contract labour in its manufacturing facilities. The Company partners with its employees to ensure a highly engaged and motivated workforce dedicated to achieving the Companys goals. We ensure a safe work environment for all our women employees. We also promote gender equality. Abiding by the Sexual Harassment Policy, we have a Complaint Committee which addresses any complaint from women employees in this relation and take necessary action. The Policy is being reframed as per the provision of Sexual Harassment of Women at the Work Place (Prevention, Prohibition & Redressal) Act, 2013. During the year the Company has not received any complaints of sexual harassment. As on 31st March, 2021, the Company has 233 employees on its payroll.


Statements made in the Report describing the Companys objective and predictions may be "forward-looking statements" within the meaning of applicable laws and regulations. Actual results may vary significantly from the forward-looking statements contained in this document due to various risks and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India, volatility in interest rates new regulations and government policies that may impact the Companys business as well as its ability to implement the strategy. The Company doesnt undertake to update the statements.