Management discussion & analysis Report provides a perspective of
the management on the external environment and steel industry, operating and financial
performance, material developments in human resources and industrial relations, risks and
opportunities and internal control systems and their adequacy in the Company during the FY
2022-23. The Report should be read along with the Companys financial statements, the
schedules and notes thereto and other information provided in the Annual Report. The
Companys financial statements have been prepared in accordance with 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.
Management Discussion and Analysis Report for the year under review, as
per regulation 34 (2) of SEBI (Listing Obligations and Disclosures Requirements)
Regulations, 2015 is as follows:
External Environment, Global / Indian Economy & Steel Industry
Global economy has been adversely affected due to multiple negative
reasons within last 3-4 years causing global GDPgrowth to slow to estimated 3.4% in 2022
from 6.2% in 2021. Further Global GDP growth is estimated to fall from 3.4% in 2022 to
2.8% in 2023. These are due to geopolitical conflict between Russia & Ukraine started
in February 2022, trade tension between US & China, rising inflation levels across
major economies, sanctions & reverse sanctions etc. The rising global inflationary
pressures led to rapid tightening of monetary policies across the advanced, emerging &
developing economies.
Indian economy has shown a good performance ahead of many countries
amid these global crisis. Indian economy is estimated to have grown by 6.8% in FY2022 as
against a growth of 8.2% in FY2021 and emerged as one of the fastest growing major
economies in the world. Yet, Indian economy faced numerous challenges in FY 2023 in terms
of rising inflations, rise in commodity prices, depreciating rupee etc.
Global steel industry had gained a good recovery momentum in CY 2021
after the pandemic situation. However, growth in the year 2022 was hampered due to higher
inflation, increasing interest rates, the Russian-Ukraine war, and Chinas Zero COVID 19
policy leading to repeated lockdowns, rising commodity prices, supply side bottlenecks
etc.
Indian steel industry performed good comparing to global steel industry
performance in 2022. Strong growth in infrastructure projects led by government, better
inflation management and rising manufacturing activities helped steel output to grow by
5.8% in 2022 after a 17.9% growth in 2021.
Indian steel industry plays an important role in the economic growth of
the country. Infrastructure projects led by government, increase in housing demand, auto
sector coming back to pre-covid levels etc. is helping domestic steel demand to grow.
Steel sector contributes around 2% to the GDP with current level of production and
capacities. National Steel Policy of 2017 envisages Indias steel production to reach at
300 Million tons by 2030 and thereby steel industrys contribution to the GDP is expected
to rise further. Indian steel industry faced numerous challenges in FY 2022-23 due to
global negative happenings. India has 76 Kg of per capita steel consumption as against a
global average of 232 Kg. Indias steel production is continuously increasing and the
country is witnessing newer capacities being added every year. As per World Steel
Associations short-range outlook published in April 2023, it is estimated that Indias
steel demand would grow at 7.3% & 6.2% in 2023 & 2024 respectively.
Industry Structure and Developments:
Despite of the positive Indian economy, Steel Industry performance the
Companys performance remain dissatisfactory during the Financial Year 2022-23. The
products of the Company are Bright Bars, Wire Rods, Round Bars, Billets of different sizes
which are manufactured at its Plant located at Zenith Compound, Khopoli, Raigad-410203.
The billets are used for making wire rods & bars. The wire rods / bars are used as the
material of gears, bolts, springs, bearings, cables and other basic components of
safety-related parts typically such as automobile engines, drive train systems and chassis
etc. Non-availability of Working Capital, debt burden, unaffordable cost of raw materials,
overheads, manufacturing expenses and virtually no capacity utilization due to poor or
non- availability of finance and market conditions have adversely affected the companys
performance during the financial Year 2022-23. The Company also undertakes Job-work. But
after June 2022, there are no Job-work during the Financial Year 2022-23. The
manufacturing activities also stopped since June, 2022. There are continuous discussions
with the workers union, lenders, potential investors and suppliers to revive the
operations, which are still to be materialised.
Opportunities and threats:
For the reasons and facts as stated above in Industry Structure and
Developments, the company has nothing to report under this head.
Segment-wise Product-wise performance:
The company has single business segment viz.. Manufacturing &
Trading of Stainless Steel & Allied Products and hence segment- wise results have not
been given.
Outlook:
In view of what has been stated in foregoing paragraphs, your
Management perceives that the outlook of the Steel Industry in the subsequent financial
years may improve subject to the effective and positive steps upon availing of finance and
addressing issues that stuck the Companys working profitably. However, for the
reasons and facts as stated above in "Industrial Structure & development"
para, the company has nothing more to report under this head.
Risks &Concerns:
It is essential to correctly assess the risk so that the same can be
mitigated before it becomes a possible threat. General risks, as are associated with
statutory compliances, economy, financials, Government policies, market related,
operational, products, safety and technology etc., The company is not immune from these
risks.
Normally the Board reviews of likely risk areas with the objective to
define a framework for identification, evaluation and mitigating the risk in the
decision-making process. However, in view of the reasons and facts as stated above in
"Industrial Structure & development" para, the company has nothing to report
under this head.
Internal Control System and its Adequacy:
The Company has proper and adequate system of internal controls
commensurate with its size and nature of operations to provide reasonable assurance that
all assets are safeguarded, transactions are authorized, recorded and reported properly
and applicable statutes are duly complied with. The Company has constituted an Audit
Committee to monitor the adequacy and efficacy of internal control systems. The adequacy
of these compliances and their effectiveness is subject to statutory audit and the same
has been adequately reported by the Auditors in their report as required under the
relevant provisions of the Companies Act, 2013. The Company also has an Internal Audit
System.
Discussions on financial performance with reference to operational
Performance:
During the Financial Year ended 31.03.2023, the Companys
operational financial performance has been quite dissatisfactory. The Companys revenue
from operations stood at Rs. 470.57 lacs (previous year Rs. 2,380.79 lacs) and the other
income stood at Rs. 189.36 lacs (previous year Rs. 896.96 lacs) and hence the total income
stood at Rs. 659.92 lacs (previous 3277.75 lacs).
The company has incurred a post tax net Loss of Rs. 3,595.80 lacs
compared to (previous year Loss of Rs.5,066.99 lacs). The manufacturing activities of the
Company has been stopped since June. 2022.
Material Developments in HRD and industrial Relations Front:
The Company recognizes the employees as the valuable assets.
Developing, motivating, and retaining talented employees is a key responsibility and
policy of the Company. As on 31st March 2023, the number of permanent employees in the
Company are around 10 at various levels.
DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS
(i) Standalone-FY 22-23
| Ratio |
Numerator |
Denominator |
31-Mar-23 |
31 -Mar-22 |
| Current Ratio (In times) |
Total Current Assets |
Total Current Liabilities |
0.49 |
0.55 |
| Debt-Equity Ratio (In times) |
Debt consists of borrowings |
Total Equity |
1.46 |
0.74 |
| Debt Service Coverage Ratio (In times) |
Net Operating Income |
Debt service = Interest + Principal
Repayments |
-2.19 |
-5.09 |
| Return on Equity Ratio (In %) |
Net Profits After Taxes |
Average Shareholders Equity |
-53.58% |
-45.86% |
| Inventory Turnover Ratio (In times) |
Cost of Goods Sold |
Average Inventory |
0.05 |
0.13 |
| Trade Receivable Turnover Ratio (In times) |
Revenue from Operations |
Average Trade Receivable |
18.87 |
1.48 |
| Trade Payable Turnover Ratio (In times) |
Purchase and Other Expenses |
Average Trade Payable |
0.07 |
0.30 |
| Net Capital Turnover Ratio (In times) |
Revenue from Operations |
Working Capital (i.e. Total Current Assets
less Total Current Liabilities) |
0.02 |
0.09 |
| Net Profit Ratio (In %) |
Net Profits After Taxes |
Revenue from Operations |
-764.14% |
-212.83% |
| Return on Capital Employed (In %) |
Earnings Before Tax and finance cost |
Total Assets - Total Current Liabilities |
-6.82% |
-15.73% |
| Net Worth Ratio (In %) |
Net Profits After Taxes |
Total Assets Total Liabilities |
-74.07% |
-59.14% |
(il) Consolidated-FY22-23
| Ratio |
Numerator |
Denominator |
31-Mar-23 |
31 -Mar-22 |
| Current Ratio (In times) |
Total Current Assets |
Total Current Liabilities |
0.49 |
0.55 |
| Debt-Equity Ratio (In times) |
Debt consists of borrowings |
Total Equity |
1.46 |
0.74 |
| Debt Service Coverage Ratio (In times) |
Net Operating Income |
Debt service = Interest + Principal
Repayments |
-2.19 |
-5.09 |
| Return on Equity Ratio (In %) |
Net Profits After Taxes |
Average Shareholders Equity |
-53.56% |
-45.90% |
| Inventory Turnover Ratio (In times) |
Cost of Goods Sold |
Average Inventory |
0.05 |
0.13 |
| Trade Receivable Turnover Ratio (In times) |
Revenue from Operations |
Average Trade Receivable |
18.87 |
1.48 |
| Trade Payable Turnover Ratio (In times) |
Purchase and Other Expenses |
Average Trade Payable |
0.07 |
0.30 |
| Net Capital Turnover Ratio (In times) |
Revenue from Operations |
Working Capital (i.e. Total Current Assets
less Total Current Liabilities) |
0.02 |
0.09 |
| Net Profit Ratio (In %) |
Net Profits After Taxes |
Revenue from Operations |
-763.38% |
-212.89% |
| Return on Capital Employed (In %) |
Earnings Before Tax and finance cost |
Total Assets - Total Current Liabilities |
-6.82% |
-15.74% |
| Net Worth Ratio (In %) |
Net Profits After Taxes |
Total Assets- Total Liabilities |
-74.03% |
-59.20% |
The significant changes in the ratios and net worth was mainly on
account of losses. The continuing scarcity of working capital needs, closure of
manufacturing activities has caused significant losses.
STATUTORY COMPLIANCE:
The Company has in place adequate systems and processes to ensure that
it is in compliance with all applicable laws. The Managing Director, places before the
Board, at each meeting, a certificate of compliance with deviations if any with the
applicable laws.
ACCOUNTING TREATMENT:
The Company consistently follows a treatment that has been prescribed
in Indian Accounting Standards (IndAS)in the preparation of financial statements which
shows true and fair view of the financial statements.
Cautionary Statements:
This discussion and analysis have been provided with a view to enable
shareholders with a better understanding of the performance of the Company. The
Shareholders must read and understand the same with due understanding and necessary
caution as they may be forward looking and prone to change in the dynamic economic
environment and tax regime. In certain areas, if there is any discussion covering
strategic decision and management expectations from the same, the same should not be
construed as a guarantee of performance and actual results may differ significantly
depending upon the operating conditions and external environment.
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