Jainam Ferro Alloys (I) Ltd Management Discussions

1. INDUSTRY OVERVIEW:

The company is engaged in various products such as Ferro manganese, Silicon manganese and Ferro manganese slag and rise in demand for steel and metal alloys; and growth in automobile and construction industries are driving the ferrosilicon market. It has various features such as Impeccable Chemical Composition, free from impurities, corrosion proof, fire anti-oxidant characteristics low melting point and sturdiness. Ferroalloys market will progress in positive direction due to their ability to enhance properties of various types of alloys and steel. They help in adding various alloying elements in desired quantities in the most technical and economic ways. The product plays a very significant role in industrial development. The major end-use of ferroalloys is in automotive, railways, construction and various mechanical engineering industries. High energy consumption during production along with increasing fuel prices across the globe may hinder the growth of market in coming years.

2. FERRO ALLOYS INDUSTRY:

GLOBAL:

The global ferroalloys market is expected to grow on account of rising steel production around the world. The ferroalloys include ferrochrome, ferrosilicon, ferromanganese and ferromolybdenum, among others. Various types of ferroalloys have different purposes in the production of steel. For instance, ferrovanadium in steelmaking is used to provide strength against alkalis and acids such as sulphuric and hydrochloric acid. It provides corrosion resistance and enhances tensile strength of casting & welding electrodes.

Nearly 85 to 90% of all the ferroalloys are used in the production of steel. Therefore, production and consumption of steel and related products have a huge impact on the pricing of ferroalloys and vice versa. Cost of ferroalloy is one of the key criteria for deciding suitable ferroalloy for the production of a particular grade of steel. Specification of steel is also an important factor while calculating the costs of steelmaking. For instance, specific grade of steel with low phosphorous can be manufactured using two methods viz. either by the use of normal steelmaking process, which uses expensive ferroalloys with low phosphorous content or by increasing the refining time and basicity of slag to reduce phosphorous at low levels.

As per the World Steel Association, the global production of crude steel reached 1,950.5 million tons in 2021, an increase of 3.7% from 2020. China was the leading producing country with production of 1,032.8 million tons in 2021. China was followed by India, Japan, the U.S., Russia, South Korea, Turkey and Germany. These leading countries are expected to remain the key markets for ferroalloy producers. As the economy gradually recovered from the effects of the pandemic, chromium ore output increased by 24.8% to 34.89 million tonnes in 2021 from 27.96 million tonnes in 2020. South Africa continued to be the largest producer of chromium in 2021 with 21.06 million tonnes followed by India with 4.19 million tonnes.

Construction is the largest end-use industry of steel products, wherein rebars, sections, channels and angles are widely used in the industry. The construction sector around the world is projected to grow moderately from 2022 to 2030. This is expected to positively affect the demand for steel products and thus benefit the demand for ferroalloys, which are among the key feedstocks in the production of steel.

Infrastructure investment plans in different countries around the world is likely to benefit the crude steel demand and thus ferroalloys. For instance, Turkey?s long term infrastructure development plan is likely to generate high demand for steel products in the country. Under ‘Vision 2023?, the government of Turkey is expected to build 5,748 km of highways and 13,478 km of roads by 2023. The plan also includes development of 10,000 km of high speed railway line by 2023.

3. MARKET TRENDS:

The Asia Pacific region has the largest ferro alloys market share, and this trend is projected to continue in the next years. This region is generating increasing ferroalloys market share due to consumer discretionary income growth and the regions growing construction industry. There are following key points based on the market trends of the Industry:

? Asia Pacific has the greatest market share, and this area is often regarded as leading the worldwide market by creating the greatest ferroalloys market share among other regions. The regions construction industry and disposable income are growing, which is boosting market expansion and increasing the ferroalloys market share.

? The use of ferroalloys in the automotive industry, as well as the increasing use of matrix alloys, is expected to drive growth in the European areas throughout the reviewed period.

? The North American area region is predicted to expand due to increased demand for ferroalloys in various end-use sectors such as metallurgy, electronics, construction, aerospace, medical devices and automotive.

? Market players are adopting many strategies such as acquisition, mergers, contract, agreement and partnership to expand their business.

? End-users such as electronics, automotive and construction are expected to enhance the global market as well as the demand for ferroalloys.

Ferroalloys Market Report Highlights:

Segments		Sub-segments
	Ferro chrome
	Ferro manganese
By Product Type
	Ferro Silico manganese
	Ferro silicon
	Carbon & Low Alloy Steel
	Stainless Steel
By Application	Alloy Steel
	Cast Iron
	Others

	Asia-Pacific (China, India, Japan, South Korea, Rest of Asia-Pacific)
	North America (United States, Canada, Mexico)
By Region	Europe (Germany, United Kingdom, France, Italy, Rest of Europe)
	Asia-Pacific (China, Japan, India, South Korea, Rest of Asia-Pacific)
	LAMEA (Brazil, UAE, Saudi Arabia, South Africa, Rest of LAMEA)

4. FUTURE OUTLOOK:

With rapid industrialization, rising construction activities as well as infrastructure development around the world, and high product usage across applications such as automotive, power, pipes, fittings and valves, industrial machinery, among others, the metals and alloys market is expected to grow significantly in the coming years. Depending on the process of steel making and the type of steel being manufactured, the requirement of different ferroalloys varies widely.

Indian Ferroalloys Industry has immense potential and capability to compete in the international market. On the positive side, India produces some of the finest ferroalloys in the world. Indian ferroalloys are extensively preferred in Europe. India exports potential is indeed bright with very high growth prospects. As per the steel world report, ferroalloys Industry is estimated to grow at a CAGR of 5.9% between 2017 to 2025 and is expected to reach a valuation of US$ 188.7 Bn by 2025. India is expected to show strong growth in usage of steel in the coming years because of its robust economy, massive infrastructure needs and expansion of industrial production. India is expected to become one of the leading steel consuming nations in the next decade. In this scenario, the Ferroalloys Industry estimates that the consumption of ferroalloys will increase domestically and internationally in the coming years. Some of the Ferroalloy Producers have already gone for expansion and some new units are coming up.

As per the National Steel Policy, 2017, Ferroalloy is a power intensive industry. Hence, captive power generation in the ferroalloys plants will be extensively supported. Since the demand for ferroalloys is likely to grow along with steel production in the country, the Industry would have to be encouraged to set up larger units to achieve adequate economies of scale. Efforts in the direction of providing necessary raw materials linkages and stable supply of power to the Ferroalloy units must be rendered priority.

5. OVERVIEW OF THE COMPANY AND ITS BUSINESS:

Our Company was originally incorporated as Jainam Infraways Private Limited in March 2014. We are currently manufacturing two types of Ferro Alloys namely, Ferro Manganese (FeMn) and Silico-manganese (SiMn). Both the alloys are largely used in Steel industry. Ferro-manganese adds strength, toughness and other properties to steel. Silico manganese provides additional silicon which is a stronger De-oxidant in manufacturing steel. Our Company also generates revenue from its trading activities of manganese ore, used as a raw material in manufacturing Ferro alloys.

In the year 2016, our Company took over the property of ferro alloy plant of M/s Raghuvir Ferro Alloys Private Limited vide Sale deed dated June 21, 2016. Pursuant to the sale deed the company acquired the entire factory of M/s Raghuvir Ferro Alloys Private Limited having its factory located at Plot No. 103 to 113 & 130 to 136/A & 137, Sector-C, Urla Industrial Area, Raipur, Chhattisgarh- 492003, India including Super Structure Factory Shed, Administrative Buildings, Plant and Machinery, Weigh Bridge, Electrical Installation, Office equipment together with all rights, concessions, licenses and other privileges and the allotted manganese ore mines at K.H. No. 8/2, 9/1, 10/1, 10/2 and 14/1, Village Jagantola, Tehsil Baihar, District Balaghat, Madhya Pradesh with valid lease period upto 2028 which was later extended upto 2058 by the State Government vide Extension Lease Deed dated April 11, 2018.

Thereafter we started commercial production with one furnace having designed capacity of 9 MVA with 5000 KVA power load for the production of Ferro alloys of the different grades. Buyout by the response from the market in June 2017, the company started one more furnace having designed capacity of 6 MVA with 4000 KVA power load for the same manufacturing activity. The products manufactured by our Company are primarily used in manufacturing of steel and in foundry activities. It is used as an alloying element which enhances some key physical properties of steel like elasticity, ultimate tensile, strength and toughness etc. Sometimes addition of some elements in the form of alloys is done deliberately to liquid steel for developing abrasion resistance, wear resistance and corrosion resistance properties. Apart from using manganese alloys for alloying the steel, they are also widely used for deoxidizing, desulphurization & refining of steel. Phosphorus and other elements can also be controlled depending on customer specification. Smaller quantities of alloys are used as reductant in order to produce other metals. Besides their use in plain carbon steel and alloy steel plants, Ferro alloys are consumed by the foundries and electrode industries. A very specific application of refined manganese alloys is a constituent in the coating of welding electrodes. In ceramic industries, manganese alloys are used in small quantities.

Our customers include companies like Steel Authority of India Ltd, Jindal Stainless Ltd (Jaipur), Jayaswal Neco Industries Limited, Jindal Steel & Power Ltd (Raigarh), Ahmedabad Metal & Alloys, Ascent Enterprises, Saarloha Advanced Materials Pvt. Ltd, BRGD Ingot Pvt. Ltd, Shri Madhav International, JSW Steel Limited (Bellary).

OUR COMPETITIVE STRENGTHS

We believe that the following are our primary competitive strengths:

Quality Assurance

Our Company is dedicated towards quality of our products, processes and input raw material. Our Company had been accredited with "ISO 9001:2015" Certification for Quality Management System and "ISO 14001:2015"

Certification for Environmental Management System for Manufacturing of Ferro Alloys such as Ferro Manganese & Silico Manganese. We adhere to quality standards as prescribed by our customers to meet the desired chemical composition; hence we get repetitive orders from our buyers. Delivering Quality products on time is one of our prime objective. We dedicate resources for quality assurance to ensure that quality norms are continually met. We also have quality control checks before any consignment of Raw material is accepted since it has a direct impact on the quality of Finished Product.

Customer Satisfaction

Customer satisfaction is very important for the growth of any business. We have developed a significant and mutually beneficial business relationship with our customers and it can be reflected in the repeat orders we get from our customers. This indicates their level of confidence in our ability to deliver our products because of the trust of our customers we have been able to attain orders from a diverse range of client base.

Technical expertise and Operational Excellence

We have experienced employees having technical and commercial backgrounds. Our company feels that the strength of any successful organization lies in the experience and guidance of its team leaders and staff alike. A lot of care is taken in choosing the right people for the right job. Our management has gained efficiency in the application of marketing and distribution initiatives in this sector. Thus the whole team of the company has been instrumental in the growth of Company?s sustainability. Our attention to process optimization to achieve the highest safety and quality has resulted in a culture of operational excellence. The strategic location of our factory facilitates with proper transportation of raw material and dispatch of finished goods, availability of power, fuel, water and other utilities.

Well positioned to capture the growth potential of the Indian steel industry

The Indian steel industry is expected to continue to advance on a strong growth trajectory. This is expected to result in continued demand for manganese alloys. We believe that the gradual trend towards the use of ferro Manganese Alloy and Silico manganese Alloy in the steel industry will continue, providing an opportunity for improved market potential.

OUR STRATEGIES

i. To Build-up a Professional Organization

We are committed towards building a professional organization. We believe in transparency, commitment and coordination in our work, with our suppliers, customers, government authorities, banks, financial institutions etc. We believe that we have an appropriate mixture of the talent, experience and the sufficient staff for taking care of our day to day operations. We are also committed towards gaining knowledge of the new and improved technologies in order to keep pace with the changes taking place in the market. ii. Optimal Utilization of Resources and Installed Capacities

The Companys strategy is to operate the business in an efficient & effective way so as to supply quality products that satisfy its customers needs and add value to its business. The focus of the Company will be to increase the contribution on the products by reducing the cost of production, control over logistics and command high prices through gradual shifting to value added products and to ensure long term sustainability of the Company. Our main thrust is on saving the Power cost which is quite significant in our industry with the use of technology and processes. Our Company constantly endeavors to improve our process, skill upgradation of our employees, modernization of infrastructure, equipment?s and methods of processing. We regularly analyze our existing process and to identify the areas of bottlenecks and correct the same in a timely manner. By taking the timely corrective action we can make optimal utilization of our resources and expand the manufacturing facility by increasing the volume of productions and adding more products to the portfolio. We look forward to build a self-sufficient and fully integrated manufacturing facility and shall continue to invest in increasing our operational efficiency throughout the organization.

iii. Establish and strengthen Long Term Relationship with Clients

Customer satisfaction and Strong relationship with the client is key to success for any organization. Timely delivery and quality products help us maintain strong relationship with our customers and also gives us competitive strength against our peers. We focus on strengthening our existing customer relationship and also thrive to enter into new geographies so as to expand our customer base.

iv. Enhance customer base by entering new geographies to establish long-term relationships

We intend to cater to the increasing demand of our existing customers and also to increase our existing customer base by enhancing the distribution reach of our products in different parts of the country. Our Company operates from Raipur in India. Furthermore, we have deployed commission agents/brokers which thereby results in increase of our sales. We propose to increase our marketing and sales team which can focus in different regions and also maintain and establish relationship with customers. Enhancing our presence in additional regions will enable us to reach out to a larger population. Further, our Company believes in maintaining long term relationships with our customers in terms of increased sales. We aim to achieve this by adding value to our customers through innovation, quality assurance, timely delivery, and reliability

6. SEGMENT WISE OR PRODUCT WISE PERFORMANCE

Company currently operates in only one segment i.e. Manufacturing and Sale of Ferro Manganese and Silico Manganese during the Year under review. Your Company has performed excellent during the preceding year due to increase in market realization and optimum utilization of the plant capacity.

The following table sets forth our revenue from operations from our different products for the periods indicated:

	Revenue from operations (in lakhs)
Particular
	2023	2022
Ferro Manganese	7708.92	12181.32
Silico manganese	13595.87	7748.10
Slag	287.82	297.07
Others	11.45	0.47
Manganese Ore	3944.08	3684.61
Total	25547.86	23911.57

7. INDUSTRIAL RELATIONS & HUMAN RESOURCE MANAGEMENT:

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.