Kamdhenu Ltd Management Discussions

Steel that Builds Dreams

Kamdhenu Limited (referred to as kamdhenu or The Company)—synonymous with agility, versatility and quality-manufactures steel products that are more than just materials; they are the building blocks of your dreams. The Company values this trust and strives to constantly improve its products, set new standards for quality and design, and ensure transparency for everyone, from its customers to its franchise partners.

The Companys commitment extends to empowering its employees, creating a diverse, opportunity-rich ecosystem that stimulates their professional growth and nurtures well-being.

Paving a Path towards a Brighter Tomorrow

Kamdhenus forward-thinking vision for a brighter future inspires the Company to develop a robust growth strategy, meticulously crafted to deliver superior value to all stakeholders. This strategy stands on four pillars: Brand Innovation, Sustainability, Customer Needs, and Safety.

Embracing Agility for Innovative Solutions

In a businesses, such as steel, a deep understanding of the business risks gives the competitive edge necessary for staying ahead. Therefore, Kamdhenus risk management strategy underscores agile methodologies, enabling the Company to deploy solutions quickly through testing and learning. This approach helps the Company identify and address risks promptly and effectively.

Addressing Stakeholder Concerns

Having a thorough grasp over stakeholders concerns and ESG issues that impact Kamdhenus business is critical for ensuring its persistent progress. Hence, the Company regularly conducts materiality assessments to achieve this goal. Moreover, it aims to drive progress among its partners by sharing best practices and fostering inclusive growth. Under its Skill India Initiative, the Company extends support to underprivileged children by offering skill development programs and contributes to enhancing climate change adaptability.

A Strong Commitment to Sustainability

As Kamdhenu expands and consolidates its standing within the steel industry, it stays committed to reduce its environmental footprint, upholding sustainable success as the way forward. Commensurate with this approach, the Company aims to minimize its consumption of natural resources, water, energy, and emissions, sculpting a thriving future for all stakeholders.

Global Economy

Despite facing significant challenges, the global economy has demonstrated remarkable tenacity, driven by steady growth and a rapid decrease in inflation. The journey has been marked by events such as post-pandemic supply- chain disruptions, an energy and food crisis triggered by the Russia-Ukraine conflict, and a surge in inflation, followed by synchronised monetary policy tightening.

Global growth, which reached 3.2% in CY 2023, is forecasted to remain steady through CY 2024 and CY 2025. However, this falls short of the 3.8% historical average, owing to restrained monetary policies, diminished fiscal aid, and sluggish productivity growth. Global headline inflation is expected to moderate considerably, falling from an annual average of 6.8% in 2023 to 5.9% in 2024 and further to 4.5% in 2025. This decline can be attributed to a more front-loaded decrease in inflation in advanced economies, alongside projections indicating a return to pre-pandemic levels sooner than in emerging markets and developing economies.

Advanced Economies

Growth in advanced economies is projected to increase slightly from 1.6% in 2023 to 1.7% in 2024 and 1.8% in 2025. The upward revision for 2024 reflects stronger- than-expected performance in the United States, where growth is forecasted to rise to 2.7% in 2024, due to statistical carryover from robust Q4 2023 and continuing momentum, before slowing to 1.9% in 2025 due to fiscal tightening and a softening labor market. In the Euro Area, growth is expected to recover from 0.4% in 2023 to 0.8% in 2024 and 1.5% in 2025, driven by increased household consumption as inflation decreases. However, Germanys growth outlook has been revised downward due to weak consumer sentiment, offset by upgrades in Belgium and Portugal. The United Kingdoms growth is projected to rise from 0.1% in 2023 to 0.5% in 2024 and 1.5% in 2025 as high energy price impacts fade and real incomes recover. Japans growth is expected to slow from 1.9% in 2023 to 0.9% in 2024 and 1.0% in 2025 as one-off growth factors like tourism surges diminish.

Emerging Markets and Developing Economies

Growth in emerging markets and developing economies is expected to remain steady at 4.2% in both 2024 and 2025. This stability is due to a balance between slower growth in emerging Asia and rising growth in other regions. For instance, while Chinas growth is projected to slow down due to the fading effects of post-pandemic consumption boosts and persistent weaknesses in the property sector, Indias growth remains strong, driven by robust domestic demand and a growing working-age population.

Other regions, such as the Middle East, Central Asia, and sub-Saharan Africa, are expected to see increasing growth. The Middle East and Central Asia are forecasted to grow as non-oil activities and revenues improve. Sub-Saharan Africas growth is anticipated to rise as the negative impacts of previous weather shocks diminish and supply issues improve.

In contrast, Latin America and the Caribbean are expected to experience a slight decline in growth in 2024 due to fiscal policies and economic adjustments before rebounding in 2025. Overall, the growth outlook for these economies reflects a complex interplay of regional developments and sector-specific factors, balancing slower growth in some areas with rising growth in others.

Outlook

The global economic outlook is marked by balanced risks and ongoing uncertainties. Geopolitical tensions and conflicts, such as those in Ukraine and Gaza, could spike prices and weaken asset values. Varied rates of disinflation among major economies may cause currency fluctuations, impacting financial sectors. High interest rates, household debt, and mortgage adjustments pose financial stability risks.

Chinas growth is threatened by unresolved property sector issues, potentially affecting trading partners. High government debt levels may require disruptive fiscal adjustments, undermining investor confidence and climate change efforts. Geo-economic fragmentation could further hinder supply dynamics. Conversely, fiscal policy loosening might boost short-term economic activity but necessitate significant future adjustments. Rapid inflation decline could lead central banks to ease policies sooner. Advances in AI and structural reforms could enhance productivity.

Central banks will be crucial in managing inflation for a soft economic landing. Medium-term fiscal consolidation is needed to ensure debt sustainability and vital investments. Tailored policies and supply-enhancing reforms are essential for addressing inflation, reducing debt, fostering growth, and narrowing income disparities. Multilateral cooperation is vital to tackle challenges like geo-economic fragmentation, climate change, and debt restructuring, promoting a sustainable and inclusive recovery.

Policy Priorities

O Managing the Final Descent of Inflation: As inflation declines, central banks are transitioning from rate hikes to a more accommodative stand. It is important to ensure that wage and price pressures are genuinely dissipating before considering rate adjustments. Monitoring financing conditions and deploying financial stability tools are going to be vital in this respect.

O Rebuilding Buffers to Prepare for Future Shocks and Achieving Debt Sustainability: As fiscal deficits remain high, fiscal consolidation based on credible medium- term plans is needed. This involves increasing fiscal balances over time, protecting investments, and supporting the vulnerable. Orderly debt restructuring may also be necessary.

O Enabling Durable Medium-Term Growth: Targeted structural reforms have the potential to boost productivity growth and reverse the downward trend in economic prospects. Bundling reforms that alleviate existing economic constraints can front-load output gains and secure public support. Additionally, prioritizing investments in climate adaptation and infrastructure is crucial for sustained progress.

O Strengthening Resilience through Multilateral Cooperation: Cooperation is essential for mitigating the costs of economic bloc separation. It is necessary for addressing climate change, facilitating the green energy transition, and safeguarding critical mineral transportation. Restoring the WTOs dispute settlement mechanism and ensuring responsible use of new technologies are also the priorities.

(Source: https://www.imf.org/en/Publications/WEO/ lssues/2024/04/16/world-economic-outlook-april-2024)

Indian Economy

Indias economy has exhibited exceptional endurance and sustained growth over the past three years, notwithstanding global economic challenges. This robust trajectory is supported by a combination of stringent policy and regulatory measures, coupled with the gradual resurgence of the private sector. Positioned on the brink of further economic advancement, the nation is propelled by substantial investments in emerging sectors, continued Government spending, and efficiency gains driven by upgradation in digitalization and infrastructure.

In the fiscal year 2023-24, Indias economic growth narrative has been one of robust expansion, achieving an impressive 8.2% growth rate, surpassing prior forecasts.

However, as we look to the next fiscal year, a note of caution is sounded, with GDP growth expected to moderate to 6.8%. This anticipated slowdown reflects the impacts of elevated interest rates and a constrained fiscal policy, aimed at reducing the deficit to 5.1% of GDP. Despite these headwinds, the vibrancy of Indias economy is reinforced by several factors, including the strengthening of consumer purchasing power through disinflation, expected robust agricultural outputs, and a revitalization in private capital expenditure. Furthermore, Government initiatives aimed at bolstering rural incomes and enhancing infrastructure spending solidify Indias status as the fastest-growing major economy globally.

Outlook

Looking ahead, the Indian economy is poised to scale greater heights in the years to come. Projections indicate that the economy will approach the USD 7 trillion milestone by 2031, cementing its position as the worlds third-largest economy. Capital and productivity enhancements, driven by a holistic integration of digital and physical infrastructure, are going to be the catalysts of this growth. The manufacturing sector is anticipated to experience a revival, benefiting from global opportunities, domestic policy support, and a focus on green energy transition.

The future promises robust growth in capital expenditure, driven by industrial vigor and efficient infrastructure development. This momentum is supported by a host of factors, including the sound financial health of Indian corporates, consistent revenue growth, and an optimistic commodity price outlook. Furthermore, the Governments Production Linked Incentive (PLI) scheme aims to elevate Indias manufacturing prowess on the global platform, further accentuated by a robust banking sector and innovative financing avenues. Indias economic journey is fortified by domestic reforms, competitive advancements, and a commitment to value-added growth, all of which are strengthened by substantial infrastructure development.

Global Steel Industry

The global steel industry is poised for significant growth, fueled by a multitude of factors. Driven by increasing demand in military and aerospace applications, rising usage in electrical appliances, growing roles in shipbuilding, and escalating uptake in consumer goods, the industry is expanding with strong momentum. With the industrys size reaching USD 942.3 billion in 2023, further projections suggest a surge to USD 1,279 billion by 2032, showcasing a growth rate of 3.3% during the period spanning 2024 to 2032.

The global expansion of the automotive industry and the rise in steel TMT Bars is hailed as a significant driver for the increasing demand for steel. The essential role of steel in enhancing vehicle safety, integrity, and lightweighting is indisputable, particularly as the transition towards electric and hybrid vehicles continues to gain momentum. This shift intensifies the necessity for advanced steel alloys to meet strict efficiency and emission criteria. The TMT steel bar market is projected to reach USD 524.6 billion in 2024, exhibiting a compound annual growth rate (CAGR) of 5.6% during the forecast period. This growth trajectory is primarily driven by factors such as increasing urbanization and a rise in disposable income levels. This is further driving the growth for global steel industry.

Concurrently, the defense sectors reliance on steel for military aircraft manufacturing highlights its criticality for strength, durability, and resilience. The demand is further spurred by increased global defense spending on fleet modernization requiring high-performance steel.

Moreover, rapid technological advancements across various sectors, including healthcare, electronics, and renewable energy, have amplified steels significance. Growing innovations in manufacturing, artificial intelligence, and the Internet of Things (IoT) mandate its use in infrastructure, devices, and machinery, positioning steel as indispensable in the era of technological evolution.

The landscape of steel production reflects regional dynamism and technological innovation. Significant surges in steel output were observed in Africa, Asia and Oceania, and the Middle East in February 2024, underscoring robust industrial activity and economic growth in these regions. Conversely, production dips in the EU, North America, and Russia highlight the challenges and shifting priorities within these markets. China remains the frontrunner in volume, emphasizing its critical position in the global steel supply chain. Additionally, India, Brazil, and Turkiye show impressive growth rates, driven by domestic demands and export capabilities.

Crude Steel Production by Region

Regions (in million tons)	January-February 2024	% Change (January-February 2024/2023)
Africa	3.7	12.3
Asia and Oceania	227.1	2.7
EU (27)	21.1	(0.9)
Europe, Other	7.6	27.2
The Middle East	8.9	17.0
North America	17.7	(2.2)
Russia & Others CIS + Ukraine	13.7	(0.7)
South America	7.1	4.8

(Source: https://worldsteel.org/wp-content/uploads/February-2024-crude-steel-production.pdf)

Top 10 Crude Steel Production Countries (in million tons)

Countries	2023	2022
China	1 019.1	1018.0
India	140.8	125.3
Japan	87.0	89.2
The United States	81.4	80.5
Russia	76.0	71.5
South Korea	66.7	65.8
Germany	35.4	35.1
Turkiye	33.7	36.8
(Brazil	31.8	34.1
Iran	31.0	30.6

(Source: https://worldsteel.org/data/world-steel-in-figures-2024/)

Outlook

The steel industrys outlook is closely tied to technological advancements, with rapid progress in manufacturing processes, material science, and environmental sustainability shaping its future. Innovations in steel production, such as electric arc furnace technology and the development of new alloys, are making the industry more responsive to the demands of the 21 century. The need for materials that support green energy initiatives and advanced military and aerospace applications continue to spur the demand for steel. As the global economy continues to evolve, the steel industrys adaptability, innovation, and intrinsic value to critical sectors position it for sustained growth and relevance in the decades to come.

(Source: https://www.imarcgroup.com/steel-market)

Indian Steel Industry

Market Resurgence and Growth Projections

The Indian steel sector is witnessing a remarkable resurgence, with projections indicating the market size at 135.81 million tons in 2024. This figure is expected to surge further to 209.93 million tons by 2029, with an impressive CAGR of 9.18%. This growth trajectory marks a significant recovery from the Covid-19 pandemics impact, showcasing a sector buoyant with activity and optimism, driven by a confluence of supportive Government policies, urbanization, and heightened infrastructure spending.

Pillars of Progress: Driving Forces behind the Boom

The upward momentum of the Indian steel market is anchored by robust drivers:

O Governmental Support and Investments: A robust policy framework and influx of investments are rejuvenating the steel sector.

O Urbanization and Infrastructure Expansion: Accelerated urbanization coupled with extensive infrastructure and construction projects feed the growing demand for steel.

O Shift towards Branded Products: As the building material industry continues to progress, there is a noticeable shift among customers towards branded and sustainable products. Branded products often offer assurance of quality and reliability, while sustainable options appeal to those seeking to minimize their ecological footprint.

O Resilient Domestic Demand: The steel sector is forecasted to hit around 136 million tons in 2024, buoyed by increased infrastructure outlays and Government initiatives, especially significant in an election year.

O Correcting Price Paradox: Despite experiencing a nearly 6% price correction due to inventory pressures, the market is adjusting, with domestic steel prices now aligned with import parity.

Navigating Challenges: Price Fluctuations and Cost Pressures

While the Indian steel industry sails on a growth tide, it navigates the choppy waters of fluctuating steel prices and rising raw material costs. The recent price adjustments and the surge in costs for essential raw materials like coking coal spotlight the industrys resilience in maintaining profitability amid market volatilities.

On 14th January, the Central Government implemented a GRAP Stage 3 ban on non-essential construction work in Delhi in response to unfavorable climatic conditions and local pollution sources impacting the Air Quality Index (AQI). This ban persisted for 37 days in the NCR region, resulting in a reduction in demand.

Strategic Moves and Global Dynamics

The industrys strategic foresight is evident in its ambitious infrastructure investment plans, with a noteworthy 11.1% year-on-year leap to Rs. 11 trillion (USD 134 billion) in FY 2024-25, promising to further stoke domestic steel demand. Additionally, Indias stature as the worlds second-largest steel producer, coupled with innovative production methodologies like hydrogen utilization, underscores its global competitiveness and adaptability.

Outlook: Adapting to Global Shifts

The future of the Indian steel industry gleams with opportunities, buoyed by strategic adaptations and an optimistic global market outlook. Vigilant towards the shifting dynamics of Chinese steel exports and international raw material markets, the sector stands ready to seize emerging opportunities for sustained growth and global market integration. Poised on a trajectory of robust growth and strategic evolution, the Indian steel industry thrives amid supportive Government policies, global market shifts, and technological innovations. Navigating challenges like price volatility and raw material cost pressures, its resilience and forward-looking strategies herald a dynamic and promising future in the global steel landscape.

Government Initiatives Boosting Indias Steel Sector

O National Steel Policy (NSP) 2017: The National Steel Policy (NSP) 2017 outlines a comprehensive roadmap to propel the steel industry forward, with the goal of boosting domestic steel consumption, ensuring high-quality steel production, and creating a technologically advanced and globally competitive steel industry. Aligned with the Make in India initiative, one of its primary objectives is to domestically meet the entire demand for high-grade automotive steel, electrical steel, special steels, and alloys for strategic applications. Additionally, the policy aims to increase the domestic availability of washed coking coal to reduce import dependence from about 85% to around 65% by 2030-31, thereby enhancing the self-sufficiency of the steel sector.

O Preference to Domestic Products: Another significant initiative is the Governments policy to provide preference to domestically manufactured iron and steel products in Government procurement. This move aims to promote the use of domestically produced steel, supporting domestic producers and reducing the countrys import bill.

O Production Linked Incentive (PLI) Scheme: The PLI

Scheme for Specialty Steel is another crucial initiative, designed to boost the production of value-added steel in India. The scheme aims to increase specialty steel production to 42 million tons by the end of FY 2026-27, thereby enhancing Indias position in high-value steel segments and reducing import dependence.

O Steel Research and Technology Mission of India (SRTMI): To drive innovation and research within the sector, the Ministry of Steel, Government of India, is actively supporting the establishment of the SRTMI in collaboration with public and private sector steel companies. SRTMI is expected to spearhead research and development activities in the iron and steel industry, thereby enhancing the technological prowess and global competitiveness of the Indian steel industry.

O Import Duty Revisions: The Government has taken steps to protect the domestic steel industry from unfair international competition. This includes raising import duties on most steel items and implementing antidumping and safeguard duties on iron and steel items.

O Green Hydrogen Plant: A recent milestone in the sectors move towards sustainability is the inauguration of Indias first green hydrogen plant in the stainless-steel sector at Hisar. This off-grid green hydrogen plant, equipped with rooftop and floating solar, aims to significantly reduce carbon emissions, while establishing a global benchmark for sustainable steel production practices.

Highlights of Interim Budget Impact on Steel Industry

O Infrastructure Spending: A standout feature of the budget was the allotment of Rs. 11.11 Lakh Crores for infrastructure spending. This substantial investment is intended to fund the construction of roads, bridges, airports, and urban development projects. As steel plays a pivotal role in these infrastructure projects, this initiative is expected to create a major ripple effect in the steel sector and substantially boost the demand for steel.

O Railway Corridors: The Interim Budget announced the development of three unique, commodity-specific railway corridors aimed at alleviating congestion in high-traffic zones. The construction of these corridors will require significant quantities of steel for railway tracks, bridges, and other infrastructure, further contributing to the demand for steel.

O Aviation Sector Development: In a bid to energize the aviation sector, the Budget included provisions for the construction of new airports and the procurement of 1,000 new aircraft. This move is set to increase the demand for steel in the aviation sector, particularly for the manufacturing of aircraft bodies, landing gear, and engine components.

O Solar Rooftop Installations: The Interim Budget proposed solar rooftop installations for 1 Crore households, envisioned to generate free electricity for these units. This initiative will necessitate the use of steel for the mounting systems and framing of solar panels, thereby boosting the demand for steel in the renewable energy sector.

O Housing Development: Aligned with the Governments efforts to ensure affordable housing, the Budget included financing provisions for building and mending houses for deserving middle-class sectors. This is expected to drive the demand for steel in construction, particularly for steel plates, frames, and TMT bars used in residential construction.

O Domestic Manufacturing: The Interim Budget underscored the importance of domestic manufacturing, particularly in IT hardware and semiconductors. This emphasis is likely to drive the demand for steel in the manufacturing sector, given its essential role in the production processes of these industries.

O E-Vehicle Infrastructure: Emphasizing the promotion of electric vehicles and sustainable modes of transportation, the budget highlighted the growth of the e-vehicle transport system infrastructure and the procurement of e-buses for public usage. This initiative is expected to increase the demand for steel in the manufacturing of electric vehicles and related infrastructure, including charging stations and battery storage facilities.

These initiatives outlined in the Interim Budget for 2024 are expected to create a favorable environment for the steel industry in India, driving the demand for steel and forging new opportunities for growth and investment in the sector.

Company Overview

Kamdhenu Limited founded in 1994, is a pioneering manufacturer and supplier of TMT bars, pipes, structural steel, and roofing solutions, among others. With a vast network of 8500+ dealers and 250+ distributors across India, the Company is a retail segment leader, recognized for its quality and innovative products. Committed to sustainability, Kamdhenu actively engages in environmental initiatives aimed at reducing its environmental footprint. The Companys asset-light business model, combined with robust branding initiatives and a well-established, pan-India distribution network, has propelled it to remarkable success within a short timeframe. Kamdhenu stand poised to capitalize on diverse growth opportunities within its industry, leveraging the substantial value the Company created along its journey. The Companys intensified focus on high-margin B2C sales, adoption of a franchise-based business model, and enhancements in manufacturing processes have been instrumental in driving its strong performance.

This strategic approach delivers dual benefits: it provides franchisees with a unique identity while also generating royalties for Kamdhenu, thereby fostering a sustainable and mutually beneficial business ecosystem. The Company remains committed to further enhancing its market position and delivering value to all stakeholders as it continues to innovate and expand its operations.

Financial Metrics

During the year under review, the total income of the Company for FY 2023-24 stood at Rs. 73,829.48 Lakhs which is higher than the previous years revenue of Rs. 73,367 Lakhs. The Profit after Tax (PAT) attributable to the Shareholders of the Company for FY 2023-24 stood at Rs. 5,013.35 Lakhs, as compared to the previous FY 2022-23 which was Rs. 4,102.38 Lakhs. Further, the ratios reported below by the Company for the financial year ending on 31st March, 2024. The net worth of the Company for the year under review stood to Rs. 23,738.76 Lakhs as against Rs. 16,667.75 Lakhs as of 31st March, 2023.

Metrics	FY 2022-23	FY 2023-24	Change (%)
Current Ratio	4.86	6.10	25.42%
Debt-Equity Ratio	0.02	0.01	(49.34%)
Debt Service Coverage Ratio	1.17	31.36	2584.21%
Return on Equity Ratio (in %)	27.78	24.81	(10.68%)
Inventory Turnover Ratio	39.78	44.64	12.20%
Net Profit Ratio (in %)	5.60	6.92	23.45%
Return on Capital Employed (in %)	33.12	27.71	(16.34%)
Interest Coverage Ratio	30.01	114	280%
Operating Profit Margin (%)	7.76	9.32	20.10%

Corporate Social Responsibility

The Company, for three decades, has been driven by its dedication to responsible growth, complemented by its endeavor to cultivate harmonious relationships. Rooted its Charter value of enriching peoples lives, the Companys CSR vision is anchored in trust, fairness, and compassion. To maximize its impact, the Company has formulated an effective CSR policy and established a structured Committee comprising members from the Board of Directors.

Initiatives Promoting Environmental Sustainability

The Company has added more depth to its commitment to promote environmental sustainability by launching a Green India campaign. Through this initiative, it motivates its 8500+ dealers and 250+ distributors to plant at least five saplings annually and nurture them to maturity. Spearheaded by the Kamdhenu Jeevandhara Foundation, the Companys CSR wing, a range of social engagement programs are conducted, concentrating on identifying and addressing the pressing needs of marginalized communities. Following thorough assessment, the Foundation implements tailor-made, technology-driven solutions aimed at enhancing their overall quality of life.

Initiatives Promoting Educational and Social Development

Kamdhenu places utmost importance on education for its role in nation-building. The Company has been undertaking its CSR activities in the area of Skill Development of underprivileged children and women for their upliftment and has also been engaged in providing basic healthcare facilities through its CSR Wing Kamdhenu Jeevandhara Foundation which is a wholly owned subsidiary of the Company. It has set up the Skill development facility through its CSR Wing in the Bhiwadi, Rajasthan region. Through Kamdhenu Jeevandhara Foundation, the Company directs its focus towards providing basic education to underprivileged children and organizing camps, motivational programs, and special skills training for the differently-abled across the country. These initiatives are carried out in collaboration with other social organizations, in alignment with the CSR Policy. Details of the Companys CSR activities and ongoing projects are presented in Annexure D of the Boards Report, in accordance with Schedule VII of the Act, read with the relevant rules.

Commitment to Societal and Environmental Development

The Company strives to give back to society with all its vigor. It believes that societal and environmental development is imperative for sustainable progress. On the environmental front, it takes effective measures to prevent damage. These include ensuring compliance with all environmental safety regulations, avoiding industrial discharges, and adopting healthy methods of residue and waste disposal to maintain a sustainable environment for future generations.

Risk Management

The Company prioritizes the efficient management of risks within its daily operations. Deploying a comprehensive risk management framework, the Company aims to systematically identify both risks and opportunities, diligently monitoring their potential impact on business operation. This assessment is structured around two key parameters: likelihood of occurrence and impact on operations. This evaluation is crucial for safeguarding the Companys capital and earnings. Moreover, Kamdhenus risk management practices are robust and aligned with strategic and operational decisions, ensuring sustainable business performance. The oversight of risk-related challenges and mitigation plans falls under the purview of the Risk Management Committee comprising Independent Directors. This systematic approach guides strategic decisions and targeted risk responses, ensuring the Companys resilience in the face of evolving risk landscapes.

Risk Type	Risk Brief	Mitigation Strategies
Macroeconomic Risk	Encountering uncertain developments in the global business landscape may adversely impact operations, creating financial concerns.	Well-diversified product portfolio to capitalize on industry opportunities with low impact on business helps combating this risk.
Industrial Risk	Escalating steel prices may have a detrimental impact on businesses, operating within industries that manufacture, deal with, or use steel as a key raw material.	Strategic positioning to capitalize on opportunities in the infrastructure and real estate sectors aids in mitigating this risk.
Competition Risk	The impending threat of new entrants may pose risks to Kamdhenus competitive edge, creating pressures on margin and return ratios.	Strong focus on research and development, and an effective business strategy, ably supported by a diverse range of high-quality products and services, helps in mitigating this risk.
Regulatory & Compliance Risk	In the ever-evolving complex regulatory and compliance landscape, any deviation from the regulatory framework could impact the Companys operations and goodwill.	Continuous monitoring of regulatory environment, adherence to laws and regulations, strong compliance management system, and employee awareness assist in alleviating this risk.
Financial & Credit Risk	Operating conditions of the steel and paint markets may impact Kamdhenus profitability and cash flow. Additionally, rising finance costs and failure to meet debt obligations could hamper the Companys creditworthiness.	Maintaining low debt free status, efficient financial resource management, reliance on internal accruals for growth funding support in addressing this risk.
Capacity Risk	Facing the inability to produce and deliver required volumes could damage the Companys reputation.	Asset-light strategy through franchisee business model, assessing franchisee capabilities and skill sets for optimal results ensure uninterrupted and promised volume, helping in easing this risk.
Raw Material Price Risk	Changing raw material costs or lack of necessary inputs could affect the Companys operations, causing delays and cost inflation.	Spot-basis storage for ingots and billets, and closely monitoring price movements, while implementing necessary strategies for mitigation facilitate in lessening this risk.
Health and Safety Risk	Ensuring the safety of all stakeholders, while adhering to health and safety protocols may pose challenges.	Deployment of senior officials to oversee health and safety protocols, and implementation of safety induction programs for employees and third-party workers help in mitigating this risk.
Supply Chain Risk	Encountering inefficient supply management, logistics, and distribution may lead to delays in the delivery of finished goods.	Strong end-to-end supply chain management, from raw material acquisition to distribution network across India assists in covering this risk.
Goodwill Risk	The manufacturing of substandard products by franchisee units may potentially tarnish the Companys reputation.	Stringent quality standards and technical requirements for franchisee units, complemented by employee training in manufacturing facility supports in addressing this risk.
Environment, Social and Governance (ESG) Risk	Dealing with critical ESG factors could affect long-term viability and ethical impact.	Adherence to high ethical standards and integrity, compliance with statutory rules and legislations, and environmental conventions contributes to minimizing this risk.
Human Resources Risk	Facing loss of valuable employees could impact operations and growth prospects.	Recruitment of the right individuals, formulation of specialized training courses, development of talent pipeline, and the creation of a positive employee relationships help in combating this risk.
Information and Cybersecurity Risk	Experiencing cyber-attacks and noncompliance with IT laws and regulations could hinder business operations.	Implementation of fraud control mechanisms, and cybersecurity systems assists in tackling this risk.

Human Resource

Kamdhenu, as a conscientious corporate citizen, recognizes the pivotal role of employee satisfaction and happiness in shaping the organizations growth narrative. The Company is committed to embedding its core values—team-spirit, openness & fairness, commitment to excellence, and customer focus & care for people—deep within its organizational culture. In doing so, Kamdhenu aims to cultivate a thriving workplace environment conducive to sustained success and mutual prosperity.

Fostering Stronger Skillset

The Company identifies pools of competencies necessary for delivering tangible outcomes and focuses on developing these skills through continuous training & development initiatives. Through a blend of technical and behavioral training programs, the Company strives to augment both technical expertise and leadership acumen among its employees. Additionally, recognizing the significance of succession planning, Kamdhenu has been endeavouring continuously aimed at identifying and grooming potential successors for key positions, thereby ensuring seamless continuity and growth.

Nurturing Talent and Ensuring Safety

The Company prioritizes a safe and inclusive work environment, as it strives to provide various learning opportunities to enhance the skills and knowledge of its workforce. Continuous improvements in health and safety protocols, undertaken by the Company, are geared towards attaining a zero-harm goal and implementing safety measures throughout the organizational hierarchy. The Companys commitment to employee well-being extends to protecting against sexual harassment and ensuring the prevention and redressal of complaints.

Building a Future-Ready Team

Kamdhenu, as a forward-thinking company, seeks agility in its employees to adapt to the dynamic external environment. Therefore, the focus is on building a resilient team equipped to face existing challenges and seize emerging opportunities. To inculcate a sense of achievement among the deserving workforce, key performers are provided with fast-track growth opportunities. Additionally, the Companys competitive reward policy keeps the team motivated and engaged in achieving milestones. As of 31st March, 2024, Kamdhenu had a total of 549 permanent employees on its payroll.

Adequate Internal Control System

The Company has established a robust internal control framework to ensure the safeguarding of all assets against unauthorized use or disposition, and to ensure that transactions are promptly authorized, recorded, and reported. Aligned with the Companys risk management system, this framework is tailored to match the size, scale, and complexity of its operations. The internal controls, including financial controls, are well-defined, effective, and encompass all aspects of operations and functional areas. Throughout the year, these controls have persistently demonstrated effective operation.

The Company, in its pursuit to ensure the efficacy and robustness of these controls across all its offices, factories, and key business areas, has engaged an external consultant as an internal auditor. Collaborating with the statutory auditor, the internal auditor evaluates the design, adequacy, and operating effectiveness of the Companys internal financial controls. Their focus remains on aligning this framework with the criteria established under the Companies Act, 2013, and the Guidance Note issued by the Institute of Chartered Accountants of India.

The Audit Committee recommends the appointment of the internal auditor to the Board, taking adequate measures to ensure their objectivity and independence, including regular one-on-one discussions. Additionally, the Companys finance team conducts internal control reviews and followup audits, monitoring the implementation of action points arising from internal audits.

As part of their audit process, the internal auditor and finance team conduct systems and process audits to ensure that the IT and other systems used for transaction processing have adequate internal controls embedded for preventive and detective purposes. Moreover, the audit process includes transaction validation on a sample basis to ensure compliance with internal policies and ethical standards. The Audit Report is reviewed by management for corrective actions and is also presented to and reviewed by the Audit Committee of the Board.

Internal financial controls are integrated into the risk management process, which is part of corporate governance and addresses financial and financial reporting risks. Throughout the year under reporting, the Company exercised due care with respect to all requirements of the Company Law and SEBI Listing Regulations.

The internal control framework is designed to provide reasonable assurance regarding:

O Recording and providing reliable financial and operational information

O Ensuring compliance with applicable laws

O Safeguarding assets from unauthorized use

O Executing authorized transaction properly and maintaining compliance with corporate policies, minimizing errors

O Upholding accuracy and completeness of accounting records

O Undertaking timely preparation of reliable financial disclosures

Cautionary Statement

The statements in the Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, and expectations may be forwardlooking within the meaning, if applicable, of securities laws and regulations. The Companys expectations are based on reasonable assumptions; thus, the forwardlooking statements may be influenced by numerous risks and uncertainties. This could cause actual outcomes and results to be materially different from the given or implied details. Important factors that could influence the Companys operations include economic developments within the country, demand and supply conditions in the industry, input prices, changes in Government regulations, tax laws, and other factors such as litigation and industrial relations. The Company is not responsible for the forwardlooking statements herein, which may undergo changes in the future based on subsequent development, information, or events, and holds no obligation to update these in the future.