La Tim Metal & Industries Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS BUSINESS OVERVIEW

The Company is engaged in the business of manufacturing and dealing in color coated coils and profiles for the Indian market. The Company envisages a long term potential for steel consumption in the domestic market. The Steel Industry is considered as backbone of the modern society and has direct correlation with the Industrial development of the Country. The Company has also ventured into the export markets, specially the European market. Besides local procurement, the Company also depends on imports for its raw material requirements.

GLOBAL SCENARIO

The global economy continues to face headwinds from geopolitical tensions and economic adjustments. The Russia-Ukraine conflict and resultant supply chain disruptions have persisted, albeit with a lesser impact than initially anticipated. Central banks worldwide have continued their monetary tightening policies, contributing to a downward adjustment in economic growth projections. Despite these challenges, the global GDP growth rate is expected to recover slightly as per IMF. In addition, due to Red Sea Crisis, the time period & logistic costs of import and export movement to and from India was severally affected.

IMF projects the global economy to grow by 3.2% in CY 2024-2025.

Performance of the global economy was betterthan earlier projections, given the lower-than-expected severity of the Russia-Ukraine war and high energy prices. Manufacturing PMI, which fell below the 50-level mark is moving up in most economies. Chinas governments infra and construction push has further improved the expectation of increased economic activities, generating positivity for the global economy. Inflation levels in most of economies peaked, but expected to fall to 5.9% in CY 2024, improving global financial conditions and business sentiment.

Indian Economy & Steel Industry

India remained the fastest growing major economy in the world in FY 2023- 24, with its real GDP estimated to have grown by 8.2%, according to the data released by the Ministry of Statistics and Programme implementation (MoSPI), compared to 7.0% in FY 2022- 23.

The Indian economy has continued to outperform many of its global counterparts, maintaining its position as a key driver of steel demand. India remains "Bright spot" for global steel demand. As one of Indias core industries, the steel sector contributes over 2% to the national GDP.

In FY 2024, Indias crude steel production increased by 4.5% to 130 million tonnes. Indian governments continuous focus on infrastructure building has led to an increase in Indian steel finished consumption by 7.5% to 129 million tonnes in FY 2024. Due to the Red Sea crisis, the exports from India to Europe & other countries have taken a beating thereby generating a creak pressure on the streel prices.

Besides the weak economic condition in China, specially in relation to the construction & real estate industry, has substantially affected the steel industry leading to further softening of prices and dumping of steel to India.

Demand is expected to rise further by 6.3% to reach 136.97 mt in the next financial year 2024-25 as per the ISA projections.

OUTLOOK

According to predictions by the World Steel Association, the steel ind ustry growth rate is estimated to be around 5.2% in 2024. The growth prospects and steel industry outlook in India is favourable. Recent changes in export taxes and import duties on steel, complemented by the rising demand for affordable housing, infrastructure development and construction projects, has led to a pan-India need for steel metal. Moreover, the governments initiative to make India self-sufficient has made room for sustainable urban and semi urban development, construction of proposed logistics parks and industrial corridors - all adding to the meteoric demand for finished steel and steel as a raw material.

OPPORTUNITIES AND THREATS

The major threat to the global economy as a whole is inflation. The action by the US government of increasing the interest rates sharply as a result of high inflation, and to try and control it, has led to fall in consumption and purchases. It has also resulted in the currencies of most countries depreciating against the US$. All these factors are a threat to the growth in global trade.

Prospect for the steel sector in India, however, is seen to be bright in the long term. Production capacities have increased. Government has introduced the Productivity Linked Incentive Scheme (PLI) forthe steel sector. The steel body also sees growth coming for the Industry from investments in railways, infrastructure and automotive sector which is making consistent efforts to boost sales of their lower segment priced vehicles. The Company has a positive outlook to benefit from the commodity market revival in the the year.

In India, color coated coils and profiles are mainly consumed in construction and infrastructure sector. In recent years, color coated coils and profiles have gained lots of acceptance in the domestic market and consequently their consumption has tremendously increased in last several years. It is widely expected that color coated coils and profiles will gradually replace traditional roofing and siding materials in construction sector.

Your Company is cautious while looking for growth opportunities and also for new markets in its product segments. The Company faces several market risks arising in its normal course of business. The major threat to this industry include variations in raw material prices, fluctuations in foreign currency exchange rate and changes in interest rates which may have an adverse effect on the Companys financial assets, liabilities and/or future cash flows.

The Company however has identified certain growth opportunities and is planning to expand in those niche segments.

OPERATIONS/STATUS OF COMPANYS AFFAIRS

During the year Company merged with its subsidiary Company La Tim Sourcing (India) Private Limited.

During the Financial Year under review, the Company has earned the Total income of Rs 35,122.62 lakhs as compared to Rs. 27,332.37 lakhs in the previous year and the Net Profit after Tax is Rs. 765.24 lakhs as compared to loss of Rs. 749.93 lakhs (including exceptional items) in the previous year.

FUTURE STRATEGY

Your Company has taken innovative steps in strict negotiation for

Raw Materials sourcing, improved inventory management and increasing Domestic Sales besides starting of exports. This helped us improve operational performance of the Company. In keeping with the initiatives taken by your Company for increasing investments, it has introduced new designs in wood, marble, stones and flowers in various shades. The company is planning to expand into the printed multi color design which has opportunities in various furniture and interior and exterior segments of the construction industry. This has helped increase not only business volumes, but also value addition of product lines. We foresee a much bigger demand for domestic and export sales. Besides, our efforts to penetrate more specialized market of appliance sector would also offer a much higher return. The demand for Steel products in the market is definitely bound to improve and expected to grow further in the medium to long term. With all these investments, your Company is expected to do much larger business volumes in the coming years.

The Company has been exploring new business verticals under different product line like

1. Stone Coated steel/ Roofing sheets.

2. Self-drilling screws for roofing/cladding/paneling etc.

3. Designer coated steel coils with prints of Wood, Marble stones, Floral prints for wall. Ceiling Panels/Louvers/Furniture/Fencing etc.

Our Company has been successful in launching the new product of stone coated steel, roofing in various markets in India. This new product vertical has a good value addition and is mainly targeted towards the premium category of hotels, resorts & Bunglow schemes, premium community housing etc.

It is targeting towards the growth is hospitality industry as well as the premium real estate industry. Our Company has focused on the niche markets with dedicated marketing & promotion towards brand creation. And is also expanding its reach through large potential building material distributors and dealers.

Our Company is very confident for this product in the Indian market and the company is expecting more demands for it. To meet the supply chain requirement, the company will take necessary action like expansion of plant or set up a new pant.

The Company always involved in research and development for enhancing new products. In this process, the company comes with a new product which is First time launched by the company in this year. The product is in an advanced development stage will combine the function generating energy with the help of solar panels which are integrated into the stone coated roofing. The Company will launch this product very soon. In future products company is planning to introduce Stone Coated Solar Roofing Tiles and Asphalt Shingles.

Company is also in real state business. To expand its business in this sector, company entered into new venture La Tim Industrial Park, large land parcel in Khopoli-Pali area, LaTim Group brings huge business potentiality, among an existing hub of steel industries including Tata Bhushan Steel Ltd., Asian Colour Coated Ispat Ltd., Uttam Galva Steels, Top worth Pipes and Tubes, Maharashtra Seamless Tubes & JSW Steel Plant and many more in the nearby vicinity.

RISK AND CONCERN

While risk is an inherent aspect of any business, the company is conscious of the need to have an effective monitoring mechanism and has put in place appropriate measures for its mitigation including business portfolio, financial, legal & internal process risk.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Companys internal financial control systems are commensurate with the nature of its business and the size and complexities of its operations. These systems are designed to ensure that all the assets of the Company are safeguarded and protected against any loss and protected against loss and that all transactions are properly authorized, recorded and reported. The company is always trying to improve on the internal controls to further safeguard any leakages.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED:

It is your Companys belief that people are at the heart of corporate purpose and constitute the primary source of sustainable competitive advantage. Your Companys belief in trust, transparency and teamwork improved employee productivity at all levels.

The Company continues to lay emphasis on developing and facilitating optimum human performance. Recruitment process has been strengthened to ensure higher competence levels. During the year company merged with its subsidiary company. Now the company has 70 employees to meet the need of business. From time to time Company introduced new employees and conduct programs to develop the skills of the employees.

DISCLOSURES

During the year the company has not entered into any transaction of material nature with its promoters, the directors or the management, their subsidiaries or relatives etc, which may have potential conflict with the interest of the Company at large. All the details of transaction covered under related party transaction are given in the notes to accounts.

CAUTIONARY STATEMENT:-

Certain statements in the Management Discussion and Analysis and Directors Report describing the Companys Objectives, Strategies, projections, outlook, expectations, estimates and others may constitute forward - looking statements and progressive within the meaning of applicable laws and regulations. Actual results may vary from those expressed or implied, depending upon economic conditions, Government Policies and other incidental factors. Readers are cautioned not to place undue reliance on the forward looking statements