Steel is one of the most important and widely used materials in the
world. It is used in construction, transportation, manufacturing, and many other
industries. The steel sector is not only vital to the global economy but also plays a
critical role in the economic growth of any country. The industrys impact on the
economy goes beyond its direct contributions to GDP. The production and consumption of
steel have a significant multiplier effect on other sectors of the economy like
infrastructure, transportation, automobiles etc. Steel is also an essential material for
the energy sector, as it is used in the production of wind turbines and oil rigs.
Furthermore, the steel industry is a key player in international trade. India is the
second-largest producer of steel in the world, after China. The demand for steel in India
has been robust in the last one year, driven by the governments infrastructure
projects and the support extended to the manufacturing sector. The stainless steel market
in India has also witnessed growth in the last one year. The demand for stainless steel
has been driven by the construction, automotive, and consumer goods industries. The
growing awareness of the benefits of using stainless steel, such as durability and
corrosion resistance, has also contributed to the growth of the market. However, the
industry has also faced some challenges such as the shortage of raw materials, ongoing war
between Russia and Ukraine, effect of the COVID-19 pandemic on the global supply chain
etc. But despite these roadblocks, the steel manufacturing sector has been striving hard
to ensure its growth and India is one of the few countries where maximum new capacity both
by way of greenfield and brownfield initiatives is in the pipeline.
The Global Economy
The global economy has been on a rollercoaster ride in recent times,
driven by the effect of COVID-19 pandemic and a range of other factors. As we look ahead
to the global economy in the year 2023-24, there are several factors that are likely to
shape economic growth and business conditions. The January 2023 World Economic Outlook
Update projects that global growth will rise to 3.1 percent in 2024. Global inflation has
been more persistent than previously assumed, and high core inflation suggests that
inflation may remain above pre-pandemic averages in many countries for an extended period.
To rein in high inflation and bolster credibility, major central banks have tightened
their policy. Aggressive monetary policy tightening to contain high inflation,
deteriorating financial conditions, declining confidence, and widespread energy shortages
have contributed to a downgrade in global growth.
The Indian Economy
Indias steel production reached a record high of 121.06 million
tonnes in the financial year 2022-23, up 10.4% from the previous year. The sector also
benefited from the governments focus on infrastructure development, increased demand
from the automobile and construction sectors. Though we saw a strong growth curve in the
domestic market but on the export front, Indian manufacturers did see a decline. India,
the worlds second-biggest producer of crude steel, shipped around 6.7 million tonnes
of finished steel in 2022-23, which was a decline of around 50.2% from the year 2021-22
and the lowest since the period of 2018-19. Meanwhile, Indias imports touched a
four-year high at 6 million tonnes in 2022-23, a growth of 29% from the year 2021-22 and
the highest since 2019-20. The volatility in the market was mainly the effect of several
causes which contributed in their own ways like the Russia-Ukraine war which resulted in
the global slowdown in demand and second was the export tax imposed by the government in
the month of November 2022 that capped export opportunities for Indian steelmakers. In
addition, a lack of appetite from Southeast Asian counties also affected steel exports.
Overall, Indias crude steel production reached a record high in the year 2022-23.
Surprisingly, India was the only country among worlds top 10 steel-producing
countries that saw a positive growth in crude steel output in 2022. Regarding the economic
development of the nation, IMF has projected the GDP growth of India at 5.9% compared to
the projection of 6.5% by the Reserve Bank of India. Amidst the given circumstances and
the economic scenario around the country, we are hopeful that India has
a high chance of becoming the epicentre of the growth of steel in the world. Growing
strength to strength in the last 9 years, our country is on course to achieve two great
landmarks i.e. production of 125 Million tonnes of steel and achieving 11 %-12% growth in
steel consumption in the time ahead.
Outlook
The basic aim of the Company is to be able to produce Steel Structural
as per market requirements and be able to manage market trends to its advantage.
"Opportunities abound in growing economies and opening of economy in India has
created opportunities for Indian enterprise to move beyond national boundaries as well to
create productive assets".
The outlook for the industry looks reasonable, since India has good
iron ore deposits, skilled manpower and growing demand for steel. The improved demand is
expected to continue in the current fiscal as well on the back of ongoing government
funded infrastructure projects. In spite of a downturn in the Global Steel demand, Indian
steel demand could survive showing an upward trend, setting a road ahead for the growth of
the domestic steel industry in the long run. The upward trend is expected to be continued
on account of fiscal measures taken by the Government such as infusion of funds for
development of infrastructure sector, introduction of stimulus packages for revival of
industry besides factors like increase in consumption and production of steel, upcoming
infrastructure and Greenfield projects, stabilization of prices etc.
Risk and concerns
The Banks are cautious in their lending to the Corporate Sector perhaps
on account of large NonPerforming Assets (NPA). This has impacted the investment by Public
and Private Corporate Sectors in their expansion plans. Margins in the Engineering
Industry continue to be under pressure. We are continuously up-grading our skills,
modernization, and cost saving. Risk and concerns are being addressed on a continuous
basis. The business has weathered the challenges posed by the COVID-19 pandemic by
adopting safe working practices, encouraging work from home whenever needed, increasing
the virtual meetings, virtual audits and inspections, online approvals amongst other
measures.
Mitigation of Risk /Risk Management
The Board identifies and categorizes risks in the areas of operations,
finance, marketing, regulatory compliances and corporate matter. The Company re-views
periodically the "List of Risk Area" to identify potential business threats and
takes suitable corrective actions. Confirmations of compliance with appropriate statutory
requirements are obtained from the respective units/divisions. The Internal Auditor
expresses his opinion on the level of risks during the audit of a particular area and
reports to the Audit Committee.
The Company also has in place a Risk Management Policy and Procedure
for mitigating risks and managing as well as recording them. Further, corrective actions /
steps are being taken as and when necessary, in a continuous manner.
Internal Control Systems and their Adequacy
The Company believes in systematic working and placing of proper
checks. 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 authorised, recorded and reported properly. The internal
auditor of the company conducts audit of various department and areas. The Internal
Audit Department reports its findings and observations to the Audit Committee which meets
to review the audit issues and to follow up implementation of corrective actions. The
statutory auditors also provide assurance on the adequacy of the internal control systems
in the Company.
Discussion on financial performance with respect to operational
performance.
This year Mahamaya Steel has completed 35 years since its foundation
back in 1988. Since then Mahamaya Steel has been consistently upgrading its facilities and
investing in new facilities to meet customer requirements. Continuing its commitment, to
enhance the efficiency in Production and also to reduce power consumption cost we have
taken effective steps by replacing two old furances with two new furnaces with capital
expenditure of Rs. 4 crores (approx),
We have also installed new CCM set up with hot charging facility so
that there will be direct feeding of raw material from CCM to our 3 rolling mills 16
inches, 26 inches and 28 inches, this will help to reduce the fuel cost and the old CCM
will be kept stand by that can be used in times of breakdown.
During the year under review the Company had achieved a total revenue
from operations Rs. 64977.18 Lacs as against Rs. 49575.24 Lacs in the last Financial Year.
Further the Profit before tax stood at Rs. 601.05 Lacs as against Rs. 492.12 Lacs in the
last Financial Year.
The financial performance of the Company has been discussed better in
Directors Report under the heading "Financial Performance and the State of the
Companys Affairs".
Human Resources and Industrial Relations
Human Resources Department ("HRD") works continuously for
maintaining healthy working relationship with the workers and other staff members. The
underlying principle is that workers and staff at all levels are equally instrumental in
attaining the Companys goals. Training programmes are regularly conducted to update
their skills and apprise them of latest techniques. Senior management is easily accessible
for counselling and redressal of grievances. The HR department continuously strives to
maintain and promote harmony and coordination among workers, staff and members of the
senior management. The total number of employees as on 31st March, 2023 was
249.
The HR department of the Company is continuously in touch with the
employees to guide them and solve their problems. The Company has maintained healthy and
cordial industrial relations during the year
Key Financial Ratios
In accordance with the SEBI (Listing Obligations and Disclosure
Requirements 2018) (Amendment) Regulations, 2018, the Company is required to give details
of significant changes (change of 25% or more as compared to the immediately previous
financial year) in key financial ratios
The Company has identified the following ratios as key financial
ratios:
Particulars |
2022-23 |
2021-22 |
Variance |
Current Ratio |
1.78 |
2.21 |
-19.27% |
Debt to Equity Ratio |
0.34 |
0.37 |
-7.82% |
Debt Service Coverage Ratio |
3.06 |
1.30 |
135.01% |
Return on Equity Ratio |
3.32 |
2.72 |
22.05% |
Inventory Turnover Ratio |
849.52 |
657.81 |
29.14% |
Trade Receivables turnover Ratio |
3299.09 |
2400.96 |
37.14% |
Trade Payables turnover Ratio |
4728.90 |
3496.07 |
35.26% |
Net Capital turnover Ratio |
1395.35 |
966.68 |
44.34% |
Net Profit Ratio |
0.64 |
0.64 |
1.05% |
Return on Capital Employed |
5.39 |
5.89 |
-8.62% |
Reasons for variance
a. The Debt Service Coverage ratio came up as compared to last year is
mainly because of improved sales and less Principal repayments of loans and liabilities as
compared to last year.
b. Effective management of inventory coupled with improved sales has
led to improvement in Inventory Turnover Ratio.
c. Effective collection coupled with improved sales has led to
improvement in Trade Receivables turnover ratio.
d. Effective payoffs has led to improvement in Trade payable turnover
ratio.
e. Improved Sales and profitability has led to improved Net Capital
turnover Ratio.
Cautionary Statement
The Management Discussions and Analysis describe Companys
projections, expectations or predictions and are forward looking statements within
the meaning of applicable laws and regulations. Actual results could differ materially
from those expressed or implied. Important factors that could make a difference to the
Companys operations include economic conditions affecting demand and supply and
price conditions in domestic and international market, changes in Government regulations,
tax regimes, economic developments and other related and incidental factors.
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