Maithan Alloys Ltd Management Discussions

Jul 24, 2024|02:34:56 PM

Maithan Alloys Ltd Share Price Management Discussions

The Indian steel industry has emerged as a key player in the countrys economic growth. With remarkable resilience, the industry has fully recovered to pre-pandemic levels, showcasing robust growth and increased economic demand. As the second-largest producer of crude steel globally, Indias steel sector plays a crucial role in the countrys development. This article explores the domestic and global perspectives of the Indian steel industry, including production, demand, exports, government initiatives, and its future outlook.

Overview of Steel Industry

Global Scenario of the Steel Industry

The global steel industry has witnessed steady growth in recent years. In 2021, world crude steel production reached 1,911.9 million tonnes (mt), indicating a growth of 3.6% compared to the previous year. China remains the largest producer of crude steel, with a production of 1,032.8 mt, followed by India with 118.1 mt. The per capita finished steel consumption in India stood at 70 kg in 2020-21, significantly lower than the global average of 228 kg. However, Indias position as the second-largest producer and the second-largest finished steel consumer after China highlights its significant presence in the global steel market.

Domestic Scenario of the Indian Steel Industry

The Indian steel industry has experienced remarkable growth in recent years, becoming the second- largest producer of crude steel in the world. Additionally, India holds the position of the largest producer of Sponge Iron or DRI globally and the second-largest finished steel consumer after China. The government plays a vital role in facilitating the steel sectors growth by providing policy guidelines and establishing an institutional mechanism to enhance efficiency and performance.

Production: An Overview

In 2021-22, the production of total finished steel in India reached 113.60 mt, marking a growth of 18.1% compared to the previous year. The production of Pig Iron stood at 5.76 mt, while Sponge Iron production reached 39.03 mt. The private sector has played a significant role in the growth of the industry, accounting for 89% of pig iron production and establishing coal-based units for Sponge Iron production. The steel industry has invested in modernization and expansion projects, adding a capacity of 29 mt.

Demand and Exports

The demand for steel in India is primarily driven by the automotive and construction sectors. In FY22, the consumption of finished steel stood at 86.3 mt, and the demand is expected to increase by 17% to reach 110 million tonnes. The governments focus on infrastructure development, including railways, roads, and highways, will further boost steel consumption. India has also been exporting finished steel, with exports reaching 13.49 mt in 2021-22.

Government Initiatives and Policies

The Indian government has implemented several measures to boost the growth of the steel sector. The National Steel Policy 2017 provides a roadmap for long-term growth, focusing on both demand and supply sides. The government has also introduced policies to promote domestically manufactured iron and steel products in government procurement. To encourage the production of specialty steel, the government has approved a Production-linked Incentive (PLI) Scheme, aiming to increase production to 42 million tonnes by 2026-27.

Indian Economy and Steel Industry Outlook

The recovery of the Indian economy to pre- pandemic levels and its strong growth momentum bode well for the steel industry. Future capital spending by the government, tax reforms, and digitization of tax filing will support infrastructure development and increase growth multipliers. The revival in monsoon and Kharif sowing will further strengthen the agriculture sector, contributing to overall economic growth. Indias robust democracy and strong partnerships position it as one of the fastest-growing major economies globally, with the potential to become one of the top three economic powers in the next 10-15 years.

The Role of Manganese in the Indian Steel Industry

Manganese plays a crucial role in the steel industry, enhancing steels hardenability and tensile strength. It is widely used in battery production and steel manufacturing. The global manganese market is expected to witness significant growth due to the increasing demand for lithium-ion batteries and the global shift towards electric vehicles. The Asia-Pacific region dominates the global manganese market, driven by rapid urbanization and the presence of various end-user industries. Indias manganese ore production volume amounted to approximately 2.83 million metric tons in 2019, and the country has over 90 minerals being produced.

Rising Demand for Sustainable Materials in Energy-efficient Buildings

The rapid urbanization and increasing population have led to a surge in construction activities, driving the demand for sustainable materials in the construction industry. Green construction practices, including the use of sustainable building materials and energy-efficient construction processes, are gaining traction. Manganese alloys, with their high performance, lightweight, durability, and strength, are increasingly being used as a sustainable alternative in energy-efficient buildings.

Increased Usage of Lightweight Materials in the Automotive Industry

The automotive industry is witnessing significant investments and growth, with a focus on producing lightweight vehicles to improve energy efficiency and reduce material consumption. Manganese steel, with its excellent strength-to-weight ratio and impact resistance, is a preferred material for automobile manufacturing. It allows for the reduction of body thickness and weight, resulting in improved safety performance. The increasing demand for lightweight automobiles to achieve weight reduction, fuel economy, and reduced CO2 emissions is driving the growth of manganese alloys in the automotive industry.

Increase in Usage of Silicomanganese Alloy to Boost Market

Silicomanganese, a type of manganese alloy, is primarily used as an alloying agent in steel production. It offers necessary strength, toughness, and hardness required for steel manufacturing. Silicomanganese is a stronger de-oxidant compared to high carbon ferromanganese, enhancing the natural properties of steel and providing increased strength, function, and esthetic appeal. Moreover, silicomanganese alloys find applications beyond standard steel products, further driving the demand for manganese alloys in the market.

Increase in Usage of Manganese Alloys in the Steel Industry

Steel, known for its strength and recyclability, is widely used in the construction and infrastructure sectors. Manganese alloys play a vital role in enhancing the properties of steel, making it harder and more resistant to wear. This makes it an ideal choice for construction projects that require durability and strength. The rapid growth of steel production worldwide, particularly in the construction sector, is driving the demand for manganese alloys in the steel industry. The addition of manganese to steel not only improves its properties but also enables the production of low carbon steels, which are in high demand.

Regional Outlook of the Global Manganese Alloys Market

The Asia-Pacific region dominates the global manganese alloys market, accounting for a significant share in terms of value. The regions booming automotive and construction industries, particularly in countries like China and India, drive the demand for manganese alloys. North America and Latin America also contribute significantly to the market, with growing investments in infrastructure development and automotive manufacturing.

Analysis of Key Players in the Global Manganese Alloys Market

The global manganese alloys market is highly competitive, with several key players operating in the industry. These players focus on strategies such as vertical integration, mergers, and acquisitions to remain competitive in the market. Some of the prominent entities in the market other than Maithan Alloys Ltd. are - Eramet S.A., Ferroglobe, South32, and Pertama Ferroalloys Sdn. Bhd. These companies have been profiled based on their financial overview, product portfolio, business strategies, and recent developments.

Key Developments in the Global Manganese Alloys Market

The market has witnessed several key developments in recent years. For instance, Maithan Alloys Ltd. announced the acquisition of Impex Metals & Ferro Alloys (IMFAL), aiming to expand its production capacity of silicomanganese and ferromanganese. Salasar Techno Engineering launched a heavy steel manufacturing plant in Uttar Pradesh, India, with a capacity of 15,000 tons per annum of structural steel. These developments highlight the growing importance of manganese alloys in various industries and the efforts of market players to meet the increasing demand.


The Indian steel industry, with its significant growth and role in the countrys economy, is poised for further development. The governments initiatives for infrastructure development, domestic manufacturing, and policy support create a favourable environment for the industrys growth. Additionally, the global manganese market presents opportunities for India to leverage its mineral resources and contribute to the global market. With the right policies, investments, and strategic partnerships, India can strengthen its position as a major player in the steel and manganese industries, driving economic growth and sustainability.


The financial statements have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under section 133 and other applicable provisions of the Companies Act, 2013 read with the Rules framed thereunder.


Total income

Total income marginally decreased by 0.13% during the financial year 2022-2023, i.e. from 3092.38 Crore in the financial year 2021-2022 to 3088.21 Crore in the financial year 2022-2023 mainly on account of lower sales realization.


The Companys EBITDA decreased by 37.26% during the financial year 2022-2023, i.e. from 1086.40 Crore in the financial year 2021-2022 to 681.64 Crore in the financial year 2022-2023 due to higher costs of Raw Materials and Power.

Finance costs

Finance costs increased by 90.17% during the financial year 2022-2023, i.e. from 1.14 Crore in the financial year 2021-2022 to 2.16 Crore in the financial year 2022- 2023 owing to increase in borrowings required for operations.

Other incomes

Other income increased by 419.39% during the financial year 2022-2023, i.e. from 34.79 Crore in the financial year 2021-2022 to 180.65 Crore in the financial year 2022-2023 owing to increase in interest income, writing back of liabilities and gain on sale of investments.

Tax expenses

Tax expenses decreased by 47.94% during the financial year 2022-2023, i.e. from 262.29 Crore in the financial year 2021-2022 to 136.54 Crore in the financial year 2022-2023 owing to lower taxable profits.

Net profit

Net profit stood at 426.51 Crore for the year ended 31 March 2023 as compared to 807.69 Crore for the year ended 31 March 2022, registering a decrease of 47.19%.


Net worth

Net worth stood at Rs2730.69 Crore as on 31 March 2023 compared to 2322.08 Crore as on 31 March 2022 i.e. an increase of 17.60 %. Net worth comprises of paid up equity capital of 29.11 Crore and other equity of 2701.58 Crore, as on 31 March 2023.

Loan profile

Total loan funds stood at 11.81 Crore including lease liability of 3.40 Crore, as on 31 March 2023 as compared to 5.20 Crore including lease liability of 3.48 Crore, as on 31 March 2022.

Trade payables and other current liabilities

Trade payables and other current liabilities amounts to 186.86 Crore as at 31 March 2023 as compared to 305.05 Crore as at 31 March 2022.

Total assets

Total assets increased by 11.27% during the financial year 2022-2023, i.e. from 2721.58 Crore as on 31 March 2022 to 3028.38 Crore as on 31 March 2023.


Inventories decreased by 55.20% during the financial year 2022-2023, i.e. from 608.12 Crore as on 31 March 2022 to 272.44 Crore as on 31 March 2023. Inventories comprises of raw material amounting to 195.48 Crore, work-in-progress worth 1.97 Crore, finished goods worth 62.52 Crore, stock-in-trade worth 0.41 Crore and stores and packing materials worth Rs12.06 Crore as on 31 March 2023.

Sundry debtors

Sundry debtors stood at 423.27 Crore as on 31 March 2023 compared to 761.86 Crore as on 31 March 2022 resulting in decrease of 44.44%.

Cash, cash equivalents and Other bank deposits

Cash, cash equivalents and other bank deposits as on 31 March 2023 stood at 1077.43 Crore compared to 94.26 Crore as on 31 March 2022.

Current investments

Current investments as on 31 March 2023 stood at 862.45 Crore compared to 815.68 Crore as on 31 March 2022.

Working capital management

• Total Current assets as on 31 March 2023 stood at ?2753.33 Crore compared to ?2474.02 Crore as on 31 March 2022.

• Current liabilities stood at ?267.76 Crore as on 31 March 2023 compared to ?368.50 Crore as on 31 March 2022.

• Current ratio as on 31 March 2023 stood at 10.28 compared to 6.71 as on 31 March 2022.


(i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor:

There was significant change in the following key financial ratio as compared to the previous financial year mainly due to increase in cost of production resulting in lower profits during the year under review.

1. Interest Coverage Ratio decreased from 939.58 to 308.86 due to increase in finance cost from 1.14 Crore to 2.16 Crore and decrease in EBIT margins by 37.72% during the financial year 2022-2023 .

2. Current Ratio increased from 6.71 to 10.28 due to increase in liquid assets and reduction in trade payables during the financial year 2022- 2023.

3. Operating Profit Margin decreased from 33.89% to 16.73% due to due to higher costs of Raw Materials and Power during the financial year 2022-2023.

4. Net Profit Margin decreased from 26.42% to 14.67% due to decline in profit after tax as result of increase in cost of goods sold and payment of arrear of electricity charges being exceptional item during the financial year 2022- 2023.

Please also refer to Note No. 55 to the Standalone Financial Statement for other Financial Ratios.

Details of change in Return on Net Worth as compared to the immediately previous financial year along with detailed explanations thereof:

The Return on Net worth was 15.62% during the financial year 2022-2023 as compared to 34.78% during the financial year 2021-2022. The decrease in Return on Net worth by 19.16% is due to decrease in net profit margins during the financial year 2022-2023 resulting from higher cost of input specifically raw material costs and power costs.


Particulars Financial Year 2021-2022 Financial Year 2022-2023
EBITDA/Turnover 35.13% 22.07%
EBITDA/Net interest 952.98 315.57
Debt-equity ratio 0.00 0.00
Book value per share () 797.64 938.00
Earnings per share () 277.44 146.51


Risk management is applied across all management levels and functional and project areas. Risk management initiatives are overseen by the Risk Management Committee. The committee members provide overall coordination of risk management processes and perform day-to-day monitoring of the risk management process across all segments of business.

Our risk management structure:

Risk Identification: Definition and descriptions of risk elements including sources, events, causes and impacts

Risk Assessment: Analysing risk, its implications, and forms of impact on the achievement of the Company

Development, assessment and follow-up: Developing, implementing, and following up on risk management activities to achieve organisational goal

Monitoring: Supervising the identification, assessment, implementation, and follow-up of risk management

Principal risks and their mitigation measures

Business risks

Industry risk (External risk) Mitigation measures
Potential Impact: With a complete basket of ferro alloys product, strong relationship with the customers and financial flexibility, Maithan at present is in a sweet spot and is in a position to grow faster than the Industry.
• Slowdown in product offiake
• Cyclical nature of steel industry
• Unfair trade practices and remedial measures
Quality risk (Internal risk) Mitigation measures
Potential Impact: The Company works rigorously on the quality front with streamlined operating procedures. Stringent quality checks are followed to mitigate the risk, for both inward and outward supply of goods and materials.
• Inconsistent product quality
• Erratic quality of raw materials procured
Pandemic risk (External risk) Mitigation measures
Potential Impact: Strict adherence to Government Guidelines to counter pandemic, vaccination of manpower, necessary response measures including factory shutdowns, disinfecting and deploying safety measures in the factory and office premises, encouraging employees to maintain adequate social distance, etc. have been undertaken.
• Risk of loss of production
• Risk of availability of manpower
Strategic risk (Internal risk) Mitigation measures
Potential Impact: The Company has been conservative regarding business expansions. It only considers assets if the valuations fit the Companys comfort level.
• Risk of erroneous strategic business decisions
Geographic risk (External risk) Mitigation measures
Potential Impact: The Companys Kalyaneshwari unit is located in the steel belt of India while the Visakhapatnam unit of the Company is close to two deep sea ports. Besides servicing Indian customers, the Company is servicing customers across countries.
• Risk of locational disadvantages
• Risk of limited area of market

Operational risks

Input Cost risk (Internal risk) Mitigation measures
Potential Impact: The Company is among the lowest cost manufacturers of ferro alloys and has superior process controls. The Company has strong relationships with its suppliers. It hffl PPA agreements with power utilities for supplying uninterrupted power at pre-determined prices. To minimise the commodity risk, the Company maintains a close matching between order book and inventory book.
• Risk of increased cost of operations
• Volatile rates of raw materials
Logistic risk (External risk) Mitigation measures
Potential Impact: The Companys manufacturing units are proximate to key downstream users as well as ports, facilitating ease of raw material imports and finished products exports.
Congestion, strikes, channel blockages
Storage, transportation and material handling risks
Human capital risk (Internal risk) Mitigation measures
Potential Impact: The Company has emerged as one of the sought-after destination for prospective employees. Over the years the Company has created a dedicated team driving the business. The employees are regularly trained in a harmonious work environment. The Company enjoys one of the best retention rates in the industry.
Inability to attract and retain talent
High employee attrition
Inadequate training and employee errors
Low employee productivity
Liquidity risk (Internal risk) Mitigation measures
Potential Impact: The Company has cash and liquid investments including Bank Deposits in excess of Rs 1,900 Crore. The Company enjoyed a current ratio of 10.28 as on 31 March 2023.
Risk caused by inadequate liquidity
Shortage of funds
Currency fluctuation risk (External risk) Mitigation measures
Potential Impact: The company endeavours to avail the benefit of natural hedge by exporting more than it imports. However, whenever necessary currency fluctuation risk is mitigated through hedging mechanism.
Adverse impact on profitability
Fluctuation in foreign exchange rate

For details of Financial Risk, please refer to Note No. 48 to the Standalone Financial Statement.

Human resources

The Company believes that its intrinsic strength lies in its dedicated and motivated employees. As such, the Company provides competitive compensations, an amiable work environment and acknowledges employee performance through a planned reward and recognition programme. The Company aims to create a workplace where every person can achieve his or her true potential. The Company encourages individuals to go beyond the scope of their work, undertake voluntary projects that enable them to learn and devise innovative ideas.

The total number of employees on the payroll of the Company as on 31 March 2023 was 565.


The Statements made in this section describes the Companys objectives, projections, expectation and estimations which may be forward looking statements within the meaning of applicable securities laws and regulations.

Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and

Internal control systems and their adequacy

The internal control and risk management system is structured and applied in accordance with the principles and criteria established in the corporate governance code of the organisation. It is an integral part of the general organisational structure of the Company and Group and involves a range of personnel who act in a coordinated manner while executing their respective responsibilities. The Board of Directors provide its guidance and strategic supervision to the Executive Directors and management and committees of the Board. The Executive Directors and the heads of the accounts department maintain constant dialogue with the Auditors. expectations are accurate or will be realised by the Company. Actual result could differ materially from those expressed in the statement or implied due to the influence of external factors which are beyond the control of the Company.

The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements on the basis of any subsequent development, information or events.

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