Marmagoa Steel Ltd Management Discussions.
Opportunities and threats:
The Companys plant, in the West Coast of India, has state-of-the-art facilities with ISO 9001 and 14001 affiliations. The company is well connected by road, rail and sea. The company enjoys the benefits of the lowest power cost in the country, proximity to the sea port and cordial labour relations. The Company manufactures alloy and special steel through the Electric Arc Furnace route 1
to produce Alloy Steel Billets, Flats, and Rounds. The billets produced are for captive consumption for re-rolling.
The main product of the Company is spring steel flats, which is the key component for manufacture of leaf spring used in automobiles.
The Steel industry is presently doing well due to the growth in automobile, construction and infrastructural activities.
The company faces competition from other steel mills in the country who can offer the same products at a lower price mainly due to locational advantage.
Risks and Concerns:
Nature of the industry:
The company presently produces Alloy Steel rounds and Steel flats for the automobile industry. This segment has very high competition. The management is considering development of alternate products to improve the companys performance.
With technology obsolescence being an inherent risk in any industry, the Company is constantly upgrading and modernizing its manufacturing process. The company has commissioned an Electro Magnetic Stirrer and has commissioned a Vacuum Degassing System / Vacuum Oxygen Decarburization for the melting process for improvement in the quality of the steel billets.
The company is now in a position to cater to the stringent requirement of the automobile, defense and Railways sectors.
The lack of adequate Working Capital Facilities has had an adverse impact not only on the volume of production but also on the liquidity position of the companys finances.
There is a good demand for the companys product. If adequate Working Capital support is extended by the Companies Bankers, the management is confident that there will be no fall in demand for its product in the near future.
Internal Control Systems
There are adequate internal control procedures commensurate with the size of the Company and the nature of its business for:
Purchase of stores and assets, and sales of its products.
Adequacy of accounting records and Authorisation for and record of transactions.
Financial Performance The current years financial performance has been discussed in detail in the Directors Report forming part of this Annual Report.
Industrial relations have remained cordial and good.
Statements in this report describing the Companys objectives, projections, estimates and expectations may be "forward looking statements" within the meaning applicable in securities law and regulations. Actual results could differ materially from those expressed or implied.
The Board of directors wishes to thank the Companys shareholders, employees, customers, suppliers, bankers/ARCs and the Government of Goa and its agencies for their continued and unstinted support.
For and on behalf of the Board
|Ashok Mittal||K.V. Ramarathnam|
Place: Camp Bangalore