Megatherm Induction Ltd Management Discussions

Management Discussion and Analysis

GLOBAL ECONOMIC GROWTH

The International Monetary Fund (IMF) reports that the global economy started 2024 with a 3.1% growth rate, expected to rise to 3.2% in 2025. This growth is mainly due to the strong US economy, emerging markets, and Chinas fiscal support. However, challenges like restrictive monetary policies and low productivity could hinder progress, requiring careful policy management for continued growth.

Global economy growth

The IMF forecasts a slight dip in advanced economies growth from 1.6% in 2023 to 1.5% in 2024, then an increase to 1.8% in 2025. The US is expected to perform better than anticipated, while the euro areas growth is set to recover from 0.5% in 2023 to 0.9% in 2024 and 1.7% in 2025. Emerging markets are likely to maintain a 4.1% growth in 2024, with China at 4.6% and India at a robust 6.5% for both 2024 and 2025.

Global inflation should decrease to 5.8% in 2024 and 4.4% in 2025, with advanced economies experiencing a sharper decline to 2.6%. In contrast, emerging markets will see a modest reduction to 8.1%. Trade growth is expected at 3.3% in 2024 and 3.6% in 2025, below the historical average of 4.9%. Despite trade challenges, increased government and private spending, along with easing labor markets, could boost trade.

Outlook

The global economy is improving, with a lower risk of recession, thanks to the U.S. economys strength. Yet, global growth may slow due to tight monetary policy and slow trade. The U.S. should see growth from consumer spending and job strength, while the Euro area and China face slower growth due to various economic pressures.

Challenges like geopolitical tensions, financial stress, inflation, and climate issues pose as an impediment global growth. Global cooperation is needed to tackle these and support emerging economies, which are struggling with fiscal challenges and high borrowing costs amid slow trade and tight financial conditions.

INDIAN ECONOMY OVERVIEW

One of the fastest growing economies in the world, the Indian economy is anticipated to experience a consistent growth of 6.7% annually from 2024 to 2031, as per the latest report by CRISIL. This projection slightly surpasses the pre-pandemic average of 6.6%. CRISIL attributes this growth trend to capital, highlighting the governments investment-driven approach during a period when the private sector hesitated to make substantial investments. The governments notable increase in capital expenditure, supporting infrastructure projects and offering interest- free loans to states, is identified as a pivotal factor.

Expected to grow by 7.3% in the current financial year (FY24), according to the first advance estimate released by the National Statistical Office, reflects both global and domestic optimism in the countrys economy on the back of robust manufacturing activity and infrastructure spending. Indias inflation level stood at 5.7%, primarily driven by fluctuating vegetable prices and food grain inflation. Indias economy grew at its fastest pace in one-and-half years in the final three months of 2023, led by strong manufacturing and construction activity. Additionally, the Governments emphasis on monitoring the Middle East conflicts impact on energy and logistics costs helped the Indian economy remain resilient throughout the 2023 despite the challenging global environment.

Indian economic growth projects

Indias GDP growth was fueled by a 31% increase in Central Government and 43% increase in State Government capital expenditure. The mining sector thrived due to policy reforms and high demand, while manufacturing benefited from lower global commodity prices. Construction saw a boost from government spending and urban demand for housing and office spaces. Financial, real estate, and professional services are also expected to grow significantly, driven by credit expansion and demand for real estate and professional services.

Expected to grow by 7.3% in the current financial year (FY24), according to the first advance estimate released by the National Statistical Office, reflects both global and domestic optimism in the countrys economy on the back of robust manufacturing activity and infrastructure spending. Indias inflation level stood at 5.7%, primarily driven by fluctuating vegetable prices and food grain inflation.

EXPORT SCENARIO

Indias strong GDP growth fundamentals and expected global easing of monetary tightening helped spur global demand, thereby resulting in a positive growth sentiment for the exports during the fiscal.

Due to geopolitical conflicts and interruptions in trade routes, India experienced a 3% decline in merchandise exports, amounting to $437 billion in the fiscal year 2023-24. Concurrently, imports decreased by 5.4%, totaling $677 billion. This contraction in trade activity contributed to a reduction in the trade deficit, which shrank to $240 billion in FY24 from $265 billion in the preceding fiscal year. Over the entire year, the countrys exports of goods and services reached an unprecedented high of $776.7 billion, while imports combined to approximately $855 billion.

Trade deficit at 11 months low - Indias export statics in the last financial year

Petroleum products significantly impacted export figures, with a 14% reduction to $84 billion in the last fiscal year, partly due to decreasing global prices. Conversely, electronics and pharmaceuticals stood out as key sectors. Mobile phones drove electronics exports up by 23.6%, surpassing $29 billion, while pharmaceutical exports from the country are believed to have grown by 9.7%, reaching $27.8 billion. Engineering goods also saw an increase, with shipments exceeding $109 billion, a 2.1% increase. Similarly, on the import side, there was a 14% decrease in crude oil imports, amounting to $179.6 billion.

INDIAN MSME SECTOR

The Indian Micro, small and medium-sized enterprises (MSMEs) is one of the pillars the Indian economy as it is one of the primary drivers of economic development, innovation, and employment in India. MSMEs sector is characterized by minimal investment, increased job opportunities, operational flexibility, reduction in regional disparities and import substitution. In India, more than 95% units are engaged in the MSME sector and contribute to approx. 30% of India GDP, 45% of manufacturing output, 40% of the countrys total export and creates around 11.10 crore jobs.

The introduction of micro, small, and medium enterprise (MSME) financing in India has served as a catalyst for the expansion of the MSME sector. This growth has been further supported by the emergence of neo-banks and digital payment channels. The digitalization of MSMEs has brought about numerous benefits, including access to a larger client base, reduced reliance on staff, increased production efficiency during economic downturns, streamlined transactions between buyers and sellers, and more.

The Government of India has been actively promoting initiatives to bolster the growth of MSMEs in the country, leading to a significant shift from offline to online business operations within the sector. MSMEs are increasingly leveraging technology to enhance their processes, improve efficiency, and deliver prompt services to their customers and clients. This transition underscores the sectors commitment to embracing digital advancements and adapting to the evolving business landscape.

Key Budget takeaways for the Indian MSME Sector

Credit Guarantee for MSMEs: A significant initiative aimed at supporting first-generation entrepreneurs in their pursuit of self-employment. The scheme encourages entrepreneurs by providing credit guarantee funding for third-party guarantee-free and collateral-free loans. A part of the Credit Guarantee scheme, the government revamped the Credit guarantee trust for the small microenterprises scheme with a required infusion of Rs.9,000 crore, effective April 1, 2023.

Increased allocation for MSME sector: The budget allocation for the MSME for FY2021-22 was more than doubled to Rs.15,700 crore from Rs.7,000 crore in 2019-20. In the Union Budget 2023-24, the allocation was further enhanced to Rs.22,138 crores.

Changes in presumptive taxation rules:

The government has raised turnover limits for presumptive taxation, increasing it from Rs.2 crore to Rs.3 crore for micro units and from Rs.50 Lacs to Rs.75 Lacs for certain professionals this fiscal year. However, those opting for presumptive taxation must ensure cash receipts dont exceed 5% of total receipts. Also, under this system, individuals and businesses are relieved from maintaining account books or undergoing audits.

Reduced cost of financing for MSMEs: With the new credit guarantee programme, the government plans to reduce the cost of financing for MSMEs by 1% and enable them to obtain an additional 2 Lacs crore in collateral-free credit guarantees. Further, another programme called Raising and Accelerating MSME Performance (RAMP) with an outlay of Rs.6,000 crore was also announced as part of the budget.

Subordinated Debt for MSMEs: Under this scheme, the government announced subordinate debt for MSMEs in the tune of Rs.20,000 crore ($3 trillion) Automatic loans without collateral for businesses, particularly MSMEs MSME Fund of Funds equity infusion of Rs.50,000 crore MSMEs are now being registered using "Udyam Registration" for the convenience of doing business There are no international bids for purchases under Rs.200 crores.

Vishwas-I voluntary initiative: During the MSME Budget 2023, the FM also stated that MSME suppliers who were unable to fulfil contracts during the Coronavirus pandemic will get 95% of their forfeited amount back from the government and the government undertakings with which they were working. The FM announced this relief measure under the Vivad Se Vishwas-I voluntary initiative, which was launched in 2020 to resolve pending direct tax disputes. This move will benefit MSMEs who do not have access to institutional financing.

Contractual dispute settlement (Vivad Se Vishwas-II):

Under the Vivad se Vishwas II scheme, all commercial disputes involving the government or government undertakings will be settled through a "voluntary settlement scheme," containing standardized terms. The settlements will be graded according to the pendency of the dispute.

enhancing last-mile connectivity: About 100 transport infrastructure projects have been identified in the Union Budget, that will help sectors like coal, fertilizer, food grain, steel and shipping. These projects, amounting to Rs.75,000 crore, will be funded in part by private players to the tune of Rs.15,000 crore.

ensuring infra boost for Tier-I and Tier-II cities:

The government has earmarked Rs.10,000 crore for the creation of the Urban Infrastructure Development Fund (UIDF), which will empower small cities to set up the infrastructure necessary for maintaining adequate sanitation and hygiene. The government aims to make these cities more sustainable and cleaner through this move.

outlook

Indias economic growth outlook for FY2025 looks promising, according to the latest report from the Finance Ministry. This positive forecast is fueled by strong growth and robust fundamentals. Economic activity will be driven by a healthy rabi harvest, sustained manufacturing profitability, resilience in the services sector, and improved household consumption and private capex cycle.

Strong private consumption has contributed to the Indian economys resilience and high growth rates in the past three years. This has led to the establishment of new plants and the acquisition of machinery to meet increasing capacity utilization. According to the Reserve Bank of India, Indias GDP is expected to grow by over 7% in FY25 also.

Despite these positive trends, there are some challenges on the horizon. Geopolitical tensions, supply chain disruptions, higher logistics costs, volatility in international financial markets, and geoeconomic fragmentation are concerns that the government will need to address.

Overall, the economic outlook for India in FY25 is optimistic, with strong growth prospects supported by various factors. It will be important for policymakers to navigate potential challenges effectively to ensure continued economic growth and stability.

GLOBAL STEEL INDUSTRY

According to the World steel forum, the global steel demands expected to witness a rebound of 1.7% in 2024 to reach 1,793 MT Steel demand, whereas the same is forecasted to grow by 1.2% in 2025 to reach 1,815 MT.

In 2024, it is anticipated that demand in China will stabilize compared to 2023 levels, as the decrease in real estate investments is counterbalanced by increased steel demand from infrastructure projects and manufacturing activities. However, in 2025, a downward trend is predicted for Chinas steel demand, with a projected 1% decline.

For 2023, our apparent steel use (ASU) estimate for China is based on official statistics and suggests a 3.3% drop. This represents a downwards revision of our 2023 steel demand growth rate estimate by around 5 percentage points from our previous forecast made in October 2023. Chinese steel demand in Q4 last year had indeed been weaker than what we expected back in October 2023. However, indicators of major steel using sectors suggest that the actual steel demand was better than the estimated ASU.

According to the official statistics, Chinas apparent steel use (ASU) in 2023 saw a decline of 3.3%. This marks a downward adjustment of our previous growth rate forecast by approximately 5% points from our October 2023 projection. Despite weaker steel demand in Q4 of the preceding year than anticipated, indications from key steel-consuming sectors suggest that actual demand may have surpassed the estimated ASU.

The steel demand in emerging markets like MENA and ASEAN is projected to experience a surge in growth during the period of 2024-2025 following a notable deceleration in 2022-2023. Based on our observations, its anticipated that in 2024 steel demand in the ASEAN region is expected to witness a decline due to mounting challenges, including political instability and erosion of competitiveness.

The developed world is also expected to show a strengthening recovery with 1.3% in 2024 and 2.7% in 2025, as we expect to see steel demand finally showing a meaningful pick up in the EU in 2025 and continued resilience in the US, Japan, and Korea.

The EU (and the UK) remains the region currently facing the biggest challenges. The region and in particular its steel using sectors are challenged on a multitude of fronts - geopolitical shifts and uncertainty, high inflation, monetary tightening and partial withdrawal of fiscal support, and still high energy and commodity prices. The persistence of these downside factors resulted in a major drop in the regions steel demand in 2023 to the lowest level since the year 2000 and to substantial downward revisions of the forecast for this year. After only a technical rebound in 2024, the regions steel demand is expected to finally show a meaningful recovery with a 5.3% growth in 2025. The forecasted steel demand for the EU in 2024 is only 1.5 Mt higher than the pandemic trough in 2020.

Trends in the Global Steel Industry

The residential construction downturn driven by high interest rates and high construction costs have dragged down steel demand across most major steel using regions. In 2023 a sharp drop-in housing activity in the US, China, Japan and the EU, and weakness in housing activity is expected to stretch well into 2024 in most major markets on the lagged impact of monetary tightening. A meaningful recovery in residential construction is expected to begin only from 2025 onwards. Weakness in global manufacturing activity on high costs and uncertainties, tight financing conditions and weak global demand also hampered global steel demand in 2023. Leading indicators suggest the start of a recovery in global manufacturing activity in 2024.

Strong investment activity in manufacturing facilities and public infrastructure have underpinned global steel demand in 2023. Investment in manufacturing facilities is driven by major economies ambition to develop strategic sectors and ensure supply security for strategic components and materials against a backdrop of increasing geopolitical tensions. It is believed that the green transition of the world economy, which requires an economic transformation of unprecedented magnitude and scope, is one of the major factors behind the strength in public infrastructure investments. For example, a recent Economics Committee study estimated that global steel demand for new wind energy installations will triple by 2030 to around 30 Mt when compared with early 2020s. While the share of steel demand for wind energy installations will remain relatively low in total global demand, it may give quite a noticeable support to overall steel demand in certain regions such as Europe.

We expect to see continued strength in investments in public infrastructure and manufacturing facilities. However, we also observe that high construction costs and labour shortages emerge as major constraints for many major economies, and this might constrain further growth in public infrastructure and manufacturing facility investments in the short-term.

	million tonnes			y-o-y growth rates, %
Regions	2023	2024 (f)	2025 (f)	2023	2024 (f)	2025 (f)
European Union (27) & United Kingdom	136.8	140.7	148.1	-10.0	2.9	5.3
Other Europe	44.3	47.9	46.1	13.5	8.1	-3.7
Russia & other CIS + Ukraine	56.1	58.4	58.9	8.6	4.1	0.8
USMCA	131.7	133.6	136.2	-1.0	1.4	1.9
Central and South America	45.7	45.5	46.8	0.9	-0.5	2.8
Africa	35.0	36.9	38.5	-1.7	5.4	4.4
Middle East	54.9	57.2	58.7	-0.4	4.1	2.6
Asia and Oceania	1,258.5	1,273.1	1,281.9	-1.0	1.2	0.7
World	1,763.0	1,793.1	1,815.2	-1.1	1.7	1.2
World excl. China	867.3	897.4	928.4	1.3	3.5	3.5
Developed Economies	359.4	364.2	374.1	-4.2	1.3	2.7
China	895.7	895.7	886.7	-3.3	0.0	-1.0
Em. and Dev. Economies excl. China	507.9	533.2	554.3	5.5	5.0	4.0
ASEAN (5)	73.4	75.9	79.2	1.1	3.5	4.3
MENA	69.3	72.6	74.8	-2.2	4.7	3.0

f - forecast

ASEAN (5): Indonesia, Malaysia, Philippines, Thailand, Vietnam

INDIAN STEEL INDUSTRY OVERVIEW

The steel industry has played a crucial role in contributing to the economic growth of India. The steel sector in India has gained international recognition, and the country has made notable strides towards achieving self-reliance in manufacturing, particularly in the steel industry. Currently, India holds the distinction of being the worlds second-largest producer and consumer of steel. Backed by both rapid economic development and government initiatives focused on bolstering the steel industry, it is primed for continued expansion. India has set ambitious goals to reach a crude steel capacity of 300 million tonnes (MT) by FY31 and 500 MT by 2047. With the potential for increased economies of scale and deeper market penetration with specialized value-added steel products, the 25 years holds great promise for the Indian steel sector.

In FY24, India steel industry shone as a standout performer in the worldwide steel market, propelled by robust internal demand. The nations steel consumption is projected to rise at an impressive rate of approximately 7.7% in 2024, mirroring the 8.6% growth experienced in 2023. This is in stark contrast to the global expansion rates of 1.8% and 1.9%, which are largely fueled by advancements in the infrastructure and construction industries.

The expansion of Indias construction and infrastructure sectors is largely attributed to increased governmental expenditure in infrastructure and the real estate industry, coupled with a resurgence in private sector investment. The ongoing positive outlook in the infrastructure domain, along with sustained investments, are anticipated to bolster the capital goods sector, thereby expecting to create a sustained demand for the structural steel and steel products. Furthermore, the automotive sector is expected to maintain its robust growth trajectory. Collectively, these factors are likely to catalyze a surge in the countrys steel consumption.

Indias crude ana Mnisnea steel proauction and consumption (in million tonne)

The Indian steel industrys expansion has been fueled by the ready access to indigenous raw materials, including iron ore, and the availability of affordable labor. As a result, the steel industry has played a pivotal role in bolstering Indias manufacturing sector.

The steel consumption per person in India is estimated at around 78 kg, in contrast to the global average of approximately 233 kg. Based on these figures, it is evident that there is a substantial opportunity to raise per capita steel consumption and, as a result, boost steel demand in the country. Taking into consideration the current scenario, it can be observed that the building, construction, and infrastructure sectors hold the largest share of domestic consumption. The future outlook for these sectors is promising, with the potential to propel Indian finished steel consumption to 230 MT in FY31.

Key factors to drive demand for steel

Infrastructure sector

This sector is focused on the growth and broadening of facilities such as airports, railways, pipelines for fuel transport, electricity generation and distribution networks, as well as roads and bridges. It predominantly relies on public funding. The Economic Survey of 2018 projects that an investment of approximately Rs.4.5 trillion is needed by the year 2040 for the advancement of Indias infrastructure. Furthermore, the Economic Survey of 2019-20 suggests that to reach a US$ 5 trillion economic milestone, India must allocate roughly US$ 1.4 trillion, or about Rs.110 Lacs crore, towards infrastructure over the ensuing five years.

Building and construction sector

The sector focuses on the development of urban housing, rural housing, commercial real estate, and industrial construction (warehouses, data centres, etc.). At present, about 29% of the steel demand in the country is in real estate constituting residential, commercial, and institutional buildings. However, the market share of steel frame-based construction is lower than 10%; for the developed nation, the share is as high as 80%.

Automobile sector

As a result of the rapid urbanization and increased per capita income, this sector has been growing consistently. The sectors contribution to national GDP reached about 7.1% in FY23

from 2.77% in 1992-93. The total export of automobiles grew by 35.9% in FY22. Being the largest two- and three- wheel manufacturer in the world, the sector aims to double its size to Rs.15 Lacs crore by the end of 2024. The automobile sector is anticipated to undergo substantial growth over the next 10 years.

Engineering and packaging sector

The engineering and packaging sector includes capital goods, consumer durables, general engineering products and electrical goods, among others. The sector is expected to grow by 10-12% in FY24. About US$ 112billion of capital goods are expected to be produced by 2025. This sector is expected to have a significant share of ~21% in the total finished steel consumption of India by FY31.

Rapid urbanization

The development of tier-II and tier-III cities and smart cities, along with the emergence of smart cities, combined with swift demographic expansion, evolving dynamics of nuclear families, and the transition from temporary housing to permanent homes facilitated by state initiatives, are all expected to drive the demand for steel. It is anticipated that by the year 2030, Indias urban population will reach approximately 630 million, contributing to 75% of the nations GDP.

Real estate growth

Steel demand in India is set to rise with growth in construction and urban development, including affordable housing. The real estate sector is expected to reach US$ 1 trillion by 2030, making up 18-20% of GDP. Demand for data center real estate could grow by 15-18 million sq. ft. by 2025. Urban and rural housing developments, along with better connectivity, will further drive steel consumption.

Government infrastructure spending to boost demand for steel

According to the National Infrastructure Pipeline, about Rs.1.5 Lacs crore of infrastructure projects is likely to be implemented over the next few years. The governments budget support for road infrastructure rapidly increased, reaching about Rs.1.4 Lacs crore in FY23. Capital expenditure on railway infrastructure steadily increased over the past four years, with a budget of Rs.2.5 Lacs crore allocated in FY23. The railway sector is also poised for growth, driven by governmental plans for railway network expansion, alleviation of freight line congestion, expansion of metro systems, and initiation of high-speed rail projects. The number of airports with civilian flights doubled in the past nine years, from 74 in 2014 to 148 in 2023.

Green steel demand in India Indias pursuit of net-zero emissions by 2070 is driving the demand for green steel, with commitments from companies to purchase at least 10% low-emission steel by 2030. The EUs carbon border adjustment mechanism (CBAM) and potential domestic carbon pricing may further increase this demand. The automotive industry, eyeing Indias market potential and their own net-zero goals, is expected to be an early adopter of green steel. Government steel procurement, particularly for infrastructure and construction, could also boost the green steel market if aligned with Green Public Procurement (GPP) and Green Corporate Procurement (GPC) policies. Additionally, carbon pricing mechanisms, harmonized with international systems, could incentivize the steel sectors decarbonization by making it more cost- effective to reduce emissions.

GLOBAL PIPING INDUSTRY

The global pipe market is projected to be valued at US$ 146.38 billion by 2024 and rise to US$ 238.67 billion by 2034. The pipes are anticipated to expand at a moderate CAGR of 5.01% from 2024 to 2034.

The pipe market experienced a CAGR of 2.38% from 2019 to 2023. This subdued growth rate can be attributed to factors such as economic fluctuations, limited infrastructure investments, and challenges in certain end-user industries.

Despite steady demand for pipes in construction, utilities, and industrial applications, the market faced constraints like regulatory hurdles and pricing pressures during this period.

Looking ahead to the forecasted period from 2024 to 2034, the market is expected to witness a significant acceleration in growth, with a forecasted CAGR of 5.01%. This optimistic projection is underpinned by several factors including increased infrastructure spending, particularly in emerging economies, technological advancements driving demand for advanced piping systems, and growing focus on sustainable and ecofriendly piping materials.

The expansion of industries such as oil and gas, water and wastewater management, and construction is anticipated to contribute to the robust growth trajectory of the pipe market during this forecasted period.

Innovations in pipe materials, manufacturing processes, and design enhance durability, efficiency, and performance, driving adoption in diverse sectors and applications.

Stringent environmental regulations promoting eco-friendly and sustainable piping materials boost demand for alternatives such as plastic pipes and composite materials.

Increasing awareness about water scarcity and the importance of water conservation drives the adoption of efficient irrigation systems and water distribution networks, thus increasing demand for pipes.

Pipe Market Changes

Fluctuations in raw materials prices such as metals, plastics, and resins impact production costs and profitability for pipe manufacturers, requiring effective supply chain management and pricing strategies.

Limited public funding for infrastructure projects in certain regions and economic downturns can dampen demand for pipes, particularly in the construction sector, posing challenges to market growth.

Corrosion and durability concerns, particularly in harsh environments or corrosive fluids, can affect the longevity and performance of pipes, requiring continuous innovation in materials and coatings to address these challenges effectively.

INDIAN PIPING INDUSTRY

The Indian pipe industry is a dynamic sector, driven by growing demand from infrastructure, oil and gas, power, and water and sanitation industries. While the market shows promise with a projected growth rate, it faces challenges due to inflation from the Ukraine conflict and the lingering impact of the pandemic, raising raw material and energy costs for end-users.

The pipes market is primarily driven by various factors such as a rise in the number of new residential and commercial buildings, development of water supply pipelines, an increase in the number of wastewater treatment facilities, public agriculture irrigation systems, and other infrastructure in developing economies. In addition, the rise in the number of industrial facilities, including food and beverages, chemical and petrochemicals, pharmaceuticals, and other industrial facilities globally, also positively affects the pipes market growth.

In CY23, the proportion of Indias iron and steel pipes and tubes was 5.5% of the total steel market, compared to a 9% global average. By CY30, this figure is projected to rise to approximately 8.3%, with the Indian structural steel tube market expanding at an estimated compound annual growth rate (CAGR) of around 12%, reaching close to 17.3 million tonnes per annum (mtpa) from 7.7 mtpa in CY23. Volume-wise, ERW pipes make up about 70%, while stainless steel and SAW pipes account for the remaining 30%.

Per capita, Indias usage of steel pipes and tubes is at 6 kilograms, significantly lower than the worldwide average of 21 kilograms, suggesting considerable potential for expansion.

The upcoming commissioning of new blast furnaces and hot-rolled coil (HRC) mills within the next three to four years is expected to guarantee a consistent supply of HR coils domestically. The prices for domestic HRC have nearly reached their lowest point, which is advantageous for manufacturers of HRC-based steel pipes. The current spot premium for HRC-based pipes is also near the longterm average of Rs.15,430, indicating that manufacturers using scrap are unlikely to capture a substantial market share compared to those using HRC.

The Indian piping sectors growth is driven by various factors, notably the development of infrastructure across commercial, residential, industrial, and agricultural domains. PVC pipes are extensively utilized in these sectors for water distribution, irrigation, waste disposal, and managing cables.

The Indian governments focus on initiatives such as Smart Cities, affordable housing, and rural development has contributed to the increasing demand for both PVC and steel pipes.

In recent years, the Indian pipe industry has witnessed significant growth, with the market size estimated to reach USD 1,041 billion by 2026.

The growth for the Indian piping industry is likely to be driven by a number of factors, including:

Increasing infrastructure development: The Indian government is investing heavily in infrastructure development, which is creating a strong demand for pipes for various projects, such as roads, bridges, and railways.

Rising oil and gas consumption: Indias oil and gas consumption is growing steadily, which is driving demand for pipes for upstream and downstream operations. Governments "One Nation, One Gas Grid" initiative is expected to create a demand for 4 MT of steel pipes over the next few years.

New opportunities in solar industry: Governments increased focus on green energy is likely to push domestic demand for steel products and impact growth of the sector positively,

Growing power demand: Indias power demand is also growing rapidly, which is creating a demand for pipes for power transmission and distribution projects.

Increasing urbanization: Indias urbanization is leading to a growing demand for pipes for water supply and sanitation projects.

Governments focus on defense industry: The general push for indigenization of equipment will drive the need for steel pipes and tubes finding usage in constructing ships, submarines, aircraft, and armored vehicles.

However, the piping industry is expected to face a number of challenges, including:

Raw material price volatility: The prices of raw materials, such as steel and PVC, are volatile, which can affect the profitability of pipe manufacturers.

Competition from imports:

The Indian pipe industry faces competition from imports from countries such as China and Vietnam.

Environmental regulations: The Indian government is implementing stricter environmental regulations, which is increasing the cost of production for pipe manufacturers.

Here are some of the key trends in the Indian pipe industry: The demand for seamless pipes is growing, as they are more durable and corrosion-resistant than welded pipes.

The demand for plastic pipes is growing, as they are lighter and easier to transport than steel pipes.

Pipe manufacturers are adopting new technologies, such as continuous casting and extrusion, to improve their efficiency and productivity.

The Indian pipe industry is a promising sector with a bright future. The industry is well-positioned to benefit from the growing demand for pipes from various end- user industries and is expected to continue to grow in the coming years.

GLOBAL FOUNDRY MARKET

The foundries market size has grown strongly in recent years. It will grow from $179.84 billion in 2023 to $189.69 billion in 2024 at a compound annual growth rate (CAGR) of 5.5%. The growth observed in the historical period can be attributed to several factors, including increased demand from the automotive and aerospace industries, growth in construction and infrastructure development, manufacturing of consumer goods, requirements within the energy sector, and the globalization of supply chains.

The foundries market size is expected to see steady growth in the next few years. It will grow to $229.96 billion in 2028 at a compound annual growth rate (CAGR) of 4.9%. Forecasted growth is driven by the transition to electric vehicles, renewable energy projects, material science advancements, stricter environmental regulations, and increased demand for customization. Major trends include digital twin technology, advancements in casting processes, smart foundries, and the demand for lightweight materials.

The Asia-Pacific was the largest region in the foundries market in 2023. Western Europe was the second-largest region in the foundries market. The regions covered in the foundries market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa. The countries covered in the foundries market report are Australia; China; India; Indonesia; Japan; South Korea; Bangladesh; Thailand; Vietnam; Malaysia; Singapore; Philippines; Hong Kong; New Zealand; USA; Canada; Mexico; Brazil; Chile; Argentina; Colombia; Peru; France; Germany; UK; Austria; Belgium; Denmark; Finland; Ireland; Italy; Netherlands; Norway; Portugal; Spain; Sweden; Switzerland; Russia; Czech Republic; Poland; Romania; Ukraine; Saudi Arabia; Israel; Iran; Turkey; UAE; Egypt; Nigeria; South Africa.

INDIAN FOUNDRY INDUSTRY OVERVIEW

The India Foundry Market is projected to reach USD 31.77 billion by 2029, with an estimated size of USD 19.46 billion in 2024, experiencing a compound annual growth rate (CAGR) of 10.30%. The ramifications of the COVID-19 pandemic were evident in December 2020 when over 400 small foundries in Coimbatore ceased operations due to escalating raw material costs. This closure had far- reaching consequences, impacting numerous employees across various sectors including pumps, textile machinery, automobiles, and engineering. Additionally, in March 2023, several foundry units in Kolhapur temporarily halted production, granting employees three to four days of leave owing to a surge in raw material prices triggered by the Russia-Ukraine conflict.

India emerged as the 2nd largest producer of castings in the world and has ambitious growth plans with new capacities being added at rapid pace. With nearly 4,500 units (out of which 85% can be classified as small-scale units & 10% as medium & 5% as large-scale units), the Indian foundry industry produced 12 Million MT of various grades of Castings as per International standards in 2023. The Indian foundry industry recorded a turnover of approx. USD 20 billion with exports approx. USD 3.54 billion.

Indian Foundry market industry - Driving factors

The Indian foundry market is primarily driven by rapid industrialization and urbanization, which have increased the utilization of the metal casting process across the country. The surge in automobile manufacturing is also a significant factor boosting market growth.

India stood as one of the worlds leading countries in vehicle production. In the financial year 2023, the total vehicle production in India reached around 25.93 million units, marking an increase from the previous year, as reported by the Society of Indian Automobile Manufacturers (SIAM). In 2020, the production value experienced a contraction primarily due to

the introduction of the new Bharat Stage VI (BS-VI) emissions standards on April 1, 2020, and an overall scaled-down production due to the lower stock of the old BS-IV vehicles. The coronavirus pandemic in India further exacerbated the subsequent decline in production.

According to the Society of Indian Automobile Manufacturers (SIAM), in 2022, India produced approximately 22.93 million vehicles, encompassing commercial vehicles, passenger cars, tricycles, and two-wheelers. The automotive industry experienced a 13.63% growth in sales in 2022 compared to 2021. Specifically, motorcycle sales increased by 4.7% in 2022 over the previous year, according to SIAM.

Another significant driver for the Indian foundry markets growth is the increasing government expenditure on infrastructure expansion, stimulating demand for various machinery and equipment such as pumps, cranes, fans, motors, and conveyor belts. This surge in demand, in turn, amplifies the need for metal castings.

Consequently, there is an escalated demand for auto parts necessary for automobile manufacturing. To address this growing demand for metal castings in India, foundries are investing in new technology and equipment. The anticipated benefits from these investments include lower power consumption, improved production efficiency, higher utilization rates, and increased profit margins for Indian foundries. Therefore, the burgeoning automobile industry is expected to drive the growth of the Indian foundry market during the forecast period.

Indian Foundry market industry - Government Initiatives

The Indian Foundry Industry data indicates approximately 500,000 direct and 15,00,00 indirect employees, making it a significant source of employment, primarily for socially and economically disadvantaged sections. Forecasts suggest the potential creation of an additional 2 million jobs over the next decade due to the industrys labor-intensive nature.

According to the 56th World Casting Census by Modern Castings USA (January 2023), China, India, and the US lead global casting production, with production ramping up after a COVID-induced two-year hiatus. China reported 54.05 million tonnes of casting, followed by India as the worlds second-largest producer, with 12.49 million tonnes.

Indias foundries are actively upgrading their facilities and technologies to enhance productivity and expand capacity, responding to escalating demand. A majority of these foundries fall under the MSME sector, which has demonstrated consistent growth. The Ministry of Micro, Small and Medium Enterprises (India) and the India Brand Equity Foundation reported nearly 13.8 million micro-enterprises, constituting 96 percent of the MSME sector. Small and medium enterprises accounted for three and 0.28 percent, respectively, totaling more than 14 million registered MSMEs.

In the second financial year of 2023, over two trillion INR (USD 24 billion) was disbursed in the MSME segment in India, as reported by SIDBI. Reinforced implementation of initiatives like the Public Procurement Policy, Pradhan Mantri MUDRA Yojana, Make in India, Startup India, and Skill India are catalysts fostering the growth of the MSME sector. This surge in government support is expected to further propel the foundry market in the foreseeable future.

Global Automative Industry

The Global Automative Outlook 2024 will have global passenger and commercial vehicles combined sales projected to 95 million units in 2024, witnessing a YoY growth of 3.1% during the forecasted period. The combined sales volume of passenger vehicles and commercial vehicles witnessed a YoY growth of 12.3% from 2022 to 2023, wherein passenger vehicles segment dominated the sales of the cars in 2023 with over 60% of the share. Further, within the regional market Asia and ME region combined accounted for more than half of the market share. With the internal Combustion Engine (ICE) vehicles held the major share, the Electric Vehicle (EV) segment grew at a rate of 30-35% over 2023. Dedicated to achieving zero emission target, the OEMs have planned to invest over USD 500 Billion by 2030 to EV production facilities.

Globally there are more than 2.7 million public charging points by the end of 2022, out of which almost a million were set up in 2022 alone. Further it is estimated that over more than one million charging stations were installed by the end of 2023.

INDIAN AUTOMATIVE INDUSTRY

India enjoys a strong position in the global heavy vehicles market as it is the largest tractor producer, second- largest bus manufacturer, and third-largest heavy truck manufacturer in the world. Indias automobile sector is split into four segments, i.e., two-wheelers, three- wheelers, passenger vehicles, and commercial vehicles, each having a few market leaders. Two-wheelers and passenger vehicles dominate the domestic demand.

In terms of market size, the Indian passenger car market was valued at US$ 32.70 billion in 2021, and it is expected to reach a value of US$ 54.84 billion by 2027 while registering a CAGR of over 9% between 2022-27. The global EV market was estimated at approximately US$ 250 billion in 2021 and by 2028, it is projected to grow by 5 times to US$ 1,318 billion.

India has a strong market in terms of domestic demand and exports. In November 2023, total passenger vehicle sales reached 3,34,130. Sales of Passenger Vehicles in November 2023 have been the highest, with a marginal growth of 3.7%, compared to November 2022. This is because India has significant cost advantages, as automobile firms save 10-25% on operations vis-avis Europe and Latin America. The Indian automotive industry is targeting to increase the export of vehicles by five times during 2016-26. In FY23, total automobile exports from India stood at 47,61,487. This sectors share of the national GDP increased from 2.77% in 1992-1993 to around 7.1% presently. It employs about 19 million people directly and indirectly.

In November 2023, the total production of passenger vehicles, three-wheelers, two-wheelers, and quadricycles was 2.22 million units. In (April-November) 2023-24, the total production of passenger vehicles, commercial vehicles, three-wheelers, two-wheelers, and quadricycles was 15.56 million units.

In the first quarter of 2023-24, total production of passenger vehicles, commercial vehicles, three wheelers, two wheelers, and quadricycles was 6.01 million units.

India is currently shifting focus to electric cars to reduce emissions. India accomplished a significant milestone, with the sale of 8,32,434 EVs in 2023-24 (till August 2023). In terms of electric vehicles (EVs), in Q4 FY22, sales reached a new high of 60,94,960 units. Overall, in 2022-23, 2,12,04,162 EVs were sold in India, indicating a 168% YoY growth over last years sales. A report by India Energy Storage Alliance estimated that the EV market in India is likely to increase at a CAGR of 36% until 2026. In addition, the projection for the EV battery market is forecast to expand at a CAGR of 30% during the same period.

GROWING DEMAND

Rising middle-class income and a huge youth population will result in strong demand.

In November 2023, the total production of passenger vehicles, three-wheelers, two-wheelers, and quadricycles was 2.22 million units.

The global EV market was estimated at approximately US$ 250 billion in 2021 and by 2028, it is projected to grow by 5 times to US$ 1,318 billion.

OPPORTUNITIES

India could be a leader in shared mobility by 2030, providing opportunities for electric and autonomous vehicles.

Focus is shifting to electric vehicles to reduce emissions.

By 2030, the Indian government has committed that 30% of the new vehicle sales in India would be electric.

) POLICY SUPPORT

Automotive Mission Plan 2016-26 is a mutual initiative by the Government of India and the Indian automotive industry to lay down the roadmap for the development of the industry.

FAME Scheme was extended for a further period of 2 years up to March 31st, 2024.

INDIAN DEFENCE SECTOR

India is one of the strongest military forces in the world and holds a place of strategic importance for the Indian government. The top three largest market segments of the Indian defence sector are military fixed wing, naval vessels and surface combatants, and missiles and missile defense systems. Military rotorcraft, submarines, artillery, tactical communications, electronic warfare, and military land vehicles are some of the other well-known segments. Some of the major defence manufacturing companies in India are Bharat Earth Movers Ltd. (BEML), Bharat Electronics Ltd. (BEL), and Hindustan Aeronautics Ltd. (HAL).

The Indian defence manufacturing industry is a significant sector of the economy. The industry is likely to accelerate with rising concerns about national security. Demand for defence equipment in India has been growing due to the ongoing territorial disputes with Pakistan and China over the ownership of the Northern State of Kashmir and the North Eastern State of Arunachal Pradesh, respectively. Over the last five years, India has been ranked among the top importers of defence equipment to gain technological advantages over rival countries such as China and Pakistan. To modernise its armed forces and reduce dependency on external dependence for defence procurement, several initiatives have been taken by the government to encourage Rs.Make in India activities via policy support initiatives.

India has the worlds third-largest defence expenditure, as of 2021, and expects to export equipment worth US$ 15 billion by 2026. Indias military spending of US$ 76.6 billion ranked third highest in the world in 2021. This was up by 0.9% from 2020 and by 33% from 2012.

As per the Union Budget 2022-23, 25% of the defence R&D budget has been earmarked for private industry and start-ups which will pave the way for the innovation of new defence technologies in India. Till October 2022, a total of 595 Industrial Licences have been issued to 366 companies operating in Defence Sector. Defence exports grew by 334% in the last five years; India now exports to over 75 countries due to collaborative efforts.

According to the Global Power Index, the Indian defence sector ranks fourth in terms of firepower with a score of 0.0979 (with 0.0 being the perfect score). The Indian government has set the defence production target at US$ 25 billion by 2025 (including US$ 5 billion from exports by 2025). India is one of the worlds biggest defence spenders with a total outlay of Rs.5.25 Lacs crore (US$ 66 billion), accounting for 13.31% of the total budget and indicating an increase over the budget estimates of 202122 by Rs.46,970 crore (US$ 5.9 billion).

The value of defence production in the country crossed Rs.1 Lac crore (US$ 12 billion) for the first time on the back of key reforms to spur growth in the sector that holds vast potential. The figure stood at Rs.1,08,330 crore (US$ 13.07 billion) in FY23 compared to Rs.95,000 crore (US$ 11.47 billion) in FY22 and Rs.54,951 crore (US$ 6.63 billion) five years ago.

Indias defence import value stood at US$ 463 million for FY20 and US$ 469.5 million in FY21. India targets to export military hardware worth Rs.35,000 crore (US$ 5 billion) in the next five years. As of 2019, India ranked 19th in the list of top defence exporters in the world by exporting defence products to 42 countries. Defence exports in the country stood at Rs.15,920 crore (US$ 1.94 billion) in 2022-23.

Defence exports grew by 334% in the last five years and India now exports to over 75 countries due to collaborative efforts.

GROWING DEMAND

Demand growth is likely to accelerate with rising concerns of national security.

Till October 2022, a total of 595 Industrial Licences have been issued to 366 companies operating in Defence Sector.

Defence exports grew by 334% in last five years; India now exporting to over 75 countries due to collaborative efforts.

The Ministry of Defence has set a target of achieving defence exports worth

COMPETITIVE ADVANTAGE

India has the worlds third- largest defence expenditure, as of 2021, and expects to export equipment worth US$ 15 billion by 2026.

The Government of India opened the defence industry for private sector participation to provide impetus to indigenous manufacturing.

As per the Union Budget 202223, 25% of defence R&D budget has been earmarked for private industry and start-ups which will pave the way for innovation of new defence technologies in India.

GOVERNMENT SUPPORT

Under the Atmanirbhar Bharat Initiative, four positive indigenization lists of 411 products have been promulgated by Department of Military Affairs and Ministry of Defence to be manufactured domestically for the defence sector, instead of being sourced via imports.

SRIJAN portal launched to promote indigenization. 19,509 defence items , have been displayed on the portal for indigenisation

INDIAN RAILWAYS SECTOR

The Indian railway system is regarded as the foundation and lifeblood of the economy. Indian railways span thousands of kilometres practically covering the entire nation, making it the fourth largest in the world after the US, China, and Russia. The Railways Board, which has a monopoly over the provision of rail services in India, oversees overseeing the whole infrastructure. Due to its low cost and effective operations, railways continue to be the most popular means of transportation for most Indians when travelling long distances.

Indias railway network is recognised as one of the largest railway systems in the world under single management. The railway network is also ideal for long-distance travel and movement of bulk commodities, apart from being an energy-efficient and economic mode of conveyance and transport. Indian Railways is the preferred carrier of automobiles in the country.

The government of India has focused on investing in railway infrastructure by making investor-friendly policies. It has moved quickly to enable Foreign Direct Investment (FDI) in railways to improve infrastructure for freight and high-speed trains. At present, several domestic and foreign companies are also looking to invest in Indian rail projects.

India has the fourth largest railway network with over 22,593 operating trains (9141 freight and 13,452 passengers) with a daily passenger count of 24 million passengers and 203.88 million tonnes of freight. In FY22 passenger traffic stood at 3.54 billion as compared to 1.28 billion in FY21. In FY23, railway freight volume stood at 1,509 MT which depicted year-on-year growth of 6.59%. Since August 2020, the Indian Railways has run 450 Kisan Rail services and was able to transport over 1.45 Lacs tonnes of agricultural produce & perishables RailTel, a PSU under the Railway Ministry, which provides fast and free Wi-Fi across the In November 2020, India Railways announced that 40% of dedicated freight corridor (DFC) will be opened for traffic by end-FY21. India is among the top 3 exporters of railways globally as of 2022. In financial year 2023, the export value of railway transport and parts from India amounted to about 371 million U.S. dollars. This was a decrease compared to the nearly 416 million U.S. dollars in the previous year.

In 2022-23, Railways is estimated to earn 69% of its internal revenue from freight and 24% from passenger traffic. The remaining 7% will be earned from other miscellaneous sources such as parcel service, coaching receipts, and sale of platform tickets.

Total revenue from traffic for 2022-23 is estimated to be Rs.2,39,803 crore (US$ 29.18 billion), an increase of 25.37% over revised estimates for 2021-22. Freight revenue is estimated to be Rs.1,62,100 crore (US$ 19.72 billion) in 2022-23, an increase of 14.89% over the revised estimates for 2021-22. The passenger revenue is estimated to be Rs.63,300 crore (US$ 7.70 billion), an increase of 61.42% over a low base in 2021-22.

GROWING DEMAND

• Increasing urbanisation and rising income (both urban and rural) is driving growth in the passenger segment.

• India is projected to account for 40% of the total global share of rail activity by 2050.

• In 2023-24, traffic revenue is estimated to be Rs.2,64,600 crore (US$ 32.18 billion), comprising 99.8% of the total revenue.

ATTRACTIVES OPPORTUNITIES

• Indian Railways is developing and creating technology in areas such as signaling and telecommunication with 15,000 kms being converted into automatic signaling and 37,000 kms to be fitted with KAVACH, the domestically developed Train Collision Avoidance System

HIGHER INVESTMENT AND POLICY SUPPORT

• FDI inflows in railway-related components stood at US$ 1.40 billion from April 2000-September 2023.

• Rail infrastructure will see an investment of Rs.50 Lacs crore (US$ 715.41 billion) by 2030.

• Railway infrastructure investment is expected to increase from US$ 58.96 billion in 2013-17 RE to US$ 124.13 billion by 2018-22E.

• Government has allowed 100% FDI in the railway sector.

• In January 2021, the Ministry of Railways rolled out a new iron ore policy governing allocation of rakes and transportation of iron ore.

POWER AND DISTRIBUTION SECTOR

Power is among the most critical components of infrastructure, crucial for the economic growth and welfare of nations. The existence and development of adequate power infrastructure is essential for sustained growth of the Indian economy. The fundamental principle of Indias power industry has been to provide universal access to affordable power in a sustainable way. The Ministry of Power has made significant efforts over the past few years to turn the country from one with a power shortage to one with a surplus by establishing a single national grid, fortifying the distribution network, and achieving universal household electrification.

Indias power sector is one of the most diversified in the world. Sources of power generation range from conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power, to viable non-conventional sources such as wind, solar, agricultural and domestic waste. Electricity demand in the country has increased rapidly and is expected to rise further in the years to come. In order to meet the increasing demand for electricity in the country, massive addition to the installed generating capacity is required.

India was ranked fourth in wind power capacity and solar power capacity and fourth in renewable power installed capacity, as of 2021. India is the only country among the G20 nations that is on track to achieve the targets under the Paris Agreement.

India is the third-largest producer and consumer of electricity worldwide, with an installed power capacity of 426.13 GW as of November 30, 2023.

As of November 30, 2023, Indias installed renewable energy capacity (including hydro) stood at 179.57 GW, representing 42.1% of the overall installed power capacity. As of November 30, 2023, Solar energy contributed 72.31 GW, followed by 44.56 GW from wind power, 10.26 GW from biomass, 4.98 GW from small hydropower, 0.57 from waste to energy, and 46.88 GW from hydropower.

The non-hydro renewable energy capacity addition stood at 15.27 GW in FY23, up from 14.07 GW in FY22.

Indias power generation witnessed its highest growth rate in over 30 years in FY23. Power generation in India increased by 8.87% to 1,624.15 billion kilowatt-hours (kWh) in FY23. According to data from the Ministry of Power, Indias power consumption stood at 130.57 BU in April, 2023.

The peak power demand in the country stood at 243.27 GW in November 2023.

Thermal power plant load is estimated to improve by 63% in FY24, fuelled by strong demand growth along with subdued capacity addition in the sector.

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India is the third-largest producer and consumer of electricity worldwide, with an installed power capacity of 426.13 GW as of November 30, 2023.

Growing population along with increasing electrification and per-capita usage will provide further impetus. Power consumption in India in FY23 logged a 9.5% growth to 1,503.65 billion units (BU).

In the Union Budget 2023-24, the government allocated US$ 885 million ( Rs.7,327 crore) for the solar power sector including grid, off-grid, and PM-KUSUM projects.

To meet Indias 500 GW renewable energy target and tackle the annual issue of coal demand-supply mismatch, the Ministry of Power has identified 81 thermal units which will replace coal with renewable energy generation by 2026.

Policy Support

100% FDI allowed in the power sector has boosted FDI inflow in this sector.

Schemes such as Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY) and Integrated Power Development Scheme (IPDS) are expected to augment electrification across the country.

As per the National Infrastructure Pipeline 2019-25, energy sector projects accounted for the highest share (24%) out of the total expected capital expenditure of US$ 1.4 trillion ( Rs.111 Lacs crore).

Total FDI inflows in the power sector reached US$ 17 billion between April 2000-September 2023.

COMPANY OVERVIEW

Megatherm Induction Limited, established as a private limited company in 2010, aims to make a significant impact across the steel, foundry, forging, and various other metalworking sectors. As a subsidiary of Megatherm Electronics Private Limited, the group began its journey in 1989 with the manufacture of induction melting and heating equipment. In 2021, the company expanded into the transformer manufacturing segment to meet the growing demand for power distribution and industrial transformers in the country. Leveraging our extensive experience, we have progressively broadened our product portfolio to include transformers, metallurgical equipment, and auxiliary equipment. Additionally, we have entered the business of installing and setting up steel melt shops. This process involves meticulous planning and a deep understanding of our customers requirements.

Our company offers comprehensive solutions for steelmaking needs, encompassing equipment such as transformers, induction melting furnaces, static frequency converters, water cooling plants, fume extraction systems, ladle refining furnaces, continuous casting machines, and in-line induction billet heaters. We also manufacture electric arc furnaces for alloy and special steelmaking industries. Our service portfolio includes turnkey solutions for steel plants, involving the design, engineering, supply, erection, and commissioning of steel melt shops using both insourced and outsourced plant machinery. We also provide after-sales services, including maintenance contracts and spare parts supply.

OUR OPERATIONAL PROWESS

At MIL, we proudly own and operate a state-of-the-art manufacturing facility in Kharagpur, West Bengal, with an impressive production capacity of 300 units per year. We specialize in producing induction heating and melting equipment, including furnaces and transformers. Our manufacturing units are fully equipped with advanced machinery and infrastructure, enabling us to handle the entire manufacturing process from start to finish. With years of experience in metal heating and melting equipment, we are adept at meeting the unique and rigorous requirements of our customers.

We excel at every stage of the manufacturing process, from product design, product engineering and development to material sourcing, testing, and ensuring effectiveness. This comprehensive approach allows us to meet our customers needs with precision. Our sophisticated manufacturing setup, combined with our extensive industry experience, not only enhances our product quality and efficiency but also provides us with a cost advantage over our competitors. We are committed to delivering high-quality products and timely solutions, tailored to our customers specifications, all while maintaining cost-effectiveness and without compromising on quality.

FINANCIAL REVIEW

Revenue from operation achieved during FY2024 was Rs.30,625.46 lacs, as against Rs.26,588.15 lacs in the previous year, registering 15.18% year-on-year (y-o-y) growth. Profit before tax (PBT) was recorded at Rs.2,760.02 lacs against Rs.1,983.47 lacs during the previous year. Profit after tax (PAT) for the year stood at Rs.2,072.39 lacs against Rs.1,400.41 lacs in the previous year. For FY2024, EBITDA grew by 30.86% y-o-y to Rs.3,604.01 Lacs in FY2024, compared to Rs.2,754.40 Lacs in FY2023. EBITDA margin for FY2024 stood at 11.77%, improved by 141 bps on a y-o-y basis. Various cost control measures, coupled with better market dynamics, led to higher growth in EBITDA and PAT.

Total borrowings of MIL as of March 31, 2024, stood at Rs.3,615.56 lacs vis-a-vis Rs.4,282.04 lacs as on March 31, 2023.

FINANCIAL PERFORMANCE SuMMARY

			(Rs. in Lacs)
	FY24	FY23	% Change
Revenue	30,625.46	26,588.15	15.18
Gross profit	7,013.04	5,446.78	28.76
EBIDTA	3,604.01	2,754.40	30.86
Depreciation	338.53	242.82	39.42
EBIT	3,377.70	2,567.27	31.57
Finance cost	617.68	583.80	5.80
Profit before Tax (PBT)	2,760.02	1,983.47	39.15
Profit after Tax (PAT)	2,072.39	1,400.41	47.99

SUMMARY OF BALANCE SHEET

		(Rs. in Lacs)
	FY24	FY23
Equity and liabilities
Equity share capital	1,884.07	923.25
Other equity	10,150.43	4,139.39
Non-current liabilities	1,081.76	1,817.17
Current liabilities	13,898.95	12,318.06
total	27,015.21	19,197.87
Assets
Non-current assets	1,227.53	943.13
Fixed assets	6,411.27	5,863.32
Current assets	19,376.41	12,391.42
total	27,015.21	19,197.87

KEY RATIOS

	FY24	FY23	Reason for change
Gross Profit Margin	22.90	20.49	-
EBITDA Margin	11.77	10.36	-
EBIT Margin	11.03	9.66	-
Profit Before Tax Margin	9.01	7.46	-
Profit After Tax Margin	6.8	5.3	-
Inventory turnover ratio	2.94	2.88	-
Current ratio	1.39	1.11	The increase in the Current Ratio is due to the Initial Public Offer (IPO) made by the company during the FY under review.
Net debt-to-equity ratio	0.30	0.85	The decrease in Debt Equity Ratio is due to the IPO made by the company during the FY under review and due to periodical repayment of Debt.
Return on Equity (RoE)	17.22	27.66	The decrease in the RoE is due to the IPO made by the company during the FY under review.
Return of Capital Employed (RoCE)	0.23	0.33	The decrease in the RoCE is due to the IPO made by the company during the FY under review.

RISK MANAGEMENT

A thorough risk-management framework allows us to preemptively monitor risks emanating from the internal and external environment. As a result, we have been able to consistently create value for all our stakeholders, despite industry cycles and economic headwinds.

Identification and assessment approach

Forecasting and calculating the probability of occurrence, magnitude, category and rating of the risk.

Prevention and control strategy

> Devising plan of actions to prevent risk, temper its strength and reduce its aftermaths.

Monitoring

Gauging the potency of controls, reacting to the revelations and continuously honing the method.

Reviewing and reporting on the risk

Overseeing the process at regular intervals (at least annually).

Our risk mitigation plan

The Board takes the following steps as a part of its risk management and mitigation plan:

Defines the roles and responsibilities of the different board committees

Participates in major decisions affecting the organisations risk profile

Integrates risk-management reporting with the Boards overall reporting framework

The Company functions under a well-defined organization structure. Flow of information is well defined to avoid any conflict or communication gap between two or more departments. Second-level positions are created in each department to continue the work without any interruption in case of non-availability of functional heads. Proper policies are followed in relation to maintenance of inventories of raw materials, consumables, key spares and tools to ensure their availability for planned production programmes. Effective steps are being taken to reduce the cost of production on a continuing basis, taking various changing scenarios in the market.

INFORMATION TECHNOLOGY

Your Company recognizes the critical role of a robust IT infrastructure, both in scale and technology, as the cornerstone of stable IT systems and superior support. Boasting state-of-the-art IT systems, it possesses a comprehensive IT framework essential for managing service administration and delivery. The Companys IT setup is instrumental in generating a variety of business intelligence reports for production management, electronic procurement, paperless transactions, budgeting, forecasting, and cash flow analysis, supporting MIL. It adheres to international benchmarks in information automation, performance metrics, remote working capabilities, and managerial excellence. The technical team is tasked with system programming and providing user support for technological advancements.

INTERNAL CONTROL SYSTEM AND ADEQUACY

The Company has in place strong internal control procedures commensurate with its size and operations. The Company believes that safeguarding of assets and business efficiency can be prolonged by exercising adequate internal controls and standardizing operational processes. 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 organizational 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 offers its guidance and strategic supervision to the Executive Directors and management, monitoring and support committees.

HUMAN RESOURCE

The Companys seasoned leadership and deep industry expertise furnish it with a distinct edge as it continues to broaden its reach in current markets and venture into new territories. MIL steadfastly invests in its Rs.Human Capital. By integrating skilled professional management and essential staff, MIL is fortified to operate autonomously. The company remains committed to fostering a culture of meritocracy, integrity, and adherence to legal and compliance standards. It has introduced numerous governance policies to empower employees to voice concerns without fear of retaliation or bias. The Companys Code of Conduct includes pertinent regulations aimed at preventing sexual harassment and features a whistleblower policy for the prompt reporting and resolution of issues.

The collective growth and unity of the team are the groups core strengths. Training and skill enhancement are pivotal for the personal and organizational development of the workforce. The Company conducts regular training and development programs, inspiring its employees to realize their utmost potential. Additionally, we prioritize a transparent communication hierarchy to facilitate clear dialogue between employees and management. These efforts are instrumental in attracting and retaining elite talent within the industry, contributing to the Companys reputation for having dedicated and content human resources. The Company has effectively put into practice significant HR strategies and people management techniques. As of 31st March 2024, MIL proudly employs over 282 individuals.

HEALTH AND SAFETY MEASURES

The well-being of our staff is of paramount importance. Leadership in our factories spearheads our commitment to health, safety, and environmental (HSE) standards, conducting frequent audits to bolster our workforces health and safety. With their guidance, weve implemented numerous initiatives to enhance our personnels safety. Additionally, we have formed teams dedicated to quickly identifying and addressing safety issues at each manufacturing location. Our Company enforces a comprehensive set of health and safety guidelines that all employees across every site must rigorously follow.

In light of the pandemic, we intensified our focus on these protocols. Beyond adhering to governmental regulations, weve instituted regular sanitization processes and enforced proper social distancing measures. Proactive steps, including routine employee health checks and controlled access via oximeter and thermal screenings, were promptly put in place. Moreover, we initiated wellness programs for our employees and their families, aimed at fostering resilience, adapting to change, and improving overall well-being during these trying times.

CAUTIONARY STATEMENT

The statements made in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations may be "forward-looking statements" within the meaning of applicable securities laws & regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand-supply and price conditions in the domestic & overseas markets in which the Company operates, changes in the government regulations, tax laws & other statutes & other incidental factors.

For and on behalf of the Board of	Directors of
Megatherm Induction Limited
Shesadri Bhusan Chanda	Satadri Chanda
Chairman & Managing Director	Director
DIN: 00961593	DIN:02302312
	Kolkata : 28th May, 2024