mideast integrated steels ltd share price Management discussions

INDUSTRY STRUCTURE AND DEVELOPMENT:

Global steel prices continued to remain volatile in April 2023 due to a combination of local and global factors: a) The Russia-Ukraine conflict and its many-sided repercussions, from raw material supply to logistics to uncertainties in trade flows to the growing impact of sanctions. Fluctuations in prices of major raw materials for steel making which showed an upward bias in the first quarter of 2023. b) Stubbornly high inflation across geographies, tighter monetary policies, and turmoil in financial markets in view of bank failures in the USA, weighing on outlook for the industry. c) Developments in the Chinese market: The economic recovery remains patchy and may be struggling to sustain momentum though Beijing has dropped its Covid Zero policy in a move to boost its flagging economy. d) Euro zone manufacturing still remains in troubled water with factories reporting a fall in demand for goods for the eleventh straight month. e) Supply constraints pushing up prices of the steel in the USA in view of steady demand for the commodity.

PERFORMANCE HIGHLIGHTS - INDIAN STEEL INDUSTRY

India remains a bright spot in the global steel industry and the steel demand in the country is expected to show a healthy growth of 7.3% and 6.2% in 2023 and 2024 compared to a global growth of 2.3% and 1.7%, respectively, according to Short Range Outlook of The World Steel Association. The world steel forecast comes against the backdrop of the countrys macro-economic fundamentals like manufacturing and services PMIs, IIP, core infrastructure growth, remaining steady and strong and it is expected to register a GDP growth ranging from 6 to 6.5% in fiscal 2023-24, as estimated by different agencies including the RBI, IMF & World.

OPPORTUNITY AND THREATS

With an accelerated push from the policies proposed by the new Government regarding steel intensive segments such as infrastructure, capital goods and construction, stepping up capital expenditure, the outlook for the steel industry remains bright because of high export potential to European and South East Asia markets.

Increased competition from domestic and international steel companies located in India Volatility in Coking Coal Prices and Exchange Rate and rising Crude Oil prices, Volatility in Steel Prices, Inflationary pressure.

OUTLOOK

GDP: As per provisional estimates of the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, Real Gross Domestic Product (GDP) at Constant (2011-12)Prices in Q3 2022- 23 is estimated to have attained a level of ? 40.19 lakh crore, as against ?38.51 lakh crore in Q3 2021-22, showing a growth of 4.4 per cent. Barring Manufacturing, all the other sectors reported growth during this period, with Trade, Hotels, Transport, Communications and Services related to Broadcasting sector reporting the highest growth(9.7%) and Manufacturing sector, the lowest (-1.1%).

Industrial Production: Provisional CSO data show that the overall Index of Industrial Production (IIP) for financial year 2022-23 rose by 5.1% over same period of last year, encouraged by similar high levels of

growth trends noted for the various sectors/subsectors.

Infrastructure Growth: Provisional data released by the DPIIT indicate that the Index for the Eight Core Infrastructure Industries saw a growth of 7.6% during financial year 2022-23 with all the sectors, barring only crude oil, reporting increase in output.

Inflation: The rate of inflation based on Consumer Price Index stood at 4.70% and that on Wholesale Price Index stood at -0.92% in April 2023. Both the CPI inflation and WPI inflation came down compared with the previous month.

RISK AND CONCERNS

Risk is integral part of any Industry and Iron Industry is no exception. There is always risk and concern with respect to the prices of steel in the market due to government policies and other regulations. The steel industry internally, concerns on delays in the ramping up of production, due to initial stabilization of thenew mills. Further, higher capital related charges on account of incremental Depreciation and Interest on new facilities have also increased expenses.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has adequate and efficient Internal Control Systems for achieving the following business objectives of the Company: Efficiency of operations. Judicious utilization and protection of resources. Accuracy and promptness of financial reporting. Compliance with the laid down policies and procedures. Compliance with various laws and regulations.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE.

Standalone Operations:

During the year under review, the Companys net revenue from operations was Rs. 170.02 Million as against Rs. 1389.08 Million in the previous financial year. The Companys Profit/(Loss) before Depreciation Interest and Tax ("PBDIT") is Rs. (1046.17) Million in the financial year ended 31st March, 2023 as opposed to PBDIT of Rs 1708.77 Million in the immediate previous financial year.

Taking into account depreciation and interest cost, profit/ (Loss) before tax (PBT) stood at Rs. (1441.20) Million as against Rs. 1155.36 Million in the previous financial year and total comprehensive income for the year was Rs. (1441.20) Million as against Rs. 1155.36 Million in the previous financial year.

HUMAN RESOURCE AND INDUSTRIAL RELATIONS FRONT

The Human Resources department is committed to recruiting strong candidates and this commitment involves discussing the needs of a department, advising on recruitment strategies, participating in the selection of the right candidate, checking references and making job offers. As part of this process, Human Resources analyzes data such as the number of vacant positions, the number of positions filled and the time it took to fill positions. Tracking this information helps to ensure quality of service and leads to a better understanding of the time required to fill a position.

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefore, including details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof.

DETAILS OF SIGNIFICANT CHANGES IN THE KEY FINANCIAL RATIOS: The details of significant changes in the key financial ratios during financial year 2022-23 as compared to the immediately previous financial year 2021-22 are given below:

Particulars	2022-23	2021-22	Change in %
Debtor Turnover	Not calculated as no credit sale made		-
Interest Coverage Ratio	-	-	-
Current Ratio	0.55	0.65	-13%
Debt Equity Ratio	1.35	1.08	25.44%
Net Profit Margin (%)	-8.48	0.83	(1121.26)
Return on Net Worth (%)	(0.30)	0.18	-262%