Mideast Integrated Steels Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENT:

The global steel industry, witnessed sharp decline in both steel demand and production and a sharper-than- expected recovery also. The short-term disruptions, however, inflicted significant pain on economies where the manufacturing sector was already under enormous stress. The recovery of steel consuming industries such as automobiles has been faster than expected. As economies around the world build back, infrastructure will be a key enabler for growth.

PERFORMANCE HIGHLIGHTS - INDIAN STEEL INDUSTRY

Global steel production in CY 2020 marginally dropped by 0.9% to 1,864 MnT from 1,880 MnT in CY 2019 (Source: World Steel Association). Steel demand fell by 0.2% to 1,771.8 MnT from 1,775 MnT in CY 2019. The steel pricing scenario has remained buoyant since Q4 FY 2021-22, which has seen highs not witnessed in over a decade. In CY 2020, average global steel price was about US$ 582/tonne. However, as CY 2021 commenced, average price in the first five months jumped to US$ 883/tonne.

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, theoutlook 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

China, the largest steel making country, is limiting production, restricted exports, encouraging importof semi-finished steel and is focusing on domestic consumption. This means that excessive supply and dumping experienced earlier from China are expected to be under control. Similarly, across the world, the underinvestment for past several years on infrastructure is now an opportunity to stimulate economic activity with huge spending on infrastructure through massive fiscal stimulus. This presents a case for sustained and growing demand. However, on the supply side the increase is not proportionate, with rising scrutiny on Environmental, Social and Governance (ESG) aspects. In light of this, steel demand and pricing are expected to remain firm in the near-tomedium term, with bouts of short-term corrections

RISK AND CONCERNS

Risk is integral part of any Industry and Iron Industry is no exception. There is always risk and concernwith 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. 510.30million as against Rs. 170.02million in the previous financial year. The Companys Profit/(Loss) before Depreciation Interest and Tax ("PBDIT") is Rs. (998.27) Million in the financial year ended 31st March, 2024 as opposed to PBDIT of Rs. (1437.52) Million in the immediate previous financial year.

Taking into account depreciation and interest cost, profit/ (Loss) before tax (PBT) stood at Rs. 589.39million as against Rs. (1441.20) Million in the previous financial year and total comprehensive income for the year was Rs. 600.15 million as against Rs. (1441.20) 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, includingdetails 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 2023-24 as compared to the immediately previous financial year 2022-23 are given below: