Nitin Castings Ltd Management Discussions.

Industry Structure and Development

The Managements Discussion and Analysis ("MD&A") summarizes the financials and relays managements insights into the companys performance. This Management Discussion and Analysis Report of Nitin Castings Limited, for the year ended on March 31, 2020 contains financial highlights but does not contain the complete financial statements of the Company. This should be read in conjunction with the Companys audited financial statements, the schedules and notes thereto and the other information included elsewhere in the Annual Report. Statements in the Management Discussion and Analysis Report describing the Companys objectives, projections, estimates and expectations may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results might differ materially from those expressed or implied. MD&A is headed towards providing a narrative explanation of a companys financial statements that enables investors to see the company through the eyes of management and to enhance financial disclosure.

Opportunities :

In the future there are more opportunities and people have understood that they would focus on technology as new opportunities are going to provide growth. The growth is expected to come from agriculture, infrastructure, water pipes, wind turbines, automotive, railways, defense and oil & gas sectors, Emerging opportunities are investment in infrastructure, in oil and gas within the country, mining sector, railways and defense. These sectors will drive the future of the industry. The strong demand conditions coupled with the availability of young and skilled workforces and abundant mineral resources in India has also been a crucial reason behind the competitive mind set of Indian steel industries which has also been an inducement to expand the plant capacities. Further, the Indian steel industries are also penetrating the rural market by expanding their distribution networks in the rural areas.

Re-implementation of Public Procurement Policy, Pradhan Mantri MUDRA Yojana, Make in India, Startup India, and Skill India initiatives and recent initiative of Aatmanirbhar Bharat and Vocal to Local would extend great help in the growth of the MSME sector in the country.

THREATS:

• Competition in the market is intense and is likely to remain so in the foreseeable future. Most international players have identified India as a focus market. Competitions response to rising cost of goods might be slower than the Company, putting pressure on volume growth.

• The main challenge causing the industry down is lack of resources for technology upgradation and access to quality manpower as the availability of skilled manpower and the retention of managerial talent have become a key issue.

• The commodity sector is highly volatile and changes in the cycle are hardly predictable. It thus becomes imperative to improve product mix and diversify business over long gestation industrial sectors.

• Additive manufacturing techniques are no longer in their infancy and are finding increased application in the production of metallic parts. It is necessary to track changes of this unfolding technology and develop similar capabilities.

• Since most of the castings manufacturing units fall under small and medium enterprises (SMEs), they cannot use advanced technological equipment or automation due to high costs, thus limiting their marketing strength. It is challenging for them to sustain their position in the global marketplace. The inability to meet the domestic demand for castings and to supply quality products to the global market acts as a huge barrier for the industry to grow further.

Risk and Concerns

The factors like slowdown in the infrastructure investment can lead to lower order intake. The other factor like power shortages and its cost; increase in labour cost and transportation cost due to petrol/diesel price increase etc. could contribute to inflation. The Company considers good corporate governance as a pre-requisite for meeting the needs and aspiration of its shareholders. The main risk to the Company which may arise is mainly due to Government policies and decisions, Fluctuations in prices of Raw materials, Exchange rate fluctuations, Industry demand etc.

ECONOMY AND MARKET RISK:

The Automotive industry plays a major role in enabling economic growth, any slowdown in the overall economy will affect demand. COVID-19 pandemic has brought-out downfall into auto industries which will definitely affect the performance of the Company, however, your Company not much more dependent on automotive industry, thus, might not be significantly affected on the performance of the Company. However, your Company has been developing its exports countering this risk. The Company continuously evaluates its marketing and sales strategy and alters its sales plan in terms of products to be manufactured and markets to be served and keeps itself current with the changing environment.

SEGMENT OR PRODUCT WISE PERFORMANCE

The Company is operating in one segment known as Alloys Steel Castings in the range of static and centrifugal. The product wise comparison is not possible as every product is specific as per order and to the size, shape and alloy mix. Therefore, performance of the Company has to be seen in overall manner and the Company has done reasonably well in the present scenario.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has developed adequate internal control system commensurate to its size and business. The Company has appointed Internal Auditors, an outside independent agency to conduct the internal audit to ensure adequacy of internal control system, compliance of rules and regulations of the country and adherence to the management policies.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the year under review, your Company has registered revenue of Rs. 6,523.91 Lakhs as against Rs. 7,558.23 Lakhs in the previous year. The Profit before taxes in the current year is Rs. 166.32 Lakhs as against Rs. 331.56 Lakhs in the previous year and profit after taxes are Rs. 132.61 Lakhs as against Rs. 233.72 Lakhs in the previous year.

COMPLIANCE WITH INDIAN ACCOUNTING STANDARDS (IND-AS)

In the preparation of the financial statements, the Company has followed the Indian Accounting Standards (Ind-AS) notified by Ministry of Corporate Affairs from time to time. The significant accounting policies which are consistently applied have been set out in the Notes to the Financial Statements.

ENVIRONMENT PROTECTION AND POLLUTION CONTROL

The Company has always been socially conscious corporate, and has always carried forward all its operations and procedures following environment friendly norms with all necessary clearances.

Your Company has taken the following steps towards environment and Ecological balance in manufacturing of Castings.

Continuous plantation activities in and around the Factory as usual has helped in keeping the environment pollution free.

GOAL

The main goal of the company to set and achieve highest standard in performance and quality. The goal is to align all sections of the organization internally to generate even better customer value propositions and returns for share holders. The goal is also to set and maintain high safety and environment norms for the company.

HUMAN RESOURCES

Human resources are integral and important part for the Company. It has put in place sound policies for the growth and progress of its employees. During the year, Company maintained harmonious and cordial industrial relations. No man days were lost due to strike, lock out etc.

DISCLOSURE BY THE SENIOR MANAGEMENT PERSONNEL I.E. ONE LEVEL BELOW THE BOARD INCLUDING ALL HODS

None of the Senior Management Personnel has financial and commercial transaction with the Company, where they have personal interest that would have a potential conflict with the interest of the Company at large.

CAUTIONARY STATEMENT

The statements in this management discussion and analysis describing the outlook may be "forward looking statement" within the meaning of applicable laws and regulations. Actual result might differ substantially or materially from those expected due to the developments that could affect the companys operations. The factors like significant change in political and economic environment, tax laws, litigation, technology, fluctuations in material cost etc. may deviate the outlook and result.