Your directors have pleasure in presenting the Management Discussion and Analysis
report for the year ended on 31st March 2023.
INDUSTRY STRUCTURE AND DEVELOPMENT:
Steel is crucial to the development of any modern economy and is considered to be the
backbone of human civilization. The level of per capita consumption of steel is treated as
an important index of the level of socio-economic development and living standards of the
people in any country. It is a product of a large and technologically complex industry
having strong forward and backward linkages in terms of material flows and income
generation. All major industrial economies are characterized by the existence of a strong
steel industry and the growth of many of these economies has been largely shaped by the
strength of their steel industries in their initial stages of development.
SEGMENTWISE PERFORMANCE:
The Company trades in a single business segment i.e. Trading of Steel and Steel
Products. In view of sluggish global demand, the Company repositioned some of its supplies
to favourable markets. The company has passed through a very unusual phase, any worthwhile
comparison of performance between two periods would be inconclusive. There is, yet,
considerable scope for improvement.
OPPORTUNITIES AND THREATS:
India is the only major steel consuming market globally. As of 2017, India is the
worlds third largest producer of crude steel (up from eighth spot in 2003). Indias steel
production in 2017 stood at 101.4 MT.
Easy availability of low-cost manpower and presence of abundant iron ore reserves make
India competitive in the global set up. India is home to the fifth-highest reserves of
iron ore in the world.
Steel demand in India is expected to grow above 7.5% in the current as well as next
year, according to the World Steel Association. Trading players in steel industry have
faced cascading effects in the steel manufacturing industry. The major threats to steel
industry are:
? Slow Industry Growth
? Technological Change
? Price Sensitivity and demand volatility
? Recession in other countries resulting in dumping of materials.
FINANCIAL HIGHLIGHTS:
Paid up Share Capital of the Company as on 31 March 2023, stands at 71,70,000 divided
into 7,17,000
number of equity Shares of Rs. 10/- each fully paid up. Income from operation stood at
Rs. 16,66,32,226/-
for fiscal 2023. Profit/Loss before Taxes of fiscal 2023 was Rs. 15,70,201/-.
Basic Earnings per Share for fiscal 2023 was Rs (8.13).
Net Worth of the company stood at Rs. 9,99,20,354/- as on March 2023.
STRENGTH:
The strengths of Indias steel industry include: abundant availability of iron ore and
coal; low labour costs, abundant manpower, mature production base and supporting
government policy, particularly towards MSME sector. However, the major weakness include
unscientific mining and production, low productivity, energy inefficiency, dependence on
coal imports despite huge reserves, inadequate infrastructure, regulatory hurdles etc.
India has emerged as the 2nd Largest Producer of Crude Steel in the world: Union
Minister of Steel & Civil Aviation Shri Jyotiraditya M. Scindia
Union Minister of Steel and Civil Aviation, Sh. Jyotiraditya M. Scindia held a press
conference on the theme 9-years of Governments "Seva, Sushasan and Gareeb
kalyan" focusing on the Steel sector, at Rajiv Gandhi Bhawan, New Delhi
The Minister started his address by highlighting the importance of Steel sector in
ensuring the pragati (growth) and vikas (development) of the country. "India
currently ranks as the Worlds 2nd Largest Producer of Crude Steel, surpassing Japan in
2018", the minister said, while mentioning the remarkable growth recorded by Indias
steel industry.
Highlighting achievements of the government in the last 9 years, he mentioned that
India stands as a net exporter of steel witnessing an export of 6.72 MT of finished steel
against the import of 6.02 MT in 2022-23. The country was a net importer of steel in
2014-15 with 9.32 MT imports Vis-?-vis the export of 5.59 MT. He also mentioned the
progress made by the steel sector from pre-2014-15 to 2022-23 which can be seen in the
table mentioned below
| Key parameters |
FY 2014-15 |
FY 2022-23 |
% increase |
| Crude steel Capacity (MT) |
109.85 |
160.3 |
46% |
| Crude steel Production (MT) |
88.98 |
126.26 |
42% |
| Total Finished Steel Production (MT) |
81.86 |
122.28 |
49% |
| Consumption (MT) |
76.99 |
119.86 |
57% |
| Per capita steel consumption (in Kg) |
60.8 |
86.7 |
43% |
In the past 9 years (2014-15 to 2022-23), Steel CPSEs viz. SAIL, NMDC, MOIL, KIOCL,
MSTC, and MECON, used 90,273.88 crores of their own resources for CAPEX and paid a
dividend to the Government of India to the tune of 21,204.18 crores
‘Brand India labeling is an important exercise to differentiate Indian
quality steel from the others. The minister in this regard said that the Ministry of Steel
has undertaken the initiative of Made in India branding of Steel produced in the country
and major Steel Producers havea already come together in this direction. The Ministry of
Steel has also on-boarded itself on the PM Gati Shakti National Master Plan Portal and
identified 22 critical infrastructure gaps and is pursuing it with the Ministry of Road
Transport and Highways, Ministry of Railways, Ministry of Ports, Shipping and Waterways.
RISK AND CONCERNS:
Your company is working essentially in domestic market place. However since the Company
is into trading activity It is attributed to all the risk and concerns attached with the
trading industries as a whole. Also any downward movement in prices in manufacturing
industry has a direct effect on the revenues of the Company, as margin drops. It is
essential to correctly assess the risk in each segment so that the risk is mitigated
before it becomes a possible threat. General risk segments are statutory compliances,
economy, financials, Government policies, market related, operational, products and
technology etc., The management has a rapid review of likely risk areas with the objective
to define a framework for identification, evaluation and mitigating the risk in the
decision making process and to encourage proactive management and not reactive management.
GOVERNMENT INITIATIVES:
Some of the other recent Government initiatives in this sector are as follows:
National Steel Policy (NSP) 2017: The new Steel Policy enshrines the long-term
vision of the Government to give impetus to the steel sector.
? It seeks to enhance domestic steel consumption and ensure high-quality steel
production and create a technologically advanced and globally competitive steel industry.
? The policy also envisages domestically meeting the entire demand for high-grade
automotive steel, electrical steel, special steels, and alloys for strategic applications
and increasing domestic availability of washed coking coal to reduce import dependence on
coking coal from about 85% to around 65% by 2030-31
The Government has also announced a policy for providing preference to domestically
manufactured Iron & Steel products in Government procurement.
The government has also approved a Production-linked Incentive (PLI) Scheme for
Specialty Steel. It is expected that specialty steel production will become 42 million
tonnes by the end of 2026-27.
The Ministry of Steel is facilitating the setting up of an industry-driven Steel
Research and Technology Mission of India (SRTMI) in association with the public and
private sector steel companies to spearhead research and development activities in the
iron and steel industry.
The Government of India raised import duty on most steel items twice, each time by
2.5%, and imposed measures including anti-dumping and safeguard duties on iron and steel
items.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The internal control system is looked after by Directors themselves, who also looked
after the day to day affairs to ensure compliances of guide lines and policies adhere to
the management instructions and policies to ensure improvements in the system. The
Internal Audit reports are regularly reviewed by the management. The Company has proper
and adequate internal control system commensurate with the size of the business operations
geared towards achieving efficiency in its various business operations, safeguarding
assets, optimum utilization of resources and compliance with statutory regulations.
Efforts for continued improvement of internal control system are being consistently made
in this regard.
HUMAN RESOURCES VIS-?-VIS INDUSTRIAL RELATIONS:
The Companys Human Resources philosophy is to establish and build a strong performance
and competency driven culture with greater sense of accountability and responsibility. The
Company has taken pragmatic steps for strengthening organizational competency through
involvement and development of employees as well as installing effective systems for
improving the productivity, equality and accountability at functional levels. With the
changing and turbulent business scenario, the Companys basic focus is to upgrade the
skill and knowledge level of the existing human assets to the required level by providing
appropriate leadership at all levels motivating them to face the hard facts of business,
inculcating the attitude for speed of action and taking responsibilities. In order to keep
the employees skill, knowledge and business facilities updated, ongoing in house and
external training is provided to the employees at all levels. The effort to rationalize
and streamline the workforce is a continuous process. The industrial relations scenario
remained harmonious throughout the year.
CAUTIONARY STATEMENT:
Statements in the Management Discussion and Analysis describing the Companys
objectives, projections, estimates and expectations may be ‘forward looking
statements within the meaning of applicable securities laws and regulations. Actual
results could differ materially 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 and
overseas markets in which the Company operates changes in the Government regulations, tax
laws, and other statutes and other incidental factors.
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