raasi refractories ltd Management discussions

Company overview:

Management presents herein the industry overview, opportunities and threats, initiatives by the Company and its overall strategy for the future. This outlook is based on the assessment of current business environment, which may vary due to the future economic and other developments both in India and abroad.

A. Industry Structure & Development

Fortune of your Company which is in refractory industry is directly linked to the performance of Steel Industry as it is the largest consumer of refractory products. The other consumers of refractory products are Cement, Copper, Glass, Aluminum and Petro-chemical industries etc. which are witnessing reasonable growth, all these factors will have a very positive impact on the growth of refractory industry in near future.

Products of Raasi Refractories are manufactured at its manufacturing facility at Hyderabad, in Telangana. The Company has ongoing programs for improving efficiency and effectiveness of its manufacturing processes, raw material cost, energy conservation, control over working capital and to produce special refractories at low cost so as to add maximum value to the customers. Energy efficient installations have been made at the factory. Best in class safety measures and processes have been put in place and improved upon at the factory and all working sites.

B. Opportunities & Threats Opportunities

The refractories industry largely follows trends set by its main driver, the steel industry. Iron and steel production is responsible for up to 70 % of the total demand for Refractories; therefore the profitability of the refractories industry as a whole is strongly influenced by steel production levels and steel plant investments.

Consequent technology advancement in steel making processes, major opportunity lies in manufacturing of continuous casting refractories, special monolithics viz. Castables; Plastic based ramming mass and gunning materials, etc. The Company is having its vision in line to this technology change. Demand for refractories has increased substantially due to increased steel and Aluminum production in India.

Threats

Competition in refractory industry is building up. Lot of consolidation and re-organization is taking place in refractory industry. Input costs mainly the increase in cost of raw materials is also a cause of concern for refractory industry. Cost reduction measures will play an important role in keeping the unit viable in the face of stiff competition. Your Company has taken several cost reduction measures for improving operations to bring down the cost of production and is hopeful to successfully meet the challenges of competition. Further the company is continuously pursuing for some large orders from the consumers in India.

Your Company is taking steps to take on the challenges and strengthen its brand image in neighboring states as well as in Telangana where the company is already a brand leader. Power remains another major threat to the industry. Severe power shortage and high cost of power in the State has rendered most of the factories very non remunerative.

C. Segment or Product Wise Performance

Your company operates in only one business segment and one product viz., refractories.

D. Outlook

Market outlook in future for refractory seems good. Per capita consumption of steel in India isbeing far below in comparison to the international standards. It is expected that the demand for increase of domestic steel production will be robust and this will have positive impact in refractory consumption. Growth in real estate and consumer durable sector will lead to increase in cement, glass and special alloys production. This will also necessitate use of better quality refractories. Your Company’s effort to keep pace with changing technology which offer superior product will ensure not only retention of existing business but also increase the business volume wherever such products are used.

E. Risks & Concern

Indian refractory manufacturers are dependent on China for key raw materials like Bauxite and Magnesia. Clogged logistical network and lack of transportation facilities are taking toll on timely delivery of raw material. It is very difficult to comment on forecast, even to comment on short term outlook is difficult because of Government’s action which are changing the situation on day to day basis.

Another major area of concern is availability of adequately qualified and competent workforce. The Industry is facing countless difficulties both in terms of increasing raw material and other input costs as well as the availability, further the negotiating power of the refractory makers is poor mainly due to their size as it caters to the industries which is far bigger in sizes like aluminum, steel, cement etc.

F. Internal control systems and their adequacy

Your Company has adequate internal Financial controls commensurate with its size and nature of business which are reviewed periodically. The internal auditors of the Company conduct regular audits as per approved plan and the Audit Committee reviews periodically the adequacy and effectiveness of internal control systems and takes steps for corrective measures whenever required.

G. Discussion on Financial Performance with respect to Operational Performance

Your Company’s gross turnover has declined to Rs.5906.52 lacs against a turnover of Rs.6289.30 lacs achieved during the previous financial year. The Net profit has declined to Rs.86.43 lacs as against profit of Rs.115.06 lacs during previous year. The Company’s profit before tax amounts to Rs.103.80 lacs as against Rs.56.41 lacs for the previous year.

H. Material developments in Human Resources/lndustrial Relations front including number of people employed

It is your Company’s belief that the competence and commitment of its people are key drivers of competitive advantage enabling the Company to compete successfully in the market place. Your Company endeavors to strengthen organizational culture in order to attract and retain the best talent and bring out the best in people.

CAUTIONARY STATEMENT:

Statements in the Management Discussion and Analysis describing the Company’s objective, projections, estimates, 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 Company’s operations include, among others, 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 incidental factors.

	By order of the Board
	For RAASI REFRACTORIES UMITED
	Sd/-	Sd /-
	VENKANNAKOIMDA	LAXMAIAH KONDA
Place : Hyderabad	Director	Managing Director
Date : 02-09-2023	DIN: 05119181	DIN: 00573281