Rama Steel Tubes Ltd Management Discussions.

WORLD ECONOMY

Global economic growth exhibited positive outlook as the United States and China trade relations are expected to improve over the coming period. Key risks like weak trade growth, global financial tightening and slowed manufacturing growth have contributed towards lower than expected economic growth while the development prospects are expected to pick up in 2020. As per International Monetary Fund (IMF), world economic output growth rate is predicted to be slower from 3.6% in 2018 to 3.2% in 2019 before growing to 3.5% in 2020.

Source: IMFs World Economic Outlook report- July 2019

Reduced consumer spending and weakening business activities across economies combined with Chinas local regulatory tightening affected the growth for emerging markets, which is expected to decline from 4.5% in 2018 to 4.1% in 2019. However, with positive market sentiment along with adequate fiscal control and effective financial measures, the growth is expected to reach 4.7% in 2020. Subdued inflation pressure, reduced commodity prices and the launch of new fuel emission standards for diesel-powered vehicles in Europe has led to deterioration in growth of the advanced economies, which is further expected to decline from 2.2% in 2018 to 1.8% in 2019 and 1.7% in 2020.

INDIAN ECONOMY

Recent Global economic slowdown has also stressed Indias economic growth, as reflected in slower than expected growth in Indian GDP. As per Economy Survey Report July 2019, Indian GDP grew slower by 6.8% in FY18-19 as compared to 7.2% in FY17-18 and is projected to grow by 7.0% in FY 2019-20. IMF also predicts the Indian economy growth of 7.0% in FY 2019-20 backed by anticipated pickup in investments and acceleration in consumption. RBI is also implementing adequate fiscal and monetary measures to revive the growth process in India for achieving a level up performance. India is envisaged to be the fastest growing economy; all set to become a USD 3 trillion economy by the end of FY19-20 and USD 5.0 trillion economy by FY24-25. Robust push for technology, growth of social infrastructure, digitisation, reducing pollution, unemployment and other major issues faced by the economy have been envisioned in the Union Budget for FY19-20.

As the short term effects of GST (Goods & Services Tax) and demonetisation subside, Indian economy is now expected to achieve faster growth. The growth will be further supported by centrally sponsored schemes like Make in India, Digital India, Skill India, Rural electrification programs, Smart Cities Mission, Impetus on strong infrastructural growth, reduced inflation, sound growth in exports and private investments. Such robust government intervention has also improved Indias stand in World Banks Ease of Doing Business Rankings by recording a jump of 23 positions to 77th rank among 190 countries. Increasing FDI, consumer expenditure, upliftment of low income masses to the middle class level and constant upgradation of infrastructure and other amenities would enforce an all-round development in India.

GLOBAL STEEL TUBES & PIPES INDUSTRY OUTLOOK

Globally steel industry has been ever-growing at a considerable pace and is expected to experience continuous growth going forward. As per the World Steel Association (WSA), global crude steel production stood at 1,808.6 million tonnes (MT) in 2018, up by 4.5% over that of 2017. The major contributors namely China, India and Japan registered production growth of 6.6%, 4.9% and 0.4% respectively in 2018, while the European Union registered 0.3% contraction in steel production in 2018.

Source: World Steel in Figures report, 2019

Steel demand in the developed economies grew by 1.8% in 2018 following a resilient 3.1% growth in 2017. In the United States, steel demand was driven by government-led fiscal stimulus that resulted in high confidence and a robust job market in the country. With waning effects of fiscal measures taken and a tightening monetary policy combined with moderation in construction and manufacturing growth, oil and gas exploration and infrastructure spending, the demand in developed economies is expected to further decelerate to 0.3% in 2019 and 0.7% in 2020.

Steel demand in emerging and developing economies excluding China is expected to grow by 2.9% and 4.6% in 2019 and 2020 respectively, making it the fastest growing region in the global steel industry. Certain internal and external uncertainties such as trade and tari_ related tensions along with volatile currency movements pose risk towards the growth expectations for the emerging markets despite resilient growth expected in the coming years.

INDIAN STEEL INDUSTRY

Rapid rise in production has resulted in India becoming the 2nd largest producer of crude steel. India has also being the third largest finished steel consumer during 2018, after US & China. The country has also been the largest producer of Sponge Iron in the world with an annual capacity of 49.6 MT in FY17-18. In FY18-19, production of total finished steel (alloy + non alloy) stood at 131.57 MT, representing a growth of 3.7% over previous year. India has also been an important producer of pig iron. Post-liberalization, with setting up several units in the private sector, not only imports have drastically reduced but also India has turned out to be a net exporter of pig iron. Production of Pig Iron in FY18-19 was 6.06 MT, a growth of 5.7% over last year. The private sector accounted for 90% of total production of pig iron in the country in FY18-19. The total Sponge Iron production in the country stood at 33.04 MT in FY18-19, out of which coal based route accounted for 79%.

India has emerged as a net exporter of total finished steel in FY16-17 and FY17-18 but has become a net importer in FY18-19. For the year under review, Indian Steel industry witnessed 0.72 MT exports and 1.12 MT of Imports. As per the World Steel Report, the wide range of continuing infrastructure projects is likely to support growth in Indian steel demand above 7% in both 2019 and 2020. The liberalization of industrial policy and other initiatives taken by the Government have given a definite impetus for entry, participation and growth of the private sector in the steel industry. While the existing units are being modernized and expanded, a large number of new steel plants have also come up in different parts of the country. In the last few years, the rapid growth in steel demand has also prompted domestic entrepreneurs to set up Greenfield projects in different states of the country.

Source: worldsteel.org/media-centre/press-releases/2019/worldsteel-short-range-outlook-april-2019.html,

Government Initiatives: Centrally sponsored schemes such as Smart City Mission, Housing for All, improvement in the areas like transport & communication, expansion in electricity generating capacity especially using solar energy, urban infrastructures like metro rail, malls, airports etc. are expected to boost growth in the steel industry, some of them are discussed as follows:

National Steel Policy 2017: National Steel Policy has been formulated by the Ministry of Steel, which aims to achieve 300 MT of steelmaking capacity and increase per capita steel consumption to 160 KGs by 2030-31. This would translate into additional investments of _10 lakh crore (USD 156.08 billion). Since the roll out of this New Steel Policy in May 2017, an estimated savings of _5,000 crore of foreign exchange outflow have been achieved as on 10th June 2018. Also the Domestically Manufactured Iron & Steel Products (DMI&SP) policy, with the aim that government tenders to give preference to domestically manufactured steel and iron products has resulted in net savings of foreign exchange outflow to the tune of _8,000 crore as on 22nd January 2019.

R&D Promotion: The scheme for the promotion of R&D (research and development) in the iron and steel sector has been continued under the 14th Finance Commission (FY19-20). Under the scheme, 26 projects have been approved with financial assistance of _161 crore (USD 24.98 million) from Ministry of Steel. The Ministry of Steel has been actively participating in the Impacting Research Innovation & Technology (IMPRINT) & Uchchatar Avishkar Yojana (UAY) Schemes launched by Ministry of Human Resource Development. IMPRINT scheme aims to solve major engineering and technology challenges and UAY has been promoting industry sponsored, outcome-oriented research projects. Further Ministry of Steel has set up an industry driven institutional mechanism under Steel Research & Technology Mission of India (SRTMI) with an initial corpus of USD 30.89 million. The institute would facilitate joint collaborative research projects in the sector.

Change in Custom Duty: In Union Budget 2019-20, customs duty on stainless steel products increased by 2.5% to 7.5%. It was also proposed to increase duty on other alloy steel and wire of other alloy steel (other than INVAR) to 7.5% from 5%. The increase in custom duty will provide boost to domestic steel industry. However, the custom duty on MgO coated cold rolled steel coils, Hot rolled coils, Hot rolled annealed and pickled coils etc. has been reduced to 2.5% from 5%.

Source: IBEF report on Steel industry 2019, India Budget 2019-20,btvi.in/ news/india-saved-rs-5-000-cr-forex-post-new-steel-policy--secretary/78462, http://pib.nic.in/PressReleaseIframePage.aspxPRID=1560947

GLOBAL STEEL TUBES & PIPES INDUSTRY OUTLOOK

Steel tubes and pipes application areas include transport, energy, buildings and infrastructures, regular household appliances such as fridges, heating system and plumbing systems. Infrastructure sector includes building requirements like pipe bollards and hand rails also use steel tubes and pipes. As per the World steel report, total exports of Steel tubes and fittings stood at 41.3 MT in 2018, declined by 1.44 % from 41.9 MT in 2017. Oil & gas sector is the biggest consumer of steel pipes globally. Heightened activity in both, the global energy markets is expected to trigger sustained demand for steel pipes. Going forward, it is estimated that global Stainless Steel Tubes and Pipes industry will continue rising with a stable growth rate. Also with the rise in investments, the production and sales of Stainless Steel Tubes and Pipes products would also grow at a considerable rate.

Source: industryreports24.com/32197/stainless-steel-pipes-and-tubes-market-size-status-and-demand-outlook-2019-to-2025/

INDIAN STEEL TUBES & PIPES INDUSTRY OUTLOOK

Indian steel tubes and pipes market is primarily an un-organised market. The tubes and pipes exports contributed 10% of total steel exports amounting to 1.1 Million Metric Tonnes (MT) in 2018. Nigeria and the United States contributed for 14% and 11% of Indias tubes and pipes exports accounting for 0.14 MMT and for 0.11 MMT respectively in 2018. Areas like Oil & Gas exploration, production & distribution and Infrastructure projects such as railways, ports and airports, water projects, residential construction, consumer durables etc. involve huge requirement of steel tubes and pipes. Demographic factors such as higher disposable income, rise in purchasing power, increasing workforce, would also enhance sales in automobile and durables sector which in turn will lead to higher demand for steel tubes and pipes.

The industry has witnessed growth resulting out of product evolution like hollow pipes for infrastructure. Gradually this segment has grown manifold replacing angles, channels, wood, etc. With industry now focusing on increasing numerous applications, new products are being explored and added continuously. Further, ERW steel pipe industry is leveraging on the growth from its increased usage in unconventional sectors such as construction of malls, airports, bus body, metros, gym equipment, furniture, etc. The government push for expanding network of highways, railways and airports and related Upgradation activities providing huge scope for steel tubes and pipe industry. As per 2019 Union Budget, the Government of India is likely to invest up to _1 trillion on several key government backed infrastructure projects (renewable energy, metro, irrigation and urban development) and social projects (Atal Mission for Rejuvenation and Urban-AMRUT, National Rural Drinking Water Programme-NRDWM) during FY19-20. The execution of these projects will provide demand impetus for ERW pipes.

Source: trade.gov/steel/countries/pdfs/exports-India.pdf, May 2019

Major growth drivers for Steel Tubes and Pipes Industry: The major growth drivers relating to Government initiatives that are supposed to augment the steel tubes and pipes industry are discussed as follows:

Housing for All by 2022 MS Black Tubes and Hollow Section for Roofing, Rails, Grills, Gate etc. Tubes and Pipes used for prefab home and shelter
Smart Cities Large hollow section pipes and poles used in infrastructure projects, street lightings, sewage etc.
24x7 Electricity - DDUGJY (Deen Dayal Upad- hyaya Gram JyotiYojana) / Saubhagya Yojna Power Transmission and Distribution structures and poles
National Highway Development Programme Road crash barrier for highway safety
Renewable Energy Target 100 GW Solar mounting structures used for supporting solar pannels
PM Krishi Sanchar Yojna Casing pipes and galvanised pipes for boring and tubewells
Swachh Bharat Abhiyan Hollow section used in prefab toilets

COMPANY OVERVIEW

Rama Steel Tubes Limited (the Company) is a leading player engaged in the manufacturing and trading of Steel Tubes & Pipes and Rigid PVC (Poly Vinyl Chloride) & G.I. (Galvanised Iron) Pipes in India as well as in the world. With more than four decades of experience in the Indian steel tubes and pipes market, the Company has established its strong brand equity across the globe. The Company has state-of-the-art manufacturing facilities located in the North, South and West India, which provide strategic advantage to gain significant hold over the respective market regions. The Companys niche product comprises of ERW (electric resistance weld) Black Pipes and Galvanised Steel Pipes.

Product Portfolio: The Company has added wide range and variety of products in its portfolio over the years and is constantly working on evolving new products as per the market dynamics. The Companys products cater to multiple sectors of end-use, including applications in automobiles, infrastructure, real estate and furniture.

The various products of the Company are being discussed as follows:

Steel Tubes and Pipes: The major products manufactured by the Company in this segment include ERW galvanised tubes and pipes, ERW Black steel tubes and pipes, scaffolding tubes and pipes, pre grooved pipes, swaged poles. Its application areas include water pipelines, agriculture and irrigation, deep tube wells & casing pipes, gas pipe lines and cross country pipelines. It also include application in fencing tubes requirements in building sign poles, bumpers, towers, rollers etc. and also used in building highway and street lighting poles along with all the standard types of trafic signal poles.

Telecommunication Transmission Tower & Substation Structure: The Company started operation in this field in 1985 and has developed expertise in design & maintenance of significantly customisable High & Light Towers products like Legged Square Lattice Steel Towers, Three Legged Tubular Steel Tower etc. The Companys other application areas include Radar Towers and Railway Electrification Structure.

Structural Steel Products: It include Square / Rectangular Tubes & Pipes with hollow sections and is primarily used in furniture industries, hand railings, cranes, material storage racks, pallets, staircases, cabins, bus stands, milk booths, Truck & Bus body Members Trusses, trolleys, columns and purlins etc.

Coils and Sheets: The Company also manufactures and trades various cold rolled coils/sheets, galvanised plain coils/sheets, galvanised corrugated sheets, colour coated coils/sheets.

BUSINESS STRENGTHS

Leadership Presence: With the valuable experience in steel tubes and pipes industry of more than four decades, the

Company has been strongly positioned as a pioneer among the manufacturers of steel tubes and pipes.

Global Footprints: The Company has a strong global presence with its products being well accepted in countries like United Kingdom, UAE, Sri Lanka, Ethiopia, Kenya, Uganda, Ghana, Kuwait, Republic of Congo, Yemen, Guyana, Germany, USA, South Africa, Zambia and Malta etc. The Company derived revenues of _14.34 Crores from exports during the financial year under consideration.

Advanced Technical Know-how: With its huge technical and research capabilities, the Company is able to deliver superior products in tandem with the latest technological advancements. The Companys increased focus on improving its superior technology has improved its profitability over the years. The Company has installed a modern high speed tube mill based on latest technology of world leader M/s Kusakabe of Japan to serve the market better. The Company is continuously developing innovative processes to modernize production and serve its customers more effectively.

Strong and Reputed Client Base: The Company has strong and diversified clientele across various sectors which include SAIL (Steel Authority of India Limited), DLF group, Reliance Industries, Reliance Petroleum Limited, NDPL(North Delhi Power Limited), NTPC (National Thermal Power Corporation Limited), Bajaj Industries, Airtel, Ashok Leyland, Gujarat Gas, Hindustan Petroleum, Tata Motors, BSNL (Bharat Sanchar Nigam Limited), GAIL (Gas Authority of India Limited), LANCO (Lanco Infratech ) etc. The Company has established longstanding relationships with its clients and strives to be the best possible supplier in the country.

Skilled Employees: The Companys team is comprised of highly experienced and highly qualified engineers hired from the Indias best institutions. Best and customised quality products are being developed by the Company with the help of its highly skilled workforce that has enabled the Company to stay on the top among its other competitors. As on FY18-19, The Companys total workforce comprised of about 300+ employees.

State of the Art Manufacturing Facilities: The Company has established its manufacturing footprint across three regions in India – North, South and West. It has developed four sophisticated manufacturing facilities of which one is based in Khopoli Mumbai (Maharashtra), one in Anantapur (Andhra Pradesh) and two in Sahibabad (Uttar Pradesh). The Companys total consolidated installed capacity stood at 1,68,000 MTPA and has been constantly increasing its capacities to serve to its wide base of clients both in India and abroad. The Company has already set up solar plant at Khopoli which is one of Indias largest solar energy projects with 750 KW capacity and also one of its kind in the ERW pipes segment. In FY18-19, capacity utilization was at 52% with 88,054.47 MTPA as against 79,175.93 MTPA in the previous year. The new facility at Anantapur in South India was started in the previous year (FY17-18) which is going to further strengthen the Companys market. It derives strategic advantage in Khopoli and Anantapur plants as it is in close proximity to ports and commercial markets.

STRATEGIES:

Expanding Manufacturing Capacity: The Company aspires to emerge as a leading manufacturer in steel tubes and pipes industry on the back of its quality and strength. The expansion of South facility under its subsidiary, Lepakshi Tubes Pvt Ltd. has started production in FY17-18 with added capacity of 36,000 MTPA in Andhra Pradesh. For the Khopoli plant the Company is planning to ramp up its capacity to 60,000 MTPA taking its overall installed capacity to 2,28,000 MTPA.

Increasing Dealer Network: The Company has network of 300+ dealers across India and is further planning to expand its dealer network in South and West India. The network expansion would lead to increased revenue generation and lead to a higher customer base.

Securing Future Energy Requirement: The Company has set up a solar power plant in its Khopoli unit based in Mumbai, Maharashtra. It is also planning to set up solar power plant of 0.750 MW each at Andhra Pradesh and Uttar Pradesh in order to achieve optimisation in its power expenditures. In FY19-20, the Company has planned to increase solar power generating capacity to meet the power demand of its expansion projects.

Expanding Customer Base: The Company has made broad based plans to increase its customer base by increasing its production capacity and offering value added products. The proposed expansion of capacity in Mumbai (Khopoli) will increase two new product lines to meet the robust demand in the western market. The Company has portfolio of 300+ SKUs and it plans to increase it significantly to meet its ever increasing customer demand that would further drive its revenue growth and profitability.

Business Outlook: The Company has constantly increased its stand as the pioneer and major player in the ERW pipe industry. With increased focus on upgradation of technology in its manufacturing facilities, the Company endeavours on filling up the demand supply gap in the industry and maintaining its valuable market share in the industry. The capacity expansion, addition of new product lines in its diversified portfolio, cost efficiency by setting up power projects, strengthening of SKUs will help the Company increasing its future revenue, growth and profitability and to become the preferred choice for all Its customers.

FINANCIAL PERFORMANCE:

The brownfield capacity expansion at Khopoli, Maharashtra combined with stable prices of steel during the year has resulted in higher revenue. The consolidated total revenue stood at _506.79 crore in FY18-19, grew by 31% as compared to Rs. 386.81 in FY17-18. The growth was broad based across all the product segments. In FY18- 19, capacity utilization was at 52 % with 88,054.47 MTPA as against 79,175.93 MTPA in the previous year.

The Company faced increased competition during the year under review which has resulted in lesser margins. However, the effect was mitigated to some extent by lower power costs due to installation of solar power plant. The EBIDTA (earnings before interest, depreciation and tax) stood at Rs. 21.53 Crores in FY18-19 as compared to Rs. 27.28 Crores in FY17-18. The PAT (profit after tax) stood at Rs. 8.55 Crores in FY18-19, as compared to Rs. 12.73 Crores in FY17-18. The PAT margin decreased to 1.69% in FY18-19 from 3.29% in FY17-18. EPS for FY18-19 was Rs. 5.09, as against Rs. 7.62 in FY17-18, decreased by 33.20%

At the end of March 31, 2019, the Companys net worth stood at Rs. 87.01 Crores registered a growth of 11% from FY17-18. The Company has incurred a Capex of Rs. 3.39 Crores in FY18-19. Due to significant capex activities and working capital requirement considering increasing trend size of the business, the Companys total debt increased from Rs. 60.24 crore in FY17-18 to Rs. 86.72 crore in FY18-19 resulting in a higher debt/ equity ratio of 1.00 as compared to last years ratio of 0.76. While Cash and Cash Equivalents stood at Rs. 6.76 Crores for FY18-19 as against Rs. 9.72 Crores recorded in FY17-18. The working capital stood at Rs. 55.29 crore with working capital cycle days of 38 days as against 48 days in the previous year.

CORPORATE SOCIAL RESPONSIBILITY

The Company has always put efforts in improvement of community life for society at large and also for immediate neighbourhood. It believes in economic value creation and commitment towards sustainable development of societies at large. Several projects are executed with better governance and ethical business practices. The Company has appointed a Corporate Social Responsibility Committee as per the requirement of Section 135 of the Companies Act 2013. The Committee monitors in areas such as waste management, sanitation activities, providing skill development and vocation based education, working for the upliftment of the lives of under privileged and women & youth empowerment. It also contributes towards certain areas like Environmental sustainability, Disaster Relief and National Missions projects. The Company under its CSR policy has spent a sum of Rs 20.93 Lakhs towards the CSR expenses on women empowerment and skill development till March 31, 2019.

RISKSA ND MITIGATION STRATEGIES

Slow Economic Growth Risk: Economic slowdown adversely impacts on all steel end user segments like oil and gas, construction, capital goods, consumer durables, automobiles etc. The Companys revenue stream may get affected from certain unfavourable events like high inflation, macroeconomic slowdown, etc.

Mitigation strategy: With efficient government stimuli, India is well set for strong growth in the coming years. The Companys revenues are well-diversified because of its wide spanning product portfolio, multiple end user sectors and strong presence in international markets.

Supply Demand Gap Risk: Domestic producers might get affected of overcapacity and oversupply of steel globally leading to higher imports in India at cheaper rate resulting in fall in steel prices.

Mitigation Strategy: With better customer understanding, customer relationship and focus on constant upgradation of facilities and use of modern techniques, the Company has firmly established itself as a leader in the industry.

Peer Risk: The Company might receive high competition from its peers, as the barriers to entry in the market are low after liberalisation of steel trade.

Mitigation Strategy: The Company has developed value added products that helps to ensure its product antiquity and its high product quality safeguards it from global competitive risks.

Input Risk: Raw material price fluctuations may have a significant effect on the costs, which might affect profit margins.

Mitigation Strategy: The Company has laid clear terms in dealing with its creditors and has also established long lasting relationship with dealers for long term contracts of raw material and supply of finished products respectively. It also keeps a close watch on the demand scenario and thereby adjusts its inventory levels in order to mitigate the risk related to in raw material price volatility.

Evolution Risk: End users product requirements are evolving in nature and that may require up gradation or complete change in product range developed by the Company.

Mitigation Strategy: The Company uses modernized processes, upgraded technology for its facilities and latest equipment and processes. The Company keeps a close eye on emerging trends and braces itself to develop products for future needs.

Fiscal Risks: Government policies have a great impact on steel production and trade. The steel industry has been exposed to strong regulatory scrutiny and policy changes risks. The Companys sustainability is exposed to risk if there is any non-compliance to regulatory and environmental norms or any delay in obtaining approvals.

Mitigation Strategy: The Company has been benefitted by the increasing government focus on clearing infrastructure bottlenecks. The Company has also gained from the governments huge push on the development of Indian economy. The Company constantly monitors on the changing regulatory scenario and makes necessary modifications as per the requirement.

Capex Risks: Any misinterpretation or any unfavourable decision regarding capital investments may result in lower returns than expected.

Mitigation Strategy: The Company manages its projects and investments with its finance team delegation that constantly reviews, monitors and analyses various aspects related to adequacy and feasibility of capital investment.

Currency Risk: The Company is exposed to currency risks as its clients are spread across all over the world, which might have favourable or adverse effect on the Company.

Mitigation Strategy: The Company has a well-defined Foreign Exchange (FX) risk management system under which it optimises the risk using various hedging activities. The Company uses derivative financial instruments, such as forward contracts to hedge its foreign currency exposure.

ENVIRONMENT, HEALTH AND SAFETY EHS

The Companys EHS management includes the use of end-to-end business processes and requirements that are designed to systematically achieve continuous improvement in EHS performance. EHS management includes increased integration with other software systems such as ERP to better streamline it in order to achieve overall sustainability management.

QUALITY

The Company is committed towards best in class quality control processes and systems to manufacture absolute quality products for highest customer satisfaction. In order to achieve this, the Company focuses on vigorous efforts and adopts high end technological advancements. The Companys manufacturing facilities are highly automated and centrally controlled. Total Quality Control (TQC) is carried out through the whole process of production; con_gurations of operation are being stringently respected. Also the quality standards are being strictly observed and safety protocols are being diligently enforced.

INTERNAL CONTROL SYSTEMS

The Internal Control structure is designed to operate as a well-managed and synchronized system comprising of regular risk assessment, mitigation and monitoring. The Companys policies and procedures are well-framed so that they include the design, implementation and maintenance of proper internal financial controls considering the size and nature of business. The internal financial controls make sure about the orderly and efficient functioning of its business conduct. The Company has an expansive system of identifying key business risks and taking mitigating measures. The Companys internal team and an independent Internal Audit Firm regularly monitor all of its business operations and any deviations are immediately brought to the notice of the Management and Audit Committee for immediate correction. The Company is equipped with latest and dynamic IT systems that safeguard sensitive data and eases out audit process. Financial transactions are recorded by strictly following Accounting Standards. The Company strictly adheres to all applicable procedures, laws, rules and statutes by implementing well documented policies and procedures. Robust MIS systems have helped the Company to devise host of profit enhancing strategies and also to control its expenditure. Any variations from budgetary allocations are immediately reported and promptly corrected to ensure strict compliance.

HUMAN RESOURCES

The Company believes that human resource forms the most important and vital part of any business organization. The Company focusses on efficient and proactive recruitment policies, training and development, compensation and benefits, performance appraisal and other legal Compliance relating to the human resource management. Employees are infused with a sense of belongingness and empowerment that drives business growth. The Company provides firm atmosphere for development of different skills, which enables it to recruit and retain quality professionals in all the fields. It firmly believes that key to excellent business results is an excellent talent pool. Its HR policies provide a work atmosphere that leads to employee satisfaction, unflagging motivation, and a high retention rate. The Company is devoted towards maintenance of employees entire work life cycle to ensure timely interventions that help build future leaders. Within the Company, the potential leaders are identified and consistent talent pool is maintained by constantly improving workforce capabilities and capacities to make them ready to tackle the ever-changing technology and environment. As of March 31, 2019 the Company had a workforce of 150+people on its rolls.

CAUTIONARY STATEMENT

This Statement contains forward-looking statements about the business, financial performance, skills and prospects of the Company. Statements about the plans, intentions, expectations, beliefs, estimates, predictions or similar expressions for future are forward-looking statements. Forward-looking statements should be viewed in the context of many risk issues and event that could cause actual performance to be different from that contemplated in the Directors Report and Management Discussions and Analysis Report, including but not limited to, the impact of changes in oil, steel prices worldwide, technological obsolescence and domestic, economic and political conditions. 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 incidental factors. The Company disclaims any duty to update the information given in the aforesaid reports.