real growth commercial enterprises ltd share price Management discussions

ECONOMY OVERVIEW

Global Economy Overview -Strong economic recovery was observed in 2022-23 after the sharp decline in the global economy induced by the COVID-19 pandemic in 2020. According to International Monetary Fund (IMF) - World Economic Outlook April 2023 the world economy grew by 6.1% in 2023, as compared to a contraction of 3.1% in 2020 The driving force behind this growth was a globally coordinated effort to collaborate on the implementation of viable health policies, as well as effective fiscal and monetary policies. The emerging markets and developing economies (EMDEs), which experienced a growth rate of 6.8% in 2021 compared to a contraction of 2% in 2020, formed the main drivers of this growth.

World GDP Growth (%)

The ongoing conflict between Russia and Ukraine and the likelihood for another COVID-19 wave are both anticipated to have an adverse effect on global economic development in 2023. Global economy is expected to grow by 3.6% as a result of supply chain disruptions and inflationary pressures in the year 2022-23. Economic growth rates for the advanced economies are anticipated to be lower in 2023, at 3.4%. The total output of advanced economies will take longer to reach pre- pandemic levels. Additionally, it is anticipated that the disparity between advanced economies and EMDEs, which first appeared in 2021, will continue, indicating some long-term effects from the pandemic. In addition, EMDEs may benefit from the crisis by gaining access to untapped markets of Russia and Ukraine. Hence EMDEs economic growth is predicted to expand by 3.9% in 2023. In this complicated and uncertain climate, effective national-level policies and international efforts have become increasingly important in determining policy outcomes. Capital outflow and currency devaluation may increase in EMDEs if central banks in developed economies tighten monetary policy and raise interest rates, hence exerting inflationary pressures on their economies.

Indian Economy Overview

The majority of Indian market segments have exceeded their pre-pandemic activity levels, thereby cementing the economic recovery. India repressed the third wave of COVID-19 while concurrently pursuing economic recovery through rapid vaccination programme rollouts, and increased government investment. Indias Gross domestic product (GDP) growth has moved into positive territory in FY23, suggesting a pick-up in economic activity, following a period of sluggish growth caused by an increase in COVID-19 cases in the first half of FY22. Consistent supply-side reforms were implemented to set the economy for long-term growth, together with a significant increase in infrastructure spending to restore medium-term demand. According to NSOs (National Statistics Office) second advance estimates, Indian GDP growth is pegged at 6.1% in FY22-23.

Outlook

The ongoing Russia-Ukraine conflict and expected spikes in inflation are likely to have a negative impact on prospects for a long-lasting and steady recovery of steel demand. The worlds steel demand is anticipated to increase by 0.4% in 2022 to reach 1,840.2 million tonnes and by 2.2% to reach 1,881.4 million tonnes in 2023, according to the World Steel Short Range Outlook April 2022. In the developed world, the demand for steel is anticipated to rise by 1.1% in 2022 and by 2.4% in 2023. The government is attempting to increase infrastructure investment and stabilize the real estate market, therefore it is anticipated that Chinese steel consumption will remain constant in 2023 and will show a little increase in 2023. Additionally, the emerging economies outside of China are probably going to experience macro-economic challenges which would result in a low demand growth of 0.5% in 2022 and then grow to 4.5% in 2023.

INDIAN STEEL INDUSTRY

The steel industry is extremely important to the Indian economy, generating about 2% of Indias GDP and directly and indirectly supporting over 500,000 jobs. The Indian steel industry is fundamentally fragmented, with a few large integrated businesses coexisting with a large number of smaller and mid-sized players The Indian steel sector has entered a new era of expansion following deregulation, riding high on the rebounding economy and increased steel demand.

INDIAN STEEL TUBES & PIPES INDUSTRY

India has emerged as one of the largest producers of steel pipes after Europe and China in the pipe & tube industry. The country has a well-developed steel manufacturing industry capable of producing everything from raw steel to steel products with added value, including tubes and pipes. The success of Indias steel pipe and tube sector has been encouraged by the availability of raw materials, cheap labour, and the capacity to make steel at low cost. The development of such a large infrastructure for producing primary steel has also aided the growth of secondary and completed steel products. According to Dun and Bradstreet report, the nations manufacturing capacity as on April 2023 for steel tubes and pipes is approximately 21.5 million tonnes, further divided into welded, seamless, and cast pipes with corresponding capacities of 16.3 million tonnes, 1.5 million tonnes, and 3.7 million tonnes respectively. Within the category of welded pipes, ERW capacity is anticipated to be 9.5 million tonnes and SAW capacity is 6.80 million tonnes. Annual production of steel tubes & pipes in India was anticipated to reach 6.22 million tonnes in FY23, while apparent consumption is anticipated to reach 5.55 million tonnes.

INTERNAL CONTROL SYSTEMS

RGCEL has established a robust internal control system that protects all of its assets and assures operational excellence. The internal control system also assures regulatory compliance and precisely documents all information regarding the Companys transactions.The internal control system is totally relevant to the businesss type, size, scope, and complexity of operations. The Company has effective internal financial control mechanisms in place to make sure that transactions are properly authorised, documented, and reported. Regular internal audits and checksmake sure that operations are carried out successfully. The audit committee is in charge of establishing and maintaining suitable internal financial controls to guarantee the smooth and effective operation of itsaffairs. Periodically, the Audit Committee reviews significant issues and material weaknesses brought up by the Internal and Statutory Auditors. It is ensured that prompt and sufficient measures are made to limit the risk and make the necessary corrections

HUMAN RESOURCES

RGCEL considers its people to be the foundation of the Companys success. The Company takes great pride in recognizing the success of its human resource, which has always responded with unwavering dedication to accomplish business growth and market leadership.

The executive leadership serves as the governing force in promoting a progressive workplace culture. The Company believes in reinforcing the core thrust areas, namely becoming the employer of choice, fostering an inclusive culture, developing a strong talent pipeline.

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 result

By Order of the Board

Jor REAL GROWTH COMMERCIAL ENTERPRISES LIMITED