(a) Industry Structure and Development:
Stainless steel pipes and tubes are among the tubular products that are expected to experience significant growth over the forecast period. The expanding construction sector, as well as the expanding demand from the oil and gas, petro chemical, nuclear power and chemical sectors, are the main drivers of the need for stainless steel pipes and tubes. The exceptional corrosion resistance and longevity of stainless steel pipes and tubes make them the perfect choice for these applications. Also, the growing usage of renewable energy sources like solar and wind energy, which need stainless steel components for their construction, is a factor in the demand for stainless steel pipes and tubes.
(b) Opportunities and Threats:
The domestic stainless steel demand is expected to register significant growth over the next 3-5 years. India is adopting stainless steel faster because of its higher durability and lower maintenance. The demand for stainless steel is rising across a range of end-use industries, including the automotive, construction, and aerospace sectors, among others, and this is one of the main drivers of market expansion. Due to its great strength, low maintenance requirements, and resistance to corrosion, stainless steel is in higher demand. Automobile parts including gasoline tanks, suspension systems, and exhaust systems, among others, are frequently made of stainless steel. The requirement for lightweight, strong materials that can survive extreme weather conditions is driving the demand for stainless steel in the automotive industry.
The recovery in demand for steel products will enable the Company to expand its activities. The expected rise in nickel output and consumption might help the Company to improve our operations. Growing Usage of substitutes are gaining popularity, posing threat on the growth in demand for stainless steel products.
Government regulatory actions mandate use of steel substitutes, either for environmental reasons or to spur the development of a substitute market. Popularity of steel replacements could diminish demand for steel products, affecting market prices and, as a result, the Companys cash flow and profitability. Therefore, compelling the industry to seek out new alternatives.
Russia-Ukraine war may have some impact on capex investments and consumption amidst uncertainty. The government is taking steps to revive the economy, we are hopeful that the economic environment will improve, customer sentiment will turn positive and the industry will see better growth in coming times. The growth in the power, both thermal & nuclear, fertilizer, oil and petroleum sectors, petrochemical, speciality chemicals offer opportunities for the Companys products. However, the pricing volatility of key raw material ingredients (such as nickel) can a ect demand and usage patterns of user industry as well as affect the viability of major project investments. Apart from this, installation of LNG terminals can have a substantial contribution in the usage of stainless steel tubular products. The dumping of secondary quality products, imports of S.S. Pipes under FTA continuous to be a threat and can have an adverse impact on demand of locally manufactured products. The Government of Indias Policy of Aatmanirbhar Bharat to promote local manufacturing will help the industry to grow. Government of Indias policies to restrict imports can adversely affect the availability of material in special category, while at the same time creating opportunities to develop more products as import substitutes. Several Companies have expanded/ created additional facilities, this can lead to short term pricing and demand pressures.
(d) Risk and Concerns:
In a highly dynamic business environment, business risks are constantly evolving. As a result, there is significant variation in the emerging risks landscape across businesses. we continuously monitor the internal and external environment to identify potential, emerging risks and their impact on our business. Our risk management framework ensures identification of emerging risks and is exible enough to accommodate decentralized risk management practices. We evaluate risks that can impact our strategic, operational, compliance and reporting objectives.
Persisting inflation could postpone project execution and demand for the Companys products. Recessionary headwinds across global markets could impact the Companys business prospects. Volatility in steel prices could adversely impact business profitability
The Company also recognizes the risks associated with business and would take adequate measures to address the associated risks and concerns. Some of these factors include competition from multinational Companies, duty free imports by customers against export obligations, our pricing strategy being mainly dependent on import a airs and dependence on imported raw material. The global environment continues to be marked by economic volatility. The uncertainty in the international and domestic markets Geo political events or availability of raw materials may affect demand. Any significant wave in future can impact recovery, demand, consumer sentiment and delay in private investment. It may also have a further impact on the Indian Rupee, which would make imports more expensive The Company is also having eye on Global supply chain disruption and inflation.
(e) Internal Control Systems and their adequacy:
The Company has adequate internal control systems in technical and nancial elds.
(f) Financial Performance:
The Financial Performance of the Company has been impacted during the year due to uctuation in raw material prices due to Geo political events.
(g) Human Resources/ Industrial Relations:
The Company has maintained good industrial relations and has maintained harmonious relations with the employees.
(h) Cautionary Statement:
Statements in this report on Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations may be "forward looking statements" within the meaning of applicable securities laws or regulations. These statements are based on certain assumptions and expectations of future events. 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 global and domestic demand and supply, finished goods prices in the domestic and overseas markets in which the Company operates, raw-materials cost and availability, changes in Government regulations, tax regimes, economic developments within or outside India and other factors such as litigation and industrial relations. The Company assumes no responsibility to publicly amend, modify or revive any forward looking statements on the basis of any subsequent developments, information or events.
(i) Details of significant changes in Key Financial Ratios:
There is no significant change in key financial ratios as compared to the ratios of previous financial year except following:
Sr. No. Particulars
|1) Interest Coverage Ratio
|The Interest Coverage ratio has been lowered due to increase in interest rates.
|2) Debt Equity Ratio
|The Debt Equity Ratio has reduced due to repayment of loans.
|3) Operating Profit Margin Ratio (in %)
|The Operating Pro t margin ratio has been decreased due to increase in nance cost and volatility in raw material prices.
|4) Net Profit Margin (in %)
|The Net pro t has been decreased due to decline in pro ts due to volatility in raw material prices and increase in nance cost.
|5) Return on Net worth
|The Return on Net worth has been decreased due to decline in pro ts due to volatility in raw material prices and increase in nance cost.