Management Discussion and Analysis Report
1. Economy and Markets overview
The following operating and financial review is intended to convey the managements
perspective on the financial condition and on the operating performance of the Company as
at the end of the Financial Year 2015-16. The following discussion of the Companys
financial condition and result of operations should be read in conjunction with the
Companys financial statements, schedules and notes thereto and the other information
included elsewhere in the Annual Report. The Companys financial statements have been
prepared in compliance with the requirements of the applicable Companies Act, guidelines
issued by the Securities and Exchange Board of India (SEBI).
2. Industry Structure & Development
The iron ore industry is a high volume industry. Its characterized by high barriers to
entry, due to its highly capital intensive nature, in terms of upfront investment required
for heavy earthmoving equipment, buildings, vehicles, and transport networks and long
production start-up lead times. These barriers reward players with huge financial muscle
and scale and deter new entrants.
India currently produces nearly 89 minerals under different groups such as fuel
minerals, metallic minerals, non-metallic minerals, atomic minerals and minor minerals.
In India, 80% of mining is in coal and the balance 20% is in various metals and other
raw materials such as gold, copper, iron, lead, bauxite, zinc and uranium. India with
diverse and significant mineral resources is the leading producer of some of the minerals.
India is not endowed with all the requisite mineral resources. Of the 89 minerals produced
in India, 4 are fuel minerals, 11 metallic, 52 non-metallic and 22 minor minerals.
Iron ore is a metal of universal use. It is the backbone of modern civilisation. It is
the foundation of our basic industry and is used all over the world. The standard of
living of the people of a country is judged by the consumption of iron. Iron is taken out
from mines in the form of iron ore. Different types of iron ore contain varying percentage
of pure iron.
3. Company Overview:
Resurgere Mines & Minerals India Limited is presently engaged in the business of
extraction and processing of iron ore, bauxite and soapstone. Resurgere Mines and Minerals
India Limited professes the following corporate objectives: "Providing quality
products for domestic and foreign clients; securing generous returns for company
shareholders; creating development opportunities for employees; and moving forward hand in
hand with business partners". We promote the corporate philosophies of
"people-centeredness, good faith towards all, being relevant to the times, helping
each other in survival and in the achievement of honor". With these objectives and
philosophies, Resurgere Mines and Minerals India Limited has been able to run its business
in a stable and healthy way, to be creative but yet realistic, to stick to its core
business, and to pursue a balanced growth. Our products are as follow:
Lump Ore:
* Basic form of Iron Ore generated after screening of Run-of-Mine
* Having physical specification of above 40mm
* Low Profit margin product
* Used as raw material for manufacture of Calibrated Lump Ore (CLO)
Size Ore:
* Output of the screening of Run-of-Mine extracted
* Having physical specification ranging between 10mm – 40mm
* Low priced product with lower profit margin
* Used as one of the basic raw materials in Pig Iron Plants
Calibrated Lump Ore:
* Purest form of Iron-ore with high Fe content
* Has physical specification between 5mm to 18mm
* Used as main raw material in sponge Iron Plants for manufacturing of Iron and has
huge domestic demand from
all steel plants
* High value product
Iron Ore Fines:
* Smallest size of Iron-ore having physical specification upto 10mm
* Being produced as by-product of CLO during crushing activity
* Has purity content between 54 Fe to 63.5 Fe
* Used for sintering process in steel plants
* Not much in demand in domestic market
Bauxite:
* Aluminum ore, called bauxite, is most commonly formed in deeply weathered rocks
* Approximately 95% of the worlds bauxite production is processed into aluminium
* Bauxites are heated in pressure vessels with sodium hydroxide solution at 150-200 C
through which aluminium is dissolved as aluminate
* Most materials used for transportation use large amounts of aluminum: cars, trucks,
boats, aircraft, and aircraft engines
4. Financial Overview
In accordance with the requirements of the Listing Agreements, a consolidated Financial
Statement of the Company as on 31.03.2016 is also included in this Annual Report
comprising Wholly owned subsidiary companies - Resurgere Sponge Iron Limited, Resurgere
Ferro Alloys Limited, Resurgere Industries Limited, Resurgere International FZE - a 100%
non-integral foreign subsidiary and 70% proportionate interest in the jointly controlled
entity i.e. Resurgere Coal India LLP.
The total net sales are decreased by Rs. 76.50 lacs from Rs. 296.88 Lacs last year to
Rs. 220.38 Lacs this year. The company has incurred a loss of Rs. 7,858.33 Lacs during the
current financial year under review.
5. SWOT Analysis (Opportunities and Threats)
There are opportunities for mining equipment players. Even for open cast mining,
companies are increasing capacity. Some are expanding underground activities as these do
not involve land acquisition or forest clearance. In the eastern part of India, there are
nine underground mining projects on the anvil. Also, given the growing trends in power
demand and per capita consumption of metals in the medium-long term, there are sizeable
opportunities for mining and suppliers.
As things stand today, the Indian mining sector is expected to be driven by government
policies in 2017. As the long-term demand for steel, other metals and energy in India is
intact, demand growth for minerals is assured. The state governments have started getting
ambitious in revenue generation from the sector and are certain that if these headwinds
abate, mining in India can gradually ramp up. On the other hand, if the policy challenges
remain and no clear direction is provided, India may have to increasingly resort to
imports to meet its domestic demand. That will be a huge loss of opportunity.
6. Internal Control System and their advocacy
The Company maintains appropriate systems of internal control, including monitoring
procedures, to ensure that all assets are safeguarded against loss from unauthorized use
or disposition. Company policies, guidelines and procedures provide for adequate checks
and balances and are meant to ensure that all transactions are authorized, recorded and
reported correctly.
The Head of Internal Audit together with external audit consultants review the
effectiveness and efficiency of these systems and procedures to ensure that all assets are
protected against loss and that the financial and operational information is accurate and
complete in all respects. The Audit Committee of the Board of Directors approves and
reviews audit plans for the year based on internal risk assessment. Audits are conducted
on an on-going basis and significant deviations are brought to the notice of the Audit
Committee of the Board of Directors following which corrective action is recommended for
implementation. All these measures facilitate timely detection of any irregularities and
early remedial steps.
7. Environment & Safety
The company always strives for the excellence so that mining can become more
environmentally sustainable by developing and integrating practices that reduce the
environmental impact of mining operations. These practices include measures such as
reducing water and energy consumption, minimizing land disturbance and waste production,
preventing soil, water, and air pollution at mine sites, and conducting successful mine
closure and reclamation activities.
In order to be more environmentally sustainable, mining operations are increasingly
conducted in a manner that minimizes their impact on the surrounding environment, and
leaves mine sites in an acceptable state for re-use by people or ecosystems. A number of
management strategies and technologies are being developed and used by the company to
reduce the environmental impacts of mining, and are given below.
Reducing inputs
* Water
* Energy
* Land disruption
Reducing outputs
* Waste:
- Using cleaner production techniques
- Environmental control technologies
- Using waste as raw material, and
- Reducing the amount of waste produced through process re-engineering.
* Restoring environmental function at mine sites
8. Risks and concerns
The resources sector is currently in the midst of a correction, with an extended period
of lower and volatile commodity prices impacting earnings, balance sheets and investor
perceptions. Our businesses are also exposed to a variety of risks, which are inherent to
a global natural resources organisation. It is therefore essential to have in place
necessary systems to manage these risks, while balancing the relative risk reward equation
demanded by our stakeholders. Our management systems, organisational structures,
processes, standards, code of conduct together form the system of internal control that
governs how we conduct the Groups business and manage the associated risks. Our risk
management framework is designed to be simple, consistent and clear for managing and
reporting risks from the business to the Board. Risk management is embedded in our
critical business activities, functions and processes. It helps Resurgere meet its
objectives through aligning operating controls with mission and vision. The effective
management of risk is critical to support the delivery of the Groups strategic
objectives. The framework helps the organisation meet its objectives through alignment of
operating controls to the mission and vision of the Company.
9. Outlook
In FY 2016-17 production are expected to start.
10. Forward Looking Statement
This report contains "forward-looking statements" – that is, statements
related to future, not past events and may be interpreted as ‘forward looking
statements within the meaning of applicable laws and regulations. In this context,
forward-looking statements often address our expected future business and financial
performance, and often contain words such as "expects," "anticipates,"
"intends," "plans," "believes," "seeks,"
"should" or "will."
Forward–looking statements by their nature address matters that are, to different
degrees, uncertain. Actual results might differ substantially or materially from those
expressed or implied. Important developments that could affect the companys operations
include a downtrend in the iron ore, bauxite, steel, pig iron, soapstone, & met coke
industry –global or domestic or both, significant changes in political, economic,
business, competitive or regulatory environment in India or key markets abroad and from
numerous other matters of national, regional & global scale including but not limited
to natural calamity, tax laws, litigations, Government policies & regulations,
fluctuations in interest and or exchange rates of Indian Rupee, etc.
Any forward-looking information in this report has been prepared on the basis of a
number of assumptions, which may prove to be incorrect.
This report should not be relied upon as a recommendation or forecast by Resurgere
Mines & Minerals India Limited. The views expressed herein may contain information
derived from publicly available sources that have not been independently verified; no
representation or warranty is made as to the accuracy, completeness or reliability of this
information. We do not undertake to update our forward-looking statements.
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