Riddhi Steel & Tube Ltd Management Discussions

GLOBAL OVERVIEW:

The global structural steel market size was valued at USD 1 17.1 2 billion in 2023 and is likely to register a CAGR of 5.9% from 2024 to 2030.Indias present steel-making capacity stands at 1 26 MT, which is likely to go past 1 50 MT by 2020. The government is targeting to add another 1 50 MT steel capacity in the country over the next 10 years

INDUSTRY STRUCTURE AND DEVELOPMENTS:

India is the worlds second-largest producer of crude steel, with an output of 1 25.32 MT of crude steel and finished steel production of 1 21.29 MT in FY23. In FY24, the production of crude steel and finished steel stood at 143.6 MT and 1 38.5 MT, respectively.In FY23, crude and finished steel production stood at 1 25.32 MT and 121.29 MT, respectively. In July 2023, crude steel production in India stood at 1 1.52 MT. The consumption of finished steel stood at 105.751 MT in FY22. In FY23, the consumption of finished steel stood at 119.17 MT. In FY24, the consumption of finished steel stood at 135.90 MT.The per-capita consumption of steel stood at 86.7 kgs in FY23. Indias steel production is estimated to grow 4-7% to 1 23-1 27 MT in FY24.

STRENGTH AND WEAKNESS:

The company has strong promoter background with rich experience in the segment. Board of Directors of the company is well qualified in the specified field. Composition of Board consists of Executive Directors and Non-executive independent Directors adding value to the company. The Company has an extremely cost conscious culture that has resulted in multiple cost management, thus company is trying to cope up with inflationary pressure. The Company has extremely favorable organizational Culture. The Company has not borrowed money from the market since last many years and working with owned funds thus The company has limited fund to meet the challenges of the markets and to overcome the weakness company has define the strategies to meet the fund requirement.

RISK AND CONCERN:

Your Company considers that risk is an integral part of its business and therefore, it takes proper steps to manage all risks in a proactive and efficient manner. The Company management periodically assesses risks in the internal and external environment and incorporates suitable risk treatment processes in its strategy, and business and operating plans. The details of practices being followed by the Company in this regard, forms part of the Corporate Governance Report. There are no risks which, in the opinion of the Board, threaten the very existence of your Company. However, some of the challenges faced by it have been dealt with under Management Discussion and Analysis which forms part of this Report.

MANAGEMENT CONTROL, INTERNAL CONTROL AND INTERNAL AUDIT SYSTEM AND THEIR ADEQUACY:

The company has put in place strong internal control system and best in class processes commensurate with its size and scale of operations.

A well-established multidisciplinary management Audit & Assurance services consists of professionally qualified accountants who carries out extensive audit throughout the year, across all functional area and submits its reports to management and audit committee about the compliance with internal controls and efficiency and effectiveness of operation and key processes and risks.

Some key features of the companys internal control system are:

• Adequate documentation of policies & guidelines.

• Preparation & monitoring of annual budget for all functions

• Management audit department prepares risk based internal audit scope with the frequency of audit being decided by risk ratings of areas/functions. Risk based scope is mutually accepted by various functional heads/process owners.

• The company has strong compliance Management System which runs on an online monitoring system.

• Company has well defined delegation of power with authority limits for approving revenue & cape expenditure.

• Apart from having all policies, procedures and internal audit mechanism in place, company periodically engages outside experts to carry out and independent review of the effectiveness of various business processes.

• Internal audit is carried out in accordance with auditing standards to review design effectiveness of internal control system & procedures to manage risks, operation of monitoring control compliance with relevant policies & procedure and recommend improvement in processes and procedure.

• The audit committee of the board of directors regularly reviews the adequacy & effectiveness of internal audit environment and monitor implementation of internal audit recommendations including those relating to strengthen of companys risk management policies & syst ems.

HUMAN RESOURCE DEVELOPMENT

Human resource department is instrumental in building employees capabilities through structured talented acquisition and its development through technical and need based training. The company enjoys harmonious employee relations and hired employee during the year which have been built over the years by taking various HR initiatives to enhance the employee morale.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATION PERFORMANCE:

1. The total Revenue of the Company for the year ended on 31st March, 2024 is Rs. 33017.91 Lakhs out of which revenue from operational income is Rs. 32757.39 Lakhs as compared to the revenue of the company in previous year of Rs. 30266.54.

2. The Net profit of the Company during the previous year was Rs. 340.1 1 Lakhs. During the current year, Company has incurred a profit of Rs.479.73 Lakhs The Directors are trying to achieve higher profit in the upcoming year.

3. Price earning per shares as on 31 /03/2024 is INR 5.79/- on face value of INR 10/- each.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:

There are following significant changes in the key financial ratios of the company:

Sr. No. Ratios	31.03.2024	31.03.2023
1 Return on Equity Ratio	8.75%	6.70%
2 Net capital turnover ratio	3.71	3.59
3 Net profit ratio	1.74%	1.32%
4 Return on Capital employed	1 8.44%	1 6.98%
5 Return on investment	39.97%	4.07%

INTERNAL CONTROLS:

Your Company has a well-established internal control system, which is commensurate with the size and nature of its business. The Company strives to maintain a dynamic system of internal controls and procedures including internal control over financial reporting designed to ensure reliable financial record keeping, transparent financial reporting and disclosures. The management duly considers and takes appropriate action on the recommendations made by the statutory auditors, internal auditors and the independent Audit Committee of the Board of Directors.

ESTABLISHMENT OF INTERNAL MANAGEMENT INFORMATION SYSTEMS:

Any problems requiring policy decisions are being intimated to Audit Committee for redressed or amendments in the policy and procedure. The progress reports are being regularly on monthly basis intimated to the Audit committee through the Financial Officers of the company who in turn put the same to Audit Committee.

INFORMATION SYSTEM BETWEEN COMMITTEE AND THE BOARD:

Both Audit committee and Stakeholder Relationship Committees receive periodical regular information from the concerned function heads, and after resolution of all the problems re-communicate the same to functional heads for further communications and implementation of any suggestions. The progress report and minutes of all meetings held of both the committees are being placed before the Board for information and taking the same on records.

INFORMATION SYSTEM BETWEEN THE COMPANY AND INVESTORS:

The Company is taking on record the unaudited financial results on quarterly basis as per requirements Regulation 33 of the SEBI (Listing Obligations & Disclosures Requirements) Regulations, 201 5 and the same are published in English and Gujarati Newspapers in time. The Audited Financial Balance Sheet is being dispatched to every shareholder in time at their registered addresses in Compliance with the Companies Act, 2013.

CAUTIONARY STATEMENT:

Statements in this Management Discussion and Analysis describing the companys objectives, projections, estimates and expectations may be forward looking statement within the meaning of applicable laws and regulations. Since these are based on certain assumptions and expectations of future events, the Company cannot guarantee that these are accurate or will be realized. The Company assumes no responsibility to publicly amend, modify or revise any such statements on the basis of subsequent developments, information or events.

	For, Riddhi Steel And Tube Limited
	SD/-	SD/-
	Mr. Rajesh Kumar Mittal	Mrs. Preeti Mittal
Date: 04/09/2024	Managing Director	Director & CFO
Place: Ahmedabad	DIN: 00878934	DIN: 01594555