Shyam Metalics & Energy Ltd Management Discussions

Economic Environment

Global Economic Overview¹

In CY 2024, the global economy grew by 3.3% amid strong geo-economic turbulence. Emerging Markets and Developing Economies (EDMEs) exhibited steady growth despite supply-chain challenges and geopolitical tensions. Inflation eased from 6.6% in CY 2023 to 5.7% in CY 2024 and although central banks around the world tightened policy in unison, a recession was avoided.

During the calendar year, the US economy demonstrated strong growth at 2.7% driven by a robust labour market and strong underlying demand. Meanwhile, European economy remained subdued as Germany and France battled political and economic uncertainties while Italy and the UK barely managed to avoid a recession. The Russia-Ukraine war had heightened energy costs in Europe and put elevated pressure on key industries. Currency depreciation, lack of innovation and competition from international counterparts have all contributed to the downturn.

Prevailing geo-economic uncertainties have adversely impacted global investor sentiment. This is indicated by rising term premiums on long-term government bond yields across most G7 countries.

1https://www.imf.org/en/Publications/WEO/Issues/2025/04/22/ world-economic-outlook-april-2025

Outlook

Global GDP is projected to grow at 2.8% in CY 2025 and 3.0% in CY 2026. This measured growth reflects cautious optimism. Advanced economies are expected to expand by 1.4% while Emerging Markets and Developing Economies (EDMEs) are expected to maintain a robust growth of an estimated 3.7%. Inflation in advanced countries is projected to fall to 4.3%, helping them meet their policy objectives sooner. European nations, under pressure from global manufacturing competition are expected to draw on their industrial bases and recover domestic demand, with Germany preparing major public-spending reforms. Within the Eurozone, trade ties are likely to strengthen despite rising geo-economic fragmentation. In the US, recent reciprocal tariffs have prompted a more cautious global trade outlook and reinforced trends toward economic decoupling. Despite economic uncertainties, fiscal discipline, strategic investments and enhanced consumption are foreseen to create an atmosphere conducive to growth.

Indian Economic Overview²

Despite global economic turbulences, the economy of India grew by an estimated 6.5% in FY 2024-25. The growth was supported by strong performance of sectors, such as services, manufacturing and agriculture. During the year, urban consumption moderated and rural consumption picked up on the back of a favourable monsoon. Core-led inflation was estimated at 4.8%, well within the Reserve Bank of Indias 2–6% tolerance. To drive growth, the government increased the infrastructure budget to _10.2 lakh crore and extended the Production Linked Incentive (PLI) scheme to trigger investment and economic activity. Despite global supply-chain pressures, electronics, semiconductor and pharmaceutical exports remained strong. Further, PLI 2.0 is aimed at establishing India a global IT-manufacturing powerhouse.

Within the constituents of growth, Indias private final consumption expenditure has grown by 7.3% in FY 2024-25. Investment activity which gained momentum in Q1, supported by high-capacity utilisation, robust steel and cement industries and high capital goods imports, moderated as the year progressed. To safeguard the domestic steel producers from Chinese imports, the Government of India imposed tariffs on the import of steel.

Outlook

Indias medium-term prospects are optimistic with a positive caveat. Strong domestic demand and a benevolent policy regime should induce private investment, as reallocation of capital from the US positions India as a lucrative location for foreign investors. An accommodative monetary stance and a salaried individuals tax relief will promote liquidity and domestic consumption. Moderation in depreciation against the dollar can be anticipated, which can stimulate export competitiveness. Further, India is maintaining a watchful stance regarding the evolving tariff situation and is expected to respond appropriately. In addition, India has recently concluded a historic Free-Trade Agreement (FTA) with the UK. This is foreseen to augment the strategic and economic ties between the two nations.

Increased government capital expenditure is expected to facilitate the recovery of fixed capital formation. Sustained demand from rural areas, an anticipated revival in urban consumption, higher capacity utilisation and healthy balance sheets of corporates and banks are additional factors contributing to support growth prospects.

With India resolute on achieving the developed-nation status by 2047, growing energy requirements will be met by energy self-sufficiency policies and the growth of high-technology manufacturing.

Industry Overview

Global Steel Industry Overview

World steel consumption declined in 2024. It witnessed a 0.9% year-over-year decline to 1.75 billion metric tons. This marks its third straight annual contraction.³ The decline can be attributed to sustained softness in manufacturing and elevated financing rates. Geo-political pressures further resulted in a 2.0% fall in demand in developed economies, such as the US, Japan and Germany. China, the largest consumer of steel, observed a reduction of 3% in demand due to its real estate crisis, with another 1% decline foreseen in 2025. Conversely, India emerged as the main growth driver, as steel demand grew by 8% in CY 2024. This hike was primarily propelled by heightened infrastructure expenditure and industrial production.⁴

Developing countries excluding China posted 3.5% demand growth, driven by the recovery of ASEAN and MENA regions. World crude steel output hit 1.88 billion tonnes last year. China accounted for 54% (1.01 billion tonnes) of this output.

The industrys subdued performance can be attributed to the turbulent global economic landscape. Headwinds, such as tight monetary policies and high construction exacerbated the decline in demand. Nevertheless, a 1.2% recovery in global demand is foreseen in 2025. This recovery is envisioned to be facilitated by sustained recoveries in the EU and emerging economies.

Indian Steel Industry Overview

Indias steel industry is witnessing robust growth. The industry is expected to exhibit an estimated growth of 8-9% in FY 2024-25. This foreseen growth is much higher than worldwide trends.⁵ While key economies such as China, Europe and the US witnessed declining steel demand, India remained the sole major economy to reflect strong growth in steel consumption.

Indias steel production capacity has hit a new high in FY 2024-25, reaching ~149 million tonnes. This is ~6% higher than FY 2023-24s ~140 million tonnes.⁶ Aggressive capacity expansion initiatives implemented by both private and public sector player have enabled the country to almost double its production capacity from 87 MT in 2015.

Key Industry Drivers

Government Initiatives

The heightened integration of steel in residential and infrastructure construction is one of the key drivers of demand of steel. Government initiatives, such as the ‘Pradhan Mantri Awas Yojana (PMAY) and the ‘Gati Shakti Master Plan are playing a crucial role inn augmenting the consumption of steel .

The National Infrastructure Pipeline (NIP) programme, aimed at enhancing project preparation and drawing investment, remains a major driver of steel demand in FY 2024-25.

The Production Linked Incentive (PLI) programme for specialty steel has seen investment made of _20,000 crore out of commitments worth _27,106 crore. Incentive of _48 crore has been released with expectations of _2,000 crore to be disbursed till the end of the scheme.⁸ These high-profile infrastructure initiatives are generating long-term momentum across development sectors.

The Steel Ministry has proposed the implementation of stringent quality control regulations across all grades of steel utilised in the nation. This initiative intends to incorporate an additional 1,000 grades of steel under the Quality Control Order (QCO). The QCO currently regulates 1,376 items.⁹ The measure serves a twofold purpose of enhancing the quality of infrastructure and curtailing cheap imports that adversely affect the domestic manufacturers across the steel value chain.

Construction

Sustained urbanisation remains a key propellant of consumption of steel in India. Heightened migration from rural to urban areas is further augmenting the demand of residences and commercial premises, thereby, heightening the demand of steel.

Indias construction industry is one of the pillars of its economic growth. The industry addresses the infrastructure demand of the country and generates large-scale employment. Public and private investments have been primarily directed towards infrastructure and real estate properties like offices, retail, housing and data centres. Logistics and warehousing have become crucial elements, driven by fast-paced urbanisation and the need for efficient supply chains. The trend of modular and prefabricated buildings in the construction sector presents new growth opportunities for the industry.

infrastructure investment in India has witnessed a remarkable rise. This elevation was facilitated by joint public and private funding. The heightened capital outlay has helped the country to build the second largest road network in the world. The Pradhan Mantri Grameen Sadak Yojana has completed the construction of 7,83,335 km of rural roads, significantly improving connectivity to rural areas.¹⁰

During the year under review, the Indian Railways renewed 6,450 km of leading track and overhauled 8,550 turnouts to enhance network dependability and safety.¹¹

National Real Estate Development Council (NAREDCO) and Knight Frank estimate that Indias warehousing market will need 159 million square feet by 2047, increasing at a rate of 4% per annum. This growth is driven by investments by the e-commerce and manufacturing industries in logistics parks, industrial corridors and modern warehouse space across the country. Moreover, Indias real estate industry is projected to reach $5.8 trillion by 2047, accounting for 15.5% of the countrys GDP. ¹²

Engineering and Manufacturing

Heightened demand of steel from industries, such as engineering, packaging and industrial manufacturing played a crucial role in propelling steel consumption in FY 2024-25. The diversification of steel utilisation across varied industries allows for a balanced demand pattern. This reduces the dependence on any one industry. Indias engineering exports is estimated to have reached an unprecedented high of $116.67 billion in FY 2024-25.¹³

Further, India is aiming to establish itself as a global IT hub through initiatives, such as the National Policy on Electronics (NPE), Make in India, Digital India, Skill India, Electronics Development Fund Policy, Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) as well as the Production Linked Initiative (PLI). These schemes are playing a key role in are attracting investment in the electronics manufacturing sector.

Automotive Industry Growth

India is the worlds third-largest passenger vehicle market, following China and the US. During FY 2024-25, the Indian automotive sector grew by 7.3% in domestic sales while exports were accelerated by 19.2%. This highlights the strong global demand and heightened competitiveness within India.¹⁴ The rapidly expanding Electric Vehicle (EV) segment of the industry is augmenting the demand of specialised steel products. With sustained growth of the Indias automotive sector and its gradual transition towards electrical mobility, the utilisation of electric and other specialised types is foreseen to witness a steady growth.

The low vehicle ownership rate in India (38 vehicles per 1,000 inhabitants) represents a huge growth potential. The Indian automotive market present a lucrative opportunity for global auto manufacturers. Indias light-vehicle manufacturing capacity is expected reach 10 million units by 2031¹⁵.

Opportunities and Threats

Opportunities

Booming Global Infrastructure Needs

Developing economies around the world are augmenting the demand of steel due to heightened urbanisation and transportation programmes. India is strategically positioned to capitalise on this demand, especially stemming from Asia and Africa, where infrastructure gaps persist.

Safeguard Duties on Imports

During April 2025, India imposed a 12% provisional safeguard duty on specific steel imports to shield the domestic steel industry from cheap imports from China, South Korea and Japan. The implementation of the safeguard duty came as a response to the record high import of steel at 9.5 million metric tons during 2024-25. The volume of import was the highest in nearly a decade.¹⁶ The intervention will offer temporary relief to the market from the flow of cheap imports.

Policy-Driven Market Access

The Production Linked Incentive (PLI) scheme 1.1 for specialty steel, with a _6,322 crore outlay, aims to augment high-value steel production to 42 million tonnes by 2026-27.¹⁷ Export promotion schemes like Remission of Duties and Taxes on Exported Products (RoDTEP) further enhance competitiveness.

Power and Energy Sector Advancements

India is the third-largest global energy consumer after China and the US. Rapid economic development, heightened urbanisation and expedited industrialisation have contributed to the overall increase in energy consumption. The outlook for Indias energy sector remains highly optimistic. Sustained investment, technological innovation and international collaborations are expected to further initiate capacity additions in the years ahead. This capacity expansion will considerably augment the demand for steel.

Telecommunications Network Expansion

Indias telecom sector experienced notable growth propelled by ground-breaking technological achievements, regulatory reforms, declining unit prices and heightened adoption. Overall tele-density increased with rural growth outpacing the urban growth. The country witnessed the fastest 5G rollout in the world, covering more than 99% districts.

Expansion in Defence and Aerospace

After the initiation of the Make in India movement, Indias defence production reached an all-time high of _1.27 lakh crore during FY 2023-24, with exports crossing _23,622 crore during FY 2024-25.¹⁸ This transition from being import-dependent to being the

world leader in manufacturing shows Indias commitment towards self-reliance and economic growth. Policies have strengthened this progress by facilitating private sector participation, promoting technological advancement and developing contemporary military platforms.

Environmental Sustainability Initiatives

Investments under PLI focus on automotive-grade alloys and electrical steel, which is in line with international trends towards sustainability. The scheme plans to establish India as a global supplier of value-added steel by 2030.

Threats

Trade tensions

Recent protectionist measures implemented by the US government, specifically the 25% tariff imposed on the import of steel, pose major threats to Indian steel producers, despite their limited direct exposure to the American market. These barriers are foreseen to redirect the excess steel to other markets, aggravating regional oversupply and putting downward pressure on prices and margins hroughout Asia.

The international metals market is dominated by scale players such as China and Russia, whose immense production capacities and strategic re-routing of exports have increased competitive pressure. As a result, Indian companies are embracing Industry 4.0 technologies, creating sophisticated high-strength steel grades and utilising waste-heat recovery systems to enhance operating efficiency, reduce costs and achieve stringent quality standards.

Environmental Challenges

Adherence to strict environmental standards in major export markets has become necessary. Indian exporters are modernising furnaces, adopting water-recycling techniques and obtaining carbon-emission and energy-efficiency certifications to meet international regulatory systems and attract eco-conscious consumers.

Finance

Indian steel industry requires substantial investments. This demand is further intensified by the cautious lending practices, driven by higher interest rates and cyclical demand pattern. To counter these fiscal challenges, stakeholders have to embrace new funding options, including the mobilisation of foreign direct investment and access to overseas capital markets. Increased government financing programmes can decrease risks and help accommodate necessary capacity expansions.

Supply chain vulnerabilities

Strong logistics and port facilities are imperative to support the growing industry. Heightened rail freight rates, poor last-mile connectivity and underdeveloped port handling facilities drive up costs and compromise delivery reliability, weakening Indias stand in global supply chains. Heightened investment in dedicated freight corridors, multimodal transportation nodes and faster customs clearances are the keys to securing timely exports and garnering the trust of foreign customers.

Company Overview

Shyam Metalics and Energy Limited is the sixth-largest metal-producing Company based in India, providing end-to-end solutions with integrated capabilities. As of March 2025, the Company stands as one of the largest ferro alloy producers in terms of installed capacity. It also stands as the fourth largest sponge iron manufacturer in India and a leading market player in pellet making. The product portfolio comprises both intermediate and finished steel products, catering to the various stages of the steel value chain.

Strategically positioned with a robust manufacturing footprint encompassing five units in West Bengal, one in Odisha, one in Jharkhand and one in Madhya Pradesh. As of March 31, 2025 these units collectively possess an impressive installed metal capacity of 15.13 million tonnes per annum, covering both intermediate and finished steel products.

Most of the plants benefits from captive power generation, with a total installed capacity of 467 MW as of March 31, 2025. This in-house energy infrastructure enhances operational reliability and allows better control over costs.

The Companys geographical reach enables it to serve a wide range of markets efficiently. While the Sambalpur facility serves primarily southern and western India, the Jamuria and Mangalpur facilities serve northern and eastern India. p>

The Company also ranks among Indias largest exporters of aluminium foil. Its strong emphasis on quality control, coupled with an integrated approach to manufacturing, has firmly established Shyam Metalics as a powerhouse in the Indian steel industry. Moving ahead, the Company is anticipated to make significant strides in both domestic and international markets.

Business Segmental Capacities

	(MTPA / MW)
Business Segment	FY2024-25	FY2023-24
Iron Pellet	6.00	6.00
Sponge Iron	3.05	2.90
Billets	2.01	2.01
TMT, Structural Steel, Wire Rods and Pipes	2.07	2.08
Specialty Alloys	0.22	0.22
Captive Power	467 MW	357 MW
Renewable Power	9 MW	9 MW
Stainless Steel Billet	0.12	0.12
Stainless Steel Finished Steel	0.15	0.15
Aluminium Foil	0.04	0.04
Pig Iron	0.77	NA
Coke Oven	0.45	NA
Colour Coated Sheet	0.25	NA

Human Resource

The Company reinforced its belief that people are its most valuable asset by encouraging a vibrant, inclusive and performance-driven culture.

Monthly Engagement Activities - Interactive sessions and team-building events were held regularly across locations. These initiatives kept employees inspired, connected and engaged throughout the year.

Open Communication- Townhalls, leadership interactions were promoted. This encouraged every voice to be heard and strengthened transparency.

Ethical Workplace- Whistleblower Policies and Code of Conduct trainings were actively reinforced. These measures-built trust, accountability and an ethical work environment.

Talent Development and Capability Building

The Company invested extensively in skill enhancement to shape a resilient and agile workforce ready for tomorrow.

Structured Training Programs- Targeted learning modules were designed for executives and staff. These covered technical, functional and behavioural skills to build holistic capabilities.

Training Mandays- Defined training schedules ensured employees engaged in continuous learning. Sessions were aligned with individual career goals and growth aspirations.

Skill Development Focus- A dedicated agenda focused on upskilling teams across diverse functions. This empowered employees to navigate dynamic industry trends effectively.

Digitalisation and Process Transformation

To stay ahead of the curve, the Company embraced technology and automation across HR processes.

HRMS Implementation- A strong digital platform streamlined payroll, attendance and performance management processes. This enhanced accuracy, compliance and employee experience across the organisation.

Process Simplification- Automation significantly reduced manual workloads and repetitive tasks. Teams were empowered to focus their efforts on more strategic, high-impact work.

Employee Well-Being and Engagement

Recognising that well-being fuels performance, the Company took significant strides to build a caring culture.

Health and Safety Measures- Enhanced protocols and strict hygiene standards were implemented to create a secure and healthy workplace. Regular audits and training sessions ensured all employees adhered to safety guidelines consistently.

Work-Life Balance- Flexible policies and hybrid work arrangements enabled employees to balance personal and professional responsibilities. Supportive initiatives promoted well-being and helped reduce stress across teams.

Recognition and Rewards- Achievements were celebrated through structured awards, appreciation programs and spotlight features. These efforts inspired employees to excel and strengthened a culture of motivation and belonging.

Culture of Collaboration and Inclusion

Promoting inclusivity and togetherness continued to be a central focus of the HR strategy.

Inclusive Policies -The Company prioritised fairness, equal opportunities and respect for every individuals contribution. Policies were designed to create an inclusive, supportive work environment for all employees.

Community Building-Festivals and milestones were celebrated together, fostering unity and shared purpose. These initiatives strengthened bonds and reinforced a sense of belonging across the organisation.

Corporate Social Responsibility

Shyam Metalics believes its success should not just be about financial progress but should also include the positive impact made on society. The Companys CSR initiatives are designed to support socioeconomic development and uplift communities, with a particular focus on empowering individuals from marginalised communities.

While some initiatives focus on water conservation through the construction of check dams and ponds, other strategies are designed to introduce large-scale landscaping and tree planting. Further, the organisation promotes the adoption of renewable energy by utilising solar lights and solar-powered irrigation pumps. The Company also promotes organic cultivation methods to champion environmental stewardship and improve health as well as the well-being of society.

To develop local skills and improve livelihoods, Shyam Metalics operates a sewing centre under its ‘Kalp Vriksha scheme. These activities empower residents to gain valuable technical and entrepreneurial skills, providing alternative income opportunities.

Additionally, the Company also undertakes strategic initiatives to revive village temples, improve sanitation facilities and revive traditional handicrafts.

The Company also offers educational assistance in rural communities through a free coaching centre and a computer training centre located in Dhasna village. Further, the Shyam Scholarship helps deserving students from marginalised communities receive long-term access to quality education. In addition to this, it also sponsors a company football team, offering footwear and sports kits, and constructing playgrounds in the community. These initiatives aim to encourage young people to embrace healthy lifestyles and progress towards a brighter tomorrow.

In the realm of rural health, the Company conducts annual eye and medical camps, offering free consultation, medications and spectacles. Villagers also benefit from free ambulance and access to safe drinking water facilities. Further, a newly established health centre, complete with a homoeopathy clinic, aims to further enhance local healthcare provisions.

Financial Overview

Total Income decreased by 2.17% from _6,764.85 Crore to _ 6,617.89 Crore. Operating EBITDA increased by 22.12% from _636.25 Crore to _ 777.02 Crore. Net Profit increased by 39.33% from _ 351.40 Crore to _ 489.62 Crore.

Financial Snapshot of Standalone business (Rs in crores)

Particulars	FY2024-25	FY2023-24
Total Income	6,617.89	6,764.85
Operating EBITDA	777.02	636.25
Interest and Financial Charges	49.88	57.93
Profit Before Tax	660.46	456.04
Tax Expenses	170.84	104.64
Net Profit	489.62	351.40

Key Financial Ratios

Financial Ratio	FY2024-25	FY2023-24	Change (%)	Reason for Variation for the change by more than 25% to the previous FY
Debtors Turnover (times)	7.00	11.67	-40%	Note: a
Inventory Turnover (times)	7.77	6.92	12%	NA
Return on Equity (%)	8.48	7.46	14%	NA
Interest Coverage Ratio (times)	14.71	11.56	27%	Note: b
Current Ratio (times)	1.80	2.16	-17%	NA
Debt-Equity Ratio (times)	0.03	0.02	83%	Note: c
Operating Profit Margin (%)	8.77	6.29	39%	Note: d
Net Profit Margin (%)	7.59	5.29	43%	Note: e

Notes: a) Decrease is primarily due to increase in receivable balance as at the year end and on account of increased operation. b) Variation is primarily due to increase in overall borrowings during the year. c) Variation is primarily due to increase in overall borrowings during the year. d) Variation is primarily due to improve operational cost. e) Variation is primarily due to movement in gross margins and increase in operations during the year.

Business Outlook

Shyam Metalics is steadily fortifying its position in the market. The Company aims to achieve a leading market position in all four metal segments- steel, stainless steel, ferro alloys and aluminium foil. It intends to enhance its geographical footprint while simultaneously improving brand recall and enhancing profit margins.

Additionally, the Company plans to diversify its product portfolio by launching value-added products through its existing distribution channels, with the goal of these high-margin products contributing 80% of revenue. Further, the Company embraces cutting-edge supply chain technologies to improve cost-effectiveness and enhance ancillary operations and backward integration.

The Company is expanding its capacity through investment in a greenfield project for a cold rolling mill, spanning 55 acres of land at Jamuria, West Bengal. The mill will produce GI/GL coils and PPGL (Pre-Painted Galvalume Coils). It is expected that Phase 2 expansion will add another 1,50,000 tonnes to the existing 2,50,000 tonnes capacity of this plant.

Shyam Metalics has also announced a greenfield expansion of Aluminium Flat Rolled Products (0.06 MMTPA) along with expansion of Aluminium Foil (0.018 MMTPA) with an investment of H 700 crores. It has also strategically forayed into the stainless steel sector through the acquisition of Mittal Corp. and is focused on increasing its capacity. The Company is also pursuing capacity expansion through an inorganic route via its joint venture, Ramsarup Industries is manufacturing sponge iron, wires, TMT Bars and steel. Further capital investment is planned for the third phase of Ramsarups expansion.

The Company is committed to driving both forward and backward integration to strengthen its core competencies while simultaneously building a diversified portfolio. As Shyam Metalics marches ahead, it remains focused on minimising its carbon emissions and enhancing sustainability practices throughout its organisation.

Risk Management

Risk	Impact	Mitigation Strategy
Financial Risks	Significant capital expenditure for expansion and fluctuating raw material costs lead to market instability and reduced profit margins.	Shyam Metalics has secured capital in terms of Qualified Institutional Placement (QIP) and maintains healthy cash reserves. To mitigate financial risks, the Company has entered into strategic alliances and established long-term supply deals.
Competition Risks	Entry into stainless steel and aluminium foil introduces stronger domestic and global competition.	The Company continues to expand distribution networks and diversify its product range to gain a strong competitive advantage. Additionally, it prioritises high- margin B2C products to sustain profitability and ensure market stability.
Operational Efficiency Risks	Inability to scale up production capacity can lead to inefficiencies and project delays. Further, it can tarnish the brand image and erode stakeholders trust in the Companys capabilities.	The Company invests in state-of-the-art manufacturing equipment and implements efficient supply chain and inventory management systems to ensure seamless operations.
Environmental and Regulatory Compliance Risks	Stringent environmental regulations could increase operating expenses and necessitate changes to the Companys production processes.	Shyam Metalics embraces sustainable practices to ensure compliance with regulations and minimise long- term environmental costs.
Supply Chain and Sourcing Risks	Fluctuating raw material prices and potential supply chain disruptions can negatively impact cost control and delivery timelines.	The Company enhances backward integration through local sourcing and captive power generation capabilities. It employs strategic stockpiling and long- term agreements to ensure assured supply.
Technological Risks	Continuous investment in new technologies is required to avoid obsolescence and maintain a competitive edge.	The Company is committed to strengthening its R&D efforts, focusing on innovations such as battery- grade aluminium foil and advanced stainless steel. It also partners with experts to drive technological advancement within its operations.

Internal control systems and their adequacy

The Board of Directors has set in place an extensive system of internal controls that links Company policies and plans with efficient and orderly business processes. The system comprises specific processes for the identification and tracking of external and internal risks.

It is based on five main components:

Risk assessment

Control environment

Control activities

Information and communication

Monitoring at all organisational levels

Internal audit operates autonomously to review the completeness and accuracy of records, processes and performance relative to predetermined objectives. It acts as a value-added function for the Board in its concentration on:

Effectiveness and efficiency of operations

Safeguarding company assets

Internal and external reporting reliability

Compliance with legislation, regulation and internal policy

Internal audit drives change through delivery of fact-based information and practical recommendations. These activities are monitored at the Board-level Audit Committee to ensure transparency and accountability. Throughout the year, focus was given to independent decision-making, recording process weaknesses, and taking corrective action. Regular reviews are carried out by an external Chartered Accountant firm under defined policies and procedures. Important audit findings are reported to management and the Audit Committee directly.

Cautionary Statement

This statement made in this section describes the Companys objectives, projections, expectation and estimations which may be ‘forward looking statements within the meaning of applicable securities laws and regulations. Forward–looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised by the Company. Actual result could differ materially from those expressed in the statement or implied due to the influence of external factors which are beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent developments.