Stratmont Industries Ltd Management Discussions.

M/s. Stratmont Industries Limited is looking for new business avenues in various areas like Manufacturing of Coke, hard coke and other coal / coke related products.

Industry Dynamics

Coke - a derivative of metallurgical coking coal is particularly a raw material used by various industries. Being a vital component in the process of conversion of metallurgical ores into metal, coke plays an important role in the metal industry. The coke industry is dominated by large integrated steel plants (ISPs). Traditionally, coke production has been captive, thus ISPs leaving a measure surplus for merchant trading. But during the past years, a number of pig iron plants have been built in India without captive coke making facilities. Also, most coke oven batteries are located in the eastern region of the country in proximity to steel units. As a result, coke consumers in the western and southern regions have to rely primarily on imported coke.

Major Coke consuming industries

• Pig iron producers and Steel Industry

• Foundry industry

• Ferro- alloys industry

• Blast Furnaces

• Zinc and lead producers

• Cement Industry

CURRENT DYNAMICS

With the global slowdown engulfing the world, the infrastructure sector has also suffered contraction and consequently steel producers world over have cut down production. This has caused a direct impact on coke demand and pulled down prices. Being cautious in the fragile market scenario, players are keeping low inventory levels and thus the coke demand has seen downturn. However, steel demand in India is far from softening on long term basis, and with inventory levels turning near to ground, the demand is once again expected to resurface. We expect the coke prices to lower at current level in the near term due to weak sentiments but recover to sustainable levels in the medium to long term.

RISK AND THREATS TO BUSINESS:

The steel sector has been severely impacted due to the economic slowdown and the coal consumption as raw material also fell down. This sector requires large amount of funds for investment which has further brought the sector under pressure. Slowdown in industry is generally and specifically to the industry and job losses are having adverse impact on the sector. Difficulty in getting finance at reasonable cost may hamper the business. While these concerns are valid to some extent, the Company believes that in near future we will be able to control the situation because of their skills, competencies, and demand supply gap.

HUMAN RESOURCE MANAGEMENT:

A strong brand image has been built by the Company. This could not have been possible but for the dedicated professional and experienced manpower resources of the company. The Company ensures best manpower resources of the company. The Company ensures best work environment and equal opportunities with better prospects of career development to all its employees.

Since the Company is engaged in trading activity therefore minimum number of staff and workers has been retained in the Company to oversee day to day operations. The Company cares for its personnel and considers them as their assets. The Company is exposed to risks from market fluctuation of interest rate and stock market fluctuation of the share price.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has an in house internal audit department which examines and ensures adequate internal checks and control procedures. It also ensures proper accounting, records authorization, control of operations and compliance with law. Further the Company is continuously working to improve and strengthen internal check and control system to align with the expected growth in operations.

RISK MANAGEMENT:

The Company is taking care of its risk management through robust risk management system. Risks are being identified to achieve its strategic business objective, plans are made, implemented and monitored to mitigate suck risks.

COMPLIANCE WITH LOCAL LAWS:

THE Company believes strongly in complying with the laws of various states where it operates. The Company has legal set up for ensuring compliance with all statutes which are applicable periodically to its operations/ ventures. Any approvals or permissions related to specific operations are either handled by legal cell or by the concerned department.

CAUTIONARY STATEMENT:

In accordance with the code of corporate governance approved by the Securities and Exchange Board of India, shareholders and readers are cautioned that in case of data and information external to the Company, no representation is made on its accuracy or comprehensiveness through the same are based on sources believed to be reliable. Utmost care has been taken to ensure that the opinions expressed by the management herein contains its perception on the material impacts on the Companys operations but it is not exhaustive as they contain forward - looking statement which are extremely dynamic and increasingly fraught with risks and uncertainties, Actual results, performances, achievements or sequence of events may be materially different from the views and expressed herein.

By The Order of The Board
Sd/-
Mr. Jagadish Savajibhai Chhanga
Managing Director
Mumbai
May 30, 2020