Sujana Universal Industries Ltd Management Discussions.
Pursuant to Regulation 34 read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 your directors wish to report as follows:
Statements made in this report describing the Companys objectives, projections, estimates and expectations may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates; changes in the Government regulations; tax laws and other statutes and incidental factors.
INDUSTRY STRUCTURE AND DEVELOPMENTS
India was the worlds second-largest steel producer@ with production standing at 106.5 MT in 2018. The growth in the Indian steel sector has been driven by domestic availability of raw materials such as iron ore and cost-effective labour. Consequently, the steel sector has been a major contributor to Indias manufacturing output. The Indian steel industry is very modern with state-of-the-art steel mills. It has always strived for continuous modernisation and up-gradation of older plants and higher energy efficiency levels. Indian steel industries are classified into three categories such as major producers, main producers and secondary producers.
Indias finished steel consumption grew at a CAGR of 5.69 per cent during FY08-FY18 to reach 90.68 MT. Indias crude steel and finished steel production increased to 103.13 MT and 104.98 MT in 2017-18, respectively. In 2017-18, the countrys finished steel exports increased 17 per cent year-on-year to 9.62 million tonnes (MT), as compared to 8.24 MT in 2016-17. Exports and imports of finished steel stood at 0.72 MT and 1.12 MT, respectively, in FY20P(up to May).
Some of the other recent government initiatives in this sector are as follows:
An export duty of 30 per cent has been leviedonironore^(lumpsandfines) toensure supply to domestic steel industry.
Government of Indias focus on infrastructure and restarting road projects is aiding the boost in demand for steel. Also, further likely acceleration in rural economy and infrastructure is expected to lead to growth in demand for steel.
The Union Cabinet, Government of India has approved the National Steel Policy (NSP) 2017, as it seeks to create a globally competitive steel industry in India. NSP 2017 envisages 300 million tonnes (MT) steel-making capacity and 160 kgs per capita steel consumption by 2030-31.
The Ministry of Steel is facilitating setting up of an industry driven Steel Research and Technology Mission of India (SRTMI) in association with the public and private sector steel companies to spearhead research and development activities in the iron and steel industry at an initial corpus of Rs 200 crore (US$ 30 million).
The Government of India raised import duty on most steel items twice, each time by 2.5 per cent and imposed measures including anti-dumping and safeguard duties on iron and steel items.
The National Steel Policy, 2017, has envisaged 300 million tonnes of production capacity by 2030-31. In 2018, steel consumption of the country is expected to grow 5.7 per cent year-on-year to 92.1 MT*. Further, India is expected to surpass USA to become the worlds second largest steel consumer in 2019*. Huge scope for growth is offered by Indias comparatively low per capita steel consumption and the expected rise in consumption due to increased infrastructure construction and the thriving automobile and railways sectors.
Exchange Rate Used: INR 1 = US$ 0.0144 as on March 30, 2019.
RISKS AND CONCERNS
Your Company is actively, albeit cautiously, looking for growth opportunities and new markets for its products. The Company is exposed to a number of market risks arising from its normal business activities. These risks include changes in raw material prices caused due to market fluctuations and imposition of various government duties as in the recent times, foreign currency exchange rate, interest rate which may adversely impact the Companys financial assets, liabilities and/or future cash flows. The Company continues to mitigate these risks by careful planning of optimum sales mix, active treasury management, product diversification, innovation and penetration in different markets, both domestic and international. Further cost saving measures across all segments of the Company, would help in improving the margins in an otherwise difficult market.
OPPORTUNITIES AND THREATS
A diversified product portfolio and considerably wide geographical reach, both domestic and international, have helped the Company to significantly its business and meet the risks with suitable precaution. The Company is focused on enhancing value added products. Improvement in safety performance is of utmost priority, for which the Company has constantly been initiating measures to avert accidents.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has in place adequate internal control systems and procedures commensurate with the size and nature of business. Depending on the changing requirements the internal audit department is strengthened. The Company has implemented corporate governance requirement and the audit committee periodically reviews the systems and procedures of the Company.
These procedures are designed to ensure that:
All assets and resources are acquired economically, used efficiently and are adequately protected; financial, managerial and operating information is accurate, reliable and is provided timely; and Significant
All internal policies and statutory guidelines are complied with.
The effectiveness of internal control is continuously monitored by the Audit Committee of the Company. The Company has an Audit Committee which regularly reviews the reports submitted. The Audit Committee observations are acted upon by the Management. The Company has implemented the corporate governance requirements and the Audit Committee periodically reviews the systems and procedures of the Company.
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:
The operating performance of the Company has been discussed in Directors Report under the head Financial Highlights & Operations and Overall Performance in the current period.
Your Company gives priority to comply all of the statutory requirements in time and the management regularly discusses the same with all of the departmental heads. The compliance officer, timely ensures compliance of the provisions of the Companies Act, 2013, SEBI Regulations and provisions of Listing Agreements. Compliance Certificates are obtained from various units of the Company and the Board is informed of the same at every Board Meeting.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES:
The development of human resources is a key strategic challenge in order to prepare people for future responsibilities in terms of professional skills as well as business skills. Your Company has conducted training programmes to its employees enabling them to improve / upgrade their skills.
Silent Revolution continues unabated: Creating tomorrows leaders through identification and nurture of potential talent. Company has taken numerous initiatives for leadership development.
The Company is a defendant in legal proceedings related to its business and operations and these legal proceedings are pending at different levels of adjudication before various courts and tribunals in different jurisdictions. The proceedings may be decided adversely against the Company, or that any new developments may arise, such as a change in Indian law or rulings against the Company by appellate courts or tribunals. This could require the Company to make provisions in its financial statements, which could have a material adverse effect on its financial position and on the Companys business. The Company understands this and has strategically deployed legal resources across geographies to mitigate the risk.
CORPORATE SOCIAL RESPONSIBILITY
Sujana Foundation, the CSR arm of the Sujana Group was established in 2007 to serve the society and community in the sectors of Agriculture, Education, Management, Healthcare, Rural Development, Rural Entrepreneurship and Poverty alleviation. Sujana Group has integrated the real mechanisms of CSR Accountability, Sustainability, Transparency and Responsibility into its core business strategy. Over the years Sujana is sharing its success and resources with those less privileged in society through Community involvement.
|For SUJANA UNIVERSAL INDUSTRIES LIMITED|
|(IP Registration No.IBBI/IPA-001/IP-P00108/2017-18/10215)|
|PLACE: Hyderabad||(A Company under Corporate Insolvency Resolution Process by|
|DATE: November 14th, 2019||NCLT order No. CP(IB)No. 186/09/HDB/2019)|