Suraj Ltd Management Discussions

REPORT

ANNEXURE-A

Industry Structure and Development:

Suraj Limited ("the Company") is Indias leading Manufacturer of Stainless Steel seamless Pipes, tubes, and "U" tubes, Flanges & fittings with Electro polishing having a plant at Survey no. 779/A, Thol, Tal:- Kadi, Dist: - Mehsana and Survey No. 51, Village : Chandarda, Kalol-Mehsana Highway, Dist : Mehsana, Gujarat. Our products find application in important industry segments like pharmaceuticals, dyes & pigments, Oil, Gas, Refinery, etc. The day to day management of the Company is looked by the Executive Director assisted by a team of competent technical & commercial professionals.

Financial Performance:

The company has earned gross revenue from operation during the year Rs. 33,066.53 lakhs as against Rs. 36,663.86 lakhs achieved in the previous year on standalone basis. The Company earned total income of Rs. 33,411.80 lakhs during the year as against total income of Rs. 37,230.39 lakhs earned in the previous year on standalone basis.

PAT during the year reported as Rs. 2,066.18 lakhs as against Rs. 2,023.39 lakhs reported in the previous year on standalone basis. PAT of your company increased by 2.11% during the year under review.

Opportunities, Threats, Risks and Concerns:

As is normal and prevalent for any business, the Company is likely to face competition from large scale imports. There can be risks inherent in meeting unforeseen situation, not uncommon in the industry. Company is fully aware of these challenges and is geared to meet them. Company also recognizes the risks associated with business and would take adequate measures to address the associated risks and concerns. Some of these factors include competition from multinational Companies, duty free imports by customers against export obligations, our pricing strategy being mainly dependent on import affairs and dependence on imported raw material.

Internal Control Systems and their Adequacy:

Management has put in place effective Internal Control Systems to provide reasonable assurance for:

• Safeguarding Assets and their usage.

• Maintenance of Proper Accounting Records and

• Adequacy and Reliability of the information used for carrying on Business Operations. Key elements of the Internal Control Systems are as follows:

(i) Existence of Authority Manuals and periodical updating of the same for all Functions.

(ii) Existence of clearly defined organizational structure and authority.

(iii) Existence of corporate policies for Financial Reporting and Accounting.

(iv) Existence of Management information system updated from time to time as may be required.

(v) Existence of Annual Budgets and Long Term Business Plans.

(vi) Existence of Internal Audit System.

(vii) Periodical review of opportunities and risk factors depending on the Global / Domestic Scenario and to undertake measures as may be necessary.

The Company has appointed an Independent Auditor to ensure compliance and effectiveness of the Internal Control Systems in place.

The Audit Committee is regularly reviewing the Internal Audit Reports for the auditing carried out in all the key areas of the operations. Additionally, the Audit Committee approves all the audit plans and reports for significant issues raised by the Internal and External Auditors. Regular reports on the business development, future plans and projections are given to the Board of Directors. Internal Audit Reports are regularly circulated for perusal of Senior Management for appropriate action as required.

Human Resource/Industrial Relations:

Human Resources Development, in all its aspects like training in safety and social values is under constant focus of the management. Relations between the management & the employees at all levels remained healthy & cordial throughout the year. The Management and the employees are dedicated to achieve the corporate objectives and the targets set before the company.

Business outlook:

India remains a bright spot in the global steel industry and the steel demand in the country is expected to show a healthy growth of 8.6% and 7.7% in 2023 and 2024 compared to a global growth of 1.8% and 1.9%, respectively, according to Short Range Outlook of The World Steel Association. World crude steel production stood at 1849.7 mt in 2023, registering a decline of 0.1% yoy, according to provisional data released by World Steel Association (worldsteel). In December 2023, world crude steel production stood at 135.7 mt, down 5.3% compared with the same period of the previous year. The top 10 countries cumulative production in 2023 stood at 1601.55 mt (up 0.8% yoy) and they accounted for 86.6% of world crude steel production during the period. India Ratings and Research (Ind-Ra) has maintained a neutral outlook for the steel sector for 2023-24. The Indian steel sector has enjoyed a multi-year demand surge which will continue in the current FY24 but it is expected to moderate in the coming fiscal, global analytics company Crisil said. Overall the Indian steel sectors outlook remains positive, albeit with a projected dip in demand next year. The industrys focus will be on ramping up domestic production and tackling import concerns to maintain a robust long-term growth.

Key Financial Ratios:

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios are as under:

Ratio	Numerator	Denominator	Current Period	Previous Period	% Variance	Reason for Variance
Current Ratio	Current assets	Current liabilities	1.16	2.05	-43.53%	Decrease due to reduction payment cycle.
Debt - Equity Ratio	Total Debt	Shareholders Equity	0.51	0.40	27.23%	Increase in debt during FY 2023-24.
Debt Service Coverage Ratio	Earnings available for debt service	Debt Service	1.15	1.58	-27.14%	Increase in debt during FY 2023-24.
Inventory Turnover Ratio	Cost of Goods sold	Average Inventory	15.22	14.62	4.07%	-
Net Profit Ratio	Net Profit	Revenue	0.09	0.08	15.72%	-
Return on Capital Employed	Earning before interest and taxes	Capital Employed + Non Current Liability	0.27	0.31	-13.88%
Debt Equity Ratio Operating Profit Margin	Total Debt	Shareholders Equity	0.51	0.40	27.23%	Increase in debt during FY 2023-24.

Cautionary Statement:

Statements in the Management Discussion and Analysis and Directors Report describing the Companys strengths, strategies, projections and estimates, are forward-looking statements and progressive within the meaning of applicable laws and regulations. Actual results may vary from those expressed or implied, depending upon economic conditions, Government Policies and other incidental factors. Readers are cautioned not to place undue reliance on the forward looking statements.