Indian Economy
Indias economy showcased significant growth in the January-March quarter of 2022-23,
with a GDP growth rate of 6.1%.
According to Quantico Research, the GDP growth in Q4 FY23 was more significant than
anticipated, which was a welcome surprise. It appears to have been fueled by a general
improvement in domestic drivers of private consumption, state consumption, and
investments. Another consolation was the decreasing external trade imbalance. These
factors contributed to an annual growth rate of 7.2%.
The growth boosted the Indian economy to US$ 3.75 trillion and prepared the ground for
it to reach the US$ 5 trillion goal in the coming years.
Private consumption increased steadily and reached its highest level since 2006-07 at
58.5%, representing sustained growth, while exports of goods and services amounted to
23.5% of GDP, the highest level since 2014–15. From 2011 to 2023, Indias GDP from
Manufacturing rose from C5,088.17 billion to an all-time high of C7,382.00 billion. The
gross GST revenue for the _scal year 2022–2023 was C18.10 lakh crore, an increase of
22% over the prior year.
As we advance, global growth is anticipated to slow down in 2023 and remain largely
muted in the following years. Indias CAD in FY24 will likely increase due to the
decreasing demand driving down commodities prices globally.
However, a quick rebound mainly spurred by domestic demand and, to a lesser extent, by
exports poses a downside risk to the current account balance. With the improvement of the
business and banking sectors balance sheets, growth in India is anticipated to be rapid
in FY24 due to a robust credit disbursal and capital investment cycle.
Even as Indias outlook remains encouraging, global economic prospects for 2023 have
been weighed down by the combination of a unique set of challenges expected to result in a
few downside risks.
Indian Infrastructure:
The Governments expenditure on infrastructure is a captive source of income for big
infrastructure players – cement and steel makers. The infrastructure sectors
strength was what let the Indian economy withstand the threat posed by the pandemic. The
Governments current infrastructure spending and domestic demand are putting the nation at
the peak of a positive growth cycle.
The Government of India has approved investment proposals worth C564.2 billion (US$
6.88 billion) to state governments under a scheme that gives interest-free loans for
infrastructure spending. While addressing the budget for 2023-24, the finance ministry
declared that it would provide special assistance to states by extending 50-year
interest-free loans worth C1.3 trillion during the ongoing
financial year.
The Governments increased spending on infrastructure in FY 24 will push engineering,
procurement, and construction companies to hit revenue growth of 17-20% and shoring their
pro_tability. In the Budget 2023-24, the Government has increased the outlay for capital
expenditure on the infrastructure sector by 33% from C7.5 lakh crore to C10 lakh crore.
This buoyancy is supported by the expected strong order in_ows owing to the Governments
focus on infrastructure in the latest budget.
Government Programs
The Government has been focusing on policies to ensure world-class infrastructure
creation promptly. Some of the schemes are :
National Infrastructure Pipeline: The main emphasis of this is on ease of living. It is
a group of social and economic infrastructure projects slated to be established over five
years. The NIP will fulfill all the crucial factors that will help India achieve its
target of becoming a US$ 5 trillion economy by the financial year 2025.
National Logistics Policy: This policy aims to develop infrastructure, expand business
and increase employment opportunities. This policy will attract global investments and
help the country compete better with China and the USA in the globalisation age. The
policy will improve the infrastructure, such as roads, rail and waterway networks,
airports, logistics hubs, and digital services related to the sector. The logistics
services will improve drastically and aid in Indias mission - Self-Reliant India.
Indian Water Infrastructure:
A large number of Indians experience moderate to severe water stress. This difficulty
is worsened by Indias reliance on a monsoon that is becoming more unpredictable for its
water needs. Even as the country experiences more _oods and droughts, climate change will
likely worsen this demand for water resources. However, by tackling these problems and
creating an ecologically sound framework, India has continued to lead numerous
international projects to safeguard the environment and its water supplies.
Since 1980, there has been an increase in water infrastructure in India. The country
conserves only a tiny portion of its erratic rainfall across regions. Unlike arid-rich
countries (such as the United States and Australia) – which have built over 5,000 m3
of water storage per capita – and China – which can store over 1,000 m3 per
capita – Indias dams can only store about 200 m3 per person.
The Government has taken several initiatives in this area, from establishing a
dedicated ministry for water resources to putting into practice a comprehensive strategy
for conservation. With the advent of the Jal Jeevan Mission in 2019, about five crore
households have rapidly been provided with similar water connections over the last two
years – more than the number of households that obtained such connections in the last
sixty-five years. This was launched to provide all rural families access to clean and
sufficient drinking water through individual household tap connections by 2024. It was
designed to help the enormous and underprivileged rural Indian population.
Recently, on April 24, 2022, Mission Amrit Sarovar was launched to construct at least
75 ponds to overcome the water crisis in rural areas. Achieving resounding success in
water conservation measures within months of its launch, more than 25,000 ponds have been
constructed as part of the Yojana. Another initiative started for water conservation is
the campaign Catch the Rain under the _agship scheme of the Jal Shakti Abhiyaan. They
initiated to promote awareness and put a special action plan for rainwater conservation in
the country. As part of this campaign, the Government has increased awareness of issues
like planting trees, cleaning up, building puddles, and other activities.
Steel Industry
India currently ranks as the Worlds 2nd Largest Producer of Crude Steel, surpassing
Japan in 2018, with an output of 33.2 MT in January-March 2023, showing a yoy growth of
3.0%. India is a net steel exporter, witnessing an export of 6.72 MT of _nished steel
against the import of 6.02 MT in 2022-23. The country was a net importer of steel in
2014-15 with 9.32 MT imports Vis-?-vis the export of 5.59 MT.
Indias _nished steel consumption increased by 12.7% on the year to 119MT in 2022-23,
while crude steel output rose by 4.2% against the previous year to 125MT, according to
provisional data from the steel ministrys joint plant committee.
The Indian Steel Association (ISA) forecasts a 7.5% growth in steel demand in _scal
year 2023-24 to 128.85MT, driven by strong infrastructure spending. The association also
expects a 6.3% growth in steel demand to 136.97MT in _scal year 2024-25.
Key parameters |
FY 2014-15 |
FY 2022-23 |
% increase |
| Crude steel Capacity (MT) |
109.85 |
160.3 |
46% |
| Crude steel Production (MT) |
88.98 |
126.26 |
42% |
| Total Finished Steel Production (MT) |
81.86 |
122.28 |
49% |
| Consumption (MT) |
76.99 |
119.86 |
57% |
| Per capita steel consumption (in Kg) |
60.8 |
86.7 |
43% |
Steel Pipes and Tubes
With a nearly 8% contribution to Indias steel consumption, the Indian steel pipe
industry is one of the significant verticals in the Indian steel industry. Steel pipes and
tubes are produced in various diameters depending on the purpose and can be divided into
two categories: Submerged Arc Welded and Seamless (S&S) and Electric Resistant Welded
(ERW). The industry has been valued at roughly 50,000 crores overall, with value shared
equally between the two categories.
The global Steel pipes and tubes market size was US$ 94 billion in 2022 and is expected
to reach a value of US$ 122.65 billion in 2032 and register a revenue CAGR of 3% during
the forecast period. The primary factors driving the market revenue growth are emerging
nations rapid industrialisation and growing requirement for infrastructure development.
Manufacturers are constantly developing technologically advanced products to address the
demand for e_cient and long-lasting steel pipes and tubes.
Due to increased demand from several end-use industries, including oil and gas,
construction, the automobile industry, and others, the market for steel pipes and tubes is
proliferating. Due to their extensive usage in transporting and distributing oil and gas,
steel tubes and pipes are in great demand. The Worlds growing urbanisation and
population, which have raised the demand for residential and commercial buildings, are
other factors driving the need for steel pipes and tubes.
One of the main factors driving the growth of the steel pipes and tubes market is the
rising demand for reliable and durable infrastructure, particularly in emerging economies.
Due to considerable expenditures made by various governments in infrastructure projects
like roads, bridges, and airports, there is an increase in demand for steel pipes and
tubes.
The market is also growing due to the rising need for steel pipes and tubes in the
automotive sector. Steel pipes and tubes are extensively used to manufacture automobile
components such as fuel injection, structural, and exhaust systems.
Seamless steel pipes and tubes are a significant market driver due to their exceptional
attributes, including high strength, corrosion resistance, and lifespan. These pipes are
widely used in various systems, such as those for oil and gas exploration, hydraulic
systems, and power generation.
However, the market for steel tubes and pipes also confronts several challenges, such
as varying raw material costs, increased competition from replacement materials, and
stringent government regulations restricting the use of particular chemicals in the
manufacturing process.
About the Company
Surani Steel Tubes Limited launched its operations in July 2012 on a solid foundation
built by years of industry experience. Surani Steels brand stands out as a reliable brand
in steel tubes and ERW pipes sector. The Company is managed by experienced professionals
with decades of experience in ERW / MS pipe and steel tube manufacturing.
Human Resource
At Surani, we have focused on creating a future-ready workforce. We nurture talent
through our best-in-class working environment and numerous learning opportunities. This
has helped us build a strong team with the best candidates committed to the Companys
goals and values. We consistently emphasise accountability and ownership to encourage our
workers to participate equally in every stage of growth journey.
Financial Performance
Particulars |
FY23 |
FY22 |
%change |
Reason for Change |
| Stability Ratios |
|
|
|
|
| Debt Equity Ratio |
0.5 |
0.61 |
-18.25 |
|
| Debt Service Coverage Ratio |
0.04 |
2.2 |
-98.18 |
Reduced due to decrease in net pro_t |
Interest Coverage Ratio Liquidity Ratios |
-0.37 |
2.22 |
-116.58 |
Reduce due to increase in EBIT |
| Current Ratio |
2.04 |
1.5 |
35.96 |
Due to increase in current asset compared to current liabilities |
| Debtor Turnover Ratio (days) |
39 |
13 |
200 |
Increase in trade receivable and decrease in net sales |
| Inventory Turnover Ratio (days) |
51 |
72 |
29.17 |
Decrease in inventory and decrease in sales in not in same ratio |
| Pro_tability Ratios |
|
|
|
|
| Operating Pro_t Margin (%) |
0.5 |
3.5 |
-85.71 |
Due to increase in operating pro_t |
| Net Pro_t Margin (5%) |
-0.01 |
0.01 |
-207.02 |
Due to loss in current year |
Internal Control System and Adequacy
The Companys internal controls are commensurate with its size and the nature of its
operations. They have been designed to provide reasonable assurance about recording and
providing reliable financial and operational information, complying with applicable
statutes, safeguarding assets from unauthorised use and ensuring compliance with corporate
policies. The all-encompassing control framework covers all critical business functions,
including governance, compliance, audit, control and reporting.
The Companys state-of-the-art ERP system and stringent procedures ensure high accuracy
in recording and providing reliable financial and operational information, meeting
statutory compliances.
The Companys internal audit team keeps a close eye on business operations, and any
deviations are promptly brought to the notice of the leadership. The Internal Audit
reports are periodically reviewed by the management and the Audit Committee of the Board,
and necessary improvements are undertaken if required.
Risk Management
At Surani Steel, our risk strategy is determined by a risk appetite de_ned by a series
of risk criteria. The criteria are based on sectoral circumstances, liquidity available
and our earnings target within accepted volatility limits. These criteria provide a
reference for our operating divisions.
The Companys risk management framework encompasses strategy and operations and seeks
to proactively identify, address and mitigate existing and emerging risks to make the
business model emerge stronger and ensure that pro_table business growth becomes
sustainable.
Cautionary statement
Statements in this document/discussion relating to future status, events, or
circumstances, including but not limited to statements describing the Companys
objectives, projections, estimates and expectations, may be forward-looking statements
within the meaning of applicable laws and regulations. Such statements are subject to
numerous risks and uncertainties and are not necessarily predictive of future results.
Actual results may di_er materially from those expressed or implied in the statements.
Important factors that could make a di_erence to your Companys operations include
economic conditions a_ecting demand/supply and price conditions in the market in which the
Company operates, changes in Government regulations, tax laws and other statutes and other
incidental factors.
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