vaswani industries ltd share price Management discussions


Vaswani Industries, a renowned Chhattisgarh conglomerate, boasts a range of value-added offerings: Induction Furnace, Sponge Iron, Power, Steel Billets, Rolling Mill, TMT Bars, Forgings & Casting. With a legacy of dependable customer service and top-tier products, weve expanded our portfolio in response to evolving needs. Our foundation rests on superior quality, customer satisfaction, employee well-being, ethical conduct, and responsible corporate engagement.

GLOBAL ECONOMIC SCENARIO & OUTLOOK

The global economic outlook for 2023 is uncertain. The International Monetary Fund (IMF) projects global growth to slow from 3.6% in 2022 to 2.8% in 2023, the lowest annual rate since the global financial crisis. This slowdown is being driven by a number of factors, including the war in Ukraine, rising inflation, and tighter monetary policy.

The war in Ukraine has disrupted global trade and investment, and has led to higher energy and food prices. Inflation is also rising in many countries, as supply chain disruptions and strong demand put pressure on prices. In response, central banks are raising interest rates, which is expected to slow economic growth.

The global economic outlook is overshadowed by risks like pessimism in the Chinese market, sustained decline in Chinas GDP growth, and rising inflation, adding to the prevailing uncertainty and impacting overall stability.

EMERGING MARKET AND DEVELOPING ECONOMIES (EMDE) OUTLOOK

The 2023 outlook for Emerging Market and Developing Economies (EMDEs) is a blend of challenges and potential. Anticipated growth reduction from 4.6% (2022) to 4.1% arises due to a cooling global economy, elevated inflation, and tightening monetary policies. The Ukrainian conflicts impact on trade and investment adds to the complexity. Yet, positives emerge: Navigating the dynamics of the USA and European Union, Chinas "plus one" policy, escalating commodity prices, and fiscal support in specific EMDEs requires adept risk management and seizing opportunities. These factors collectively shape the path forward for EMDEs in the current year

INDIAN ECONOMY

The Indian economy is projected to grow by 6.5% in 2023-24, making it the fastest growing major economy in the world. The growth will be driven by strong domestic demand, as well as investment in infrastructure and manufacturing. However, the economy faces some headwinds, such as rising inflation and the ongoing war in Ukraine.

Here are some of the key factors that are expected to shape the Indian economy in 2023-24:

* Strong domestic demand: The Indian economy is expected to benefit from strong domestic demand, driven by rising incomes and consumption. This will be supported by the governments focus on providing social welfare benefits and infrastructure development.

* Investment in infrastructure and manufacturing: The government is also investing heavily in infrastructure and manufacturing, which will boost economic growth. This includes projects such as the National Infrastructure Pipeline and the Make in India initiative.

* Rising inflation: Inflation is expected to remain a challenge in 2023-24, due to factors such as rising commodity prices and supply chain disruptions. This could dampen consumer spending and slow economic growth.

* Ongoing war in Ukraine: The ongoing war in Ukraine is also a major risk to the Indian economy. The war has led to rising oil prices and disrupted global supply chains, which could have a negative impact on economic growth.

Overall, the Indian economy is expected to grow at a healthy pace in 2023-24. However, there are some risks that could dampen growth, such as rising inflation and the ongoing war in Ukraine.

BUSINESS OUTLOOK STEEL INDUSTRIES

1. INDIA AND GLOBAL STEEL INDUSTRIES

The global steel industry is expected to grow by 2.3% in 2023 and 1.7% in 2024, after a decline of 0.4% in 2022. The Indian steel industry is expected to grow by 7.3% in 2023 and 6.2% in 2024, after a growth of 18.4% in 2022. The growth of the Indian steel industry is being driven by strong domestic demand, as well as government initiatives to boost infrastructure development.

Here are some of the key factors that are expected to shape the global and Indian steel industry in 2023- 2024:

* Strong domestic demand: The global economy is expected to grow at a healthy pace in 2023-2024, which will boost demand for steel. This will be supported by rising incomes and consumption, as well as government spending on infrastructure development.

* Government initiatives: Governments around the world are taking a number of initiatives to boost the steel industry. These include providing incentives to steel manufacturers and investing in infrastructure development.

* Rising environmental concerns: The steel industry is facing increasing pressure to reduce its carbon emissions. This is leading to a focus on green steel production, which uses renewable energy and recycled materials.

Overall, the global and Indian steel industry is expected to grow in 2023-2024. However, there are some risks that could dampen growth, such as rising inflation and geopolitical tensions

2. OPPORTUNITIES AND THREATS

The largest contributor for the Steel demand continues to be the Construction and Infrastructure sector. With a likely realignment of global supply chains, India has the skill, resources and expertise to emerge as a location of choice. The Metals and Mining sector in India is expected to witness a major reform in the next few years, owing to reforms such as Atmanirbhar Bharat and Make in India Campaign. The Cabinet Committee on Economic Affairs (CCEA) has approved commercial coal and iron ore mining for private sector and the methodology of allocating mines via auction and allotment, thereby prioritizing transparency, ease of doing business and ensuring the use of natural resources for national development.

The key threat to the steel industry continues to be the smooth availability and the price volatility of iron ore and coal, which are the key raw materials. The non- availability of non coking coal and the rising prices of Iron Ore might pose significant challenge in the future.

OPPORTUNITIES

The steel sector presents significant opportunities for Indian companies. With escalating infrastructure development and robust demand, the industry offers a chance to capitalize on domestic growth. Expanding into value-added products, adopting sustainable practices, and leveraging technological advancements can enhance competitiveness. Additionally, Indias position as a global steel hub, coupled with favorable government initiatives, creates a favorable landscape for companies to innovate, diversify, and thrive in the steel sector. The allocation for various schemes like Pradhan Mantri Awas Yojana (PMAY) scheme, Jal Jeevan Mission will also have a positive impact on long steel players. Further, the restrictions imposed on the export from Russia, which is the 2nd largest steel exporter (followed by China) to the European Union will also create opportunity for export to the Indian steel makers.

THREATS

The Indian steel industry faces a mix of challenges in its path to growth. Escalating input costs are squeezing margins, while fierce competition from Chinas low-cost production poses a substantial threat. Stricter environmental regulations are also driving up production costs, and mounting trade barriers from global players like the US and the EU are adding further complexity. Geopolitical tensions, exemplified by the war in Ukraine, have the potential to disrupt international trade and investments, thereby impacting the resilience of the Indian steel sector. Strategic adaptation and innovation will be pivotal in navigating these intricate challenges.

SUSTAINABILITY

Embracing sustainability, our company forges a greener future. Through innovative processes, we reduce carbon emissions, conserving energy and preserving resources. Our commitment to recycling minimizes waste, while eco-friendly technologies enhance efficiency. We prioritize ethical sourcing, ensuring responsible industrial practices. By fostering a safe and inclusive workplace, we empower our diverse workforce. Collaboration with local communities advances shared prosperity. From production to delivery, sustainability guides every step, creating steel that builds progress while safeguarding the planet. Together, we shape a sustainable tomorrow through unwavering dedication to environmental consciousness and social well-being.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCE/INDUSTRIAL RELATIONS

The Companys HR vision is to build an organization, where everyone is motivated to perform to the fullest capacity to contribute to developing and achieving individual excellence with organizational objectives. The Company continues to maintain healthy work environment and constructive relationship with its employees with a continuing focus on productivity and efficiency. The Company believes that its success is driven by the success of its people, who are at the core of everything the Company does. Keeping this in mind, the Company has invested significantly in the professional development of employees through training and leadership development programs. The Company has maintained healthy and cordial industrial relations during the year

RATIO ANALYSIS

S.No. Particulars FY.2023 FY.2022 %change Reason
1 Debt equity Ratio 0.32 0.49 34.69% Reduction in Debt
2 Current ratio 1.82 1.46 -24.66% Reduced Short-Term Debt
3 Debt service coverage ratio 3.18 3.3 3.64% Better Cash Flow
4 Return on equity 5.48 4.23 -29.55% Better profitability
5 Inventory turnover ratio 8.91 8.9 -0.11% No significant variation
6 Net capital turnover 6.87 9.29 26.05% Increase in Inventory cost

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Our company maintains an appropriate internal control system aligned with our scale and business nature. This system ensures reliable financial and operational data, legal compliance, asset protection, and adherence to corporate policies. A robust business planning system establishes operational targets and benchmarks, promptly enabling corrective measures. Weve engaged an independent professional firm for thorough internal audits, ensuring the efficacy of our risk management and governance. This objective review offers assurance on our controls sufficiency and effectiveness.

CAUTIONARY STATEMENT

Statements made herein describing the Companys expectations or predictions are "forward-looking statements". The actual results may differ from those expected or predicted. Prime factors that may make a difference to the Companys performance include market conditions, input costs, govt. regulations, economic development within/outside country etc.