Vaswani Industries Ltd Management Discussions.


As steel industry is at the heart of the global economy and equally so at the core of our sustainable modern society. Despite the influence of the pandemic, through its different regional impacts, the global steel industry was fortunate to end 2021 with only a minor contraction in steel demand. In the second half, the steel industry showed a rebound with resumption of economic activities in almost every part of the world, which translated into more than 30% jump in the steel prices globally.

The World Steel Association (world steel) has forecasted that steel demand will grow by 5.8% in 2021 to reach 1,874.0 million tonnes and will further grow by 2.7% to reach 1,924.6 million tonnes in 2022.


The largest contributor for the Steel demand continues to be the Construction and Infrastructure sector. The sector anticipates growth in near future, owing to Government infrastructure projects like Bharatmala, Sagarmala, Atal Mission for Rejuvenation and Urban Transformation, setting up of National Investment and Manufacturing Zone, Smart cities etc. Further, the rapid investment in the Infrastructure sector is expected to result in a growth in Capital Goods which consumes nearly 15% of the domestic Steel production. The Automotive Mission Plan 2026 is also expected to fuel the Steel demand in auto sector, which is another major driver for steel demand in the country. The National Steel Policy (NSP) and its emphasis on Government tenders for domestically manufactured steel & iron products shall also support the industry in the coming times. Last but not the least, the current low per capita steel consumption and rapid urbanization in the country shall continue to provide significant potential for growth of the steel sector. The major threat to the domestic steel sector continues to be the high cost of borrowed funds as compared to the developed countries such as China, Japan and Korea, which makes the Indian steel players more vulnerable to any slowdown in the economy. Moreover, the steel demand is cyclical, which further makes the situation difficult for the indigenous steel makers. Also, another key threat to the steel industry continues to be the availability and the price volatility of iron ore, which is the key raw material. However, your Company has insulated itself against these possible threats by being one of the lowest leverage company in the industry.


The company has four segment iron & steel, power, real estate and agri division. The necessary disclosures have been made as per accounting standard 32 on segment reporting in the notes to accounts.


The coronavirus pandemic plummet the steel industry in the first half of 2020, but it quickly bounced back with a pick-up in domestic demand at the onset of the third quarter due to restoration of activities. The industry expects the strong demand to continue in the current year also. The mood in the steel industry is upbeat so far as demand growth in India is concerned as the per capita consumption of steel in India is significantly low, which leaves room for growth. In India, it stands at around 78 kg compared to a global average of 225 kg. Further, the National Steel Policy 2017, which has laid down a roadmap for achieving long term growth in the Indian steel industry, both on the demand and supply side, will continue to aim to increase demand of steel in the country by targeting the domestic per capita steel consumption at 160 kgs by the year 2030-31. The Governments focus on infrastructure spending, expansion of housing and manufacturing sector, road and railway projects will also fuel the demand for steel in the country.


Risk which is the manifestation of business uncertainty affecting corporate performance and prospects, is an integral part of business. The Company follows a well-defined and exhaustive risk management process, which is integrated with its operations. This enables the Company to identify, categorize and prioritize operational, financial and strategic business risks. The Company has formed a Risk Management Committee which has the mandate of identifying the risks and suggesting the ways to mitigate them. The Company spends significant time, effort and human resources to manage and mitigate identified risks. The Company has identified its risk parameters and planned out mitigation measures to sustain its operations. The steel making business is subject to various potential risks among which the key risks are global steel demand scenario, domestic steel demand and assured supply of key inputs like iron ore, coal and power.

Cost of Iron ore and coal i.e. the basic raw material has a direct impact on the profitability. Iron ore prices has increased substantially and availability of the required grade has suffered to a great extent due to various restrictions imposed by the authorities. Coal Indias new coal distribution policy and consequent Fuel Supply Agreement has disrupted coal linkages forcing producers to procure more e-auction coal. Coal India has also increased the price of coal substantially.


The Company has an internal control system commensurate with the size, scale and complexity of its operations. The system provides a reasonable assurance in respect of providing financial and operational information, complying with applicable statutes, safeguarding the assets of the Company and ensuring compliance with corporate policies. The Company has availed the services of independent professional firm for Internal Audit, which checks the effectiveness of the internal controls with an objective to provide an independent, objective and reasonable assurance of the adequacy and effectiveness of the Companys risk management, control and governance processes. The scope and authority of the Internal Audit activity are approved by the Audit Committee. The Internal Auditor

reports directly to the Audit Committee of the Board. Based on the report of the Internal Auditors, process owners undertake corrective actions in their respective areas and thereby strengthen the control. Audit Committee periodically reviews the Internal Audit Reports and issues guidance and advice. Minutes of the Audit Committee are put up to the Board of Directors


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


1. Debt Equity Ratio TIMES 0.92 1.00
2. Current Ratio TIMES 1.46 1.37
3. Operating Profit Margin % 4.61% 2.94%
4. Net Profit Margin % 1.29% -0.71%
5. Interest Coverage Ratio TIMES 1.55 1.02
6. Debtors Turnover Ratio TIMES 5.86 6.55
7. Inventory Turnover Ratio TIMES 6.97 9.54


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.