"Annexure C to Boards Report"
I. OVERVIEW
The objective of this report is to convey the Managements perspective on the external
environment and steel industry, as well as strategy, operating and financial performance,
material developments in human resources and industrial relations, risks and opportunities
and internal control systems and their adequacy in the Company during the financial year
2022-23. This report should be read in conjunction with the Companys financial
statements, the schedules, notes thereto and other information included elsewhere in the
Annual Report.
II. Industry Structure and Developments
(Source: World Steel Association: 2023 world steel in figures)
World Steel Scenario
Global steel sector has over the years saw a significant growth pattern, together with
several challenges and shortcomings which are on the verge of becoming the strength of the
industry in the near future.
The world crude steel production has increased to around 1951 Million Tonnes
(MT) in the year 2021 as per the data provided by World Steel Association, China being the
top-most steel producing nation.
The world apparent steel use per capita has decreased to around 232.8 kilograms
for the CY 2021 as compared to 229.0 kilograms in the CY 2020.
Due to special emphasis on productivity and quality improvement global steel demand in
2021 increased to 6.1% as compared to 5.3% in 2020.
Indian Steel Scenario
The Indian economy stayed on a steady growth path, demonstrating strong resilience to
multiple headwinds stemming from elevated inflation and a volatile global macro
environment. The Indian economy is estimated to have grown by 7.2% in FY 2022-231, driven
by strong private consumption, steady manufacturing and normalisation of contact-intensive
services sectors. Although inflation remained above the upper band of the RBIs comfort
range of 4-6% for most part of FY 2022-23, it started easing during the third and fourth
quarters, as the central bank hiked its policy rates by 250 basis points cumulatively to
contain inflation.
In April 2023, the RBI hit a pause to its rate hike cycle, and is widely expected to
maintain it, if a benign inflationary environment persists. The Indian economy growth
stems from the resilience seen in the rebound of private consumption, seamlessly replacing
the export stimuli as the leading driver of growth. The uptick in private consumption has
also given a boost to production activity resulting in an increase in capacity utilisation
across sectors. The rebound in consumption was engineered by the near-universal
vaccination coverage overseen by the government, which brought people back to the streets
to spend on contact-based services, such as restaurants, hotels, shopping malls, and
cinemas, among others
Global Steel Scenario
Global steel demand was impacted by high inflation and consequent aggressive monetary
policy tightening by major central banks, coupled with supply chain bottlenecks. In 2022,
the developed economies experienced a significant decline in steel demand due to factors
such as monetary tightening and surging energy expenditure. Following a substantial
decrease of 6.2% during CY 2022, there is an anticipation of a modest rebound with a
projected 1.3% increase in steel demand for CY 2023. Looking ahead to CY 2024, a more
substantial recovery of 3.2% is expected. Further, the looming energy crisis in the EU led
to weakened sentiment, aggravated by the fear of potential gas rationing in the absence of
Russian supplies. Chinas steel demand contracted by 4% in 2022.
In CY 2022, total crude steel production stood at 1,885 MnT, down 3.9% y-o-y, as steel
producers reduced output in response to weak demand and weak margins due to falling steel
prices and elevated raw material costs. The worlds largest steel producer China recorded
production of 1,018 MnT, a 1.6% y-o-y decline and Japans production fell 7.4% y-o-y to
89.2 MnT. This was partly offset by a 6.0% y-o-y increase in production to 125.3 MnT in
India.
III. Opportunities and Threats
Opportunities
(Source: Ministry of Steel: Make in India)
During the period January to December 2021, India was the 2nd largest producer of Crude
Steel in the world.
In line with Governments announcement of various schemes like Housing for all, Jal
Shakti and the resulting investments they will drive into roads, railways and other
infrastructure will be major drivers for the growth of the steel sector in India.
Governments focus on strengthening the domestic manufacturing base under the flagship
"Atmanirbhar Bharat" programme. The Production Linked Incentive scheme for
Specialty Steel has been introduced to boost the manufacturing sector in industries like
automobile & auto components, consumer durables, solar equipment, telecom, etc. These
are expected to boost steel consumption.
Government has announced an investment of over Rs. 1 trillion in infrastructure over
the next 5 years. This would be a key growth driver not only for steel industry but will
also be a multiplier of growth across the sectors, boosting steel demand from sectors such
as transportation, real estate and infrastructure.
Threats
Demand-Supply imbalance.
Political, legal and regulatory risks.
Financial Risks.
Depletion of high quality raw materials required for production of steel.
Environmental concerns.
Dumping of excess inventory in other countries by countries producing steel in
abundance.
IV. Outlook Steel Sector
Chinas re-opening, lower energy cost and easing supply chain bottlenecks are likely to
lead to a ~2.3% increase (after the 2022 contraction) in global steel demand in CY 2023.
Chinese steel demand is expected to grow by ~2% in CY 2023, aided by a marginal recovery
in the property market. Demand in the US is expected to grow moderately by ~1% in CY 2023,
supported by the infrastructure sector following the 2021 Infrastructure Law and Inflation
Reduction Act. A strengthening construction sector, easing supply chain and exports could
boost steel demand in Japan and South Korea. Meanwhile, Indias steel demand is on track
with infrastructure investments and urban consumption driving demand for automobiles and
capital goods.
V. Risks and Concerns
The business environment in which the Company operates faces a variety of risks which
may affect its operations, financial results. Many of risks are driven by the factors
which are beyond the control of the Company. Broadly, the risks are classified as under:
Macroeconomic Risk;
Operational Risk;
Market Related Risk;
Regulatory Risk; and
Environmental Risks
Hence, adequate risk management system has been put in place by the management to
ensure the success of the Company.
VI. SEGMENT WISE OR PRODUCT WISE PERFORMANCE
The Company operates only in one segment i.e. Trading Segment. During the period under
review the Company was inoperative.
VII. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Financial Controls (‘IFC) framework, commensurate
with the size, scale, and complexity of the Companys operations. The Board of Directors
of the
Company is responsible for ensuring that IFC have been laid down by the Company and
that such controls are adequate and operating effectively. The internal control framework
has been designed to provide assurance with respect to recording and providing reliable
financial and operational information, complying with applicable laws, safeguarding assets
from unauthorised use, executing transactions with proper authorisation and ensuring
compliance with corporate policies.
The Company maintains an adequate and fair system of internal control based on well
established policies and procedures designed for transparent operations. The management is
regular in reviewing, on periodic basis, issues and concerns that have or could have an
effect on the operations, functioning or performance of the Company.
VIII. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL
RELATIONS FRONT INCLUDING NUMBER OF PEOPLE EMPLOYED
Human resource is considered as one of the key assets of an organisation as human
resource is unique to a particular organisation and plays an active role in its growth.
The total number of permanent employees on roll as on 31st March, 2023 were
two.
IX. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO
OPERATIONAL PERFORMANCE
A. FINANCIAL PERFORMANCE
During the year under review, the turnover of the Company is Nil. The financials
depicting loss in the company. The loss before tax is of 558.50 Lacs as against
loss of 93.50 Lacs for the previous financial year. The loss after tax is of 560.22
Lacs as against loss of Rs. 93.18 Lacs for the previous financial year.
B. OPERATIONAL PERFORMANCE OF THE COMPANY
During the year under review, the company had no operations.
C. HEALTH, SAFETY, SECURITY AND ENVIRONMENT
During the year under review, the company had no operations. Thus there was no
requirement to maintain healthy, safety, security and environment.
D. CHANGES IN KEY FINANCIAL RATIOS:
During the year under review, the change in the key financial ratios as compared to
previous year do not exceed 25% (Twenty Five Percent)
E. CAUTIONARY STATEMENT
This Management Discussion and Analysis Report, giving a brief profile of the Company
along with its vision, mission, objectives, performance and future prospects and also
reflecting the scenario of the industry at domestic and global level, may consist of
"forward looking statements" which involve a number of risks and uncertainties
that could cause actual results to differ materially from those stated. Important factors
that could make a difference to the Companys operations include external economic
conditions affecting demand/supply or influencing price conditions in the market in which
the Company operates, changes in regulatory regime and other incidental factors.
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