Visa Steel Ltd Management Discussions

OVERVIEW

During FY 2024-25, the operations of the Company continued under conversion arrangement to continue as a going concern, due to non-availability of working capital.

INDUSTRY STRUCTURE AND DEVELOPMENTS Industry Overview

The global High Carbon Ferro Chrome production was at approx. 17.59 million tonnes in 2024, out of which India?s Ferro Chrome production stood at approx. 1.30 million tonnes. India exported approx. 39% of its Ferro Chrome production, primarily to China. India?s Chrome Ore production reduced from approx. 2.83 million tonnes in FY 2023-24 to approx. 2.78 million tonnes in FY 2024-25, out of which OMC produced approx. 1.33 million tonnes of Chrome Ore in FY 2024-25 against an EC capacity of 1.70 million TPA.

Company Overview

Your Company has established manufacturing assets for production of Ferro Alloys at Kalinganagar in Odisha.

OPPORTUNITIES AND THREATS Opportunities

In view of the Government?s infrastructure spending and reform initiatives to revive the manufacturing sector, the demand for Ferro Alloys is expected to grow over time.

Threats

The long-term competitiveness of the Ferro Alloy Industry in India will depend on the cost of doing business including raw material costs, energy costs, regulatory costs, logistics costs for inbound and outbound transportation of raw material and finished goods, interest costs etc. There has been a significant drop in the production volume and availability of chrome ore which has resulted in a huge supply demand mismatch, due to which the Chrome Ore prices have increased to very high levels. However, your Company is determined to face these challenges going forward.

SEGMENT WISE PERFORMANCE & OUTLOOK

Your Company is engaged in the manufacturing of Ferro Alloys. During the year under review, the operations of your Company continued under conversion arrangement. Your Company is carrying out major refurbishment and relining of Furnaces in phased manner.

Your Company is operating the Ferro Chrome Plant under conversion arrangement to continue as a going concern, due to non-availability of funds for working capital and major refurbishment and relining of Furnaces.

The Company has been taking support of related parties and other operational creditors to continue Plant operations under conversion arrangement without which such operations as a going concern would be impossible and there is a risk of Plant closure and agitation and other law and order problems.

RISK MANAGEMENT

The volatility in the Global economy and the increasingly complex interplay of factors influencing a more globally integrated business makes Risk Management an inevitable exercise and to cater to the same, your Company has identified major focus areas for risk management to ensure organisational objectives are achieved and has a well-defined and dynamic structure and proactive approach to assess, monitor and mitigate risks associated with these areas, briefly enumerated below:

a) Operations –

The price and availability of key raw materials, non-availability of working capital and regulatory changes such as duties / taxes / cess etc. have an impact on the operations. Moreover, the stocks are also subject to the other foreseeable risks. Necessary coverage has been taken in the form of a comprehensive Industrial All Risk (IAR) policy which covers plant, machinery, buildings (with contents), tools & equipment and stocks (raw materials, stores & spares and finished goods) against fire, allied perils and all other foreseeable risks. The policy also covers loss of profit to the business arising from any accidental event. The Company also has coverage in form of a Sales Turnover policy which provides all-risk transit insurance cover to the finished goods produced and sold by your Company and also covers transit of all the incoming raw materials.

b) Foreign Exchange –

A comprehensive forex policy has been formulated for managing its foreign exchange exposure.

c) Systems –

Your Company is having SAP, the leading software for Enterprise Resource Planning, to integrate its operations and to use best business and commercial practices.

d) Statutory compliances –

Procedure is in place for periodical reporting of compliance of statutory obligations and is reported to the Board of Directors at its meetings.

INTERNAL CONTROL AND SYSTEMS

Your Company has in place detailed and well spelt internal control systems, which commensurate with the size and nature of its operations and periodic audits are conducted in various disciplines to ensure adherence to the same. During the year, M/s. L. B. Jha,

& Co. Internal Auditor of your Company had independently evaluated the adequacy and efficacy of the audit controls. The direct reporting of the Internal Auditors to the Audit Committee of the Board ensures independence of the audit and compliance functions. The Internal Auditor regularly reports to the Audit Committee on their observations on your Company?s processes, systems and procedures ascertained during their audit. Your Company has also appointed Cost Auditors for the cost audit of its manufactured products and the Cost Auditors also report to the Audit Committee on their observations. Your Company has appointed Auditors to report on arm?s length pricing policy and its compliance with the Companies Act, SEBI regulations on related party transaction. Your Company currently uses cloud which has reduced the IT Cost and protects from data loss in case of hardware failure. Emphasis is placed on adequacy, reliability, and accuracy of dissemination of financial data and information. Compliance issues are given utmost importance and reported regularly to the Board.

Your Company has been accredited with ISO 14001:2015 (Environmental Management System), ISO 45001:2018 (Occupational Health and Safety Management System), ISO 9001:2015 (Quality Management System) and ISO 50001:2018 (Energy Management System) Certification by BSI (British Standard Institution).

It shows commitment to quality, customers, and a willingness to work towards improving efficiency.

Your Company has an adequate internal financial control system over financial reporting which were operating effectively as at

31 March 2025 and have been audited and certified by the Statutory Auditor of the Company.

FINANCE REVIEW AND ANALYSIS

Your Company reported Standalone Revenues from operations of Rs.5,664.90 Million. The standalone operating profit was Rs.322.20 Million.

Highlights (Standalone) (In Million)

Sales & Other Income: Sales Revenue decreased due to lower production of Ferro Chrome.

Expenditure: Expenditure decreased due to lower production. Other expenses have reduced due to lower production.

Finance Cost: Your Company did not provide majority part of the finance cost as per details mentioned in Note 17B of the Standalone Financial Statements. Your Company has been under financial stress since 2011-12 due to various external factors beyond the control of your Company and its management. The Lenders have not disbursed sanctioned facilities for operations, and adjusted the same with interest resulting in complete depletion of working capital and it now appears that the whole exercise of purported restructuring was mere evergreening of debt without even considering its adverse effect on the Company?s operations.

Your Company has reserved its right to claim losses suffered due to the actions and inactions of Banks including arising out of breaches and violations of contractual and other arrangements and such amount shall be claimed as a set-off against any dues. Majority of the lenders with 95% of the Debt have assigned their debts to Assets Care & Reconstruction Enterprise Limited (ACRE). The Company is engaged with ACRE for restructuring its outstanding loan exposure through out of court settlement.

DEVELOPMENTS IN HUMAN RESOURCES & INDUSTRIAL RELATIONS

Your Company has formulated a detailed Code of Conduct in order to practice ethical behaviour and sound conduct to establish the principles that guide our daily actions. Ethical conduct is the cornerstone of how your Company does business. Your Company is committed to creating a healthy work environment that enables employees to work without fear of prejudice, gender bias, sexual harassment and all forms of intimidation or exploitation. It is committed to provide a work environment that ensures every employee is treated with dignity and respect.

Your Company has been focussed on ensuring safety of employees and compliance of guidelines issued by Government of India and Government of Odisha. The Company recognizes Human Resource as its most important assets and is constantly engaged in developing its employees through various development & training programmes. We improve our team building through various employee engagement social activities.

The total number of employees in your Company, including those inducted as trainees in your Company, as on 31 March 2025 was 323.

CORPORATE SOCIAL RESPONSIBILITY

As a responsible Corporate, your Company is focused on the happiness of people living in its neighbouring communities. Your Company?s CSR team has directed its community development work in the areas of education, healthcare, rural development, sports & culture, and your Company wishes to continue its support and focus on these issues.

HEALTH AND SAFETY

Your Company endeavours to be one of the most respected enterprises in terms of providing a safe work place to its employees, contractors, and other stakeholders. The management is making every possible effort to ensure that its employees and contractors adopt, practice, and enjoy world class health and safety standards.

KEY FINANCIAL RATIOS

During the current year, some financial ratios are unascertainable due to negative denominator.

#Details of significant changes (ie. change of 25% or more as compared to the immediately previous financial year).

OUTLOOK

The key risks going forward include shortage in availability of Chrome Ore at viable prices, geo-political uncertainty, impact of US tariff and slowdown in the Chinese economy.

CAUTIONARY STATEMENT

Statements in this "Management Discussion & Analysis" describing the Company?s objectives, projections, estimates, expectations, or predictions may be ‘forward looking statements? within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company?s operations include global and Indian demand supply conditions, finished goods prices, input availability and prices, cyclical demand and pricing in the Company?s principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts business and other factors such as litigation and labour negotiation.