Welcast Steels Ltd Management Discussions

A. INDUSTRY OVERVIEW:

Welcast Steels Limited (“WSL”), manufactures various size of high chrome grinding media balls which form parts of mill internals that are used in the process of Crushing and Grinding in Cement, Mining and Thermal Power industries. The Company employs casting process for the manufacture of these products.

In financial year 2023-24, the world had largely come out of the impacts due Covid-19 pandemic recession. The key economics of the world more or less normalised to a regular even pattern. As a fallout the overall economic sentiment remained even without any ups and downs. Also the prices of major commodities and metals has eased out and reached realistic levels of pre Covid situation.

Since India in its last budget have shown strong resilience to push the growth in its infra structure developmental work we believe that going forward, Cement industry should continue to grow in India, Further the Cement Industry has practically use the High Chrome consumable wear parts, whereas in the mining industry migration from the use of conventional method using forged grinding balls to the use of High Chrome Grinding Media is still in progress. Hence there is a considerable growth opportunity in the mining sector and demand for our product is expected from mining Industry also.

With the considerable headroom available for migrating from the usage of conventional method of grinding (using forged castings) to High Chrome by mining industries, our company should not have any material adverse impact on our stability at least at present level. However, while we remain cautiously optimistic we are carefully and diligently monitoring the situation.

B. SEGMENT WISE PERFORMANCE:

The Company primarily operates in only one segment i.e. manufacturing of High Chrome Grinding Media Balls.

C. OUTLOOK AND PROSPECTS:

WSLs prospects are linked to activity in basic industries of Mining, Cement and Thermal Power generation. These industries are stabilised now resulting in rapid recovery in consumption and intern manufacturing and services activity saw a sharp increase which allowed WSL to ensure continued operations.

Hence in terms of sales quantities the total sales volume in F.Y. 2023-24 at around 9,480.29 MT looks more or less the same as the sales volume achieved in F.Y. 2022-23.

Going forward, WSL continues to maintain its stability, reduction in operating costs in terms of wear costs, power costs and reagent consumption. This value addition is offered by continuous and direct engagement with operations personnel at plants.

D. CAPEX PLAN:

There are no immediate capex plan except for maintain / modernization of the pollution control machineries of the plant to meet the statutory requirements.

E. RISKS AND CONCERNS:

The Company is exposed to normal operating business risks, similar to most manufacturing companies like fluctuations in raw material prices, labour unrest, reduced demand etc. which are mitigated by regular monitoring and corrective actions.

Key risks that the Company faces are around stability in the mining market, foreign exchange rate fluctuation, fluctuation in raw material prices, debtor defaults.

F. INTERNAL CONTROL SYSTEMS AND ADEQUACY:

The Companys Internal Control Systems are commensurate with the size and nature of its operations, aimed at achieving efficiency in operations, optimum utilisation of resources, reliable financial reporting and compliances with all applicable laws and regulations. The system also provide reasonable assurance that all assets are safeguarded, transactions are authorized, recorded & reported properly to ascertain operating Business risks, which are mitigated by regular monitoring and corrective actions. The internal control system has been designed so as to ensure that the financial and other records are reliable and reflects a true and fair view of the state of the Companys business. A qualified and independent Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of internal control systems and suggests

improvements for strengthening them. Similarly, the Internal Auditors Talati and Talati LLP, Chartered Accountants are also monitoring the Internal Control Systems. It carries out extensive internal audit throughout the year across all functional areas and submits reports to Management and Audit Committee. The recommendations from such internal audit and follow up actions for improvements of the business processes and controls are also periodically reviewed and monitored by the Audit Committee.

G. FINANCIAL PERFORMANCE REVIEW:

An analysis of financial performance of the Company is given below:

• Production

The production achieved is as under.

(Qty.in M.T)

• Sales Turnover

The comparative position of sales turnover achieved by the Company is as under:

(? in lakhs)

Key Performance Indicators

An analysis of the key indicators as percentage to Revenue is given below:

(? In Lakhs)

H. INDUSTRIAL RELATIONS AND HUMAN RESOURCE MANAGEMENT:

The Company believes that human resource is the most important asset of the organization. During the year under review, your Company continued its efforts to improve HR related processes, practices and systems to align these to the organizational objectives. Training and development of its employees is ensured through on the job and outside training programs and workshops. The relationships with the employees, in general, remain cordial.

I. DETAILS OF SIGNIFICANT CHANGES IN THE KEY FINANCIAL RATIOS & RETURN ON NET WORTH

Pursuant to amendment made in Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 details of significant changes (i.e change of 25% or more as compared to the immediately previous Financial Year) in Key Financial Ratios and any changes in Return on Net Worth of the Company including explanations therefor are given below:

J. CAUTIONARY STATEMENT:

Statements made in the Management Discussion & Analysis describing the Companys objectives, projections, estimates, expectations may be “Forward-looking statements” within the meaning of applicable Securities, laws & regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand supply and price conditions in the domestic & overseas markets in which the Company operates, changes in the government regulations, tax laws & other statutes & other incidental factors.

None of the Senior Management personnel have Financial and Commercial transactions with the Company, where they have personal interest that would / could emerge as potential conflict with the interest of the Company at large.