Today's Top Gainer
Note:Top Gainer - Nifty 50 More
Pursuant to the amended Regulation 34 read with the Schedule V of the SEBI (listing Obligations and Disclosure Requirements) Regulation, 2015 your Directors wish to report as follows:
(a) Indian Economy:
India is the fastest-growing G20 economy with expected growth of around 7.4% in FY18 against 7% in FY17. The acceleration of structural reforms, the move towards a rule based policy framework and low commodity prices have provided a strong growth impetus. Recent deregulation measures and efforts to improve the ease of doing business have boosted foreign investment. A comprehensive tax reform would promote inclusive growth. The effective implementation of GST would support competitiveness, investment and economic growth. GST will reduce the cascading effect of tax; it will boost Indias competitiveness, investment and job creation. GST reform is designed to be initially revenue-neutral. The Governments plans to reduce the corporate income tax rate and broaden the tax base will serve the same objectives. Moreover, as a consequence of the Centres major economic reform demonetization and on the back of moderating inflation, market interest rates and yields on g-secs are expected to be lower in FY18 as compared to FY17. Although demonetization and GST have been slowing down the industry but it will be beneficial in long term.
(b) Industry Structure & Developments:
Steel is a product of large and technologically complex industry having strong forward and backward linkages income generation. It is also one of the most important products of the modern terms of material flows world and of strategic importance to any industrial nation. From construction, industrial machinery to consumer products, steel finds its way into a wide variety of applications. It is also an industry with diverse technologies based on the nature and extent of raw materials used. In India, steel has an output multiplier effect of nearly 1.4X on GDP and employment multiplier factor of 6.8X.
The growth in Indian economy has fueled the infrastructure and industrial manufacturing sectors in the country which have in turn led to significant increase in steel demand. The domestic steel industry has in turn grown in line to meet the steel demand. From a modest capacity of 22 MT and production of 17 million tonnes of crude steel in 1991-92, it has grown by over 400% to reach a capacity of 122 MT and a production level of ~89 million tonnes in 2015-16. In fact, in 2015, India overtook the United States to become the third largest steel producer and is well on course to become the second largest producer soon. Even during the global economic downturn of 2008-09, when the steel industries of rest of the major producing countries faltered, Indian steel industry stood resilient.
Indias steel sector posted a robust 11% growth in production in 2016-17 at 101.2 MT even as domestic consumption remained anemic mainly due to poor off take from the end-use segments like construction, automobiles and white goods sectors. India became the 3rd largest producer of steel in 2015 and is now well on track to emerge as the 2nd largest producer after China. There is significant potential for growth given the low per capita steel consumption of 61 Kg in India, as compared to world average of 208 Kg. Indian economy is rapidly growing with enormous focus on infrastructure and construction sector. Several initiatives mainly, affordable housing, expansion of railway networks, development of domestic shipbuilding industry, opening up of defense sector for private participation, and the anticipated growth in the automobile sector, are expected to create significant demand for steel in the country. Further, while the main focus of the industry is on the domestic market, being in close vicinity of the developed west and developing east, provides it a strategic location that augurs well for the industry seeking opportunities for exports of finished goods and imports of some scarcely available raw materials.
(c) Opportunities & Threats:
The Government of India is coming up with new projects and investments in the irrigation sector. The focus of the government is on rural water management, which will be fulfilled only when of water to the end-user. This is one of the major demand drivers of the pipe industry along with expansion of housing sector and increasing demand for oil and gas transportation. The union budget did not have any direct schemes for pipe industry, but several measures announced in the oil & gas, solar power, water and sanitation space are likely to drive domestic pipe demand. The proposed pipeline infrastructure will lead to more demand for steel pipes in India. However, availability of gas is an important pre-requisite towards effective implementation of this proposal.
In the new environment, the industry has to be steered with appropriate policy support to ensure that production of steel matches the anticipated pace of growth in consumption. Special emphasis is needed to ensure that the industry follows a sustainable path of development in respect of environmental friendliness, mineral conservation, quality of steel products, use of technology and indigenous R&D efforts to ensure that the country can, over time, reach global efficiency benchmarks to become a world leader in steel production technology, as well as in production of high end steel.
The ambitious infrastructure projects and the thrust in manufacturing through the "Make in India" campaign are steps in the right direction. The plan for smart cities, improved road and rail connectivity by building highways, bridges and dedicated freight and superfast rail corridors have huge potential to spur domestic steel demand. Consuming sectors - construction, automobile and engineering are expected to grow in 2017- 18 fuelled by the softening of interest rates and implementation of government policies for the revival of infrastructure and investment in the country.
However, the Indian steel sector is disadvantaged due to limited availability of essential raw material such as high grade Manganese ore & Chromites, cooking coal, steel grade limestone, refractory raw material, Nickel, Ferrous Scrap etc. Due to shortage of domestic coking coal, both in terms of quantity and quality, pig iron producers/ BF operators in India have to significantly depend on import of coking coal. 1.10. In the recent past, multiple issues have also adversely impacted the steel sector, viz. cancellations of iron ore and coal mine allocations, delays in land acquisition, environmental clearances, which led to many of the projects facing significant cost and time overruns. Additionally, companies also faced substantially increased operating costs on account of increased logistics & raw material costs and other charges.
It is expected that at the current rate of GDP growth, the steel demand will grow threefold in next 15 years to reach a demand of 212 - 247 MT by 2030-31. However, even with this demand of finished Indias per capita consumption would reach only to 160 Kgs, lower than the current global average of 208 kg.
(d) Segment-wise or Product-wise Performance
Since your Company operates only in one Segment, segment-wise or product-wise analysis of performance is not applicable.
Indias average Gross Domestic Product (GDP) growth has been estimated to grow by 7.2% in 2017-18, up from 7.1% in 2016-17 supported by industrial growth of which would gradually increase steel demand in the country.
In According to World Steel Association (WSA) is one of the few countries to remain a "resilient "economy in the face of a "global Slowdown" because of its commitments to "reforms". Hopefully, good showing in manufacturing, mining and electricity sectors will be sustained to generate improved demand for steel in the months ahead.
(f) Risks and Concerns:
Though Regulation 17 the SEBI (listing Obligations and Disclosure Requirements) Regulation, 2015 is not applicable your Company has duly adopted steps for framing, implementing and monitoring the risk management plan and accordingly of your Directors have put in place critical risk management framework across the Company for identification and evaluation of all potential risks. Your Company is continuously evolving and improving systems and measures to take care of all the risk exigencies involved in the business. All inherent risks are identified, measured, monitored and regularly reported to management. The management decides measures required to overcome these risks and ensure implementation of proper risk mitigation plans. The risk report and mitigation plans are presented to the Board of Directors periodically.
(g) Internal Control Systems and their adequacy:
Your Company has an effective Internal Control System to prevent fraud and misuse of Companys resources and protect shareholders interest. Your Company has an independent Internal Audit Department to monitor and review and focus on the compliances of various business processes. The internal audit report along with audit findings and tracking of process improvements & compliances is presented for review to the Audit Committee of Board of Directors.
(h) Discussion on Financial Performance with respect to Operational Performance and state of Companys affairs:
During the year under review, the net income of the Company stood at Rs.8659.41 lacs as compared to Rs.9681.03 lacs of previous year. The Company is working on the ways and means to regularize the overdraft with the co- operation and consensus of the bankers. Loss after Tax for the financial year stood at Rs.3373.56 lacs as against loss of Rs.3117.26 lacs of previous year.
(i) Human Resources Development and Industrial Relations:
Your Company focuses on developing the most superior workforce so that the organization and individual employees can accomplish their work goals in service to the end users. To improve employee productivity, PMS (Performance Management System) was implemented across the organization.
Your Company has put in place suitable processes and mechanism to ensure that grievances are effectively addressed. Employee Grievance Redressal Committee and the Internal Complaints Committee are intended to facilitate open and structured discussion on work related grievances of employees and Sexual Harassment complaints respectively, to ensure that these are dealt with in a fair and just manner. Our Anti-Sexual Harassment initiatives allow employees to report sexual harassment case at the workplace.
Presently, your Company employs around 550 employees. There is Lock-out at factory at Khopoli since December, 2013. The industrial relation continues to remain generally cordial at all locations of the Company except its factory at Khopoli.
(j) Cautionary Statement:
The Management Discussion and Analysis describe Companys projections, expectations or predictions and are forward looking statements within the meaning of applicable laws and 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 and supply, price conditions in domestic and international market, change in Government regulations, tax regimes, economic developments and other related and incidental factors.