MANAGEMENT DISCUSSION & ANALYSIS Steel Industry in India: The liberalization of industrial policy and other initiatives taken by the Government have given a definite impetus for entry, participation and growth of the private sector in the steel industry. While the existing units are being modernized/ expanded, a large number of new steel plants have also come up in different parts of the country based on modern, cost effective, state of-the-art technologies. In the last few years, the rapid and stable growth of the demand side has also prompted domestic entrebrneurs to set up fresh Greenfield projects in different states of the country. Crude steel capacity was 109.85 MT in 2014-15 and India, which emerged as the 3rd largest producer of crude steel in the world in 2015 as per ranking released by the WSA, has to its credit, the capability to produce a variety of grades and that too, of international quality standards. The country is expected to become the 2nd largest producer of crude steel in the world soon, provided all requirements for creation of fresh capacity are adequately met. Global Steel Industry: • In 2014, the world crude steel production reached 1665 million tonnes (MT) and showed a growth of 1% over 2013. • China remained the world's largest crude steel producer in 2014 (823 MT) followed by Japan (110.7 MT), the USA(88.2MT) and India (86.5MT) atthe4th position. • WSA has projected Indian steel demand to grow by 6.2% in 2015 and by 7.3% in 2016 as compared to global steel use growth of 0.5% and 1.4% respectively. Chinese steel use is projected to decline in both these years by 0.5%. • Percapita finished steel consumption in 2014 is estimated at 217 kg for world and 510 kg for China by WSA. Business Overview: The main object of the company is into trading of steel. Recovery in steel demand in developed markets remains fragile, but the strong growth in steel demand in emerging markets will continue, fuelled by growing demand from infrastructure, construction and automotive end-users. The company has not done trading during the year in view of adverse market conditions and heavy forex fluctuation. The company has always explored the possibility of doing business but did not find good opportunities and hence, decided to wait till right opportunity emerges. Risk Management: The objective of risk management is to ensure that it is adequately estimated and controlled to enhance shareholder as well as stakeholder's values. Risk is pertinent to virtually all business activities though in varying degrees and forms. It is the constant endeavor of the Company to identify, assess, prioritize and manage existing as well as emerging risks in a planned and cohesive manner. Internal Control System & Adequacy: The Company has an adequate Internal Audit System that promotes reliable financial reporting, safeguards assets, encourages adherence to fair management and ethical conduct. The strong Internal Control Systems have been designed in a way that, they not only brvent fraud and misuse of the Company's resources but also protect shareholders' interest. The Audit Committee of Board of Directors, on regular intervals and in co-ordination with Internal and Statutory Auditors, reviews the adequacy of Internal Control Systems within the Company. The internal audit focuses on compliance as well as on robustness of various business processes. A feed back on nonconformities along with recommendation for process improvements is directly provided to the top management of the Company. Compliance on audit findings and tracking of process improvements is regularly carried out. Cautionary Statement: “Statements in Management Discussion and Analysis describing the Company’s objectives, projections, estimates and expectations are may be “forward looking” within the meaning of applicable laws and regulations. Actual results might differ materially from those exbrssed or implied.” |