MANAGEMENT DISCUSSION AND ANALYSIS REPORT Chennai Ferrous Industries Limited is engaged in Sponge Iron manufacture and the opportunities and threats available for the company are briefly provided below: Steel occupies a prominent place in Indian manufacturing sectors. Indian Steel Industry has been riding high on the resurgent economy and rising demand for steel. Rapid rise in production has resulted in India becoming the 3rd largest producer of crude steel in 2015 in World and the country continues to be the largest producer of sponge iron or DRI in the world. India is the largest producer of sponge iron in the world with the coal based route accounting for 90% of total sponge iron production in the country.[Source: Ministry of Steel]. In the recent years, the demand for Sponge Iron is sluggish. The factors like continuous rise in crude Oil prices, volatile raw materials prices, regional demand & supply imbalances, INR debrciation against global currencies and political instability on policy reforms have impacted significantly the Indian Sponge Iron manufacturers and resulted sharp fall in demand which ultimately impacted on profit of the Company during the year. This may be improved in future. The high cost and short supply of power in India may hamper the steel industry's production level. Cheap import of steels products from neighboring countries may result in the lowering prices and making the market highly competitive. The management finding to revive the company as the demand for sponge iron products seems better in the future with economic and Industrial growth. |