Heera Ispat Ltd Management Discussions

INSIGHTS ON GLOBAL ECONOMY

The global economy is projected to grow 6.0 percent in 2021 and 4.9 percent in 2022.The 2021 global forecast is unchanged from the April 2021 WEO, but with offsetting revisions. Prospects for emerging market and developing economies have been marked down for 2021, especially for Emerging Asia.

Recent price pressures for the most part reflect unusual pandemic-related developments and transitory supply-demand mismatches. Inflation is expected to return to its pre-pandemic ranges in most countries in 2022 once these disturbances work their way through prices, though uncertainty remains high. Elevated inflation is also expected in some emerging market and developing economies related in part to high food prices.

These revisions reflect pandemic developments and changes in policy support. The 0.5 percentage- point upgrade for 2022 derives largely from the forecast upgrade for advanced economies, particularly the United States, reflecting the anticipated legislation of additional fiscal support in the second half of 2021 and improved health metrics more broadly across the group.

A double hit to emerging market and developing economies from worsening pandemic dynamics and tighter external financial conditions would severely set back their recovery and drag global growth below this outlooks baseline.

The growth for H1 was roughly the same as the 14.5% on-year growth for the first five months of 2021, and for June alone, the output grew 11.6% on year to nearly 168 million tons among the 64 countries, or down 3.7% on month.

China, though still the worlds top steelmaking country, posted the lowest on-year gain for the second month in June among the top ten steelmaking countries, or up 1.5% on year but down 5.6% on month to 93.9 million tons, the WSA data showed, with was in line with WSAs projection in April that for 2021 the other steelmaking countries would probably post stronger gains than China.

India, the worlds second largest steel-producing country, posted the greatest gain among the top ten in steel output over January-June, up 31.3% on year though its steel output for June swelled just 21.4% on year, ranked the fifth in growth among the top ten, and three others posted surges by over 40% on year for June with Brazil scoring the highest 45.2% gain from a year ago.

For the first half of 2021, crude steel production among 64 countries worldwide under the monthly survey of World Steel Association (WSA) maintained its momentum in growth, up 14.4% on year to slightly above 1 billion tones.

(a) PRESENT STRENGTH OF THE COMPANY

The company has made extensive efforts in developing of various products used in steel and is working to survive in the business. However, due to Covid-19 Pandemic Situation Companys Business Operation has been shutdown for the year 2020-21.

(b) FUTURE OUTLOOK:

In Construction and Infrastructure Industry there is good demand of steel. The Steel bars and wires proposed to be manufactured by the Company by using new raw materials, and imported coal, Pig Iron etc. will find a new market for these two industries. There is a bright future for the company. Once the directors find the proposal commercially viable and receive good orders, the company will immediately start its production unit which would start earning good amount of profit for the company.

(c) COMPANYS ACTION PLAN:

The management of your company is trying to identify and explore all the available possibilities for smooth marketing of the products of steel plates, steel bars, wires for construction industry and cast iron products for automobile industry with best available remunerative prices and also provide after sales service.

RISK AND CONCERNS

The process of Risk Management in the company identifies inherent risks in its operations and records residual risk after taking specific risk mitigation steps. The company has identified and categorized risks in the areas of Operations, Finance, Marketing, Regulatory Compliances and Corporate matter.

The volatility in price of sponge iron, excess supply of sponge iron in the market will have an effect of squeezing margins and poses risk to the profitability. New customers, new market and cost reduction have been identified as the mitigation measures.

Also, the enforcement of recent Tariff policy guidelines on power by Government of India that requires the State Electricity Regulatory Commission to ascertain sale price of power based on cost of generation will have an impact on the revenue from export of power.

Fluctuation of import coal price, increase in USD-INR exchange rate, may lead to increase in cost of production. This is mitigated by continuous evaluation of international coal price vis-a-vis Indian coal price and accordingly the action plan for procurement has been formulated.

INTERNAL CONTROL SYSTEM AND ITS ADEQUACY

The Company has adequate internal control procedures commensurate with its size and nature of its business. The objectives of these procedures are to ensure efficient use and protection of the Companys resources, accuracy in financial statements and due compliance of statutes and Companys policies and procedures.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company is working on enhancing its competencies to take care of current and future business. Human Resource and Industrial Relations departments have developed systems and policies on recruitment, performance management, learning and development, and employee engagement. The Workers union of the Company has maintained healthy and cordial industrial relations, and has been an equal partner in implementing Companys policies and achieving stretched operational targets, year on year.

CAUTIONARY NOTE

Cautionary Statement The Above Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations 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 Companys operations include external economic conditions affecting demand/supply influencing price conditions in the market in which the Company operates, changes in Government regulations, tax laws, and other incidental factors.