Modern Steels Ltd Management Discussions

MANAGEMENT DISCUSSIONS AND ANALYSIS REPORT

The Company was secondary producer of special and alloy steel through steel scrap as its main raw material till 05.01.2022 as the business has been transferred through slump sale and catered mainly to Automotives and Engineering sector.

1. Industrys Structure and Developments

There has been massive push by the Government to every connectivity avenue including industrial corridor, dedicated freight corridors, Bharat Mala, Sagar Mala towards achieving the goal of becoming 5 trillion $ economy by 2024. The infrastructure and construction industry are the biggest consumer of steel. The auto sector is very important consumer of special and alloy steel. The other industry like power, aerospace, defense have started using more and more special steel thereby giving big boost.

2. Opportunities & Threats

Key Opportunities include:

- Infrastructure sector is going to rebound in view of focused investment by the government.

- High special steel requirement for aerospace and defense application.

Key Threats include:

- Scrap prices are prone to volatility

3. Risks and concerns, the management perceives

- Raw material volatility

4. Internal control system and their adequacy

To provide reasonable assurance that assets are safeguarded against loss or damage and that accounting records are reliable for preparing financial statements, management maintains a system of accounting and controls including an internal audit process. Internal controls are supported by Management reviews.

The Board of Directors have an Audit Committee that is chaired by an Independent Director. The Committee meets periodically with Management, Internal Auditor, Statutory Auditors to review the Companys program of internal controls, audit plans and results, recommendations of the auditors and managements responses to those recommendations.

5. Performance

During the year under review, the company achieved net sales of Rs. 18242 Lakhs as against Rs. 8724 Lakhs in the previous year and resulting into net operational profit before exceptional items of Rs. 7613 Lakhs against the net loss of Rs. 2250 Lakhs in the previous year.

6. Cautionary statement

The Management Discussion and Analysis Report may contain statements that might be considered forward looking. These statements are subject to certain risks and uncertainties. Actual results may differ materially from those expressed in the statement as important factors could influence the Companys operations such as Government policies, political and economic developments and such other factors are risk inherent to the Companys growth.