Chairman's Message

Dear Shareholders,

It is an honour for me to present you the 43rd Annual Report. I would like to take you through the macro perspective and industry dynamics and share my perspectives on the Company’s performance and way forward.

The year 2015-16 witnessed several global turbulences, leaving the global economy more exposed to negative risks. The developed economies also grew at an increasingly disappointing pace. However, the growth in China and India has been broadly in line with projections, but the trade growth slowed down noticeably owing to scaling down of investment in commodity exporters in the emerging markets, particularly those facing difficult macroeconomic conditions.

Despite such volatility, the Indian economy managed to grow over 7%, becoming the fastest growing economy, globally. This is a remarkable achievement despite India’s own concerns of declining exports, rupee depreciation and two consecutive years of inadequate rainfall. The Indian Government has proactively unveiled series of initiatives to strengthen India’s fiscal deficit and enhance public investments in the infrastructure sector, especially roads, railways and ports. The ambitious Make in India initiative has been successfully established to promote manufacturing expertise in India, in line with global quality benchmarks. The focus on Smart Cities, with world class amenities and rural upliftment trajectories, will act as a growth catalyst of the economy and the steel sector in particular.

During the year, India became the major steel consuming market. However, the demand dryness in the global markets saw increase in low-priced steel imports from China, Japan, South Korea and Russia, forcing the domestic manufacturers to take a price cut and margin squeeze, impacting their profitability. In response, the Indian Government undertook necessary corrective trade remedial measures to maintain a level playing field. It enhanced customs duty and introduced the minimum import price (MIP) mechanism to curb imports at prices below marginal cost of exporting nations. The Government also introduced BIS standards for steel to check sales of inferior quality steel into India. The initiative gave a breathing space and positive hope to the Indian Steel Manufacturers.

Your Company reported a consolidated turnover and net profits of Rs 1,150 crore and Rs 38 crore, respectively. The realisations and margins were impacted owing to several external challenges through the year. These include:
• De-allocation of coal mines w.e.f. 1st April, 2015 pursuant to Supreme Court Order
• Temporary suspension of operations in our iron ore mines owing to naxal problems
• Recession world over

Despite muted growth, I would say I am considerably happy with certain achievements. The adversities made us more resilient. We relentlessly diversified our focus on strengthening our internal efficiencies through process improvements to remain competitive in the challenging scenario. The initiatives led to:
• Better yield
• Reduced wastage
• Overall cost reduction
• Maintaining quality

Resultantly, our production levels improved, without altering our raw material mix or allocating any additional resources. Our stringent financial prudence and cost rationalisation further allowed us to maintain low leveraging, giving us a cushion in the adverse market scenario. Our hydro power at Gullu project has witnessed a considerable amount of progress and will be completed in the financial year 2016-17. This will considerably add to our bottomline and give us a natural hedge to our carbon footprints.
Going ahead we look forward to consolidate our operations by focussing on:
• Completion of existing projects
• Strengthening domestic market share
• Leveraging locational advantage in minimising logistics cost as well as reaching out to different parts of the country
• Maintaining cost effectiveness and quality standards
• Exploring opportunities in the customised product requirements globally

There’s a lot of churning going in the Government’s Policy in terms of price control and mining segment. We are competitively placed in terms of capacities and operations and are all set to reap the benefits from the economic turnaround, the much awaited GST as well as revised Government Policies. I would like to thank the shareholders, customers, vendors, investors, bankers and all the stakeholders for their continued faith on our abilities. A special thanks to the members of the Board, all our employees and the key management personal for proficiently managing the challenging times and culminating the culture of trust and mutual growth. Your company will continue to innovate and keep building milestones in the years to come.

Kamal Kishore Sarda,  
Chairman and Managing Director