With immense delight I wish to inform you that this year has not only marked thebeginning of Jlndal Stainless (Hisar) Limited by listing on bourses but it also borewitness to improved performance despite taxing business environment.
India has again emerged as one of the fastest growing economies of the world amidglobal economic stagnation. International Monetary Fund (IMF) and the World Bank havereiterated that India would be one of the brightest spots with a growth rate of 7.4% amongemerging economies. A negative economic trend in Euro Zone has outweighed positive signalsin US. In contrast Indian economy showed resilience in the financial year 15-16 andgrowth stood at 7.6% highest among all BRICS economies.
The global stainless steel industry was impacted by the prevailing global economicscenario. The stainless steel industry has been facing hardship owing to oversupply andcontinuous fall in commodity prices. As a result the year 2015 showed a decline of 0.3%YoY in global melt shop production. Oversupply from China continued to deluge the globalmarkets.
However you would be happy to note that your Company's standalone profit beforedepreciation interest exceptional item and tax (EBIDTA) stood at Rs.800.72 crate inFY15-16 as againstRs. 712.89 crore in FY14-15 showing a growth of 12.32%.
Global Stainless Steel Scenario
The global stainless steel meltshop production as per the International Stainless SteelForum (ISSF) for year 2015 saw a dip of 0.3% YoY to 41.5 MT from 41.7 MT in year 2014.Noticeably the production increased in Asia by 1.4% whereas production in Chinastagnated. The Chinese economy grew at 6.9% the lowest In 25 years. The weakness Inglobal economy is also reflected on the demand side. CRU estimates that the consumption ofcold-rolled flat products would increase by barely 1 % in 2016 globally. Major quantum ofthe growth will come from matured markets in Western Europe and North America as well asIndia. Declining Nickel prices contributed to a fall in the prices of Nickel bearingStainless Steel. Nickel prices saw a decline of almost 32% since April 2015. Buyers wereforced to reassess the inventory holding strategy and had to push back their buyingdecisions.
Indian Stainless Steel Scenario
Domestic Stainless Steel production continues to grow steadily on back of demand fromArchitectureBuilding & Construction (ABC) and Automotive Road & Transport (ART)segments. The total stainless steel melt production in India was 3.3 MT registering agrowth of 1.4% as compared to last year. India continues to be the fourth largest producerand third largest consumer of stainless steel. The demand for industrial grade StainlessSteel products was reduced during FY15-16 due to moderate Industrial activity which islikely to pick up this year on back of improved industrial production. Railways is likelyto be one of the key sectors for the growth of stainless steel consumption in India.Indian Auto Sector is also expected to contribute to the stainless steel growth as AutoMajors expect a double digit growth with key players lining up their new productionfacilities. Infrastructure sector will also be a big propeller of stainless steel demandas the government plans to invest USD 7.34 billion for the development of 100 smart citiesacross the country. Other sectors including construction equipment power etc. will alsodrive stainless steel usage in India.
Introduction of Quality Control Order this year will ensure the availability of qualityproducts in the market and phase out substandard goods. Unwarranted imports from China andASEAN countries continue to remain a challenge for domestic stainless steel industry.Highest ever imports of 532033 MT flat products were registered in 2015-16. Imports fromChina increased by nearly 20% over last year and constituted over 50% of the total importsinto India. While trade remedial measures in the form of Anti dumping Duties have beenimposed these have been largely ineffective due to circumvention. Countervailing dutyinvestigation against imports from China is underway and industry expects a promptremedial action. An increase in Basic Customs Duty on Finished goods and lowering ofduties on inputs would provide a significant relief to the industry. We are proactivelyworking with various sections of government to ensure level playing field for the domesticindustry and also to increase the usage of stainless steel in India.
Business Highlights (Standalone)
JSHL's (Standalone) gross revenue for the financial year ended on 31 st March 2016stood at Rs.7091 crore as against Rs.8145 crore for the financial year ended on 31 stMarch 2015. Profit before depreciation interest exceptional item and taxes (EBIDTA)stood at Rs.800.72 crore as against Rs.712.89 crore in FY 14-15. Net profit/ (loss) stoodat f 14.59 crore as compared to Rs.12.32 crore of last year. The Company incurred Interestcost of Rs.470.78 crore in comparison to Rs.447.24 crore in FY 14-15 and Exceptional lossof Rs.44.96 crore as against gain of Rs.15.97 crore in FY 14-15. During the first quarterof the current year the gross revenue EBIDTA and Profit after Tax of the Company wasRs.1497.09 Crore Rs.237.76 Crore and Rs.49.43 Crore respectively.
Stainless steel demand is primarily driven by Cold Rolled products and the averageglobal consumption and production pattern is about 70 to 75 % in Cold Rolled categorywhile the balance is in Hot Rolled products form. Same ratio is applicable for Indianmarkets as well. Your company's Cold Rolled capacity is in the range of 40% and we areenhancing this capacity to about 50% of the Hot Rolled in the coming financial year. Ourefforts are directed towards further capacity enhancement in order to match it with thedomestic consumption patterns in the years to follow.
We are also investing in the Special Products category and Precision Strips divisionincluding capacity enhancement and technological upgradation to add new product range. Wewill continue our efforts for further value addition to our products and diversify ourportfolio in newer segments like defence space shipping; other areas of consumer goodsand the newly driven smart city concept.
Being committed to efficiency and product innovation through sustained R&D effortsJindal Stainless (Hisar) Limited is dedicatedly working towards making Stainless Steel themost popular amongst all the metals. Service levels are being raised through productionplanning and by increasing number of distribution centres in order to improve availabilityand reduce lead time. Sustained efforts are being made to promote the usage of stainlesssteel in newer and wide ranging applications through educative seminars and workshopsacross various segments. Your company is committed to support government's initiativestowards 'Swachh Bharat' by introducing Stainless Steel for health and hygiene and also bycontributing towards development of the countrythrough 'Skill India' programme.
I remain confident that Jindal Stainless (Hisar) Limited with its excellent talent poolled by the most competent management team will take the company to new heights.
I would like to appreciate and acknowledge the efforts of all my employees lendersshareholders customers and other stakeholders who have consistently supported us at alltimes. I look forward for your continuous support in future.
IShri Ratan Jindal