Despite our sales & profits declining from the previous year we bravelytransformed challenges into opportunities in 2015-16.
It's a time when all global iron & steel manufacturers reported a sharp decline intheir financial performance; K I C Metaliks Limited reported respectable results thatrepresent a positive divergence from external realities.
The international iron & steel industry was affected by overcapacity indicatingthe grimness of the industry position. To aggravate the reality the key user industry -realty and infrastructure - remained affected by weak demand on account of surplusproduction from China that was exported at very low prices. This reduced steel productionmoderated steel demand and eroded the realisations. Besides a subdued economic sentimentin Europe and crude oil prices affected steel consumption.
The K I C's response
At K I C we tightened our business to address this challenging scenario. We enhancedbusiness liquidity strengthened shop-floor efficiency expanded our customer basestabilised the blast furnace. The products were well received by customers and arecomparable with the best in the industry. The result is that K I C Metaliks Limitedemerged stronger in a weaker business environment attractively positioned to capitaliseas soon as fortunes rebound.
The Indian government focused on industry-driven growth through favourable policies.The imposition of anti-dumping duty on imports from China Korea and Malaysia from 7.5% to10% should assist domestic players revive volumes in the immediate near future. Besidesthe cost of key inputs declined following a decline in crude prices and pig iron demand.Besides the government has also revised customs duty on flat steel from 10% to 12.5% andon long and semifinished steel from 7.5% to 10%. Anti dumping duty was imposed for 5 yearson hot-rolled flat products of stainless steel from China Korea and Malaysia. A safeguardduty of 20% was also imposed. Government has also levied a Minimum Import Price (MIP) onvarious grades of steel to support domestic steel industry. The result of the abovemeasures has also been positive for the whole industry and after MIP imports have softenedand prices for finished products have seen a rise. As on-paper these policies translateinto tangible growth steel demand is expected to accelerate leading to a renewed demandfor pig iron by domestic steel producing companies..
Besides the government is also pushing for reforms in the domestic infrastructure andreal estate sector which are the end users of major of the steel products. The auto sectoris also seen moderately growing. These all augur well for the domestic steel industry.
Climbing to the next level
Our Company is uniquely situated within the iron & steel industry. Our vision hasled us to follow an unconventional path that we believe offers sustainable revenues and acompetitive advantage which we will continue to grow. While we have made significantstrides with our operations we realise that optimal performance is always a movingtarget. We are applying methods and best practices from our peers in the industry.
We are also further anticipating to further integrate backward or forward and newerdimensions to our portfolio in which we believe will gives us a competitive edge over ourpeers.
Message to shareholders
We will continue to focus on enhancing efficiency optimising costs and increasingliquidity and preparing for the big leap when the sector rebounds. We are optimistic thatthis will translate into superior margins returns on employed capital and marketcapitalisation enhancing value in the hands of all those who own shares in our company.
With warm regards
Radhey Shyam Jalan