As this is my first communication to you as a CMD of your company I feel extremelyprivileged and delighted in interacting with you on the occasion of 55th AnnualGeneral Meeting and presenting Annual Report for the financial year 2016-17.
FY 2016-17 has been a turnaround year for mining and metals industry and inparticular for manganese ore industry if compared with previous year. It has been abetter year for entire steel and commodity market where performance of the sector has beenimproved showing upward trend in the in the commodity market specially in the metalsector. The prices of products were at higher levels during the year as compared to theprevious year. Most of the metal companies have shown improvement in their performanceduring the year.
Manganese ore industry started heading towards a positive path from January-March 2015quarter as the manganese ore prices have been rising with marginal corrections duringsome of the quarters. Due to positive market conditions led by higher demand and risingprices MOIL increased prices of its various grades of manganese ores during the year inline with its pricing policy which resulted in improvement in average sales realizationfrom ' 5911 PMT in previous year to ' 8078 PMT in current year thus showing an increaseof 37%. With such positive movement in the market coupled with good marketing strategypricing policy and better product mix your company has been able to outperform in almostall spheres of activities except marginal reduction in the production. Your company hasbeen able to sell 11.29 lakh tonnes of manganese ore during 2016-17 in comparison to 9.67lakh tonnes of manganese ore in the previous year registering a growth of 16.75%.
Your company has registered gross sales of at ' 989.84 Crores during the financial year2016-17 as compared to ' 634.60 Crores in the previous year recording increase of about56%. The company has posted PBT and PAT of ' 461.90 Crores and ' 305.83 Croresrespectively as against ' 270.26 Crores and ' 172.98 Crores last year. The company hasproduced 10.05 lakh tonnes of various grades of manganese ore as against 10.32 lakh tonnesin previous year
MOIL is a dividend paying company since many years. I am pleased to inform that theBoard of Directors of your Company have recommended highest ever final dividend since itslisting @ 60% i.e. ' 6.00 per Equity Share for 2016-17. Thus total dividend for theyear 2016-17 works out to ' 11.00 per equity share. Out of ' 11.00 your company hasalready paid Interim Dividend of ' 5.00 per Equity Share to the shareholders in March2017.
Your Company always strives to attain highest level of Corporate Governance practices.Implementation of Integrity Pact adoption of code of conduct and a well-defined InternalControl Framework add to the transparency of the Company's business practices. MOIL iscomplying with the Government Guidelines and listing agreements on Corporate Governance.However filling up of vacant posts of Directors which is one of the requirements ofCorporate Governance is under process at Government level. A report on CorporateGovernance compliances has been made part of the Boards' Report. Your company has beengeffing "Excellent" rating from Department of Public Enterprises (DPE) forcomplying with various norms of Corporate Governance. I am sure that for the year 2016-17also it will get "excellent" rating.
Being a good Corporate Citizen MOIL has always been on the forefront in extending itsassistance for up-liftment of the needy people of the society through development andimprovement of the quality of life of internal as well as external stakeholders and thesociety at large. It has undertaken a number of CSR initiatives in the area of healtheducation construction/renovation of roads and schools water supply facilitiesperipheral development sports and cultural development etc. for community living in andaround its area of operations as well as in other areas. DAV MOIL Public School at Chiklaone of the major projects completed by MOIL under its CSR has received excellent responsefrom the people of nearby areas. The school which started with strength of 434 studentssome years back has reached strength of 864 students. The company has also taken up skilldevelopment activities for the rural youth.
Under "MOIL Foundation" your company is carrying out "CommunityDevelopment Program" (CDP) on a large scale in association with Maharashtra Instituteof Technology Transfer for Rural Areas (MITTRA) an associate of BAIF Development ResearchFoundation Pune which covers various activities like improved agricultural practicessoil health card livestock development water resource management health awarenessprogramme installation of bio-gas women self-help groups solar lamps construction oftoilets women empowerment schemes education and skill development in 21 villages in thevicinity of its mines. Works done under CDP have been appreciated by all the quarters. Thecompany has spent a sum of ' 11.43 Crores on CSR activities during 2016-17 includingtransfer of fund to MOIL Foundation.
Your company is having total mining leases over an area of 1743.77 Ha as on 31-03-2017out of which 704.22 Ha is in Maharashtra and 1039.55 Ha is in Madhya Pradesh. In therecent past MOIL has got new manganese ore leases over an area of 988.181 hectares undervarious categories. These include 311.593 hectares under mining leases in the State ofMaharashtra and Madhya Pradesh 464.98 hectares under PL and 211.608 hectares underreservation in the State of Maharashtra. In addition Government of Madhya Pradesh hasalso reserved a new area of 372.701 hectares in favour of MOIL which is adjacent to itsBalaghat mine.
With a vision to become one of the best manganese ore mining companies of the world andin order to meet the demand of Manganese ore in the steel industry and to remain marketleader in Manganese ore production your company has planned for investments indevelopment of its existing mines. In this direction investment proposal of'460.88 Croreshave been approved by the Board last year for sinking of High Speed Vertical Shaft atGumgaon Mine and Balaghat Mine. These projects are expected to double production of thesemines from about 3.70 lakh tonnes to 7.40 lakh tonnes by FY-2024 and FY 2025. During theyear MOIL has completed deepening ofvertical shaft at its Chikla mine. In addition yourcompany has taken up various projects of deepening and sinking of shafts at its ChiklaBalaghat Kandri and Munsar mines.
In order to meet the requirement of power in the mines and to promote use ofnon-conventional and environment friendly energy your company is taking necessary actionon the investment proposal approved by the Board last year for seffing up of 10.5 MW SolarPower Plant at its mines in Madhya Pradesh and Maharashtra. It is expected that the samewill be installed during the current year. In addition your company has also installed 48KW rooftop solar power project at MOIL Bhawan Nagpur
India's steel production grew from 89.03 million tonnes in the year 2015 to 95.62million tonnes in the year 2016 registering a growth of 7.40% whereas the world's steelproduction growth was only 0.80% over the same period. China the largest producer ofcrude steel showed the growth of 1.20% whereas Japan as a second largest producer showedthe negative growth of 0.30% which indicate strong growth of the steel industry in thecountry.
The performance of manganese ore industry is directly linked with the performance ofsteel industry. As per World Steel Association (WSA) the expected population growthemerging new applications for steel and more sophisticated steel applications the globalsteel market has a potential to grow further between 700 to 1000 million tonnes in thenext 50 years. That is equivalent to a market that is about 60% larger than that of today.This provides very good opportunity for manganese ore industry as well.
At present your company is the largest producer of manganese ore in the country with ashare of about 45% when compared to estimated production of the country for 2016-17.Though there is decline in import of manganese ore in India from approximately 2.22million tonnes to 1.91 million tonnes but still import of large quantities of high grademanganese ore is taking place. This indicates enough gaps between demand and supply whichprovides an opportunity for MOIL to increase its production in particular production ofhigh grade manganese ore.
With about 81.47 million tonnes of reserves and resources of manganese ore MOIL isvery well positioned to capitalize on India's steel demand growth given its dominantposition medium-to high-grade ore reserves centrally located mines low cost ofproduction and strong customer ties.
Government of India's focus on infrastructure developments continues to be on top ofthe country's economic agenda. In this direction the Government of India has taken upnumerous key initiatives like affordable housing and housing for all huge investments inthe projects of roads and railways development of smart cities etc. There are a lot ofindustries that depend directly or indirectly on the development of infrastructure sectorand steel industry is one of the key industries. If that happens it will also give boostto the demand of manganese ore.
The performance of manganese ore industry mainly depends on the performance of steelindustry. As per latest National Steel Policy-2017 India has set capacity target of 300million tonnes of steel by 2030-31 this will create domestic demand of manganese ore tothe tune of around 10 million tonnes which will provide a very good opportunity for MOILto increase its production and also increase its market share. As we know India's percapita consumption of steel is about 61 kg as against global average consumption of 208kg. This again provides opportunity for steel industry. Thus India's steel demand haspotential to rise considerably.
In order to meet the increasing demand of manganese ore of the steel industry and toremain a market leader in manganese industry in our country it is necessary to enhancethe manganese ore production. Accordingly MOIL has planned to enhance its production frompresent level of around 1.10 million MT to 2.00 million MT by 2021 2.50 million MT by2025 and 3.00 million MT by 2030 for which a strategic management plan has already beenprepared. In this direction your company has planned investments for developmentofexisting mines acquisition of new mines within and outside the country acquisition ofareas adjoining the mines seffing up value addition / diversification projects etc.
I am pleased to inform that with view to reward its shareholders Board of Directors ofMOIL has proposed issue of bonus shares in the ratio of 1:1 (one share for one share held)by capitalizing free reserves which will result into increase in further 133187804equity shares of ' 10 each. For this purpose increase in authorised share capital is alsoproposed. This is subject to approval of the shareholders at this annual general meeting.
Your Company is one of the public sector enterprises in the country known for itscontinuous excellent performance for last so many years despite ups and downs in theindustry. The Company has been geffing national/regional recognition for its good works inalmost all the fields of its activities like Quality Circle Award safety awards energyconservation award Corporate Governance "Excellent" rating. I am pleased toinform that four mines of your company have got five-star ratings from Ministry of MinesGovt of India.
I would like to take this opportunity to thank the Government of India Ministry ofSteel Ministry of Environments Forest State Governments of Maharashtra and MadhyaPradesh all Govt. Departments our valued customers Company's bankers suppliersstaff-workers unions officers association and all MOILians for their great contributionto Company's performance. At the same time I wish to acknowledge the valuable guidancegiven by the Board of Directors of the Company without which it would have not beenpossible to lead the Company in progressive direction. I look forward to continued supportand commitment of all stakeholders to Company's reaching new heights and enhancingstakeholders' value.