It is my pleasure to present to you the Annual Report for the financial year ended 31March 2017. During the last financial year global recovery remained fragile amidstpolitical uncertainty especially following the UK referendum on Brexit and the USPresidential elections. Globally on the back of populist political orientation there isrising tendency towards protectionism and economic nationalism. However there are somesigns of improvement in the private sector confi dence firmer domestic demand growth inAsia and Europe rising industrial production and recovering employment and trade flows.In this context the economic growth in India the fastest-growing G20 economy isprojected to remain robust despite the temporary impact of demonetisation in the thirdquarter of the last financial year. The acceleration of structural reforms such as Goodsand Services Tax (GST) that is due for implementation from July 2017 will be structurallyimportant to bring growth impetus to the economy and should help make India a singlemarket thereby spurring productivity investment competitiveness job creation andincomes. We must however also be patient and resilient during the implementation phase asthere could be disruption during such large scale and complex regulatory transformation.
The global crude steel production picked up during the second half of 2016 primarilydriven by acceleration of Chinese steel production led by government stimulus andimprovement in the real estate market supported by recovery in the developed world andgrowth in emerging markets. India saw the fastest growth among the top ten producingcountries globally with crude steel production rising 7.4% to 96 million tonnes in 2016as the government stepped in with protectionist measures against cheap imports. YourCompany now operates in two integral business segments namely Foundry Pig Iron andDuctile Iron (DI) Pipes post amalgamation of Tata Metaliks DI Pipes Limited. While PigIron production growth was in line with the steel production Ductile Iron Pipe productionshowed a robust growth of about 11-12%.
The growth in DI Pipes is largely driven by governments focus on infrastructureprojects in the country including AMRUT (Atal Mission for Rejuvenation and UrbanTransformation) and Smart cities. In the medium to long term compared to the pig ironmarket the DI pipe sector in India is expected to see robust growth on the back ofincreased urbanisation and increased government spending with thrust on water sanitationand irrigation infrastructure. Your Company will continue to strive to participate in thegrowth story of the DI pipe sector in the country. I am happy to report to you that theyear 2016-17 was one of the most eventful years in your Companys history with thecommissioning of major capital projects related to growth and cost efficiency such as cokeplant 10 MW captive power plant modernisation and expansion of mini-blast furnace no. 1and capacity expansion of DI pipe plant (to 2 lakhs tonnes per annum). The amalgamation ofDI pipe and pig iron businesses was completed during the year resulting in a simplifi edand cost-effective supply chain structure. Gains out of single value chain of the mergedentity along with benefits of utilisation of captive power and coke has improved yourCompanys cost and market competitiveness. Your Company will strive to leverage thesynergies derived out of this merger and continue to focus on operational efficiencies forcost and quality leadership in the market.
Despite a 91 days shutdown of one of the blast furnaces during the year your Companydelivered its best ever financial performance for third year in succession. However theshutdown resulted in reduction of hot metal production by 12% as compared to the previousyear. In line with your Companys strategy of increasing the proportion ofvalue-added products in its portfolio DI Pipes segment registered its highest everproduction and sales registering an increase of 40% over the previous year. TheCompanys Profit before tax during the year increased by 10% to Rs 152 croresfrom Rs 138 crores in the previous year notwithstanding the cost pressures onaccount of rising raw material prices of iron ore and metallurgical coke. YourCompanys strong performance was also due to its continued focus on improvement ofoperational parameters customer centricity and product mix.
The Board of your Company has proposed a dividend of Rs 2.50 per equity sharefor the year under review which is 25% higher than FY 2015-16. During the financial yearyour Company has invested significant capital in growth and cost efficiencyprojects. The focus of your Company is now on enhancing cash flows structurally improvingthe robustness of the Balance Sheet and pursuing growth opportunities especially in the DIpipe business.
I would also like to mention that as a good corporate citizen your Company iscontinuously striving to improve the quality of life of the community around its plant atKharagpur through its structured Corporate Social Responsibility (CSR) and Affi rmativeAction plans in the areas of education employability entrepreneurship employment andessential amenities. As a major initiative in 2016-17 your Company has set up a SkillDevelopment Centre at Industrial Training Institute (ITI) Midnapore in collaboration withGovernment of West Bengal for training 1200 local youths annually in readily employablevocational trades.
Finally I would like to take this opportunity to thank all our Shareholders for theircontinued support and confi dence in the Company and the management. I also express mysincere gratitude to our customers and suppliers for their trust and support towards theCompany. I am also thankful to the unions for maintaining cordial industrial relationsthe employees the management team and my colleagues on the Board of Directors and allother stakeholders for their significant contribution to the Company. Finally I wouldlike to thank Sanjiv Paul Managing Director for his leadership and contribution to theCompany over the last 4 years as he relinquishes his position to Sandeep Kumar and returnsto Tata Steel. Sanjiv Paul joined the Company at a very difficult time but led itadmirably to a much stronger position today. I would also take this opportunity to welcomeSandeep Kumar as the new Managing Director from 1 July 2017 and wish him all the verybest.
| ||Koushik Chatterjee |
| ||Chairman |
|1 June 2017 ||DIN:00004989 |