The steel industry globally is facing unprecedented challenges. Subdued demand growthhas resulted in an overcapacity situation. While steps are being taken to correctcapacities the situation continues to be challenging.
The Roll industry which predominantly caters to the steel industry is under severestress. Few reputed Roll manufacturers have either closed their operations or have beensold while many are under tremendous financial stress. The situation in China &Russia is also challenging as steel capacities are being rationalized.
The Indian Roll industry is also facing overcapacity and extremely competitive importsfrom China and Russia. This has led to a price war and prevalence of very adverse creditterms. The global reverse auction by a leading steel maker has added to the stress as theprices have dropped significantly. Subdued demand and delayed realizations have resultedin a fragile cash position leading to adverse performance of the Roll industry as awhole. The contributions have been drastically reduced leading to adverse performance.
TAYO has been facing very challenging times. This is a cause of deep concern. Thesubdued growth in infrastructure sector over-capacity situation in the Roll and Forgingindustries delayed technology absorption for next generation Rolls and severe cashconstraints among customers have led towards higher working capital requirement and highfixed cost. The adverse impact of high unabsorbed depreciation interest costs inabilityto meet future financial obligations and continued cash loss had eroded the net worth ofthe Company.
As a result your Company was referred to the Board for Industrial and FinancialReconstruction (BIFR) under First Proviso to Section 15(1) of Sick Industrial Companies(Special Provisions) Act 1985. However the Ministry of Finance issued Notifications S.O.3568 (E) & S.O. 3569 (E) dated November 25 2016 to the effect that SICA has beenrepealed with effect from 1.12.2016 and all the references or inquiry pending before theBIFR and/ or AAIFR shall stand abated.
Despite the relentless efforts and continued support from all stakeholders especiallythe Promoter(s) the changes in external environment and continued sub optimalperformance has resulted in continuous losses. As on 31.03.2017 the accumulated lossesis at Rs. 48798 lakhs and the Company's current liabilities exceeded its current assets.
The Board of Directors has decided to close the operations of the Company and theCompany has filed Closure Application U/s 25-O of the Industrial Disputes Act 1947 withthe State Government Authorities. The Application was rejected and the Company has fileda Writ Petition in the Honorable Jharkhand High Court against the rejection order whichis sub-judice.
Despite the above through continuous engagement with the Promoter your Company hasbeen able to raise funds through preferential allotment of Non-cumulative RedeemablePreference Shares to Tata Steel Limited the Promoter to meet its financial obligationstowards various stakeholders to the extent possible.
I am grateful to our Promoter(s) for extending their unstinted financial and technicalsupport. I also take this opportunity to express my sincere gratitude and heartfelt thanksof entire "Tayo Family" to our shareholders customers bankers suppliersemployees Tayo Workers Union Board Members and other stakeholders for their continuedsupport to the Company and the Management.