In 2015-16 economies of the countries with the highest steel per capita use werestruggling. Concerns over excess capacity combined with slower economic growth worldwideare being reflected in the results of steel companies. Over the next decade market forceswill play a deciding role on how the steel industry develops worldwide. Significantfactors will be the supply position of raw materials their cost technology developmentnational policies of governments on trade and investment in raw materials infrastructureand logistics.
The domestic steel sector is not isolated from developments in worldwide markets. AtUsha Martin our focus on domestic markets recognizes that steel is strongly driven byconsumption. A healthy economy needs a healthy steel industry. Our government is focusedon manufacturing growth and steel has a strong relationship with manufacturing andinvestment in fixed assets; specifically on investments made in producing capital goodshousing infrastructure like railways ports and airports are good examples along with newsegments of defense production. However these trends have only just begun as our economygears up to transformational growth.
So while the growth story of domestic steel has potential your company as part of thedomestic steel industry faces multi-dimensional challenges. In line with global trendssteel consumption faces challenges from substitute products developed with lower costalternatives and energy options. Usha Martin is attentive to these trends and are movingto serve the needs of special steel in industry segments relevant to our product linesassisted by our technical collaboration partners Aichi Steel.
The wire and wire rope division of Usha Martin was also impacted by the sharp downturnin oil prices leading to reduction in demand from this vital sector. The management havetaken steps to enhance market presence in other sectors like elevators cranes etc. topartially offset the impact.
The growth potential of our domestic industry attracts the attention of worldwideplayers with overcapacities in raw materials and products. A pre-emptive levelling of theplaying field through constructive trade policies of the government is encouraging andwill go a long way towards managing related risks to our business.
Our competitiveness depends on many factors including efficiency in production labourproductivity costs of raw materials and infrastructure to move raw materials and finishedproducts at low costs. Our management team is making efforts in developing cost reductionand rationalization programs. These projects/programmes need to be pursued with full vigorinspite of the near term challenges that may arise.
Our confidence is in the potential of our economic growth and its beneficial impact onour company. I immensely value and acknowledge the support of all shareholders andstakeholders as we journey through difficult times in the industry to a brighter future.