It is my privilege to present to you the Annual Report for the financial year 2020-21.
This year will be remembered as the year of Covid-19. With lockdowns and large-scaledisruptions across the world survival and well-being rightfully became the topmostpriority.
The intensity with which the first and second waves of the corona virus hit us shookthe entire economy and life system devastating lives and livelihoods. Undoubtedly it isa first of its kind crisis witnessed in generations. My heart goes out to everyone outthere who has suffered the loss of loved ones due to this pandemic. Given all the effortsmade by the scientists the governments and the healthcare workers over the past year Iam confident that we will eventually get this pandemic under control. Until then I urgeyou all to stay safe follow Covid-19 precautions and get vaccinated as per youreligibility.
With that being said for the past year and a half the world has been facing cashcrunches defalcations job terminations lay-offs pull-out stakes market fluctuationsas well as drastic product sales reduction due to the pandemic. These dynamics havedecreased trust and caused a chaotic situation with financial instability and politicalfluctuations throughout the country.
The unstable relationship between the US and Iran has resulted in crude oil conflictsglobally. Since India is a major importer of crude oil from Iran these conflicts havecaused great hindrance and created imbalances in the Indian economy. Furthermore foreigndirect investment has shown declining trends globally and India is highly dependent onsuch investment for growth. The automobile and other allied sectors in India too witnesseda decline in the demand for products and services. However recovery is anticipated.
In general manufacturing has also been hit hard slowing down India's development.Builders dealers retailers financial institutions and raw material supplies have beenfacing diminishing sales and earnings. However according to most economic experts theBanking system in India has been affected less in this recession period. The banks seem tobe surviving the recession due to a well-driven proactive fiscal policy that has acted asa cover for financial institutions. Other sectors which have been adversely impacted andrequire structural changes in their long term planning are the Health and Educationsectors.
In the Indian market consumption constitutes 60% of the economy and its reductionseverely affects the economy. Hence after a detailed analysis of the current situationThe Economists
Intelligence Unit (EIU) has predicted a continuous negative rate of economic growth forthe fiscal year2021 compounded by issues like global trade conflicts and imbalancedmarket and political upheavals.
However the good news is that the Indian economy has performed better than expected.People are learning to live with the virus helping the economy with positive pent-updemand. The most positive news is that the Covid-19 curve has been under control for sometime now. But recovery is not uniform across sectors. Smaller firms have taken a far moresevere hit as compared to the larger ones. Although services are trying to clawback the pick-up will be led by manufacturing. And as long as there is fear of the virusdemand services will continue to suffer from residual anxieties.
GCL supplies more than 85% of its production to the aluminium industry and the rest tothe steel and other allied industries. World production of aluminium during the yearFY2020 was 63.1 MMT registering a fall of 1.3% compared to production figures of 63.9 MMTachieved in FY2019. At the same time worldwide consumption of Aluminium also declined by1.8% from 65.2 MMT in FY20 to 64.1 MMT in FY19.
In the domestic market aluminium production declined by 2% in FY2020 and domesticconsumption declined by around 6-7%. User industries like Transportation Electrical andIndustrial Machinery Equipment sector saw a drop in consumption while Packaging andConsumer Durables were the major demand drivers.
A rise in infrastructure development will drive growth in the aluminium sector in thenear future. Demand for aluminium is expected to pick up as the scenario improves for userindustries like power infrastructure and transportation. The Government of India's"National Mineral Policy" is expected to bring more transparency betterregulation and enforcement balanced socio -economic growth as well as sustainable miningpractices in the aluminium sector. Domestic demand is likely to remain robust due toconstruction and packaging. The adoption of strong and lightweight aluminium sheets invehicle parts and structures has led to growth in the automotive body sheet segment. Thismarket has been expected to record growth despite some recent softening in European andChinese demand.
(Source: Aluminium Sector Analysis by equity master 29.01.2021)
Now I would like to take you through some key highlights of our performance for theyear under review.
This has been a challenging year for Goa Carbon. The pandemic has thrown variousunprecedented challenges at us in terms of logistics as well as manpower management. Theavailability and procurement of raw material from various offshore destinations was adaunting task. To top it off the cutting down of production levels by global refineriesadded to the problem as the raw material became scarce and the prices surged upward.
Cash Flow issues and a decrease in savings changed the pattern of our operationalplanning. With the constraint on importing raw petroleum coke imposed by the HonourableSupreme Court of India and the subsequent introduction of the licencing system by theGovernment of India for importing raw pet coke production planning has become vastly morestringent and reduced the margin of error.
With all its volatility and uncertainty this past year has brought out GCL'sresilience and its ability to deal with challenges. Our eco system inclusive approach tocalibrate shutdown restart cargo logistics and revival enabled fast track recovery anddelivered a bounce back during the last quarter. The resilient performance of the companyis reflected in the business performance. Despite a reduction in the top line to Rs. 353crores from last year's Rs. 419 crores the loss for the year was substantially broughtdown to Rs. 4.81 crores as compared to the loss of Rs. 27.75 crores last year.Furthermore the production of Calcined Petroleum Coke stood at 145068 MT as opposed to147863 MT in the previous year.
We acknowledge the commitment and spirit of our employees and our Covid-19 warriors.Looking ahead FY2022 has already begun with the second wave followed by the yet unknownchallenges of the third wave we are confident that we will get through it.
Looking to the future:
The spread of the Covid-19 pandemic across the globe from China and its surreptitiouspublic reporting compared to India's timely assistance has placed the latter in afavourable position as compared to the former. Several global companies began to considerdiversifying their manufacturing/supply chain base to India. The pandemic seems to havealso strengthened the resolve of the US to further its strategic partnership with Indiaand New Delhi too seems poised to throw its weight behind Washington and its allies. Thusnew opportunities have opened up for India to evolve as a reliable regional leader bymarshalling and utilising resources to script a success story.
The government is already on the path to accelerate reforms and bring transparency inthe decision-making process to attract foreign investment into the country. On thedomestic front the Government must re-assess the high GST rates and balance the supplywith the demand of the products. Further to that it must also invest in the basic needsof the people to build their trust in the economy and raise the spending power of thecommon man.
Unquestionably the business environment has become challenging. With decades ofindustry experience growth forecast of aluminium and in turn CPC industry in the countryyour company is hopeful for an optimistic start. In the recession caused by the pandemicthe management has focused on rigorous cost optimization and the improvement of thefinancial health of the company.
The journey has been full of excitement with achievements as well as wisdom derivedfrom the hurdles we encountered. We have learnt a lot and intend to use the new knowledgeto streamline the system and accelerate the transformation agenda thus enhancing theorganisation's agility and resilience to avail forthcoming opportunities.
GCL- Dempo Group has always been dedicated to corporate social commitment. Over theyears the company through the Group CSR initiatives as well as that of its own hasundertaken several quality CSR programs for the well-being and development of thecommunity. During the times of pandemic crises apart from independent CSR projects yourcompany contributed to the PM Cares Fund and the State Disaster Management Funds throughthe Dempo Group. The Group launched various initiatives like providing free nutritiousmeals to the Covid-19 warriors and the families of the patients at Goa Medical College andsponsored oxygen concentrators to the Government Hospitals in the state of Goa. Amongother projects GCL has contributed partially to the Group's 'Dempo Vishwa Gramshala'(DVG) Project. DVG is a special philanthropic vision of the Group committed to thepromotion of rural education by enhancing both physical campus requirements and theeducational culture & quality.
I would also like to extend our gratitude towards the Government of India GoaChhattisgarh and Odisha the Marmugao Port Trust Paradeep Port Trust Mangalore Portvarious regulatory authorities our bankers associates suppliers and all the otherstakeholders for their support faith and continued association with us.
I am grateful to the board members for their consistent commitment engagementsupport and encouragement in our journey. You are aware that Mr. Keki Elavia thesenior-most director on the Board retired in April 2021 under the Board Retirement Policy.The Board deeply appreciates the association and services offered by Mr. Elavia during histenure. He was always there to advise the management and the Board. His belief in ourabilities to lead and conviction in the company's future saw us through many testingtimes. I would also like to extend a warm welcome to our newly inducted member of theboard Mr. Subodh Nadkarni. His vast business acumen knowledge and experience shall helpyour company take forward the Board's strategy and achieve better performance in the yearsto come.
Last but not the least I am also thankful to the company's employees and theirfamilies. I urge all the employees unions staff and the management team to put incombined efforts work cohesively and be cost-consciousenabling a smooth passage throughthis turbulent business year.
May the New Year 2021-22 shed all negative elements and bring out the excellence ofhumanity to help support growth and sustainability.
Date: 17 August 2021