The fiscal year that has just ended has proved to be a mixed bag in terms ofperformance. Net Sales increased from 1602 Crore to 1879 Crore, an increase of 17%. Withinthis, tube sales increased by 21.5% from 1070 Crore to 1301 Crore, while steel salesincreased by 8.6% from 531 Crore to 577 Crore. During this period exports increased by 52%from 328 Crore to 500 Crore. However, at the same time the EBIDTA margin was under severepressure and decreased from 16.5% to 13.5%. This was reflective of two factors: Theextremely severe economical environment under which we operated, especially during thesecond half of the year and our attempts to increase sales in this adverse environment byadding new customers based on an entry pricing strategy which yielded lower margins.
The key achievement during the year has been that we have widened the customer base.Therefore, we are now well positioned to take advantage of an upturn in the market as andwhen it occurs. While it is too early to say that such an upturn is in the offing, thereare, at least some indications that the optimism level in the economy is beginning to moveup. ISMT is present in virtually all the core sectors of the economy including mining,construction (through sales to earth moving equipment manufacturers), oil exploration,automotive, and power generation. It is hard to envisage that all these sectors willcontinue to remain depressed. Once the market begins to move in a positive direction weshould, from the new customers that we have added, be able not only to increase volumesbut also to increase margins.
As we speak we continue to operate in an extremely difficult economic climate. In thissituation our company's efforts are directed at aggressively looking for new customers andreducing inventories as well as receivables. On all these fronts tremendous efforts arebeing put in by our team. We are also aggressively pruning both fixed as well as variablecosts keeping in mind however that we should be able to react quickly to a surge in themarket.
Soon we should also begin to see a perceptible positive contribution to the bottom-linefrom the 40 MW captive power plant which was commissioned on May 28, 2012 and has startedrunning smoothly. Apart from reducing costs immediately, having a captive power plantde-risks us from sudden, arbitrary increases in power costs by the State Government.
However our request for coal linkage continues to be pending for nearly four years andthe problem is further aggravated by the policy distinction between Independent PowerProducers and Captive Power Plants. Your Company alongwith Indian Captive Power ProducersAssociation is pursuing the same at all levels.
As mentioned in earlier reports, we continue to work with the Commerce / FinanceMinistry to convince them to impose an anti-dumping / safe guard duty on Chinese tubeswhich are being imported into India in ever increasing volumes. The fairness of ourrequest is unquestionable and are making ceaseless efforts in this direction.
I would like to take this opportunity to express our gratitude to our customers, banks,and business associates, for their continued support and for the trust they have reposedin us. Thank you,
Pune, August 18, 2012