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KIOCL Ltd.

BSE: 540680 Sector: Metals & Mining
NSE: KIOCL ISIN Code: INE880L01014
BSE 00:00 | 24 May 128.20 -2.40
(-1.84%)
OPEN

134.75

HIGH

134.75

LOW

127.95

NSE 00:00 | 24 May 129.55 1.20
(0.93%)
OPEN

129.00

HIGH

131.20

LOW

127.60

OPEN 134.75
PREVIOUS CLOSE 130.60
VOLUME 955
52-Week high 258.70
52-Week low 114.55
P/E 71.22
Mkt Cap.(Rs cr) 7,973
Buy Price 128.20
Buy Qty 100.00
Sell Price 149.45
Sell Qty 100.00
OPEN 134.75
CLOSE 130.60
VOLUME 955
52-Week high 258.70
52-Week low 114.55
P/E 71.22
Mkt Cap.(Rs cr) 7,973
Buy Price 128.20
Buy Qty 100.00
Sell Price 149.45
Sell Qty 100.00

KIOCL Ltd. (KIOCL) - Chairman Speech

Company chairman speech

Dear Shareholders

I am delighted to write to you at the end of one the most satisfyingand exciting year at KIOCL. 2018 is a year of solid growth for KIOCL in which weprogressed in our business momentum and strategic initiatives. We set a new benchmark inour pellet plant operations with production and dispatches touching an all-time highfigure of 2.327 million tons and 2.301 million tons after the closure of captive mine in2006. In comparison to last year the volume grew by 59% and 66% respectively and alsosurpassed the "Excellent" Targets as set out for 2017-18. Revenue fromOperations traversed Rs.1605.41 crores surpassed "Excellent" Target of FY2017-18 and achieved a growth rate of 73% on Y-O-Y basis. PBT & PAT for FY'18 wasRs.86.09 crores & Rs 81.48 crore from Rs.31.22 crores & Rs.47.93 crores in FY' 17up by 176% & 70% respectively.

As reported in the last year's Annual Report our approach responding tochange in our business environment to counter the subdued demand in steel capacityworldwide. In FY'18 we continued our strategy and approach more vigorously to maximizethe capacity utilization and successfully used blend of different grades of iron ore formaking Pellets for Domestic and International Customers. During the year we have enteredinto new markets other than

Chinese market viz.: South Korea Vietnam Japan Malaysia and Oman.Out of these markets we are now focusing on South Korea Japan and European Market toimprove market share.

We recognize that the factors that affected our performance at somepoint last year will continue to weigh on our margins in the current year. However we areconPdent we will improve our profitability during the year and we know what to do in orderto make progress.

As you all know KIOCL had re-listed its equity shares with NationalLevel Stock Exchanges in 2015. During the year we have listed our Equity Share in BombayStock Exchange on 22.08.2017. I am delighted to inform you that based on the present stockprice quoted on 31.03.2018 in the exchange we are amongst the top 500 listed Companies inthe country based on market capitalization and currently standing at 182 top listedCompany as per the National Stock Exchange (NSE) latest report. As mandated under SEBI(LODR) Regulations 2015 we are publishing a Business Responsibility Report (BRR) in ourAnnual Report for the first time describing the initiatives taken from an environmentalsocial and governance perspective.

Economy & Steel Sector Scenario

The Indian economy turned in resilient performance in 2017-18. Althoughreal GDP growth moderated to 6.6 per cent from 7.1 per cent a year ago there was a strongrebound in the second half of the year on the back of a turnaround in investment demandsupported by an acceleration in manufacturing rising sales growth a pick-up in capacityutilization strong activity in the services sector and a record agricultural harvest.

Several factors are expected to accelerate the pace of growth in2018-19. There are now clearer signs that the revival in investment activity will besustained. Global demand has been improving which should encourage exports and boostfresh investments. On the whole real GDP growth is expected to expand at 7.4 per cent in2018-19 with risks evenly balanced.

Meanwhile India has continued with structural reforms over a wide arearanging from a flexible inflation targeting framework for monetary policy; liberalizationof FDI ows; a unique identification (Aadhaar) backed direct benefit transfers; aninsolvency and bankruptcy code; the GST; realty reforms; and a swathe of measures forimprovement in the ease of doing business more generally. These factors have improvedIndia's global ranking in the World Bank's Ease of Doing Business.

As regards Steel Sector per se the world steel market looked positiveduring 2017. World crude steel production reached 1691.2 million tonnes (Mt) for the year2017 up by 5.3% compared to 2016. Crude steel production increased in most of the regionsin 2017. Annual production for Asia was 1162.5 Mt of crude steel in 2017 an increase of5.4% compared to 2016. World's largest steel producer China accounted for 49.2% of thetotal steel produces. China's crude steel production reached 831.7 Mt up by 5.7% on 2016.Japan produced 104.7 Mt in 2017 down by -0.1% compared to 2016. India became the thirdlargest steel producer with a production of 101.4 Mt up by 6.2% on 2016.

The Government has taken several steps to curb imports push localdemand with initiatives like "Make in India" Infrastructure projects toencourage the domestic markets. The Steel Ministry is working proactively to lay down theroad map to achieve 300 million tons by 2030. In addition the quick resolution of variousbig ticket steel mills under IBC and NCLT is expected to further hasten the process ofachieving higher capacity utilization.

Sharing of Profits

We conduct and grow our business in a sustainable way so that ourstakeholders all benefit. An important component of delivering value to our shareholdersand earning their trust over the long term is returning capital in a consistent andtransparent way.

The Board in its meeting held on March 19 2018 declared an interimdividend of Re.0.27/- per equity share (i.e.2.70%) of the face value of Rs.10/- eachaggregating to Rs.20.62 crores inclusive of dividend tax. Based on the Company'sperformance the Directors are pleased to recommend for approval of the members a naldividend of Re.0.79/- per equity share (i.e. 7.90%) of the face value of Rs.10/- each. Thenal dividend on equity shares if approved by the members would involve a cash outVow ofRs.50.15 crores plus a dividend tax of Rs.10.18 crores. The total dividend for thefinancial year ended March 31 2018 including the proposed nal dividend would aggregateto Rs.81.05 crores together with Corporate Tax on Dividend.

In terms of Regulation 43A of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 ("SEBI Regulations") the Company hasformulated and adopted the Dividend Distribution Policy with the objective of providingclarity to its stakeholders on the Profit distribution strategies of the Company. The saidpolicy has been hosted on the website of the Company.

New Business Opportunities/ Initiatives

The Company is in midst of large size capital investment which wasapproved by Board of Directors recently. This apart statutory clearance for developmentof Devadari Iron Ore Block are progressing at Govt. of Karnataka level hence I considernext 2 to 3 years would be very critical for timely execution of these projects. Withdedicated team in place and resources available I am conPdent to transform the companyand take to next level in the minerals & metal segments. A brief highlight of majorprojects are as follows:

A Memorandum of Understanding with Rashtriya Ispat Nigam Limited(RINL) was signed on 06.01.2018 for setting up of 2 MTPA Pellet Plant inside RINL premisesover an estimated area of 85 acre land and also providing Railway Siding with WagonTippler Unit. Joint Working Group has been constituted for take the project forward.Techno-Economic Feasibility Report (TEFR) prepared by Consultant envisaged estimatedinvestment of Rs.996 crores.

On the development of Devadari Iron Ore Mine Indian Bureau of Minesapproved the Mining Plan including Progressive Mine Closure Plan for production of 2 MTPAiron ore and setting up of

2 MTPA crushing conveying & beneficiation plant. MoEF & CCGoI after the presentation made before it on 24.04.2018 issued the Terms of Reference forconducting Base line study and preparation of EIA/EMP report for the project. The work isalready commenced and target date for submission of nal EIA/EMP report for obtainingEnvironmental clearance from MoEF&CC GoI is 30.11.2018. We have also submittedapplication for stage I forest clearance for diversion of forest land for the purpose ofthe mining and allied activities. Application is under scrutiny in the office of Nodal Ofcer Forest Department Government of Karnataka.

To make Blast Furnace Unit sustainable we have envisaged promotingforward and backward integration projects. Accordingly the Board of Directors approved toengage M/s MECON to prepare TEFR report. M/s MECON submitted the report which includesDISP project under forward and Coke Oven Plant under backward integration with10 MW CogenPower Plant at an estimated CAPEX of Rs.843.90 crores. The Board accepted the TEFR andrequested the said consultant to prepare DPR.

We have commenced G4 level Mineral Investigation works of two blocksallotted by Ministry of Mines at Tirumankaradu Iron Ore Block (TIOB) Tirupur Tamil Naduand Udbur Gold Block (UGB) Mysore Karnataka. Stage I eld works of Mysore for goldreserve and Salem for magnetite ore were completed. The large scale geological mappingworks are completed. The representative samples collected have been sent for analysis/testand the result is awaited.

On the developments in Renewable Energy Project during the five yearplan period of

2015-19. Based on approval received from Board of Directors we haveplaced work order for carrying out the design engineering procurement supply ErectionTesting Installation and Commissioning of 1 MWac Solar PV Power Plant at Blast FurnaceUnit on the receipt of Board approval. The project is expected to be commissioned during1st half of FY 2018-19. We are also in the process of setting up of another 5 MW SolarPower Plant in the state of Karnataka.

Awards & Recognitions

During FY'18 the Company has received following Awards &Recognitions:

Received "Governance Now PSU Award" during the 5th Editionof Governance now for its contribution towards Turnaround in Business.

Received "Substantial Growth in Exports" from CustomCommissionerate Mangalore for achieving highest exports & best business performancefor FY 2017-18.

Received First prize in recognition of its outstanding performance inimplementation of Official Language for Mangalore Region.

Bagged the "Recongnitions of WIPs Actvities Award" for theyear 2017 during 28th National Convention of Forum of Women in Public Sector [WIPS].

Acknowledgement

Conclusion I want to thank all KIOCL Employees for their dedicationand passion in delivering value to our company. We finished scal 2018 with strongmomentum positioning us well for the new scal year. With our highly discernedcapabilities and focused investments plan I am conPdent we will continue to drivesustainable pro table growth.

Warm Regards

M V Subba Rao
Chairman-cum-Managing Director