It gives me immense pleasure to inform the shareholders that during the year underreview equity shares of the company got listed with Bombay Stock Exchange and trading onthe shares started with effect from October 18 2017.
As soon as the business cycle for steel sector turned up wasting no time your companytook steps to restart production at its steel plant. I am happy to inform that the plantis in operation since October 2017. Your company has utilized the shutdown period to makemodifications in the plant and introduce new operational procedures for improving theperformance of the plant. All these efforts have bore fruit. The average gross coke ratehas come down while average daily production has increased thereby improving margins. Withthese measures your company would be able to sustain production at the steel plant.
The Order of the Supreme Court dated August 2 2017 on mining activities in the countryis having a deep impact on steel and mining companies in both public and private sectors.All available legal remedies have been taken to deal with the adverse impact of the Order.In parallel your company is also making efforts to raise money for making the payment ofcompensation amount as per the Order of the Supreme Court. As a result of this Order theoperations at Roida Iron Ore Mine have been suspended with effect from January 1 2018.
Having successfully navigated a difficult phase your company is now poised for betterperformance. The focus on controlling operational costs at the steel plant has led tobetter margins. Preparations are underway to restart the second blast furnace at the steelplant. This would further increase the turnover as well as margins.
On the consolidated basis (on including the income of subsidiary company Maithan IspatLtd) the company posted total income of Rs10902 million during the year. Your companyachieved doubling of standalone total income in one year raising it to Rs6443 million in2017-18 from Rs3030 million in the previous year. The company achieved EBIDTA of Rs1690million during the year as against EBIDTA of Rs1040 million in the previous year. Profitafter tax of Rs232.91 million was recorded for the year a jump of 66% over the last year.
Before restarting the production at the steel plant the company carried out a detailedtechnical study and introduced modifications in equipment and standard operatingprocedures for enhancing efficiency and productivity. These changes have improvedefficiency and brought down costs of operations. In a calibrated manner operations werestarted at one blast furnace in Oct 2017. Nearly 100 kilotons of pig iron was produced ina period of about 5 months of the year. The quality of iron ore products has improved withthe commissioning of 600 tons per hour crushing plant at the iron ore mine last year.Total production of 2.80 million tons was recorded at the mine during the nine-monthperiod of its operations. This production is almost equal to the production recorded inthe full year of 2016-17. Efforts were made to remove bottlenecks in dispatches from themine. As a result of these efforts total dispatch of 2.31 million tons was accomplishedin 9 months which compares well with the total dispatch of 2.66 million tons recorded infull 12-month period of 2016-17.
A large number of steel plants in the country are not able to meet their debtobligations and are facing insolvency under the newly introduced Insolvency and BankruptcyCode. As a result several steel assets are available for acquisition through insolvencyresolution process. Your company is actively pursuing such opportunities to expandinorganically.
Due to high NPAs banks are disinclined to lend to steel companies for two reasons onethe banks are not adequately capitalized for the fresh round of lending and second thesteel companies are responsible for very high NPAs of banks leading to an implicit embargoon further exposure to steel sector. Lack of support from banks is the main reason for thedelay in phased expansion for the steel plant. Now with the revival of the steel sectorthere would be a better response to the efforts in raising funds for the expansion of theplant. Your company has decided to take up the project to establish pulverized coalinjection facility (PCI) in the steel plant. During the year additional investment ofRs225 million was made in Maithan Ispat Ltd a subsidiary of your company. Total equityinvestment in Maithan Ispat is at Rs1818.9 million as of 31 March 2018. The modernizationand expansion of Maithan Ispat Ltd are in progress. A rolling mill for producing TMT barsof 200 kilotons per year capacity is being set up. Work on setting up an Electric ArcFurnace of 50-ton capacity has also been started which would produce 400 kilotons ofsteel.
Corporate Social Responsibility
As a responsible corporate your company remains committed to the welfare of thecommunities in the area where it operates. Under Corporate Social ResponsibilityInitiative the company has taken up works in Barbil and Kalinga Nagar areas for improvingexisting infrastructure promoting health and education women empowerment and sports.Your company is at the forefront of animal welfare activities also. During the year2017-18 about Rs27.70 Million were spent on various CSR initiatives.
For Mideast Integrated Steels Limited
Chairperson Cum Managing Director