I feel extremely privileged and delighted in interacting with you on the occasion of 56thAnnual General Meeting and presenting annual report for the financial year 2017-18. Ireally feel privileged to share historical performance of your company in many spheres ofits activities viz. highest ever turnover highest ever sales of non-fines ore highestever production of non-fines ore and highest ever capex.
Metal and mining industry continued its positive trend during FY 2017-18 also andoutperformed previous year's marks. It has been a better year for entire steel andcommodity market where performance of the sector has been improved showing upward trend inthe commodity market specially in the metal sector. The prices of products were at higherlevels during the year as compared to the previous year and most of the companies in metalsector have outperformed during FY2017-18.
FY 2017-18 begun with some hiccup in manganese ore industry resulting into reduction inprices of manganese ore in the beginning of the year by MOIL. The industry later on showedstrength and started heading towards a positive trajectory from June 2017 and prices ofmanganese ore started going in upward direction. Average sales realization improved from '8018 PMT in previous year to ' 10201 PMT in current year thus showing an increase of 27%over the previous year price. With such positive movement in the market coupled with goodmarketing strategy pricing policy and better product mix your company has been able tooutperform in all spheres of activities. The company has produced 12.01 lakh tonnes ofvarious grades of manganese ore as against 10.05 lakh tonnes in previous year which ishigher by 20% over previous year and also the highest production in last 10 years.
Your company has been able to increase sales of manganese ore by 5.13% from 11.29 lakhMT in the financial year 2016-17 to 11.87 lakh MT in financial year 2017-18.
Your company has registered gross sales of at ' 1323.46 Crore during the financial year2017-18 as compared to ' 989.84 Crore in the previous year recording increase of 33.70%.The company has posted PBT and PAT of? 647.92 Crore and ' 421.99 Crore respectively asagainst' 461.90 Crore and ' 305.83 Crore last year.
MOIL is a dividend paying company since many years. I am pleased to inform that theBoard of Directors of your Company have recommended final dividend @ 25% i.e. ' 2.50 perequity share for 2017-18. Thus total dividend for the year 2017-18 works out to ' 5.50per equity share. Out of ' 5.50 your company has already paid interim dividend of ' 3.00per equity share to the shareholders in March 2018.
Your Company always strives to attain highest level of Corporate Governance practices.Implementation of integrity pact adoption of code of conduct anda well-defined internalcontrol framework add to the transparency of the Company's business practices. MOIL iscomplying with the Government guidelines and listing agreements on corporate governance.However filling upof vacant posts of Directors which is one of the requirements ofCorporate Governance is under process at Government level. A report on CorporateGovernance compliances has been made part of the Boards' Report. Your company has beengeffing excellent rating from Department of Public Enterprises (DPE) for complying withvarious norms of corporate governance. I am sure that for the year 2017-18 also it willget excellent rating.
Being a good corporate citizen MOIL has always been on the forefront in extendingassistance for up-liftment of the needy people of the society through development andimprovement of the quality of life of internal as well as external stakeholders and thesociety at large. It has undertaken a number of CSR initiatives in the area of healtheducation construction/renovation of roads and schools water supply facilitiesperipheral development sports and cultural development etc. for community living in andaround its area of operations as well as in other areas. DAV MOIL Public School at Chiklaone of the major projects completed by MOIL under its CSR has received excellent responsefrom the people of nearby areas. The school which started with strength of434 studentssome years back has reached strength of 985 students. The company has also taken up skilldevelopment activities for the rural youth. The company is also planning to open anotherschool in association with DAV near its Munsar mine.
Under "MOIL Foundation" your company is carrying out "CommunityDevelopment Program" (CDP) on a large scale in association with Maharashtra Instituteof Technology Transfer for Rural Areas (MITTRA) an associate of BAIF Development ResearchFoundation Pune which covers various activities like improved agricultural practicessoil health card livestock development water resource management health awarenessprogramme installation of bio-gas women self-help groups solar lamps construction oftoilets women empowerment schemes education and skill development in 21 villages in thevicinity of its mines. Works done under CDP have been appreciated by all the quarters. Thecompany has spent asumof ' 9.22 Crore on CSR activities during 2017-18 (including transferoffund to MOIL Foundation).
Your company is having total mining leases over an area of 1743.77 Ha as on 31-03-2018in Maharashtra and Madhya Pradesh. An area of 814.71 Ha has been reserved by theGovernment in favour of MOIL for prospecting of Manganese ore in Nagpur and Bhandaradistricts of Maharashtra. Out of this the State Government has granted prospectinglicense (P.L.) over 11 areas aggregating to 597.44 Ha and balance
is in process. MOIL has applied for Mining Lease (M.L.) over 211.60 Ha. Out of 3 M.L.applications the Government has communicated inprincipal approval of two M.L. areascovering 132.46 Ha and one application is under process. Core drilling for remaining P.L.areas is to be taken up after requisite approvals from Govt authorities. In additionGovernment of M.P. has also reserved an area of 372.701 Ha in favour of MOIL in Balaghatfor exploitation of manganese ore. Your company has taken necessary steps to convert theseleases into mining leases so as to open new mines/expand existing mines.
With a vision to become one of the best manganese ore mining companies of the world andin order to meet the demand of manganese ore in the steel industry and to remain marketleader in manganese ore production your company has planned for investments indevelopment of its existing mines. In this direction your company has already taken upworks of sinking of high speed vertical shaft at Gumgaon mine and Balaghat mine. Theseprojects are expected to double production of these mines from about 3.70 lakh tonnes to7.40 lakh tonnes by FY 2025. Besides this your company has taken up various projects ofdeepening and sinking of shafts at its Chikla Kandri Ukwa Tirodi and Munsar mines inaddition to huge open cast development in at Dongri Buzurg mine.
In order to particularly meet the requirement of power in the mines and to promote useof non-conventional and environment friendly energy your company has taken necessaryaction for seffing up of 10.5 MW Solar Power Plant at its mines in Madhya Pradesh andMaharashtra. In addition to this MOIL is also taking necessary action to implement 20 MWSolar power project at Rajgarh Khas in Madhya Pradesh.
India's steel production grew from about 95.50 million tonnes in the year 2016 to101.40 million tonnes in the year 2017 registering a growth of 6.18% whereas the world'ssteel production growth was only 3.81% over the same period. China the largest producerof crude steel showed a growth of 2.98% whereas Japan as a second largest producerrecorded negative growth of 0.10%.
The performance of manganese ore industry is linked with the performance of steelindustry. As per World Steel Association (WSA) with the expected population growthemerging new applications for steel and more sophisticated steel applications the globalsteel market is estimated to have a potential to grow further between 700 and 1000 milliontonnes in the next 50 years and with this it will be equivalent to a market that is about60% larger than that of today.
At present your company is the largest producer of manganese ore in the country with ashare of about 50% when compared to estimated production of the country for 2017-18. Theimport during 2017-18 has increased by about 87% from 1.91 million tonnes to 3.57 milliontonnes. This indicates enough gaps between demand and supply which provides anopportunity for MOIL to increase its production in particular production of high grademanganese ore.
With continuous drilling and exploration works your company has been able to add toits reserves and resources of manganese which has increased 90.66 million tonnes Withthis MOIL is very well positioned to capitalize on India's steel demand growth given itsdominant position medium-to high-grade ore reserves centrally located mines low cost ofproduction and strong customer ties.
Government of India's focus on infrastructure developments continues to be on top ofthe country's economic agenda. In this direction the Government has taken up numerous keyinitiatives like affordable housing and housing for all huge investments in the projectsof roads and railways development of smart cities etc. There are a lot of industriesthat depend directly or indirectly on the development of infrastructure sector and steelindustry is one of the key industries. If that happens it will also give increase thedemand of manganese ore.
As per latest National Steel Policy-2017 India has set capacity target of 300 milliontonnes of steel by 2030-31.1 am sure that this will create huge demand of manganese ore inthe country to the tune of around 10 million tonnes (excluding demand for exports).India's per capita consumption of steel continues to be on lower side at about 65.20 kg incomparison to world's average consumption of 214 kg which again provides opportunity forsteel industry. Thus India's steel demand has potential to rise significantly. This willprovide a very good opportunity for MOILto increase its production and also increase itsmarket share.
In order to meet the increasing demand of manganese ore of the steel industry and toremain a market leader in manganese industry in our country it is necessary to enhancethe manganese ore production. Accordingly MOIL has planned to enhance its production frompresent level of around 1.20 million MT to 2.00 million MT by 2021 2.50 million MT by2025 and 3.00 million MT by 2030 for which a strategic management plan has already beenprepared. In this direction your company has planned investments for developmentofexisting mines acquisition of new mines within and outside the country acquisition ofareas adjoining the mines seffing up value addition / diversification projects etc. Asyou know your company has already increased its production by 20% in comparison to2016-17 and further targeted to enhance it by 15% in FY 2018-19.
Your Company is one of the public sector enterprises in the country known for itscontinuous excellent performance for last several years despite ups and downs in theindustry. The Company has been geffing national/regional recognition for its good works invarious fields like quality circle awards corporate governance "excellent"rating best employer award fastest growing PSU award etc. I am pleased to inform thattwo more mines ofyour company have got five-star ratings from Ministry of Mines Govt ofIndia.
I would like to take this opportunity to thank the Government of India Ministry ofSteel Ministry of Environments Forest State Governments of Maharashtra and MadhyaPradesh all Govt. Departments our valued customers Company's bankers suppliersstaff-workers unions officers association and all MOILians for their great contributionto Company's performance. At the same time I wish to acknowledge the valuable guidancegiven by the Board of Directors of the Company without which it would have not beenpossible to lead the Company in progressive direction. I look forward to continued supportand commitment of all stakeholders to Company's reaching newer heights and enhancingstakeholders' value.
M.P. Chaudhari Chairman-cum-Managing Director