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Steel Authority of India Ltd.

BSE: 500113 Sector: Metals & Mining
NSE: SAIL ISIN Code: INE114A01011
BSE 00:00 | 15 Feb 44.85 -1.40
(-3.03%)
OPEN

46.30

HIGH

46.40

LOW

44.35

NSE 00:00 | 15 Feb 44.90 -1.35
(-2.92%)
OPEN

46.00

HIGH

46.40

LOW

44.30

OPEN 46.30
PREVIOUS CLOSE 46.25
VOLUME 1001192
52-Week high 96.05
52-Week low 44.10
P/E 7.45
Mkt Cap.(Rs cr) 18,525
Buy Price 44.85
Buy Qty 530.00
Sell Price 44.85
Sell Qty 4900.00
OPEN 46.30
CLOSE 46.25
VOLUME 1001192
52-Week high 96.05
52-Week low 44.10
P/E 7.45
Mkt Cap.(Rs cr) 18,525
Buy Price 44.85
Buy Qty 530.00
Sell Price 44.85
Sell Qty 4900.00

Steel Authority of India Ltd. (SAIL) - Chairman Speech

Company chairman speech

Letter to Shareholders

Dear Shareholders

I am privileged to apprise you about the achievements of your Company during theFinancial Year 2017-18.

The World growth outlook projected by IMF in January' 2018 reflects a positive forecastfor both advanced and developing economies. At 3.8 percent Global growth rate in 2017 wasthe fastest since 2011. With financial conditions still supportive Global growth isexpected to tick up to 3.9 percent in 2018 and 2019. Aggregate growth in emerging marketand developing economies is projected to firm up further with continued strong growth inemerging Asia and Europe. The long-term projections by World Bank also indicate that theprolonged period of weak growth expectations characterized by systematic downgrading oflong-term forecasts seems to have come to an end. These healthy growth projections forWorld's economy indicate a steady growth prospect for the Global steel industry as well.

World Steel Association (WSA) in its April'2018 forecast said that Global steeldemand will reach 1616 Million Tonnes (MT) in 2018 an increase of 1.8% over 2017. It isforecast that Global steel demand will grow by 0.7% to reach 1627 MT in 2019. WSA hasfurther added that in 2018 high confidence strong investment levels and a recovery incommodity prices are generating a virtuous cycle for steel demand globally both indeveloped and developing economies.

Reflecting on the domestic scenario World Bank has forecast a growth rate of 7.3 percent for India this year and 7.5 per cent for the next two years making it the fastestgrowing economy among major emerging economies. This augurs well for the domestic steelindustry. The growth in domestic steel consumption is strongly backed by robustdevelopment of India's infrastructure sector. It is further supported by 7.8% growth indomestic finished steel consumption during the FY 2017-18 as a result of growingactivities of steel intensive sectors. India overtook Japan as World's second largeststeel producing nation in the last quarter of the Financial Year 2017-18. It is likelythat India may soon stake a permanent claim to be World's second largest steel producerafter China. The 300 MTPA steel production capacity for India by 2030 as envisioned in"National Steel Policy 2017" is commensurate with this growth projection.

Your Company achieved sales turnover of Rs.58297 crore during the Financial Year2017-18 which is higher by 19% over previous year. However the net sales turnover ofRs.56893 crore was higher by 30% over last year's net sales turnover of Rs.43866 crore.Slimming the losses by around 83% your Company's Profit after Tax (PAT) on standalonebasis improved to Rs.(-) 482 crore in FY18 from Rs.(-) 2833 crore in FY17. Theconsolidated profit after tax of the Company stood at Rs.(-) 281 crore for FY18 as againstRs.(-) 2756 crore in FY17. The persistent strategic approach to improve operationalprofitability assisted SAIL to improve the EBITDA in FY18 to Rs.5184 crore a substantialincrease over FY17.

The improvement in financial performance is backed by improved operational performanceindicated by increase in Saleable Steel production higher share of Concast productionimproved product mix improvement in BF Productivity reduction in Coke Rate &Specific Energy consumption reduction in specific wage bill etc. However the same hasbeen partially offset due to provisioning towards various mining related issues increasein average coal prices higher usage of imported coal in the blend due to loweravailability of indigenous coal increase in average rate of purchased power and increasein interest and depreciation costs.

On the production front Financial Year 2017-18 witnessed several landmark achievementsthrough ramping up of new facilities and surpassing all previous records in physicalperformance. Your Company achieved its highest ever production of Hot Metal of 15.983 MTCrude Steel of 15.021 MT and Saleable Steel of 14.071 MT. It also clocked an alltime bestperformance of Continuous-Cast (CC) Steel production of 12.80 MT with a growth of 9% overprevious best of 11.77 MT achieved in 2016-17. Moving towards completing the balancemodernization and expansion projects Bhilai Steel Plant's new BF#8 ‘Mahamaya'having an annual Hot Metal production capacity of 2.8 MT was blown-in on 2ndFebruary 2018. SMS-III of the Plant was also started on 31st March 2018 withblowing of first heat from Converter-1.

On the back of various new initiatives to improve productivity and efficiency acrossall Plants every Unit has registered improvement. The Financial Year 2017-18 witnessedsubstantial increase in supply of rails to Indian Railways with commercial productionfrom new Universal Rail Mill (URM) enabling a 39% growth in total UTS-90 Rails production(9.03 lakh tonnes) w.r.t previous year (6.49 lakh tonnes) coupled with record long raildispatch of 3.17 MT. At Durgapur Steel Plant Narrow Gauge Wheels from Wheel & AxlePlant and High Strength Structural E350 grade from Medium Structural Mill (MSM) weredeveloped in-house. The initiative of casting and rolling of 125 sq. mm Billets atDurgapur will further increase the productivity. At Rourkela Steel Plant the New PlateMill recorded a growth of 48.1% over CPLY by rolling more than 8 lakh tonnes in FY18. TheMill exported 127000 tonnes of CE marked plates to the European Market during theFinancial Year 2017-18. The Hot Strip Mill recorded all-time best performance of producing16.8 lakh tonnes of HR Coils during 2017-18 which is a rise of 8% over previous fiscal.With consistent efforts Bokaro Steel Plant registered record production of Cast Slab at3.276 MT (previous best: 2.990 MT) highest ever production of CR Coil for sale at 0.916MT against previous best of 0.776 MT. In addition the latest Unit of SAIL i.e. IISCOSteel Plant (ISP) Burnpur has made progress towards stabilization and has achievedpositive PBT in 4th quarter of FY18. It is expected that in FY19 ISP willcontinue to make rapid progress and contribute a decent share in the overall profitabilityof your Company.

During the year your Company's total requirement of iron ore was met from captivesources. SAIL's captive mines produced 26.83 million tonnes (MT) of iron ore.

It is a matter of great pride that your Company continues the tradition of being atrusted and valued partner in nation's development. In FY18 SAIL has supplied steel toprojects of national importance like Dhola-Sadiya Bridge Sardar Sarovar Project etc.contributing to India's growth story under the ambit of National Steel Policy 2017 and'Make in India' movement. SAIL also supplied steel for various defence projects includingindigenously built Anti-Submarine Warfare (ASW) Stealth Corvette INS-Kiltan and wasassociated with iconic projects of Chandrayan and Mangalyan missions.

On the marketing front SAIL launched diverse initiatives to target defined marketsegments. During 2017-18 your Company achieved its best ever sales volume of 14.1 milliontonnes (MT) registering a growth of 7.4% over CPLY. Continuing to maintain its presencein international markets SAIL exported 0.7 MT of steel a growth of 4% over CPLY To tapthe vast potential of steel consumption in rural India your Company organized 114"Gaon Ki Ore" workshops in 26 States/ Union Territories for increasing awarenesson usage of steel. Small consumers continued to be a focus area and 0.8MT of steel wassold through the retail marketing channels. As part of the strategy of increasing sales ofvalue added steel BSL's Cold Rolling Mill #3 commenced supplies to consumers in thehighly demanding high value auto segment. Supply of long rail panels (260 meters) toIndian Railways from BSP's Universal Rail Mill registered a growth of around 112% in2017-18. Your Company also supplied 50000 tons of steel in customized sizes from itsservice centres in 2017-18 representing 53% growth over the previous financial year.

Realizing the importance of restoration and rehabilitation of degraded eco-system formaintaining and enhancing biodiversity your Company is taking appropriate steps includingecological restoration of mined out areas fresh plantation biosequestration of CO2enhancing utilization of wastes through application of 4Rs (Reduction Reuse Recyclingand Recovery) environment friendly disposal of Poly Chlorinated Bi-Phenyls utilizationof renewable energy sources etc. More than 20.1 million saplings have been planted acrossSAIL Plants and Mines till date since inception. Giving special thrust for plantationmore than 8.27 lakhs of saplings have been planted during 2017-18.

Under the Company-wide turnaround program 'SAIL Uday' initiated in 2016-17 a roadmapfor improvement in the areas of Raw Materials Operations Sales & Marketing SupplyChain & Logistics Personnel and Human Resource has been developed and deployed. Thisprogram has yielded positive results as evidenced by the performance during the year.

Corporate Governance in your Company is reinforced by its vision and credos. SAIL hasformulated policies to ensure transparency accountability disclosures and reporting touphold highest ethical standards in conduct of business while complying with lawsregulations and guidelines including DPE guidelines. Ethical conduct throughout theOrganization is promoted with the primary objective of enhancing shareholders value.SAIL's effort as a responsible corporate citizen and partner in Nation Building has beenrecognized in the form of awards and accolades by several forums.

Your Company believes that building trust will enhance its reputation and boost theconfidence of its investors & stakeholders. In line with this SAIL has beenproactively and regularly sharing key information with all stakeholders through use ofdifferent communication channels.

At the end I take this opportunity to thank all the shareholders for their continuedtrust and support. I also thank all our other stakeholders who have contributed internallyand externally in the improved performance of the Company. I must specifically thank ourvalued Customers trusted suppliers the Central and State Governments and our talentedemployees who have always stood by the Company and contributed in the progress of SAIL. Ilook forward to the continued support and unflinching trust they have placed in us.

Place: New Delhi (Saraswati Prasad IAS)
Dated: 13th August 2018 Chairman & Managing Director