It is my privilege to apprise you with the achievements of your Companyduring the Financial Year 2018-19. The year marked the return of your Company into black.It was a year of noticeable improvement in the performance a year in which the persistentefforts of your Company to stage the turnaround finally culminated into profits afterposting losses for the past 3 years consecutively.
Your Company achieved sales turnover of र66267 crore during theFinancial Year 2018-19 which is higher by 16% over previous year. The position of loss inthe previous year 2017-18 at र(-) 482 crore was reversed and your Company posted a Profitafter Tax (PAT) on standalone basis at र2179 crore in FY19. The consolidated profit aftertax of the Company stood at र2349 crore for FY19 as against र(-) 281 crore in FY18. Thepersistent strategic approach to improve operational profitability assisted SAIL toimprove the EBITDA in FY19 to र10283 crore almost doubling over the performance ofर5184 crore in FY18.
The improvement in financial performance was based upon the improvedoperational performance indicated by increase in Saleable Steel production (7%) increasein Net Sales Realisation (NSR) for 5 ISPs (16%) higher share of Concast productionimproved product-mix reduction in Coke Rate reduction in specific wage bill etc.However the same has been partially offset due to increase in imported coal ratepurchased power rate higher expenditure on repairs & maintenance stores &spares security expenses loss on account of foreign exchange variations higher importedcoal in blend provisioning towards various mining related issues provision for entry taxin the State of UP following the Court Order and increase in interest and depreciationcosts.
On the production front Financial Year 2018-19 saw number of newrecords being created. The production improved substantially with the ramping up of newfacilities. Your Company achieved its highest ever production of Hot Metal of 17.5 MTCrude Steel of 16.3 MT and Saleable Steel of 15.1 MT. It also clocked an all-time bestperformance of Continuous-Cast (CC) Steel production of 13.8 MT with a growth of 8% overprevious best of 12.8 MT achieved in 2017-18.
With the modernisation and expansion plan on the verge of completionthe modernised and expanded Bhilai Steel Plant (BSP) was dedicated to the Nation by theHon'ble Prime Minister on 14th June 2018. The new Steel Melting Shop (SMS-III) at BSP wasput into operation along with 2 convertors 3 casters 2 Ladle Furnace and 1 RH Degasser.The hot trial for Bar Line of Bar & Rod Mill (BRM) at BSP also commenced duringDecember'18 while the trial rolling of Wire Rod from Rod Line of BRM started inFebruary'19. At Bokaro Steel Plant (BSL) the hot trials of Hot Dip Galvanising Line atCold Rolling Mill-III were started in June'18. The upgraded Blast Furnace-1 (Parvati) atRourkela Steel Plant (RSP) was blown-in on in May'18 and also dedicated to the Nation on11th June 2018 by the Hon'ble Union Minister of Steel.
A number of new initiatives were taken during the year resulting inimprovement in productivity and efficiency across all Plants. 20 new products/grades weredeveloped during the year with noticeable amongst them being NPB-750 at IISCO Steel Plant(ISP) and LHB Wheels at Durgapur Steel Plant (DSP). One of the most important products inthe basket of SAIL viz. Rails (for supplies to Indian Railways) witnessed the highestever production at 9.85 lakh tonnes (vis--vis 9.03 lakh tonnes in FY 18) during theFinancial Year 2018-19 with commercial production from new Universal Rail Mill (URM)showcasing a 83% growth year on year. The total despatches of UTS-90 Rails consisted ofrecord long rail dispatch of 4.48 lakh tonnes. At DSP the new mill MSM saw theproduction double to 1.71 lakh tonnes from 0.99 lakh tonnes in FY18. This aided the Plantin achieving its best ever performance for overall Saleable Steel production at 2.13 MT.At RSP the New Plate Mill continued the stellar performance and the new benchmark byproducing 8.61 lakh tonnes during the FY19. Supported by the performance at otherfacilities the Plant overhauled its previous performance and recorded the best everSaleable Steel production at 3.34 MT. Bokaro Steel Plant (BSL) recorded best everperformance in production of Cast Slab HR Coil and CR Coil at 3.40 MT 3.69 MT and 1.14MT respectively. ISP apart from development of NPB 750 started closed casting throughmonotube route. Other initiatives at ISP ensured its rapid progress towards stabilizationand the Plant is also expected to contribute a decent share in the overall profitabilityof your Company in the years to come.
During the year your Company's total requirement of iron ore was metfrom captive sources. SAIL's captive mines produced 28.35 million tonnes (MT) of iron ore.
SAIL steel has been a part of every major national infrastructureproject. Your Company proudly associates itself with India's Defence RailwaysInfrastructure Space Power Manufacturing etc. Living up to its label of being the mosttrusted and valued partner in Nation's development SAIL supplied steel to projects ofnational importance like Statue of Unity (tallest statue in the World) Bogibeel Bridge(longest rail-cum-road bridge in India) Kishanganga and Tuirial Hydro Projects Easternand Western Peripheral Expressways Lucknow-Agra Expressway etc. in FY'19 thus giving afillip to India's growth story under the ambit of National Steel Policy 2017 as well as'Make in India' movement. Aimed at import substitution new grades like Quenched &Tempered Plates (SAIL WR 400 ASTM 517 F S690 QL) High Tensile Parallel Flanged BeamsMedium Carbon Wire Rods (HC 52BSAE 15B21) etc. were produced and supplied for the firsttime. Your Company has also supplied steel for various defence projects includingindigenously built Anti-Submarine Warfare (ASW) Stealth Corvette INS-Kiltan and the firstindigenous as well as biggest artillery gun 'Dhanush' of the Indian Army.
On the marketing front SAIL launched diverse initiatives to increaseits market presence in different areas by targeting defined market segments. The Companyintroduced strategic processes like Sales Force Effectiveness (SFE) Programme and KeyAccounts Management (KAM) Process during the year. The branding initiatives saw the launchof a new brand "NEX" to promote Parallel Flange Sections being manufactured byDSP and ISP. Further the Company had made preparation for launch of its "SeQR"brand to promote the TMT Bars being manufactured by ISP based on its higher safety relatedproperties and features against earthquake. The brand has finally been launched in the FY2019-20. The initiative "Gaon Ki Ore" saw organisation of more than 150workshops aimed at enhancing per capita usage of steel in rural construction sector.
During 2018-19 your Company achieved its best ever sales volume of14.12 million tonnes (MT) despite the second half of the year witnessing a strongundercurrent in the market for steel products. Continuing to strengthening its presence ininternational markets SAIL exported 0.76 MT of steel a growth of 9% over CPLY. With theemphasis on increasing sales of special quality steel the proportion of these productswas increased to 42% of the overall sales. In this regard supplies from the Cold RollingMill #3 at Bokaro have been steadily increasing to consumers in the highly demanding highvalue auto segment besides new customers in Power sector. Supplies of WRC in specialgrades has commenced from the new mill at IISCO Steel Plant. With focus on meeting therequirement of small consumers 0.7MT of steel was sold through the retail channel. Withthe aim of improving the product-mix to meet the requirement of local markets SAIL hasinaugurated new Steel Processing Units at Bettiah and Jagdishpur.
Your Company has been taking all appropriate measures to restore andrehabilitate the degraded eco-system to maintain and enhance bio-diversity. This includeecological restoration of mined out areas fresh plantation bio-sequestration 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 installation of bio-digesters for processing of wastes etc.More than 20.5 million saplings have been planted across SAIL Plants and Mines till datesince inception. Giving special thrust for plantation more than 4.42 lakhs of saplingshave been planted during 2018-19.
Your Company is committed to the highest standards of CorporateGovernance which are reinforced in its vision and credos. The philosophy of the Company inrelation to Corporate Governance is to ensure transparency disclosures and reporting thatconfirms fully to laws regulations and guidelines including the Companies Act 2013 SEBI(LODR) Regulations 2015 and DPE guidelines and to promote ethical conduct throughout theOrganization with the primary objective of enhancing shareholders value while being aresponsible corporate citizen. SAIL has formulated policies which ensure transparencyaccountability disclosures and reporting. Ethical conduct throughout the Organization ispromoted with the primary objective of enhancing shareholders value. SAIL's efforts as aresponsible corporate citizen and partner in Nation Building have been recognized in theform of awards and accolades by several forums.
Your Company believes that building trust will enhance its reputationand boost the confidence of its investors & stakeholders. In line with this SAIL hasbeen proactively and regularly sharing key information with all stakeholders through useof different communication channels.
Your Company has been taking a number of strategic initiatives for itsturnaround growth and sustainance. SAIL had launched the Company-wide turnaround program'SAIL Uday' in 2016-17 which laid the roadmap for improvement in the areas of RawMaterials Operations Sales & Marketing Supply Chain & Logistics Personnel andHuman Resource has been developed and deployed culminating in the performance during FY19. Other than this your Company has adopted a multi-pronged approach that includesorganic growth brown-field projects technology leadership through strategic alliancesensuring raw material security by developing new mines diversifying in allied areas etc.Some of the strategic initiatives include MoUs for setting up of Pellet Plantsmanufacturing of capital goods in the Country setting up of hydro power plant closure ofin-operative and non-performing Joint Ventures and Subsidiary Companies.
Looking at the future IMF has projected the world growth outlook inApril'19 for the year 2019 and 2020 at 3.3 percent and 3.6 percent respectively. Althougha 3.3 percent global expansion is still reasonable the outlook for many countries is verychallenging due to considerable uncertainties in the short term especially for theadvanced economies. While 2019 started out on a weak footing a pickup is expected in thesecond half of the year. This pickup is supported by significant policy accommodation bymajor economies. With improvements expected in the second half of 2019 global economicgrowth in 2020 is projected to return to 3.6 percent. Beyond 2020 growth will stabilize ataround 3 percent bolstered mainly by growth in China and India and their increasingweights in world income.
Thus the Indian Economy is expected to continue to do reasonably wellin the long run which augurs well for the Steel Industry as the two enjoy a strongcorrelation. Similar sentiments have been echoed in the Short Range Outlook published byWorld Steel Association (WSA) in April'19. It has been forecast that Global steel demandwill reach 1735 Million Tonnes (MT) in 2019 an increase of 1.3% over 2018. It is furtherforecast that Global steel demand will grow by another 1% to reach 1752 MT in 2020. WSAhas further added that the Indian economy is expected to achieve faster growth starting inthe second half of 2019 after the election. While the fiscal deficit might weigh on publicinvestment to an extent the wide range of continuing infrastructure projects is likely tosupport growth in steel demand above 7% in both 2019 and 2020.
India having already overtaken Japan as World's second largest steelproducing Nation in FY 18 is all likely to overtake US as the second largest steelconsuming Nation in the world in 2019. The 300 MTPA steel production capacity for India by2030 as envisioned in "National Steel Policy 2017" is commensurate with thisgrowth projection. SAIL has also started its plans for increasing its capacitycommensurate with the National growth.
At the end I take this opportunity to thank all our stakeholders whohave contributed internally and externally in the improved performance of the Company. Imust specifically thank our valued customers trusted suppliers the Central and StateGovernments and our talented employees who have always stood by the Company andcontributed in the progress of SAIL. I must especially thank our shareholders includingthe Central Government for the faith they have reposed in the Company when it has beenunable to pay the dividend owning to the continued losses. As the Company has started itsascent to the top it is time we keep our investors in good spirits. Accordingly theBoard of Directors has proposed a dividend of 5% for the year 2018-19. I hope this willfurther strengthen the faith of the stakeholders in us and I look forward to the continuedsupport and unflinching trust.
|Place: New Delhi ||(Anil Kumar Chaudhary) |
|Dated: 31st July 2019 ||Chairman |