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Steel Authority of India Ltd.

BSE: 500113 Sector: Metals & Mining
NSE: SAIL ISIN Code: INE114A01011
BSE 00:00 | 03 Feb 86.00 -3.00
(-3.37%)
OPEN

89.10

HIGH

89.65

LOW

85.45

NSE 00:00 | 03 Feb 85.95 -3.05
(-3.43%)
OPEN

89.45

HIGH

89.70

LOW

85.40

OPEN 89.10
PREVIOUS CLOSE 89.00
VOLUME 1574144
52-Week high 112.30
52-Week low 63.60
P/E 7.87
Mkt Cap.(Rs cr) 35,523
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 89.10
CLOSE 89.00
VOLUME 1574144
52-Week high 112.30
52-Week low 63.60
P/E 7.87
Mkt Cap.(Rs cr) 35,523
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

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

Company chairman speech

Letter to Shareholders

Dear Shareholders

It is my pleasure to present to you the Annual Report of the Companyfor the Financial Year 2020-21. As you all are aware the year gone by saw one of theseverest challenges ever faced by mankind. Covid-19 Pandemic has affected everyone acrossthe globe as a direct risk to the health and lives as well as threatening the livelihoodby bringing down the economies. While the numbers which peaked significantly during thewaves have since come down drastically the comfort of having done away with the Pandemichas not yet been found.

Before I touch upon the performance of the Company let me brief you onthe various proactive measures taken by your Company to counter this ruthless pandemic.Your Company activated a scaled response towards management of Covid-19 at its PlantsUnits Mines and Townships. Your Company implemented the desired lockdown rules and othersocial distancing norms for breaking the chain of transmission of Covid-19 virus in theperipheral areas of Steel Plants and Units. SAIL Plants and Units are using full-bodyautomatic sanitizers touch-free hand-sanitizers water dispensers sprayingdisinfectants using digital thermal recorders at prominent locations.

On the infrastructure front for Covid care SAIL Hospitals at fiveIntegrated Steel Plant locations initially earmarked 10% of the beds (330 beds) for Covidcare which were later increased to more than 1000 beds. Your Company has also set upadditional Covid care facilities at the integrated plant locations totalling to 1100 bedswith gaseous oxygen facility from the respective Plant. SAIL Hospitals have also developedCovid-19 testing facilities like RAT RTPCR TRU-NAT in coordination with respective StateGovernments where regular testing of peripheral population is underway.

Partnering with the Nation in its fight against Covid-19 SAILcontributed Rs. 25 crore to the PM CARES Fund during FY'21. Your Company also steppedforward in making available the Liquid Medical Oxygen in different states. Till date wehave supplied more than One Lakh Tonne of Liquid Medical Oxygen.

Coming to the performance of your Company during FY'21 the yearstarted on a disappointing note for the reasons mentioned above. As the demand for steelproducts in the domestic markets practically dissipated your Company seized the availableopportunity in the form of exports to sustain its cash flows and liquidity position.Production was regulated in line with the demand. The efficiency pointers or thetechno-economic parameters also saw a major degradation due to operation of facilities atsub-optimal levels.

However as the markets opened upon relaxations in lockdown the demandstarted to surge. Your Company was aware of the situation and taking advantage of thesame set records in terms of sales volumes month after month. This helped the Company inpulling off its best ever annual sales performance of 14.937 Million Tonne (MT) growth of5% over previous year. With simultaneous rise in the realisations your Company achievedits highest ever annual sales turnover of Rs. 68452 crore during the Financial Yeargrowth of more than 12% over previous year.

Your Company achieved its highest ever annual EBITDA or the GrossMargin at Rs. 13740 crore on the back of improved operational performance as well asbenevolent market conditions in the post lockdown period. Overcoming the challenges in theinitial months of the fiscal the Techno-economic Parameters viz. Coke Rate CDI Rate andBF Productivity at 448 kg/thm 78 kg/thm and 1.81 t/m /day respectively recorded best everstatistics underlining the consistent efforts made by the Company in the area ofefficiency improvement. The Profit Before Tax (PBT) at Rs. 6879 crore is the highestduring last ten years more than doubling over previous year's performance. TheProfit After Tax (PAT) was also the highest during the decade at Rs. 3850 crore though itwas impacted by the one-time hit of Rs. 1289 crore from adoption of the new tax regimeunder Section 115BAA. Other factors which affected the profitability are detailed in theAnnual Report.

However the highlight of the financial performance without a shadow ofdoubt was reduction in the leverage position. Your Company has reduced its debts from Rs.51481 crore as on 31 March 2020 to Rs. 35350 crore as on 31 March. 2021 a massivereduction of more than Rs. 16000 crore. Consequently the debt-equity for the Companyimproved to 0.87 as against 1.36 as on previous year end.

On the production front Financial Year 2020-21was impactedsignificantly due to Covid-19 Pandemic yet the persistent efforts of SAIL Collectiveensured growth quarter after quarter. The last quarter of the fiscal saw the Companyachieve its best ever quarterly statistics in terms of Hot Metal Crude Steel and SaleableSteel produced at 4.978 MT 4.557 MT and 4.419 MT respectively thus helping to bridge thedeficit from the levels achieved in the previous year. The annual production of Hot MetalCrude Steel and Saleable Steel stood at 16.582 MT (17.438 MT in FY'20) 15.215 MT(16.155 MT in FY'20) and 14.602 MT (15.083 MT in FY'20) respectively. TheCompany continued to increase production through concast route and reached 14.733 MTvis-a-vis 14.607 MT achieved during FY'20. The Company has completely stoppedproduction through inefficient THF route. The saleable steel production from newfacilities increased to 5.199 MT growth of 8% over CPLY (4.799 MT).

A large number of new initiatives were undertaken across all the Plantsfor process improvements with special emphasis on productivity & quality improvementproduct development & commercialization energy conservation and automation. Thecontinuous activities in respect of product development have led to development of 17 newSteel Products during FY 2020-21 which will strengthen the Country in strategic areas suchas shipbuilding auto railway infrastructure & construction etc. Some of theseproducts have been developed from the newly commissioned production facilities the mostprominent among them being R-260 Rails API X70 Plates Wire Rods Coils in High Carbon/EN8and EWNR WDG4 Wheels etc. The Plant wise details are provided in the Annual Report.

On the raw materials front your Company met its entire requirement ofiron from its captive sources. SAIL's captive mines produced about 30.06 MT of ironore. However for input requirements like coal and fluxes the production from captivesources at 0.55 MT and 1.77 MT respectively was not enough to meet the entire requirementand accordingly the Company had to depend on indigenous as well as foreign suppliers.Another noticeable area under Raw Materials was sale of iron ore. After obtainingpermission from the respective State Governments in Odisha and Chhattisgarh your Companywas able to sell 3.2 MT of the mineral. The permission however is still awaited in theState of Jharkhand.

On the environment front your Company has drawn its environmentalvision in consonance with the Corporate Environmental Policy which not only addresses theneed for compliance of stipulated norms but also emphasises on striving to go beyond.While the SAIL Plants and Mines operate their processes without disturbing the ecologicalbalance they have also been taking all appropriate measures to restore and rehabilitatethe degraded eco-system to maintain and enhance bio-diversity. These include ecologicalrestoration of mined out areas fresh plantation bio-sequestration of CO enhancingutilization of wastes utilization of renewable energy sources etc. Structured plantationprogrammes are being carried out every year in the SAIL Plants and Mines. More than 1.72lakh saplings were planted during the FY 2020-21 taking the cumulative plantation by SAILto 21.21 million.

As a result of these efforts all the sustainable parameters showedimprovement with Specific PM Emission Load standing at 0.63 kg/tcs as against 0.68 kg/tcsin FY'20 Solid Waste utilisation improved to 90% vis-a-vis 88.32% during FY'20and Specific Water Consumption reduced to 3.37 m /tcs over 3.50 m /tcs during FY'20.Specific Effluent Discharge and Specific Effluent Load declined to 1.62 m /tss and 0.080kg/tcs as against 1.83 m /tss and 0.082 kg/tcs respectively during FY'21.

With an ambition for promotion of circular economy & improvement ofenvironmental footprint SAIL has signed an MoU with ICAR-IARI for participating as anindustrial partner & part finance Ministry of Steel facilitated project of“Development of steel slag based cost effective eco-friendly fertilizers forsustainable agriculture and inclusive growth”.

SAIL in association with SCOPE & Deutsche Gesellschaft furInternational Zusammenarbeit GmbH (GIZ) is setting up “Internal Carbon PriceMechanism”. This mechanism will help SAIL to better manoeuver in changed regulatoryenvironment evaluate returns on investments/projects for reduction of GHG emission and tobe prepared for the anticipated low carbon economy without compromising on operationalefficiency and market profitability.

On the marketing front as mentioned earlier your Company achieved itsbest ever sales volume of over 14.937 MT during the Financial Year 2020-21. Continuingwith its strategy of strengthening its presence in the international markets as well asthe export demand during initial months of the year your Company achieved its highestever exports at 1.94 MT a quantum jump of 65% over the previous year. Some of the newmarkets serviced were: WRC to Kenya and Egypt and HRC to China. Further the Companyexplored the export to Bangladesh through riverine route for supply of PM Plates.

The brand “SAIL SeQR” reinforcement bars launched last yearhas been growing strength to strength by clocking 2.5 lakh tonnes during FY 2020-21 whichhelps in consolidating uniform brand experience in retail channel. Further “SAILSeQR” TMT has been rolled out from BSP during FY 2020-21 thereby enhancing itspan-India footprint. During the coming years in addition to contribution to top linevalue the brand “SAIL SeQR” is expected to not only meet the qualityexpectation of the Retail Sector but also to drive brand presence of the Company.Comprehensive distribution and promotion plan has been drawn up for sale of SAIL SeQR toRetail customers. Accordingly 20 SeQR workshops and 108 ASO meets were organized invarious parts of the Country. Your Company has been working towards focused brand buildinginitiatives on “NEX” brand of structural by holding webinars and workshops withkey influencers.

Your Company is working towards expanding the 2-Tier and 1-Tierdistributorship network across India which will further strengthen our position in B2Cspace. As a part of supplementing this initiative online e-portal “SAILSuraksha” has been launched during FY 2020-21 enabling even the smallest of demandbeing serviced through the 2-Tier distributorship network.

Subsequent to launch of Mission Poorvodaya by Government of India SAILhas introduced an Incentivization Scheme for development of MSMEs based in the districtsin which its Integrated Steel Plants are located. Around 132 MSMEs have joined under theScheme during FY 2020-21. Besides this your Company jointly with Indian Steel Associationand its other members has devised a scheme to supply select steel products to MSME membersof Engineering Export Promotion Council (EEPC) at export parity price.

In order to help build awareness and acceptance of steel usage in ruralareas SAIL has an ongoing rural outreach programme “Gaon Ki Ore”. During theFinancial Year 2020-21 the organisation of workshops got impacted due to the Covid-19Pandemic. Nevertheless 117 workshops were still conducted during the Financial Year2020-21 across the Country with focus on small consumers etc.

Your Company has been contributing in nation building since inceptionby servicing the requirement of various Infrastructure Projects and also projects ofStrategic Importance. Continuing the trend SAIL has supplied significant quantity ofSteel to Power Projects Road Rail Airport & Port Infrastructure Projects MetroRail Projects Irrigation & Drinking Water projects Fertiliser Industry Oil &Gas Sector etc. During the FY 2020-21 your Company has supplied steel to number ofProjects of National Importance including Katra to Banihal Tunnel Project; BRTF Leh-LadakhProject; Leh Airport; Eastern Dedicated Freight Corridor Corporation; Lower SubansiriHydel Project Assam; Jiribam-Imphal Railway Project for Northeast Frontier Railway;Agartala - Akhaura Rail Link Project; Tripura Polavaram Multipurpose National IrrigationProject near Rajahmundry Andhra Pradesh and Rambilli Navy Project of DRDO.

The consistently improving physical and financial position of yourCompany has prompted the credit rating agency viz.; CARE to upgrade the long term ratingsto CARE AA (Stable Outlook) from CARE AA- (Negative Outlook). The short terms borrowingsprogramme of SAIL at CARE A1+ has been reaffirmed at this highest level.

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 thatconforms 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. I take this opportunity to inform you that pursuantto the circulars from the Ministry of Corporate Affairs the 49 Annual General Meeting(AGM) of the Company is being held through Video Conferencing (VC)/ Other Audio VisualMeans providing our far spread shareholders an opportunity to attend the AGM whichotherwise was difficult as per the earlier practice requiring physical presence.

Your Company has been taking a number of strategic initiatives for itsturnaround growth and sustenance. In line with the National Steel Policy 2017 yourcompany has formulated its VISION 2030 whereby it is envisaged to enhance the crude steelcapacity to 50 MT. Your Company has started working on the land bank study for next phaseof expansion.

The future projections for economy and steel industry had seen sharpdecline during the Covid-19 Pandemic. With the economies around the world recovering muchfaster than expected the estimates for GDP growth during CY 2020 emerged much better thanthe projections. This has prompted the IMF to raise its projection for the future years.IMF in its World Economic Outlook published during July 2021 has projected the Worldgrowth outlook for the years 2021 and 2022 at 6.0% and 4.9% respectively. The emergingmarket and developing economies are expected to fare better than their advancedcounterparts by growing at 6.3% and 5.2% during 2021 and 2022 respectively. At the sametime advanced economies are projected to grow at 5.6% and 4.4% during the correspondingperiods.

Similar sentiments have been echoed in the Short Range Outlookpublished by World Steel Association in April'21. It has been forecast that Globalsteel demand will reach 1874 Million Tonnes (MT) in 2021 a growth of 5.8% over 2020.Again the growth projected for 2022 at 2.7% augers well for the steel industry in thelonger run. The growth rates for India are much sharper at 19.8% and 5.9% in 2021 and 2022respectively. Hopefully with the Government support especially in the area ofconstruction and infrastructure the projected growth rates can be maintained.

Your Company has been gearing up to capitalise the opportunities bygiving thrust to increase its volumes increase efficiencies and strengthen the logistics.To highlight the efforts Saleable Steel production during April-July' 21at 5.169 MT isthe best ever performance by the Company for this period.

At the end I take this opportunity to thank all the shareholders fortheir continued trust and support. I must also thank our valued Customers trustedsuppliers the Central and State Governments and our talented employees who have alwaysstood by the Company and contributed in the progress of SAIL. I specially convey my thanksto the Ministry of Steel whose continuous guidance and support especially duringchallenging times made it possible for the Company to deliver this commendableperformance. I also thank all other stakeholders who have contributed internally andexternally in the improved performance of the Company. I look forward to the continuedsupport and unflinching trust they have placed in us.

Place: New Delhi (Soma Mondal)
Date: 1 September 2021 Chairman

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