The present world is confronting one of its greatest health threats ofa generation that profoundly impacts the socio-economic activities of its citizens. Westrongly and sincerely praise the untiring efforts of the Government health agenciescommunities and individuals including healthcare workers and first responders who areputting in their heart and soul to help the mankind during the COVID-19 pandemic.
Over the years SEML has built its reputation of standing with itsemployees and communities in the most critical times. This unprecedented environment hasbeen no different. The Company took adequate safety measures for its employees andsurrounding communities by promoting social distancing and ensuring the compliance of theSOPs laid down by the regulatory agencies. The Company also took various initiatives insupporting the noble cause of service to humanity. As regards the business continuity isconcerned I am proud to state that we are one of the least impacted companies in themetals and mining space. Thanks to our de-risked and diversified business model that hasallowed us to sustain the disruptive shock and has allowed us to test our abilities to
emerge even stronger than before.
Our proactive strategies of integrating our operations has proved tobe a blessing in disguise for a commodity player like us. It has helped us to face themarket volatilities and ensure optimum use of resources. Besides our diversification intohydro power has further given us the cushion to face the unanticipated disruptions duringthe year.
India's economic performance of 2019-20 was rather flat. During thelarge part of the year the country struggled to accelerate on the momentum set in theearlier years. Lower consumption investments and unstable global macro-economicenvironment resulting out of trade war between China and US coupled with geologicaltensions in other geographies dragged down the growth curve. The Government intervenedwith several measures to boost up the consumption and drive investments into the country.Just when the things started easing out in the early part of Q42019-20 the country wasstruck with the deadly pandemic. The nationwide lockdown halted all
the economic activities and put brakes to the growth. The 2019-20 GDPgrowth slowed to a 11-year low at 4.2%. The Government took several measures and announceda prestigious 'Atmanirbhar Abhiyan' Package worth ' 20 lakh crore giving an opportunityto kickstart Make in India 2.0. Apart from allaying near-term working capital and loanfinancing concerns during an unprecedented health crisis the package lays down a boldintent to reenergise revamp and reinforce a strong industrial and manufacturing sectorfor India's long-term growth in a post-COVID world.
India emerged as the world's second largest steel producer in 2019surpassing Japan with a crude steel production of 111.2 million tonnes (MT). India's percapita consumption stands around 74 kgs as against the world average of around 208 kgs.
The Government has taken various steps to boost the sector includingthe introduction of National Steel Policy 2017 and allowing 100% Foreign Direct Investment(FDI) in the steel sector under the automatic route. The Government's National SteelPolicy 2017 aims to increase the per capita steel consumption to 160 kgs by 2030-31. TheGovernment has also promoted policy which provides a minimum value addition of 15% innotified steel products covered under preferential procurement.
Let me now take you through the numbers we achieved during the year. Wereported consolidated revenues of ' 1983 Cr during the year as compared to ' 2341 Cr inthe previous year. The decline was owing to the following reasons:
a) Scheduled maintenance shutdown of one ferro alloy furnaces at Vizagfacility in Q1FY20 and scheduled repair work of one furnace from end of Aug-19 to Nov-19
b) Repair work related scheduled shutdown of one turbine of power plantat Raipur facility in Q4FY20
c) Covid-19 related disruption in sales and production in the lastquarter of FY20.
The EBITDA and PAT also witnessed 32% and 38% decline respectivelydue to mark-to-market losses and higher forex losses which are largely notional in nature.
However on a positive side we continued to witness highest productionlevels across our operations including hydro power. I am also happy to state that ourliquidity position is one of the best in our space making us among the few companies tobe least impacted during the unforeseen pandemic. We have successfully and timely met allour obligations without opting for the bank moratorium. Besides our strong policies withrespect to debtor and inventory management resulted in lower working capital requirement.Our commitment to our shareholders remain strong and I am pleased to announce that theBoard has recommended a dividend payout of ' 5 per equity share (50%) for the F.Y.2019-20.
Our expansions at Raipur and Vishakhapatnam reaped strong benefits. Wecontinued to operate at full capacities across our facilities. Our diversification intohydro power was a blessing in disguise for us amidst the tough times.
Our foray into hydropower gives us an opportunity for a quantum leap asthe Company is now ready to build its alternate revenue stream. The hydro project comingup in Sikkim under the subsidiary was expected to commence operations by June 2020 but dueto COVID 19 pandemic the project activities have slowed down delaying the commission ofthe plant. The company is taking steps for commissioning the plant in F.Y. 2020-21. HydroPower will result in increased cash flows. While we have already strengthened our gearingthe additional cash flows will allow us to leverage on any possible inorganic growthopportunities.
I am proud of the Company's enhanced commitment to safe operatingculture. We have invested significantly towards building a safe and healthy operatingenvironment through stringent safety measures. The efforts are visible in the decliningtrend of the incident rates over the past few years. We have also equally invested towardscommunity development initiatives by focussing in the areas of education healthcare andrural development.
I would like to acknowledge the efforts of the entire SEML team fortheir profound commitment professionalism talent and passion. It's your dedication andefforts that has brought the Company to this level.
I take the opportunity to thank the Board of Directors of the Companyand also of the subsidiaries/controlled entities for their able guidance.
I also extend my sincere thanks to the Government government agenciesdepartments our bankers suppliers customers for posing faith in us and supporting us inall our endeavours.
While we know that the macroeconomic situation is still shrouded inuncertainty we continue to remain optimistic to leverage on our diversificationadvantage. I believe that difficult times are precisely the ones during which we becomestronger. We are confident and well- placed to build further on our achievements andcontinue to provide value to our stakeholders.
Thank you for your endless support confidence and commitment.
|Yours sincerely |
|Kamal Kishore Sarda |