It gives me immense pleasure to present you the 2nd Integrated Annual Report and theAnnual Accounts of your Company for the financial year ended March 31 2019. During thefinancial year 2018-19 global macroeconomic conditions have moderated and various risksfactors need to be watched cautiously including escalating trade disputes tighteningliquidity and the impact of climate-change and related regulation.
In FY? 19 the Indian economy showed some resilience but slow economic growth in ruraland agrarian India as well as the solvency risks faced by some Non-Banking FinancialCompanies have left a long shadow affecting sentiment and private investment. On the otherhand fiscal spend and government driven infrastructure build in railways roads watersanitation has been helpful in sustaining demand in several industries including steel.
Global crude steel production increased by 4.6% in 2018 to a level of 1.8 billiontonnes with increase in all regions except in the EU. China's steel output grew by 6.6%while India increased its production to 106.5 million tonnes (4.9% over 2017) to becomethe second largest steel manufacturer surpassing Japan. India's demand for pig iron wasstable due to sustained consumption in foundries for manufacture of castings as well asfor steel making.
The demand for Ductile Iron Pipe continues to grow across drinking water sewerage andirrigation sectors through several flagship programs of the government including"Atal Mission for Rejuvenation and Urban Transformation" (AMRUT) Smart CitiesSwachh Bharat Abhiyan and Government's water grid projects for improving water supply andsanitation infrastructure in both urban and rural areas. As per estimates the overalldemand for DI Pipe continues to be robust and is likely to have an expected annual growthrate of 10-12% over the next few years.
I am happy to report to you another successful year for your Company.
The Company recorded ~14% growth in turnover and EBITDA increased by ~6% over theprevious year. Increase in sales volumes and improved cost efficiencies were howeveroffset by rising raw material costs. The net profit after tax grew by 14% over theprevious year.
During FY 2018-19 the Company's hot metal production increased by around 4% over theprevious year. This would have been higher had there not been a few unscheduledinterruptions in the blast furnaces due to unforeseen operational reasons. The long-termsupply arrangement for coke along with captive production in the coke ovens coverednearly 80% of the overall requirement; helping to some extent to offset input costvolatilities. Further the commissioning of the Pulverised Coal Injection (PCI) plant inthe second half of FY? 19 along with higher oxygen enrichment will not only increase hotmetal production but also make the Company more cost competitive by replacing about 15% ofrelatively expensive coke with coal. Pig Iron sales volume showed a marginal decline of 3%but that was primarily owing to higher off-take of metal by DI pipe division. Sale of DIPipe recorded a 13% increase over the previous fiscal as a result of recording excellentparameters on performance and availability as well as favourable product mix of orders.
The Board of your Company is glad to recommend a dividend of ' 3.50 per equityshare for FY 2018-19.
In the ever-changing business environment in which your Company operates achievingcost leadership remains a priority driven by enterprise-wide synergies and process
efficiencies. As a part of the long-term strategy of your Company the Board hasapproved investments in doubling the capacity of the DI Pipe unit from 2 LTPA to 4 LTPA byinstalling a new production unit in the same premises at Kharagpur augmentation of MBF-1capacity by 0.70 LTPA and installing a new 15 MW Power Plant. Accordingly the Board hadsought and received your approval to fund the expansion project by way of issuance ofEquity Shares and Convertible Warrants to the Promoter i.e. Tata Steel Limited on apreferential basis. The proceeds from the issue will help in funding the expansionproject repayment of loans and strengthening the balance sheet of your Company.
The expansion is aimed at building capacity and expanding the DI pipe size range up to1200 mm diameter. It is aligned to the Company's strategy to focus on value led growth andcost leadership. The Company will continue also to focus on digitisation and automationwhile implementing this state-of-the-art expansion thereby improving manpower productivitysignificantly leading to long-term value creation for all stakeholders.
In line with the Tata Group ethos and with an objective to give back to the societyyour Company strives to work for the socio-economic upliftment of communities near theKharagpur plant. Your Company undertakes several CSR initiatives classified under 5 Es -Essential amenities Education Employability Employment and Entrepreneurship. YourCompany's CSR interventions have touched the lives of more than 16000 beneficiaries innearby 20 villages. We also encourage our employees to participate in various communitydevelopment activities and I am happy to share that last year we have clocked over 6500employee volunteering hours.
As a part of our commitment to reduce the carbon footprint and help combat climatechange your Company has significantly increased captive power generation through wastegas/heat over the last few years thereby reducing consumption of grid power which isgenerated through fossil fuels. Carbon footprint will come down further in future withimplementation of the new 15 MW power plant based on waste heat recovery from expansion ofcoke oven plant (on BOOT basis). Further we continue our quest towards significantlyimproving fuel efficiency (coke and coal consumption) over the years. Your Company hasalso commissioned a comprehensive study by a reputed environment engineering &research organisation to further improve the environment in and around the plant.
Finally I would like to take this opportunity to thank all our shareholders for theircontinued support and confidence in the Company and the management. I also express mysincere gratitude to our customers and suppliers/partners for their trust and supporttowards the Company. I am also thankful to the unions for maintaining cordial industrialrelations the employees the management team my colleagues on the Board of Directors andother stakeholders for their significant contribution to the Company during FY 2018-19.
Chairman DIN:00004989 Date: April 15 2019