Driving efficiency. Propelling growth.
It gives me great pleasure to present to you the 5th Integrated Report & 32ndAnnual Accounts of your Company for the financial year ended March 31 2022.
I hope you and your family are in good health. I take this opportunity to urge everyoneto continue to remain vigilant against COVID-19 and practice safe behavior in yourday-to-day lives.
You are aware that commodity prices globally saw a significant rally towards the end ofthe previous financial year as a result of post-lockdown global restocking. Highfeedstock and raw material prices continued through FY 2021-22 putting pressure onworking capital and margins. The year was also witness to the second wave of COVID whichtook a significant toll on human lives; and then the Russia Ukraine conflict that startedin the month of FebruaryRs 2022 which besides its humanitarian impact has also resultedin disruptions in the global supply chain for businesses in our industry and many othersectors.
Global GDP growth stood at a healthy ~5.5% in calendar year 2021 after a 3.5%contraction in 2020. This improvement came on the back of rapid roll out of vaccinationsfiscal spending by governments a rebound in consumer spending post-lockdown andconsequent improved business activity. India's GDP too is estimated to have grown 8.7% inFY 2021-22 against a contraction of ~6.6% in FY 2020-21.
During Q1 FY 2021-22 Covid-induced restrictions impacted the Company's production. Thesituation improved July onwards of the financial year with economic activity picking up.The January to March quarter witnessed a much milder third covid wave hitting the countrybut the economic impact was limited; however the start of the Ukraine-Russia conflict inQ4 triggered a sharp jump in commodity prices which were already elevated. The surge ininput costs was compounded by additional royalty on iron-ore for supplies from the captivemines of Tata Steel affecting margins adversely in the later part of the year.
In the face of market volatility your Company was resilient as a result of its strongfocus on operational performance cost optimisation and improvement initiatives and agileprocurement strategies. Aided also by the rise in finished goods market prices theCompany recorded an EBITDA of Rs 394.68 crore (FY-21: Rs 397.36 crore) and its highest-ever Profit Before Tax (PBT) of Rs 339.32 crore (FY-21: Rs 307 crore). The Board ispleased to recommend the highest-ever dividend of Rs 8/- per equity share for FY 2021-22.
I will take this opportunity to mention the progress your Company has made in relationto its six business priorities which continue to create value for all stakeholders
1. Cost Leadership: The Company recorded its highest-ever Hot metal productionDuctile Iron (DI) pipe production coke production and captive power generation. StableBlast Furnace performance with controlled fuel rates amidst the raw material volatilitieswith high pulverised coal injection and oxygen enrichment led to significant reduction inhot metal production cost. Your Company continues to be one of the lowest cost producersin both its businesses.
2. Supplier of Choice: Your Company launched the Customer RelationshipManagement process in the pig iron division to enhance customer experience and alsosharpen our analytics to be able to obtain better customer insights.
3. Robust People Practices: Your Company prioritised Learning & Developmentand Employee engagement initiatives by leveraging digital tools. The Gallup EmployeeEngagement survey has shown a marked improvement with the engagement ratio going up to 7:1from 4.5:1 which is a benchmark. Your Company also takes pride on being certified as a'Great Place to Work'.
4. Responsible Corporate Citizenship:
Your Company is now a participant in the Carbon Disclosure Project (CDP) and in theGreenCo journey. The 'TML 300 schools project' aims to provide quality school educationto children in our community in the age bracket of 3-15 years in target villages with theultimate goal of ensuring a child labour free zone. The water sustainability project 'Jalse Jeevan' will help your Company become Water Positive by 2025.
5. Focus on Downstream/ and Value- add: The first phase of the new Ductile Iron(DI) Pipe plant has been commissioned by leveraging digital technologies like AugmentedReality a first in the DI Pipe industry. The new digital and robotics interventions willnot only improve safety significantly but will also enhance productivity and quality ofoperations.
6. Innovate and Excel: Your Company continued its journey of deploying anintegrated improvement framework and building a Digital culture by implementing severalprojects across 'Smart machines' 'Real-time data & analytics' and 'Business onmobile'.
The medium to long term outlook of both the businesses remains stable and optimistic.For Pig Iron business commodity prices may see some correction along with other rawmaterials but the overall demand outlook remains stable. The Ductile Iron (DI) pipebusiness remains very robust with the Government's thrust towards the developing the WaterInfrastructure sector which is reflected in its ambitious flagship 'Jal Jeevan Mission'programmes. As the Company commissions its ductile iron pipe expansion project in phasesit will expand its product footprint steadily to seize new opportunities.
Health and safety of our workforce remains the top priority for the Company. YourCompany's agile response to the Covid pandemic included a major vaccination drive foremployees and their families including contract workers creation of support groups anddigital technology-based health and wellness support for employees and their familieswithout any cost. In FY 2021-22 we conducted more than 15000 COVID-19 tests of whichmore than 500 positive cases were detected; there were 22 hospitalisation cases with 3unfortunate deaths. In addition to picking up hospitalisation costs of affected employeesfor all cases where there was an unfortunate demise on account of COVID-19 your Companyimplemented a special compensation package.
I would like to take this opportunity to thank all our shareholders for their continuedsupport and confidence in the Company and the Management. I would also like to express mysincere gratitude to all the Government authorities our customers suppliers and partnersfor their trust and support to the Company. I am also thankful to the Unions for theirconstructive engagement and strong relationship the employees the management team mycolleagues on the Board and other stakeholders for their significant contributions to theCompany during FY 2021-22.
In the face of market volatility your Company was resilient as a result of its strongfocus on operational performance cost optimisation and improvement initiatives and agileprocurement strategies.