APL Apollo Tubes Chairman's Speech > Engineering - Heavy > Chairman's Speech from APL Apollo Tubes - BSE: 533758, NSE: APLAPOLLO

APL Apollo Tubes

BSE: 533758|NSE: APLAPOLLO|ISIN: INE702C01019|SECTOR: Steel - Tubes & Pipes
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Chairman's Speech (APL Apollo Tubes) Year : Mar '15
 Dear Shareholders,
 Fiscal 2015 was a year of strength, optimism and performance for APL
 Apollo in a challenging environment. We crossed revenue milestone of `
 3,000 crores and crossed ` 1 million TPA production capacity. This is
 another year where we reaffirmed to our stakeholders that we are on the
 right track.
 Globally we are witnessing a mild improvement in the macroeconomic
 indicators in some economies of the world. India, which demonstrated a
 historical election mandate, has strengthened its macro-economic
 prospects. I believe that the government will pursue fresh economic
 reforms through investments in infrastructure and core areas. Steel
 being the foundation industry will play a significant role in this
 journey. This year, the domestic steel consumption growth improved to
 3.1% from 0.6% in previous year. However, the construction and capital
 goods sectors, which together account for about 70-75% of the total
 steel demand in India, are yet to witness much on-the-ground recovery.
 At APL Apollo, we are committed to evolve such a framework that brings
 value for all the stakeholders. We understand the infrastructural needs
 of the country and are committed to addressing them with our production
 scale, wide product portfolio, and a deep-rooted market presence.
 During the year, we centred our efforts on increasing the production
 capacity as we believe that building capacities positions us strongly in
 the industry to meet the rising demand from the customers. We increased
 our installed annual capacity to 1.05 million tonnes. Our top line saw a
 robust 22% volume growth, to reach 709,600 tonnes this fiscal.
 To address the changing needs of the market, we also initiated many new
 product innovations. We have brought colour coated pipes in India for
 the first time. We believe that colour coated pipes will find wide
 acceptance in India in the foreseeable future, given the twin benefits
 of looking aesthetically pleasing as well as performing the important
 function of prevention of rusting in pipes. The other key innovation
 that has been patented by us is the steel door frame. This product
 replaces wood, which has been the traditional material of use in normal
 door frames, with advantages of being economical and having a good
 resale value. The Government of India’s initiative to promote low cost
 housing is a big driver for this product.
 At APL Apollo, we have continued our focus on branding and marketing
 initiatives. We have further strengthened our presence in markets like
 Kerala, Maharashtra, Karnataka and UP while making deep inroads into
 virgin territories like Himachal Pradesh, Uttarakhand and other smaller
 states. Going forward, we are also looking at Eastern India wherein we
 do not have a market presence till now.
 Another key achievement is the successful SAP implementation. We have
 now completed a year with the same and can take pride in the smooth
 rollover to the new way of doing things. As the scale and complexity of
 our operations increases, this transition was extremely critical for our
 long term success.
 We achieved sales of ` 3,014 cr this year as compared to ` 2,497 cr of
 last fiscal, thereby registering a year on year growth of 20.7%. While
 we witnessed a strong domestic demand in the black and square pipes, we
 also managed a strong performance from the export markets. Today, we are
 globally recognised as a quality low cost producer and our brand
 commands a good visibility in the world markets.
 The company’s absolute EBITDA increased from ` 166.6 cr to about `
 186.2 cr which corresponds to a 6.2% EBITDA margin. The slight dip in
 the margin, factors in the inventory carrying loss, which was about ` 45
 crore for this fiscal. The prices of our key raw material - HR coil,
 have been very volatile this year and we have been operating in a period
 of falling raw material prices. This has also put a pressure on margins
 of all the players in the steel industry. The company carries an
 inventory of almost 30-40 days and this decline in inventory value has
 hit our profitability. We believe that the prices of the HR coil are
 close to bottoming out and any rebound will add to our margins in the
 coming year. In the midst of difficult market conditions, we worked
 towards improving operational efficiency. The net profit of the company
 was at ` 63.8 crore, which was 8% higher than the previous year.
 We are committed to secure a strong future for our company. Going
 forward, while we expect the momentum in demand to continue, we also
 hope to expand our margins and profitability and creating value for our
 shareholders. In this direction, the board has also recommended a
 dividend of ` 6 on a face value of ` 10, which translates to a dividend
 percentage of 60%.
 I would like to thank all our shareholders and also our customers,
 suppliers, vendors and lenders, for their continuous support to the
 company during the year. I would also like to thank all the employees
 for their commitment to enhancing the performance of the company.
 Sanjay Gupta
 Executive Chairman
Source : Dion Global Solutions Limited
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