We are pleased to achieve yet another year of superlative growth, which
outperformed our sectoral growth in 2012-13 and also established our
industry leadership. This performance was achieved through game-
changing initiatives which pioneered modernisation in the sector and
positioned our Company as a fast- moving trail blazer.
The tubes industry went through considerable under-investment in the
decade following liberalisation. Even as global infrastructure growth
standards evolved to the modern and cutting-edge, Indian standards
lagged on account of the size of infrastructure spend required on the
one hand and the sophistication of material needed on the other.
The change began to transpire about a decade ago when India began to
invest considerably larger amounts in infrastructure; the global scale
of a number of these investments were corresponded by cutting-edge
technologies. In turn, specialised consultants recommended new-age
designs and materials. This opened out a new market where the pipes
needed to be more sophisticated around newer applications. The result
was that an entirely new market began to emerge.
At that point, two things could have happened. The conventional players
could have retained their longstanding focus or widened their product
focus. APL Apollo was one of the first players to recognise the
vastness of the emerging opportunity and the potential of hitherto
overlooked geographies - South India, tier-ll and rural markets. The
Company moved with speed to invest in new production lines, introduce
new products, market products to consumers, position products around
superior attributes, demonstrate enhanced consumer value, widen the
product range to address more sectors and extend its national footprint
through warehouse cum branches.
We are happy to state that these initiatives did not just prove to be
share-enhancing; they proved to be market-widening and game-changing as
- In a commodity business, we carved out a distinctive brand
- In a business defined by fragmented capacities, we created
industry- transforming scale.
- In a business marked by conventional knowhow, we invested in
- In a business represented by a limited portfolio, we introduced
- In a business where a majority of the sales were B2B, we provided a
This is the result of our game- changing approach: APL Apollo Tubes
emerged as India''s largest ERW steel tubes manufacturer with capacity
of 6,00,000 TPA, possessing the widest product mix and pan-India
distribution network that —ten-folded our sales and profits in just
in FY13, a year of decadal-low economic growth, APL Apollo Tubes
established leadership and a superior performance:
- Net sales grew 44% YoY
- EBITDA grew 40% YoY
- PAT grew 14% YoY
- Opened six warehouse cum branches in Indore, Raipur, Hisar, Kala
Amb, Surat and Delhi taking the total to 20
- Added prestigious clients like Bangalore Metro, Goa Airport, Nashik
Airport and Firepro
- Maintained relationship with India''s leading companies across
diversified industries like BHEL, L&T, Adani, Ashok Leyland and Jain
- Expanded capacity by 100,000 TPA
- Operated plants at a high utilisation of 85%
- Introduced new product varieties
There are a number of reasons why the outlook appears optimistic for
our sector and company.
Even as infrastructure growth has been reasonable over the last few
years, there has been a wider-than-usual offtake of tubes, indicating
that the market for this is still nascent and emerging.
Even as the market has often been classified as commodity, there is a
growing demand for value-added products.
The result is that India''s steel tubes market is growing faster than
the global average, indicating that the country has possibly touched an
inflection point following which steel tubes consumption will only be
There is a growing body of evidence to support this conviction. There
is increasing governmental emphasis to connect rural Indian fringes;
India''s mass rapid transport (metro) network is driving tubes offtake;
the growth of India''s telecom sector is expected to rebound; the
country''s wind energy sector is reporting its quickest growth in years;
US, Brazil, Canada and some European countries imposed anti-dumping
duties on Chinese tubes and pipes, widening the export opportunity for
At APL Apollo Tubes, we expect to capitalise on this industry reality
through the manufacture of products addressing diverse sectors,
de-risking our growth from a downturn in one or more of our consuming
industries. We are focussed on widening our national reach, extending
the distribution network, strengthening customer relationships through
collaborative product development and working with a long-term business
The Company will support these initiatives through the creation of a 1
MTPA capacity by 2015, which will reinforce our position as India''s
largest steel tubes manufacturer.
We expect that a combination of these initiatives will translate into
projected revenues of US$ 1 billion and enhanced value for all those
who own shares in our Company.
Sanjay Gupta, Chairman