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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 '16

Dear Shareholders,

FY16 was an excellent year for our Company. Despite challenges in the industry and sharp decline in the steel prices our company outperformed the industry and reported an outstanding growth. Consolidated Sales for FY16 grew b} 34% YoY to Rs. 4,214 crore, which was primarily driven by our market leadership and new products that we introducec during the year. There is a distinct shift in demand from unorganized players to organized players like us. Our EBITD/ increased by 57% to Rs. 292 crore, driven by the improvement in operating margins, from 5.93% in FY15 to 6.92% in FY16. This was largely driven by a decline in raw material prices, better product mix and operational efficiency.

Over the last 2 years, we have launched many products which are getting good response from the market and helped us grow our sales and improve our margins. One of our product lines: door & window frames, has been an outstanding performer. The door frame replaces traditional wooden door frames, resulting in a saving of 30% in costs, with a similar finish. We expect these products will form a much bigger part of our sales mix in the coming years and help us improve our overall margins.

During the year, we rolled out our VISION2020 plan to become the largest ERW player in the world with a production of 2.5 million tons in 2020. We further aim to become debt free and a leading brand of steel product; out of India. We will keep launching new innovative products and build our brand with an aim to achieve volume growth of 25% annually. We are improving our corporate governance by getting independent directors with strong credentials and we have already appointed Deloitte Haskins and Sells LLP as Statutory Auditors.

The Company has planned a Capex of Rs. 500 crore in the next 3 years, which will be funded through internal accruals. The additional capital would go towards setting up a new plant in Raipur with 3 Lakh TPA, a new plant in the UAE with a total capacity of 3 Lakh TPA as well as a green field unit for manufacturing precision tubes for automotive application in Bangalore with a capacity of 1 Lakh TPA. We also plan to set an In-line Galvanizing plant of 1 Lakh TPA capacity in Bangalore apart from ordering 8 lines of new HSU technology mills which will help us add about 4 Lakh TPA at the existing sites in FY17.

APL''s aim has always been to be a technology leader and hence we have always relied on the latest mills from across the world. We have strip Galvanizing Lines, Cold Saws, High speed mills from Europe, and unique Rotary sizing mills. I am personally very excited about the new ''Direct Forming Technology'' that we are bringing in Indi£ for the first time. Direct Forming Technology has multiple benefits as it will save 3-10% of raw material for the same cross sections and can service small orders with customized sizes. This technology will also open new market for u; and we can launch new products for Agricultural Implements, Gym/Sports Equipments, Solar Power Plants, Truck 8 Bus Bodies, Metros/Airports Infrastructure Construction Equipments, Prefabricated Structures, and Warehouses etc.

We have expanded our reach throughout India with 26 branches & warehouses, 600 distributors & 40,000 retailers In order to have a pan India manufacturing footprint we have forayed in Eastern/Central India with a Greenfield plant in Raipur. To increase our penetration in the market, we have made a strategy of CAP i.e. New Customers, New Areas and New Products. We focused on branding during the year, which helped us in growing in Tier II and II cities, where we have emerged as a preferred supplier among fabricators and plumbers. We aim to spend over Rs. 10 crore on branding during this financial year.

Our focus is to continue improving our Return on Equity and margins and become the leading Steel Product'' manufacturer out of India with a presence across the globe.

I would like to appreciate our employees for their relentless efforts in helping us grow to become the leading player and thank all our shareholders for their continued encouragement and support.

Sanjay Gupta

Executive Chairman

Source : Dion Global Solutions Limited
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