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« Mar 15
Chairman's Speech (Jindal Steel & Power) Year : Mar '16
Dear Shareholders,
 
 The year 2015-16 at JSPL was one of cautious optimism. We exercised
 caution during the year, because the external environment was volatile
 and largely unpredictable. Internally, we successfully increased our
 production capacity, improved process efficiencies and implemented
 multiple initiatives to enhance our preparedness for JSPL''s resurgence
 in the steel and power sector. We are today more equipped and confident
 that our foresight is taking us towards the right direction. Bolstered
 by enhanced capacities, efficient processes, and supportive government
 policies, we are committed to take JSPL to a new height of operational
 excellence, financial robustness and long-term sustainability.
 
 Global economic recovery, during the year, remained sluggish, fragile
 and uninspiring.  In advance economies the recovery was modest and
 largely uneven. The US economy performed with resilience, supported by
 relatively easy financial conditions with strengthening housing and
 labour markets. In the Euro area, robust private consumption, supported
 by lower oil prices and easy financial conditions outweighed the
 weakening net exports.
 
 The scenario for emerging markets and developing economies is not very
 encouraging either. China is on a rebalancing mode; it is navigating a
 momentous but complex transition towards a more sustainable growth.
 Given China''s important role in global trade, the rebalancing efforts
 can have substantial spill-over effects, especially on emerging market
 and developing economies.
 
 India continued to be one of the most attractive economies by common
 consensus. During FY 2015-16, the economy grew by 7.6% and the
 government took considerable measures to usher in a culture of fiscal
 consolidation. The government is focusing on across the board reforms
 to spearhead infrastructure development in railways, roads and highways
 as well as the power sector, to build a broad-based foundation for
 accelerated socio-economic development.
 
 In this context, it is pertinent to mention that the government''s Make
 in India initiative has been a resounding success. It has encouraged
 domestic entrepreneurship to compete at a global scale and even
 attracted FDI to the country significantly. In the 17-month period
 (October 2014 to February 2016) after the launch of Make in India, FDI
 inflows have increased by 37% (Source: Ministry of Commerce and
 Industry).
 
 The government has already announced its first list of 20 smart cities
 that will offer smart solutions such as assured power and water supply,
 sanitation and solid waste management, efficient urban mobility, robust
 IT connectivity, e-governance, citizen safety, among others. The
 government has also implemented the Ujwal DISCOM Assurance Yojana
 (UDAY) for financial turnaround and revival of power distribution
 companies (DISCOMs), which will ensure accessible, affordable and
 available power for all. Besides, the government has also resolved the
 issues regarding the transfer of mining leases and grant of forest
 clearances to the winning bidders of coal blocks. The Deendayal
 Upadhyaya Gram Jyoti Yojana (DUGJY) is also expected to provide
 electricity to thousands of villages, languishing in darkness across
 India. As one of India''s prominent player in the steel and power
 business, we are encouraged by these initiatives; and see a larger role
 for ourselves in the gradually improving steel and power scenario in
 India.
 
 At JSPL, we have always been focused on the India-first strategy; and
 our overarching objective is to take Indian expertise and
 entrepreneurship to the global centre stage. We are aware that there
 are short-term challenges in our journey; but we are steadily building
 our overall resilience against headwinds to grow sustainably in a world
 marked by volatility, complexity and uncertainty. As a part of that
 strategy, we implemented multiple initiatives during the year.
 
 We re-organised and re-engineered our business to optimise cost,
 enhance capital efficiency and productivity of our workforce.  We also
 strengthened our consolidated steel production and sales significantly;
 achieved breakthrough order and deliveries; focused on new product
 development; and also accomplished important milestones in our power
 business. It is indeed heart-warming to note that despite challenges,
 JSPL is today among the frontrunners in the global steel domain.
 
 During 2015-16, we have witnessed unprecedented challenges owing to
 declining commodity cycle. We remained steadfast to the belief to
 counter these challenges with resilience. This we reflected through our
 strong operational performance. Our revenues stood at Rs.18,632 crore
 and EBITDA at Rs.3,633 crore in the fiscal and we registered an EBITDA
 margin of 19%.
 
 We maintained growth in our steel production and sales volumes. But our
 operating profit dipped owing to decline in Net Sales Realisation (NSR)
 which continued to be under pressure due to unabated import of steel
 from China, Korea and other countries for most part of the fiscal.
 
 But the year 2015-16 ended on a positive note. We saw good recovery of
 steel prices in the domestic market, which for the past 18 months had
 slumped to an all-time low.  Moreover, introduction of minimum import
 price (MIP), also helped to curb the rapidly growing imports at
 predatory prices.
 
 Our net profit was impacted on account of the additional coal levy of
 over Rs.3,300 crore, arising out of the cancellation of coal blocks by
 the Honourable Supreme Court of India; and enhanced finance cost due to
 borrowing. More importantly, demand was stagnant for most of the year;
 and the marginal demand growth benefited the importers. The indigenous
 steel producers failed to become true beneficiaries of the fledgling
 demand growth.
 
 SOME OF OUR KEY ACHIEVEMENTS OF FY 2015-16:
 
 Our steel melting shop at Raigarh facility produced a record 10,000
 tonnes of crude steel in a single day. This exemplary production based
 on DRI (Direct Reduced Iron) and hot metal is a testimony of our
 operational excellence in steel making. This reiterates our commitment
 towards setting new benchmarks in the steel sector.
 
 We commissioned a 1.4 MTPA Rebar Mill in Sohar, Oman, the largest in
 the Gulf and African Region. This enabled Jindal Shadeed to become the
 largest integrated steelmaker in Oman with a 2 MTPA Steel Melting Shop
 (SMS) and 1.4 MTPA Rebar Mill.
 
 We dispatched India''s longest ever 260 metre rails to a dedicated
 freight corridor railway line. Our ability to make the world''s longest
 single piece rail of 121 metre length has received a reckoning as a
 World Record.  The commissioning of our head hardening rail facility in
 Raigarh has made us India''s first and only private sector steelmaker,
 manufacturing head hardened rails. In line with the Government''s Make
 in India initiative, we are strategically positioned to participate in
 the expansion of railway infrastructure in India and export our rails
 to global customers. Our commitment to the credo of ''Making in India''
 for India and the world is vindicated by our efforts to strengthen our
 global presence and enhance exports to various countries.
 
 SOCIAL AGENDA
 
 Inspired by the vision of our founder Shri O.P. Jindal, we at JSPL have
 always tried to integrate our business priorities with community
 aspirations. Wide-ranging community initiatives have always been one of
 the pillars of our holistic sustainability strategy. From community
 healthcare and education to developing skill and vocational training
 thereby generating sustainable livelihood options to promoting art and
 culture, JSPL is committed to deliver consistently on the expectations
 of the wider stakeholder fraternity.
 
 When we look at JSPL today, we find that it has been a year of great
 transition for the Company. I am confident that we will have a more
 promising year ahead of us in view of the strategies we have
 undertaken, the gradually developing positivity in our core operative
 sectors; and India''s march towards inclusive growth and prosperity.
 
 I seek the support and cooperation of all our stakeholders to
 strengthen JSPL''s mandate to help create a progressive and prosperous
 India.
 
 Naveen Jindal
 
 Chairman
Source : Dion Global Solutions Limited
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