Steel industry has shown welcome signs of resilience in Asia and
Africa, where growth levels have been better than the western
economies. GDP growth in China has resulted in steel demand register an
increase of over 6% during the year. Quantitative easing of credit
restrictions is widely expected to fuel growth of Chinese economy
Demand for steel in India continues to grow, in tandem with the growth
in GDP. Indian economy is expected to grow by around 6% during the
year, higher than most economies in the developed world. Steel demand
in India is expected to reach 100 Million Tons in the next few years,
offering significant opportunities to steel majors to augment their
Inflationary pressures and weak investment sentiments, however,
continue to be a cause for concern in India. The Index of Industrial
Production has remained depressed and the current account deficit has
widened. Depreciation of the Indian Rupee has led to costly import
bills and the current account deficit continues to remain high. Indian
steel makers are also threatened due to steady decline in availability
of iron ore from domestic sources.
The fiscal measures recently announced by Government of India are
expected to boost economic activity and investor sentiment. Planned
investment in infrastructure and greenfield projects are likely to
accelerate steel consumption.
The Eurozone crisis and prolonged recession in major western economies
have, however, led to contraction in global steel demand. However, the
US economy has performed stronger than expected and steel demand in the
country has been up by 7% over the previous year.
YEAR 2011-12 - OVERVIEW OF PERFORMANCE
Notwithstanding the overall market conditions, JSW ISPAT achieved
marked improvement in production of various items of steel products.
Sales were also significantly higher compared to the previous year.
In view of the challenges in availability of critical inputs, the
Company could successfully tie-up alternate sources of supply, leading
to rationalisation of operations. Several initiatives were taken for
optimizing efficiencies resulting in improved operational performance.
Since January, 2012, the Company has been receiving power from a unit
(captive to the Company) of JSW Energy Limited, leading to valuable
savings in cost of power.
The Company has exited from the Corporate Debt Restructuring Scheme
effective September, 2011, upon arranging refinance of the CDR debts.
INITIATIVES - NEW PROJECTS
JSW ISPAT earnestly seeks to enhance operational efficiencies and
achieve steady growth. The Company has significant technological and
locational strengths and every effort is being undertaken to structure
its growth chart on this valuable platform.
Several cost-saving and efficiency-enhancing projects have been
undertaken in right earnest. Power project and Lime Calcining project
at Dolvi Steel Complex are expected to be commissioned during 2013. The
second Colour Coating Line at Kalmeshwar Complex is expected to be
fully operational by December 2012.
With a view to achieve raw material security, a Coke Oven project of
the capacity of 1 Million Tons and a Iron Ore Pelletisation project of
the capacity of 4 Million Tons are being set-up at Dolvi Steel Complex,
by a special purpose vehicle company. Both the projects are expected to
be commissioned during 2014.
A 6 Hi Mill of the capacity of 0.2 Million Tons is also being set-up at
Kalmeshwar Complex for increasing the overall coating volumes. The
project is likely to be commissioned during end 2013.
RESTRUCTURING - STRATEGY AND BENEFITS
With a view to achieve economies of scale, improved capital allocation,
faster implementation of cost-saving initiatives undertaken by the
Company, reduction of finance costs and other benefits, a restructuring
scheme has been proposed, which envisages, inter-alia, transfer of
Kalmeshwar unit of JSW ISPAT to a separate company and amalgamation of
the residual business of JSW ISPAT into JSW Steel Limited. The
appointed date for the composite scheme of Arrangement and Amalgamation
is July 1, 2012. The composite scheme is subject to various regulatory
and other approvals. The share exchange ratio recommended by
independent valuers appointed for the purpose is issue of one (1) fully
paid-up equity share of the face value of Rs. 10/- each in JSW Steel
Limited for seventy-two (72) fully paid-up equity shares of Rs. 10/- each
held in JSW ISPAT. Approvals of Competition Commission of India,
National Stock Exchange and Bombay Stock Exchange have already been
received. Other approvals are being sought.
Sustainable growth has been the cornerstone of JSW''s business ethos.
Economic viability, environment conservation and social responsibility
shall continue to drive the Company''s policies and plans. JSW ISPAT
shall continuously endeavor to improve and enhance these core
JSW ISPAT shall continue to engage with its stakeholders and seek to
fully protect their interests. Organisational priorities shall continue
to be led by a strong stakeholder- engagement policy.
I wish to extend my thanks to all our valued suppliers and customers as
well as lenders for their continued support. My thanks are also due to
our employees who have displayed enormous commitment towards achieving
our business goals.
Finally, my thanks to all stakeholders, the Board of Directors and the
Central and State Government for their support.