What was the big message related to the Company in 2010-11?.
The big message that I would like to share with my fellow shareholders is
not as much about where we are at present as a Company but the
direction in which we are heading.
On the overall, the year gone-by had been extremely challenging and
volatile. To retain the productivity of our mini-blast furnace we had
to close it down for repair and re-lining work for a significant part
of the year due to which our production got hampered.
Despite these odds there are some developments which give us reason to
cheer i.e. our Annular Sinter Plant (annual capacity of 3,56,000 MTPA).
The installation of the same is in full swing and is expected to
commence production shortly.
In what way is KIC strengthening its competitive edgeRs.
Before I expound on our corporate strategy, permit me to explain the
industry environment. Big is getting bigger and Low cost is getting
cheaper. No two sentences encapsulate the reality of the iron and steel
industry more faithfully than these.
As a future-focused organization, we have outlined a strategy to grow
with speed and economy, reinforcing our competitiveness.
Our strategic blue print describing our vision and zeal of not only
getting bigger, but also to emerge as one of the largest and low cost
producers of pig iron in the eastern part of India is shown below:
* Our 3,56,000 Annular Sinter Plant at the existing plant premises
would reduce our dependence on the costly iron-ore lumps. The iron-
ore and LAM Coke fines generated from our existing Pig Iron plant will
be used as raw material in the Sinter Plant which will further reduce
wastage and will also reduce our operational cost significantly.
, In the business of the manufacturing of steel and allied products,
the role of captive power source cannot be underestimated for various
reasons. One, a captive source of low-cost power translates into a
distinctive competitive edge. Two, the continued availability of power
makes it possible to circumvent production interruptions. Three, the
availability of quality power helps stabilize product quality. Four, a
captive power plant provides attractive depreciation buffers that make
it possible to accelerate payback and invest in a bigger facility.
Five, the profitable use of waste material like waste heat - provides
additional benefits in terms of profitability and waste management.
Six, an experience in power generation can be profitably monetized in
today''s environment through the commissioning of larger power plants
that can engage in merchant sale or captive consumption.
Going ahead with the same, we are working on 4.7 MW waste heat recovery
based captive power plant which would reduce our dependence on grid for
continuous supply of power and would moreover decrease our power cost
on per tonne of Pig Iron produced.
What is your view on the cyclability of your businessRs.
A number of shareholders have questioned us on the cyclability of our
industry. There are three ways when it comes to appraising a
Company like ours.
First that we operate in a cyclical environment where the demand for
our products is influenced by the health of the steel industry.
Secondly, the steel industry has continuously been seeing a market
shift. The industry that was once dominated by western markets has
gradually shifted to Asian pockets. China holds a significant portion
in the same and many large stream iron and steel industries are depen-dent
on it. With that emergence of India as a global steel hub is also
getting evident. India is slated to become the 2nd largest producer of
crude steel by 2015-16. The production and consumption of steel related
products is going to increase in the years to come with support from
Government which is boosting infrastructure spending. The overall
increase into the demand for steel is also seen from automobile and
real estate companies.
There is a third cycle at play as well. We have constantly been
reshaping our business model to enhance our counter-cyclicality and
remain relatively insulated from sharp industry swings.
Our vision of integrating from a mere commodity player to a complete
steel producing house, shows our pro-active vigour to counter
What is your outlook for futureRs.
We shall continue to grow rapidly in the coming years with captive
mineral resources and power generation in order to deliver sustainable
growth and create value for all our stakeholders.