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Last financial year 2017-18 has witnessed a year of growth for the Indian Economy, making it once again regain its position as the World’s fastest growing major economy.
The economy is back on growth path after a few slow quarters on 1 account of demonetization and the implementation of the Goods and
Services Tax. The Indian Economy is expected to grow faster, driven by increased economic activity. However, protectionist moves by the US Government and partial retaliation by China have raised concerns about the future of global trade. Higher oil prices and rising inflation expectations on the domestic front remain key challenges to macro growth estimates.
India’s GDP growth stood at 6.6% in FY 2017-18 as against projection of 7.2% due to lingering disruptions caused by demonetization of high value currencies last year and the roll out of the Goods and Services Tax (GST) this year.
Currently, the economy seems to be on the path to recovery, with indicators of industrial production, stock market index, auto sales and exports having shown some uptick. India continues to remain as one of the World’s fastest growing economies with a projected growth rate of 7.0 - 7.4% in FY 2018-19. The Government’s efforts towards enhancing India’s attractiveness as an investment destination have started bearing fruits. India has made substantial progress in improving its ranking on various parameters like Ease of Doing Business Index, Competitiveness, Innovation and Logistics Performance. More importantly, for the first time in 14 years, Moody’s has raised India’s sovereign ratings.
Global crude steel output picked-up significantly in 2017 to a record 1.69 billion tonnes, up 5.4% from 2016. This was driven by sustained production across both developed and developing economies. India’s steel production rose by 6.2% in 2017 to a record 101 million tonnes. The growth in the Indian steel sector was driven by improving domestic demand spurred by Government investment in infrastructure sector.
Amongst the larger economies, China witnessed a gradual slowdown in the economic activity but continued to grow in line with expectations. Global steel markets continued their recovery in FY 2017-18 as the global steel demand grew by approximately 2% as compared to the previous year. Steel exports from China declined due to capacity closures leading to a favorable demand-supply balance both in China as well as in the International Markets. This resulted in improved capacity utilizations in the industry, better steel prices and spreads, resulting in an improved industry performance for the year.
India too witnessed growth in steel demand owing to growth across the steel consuming sectors and the Government’s continuous push on infrastructure spending. We believe that the steel demand in India will continue to increase in the future with increased capital and infrastructure investments, including the Make in India initiative, higher urbanization trends, focus on a wider and more inclusive banking network and transition to a more formal economy, including digital initiatives even in rural areas. The Government’s initiatives to strengthen the domestic steel industry are also reflected in the National Steel Policy. The Policy endeavors to make the Indian steel industry self-sufficient, sustainable, cost efficient and internationally competitive.
The World Steel Association has projected Indian Steel demand to grow by 6.1% in 2017 and by 7.1% in 2018. The outlook by various agencies has revised the steel sector to stable for FY 2018-19 from negative in FY 2017-18, in view of healthy global and domestic demand growth along with ongoing capacity rationalizations in China. The agencies expect industry participants to exhibit an improvement in operational and financial performance, backed by steady sales realization and margins, supported by an improved demand-supply balance.
Electrotherm has been at the forefront of technology for the last 35 years of its existence and has introduced state-of-the-art and cutting edge indigenous technological products and contemporary processes for the secondary steel making and foundry industry in India and has been competing fiercely against the multinationals. The DTi technology furnace launched last year has been extremely well appreciated by our Customers making steel through the Induction route, specially in view of the lower power consumption it offers. The Engineering division is seeing a huge spurt in the demand of furnaces on account of this. With Government/MOEF/Pollution Control Boards tightening the norms for air pollution control, the Company is also seeing a spurt in demand for Air Pollution Control Equipment used on these induction melting furnaces.
In the Steel and Pipe division, the Company received many approvals from large Governmental and Non-governmental infrastructure projects for supply of TMT Bars. This will help Company substantially increase its capacity utilization of ISU (Integrated Steel Unit) while simultaneously improving price realizations. The Company also received many approvals for supply of recently launched Epoxy Coated TMT Bars for critical infrastructure projects. This should help improve the profit margins in the TMT segment.
The Company owing to operational turnaround and improved cash flows, has settled 80% of total liabilities with banks through the ARC route/direct one time settlements and continues to work hard to resolve debt related issues with remaining Banks.
As we continue our journey to create long-term value for our stakeholders, I would like to thank all the shareholders of the Company for support and reposing confidence in us during the year. I would also like to thank the Governments, Customers, Suppliers and Lenders for their relentless support to the Company. The Employees and the Associates have worked very hard during the year and I would like to thank them for their tireless commitment to the Company. Finally, I look forward to your continued and valuable support in the years to come.