I am privileged to address you once again and apprise you about the achievements of your Company in the financial year 2016-17.
The World economic recovery is on track and a pickup in Global growth presents a healthy sign for industrial and manufacturing activities across globe. With Global output, as projected by IMF, to grow by 3.5% in 2017 and 3.6% in 2018 on the back of better performing emerging economies, we expect more stability in the steel industry world-wide.
Meanwhile, India is projected to become the world''s fifth largest economy in 2017, surpassing UK and France and the world''s third largest economy by 2023, surpassing Japan and Germany. India''s GDP is projected to rise from USD 2.2 trillion in 2016 to USD 3.6 trillion by 2020. This augurs well for businesses that are focused on domestic growth in the future.
With suitable trade measures put in place by the Government of India for providing a level playing field to the domestic steel producers, the Indian steel industry could perform as per its potential and India became a net exporter of steel in FY 2016-17.
Given the current stage of development of the Indian economy and the likely growth path for the Country''s economy in the next decade, the steel demand in India will witness significant growth in future. India with its stable government, strong reforms, rising infrastructure spend & robust consumption demand will provide a platform to reach per capita steel consumption of 160 kg & total steel capacity of 300 Million tonnes by 2030-31 as envisaged by National Steel Policy 2017.
Your Company achieved a turnover of ''49,180 crore during 2016-17, which is higher by 14% over previous year due to increase in both sales volume (8%) as well as Net Sales Realization (NSR) of Saleable Steel of five Integrated Steel Plants by about 6%. The increase in NSR was partly due to an overall improvement in price levels and partly due to measures in enriching Company''s product mix. Your Company''s intensive focus on improving operational parameters resulted in positive EBITDA in all four quarters of FY 2016-17 and your Company trimmed losses by 30% by recording an overall improvement in production, sales and efficiency.
As far as production performance is concerned, SAIL achieved highest ever Hot Metal production at 15.73 Million Tonnes (MT), Crude Steel production at 14.50 MT and Saleable Steel production at 13.87 MT during FY 2016-17. There were all-round improvements in the major techno-economic parameters.
The unprecedented increase in coal prices during FY2016-17 however, adversely impacted the cost of production and overall margins. During the year, there was an additional impact of around '' 4,300 Crore as compared to FY 2015-16 on account of increase in prices of both imported and domestic coal. This increase in coal prices, neutralized the significant improvement in Net Sales Realization (NSR). Notwithstanding the increase in coal price, your Company could reduce its operational expenditure per ton of saleable steel by 2% during the fiscal.
Your Company has almost completed its Modernization and Expansion Programme (MEP). The state-of-the-art New Universal Rail Mill at Bhilai Steel Plant (BSP) was inaugurated by Hon''ble Steel Minister in January''17. This mill produces World''s longest single piece rail of 130 meters length and supplies welded 260 mts rail panels to the Indian Railways. With this capacity addition, BSP has the record of being the single largest rail producing facility at one location in the World.
The already operational new facilities under the Modernization and Expansion plan were ramped up during the year. New Blast Furnace at Rourkela Steel Plant (RSP) achieved about 100% of its capacity, whereas, other facilities like the New Plate Mill also produced near to their rated capacities. The New 3 MTPA Hot Strip Mill at RSP is also scheduled to be installed by 2018 and this will enlarge the basket of the value added products.. The new facilities at IISCO Steel Plant (ISP) have also been ramped up significantly. The Wire Rod Mill of ISP will be soon producing world class Wire rods in special grades to meet the requirement of the Indian and Global Steel industries.
There has been significant value addition in the product mix of the Company, with higher grades of steel like API X-70 from RSP''s New Plate Mill for the oil & gas sector, SAIL HT-600 for the automotive sector and high strength LPG steel grade from Bokaro Steel Plant, etc. Continuous product development efforts are being made with intensive R&D efforts especially from the new state of the art mills commissioned under the Modernization and Expansion Plan. Amongst the Indian steel producers your company continues to be in the forefront in R&D with the highest spending.
The products being manufactured by our new rolling mills have been received well by the customers and it is our constant endeavor to add more and more value added grades from these mills. Products from the RSP NPM and BSL CRM-3 are being well received in export markets too. In conjunction with increased production, focus is being given to efficient and strategic marketing for improving sales and realizations. More emphasis is being given on last mile connectivity with the end users, marketing in regions where we have natural freight advantage, increasing retail & rural sales and leveraging the brand image of SAIL.
We have launched a Companywide initiative with the help of Boston Consulting Group (BCG) named ''SAIL Uday'' for improving our all-round performance. Cross functional teams across plants, units and marketing have been formed and both short and long term action plans have been formulated. Implementation of various initiatives is already underway and many benefits are expected to come in this fiscal itself.
Your Company continued its efforts of conducting operations in an environmentally responsible manner. These have resulted in reduction of emissions and discharge levels, increase in utilization of solid wastes and green cover. Our efforts to plant more trees continued during this year too.
Finally, I would like to take this opportunity to thank you as the shareholders of the Company for your constant support and trust. I would also like to thank our customers, suppliers, the Central and the State Governments and our employees, who have always stood by the Company and I look forward for their continued support in the future.
Place: New Delhi
Dated: 11th August, 2017