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It is my privilege to apprise you with the achievements of your Company during the Financial Year 2018-19. The year marked the return of your Company into black. It was a year of noticeable improvement in the performance, a year in which the persistent efforts of your Company to stage the turnaround, finally culminated into profits after posting losses for the past 3 years consecutively.
Your Company achieved sales turnover of Rs,66,267 crore during the Financial Year 2018-19, which is higher by 16% over previous year. The position of loss in the previous year 2017-18 at Rs,(-) 482 crore was reversed and your Company posted a Profit after Tax (PAT) on standalone basis at Rs,2,179 crore in FY19. The consolidated profit after tax of the Company stood at Rs,2,349 crore for FY19 as against Rs,(-) 281 crore in FY18. The persistent strategic approach to improve operational profitability assisted SAIL to improve the EBITDA in FY19 to Rs,10,283 crore, almost doubling over the performance of Rs,5,184 crore in FY18.
The improvement in financial performance was based upon the improved operational performance indicated by increase in Saleable Steel production (7%), increase in Net Sales Realization (NSR) for 5 ISPs (16%), higher share of Con cast production, improved product-mix, reduction in Coke Rate, reduction in specific wage bill, etc. However, the same has been partially offset due to increase in imported coal rate, purchased power rate, higher expenditure on repairs & maintenance, stores & spares, security expenses, loss on account of foreign exchange variations, higher imported coal in blend, provisioning towards various mining related issues, provision for entry tax in the State of UP following the Court Order and increase in interest and depreciation costs.
On the production front, Financial Year 2018-19 saw number of new records being created. The production improved substantially with the ramping up of new facilities. Your Company achieved its highest ever production of Hot Metal of 17.5 MT, Crude Steel of 16.3 MT and Saleable Steel of 15.1 MT. It also clocked an all-time best performance of Continuous-Cast (CC) Steel production of 13.8 MT with a growth of 8% over previous best of 12.8 MT achieved in 2017-18.
With the modernization and expansion plan on the verge of completion, the modernized and expanded Bhilai Steel Plant (BSP) was dedicated to the Nation by the Hon''ble Prime Minister on 14th June, 2018. The new Steel Melting Shop (SMS-III) at BSP was put into operation along with 2 convertors, 3 casters, 2 Ladle Furnace and 1 RH Degasser. The hot trial for Bar Line of Bar & Rod Mill (BRM) at BSP also commenced during DecemberRs,18 while the trial rolling of Wire Rod from Rod Line of BRM started in FebruaryRs,19. At Bokaro Steel Plant (BSL), the hot trials of Hot Dip Galvanizing Line at Cold Rolling Mill-III were started in JuneRs,18. The upgraded Blast Furnace-1 (Parvati) at Rourkela Steel Plant (RSP) was blown-in on in MayRs,18 and also dedicated to the Nation on 11th June, 2018 by the Hon''ble Union Minister of Steel.
A number of new initiatives were taken during the year resulting in improvement in productivity and efficiency across all Plants. 20 new products/grades were developed during the year with noticeable amongst them being NPB-750 at IISCO Steel Plant (ISP) and LHB Wheels at Durgapur Steel Plant (DSP). One of the most important products in the basket of SAIL viz., Rails (for supplies to Indian Railways) witnessed the highest ever production at 9.85 lakh tonnes (vis-a-vis 9.03 lakh tonnes in FY 18) during the Financial Year 2018-19 with commercial production from new Universal Rail Mill (URM) showcasing a 83% growth year on year. The total despatches of UTS-90 Rails consisted of record long rail dispatch of 4.48 lakh tonnes. At DSP the new mill, MSM saw the production double to 1.71 lakh tonnes from 0.99 lakh tonnes in FY18. This aided the Plant in achieving its best ever performance for overall Saleable Steel production at 2.13 MT. At RSP the New Plate Mill continued the stellar performance and the new benchmark by producing 8.61 lakh tonnes during the FY19. Supported by the performance at other facilities, the Plant overhauled its previous performance and recorded the best ever Saleable Steel production at 3.34 MT. Bokaro Steel Plant (BSL) recorded best ever performance in production of Cast Slab, HR Coil and CR Coil at 3.40 MT, 3.69 MT and 1.14 MT respectively. ISP apart from development of NPB 750, started closed casting through monotube route. Other initiatives at ISP ensured its rapid progress towards stabilization and the Plant is also expected to contribute a decent share in the overall profitability of your Company in the years to come.
During the year, your Company''s total requirement of iron ore was met from captive sources. SAIL''s captive mines produced 28.35 million tonnes (MT) of iron ore.
SAIL steel has been a part of every major national infrastructure project. Your Company proudly associates itself with India''s Defence, Railways, Infrastructure, Space, Power, Manufacturing, etc. Living up to its label of being the most trusted and valued partner in Nation''s development, SAIL supplied steel to projects of national importance like Statue of Unity (tallest statue in the World), Bogibeel Bridge (longest rail-cum-road bridge in India), Kishanganga and Tuirial Hydro Projects, Eastern and Western Peripheral Expressways, Luck now-Agra Expressway, etc. in FYRs,19, thus giving a fillip to India''s growth story under the ambit of National Steel Policy 2017 as well as ''Make in India'' movement. Aimed at import substitution, new grades like Quenched & Tempered Plates (SAIL WR 400, ASTM 517 F, S690 QL), High Tensile Parallel Flanged Beams, Medium Carbon Wire Rods (HC 52B,SAE 15B21), etc. were produced and supplied for the first time. Your Company has also supplied steel for various defence projects including indigenously built Anti-Submarine Warfare (ASW), Stealth Corvette INS-Kiltan and the first indigenous as well as biggest artillery gun ''Dhanush'' of the Indian Army.
On the marketing front, SAIL launched diverse initiatives to increase its market presence in different areas by targeting defined market segments. The Company introduced strategic processes like Sales Force Effectiveness (SFE) Programme and Key Accounts Management (KAM) Process during the year. The branding initiatives saw the launch of a new brand NEX to promote Parallel Flange Sections being manufactured by DSP and ISP Further, the Company had made preparation for launch of its SeQR brand to promote the TMT Bars being manufactured by ISP based on its higher safety related properties and features against earthquake. The brand has finally been launched in the FY 2019-20. The initiative Gaon Ki Ore saw organization of more than 150 workshops aimed at enhancing per capita usage of steel in rural construction sector.
During 2018-19, your Company achieved its best ever sales volume of 14.12 million tonnes (MT) despite the second half of the year witnessing a strong undercurrent in the market for steel products. Continuing to strengthening its presence in international markets, SAIL exported 0.76 MT of steel, a growth of 9% over CPLY. With the emphasis on increasing sales of special quality steel, the proportion of these products was increased to 42% of the overall sales. In this regard, supplies from the Cold Rolling Mill #3 at Bokaro have been steadily increasing to consumers in the highly demanding, high value auto segment, besides new customers in Power sector. Supplies of WRC in special grades has commenced from the new mill at IISCO Steel Plant. With focus on meeting the requirement of small consumers, 0.7MT of steel was sold through the retail channel. With the aim of improving the product-mix to meet the requirement of local markets, SAIL has inaugurated new Steel Processing Units at Bettiah and Jagdishpur.
Your Company has been taking all appropriate measures to restore and rehabilitate the degraded eco-system, to maintain and enhance bio-diversity. This include ecological restoration of mined out areas, fresh plantation, bio-sequestration of CO2, enhancing utilization of wastes through application of 4Rs (Reduction, Reuse, Recycling and Recovery), environment friendly disposal of Poly Chlorinated Bi-Phenyls, utilization of renewable energy sources, installation of bio-digesters for processing of wastes, etc. More than 20.5 million saplings have been planted across SAIL Plants and Mines till date since inception. Giving special thrust for plantation, more than 4.42 lakhs of saplings have been planted during 2018-19.
Your Company is committed to the highest standards of Corporate Governance which are reinforced in its vision and credos. The philosophy of the Company in relation to Corporate Governance is to ensure transparency, disclosures and reporting that confirms fully to laws, regulations and guidelines including the Companies Act, 2013, SEBI (LODR) Regulations, 2015 and DPE guidelines, and to promote ethical conduct throughout the Organization, with the primary objective of enhancing shareholders value, while being a responsible corporate citizen. SAIL has formulated policies which ensure transparency, accountability, disclosures and reporting. Ethical conduct throughout the Organization is promoted with the primary objective of enhancing shareholders value. SAIL''s efforts as a responsible corporate citizen and partner in Nation Building have been recognized in the form of awards and accolades by several forums.
Your Company believes that building trust will enhance its reputation and boost the confidence of its investors & stakeholders. In line with this, SAIL has been proactively and regularly sharing key information with all stakeholders through use of different communication channels.
Your Company has been taking a number of strategic initiatives for its turnaround, growth and sustenance. SAIL had launched the Company-wide turnaround program ''SAIL Uday'' in 2016-17 which laid the roadmap for improvement in the areas of Raw Materials, Operations, Sales & Marketing, Supply Chain & Logistics, Personnel and Human Resource has been developed and deployed culminating in the performance during FY 19. Other than this, your Company has adopted a multipronged approach that includes organic growth, brown-field projects, technology leadership through strategic alliances, ensuring raw material security by developing new mines, diversifying in allied areas, etc. Some of the strategic initiatives include MoUs for setting up of Pellet Plants, manufacturing of capital goods in the Country, setting up of hydro power plant, closure of in-operative and non-performing Joint Ventures and Subsidiary Companies.
Looking at the future, IMF has projected the world growth outlook in AprilRs,19 for the year 2019 and 2020 at 3.3 percent and 3.6 percent respectively. Although a 3.3 percent global expansion is still reasonable, the outlook for many countries is very challenging due to considerable uncertainties in the short term especially for the advanced economies. While 2019 started out on a weak footing, a pickup is expected in the second half of the year. This pickup is supported by significant policy accommodation by major economies. With improvements expected in the second half of 2019, global economic growth in 2020 is projected to return to 3.6 percent. Beyond 2020 growth will stabilize at around 31/2 percent, bolstered mainly by growth in China and India and their increasing weights in world income.
Thus, the Indian Economy is expected to continue to do reasonably well in the long run which augurs well for the Steel Industry, as the two enjoy a strong correlation. Similar sentiments have been echoed in the Short Range Outlook published by World Steel Association (WSA) in AprilRs,19. It has been forecast that Global steel demand will reach 1,735 Million Tonnes (MT) in 2019, an increase of 1.3% over 2018. It is further forecast that Global steel demand will grow by another 1% to reach 1,752 MT in 2020. WSA has further added that the Indian economy is expected to achieve faster growth starting in the second half of 2019 after the election. While the fiscal deficit might weigh on public investment to an extent, the wide range of continuing infrastructure projects is likely to support growth in steel demand above 7% in both 2019 and 2020.
India having already overtaken Japan as World''s second largest steel producing Nation in FY 18, is all likely to overtake US as the second largest steel consuming Nation in the world in 2019. The 300 MTPA steel production capacity for India by 2030 as envisioned in National Steel Policy 2017 is commensurate with this growth projection. SAIL has also started its plans for increasing its capacity commensurate with the National growth.
At the end, I take this opportunity to thank all our stakeholders who have contributed internally and externally in the improved performance of the Company. I must specifically thank our valued customers, trusted suppliers, the Central and State Governments and our talented employees, who have always stood by the Company and contributed in the progress of SAIL.
I must especially thank our shareholders including the Central Government for the faith they have reposed in the Company when it has been unable to pay the dividend owning to the continued losses. As the Company has started its ascent to the top, it is time we keep our investors in good spirits. Accordingly, the Board of Directors has proposed a dividend of 5% for the year 2018-19. I hope this will further strengthen the faith of the stakeholders in us and I look forward to the continued support and unflinching trust.
Place: New Delhi (Anil Kumar Chaudhary)
Dated: 31st July, 2019 Chairman