It gives me great pleasure to write to you as the Chairman of Tata Sponge Iron Limited. The year under review has been an important year for your Company and I am happy to present to you the Integrated Report of Tata Sponge Iron Limited for Financial Year 2018-19.
Global growth witnessed a slowdown in 2018, owing to factors such as the escalation of US-China trade tensions, macroeconomic stress in Argentina and Turkey, tighter credit policies in China, and financial tightening and the normalisation of monetary policy in larger advanced economies. Despite sluggish global growth, the US economy outshone other advanced economies and grew steadily from 2.2% in 2017 to 2.9% in 2018. Emerging and developing countries, especially China and India, played a pivotal role in driving global growth. Despite various challenges, global steel demand showed resilience and grew at 2.1%. In India, steel demand witnessed favourable conditions. India produced 106.5 MnT of crude steel in 2018 and became the second largest steel producer in the world.
As the country’s leading merchant sponge iron manufacturer, we took steps to capitalise on the growing steel demand. During the year, we enhanced our sales volumes and going way beyond the industry average of ~60% capacity utilisation, we achieved a capacity utilisation of 112%.
During the year, our revenues increased by 21.48% to Rs.992.05 crore from Rs.816.65 crore in the previous year, owing to higher demand and increase in production. Our performance during the year is a result of our conscious efforts towards improving operational efficiency and focussing on yield maximisation. Instilling various aspects of business excellence in our processes and systems, we surpassed our own benchmarks in capacity utilisation, energy efficiency and environmental performance.
Your Company has been recognised for its efforts as an ‘Industry Leader’ in business excellence and has qualified for the prestigious Tata group-wide award, JRD-QV. During the year, your Company was awarded the IIM National Sustainability Award for Financial Year 2017-18 by the Indian Institute of Metals. Despite growing production, your Company maintained the highest safety standards. Our efforts were recognised by the Confederation of Indian Industry (CII) (Eastern Region), and we were awarded with the prestigious CII (ER) Productivity and CII (ER) Safety, Health & Environment (SHE) awards.
We are now geared up for a new growth era, leveraging our existing strengths and building stronger synergies with the Tata Steel group. To move beyond manufacturing of sponge iron and to expand the product portfolio of the business, during the year, your Board took a decision to foray into the long products business. As a step in this direction, we successfully completed the acquisition of the steel business undertaking of Usha Martin Limited and are now focussing on integrating the business with that of your Company, including bringing about process integration, technological changes, skill enhancement of existing workforce and other relevant cultural changes.
We endeavor to position ourselves as an integrated steel enterprise with a diversified business portfolio. To align the name of your Company with its new line of business, your Board also proposed to change the name of your Company from ‘Tata Sponge Iron Limited’ to ‘Tata Steel Long Products Limited’ The proposal for name change is being placed before you at the ensuing Annual General Meeting. During the year, your Board also approved a Rights Issue of Rs.1,800 crore.
Value for all
Value accretion for all stakeholders is at the centre of our actions. Over the years, we have maintained a consistent dividend track record. Your Board has recommended a dividend of Rs.12.50 per share for the Financial Year 2018-19.
We also strive to ensure that our efforts lead to value enhancement across multiple capitals. During the year, we maintained our specific emissions at 1.85 tCO2e/tonne of sponge iron, being one of the lowest in our industry. Our harmonious long-term relationship with communities is an outcome of our strategic Corporate Social Responsibility (CSR) interventions. During the year, we spent Rs.2.36 crore towards various CSR programmes in the areas of education, health, rural infrastructure and livelihood creation.
Your Company won the Best Corporate Social Responsibility Practice award on Education at the 8th Asia Best CSR Practices Awards 2018.
As we continue on our journey, I would like to thank you and all the other stakeholders for the continuous support to the Company and look forward to the same in the years to come.
T. V. Narendran