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From Managing Director’s Desk
I am very happy to be communicating with you again. Last year, I was completing five years of association with the steel business and this year is another five year anniversary, that of being Managing Director of the Company for 5 years. Last year, I had traced our journey up to the point. This year, I would like to point a little bit into the future.
The rolling mill expansion increased our capacity to 180,000 tons of rolling, but our melting capacity meant that we could not go beyond 130,000 tons. As mentioned in last year''s report, we are in the midst of a project to reduce the tap to tap time in the furnace which leads to increase in the production of billets. This project should get completed by November and after stabilizing the changes, we should be able to start increasing our production. Some impact of that should come in the last quarter but the full impact would come in the next year. This means that from capacity point of view, we will be ready to face the increased demand that we are foreseeing within the next year. The signs of this increase already seem visible. Similarly, we are also working on improving the performance of our bright bar section (which is a value addition on to our normal bars) by about 15-20%.
As I explained last year, our strategy is to be in the high quality, critical steel areas. This means that the grades that we make are going to become tougher than ever and the customers we serve will be more demanding. This means that demands on the quality will be higher and we have to be on our toes to constantly improve that. We have multiple teams working on improving the quality and I am happy to announce that we have started seeing those changes and we expect more results to come in by the end of the year.
To move to the next level as an organization, we need to be much stronger technically than we have ever been. Over the last few years, we have been working hard with the key engineering institutes around to be able to attract good metallurgy students to join us. I am happy to announce that over the last couple of years, we have become quite popular in the campuses and we have been able to attract more young metallurgists to come and join us. This has improved the culture of inquisitiveness and enquiry. Also, we have begun to move some of these youngsters into other functions like Exports and more will follow in the next few years.
Research & Development:
This is a futuristic thought. I have asked our team to add an additional track to our working. So far we have tried work on developing difficult grades for our customers which meant providing a better solution to what the customer was anyway using. Now our thought process is, can we develop original entirely new grades of steel which will help our customers reduce overall cost or improve performance or both? Whether we will succeed in this bold thought only time will tell but suffice to say that our intent is strong and we have started on the journey.
Changes in Management:
When the organization is in the process of changing gears, quite often there is also need to have changes in the people who will help us to move to the next level. In a first for Vardhman Group, we have hired a new President and Chief Executive, Mr. Subhasis Dey, who has a rich experience of 19 years with Tata Motors and 10 years with the Lucas TVS group. So he brings to the organization a far better understanding of the automobile and automobile component industries. I am happy to welcome him on board. A few other key people are joining the organization in the month of August. We have also brought back Mr. Tippannavar, an old veteran of the group to help take our Technical journey forward on the lines I explained earlier.
We have already started the process of debt reduction. The peak debt levels reached in March''15 have already come down and may rise marginally by March''17 because of increased capex on account of the melting expansion and upgradations as also increasing working capital requirements on higher sales. However, the debt levels will remain lower than our March''15 numbers on increased volume.
As a management, we are thinking of examining the proposals of infusing some equity in the company to make the capital base stronger. No decisions have been taken but the process has begun. We shall come back to you once we arrive at the right course of things.
And lastly, I want to share as I turned 50 in July, I have been thinking of how to infuse more adventure in our lives. I recently went on a high attitude trek in the Himalayas. We crossed Rupin Pass at a height of 15,300 feet. We had started climbing from 5,200 feet and it was an exhilarating experience.
I am now trying to infuse a sense of adventure in our organization too by sending people to white water rafting or some treks. A sense of adventure brings excitement, happiness and team work as well as increased risk taking ability.
Thank you ladies and gentlemen for coming along with me on this adventurous journey of Vardhman Special Steels Limited. Whether you will make money or not, time will tell, I can only assure you that you will have quite an adventure with me.
Thank you and all the best.
& fellow shareholder