NSE Symbol: | BSE Code: | ISIN: | Sector:
- Add to Portfolio
- Add to Watchlist
- Add to Alert
The fiscal year that has just ended and the one that is currently running are crucial years for ISMT. I expect that in the years to come we will look back upon this period as an inflection point for the company. The start of a rapid transition from being a niche producer of specialized seamless tubes and alloy steels to becoming a global leader in these products. In other words, the unfolding of our 'Vision' to be the most sought after, efficient, profitable and respected producer globally of precision seamless tubes and alloy steels.
One of the key enablers for this expected change is the PQF mill that has been commissioned during the year and which has positively impacted multiple facets of our business. Firstly, our installed seamless tube manufacturing capacity has increased from 155,000 MT per annum to 475,000 MT per annum. Secondly, our costs of producing various products within the seamless tube segment have reduced. Thirdly, as a result of the cost reductions, various markets that were outside our competitive area have now become addressable. The combination of these elements has made our business model very robust and has laid a secure foundation for growth.
The other enablers are various internal process changes that we have made, and initiatives that we have launched, to complement the introduction of the PQF product line, the commensurate increase in the scale of our production and in the diversity of our products; and to cope with a very dynamic price environment. All these initiatives, aimed at moving decision making down the line, improving the response time of the organization, and improving customer interactions, will undoubtedly yield sustained positive results.
The third and vital cornerstone of our strategy is product development, which allows us to move sales volumes from the commodity category to the value added sections of the market. During this year we have identified various such products and launched them successfully. These include new grades of seamless tubes as well as engineering steels for the Powergen and Automotive markets. While these markets are relatively difficult and slow to penetrate, we will reap the rewards in the future in terms of business stability and margin growth.
One of our strengths is that our products are consumed across a very diverse industry group ranging from oil & gas exploration, automotive, construction, Powergen, and mining. It is also very fortunate for us that many of these sectors are witnessing rapid growth particularly in India. In many of these sectors ISMT is strongly positioned and in others efforts are on to secure a sound footing. This is not to say that our industry is without its challenges.
Today the key uncertainty that grips the seamless tube markets worldwide is created by the overcapacity in China, by the consequent price cutting by Chinese enterprises, and by the response of nations to these dynamics. As we speak, the U.S., Europe, Canada, Argentina, and Mexico have either levied or are in various stages of levying anti–dumping duty on Chinese seamless tubes. This has created both a serious threat as well as some opportunities.
Faced with mounting duties in the developed markets China is now dumping seamless tubes in the remaining parts of the world including the Middle East, North Africa, South–East, and India with renewed, unbridled aggression. Selling seamless tubes in these regions is now extremely difficult, if not impossible. On the other hand, demand for Indian tubes has jumped up in countries like the U.S. and Europe, where anti–dumping duty has been levied on Chinese product.
Our response to this situation is threefold. We have filed a petition for anti–dumping duty, believing firmly, that it is the duty of the Indian Government to protect our industry from unfair competition. We hope and expect that the Indian Government will act fairly and vigorously to safeguards our interests. We have also taken steps to increase our exports to the U.S., Europe, and other regions where duty has been imposed on Chinese products. Finally, we have accelerated our efforts to shift our product portfolio in favour of more sophisticated and value added products where competition from Chinese products is less severe. With these actions, we have hedged ourselves against all outcomes in the best possible manner.
As they say, the proof of the pudding is in the eating. A robust, steadily growing bottom line is the only true test of a successful business model. I believe that your company is well poised to stand up to this test and I look forward to our shared future with optimism.
I would like to take this opportunity to express my gratitude to our customers, banks, and business associates, for their continued support and for the trust they have reposed in us.