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Your Company has completed a landmark year which witnessed the fruition of our long–cherished dream of an integrated steel & power complex with completion of the ongoing Phase III expansion. We have our dream of housing about 7 MnTPA of steel making and processing capacity (4.7 MnTPA of primary and 2.2 MnTPA of secondary) within striking range, now that our Meramandali facility is poised to stabilize production in the fiscal year 2013–14.
Challenging Business Environment
On the business front, we continue to live in challenging times. The year gone by tested the tolerance level of global economy. World GDP growth rate came down to 3.2% in 2012 from a healthier 4% recorded in 2011. Emerging & developing economies, despite a moderate growth of 5.1%, helped check the global GDP growth in a year that witnessed consistent recovery in the US, turnaround in Japan and a moderate contraction in Euro zone economies.
Fiscal year 2012–13 tested the often flaunted sound foundations of Indian economy. Amidst headwinds of inflation, liquidity crunch, lowering consumption; Indian economy recorded its decade–low GDP growth of 5%. While governments and policy makers swung into action in the latter half of FY13, relaxing FDI norms in select sectors and intensifying divestment efforts in select Public Sector Undertakings, the same yielded little to support growth.
The steel scenario remained subdued globally during the year gone by. World Steel Association estimated the world crude steel production to record a moderate growth of 0.72% in CY2012 to reach 1547 MnT. This is in contrast with 6.7% growth in 2011 over 2010. India, the 4* largest crude steel producer with 77.6 MnT of production in 2012, remained a net importer of steel with 9.3 MnT of imports and 8.2 MnT of exports. Our per capita steel consumption of just 56.9 Kg., against the world average of 216.4 Kg., augurs well for industry's growth in coming years. The impending infrastructure and housing deficit will keep adding the steel demand growth in India.
Creating Diverse Shades of Steel
Your Company's two–pronged growth strategy hinges on integrating to cover the entire steel value chain on the one hand and diversifying its product mix of specialised steel at the other. As a result, we are not only increasing our production volumes but also expanding our end–user segments.
Amidst subdued business environment, we recorded a healthy 10% increase in our gross revenues which reached Rs. 11,800 in FY13, from Rs. 10,793 crores in FY12 while our EBITDA too grew by about 10% to reach Rs. 3332 crores.
The road ahead
Now that we have successfully completed our backward integration program, we shall soon stabilize the recently added capacity under the third phase of our expansion. Another focus area will be to integrate this with our already commissioned facilities under Phase I and II. Additionally, we are intensifying our focus on expand our global business in order to increase our export revenues from the current Rs. 1813 crores (15% of our total turnover). Power self–reliance is a major boost to our operations and profitability. We are well on course to add 350 MW to take our total captive power capacity to 840 MW by FY14, including capacities under Bhushan Energy Ltd. Another area of our focus will be to strengthen the uninterrupted and cost–effective raw–material supply.
I acknowledge the unwavering trust and support of our stakeholders – shareholders, lenders, technology partners, vendors and the exchequer–in our success. I am looking forward to your patronage in our exciting journey ahead. I would also like to acknowledge the invaluable contribution of our management team, employees and workers; and congratulate them on accomplishing the expansion task.
B. B. Singal