Chairman’s Message

Mr. Mukesh Bhandari - Chairman & CTO Mr. Mukesh Bhandari
Chairman & CTO

Dear Shareholders,

The GDP growth slowed to below 5 per cent for two consecutive years, i.e. 2012-13 and 2013-14.

he combination of domestic structural constraints, inflationary pressures, particularly food inflation and uncertainty in the global economy, has affected growth and posed challenges for macroeconomic stability. However, the Economic Survey 2013-14 has pegged GDP growth for the year 2014-15 in the range of 5.4-5.9 per cent. As a result, sentiment in the country is upbeat and there is a profound change in the outlook. The GDP growth will be driven by multiple factors such as control on inflation, focus on infrastructure revival and manufacturing growth.

The increased expenditure is the main focus area of the new government therefore, opportunities to boost steel demand look more positive. Such a scenario will definitely lead to good business for the company for both Engineering division and Steel division.

The economy of India is also sure to get a boost in the coming years owing to the improvement in the global economies and the political scenario in India, where for the first time in over three decades, we have a stable government with a clear majority of a single political party. These developments both on the global and domestic front will have huge recuperations on the Indian economy.

The steps taken by the previous Government to reduce the export of iron ore through imposition of export duty has started yielding positive results. Production of pellets is on the rise, some through beneficiation and others directly. This has eased the raw material situation for the steel units in the country. The steel units operating in the South and West part of the country are specially benefitted as they were the ones which were most effected on account of ban on iron ore mining. I am sure things will further improve going forward as more and more pelletization and beneficiation plants become operational across the country.

The lifting of ban on remaining mines, expected to happen over the next 12 months, will further ease the raw material situation in the country. While the raw material situation has improved in comparison to the last year, the finished goods demand has not changed much.

This has resulted into lower capacity utilization of most steel plants across the country, especially the induction based mini steel plants.

While the demand for steel is low, the demand for DI pipes is pretty robust. We have also seen price improvements in this part of the business on account of improved demand. We expect the steel demand also to substantially increase, given the renewed focus of the new government on the infrastructure sector. The demand in Gujarat is expected to be higher than the country average.

The company’s efforts in its engineering division to introduce newer products in the last few years are also yielding positive results. In a short span of time since its introduction, the company has installed more than 60 mini high speed casters, probably the highest ever by any company in such short span of time. With the changing norms by BIS for steel products in the country, the ERF introduced with the EldFOS patented process is also being accepted and appreciated by the secondary steel makers. Both these products are expected to fetch huge demand over the next 5 years as the new steel capacity creation kicks in.

Most products of the company are linked very closely to the state of the economy. With GDP expected to grow at a much faster pace and the macroeconomic parameters expected to improve substantially going forward, we see better times ahead fourth company.

I would like to thank all my colleagues and the shareholders for their dedication and commitment towards the company during these testing times.

Mukesh Bhandari

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