Chairman’s speech – 78th AGM, 8th August 2016
A very warm welcome to all of you to the 78th AGM of your company.
Dear Members of the Company, it is with a heavy heart that I inform you about the sad demise of our Director and Chairman of the Audit Committee, Dr. N P Jain, a retired IFS Officer, who was on our board since 16 January 1990. On behalf of the board of directors, members and employees of the Company we offer our heartfelt condolences to the bereaved family.
Your Company continues to be a leader in the value added highly specialized alloy and stainless steel industry.
I am sure you have all gone through the Annual Report and noted that the gross revenue from operations in the year 2015 -16 decreased marginally to Rs.3,069 crores against Rs.3,129 crores in the previous year. This was because 2015- 16 saw a fall in raw material prices of most of the inputs required for steel making which ofcourse led to our lowering of selling prices. However, the lowering of selling prices did not affect our margins due to the measures taken by the company mentioned below.
I am happy to inform you that the margins of the company have been steadily improving quarter by quarter. Factors, such as, successful development of new products leading to increase in sales and profits as these products are import substitutions, overall improvement in efficiency of production and reduction in operating costs have all contributed to the improvement in margins.
The depreciating rupee against the dollar however arrested the possibility of increasing our profits as you know the raw materials, like, Coke, Nickel, etc. required for steel making are imported and thus the rupee dollar exchange rate is crucial.
As we all know, the bulk of the specialty and alloy steel produced by your Company is mainly consumed by the automobile component industry which continued to steadily move up the growth path. This enabled us to increase the production in the steel division.
In the year 2015, the Company had signed a Business Transfer Agreement for the transfer of its alloy steel business to Mukand Alloy Steel Pvt Ltd. This agreement did not come into effect and the management is currently considering restructuring this proposal in its larger interest. We will come back to you Shareholders with the revised proposal.
It is my pleasure to inform you that the 1st quarter of the year in running has started on a positive note. In the just concluded board meeting of the company it was announced that the net sales of the company stood at Rs 673.39 crore. The profit after tax of the company for the 1st quarter stood at Rs. 10.26 crore as against Rs. 6.02 crore in the previous quarter, which is a rise of 70%. This is the highest margin since quarter 2 of FY 2010 -11 which means it’s the highest PAT in 5 and a half years.
The fortunes of the automobile industry too has been on the rise in the 1st quarter with the sales of two wheelers and passenger cars together marking an increase 6.6% over quarter 4 of the previous year. Third party predictions show a positive growth in sales in the coming quarters which is good news for us.
It was announced that the state governments in various states are expected to auction many of the Iron Ore mines, especially those in Karnataka, which will impact the company positively as it will increase the availability of iron ore and also ease the prices of this commodity.
The dumping of cheap imports did affect certain products in the steel division in the financial year 2016. However with the introduction of the minimum import price by the Government of India, imports reduced substantially in the 1st quarter. As you know countries such as China were dumping their steel at prices that were so low forcing domestic steel makers to match these prices pushing them into huge losses. The poor state of the capital goods market also negatively impacted the Industrial Machinery division which also affected the overall turnover of the Company.
Barring unforeseen circumstances, in the year 2016-17, it is expected that your Company will register gross revenue from operations of apprx Rs.3250 crores.
Your Company continues in association with Janakidevi Bajaj Gram Vikas Sanstha to support the education of children from the economically disadvantaged communities in Shahapur Taluka in Thane district as part of its Corporate Social Responsibility. In the month of May 2016 the company distributed free uniforms, text books and note books to 10,000 children studying in classes 8,9 and 10 across 43 schools. The company also holds free math study classes in 22 schools in this area. We are happy to share with you that 9 schools in Shahapur achieved 100% pass percentage in the SSC examination in 2016.
The repercussions on trade from the exit of Britain from the European Union have been much debated in our newspapers and television. Let me assure you dear members, that this has not and will not affect your company. Our fortunes are mostly linked to the Indian markets while our exports are mainly to Italy, Germany and South East Asia.
Another headline grabbing news item has been the much awaited GST. This historic reform is in the right direction and will make it easier to do business for your Company selling its products across the country.
There have been no major changes in statutory or regulatory provisions affecting the operations and business prospects of the Company since the date of the Directors Report i.e 23rd May 2016. We now look forward to better days for your Company.
It is always a pleasure to meet you all again. On behalf of my colleagues on the Board, I thank you all for your continued support to your Company and the Management even during tough times for your Company in particular and the Steel Industry in general. I also thank all the stake holders of the Company who have always contributed to the progress of the Company.
Thank you all…..