Chairman’s Message
Your Company continued to demonstrate agility and deep resilience backed by a strong focus on operational performance improvement, fiscal discipline and cost optimisation. The Company recorded its highest-ever Ductile Iron (DI) Pipe production, coke production, and captive power generation.”
Dear Stakeholders,
I hope you and your families are safe and in good health. It gives me great pleasure to present you the 6th Integrated Report & 33rd Annual Accounts of your Company for the Financial Year ended March 31, 2023.
During financial year FY 2022-23, the global economy was impacted by the Russia-Ukraine conflict, a sharp rise in energy costs, supply chain disruptions, and resultant inflationary pressures. Central banks around the world raised interest rates in response and coupled with the impact of the zero-COVID policy in China, this moderated sentiment and economic activity.
India’s economy continued to be one of the bright-spots, reinforced by the government’s capital outlay and buoyant private consumption. India’s GDP registered a growth of ~6.8% in FY 2022-23. India’s steel consumption grew by over 10% y-o-y to 117 million tonnes in FY 2022-23.
However, the Indian steel industry was impacted by global developments as steel prices fell sharply and companies faced a margin squeeze given continuing high raw material costs. Indian steelmakers were further impacted by the introduction of a 15% export duty from May 2022 till November 2022 which further depressed domestic prices. Finally, the higher royalty costs on iron-ore supplies also adversely affected margins throughout the year.
Your Company continued to demonstrate agility and deep resilience backed by a strong focus on operational performance improvement, fiscal discipline and cost optimisation. The Company recorded its highest-ever Ductile Iron (DI) Pipe production, coke production, and captive power generation. The Company recorded an EBITDA from Operations of ₹210.73 crore (FY 2021-22: ₹394.68 crore) and Profit Before Tax (PBT) of ₹100.70 crore (FY 2021-22: ₹339.32 crore). The Board is pleased to recommend a dividend of ₹5/- per equity share for FY 2022-23.
During the year under review, the Board
has considered and approved withdrawal
of the Scheme of Amalgamation of the
Company into and with Tata Steel Long
Products Limited, owing to significant
changes in underlying business conditions
and profile in both the Companies. However,
as part of an effort to realise synergies and
create value for shareholders, the Board
approved a Scheme of Amalgamation of
the Company into and with its holding
company
i.e. Tata Steel Limited (‘Scheme’).
The Board has recommended a share
exchange ratio of 79 fully paid-up equity
shares of nominal value of ₹1/- each of
Tata Steel Limited (‘TSL’) for every 10 fully
paid-up equity shares of nominal value of
₹10/- each held by the public shareholders
of the Company. The Company has received
approval from the stock exchanges and is in
the midst of the process of stakeholder and
regulatory approval.
I now take this opportunity to highlight key initiatives during the year across each pillar of your Company’s strategy:
Cost Leadership
The Operational excellence was ably supported by the best-ever yield and productivity at 97.93% from the Blast Furnaces and Sinter Plant. Fuel rate optimisation amidst raw material volatilities, with high Pulverised Coal Injection and Oxygen enrichment, helped in controlling the Hot Metal cost. Ductile Iron (DI) Pipe conversion cost, which is a function of yield, rejection, energy consumption and use of materials and consumables, continues to remain at benchmark levels.
Supplier of Choice
Your Company last year institutionalised the Customer Relationship Management process in both businesses and consolidated all marketing and sales-related processes onto a single platform, optimising the lead-to-cash cycle, and facilitating a seamless ‘Business on Mobile’ experience.
Robust People Practices
Deeper organisational engagement and Learning & Development interventions are leveraging digital tools to increase capability and productivity. Your Company has taken bold steps towards Diversity and Inclusion and takes pride on being re-certified as a ‘Great Place to Work’.
Responsible Corporate Citizenship
Your Company has moved up by four levels to a rating of ‘B’ in its Carbon Disclosure Project (CDP) ratings. The ‘TML 300 Schools Project’ provides quality education to children in the age bracket of 3-15 years in target villages with the ultimate goal of eliminating child labour.
Focus on Downstream/Value-add
The first phase of the new Ductile Iron (DI) Pipe plant was commissioned. It employs Augmented Reality technology, a first in the industry. The enhanced capacity with latest technologies and robotics will improve safety, productivity and quality.
Innovate and Excel
Your Company has been placed in the band
of Industry Leader in the Tata Business
Excellence Model Assessment. The Company is reinforcing its focus on EBITDA-based
improvement by deploying an Integrated
Improvement Programme (IIP) framework.
In 2023, global economic growth is poised
to slow down to 2.8% (from 3.4% in
2022), led by a pronounced slowdown in
developed markets. In contrast, emerging
markets, led by India, will provide some
cushion. India shall continue to be the
fastest growing large economy for the
third consecutive year. Given the focus on
infrastructure development, steel demand
in India is expected to keep pace with the
GDP growth over the next decade. Demand
from key steel consuming sectors such as
construction, capital goods, railways, and
automotive is expected to remain robust.
The medium to long term outlook of both
the businesses remains optimistic. Ductile
Iron (DI) Pipe demand, backed by a strong
thrust by the government on infrastructure,
particularly in the water and sanitation
sector through the flagship ‘Jal Jeevan
Mission’ scheme, could be significantly
higher in FY 2023-24. Your Company is well-positioned,
both, with higher DIP capacity,
resulting from the completed and on-going
expansion programmes, and a wider
product portfolio.
Your Company has recently started working
on a detailed plan for its Long-term
Decarbonisation, with individual initiatives
being planned to be implemented under
the various Impact Centres of the Integrated
Improvement Programme framework. Your
Company remains committed to providing
a safe and healthy work environment for
employees and is focused towards achieving
“Zero Harm’ across all locations.
I sincerely thank all our shareholders for
their continued support and confidence in
the Company and the Management. I also
express my deep gratitude to Government
authorities, our customers, suppliers, value
chain partners, and other stakeholders for
their continued trust and support to the
Company. I am also thankful to the Unions
for their constructive engagement and
support, my colleagues on the Board, the
management team an employees, for their
significant contributions to the Company
during the year.
Warm regards,
Koushik Chatterjee
Chairman
The medium to long
term outlook of both
the businesses remains
optimistic. Ductile Iron (DI)
Pipe demand, backed
by a strong thrust by
the government on
infrastructure, particularly
in the water and sanitation
sector through the
flagship ‘Jal Jeevan
Mission’ scheme, could be
significantly higher in
FY 2023-24. Your Company
is well positioned, both,
with higher DIP capacity,
resulting from the
completed and
on-going
expansion programmes,
and a wider product
portfolio.”