Annual Report for 2011-2012 - Vizag Steel

30 th Annual Report 2011-12
Dear Shareholders,
Chairman's Address
I have great pleasure in welcoming you all to the 30 th Annual General Meeting of your
Company. At the outset, I am happy to inform that your company, in 2011-12, clocked a
record turnover of l4,462 Cr. with a growth of 26%. On the production front, besides
surpassing 100% capacity for the 11 th consecutive year, improvement was achieved in
important technical parameters such as Fuel Rate, Energy Consumption and Water
Consumption. These helped the company to register a Profit after Tax of 751 Cr for the
year, with a growth of 14%. Additionally, Stage-1 of 6.3 Mtpa Expansion was brought to the
stage of hot commissioning. These achievements were possible only through consistent
efforts of all the stakeholders and the dedicated RINL collective.
The Directors' Report and the Audited Statement of Accounts for the year 2011-12 and the Notice to the Share
holders have already been circulated and with your permission, I take them as read.
Year 2011-12:
In 2011-12, your Company achieved 'good overall performance earning Excellent rating ' against the MOU
signed with the Ministry of Steel for the 3 rd consecutive year.
While commissioning activities of various units under 6.3 Mtpa Expansion are continuing, significant progress
has been achieved in Modernisation and Upgradation of BF-1. Order has been placed for Revamp of Converters.
Further, tenders are under finalization for installation of additional Converter and Caster. The implementation of
these packages would take us to 7.3 Mtpa. To keep up the momentum of capital investment, Projects costing
about 6,000 Cr got approved which include the installation of Seamless Tube Mill and Coke Oven Battery-5
and the project report for the next stage of expansion to 11/12 Mtpa is under active consideration.
Strategic initiatives for business development continued by entering into MOUs with potential stakeholders for
expansion and enhancement of existing capacity, stabilising its product portfolio and securing raw material availability
globally. Major of such initiatives include signing of MOUs with Indian Railways for an Axle Plant in New Jalpaiguri,
West Bengal, with Power Grid Corporation of India Limited for Manufacture of Tower and Tower Parts and Production
of CRGO / CRNO Electrical Steel, with NMDC for Slurry Pipeline and Pelletisation Plant. Other strategic initiatives
being pursued such as Captive Jetty, Fly Ash based Cement Plant and Steel Processing Units would stand the
Company in good stead.
As we move ahead to the next trajectory of growth and business excellence, I seek the support and encouragement
of all our Stakeholders.
World Steel Scenario:
Despite a series of developments in 2011, including the European sovereign debt crisis, earthquakes in Japan, the
political/social unrest in some countries of the MENA region leading to a related surge in oil prices and the
tightening of government monetary measures in many emerging economies, World steel demand achieved a
growth of 5.6% in 2011. According to the World Steel Association (WSA), Japan's demand for steel is expected to
decline by 0.6% in 2012 due to the impact of exchange rate appreciation. In 2013, apparent steel consumption
in Japan is expected to further decline by 2.2%, reaching 77% of its 2007 level. On the other hand, Emerging
economies are expected to continue to drive growth. According to the WSA, by 2013, Steel use in the emerging
economies is forecast to be 45% above 2007 levels, and will account for 73% of world steel demand, as opposed
to 61% in 2OO7. China is expected to witness a continual growth of 4.0% in 2012 and 4.0% in 2013. More
notably, India is expected to increase its steel consumption by 6.9% in 2012 and 9.4% in 2013.
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