Download the Annual Report 2012-13. - kiocl limited

CHAIRMAN’S STATEMENTAnnual Report 2012-13Dear Shareholders,It gives me immense pleasure in extending a very hearty andwarm welcome to all of you to the 37th Annual General Meetingof your Company. On behalf of the Board of Directors, as wellas my colleagues at KIOCL, it is my privilege to thank eachone of you for making it convenient to attend this meeting.The notice convening Annual General Meeting, the Directors’Report and the Annual Audited Accounts are with you and withyour permission, I take them as read.The year 2012-13 has been a rather challenging year forthe Steel industry and for the Indian economy as a whole.The year started with concerns about the global economicslowdown on account of fiscal imbalances and reducedtrade & investments in advanced economies. Theseconcerns sustained throughout the financial year (FY) 2012-13 and prevented the world from achieving any sort ofmeaningful recovery. The domestic economy too suffered adecade-low GDP growth of 5% not only on account of globalheadwinds but also due to RBI’s liquidity tightening measures,persistent domestic inflation, constrained investment pipelineas well as widening current account deficit. While governmenthas recently announced certain reforms, but eventually, theanswer would be in making our economy more competitive.To achieve this, however, renewed focus on the infrastructuredevelopment with emphasis on timely implementation wouldbe necessary as inadequate progress in this sector has astrong bearing on our competitiveness for growth.The global Steel industry is also going through a challengingphase, which has been aggravated by excess capacity andweak demand growth. Globally, there is an installed crudeSteel capacity of about 2 billion tons per annum with Chinaaccounting for around 50% share. In contrast, 2012 globalfinished Steel consumption stood at 1.4 billion tons with Chinaaccounting for about 46% share. The global industry is underpressure on account of widening gap between demand andsupply in China and in the absence of consolidation.The domestic Steel industry faced significant impediments inthe form of weak demand growth of 3.3%, the lowest since2009. The elasticity of Steel demand to GDP growth in FY 2012-13 stood at 0.65%, compared to a 10-year average of 1.16%,indicating a less Steel intensive phase of growth.Moreover, there was pressure of rising imports, especiallyfrom countries like Japan and South Korea with which Indiahas signed Free Trade Agreements (FTA).7