Chairman's
Speech at the 28th AGM of Essar Steel on August
7, 2004
Dear
Shareowner,
It is with great pride that I welcome you to the
28th annual general meeting of your company.
This has been a record year for your company. We
have notched up gross income of Rs. 4024 crore,
with net profit of Rs. 60 crore. I would like to
thank all my colleagues for making us feel proud
to be part of the Essar Steel family. We have achieved
this through a combination of strategy, implementation,
operational efficiency and strong human relations.
Steel grows on the back of a strong economy. The
Indian economy has been growing at over 5% during
the last few years and in the last year, it has
grown at over 7%. This augurs well for us as the
demand for steel is directly related to growth in
GDP. It is important to note that the per capita
consumption of steel in India is very low at 30
kg, while global consumption is six times and China’s
is nearly five times our consumption. We have a
long way to go.
We expect substantial investments in infrastructure
and core sectors, which will translate into sustainable
demand for steel. The overall level of optimism
in the steel industry is thus very high. This optimism
is further strengthened, as we are confident that
the process of reforms will continue under the new
government at the centre.
The revival in the market for steel, both domestic
and global, has helped us fetch attractive prices.
We too have responded through aggressive marketing
and focused business development. Conscious of the
changes taking place in the dynamic market for steel
over the years, we have striven to create a niche
for ourselves in the market for steel. We are not
just a customer focused and customer friendly company.
We are also nimble-footed, agile and respond fast;
we have focused on creating and sustaining the ability
to vary our portfolio of products in tune with developments
in the market. Your company has successfully moved
up the value chain, continuously graduating to superior
products.
I say with great pride that your company has been
the largest exporter of HR flat products since 1996,
a commendable achievement. Our products have met
the exacting standards of global steel users, who
can pick and choose from anywhere, but prefer to
look to us for their steel requirements. Pioneers
in the branding of steel, we are very proud of our
24 Carat steel. I am happy to state that we are
leveraging this brand potential further.
We owe this to the fact that your company is a fine
example of effective coordination between manufacturing
and marketing. Engineering responds well to focused
marketing. Apart from flexibility in operations,
we have successfully developed new products for
application in vibrant industries. I would like
to specifically mention the dual phase steel your
company has developed for the automobile industry.
The auto industry is in a vibrant phase and we can
therefore expect dual phase steel to do very well.
It is a matter of great pride to us that we have
run successful trials for the Indian Navy’s
steel requirements and that Caterpillar Plc has
chosen our steel for all its global requirements
of steel. We have an impressive list of customers
such as Maruti, Hyundai, Swaraj Mazda, Kalyan Lemmerz,
among others. This is a tribute to a thoroughly
professional and committed family of colleagues.
The Indian steel industry grew by 6.7% during the
financial year 2003-04, against the 5.8% growth
during the previous fiscal. We can look forward
with a positive attitude as global iron and steel
research institutions indicate that favourable conditions
for steel and steel products will continue to prevail
during the medium term. It is expected that global
demand for steel is likely to grow between 3.6%
and 5.5% over the next three years, according to
institutions that have made it their business to
monitor steel. I may add here that major governments
across the world have expressed strong commitments
to sort out issues relating to subsidies. The picture
will only become clearer and firmer.
We have always believed that improvements are as
important as innovations. We have thus followed
the practice of continuous improvements that help
increase our operational efficiency. Our plant at
Hazira surprises us regularly with small and small
changes that bring significant benefits. We have
long realized that a good strategy needs strong
operations for successful implementation.
Your company is constantly attempting to reduce
finance cost through several refinancing options.
I would like to state here our appreciation of the
cooperation we have received from the financial
institutions.
We have believed that risk management is not an
independent function, but is the responsibility
of every line and staff manager. I can say that
we have chosen well as is demonstrated by our risk
management processes.
We are living in an era where information lends
strength in creating a purposeful strategy. The
goal is not just an IT-savvy organization; the goal
is to create an organization where IT effectively
plays an enabling role. I can say that our investment
in the best of breed SAP system has yielded considerable
returns.
We are deeply committed to enhancing the quality
of life of our environment and community. Your company
has quietly done its own through several initiatives
in community development.
Before I end, I thank each one of you for your co-operation,
the employees for the dedicated efforts, financial
institutions and Bankers for their unstinted support
and the colleagues on my Board for their guidance.
CORPORATE