Chairman’s Speech delivered at the Essar Steel's 28th Annual General Meeting held at Hazira.
August 07, 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.
Thanking you
Shashi Ruia
Chairman
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Essar House, 11 K.K.Marg, Mahalaxmi, Mumbai 400034, India
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