Chairman's Message

From the desk of,


Chairman & Managing Director


The present world is confronting one of its greatest health threats of a generation, that profoundly impacts the socio-economic activities of its citizens. We strongly and sincerely praise the untiring efforts of the Government, health agencies, communities and individuals, including healthcare workers and first responders, who are putting in their heart and soul to help the mankind during the COVID-19 pandemic.


Over the years, SEML has built its reputation of standing with its employees and communities in the most critical times. This unprecedented environment has been no different. The Company took adequate safety measures for its employees and surrounding communities by promoting social distancing and ensuring the compliance of the SOPs laid down by the regulatory agencies. The Company also took various initiatives in supporting the noble cause of service to humanity. As regards the business continuity is concerned, I am proud to state that we are one of the least impacted companies in the metals and mining space. Thanks to our de-risked and diversified business model, that has allowed us to sustain the disruptive shock and has allowed us to test our abilities to emerge even stronger than before.


Our proactive strategies of integrating our operations, has proved to be a blessing in disguise for a commodity player like us. It has helped us to face the market volatilities and ensure optimum use of resources. Besides, our diversification into hydro power has further given us the cushion to face the unanticipated disruptions during the year.


India's economic performance of 2019-20 was rather flat. During the large part of the year, the country struggled to accelerate on the momentum set in the earlier years. Lower consumption, investments and unstable global macro-economic environment resulting out of trade war between China and US, coupled with geological tensions in other geographies, dragged down the growth curve. The Government intervened with several measures to boost up the consumption and drive investments into the country. Just when the things started easing out in the early part of Q42019-20, the country was struck with the deadly pandemic. The nationwide lockdown halted all the economic activities and put brakes to the growth. The 2019-20 GDP growth slowed to a 11-year low at 4.2%. The Government took several measures and announced a prestigious 'Atmanirbhar Abhiyan' Package, worth Rs. 20 lakh crore, giving an opportunity to kickstart Make in India 2.0. Apart from allaying near-term working capital and loan financing concerns during an unprecedented health crisis, the package lays down a bold intent to reenergise, revamp and reinforce a strong industrial and manufacturing sector for India's long-term growth in a post-COVID world.


India emerged as the world's second largest steel producer in 2019 surpassing Japan, with a crude steel production of 111.2 million tonnes (MT). India's per capita consumption stands around 74 kgs as against the world average of around 208 kgs.


The Government has taken various steps to boost the sector including the introduction of National Steel Policy 2017 and allowing 100% Foreign Direct Investment (FDI) in the steel sector under the automatic route. The Government's National Steel Policy 2017 aims to increase the per capita steel consumption to 160 kgs by 2030-31. The Government has also promoted policy which provides a minimum value addition of 15% in notified steel products covered under preferential procurement.


Let me now take you through the numbers we achieved during the year. We reported consolidated revenues of Rs. 1,983 Cr during the year, as compared to Rs. 2,341 Cr in the previous year. The decline was owing to the following reasons:

  1. Scheduled maintenance shutdown of one ferro alloy furnaces at Vizag facility in Q1FY20 and scheduled repair work of one furnace from end of Aug-19 to Nov-19
  2. Repair work related scheduled shutdown of one turbine of power plant at Raipur facility in Q4FY20
  3. Covid-19 related disruption in sales and production in the last quarter of FY20.


The EBITDA and PAT also witnessed, 32% and 38% decline, respectively, due to mark-to-market losses and higher forex losses which are largely notional in nature.


However, on a positive side, we continued to witness highest production levels across our operations, including hydro power. I am also happy to state that, our liquidity position is one of the best in our space, making us among the few companies to be least impacted during the unforeseen pandemic. We have successfully and timely met all our obligations, without opting for the bank moratorium. Besides, our strong policies with respect to debtor and inventory management resulted in lower working capital requirement. Our commitment to our shareholders’ remain strong and I am pleased to announce that the Board has recommended a dividend payout of Rs. 5 per equity share (50%) for the F.Y. 2019-20.


Our expansions at Raipur and Vishakhapatnam reaped strong benefits. We continued to operate at full capacities across our facilities. Our diversification into hydro power was a blessing in disguise for us amidst the tough times.


Our foray into hydropower gives us an opportunity for a quantum leap as the Company is now ready to build its alternate revenue stream. The hydro project coming up in Sikkim under the subsidiary was expected to commence operations by June 2020 but due to COVID 19 pandemic, the project activities have slowed down delaying the commission of the plant. The company is taking steps for commissioning the plant in F.Y. 2020-21. Hydro Power will result in increased cash flows. While we have already strengthened our gearing, the additional cash flows will allow us to leverage on any possible inorganic growth opportunities.


I am proud of the Company's enhanced commitment to safe operating culture. We have invested significantly towards building a safe and healthy operating environment through stringent safety measures. The efforts are visible in the declining trend of the incident rates over the past few years. We have also equally invested towards community development initiatives by focussing in the areas of education, healthcare and rural development.


I would like to acknowledge the efforts of the entire SEML team for their profound commitment, professionalism, talent and passion. It's your dedication and efforts, that has brought the Company to this level. I take the opportunity to thank the Board of Directors of the Company and also of the subsidiaries/controlled entities for their able guidance.


I also extend my sincere thanks to the Government, government agencies, departments, our bankers, suppliers, customers for posing faith in us and supporting us in all our endeavours.


While we know that the macroeconomic situation is still shrouded in uncertainty, we continue to remain optimistic to leverage on our diversification advantage. I believe that difficult times are precisely the ones during which we become stronger. We are confident and well placed to build further on our achievements and continue to provide value to our stakeholders.


Thank you for your endless support, confidence and commitment.


Yours sincerely,
Kamal Kishore Sarda