Dear Shareholders,

We are delighted to present the 50th Annual Report of Sarda Energy & Minerals Limited (SEML), as we mark a significant milestone in our journey. This year, we proudly celebrate our 50th year of establishment, showcasing our resilience, adaptability, and commitment to growth. Since our inception, we have diligently pursued a vision of creating a diversified and de-risked business model, encompassing the entire value chain. Today, we stand tall as a leading player with a formidable presence across the steel, energy and mineral sectors..

Driven by Diversity

Our steel manufacturing facilities have been the cornerstone of our success, producing a wide range of quality steel products that cater to the growing demands of various sectors. Recognizing the importance of renewable energy, we ventured into the realm of hydro power generation to hedge against cyclical cashflows of metals business. Today we have successfully established annuity-like revenues leading to higher margins and steady cashflows. In line with our commitment to self-sufficiency, we also strategically invested in mining operations, ensuring a secure supply of raw materials for our steel production and also giving us a competitive edge in terms of cost efficiency and sustainability.

As part of our post balance sheet development, I am happy to state that we were declared as successful resolution applicant for Chhattisgarh-based SKS Power Generation in June 2023. With the escalating demand for power and positive industry prospects in mind, we submitted an acquisition bid via the IBC route. The plan has been filed with NCLT for its approval. As part of our resolution strategy, we’ll be integrating SKS Power into our company, a move that will yield operational synergies by capitalizing on SKS’s operational 600-megawatt thermal power plant in proximity to our Raigarh coal mine. The acquisition will be funded through a judicious mix of debt and equity. The equity component will largely be covered by surplus funds and internal accruals.

By leveraging conventional energy sources, we aim to meet the evolving energy demands of our nation while maintaining a balance between conventional and renewable sources.

Macro Scenario

With unwavering government support, driven by a self-reliance mission and bolstered by strategic policy measures, India has emerged as a formidable player in the global economy. Despite ongoing geopolitical tensions and energy challenges, India has showcased remarkable resilience, securing its position as the fastest growing major economy. Moreover, the nation is becoming an enticing destination for global investors, especially in sectors poised for transformative reforms, including energy, transport and infrastructure.

Consistent Performance

Amidst the promising backdrop, we take great pride in our robust financial performance. On a consolidated basis, we have achieved yet another milestone, recording the highest ever revenues of ₹ 4,261 Crore and continued to maintain healthy EBITDA and PAT of ₹ 1,110 Crore and ₹ 604 Crore, respectively. Furthermore, we are excited to share that during the year, we made a strategic announcement regarding the equity shares split from Face Value of ₹ 10/- per share to ₹ 1/- per share in addition to a dividend of ₹ 1.50 per share of face value of ₹ 1/- each (150%, inclusive of special dividend of 75%), reinforcing our commitment to reward our shareholders for their unwavering support.

Towards a Strong Growth Trajectory

Moving forward, we are committed to capitalize on our strong foundation by focusing on several key strategies. These include:

Enhancing ownership of key mineral assets: Following the successful commissioning of Gare Palma IV/7 Coal Mines in the previous fiscal year, we have actively pursued additional prospects in the mining sector, seeking to expand our horizons and capitalize on new opportunities. In this direction, we increased production capacity of Gare Palma IV/7 coal mine, received CTE (EC recommended) for Shahpur West Coal Mine, were awarded MDO contract for the Kalyani Coal Mine by SECL and were declared a preferred bidder for Surjagad 1 Iron Ore Block in Maharashtra in a JV Subsidiary. The resultant outcome will continue to strengthen our supply chain and reduce cost.

Consistent capex: Our capex decisions are strategically aligned to fuel continuous growth and effectively respond to the changing demands of our customers and stakeholders. During the year, we commissioned 36 MVA Ferro Alloys furnace in Vizag, ahead of its schedule. We increased wire drawing capacity to 45,000 MT from 30,000 MT. We further received consent for capacity expansion of wire rod mill from 180,000 MT to 250,000 MT. I am happy to state that we received approvals for the expansion of Gare Palma Coal Mine from 1.2 MMT p.a. to 1.44 MMT p.a and have proposed further increase.

Robust financial position: We maintain a robust financial position, underscored by our comfortable liquidity and leverage position. With a TOL/NW (Total Outside Liabilities/Net Worth) ratio of 0.58x as of March 2023, we are well-positioned for future growth. Our financial outlook is set to improve further with increased free cash flow to be generated from our Hydro Power Projects and the capacity expansions mentioned hereinabove.

Balanced Approach Towards a Sustainable Business Practices
Our commitment to a balanced approach to sustainable business practices is evident throughout our journey. We place great importance on environmental stewardship, social responsibility, community development, employee welfare and corporate governance. These core values have played a significant role in fostering enduring relationships with all our stakeholders. Adhering to SEBI’s mandate, we have included Business Responsibility and Sustainability Report (BRSR) in this annual report, which demonstrates our commitment and highlights our activities in the areas of ESG (Environmental, Social, and Governance).

Closing Note

As we reflect on our achievements and look ahead to the future, we remain steadfast in our pursuit of strengthening our business integration, diversification and strong cash flows. With a dynamic and dedicated team, a robust business model and focus on leveraging emerging opportunities, we are poised to embrace the opportunities that lie ahead. We extend our heartfelt gratitude to our valued shareholders, esteemed customers, dedicated employees and supportive partners for their unwavering trust and collaboration. Together, we have built a legacy of success, and we look forward to a future that is bright, prosperous and sustainable.