LETTER TO SHAREHOLDERS
Resilience, Adaptation, and Strategic Vision
Dear Shareholders,
As we reflect on the past year, I am pleased to present to you the annual report of
Sarthak Metals Limited for FY24. This year has been one of resilience and strategic
consolidation for our Company, as we navigated through a challenging business environment
while staying true to our long-term vision and values.
Resilience in a Challenging Environment
The year under review was marked by multiple external challenges that tested our
mettle. The steel industry, which forms the backbone of our core business, faced a poor
demand outlook, increased competition from Chinese imports and falling product
realisations for our own products. These factors collectively led to a lower top line and
subdued profitability for Sarthak Metals for the year under review. However, as we have
demonstrated time and again, our Company's strength lies in its ability to weather storms
and emerge stronger.
Despite these headwinds, I am proud to report that Sarthak Metals has shown remarkable
resilience. We have remained steadfast in our strategic priorities, continuing our thrust
on expansion into new verticals such as Flux Cored Wires and other strategic projects.
This focus on long-term value creation has been the cornerstone of our approach during
these challenging times.
Year in Review
The year witnessed a fall in ferro alloy prices, which significantly impacted the
realisations of our cored wires business. This was further exacerbated by heightened
competition from new entrants in the industry. We also faced challenges on the export
front, with some of our South American clients favouring local production, leading to a
reduction in long-term export orders.
In response to these challenges, our strategy has been multifaceted. We have focused on
maintaining our market share while strategically emphasising higher value-added products
with better margin potential. We have been cautious about engaging in business where
pricing competition was extremely high, prioritising the protection of our profitability
profile.
Adapting to the situation at hand, we looked beyond traditional steel industry
applications and ventured into newer segments like foundries. Our focus on products for SG
Iron foundries, which produce castings for automobiles, tractors, farm equipment,
railways, and defence, has allowed us to deliver higher value-add products. Our focus on
this segment will continue to increase.
Our Aluminium Flipping Coil division also experienced a slowdown, with profitability
impacted by continued supply chain disruptions and limited availability of scrap. The ban
on aluminium scrap exports by some African countries has put pressure on global scrap
availability, further challenging this segment.
While these factors contributed to an overall tepid performance in FY24, making it a
year of consolidation, I believe it has also strengthened our resolve and sharpened our
strategic focus.
Silver Linings
Amidst these challenges, I am pleased to report that our Flux Cored Wires division has
been performing exceptionally well. Our initial dispatches have received a positive
response from our customer base, with clients expressing satisfaction with the quality of
our products. Sarthak Metals has successfully created a brand name for itself, boasting
superior quality and service in this segment.
Our first manufacturing line is now running close to optimum capacity utilisation, a
testament to the growing demand for our products. We have also made inroads into the
carbon steel fabrication segment and are actively scouting for potential customers in
different domains. Given India's infrastructure boom, this sector presents a very
promising opportunity for our company.
In line with the growing demand and the significant import substitution opportunity, we
are expanding our capacities in the Flux Cored Wires domain.
By setting up 2 more manufacturing lines, we are tripling ourtotal capacityfrom 1,200
TPAto 3,600 TPA, positioning ourselves to capture a larger market share in this growing
segment.
Superior Balance Sheet Strength Offering Growth Opportunities
One of our key strengths that has emerged from the progress of recent years is our
robust balance sheet. Sarthak Metals has built a strong financial foundation, maintaining
a debt-free status for the last 2 years, with a net-cash surplus on our books. This
financial flexibility, coupled with healthy cash accruals each year, offers us significant
opportunities to pursue different projects and growth avenues.
Our strong financial position has not only supported our expansion in the Flux Cored
Wires segment but has also allowed us to explore new frontiers. One such potential project
is in the Biotechnology domain, specifically in Industrial Enzymes and Natura Proteins. We
have developed a pilot facility in Nagpur, Maharashtra, for R&D in this domain and for
rapid technology adoption. Our collaboration with the Council of Scientific &
Industrial Research (CSIR),
LIT University, and Hislop College for technology transfer and continuous research and
development in this area underscores our commitment to innovation and diversification.
Outlook
As we look to the future, we are cautiously optimistic about the prospects for our core
businesses. We anticipate a more conducive environment in our cored wires and aluminium
flipping coil business, with a better demand outlook from the steel industry, especially
in light of its ongoing capacity expansion. Our strategic focus on value-added products
and exploration of untapped markets in the foundry industry is expected to yield positive
results.
We are particularly excited about the ramp-up in our Flux Cored Wires vertical, which
we believe will proveto bean important frontier for the company's growth. As we march
forward, our commitment to innovation, quality, and customer satisfaction will remain
across all our businesses.
Our vision at Sarthak Metals is to evolve into a diversified solution provider,
expanding our presence in dynamic industries. We are committed to long-term value creation
for all our stakeholders, balancing growth with sustainability and responsible business
practices.
Inclosing, I would like to express my heartfelt gratitude to all our stakeholders - our
shareholders, employees, customers, partners, and the communities we serve - for their
unwavering support and belief in Sarthak Metals. Your trust and confidence in our company
have been the driving force behind our resilience and determination.
As we navigate through these challenging times,
I am confident that our strategic focus, financial strength, and innovative spirit will
propel Sarthak Metals to new heights. We remain committed to creating sustainable value
and contributing to India's growth story.
Thank you for your continued support and trust in Sarthak Metals Limited.
Sincerely,
Anoop Kumar Bansal
Managing Director
Sarthak Metals Limited.