Dear Shareholders,
It gives me immense pleasure to inform the shareholders that during the year under
review equity shares of the company got listed with Bombay Stock Exchange and trading on
the shares started with effect from October 18, 2017.
As soon as the business cycle for steel sector turned up, wasting no time your company
took steps to restart production at its steel plant. I am happy to inform that the plant
is in operation since October 2017. Your company has utilized the shutdown period to make
modifications in the plant and introduce new operational procedures for improving the
performance of the plant. All these efforts have bore fruit. The average gross coke rate
has come down while average daily production has increased thereby improving margins. With
these measures, your company would be able to sustain production at the steel plant.
The Order of the Supreme Court dated August 2, 2017 on mining activities in the country
is having a deep impact on steel and mining companies in both public and private sectors.
All available legal remedies have been taken to deal with the adverse impact of the Order.
In parallel, your company is also making efforts to raise money for making the payment of
compensation amount as per the Order of the Supreme Court. As a result of this Order, the
operations at Roida Iron Ore Mine have been suspended with effect from January 1, 2018.
Financial Outcomes
Having successfully navigated a difficult phase, your company is now poised for better
performance. The focus on controlling operational costs at the steel plant has led to
better margins. Preparations are underway to restart the second blast furnace at the steel
plant. This would further increase the turnover as well as margins.
On the consolidated basis (on including the income of subsidiary company Maithan Ispat
Ltd) the company posted total income of Rs10902 million during the year. Your company
achieved doubling of standalone total income in one year raising it to Rs6443 million in
2017-18 from Rs3030 million in the previous year. The company achieved EBIDTA of Rs1690
million during the year as against EBIDTA of Rs1040 million in the previous year. Profit
after tax of Rs232.91 million was recorded for the year, a jump of 66% over the last year.
Operational Performance
Before restarting the production at the steel plant, the company carried out a detailed
technical study and introduced modifications in equipment and standard operating
procedures for enhancing efficiency and productivity. These changes have improved
efficiency and brought down costs of operations. In a calibrated manner operations were
started at one blast furnace in Oct 2017. Nearly 100 kilotons of pig iron was produced in
a period of about 5 months of the year. The quality of iron ore products has improved with
the commissioning of 600 tons per hour crushing plant at the iron ore mine last year.
Total production of 2.80 million tons was recorded at the mine during the nine-month
period of its operations. This production is almost equal to the production recorded in
the full year of 2016-17. Efforts were made to remove bottlenecks in dispatches from the
mine. As a result of these efforts, total dispatch of 2.31 million tons was accomplished
in 9 months, which compares well with the total dispatch of 2.66 million tons recorded in
full 12-month period of 2016-17.
Expansion Plans
A large number of steel plants in the country are not able to meet their debt
obligations and are facing insolvency under the newly introduced Insolvency and Bankruptcy
Code. As a result, several steel assets are available for acquisition through insolvency
resolution process. Your company is actively pursuing such opportunities to expand
inorganically.
Due to high NPAs, banks are disinclined to lend to steel companies for two reasons, one
the banks are not adequately capitalized for the fresh round of lending and second, the
steel companies are responsible for very high NPAs of banks leading to an implicit embargo
on further exposure to steel sector. Lack of support from banks is the main reason for the
delay in phased expansion for the steel plant. Now with the revival of the steel sector,
there would be a better response to the efforts in raising funds for the expansion of the
plant. Your company has decided to take up the project to establish pulverized coal
injection facility (PCI) in the steel plant. During the year additional investment of
Rs225 million was made in Maithan Ispat Ltd, a subsidiary of your company. Total equity
investment in Maithan Ispat is at Rs1818.9 million as of 31 March 2018. The modernization
and expansion of Maithan Ispat Ltd are in progress. A rolling mill for producing TMT bars
of 200 kilotons per year capacity is being set up. Work on setting up an Electric Arc
Furnace of 50-ton capacity has also been started, which would produce 400 kilotons of
steel.
Corporate Social Responsibility
As a responsible corporate, your company remains committed to the welfare of the
communities in the area where it operates. Under Corporate Social Responsibility
Initiative, the company has taken up works in Barbil and Kalinga Nagar areas for improving
existing infrastructure, promoting health and education, women empowerment, and sports.
Your company is at the forefront of animal welfare activities also. During the year
2017-18 about Rs27.70 Million were spent on various CSR initiatives.
For Mideast Integrated Steels Limited
Rita Singh
Chairperson Cum Managing Director