Ratnamani Metals & Tubes Ltd

DEAR SHAEHOLDRES,

It's a happy time to connect with you. Once again, we scaled new heights as we clocked a record-breaking performance for a second year in succession. Moreover, we have strengthened our growth levers appreciably, which should help us sustain our performance and remain committed to creating stakeholder value.

"In last few years, we had excellent business momentum and are well-positioned in the marketplace. With our differentiated capabilities, our large investments and our disciplined business management, I am confident that we will continue to increase our market share and deliver value for all our stakeholders."

Business performance

Our topline and bottomline were at historic highs crossing C4,400 crore and C500 crore, respectively. Moreover, our operating margins improved by about 126 bps despite the elevated and persisting inflationary headwinds. Our overall growth was particularly encouraging.

Stable steel prices for a large part of the financial year resulted in a revival of stalled projects leading to robust demand from all sectors, especially from refineries, process industries and the core sector. Also, there was considerable traction for Carbon Steel and Stainless Steel products from across the globe.

The kind of growth we registered, we feel, was quite exceptional. Because it was the outcome of multiple factors - projects kickstarted, demand resurfaced, and new capacity came in simultaneously, which allowed us to capitalise on growth opportunities seamlessly. The perfect culmination of the right positive forces at the right time is quite a rarity in general and in these days in particular.

As our operations increased, we enjoyed the advantage of economies of scale.

Moreover, our sales mix tilted in favour of value-added products. Case in point: in carbon steel, major orders were related to the oil and gas sector, where margins are typically better. Everything worked in favour of better margins.

We have continued with our strategy to invest in more specialised products and improve efficiencies, focusing on technology and infrastructure. Our well-calculated and judicious capital allocation in capex and all investments have resulted in a solid Balance Sheet and would help us leap to the next level.

Landmark for the year

In the Financial Year 2021-22, we had received largest ever order of C700 crores and this year, we raised our benchmark and received our single largest ever order worth C801 crores for supplying Carbon Steel Coated Pipes from one of the biggest EPC Contractor for their order from Public Health Engineering Department, Jodhpur, Rajasthan.

To cater to this order, we have established a pipe mill at Kheerva, Phalodi. These pipes will be deployed to supply water in Jodhpur and nearby villages across the region under Rajiv Gandhi Lift Canal (Phase III) Project.

Capex plans

At the start of FY23, we announced a capex of around C180 crore for increasing our stainless steel cold finishing capacities. Further, intending to solidify our presence in the Eastern part of the country, we announced a capex of roughly C150 crore for a carbon steel pipe manufacturing facility in the eastern part of the country.

After some initial delay due to our Rajasthan facility (which was the need of the hour), both projects are progressing well. We expect the stainless-steel expansion of cold finishing to commence operation in the early months of Calendar 2024. For the carbon steel project, land acquisition and development are well underway. We hope to commercialise this project in the first half of FY25. The new capacities should help us shore up volumes and our performance beginning FY25.

Acquisition

We entered into a definitive agreement to acquire a majority stake in Ravi Technoforge Private Limited (RTL), a Rajkot-based company. We completed the first tranche of acquiring 53% of the shares at an investment of close to C100 crore as per the terms of the agreement. This transaction, we are confident, will add a new growth driver both domestically and globally. We are well positioned to leverage our managerial, technical and financial capabilities to scale its operations, making it more sustainable and creating long-term value for the shareholders.

Environment Stewardship

FY23 has been significantly eventful at Ratnamani as we took a decisive step towards reducing our carbon footprint. We successfully commissioned our 15MW solar project in March 2023 with an investment of approx. C50 Crores. I feel this is an important initiative to showcase our continued and long term orientation towards ESG and sustainability. We have been investing in Green Energy since 2011, and remain deeply committed to investing in sustainability strategies in the coming years also.

Looking into FY24

We have entered FY24 on a very positive note with a confirmed order book of approx. C2,600 crore. Barring unforeseen challenges, we expect the topline to grow in the range of approx. 10% and EBIDTA in line with our past track record.

The demand seems to be good for stainless steel seamless and welded products across industries and carbon steel pipes for certain specific applications. I am very optimistic about good demand potential from the water sector because a lot is happening there.

Exports also appear buoyant, because an increasing number of customers in the international market is accepting our products.

In last few years, we had excellent business momentum and are well-positioned in the marketplace. With our differentiated capabilities, our large investments and our disciplined business management, I am confident that we will continue to increase our market share and deliver value for all our stakeholders.

Medium-term prospects

The medium term prospects are considerably promising too. India is ardent about creating world-class infrastructure, reflected in the massive Budgetary allocation towards the sector for three consecutive years. In addition to accelerating economic progress, Government capex promises to create exciting growth opportunities for our Company over the coming years. Aligned with this reality, we are working on several strategies that are currently on the drawing board and should get crystalized in the current year.

Acknowledgment

We will work very deliberately to ensure that we continually shape the Company, strategically choosing growth opportunities and the geographies in which we build our presence to achieve the optimal con_guration for success.

In closing, I am grateful to the Board for guiding me to execute my responsibilities in the best possible manner. I thank all the team members for their relentless efforts in strengthening Ratnamani with each passing year. I would also like to thank all our stakeholders for the support and assistance provided throughout our journey. I solicit your continued cooperation.