valley iron steel company ltd Management discussions

VALLEY IRON AND STEEL COMPANY LIMITED ANNUAL REPORT 2005-2006 MANAGEMENT DISCUSSION AND ANALYSIS OPERATIONS: In the year 2003, we purchased one of the Units of M/s. Steel Strips Ltd., our Company after implementing a Revival Plan started commercial production on 29.06.2003 and since then, grown step by step, while achieving the targeted Goal for the year 2003-04, 2004-05 and also the Goal fixed for the previous Year. After achieving the targeted Sales for the Year 2004-05 the company has further established its base to achieve its future targets more effectively. All our efforts were put in, in order to establish faith in the buyers. All these efforts of the Company translated into a success story. The Company achieved its Production and Sales Target. It has recorded a growth of 15.05% in production from 32,613 Metric Ton to 37,521 Metric Ton and 44.21% in overall turnover from Rs. 105.43 Crores to Rs.152.04 Crores respectively, for the corresponding period in the last financial year as against the projected Production and Sales targets of 37,500 MT and Rs. 157.72 Crores. The Company earned profit before Tax of Rs. 4.14 Crores during the year ending 2006, as against the projected profit of Rs. 3.66 Crores for the period, which is higher than 90% from the Profit before tax for the corresponding period during the Financial Year 2004-05. VISCO - Moving the value chain: In the current parlance, the Stainless Steel & Alloys Steel Industry is subjected to wide scale technology, institutional and economic changes that bring about a radical reconfiguration of the structural parameters and strategic variables of competition. This change and innovative processes instituted by the Stainless Steel Industry is redefining all the kinds in their value chain. Keeping in pulse with this phenomenon-ranging world wide in the Steel Industry, currently VISCO also is moving up the value chain and also created a niche in the National Market as a preferred manufacturer of Stainless Steel, VISCO has created a very significant & strong presence in domestic market in Engg. Grade Steel Business. NEW PRODUCTS: By far the most exciting step forward by VISCO this year has been the development and fourth coming launch of a wide range of 300 & 400 series products. Industry or Construction any one can pick, without the need of a certification, branded as VISCO. The name VISCO is itself a carefully tested quality. After having earned national respect in over 15 States, the time is ripe to leverage VISCOs credibility and further enhance its presence in Global Market. RESEARCH & DEVELOPMENT: VISCO has a Global vision pertaining to products and quality. The R & D team aims at achieving excellence in high quality products that meet international standards, alternative cost effective synthetic routes, environmental friendly technologies and cost reduction by backward integration. Strict process controls are developed for safe and trouble free process technologies. With its manufacturing unit equipped with latest high precision instruments, VISCO has spared no efforts to raise its quality standards to international levels. All the analytical test procedures and manufacturing procedures are well documented and revision is undertaken as per specified protocol. The quality management system is based on ISO 9000-2000 draft guidelines. The manufacturing facilities, quality systems, technical product information and documentation are more than adequate to meet the regulatory requirements for domestic as well exports to various countries. OUR OPPORTUNITIES: As per capita consumption for Steel Products in India still remains among the lowest in the world. With a GDP growth forecast of 6-7 percent in the coming years, the Indian economy provides several attractive growth opportunities. * In Stainless Steel, VISCO will continue to maintain its position heading towards Leadership and participate in new opportunities. VISCO is pursuing a strategy of enhancing margins through an emphasis on premium grades, market shares through modernization of existing production facilities & new capacity additions and market leadership through new technology development initiatives VISCOs positions in India, coupled with its competitiveness, product quality, logistical capabilities and financial strengths will provide new opportunities in domestic as well as International Markets. We will continue to explore and pursue these new opportunities. * The upstream power sector, where VISCO intents to one of players, would provide tremendous growth opportunities to an already growing VISCO family as well nation economy. VISCO aims at leveraging its position, financial strength and project execution capabilities to effectively participate in utilizing and crating these opportunities. VISCO will invest in Power projects that deliver superior returns, and maximize the profitability of existing Steel operations. * In the downstream Alloy Steel Sector, retail marketing of Alloys/Stainless Steel products presents a significant growth opportunity. ENVIRONMENT: Environment protection is considered as very important organizational objectives. Your Company continues to pursue its policy of constantly upgrading its level of safety preparedness through safety audits and ongoing risk management reviews and training programs. Environment protection being top priority area is addressed well by the Company by investing in effluent and pollution control systems at its plants. Our efforts have been greatly appreciated by Central Pollution Control Board on their visits and your company is considered as one of the best in setting up and maintaining the Effluent Treatment Plant within the state of Himachal Pradesh. PERSONNEL: Your company strongly believes that intellectual capital and people power are the true representation of any organizational success. We are, therefore, endeavoring hard to create and environment that is transparent, flexible and has a robust performance ethic. A razor sharp focus on the growth and development of people is our on going priority. Your Company is in the process of charting out a human resources development policy that integrates people, their skills, and needs of the organization. Empowerment and learning is always encouraged at all levels. Training and Development, restructuring and induction of fresh talent are going to play a key role in ensuring a dynamic and vibrant organization. These initiatives would go a long way in creating cordial industrial relationship and high level of employee commitment to the performance of the company.