Kalyani Steels Ltd, is a part of the over $3.0 billion Kalyani Group. Founded in the year 1973, Kalyani Steels is a foremost producer of forging and engineering quality carbon & alloy steels using the blast furnace route. Over the years, the company has been constantly raising its knowledge and infrastructure. Their facilities are at equivalence with any refined steel manufacturers of the world. Although the forging industry in India is the primary market for the company’s products, manufacturers of various components for commercial vehicles, two-wheelers, diesel engines, bearings, tractors, turbines and railways also form a considerable part of the company’s customers.
Steel Industry in India
• India was the world’s second-largest steel producer in the year 2019. India surpassed Japan to become the world’s second-largest steel producer in 2019, with crude steel production of 111.2 million tonnes (approximately).
• In FY20, crude steel production and finished steel production in India was 108.5 MT and 101.03 MT (approximately), respectively.
• Between April 2020 and February 2021, India’s cumulative production of finished steel stood at 85.60 MT while the cumulative production of crude steel stood at 92.78 MT (approximately).
• In India, as per Indian Steel Association, steel demand is estimated to grow 7% (approximately) in FY 20-21. The per capita consumption of steel in the country has increased from 57.6 kgs to 74.1 kgs during the last five years. (approximately).
• Government has taken various steps to boost the sector including the introduction of National Steel Policy 2017 and allowing 100% Foreign Direct Investment in the steel sector under the automatic route.
• The National Steel Policy 2017 aims to increase the per capita steel consumption to 160 kgs by 2030-31.
• Under the Union Budget 2020-21, the government allocated ` 39.25 crore (approximately) to the Ministry of Steel.
• On demand side, rating agency “India Rating” has modified outlook of steel industry in the country from negative to stable. For FY 2021-22, the agency expects the volumes to improve year on year basis with price volatility for certain months.
Company Perspective and Review
• An ISO 9001-2000 ISO 14001 & TS 16949:2002 certified company; Kalyani Steel Ltd is fully integrated having its own mines and captive coke plant making itself self-reliant in steel manufacturing.
• The Company has performed exceedingly well even in a challenging last year 2020 – 2021 and earned an increased profit YOY. It has also done well in the first half of the current financial year and showed good numbers in the second quarter and is in line to book good profits this year too.
• The company is almost a debt free company and has a continually improving EBIDTA margin.
• For the year ending March 2021 Kalyani Steels has declared an equity dividend of 150.00% amounting to ` 7.5 per share. .
• The Company is in continuous hunt of creating more value for all its stakeholders. The Company’s various efficient teams have taken some noteworthy initiatives to not only strengthen its profitability in near future but also gain medium to long-term competitive advantage over its peers.
• Company Performance: Revenue from Operations - ` 11,880 Million and Profit before Taxation - ` 2,550 Million during the FY 20 - 21.
• Healthy financials, growing market segment and good future prospect make the Company’s stock a good buy.