INDUSTRY SCENARIO AND OUTLOOK
India is the second largest producer of cement in the world and accounts for more than
8% of the global installed capacity. Being the worlds largest democracy and a developing
economy, the cement sector in India has an essential role for the economic growth and
development of the country. The GDP growth is closely linked to cement consumption and
there continues to be a huge potential for infrastructure development and construction.
The rising demand from the housing sector, including both urban and rural housing is also
a key I driver in cement demand. Moreover, with the impact of : COVID-19 behind us, and
the governments thrust on
Atmanirbhar Bharat and Make-in-lndia initiatives, the expansion of the industrial
sector overall shows a strong potential for the increase in cement demand and consumption
in the medium and long term.
The governments allocations for creation of safe housing, clean drinking water and
sanitation, and significant road connectivity, among other initiatives in the union budget
of FY2023-24 will also lead to increase in the expenditure on infrastructure projects.
Looking to these factors, the growth in cement volumes for the FY2024 is expected to be
around 9% and the total quantity is expected to increase to 440-450 M.MT/yearfor FY2025.
With the expected increase in demand many companies in the sector have announced large
capital expenditure and capacity additions over the next few years and the price of cement
may come under pressure with the commissioning of large new capacity.
During the financial year 2022-23, the performance of the cement sector has been
heavily impacted by steep increase in cost of fuels such as coal, pet coke, and diesel.
The huge cost increase could not be passed to the customer which have depressed the
profitability.
The inability to hike prices have brought further focus for companies to continuously
improve cost efficiency and optimize volume growth. For the FY 2023-24, while the demand
is expected to remain strong, due to the highly competitive nature of the industry, the
price increases are always challenging despite the pressure of higher input costs.
COMPANY PERFORMANCE REVIEW
• FINANCIAL RESULTS (7 in Lakhs)
|
Current Year ended |
Previous Year ended |
|
31st March, 2023 |
31 st March, 2022 |
Net Sales/ Income from operations |
180158.56 |
156605.49 |
Profit before interest. Depreciation and Tax and other Amortisation
fEBIDTAO |
18280.37 |
24582.07 |
Less: Depreciation and Amortisation Expenses |
6947.22 |
6229.83 |
Finance Costs |
6615.99 |
6443.28 |
Profit/ (Loss) before Exceptional Items and Tax |
4717.16 |
11908.96 |
Less: Exceptional Item |
1945.09 |
- |
Profit/ (Loss) before Tax |
2772.07 |
11908.96 |
Less: Tax Expenses (net) |
1059.77 |
4138.41 |
Net Profit for the year |
1712.30 |
7770.55 |
Other Comprehensive Income (net of tax) |
103.87 |
67.35 |
Total Comprehensive Income (aftertax) |
1816.17 |
7837.90 |
After a growth intheFY 2021 -22, in FY 2022-23, your Company has also registered an
increase of 3.28% it volume and was able to achieve a growth n sales value by 15.04% due
to ncreased volume and better realizations in some of its markets.
During the year, power and fuel cost have increased abnormally which has affected the
bottom line. The 11 MW Waste Heat Recovery (WHR) plant has been running at full capacity.
Your Company has also started using alternative fuels like Biomass to reduce its energy
costs.
Your Company has produced 3.46 Million MT of cement as compared to 3.34 Milion MT in
the previous year and registered an increase of 3.59% in volume.
Revenue from Operations increased by 15.04 % from Rs.156605.49 lakhs in the previous
year to Rs.180158.56 lakhs in the current year.
Profit before depreciation and tax decreased by Rs. 6474.41 lakhs from Rs.18138.79
lakhs in the previous year to Rs.11664.38 lakhs in the current year.
Net Profit of the Company decreased by 7 6058.25 lakhs from Rs. 7770.55 lakhs in
previous year to Rs.1712.30 lakhs in the current financial year. The decrease in net
profit is primarily due to steep rise in power and fuel prices.
• Production in MMT
Particulars |
FY2023 |
FY2022 |
Production: |
|
|
Clinker |
2.40 |
240 |
Cementt |
3.46 |
334 |
clinker production was same in comparison to previous year and production of
cementicreasedby 3.59 % in comparison to previous year. • Cement Sales and Dispatch
Volume in MMT
Particulate |
FY2023 |
FY2022 |
Sales Volume |
346 |
3.35 |
Dispatch Volume |
3.46 |
3.35 |
• Power and Coal Consumption
Particulars |
FY2023 |
FY2022 |
Power Consumption (Per MT of Cement) |
71 kwh |
72 kwh |
Coal Consumption (Per MT of Clinter) |
103.97 Kg |
100.29 Kg |
• Power generation In Lakhs kwh |
Particulars |
FY2023 |
FY2022 |
Captive Thermal Power Plant |
1048.22 |
1325.69 |
Wind Turbines |
150.25 |
170.78 |
WHRS |
695.28 |
697.63 |
The overall performance of the Company was satisfactory.
MDF division of the Company has shown strength during the year and we expect to bring
the same in black during the financial year 2023-24
The Company continues to strengthen its production and sales of premium products and
reduce cost in the coming years.
RISKS & MITIGATING STEPS
The key risks areas are periodically reviewed and systemically reviewed by the Senior
Management. The Risk is an expression of uncertainty about events and their possible
outcomes that could have a material impact on the Companys performance and prospects.
Mangalam Cement is committed to ensure a secured business environment with proactive
awareness, appraisal and mitigation measures. The Company has proper enterprise risk
management (ERM) policies in place to identify, manage and mitigate risks and emerge as a
risk-focused organisation.
Economic volatility risk : Macro-economic factors have always formed the fundamental
baseline on which the economys industrial performance and slowdown may impact the
Companys performance. Indias new government is implementing favourable policies and
regulations that have strengthened business sentiments. With increased population, surged
need for housing, moderating inflation, stabilising currency and improved disposable
income, the Company expects the demand for cement to grow sustainably.
Key input risk: Procurement of key raw materials at the right time and right price is
an essential requirement for maintaining the overall cost of production. Any unforeseen
increase may im pact the Companys profitability. The recent volatility and up rise in the
prices of fuel and certain raw materials have been a challenge and Impacted the cost sheet
of the Company. The Company has strategically averted this risk by maintaining sufficient
limestone reserves to meet their captive requirements. It has also formed and maintained
long-term relationships with the suppliers to ensure consistent supply. Besides, the
Company has undertaken various technological initiatives to optimise raw materials usage
and enhance productivity.
Competition risk: Increasing cement players within the industry may impact realisation
on account of stiff competition. To mitigate this risk, the Company has marked its product
quality as its primary strength. Very efficiently, the Company has witnessed higher
realisations per ton of cement on account of this uniqueness. It maintains a judicious mix
of retail and institutional sales as well, which further strengthens its dealer base and
retailer network. The Company also reinforced its marketing and sales team, enabling
increased market penetration, retaining existing clients and acquiring potential
customers, simultaneously.
Regulatory risk: The legal landscape of the country Is ever evolving and vast. Non
compliance of laws and regulations may lead to reputational and financial risk to the
Company. The Company has a robust internal system in place to keep a check on the
compliances and it is made sure that the Company is in compliance with all the applicable
laws and regulations. Regular sensitization and training programmes are held.
Human asset risk: Human resource Is one of the most important assets of any company.
The lack of a judicious employee mix (experienced and new) may hinder the Companys
overall growth. Therefore, to maintain a steady balance, utmost emphasis has been laid
down on retaining experienced personnel and recruiting management trainees to create a
robust team. The Company provides specialised training to its employees and is
consistently building a leadership pipeline. It maintains an attrition level that is much
below industry standards.
Information Technology and Cyber Security risk: Risk under this head primarily includes
loss of data, manipulation of information, cyber attacks such as phising and ransomwares,
unavailability of system. Protection of data and cyber security has become a key concern
for comapnies. The Company uses SAP EPR for its core business activities such as finance;
sales, procurement The Company is constantly and continuously upgrading and strengthening
its IT infrastructure and untakes periodic review of the same for further developing it
with new systems and security features. The Company has proper and adequate mechanism for
data security, authentication, backup and recovery.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Your Companys internal control procedures are adequate to ensure compliance with
various policies, practices and statutes in keeping with the organizations pace of growth
and increasing complexity of operations.
Your Company maintains a system of internal controls designed to provide reasonable
assurance regarding the following:
• Effectiveness and efficiency of operations
• Adequacy of safeguards for assets
• Prevention and detection of frauds and errors
• Accuracy and completeness of the accounting records
• Timely preparation of reliable financial information
The internal controls and governance process are duly reviewed for their adequacy and
effectiveness through periodic audits by independent internal and external auditors. The
Audit Committee is periodically briefed on the corrective and preventive action taken to
mitigate the risks.
HUMAN RESOURCES
Employees are the core strength and backbone of any organization. Your Company has
always prioritized its people and actively takes steps in the personal and professional
development of the people. The Company continues to nurture a blend of experienced and
fresh employees in its talent pool, including highly qualified professionals, both
technical and non-technical. Your Companys human resource management function is
structured to achieve high level engagement of its people which in turn ensures both
higher productivity and happy people and thereby improve the bottom line.
At Mangalam Cement measures for employee safety, training, welfare and development
continue to get top priority at all levels and results are reflected in the improved
quality and efficiency. Companys training programmes and value-based teaching enhances
motivational level among its people. The Companys industrial relations as well as public
relations with all external agencies have been cordial. Your Company had 1084 permanent
employees, as on 31 st March, 2023.
SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS
The key financial ratios as specified under SEBI (Listing Oblications and Disclosure
Requirements) Regulations, 2015 are as follows:
| Ratios |
FY 22-23 |
FY 21-22 |
% Change |
| Interest Coverage Ratio |
1.42 |
2.85 |
-50.18 |
| Debt Equity Ratio |
0.82 |
0.85 |
-3.53 |
| Operating Profit Margin Ratio |
9.07 |
15.70 |
-42.23 |
| Net Profit Margin |
1 |
4.96 |
-79.84 |
| Inventory Turnover Ratio |
7.79 |
7.31 |
6.57 |
| Current Ratio |
0.86 |
1.04 |
17.31 |
| Debtor Turnover Ratio |
48.95 |
41.49 |
17.98 |
Explanation for change in the ratio by more than 25% : Due to decrease in profit for
the year.
| RETURN ON NET WORTH |
|
|
|
|
FY 22-23 |
FY 21-22 |
% Change |
| Return on Net worth |
2.26 |
10.47 |
-78.41 |
The decrease in the return on net worth as on 31 st March, 2023 was due to lesser
profit in current year in comparison of last year.
CAUTIONARY STATEMENT
The statement in this report on Management Discussion and Analysis describing the
Companys objectives, projections, estimates, expectations or predictions may be forward
looking, within the meaning of applicable security law or regulations. These statements
are based on certain assumptions and expectations of future events. Actual results could
however differ materially from those expressed or implied. Important factors that could
make a difference to the Companys operations include global and domestic demand-supply
conditions, finished goods prices, raw materials cost and availability, changes in
Government regulations and tax structure, economic developments and other factors such as
litigation and industrial relations.
The Company assumes no responsibility in respect of forward looking statements herein
which may undergo changes in future on the basis of subsequent developments, information,
or events.
A V Jalan, Chairman, (DIN: 01455782), Place: Kolkata Aruna Makhan, Director, (DIN:
00025727), Place: New Delhi N G Khaitan, Director, (DIN: 00020588), Place: Bangkok Gaurav
Goel, Director, (DIN: 00076111), Place: New Delhi K C Jain, Director, (DIN: 00029985),
Place: Hyderabad Date: May 27,2023
+91-9892691696
