Economic Overview
The global economy grew at 3.4% in 2022 compared to a growth of 6.2% in 2021 according
to the World Economic Outlook, released by the International Monetary Fund (IMF) in April
2023. This slowdown was primarily due to rising central bank rates as a result of high
inflation, the impact of the Russia-Ukraine conflict, and sluggish economic activity in
China due to a resurgence of Covid-19 pandemic. IMF forecasts the global growth to decline
to 2.8% in 2023 and then rise again to 3.0% in 2024, dipping below the pre-Covid-19
pandemic historical average of 3.8% (for the period 2000-2019). IMF expects global
inflation to decline in 2023 and 2024, from 8.7% in 2022 to 7.0% in 2023 and 4.9% in 2024.
Global headline inflation peaked during the third quarter of 2022, according to IMF. The
lower inflation estimates for 2023 are partly due to decline in international fuel and
non-fuel commodity prices, as well as the cooling effects of monetary policy tightening.
IMF expects the emerging and developing Asia to grow by 5.3% and 5.1% during 2023 and
2024, respectively.
As per the Economic Survey 2022-23 presented by the Finance Minister in January 2023,
the Indian economy is estimated to have grown at 7.0% in 2022-23 (vs. 8.7% in 2021-22).
This growth was mainly led by private consumption and increased Government focus on
infrastructure development. India is now the fifth-largest economy in the world and was
also the fastest growing major economy in the world during 2022-23. Economic growth in
2023-24 is likely to be in the range of 6.0% to 6.8%, as per the Economic Survey 2022-23.
This is in line with IMF forecasts that peg the growth of Indian economy at 6.1% in
2023-24 and 6.8% in 2024-25, led by resilient domestic demand.
In 2022-23, elevated core inflation led the Reserve Bank of India (RBI) to maintain a
tighter stance on the economy. RBI estimates headline inflation to be at 6.8% in 2022-23.
However, RBI expects inflation to moderate in 2023-24 to 5.3%, but remain well above its
4% target.
The Government of Indias budgeted estimate for capital expenditure outlay in 2022-23
increased by 35.4% from around _ 5.5 Lakh Crores in 2021-22 to an estimated _ 7.5 Lakh
Crores for 2022-23. Further, the Union Budget of 2023-24 has allocated a substantial
amount of approximately _ 10 Lakh Crores for the countrys infrastructure development.
This is likely to be a key growth driver for the Indian economy amid the current volatile
macroeconomic conditions.
Industry Overview
Cement
India is the second-largest producer of cement globally with an installed capacity of
577 MTPA. However, cement consumption is significantly lower than other countries on a per
capita consumption basis. This indicates room for substantial growth in the medium-term.
During 2022-23, cement production in India rose by 10.6% to 394 mn tonnes, mainly due
to an increase in demand from the infrastructure and real estate sectors. Care Ratings
Limited expects the demand for cement to rise to 440-450 MT by 2024-25. This is
backed by the Governments growing expenditure on infrastructure development, a surge in
real estate demand, and an increase in private sector capital expenditure. Further, demand
for cement in Central India is likely to be supported by the housing shortage and lower
per capita consumption of cement, when compared to the other regions.
According to India Rating & Research, rural housing accounted for around 39-41% of
the total demand for cement during 2022-23, while urban housing made up 25-27%,
infrastructure comprised 22-23%, and the commercial & industrials sector contributed
10-11%.
During 2022-23, there was a significant rise in input costs, primarily power and fuel.
This rise can be attributed to the significant increase in prices of coal and pet-coke. As
a result, cement manufacturers encountered profitability pressures during this time
period. Any potential increase in cement prices, or reduction in coal and pet-coke costs
from the current levels, could aid cement companies in restoring their EBITDA margins.
Ceramic tiles and Sanitary Ware
India is the second-largest producer of ceramic tiles globally, after China. The
organised sector of the industry constitutes roughly 50%, with the remaining half being
primarily made up of regional players situated at Morbi, Gujarat.
The tiles industry is likely to experience robust growth in the medium-term, mainly
driven by an upsurge in demand from the real estate sector. Various Government policies
and initiatives, such as ‘Pradhan Mantri Awas Yojana and ‘Smart Cities, are
contributing to strong demand in the housing sector. The demand for ceramic tiles is not
just limited to new residential projects, but the increasing application of tiles in
replacement and renovation projects is also driving the market growth. In addition to
this, the rise in disposable incomes for the Indian consumers and their desire for larger
living spaces or second homes and aesthetically pleasing interiors are further helping the
demand for tiles. Further, Indian consumers are becoming increasingly conscious of
hygiene. Demand for products, such as germ-free tiles and hygiene-centric bath-ware is
expected to pick up in the future.
Moreover, the growing preference for functional and feature-rich bathrooms is further
driving the demand for sanitaryware. In recent years, the Indian Government and
private initiatives, aimed at improving living standards and hygienic sanitation have made
significant strides. Bolstered by these initiatives, India is rapidly evolving as a hub
for sanitaryware manufacturing. Numerous domestic and international players are
establishing manufacturing facilities across the country, taking advantage of the
availability of raw materials and low labour costs.
Ready mixed Concrete
The ready mixed concrete industry in India is still in a growing phase. The significant
pick up in pace of infrastructure development by the Government of India and real estate
activities by the private sector is expected to drive demand for ready-mixed concrete in
the near-medium term. According to the Companys management, the Covid-19 pandemic
significantly affected industry volumes in the years 2020-21 and 2021-22. However, the
overall industry volume showed signs of recovery in 2022-23.
Due to a favourable shift in consumer attitudes, the demand for ready-mixed concrete is
anticipated to grow more rapidly than the demand for concrete being mixed at the site. The
use of ready mixed concrete is more convenient compared to traditional methods. Hence, it
is increasingly being utilised in construction activities, thereby replacing conventional
concrete. Not only does ready mixed concrete enhance the quality and strength of
construction but also minimises overall construction time and pollution at construction
sites.
Business Overview
Prism Cement is a prominent player in the Satna cluster in Central India, with an
installed capacity of 5.6 MTPA. Its plant at Satna, Madhya Pradesh caters to the regions
of Central and Eastern Uttar Pradesh, Madhya Pradesh and Bihar. In 2022-23, the
lead distance was around 380 kilometres. Further, during 2022-23, the Cement Division
entered into Supply Agreements with three Grinding Units for procurement of up to 0.82 MT
of cement. The cement will be produced as per Prism Cements quality and other
specifications. This will help Prism Cement improve local availability of its cement in
its strategic markets of Uttar Pradesh and Bihar.
The Company produces Portland Pozzolana Cement (PPC) under four separate brand names:
‘Champion, ‘Champion Plus, ‘Duratech, and ‘Champion All Weather as
well as Ordinary Portland Cement (OPC). The ‘Champion All Weather brand has been
recently launched in the premium category. It helps stop water ingress and makes the
construction moisture & dampness resistant.
2022-23
Performance Overview
Cement & clinker volumes grew by 13.5%, from 5.22 MT in 2021-22 to 5.92 MT in
2022-23
Premium products continued its growth trend and constituted 31% of the total cement
sales volume, compared to 29% during 2021-22
EBITDA per tonne declined from _ 709 in 2021-22 to _ 445 in 2022-23, primarily due to
higher input costs
| Particulars |
2018-19 |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
| Revenue (_ Crores) |
2,773 |
2,584 |
2,586 |
2,408 |
3,030 |
| EBITDA (_ Crores) |
523 |
509 |
560 |
370 |
264 |
| EBITDA Margin (%) |
18.9 |
19.7 |
21.7 |
15.4 |
8.7 |
| EBITDA/MT (_) |
834 |
889 |
962 |
709 |
445 |
H. & R. Johnson (India) (‘HRJ) has a rich legacy spanning 65 years.
Currently, it is one of the leading providers of lifestyle solutions for tiles and
bathroom products in India. HRJ Division has a strong distribution presence across the
country. It offers a wide range of products, including tiles, bathroom fixtures mainly
sanitaryware and faucets, and engineered marble and quartz. HRJ has 10 tile manufacturing
plants (including joint ventures) with a total production capacity of 61 mn m2.
These plants are located throughout India. Further, it operates two faucet manufacturing
plants with a total capacity of 3.6 mn pieces.
HRJ is well-known for offering high-quality, design-oriented wall and floor tiles. It
has an extensive distribution network comprising approximately 1,300 dealers and 20 large-format
Experience Centres. HRJ has made several product innovations and developments in recent
years to further enhance its product range.
During the year, the Company set up a new manufacturing facility for Industrial
Products & Natural Resources (‘IPNR) products at Dewas, Madhya Pradesh. The
facility was set up on existing land available at the Companys tile manufacturing
facility. Some of the key IPNR products/innovations that are manufactured at Dewas include
ceramic stains, ceramic filter disc, ceramic membrane and antimicrobial compounds, among
others. In parallel, the Company scaled down its existing manufacturing capacity for IPNR
products at Pen, Maharashtra. In addition to the above, the Company also has a small
capacity for some of the IPNR products at its tile manufacturing plant at Karaikal,
Puducherry.
During 2022-23, Small Johnson Floor Tiles Private Limited, a joint venture of the
Company, closed its ceramic tiles manufacturing capacity of 3.9 mn m2 per annum
as it became economically unviable. This did not have any adverse impact on the sales of
HRJ. The Company catered to the demand for ceramic tiles from its other plants and
outsourcing arrangements. In February 2023, another joint venture of the Company, Sanskar
Ceramics Private Limited, installed a new kiln and increased its tile production capacity
by 1.2 mn m2.
2022-23
Performance Overview
HRJ revenue grew by 8.0% from _ 2,221 Crores in 2021-22 to _ 2,399 Crores in 2022-23
Tiles sales volume grew by 5.2% YoY from 53.1 mn m2 in 2021-22 to 55.8 mn m2
in 2022-23
Domestic tiles sales volume grew by 11.3%, while exports volume declined by 45.3% due
to high sea freight cost and non-availability of containers
EBITDA margin declined by 330 basis points, from 10.6% in 2021-22 to 7.3% in 2022-23,
mainly due to sharp increase in gas prices
Revenue from sanitaryware & bath fittings grew by 14.4% in 2022-23 to _ 282 Crores
| Particulars |
2018-19 |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
| Tiles Sales Volume (mn m2) |
47.1 |
44.8 |
48.6 |
53.1 |
55.8 |
| Revenue (_ Crores) |
1,827 |
1,823 |
1,833 |
2,221 |
2,399 |
| EBITDA (_ Crores) |
60 |
70 |
159 |
235 |
176 |
| Margin (%) |
3.3 |
3.8 |
8.7 |
10.6 |
7.3% |
Prism RMC has a nationwide presence and ranks in the top three RMC players in India in
volume terms. RMC operates a total of 91 plants across 44 cities/towns, along with three
large quarries and crushers for manufacturing aggregates. Prism RMC has a focus on
innovative products, technology-driven production processes, and quality systems, along
with a large fleet of transit mixers and pumps. This approach positions the Company well
to meet the growing demand for ready mixed concrete in the country. To ensure strict
quality control, Prism RMC operates three technical labs that are certified by the
National Accreditation Board for Testing and Calibration Laboratories (NABL).
2022-23
Performance Overview
Prism RMCs revenue grew by 17.0% YoY from _ 1,197 Crores in 2021-22 to _ 1,401 Crores
in 2022-23
RMC volumes grew by 18.5% YoY to 3.8 mn m3
EBITDA declined from _ 9 Crores in 2021-22 to _ 5 Crores in 2022-23 due to rise in
input costs
| Particulars |
2018-19 |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
| Revenue (_ Crores) |
1,481 |
1,414 |
908 |
1,197 |
1,401 |
| EBITDA (_ Crores) |
39 |
23 |
(18) |
9 |
5 |
| Margin (%) |
2.6 |
1.6 |
(2.0) |
0.7 |
0.4 |
Raheja QBE General Insurance Company Limited (‘RQBE) is a joint venture between
the Company and QBE Insurance, Australias second-largest global insurer. RQBE specialises
in providing a range of general insurance products, including health insurance, motor
insurance, home insurance, and office insurance.
In May 2022, the Companys share sale and purchase agreement with Paytm Insuretech
Private Limited to divest its entire holding in RQBE terminated automatically. This
happened because the share sale and purchase transaction did not consummate within the
time period envisaged by the parties. The Company continues to evaluate the future
prospects of its investment in RQBE and will provide necessary updates in accordance with
applicable law.
2022-23
Performance Overview
Gross written premium grew by 1% to _ 396 Crores
Net loss after tax of _ 91 Crores during 2022-23 vs. net loss of _ 96 Crores during
2021-22
Well-capitalised with a solvency ratio of 2.03x, as against the regulatory requirement
of at least 1.5x
AUM stood at _ 850 Crores as of March 31, 2023
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