whirlpool of india ltd Management discussions

Performance Overview

The Companys Business-wise performance during the year is shown below:

Rs/ Crores

S.No. Particulars	31st March, 2022	31st March, 2021
1 EBIDTA	586.80	496.74
2 Finance Cost including interest	481.70	245.81
3 Cash Profit (1-2)	105.10	250.93
4 Depreciation	90.73	96.21
5 Profit Before Tax (3-4)	14.37	154.72
6 Tax Expenses Credit – Net	9.87	307.05
7 Profit for the year (before exceptional item) (5+6)	24.24	461.77
8 Exceptional Item	(154.25)	(294.83)
9 Total Profit / (Loss) for the year (7-8)	(130.01)	166.94

Business

Cement Industry Overview

India ranks as the worlds second largest cement producer and consumer. The top 20 cement groups accounted for almost 70% of the total production in the country. The demand, Cement Industry is likely to achieve 550-600 million tonnes per annum constantly by 2025 on the back of expanding housing, commercial construction and Industrial construction.

Risks and Concerns

Progress of the industry in India continues to be largely dependent on the development of infrastructure and housing. Infrastructure development is currently dependent on the Government spend, the risk of Government spends on the envisaged projects not getting translated, remains at large.

Demand for housing is correlated to the spend on infrastructure. Inflation may impinge on the disposable income in the hands of the public, this may have its impact on housing demand growth. In the housing sector institutional buyers, including those in the ready mix concrete category, have the ability to decide on prices at which they would affect the procurement thereby seeking to compound an existing oligopolistic situation in the industry.

The cost of energy input prices spiraling up remains a risk, as there is an uptick on in the global economy. Transportation and Logistics cost will directly vary with the movement of the energy input prices.

The path towards CO2 reduction will be an important factor for raising sources of funding.

Progressive depletion of reserves of limestone and other flux minerals required for cement manufacture is a concern. This is a clear signal for the industry to further gear up identification of fresh reserves. Side by side, there is the imminent need to expand production of blended cement and increase mixing of high grade limestone with lower grade limestone for use in clinker production. The Industry has taken strident steps to propagate blended cement, the availability of fly ash or alternate blends in the proximity to the rapidly expanding capacity may prove to be a challenge

Growth Drivers

The Company is focused on rural market penetration on a consistent basis in the last couple of years. This approach resulted in the blended cement sales volume growing in a sustained progression. We have launched a premium blended cement under the brand name "Birla Shakti conQUerete" which is likely to gain traction in the coming years.

The Company sharpened its drive on the brand positioning and producing more in the blended category which in turn will reduce CO2 emission. In the primary markets "Birla Shakti" is perched to be on the top quartile in terms of price. Our brand continues to be a preferred brand amongst the Builders based on quality parameters.

There is a massive outlay of Rs 1,81,000 Crore for the Ministry of Road Transport and Highways roads in the current budget. The "PM Gati Shakti –National Master Plan" launched for multi- modal connectivity will boost the demand for cement in the future. The Pradhan Mantri Awas Yojana with enhanced budgetary allocation is expected to boost the countrys cement Industry.

Companys Cement Business going forward

The Companys Cement Business is well poised to fully cater to the gradually increasing demand for cement in its serviced areas. Birla Shakti, is now an approved brand in several Government projects for supply of cement, including the Military Engineering Services and the Ministry of Defence. The Company will diligently use the multi-modal combination for transportation viz Surface, Rail and Sea to serve and foray into virgin market particularly in the blended cement category to propagate and sell its brand.

Reduction of cost of production and distribution by using Operations Research model is another focus operational area that is engaging attention. The quantum of reduction effected will help boost the Businesss Earnings before Interest, Depreciation, Taxation and other Amortisations ("EBIDTA").

Sale volumes are expected to rise even further as the Business expands its dealer network and escalates marketing efforts through influencers and market makers. Here also, initial results give rise to increased confidence that incremental efforts will be productive. We will continue to give value for money to our esteemed customers.

The focus on adding value and educating the customer of using blended cement have started giving encouraging signals. The clear strategy is to be a niche player in our focused markets, deliver profitable growth, foray into blended cement markets deeper and consolidate the brand presence. Prioritise use of alternate fuels and blends in manufacturing and achieving CO2 reduction thus paving the way for responsible profitable growth.

The company in its over 100 years history has placed accent on being sensitive to Environment and Society at large. The Company provide quality education for children at both our plants in Telegana and Karnataka. Regular sports meet are conducted and sponsores for development of youth, Medical camps ,Blood donation and Pulse polio camps are a regular feature. The company focuses on planting trees and maintains a Deer park adjacent to our Telegana factory to create harmony with nature. The Sedam plant has a rain water harvesting reservoir in the mines which caters to annual water requirement for the colony and plant.

Financial Performance during 2021-22

The "General Review" incorporated in the Directors Report sets out a brief performance resume of the Companys operating businesses.

The following critical ratios have changed beyond the 25% indicative threshold specified in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:

Sl. No. Particulars	2021-22	2020-21	Explanation
i) Debtors Turnover Ratio	11.93	10.84
ii) Inventory Turnover Ratio	29.06	22.25	Revenue growth and efficient inventory operations during the year has led to faster inventory churning and thereby the inventory turnover ratio has been improved.
iii) Interest Coverage Ratio	1.22	2.02	Rise in Finance Cost has led to decline in the Ratio.
iv) Current Ratio	0.86	0.64	Due to growth in Revenue along with increase in production and improved operating efficiencies in the business, cash balance, receivables and inventory balance is increased which has resulted an improvement in the ratio.
v) Operating Profit (%)	15.50%	16.33%	Rise in Cost of production mainly due to increase in Power & Fuel costs.
vi) Debt Equity Ratio	2.81	5.33	Increase in Shareholders Equity post current year shares issue and also reduction in borrowings due to prepayment of debts from the proceeds of Rights issue and internal accrualwhichhasresultedintheimprovementoftheratio.
vii) Net Profit Turnover(%)	(3.67%)	6.91%	Reduction in Net Income (PAT) due to increase in finance cost and recognition of impairment on subsidiary investment inspite of better operating margins.
viii) Return on Equity	(0.27)	0.89	Reduction in Net Income (PAT) due to higher finance cost burden inspite of better operating margins and also first time recognition of deferred tax asset in previous year. All these factors has led to reduction of the ratio in the current year.

Internal Control Systems and their adequacy

This has been covered in the Directors Report.

Material Developments in Human Resources

Human Resources continue to be the cornerstone around which the Company functions. The Company engages with the people who work for it on a proactive basis so as to transform the environment from a "place of work" to a ‘place to work". The Company believes that such approach has assisted it enormously in promoting harmony and a sense of belonging amongst those working for it thereby seeking to enhance their work life balance. The gradual evolution of this perception constitutes, according to the Company, a defining sign of sustained employee commitment to its well being. The number of people employed as on 31st March, 2022 is separately covered under Annexure VII to the Directors Report. Industrial relations remained cordial during the year.

	For and on behalf of the Board
	Manjushree Khaitan
	Chairman
Place: Kolkata	P. Radhakrishnan
Date: 11th April, 2022	Whole-time Director & CEO