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Gujarat Sidhee Cement Ltd

BSE: 518029 | NSE: GSCLCEMENT ISIN: INE542A01039
Market Cap: [Rs.Cr.] 215.82 Face Value: [Rs.] 10
Industry: Cement - North India

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Management Discussions

Industry structure and Development

The Indian Cement Industry with an installed capacity of around 360 million tonnes hasregistered a cumulative growth in production at around 6 percent during the period April2014 to March 2015 as against around 3 percent during the corresponding period of lastyear. The cumulative growth for the eight core industries, which comprise nearly 38percent of the weight of items in the IIP (coal, crude oil, natural gas, refineryproducts, fertilisers, steel, cement & electricity) is 3.5 percent during the periodApril 2014 to March 2015 as against 2.6 percent during the corresponding period of lastyear. The surplus capacity available in the states of Gujarat & Rajasthan and thelower export volumes due to unrenumerative prices are the two major factors affecting thesustained profitability of cement companies in the state of Gujarat. The entry of newmanufactures and consolidation of existing players is resulting in high price volatilityand variations in prices are experienced very frequently in different regions anddifferent periods of time.

Future Outlook

With the stable political scenario and the Government’s determination to bring inreforms, gradual increase in economic activity is expected with major infrastructureprojects. Cement and construction materials are critical for the housing need of thepopulation and for the basic infrastructure like roads, bridges, schools, hospitals,airports and many other facilities. The medium term to long term future of the cementindustry is optimistic and positive. However, due to addition of new plants with largecapacities, the capacity utilization is likely to be on the lower side and old plants withlessefficientprocess and machinery is likely to experience fierce competition in themarket places. In the state of Gujarat, there is likely to be a large surplus of capacityover demand for the near future, which may affect the stability of cement prices. A largepart of production therefore will need to be exported or transported to longer distances,in other states like Maharashtra, Karnataka and Kerala.

Opportunities & Threats

The cement consumption growth in the state of Gujarat is likely to be maintained and isexpected to give ample opportunities for growth in the cement industry.

With the government policy of deregulating the sale of diesel oil is likely to affectthe cost of delivery, though it is favorable as of now due to the fall in internationalprice of crude. The rail freight continued to be high and the transportation by rail byusing the nearest rail siding is unviable. The infrastructural constraints and high costof handling of cement at public ports continue to pose threats to the sustainability andstability of the industry in Gujarat.

The environment regulations are already amended, where the emission levels aredrastically reduced in line with the norms achieved in the equipments with latesttechnology and design. This calls for substantial additional investments in a short spanof time to upgrade the pollution control equipments with that of latest design andtechnology.

The Government has passed the Mines and Minerals (Development and Regulation)Ordinance, 2015 that has amended certain provisions of Mines and Mineral (Development andRegulation) Act, 1957. The amended act stipulates auction as the basis for allotment ofmineral concessions and is silent on the status of the applications, which are pending forvarious approvals.

Although, Gujarat state is likely to continue to be surplus in cement production, thecompany can access coastal markets economically being close to the sea.

Segment review and analysis

During the year, the company has produced and sold mainly cement of different varietieslike Ordinary Portland Cement (OPC) and Portland Pozzolana Cement (PPC). The company alsosold clinker, which is intermediate product for the manufacture of cement. The bulk of therevenue and profitability comes from the sale of cement.

Risks and Concerns

Over capacity of cement versus the demand is resulting in very volatile marketconditions and profitability of cement business. The escalation of input costs, highercost of power, restrictions imposed in buying power from energy exchange under OpenAccess, cost of delivery and the high rates of government levies (royalty of limestone,excise, sales tax, octroi, local body tax and other miscellaneous levies) continue to be amajor concern for our company.

The delay in getting the required mining lease for the additional mining areas is agreat concern as the availability of good quality limestone has substantially reduced inthe existing limestone mines.

Absence of railway siding and a port near the factory results in increase in cost oftransportation to farther markets of Gujarat as well as the markets outside Gujarat. Thecompany proposes to set up a captive jetty to mitigate the risk.

Internal Control systems and their adequacy

Your Company has adequate systems of internal controls commensurate with the size andnature of its operations. The internal audit team continuously monitors the effectives ofinternal control systems. The Management periodically reviews the Reports of the InternalAuditor highlighting suggested improvements, cost control measures and need of policymodification and assuring its adherence. The Audit Committee reviews the financialresults, adequacy of disclosures and adherence of accounting principles. The correctivesteps and suggestions of the Audit Committee are implemented and the Internal Auditorreviews the same and reports of any deviations and other recommendations to formulatemanagement policies, risk management procedures.

Human resource Development / Industrial relations

Your Company recognizes people as the primary source of its competitiveness andcontinues to focus on people development by leveraging technology and developing acontinuously learning human resource base to unleash their potential and fulfill theiraspirations.

The business environment is rapidly changing, bringing in its own set of opportunitiesand challenges. The shifting environments of the businesses demand the need to prepare ourcurrent and future leaders to face and overcome such business adversities andopportunities.

In view of people development as a key focus, it continues to take new initiatives tofurther align its HR policies to meet the growing needs of its business.

We have embarked upon employee engagement as a tool to create conducive workingenvironment that will facilitate employee commitment.

The Industrial relations at the plant were cordial.

The Management places on record the contribution of employees at all levels during theyear and their whole-hearted co-operation, which has resulted in improved results.

Corporate social responsibility (Csr)

Health Care

GSCL plant has a health care center providing medical aid to the Company’semployees and the family members, workers as well as patients from the near by areas. TheCompany conducts various Immunization programmes, family welfare education, health care,safety as well as various periodical health check up and first aid training programmes foremployees and workers.


The Company’s plant has a full-fledged secondary school for the children of theemployees and local people staying in nearby areas. In order to enable the childrenstudying in English medium schools or Colleges in Veraval and nearby areas, the Companyprovides school bus facility.


The Company is committed to the protection of environment and maintenance of biodiversity. A green belt has been developed in the plant and nearby areas. Many saplingswere planted at various places in the plant and mines area. The plant has also carried outrain water harvesting and this has increased ground water resources besides providinggreenery.

Other Csr activities

During the year under review, your company has also contributed towards the followingCSR Activities: i. Road maintenance in and around the plant vicinity area. ii. Sportsitems being donated to Morasa Village. iii. Employment and skill development of variouspersons in and around Sidheegram.

Cautionary statement

Statements in this report on Management’s Discussion and Analysis describing theCompany’s objectives, projections, estimates, expectations or predictions may beforward looking statements within the meaning of applicable security laws and regulations.The Statements are based on certain assumptions and expectation of future events. Actualresults could however differ from those expressed or implied. Important factors that couldmake a difference to the Company’s operations include global and domestic demandsupply position, raw material, fuel, transport cost and availability, changes inGovernment regulations and tax structure, economic development in India.

The Company assumes no responsibility in respect of forward-looking statements, whichmay be amended or modified in future on the basis of subsequent developments, informationor events.

On behalf of the Board of Directors
M. S. Gilotra Jay mehta
Managing Director Executive Vice Chairman
Place: Mumbai
Dated: 15.5.2015


Futures & Options Quote
Future Data Not present
Key Information

Key Executives:

M N Mehta , Chairman

Jay M Mehta , Executive Vice Chairman

Sanat M Mehta , Nominee

M S Gilotra , Managing Director

Company Head Office / Quarters:

Off Veraval-Kodinar Highway,
Phone : Gujarat-91-2876-308200 / Gujarat-
Fax : Gujarat-91-2876-286540 / Gujarat-
E-mail : sidhee-mum@mehtagroup.com
Web : http://www.mehtagroup.com


Fund Holding
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