Gujarat Sidhee Cement Ltd

BSE: 518029 | NSE: GUJ.SIDH.CEM | ISIN: INE542A01039 
Market Cap: [Rs.Cr.] 146.41 | Face Value: [Rs.] 10
Industry: Cement - North India

Management Discussions

Industry Structure and Development

The all India cement production during the period April, 2012 to March, 2013 registereda cumulative growth of 5.6 percent as against 6.7 percent during the corresponding periodof last year. The cumulative growth for the eight core industries (coal, crude oil,natural gas, refinery products, fertilisers, steel, cement & electricity) is 2.6percent as against 5 percent in the previous year. The capacity addition during the year2012 is around 35 million tonnes. The surplus capacity available in Gujarat &Rajasthan, coupled with entry of new players in the already fragmented markets result inhigh price volatility and variations in prices in different regions and different periodsof time.

Future Outlook

Though the economic growth is marginally low, the sustained policies on the need ofinfrastructure facilities and the housing needs of the population will enhance theconsumption of cement further in the country. Compared with other core industries, thegrowth of cement industry is better, though it is lower than the previous year. Thelong-term future of the cement industry is optimistic and positive. However, due toaddition of new plants with large capacities, the capacity utilization would continue tobe low. In the state of Gujarat, there is likely to be a large surplus of capacity overdemand for the near future, which may affect the stability of cement prices. A large partof production therefore will need to be exported or transported to longer distances, inother states like Maharashtra, Karnataka and Kerala.

Opportunities & Threats

With the sustained economic growth in Maharashtra and Gujarat, the cement consumptionin these states is likely to continue at a healthy rate and would therefore giveopportunities for growth in the cement industry.

Substantial increase in the prices of diesel and other petroleum products has adverselyaffected the raw material cost and cost of delivery. The diesel prices are increasingalmost on a monthly basis. The fuel surcharge on the power sourced from state grid and theincreased excise duty are additional burden on the industry. The steep increase of railfreight rendered the transportation by rail unviable. The infrastructural constraints andhigh cost of handling of cement at public ports continue to pose threats to thesustainability and stability of the industry in Gujarat.

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 coupled with slow down in the export ofcement is leading to tough market conditions and high levels of volatility in theprofitability of cement business. The cost escalation of inputs likes diesel, fuel, poweretc. and the high rates of government levies (excise, sales tax, octroi, local body taxand other miscellaneous levies) continue to be a major concern for our company. The delayin getting the required mining lease for the additional mining areas is a great concern asthe availability of good quality limestone has substantially reduced in the existinglimestone 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 internal control system and procedures commensurate with thesize of its operation and nature of its business. The independent Internal Auditorscontinuously reviews the adequacy and effectiveness of the Internal Control systems on theon-going operations of the company, which provides reasonable assurance of adequacy andeffectiveness, control, governance and risk management procedures to the Audit Committee.The recommendations of the Internal Auditors and the Audit Committee are followed upeffectively for implementation. Following objectives of the Internal Audit is forming partof the audit plan as approved by the Audit Committee.

> Adherence to the operating system and manual.

> Performance of operating activities in efficient and effective manner.

> Compliance with the risk management procedures.

> Compliance with the legislative and regulatory provisions.

The Audit Committee reviews the audit reports and also hold discussions with theStatutory Auditors.

Human Resource Development / Industrial Relations

Company believes that its Human Resource is the most important resource and continuesto work for its development. The Company continues to invest in upgrading the knowledgeand skills of the employees. The Company is providing growth opportunities to internaltalent by assigning them with higher responsibilities along with suitable exposure.

In view of people development as a key focus, the Company continues to take newinitiatives to further align its HR policies to meet the growing needs of its business.

We have embarked up on 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.

The Company had 443 permanent employees as on 31.3.2013.

Corporate Social Responsibility.

Health Care

GSCL plant has a health care center providing medical aid to the Company's employeesand the family members, workers as well as patients from the nearby areas. The Companyconducts various Immunization programmes, family welfare education, health care, safety aswell as various periodical health check up and first aid training programmes for employeesand 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.

Cautionary Statement

Statements in this report on Management's Discussion and Analysis describing theCompany's objectives, projections, estimates, expectations or predictions may be forwardlooking statements within the meaning of applicable security laws and regulations. TheStatements 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 demand supplyposition, raw material, fuel, transport cost and availability, changes in Governmentregulations 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
Place: Mumbai M. N. Mehta
Dated: May30, 2013 Chairman
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

A B Shah , Nominee

Company Head Office / Quarters:

Off Veraval-Kodinar Highway,
Phone : Gujarat-91-2876-86528/48/31/33/34/36 / Gujarat-
Fax : Gujarat-91-2876-86540 / Gujarat-
E-mail :
Web :


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