Andhra Cements Ltd Management Discussions

India is the second-largest cement manufacturer in the world. The industry is gradually embracing change to bolster decarbonisation efforts and using technological advancements to implement sustainable practices. Indian cement manufacturers are set to invest ~ $ 14.30 billion over the next few years to increase capacity by 25%. This will add 70-75 MT over the next two years and 160-170 MT to the annual cement production by 2030. The expansion will be led by the governments massive infrastructure push, with plans to invest $ 1.70 trillion in infrastructure projects by 2030.

The cement industry faced multiple challenges during FY2025, including slower growth and lower sales. Growth slowed to 4-5%, down from double-digit growth in previous years. This was partly due to elections and a long monsoon season, as well as labour shortages. However, the medium-to long term outlook remains positive, with various industry houses pegging the sector growth at 7-8% per annum, at par with the GDP growth.

The infrastructure segment continues to see strong demand, driven by increased government spending across various infrastructure segments. Housing, which accounts for 55% of cement demand, is expected to grow steadily, supported by rural housing expansion, due to favourable monsoons, moderating inflation and ongoing urban real estate projects. The governments emphasis on affordable housing and investments in mega projects such as highways, railways and industrial development is expected to further sustain cement demand.

Most brokerage reports indicate that pent-up demand, a renewed capex push, and sustained momentum in the housing sector are going to drive up demand. While a brief slowdown is anticipated in FY2025, the sector is poised for robust growth, driven by favourable demand fundamentals and structural industry shifts.

In February 2025, the Reserve Bank of India (RBI) reduced the repo rate, making borrowing more affordable for both individuals and businesses. The lower interest rates are expected to encourage higher spending and investment, stimulating economic activity and supporting overall economic growth. Further, the new tax structure will substantially reduce taxes for the middle class and leave more money in their hands, boosting household consumption, savings and investment, which is expected to work in favour of the cement sector.

Key trends Consolidation:

The Indian cement industry has already witnessed significant consolidation over the past few years, with several large firms acquiring smaller players to enhance their market share. The trend is expected to continue, driven by the need to optimise operations, cut costs and gain better pricing power.

Infrastructure development and urbanisation:

Infrastructure development and urbanisation continue to be significant drivers of the cement industry. Due to urbanisation, the demand for housing, transportation and urban amenities continues to grow, thereby increasing cement consumption.

Sustainability takes centre stage:

Indian cement companies are effectively leveraging three key levers: (a) energy efficiency, (b) clinker substitution and (c) grid decarbonisation to drive sustainable development. Scaling up these efforts would further promote the adoption of innovative products and process enhancements. A holistic approach, supported by a well-defined policy framework that addresses economic viability challenges, will be crucial for facilitating future transitions. Cement is the only sector to have voluntarily devised a Low Carbon Technology Roadmap aimed at reducing its direct CO2 emission intensity by 45% till 2050 from a 2010 baseline. https://www.cmaindia.org/the-indian-cement- industry-greengrowth-initiatives.

Circular economy practices:

The industry is rapidly adopting circular economy practices witnessed in the increasing commitment to reducing waste, reusing materials and recycling by-products such as fly ash, blast furnace slag, silica fume etc. By 2024, a rise in the use of alternative raw materials, particularly industrial by-products, is expected to decrease the industrys reliance on conventional resources.

Digital transformation and Industry 4.0:

The cement industry is undergoing a significant digital transformation, driven by Industry 4.0 principles. Manufacturers are increasingly adopting advanced technologies such as the Internet of Things (IoT), artificial intelligence (AI), and big data analytics to optimise operations, enhance productivity, and reduce costs. These digital tools enable realtime equipment monitoring, predictive maintenance, and improved process efficiency. Additionally, automation and digitalisation are streamlining material tracking, waste management and overall operational performance, paving the way for a more sustainable.

Outlook

We continue to grow at a steady pace through capacity expansion, presence in new markets and implementation of innovative processes that help to inculcate sustainable practices across our operations. Our practices and policies minimise our environmental footprint while strengthening our relationship with all our stakeholders and empower us to carry on business with the highest standards of integrity, ethics and transparency.

Our strategically located plants help to optimise costs and facilitate our expansion into new geographies. Besides, technological innovation has improved our operational efficiency. Looking forward, the Indian cement industry holds substantial potential for sustainable development. Andhra Cements Limited is poised to capitalise on these opportunities and continue to be a preferred brand for customers.

Segment-Wise Performance Together with Discussion on Financial Performance With Respect To Operational Performance:

Segment-wise (only one segment) performance together with discussion on financial performance with respect to operational performance has been dealt with in the Directors Report which should be treated as forming part of this Management Discussion and Analysis.

Internal control systems and their adequacy:

The Company is following a proper and adequate system of internal controls in respect of all its activities including safeguarding and protecting its assets against loss from unauthorized use of disposition.

The internal control systems of the company comprise of statutory audit, cost audit and internal audit. The work of all the audits have been assigned to reputed, external, independent and qualified people.

The Audit Committee comprising of independent directors will review all quarterly, half yearly and annual financial statements.

Key financial ratios

Pursuant to Reg. 34(3) nd Schedule V (B) of SEBI (LODR) Regulations, 2015, the Key Financial Ratios for the year 2024-25 are given below:

Sl. No.	Particulars	31.03.2025	31.03.2024	Formula adopted
1	Debtors Turnover Ratio (Days)	46	26	365 Days/ (Net Revenue/ Average Trade Receivables)
2	Inventory Turnover Ratio (Days)	82	44	365 Days/ Net Revenue/ Average Inventories)
3	Interest Coverage Ratio	(1.33)	(0.52)	(Profit before Tax + Interest)/(Interest + Interest Capitalised)
4	Current Ratio	0.54	1.42	Current Assets/ (Total Current Liabilities - Security Deposits payable on demand - Current maturities of Long Term Debt)
5	Debt-equity Ratio	5.24	2.27	Total Debt/ Total Equity
6	Operating Profit Margin Ratio	(0.08)	(0.02)	EBITDA/Net Revenue
7	Net Profit Margin Ratio	(0.56)	(0.24)	Net Profit/Net Revenue
8	Return on Networth	(0.69)	(0.20)	Total Comprehensive Income/Average Networth

a. EBITDA denotes Profit before Interest+Tax+Depreciation.

b. Due to decrease in the selling price, there is an adverse effect on all the ratios stated above.

Disclosures with respect to demat suspense account/ unclaimed suspense account

The Company has opened a Demat suspense Account for unclaimed shares (51 shares), which were not credited to the respective shareholders demat account at the time of crediting the new equity shares into their demat accounts, post capital reduction. The Company will release these shares, whenever the claims received from the respective shareholders.

Human resources and industrial relations:

The industrial relations at all the plant and offices continue to be cordial during the year under review. The total number of employees at the end of the financial year 2024-25 on the rolls of the Company is 175 at Cement Plant and Administrative Office.

Declaration signed by the chief executive officer stating that the members of board of directors and senior management personnel have affirmed compliance with the code of conduct of board of directors and senior management

As provided under the Schedule V(D) of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Members of the Board and Senior Management Personnel have affirmed compliance with the Companys Code of Conduct for the year ended 31st March, 2025.

Cautionary Statement:

Statements in the Management Discussion and Analysis Report describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include global and domestic supply and demand conditions affecting selling prices of finished goods, input availability and prices, changes in government policies and regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements that speaks only as of their dates.

For and on behalf of the Board

	K.V. VISHNU RAJU
Place: Hyderabad	Chairman
Date: May 28, 2025	(DIN: 00480361)