andhra cements Management discussions

Industry structure and development:

Indias cement demand remained passive for most of F.Y 2023, particularly on account of low demand from the housing segment. However, there were signs of demand recovery in the last quarter, reflected in double-digit growth riding on higher infrastructure spending and development in Andhra Pradesh. As the economy revives, the countrys cement industry is expected to perform better. The Cement Division is incurring losses due to its inability to operate continuously at optimum levels on account of inadequate working capital and high cost of production which is mainly due to high power consumption and coal when compared to industry norms of similar capacity. Now the management has taken various steps to optimize the production levels and taken necessary measures to reduce the cost of production.

Opportunity and threats:

Our cement plant being strategically located with high quality limestone mines very near to the plant can cater to the neighboring States of Telangana, Tamil Nadu and Karnataka, where the realizations are better. The management is putting its best efforts to revive the industry to normal levels.

Outlook:

The initiatives by the Central Government such as housing for all, smart cities, Swach Bharat campaign, infrastructure spending, concrete road initiatives and an increase in allocation of funds to States are likely to see a positive impact on the Cement Industry.

Infrastructure development is the need of the nation; this along with rising housing provision will accelerate construction activity. Recovery of the global scenario could also provide impetus to economic growth and cement. The State has seen new players and also the existing players expanding capacities due to huge availability of limestone, which is the primary material for cement.

Risks and concerns

The drying up of Government contracts through irrigation, infrastructure and housing programs was major reason for hitting the Industry. However, post the bifurcation of erstwhile Andhra Pradesh and formation of 2 new states will impetus the growth of cement consumption during the year.

Concerns of the Indian Cement Industry are high cost of power and coal, high freight costs, inadequate infrastructure, non-availability of wagons and poor quality of coal and heavy taxes/royalty levies.

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) and Schedule V (B) of SEBI (LODR) Regulations, 2015, the Key Financial Ratios for the year 2022-23 are given below:

Sl. No.	Particulars	31.03.2023	31.03.2022	Formula adopted
1	Debtors Turnover Ratio (Days)	(#)	(#)	365 Days/ (Net Revenue / Average Trade Receivables)
2	Inventory Turnover Ratio (Days)	(#)	(#)	365 Days/ Net Reveue/ Average Inventories)
3	Interest Coverage Ratio	57.41	(0.49)	(Profit before Tax + Interest)/(Interest + Interest Capitalised)
4	Current Ratio	2.39	0.01	Current Assets/(Total Current Liabilities-Security Deposits payable on demand-Current maturities of Long Term Debt)
5	Debt-equity Ratio	1.48	(*)	Total Debt/ Total Equity
6	Operating Profit Margin Ratio	(#)	(#)	EBITDA/Net Revenue
7	Net Profit Margin Ratio	(#)	(#)	Net Profit/Net Revenue
8	Return on Networth	(**)	(**)	Total Comprehensive Income/Average Networth

(#) Since Net Sales Revenue is zero, these ratios cannot be calculated.

(*) Since equity is negative, ratio cannot be calculated.

(**) Since average Networth is negative, ratio cannot be calculated

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

b. Increase in Interest Coverage Ratio is due to reduction in Interest cost and increase profit by way of Exceptional Item as a result of implementation of resolution plan.

c. Current Ratio is increased due to extinguishment of liabilities and infusion of funds on account of implementation of resolution plan.

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 respective demat accounts, after 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 2022-23 on the rolls of the Company is 119 at Cement Division and Central Administrative Office.

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.

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, 2023.