Barak Valley Cements Ltd Management Discussions

WORLD ECONOMY

The International Monetary Fund projects global economy growth at a moderate 2.8% to 3% in 2025 and 2026. The prevailing and emerging uncertainties in the global economy, particularly around trade and fiscal policies, are posing significant risks to the global economic outlook. The trade restrictions and geopolitical tensions could pose as headwinds. To counter these and to foster sustainable growth, nations are focusing on implementing structural reforms and strengthening bilateral and multilateral cooperation. Within this scenario, Indias economy is expected to maintain a healthy trajectory with a projected GDP growth rate of around 6.3%, continuing to be the fastest-growing major economy in the world. This optimistic outlook is driven by robust domestic demand, with sustained private consumption and governments programme for infrastructure development being key drivers. Sectors such as construction, trade, and financial services are expected to perform well, supporting overall economic activity.

INDIAN ECONOMY

Overall, Indias economic outlook is positive, with strong growth prospects supported by robust domestic demand, manageable inflation,and strategic policy measures. However, external risks such as global trade tensions and geopolitical uncertainties will need to be navigated carefully to sustain this growth momentum.

Indian Cement Overview:

The Indian cement industry, a good indicator of national economic trajectory, achieved a decadal high in organic capacity addition during FY25, with nearly 30 million tonnes of new capacity bringing Indias total installed capacity to 655 million tonnes as of 31st March, 2025. This is against an average of 25 to 30 million tonnes of annual capacity addition over the last decade. An additional 90 to 100 million tonnes are expected to be added over the next two years. Cement demand has reached approximately 435 million tonnes.

Continued government focus on infrastructure development, affordable housing, and urbanisation is expected to bolster the demand further. The Union Budget 2025–26, core to the vision of Viksit Bharat@2047, allocates Rs11.21 Lacs crore for the infrastructure sector, providing further tailwind to demand for cement. The outlook for 2025–26 is therefore optimistic, with the cement industry expected to grow by around 8%.

Overall, the Indian cement industry is poised for significant growth in 2026, supported by strategic growth initiatives, government policies, and a focus on sustainability. The sectors ability to navigate challenges and capitalise on opportunities will be crucial for its continued success.

It is against this backdrop, that we share your Companys performance during FY 2024–25.

Cement firms are expected to benefit from structural cost reductions as they transition toward sustainable practices. Initiatives such as renewable energy adoption, waste heat recovery systems, and alternative fuel usage will lead to cost savings, enhancing margins over the next two to three years. Additionally, logistical efficiencies, bolstered by higher rail penetration and increasing Electric Vehicle

("EV") and Compressed Natural Gas ("CNG") usage, will further reduce costs.

Fiscal Policy and Economic Development

The Survey highlights that, despite global uncertainty, India has displayed steady economic growth. Indias real GDP growth of 6.4 per cent in FY25 remains close to the decadal average.

From an aggregate demand perspective, private final consumption expenditure at constant prices is estimated to grow by 7.3 per cent, driven by a rebound in rural demand.

On the supply side, the real gross value added (GVA) is estimated to grow by 6.4 per cent.

International Comparisons and Global Position

Indias economic development is evident in its improved global rankings and robust foreign exchange reserves, reflecting financial stability and competitiveness. Indices such as the Ease of Doing Business and the Global Innovation Index highlight Indias growing stature on the world stage.

Achieved Poverty Reduction:

In one of the most remarkable achievements of the past decade, India has lifted 171 million people out of extreme poverty. The World

Bank acknowledges Indias decisive fight against poverty in its Spring 2025 Poverty and Equity Brief. According to the report, the proportion of people living on less than 2.15 US dollars a day, which is the international benchmark for extreme poverty, fell sharply from 16.2 percent in 2011-12 to just 2.3 percent in 2022-23.

Additionally, initiatives like the Made in India campaign aimed to promote manufacturing and attract foreign investment, contributing to industrial growth and job creation. The governments focus on infrastructure development through schemes like the Bharatmala Project and Sagarmala Project helped enhance connectivity and logistics, further facilitating economic growth.

Y-o-Y Growth of Indian Economy

The Indian GDP expanded 7.4% from the previous year in the March quarter of 2025, accelerating from the upwardly revised 6.4% growth in the earlier period and sharply above market expectations of a 6.7% rise, marking the sharpest growth rate of the fiscal year.

The recovery pointed to traction in Indian economic growth after a period of softening, as lower food and energy prices improved eased benchmark interest rates and spurred investment, while Indias low dependence on exports made it robust to global tariff threats. Gross fixed capital formation surged by 9.4% in the period, the most in nearly two years, and private consumption expanded by 6%. In the meantime, the net foreign demand had a positive impact in the GDP growth, with exports rising by 3.9%, while imports slumped by 12.7%. Regarding the full fiscal year of 2025, the Indian GDP expanded by 6.5%, the least in four years.

CEMENT INDUSTRY OF NORTH EAST REGION

The cement industry in India is experiencing robust demand growth, fueled by several key factors that collectively contribute to its upward trajectory including rural housing, urban housing and infrastructure development. Indias long-term growth story, supported by continuous infrastructure development, a revival in the real estate sector, and expected industrial capital expenditures, has led to significant capacity expansion plans in the cement industry. By mid-FY26, the industry is expected to add 90 MTPA of cement capacity.

Opportunities and Threats, Risks and Concerns

Overall despite the challenges being faced, the cement industry is here to grow with the growth story of the nation remaining intact . With the rise of income of the middle class, launch of various housing schemes by the government, easier home loans availability & infrastructure push by the government, the sun looks brighter for the industry & just like any other industry, the cement industry is also reinventing & innovating itself with newer technologies & processes to ride alongside the positive outlook of the nation.

(Source: https://www.insightssuccess.in/cement-manufacturing-opportunities-challenges/)

Risk Management

We face both internal and external uncertainties that influence the formulation of our Risk Management Policy. Stringent compliance systems are effectivein handling internal risks, while external risks are contingent on several uncontrollable factors. A robust risk management approach enables the anticipation and proactive mitigation of emerging risks. Our dedicated Risk Management Committee actively evaluates the day-to-day risks faced by the Company and ensures timely mitigation measures are implemented.

I. OUTLOOK

We generate value by expanding our capacity, embracing technological innovation, and adopting sustainable manufacturing practices. Our strategically located plants across south, central, and eastern India help optimize costs and facilitate our expansion into new geographies. Our resolve to increasing the share of green cement in our portfolio is indicative of our dedication to minimizing our environmental impact through technological advancements. The unwavering trust demonstrated by our stakeholders has established us as a preferred brand among customers, suppliers, contractors, and the communities in which we operate. This trust is a catalyst for our sustainable growth. Looking forward, the Indian cement industry holds substantial potential for sustainable development. SGC is poised to capitalize on these opportunities by focusing on capacity building, maintaining an emphasis on quality and innovation, and aspiring to secure a larger market share in north India while retaining our current leadership position. We are strongly optimistic about a future in which we strategically leverage the growing demand for cement in southern, eastern and central India.

II. FINANCIAL PERFORMANCE

The following are the highlights of the performance of the Company (Standalone):

Particulars	2024-25	2023-24
Net Sales	20,699.87	23,214.34
Profit/(Loss) after Tax	807.18	985.92
Net Worth	11,114.20	10,314.66
Borrowings(Long Term)	1,091.23	1,789.52
Earnings Per Share	3.64	4.45
Production(MT)	3,09,374	3,46,005
Dispatches(MT)	3,08,878	3,46,746

During the year under report, your Company has earned a profit of Rs. 807.18 Lacs in comparison to net profit of Rs. 985.92 Lacs in the previous year.

SALES & MARKETING

Your Company has a diversified customer base in Mizoram, Manipur, Barak Valley Region and Tripura consisting of potential customers, contractors, builders, institutions, Government Agencies. Your Companys brand "Valley Strong" is a brand of trust and reliance for the people of North East since inception and therefore the entire production of the Company is sold in North East Region. During the year, the Gross Revenue from operations were Rs. 20699.87 Lacs in comparison of previous year Rs. 23,214.34 Lacs. Your Company had also incurred Rs. 358.45 Lacs in the year 2024-25 as compared to Rs. 330.11 Lacs in the year 2023-24 on the Advertisement, Publicity & Sales Promotion expenses.

COSTS

(a) Raw Material (i) Lime Stone:

During the year, the Company has consumed 217541.62 MT of Limestone as compared to 255340.64 MT of Limestone during last year. The Company had incurred Rs. 1144.99 per MT an average acquisition cost of Limestone as compared to Rs. 1076.05 per MT in last year.

(ii) Fly Ash:

During the year, the Company has consumed 79590.81 MT of Fly ash against 89026.89 MT during last year. The average consumption cost per MT of Fly ash has been Rs. 2442.71 per MT in current year as compared to Rs. 2341.60 per MT in the last year. The total cost of fly ash consumed in the year 2024-25 is Rs. 1944.17 lacs as compared to 2023-24 was

Rs. 2084.65 Lacs.

(iii) Gypsum:

During the year 2024-25, the Company has consumed Rs. 1.68 Lacs of Gypsum as compared to Rs. 19.15 Lacs of Gypsum during last year.

(b) Salaries, Wages and Labor Cost

In current year 2024-25, the Company has incurred Rs. 1891.00 Lacs on salaries, wages and labour cost as against Rs. 1708.61 Lacs in 2023-24.

(c) Transportation Cost

The Company has dispatched 308878.45 MT of cement in the Year 2024-25 as compared to 346746.15 MT of cement in the previous financial year. Due to excessive dispatches of Cement on Ex- Works basis, overall transportation cost had decreased to Rs. 600.02 Lacs as compared to Rs. 1364.94 Lacs in the last year.

(d) Financial Costs

During the year the Company had incurred Rs. 555.62 Lacs in Interest & Financial Costs as compared to Rs. 720.02 Lacs in the previous year 2023-24. Financial Cost has come down due to repayment of Secured and Unsecured borrowings during the year.

III. DISCLOSURE OF ACCOUNTING TREATMENT:

The Company adheres to the prescribed Accounting Standards for the purpose of preparation of Financial Statements. The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notifiedunder the Companies

(Indian Accounting Standards) Rules, 2015 under the provisions of the Act and subsequent amendments thereof.

The financial statements are prepared on a going concern basis and are presented in Indian Rupees and all values are rounded off to the nearest lacs except when otherwise indicated. The financial statements have been prepared under the historical cost basis except for certain financial assets and liabilities that have been measured at fair value.

IV. INTERNAL CONTROL SYSTEM & THEIR ADEQUACY

The Board of Directors are satisfied with the adequacy of the internal control system currently in force in all our major areas of operations, supported by SAP software and Compliance Management Systems. The Audit Committee assists the Board of

Directors in monitoring the integrity of the financial statements, reservations, if any, expressed by our auditors including, the financial cost. Our internal controls are adequate and effective.

V. STATEMENT OF KEY FINANCIAL RATIOS

Particulars	March 31, 2025	March 31, 2024	% change in Financial Ratios
Debtor Turnover Ratio	11.79	15.86	(25.66)
Inventory Turnover Ratio	6.57	6.67	(1.50)
Debt Service Coverage Ratio	1.79	1.50	19.33
Current Ratio	1.27	1.14	11.40
Debt Equity Ratio	0.39	0.55	29.09
Operating Profit Margin (%)	8.19%	8.17%	0.24
Net Profit Margin (%)	3.90%	4.25%	(8.24)
Return on Net Worth (%)	7.53%	10.04%	(25.00)

follows: Thereasonsforsignificantchanges(i.e.,change of 25% or More)inabove key financialratiosareas

• Debtor Turnover Ratio

Decline in Turnover and extended payment periods of customer collection led to lower receivable turnover ratio.

• Debt Equity Ratio

Debt Equity Ratio is improved due to substantial repayment of debts during the year.

• Return on Net Worth (%)

Due to decline in profit margins during the year, return on networth has been declined.

VI. 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 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 regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.

For BARAK VALLEY CEMENTS LIMITED

Sd/-	Sd/-
Kamakhya Chamaria	Nishant Garodia
(Vice Chairman & Managing Director)	(Director)
DIN : 00612581	DIN: 00129815
Add: 48/72, West Punjabi Bagh	Add:CF-361, Salt Lake City,Sector 1, Biddhanagar,
Delhi-110026	North 24 Parganas, Kolkatta- 700064

 

Place: New Delhi

Date: 14.08.2025