Barak Valley Cements Ltd Management Discussions.


Amid an improving macro-economic environment, the global economy is witnessing a cyclical recovery, reflecting a rebound in investment, manufacturing and trade. For the first time since 2010, the world economy is outperforming expectations on the back of benign global financing conditions, accommodative policies, rising confidence and firming commodity prices. The global GDP forecast for 2018 and 2019 is 3.9%, up from 3.8% in 2017 and 3.2% in 2016. The global economic growth is broad-based across most advanced and emerging economies, with the Indian economy projected to be the engine of world economic growth, as it is expected to expand at 7.3% and 7.5% in FY 2018-19 and FY 2019-20.

Source: IMFs World Economic Outlook - April 2018

World Bank India Report, March 2018

As the fastest growing economy in the world, India is expected to emerge as one of the top three economic powers of the world over the next 10-15 years, as per the Central Statistics Organisation (CSO) and IMF (International Monetary Fund). Moodys upgradation of Indias sovereign rating after 14 years, from Baa3 (lowest investment grade) to Baa2, also underlines the strength of the countrys economic fundamentals. After a temporary slowdown triggered by the demonetisation and implementation of GST exercise, the economy started showing signs of recovery in the second half of FY 2017-18. The revival in positive sentiment was reflected in the pick-up in industrial production and a decline in retail inflation (as measured by the CPI) after a period of negativity. The last quarter of the fiscal saw India record its fastest growth in seven quarters at 7.7%, to overtake China, which grew at 6.8% in the quarter ended March 2018. The farm, manufacturing and services sectors propelled this growth, which is expected to sustain in the coming year.


India is the second largest producer Of cement in the world. No wonder, Indias cement industry is a vital part of its economy, providing employment to more than a million people, directly or indirectly. Ever since it was deregulated in 1982, the Indian cement industry has attracted huge investments, both from Indian as well as foreign investors.

India has a lot of potential for development in the infrastructure and construction sector and the cement sector is expected to largely benefit from it. Some of the recent major initiatives such as development of 98 smart cities are expected to provide a major boost to the sector.

Expecting such developments in the country and aided by suitable government foreign policies, several foreign players such as Lafarge-Holcim, Heidelberg Cement, and Vicat have invested in the country in the recent past. A significant factor which aids the growth of this sector is the ready availability of the raw materials for making cement, such as limestone and coal.

The housing and real estate sector is the biggest demand driver Of cement, accounting for about 65 per cent of the total consumption in India. The other major consumers Of cement include public infrastructure at 20 per cent and industrial development at 15 per cent.

Indias total cement production capacity is nearly 455 million tonnes, as of 2017-18. Cement consumption is expected to grow by 4.5 per cent in FY19 supported by pick-up in the housing segment and higher infrastructure spending. The industry is currently producing 280 MT for meetings its domestic demand and 5 MT for exports requirement.

The Indian cement industry is dominated by a few companies. The top 20 cement companies account for almost 70 per cent of the total cement production of the country. A total of 210 large cement plants account for a cumulative installed capacity of over 350 million tonnes, with 350 small plants accounting for the rest. Of these 210 large cement plants, 77 are located in the states of Andhra Pradesh, Rajasthan and Tamil Nadu.

In order to help the private sector companies thrive in the industry, the government has been approving their investment schemes. Some such initiatives by the government in the recent past are as follows:

In Budget 2018-19, Government of India announced setting up of an Affordable Housing Fund of Rs 25,000 crore (US$ 3.86 billion) under the National Housing Bank (NHB) which will be utilised for easing credit to homebuyers. The move is expected to boost the demand Of cement from the housing segment

Due to the increasing demand in various sectors such as housing, commercial construction and industrial construction, cement industry is expected to reach 550-600 Million Tonnes Per Annum (MTPA) by the year 2025.

Source: IBEF

Opportunities And Threats, Risks and Concerns

The North Eastern Region of the Country comprising of eight states are very rich in natural resources. Post-independence era and after partition the region became land locked and lost its easy access to ports and rest parts of the country. As a result, it witnessed lack of development in comparison with other states of the country. The Government of India has taken several measures to accelerate growth of the North East Region (NER). Your Company is one among the leading Cement Producing Company in the North-Eastern Region. The North-Eastern Region of India is growing and developing its infrastructure at rapid rate and the abundant resources is the region leads to the cost effective production.

On the infrastructure fonts, long awaited attention has been given for the development. The total budgetary allocation for the NER for the financial year 2018-19 has been set Rs. 47,994.88 crores which is significantly higher of Rs. 7,023.19 crores for the financial year 2017-18. The budget of Development of North Eastern Region (DoNER) Ministry has also been hiked from Rs. 2,737 crores for the financial year 2017- 18 to Rs. 3,060 crores. As a result, certain mega infrastructure projects, roads, bridges, expansion of existing power projects have been undertaken in the region. A total of 20 major railway projects for laying of 13 new rail lines, gauge conversions, laying of double tracks, construction of new stations have been initiated. The budget also provided Rs. 1,014.09 crores under UDAN scheme for construction of new and expansion of present and revival of defunct airports, heliports and advanced landing grounds. Under the Bharatmala Pariyojana, construction of 5301 km of roads have been approved and out of which 3,246 km road for development of Economic Corridor in NER. New 92 routes will be opened under the UDAN Scheme. Educational and medical facilities have improved a lot in the region during last few years. Connectivity within NER States and with rest of India has also improved with initiatives taken towards infrastructure development. This has resulted into improved purchasing power with people at large in the Region.

Cement industry being majorly dependent upon availability of quality coal at affordable cost. Policy of the Government may impact availability of coal. Policies of the Government as well as regulatory role may affect the industry to a great extent. Indias cement sector has high resource risk as limestone, which is an important raw material used in the production Of cement is considered as scarce mineral and extraction of limestone is regulated by various State and Central Laws. Any major changes in Governments Environmental and Forest regulations may affect limestone availability to cement plants. In order to boost the cement sector, the Government of India has allowed FDI in the sector which will attract foreign players in the country and this may lead to tougher competition to the domestic players.

Your Company has evolved a risk management framework to identify, assess and mitigate the key risk factors of the business .The Board of Directors of the Company is kept informed about the risk management of the Company.


Growth in the cement sector is expected to be around 8% in FY 2018-19, which is encouraging vis-a-vis growth over the last few years. The Governments unrelenting thrust on bringing the nations infrastructure up to speed coupled with inclusive growth, is the major push factor for the economy. The outlook on the sector is bright.


The following are the highlights of the performance of the Company on Standalone basis:

Particulars 2017-18 (Rs. in Lakhs) 2016-17 (Rs. in Lakhs)
Revenue from operations 15,178.64 12,416.51
Pro t/(Loss) after Tax 282.91 150.39
Net Worth 8160.17 7877.06
Borrowings(Long Term) 3704.33 3,187.94
Earning Per Share 1.28 0.68
Production(MT) 238681.00 20,6119
Despatches(MT) 239353.00 207817.00

During the year under report, your Company has earned net Profit of Rs. 282.91 Lakhs in comparison to net Profit of Rs. 150.39 Lakhs in the previous year.


Your Company has a diversified customer base in Tripura, Mizoram and Barak Valley Region 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. 15178.64 Lakhs in comparison of previous year Rs. 12416.51 Lakhs. Your Company had also incurred Rs. 140.27 Lakhs in the year 2017-18 as compared to Rs. 119.70 Lakhs in the year 2016-17 on the Advertisement, Publicity & Sales Promotion expenses.


(a) Raw Material

(i) Lime Stone :

During the year, the Company has consumed 208137 of MT of Limestone as compared to 146831 MT of Limestone during last year. The main source of Limestone is from wholly owned subsidiary i.e. Meghalaya Minerals & Mines Ltd. The Company had incurred Rs. 1048 per MT an average acquisition cost of Limestone as compared to Rs. 927/- in last year.

(ii) Fly Ash:

During the year, the Company has consumed 30523 MT of Fly ash against 21144 MT during last year. The average acquisition cost per MT of Fly ash has been Rs. 1005 per MT in current year as compared to Rs. 1029/- per MT in the last year. The total cost of y ash consumed in the year 2017-18 was Rs. 306.64 lakhs as compared to Rs. 217.48 lakhs in 2016-17.

(iii) Gypsum:

Gypsum consumption of the Company in the year 2017-18 was 4.91 MT as compared to 24.32 MT in the year 2016-17. The total cost of gypsum in the year 2017-18 was Rs. 0.27 Lakhs and in the year 2016-17 it came out to be Rs. 1.31 Lakhs.

(b) Salaries, Wages and Labor Cost

In current year 2017-18, the Company has incurred Rs. 968.14 lakhs on salaries, wages and labour cost as against Rs. 776.66 lakhs in 2016-17.

(c) Transportation Cost

The Company has dispatched 239353 MT Of cement in the Year 2017-18 as compared to 207817 MT Of cement in the previous financial year. The overall transportation cost had reduced to Rs. 3009.28 lakhs as compared to Rs. 3056.08 lakhs in the last year.

(d) Financial Costs

During the year the Company had incurred Rs. 929.89 Lakhs in Interest & Financial Costs as compared to Rs. 541.34 Lakhs in the previous year 2016-17.


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 (IndAS) notified under 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 million except when otherwise indicated. The financial statements have been prepared under the historical cost basis except for derivative financial instruments and certain other financial assets and liabilities that have been measured at fair value.


The Company has discussed the performance of following segments:

2017-18 2016-17
Name of Segment Segment Segment Segment Segment
Revenue(Rs. in Lakhs) Profit/Loss(Rs. in Lakhs) Revenue (Rs. in Lakhs) Profit/Loss ( Lakhs)
Cement 15178.64 107.24 12606.50 69.04
Power - (127.90) - (111.38)
Unallocated/Others 771.33 (207.45) 582.49 (230.70)
Total 15949.97 (228.11) 13188.99 (273.04)

During the year, the revenue and Profit from Cement division have increased as compared to the previous year. The losses from Power division has increased by Rs. 16.52 Lakhs.


Your Company has built up a strong and efficient internal control mechanism which is commensurate with the size of its business operations. It has laid down standard operating guidelines and processes which ensure smooth functioning of activities and zero ambiguity in the minds of people who actually execute the operations. Chief Financial Officer and Finance Heads are accountable for financial controls. They are fully responsible for accuracy of books of accounts, preparation of financial statements and reporting in line with the Companys accounting policies. BVCL has deployed a vigorous Internal Controls and Audit Mechanism to facilitate an accurate and fair presentation of its financial results. This process not just ensures adherence to regulatory standards and meets statutory compliance requirements, but also confirms that our reporting is complete, reliable and understandable. In addition, there is a specific impetus on safeguarding investor interests with deployment of the highest levels of governance and regular communication with them.

Further, Internal Audit functions is looked by Internal Audit department which reports to the Audit Committee of the Board. Internal Audit function works independently and evaluates the efficacy and adequacy of internal control system, its compliance with operating system and policies of the company and accounting procedure at all location, i.e. plant, marketing Office & depots. Based on the input of internal audit report, designated process owner takes corrective actions in their respective area thereby strengthening controls and checks. In case any significant observations are noticed same is brought to the knowledge of members of audit committee for corrective actions.


Your Companys human resources is the strong foundation for creating many possibilities for its business. Success of any organization depends upon the engagement and motivation levels of its employees. In Human Resources, our emphasis was to give autonomy to people at different levels and create a sense of ownership in order to unleash their potential. The Human Resources Division has played a significant role in achieving the overall business objectives by creating a common vision, building capability amongst people and more importantly, involve and engage employees in improvement programmes across the functions for achieving higher results.

The Company provides a culture of freedom for the employees where an employee is able to speak his / her mind for the organizational improvements. The Leaders conduct meetings to provide a platform to the team where they can share their concern and get solutions.

We believe in our home-grown talent and aim to develop the leaders within the organisation by imparting them the desired trainings, opportunities to work on various projects, assigning them tasks outside their routine work and relocating employees to various geographies etc.

The Company dignifies to state that no such strike or lock-out has ever took place, since inception of the Company which affirms in maintaining of absolute harmony in its work force. The total manpower strength of the Company as on 31st March, 2018 remains 229 (Two Hundred and Twenty Nine) with the considerably Minimal Labour Turnover, which is another indicator of effective management of the Company.

The Company places a strong emphasis on the work ethics in order to foster a healthy corporate culture in the Company. It has always believed in adhering to the best governance practices to ensure protection of its stakeholders interests in tandem with healthy growth of the Company. With this belief, the Company has adopted a Code of Conduct which extends to all its Board Members and Senior Management personnel. Additionally, the Company has framed a policy which deals with Code of Conduct by all the employees across the levels, including its subsidiaries. The Code intends to forbid any activity / association / relationship by Directors / employees which is detrimental to the Companys interest..

During the year under review, there has not been any material changes in human resources and industrial relations.


The Company is a socially responsible corporate citizen committed to deliver a positive impact across social, economic and environmental parameters. The Company acknowledges its responsibility in the manner that its activities influence its consumers, employees and stake holders, as well as the environment. The Company seeks to achieve its corporate and social objectives by focusing on the following strategic areas:-

a) Health Care Initiatives

The Company has established its initiatives for "better health care" and in pursuance to which one Free Health Care Centre is set up at Debendra Nagar, Badarpur Ghat, Distt. Karimganj, Assam for the welfare of Local Community. Health Awareness programmes and other Health care activities like pulse polio Immunization programme, family planning programme, vaccination for child, provisions of safe drinking water, Yoga camp, Diabetic Camp are also being organized in this health care centre.

b) Educational Initiatives

Your company has been constantly providing assistance, support and has been bearing the maintenance expenses for the schools which were previously constructed the company and operating in the name of "Vivekananda Kendra Vidyalaya" in the view of the company to provide modern day schooling, students of Debendra Nagar, Badarpurghat, Assam. The Company has been sponsoring the students of this locality for education at V.K.V. School, Debendra Nagar with provided Furniture, Black Board etc.

c) Environmental Initiatives

The Company in view of the Mass Trees Plantation motto has utilized the unused/waste lands lying in the area and taken up for plantation of various types of Trees through mutual understanding with landlords and have given a significant environmental impact.

Recognizing the importance of environment, the Company celebrated and planted more variety of trees with the collaboration of various organizations and forest department on 5th of June, 2015.

d) Community Welfare Initiatives

Under community welfare concerns the Company has undertaken various initiatives like:

• The Company is continuously repairing and maintaining the various waiting sheds constructed in the previous year for common mass people at Badarpurghat, Silchar and Ziribam.

• The Company is also bearing an expense incurred in maintaining the park constructed in the previous year at Valley Strong Island at Badarpurghat at tri-junction on NH-44 and NH-53.


Statements in the Management Discussion & Analysis Report detailing the Companys objectives, projections, estimates, expectations or predictions may be forward looking statements. These statements being based on certain assumptions and expectations of future events, actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting domestic demand-supply conditions, finished goods prices, changes in Government regulations and tax regime etc. the Company assumes no responsibility to publicly, modify or revise any forward looking statements on the basis of subsequent developments, information or events.

Place: New Delhi Bijay Kumar Garodia Kamakhya Chamaria
Date: 13.08.2018 (Director) (Vice Chairman & Managing Director)
DIN: 00044379 DIN : 00612581
Add: CF-361, Salt Lake City Add: 48/72, West Punjabi Bagh
Sector-I, Block CF-Ward No. 10, New Delhi-110026
Bidhan Nagar, north Kolkata,
West Bengal-700064