Burnpur Cement Ltd Management Discussions

INDUSTRY STRUCTURE & DEVELOPMENTS

India is the second-largest cement producer in the world. The global cement industrys installed capacity was 5.55 billion tons in FY 2025. Out of total capacity Indias installed capacity lies 553 million metric tons with a production of 298 million metric tons in FY 2025.

Indias capacity utilization was projected to rise to 71 % in FY 2025 backed by increased cement volume due to demand in roads, urban Infrastructure and commercial real estate. Cement demand has increased by 8-9% in FY 2025, reaching 460 -465 MTPA fueled by increased construction activities and rising capacity utilization.

The distribution of cement production capacity across Indias region is as follows:

Southern India : Approximately 32% of total Capacity. This region benefits from abundant limestone deposits, particularly in states like Andhra Pradesh, Tamil Nadu, Telangana and Karnataka.

Northern India : Around 20% of total Capacity. Notable states are Rajasthan, Punjab, and Haryana. Eastern India : Approximately 20% of total Capacity. Key States include West Bengal, Chhattisgarh, Odisha and Jharkhand.

Western India : Around 15% of total capacity. This includes Gujrat, and Maharashtra

Central India : Approximately 13% of the capacity. Sates like Madhya Pradesh and Uttar Pradesh are prominent in this region.

As the country experiences rapid economic growth and urban migration, the demand for robust infrastructure and modern urban living spaces has in creased. Urbanization is a defining phenomenon, with millions of individuals relocating from rural areas to cities in search of better employment opportunities, education, and improved lifestyles. This mass movement has led to an increased need for housing, transportation networks, healthcare facilities, and educational institutions.

The Indian cement industry is projected to grow at a CAGR of 4.9% from 2024 to 2029, reaching 5.09 billion tons by 2028-29. The Housing Segment constituting 55% of cement demand is anticipated to witness steady growth on the back of healthy traction in rural housing and urban real estate projects. The Governments consistent emphasis on affordable housing will further help sustain the demand for cement.

Opportunity & Threats

The Indian cement industry is well-positioned for growth due to abundant limestone deposits and a growing construction sector. The Indian cement industry is expected to continue its fast-paced growth, with installed capacity projected to reach 850 million t/a by 2030 and 1350 million t/a by 2050. Cement, which is a critical ingredient in all infrastructure projects and backbone of construction is set to witness a massive demand uptick. The continued large investments in infrastructure projects and logistic supply chain, will fuel more cement demand.

The growing housing sector, which typically accounts for 60% to 65% of Indias cement consumption, will also continue to remain a key demand driver.

The Union budget 2025 has laid out a visionary roadmap for Indias economic growth, with a strong emphasis on national infrastructure development including Railways, Roadways and coastal.

In the Union Budget 2024-25, the government has made provision of Rs. 11.11 lakh crores for infrastructure which is 3.4% of GDP and has proposed a substantial Rs. 1.5 lakh crore fund for states to speed up Infrastructure Development. This allocation underscores the governments commitment to building a robust infrastructure framework that supports economic growth and enhances the quality of life for citizens.

The Pradhan Mantri Gati Shakti National Master plan launched by Prime Minister for Multimodal connectivity, smart city mission and Amrut are also contributing to cement consumption. All these measures are likely to increase cement consumption and may help us increase in sale.

The cement sector is a major contributor to the countrys greenhouse gas (GHG) emissions. The Indian cement industry is also taking steps to reduce its environmental impact through the adoption of new technologies. The cement industry is one of the largest industrial emitters of greenhouse gases (GHGs), accounting for around 7 per cent of global C02 emissions. This is due to the energy-intensive process of cement production, which involves heating limestone and clay to over 1400 degrees Celsius.

On the other hand, the Indian Cement Industry faces several challenges that could impact profitability and growth. Key threats include:

Declining Cement Prices : Cement prices have experienced a significant downturn, with a 7% year on year decline in April - January period 2025. This is attributed to weak demand and intensified competition from new supply additions.

Slower Demand Growth : The compound Annual Growth rate (CAGR) of cement demand, which was 11% between FY2022 and FY 2024, is projected to slow to 4.5 to 5.5% in FY 2025. Factors contributing to this slowdown includes a base effect, extended heat waves, labour shortages, during general eelction and reduction in construction activities in the first half of the year. However, a recovery is anticipated in the latter half driven by improved rural demand and higher government spending on Infrastructure.

Rising Input Costs : While input costs are expected to remain under control, smaller cement companies are feeling the strain of rising raw material and fuel costs. Increased prices for coal, petcoke and other raw material have tightened margins. This had led to increased costs for related construction products and caused cost overruns.

Intensified Competition and Overcapacity : The cement Industry had witnessed significant capacity expansion over the past two years with 101 million tons(MT) added. This surge in capacity combined with weak demand, had led to pricing pressures and reduced profitability. In the southern region, prices are projected to decline by 5-6% due to subdued demand and increased capacity growth. Similarly, other regions are experiencing price drops with the eastern region facing the steepest decline of 11-12%.

Segment wise, Financial and Operational Performance

Since January, 2017, your Company operates in Single Segment i.e. Cement Segment. The discussion on Financial Performance with respect to Operational Performance forms a part of the Directors Report.

Future Outlook

The outlook for Indias cement Industry in FY25 and 26 reflects a period of moderate growth, strategic capacity expansion and involving market dynamics.

Cement volumes are projected to grow by 4—5% year-on-year, reaching approximately 445-450 million metric tons (MT). This adjustment from earlier estimates accounts for a post-election slowdown in construction activities and adverse weather conditions affecting the first half of the fiscal year. However, a rebound is anticipated in the second half, driven by increased rural and urban housing demand and a surge in infrastructure spending

The cement industry is set to add 70-75 million MT of capacity over FY 2025-26. Approximately 3335 million MT will be added in FY 2025, with the remaining capacity coming online in FY 2026. This expansion is expected to keep capacity utilization rates moderate, around 70-71%.

Companies are focusing on renewable energy adoption and green cement technologies to reduce carbon footprints. Innovations in green cement production methods, such as utilizing electric arc furnaces powered by renewable energy to recycle cement from demolished buildings, are emerging as potential game-changers.

In the years to 2030, cement-intensive infrastructure development will be key to sustaining the high-level of broad-based GDP growth that India requires to lift the livings standards of a population that will have passed 1.5 billion people.

The high levels of investment that the Government will commit in the coming years to building a new India will be dependent on robust revenue streams. As the third largest contributor of tax revenues, a growing and successful cement industry is vital to financing a better future for the country.

Further, as India seeks global capital to accelerate Make in India, the cement industrys strong long-term growth fundamentals will be a major attraction for FDI given the necessity to locate cement production close to the sources of demand.

Risk& Concern

I. To meet the future demand for cement in 2030 the Indian cement industry will need to invest in 368 MMT additional capacity - an increase of 83%. This will not only require setting up new plants but also acquiring adequate land, securing raw material supplies and hiring additional talent. Insufficient investment in the sector can be seen as a cause of concern.

II. Major policy changes including demonetization, RERA and GST is going to affect the pricing and demand in the sector. Further the bans on sand mining will lead to lower availability of sand and that would halt or slow construction activities, thus having a cascading impact on cement demand.

III. Increase in cost of finance (rate of borrowing) and increase in cost of raw materials, energy, delivery cost,and continuous increase in crude prices, duties and taxes are pushing the cost of production without a corresponding increase in the price realizations due to excess supply, which will pose a threat to improving the overall scenario in cement sector. The increase in costs may be difficult to pass on to the customers as the prices would remain under pressure due to the excess capacity.

IV. The cement industry is associated with significant negative externalities, notably high C02 emissions. The increase in emissions is difficult to handle and the industry have to buy carbon credits or use alternative sources of energy for nations growth and environment sustainability.

V. With more and more dependence on information technology, there have been risks associated thereon. In addition to data loss, the cyber security also assumes importance as any attack can impact the business operation and all its assets

Internal control system and its adequacy :

Your Company has in place an adequate system of internal controls, with documented procedures covering all corporate functions and its operating units. Systems of internal controls are designed to provide reasonable assurance regarding the effectiveness and efficiency of operations, the adequacy of safeguards for assets, the reliability for financial controls, and compliance with applicable laws and regulations. Adequate internal control measures are in theform of various policies and procedures issued by the Management covering all critical and important activities viz. Revenue Management,Operations, Purchase, Finance, Human Resources, Safety, etc. Adequate measures are taken from time to time to monitor energy efficiencies, safety and security as well as the hygiene standards maintained in the plant and corporate office. During the financial year, the standard terms of reference for Internal Audit which defines the framework for conduct of Internal Audits was updated incorporating latest changes to regulatory requirements and the evolving business context. Moreover, the Audit Committee of the Board reviews the findings of the Internal Auditor and closely monitors the implementation of their recommendations by reviewing the compliance reports furnished.

Details of Significant changes in Key Financial Ratios

Debtor Turnover Ratio :

The Debtor Turnover ratio for the year is 0.00 times as compared to previous year of 0.000096 times. It shows 100% changes as compared to the previous year. The ratio become nil during the year due to nil revenue generated by the company and on the other side some receivables lies in the books has been written back, as the management has ascertained the amount receivables no longer to be recovered.

Inventory turnover ratio:

The inventory turnover ratio for the year is Nil. It shows the negative changes of 100 % during the current financial year as compared to the previous financial year (i.e. 12.22 times). In the current financial year,the revenue and inventory became nil as Company has no operational unit at present.

Interest Coverage Ratio:

The interest coverage is -135.71 times however it was -2.60 times during previous financial year. The reason being negative ratio is Nil revenue generated by the company during the entire financial year as Companys do not have any operational unit at present however interest is being charged on Secured loan on cumulative basis. However, there is some other income which is mostly non cash income nad generated by written -off/written back of some old payables and receivables simultaneously (after netting off) which companys management has ascertained that credit balances are no longer to be paid, and debit balances are no longer to be recovered.

Current Ratio:

The Current ratio for the year is 0.003 times as compared to previous year of 0.004 times. The ratio is almost same as compared to the previous financial year. The reason for non-ideal ratio is the impact of finance (Interest) charges of Rs 6612 lacs on cumulative basis and the repayment schedule is nil.

Debt Equity Ratio:

The Debt equity ratio for the year is -0.98 times; whereas it was -0.92 times in the previous financial year. It shows changes of 6 % during the current financial year as compared to the previous financial year. The reason being increase in Debt by approx. 16 % however shareholders fund decreases by 9.55 % due to current year losses. Debt has increased mostly due to Interest implication and to maintain fixed and day to day expenses.

Operating Profit Margin :

The Operating Profit Margin for the year is Nil, whereas it was -0.21% in the previous financial year. No operation was taking place during the entire year as Companys do not have any operational unit at present.

Net Profit Margin :

The Operating Profit Margin for the year is Nil, whereas it was -0.74% in the previous financial year. No operation was taking place during the entire year as Companys do not have any operational unit at present.

Cautionary Statement

Statement made in the Management Discussion and Analysis, describing the Companys objectives, projections, estimates, predictions and expectations may be forward looking statement with the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied.

Place : Kolkata	For and on behalf of the Board Indrajeet Kumar Tiwary Ritesh Aggarwal
Date : 9th July, 2025	Wholetime Director	Director
	DIN : 06526392	DIN : 07671600