<dhhead>MANAGEMENT DISCUSSION AND ANALYSIS</dhhead>
CEMENT INDUSTRY AND OUTLOOK
India’s higher cement demand and production growth rates appear to
be decelerating as the effects of a low comparison base began to wane towards the end of
the second quarter of FY 2021-22. On the cost-front, headwinds continue to impact producer
margins. The second wave, at the onset of fiscal 2022, did not affect cement production as
severely as the first wave, as labour and supply chain remained intact.
The cement industry operated at a capacity utilization of about 63 to
65%. However, the clinker capacity utilization was about 75%. The capacity utilization is
expected to improve further in the next two years. About 100 to 115 Million Tons of new
capacity is being planned which would materialize progressively upto 2027, a large part of
which would be in the South, East and Central regions.
As per CRISIL research, cement demand in the country and the western
region over the next 5 years is expected to register a CAGR of 5-6% and 3.5%-4.5%
respectively. New COVID-19 waves and monsoons will remain the key monitorable and can
potentially reflect in demand. The key drivers of growth being Infrastructure development,
such as urban infrastructure projects (metros, expressways, NHAI), state roads in Gujarat,
Mumbai Ahmedabad Bullet train, trans-harbor link, and coastal roads, along with a pickup
in real estate and urban affordable housing demand would drive demand in the region.
On the cost front, in the Financial Year 2022-23, Coal prices are
expected to remain sticky on the back of various reasons and few of the major reasons
being: (1) Supply constraints because of the Russia-Ukraine conflict, (2) Weather
disruptions in key mining areas in Australia and (3) Indonesian ban on coal exports to
meet domestic demand. International and domestic petcoke prices followed suit, up 50-60%
on year. The power and fuel costs will continue to increase due to spike in the petcoke,
coal and diesel prices which will in turn lead to the higher freight costs.
PERFORMANCE ANALYSIS
During the Financial Year ended 31st March 2022, your
Company earned a net profit of Rs 20.17 crores as against net profit of Rs 30.55 crores in
the previous Financial Year. The decrease in profitability was mainly on account of lower
price and demand pursuant to the impact of COVID-19 coupled with steep increase in
limestone, coal, pet coke, packing materials and diesel costs.
KEY FINANCIAL RATIOS
The details of significant changes in key financial ratios of your
Company for the current Financial Year vis-?-vis the previous Financial Year are given on
the following Table:
| Ratio |
Current |
Previous |
Variance % |
Reason for Variance |
|
FY 2021-22 |
FY 2020-21 |
|
|
| Debtors Turnover Ratio |
33.36 |
29.06 |
15% |
|
| Inventory Turnover Ratio |
8.67 |
8.36 |
4% |
|
| Debt Service Coverage Ratio |
2.81 |
3.43 |
-18% |
|
| Current Ratio |
1.28 |
1.17 |
9% |
|
| Operating Profit Margin (%) |
6.48% |
11.36% |
-43% |
Reduction in Profit mainly
due to Higher Cost of Power and Fuel |
| Net Profit Margin (%) |
2.87% |
5.40% |
-47% |
Reduction in Profit mainly
due to Higher Cost of Power and Fuel |
The Return on Net Worth of your Company for the FY 2021-22 was 4.34% as
against 7.03% in the Previous Financial Year. The reason for change is mainly due to the
impact of Higher Cost of Power and Fuel.
RISK AND CONCERNS
Your Company has internal control procedures to evaluate, monitor and
review the risks impacting the Company. The major risks identified by the Board of
Directors / Committees is as under:
? Uncertainty in availability of fuel - coal and pet coke.
? High energy costs due to the steep increase in the costs of all
commodities.
? Addition of new capacities likely to create supply overhang and
put pressure on prices.
? Increase in logistics costs due to steep increase in the diesel
costs.
? Low availability of limestone from own mines.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
To encourage a strong culture of integrity and ethics, provide
reasonable assurance on efficient conduct of business, and ensure safeguarding of assets,
prevention of frauds/errors and compliance with the applicable regulatory requirements,
the Company has robust internal control systems in place, commensurate with the size and
industry in which it operates.
The internal control framework is designed to effectively monitor the
adequacy, efficacy, and usefulness of financial and operational controls on a regular
basis. The Company’s policies and procedures are well articulated and documented to
maintain the integrity and reliability of the internal control systems. The Company’s
Code of Conduct comprehensively explains a set of principles that direct the action and
behaviour of its employees. In addition, a Whistle-Blower Policy is in place to ensure
fair, transparent, and ethical practices across the organisation, benefiting all its
employees alike and protecting them from victimization. Any significant audit observations
and follow-up in this regard is reported to the Audit Committee.
The Audit Committee reviews adequacy and effectiveness of the
Company’s internal control processes and monitors the implementation of audit
recommendations, including those relating to strengthening of the Company’s risk
management policies and systems. Any deviations from standard are corrected and measures
are taken to strengthen the internal control framework further.
The constitution of the Audit Committee and its terms of reference are
set out in the Corporate Governance Report as
Annexure B.
Human Resource Development / Industrial Relations
Your Company believes that human capital is most precious assets of the
organisation. The transition from physical offices to remote working has exponentially
increased the need to extend healthcare, emotional and financial support to employees
which required a deeply engaged team. All these developments have pushed your Company to
modify it’s HR practices and processes. Your Company has moved beyond the current ERP
system into a new age digital transformation with SAP integration. The overall solution of
SAP S4hana with simple user experience, gives competitive edge with better workflows. The
robust system will be the digital foundation for integral relationship of team &
network. Hathi-Sidhee Buniyaad, Autoplant, Salesforce, Happay, Success factors, Ariba,
Bandhan are all integral part of the transformation across functions.
In order to enhance managerial capabilities, your Company has been
providing new age trainings via gamification to upgrade skills of employees to build a
pool of talent for the future roles. We organized learning and skills development programs
through Online modules of One-hour Learning and nominated employees for relevant webinars,
covering Technical, Functional, and Behavioural, as well as Employee Wellness programs.
Total 813 number of programs conducted covering 100% of employees from Plant, Corporate
Office & Marketing Offices. This has resulted in employees opting for self-development
mode.
Taking into consideration the emergency situation created by the
pandemic, the health of team members and their families became the top priority for your
Company. As soon as the lockdown was imposed, your Company was quick to form and adopt
‘Work from Home’ policies for most employees and detailed guidelines about
safety protocols were issued to the employees working on shop floor. Your Company strictly
followed all the guidelines of Government of India regarding lock down in Plant and Colony
areas. Banning of all the unnecessary entries inside and outside the Plant and Colony.
Ensuring use of mask, gloves and sanitizers by everyone. Installation of Sanitizing
Tunnels at both the entry point of Plant at Main Gate and at North Gate. Proper Scanning
by thermo temperature machine gun at Gate Entry. Distribution of masks, gloves and
sanitizers to all employees and workers. Proper scanning of all goods and visitors before
plant entry. Awareness campaign was conducted across the organization by means of
displaying Boards about Covid-19 and precautionary measures. Proper sanitization of the
entire plant area, offices, colonies and adjacent and surrounding roads. Installation of
liquid soap dispensers at all the water points and various places at the Plant, colony,
health centre and shopping complex.
Your Company continued its Annual initiative for employees with a
project called "Talk To Me", which included employee wellness survey, T&D
effectiveness survey providing insight into employees learning & development, health,
well being and also employees expectations & aspirations. This helped the Company in
revitalizing company policies, practices and employee engagement.
The Industrial Relations at the Factory have remained cordial.
The Management is pleased to acknowledge the contribution of all
employees who have helped your Company perform well, for the remarkable Performance
resulted into achieving the following Milestones. The employee relations have been
harmonious and amicable throughout the year.
As on 31st March, 2022 your Company had 355 permanent
employees.
Community Welfare Activities
Sustainability and Community Welfare Activities have been your
Company’s core values since its inception. Your Company strives to positively impact
the lives of communities around its nearby areas of operation, minimize impact on
environment and address concerns of communities in a mutually beneficial manner.
Therefore, the Company lay emphasis on understanding the requirements of the local
community and embark on initiatives, investing considerable resources, which create
long-term Societal benefits. The emphasis of all CSR initiatives is to bring about a
meaningful change in the lives of people in with its local communities.
Your Company takes utmost care in selection of community interventions
initiated. The prime endeavor is to remain focused on creating long-term wealth creation
for all local community members; irrespective of their gender, ethnic and religious
backgrounds. Your Company has zero tolerance policy towards sexual harassment at
workplace; as per the applicable law.
Occupation Health & Safety
Your Company continuously undertakes various initiatives aimed at
providing a healthy and safe workplace to its staff (full-time employees, as well as
contract workers). Your Company is committed to ensuring zero harm to its employees,
contractors, and the communities in which it operates. This is integral to the business
process and is laid down in the Health and Safety (H&S) policies, standards and
working procedures. The factory has a Health Care Center, providing medical aid to the
Company’s employees and their family members, workers, as well as patients from the
vicinity. Your Company conducts various immunization programs, blood donation camp, family
welfare education, health care, safety, as well as various periodical health checkups and
first aid training programs for employees and workers. Your Company continues to
contribute towards the Medical Centre and occupational health services. Your Company take
pride in sharing that during pandemic, your Company’s Medical Team has contributed
their time and efforts to the best of their abilities to take care of health of employees,
their families and community around villages. Your Company is frequently arranging Health
Awareness Sessions for Employees through our Chief Medical Officer.
Education
Your Company has a full-fledged School up to 10th Standard,
affiliated with CBSE, New Delhi and DAV Management, New Delhi for children of the
employees and local people staying in nearby areas. Your Company provides school bus
facilities to needy children in the vicinity. Your Company also facilitates the nearby
school to strengthen the educational system & infrastructure. During Covid-19 period,
the School commenced online teaching for its students. School staff are well qualified and
trained, achieving 100% result in CBSE Board since 1993. Company also provides Residential
facilities to all the out of state staff.
Sanitation
Your Company continues to improve sanitation and is connected with
Government of India in ‘Swachh Bharat Abhiyan’ initiated in India by our
Hon’ble Prime Minister. During lock down and last year too, your Company has
initiated extra ordinary preventive actions to ensure cleanliness in and around the
Company’s Plant and in the vicinity. Your Company is arranging Mass Cleaning
Campaigns frequently for Plant and Colony areas.
Reforestation
Your Company is committed to protection of environment and maintenance
of bio-diversity. A green belt has been developed in the Plant premises and nearby areas.
Your Company has planted more than two lakh trees in the last one decade, with survival
rate of more than 90%. During this financial year, your Company has planted 8749 plants.
The team at the Factory has put in a lot of efforts in conservation and propagation of
rare species of trees, increasing forest cover and fruit garden.
CORPORATE SOCIAL RESPONSIBILITY
For your Company, Corporate Social Responsibility (CSR) means the
integration of social, environmental and economic concerns in its business operations. CSR
involves operating Company’s business in a manner that meets or exceeds the ethical,
legal, commercial and public expectations. In alignment with vision of the Company,
through its CSR initiative, your Company will enhance value creation in the society
through its services, conduct and initiatives, so as to promote sustained growth for the
society.
The various initiatives taken during the year by your Company are in
the areas of Health, Education, Drinking Water, Environment, and Rural Development. The
initiatives are aimed at creating long-term value and are implemented for the community
members irrespective of their gender, ethnicity and religious background. Your Company has
also taken initiatives in helping the District Administration in implementing COVID-19
appropriate activities including providing ventilators and overcoming the pandemic
impact..
The Board of Directors of your Company has further formulated and
adopted a policy on Corporate Social Responsibility which can be accessed at the website
of the Company.
The CSR Policy of your Company outlines the Company’s philosophy
for undertaking socially useful programs and activities for welfare and sustainable
development of the community at large as part of its duties as a responsible corporate
citizen.
AWARDS
1. Your Company was awarded by Sustainable Development Foundation
– A Unit of Ek Kaam Desh Ke Naam, supported by Ministry of Environment, Forest and
Climate Change, Govt. of India by 10th Exceed Environment Award &
Conference 2021 in Platinum Category m Award in Cement Sector for outstanding achievement
in Environment Preservation.
2. Your Company was awarded by Indian Bureau of Mines, Government of
India, Ministry of Mines – Awarded to Morasa Vavdi Limestone Mines for Exemplary
Performance in implementation of sustainable Development Framework during the year 2019-20
assessed under the Star Rating System on 23rd November, 2021 at New Delhi.
3. Your Company was awarded by Apex India Green Leaf Award 2020 for
Environment Excellence Award in Platinum Category for Corporate Sector in November, 2021.
CAUTIONARY STATEMENT
Statements in this report on Management’s Discussion and Analysis
describing the Company’s objectives, projections, estimates, expectations, or
predictions may be forward looking statements within the meaning of applicable securities
laws and regulations. The Statements are based on certain assumptions and expectations of
future events. Actual results could however differ from those expressed or implied.
Important factors that could make a difference to the Company’s operations include
global and domestic demand supply position, raw material, fuel, transport cost and
availability, changes in Government regulations and tax structure, economic development in
India. The Company assumes no responsibility in respect of forward- looking statements,
which may be amended or modified in future based on subsequent developments, information
or events.
For and on behalf of the Board of Directors
|
Jay Mehta |
M.S. Gilotra |
|
Executive Vice Chairman |
Managing Director |
|
(DIN: 00152072) |
(DIN: 00152190) |
| Place: Mumbai |
|
|
| Date: May 26, 2022 |
|
|
+91-9892691696
