Kesoram Industries Ltd Management Discussions

Performance Overview

The Companys Business-wise performance during the year is shown below:

H/ Crore

Business

Cement Industry Overview

India is the second largest producer of cement in the world accounting for 7% of the global installed capacity. The cement industry is mainly driven by the consequential number of construction activities with the growing demand and a surging need for residential complexes of urbanised population. Furthermore, the construction of various infrastructure projects such as airports and roads, undertaken by the government in recent times, propels the growth of the market.

The demand growth forecast for the industry is closer to 10%. Cement production capacity in the country is expected to steadily grow and achieve 550-600 million tonnes per annum by 2025.

For the cement industry in India, the next few years affords it an opportunity of scalability. An upturn in the economy would amount to a further increase in infrastructural spends thereby boosting cement demand. That would enhance the adage of Building More, Building Well and Building Right.

The concomitant upgradation in investment on cement will favourably impact employment, the countrys resource base and therefore domestic GDP.

Risks and Concerns

The interest rates hike by various central banks are likely to impact consumption in the near term. The sticky inflation may be a dampener for growth.

The progressive depletion of reserves of limestone and other flux minerals required for cement manufacture is yet another concern. This is a clear signal for the industry to further gear up identification of fresh reserves. Side by side, there is the imminent need to expand production of blended cement and conserve high grade limestone by tweaking the mix in clinker production. The Industry has taken strident steps to propagate blended cement, the availability of fly ash or alternate blends in the proximity to the rapidly expanding capacity may prove to be a challenge.

The shift from fossil fuel to alternate fuels needs investment and has its limitations.

Growth Drivers

The Company is focused on rural market penetration and brand positioning on a consistent basis and this approach resulted in the volume growth and clocking ever highest sale.

Increased capital investment outlay by 33.4% to H 10 lakh Crore, H 75 thousand Crore investment for one hundred critical transport infrastructure projects for first and last mile connectivity for various sectors, capital outlay of H 2.4 Lakh Crore for Railways and 50-year interest free loan to State Governments to incentivize infrastructure investment, are providing a boost to the growth.

There is considerable indication for allocation to infrastructure in the current year Pre-election budget. The full-fledged budget post elections is likely to place accent on growth of infrastructure.

Companys Cement Business going forward

The Businesss brand, Birla Shakti, is an approved brand in several Government projects for supply of cement, including the Military Engineering Services and the Ministry of Defence. The confidence reflects in the initiatives taken for brand positioning and brand extension, intensification of its efforts at further refining its brand in its niche markets. Brand extension to blended cement is gaining distinct ground and augurs well for the future.

The Companys premium Blended Cement Brand "Birla Shakti ConQUerete" is well received in the market and would be a key driver to grow blended cement share in years to come.

Sale volumes are expected to rise as the Business expands its dealer network and escalates marketing efforts through influencers and market makers. The focus on adding value and educating the customer of using blending cement have started giving encouraging signals. The Companys curated concentrate product "Birla Shakti Super Plast" is getting recognized and is widely used in plastering and tile fixing.

The "General Review" incorporated in the Directors Report sets out a brief resume of performance of the Companys Cement Business.

The demerger of Cement business and its merger with UltraTech augurs well for the expansion and growth of the Cement business.

The following critical ratios have changed beyond the 25% indicative threshold specified in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:

Sustainability

Sustainability remains Companys key focus area and continuously working towards addressing challenges around issues of climate and energy, environment, circular economy and community. The Company is diligently working towards the goals set for reducing carbon emissions, replacing traditional fuel sources with renewable energy, mindful management of water and waste and conservation of biodiversity.

Internal Control Systems and their adequacy

This has been covered in the Directors Report.

Material Developments in Human Resources

Employees constitute the Companys most important assets. This belief has been instilled in the Company to further amplify its people practices especially in the area of talent management.

The number of people employed as on 31^st March, 2024 is separately covered under Annexure VII to the Directors Report.