Panyam Cements & Mineral Industries Ltd Management Discussions

Industry structure and development:

As per trusted website sources, India is the second-largest cement producer in the world and accounts for over 8% of the global installed capacity.

In the past five fiscal years, the industry has added capacity by 119 Million Tonnes (MT) per annum to reach 600 MT now. Cement demand in India is experiencing a steady increase. The past year witnessed strategic shifts within the cement industry, with environmental consciousness and implementation of sustainable practices. According to ICRA, cement demand is expected to stay strong, with volumes likely to grow by 4–5% to around 445-450 million tonnes in FY25, and and the projections for FY2026 volumes expected to increase by 6-7% reaching around 475-480 million MTPA.

As per Crisil Ratings Report, to cash in on rising demand from infrastructure and housing sectors, the cement industry is on course to add capacity by 150-160 MT from FY 2026 to FY 2028.

Major growth drivers for the India cement market include the growing need from construction and infrastructure sectors and rising governmental initiatives and investments in expansive infrastructure ventures encompassing highways, railways, airports, and public edifices. Positive real estate trends drive construction demand, influenced by a growing populations need for housing, education, and healthcare infrastructure. Investments from international players, including Lafarge-Holcim, Heidelberg Cement, and Vicat, and abundant raw materials, such as limestone and coal, fortify Indias position as a thriving hub for cement production. The surge in industrialization and commercial construction, along with the implementation of Gati Shakti (National Master Plan), will further boost the demand for cement in the future.

In 2024, the market size of Indias cement industry reached 4.4 billion tonnes and is expected to touch 8.22 billion tonnes by 2032, exhibiting a CAGR of 3.3% during 2025-32. As India has a high quantity and quality of limestone deposits throughout the country, the cement industry promises huge potential for growth. India has a total of 210 large cement plants, of which 77 are in Andhra Pradesh, Rajasthan, and Tamil Nadu. Nearly 32% of Indias cement production capacity is based in South India, 20% in North India, 13% in central, 15% in West India, and the remaining 20% is based in East India. Indias cement production reached 426.29 million tonnes in FY24, a growth rate of 3.3% year-on-year (yoy).

Opportunity and threats:

The expanding operations of industries have led to a significant increase in the requirement for modern, well-equipped industrial facilities. Furthermore, the presence of multinational corporations and the growth of domestic businesses have reinforced the demand for commercial spaces. These spaces encompass various purposes, including corporate offices and retail outlets, and the necessity for well-planned and highly functional structures has grown substantially. This demand is not limited to metropolitan areas but has extended to smaller cities and towns, where there is a notable surge in commercial and industrial activities. Cement, serving as the fundamental construction material, plays a pivotal role in these undertakings. Industrial facilities rely on cement for their robust flooring, structural components, and machinery foundations, while commercial spaces value cement for its durability and adaptability to a variety of architectural designs. Our cement plant being strategically located with high quality limestone mines proximate to the plant, can cater to the neighboring States – Karnataka, Telangana, Tamil Nadu, Goa and Kerala thereby expanding the market footprint.

Strict regulations pertaining to carbon emissions from cement manufacturing plants and compliance with these regulations often necessitates substantial investments in cleaner and more efficient technologies, resulting in increased production costs. The fluctuating commodity prices, particularly for key inputs like energy and raw materials; Changes in government regulations and policies, Competitive pricing constraints and Negative perceptions of the previous operation of the plant under erstwhile management may impact public relations are possible threats of the Company.

The management is dedicating its best efforts to elevate the company and the industry to their highest potential.

Performance:

During the year under review, the performance of cement plant was mentioned in the Directors Report under state of company affairs, where 248,000 Tonnes of Limestone has been mined from the quarries, heated and processed to make a total production of 1,80,511 Tonnes of Clinker and performed grinding to make a production of 2,26,992 Tonnes of Cement, wherein, the company has sold/dispatched 7,726 Tonnes of Clinker and 2,31,124 Tonnes of Cement and this includes 1,03,041 Tonnes of OPC Cement; 71,904 Tonnes of OPC Bulk; 56,179 Tonnes of PPC Cement.

Outlook:

In 2025 Indias economic landscape appears stable and on an upward trajectory. Positive trends are anticipated in various sectors, notably in services and manufacturing, particularly in education, healthcare, IT, and industries under the Production-Linked Incentive (PLI) scheme. These favourable developments are expected to benefit the real estate sector. The strong momentum in manufacturing, coupled with urban spending surpassing rural demand and increased investments positions the country on a promising growth path.

Risks and concerns

The company is operating in a rapidly changing environment and the Company must identify such risks and measure impact of such changes on business operations. Concerns of the Indian Cement Industry are high cost of power and coal, freight costs, inadequate infrastructure, non-availability of wagons and poor quality of coal and heavy taxes/royalty levies. The Operations of Cement companies in Telangana and Andhra Pradesh suffer due to availability of Coal & Fuel at higher prices resulting lower realizations.

Concerns of the Cement division are high cost of Power and Coal, high freight cost, inadequate infrastructure, non-availability of Wagons, and poor quality of coal and heavy taxes /royalty levies and heavy finance cost as the cements industry is the capital intensive industry. The Operations of Cement companies in Telangana and Andhra Pradesh suffer due to availability of Coal, Fuel, lower realizations and lower demand in the state. Increase in the costs of raw material, power and fuel due to inflation or global price trends may impact profitability. The Company is employing various means to reduce the impact of rising costs through better fuel sourcing, dynamic fuel mix capabilities to capitalize on changing trends in price and the use of alternative fuels. Focus on achieving better operating efficiencies and reducing coal and power consumption continues as a way of life. The Company continues to evaluate and assess long term strategic solutions from waste heat recovery systems to solar energy, from alternate fuel to alternate sources, etc. to manage costs in the medium and long term.

In addition to conventional risks, the cement sector is under increasing scrutiny for ESG compliance, carbon intensity reduction, and green cement adoption. The Company is proactively exploring opportunities in blended cement, renewable energy sourcing, and digital process optimization to mitigate these risks and remain future ready.This initiative is subject to companys financial performance will be substantially improved with positive economic growth coupled with market growth.

Internal control systems and their adequacy:

The Company is following a proper and adequate system of internal controls in respect of all its activities including safeguarding and protecting its assets.

The internal control systems of the company comprise of internal audit, cost audit and statutory audit. The work of all the audits have been assigned to reputed, external, independent and qualified people.

The Audit Committee comprising of independent directors will review all quarterly, half yearly and annual financial statements.

Segment-Wise Performance Together with Discussion on Financial Performance With Respect To Operational Performance:

Segment-wise (only one segment) performance together with discussion on financial performance with respect to operational performance has been dealt with in the Directors Report which should be treated as forming part of this Management Discussion and Analysis.

Human resources and industrial relations:

The industrial relations at all the plant and offices continue to be cordial during the year under review. The total number of employees of the Company (on-rolls and off-rolls) as at the end of the financial year 2024-25 is 435 at Cement Division and Central Administrative Office.

Details of significant changes:

S. No. Particulars	2024-25	2023-24
(i) Debtors Turnover	26.78	52.76
(ii) Inventory Turnover	2.65	6.76
(iii) Interest Coverage Ratio	(0.28)	(0.25)
(iv) Current Ratio	0.53	0.47
(v) Debt Equity Ratio	(1.73)	(2.06)
(vi) Operating Profit Margin	(0.64)	(0.36)
(vii) Net Profit Margin	(1.07)	(0.46)
(viii) Return on Capital Employed	(47.94)	(23.04)

The Company was significantly more operational during the year under review compared to the previous year, as clinker production was done in-house rather than being purchased from external sources. Unlike last year, when no loans were obtained and no interest was paid, the Company availed loans from Canara Bank during the year under review, resulting in an increase in the interest ratio.

Accordingly, the above ratios have differed.

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 materially from 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 policies and regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements that speaks only as of their dates.

By Order of the Board of Directors

For Panyam Cements & Mineral Industries Ltd

 

Sd/-	Sd/-
Jagathrakshakan Srinisha	Narayanasamy Elamaran
Managing Director	Director
DIN: 01728749	DIN: 01744259

 

Place: Chennai

Date: 06-10-2025