Prism Johnson Ltd Management Discussions.

Economy Overview

The global economy contracted (3.3%) in 2020, as per the World Economic Outlook published by International Monetary Fund (IMF) in April 2021, primarily due to the spread of COVID-19 pandemic. It weighed down growth for most economies in the world as consumption slipped and crude prices declined. When several Governments around the world implemented lockdowns to control the significant rise in COVID-19 infections, many economies in the world saw an unprecedented GDP contraction in recent history. Since then, IMF has revised upwards its global GDP forecasts for 2021 and 2022 to 6.0% and 4.4% respectively, mainly due to additional fiscal support provided by a few large economies and vaccine-led recovery likely to be in the second half of 2021.

India, like many other major economies in the world, saw GDP contract in 2020-21 due to a slowdown in the economic activity. Indias GDP in 2020-21 is expected to have contracted by (7.7%), comprising a (15.7%) decline in the first half and (0.1%) decline in the second half of 2020-21, as per the Economic Survey 2020-21. While urban India was severely impacted due to COVID-19 and related lockdowns or curbs, economic activity and demand scenario in rural India remained resilient.


The rollout of multiple vaccines, aggressive inoculation drive, Government reviving several infrastructure projects and pick-up in real estate activities in India is likely to create a positive momentum in the economy, especially for the building materials sector.Rs.

The Indian economy is undergoing a V-shaped recovery, showing strong signs of revival. These positive signals are underpinned by an aggressive vaccine rollout, increasing mobility and a strong recovery expected in consumption and investments. India is expected to be the fastest growing economy in the world with GDP estimated to grow at 10.5% in 2021-22, as per the Reserve Bank of India. However, the local level lockdowns and curbs implemented in April-May 2021, due to the second wave of COVID-19 in India, is likely to have an adverse impact on Q1 FY22 GDP.

Industry Structure and Developments

India ranks second in cement production and consumption globally, with an estimated installed capacity at 540 mn tonnes at the end of FY21. During 2020-21, domestic cement production declined 12.0% to 294 mn tonnes, as per the data provided by the Office of the Economic Advisor, primarily due to the impact of the pandemic.

While rural housing constituted an average 34-36% of cement demand during the period FY19 to FY21, urban housing constituted 25-27%, infrastructure sector constituted 24-26% and the commercial sector constituted 14-16% during the same period, as per CRISIL.

The demand-supply dynamics of the cement industry was affected during CY2020 due to the lockdown and curbs implemented by the Government to control the spread of COVID-19 pandemic. The nationwide lockdown came at a time when construction activities are usually at its peak and this hampered the overall demand. During the pandemic, cement consumption remained resilient in the rural and semi-urban markets. This demand was majorly driven by construction of rural infrastructure and low-cost housing. With the economy reviving, demand has started gaining traction with most regions reporting growth and construction activities picking up pace. Cement demand, which had been particularly tepid in Tier-I cities, has recovered during the past few months. The low-cost affordable housing segment has further contributed to demand spur for the cement sector.

According to a report by CRISIL published in March 2021, cement demand is expected to increase by 13% in 2021-22 due to expectations of strong demand from housing, infrastructure and commercial sectors and also a low-base effect. Cement demand in Central India is expected to grow at 11-13% during 2021-22. However, cement demand is likely to get impacted due to the surge in COVID-19 cases during April and May 2021.

Cement Demand: Growth Drivers

Rural housing

Rural individual housing growth led by rising rural income; Government thrust on affordable housing

Urban housing

Government focus on housing for all by 2022

Provisions for additional outlay of Rs. 18,000 Crores for urban housing scheme over and above budget estimates of Rs. 8,000 Crores for 2021 by the Government of India under the Atmanirbhar Bharat package; Houses planned for construction under Pradhan Mantri Awas Yojna


Resumption of construction work for institutional infrastructure projects, such as ports, railways; Government initiatives such as construction of concrete roads and highways under the Bharatmala Project, development of rural roads under the Pradhan Mantri Gram Sadak Yojana, among others; National Highway Projects announced by the Government across several states


Pick up in commercial activities

Ready-Mixed Concrete: Strong Growth Potential

In 2020, the Ready-Mixed Concrete (RMC) industry was severely impacted due to the disruptions in the infrastructure development and real-estate activity caused by COVID-19. Nationwide lockdowns brought construction activities to a complete halt and the problems of labour migration exacerbated the situation in 2020-21. However, with the re-opening of the economy and businesses slowly returning to normal, the RMC industry expects a recovery in demand from real estate and infrastructure segments. India still has a long way to go in terms of RMC adoption. Moreover, with the unorganised players holding approximately 50% of the market share, the RMC sector is fragmented but with ample growth opportunities. Demand for RMC is expected to benefit from a favourable change in the consumer attitude and is predicted to rise faster than cement demand due usage of RMC being of greater convenience compared to traditional methods. RMC replaces conventional concrete in construction activities, as it helps in reducing pollution at construction sites.

Ceramic Tiles Industry

India is the worlds second largest producer of ceramic tiles and sanitaryware, after China. Around 80% of the tiles produced in India are consumed domestically and the remaining 20% are exported as per CARE Ratings Limited. The organised sector in India accounts for around 50% of the industry and the remaining half is represented mostly by regional players in Morbi, Gujarat.

Demand for tiles in India has remained sluggish in recent years, owing to weakness in the real estate sector, particularly in urban areas. With the pause in construction activities and slowdown in economic activity during the pandemic period, the tiles sector was affected further. As per CARE Ratings Limited, majority of the manufacturing units did not operate in April 2020 and gradually resumed operations during May-June 2020. However, the industry faced several challenges such as liquidity issues, shortage of labour and supply chain constraints. With restrictions easing out in a phased manner leading to an economic revival in the latter half of the year, there is an uptick in construction demand and real-estate development, which has contributed to volume recovery for the tiles segment.

Exports have partially offset the effects of the domestic real estate slowdown. During April 2020 to January 2021, Indias tiles exports grew 20% y-o-y to Rs. 97.2 bn. While exports to GCC countries grew 3% y-o-y to Rs. 29.7 bn, Indias tile exports to the US skyrocketed 149% y-o-y to Rs. 7.1 bn during this period. Average tiles realisations grew 4% y-o-y during the same period.

As regulatory and compliance procedures become more stringent and adherence to environmental standards increase, we believe that the organised ceramic industry in India will benefit more and gain market share from the unorganised players. Further, the National Green Tribunals (NGT) ban on Morbi players using coal gasifiers, tighter GST compliances, and change in sentiments towards China in the global markets are likely to benefit the domestic organised players. With increasing Government spending on infrastructure development, the demand for tiles is expected to witness a surge going ahead.

Sanitaryware and bath fittings

The Indian sanitaryware and faucets industry was valued at around Rs. 14,300 Crores in FY20 and it is expected to expand at a CAGR of 12-15% over the next few years. During 11M-FY21 (11 months ending February 28, 2021), Indias sanitaryware exports were flat on a y-o-y basis at 919 Crores. Over the past few years, bathrooms have become more of a statement embodying a persons lifestyle. To make bathrooms chic, demand for tiles, sanitaryware, and bathroom fittings has accelerated across the country. Due to various market innovations, such products are also undergoing rapid transformation. Indias sanitation consciousness has increased manifold with sustained public and private initiatives over the past few years, combined with the aspirations for better living standards. These have created an enormous space for products used in constructing public sanitation facilities and domestic bathrooms, including bathroom fittings and sanitaryware.

Due to the growing popularity of designer washrooms, the demand for providing a one-stop shop solution for all sanitaryware and fittings requirements has increased. Further, as the importance of in-store experience has grown, manufacturers are establishing experience centres where customers can view the whole range of products and can also explore a virtual version of the bathroom before deciding. These are vital factors that encourages consumers to invest in premium bathroom items, reinforcing the growth of the Indian tiles, sanitaryware and bathroom fittings industry.



With cement production capacity at 5.6-mn-tonnes at Satna in Madhya Pradesh, Prism Cement remains a prominent cement manufacturer in central India. The Company makes Portland Pozzolana Cement (PPC) under three brands ‘Champion, ‘Champion Plus, and ‘Duratech as well as Ordinary Portland Cement (OPC). It sells cement from the plant in Satna to regions in eastern Uttar Pradesh, Madhya Pradesh, and Bihar, with an average lead distance of 384 kms in 2020-21. Prism Johnson has the highest quality standards with modern state-of-the-art machines and automated controls. It has a wide marketing network with about 4,000 dealers serviced from ~160 stock points.

2020-21 Performance:

Cement & Clinker sales volume improved marginally from 5.72 mn tonnes in 2019-20 to 5.82 mn tonnes in 2020-21, despite a steep 23.1% decline in cement and clinker volume during Q1 FY21. With the economy coming back on its feet, the Company saw a recovery in demand and cement volumes grew 11.9% during the nine-month period Q2-Q4 FY21. Share of premium products continued to grow, accounting for about 27.7% of total cement sales volume in 2020-21. Several cost reduction measures led to 8.2% y-o-y growth in EBITDA per tonne, from Rs. 889 in 2019-20 to Rs. 962 in 2020-21.

Taking a step forward towards sustainability, the Company installed a 22.4 MW Waste Heat Recovery System (WHRS) in 2020-21 at its cement plant at Satna, Madhya Pradesh. It also commissioned an additional 10.0 MW of solar power plant during 2020-21, taking its total solar capacity at Satna, Madhya Pradesh, to 22.5 MW.


With over six decades of experience, H & R Johnson (HRJ) is among the largest ceramic tiles players in India. HRJ offers an end-to-end solution in tiles, sanitaryware & bath fittings, engineered marble & quartz and construction chemicals. The Company, along with its JV partners, has one of the largest manufacturing capacities in the domestic ceramic industry aggregating 60 mn square meters per annum across 11 manufacturing plants in India. HRJs ceramic products are sold under several strong brands, viz. Johnson, Johnson Marbonite, Johnson Porselano and Johnson Endura.

Today, HRJ is a brand name synonymous with high-quality design-led product. In the tiles and bathrooms segment, the Company carried out several product innovations and development throughout the year to further strengthen its product range. The Company continued to invest in marketing and distribution networks to increase the demand for its quality products and improve sales and efficiencies.

The Companys Johnson Aspire initiative is a unique platform that connects the Company with the specifier community. It facilitates exchange of information and enables the Company to harness exciting opportunities and achieve newer milestones.

2020-21 Performance:

Under the HRJ division, the Company exhibited better operating performance led by strong volume growth and sustainable cost optimisation initiatives during the year. Consolidated Revenue from HRJ Division was Rs. 1,833 Crores in 2020-21. Tiles sales volume increased by 8.5% in 2020-21, despite a COVID-19-led weak Q1 FY21, largely led by strong growth in the second half of the year 2020-21.

HRJ successfully managed to reduce its fixed costs and working capital requirements during the year. Led by higher volumes and cost reductions, the EBITDA margin increased by 490 bps in 2020-21 to 8.7%. The Company focused on improving product mix and expanding distribution network. It carried out product innovation and developments under large format, germfree, R series (better slip resistance), SRI cool roofs among others in tile segment and Johnson International in bathroom segment.

Revenue from Johnson Bath Division (comprising sanitaryware and bath fittings) grew by 11.9% in 2020-21 and stood at Rs. 197 Crores. In 2020-21, tile exports grew by 54.1% to Rs. 184 Crores. Revenue from exports for the engineered marble and quartz segment was Rs. 104 Crores in 2020-21. Post the revival of the economic activities and rise in demand for real estate, HRJ expects a growth in volumes.

Particulars FY17 FY18 FY19 FY20 FY21
Revenues (Rs. Crores) 1,715 1,685 1,827 1,823 1,833
EBITDA (Rs. Crores) 8 63 60 69 159
EBITDA Margin (%) 0.5 3.7 3.3 3.8 8.7


Financial data starting FY19 is after incorporating the impact of the Scheme of Arrangement and Amalgamation and therefore, not comparable with previous years.

Update on Scheme of Arrangement and Amalgamation:

The Company received an approval from the Honble National Company Law Tribunal (NCLT), Hyderabad vide its order dated April 28, 2021, regarding the Composite Scheme of Arrangement and Amalgamation among Prism Johnson Limited, H. & R. Johnson (India) TBK Limited, Milano Bathroom Fittings Private Limited, Silica Ceramica Private Limited, TBK Rangoli Tile Bath Kitchen Private Limited, TBK Venkataramiah Tile Bath Kitchen Private Limited, TBK Samiyaz Tile Bath Kitchen Private Limited and their respective shareholders and creditors ("Scheme)", under the provisions of Sections 230 to 232 read with Section 52 and other applicable provisions of the Companies Act, 2013. The appointed date for the Scheme is April 1, 2018, and the effective date is May 11, 2021. As a result, the financials for 2018-19 and 2019-20 have also been restated to give effect to the above.

The Scheme has resulted in consolidation of business and operations, simplification of the group structure by eliminating multiple operating companies, thereby also leading to a reduction in compliance and administrative overheads. It will also lead to efficient cost management, optimum utilisation of resources and provide scale benefits.


Prism RMC is among Indias leading ready-mixed concrete manufacturers. The Company operates 96 ready-mixed concrete plants in 44 cities across the country as of March 31, 2021. The commercial concrete vertical is our core business, which addresses the needs of infrastructure development in metro, urban as well as the semi-urban areas in India. Prism RMC also operates in the aggregates business and operates six large quarries and crushers. The Company has six quarries across the country, as of March 31, 2021.

The Company believes in leading the way by setting higher standards for plant, machinery and R&D in the Ready-Mixed Concrete industry. It has also prioritised in providing its customers higher standards of quality products. The Company has three technical laboratories that are certified by National Accreditation Board for Testing and Calibration Laboratories

(NABL) to adhere to strict quality controls. With a greater emphasis on safety and maintenance, the Plant Health Index continues to increase.

2020-21 Performance:

Prism RMC witnessed a slowdown in sales from Rs. 1,414 Crores in 2019-20 to Rs. 908 Crores in 2020-21 owing to the pause in real estate and infrastructure development due to COVID-19 led curbs. However, sales started picking up in the third quarter primarily driven by recovery in construction activities in metro and Tier-I cities and increase in Government spending on infrastructure development. Going forward, the Company continues to focus on improving plant utilisation levels, increasing sales of value-added products and individual home builder segment.

Particulars FY17 FY18 FY19 FY20 FY21
Revenues (Rs. Crores) 1,229 1,364 1,481 1,414 908
EBITDA (Rs. Crores) 38 28 39 23 (17)
EBITDA Margin (%) 3.1 2.0 2.6 1.6 (1.9)