INDIAN ECONOMY
Economic Survey 2023 estimated Indias GDP growth at about 7 per
cent for FY 2022-23. The growth follows a high growth of about 7-8 per cent in FY 2021-22
and despite the triple shocks of Covid-19, Ukraine-Russia conflict and steep increases in
interest rates across the globe. The year witnessed high volatility in the fuel costs, an
energy crisis and high inflation.
The net direct tax collections increased by 17.63 per cent compared to
FY 2021-22 and were higher than the budget by Rs. 2.4 lakh crores. A part of the
additional collections is expected to be invested by the Governments in affordable housing
and infrastructure development, which in turn are likely to boost cement consumption.
Various agencies estimate the GDP growth for FY 2023-24 at about 6 to
6.8 per cent supported by domestic demand and a pickup in capital investment.
CEMENT INDUSTRY AND OUTLOOK
India is the second largest consumer of cement and produces about 8 per
cent of the global cement production. However, its per capita consumption is only about
half of the world average per capita consumption, indicating a large potential for demand
growth.
As per CRISIL, the all India cement consumption for FY 2022-23 was
about 11 per cent higher than the previous year. However, the installed capacity was far
in excess of the consumption resulting in a low capacity utilization for the industry of
about 68-69 per cent. About 55 to 60 per cent of the demand continues to come from the
housing sector particularly from the Governments thrust on rural and affordable
housing.
Infrastructure sector contributed to about 26 to 28 per cent of the
cement demand, the major drivers being construction of National Highways, Gati Shakti
Project, Bharatmala and Sagarmala projects, Dedicated freight corridors, construction of
smart cities, metro rail and other infrastructure projects being undertaken in metros,
state capitals, tier 1 and major tier 2 cities, bullet train project etc.
The industry witnessed a steep increase and volatility in the
international energy costs coupled with currency depreciation, which led to a runaway
increase in the costs of coal, pet coke, power etc. However, the increase in costs could
not be fully passed on to the customers as the cement prices remained under pressure due
to the supply overhang coupled with the fragmented nature of the industry. This resulted
in erosion in the profit margins of most of the cement companies as cement manufacturing
is energy intensive.
As per CRISIL, cement consumption is expected to grow at about 7 to 9
per cent per annum during the next two years. However, about 60 Million Tons of capacity
addition is expected to materialize in the next two years, which would continue to put
pressure on the pricing. The fuel prices have started moderating in the last few months.
However, the non-resolution of the Ukraine-Russia conflict continues to affect the
volatility in the fuel prices, which are about 150 per cent higher than those prevailing
two years back. The operating margins are expected to remain under pressure.
PAINT INDUSTRY OUTLOOK
Paints serves functional as well as aesthetic purposes and is therefore
a critical element in the construction. The paints industry has witnessed a healthy double
digit compounded annual growth rate over the last decade. The growth in the paints
industry is driven largely by increase in housing and commercial construction activities.
Shortening of repainting cycles also contributes significantly to the demand for paints.
The impact of Covid-19 on the paints industry is waning resulting in a significant
increase in the demand for paints. As per the Indian Paints Association, the decorative
paints sector which constitutes about 70 per cent of the total paints market is expected
to grow to about
Rs. 1 lakh crores in the next five years.
The industry witnessed increasing costs due to rising crude prices,
currency depreciation and logistics costs. The increase in the prices of paints was not
commensurate with the rising costs and the profitability margins remained under pressure.
The outlook for paints remains positive with the pick-up in housing,
infrastructure and construction activities across all regions. Increasing income levels,
rural growth, increasing urbanization, rising aspirations of a growing middle class and
increasing disposable incomes are likely to be the growth drivers for the paints industry.
Moreover, the Indian paint industry has been witnessing a shift in the preferences of
people from the traditional whitewash to high quality paints like emulsions and enamel
paints, which have better margins.
PERFORMANCE ANALYSIS
During the year, the Honble National Company Law Tribunal,
Ahmedabad Bench vide its order dated 16th March 2023 approved the scheme of
amalgamation for merger of Gujarat Sidhee Cement Limited with Saurashtra Cement Limited.
The appointed date was 1st January 2022. The scheme became effective from 30th
March 2023. In view of the amalgamation, the accounts for the last two years have been
recasted.
During the Financial Year ended 31st March 2023, your
Company (merged entity) earned / (incurred) a net loss of
Rs. 22.17 crores as against net profit of Rs. 21.45 crores in the
previous Financial Year.
Since cement is the core business of the Company, the majority of the
revenue and profitability comes from the sale of different types of cement. The company
has acquired the paints business of Snowcem Paints, which is operating as paints division
of the company.
Although currently the share in revenue of the paints division is
insignificant, it is likely to have a healthy growth.
KEY FINANCIAL RATIOS
The details of significant changes in key financial ratios of the
Company for the current Financial Year vis-?-vis the previous Financial Year are given in
the following Table:
| Ratio |
Current FY 2022-23 |
Previous FY 2021-22 |
Variance, % |
Reason for Variance |
| Debtors Turnover (Days) |
15.28 |
13.33 |
-15% |
|
| Inventory Turnover (Days) |
40.87 |
39.76 |
-3% |
|
| Interest Coverage Ratio |
1.01 |
3.21 |
-69% |
Consequential impact of decrease in profit |
| Current Ratio |
0.93 |
1.24 |
-25% |
Decrease in current assets, mainly bank balances due to
Non-current classification of Fixed Deposits with Bank with maturity greater than 12
months from the date of Balance Sheet |
| Debt Equity Ratio |
0.07 |
0.11 |
-36% |
Decrease in debt, mainly current bank borrowings |
| Operating Profit Margin (%) |
1.14% |
5.49% |
-79% |
Decrease in profit, mainly due to Higher Cost of Power and
Fuel which could not be passed on fully |
| Net Profit Margin (%) |
-1.35% |
1.48% |
-191% |
Decrease in profit, mainly due to Higher Cost of Power and
Fuel which could not be passed on fully |
The Return on Net Worth of the Company for the FY 2022-23 was (2.48%)
as against 2.40% in the Previous Financial Year. The reason for the change is the impact
of decrease in profit, mainly due to Higher Cost of Power and Fuel which could not be
passed on fully during FY 2022-23.
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: Proximity to Barda Wildlife Sanctuary (Adityana
Mines-Ranavav Unit) Validity of Adityana Mining Lease upto 31.3.2030.
Low availability of limestone from own mines and higher cost of raw
material at Sidheegram unit.
Cost structure constraint to sell in South & North Gujarat,
Mumbai, South Rajasthan and Kerala owing to supply overhang and market dynamics
NTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Internal Control Systems of your Company are robust and
commensurate with the nature, size and complexity of its business. Adequate internal
financial control mechanism as laid down and adopted continue to be followed by your
Company. Policies and procedures, as approved by the Board have been adopted by the
Management of the Company for ensuring orderly and efficient conduct of its business,
including adherence to Companys policies, safeguarding of its assets, prevention and
detection of frauds and errors, accuracy and completeness of accounting records and timely
preparation of reliable financial information. The control activities continue to
incorporate, among others, continuous monitoring, routine reporting, digital business
environment with minimum possible manual intervention, checks and balances, purchase
policies, authorization and delegation procedures, audits including compliance audits,
which are periodically reviewed by the Audit Committee. Based on the report of Internal
Auditors, the Audit Committee / Board initiates corrective action in respective areas and
thereby strengthens the controls. The Audit Committee of the Board of Directors approves
from time to time - the quarterly audit assignments, reviews the progress of audit
findings presented by the Internal Auditors. Also the status of the implementation of
audit recommendations and adequacy internal controls is reviewed by the Audit Committee.
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 considers employees as the most valuable assets and their
competencies and capabilities are critical to achieving our business objectives and
fulfilling their aspirations. Your Company continuously provides training to internal
talent and build a talent pool for future roles, utilizing inter-alia the effective
e-learning model. Your Company imparted 1867 training programs covering 6090 hours during
the year.
Your Company also implemented SAP Payroll and Success Factors to manage
people profiles, organizational charts, employee benefits, time attendance, and HR
compliance with more confidence, as well as an inbuilt PMS, learning and development
module for employees overall development.
Industrial relations have remained cordial, and employee relations have
been harmonious throughout the year. As on 31.03.2023, the number of permanent employees
in your Company were 817.
OCCUPATIONAL HEALTH AND SAFETY
Your Company values a healthy body and mind as the basic need of every
organization. Health centre of your Company takes care of health-related issues of
employees and their family members, which is also extended to the community free of cost.
In addition to treatment, the health centre offers immunization programs, occupational
health services, and family welfare education programs. Your Company has a robust
management system to ensure safety culture which is imbibed across the organization. Your
Companys occupational health and safety measures are certified by recognized
certification bodies, and have implemented International Safety Standards OHSAS 18001 and
now ISO 45001 for occupational health and management systems. Your Company regularly
conduct Safety events like National Safety Day, National Fire Service Day and awareness
sessions, internal/external safety audits, and behaviour-based safety drives to mitigate
unsafe conditions at the workplace. Your Company is committed to ensuring the safety of
all employees, contractors, and others connected with its operations through its Zero Harm
policy.
CORPORATE SOCIAL RESPONSIBILITY
Your Company is sensitive towards society and the environment and
ensures minimal impact of its operations. Your Companys CSR initiatives focus on
areas such as health, education, drinking water, environment, and rural development. These
initiatives aim to create long-term value and are implemented for community members,
irrespective of their gender, ethnicity and religious background. Your Company also
supported the District Administration in reducing the impact of the recent pandemic.
Education
Your Company has been striving for the cause of education for many
decades. Your Company runs a full-fledged school for employees children in and
around Ranavav unit and children from neighbouring areas at a nominal cost, providing bus
facility to children for commuting to the school and initiated extra coaching classes for
the underprivileged promising students from nearby areas, thereby giving encouragement and
guidance to the underprivileged students. Your Company generously donates to other
educational institutes from time to time.
SANITATION
Your Company participate in national programs implemented by the
government and NGOs by participating in the Swachh Bharat Abhiyan.
ENVIRONMENT INITIATIVES
Your Company is committed to minimizing its impact on the environment,
measure and reduce the environmental impact of our operations and our manufacturing unit
is certified to ISO 14001 for environment management systems. As a responsible and
environmentally conscious organization, the operating units are equipped with
state-of-the-art air pollution control devices, including reverse air bag houses,
electrostatic precipitators, and jet pulse filters. Your Company has also modified our
existing pollution control equipment to meet our statutory emission obligations. To
promote cleaner production technologies, your Company co-processes various industrial
hazardous wastes as alternative fuels in cement manufacturing and in 2022–23,
co-processed more than 25,000 MT of hazardous waste and other wastes as Alternative Fuels
and Raw Materials (AFR).
Water is an essential resource, and your Company understands its
importance. To improve the groundwater level of the surrounding area, your Company has
taken the initiative to recharge the groundwater through rainwater recharging pits. Your
Company has constructed 12 rainwater recharge pits at the plant and colony areas and
installed piezometers at the plant and mine area to monitor the impact of groundwater
recharge on the groundwater table.
World Environment Day, World Ozone Day, World Water Day and World Earth
Day were celebrated by your Company to raise awareness not only among the employees but
also amongst the communities in the surrounding villages. Your Company organizes various
training programs and competitions, such as an environment quiz, poster competition and
slogan competition, to encourage everyone to become more environmentally conscious.
As we all know that trees are essential to maintaining a healthy
environment as they provide food, shelter, and clean air. In addition, they play a crucial
role in protecting the ozone layer by absorbing harmful gases such as CO2. Recognizing the
importance of trees to our ecosystem, your Company has made its duty to contribute to
their growth through tree plantation programs. Your Company has participated in various
events such as World Environment Day, World Earth Day and World Ozone Day to increase
awareness about the importance of tree plantation.
During the year 2022-23, your Company has planted 8749 saplings in
Ranavav and Sidheegram plants, with special emphasis on high density plantation (HDP).
Your Company is committed to ensuring that its operations are
sustainable and environmental friendly.
Your Company will continue to explore innovative ways to reduce its
environmental impact and protect the planet.
AWARDS AND RECOGNITION RANAVAV UNIT:
Five Star Award to Adityana Limestone and Marl Mines by Ministry of
Mines for the efforts and initiatives taken for implementation of the Sustainable
Development Framework by the Company at the 75th Anniversary and Star Rating
Ceremony held on 1st March 2023.
SIDHEEGRAM UNIT:
Mission Energy Foundations Award 2022 received for best utilization
of Fly Ash.
Indian Bureau of Mines, Government of India, Ministry of Mines
– Awarded to Prashnavada-Morasa Limestone Mines for Exemplary Performance in
implementation of Sustainable Development Framework during the year 2022-23 assessed under
the Star Rating System on 1st March, 2023 at Nagpur.
CAUTIONARY STATEMENT
Statements in this report on Managements Discussion and Analysis
describing the Companys 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 Companys 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 M. Mehta |
M. s. Gilotra |
|
Executive Vice Chairman |
Managing Director |
|
(DIN: 00152072) |
(DIN: 00152190) |
| Place : Mumbai |
|
|
| Dated : May 25, 2023 |
|
|
+91-9892691696
