download-pdfAnnual Report 2019-20

Message from the CEO

Dear Shareholders,

I have lived through many a challenging time. One thing that I have learnt through each of them is while they test one’s will and determination, they also provide extraordinary opportunities. COVID-19 is one such event. Until a few months back, the world was oblivious to the unprecedented crisis that was unfolding and would go on to disrupt businesses and life like never. And today, as we are navigating through the pandemic and witnessing its wrath, it is gratifying to see how the world has come together to overcome it. How people are adjusting and how companies are reshaping their business models to the new realities. Such times show the true strength of an organisation.

9.08 MnT

Clinker production

5.42%

11.41 MnT

Cement production

2.04%

I am proud of our team at Ramco who have displayed immense fortitude and dedication to ensure business continuity and provide continuous support to customers every way possible. Our robust technology platform has played a critical role in these difficult times.

Performance review FY 2019-20

You will be happy to note that in spite the pandemic and other challenges like macro-economic slowdown and monsoon issues, your Company delivered strong performance even as the industry de-grew. Clinker production increased by 5.42% to 9.08 million tons (MnT) and cement production grew by 2.04% to 11.41 MnT.

Cement sales grew from 11.12 MnT to 11.20 MnT. With this, the net revenue from operations grew by 4.46% to ₹ 5,405.64 Crores. Costs were mostly under control with better management, though rupee depreciation offset some gains made.

As a result, bottom line growth was stronger. Operating profit grew by 10.22% to ₹ 1,173.82 Crores and PAT by 18.82% to ₹ 601.09 Crores.

The marketplace for cement being very competitive, the company strives to offer the consumers the right cement for the right application. The company’s robust R & D process leveraged its ability to innovate and diversify its offerings in various segments with wide spectrum of products. Our intensive research fostered by inputs on techno-commercial aspects based on market trials at various locations culminated in the development of two high value products viz., RAMCO SUPERCRETE, a premium blended cement, which is a crack resistant high strength cement and RAMCO INFRA, a speciality concept cement, meant for infrastructure projects demanding varied requirements of high strength applications. In collaboration with the manufacturing team, these products were successfully launched across the company’s core markets. The efforts of the Marketing and MACE team have helped to create the intended awareness among the consumers about the superior attributes of these products. The Logistics team ensured timely delivery of these products by devising the most optimal model for distribution even when the customers’ requirements were in smaller lots. The concerted efforts have received tremendous response in the niche market, graduating the company from a cement-maker to a complete cement solutions provider. The development of these new products and its successful marketing, stand testament to the company’s commitment to add value to its customers and would stand in good stead for the future of the company.

Capex update

On operational front, we continued with our expansion strategy in the Eastern markets, alongside consolidating position in the Southern markets. Our ambitious ₹ 3,500 Crores capex programmes across five sites in the South and East of India have majorly progressed as scheduled.

We have successfully commissioned the grinding unit capacity augmentation programme at Kolaghat, West Bengal and at Vizag, Andhra Pradesh with additional grinding line of 1.05 MTPA each. The establishment of 1 MTPA greenfield cement grinding unit at Haridaspur, Odisha is nearing completion.

These grinding units would enable us to expand markets in Andhra Pradesh, Odisha, Jharkhand and West Bengal. Their proximity to the fly ash and slag availability areas and major cement consumption markets would further economise transportation costs.

The clinker demand of these units will be met through our other ongoing projects. This includes an additional 1.5 MTPA clinkerisation capacity with a 27 MW WHRS at existing Jayanthipuram plant and a Greenfield cement unit at Kalavatala, Andhra Pradesh having a clinkerisation and grinding capacity of 2.25 MTPA and 1 MTPA respectively. The Kalavatala unit will also have a WHRS and Thermal power plant with an aggregate capacity of 30.15 MW along with railway siding. They are scheduled to be completed by the end of FY 2020-21.

On completion of all these projects, the aggregate grinding capacity at the satellite grinding units will increase to 7.30 MTPA and the aggregate cement manufacturing capacity at the integrated cement plants will increase to 13.49 MTPA and making a total of 20.79 MTPA.

Summing up

FY 2020-21 is going to be another challenging year for the cement industry. While the initial few months were impacted by COVID-19 related lockdown, the remaining months would see slower pick-up as majority of Government spending gets channelised towards healthcare and supporting weaker sections of society.

We are, however, confident and optimistic of overcoming the challenge. The granularity in our customer base across many individual house builders and small buyers ensures revenue spread across large base and insulates us from risk of dependence on few large accounts. Also, a large portion of our capacities are now in eastern belt of country where we expect high growth potential.

We recognise the role that our industry plays in nation building, and remain committed to building a world-class cement company by driving excellence across all facets of business. We are strengthening our brand and people capabilities and are focussed on capitalising our strong service differentiation to penetrate new markets. We will continue to nurture our research and development activities and leverage our diverse portfolio comprising 12 different types of cement for various applications to target the right customer segment.

We recognise the role that our industry plays in nation building, and remain committed to building a world-class cement company by driving excellence across all facets of business

5,405.64 Crores

Net revenue from operations

4.46%

1,173.82 Crores

Operating profit

10.22%

I thank all our stakeholders for their support and trust in us. Ramco Cements is acknowledged as a trendsetting and pioneering company in India’s cement industry and it has also set a trail of benchmarks when it comes to value creation for shareholders. We have a unique record of providing 30 years of uninterrupted dividend to our valued shareholders while delivering an average return of 17% which is amongst the best in the industry.

Value creation for shareholders will remain core to our business. Our robust business model with strong cash flows of ₹ 1,102.47 Crores and low debt : equity ratio of 0.61 as on 31st March 2020 provides sufficient headroom for growth and cushion to resist any shocks. Our priorities will be to efficiently market products and becoming debt-free entity in the next three years.

On a closing note, Ramco Cements has always weathered and grown irrespective of good times or bad, up cycle or down. Each member of the Board, our management and our employees remain focussed and committed to sustain this growth trajectory. Last but not the least, my sincere gratitude to all the employees. I am confident that together we will emerge much stronger and resilient in the future. In the meanwhile, please stay safe and healthy.

Warm Regards

A V Dharmakrishnan