This is an unprecedented time like no other in our lives. The COVID-19 pandemic continues to drive uncertainty, stress and trauma. My heartfelt sympathies are to the many families who have been adversely impacted by COVID-19. At the same time, on behalf of all at Ramco Cements, my immense gratitude to all the doctors, medical staff members and the frontline staff at hospitals and to all the essential workers and volunteers for serving and caring for people in need.
While the pandemic has caused severe social crisis, its economic ramifications have also been manifold. It has pushed majority of global populace under lockdown and triggered global recession. The Indian economy too is no exception. Majority of sectors have been impacted, including the infrastructure segment which may see delays in investments due to fiscal constraints.
Though the near-term scenario may seem bleak, let us not forget that the country has risen stronger from many such past crises. Though recovery may take time, we are optimistic of the longer-term outlook. Measures by RBI to reduce repo rates and by the Government to roll out ₹ 20 Lac Crore economic-cum-relief stimulus package will help revive the economic engine.
It is noteworthy that amidst this challenging scenario marked by sluggish demand and pressure on input costs, your Company delivered a steady performance.
The Indian cement industry which was already dealing with difficult economic scenario too was impacted. Lower government spending, liquidity crunch in the real estate along with monsoon issues and natural calamities led to a 1% decline in demand in FY 2019-20. Aggressive capacity addition by the industry players led to the capacity utilisation falling by an estimated 3-5 percentage points as demand slumped.
It is noteworthy that amidst this challenging scenario marked by sluggish demand and pressure on input costs, your Company delivered a steady performance. Our capex programmes largely remained on track. The grinding capacity at Kolaghat, West Bengal and Vizag, Andhra Pradesh have been successfully doubled and the establishment of greenfield grinding unit at Haridaspur, Odisha is all set to commission. The other projects of greenfield Cement Plant at Kalavatala and establishment of Line III at Jayanthipuram Cement Plant both in the State of Andhra Pradesh are scheduled for commissioning by the end of FY 2020-21.
This additional capacity comes on stream at a time when the demand is expected to be weak. Factors such as weak global demand, supply disruptions, grappling economy with lockdown and factory shutdowns and delayed capex cycle will impact the construction industry. However, we expect the demand to revive from the second half of FY 2020-21 with pick up in rural housing, Pradhan Mantri Awas Yojana (rural), Pradhan Mantri Gram Sadak Yojana and spending on key infrastructure projects. Our focus until then will be to stabilise operations at the newly commissioned plants and ensure steady progress of ongoing projects. More importantly, these plants being strategically located in the Eastern part of India will ensure faster recovery. This region is largely underpenetrated and thus has high growth potential compared to rest of our country.
I also believe that our ability to differentiate will ringfence us. Ramco Cements has been a company where manufacturing is largely accompanied by focussed investments in research, service and information technology. Our feet on the ground and decades of domain expertise enable us to understand the gaps in the market and anticipate needs which ensures consumer delight.
Our practical insights combined with superior technical research allows us to develop right and superior quality products. Our product bouquet comprises specific grades and types of cement that are customised for specific purposes and provide the required differentiation to consumers. With our technical advisory services, we ensure that the consumers use the right products for right applications in the right way which is essential to get maximum benefit out of it. Our MACE division comprising of a highly experienced technical team plays an invaluable role in this endeavour.
Our robust information technology platform has been a true game changer. It enables us to run business efficiently and control operations end-to-end besides ensuring hassle-free supply chain management with real-time information for just-in-time delivery.
Alongside business, Ramco Cements has been a strong proponent of environment protection and sustainable development with its 4P bottom line approach – Product, Profit, Planet and People. We are continuously undertaking research and investing in green energy to make our products and processes more sustainable. We are increasingly using IT in supply chain management for better planning and rationalising logistics which has reduced the number of truck movements. Our safety practices are benchmarked to global best practices.This was evident during the COVID-19 pandemic where we carried out regular temperature checking of employees and truck drivers along with carrying out sanitisation.
We are continuously undertaking research and investing in green energy to make our products and processes more sustainable.
Our community engagements around education, health and skill development are contributing to holistic socio-economic development of villages.
I take this opportunity to congratulate the senior leadership and the team whose tireless efforts has led to a good performance even in tough times. It only goes on to show their dedication and passion. I also thank all our stakeholders for their continued support and the members of the Board for their guidance. Our efforts will continue to deliver sustainable growth and ensure value creation for all stakeholders.
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