Last year our industry witnessed a historic event when two of the worlds largestcement companies merged. Holcim Ltd. Switzerland and Lafarge SA France announced thecompletion of their global merger in July 2015 to create LafargeHolcim Ltd. a leader inthe cement and building material industry present in 90 countries with over 115000employees. LafargeHolcim will support Ambuja in all our business functions just as Holcimhas so ably in the past. We look forward to strengthening our relationship withLafargeHolcim with even greater achievements enabled by the many synergies and interestsshared between us.
Indias slow-moving economy in 2015 adversely impacted the cement industry whichhas always been closely tied with the countrys growth. The demand for cement lastyear grew by just 1.5% on a YOY basis due to a weak rural economy and reduced governmentspending. A poor monsoon for the second consecutive year further affected the ruraleconomy.
Once again when faced with a challenge our teams used their grit and ingenuity tosteer the Company to safer ground. Because of their hard work Ambujas sales volumeremained constant through 2015 even in the face of weak demand. Our teams were able tooffset negative growth in the 1st quarter by improving sales performance in the 2ndquarter. They were also able to improve ef ciencies in cost management by using a betterenergy mix (pet coke and alternative fuels) helped in part by softer fuel prices. Howeverin the nal analysis weak cement demand excess capacity and failing prices had a negativeimpact on the Companys nancial performance with net sales lower by 5.5% to `9368crores. Net pro t was down by 46% at `808 crores due to lower prices additionaldepreciation and tax provisions and higher tax write-backs in 2014.
On a positive note the government has announced various initiatives that could lead togrowth for the cement industry. Revival of infrastructure projects would increase demandthereby reducing the gap between supply and demand. Going forward its notunreasonable to foresee cement demand enjoying a compounded growth rate of 6-7% over thenext ve years. This is expected to be driven by strong urbanisation and residential demandcoming from individual home builders along with governments announcement of variousinitiatives and their on-ground implementation. We are also con dent that our variousOperational Excellence Programs will yield results for the Company across every parameter.
The Company embarked on an initiative to strengthen customer support in 2015. A networkof 7 Ambuja Knowledge Centres (AKC) were added to the existing 20 AKCs that were set up inmetros and towns to reach out to construction professionals. These centres bring inworld-renowned speakers to give lectures and practical guidance on contemporaryconstruction practices. This enables small contractors across India to use cutting-edgetechniques to improve the quality and ef ciency of their work.
Over the last few years sustainability has been a key focus area for the Company. Ourjourney to achieve sustainability continued this year with improved performance ingovernance environmental protection and social responsiveness. Our efforts have bornefruit yet again. Id like to congratulate our teams for winning the prestigious CIISustainability Award for Corporate Excellence for the 5th year in a row.
Our CSR initiatives have also broken new ground. I am happy to share that the AmbujaCement Foundation (ACF) has made new strides to develop the employment skills of youngpeople in our communities. ACF has established 16 Skill and Entrepreneurship DevelopmentInstitutes (SEDI) across 10 states that provide vocational training in 12 sectors. Tilldate SEDI has trained over 26000 youth 70% of which have been successfully employed invarious industries. I am also delighted to share with you the outstanding performance oftwo intellectually challenged students of the Ambuja Manovikas Kendra (AMK) who broughtglory to their school at the Summer Special Olympics held in Los Angeles.
The coming year may be as challenging as the last. But I am con dent as in the pastthat our peoples I Can spirit will help us turn adversity into opportunityand we will rise to overcome every challenge the year brings.
With warm regards
25th February 2016