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Barak Valley Cements Ltd.

BSE: 532916 Sector: Industrials
NSE: BVCL ISIN Code: INE139I01011
BSE LIVE 12:34 | 07 Dec 22.50 -0.50
(-2.17%)
OPEN

23.70

HIGH

23.70

LOW

22.50

NSE LIVE 15:20 | 08 Dec 23.50 0
(0.00%)
OPEN

22.25

HIGH

23.50

LOW

22.15

OPEN 23.70
PREVIOUS CLOSE 23.00
VOLUME 390
52-Week high 34.40
52-Week low 13.70
P/E 86.54
Mkt Cap.(Rs cr) 49.86
Buy Price 22.50
Buy Qty 50.00
Sell Price 23.60
Sell Qty 25.00
OPEN 23.70
CLOSE 23.00
VOLUME 390
52-Week high 34.40
52-Week low 13.70
P/E 86.54
Mkt Cap.(Rs cr) 49.86
Buy Price 22.50
Buy Qty 50.00
Sell Price 23.60
Sell Qty 25.00

Barak Valley Cements Ltd. (BVCL) - Chairman Speech

Company chairman speech

BARAK VALLEY CEMENTS LIMITED ANNUAL REPORT 2006-2007 CHAIRMAN'S REPORT Dear Shareholders, It gives me immense pleasure to present the Eighth Annual Report of the Company for the year ending 31st March, 2007. Outlook for Cement The cement industry is experiencing a boom on account of the overall growth of the Indian economy. The demand for cement, being a derived demand, depends primarily on the industrial activity, real estate business, construction activity, and investment in the infrastructure sector. India is presently passing through a positive trend of growth on all these fronts and hence the cement market is flourishing like never before. Indian cement industry is globally competitive because the industry has witnessed healthy trends such as application of cost reduction measures and continuous technology upgradation. As observed by Fitch Ratings, a reputed global rating agency has commented that cement demand in India is expected to grow at 10% annually on account of rapid growth in housing projects, infrastructure activities and corporate capital expenditures. Indian Cement Industry is presently contributing approximately 6% of overall global production. The recent boom in Cement Sector has worked wonders for the cement manufacturing companies with the maximum capacity utilization for the first time in January, 2007. The consumption of cement is also likely to exceed 150 million tonne mark annually for the first time. Backed by the need for mammoth infrastructure development in the country the outlook of the Cement Industry remains buoyant. The cement industry has outpaced itself attracting top class cement companies in the country ramping up production capacity due to the recent boom in Housing Sector and increased activity in Infrastructure Development by State and National Highways and already underway National Highway Development Project (NHDP) resulting in increased demand of cement. Besides, Government's thrust on developing infrastructure facilities in the country by way of modernizing airports, seaports, railway stations etc. will further boost demand for the cement at national as well as regional levels. Cement Industry -Salient Trends The Indian cement industry is the second largest producer of quality cement, which meets global standards. The cement industry at present comprises of 130 large cement plants with an installed capacity of 156.26 million tones and more than 300 mini cement plants with an estimated capacity of 11.10 million tonnes making a total installed capacity of 167.36 million tonnes. Due to the on going expansion plans of various companies; the installed capacity is likely to be increased up to 189 million tones capacity by the end of September 2007. The Cement Industry has made tremendous strides in technological up gradation and assimilation of latest technology. Presently, 93% of total capacity in industry is based on modern and environment friendly dry process technology and only 7% is based on old wet and semi-dry process technology. Outlook for National Economy The Cement Industry is presently contributing approximately 1.3% of GDP and employs over 0.14 million people apart from being a significant contributor to the Central and State Government revenues through excise and sales tax. Cement production in India has grown significantly over past three decades. It is further expected to witness strong production and consumption growth of 10% during FY 2008 on account of befitting co-relation between GDP and increased activity in construction sector. Future Cement demand is likely to grow up in India due to increased spending on road and housing projects. Fundamentals of demand also look bright and cement demand in medium term is expected to grow by around 9%. Outlook for Cement Industry vis-a-vis BVCL in North East Region Your company is one of the major Cement producers in North -East region and India has vast potential for growth and expansion plans in this region. The Central Government has announced several incentives in the North Eastern region more particularly related to special accelerated road development programs at an estimated cost of Rs 46.18 billion. The Government has also decided to develop 1000 kms of access- controlled expressways. The North East Industrial and Investment Promotion Policy, 2007(NEIIPP, 2007) announced by the Government of India is also a step further towards developing the North-east areas. Government has declared various exemptions like income-tax exemption, excise duty exemption, capital investment subsidy, and interest subsidy for a further period of ten years. The various incentives offered by the Central and State Government, increasing demand from infrastructure projects and industrial/commercial ventures will prove to be quite in favour and interest of the company in the coming near future. Cement Production and Sales/ Financial Review It is indeed a matter of great satisfaction that your Company has been able to keep moving forward and surpass the targets set for itself. Efforts both on improving the efficiency parameters and cost compression on one hand and maximizing the production and sales realization on the other have been the mainstay of the Company's strategy. It is satisfying that the Company has made substantial progress on both the fronts. Reaping full benefits of the Company's strategy of focusing on its business, it has achieved 104.91% capacity utilization during the accounting year 2006-07, with achieving sales target of 1,59,545 tonnes. The turnover of the Company increased by 39.90 % and its Profit before Interest, Depreciation and Tax grew by a whopping 26% to Rs. 2405.79 lakhs as against Rs. 1909.13 lakhs in the previous year. Future Growth Plans Progress made by the Company on its on-going projects for expansion of the plant capacity as well as setting up of a grinding unit by its wholly owned subsidiary company (CIL), has been fairly satisfactory. The Grinding unit in CIL has already commenced its production from the month of April 2007 and as far as the expansion project of BVCL is concerned it is expected to commence its production from the month of October 2007 onwards. The Company's other ambitious project of setting up of a 6 MW Biomass based Captive Power Plant in its wholly owned subsidiary company (BEPL) is also progressing well. It is expected that the Power Plant will be commissioned by September 2007. The commissioning of this project would mark the end of Company's dependence on the power from the State Grid, which besides being very expensive suffers from inconsistent quality. The comparative cheaper cost of the captive power generation would further improve the bottom line of the Company. Another Project of 800 TPD Crusher unit at Meghalaya, in its subsidiary company i.e. Meghalaya Minerals and Mines Limited is also doing well and this Plant is expected to start its commercial production by the end of July 2007. Concerns for Cement Industry Recently, the Government of India has announced the scrapping of the Counter veiling Duty (CVD) of 16% and Special Additional Duty (SAD) of 4% on the imports of Cement to India. However, freight costs and port infrastructure were all factors in deciding imports of this high volume, low value commodity. The lowering of the import duty is unlikely to mount much pressure on the cement companies, as the cement prices are unlikely to soften since lower import duty has no material impact on the domestic industry. Acknowledgements I must not forget to take out some time for thanks giving firstly to workers and staff of the company at all levels for their unstinting hard labour and support and secondly to all those who are directly or indirectly have extended their co-operation and support to the company including government agencies, banks, shareholders, dealers etc. I greatly value the collective efforts of entire BVCL team and the contribution and involvement of my colleagues on Board in achieving the present corporate shape and status of the company. For Barak Valley Cements Limited Sd/- Bijay Kumar Garodia Chairman

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