"Growing other leaders from the ranks isn't just the duty of the leader it's anobligation." Warren Bennis
It has been an honor to lead the company as Chairman and Managing Director for 40 longyears and take the company this far with all the memories of modernization of the cementunits and the humungous expansion of the Engineering Unit into a versatile capital goodsmanufacturer.
My tenure witnessed the demerger of sugar businesses and addition of fresh capacitiesin Cement by way of Green field and brown field expansions and setting up of plants forgeneration of power from Wind Hydel Thermal and Solar.
The policies of transparent management with a set of prudent corporate governanceprinciples have also led the company to associate with companies in the global arenaestablished as world leaders in the fields in which we are focused. The association withFuller International Inc of USA in the cement technology sector resulted in the formationof Fuller K C P Ltd which performed exceedingly well and paid rich dividends.
Presently the company has an association with Fives group of France as a Joint Venturein the name of Fives Cail KCP Ltd and has been doing competently well with generoustechnical support from its partners.
After the demerger of the sugar businesses in 1996 the company with its richexperience in the sugar industry and in the field of machinery manufacturing for thatindustry set up a subsidiary KCP Vietnam Industries Ltd in Vietnam. This venture hasexpanded its crushing capacities since its inception and has been performing extremelywell.
Another significant area that the company has ventured into the Hospitality industrywith a 128 room four star hotel project by putting to beneficial use the available landin a strategic location in Hyderabad. Before I elaborate on the performance of theCompany in the year 2016-17 let me ponder over the economic events in the country whichhave relevance to the operations of your company.
GST the most significant indirect tax reform in decades has at last become realityand would be a game changer. It may not be the optimal GST structure but let the best notbe the enemy of the good. It is expected to usher in significant efficiencies and benefitsin the logistics chain across sectors and lift India's growth trajectory over the mediumrun.
Although somewhat disruptive in the short run demonetization is being leveraged tomove India towards a less-cash' economy. The recent data shows a small andtransitory hit to India growth from demonetization. It is expected to lift India's GDPgrowth to 7.4% in fiscal 2017-18 from 7.1% in the preceding fiscal. GST together with themove towards a less cash' economy will also give speed to the formalization of theeconomy
With this back ground now I proceed to the performance of the company.
The performance of the cement segment is heartening. The segment recorded a growth of15% in volumes. Despite de-growth in realizations demonetization blues the segmentregistered impressive best ever performance both in top line and bottom line. With thebrown field expansion at Muktyala unit likely to be completed by mid 2018-19 the volumesare expected to grow substantially.
On the power front hydel unit continues to disappoint as hardly any power could begenerated with scanty rains in the catchment areas. The thermal power generation was lowerin fiscal 2016-17 as the available surplus capacity could not be utilized to export toothers as was done in 2015-16 due to ample availability of power in AP & Telangana.Further the selling rates available in power exchanges also were not encouraging. With thebetter season Wind power could generate 78% more than that of 2015-16.
The engineering unit continues to struggle due to combination of reasons like therecovery from cycle Vardah' delayed reflection of impact of reforms etc. The Unitis vigorously pursuing the opportunities in defense space etc. apart from strengtheningits core competent areas of cement sugar and power.
The expansion from 6000 TCD of cane crushing to 8000 TCD in the Vietnam subsidiary hasbeen completed. But the effects of expansion could not get reflected in the financialperformance as the production was lower due to excessive rains in that area during theseason. The subsidiary has embarked on further expansion to 10000 TCD which is expectedto be on stream in about a year's time.
Finally let me thank all of you for your cooperation and confidence imposed and Istrongly believe KCP's brightest and most innovative days are ahead of it with the newManaging Director and Joint Managing Director and I look forward in contributing to itssuccess in a new role as Executive Chairman.