The year FY2014-15 proved to be a satisfactory year at CMCL for some pertinent reasons.
CMCL successfully outperformed the cement industry across parameters:
A 30.50% growth in volumes as against a cement industry growth of 5.6%
A capacity utilisation of 70% (an increase of 15 bps over 2013-14).
A 43.11% increase in gross revenues to RS.1469.66 crore
A 84.87% increase in EBIDTA to RS.437.23 crore
CMCL was able to outperform its sectoral averages for various reasons:
Expanding capacities: The year 2014-15 was the first full year of operationsfollowing our capacity expansion. The Company's newly commissioned grinding unit inSonapur Assam produced 1.44 million tonnes of cement during the year under reviewcompared to 0.95 million tonnes in the previous financial year; the recently-commissionedclinkerisation unit at Lumshnong produced 1.55 million tonnes as against 1.10 milliontonnes during FY2013-14. The Company posted a 30.50% increase in overall volumes withcorresponding economies-of-scale.
Widening footprint: We continued to extend deeper into new geographies toposition ourselves not only as one of the leading cement manufacturers in North EasternIndia but also across the Eastern India. The result is that we now enjoy fair marketshares in the markets of both Bihar and West Bengal.
Enhanced visibility: We undertook numerous various initiatives to engage withdealers distributors masons and concrete technologists. As a means to this end weinitiated the Star Pravin Mason Certification programme to provide masons and constructionengineers the latest technological knowhow. This programme was led from the front byindustry veterans like M.A. Shetty a pioneer of concrete technology in India. The result:the Company's brand recall improved visibly and translated into enhanced offtake.
Sourcing locally: The Company engaged third-party grinding units in WestBengal procuring clinker from the mother plant in North East India to enhance our localpresence. The result was a visible reduction in delivery turnaround and a correspondingincrease in the number of satisfied clients.
The North Eastern states of India are relatively virgin markets when it comes to cementconsumption. Over the next 10 years India is expected to emerge as one of the most activeconstruction and infrastructure hubs securing prospects for cement manufacturers.Besides according to the Department of Industrial Policy and Promotion (DIPP) cement andgypsum products attracted foreign direct investment (FDI) worth US$ 3084.89 millionbetween April 2000 and December 2014.
In the 12th Five Year Plan the Central Government plans to increase investment in theinfrastructure sector to the extent of US$ 1 trillion. This is expected to incentivise anincrease in the cement industry's capacity by 150 million tonnes per annum. The governmentannounced a number of tax benefits for players operating out of North Eastern Indiahelping catalyse output and improve competitiveness.
At CMCL we believe we are well-placed to capitalise on these emerging realities forsome good reasons.
We carved out a sizeable market share of 23% in the region with no major capacityadditions expected in the immediate future.
We have carved a niche for ourselves on the back of our superior product quality andholistic customer engagement initiatives.
We have forged enduring relationships with key opinion makers like masons architectsand engineers.
We have fostered a healthy work culture resulting in one of the highest peopleretention rates.
Consequently our learning curve has declined our capacity utilisation has increasedour marketing coverage has widened and our brand recall improved.
In the years that lie ahead the Company aims to penetrate deeper into the existingareas of our presence (North Eastern India) and foray into other Eastern Indian states(apart from West Bengal Bihar and Jharkhand).
This will reduce the risk of CMCL's excessive dependence on North Eastern India andallow us to reaffirm our identity as one of the formidable cement players in the region.