The global economy continued to be subdued in 2016. The slowdown in the advancedeconomies of the West adversely impacted growth levels resulting in the slowing of theworld economic growth to 3.1% from 3.4% in the earlier year. The growth in emergingmarkets and developing economies was encouraging. however China and India experienced adeceleration. Financial markets reflected a broad uptrend notwithstanding Brexit and therate hikes by the Us Fed.
Recent data reveals that the global economy is gaining momentum. PMIs (Purchasingmanagers' Indexes) accelerating trade flows and better business and consumer confidenceare the key pointers. The IMF has projected global growth to notch up to 3.5% in 2017 from3.1% last year. Growth in the advanced economies is estimated at 2% with US growth at2.3% the Euro area at 1 .7% and Japan at 1.2%. Growth in the emerging markets is peggedat 4.5% driven largely by China india and the aseAN region. latin America is expected togrow only 1.1% affected by the weak trend in Brazil.
India is on a roll. There is a buzz about india as it blazes forth as the fastestgrowing economy in the world at 7.1%. The trade deficit in 2016-17 was USD 106 billionlower by 11% over the previous year. The current account deficit has been significantlypared. India's foreign exchange reserves as at March end 2017 were UsD 370 billion.investors are bullish. Foreign investment flows which were at over USD 60 billion inFY-17 are scaling new records. Markets are buoyant. stock index is at a historic peak.india's global ranking has jumped up in competitiveness and on the innovation index.
The various initiatives and reforms of the Modi Government have built the platform fora quantum leap ahead. High impact national projects coming to grips with structuralissues which were holding back the country's progress innovative approaches in policymaking - have collectively contributed in driving india on a high growth trajectory. Goingforward the abiding sense is one of immense optimism and confidence in the future with thenation slated to grow at 7.5% to 8%. india's narrative is unmatchable.
That said if there is one subject that needs greater attention on the government'sradar for the ensuing years it is the revival of investment activity and creation ofquality jobs in large measure. The Government is seized of these issues. The Governmenthas taken many steps including a sharp focus on improving ease of doing businessspeeding of green clearances and stepping up public sector outlays for infrastructure. ibelieve it is a matter of time before the private sector investments pick up - as NPAsare resolved and corporate balance sheets are deleveraged.
Your Company's Performance
In the first half of the year the cement industry saw moderate growth. Subsequentlysluggish demand from the housing segment coupled with the absence of private sectorcapital expenditure impacted cement demand.
Against this backdrop during 2016-17 your Company recorded net revenues of US$ 3.78billion (' 25375 crores) and EBiTDA of Us$ 0.873 billion (' 5861 crores) a rise of 9%.
During the year your Company marked major milestones. First your directors approved ascheme of arrangement between Jaiprakash associates Limited (JAL) and Jaypee CementCorporation Limited (JCCL) wholly-owned subsidiary of JAL for the acquisition of some ofits cement plants located in Madhya Pradesh Uttar Pradesh Himachal Pradesh Uttarakhandand Andhra Pradesh of a total capacity of 21.20 mtpa which your Company is acquiring atan enterprise value of ' 16189 crores.
The Scheme has been approved by the shareholders and creditors of your Company theCompetition Commission of india the National Company Law Tribunal and the Securities andExchange Board of india. A joint application for the transfer of mineral concessions fromJAL and JCCL to your Company has been made with the respective State Government offices.After receiving these the process will move forward.
This move is essentially for geographic market expansion which will lead to yourCompany's entry into high growth markets of india. The operations will be strengthened bythe consequent technological upgradation and enhancement in capacity post acquisition. itwill lead to creating synergies in manufacturing distribution and logistics. As a resultadvantages such as economies of scale and reduced lead time to markets will be achieved.These will enhance competitiveness benefit consumers and in turn create value forshareholders with the acquisition of ready-to-use assets. We expect the transaction to beconsummated by the first quarter of FY18.
Furthermore your Company has commissioned cement grinding units at Jhajjar in HaryanaDankuni in West Bengal and Pataliputra in Bihar. A cement bulk terminal went on stream atPune in Maharashtra. With the commissioning of these assets your Company's cementcapacity in india now stands at 66.3 MTPA.
To reduce lead distance and to service the markets of south-west Madhya Pradesh yourCompany will be setting up a 3.5 mtpa integrated cement plant at Dhar MP and at a capexof ' 2600 crores. its commercial production is expected to commence by Q4FY19.
Consequent to this expansion and the acquisition of the cement plants of JAL and JCCLyour Company's cement capacity will stand augmented to 95.3 mtpa including its overseasoperations.
It is with great pride that i record that UltraTech is the largest cement player inIndia and the fifth largest on the world stage.
As i look ahead i feel optimistic. india as we are aware is moving on to a highergrowth track. The Government's thrust on infrastructure development housing interestrate subvention scheme on housing loans the development of smart cities among otherprojects beam a good signal to the cement sector. i expect UltraTech to perform well.
A big thank you to all of our employees
Organisational agility excellence in execution customer centricity and costoptimization are a given. i believe to drive business growth in a sustainable manner thecriticality of our people - our intellectual capital is beyond expression. We deeplyvalue our employees' engagement and their commitment to our culture of innovation andperformance accountability.
Aditya Birla Group: In perspective
At the Group level our performance both in terms of revenue and earnings has beengrowing. in fact our EBiDTA has been the highest ever. in line with our people focus wehave strengthened the capacity of our leadership bench as well as employees across levels.Our Group's HR agenda is even more sharper and defining of our future. Our HR function hascollectively developed and clearly articulated the HR 2020 strategy across theorganization. it has clear actionables and review mechanisms focused on talenttechnology productivity and employer brand.
On the people front it has truly been an exciting year of development building on thestrong foundations of the earlier years.
As i had shared with you earlier we have 3 accelerated leadership programs. First -The Turning Point which prepares high potential leaders for P&L roles.
Second - Step Up which infuses a ready pipeline for Functional Head roles and
Third - Springboard designed especially for high caliber women leaders.
These have enabled us set up the requisite bench strength of leaders.
We have prepared 123 leaders for higher responsibilities over the last one year. ofthis 26 have already taken on new roles. The Business leadership and i have personallyreviewed talent across the business and am happy to see the evolution of our structuredsuccession plans.
The hiring freeze came into effect in January 2016. This coupled with our leadershipdevelopment actions has resulted in extremely encouraging people moves. over the lastyear we witnessed 5500+ career movements across the Group. of these 600+ wereinter-business movements 150% higher than the previous year.
The Aditya Birla Group leadership Program (ABGLP) is another strong source of buildingleaders. it has gained greater traction this year with 67% higher intake. From the earlierbatches 95 participants have over the last 2 years been given cross business andfunction exposures grooming them for a holistic perspective. i am happy to share that wecontinue to be an employer of choice amongst the top B schools in india. our Groupfeatures among the formidable Top-5 in the A C Nielsen - CRI Campus Recruitment indiaindex 2016 as well.
Additionally to accelerate opportunities for our talent we have set up talent Councilsled by Business Heads and Directors at the business and Group levels. Up until now morethan a 100 talent Councils meetings have happened across the Group where the developmentplans of approximately 3000 colleagues have been discussed and actions taken.
Project Vega is yet another initiative launched this year. its basic objective is toreview the agility of decision making in the organization keeping in view end-customerimpact. This has yielded significant changes to internal processes delegation ofauthority and speed of decision making in turn empowering teams and freeing up leadershipbandwidth. This along with our focus on technology enabled processes i believe willkeep us sharp and nimble.
Furthermore to hone and enhance our functional expertise Gyanodaya the Aditya BirlaGlobal Centre for Leadership & Learning launched Functional academies last year. Thesales Marketing & Customer Centricity academy and HR academy enabled 1150 leadersbuild deeper expertise in their domain areas. Gyanodaya continues to deliver superiorlearning programs with over 1583 managers enrolled last year.
Additionally the Gyanodaya Virtual Campus hosts more than 500 e-learning modules inmultiple languages. During the year over 31664 employees accessed these e-learningprograms. I am happy to update you that we are doubling our capacity in Gyanodaya throughupcoming expansion plans.
Our Group's solid reputation robust financials the quality and commitment of ourtalent our leadership positions in our businesses our operational excellence and our Csrengagement are our strengths that i believe will see us ride the wave of success.
Kumar Mangalam Birla