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JK Lakshmi Cement Ltd.

BSE: 500380 Sector: Industrials
NSE: JKLAKSHMI ISIN Code: INE786A01032
BSE 00:00 | 14 Dec 279.65 5.70
(2.08%)
OPEN

290.00

HIGH

294.00

LOW

278.00

NSE 00:00 | 14 Dec 280.05 6.00
(2.19%)
OPEN

281.80

HIGH

291.00

LOW

277.40

OPEN 290.00
PREVIOUS CLOSE 273.95
VOLUME 12239
52-Week high 484.00
52-Week low 249.55
P/E 51.41
Mkt Cap.(Rs cr) 3,291
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 290.00
CLOSE 273.95
VOLUME 12239
52-Week high 484.00
52-Week low 249.55
P/E 51.41
Mkt Cap.(Rs cr) 3,291
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

JK Lakshmi Cement Ltd. (JKLAKSHMI) - Chairman Speech

Company chairman speech

Dear Shareholders

The financial year 201 7-18 seems to be an inflection point for the economy and as canbe seen later in this message for the company as well. The turbulences caused bystructural reforms seems to have calmed down now. After turning the corner the countryseems to be picking up speed along a faster growth track; by any reckoning the country isset to retain its position as the fastest growing major economy for years into the future.

Most macro trends in our sector are looking up including the tax revenues grosscapital formation & the demand is gathering momentum. The Cement industry is noexception which is undergoing a phase of consolidation. After a spurt in capacityadditions that was witnessed during last decade; during which the industry capacity hasalmost doubled to over 450 Million MTPA; the pace of new capacity addition hasconsiderably slowed down.

However considerable surplus has already been created in the system because ofsub-optimal demand growth in last 3-4 years; which fortunately now has gathered momentum.Nevertheless even at current pace of growth the surpluses will take at least 3-4 moreyears to be fully absorbed. Though this is not to say that the new capacities shall notbe added until existing capacities are fully absorbed but hopefully it would be moremature and responsible.

Locations of the cement capacities are largely a factor of availability of the limestone which is not uniformly available in all geographies. As a result while there is anoverall surplus in the system there are pockets of huge surplus while there are areaswhich are relatively well placed. The cement prices in these pockets of excess have been abig casualty so much so that the retail selling price in many markets today are whatprevailed 5 years back. The cost pressure on the other hand has accelerated considerablyowing to the steep increase which the oil prices has seen in the international market. Theoverhang of supplies has impacted the cement prices considerably especially in the marketsof high surplus.

The cement industry to some extent is witnessing predatory pricing in some segments ofthe market. In our response to the prevailing industry and market conditions we haveadopted a calibrated approach. Starting with completion of various projects that we haveundertaken in last 3 - 4 years we are now focusing on consolidating our presence inoperating markets. This is with a view to optimize our logistics costs. The efficienciesand cost parameters of the new capacities and expansions are being brought at the levelwhich the mature plant at Sirohi has already achieved and which has enabled the plant tobe in the league of the least cost producers. Absence of adequate captive power capacityin our eastern operation was one of the cost handicaps that we sought to correct first byinstalling WHRP at Durg in FY 2018 and the balance power requirement shall be met by thecaptive thermal power plant which shall be completed during the ongoing financial year. Weare confident that the steps we are taking on all fronts would hold us well in theemerging growth period not withstanding the short term challenges of unremunerative pricesand incessant cost push.

While the future looks to be full of promises the year gone by was full of challenges.If on one hand industry witnessed softening of prices especially in non trade segment toan unprecedented low levels it also faced the challenge of rising input costs especiallyin fuel energy and logistics. In respect of fuel besides the increasing priceschallenges were also faced on account of uncertainty of availability of Petcoke - which isa source of energy as well as feedstock in clinker manufacturing. Undoubtedly these havetaken their toll on the operating performance of the industry with your company not beingan exception. Yet with our heads high and feet firmly on ground despite such challengesyour company grew its turnover by 8% and operating profits (EBITDA) by 10% in FY18.

Future is all about team work collaboration and cooperation. Different functionsdepartments teams and individuals in the organisation have collaborated together todeliver world class manufacturing facilities operational efficiencies and have setbenchmarks in project execution. For me this word 'together' has larger meaning as itpertains to not only the company and its people but includes its other group associatestheir people all the stakeholders the community and the environment. If together we havecome this far i.e. growing from a modest capacity of 0.5 million MTPA to more than 12million MTPA now collectively we can go even farther. Even for the country with everincreasing focus on democratic values; and cooperative & collaborative federalism; theword together has far deeper meanings and insights. With India considerably improving itsinternational ranking and the states competing between themselves on 'Ease of DoingBusiness' there can never be a better opportunity than this to collaborate cooperateand work together to take the next big leap.

For India to retain its position as a strong economic contender it will continuouslyhave to invest not just in the physical infrastructure but in its social health andeducation infrastructure too. Number of initiatives taken by the government in thisdirection are a precursor to these developments and the pace of these developments willonly step-up in the coming years. We are keeping our antennas open to scout opportunitiesfor aligning our own growth with economic growth that our country is witnessing.

As we take bold and firm steps into the future I would like to express my utmostgratitude to all our customers shareholders channel partners business associatesfinancial institutions and all our employees who have bestowed confidence and faith in us.Their continued trust and invaluable support motivates and inspires us to keep deliveringa concrete performance year after year.

BHARAT HARI SINGHANIA -

CHAIRMAN & MANAGING DIRECTOR