I would like to first acknowledge and applaud the dedication and courage of themedical community sanitation workers essential service providers and law enforcementagencies in keeping the country healthy and away from the pandemic day in and day out.
COVID-19 has turned into a global crisis it is changing human attitudes and behaviorstoday. Your Company is relentlessly endeavoring to ensure the safety and health of notonly employees but all the communities living around our areas of operation.
The difficult times for the people and economies of the world and the country have notabated. Waves after waves of the pandemic are striking the country with ever-increasingvigor and variations. But every problem is to be taken as a gift since without problemswe would not be sharp and vigilant.
The tapering of the Covid-19 second wave coupled with an aggressive vaccination pushbrightened the nearterm prospects for the Indian economy. The real gross domestic product(GDP) growth was estimated at 22.1 percent in the April-June quarter as the Reserve Bankof India (RBI) said in its July bulletin. A solid increase in aggregate demand is yet totake shape as per RBI. Agricultural conditions are turning buoyant with the revival inthe monsoon.
But the danger of the third wave is lurking around the corner. The country and yourcompany are braced for the impact. The recovery of the economy would to a large extentdepend on the pace of vaccination the timing of government's expenditure and the extentof stimulus to the industry.
The latest forecast of GDP growth is about 9.5% and an almost similar growth rate ispredicted for Cement which is a flagship segment of your Company. With the world strivingto relocate their sourcing the opportunities for Indian manufactures would get greatlyenhanced.
Coming to the operations of your Company the pandemic of Covid impacted the companyduring the most period of the financial year 2020-21. However the company endured thevagaries. I am happy to state that your company recorded best-ever performance from theCement Segment. It is not an overnight success but a result of planning ahead even indifficult times like our expansion of cement lines.
Despite the lockdown which started right from March 2020 the cement sector founddemand for its products. The pent-up demand for cement helped in enhancing the volumes aswell as realizations. On the costs side the lower prices of coal helped in lower costs.The company also resorted to a stringent cost-control regime. Of course being on righttrack is not enough. We are conscious of the fact that competitors would try to run overus. In recent times freight rates coal prices have risen substantially. As part ofpersistent efforts to reduce costs we are setting up a packing plant near Chennai.
The Heavy Engineering unit could reasonably contain the losses as the Company remainedcommitted to its customer deliverables despite halting the manufacturing process for afew months. Here again the cost control helped in reducing some expenditure and thusleading to lower losses. The segment is exploring new opportunities to ensure bettermargins. With the revival of fortunes of cement and steel it is hoped that a few ordersfor equipment replacements would flow in.
In the Power segment hydel generation was decent with a good monsoon. Similarly withhigher cement production levels waste heat recovery and thermal powers performed betterowing to economies of scale.
The cause of worry is the Hospitality segment. The hotel which is dependent onoccupancies of rooms had to face severe losses due to complete lockdown conditions. Whenthe recovery was around the corner the second wave hampered the progress. This segment istotally dependent on free travel which in turn depends on the impact and pace ofvaccinations.
Regarding the sugar manufacturing facility in Vietnam the performance of thesubsidiary started improving from Quarter 4 of the financial year 2020-21 due toimprovement in realizations. Dumping from across the borders of that country is beingdiscouraged with a levy of duties.
Going forward with vaccinations picking up pace supporting faster normalization ofmobility levels and various initiatives of the Government of India includingprivatization of public sector enterprises monetization of assets implementation ofNational Infrastructure pipeline targeted investment incentives through theproduction-linked incentives scheme and the new Labor Code could spur investments andgrowth. The primary drivers of growth will be infrastructure and affordable housing. Ruraldemand aided by prosperity due to good monsoons would be a silver lining.
For your Company sustainability is an integral part of the business philosophy.
Our business growth and profitability are integrated with its contribution to societalwell-being and we continue to engage for the development of the communities where weoperate with social projects in education environmental conservation healthcare digitalliteracy and culture.
As Winston Churchill said Success is not final; failure is not fatal: it is the courageto continue that counts. And at KCP we believe that success usually comes to those who aretoo busy to be looking for it.
On behalf of the Board of Directors of the company I would like to thank all thestakeholders including investors suppliers employees banks people around ourfacilities and the governments at the States and at the Centre for all the support givenand confidence reposed in the Company with a long history.