I am enthused to connect with you once again to share a bit on globaleconomy and the overall performance of your Company.
During the year 2016 the world economy grew at 3.1%. The recentforecast suggests better growth going ahead on the back of better global demand andoptimistic financial markets. China grappled with slowdown in its GDP growth rate whichstood at 6.7% in 2016 and further deceleration is expected to continue over the next twoyears. On the other hand Indian economy being the bright spot on global map grew at 7.1%in FY17. The softening of oil prices has been favorable for our economy; however they havestarted firming up of late which might push the upward trajectory of inflation and currentaccount deficit.
The long awaited GST Bill has seen the light of the day. This wouldlead to transparency in the way of doing business leading to gradual shift in businessfrom unorganized to organized players over medium to long time. Two of the Company'sDivision Tiles and RMC have large presence of unorganized players. The implementation ofRERA would bring further transparency and better execution in the real estate segmentleading to better demand for Company's products in the medium term. The governmentinitiatives like 'Make in India' 'Housing for All' 'Smart Cities' and particularly theInfrastructure status that has been granted for affordable housing in the Union Budget2017-18 augurs well for the construction industry. Many States have also re-aligned withGovernment's thrust on development as core agenda with increased spend on infrastructureand housing in State Budgets.
Coming to Company's performance for the FY17 it should be viewed inlight of two major events the heavy monsoons in the region that the Company sells cementand demonetization. Cement division was particularly impacted as Satna belt saw one of thehighest rainfalls in several decades. While business activities are back topredemonetization period it created impact on all the three Divisions in the short term.
Despite the uncertainties due to above events the Company was able tosustain overall performance as compared to previous year. The Cement Division benefittedfrom the ongoing cost rationalization measures. The Company undertook several initiativesin past years like increase in pet coke usage resorting to imported coal and reduction inpower consumption.
I would take this opportunity to highlight few key developments duringFY17. Further details are part of MD&A.
A Company signed a power supply agreement with BLA Power for sourcing25 MW of power for its plant under the Captive Arrangement as per the Electricity Rules2005.
A The Division managed to optimize on logistic costs despite increasein fuel price in the later part of the year.
A Supply agreement with ECO Cements Ltd (ECL) for Bihar market. ECLwill manufacture and supply cement to the Company as per the Company's quality and otherspecifications.
A The Company has also successfully won the bid for 138300 tonnes perannum of coal from South Eastern Coalfields Ltd to partially secure the fuel requirementfor the next 5 years.
A The premium/better priced brands such as 'Hitech' 'Duratech' and'Champion Plus' together contributed nearly 11% of overall volumes as compared to 6% inFY16.
The TBK Division is in consolidation mode and we are relentlesslyworking on improving the performance. The division has scaled up the marketing activitiesand distribution channels. Further focus is on expanding product range launch newproducts and display centres. We have sales team in place to generate demand for dealersthrough strong influencer connect. We are expanding presence in new geographies. Webelieve that the above initiatives should help to improve utilization levels and productmix.
The RMC Division's performance was also impacted due to heavy monsoonsand demonetization. With strong order book in the Mega Projects Vertical and gradual pickup in the real estate sector we see good potential in this segment.
India has a significant growth potential and would immensely benefitfrom the ongoing reforms from a stable and forward looking Government. The major thrust oninfrastructure sector and affordable housing in the recent budget along with forecast ofnormal monsoon this year will certainly push the growth trajectory. This favourableenvironment will be conducive for growth and will increase the sales of Cement RMC andTBK segments.
I thank all the stakeholders for their immense contribution and beliefin the Company. At the same time I am also grateful to all our employees for theirrelentless efforts and dedication towards the organization.