Demonstrating holistic performance
"We have what it takes to play a significant role in India'sgrowth story. With the right investments the right intent and the right approach we willcross many more milestones in the coming years."
It is a moment of pride for all of us to present to you our proposedfirst ever integrated report as part of our continued commitment to transparent andholistic stakeholder communication.
This report would highlight the entire spectrum of our value creationprocess with the relevant resources that are deployed and relationships that are involvedin producing the desired outputs and outcomes. SCL is one of India's first cementcompanies to adopt Integrated Reporting <IR> to raise the bar in transparentstakeholder communications.
Notwithstanding the COVID-19 catastrophe when I look back at FY2020 Ican say that the year was a mixed bag. While at the start of the year global growth wasstunted towards the fourth quarter we could see some easing in geopoliticaluncertainties and protectionist measures adopted by various countries. However globalgrowth was fragile and prone to various headwinds.
"The cement sector is a huge helping hand in supportinginfrastructure creation and has an important correlation with the socio-economicprosperity of any nation."
India continued to suffer from structural impediments such as creditcrunch low private capex and tepid consumption. The Reserve Bank of India (RBI) announcedsignificant rate cuts to infuse additional liquidity in the economy and undertook variousregulatory initiatives to reinstate the trust of stakeholders in the banking and financialsector. This was needed to support India's growing appetite for capital bolster economicgrowth and enhance the quality of life of average citizens.
Infrastructure creation is critical to take the economy to the nextorbit of growth. During the year the Government of India announced a NationalInfrastructure Pipeline with a proposed investment of C 102 Lakhs Crores which isexpected to go a long way in making India a US$ 5 trillion economic powerhouse by 2024.
In India the cement demand was subdued in the first half owing tocautious sentiment during the parliamentary elections while extended monsoons erodeddemand in the second half. The result was stagnant sectoral growth (1.5-2%). That saidwith large-scale infrastructure projects being planned the cement industry is expected tobenefit in the medium to long term.
SCL has undertaken two capacity expansion projects in Madhya Pradeshand Odisha. Our majority stake investment in Satguru Cements Private Limited a 1 MTPAcement production facility enhances our presence in the central Indian markets.Similarly our full ownership of Jajpur Cements Private Limited a grinding unit with a1.5 MTPA capacity strengthens our capability to fully serve the eastern belt. Both thesegreenfield projects are expected to be completed by September 2021 and our units inMattampally Gudipadu and Bayyavaram will chart a new growth chapter for SCL.
Even amidst a dynamic and challenging year we delivered a relativelyrobust performance with a slight dip in the revenue but a significant increase inprofitability at both operating and net levels. It's a good reflection of our unwaveringcost focus larger use of technology and long-standing commitment from our people. Iapplaud the management for holding the ground and delivering such results even amidstchallenging times.
With the world combating emerging risks such as environmentaldegradation and climate change the need for all businesses to pursue EnvironmentalSocial and Governance (ESG) priorities has become a standard ask.
Good mining practices technology-led and data-driven manufacturingprocesses proactive waste reduction strict emission control and increased use ofrenewable energy comprise our key environmental priorities. On the social front ourcontinued engagement with local communities ensure that they can also partner ourprosperity. In the past three years we have spent nearly C 3 Crores on corporate socialresponsibility initiatives with intervention areas ranging from infrastructure buildingto education and providing healthcare services to the disadvantaged sections of thesociety.
I must acknowledge the contribution of our 1800+ workforce on behalfof the Board and the leadership team. Their boundless passion and untiring efforts havemade us what we are today.
Having associated myself with your Company as its Chairman for nearlyfour decades I am leaving the board with a sense of satisfaction over my contribution toits growth.
We have what it takes to play a significant role in India's growthstory. With the right investments the right intent and the right approach I am sure yourCompany will cross many more milestones in the coming years. In this journey
I seek your continued support and guidance to it.
O. Swaminatha Reddy
Date 24th June 2020