My Dear Shareholders
"We live in interesting times" is a saying to denote thatthere is so much confusion and there are several uncontrollable events around you. I amreminded of this as I sit down to share few of my thoughts. I had mentioned in lastyear's letter to you that the "Game Changer" will be vaccination for India. Oursecond wave was lethal but third wave was relatively mild due to vaccination. Otherwisewith our health infrastructure crumbling down like pack of cards we would have been inreally very bad shape in third wave.
Post this life was slowly returning to normalcy and then came thebiggest bolt from blue - Russia-Ukrainian war. This has changed the economy andgeo-political situation to the worst ever levels. Apart from loss of lives and threat toGlobal peace the cost of this war is being borne by the entire world in terms of highcost - be it oil gas coal or wheat. World is now experiencing the hyper-inflation ithas not seen in many decades. The economies which were used to almost zero inflation areexperiencing 8-10% inflation throwing every economic situation out of bounds. Interestrates have been rising in the western world never seen before and this is threatening torise even with faster pace.
This has already impacted cement and other large industries very badly.We import about 85% of oil needs being the third biggest oil consuming and importingnation. Our petrol diesel and gas prices have shot up twice over causing ripples in ourinflation indices.
Cement as you are aware is one of the most energy intensiveindustries. Rise in fuel prices specially coal has impacted our Company the most. Our costof production has gone up by almost 20% due to this. We are of course very fortunatethat we have our own port and we could import high quality of coal straight on our portsaving on time and cost in these "strange times". It's my fervent hope andprayer that the Global peace is restored soon and we get on with life and see "newnormal" times very soon.
Meanwhile in this gloom and doom your company continues to excel. Ourteams really rose to the challenging times bracing 2nd and 3rd waveand huge increase in cost of production due to rise in fuel costs. We have produced andsold "HIGHEST EVER" cement - 1.2 million tonnes. I am indeed very pleased andproud of our team efforts to overcome these adversities and have posted highest everEBITDA of Rs 121.06 Crores. As mentioned in my previous letter your board of directorsbelieve in rewarding the Shareholders by
paying high dividends. I am very pleased to share a high payout ofdividend we have proposed 20% final dividend (in addition to 15% interim dividend) -total Rs. 3.50 per share which makes a payout ratio of over 90% perhaps highest in cementindustry. I am also very happy to share our best-in-class financial ratios:
Dividend Payout Ratio - 91%
Dividend Yield (at current price of Rs. 65 per share) -
I am also happy to share that we will soon be generating and consumingover 65% of our power needs through green energy. This will make us not only more relianton our captive resources but at the same time save our climate from carbon emission.
As I close this letter there is a big development in cement industry.Adani group in India has just announced takeover of 2 of the largest cement companiesAmbuja and ACC Ltd from Holcim. Ambuja/ACC form part of 2nd largest cementproducer in India and once this takeover is completed we would see the exit of thelargest cement producer in the world and emergence of Adani group in cement space. Iexpect this to change the market dynamics of cement for all the time to come.
I remain optimistic as ever hopeful that the war will end soon and wewill have good growth in cement demand and your company doing well in the coming years -as always.
|Best Regards || |
|Anil Singhvi || |
| ||18th May 2022 |