J.K. Cement: Leading The Pack
On December 5, the Reserve Bank of India (RBI) set at rest many misgivings by reposing faith in India’s “macroeconomic fundamentals” and a sustained increase in the rate at which the gross domestic product (GDP) is growing. The RBI forecast a 7.4 per cent growth in GDP in the ongoing fiscal and saw it at a 7.5 per cent canter in the first half of 2019-20, with increased flow in investment. During the ongoing fiscal (2018-19) some of the gloss in the GDP had rubbed off from a spurt in infrastructure building, which J.K. Cements Limited (JKCL) Chairman and Managing Director Yadupati Singhania likes to describe as a “revolutionary phase”.
The pick up in building of highways, flyovers, skywalks and other infrastructure projects gave a fillip to many manufacturing industries, the cement industry among them. The pick up in demand led to a spurt in production, revenues and profits. The total output of cement in the 2017-18 fiscal was 455 million tonne and leading the pack in the industry was J. K. Cement. The company saw a nine per cent jump in revenue to Rs 4,758.17 crore in FY18. Its EBITDA (earnings before interest, tax, depreciation and amortisation) catapulted by 10 per cent to Rs 760.65 crore and profit after tax (PAT) jumped 62 per cent to Rs 341.87 crore.
According to the India Brand Equity Foundation (IBEF), 210 large cement plants now account for 410 million tonnes of installed capacity in the country. The rest of the cement in the market comes from 350 mini cement plants. Of the 210 large cement plants in India, 77 are located in Andhra Pradesh, Rajasthan and Tamil Nadu.
Cement production in India increased from 230.49 million tonnes in 2011-12 to 297.56 million tonnes in 2017-18, indicating a sustained demand despite the recent slump in housing projects. Cement, clinker and asbestos cement exports increased at CAGR (compound annual growth rate) of 10.37 per cent between FY12 and FY18, accounting for a cumulative industry turnover of $433.87 million.
During the same period, cement, clinker and asbestos cement imports increased at a CAGR of 11.14 per cent to $174.36 million in FY18. In the first six months of the fiscal (April to September 2018) $ 79.61 million worth of cement, clinker and asbestos cement were imported, pointing to a growing demand. Cement, clinker and asbestos cement exports during the period were worth $237.75 million.
J. K. Cements CMD Yadupati Singhania attributed his company’s outstanding performance to committed team work, excellence and integrity of its workforce. Singhania said while the company was expanding to cope with rising demand, it was also sensitive toward the environment and to sustainable development.
He was optimistic about the future of the industry because of the “revolutionary phase” that the infrastructure sector was going through. “There are some developments that are likely to drive the industry in the longer run,” Singhania said, notwithstanding challenges like a slowdown in demand in the housing sector, ban on sand mining and use of pet coke.
He was sanguine that the cement industry would get a major boost by the end of FY19 and in 2020, from policies like ‘Housing for All’. An indication of its faith in the “revolution” in infrastructure building is a decision to increase capacity in grey cement by 4.2 million tonnes per annum. J.K. Cements is also investing around Rs 2,000 crore in the brownfield expansion of its facility in Rajasthan and spilt grinding units in Uttar Pradesh and Gujarat over the next 24 months. “Subsequently, we are setting up a greenfield project at Panna in Madhya Pradesh, where we already have a mining lease,” Singhania said.
The company, which is 38 in BW Businessworld’s overall list of the Most Respected Companies of 2018 and top most in the sectoral list, has achievements that go beyond cement production. It has also had a special focus on preservation of national heritage sites. Along with infrastructure and rural development projects, J. K. Cements has also demonstrated interest in promoting education. The cement conglomerate has done its bit for skill development and livelihood opportunity projects for women too.
