It gives me immense pleasure to present the Eighth Annual Report of the
Company for the year ending 31st March, 2007.
Outlook for Cement
The cement industry is experiencing a boom on account of the overall
growth of the Indian economy. The demand for cement, being a derived
demand, depends primarily on the industrial activity, real estate
business, construction activity, and investment in the infrastructure
sector. India is presently passing through a positive trend of growth
on all these fronts and hence the cement market is flourishing like
never before. Indian cement industry is globally competitive because
the industry has witnessed healthy trends such as application of cost
reduction measures and continuous technology upgradation. As observed
by Fitch Ratings, a reputed global rating agency has commented that
cement demand in India is expected to grow at 10% annually on account
of rapid growth in housing projects, infrastructure activities and
corporate capital expenditures. Indian Cement Industry is presently
contributing approximately 6% of overall global production. The recent
boom in Cement Sector has worked wonders for the cement manufacturing
companies with the maximum capacity utilization for the first time in
January, 2007. The consumption of cement is also likely to exceed 150
million tonne mark annually for the first time.
Backed by the need for mammoth infrastructure development in the
country the outlook of the Cement Industry remains buoyant. The cement
industry has outpaced itself attracting top class cement companies in
the country ramping up production capacity due to the recent boom in
Housing Sector and increased activity in Infrastructure Development by
State and National Highways and already underway National Highway
Development Project (NHDP) resulting in increased demand of cement.
Besides, Governments thrust on developing infrastructure facilities in
the country by way of modernizing airports, seaports, railway stations
etc. will further boost demand for the cement at national as well as
Cement Industry-Salient Trends
The Indian cement industry is the second largest producer of quality
cement, which meets global standards. The cement industry at present
comprises of 130 large cement plants with an installed capacity of
156.26 million tones and more than 300 mini cement plants with an
estimated capacity of 11.10 million tonnes making a total installed
capacity of 167.36 million tonnes. Due to the on going expansion plans
of various companies; the installed capacity is likely to be increased
up to 189 million tones capacity by the end of September 2007.
The Cement Industry has made tremendous strides in technological up
gradation and assimilation of latest technology. Presently, 93% of
total capacity in industry is based on modern and environment friendly
dry process technology and only 7% is based on old wet and semi-dry
Outlook for National Economy
The Cement Industry is presently contributing approximately 1.3% of GDP
and employs over 0.14 million people apart from being a significant
contributor to the Central and State Government revenues through excise
and sales tax. Cement production in India has grown significantly over
past three decades. It is further expected to witness strong production
and consumption growth of 10% during FY 2008 on account of befitting
co-relation between GDP and increased activity in construction sector.
Future Cement demand is likely to grow up in India due to increased
spending on road and housing projects. Fundamentals of demand also look
bright and cement demand in medium term is expected to grow by around
Outlook for Cement Industry vis-a-vis BVCL in North East Region
The company is one of the major Cement producers in North -East region
and India has vast potential for growth and expansion plans in this
region. The Central Government has announced several incentives in the
North Eastern region more particularly related to special accelerated
road development programs at an estimated cost of Rs 46.18 billion. The
Government has also decided to develop 1000 kms of access- controlled
expressways. The North East Industrial and Investment Promotion Policy,
2007(NEIIPP, 2007) announced by the Government of India is also a step
further towards developing the North-east areas. Government has
declared various exemptions like income-tax exemption, excise duty
exemption, capital investment subsidy, and interest subsidy for a
further period of ten years. The various incentives offered by the
Central and State Government, increasing demand from infrastructure
projects and industrial/commercial ventures will prove to be quite in
favour and interest of the company in the coming near future.
Cement Production and Sales/Financial Review
It is indeed a matter of great satisfaction that the Company has been
able to keep moving forward and surpass the targets set for itself.
Efforts both on improving the efficiency parameters and cost
compression on one hand and maximizing the production and sales
realization on the other have been the mainstay of the Companys
strategy. It is satisfying that the Company has made substantial
progress on both the fronts. Reaping full benefits of the Companys
strategy of focusing on its business, it has achieved 104.91% capacity
utilization during the accounting year 2006-07, with achieving sales
target of 1,59,545 tonnes. The turnover of the Company increased by
39.90 % and its Profit before Interest, Depreciation and Tax grew by a
whopping 26% to Rs. 2405.79 lakhs as against Rs. 1909.13 lakhs in the
Future Growth Plans
Progress made by the Company on its on-going projects for expansion of
the plant capacity as well as setting up of a grinding unit by its
wholly owned subsidiary company (CIL), has been fairly satisfactory.
The Grinding unit in CIL has already commenced its production from the
month of April 2007 and as far as the expansion project of BVCL is
concerned it is expected to commence its production from the month of
October 2007 onwards.
The Companys other ambitious project of setting up of a 6 MW Biomass
based Captive Power Plant in its wholly owned subsidiary company (BEPL)
is also progressing well. It is expected that the Power Plant will be
commissioned by September 2007. The commissioning of this project would
mark the end of Companys dependence on the power from the State Grid,
which besides being very expensive suffers from inconsistent quality.
The comparative cheaper cost of the captive power generation would
further improve the bottom line of the Company.
Another Project of 800 TPD Crusher unit at Meghalaya, in its subsidiary
company i.e. Meghalaya Minerals and Mines Limited is also doing well
and this Plant is expected to start its commercial production by the
end of July 2007.
Concerns for Cement Industry
Recently, the Government of India has announced the scrapping of the
Counter veiling Duty (CVD) of 16% and Special Additional Duty (SAD) of
4% on the imports of Cement to India. However, freight costs and port
infrastructure were all factors in deciding imports of this high
volume, low value commodity. The lowering of the import duty is
unlikely to mount much pressure on the cement companies, as the cement
prices are unlikely to soften since lower import duty has no material
impact on the domestic industry.
I must not forget to take out some time for thanks giving firstly to
workers and staff of the company at all levels for their unstinting
hard labour and support and secondly to all those who are directly or
indirectly have extended their co-operation and support to the company
including government agencies, banks, shareholders, dealers etc.
I greatly value the collective efforts of entire BVCL team and the
contribution and involvement of my colleagues on Board in achieving the
present corporate shape and status of the company.