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J. K. Cement Ltd.

BSE: 532644 | NSE: JKCEMENT |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE823G01014 | SECTOR: Cement - Major

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Sep 28, 16:01
2513.85 -43.30 (-1.69%)
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Sep 28, 15:57
2516.50 -38.00 (-1.49%)
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Annual Report

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Chairman's Speech



Despite global headwinds, India continues to be one of the world’s fastest growing major economies. Although the growth rate was muted and stood at 6.8% in the reporting year, marginally lower than that of FY 2017-18, the fundamentals of the economy continue to be robust with moderate inflation, low fiscal deficit (3.4% of GDP), accommodative monetary policy by the Reserve Bank of India and gradually improving private investment cycle. Infrastructure creation continues to be one of the major priorities of the Government of India; and with interest rates declining and additional liquidity in the economy, the infrastructure space is likely to see significant activity, which augurs well for cement demand.

India is the second largest cement producer globally; and has a huge helping hand in strengthening the country’s infrastructure space and accelerating economic development. The cement sector is likely to grow sustainably, propelled by higher government spending in airports, ports, railway corridors, highways, smart cities, affordable housing and irrigation, among others.

Capitalizing on India’s favorable macro-economic indicators, we are happy to report another successful year for J.K. Cement. We reported 8.3% growth in revenue from operations to Rs,4,919.19 Crores in FY 2018-19, compared to Rs,4,542.59 Crores in FY 2017-18, driven by sustained cement demand on the back of a growing housing segment and higher infrastructure spend. Our EBIDTA increased 6.5% to Rs,810.12 Crores in FY 2018-19 vis-a-vis Rs,760.66 Crores in FY 2017-18 owing to better efficiencies across the board. We maintained a healthy EBIDTA margin of 16.47% in FY 2018-19. Our net profit stood at Rs,324.90 Crores in FY 2018-19 and our earnings per share stood at Rs,45.28 in FY 2018-19.

Our integrated approach to cement production allows us to rationalize our costs, especially those pertaining to power supply requirements, raw materials and logistics. This enables us to offer our products at competitive prices, strengthening our market leadership and brand recall.

As you already know, our spectrum of products comprises grey cement, white cement, white cement based wall putty and certain other value-added products, which are margin-accretive.

In the grey cement segment, we have embarked upon a robust expansion journey, which will enable us to grow our industry prominence.

We are committed to invest Rs,2,000 Crores to enhance our grey cement production capacity to 15 MnTPA by the end of fiscal 2019-20, from present capacity of 10.50 MnTPA, and expanding our presence into existing markets of Gujarat and Uttar Pradesh.

We have made substantial progress in our brown field expansion of cement grinding capacity at Mangrol and Nimbahera, Rajasthan by 1 MnTPA which is likely to be commissioned by the middle of fiscal 2019-20.

Moreover, our capacity expansion for our clinker production line at Mangrol and split grinding units at Aligarh, Uttar Pradesh and Balasinor, Gujarat are going on in full swing.

We obtained the environment clearance for Balasinor unit also during FY 2018-19. Already, we have spent over Rs,550 Crores for these expansions.

Our expansions are funded through a judicious mix of debt and internal accruals. As on 31st March 2019, our gross debt stood at Rs,2,199 Crores with a healthy debt equity ratio of 0.76. Moreover, we raised Rs,511 Crores through a qualified institutional placement (QIP) in December 2018.

To expand our market share, we are reinforcing our distribution network by adding additional authorized dealers and retailers to our network and strengthening our relationships with existing dealers. We are regularly organising ‘dealer meets’, which involve knowledge share on marketing and sales techniques and technical applications of cement products.

We are one of the two major players in India’s white cement market. We have an aggregate installed capacity of 0.60 MnTPA and 0.90 MnTPA for white cement and wall putty, respectively in India. Our dual-process cement plant is having capacity to produce both white and grey cement (interchangeably) in Fujairah, U.A.E; and is currently used for manufacturing white cement only, with a capacity of 0.60 MnTPA. During FY 2018-19, we commissioned an additional installed capacity of 0.20 MnTPA of white cement-based wall putty at our Katni plant in Madhya Pradesh.

We have undertaken wide-ranging measures for resource optimization, energy efficiency, water conservation, monitoring and controlling emissions, waste management and conservation of biodiversity, thereby helping us to protect the environment. Various initiatives have been undertaken to fulfil our sustainability agenda. We believe these initiatives are helping us move towards our objective to build a more sustainable future.

Our empowered talent pool drives our business and sustainability initiatives. We invest significantly to upskill our talent pool and motivate our go-getters to rise to the challenge. We offer remunerations, rewards and growth opportunities through continuous learning and knowledge transfer. We promote diversity and inclusiveness in our team that underpin our HR policies, thereby supporting our sustainable business agenda.

Beyond business priorities, our focus has always been on giving back to society by creating shared value. Our community interventions comprise education, art, culture and community welfare, environment, rural infrastructure development, health and development. Our social activities include initiatives in the domains of education, community hygiene, livelihood support, vocational training and skill development.

Before I conclude, let me inform that rewarding shareholders sustainably remains at the heart of our business strategy. I am happy to inform that our Board has recommended a dividend of Rs,10 per share (face value: Rs,10) for the year under review.

As I look into the future, I am optimistic that cement demand is likely to grow sustainably.

The demand is projected at 6-6.5% compound annual growth rate (CAGR) from FY 2017-18 to FY 2022-23. We are well positioned to capitalize on emerging industry opportunities; and seek the support and guidance of all our stakeholders in our progress.

Warm regards,

Yadupati Singhania

Chairman and Managing Director

DIN – 00050364