My dear fellow shareholders,
It gives me immense joy and a matter of pride to address this
communication to you and also this is a time for me to reflect on the last 5 years
achievements post change of control in mid-2019.
On all parameters your company has done exceedingly well and achieved
many new highs and records be it - clinker production, cement production, sale of cement,
the blending percentage and the mix of sales. The result of all of which could not have
been different than achieving highest ever EBITDA, PBT and PAT. A short table below will
give you a sense of how your company has been transformed from being a loss-making company
for almost 3 decades. You may also recall that it was admitted in BIFR (Erstwhile
Insolvency Proceedings) and from there to today it's a transformational story of
corporate India and specially in cement industry.
|
FY 2019 |
FY 2024 |
| Clinker MT |
850696 |
1033509 |
| Cement MT |
1056697 |
1348230 |
| Cement Sales MT |
1053475 |
1360620 |
| EBITDA ( in Crores) |
31.17 |
154.94 |
| PBT ( in Crores) |
3.32 |
118.21 |
| PAT ( in Crores) |
2.06 |
87.76 |
| ROCE |
2% |
33% |
| ROE |
1% |
25% |
| Dividend ( in Crores) (5 years total) |
Nil |
209.49 |
| None for 30 years prior to FY'2018-19 |
- |
- |
I may also hasten to add that from our cement plant vintage, this
perhaps is the most profitable cement company in India and there cannot be a lesser joy
for me to have enjoyed this journey with the ordinary people achieving extra ordinary
results. I wish to place on record my deep sense of gratitude to the entire team working
at Kamal cement and specially the top management team. This is truly remarkable. We have
just about 250 people and the last EBITDA for 2023-24 was about 155 Crores, on a per
person basis it's about 62 lakhs. I don't think there is any parallel in
cement industry to have achieved this kind of profitability by such a small team of
ordinary souls having extra ordinary passion.
Having achieved a tremendous turnaround in productivity in every sphere
of our cement plant this is the time for us to look forward for expansion of capacity.
As shared with you last year, we have embarked upon increasing the
cement capacity to about 3 million tons. I wish to add one dimension of Indian cement
industry that it's very difficult to find cement companies having large Free Cash
Flows (FCF). Most cementcompanies,howsoeverprofitablethey maybe, they are very poor on
FCF. We at Kamal cement want to look at growth in a very different manner. We look at
capital allocation as the mantra and guided by FCF. We want to add capacity without adding
huge burden on the balance sheet. We constantly evaluate build versus buy and are of the
considered opinion that if we can efficiently buy cheaper than build, then there is no
reason in burdening the balance sheet. And it's very endemic to see even efficient
cement companies earning though reasonably good EBITDA, but often very poor ROCE and ROE.
This is largely on account of constant burn of cash and often over leverage. We have
challenged the conventional wisdom of self-reliant and have worked extremely efficient in
creating the chain management to achieve both high EBITDA and also high ROE and ROCE. will
be able to achieve our Iamreasonablyconfident expanded capacity with a very low capital
cost and new capacity is expected to be available to us in the 4th quarter of
FY' 2024-25. Once again, I wish to place on record my deep appreciation of the work
done by the teams at Kamal Cement and also vast dealer network, customers, our valued
vendors and government agencies without their help it would have been impossible to
achieve what we have achieved in last 5 years.