#MDStart#
DIRECTORS' REPORT AND MANAGEMENT DISCUSSION AND
ANALYSIS
Dear Shareholders,
Your Directors present the 24th Annual Report together with
the audited accounts of your Company for the year ended 31st March 2024.
Overview and the State of your Company's Affairs
The International Monetary Fund ("IMF") projects global
growth at 3.1% in 2024 and 3.2% in 2025. This is on account of greater-than-expected
resilience in the United States and several large emerging markets and developing
economies, as well as fiscal support in China. While inflation is projected to decline
steadily, tighter monetary policies and lingering geopolitical issues are tempering growth
prospects.
The global growth forecast for 2024-25 is below the historical 2000-19
average of 3.8%, with elevated central bank policy rates to fight inflation, a withdrawal
of fiscal support amid high debt weighing on economic activity, and low underlying
productivity growth. Inflation is falling faster than expected in most regions, amid
unwinding supply-side issues and restrictive monetary policy.
With disinflation and steady growth, the likelihood of a hard landing
has receded, and risks to global growth are broadly balanced. On the upside, faster
disinflation could lead to further easing of the financial conditions. On the downside,
new commodity price spikes from geopolitical shocks - including continued attacks in the
Red Sea and supply disruptions or more persistent underlying inflation, could prolong the
tight monetary conditions.
The Indian economy demonstrates resilience and maintains healthy
macroeconomic fundamentals, despite uncertainty from adverse geopolitical developments.
Strong domestic demand for consumption and investment, along with the Government's
continued emphasis on capital expenditure are seen as among the key drivers of GDP.
Additionally, a growing domestic services sector will contribute significantly. India has
registered the highest growth among major advanced and emerging market economies during
this period. As per the IMF, India is likely to become the third largest economy in 2027.
It also estimates that India's contribution to global growth will rise by 200 bps in five
years.
The substantial tripling of capital expenditure over the past four
years has significantly amplified India's economic growth and job creation. As a result,
there has been an 11.1% increase in the capital expenditure outlay for the next year,
amounting to ' 11,11,111 crores. This figure represents 3.4% of the GDP.
Macroeconomic stability and improvement in India's external position,
particularly the significant moderation in the current account deficit and the resurgence
of capital flows, were bolstered by a robust foreign exchange reserves buffer. This
contributed to the stability of the Indian Rupee during FY 2023-24. Additionally,
inflationary pressures in India were mitigated, largely due to proactive supply-side
initiatives by the Government.
The Government's fiscal policy has aimed at bolstering the domestic
economy's resilience against external shocks while safeguarding macroeconomic stability.
There has been a concerted focus on the integrated and coordinated planning and
implementation of infrastructure projects, adhering to the principles of PM Gati Shakti.
Priority has been given to allocating expenditure towards vital sectors such as drinking
water, housing, sanitation, green energy, health, education, agriculture, and rural
development to foster sustainable and inclusive advancement. Additionally, the
effectiveness of cash management has been enhanced through the timely release of resources
using the Single Nodal Agency/Treasury Single Account system.
Responding to the increasing demand from the infrastructure and housing
sectors, the Indian cement industry is poised to add new production capacities. As much as
35 - 40 million tonnes capacity is expected to be commissioned in the next fiscal, with 60
- 65% concentrated in the eastern and southern regions.
In FY 2024-25, cement demand is projected to grow by ~7-8% driven by an
increase in construction activities throughout the country, spread across the
infrastructure and housing sector. This is indicating a steady increase in the cement
industry's capacity utilisation from around 68% in FY23 to around 72% in FY25.
It is against this backdrop, that we share your Company's performance
during FY 2023-24.
Business Performance
Production and Capacity Utilisation (Grey Cement)
Particulars |
FY 2023-24 |
FY 2022-23 |
% change |
Installed capacity in India (MTPA) |
140.76 |
126.95 |
11 |
Production (MMT) |
111.63 |
99.43 |
12 |
Capacity Utilisation |
85% |
84% |
1% |
MTPA - Million Metric Tonnes Per Annum; MMT - Million Metric Tonnes
Cement production in FY 2023-24 was higher by 12% at 111.63 million
tonnes as compared to FY 2022-23, while capacity utilisation was at 85% as compared to
84%.
Sales Volume
Particulars |
FY 2023-24 |
FY 2022-23 |
% change |
Grey Cement - India |
112.81 |
100.06 |
13 |
Grey Cement - Overseas |
4.93 |
4.42 |
11 |
White Cement |
1.84 |
1.63 |
13 |
Total Sales Volume* |
119.04 |
105.71 |
13 |
* After elimination of inter Company sales.
Domestic sales volume registered a growth of 13% in FY 2023-24. Your
Company achieved the unique distinction of registering over 150 million tonnes of capacity
globally in April 2024.
Financial performance
|
Standalone |
Consolidated |
|
FY 2023-24 |
FY 2022-23 (re-stated*) |
FY 2023-24 |
FY 2022-23 |
Net Turnover |
67,536 |
60,360 |
69,810 |
62,338 |
Domestic |
67,119 |
60,133 |
67,135 |
60,192 |
Exports |
417 |
226 |
2,675 |
2,145 |
Other Income (Other Operating Income and Other Income) |
1,767 |
1,382 |
1,716 |
1,405 |
Total Expenditure |
56,021 |
50,952 |
57,940 |
52,620 |
Profit before Interest, Depreciation, and Tax (PBIDT) |
13,282 |
10,790 |
13,586 |
11,123 |
Depreciation |
3,027 |
2,773 |
3,145 |
2,888 |
Profit before Interest and Tax (PBIT) |
10,255 |
8,018 |
10,440 |
8,235 |
Exceptional Items: Stamp Duty on Business Combination |
72 |
- |
72 |
- |
Interest |
867 |
756 |
968 |
823 |
Profit before Impairment and Tax Expenses/share in profit
of Associates |
9,316 |
7,262 |
9,400 |
7,412 |
Share in Profit/(Loss) of Associates and Joint Venture (net
of tax) |
- |
- |
22 |
4 |
Profit before Tax Expenses |
9,316 |
7,262 |
9,422 |
7,416 |
Normalised Tax Expenses |
2,411 |
2,310 |
2,418 |
2,343 |
Profit after Tax (PAT) |
6,905 |
4,951 |
7,004 |
5,073 |
Profit Attributable to Non-controlling Interest |
- |
- |
-1 |
9 |
Profit Attributable to Owner of the Parent |
- |
- |
7,005 |
5,064 |
* The Scheme of Amalgamation of UltraTech Nathdwara Cement Limited
("UNCL") (a wholly-owned subsidiary of your Company) and its wholly- owned
subsidiaries viz. Swiss Merchandise Infrastructure Limited ("Swiss") and Merit
Plaza Limited ("Merit") is effective from 20th April 2024. The
Appointed Date being 1st April 2023, previous year figures have been restated
in accordance with the provisions of IndAS.
Net Turnover
Your Company's Net Turnover at ' 67,536 crores was 12% higher
than the previous year.
Other Income
Other income was ' 1,767 crores, an increase of 28% from the
previous year.
Operating Profit (PBIDT) and Margin
PBIDT at ' 13,282 crores was 23% higher than the previous year.
The higher operating margin was attributable to lower input costs and volume growth,
partly offset by lower sales realisations.
Cost Highlights
i. Energy Cost
Overall energy costs decreased by 10% from ' 1692/t in FY
2022-23 to ' 1,514/t, mainly due to lower fuel prices.
ii. Input Material Costs
Input material costs increased by 3% from ' 600/t in FY 2022-23
to ' 617/t.
iii. Freight and Forwarding Expenses
Freight and forwarding expenses decreased by 1% from ' 1,248/t
in FY 2022-23 to ' 1,233/t mainly due to reduction in lead distance.
iv. Employee Costs
Employee costs increased to ' 2,910 crores as compared to '
2,621 crores in the previous year, primarily due to annual increments and addition of new
capacities.
v. Depreciation
At' 3,027 crores, depreciation was higher by ' 254 crores
on account of capitalisation of new capacities during the year.
vi. Finance Cost
Finance cost increased to ' 867 crores from ' 756 crores
primarily on account of increase in interest rates.
Your Company does not accept any fixed deposits from the public falling
under Section 73 of the Companies Act, 2013 ("the Act") and the Companies
(Acceptance of Deposits) Rules, 2014.
Credit Rating
Your Company has adequate liquidity and a strong balance sheet. CRISIL
and India Ratings and Research reaffirmed their credit rating as CRISIL AAA/Stable and IND
AAA/Stable for Long Term and CRISIL A1+ and IND A1+ for Short Term, respectively. Further,
CARE Ratings has rated the long-term borrowings as CARE AAA/Stable and short-term
borrowings as CARE A1+.
Your Company has also obtained its credit rating for its foreign
currency bond issuances from Fitch and Moody's and has been rated by them as BBB- and
Baa3, respectively.
This is a testament to your Company's sound financial management as
well as its ability to service its financial obligations in a timely manner.
Income Tax
During the year ended 31st March 2024, provision for current
and deferred tax expenses has been recognised as per the new tax regime adopted by your
Company from FY 2023-24 in terms of the provisions of Section 115BAA of Income tax Act,
1961.
Net Profit
Normalised PAT increased by 39% from ' 4,951 crores to ' 6,905
crores.
Significant changes in key financial ratios, along with detailed
explanations
Particulars |
FY 2023-24 |
FY 2022-23 (Restated) |
% Change |
Debtors Turnover (Days) |
18 |
18 |
- |
Inventory |
39 |
35 |
-10% |
Turnover (Days) |
|
|
|
Interest Coverage Ratio |
13.8 |
12.9 |
7% |
Current Ratio |
0.99 |
1.06 |
7% |
Debt Equity |
0.14 |
0.16 |
16% |
Ratio (Gross) |
|
|
|
Debt Equity Ratio (Net) |
0.01 |
0.03 |
56% |
Operating Profit |
18.7 |
17.0 |
10% |
Margin (%) |
|
|
|
Net Profit Margin (%) |
10.2 |
8.2 |
25% |
Return on |
12.3 |
9.6 |
28% |
Net Worth (%) |
|
|
|
Return on Capital |
14.4 |
12.0 |
21% |
Employed (%) |
|
|
|
Earnings Per Share (EPS) |
240 |
172 |
40% |
Detailed explanation of ratios
I. Debtors Turnover (Days) is used to quantify a company's
effectiveness in collecting its receivables or money owed by customers. The ratio shows
how well a company uses and manages the credit it extends to customers. The ratio is
calculated by dividing average trade receivables by average turnover per day.
II. Inventory Turnover (Days) represents the average number of days
a company holds its inventory before selling it. It is calculated by dividing average
inventory by average turnover per day.
III. Interest Coverage Ratio measures how many times a company can
cover its current interest payment with its available earnings. It is calculated by
dividing PBIT by finance cost.
IV. Current Ratio is a liquidity ratio that measures a company's
ability to pay short-term obligations or those due within one year. It is calculated by
dividing the current assets by current liabilities (excluding current borrowings).
V. Debt Equity Ratio is used to evaluate a company's financial
leverage. It is a measure of the degree to which a company is financing its operations
through debt versus owned funds. It is calculated by dividing a company's total
liabilities by its shareholder's equity. Your Company's Debt Equity Ratio (Net) has
improved by 56% in FY 2023-24, primarily on account of reduction in debt and increase in
net worth during the year.
VI. Operating Profit Margin (%) is a profitability or performance
ratio used to calculate the percentage of profit a company generates from its operations.
It is calculated by dividing the PBIDT (excluding Other Income) by turnover.
VII. Net Profit Margin (%) is the net income or profit a company
generates as a percentage of its revenue. It is calculated by dividing the profit for the
year by the turnover. Your Company's Net Profit Margin increased by 25% mainly on account
of lower energy costs and higher volume, partly set off by higher interest outgo and lower
realisations during the year.
VIII. Return on Net Worth ("RONW") is a measure of
profitability of a company expressed as a percentage.
It is calculated by dividing Net Profit from continuing operations for
the year by average Net Worth during the year. Your Company's RONW increased by 28% mainly
on account of increase in Net Profit during the year.
IX. Return on Capital Employed (ROCE) (%) measures a company's
profitability and the efficiency with which its capital is used. In other words, the ratio
measures how well a company is generating profits from its capital. It is calculated by
dividing profit before interest, exceptional items, and tax, by average capital employed
during the year.
X. Earnings Per Share [EPS] is the portion of a company's profit
allocated to each share. It serves as an indicator of a company's profitability. It is
calculated by dividing profit for the year by weighted average number of shares
outstanding during the year. Increase in Net Profit by 39%, resulted in your Company's EPS
increasing by ' 68, from ' 172 in FY 2022-23 to ' 240 in FY 2023-24.
Cash Flow Statement
|
FY 2023-24 |
FY 2022-23 |
Sources of Cash |
|
|
Cash from Operations |
11,020 |
9,137 |
Non-operating Cash Flow |
163 |
296 |
Proceeds from Issue of Share Capital |
2 |
5 |
(Increase)/Decrease in Working Capital |
(122) |
619 |
Total |
11,063 |
10,057 |
USES OF CASH |
|
|
Net Capital Expenditure |
8,879 |
6,011 |
(Redemption)/Increase in Investments |
(43) |
530 |
(Redemption)/Investment in Subsidiaries, Joint Ventures,
Associates, and Others |
(842) |
876 |
Repayment of Borrowings (Net) |
713 |
368 |
Repayment of Lease Liability including Interest thereof |
189 |
167 |
Purchase (Issue)/(Sale) of Treasury Shares (Net) |
84 |
106 |
Interest |
781 |
651 |
Dividend |
1,094 |
1,091 |
Total |
10,855 |
9,801 |
Increase/(Decrease) in Cash and Cash Equivalents |
208 |
257 |
Sources of Cash Cash from Operations
Cash from operations was higher compared to the previous year led by
higher volume and lower costs, partly set-off by increase in working capital.
Non-Operating Cash Flow
Cash from other activities was lower on account of reduced interest
income on bank deposits and inter-corporate deposits.
Increase in Working Capital
Increase in working capital is attributed to increase in inventories
and trade receivables on account of increase in fuel inventory and higher sales,
respectively.
Uses of Cash
Net Capital Expenditure
Your Company spent ' 8,878 crores on various capex during the year.
This was primarily towards growth and maintenance capex as well as Waste Heat Recovery
Systems.
Decrease in Investments
Your Company's liquid investment was used for repayment of borrowings.
Repayment of Borrowings
During the year, your Company repaid debt (on a net basis) of ' 713
crores.
The loan repayments have been made out of free cash flows that your
Company generated during the year. The aforesaid steps have resulted in an improved Net
Debt/Equity ratio and Net Debt/EBITDA ratio.
T ransfer to General Reserves
Your Company proposes to transfer an amount of ' 5,000 crores to
General Reserves.
Dividend
Your Company achieved remarkable performance during the year. Despite
significant capital expenditure of ' 8,879 crores, robust cash flows have been generated.
With a net debt EBITDA of 0.2x, your Company exhibits strong financial resilience. It is
further poised to fuel its expansion through internal accruals, without requiring any
leverage. Furthermore, the ongoing capacity expansions are expected to generate cash
inflows.
Given the commendable performance, your Directors deem it apt to
consider an increase in dividend payout and recommend a dividend of ' 70/- per
equity share of ' 10/- per share, totalling ' 2,020.84 crores. The dividend
shall be taxed in the hands of shareholders at applicable rates of tax and, your Company
shall withhold tax at source appropriately.
Your Company's dividend policy is given in Annexure I of this
Report and is also available on your Company's website.
Unclaimed dividend for the year ended 31st March 2016,
aggregating to ' 1.61 crores, has been transferred to the Investor Education and
Protection Fund ("IEPF"). Your Company has also credited to the IEPF, equity
shares in respect of which dividend had remained unpaid/unclaimed for a period of seven
consecutive years within the timelines laid down by the Ministry of Corporate Affairs,
Government of India. Unpaid/unclaimed dividend for seven years or more have also been
transferred to the IEPF, pursuant to the requirements under the Act.
Corporate Development
Composite Scheme of Arrangement - Kesoram Industries Limited
During FY 2023-24, your Directors approved a Composite Scheme of
Arrangement ("the Scheme") between Kesoram Industries Limited
("Kesoram") your Company and their respective shareholders and creditors. The
Scheme provides for demerger of the Cement Business of Kesoram into your Company; and the
reduction and cancellation of the preference share capital of Kesoram.
The Cement Business of Kesoram consists of two integrated cement units
at Sedam (Karnataka) and Basantnagar (Telangana) with a total capacity of 10.75 mtpa. The
cement business also has a 0.66 MTPA packing plant in Solapur, Maharashtra. Under the
Scheme, your Company will issue one equity share of face value of ' 10/- each for
every 52 equity shares of Kesoram of face value ' 10/- each to the shareholders of
Kesoram as on the record date as defined in the Scheme, resulting in the issuance of
59,74,301 new equity shares of your Company. The transaction will provide your Company
with the opportunity to extend its footprint in the highly fragmented, competitive, and
fast growing Western and Southern markets in the country. It will also help enhance your
Company's geographic reach in Southern markets such as Telangana where it currently does
not have any cement manufacturing plant.
The transaction is subject to the approval of your Company's
shareholders and creditors, stock exchanges, National Company Law Tribunal
("NCLT"), Competition Commission of India ("CCI") and other regulatory
authorities as may be required. The CCI has approved the transaction on 19th
March 2024.
Directors' Responsibility Statement
The audited accounts for the year under review are in conformity with
the requirements of the Act and the Indian Accounting Standards. The financial statements
reflect fairly the form and substance of transactions carried out during the year under
review and reasonably present your Company's financial condition and results of
operations.
Your Directors confirm that:
• In the preparation of the Annual Accounts, applicable accounting
standards have been followed along with proper explanations relating to material
departures, if any.
• The accounting policies selected have been applied consistently,
and judgments and estimates are made that are reasonable and prudent to give a true and
fair view of the state of affairs of your Company on 31st March 2024, and of
the profit of your Company for the year ended on that date.
• Proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the Act for safeguarding
the assets of your Company and for preventing and detecting frauds and other
irregularities.
• The Annual Accounts of your Company have been prepared on a
going concern basis.
• Your Company has laid down internal financial controls and that
such internal financial controls are adequate and were operating effectively.
• Your Company has devised proper systems to ensure compliance
with the provisions of all applicable laws and that such systems were adequate and
operating effectively.
Capital Expenditure Plan
Your Company's expansion programme is progressing as per schedule. Work
on the second phase of 22.6 MTPA capacity announced in FY 2022-23 is under progress with
capacities commissioned across several locations. For the third phase of capacity
expansion, announced in October 2023, major orders have already been placed to key
technology suppliers, and civil work has also commenced at some locations.
During the year, your Company added 13.27 MTPA grey cement capacity
across locations. It further commissioned 2.7 MTPA greenfield cement capacities each at
Karur (Tamil Nadu) and Kukurdih (Chhattisgarh), respectively aggregating to 5.4 MTPA in
April 2024. Your Company also acquired a 0.54 MTPA cement grinding asset of Burnpur Cement
Limited, located at Patratu in Jharkhand, marking its entry into the state of Jharkhand.
Further, your Company also entered into an agreement to purchase a
grinding asset with an installed capacity of 1.1 MTPA in addition to a captive railway
siding, at Parli in Maharashtra from The India Cements Limited. It is also working on a
brownfield capacity expansion of 1.2 MTPA at the Parli grinding unit as well as expanding
capacity at its grinding unit at Dhule in Maharashtra from 1.8 MTPA to 3.6 MTPA.
With the acquisition of the Parli grinding unit, the ongoing expansion
of 36.2 MTPA across locations and the proposed acquisition of the Cement Business of
Kesoram, your Company's grey cement capacity will stand augmented to 199.6 MTPA, including
its overseas capacity of 5.4 MTPA. These initiatives underscore your Company's commitment
towards a resilient and prosperous India, while ensuring that your Company's growth is in
tandem with the nation's development. Your Company, as India's leading cement and
ready-mix-concrete player, is well placed to support the country in its exciting growth
journey ahead.
Corporate Governance
Your Directors reaffirm their commitment to good corporate governance
practices. During the financial year under review, your Company was compliant with the
provisions relating to corporate governance. The compliance report is provided in the
Corporate Governance section of this Report. The Auditor's Certificate on compliance with
the conditions of corporate governance forming part of the Securities and Exchange Board
of India (Listing Obligations and Disclosure Requirements) Regulations, 2015
("Listing Regulations") is provided in Annexure II of this Report.
Employee Stock Option Schemes (ESOS)
ESOS-2013
The Nomination, Remuneration and Compensation Committee ("the NRC
Committee") allotted 5,660 equity shares of ' 10 each of your Company to
option grantees, upon exercise of stock options and Restricted Stock Units
("RSUs"). 5,313 equity shares were pending allotment as on 31st March
2024.
ESOS-2018
During the financial year, the NRC Committee:
• Vested 76,703 stock options and 8,010 RSUs to eligible
employees, subject to the provisions of ESOS-2018.
• 40,460 equity shares were transferred to option grantees during
the year from the employee welfare trust, upon exercise of options for transfer of equity
shares. 1,792 equity shares were pending transfer as on 31st March 2024.
ESOS-2022
During the year, the NRC Committee granted 117,423 stock options at an
exercise price of ' 8,224.15 per stock option exercisable into the same number of
equity shares of ' 10 each and 13,857 Performance Stock Units ("PSU") at
an exercise price of ' 10 each on 21st July 2023.
In terms of the provisions of the Securities and Exchange Board of
India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("SEBI SBEB
& SE Regulations") details of stock options and RSUs/PSUs granted under the
various schemes are available on your Company's website;
https://www.uitratechcement.com/investors/financiais.
A certificate from the Secretarial Auditors on the implementation of
your Company's ESOS wiii be available at the ensuing Annual General Meeting
("AGM") for inspection by the Members.
Share Capital
During the year, your Company allotted 10,973 equity shares of '
10 each to option grantees upon exercise of stock options and RSUs in terms of ESOS-2013.
As a result, your Company's paid-up equity share capital increased to ' 2,88,69,20,050,
comprising of 28,86,92,005 equity shares of ' 10 each.
Transfer of unclaimed dividend and shares - details relating to
unclaimed dividend and shares are given in the Corporate Governance section that forms
part of this Report.
RESEARCH AND DEVELOPMENT
For your Company, Research and Development ("R&D")
efforts are aimed towards exploring new ways of sustainable product development,
responsible use of resources, energy conservation, and environment preservation. Your
Company's constant endeavour is to improve the quality of products, in terms of enhanced
functional attributes and develop new ones, especially to reduce the ecological footprint.
The R&D team focuses on circular economy by improving raw mix
designs using alternative and other waste raw materials, reducing clinker factor, and
enhancing alternative fuels and materials usage. The R&D Center is constantly and
closely engaged with your Company's manufacturing units to improve energy efficiency and
productivity; with the technical and marketing teams to enhance customer satisfaction by
providing innovative and best technical solutions to lower carbon footprints.
The R&D Centre also extends support to and learns from other
businesses' innovation activities from the Aditya Birla Group's research and development
center 'Aditya Birla Science and Technology Company Private Limited', which serves the
research needs of the Group's multi-disciplinary experts working on applied research
projects.
Being a founding member of the Global Cement and Concrete Associations
("GCCA"), your Company's R&D Centre engages and collaborates with
'Innovandi' - the Global Cement and Concrete Research Network. This initiative brings
together technology startups and the world's leading cement and concrete companies, to
accelerate the next wave of innovations and achieve net zero mission. Mitigating climate
change by decarbonising levers, exploring technology adoption, enhancing customer
satisfaction, and developing sustainable products are the core principles followed by your
Company's researchers. Your Company actively collaborates with various national and
international institutions, industry partners, and associations to benchmark and learn
best practices, technology piloting, process debottlenecking, and predictive studies for
natural and non-renewable resource preservation, energy conservation, improved product
durability, and reduced carbon footprint.
Your Company's commitment to sustainable product development is not
just about the environment; it is about its customers. Over the years, your Company
has developed and manufactured various types of blended cement using
additive materials such as fly ash, slag, calcined clay, among others, which not only
helps reduce consumption of limestone - a natural resource but also aids in waste
minimisation and leads to a circular economy.
Your Company has also developed a new type of cement currently being
sold as 'Weather Plus' cement and developed composite cement for reinforcing concrete.
This innovative product, 'Weather Plus', is a water repellent that effectively repels
water and offers superior protection from dampness, thus safeguarding homes. This leads to
reduced repair and improved service life of homes, a clear demonstration of your Company's
customer-centric approach. Using composite cement to reinforce concrete will help the
construction industry reduce its carbon footprint.
New Product Development Initiatives
• Green Concrete: Your Company's R&D researchers have
designed and developed green concrete, a sustainable option that addresses the need for
ecofriendly construction materials by utilising a high amount of Supplementary
Cementitious Materials ("SCMs") such as fly ash (45-60%) and slag (up to 70%)
with similar performance specifications of traditional concrete grade by lowering the
cement content, thus leading to significant reduction of carbon footprint and conservation
of non-renewable resources and energy. Reducing carbon emissions associated with the
production of traditional concrete thus helps mitigate the harmful effects
of greenhouse gases on the environment. The enhanced addition of the
SCMs in the concrete leads to improved durability and workability, thereby improving the
life of the concrete structure. Green concrete is ideal for large-scale construction
projects wanting to lower their overall carbon footprint.
• Low Water Requirement Concrete:
Considering water scarcity and stress areas, your Company's researchers
are designing and developing a new variant of concrete that will require no or minimum
water curing. This will lead to considerable savings in water required for curing concrete
with increased durability of structures and construction applications.
• Ultra-High-Performance Concrete:
Your Company's researchers have developed Ultra-High- Performance
Concrete ("UHPC") with strengths in the range of 150-180 MPa. The trials carried
out indicate that the developed UHPC provides a viable and long-term solution for improved
sustainable construction owing to its ultra-high strength properties and very low
porosity, which imparts excellent resistance against aggressive environment and hence,
enhanced durability.
Energy Efficiency Improvement Initiative
The cement manufacturing process requires significant thermal and
electrical energy. Reducing energy consumption through systematic operational intervention
and modifications is beneficial for enhancing the sustainability of operations and
lowering carbon emissions. Using Computational Fluid Dynamics ("CFD") modeling
and simulations, the preheater exit gas temperature is lowered, which reduces thermal
energy consumption. This leads to specific fuel requirements and enhanced sustainability
credentials for the operations.
CFD modeling and simulations are also used extensively across the
pyro-processing operations to reduce thermal and electrical energy consumption and
improving use of alternative fuels in the cement units.
In the clinker cooling operations, several cooling fans are employed
which consume significant electrical energy. Fan inlet velocity profile and frictional
losses are reduced by modifying the fan inlet geometries, which help in reducing power
consumption, thus helping the operations to reduce carbon emissions.
Sustainability
Your Company has imbibed sustainability across its business and is
committed to adopting the most scientific approaches and latest technologies to enhance
operational efficiency and ensure long-term sustainability.
Your Company has committed to GCCA's Net-Zero Concrete Pathway to
produce carbon-neutral concrete by 2050. It targets to reduce its Scope 1 emission
intensity by 27% and Scope 2 emission intensity by 69% by 2032, from base year 2017,
validated by Science Based Targets Initiative (SBTi).
Your Company's major decarbonisation initiatives include transition to
green energy mix (waste heat recovery and renewable energy), substituting fossil fuels
with alternative fuels, R&D for low-carbon products and technological advancements.
Your Company has also signed an agreement with Coolbrook, a Finland-based company, for
large-scale deployment of their patented technology - RotoDynamic HeaterTM for kiln
electrification.
As part of its commitment to RE100, your Company is working extensively
towards transition to green energy and targets to substitute 85% of its electricity
requirement through green energy mix by 2030. During the year under review, your Company
achieved 22% substitution through green energy mix. Being committed to EP100, your Company
has doubled its energy productivity from base year of 2010, way ahead of its target year
2035.
This year, your Company utilised 35 million tonnes recycled input
materials and alternative fuels in cement production and conserved 106 million cubic
meters of water, achieving its target of becoming five times water positive.
As a responsible corporate citizen, your Company recognises its role in
conserving nature. Its efforts on circular economy, water management, biodiversity and
product stewardship are a testament to this philosophy. This year, your Company utilised
35 million tonnes recycled input materials and alternative fuels in cement production and
conserved 106 million cubic meters of water, achieving its target of becoming five times
water positive. Your Company completed biodiversity impact assessments at 15 integrated
units and plans to assess all its integrated units by the end of 2024. The Life Cycle
Assessment for four of its major products has been completed, with public availability of
their Environmental Product Declaration.
Your Company has also introduced the one-of-a-kind Sustainable Supply
Chain Programme, where all the new suppliers and vendors are assessed for ESG risks before
onboarding. Your Company is also assessing its existing Tier 1 suppliers and is providing
capacity-building sessions to its suppliers to embark on their sustainability journey.
Your Company's efforts in sustainability are well recognised globally.
Your Company has consistently maintained its position - 6th among Top 10 Global
Companies in Construction Materials sector by S&P Global (DJSI, CSA 23). Your Company
has also improved its CDP-Water ranking to A-, highest in the cement sector, securing a
leadership place in the global league.
Digitalisation
Secure by Design - Privacy as a priority
Your Company is deeply committed to leveraging digital technologies to
drive operational excellence and deliver greater value to its customers. From improving
safety to enhancing reliability and efficiency, your Company is constantly exploring new
ways to optimise its operations through innovative technologies. By investing in advanced
digital solutions, your Company is poised to achieve even greater success in the years to
come.
Your Company's commitment to digital innovation powers its operational
excellence and customer value. By harnessing innovative technologies, your Company
enhances safety, reliability, and efficiency across the board. The strategic investment in
digital solutions sets your Company on a path to unprecedented success.
Road to Digital
Your Company's digital transformation journey has been centered around
the key areas of speed, scale, customer convenience, and operational efficiency. Your
Company has successfully rolled out digital solutions for its employees, customers, and
service partners, accelerating its efforts to provide superior value. It has made
considerable progress in leveraging the best technologies to cater to the focus areas. One
of its major achievements has been the seamless adoption of mobile app-based solutions by
your Company's channel partners and institutional customers. By replacing paper-based
processes with digital solutions, your Company has saved time and improved operational
speed for all stakeholders.
Smart Manufacturing
As your Company accelerates the adoption of digitalisation, there have
been active investments in cloud infrastructure to build smart and connected factories.
This investment is a key foundation of your Company' commitment to innovation, delivering
improved efficiencies and enhanced customer experiences. It reflects your Company's
determination to drive digital transformation and accelerate growth.
Industry 4.0 Technologies
Your Company has adopted Industry 4.0 technologies, which have
complemented its existing preventive procedures : with predictive and early alerts. The
reliability teams have leveraged software and Al solutions to monitor and sustain process
stability, enabling your Company to beat reliability records across its plant operations.
Your Company is currently making efforts to validate advanced algorithms that can further
improve reliability.
Your Company continues to assess technologies such as Generative AI,
and AI-ML algorithms for increasing overall equipment effectiveness (OEE), process
optimisation, and predictive maintenance.
Deployment of Radio Frequency Identification (RFID) sensor- based
systems have helped to regulate vehicular movement at your Company's truck yards and
manufacturing units, leading to improved turnaround time. This has helped optimise fleet
utilisation for your Company's transport partners and enhance safety for the drivers.
During the year, additional enhancements have been introduced in this system to reduce
vehicle waiting time at yards by integrating those with fleet GPS systems.
Energy Optimisation and Enhanced Productivity
Your Company has continued to build on its efforts from the previous
year by scaling up the adoption of algorithmic advisory solutions aimed at improving
process stability and energy efficiency. The focus of the efforts has been on increasing
consumption of alternative fuels and improving the generation of power through WHRS. Your
Company's continuous investments in expert control systems have yielded substantial
enhancements, both in process stability and efficiency. Your Company is also working on
digital mining management and optimisation initiatives to further improve operational
efficiencies.
Safer Operations
Your Company has adopted and scaled various advanced technologies such
as computer vision to detect and prevent safety incidents, augmented reality (AR), virtual
reality (VR), and other sensors to support its safety objectives at the units. Your
Company will continue to expand on safety- related use cases to ensure safety of its
staff, contractors, and plants.
Empowering Partners
Your Company's multilingual app, Eye-to-Track, launched for the driver
partners has been well-received with over 50,000 drivers using the app. It has been
instrumental in helping your Company to provide a superior delivery experience to its
customers. An option of paperless outbound journey with real-time e-invoice visibility has
been introduced in the driver app. Your Company utilises a transporters' portal with an
aim to develop an efficient way of collaborating with transporters digitally and
end-to-end paperless transactions between both the parties, starting from freight
determination through e-bidding to digitally signed online submission of bills providing
online visibility at every stage. Comprehensive integration with Indian Railway's Centre
for Railway Information Systems ("CRIS") and associated dashboards for
operational and commercial MIS enables effective utilisation of rakes and related cost
management.
Empowered Teams
Your Company has implemented various digital solutions to improve the
dynamic planning and sourcing of packaging materials, resulting in enhanced central
synergies and efficiency. The end-to-end fuel sourcing planning platform has enabled your
Company to take optimal decisions that impact energy costs, leading to significant
savings.
The procurement team has also adopted a 'procure to pay' digital
platform for engineering and packaging materials, further driving efficiency, and
streamlining the procurement process.
Empowering Internal Stakeholders
Your Company's Logistics Control Tower ("LCT"), an integrated
information hub providing end-to-end visibility of logistics, has been extended to the
front-end sales teams through the mobile app LCT Lite. This helps to improve collaboration
and logistics efficiencies. The digital solutions, such as 'UltraTech Trade Connect' and
'UltraTech Customer Connect', provide a unified flow of information within your Company's
network of dealers, retailers, transporters, and drivers. By functioning together as an
integrated platform, these solutions enable your Company to be a customer-centric partner
for both its customers and end-consumers.
Empowering Employees and Contract Labour
Your Company has implemented digital solutions for facial biometric
attendance recording system and end-to-end workflow management for contract labour,
including completion of medical and safety training, and for regulatory compliance. This
solution also ensures timely payments to vendors providing contract labour services.
Customer First
Your Company prioritises its customers and strives to enhance their
experience through a team of experienced technical professionals offering on-site support
and demonstrations through a mobile testing van. Additionally, your Company has
implemented an efficient complaint-handling procedure that ensures timely logging,
investigation, resolution, and closure of customer complaints. Your Company is committed
to providing excellent customer service and addressing concerns effectively.
UltraTech Trade Connect is a mobile app-based solution that offers
unparalleled convenience to your Company's dealer and retailer network across the country.
The solution provides a single interface across grey cement, building products, and RMC
segments, empowering channel partners to manage their day-to-day operations with ease.
Over 90% of your Company's dealers across India extensively use this app.
UltraTech Customer Connect is a mobile app-based solution that
assists your Company's institutional customers in better planning their site operations.
This app provides visibility of supplies and test certificates, allowing institutional
customers to track deliveries and access essential information on a real-time basis. With
the ability to provide electronic proof of delivery (ePOD) and access to finance
documents, this solution has streamlined the payment process for the customers.
Your Company's Shared Services viz. UltraTech Knowledge Service
Centre ("UKSC"), now operating for around five years, has grown to a
strength of 721 members processing ~2.3 million vendor invoices annually, maintaining 1.3
million customer/vendor master records, ensuring GST compliances for 26 states, and
closing books of accounts for each of the 80+ units/zones every quarter to enable
company-level consolidation for all your Company's operations.
UKSC is built as a scalable and digitally enabled 'Centre of
Excellence' ("CoE"), which not only helps your Company to seamlessly absorb
accounting work for any new cement capacity expansion, but also serves as a knowledge hub
to create future finance leaders. Your Company has continued with its commitment of
implementing best- in-class technology and successfully implemented SAP Blackline
application. This milestone represents a significant achievement in your Company's digital
transformation journey. Blackline will streamline and automate key processes, enhancing
efficiency and accuracy in transaction reconciliation and system-driven substantiation of
General Ledger Balance which will ensure robust internal controls and audit trail
compliance.
Continuing the collaboration between the CIO's and business finance
team, UKSC is currently adopting further digital initiatives for people, process, and
compliance which will not only make it more efficient but also create business value by
providing actionable insights to business leaders on costs, working capital and other
levers to optimise the ROCE.
UKSC will continue to focus on unlocking value through the higher
visibility on transactions and partner business teams to drive significant business
impact. Finance transformation and operational excellence will be the top priority along
with improving stakeholder experience through timely and accurate quality of output. UKSC
is well poised to absorb the business expansion and is expected to further accelerate its
value proposition in the coming quarters, yielding significant benefits for your Company,
and its stakeholders.
Your Company is proud to highlight the continued success and impact of
the Shared Services initiatives. By centralising the core transactions of the Finance and
Accounting function, your Company has strengthened operational efficiency and fostered a
culture of collaboration across your Company. Through the Shared Services journey, your
Company has been able to optimise resource allocation, reduce overhead costs, and enhance
service delivery to its internal and external stakeholders. This strategic approach not
only reinforces your Company's commitment to operational excellence but also positions it
for sustainable growth and success in the years ahead.
Human Resources
Your Company's ongoing success is deeply rooted in the core values of
collaboration and teamwork. It is this seamless collaboration among diverse teams across
different regions that has propelled your Company to a leading position in the industr y.
To sustain your Company's trajectory of growth, efforts are
continuously dedicated to nurturing internal talent and empowering them to deliver
high-performance results. It also focusses on enriching the talent pool through rigorous
campus and lateral recruitment processes. Initiatives include tailored programmes for
swift integration of new hires into the organisation, prioritising accelerated learning to
boost individual and team productivity. Your Company is committed to providing fulfilling
career paths and fostering an inclusive and rewarding work environment for all employees.
Investing in talent development and enabling individuals to assume
leadership roles are crucial strategies for enhancing your Company's human capital. As
your Company pursues its growth ambitions, it remains steadfast in recognising and
rewarding efforts of its employees, motivating them to reach even greater heights.
Your Company's employee strength stood at 23,137 on 31st
March 2024, compared to 22,916 a year ago.
Safety
Your Company accords the utmost importance to human life. The safety of
people involved with its business remains at the core of your Company's operations.
Throughout the year, your Company has undertaken various initiatives to bolster the
effectiveness of its safety management system.
With the goal of achieving 'zero harm' gaining momentum, your Company
has implemented numerous interventions to enhance employee safety across its Units. While
your Company continues to strengthen its focus on Fatal-4 elements, it has also initiated
additional actions targeting accidents related to vehicles, drivers, and gas cylinder
management:
• Strengthened actions to ensure safety throughout the entire gas
cylinder supply chain, from re-fillers to transportation, storage, handling, and usage.
Implementation of guidelines is closely monitored on a periodic basis.
• Enhanced driver training, particularly for market truck drivers,
with penalties for non-compliance with safety protocols.
To further enhance the effectiveness and quality of safety initiatives,
your Company conducted safety leadership training for professionals and organised five
visible felt leadership ("VFL") sessions for seniors with the help of external
experts, covering 172 senior employees across locations. Safety workshops were organised
for 60 safety professionals across all Units, and half-day virtual safety leadership
sessions were organised for all the Unit Heads.
To build zone ownership culture, each Unit is divided into smaller
parts, with one employee assigned as the owner of each part. Their objectives include
assessing safety awareness, improving safety compliance, mitigating risks, reinforcing
safe behaviour, and monitoring improvement initiatives.
Special emphasis has been placed on enforcing key systems such as
Process Safety Management and Management of Change to control critical risks at the sites.
Your Company has evaluated the top 10 risks at each Unit and implemented appropriate
control measures based on comprehensive Hazard Identification and Risk Assessment.
To prevent accidents, contract workers are empowered to refuse unsafe
work conditions through the 'Sixty Seconds to Think' initiative. Lessons learned from
incidents are shared across Units, and corrective actions are monitored closely.
Additionally, implementation of safety standards at manufacturing units are assessed by
third-party audits, with compliance verified during visits.
Moreover, 6,882 findings were reported through Contractor Field Safety
Audit ("CFSA") and 4,376 findings were reported through First-Party Safety Audit
("FPSA") during the year. All the findings have been duly rectified.
Your Company has revamped the Walk-Through Inspection ("WTI")
checklist to enable employees to identify and rectify unsafe conditions more effectively
and introduced a WTI App for easier reporting. During the year, 5,72,277 and 1,015
findings were identified, through WTI, in cement manufacturing units and ready-mix
concrete ("RMC") plants respectively. Further, a total of 3,77,153 safety
observations in cement manufacturing units and 1,577 safety observations in RMC plants
have been conducted throughout the year.
Furthermore, guidelines for Truck Parking Yard Maintenance Fund have
been revised to manage vehicle-related risks.
Innovations such as drone applications have been introduced to mitigate
risks associated with work at height and confined spaces. External safety experts have
been deployed, and high-risk committees have been formed at project sites to ensure safe
project execution.
An updated digital safety management portal, mySetu has been launched
to facilitate reporting and analysis of safety- related information. Proactive consequence
management has been strengthened to discourage risky behaviour.
In terms of safety metrics, your Company's fatality rate stood at
seven, and the Lost Time Injury Frequency Rate ("LTIFR") was 0.08 which is a
significant improvement from 0.10 during FY 2022-23.
Regarding safety training and initiatives undertaken, during FY
2023-24, your Company organised approximately 987,774 man-hours of safety training across
Units. In addition, 24,50C persons have been trained on behavioural safety through a
programme coined as 'Panchsheel'.
A total of 44,900 persons have been imparted VR-enabled training on 44
specific modules.
To build a pool of competent employees across units, five programmes
(each of five-day duration) were organised for Standard Champions Training by external
experts. Each of the six clusters were covered through this. Also, a total of 340
employees trained in one of the 14 safety standards covered by this programme.
During the year, 7,178 employees have successfully completed e-learning
on five critical safety modules.
Moreover, virtual technical safety training was given to 3,568
employees and to 7,000 contractual workers by Regional Labour Institute, Kanpur (RLI,
Kanpur) ("Amritkaal Suraksha").
A total of 67 employees from various units were trained, during FY
2023-24, to conduct structural stability assessment.
To improve adherence to safe operating procedures, your Company
introduced 20 Pictorial Standard Operating Procedures for high-risk activities and
provided trainings on Do's and Don'ts to drivers in Hindi and English. Additionally, it
established a safety toll-free number to encourage anonymous reporting of safety concerns.
In pursuit of Emergency Preparedness, each Unit has its on-site
emergency preparedness plan duly approved by concerned regulatory authority. All types of
potential emergencies and their response plans are part of the approved document. The
roles and responsibilities of the nodal members such as incident controller and rescue
members are clearly articulated and communicated. All employees and contract workers are
trained in their roles in case of any emergency. Units conduct mock drills to evaluate the
response of people, equipment, and tools against all the possible emergency situations
which are periodically covered in mock drills.
In terms of safety governance, your Company conducted workshops and
review meetings at various levels to formulate strategies and review safety performance.
Weekly safety reviews, WTIs, and contractor engagement sessions were conducted to
reinforce safety norms.
On a monthly basis, Unit Apex committees headed by the Unit Head review
effectiveness of the sub-committees' functioning. Representatives of Unit-level
sub-committees update status in the respective board level sub-committee meetings held
once in every four months where decisions are taken to act based on inputs/review
outcomes. Finally, the Organisational Health and Safety Board chaired by the Managing
Director and Chief Manufacturing Officer ("CMO") review organisational safety
performance once every two months, and further course of action is communicated across
Units.
To further bolster safety governance, during FY 2023-24, the following
Leaders' Connect initiatives were continued:
• Weekly Safety Review by CMO and Unit Head, Function Head
(Technical) and Department Head (Safety) of randomly selected three Units are connected
for interaction on various safety KPIs of their respective Units.
• A total of 492 employees across all Units were connected through
123 sessions of 'Pratibimb' in which Cluster Heads reviewed the quality of WTIs done by
those employees and guided them for further improvement.
• ^" (Contractor Connect Initiative): Unit
Heads/Function Heads engaged through weekly sessions with contractors and their workers to
verify their adherence to safety norms while at work.
To incentivise safety improvements, your Company has implemented a
rewards and recognition policy, with rewards given to individuals and contractors
demonstrating positive safety behaviour. These include safety person of the month,
safety quiz winners, and rewards for contractors with best safety
performance. During FY 2023-24, the total number of safety rewards and recognitions were
18,660 (11,028 rewards and 7,632 on-spot recognitions).
Corporate Social Responsibility
In terms of the provisions of Section 135 of the Act read with the
Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors of
your Company have constituted a Corporate Social Responsibility ("CSR")
Committee, chaired by Mrs. Rajashree Birla. Other Members of the Committee are Mrs.
Sukanya Kripalu, Independent Director, and Mr. K. C. Jhanwar, Managing Director.
Dr. (Mrs.) Pragnya Ram, Group Executive President, CSR, Legacy,
Documentation and Archives, is a permanent invitee to the Committee. Your Company has in
place a CSR Policy, which is available at https://www.ultratechcement.com/
corporate/investors-/corporate-governance.
D136.09 crores
CSR spend
Your Company's CSR activities are focused on social empowerment and
welfare, infrastructure development, sustainable livelihood, healthcare, and education.
Various activities across these segments have been initiated during the year around its
plant locations and adjacent villages.
During the year, your Company spent ' 136.09 crores on CSR
activities and set off ' 13.70 crores from the excess spent during FY21,
aggregating to ' 149.79 crores, resulting in 2% of the average net profits of your
Company during the last three financial years. A report on CSR activities is provided in Annexure
III, which forms part of this Report.
Subsidiaries, Joint Ventures, and Associate Companies
The audited financial statements of your Company's subsidiaries and
joint ventures viz. Harish Cement Limited, Gotan Limestone Khanij Udyog Private Limited,
Bhagwati Lime Stone Company Private Limited, UltraTech Cement Middle East Investments
Limited ("UCMEIL"), UltraTech Cement Lanka (Private) Limited, and their related
information are available for inspection on your Company's website.
The Scheme of Amalgamation of UltraTech Nathdwara Cement Limited
("UNCL") (a wholly-owned subsidiary of your Company) and its wholly owned
subsidiaries viz. Swiss Merchandise Infrastructure Limited ("SMIL") and Merit
Plaza Limited ("MPL") (collectively 'Transferor Companies') was made effective
from 20th April 2024 upon receipt of necessary approvals, including those from
the respective benches of the National Company Law Tribunal at Mumbai and Kolkata. The
Appointed Date of the Scheme being 1st April 2023, previous year figures have
been restated in accordance with the provisions of Ind AS. All assets and liabilities of
UNCL, SMIL and MPL stand transferred to your Company from the Appointed Date, and all
three companies, viz. UNCL, SMIL and MPL stand dissolved without winding up.
During the year, your Company incorporated a wholly owned subsidiary
viz. Letein Valley Cement Limited, for the purposes of carrying on the business of mining
of limestone and other raw materials as well as manufacture and sale of cement. Any Member
who is interested in obtaining a copy of the audited financial statements of your
Company's subsidiaries may write to the Company Secretary. In accordance with the
provisions of Section 129(3) of the Act read with the Companies (Accounts) Rules, 2014, a
report on the performance and financial position of each of the subsidiaries, joint
ventures, and associate companies is provided in Annexure IV of this Report.
Particulars of Loan, Guarantee, and Investment
Details of loan, guarantee, and investment covered under the provisions
of Section 186 of the Act read with the Companies (Meetings of Board and its Powers)
Rules, 2014, are given in the Notes forming part of the standalone financial statements.
Energy, Technology, and Foreign Exchange
Information on the conservation of energy, technology absorption, and
foreign exchange earnings and outgo, required to be disclosed pursuant to Section
134(3)(m) of the Act read with the Companies (Accounts) Rules, 2014, is given in Annexure
V of this Report.
Particulars of Employees
Disclosures relating to remuneration and other details as required
under Section 197(12), read with the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, are given in Annexure VI. In accordance with the provisions
of the aforementioned section, the names and other particulars of employees drawing
remuneration more than the limits set out in the aforesaid rules form part of this Report.
However, in line with the provisions of Section 136(1) of the Act, the Report and Accounts
as set out therein, are being sent to all Members of your Company, excluding the aforesaid
information. Any Member who is interested in obtaining these particulars may write to the
Company Secretary.
Business Responsibility Sustainability Report
Business Responsibility and Sustainability Report Core forms part of
this Report. Your Company has obtained reasonable assurance on the BRSR Core reporting.
Contract and Arrangement With Related Parties
Related party transactions entered by your Company during the financial
year were completely on an arm's length basis and in the ordinary course of business.
There were no material transactions with any related party, as defined under Section 188
of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014.
All related party transactions have been approved by the Audit
Committee of your Company and reviewed by it on a periodic basis. The policy on Related
Party Transactions, as approved by the Audit Committee and the Board, is available at
https://www.ultratechcement.com/investors/corporate- governance#policies.
The details of contracts and arrangements with related parties of your
Company for the financial year ended 31st March 2024, is provided in Note No.
40 to the standalone financial statements of your Company.
Risk management
The Indian cement industry, a vital contributor to national
infrastructure development, faces a complex and dynamic operating environment. Your
Company recognises the importance of proactive risk management to navigate these
challenges and achieve sustainable growth. It believes that effective risk management can
help avoid, mitigate, transfer, or accept the associated impact of risk.
Your Company has a dedicated Risk Management and Sustainability
Committee ("RMS Committee") that oversees all the Company risks. This committee
performs three key functions:
• Framework Review: review your Company's Enterprise Risk
Management Framework, ensuring it stays up-to-date and effective.
• Risk Analysis: conduct in-depth analyses of identified
risks. This analysis considers the potential impact and likelihood of each risk.
• Mitigation Strategies: define appropriate mitigation
actions to minimise the impact or likelihood of each risk. They consider factors like the
business environment, current operational controls, and compliance procedures when
developing mitigation strategies.
Identifying and Prioritising Risks
Your Company takes a proactive approach to risk management by
identifying a wide range of potential risks. These risks fall into several categories,
including:
• Economic and market fluctuations
• Cost pressures and inflation
• Regulatory and compliance landscape
• Environmental and sustainability concerns
• Financial risks
• Technological disruption risks
The Committee further classifies these risks based on their timeframes:
• Long-Term Strategic Risks: These risks pose threats to
your Company's long-term goals and require ongoing management.
• Short-to Medium-Term Risks: These risks are more
immediate threats that require focused attention within a specific timeframe.
• Single Events: These are unpredictable but potentially
disruptive events that require contingency plans.
By analysing both the likelihood and potential impact of each risk, the
RMS Committee prioritises them and determines the most appropriate risk management
strategy for each.
Economic and Market Fluctuations Risk
Slowdown in economic growth, coupled with subdued infrastructure
development, can significantly impact cement demand. An overcapacity situation in the
industry further exacerbates this issue.
Mitigation Strategies
• Brand Building and Innovation: Your Company emphasises on
brand building through innovative marketing activities. It invests in research and
development to create value-added products that cater to specific construction needs.
• Product Portfolio Diversification: Your Company has a
continuous focus on expanding the product portfolio beyond Ordinary Portland Cement
("OPC") to include blended cements, premium products, and ready-mix concrete.
This diversification strategy caters to a wider market segment and reduces dependence on
the volatile demand for OPC.
• Collaboration with Government: Your Company actively engages
with the government to advocate policies that support infrastructure development
initiatives, a key driver of cement demand.
Cost Pressures and Inflation Risk
Fluctuations in the prices of key raw materials like coal, pet coke,
and power significantly impact the cost of production, squeezing profit margins.
Mitigation Strategies
• Long-Term Fuel Contracts: Your Company leverages its strong
market position to secure long-term fuel contracts, mitigating the impact of short-term
price volatility.
• Fuel Mix Optimisation: Your Company invests in optimising
the fuel mix by co-processing alternative fuels like waste-derived fuels and biomass. This
not only reduces dependence on traditional fuels but also contributes to a more
sustainable production process.
• Procurement Efficiency: Your Company emphasises on
establishing efficient procurement policies for raw materials. These include exploring
alternative sources of supply, negotiating favourable terms with vendors, and adopting
just-in-time inventory management practices.
Regulatory and Compliance Landscape Risk
The ever-evolving regulatory environment, coupled with complex legal
interpretations, can lead to noncompliance issues and potential penalties. This can also
damage a company's reputation.
Mitigation Strategies
• Risk-Based Compliance Programmes: Your Company has
established comprehensive risk-based compliance programmes. These programmes involve
regular training for employees on relevant regulations and adherence to a robust code of
conduct.
• Focus on Corporate Governance: Your Company prioritises
maintaining high standards of corporate governance and public disclosure. This
transparency fosters trust with stakeholders and minimises the risk of non-compliance.
• Professional Guidance: Your Company also emphasises on
seeking professional guidance when navigating changes in regulations. This ensures timely
adaptation to evolving legal requirements and minimises the risk of inadvertent
non-compliance.
Environmental and Sustainability Concerns Risk
Greenhouse gas emissions, pollution from waste discharge, and water
scarcity are major environmental concerns that can attract regulatory sanctions and damage
a company's reputation.
Mitigation Strategies
• Pollution Control and Monitoring: Your Company invests in
advanced pollution control equipment and continuously monitor emissions through real-time
systems. This ensures compliance with environmental regulations set by the Pollution
Control Boards.
• Water Conservation: Your Company is actively implementing
rainwater harvesting systems and exploring Zero Liquid Discharge technology for water
conservation. This allows for the reuse of treated wastewater within the production
process.
• Sustainable Product Development: Your Company has been
investing in research and development to create low-carbon cementitious materials. It is
also expanding its product portfolios to include sustainable construction solutions.
Financial Risks
Risk
Your Company is exposed to various financial market fluctuations
including -
• Interest Rate Fluctuations: Rising interest rates can
significantly impact profitability by increasing borrowing costs and debt servicing
expenses.
• Foreign Exchange Rate Fluctuations: Currency fluctuations
affect the value of foreign assets and liabilities, potentially leading to unexpected
losses.
Mitigation Strategies
• Exposure Identification and Measurement: Your Company
actively monitors its involvement in financial activities and quantifies potential losses
or gains under various market scenarios. This helps your Company to understand its level
of exposure to each type of fluctuation.
• Financial Modelling and Stress Testing: Your Company
utilises financial modelling tools to simulate the impact of different market movements on
its financial performance. This allows your Company to assess its resilience under
challenging economic conditions.
• Derivatives and Hedging Strategies: Your Company may employ
financial instruments such as options or futures contracts to hedge against specific
risks. These instruments can help mitigate potential losses arising from unfavourable
market movements.
• Regular Monitoring and Reporting: Your Company maintains a
system for continuous monitoring of financial markets and our risk exposures. Regular
reports are generated to keep the management informed and enable timely adjustments to the
risk management strategy.
Technological Disruption
Risk
Your Company is faced with the challenge of adapting
to a rapidly evolving technological landscape -
• New construction materials: Advancements in materials
science could lead to the development of alternative building materials with lower
environmental impact or superior performance.
• Digital transformation lag: Failing to embrace
automation, data analytics, and digital tools risk falling behind competitors who leverage
these technologies for greater efficiency and optimisation.
• Disruptive technologies in construction: Technologies like
Building Information Modelling and Prefabrication could significantly alter construction
methods.
Mitigation Strategies
• Research and Development: Your Company invests in R&D to
develop next-generation cements with lower embodied carbon, higher strength-to-weight
ratios, and self-healing properties.
• Strategic Partnerships: Your Company considers strategic
partnerships with companies developing alternative construction materials to explore
potential applications and complementary solutions.
• Automation and Robotics: Your Company invests in automation
solutions for repetitive tasks in production lines, material handling, and quality
control. It also explores the use of robotics for hazardous or physically demanding jobs.
• Data Analytics and Al: Your Company has implemented data
analytics tools to optimise production processes, predict equipment maintenance needs, and
improve forecasting accuracy. It also explores the use of Al for process optimisation and
quality control automation.
• Continuous Innovation: Your Company believes in cultivating
a culture of continuous innovation encouraging exploration of new technologies and
fostering collaboration across departments.
Information Technology Risks Risk
Your Company deploys IT systems, including ERP,
SCM, CRM, Portals, Workflows, Data Historian, and Mobile Solutions, to
support its business processes, communications, sales, logistics, and production.
Risks could primarily arise from the unavailability of systems and/or
loss or manipulation of information, new vulnerabilities, Artificial Intelligence driven
phishing attacks.
Mitigation Strategies
• Making critical applications available from DR site.
Use backup procedures and store information at two different locations.
• Role based access, segregation of duty to avoid manipulation.
• Regular upgradation of IT systems with latest security
standards. Advanced anti-malware system ("EDR") installed on IT devices.
• Basis information about emerging risks, security policies and
procedures are updated periodically, and users are educated.
• Having business continuity plan for despatch processes.
• Your Company is also in the process of beefing up information
security around Plant Production Equipment and reviewing information security processes of
BPs (who provide critical services) as well.
Talent Management Risk
Your Company's growth could be hindered by its inability to attract and
retain top-quality talent while effectively engaging them in the right jobs.
Mitigation Strategies
• Continuing to be being an employer of choice and instilling a
sense of belonging.
• Specialised training courses are adopted to enhance and reskill
employees to prepare them for future roles and create a talent pipeline.
Global Geopolitical Tension Risk
The rising fuel prices in the wake of geopolitical tensions have had an
adverse impact on the cost of manufacturing owing to increased raw material, fuel, and
energy costs. For your Company's business, raw material, fuel, and logistics account for a
major share of the manufacturing cost.
Mitigation Strategies
• Prioritise local dependence for raw material and energy
fulfilment to mitigate the disruption caused due to such global geopolitical tension.
Internal Control Systems and their Adequacy
Your Company has put in place adequate internal control systems that
are commensurate with the size of its operations. Policies and procedures related to
internal control systems are designed to ensure sound management of your Company's
operations, safekeeping of its assets, optimal utilisation of resources, reliability of
its financial information, and compliance. Clearly defined roles and responsibilities have
been institutionalised, and systems and procedures are periodically reviewed to keep pace
with the growing size and complexity of your Company's operations.
Directors
Retiring by rotation
In accordance with the provisions of the Act and Articles of
Association of your Company, Mr. Kumar Mangalam Birla (DIN: 00012813) retires by rotation,
and being eligible, offers himself for re-appointment.
Appointment of Whole-time Director
The Board at its meeting held on 29th April 2024, based on
the recommendation of the NRC Committee considered and approved the appointment of Mr.
Vivek Agrawal, (DIN: 10599212) as Whole-time Director of your Company with effect from 9th
June 2024 to 31st December 2026.
Mr. Agrawal is currently the Chief Marketing Officer of your Company.
Resolution seeking his appointment along with a brief profile forms part of the Notice
convening the AGM.
Re-appointment of Managing Director
The Board at its meeting held on 29th April 2024, based on
the recommendation of the NRC Committee, and taking into account the contributions made by
Mr. K. C. Jhanwar, approved his re-appointment as Managing Director from 1st
January 2025, to 31st December 2026. Resolution seeking his re-appointment
along with his brief profile forms part of the Notice convening the AGM.
The existing term of Mr. Atul Daga (DIN: 06416619), Wholetime Director
and Chief Financial Officer is up to 8th June 2024. He will however continue to
be the Chief Financial Officer of your Company. The Board of Directors extend their
sincere appreciation and gratitude to Mr. Daga for his invaluable contributions during his
tenure as Wholetime Director.
Meetings of the Board
Your Company's Board of Directors met seven times during the year to
deliberate on various matters. The meetings were held on 28th April 2023; 21st
July 2023; 19th October 2023; 28th October 2023; 30th
November 2023; 3rd January 2024 and 19th January 2024. Additional
details relating to the meetings of the Board of Directors are provided in the Report on
Corporate Governance, which forms part of this Report.
Your Company has the following Board-level Committees, established in
compliance with the requirements of business and relevant provisions of applicable laws
and statutes, viz. Audit Committee; Nomination, Remuneration, and Compensation Committee;
Stakeholders Relationship Committee; Corporate Social Responsibility Committee; Risk
Management and Sustainability Committee; and Finance Committee.
Details with respect to the composition, terms of reference, number of
meetings held, etc. of the above Committees are included in the Report on Corporate
Governance, which forms part of this Report.
Independent Directors
Mr. S. B. Mathur and Mr. Arun Adhikari complete their term as
independent directors on 17th July 2024. The Board of Directors extend their
sincere appreciation and gratitude to Mr. Mathur and Mr. Adhikari for their long
association and invaluable contributions during their tenure on the Board of your Company.
The NRC Committee considered the appointment of Ms. Anita Ramachandran
(DIN:00118188) and Mr. Anjani Kumar Agrawal (DIN:08579812) as independent directors, and
recommended their appointment to the Board with effect from 17th July 2024. The
Board, on the recommendation of the NRC Committee considered and approved the appointment
of Ms. Ramachandran and Mr. Agrawal as independent directors, subject to the approval of
your Company's shareholders at the ensuing AGM.
AH independent directors, including Ms. Ramachandran and Mr. Agrawal
have submitted requisite declarations confirming that they meet the criteria of
independence as prescribed under Section 149(6) of the Act and Regulation 16(1)(b) of the
Listing Regulations. The independent directors have also confirmed that they have complied
with the provisions of Schedule IV of the Act and your Company's Code of Conduct.
Your Company's Board is of the opinion that the independent directors
possess requisite qualifications, experience, and expertise in industry knowledge;
innovation; financial expertise; information technology; corporate governance; strategic
expertise; marketing; legal and compliance; sustainability; risk management; human
resource development, general management including proficiency in terms of Section 150(1)
of the Act and applicable rules thereunder, and they hold the highest standards of
integrity. All Independent Directors of your Company have registered their name in the
data bank maintained with the Indian Institute of Corporate Affairs, Manesar, in terms of
the provisions of the Companies (Appointment and Qualification of Directors) Rules, 2014.
Resolutions seeking the appointment of Ms. Ramachandran and Mr. Agrawal
as Independent Directors of your Company for a term of five years commencing 17th
July 2024 along with their brief profiles form part of the Notice convening the AGM.
Formal Annual Evaluation
Your Company's Board Evaluation Process was set up in 2014. The
evaluation framework, for assessing the performance of your Company's Directors, comprises
of contributions at meetings and strategic perspective or inputs regarding the growth and
performance of your Company, among others. Given the focus on strengthening governance,
the process has significantly evolved for companies following good governance practices.
In March 2024, the NRC Committee reviewed and amended the evaluation framework with an aim
to deliver the following outcomes:
• Improved effectiveness of the Directors and the Board.
• Clarify roles and accountability of various stakeholders and
build a culture of continuous improvement and trust.
• Fortify the Aditya Birla Group Brand on good governance.
A revised evaluation framework was formulated and circulated to the
Board for the evaluation exercise for FY 2023-24. This was an online exercise with
separate evaluation forms circulated to individual Directors for evaluation of the Board,
its Committees, Independent Directors/Non-Executive Directors/Executive Directors, and the
Chairman of your Company.
The process broadly comprised of:
Board and Committee Evaluation
Evaluation of the Board as a whole and the Committees are done by
individual Directors. These are collated for submission to the NRC Committee and feedback
to the Board.
Independent/Non-Executive Directors Evaluation
Evaluation done by Board members, excluding the Director who is being
evaluated, is submitted to the Chairman of your Company, and individual feedback is
provided to each Director. The evaluation of the Chairman/Executive Directors, as done by
the individual Directors, is submitted to the Chairman of the NRC Committee and
subsequently to the Board. The evaluation framework focuses on various aspects of the
Board and Committees such as review, timely information from management, and others.
Performance of individual Directors are categorised into Executive, Non-Executive, and
Independent Directors and is based on parameters such as contribution, attendance,
decisionmaking, action-orientation, external knowledge, etc.
A summary of the evaluation exercise is as follows:
• Board expressed satisfaction on its functioning and that of its
Committees. Additionally, the Board paid attention towards business strategy, market
trends, sustainability considerations, digital transformation, and succession planning.
• Independent directors scored well on expressing their views in
understanding the Company and its requirements. They kept themselves updated on current
areas and issues that were likely to be discussed at the Board meetings. They shared their
external knowledge and perspective during the deliberations at the Board meetings.
• Non-Executive directors scored well in understanding your
Company, focused on business matters and other requirements. They shared their external
knowledge and perspective during the deliberations at the Board meetings.
• Executive Directors are action oriented and ensure timely
implementation of board decisions. They effectively lead discussions on business issues.
• The Chairman leads the Board effectively, provides clear
strategic guidance, encourages discussion, and listens to diverse viewpoints.
The details of the familiarisation programme for Independent Directors
are available at https://www. ultratechcement.com/about-us/board-of-directors.
Policy on Appointment and Remuneration of Directors and Key Managerial
Personnel and Remuneration Policy
Your Company's Directors are appointed/re-appointed by the Board on the
recommendations of the NRC Committee and approval of the shareholders.
In accordance with the Articles of Association of your Company,
provisions of the Act, and the Listing Regulations, all Directors, except the Executive
Directors and Independent Directors, are liable to retire by rotation and, if eligible,
offer themselves for re-appointment. The Executive Directors are appointed for a fixed
tenure and are not liable to retire by rotation. The Independent Directors can serve a
maximum of two terms of five years each, and their appointment and tenure are governed by
provisions of the Act and the Listing Regulations.
The NRC Committee has formulated the remuneration policy of your
Company, which is provided in Annexure VII of this Report.
Key Managerial Personnel
In terms of the provisions of Section 203 of the Act, Mr. K. C.
Jhanwar, Managing Director; Mr. Atul Daga, Whole-time Director and Chief Financial
Officer; and Mr. Sanjeeb Kumar Chatterjee, Company Secretary, are the Key Managerial
Personnel ("KMP") of your Company.
Mr. Vivek Agrawal, Whole-time Director and Chief Marketing Officer will
be a KMP with effect from 9th June 2024.
Audit Committee
The Audit Committee comprises of Mr. S. B. Mathur, Mr. Arun Adhikari,
Mrs. Alka Bharucha, and Mr. K. K. Maheshwari, majority of whom are Independent Directors,
with Mr. S. B. Mathur being the Chairman. Mr. K. C. Jhanwar, Managing Director, and Mr.
Atul Daga, Whole-time Director and Chief Financial Officer, are permanent invitees. The
composition of the Committee will be re-constituted with effect from 17th July
2024. Mr. Anjani Kumar Agrawal, Ms. Alka Bharucha and Ms. Anita Ramachandran, all
independent directors will form the Committee. Mr. K. K. Maheshwari, Mr. K. C. Jhanwar and
Mr. Atul Daga will be the permanent invitees. Further details relating to the Audit
Committee are provided in the Report on Corporate Governance, which forms part of this
Report. During the year under review, all recommendations made by the Audit Committee were
accepted by the Board.
Vigil Mechanism/Whistle Blower Policy
Your Company has in place a vigil mechanism for Directors and employees
to report instances and concerns about unethical behaviour, actual or suspected fraud, or
violation of your Company's Code of Conduct. Adequate safeguards are provided against
victimisation of those who avail of the mechanism, and direct access to the Chairman of
the Audit Committee, in exceptional cases, is provided to them.
The vigil mechanism/whistle blower policy is available at
https://www.ultratechcement.com/investors/corporate- governance#policies .
Significant And Material Orders Passed By The Regulators
Your Company had filed appeals against the orders of the Competition
Commission of India ("CCI") dated 31st August 2016 (Penalty of '
1,616.81 crores) and 19th January 2017 (Penalty of ' 68.30 crores). Upon
the National Company Law Appellate Tribunal ("NCLAT") disallowing its appeal
against the CCI order dated 31st August 2016, your Company filed an appeal
before the Hon'ble Supreme Court, which has, by its order dated 5th October
2018, granted a stay against the NCLAT order. Consequently, your Company has deposited an
amount of ' 161.68 crores, equivalent to 10% of the penalty of ' 1,616.81
crores. Your Company, backed by legal opinions, believes that it has a good case in both
the matters, and accordingly, no provision has been made in the accounts.
Auditors
Statutory Auditors
Pursuant to the provisions of Section 139 of the Act and the Companies
(Audit and Auditors) Rules, 2014, M/s. BSR & Co. LLP, Chartered Accountants, Mumbai
(Registration No: 101248W/W-100022) and M/s. KKC & Associates LLP, Chartered
Accountants (formerly Khimji Kunverji & Co.), Mumbai (Registration No:
105146W/W100621) have been appointed as Joint Statutory Auditors of your Company for a
second term of five years until the conclusion of the 25th and 26th
Annual General Meetings ("AGMs"), respectively. In accordance with the
provisions of the Act, the appointment of Statutory Auditors is not required to be
ratified at every AGM.
The Joint Statutory Auditors have confirmed that they are not
disqualified to continue as Auditors and are eligible to hold office as Statutory Auditors
of your Company.
During the year, there were no instances of any fraud reported by the
auditors to the Audit Committee or the Board. The observations made in the Auditor's
Report are self-explanatory and therefore, do not call for any further comments under
Section 134(3)(f) of the Act.
Cost Auditors
The cost accounts and records as required to be maintained under
Section 148(1) of the Act are duly made and maintained by your Company.
In terms of the provisions of Section 148 of the Act read with the
Companies (Cost Records and Audit) Rules, 2014, the Board of Directors of your Company
have, on the recommendation of the Audit Committee, appointed M/s. D. C. Dave & Co.,
Cost Accountants, Mumbai and M/s. N. D. Birla & Co., Cost Accountants, Ahmedabad, to
conduct the Cost Audit of your Company for the financial year ending 31st March
2025, at a remuneration as mentioned in the Notice convening the AGM.
As required under the Act, the remuneration payable to the Cost
Auditors must be placed before the Members at a general meeting for ratification. Hence, a
resolution relating to the same forms part of the notice convening the AGM.
Secretarial Auditors
In terms of the provisions of Section 204 of the Act read with the
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board
had appointed M/s. Makarand M Joshi & Co. LLP, Company Secretaries, as Secretarial
Auditors for conducting Secretarial Audit of your Company for the financial year ended 31st
March 2024.
The report of the Secretarial Auditor is provided in Annexure VIII.
Compliance with Secretarial Standards
Your Company is compliant with the Secretarial Standards specified by
the Institute of Company Secretaries of India. Your Company has complied with all
applicable provisions of Secretarial Standard-1 and Secretarial Standard-2 relating to
'Meetings of the Board of Directors' and 'General Meetings' respectively, issued by the
Institute of Company Secretaries of India.
Annual Return
In terms of the provisions of Section 92 and Section 134 of the Act
read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual
Return is available at https://www.ultratechcement.com/investors/ financials.
Other Disclosures
• No material changes and commitments affected the financial
position of your Company between the end of the financial year and the date of this
Report.
• Your Company has not issued any shares with differential voting
rights.
• There was no revision in the financial statements.
• There has been no change in the nature of the business of your
Company.
• Your Company has not issued any sweat equity shares.
• There is no application made or proceeding pending under the
Insolvency and Bankruptcy Code, 2016 during the financial year 2023-24.
• There was no instance of one-time settlement with any Bank or
Financial Institution.
Disclosures as per the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013 (POSH Act):
Your Company has adopted zero tolerance for sexual harassment in the
workplace and has formulated a policy on the prevention, prohibition, and redressal of
sexual harassment in the workplace in line with the provisions of the POSH Act and the
rules framed thereunder, for prevention and redressal of complaints of sexual harassment
in the workplace. Your Company has complied with provisions relating to the constitution
of the Internal Committee under the POSH Act. During the year under review, your Company
received nine complaints of sexual harassment, of which seven complaints have been
resolved. Investigations have been completed in the remaining two and the report is under
finalisation.
Cautionary Statement
Statements in the Directors' Report and the Management Discussion and
Analysis describing your Company's objectives, projections, estimates, expectations, or
predictions may be 'forward-looking statements' within the meaning of applicable
securities laws and regulations. Actual results could differ materially from those
expressed or implied. Important factors that could make a difference to your Company's
operations include global and Indian demand-supply conditions, finished goods prices, feed
stock availability and prices, cyclical demand and pricing in your Company's principal
markets, changes in government regulations, tax regimes, economic developments within
India and the countries within which your Company conducts business, geopolitical
tensions, risks related to an economic downturn or recession in India, and other factors
such as litigation and labour negotiations. Your Company is not obliged to publicly amend,
modify, or revise any forward looking statements based on any subsequent development,
information, or events, or otherwise.
Acknowledgement
The Board of Directors of your Company express their deep sense of
gratitude to the banks, financial institutions, stakeholders, business associates, and
central and state governments for their support, and looks forward to their continued
assistance in the future. Your Company thanks its employees for their contribution to your
Company's performance and applauds them for their superior levels of competence,
dedication, and commitment to your Company.
#MDEnd#