2002-03 - Grasim

CEMENT
FY03 FY02 % Change
GREY CEMENT
Installed Capacity (Mn TPA) #12.92 11.37 14
Production (Mn Tonnes) 11.09 9.53 16
Sales Volume (Mn Tonnes) 11.16 9.68 15
Net Turnover (Rs. Crores) * 2,002.3 1,926.3 4
Average Realisation (Rs./MT) 1,690 1,917 (12)
WHITE CEMENT
Installed Capacity (TPA) 400,000 400,000 —
Production (Tonnes) 310,163 267,915 16
Sales Volume (Tonnes) 305,223 266,105 15
Net Turnover (Rs. Crores) 180.3 143.6 26
Average Realisation (Rs./MT.) 5,534 5,317 4
NET DIVISIONAL TURNOVER (Rs Crores) 2,182.6 2069.8 5
DIVISIONAL OPERATING MARGINS (%) 17 23 —
* Includes turnover of Rs.115.99 Crores (previous year – Rs.59.85 Crores) from RMC
# Capacity increased at the year-end mainly due to de-bottlenecking at various plants and increase in proportion of Blended Cement.
Review of operations
It was a challenging year for the cement business. Though industry despatches grew by over 9%, prices came under pressure in all
markets, except Eastern India. Commissioning and stabilisation of new capacities in the Western and Southern regions, improved
plant productivity in the industry and the progressive shift to blended cement aggravated the demand-supply imbalance. The
introduction of dual Sales Tax regime in Tamil Nadu also had a negative impact on prices.
Sales volumes grew by 15% to 11.16 Mn. MT, helped by impressive rise in volumes across the regions, except in the western
region. Sales grew by 21% in the North, 17% in the South and by 24% in the East. The strong volume performance is attributed
to the benefits of full year operations at the Bhatinda grinding unit commissioned last year, aided by better capacity utilisation at
plants located in Chattisgarh and Tamil Nadu.
Production volumes grew in line with sales, bolstered by increased throughput from existing production lines and a progressive
conversion to blended cement. The Company improved capacities at its major locations by 14% YoY, and now has a grey cement
capacity of 12.92 Mn. MT. The share of blended cement in the total volumes has also risen from 19% in FY02 to 34% in FY03.
The average realization for the full year was lower by 12%, on account of 22% fall in selling prices in the West and over 18% fall
in the South, due to significant addition to capacities in these regions, and the effect of the dual sales tax regime in Tamil Nadu.
Consequently, cement business margins declined from 23% to 17% in FY03. Though the impact of this was partly mitigated by a
reduction in costs.
There was an increase in throughput from existing lines supported by a change in the product mix, tilting towards higher blended
cement. The use of alternate fuels reduced the fuel cost by 4% and the power consumption was lower by 2 units per MT of cement.
The company could also lower the freight cost by 9% due to improved logistics. Thus the concerted efforts were to reduce the cost
of these three major cost drivers. The Company’s capital expenditure plans aims to pare the overall cost further.
(12)