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8/8/2019 Annual Report 08 09.PDF Lalit
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trust empowersuntried hands
Perhaps the most compelling reason for inculcating trust is
the feeling of empowerment enjoyed by employees. In the
words of the comic book superhero, Spiderman, 'with
great power comes great responsibility.
We have nearly done away with micromanagement. Not
only does it take a toll on top management in terms of time
and effort, but it also creates weak second lines without
initiative or enthusiasm. Thus, the buzzwords inside the
Company are Delegation and Decentralisation across
departments and functions. Most of our departments and
project teams seem to run on 'autopilot' mode.
Direction rather than supervision
Empowered juniors
We have immense faith in our young brigade. A big case in
point is that the Unit VII record was largely the result of
efforts and initiatives of junior management promoted up
the order to take larger responsibilities.
Major events like plant shutdowns are decided collectivelyand planned in a way to minimise intervention of seniors.
The logic is that shop floor personnel know their job best,
are perfectly capable of handling routine operations and
therefore, very well deserve our trust. During exigencies,
the juniors know they can turn to their seniors for guidance
and support.
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trust discoversopportunityuntested Trusting people yields initiatives that materialiseopportunities where none existed before.
Take cement dispatches, which generally take place in
covered rail wagons for long distances. The possibility of
securing freight rebates led our managers to experiment
with open wagon dispatches. Although, initially, open
wagon loading took long, experimentation was allowed to
continue. By modifying loading chutes, open wagon
loading cycle has been reduced to 12-13 hours for 3835 MTof cargo. This is a figure that compares well with the 9-10
hours of loading time for 2700 MT in covered wagons.
What is the opportunity? Lower freight per ton kilometre
allows us to extend radius control and reach long-distance
markets with good potential. Newer markets also mean
more diversified business. This is good news for the
Company, because we have multiple brands to take
advantage of just such a diverse customer base.
Earlier, brand managers of our three brands - Shree Ultra
Jung Rodhak Cement, Bangur Cement and Rockstrong
Cement engaged in healthy competition amongst
Open rail wagon loading
Logistics integration
themselves to cultivate their own distribution channels and
gain larger shares of the market. But, looking at the
possibility of integrating the logistics function across all the
brands, a decision was made to share transport and storage
capacities. Of course, this necessitated a spirit of trust,
cooperation and coordination between all brand managers
in the larger interests of the Company.
Our policy of keeping redundant captive power capacity
opened up a new avenue - power sales. Cashing on the righttariff at the right time required trust and coordination
between the power sales team, the power plant and the
cement plant. The power plant had to generate enough
power to accommodate the load of the cement and
grinding plants, its own requirement of auxiliary power and
the need to push power sales volumes. The cement plant
was asked to optimise power consumption in a way that
allowed such sales to capitalise on peak-hour tariff. The
power sales team had to look at the generation of the power
plant and the need of our cement and grinding plants to
identify potential slacks in power uptake. Then power
offloads outside the system had to be planned such that
they leveraged such systemic slacks as well as market tariff
to ultimately maximise revenue.
New opportunity in power sales
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Value for shareholders
Community benefit programmes
Greening the processes
We realise that shareholders put their trust in us by investing
their funds in our stock. We consider it our prime
responsibility to add to their value. Thus, although we have
maintained an unbroken dividend payout record, we have
been prudent in deciding the dividend rate; to ensure a
higher intrinsic value of the Company for them over the
long term, we have opted not to pursue a higher dividend
payout strategy. We have repaid their confidence in us by
generating a high return on net worth or intrinsic value.
Shree was the first Company from Rajasthan to receive the
Golden Peacock Award for excellence in corporate
governance - an affirmation of our continual efforts at
improving credibility with our shareholders.
The community looks up to Shree as a responsible and
supportive corporate citizen. The Company has been ac tive
in promoting community interests. For instance, the
Company has renovated and created community assets like
River Ghats. As usual, the Company's annual temple
function, featuring scintillating performances by both
domestic and international artistes is a big hit with local
people and folks from surrounding areas.
It is on the Country's environment map that our company
has been a notable presence. Our 'green' credentials are
impeccable. Shree is the first cement company in the world
to earn carbon credits for its CDM project, Optimal
Utilisation of Clinker.
In a first of its kind endeavour in India, our company
developed a 'green power' system to utilise excess heat
from the main cement plant in order to turn a power
generator.
With the aim of producing 'green' cement, experiments are
being conducted to use as inputs waste materials like lead-
zinc, slag, waste gas, etc.
Trust for us is a deep-rooted and intangible instinct. But, as
shown by the interaction between Lord Krishna and Arjuna,
trust is also something that takes performance to
untouched orbits. At Shree, we too are using trust in a
material and tangible way to achieve higher levels of
performance.
Illustrating the benefits of mutual faith is a motto I am going
to leave you with - 'As faith wills, fate fulfils.
Taking it to the next level
trust deliversbenefitsinvaluable
A primary objective of our Company is to create a circle of
trust involving all stakeholders. We pursue a sustainable
development agenda rather than a profit-centric one. This
comes out in our aforementioned triple bottom line
approach to performance.
Sustainable development is about looking after the
interests of all stakeholders, including employees,
shareholders, community and environment, and ensuring
minimum resource footprint. Such a culture in an
organisation helps it develop trust with stakeholders.
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2.12.3
2.7
1.4
2.1
1 . 9
1 . 9
2 . 2
0 . 7
1 . 1
Current & Quick Ratio (Times)
3.0
0
Current Ratio
Quick Ratio
2.0
1.5
1.0
0.5
04-05
08-0907-08
06-0705-06
2.5
1033.7
939.2
611.0
221.5173.9 5 7 8 . 0
2 6 0 . 4
1 7 7 . 0
1 8 . 4 2 9
. 1
EBIDTA & Net Profit (Rs. Crore)
1200
0
EBIDTA
Net Profit
1000
800
600
400
200
04-05
08-0907-08
06-0705-06
Gross Fixed Assets & Net Fixed Assets (Rs. Crore)
Gross Fixed Assets
Net Fixed Assets
04-05
08-0907-08
06-0705-06
3000
2500
2000
1500
1000
500
0
2734.8
2205.32001.1
1390.91139.6
1 1 0 5 . 7
7 7 7 . 9
8 9 1 . 9
7 2 7
. 7
6 3 5 . 3
Performance Highlights
77.7
63.4
48.0
32.230.2
6 4 . 2
4 6 . 2
3 5 . 1
2 7 . 7
2 4 . 8
Clinker & Cement Production (Lac Tons)
90
60
50
40
30
20
10
0
70
80
Cement Production
Clinker Production
04-05
08-0907-08
06-0705-06
Operating & Net Profit Margin (in %)
Operating Margin
Net Profit Margin
04-05
08-0907-08
06-0705-06
45
40
35
30
25
20
15
10
5
0
38.1
44.544.7
33.129.9
2 1 . 3
1 2 . 3 1 2
. 9
2 . 7 5 .
0
Cash EPS & EPS (Rs. Per Share)
Cash EPS
EPS
04-05
08-0907-08
06-0705-06
0
25
50
75
100
125
150
175
200
225
250227.2
207.9
154.2
53.043.5
1 6 5
. 9
7 4 . 7
5 0 . 8
5 . 3 8 .
3
Gross Turnover & Net Turnover (Rs. Crore)
Gross Turnover
Net Turnover
04-05
08-0907-08
06-0705-06
3500
3000
2500
2000
1000
500
0
3097.1
2440.3
1613.1
824.1723.0
2 7 1 5 . 0
2 1 0 9
. 1
1 3 6 8
. 0
6 6 9 . 4
5 8 2 . 1
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Debt Equity Ratio (Times)
0.9
1 . 7
1 . 9
1 . 0
0 . 8
04-05
08-0907-08
06-0705-06
2.00
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0
Dividend (Rs. Per Share)
10
8
6 5
4
04-05
08-0907-08
06-0705-06
12
10
8
6
4
2
0
Book Value (Rs. Per Share)
347.3
1 9 3
. 1
1 3 0 . 5
8 5 . 1
8 3 . 1
04-05
08-0907-08
06-0705-06
400
350
300
250
200
150
100
50
0
Royalty & Cess
Income Tax
Sales Tax
Excise Duty & Service Tax
Other Taxes
33
19191149
11
1477
101
140
266
195
698
223186
97
27
126
180
113
474
46
183
308
242
828
Contribution to Exchequer (Rs. Crore)
04-05
08-0907-08
06-0705-06
28
4964
11
0
100
200300
400
500
600
700
800
900
Performance Highlights
Return On Capital Employed (in %)
04-05
08-0907-08
06-0705-06
33.9
2 4 . 9
3 9 . 3
2 4 . 6
2 1 . 9
45%
40%
35%
30%
25%
20%
15%
10%
5%
0
Return On Net Worth (in %)
04-05
08-0907-08
06-0705-06
48.4
3 6 . 5
2 4 . 1
9 . 7
1 8 . 5
50
40
30
20
10
0
0
10
20
30
40
50
60
Inventory Turnover (Days)
18.2 2 6 . 4
3 5 . 3
5 0 . 0
3 6 . 6
04-05
08-0907-08
06-0705-06
Debtor Turnover (Days)
6.9 7
. 4
5 . 9
8 . 1
1 2 . 1
04-05
08-0907-08
06-0705-06
14
12
10
8
6
4
2
0
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Departmental Highlights
Material management
Limestone
Fly ash
Since limestone is the principal raw material going into
cement, all attempts are made to increase its production
while keeping costs low. Shree enjoys 100% self-reliance in
sourcing limestone from its captive mines.
As Shree has grown, so also has the internal capacity to
process limestone from 5000 TPD (tons per day) to 50,000
TPD in the last five years. Not content with such an
impressive trajectory, the Company is aiming bigger; Shree
has acquired prospecting licenses and mining leases in
different parts of the Country in an effort to increase its
mining area.
Use of hi-tech machinery, large-sized equipment to realise
size economies, building of levelled and compacted roads
and modification of equipment design are some of the
steps that have increased the efficiency of critical mining
equipment like dumpers and excavators. For instance, such
measures have improved output of dumpers from 160 TPH
(tons per hour) to 290 TPH.
Flyash is a critical component of PPC (Pozzolana Portland
Cement) manufacturing. Its availability in the near future is
likely to come under strain as all cement manufactures push
hard to tie up long / medium term arrangements with itssuppliers, thermal power plants. Anticipating such a
situation, Shree has already forged long term agreements
with several thermal power plants. This should be enough
to fulfil our present and future requirements. Against the
present requirement of about 5000 TPD (tons per day), the
Company's long-term arrangements ensure supply security
of 7000 TPD. Shree ensures pollution-free transportation of
flyash through special purpose vehicles like pneumatic
bulkers and close body trucks.
Gypsum
The gypsum market is a monopolistic one with limited
supply. Anticipating production demands, planning
procurement schedules and developing market relations
with the suppliers have ensured procurement of nearly
4.25 Lac MT for the Company which has fully met our annual
requirements.
Considering its limited supply and increased future
demand, Shree has started using Chemical Gypsum. The
Company is also exploring use of other types of gypsum,
namely Phospho, Marine, etc. Because of the high purity of
such gypsum, quantity required per ton of cement gets
reduced. This makes the new-source gypsum very cost-
effective. The Company has already tied up with one
supplier and is in the process of making arrangements with
a few others.
Flyash Procurement (Lac Tons)
4 . 3 2
7 . 0 3
1 2 . 3 5
1 6 . 4
9
1 6 . 1 3
18
0
14
10
6
2
04-05 05-06 06-07 07-08 08-09
16
12
8
4
Raw material cost per ton of CementRaw Material 04-05 05-06 06-07 07-08 08-09Limestone & others 156 151 158 152 165Gypsum 30 33 52 46 50Flyash 53 78 131 139 106 Total 239 262 341 337 321
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Pet coke
Shree is the pioneer in the use of 100% pet coke, a waste
from petroleum refineries, both for its cement as well as
power plant operations. Today, with annual consumption of
1.2 Million Tons, Shree is the largest pet coke consumer in
the world cement industry.
The recessionary trends in the world economy depressed
international pet coke prices during the later part of
2008-09. Finding imported pet coke to be much cheaper
than domestic supplies, the Company went on a
procurement spree of pet coke from international markets
from December '08 to March '09. The Company alsoengaged in hard bargaining with domestic suppliers to
reduce their prices against the background of recession and
lower imported pet coke prices.
To ensure supply security, Shree forged a two-year contract
with Indian Oil Corporation (IOC) to lift 35,000 tons per
month, which covers 35% of our total requirement. We have
also decided to widen our supplier base by turning to
international suppliers, as against the earlier approach of
banking on only domestic suppliers.
Procurement of packing bags
We have an online bidding system, which allows packing
bag suppliers to bid and compete for our orders.
A tremendous success, the system has been able to handle
larger and larger procurements. In the year under review,
we were procuring at the rate of 1.5 crore bags a month.
Such volumes are drawing more and more vendors to the
system, thereby increasing its competitiveness and
enabling procurement at lower costs.
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Manufacturing
Power and fuel consumption
n
n
n
The higher production figures were achieved at lower
power and fuel costs. This happened partly due to energy
conservation measures taken by the Company such as:
Installation of High Efficiency Main ESP and PH fans
Increase in the stack height of Cooler ESP fan
Installation of VFDs on Dust Collector Fans in Cement
Mill, Raw Mill and Packing Plant at all the units
Clinker production in Kiln I during 2008-09, at 10.87 lac tons,
was its highest ever. Similarly, productivity of all the kilns of
the Company improved last year; surely, an outcome of
better operation & maintenance practices of equipments
and efficiency improvement initiatives.
Such practices have slashed downtime of various
equipments in the production process. Take, for instance,
the following :
36 hours to dismantle ring formation inside Kiln I from
feed to feed, instead of the earlier 72 hours
76 hours to replace old Roller Press Rollers in Cement
Mill II with new ones without the help of equipment
engineers, instead of the normal 96 hours
4 hours of downtime saved during annual shutdown
through faster cooling of Kiln by running SG Fan
24 hours to replace cracked inner race of fixed roller
drive end bearing without dismantling roller bearing,
instead of the usual 72 hours
n
n
n
n
Clinker Production (TPH)Kiln 2008-09 2007-08I 131 124II 189 183III 131 120IV 135 118V 129 110VI 132 52*
*Low because Unit VI commissioned in March 08 wasunder stabilisation.
Product mix
In response to growing demand for OPC (Ordinary Portland
Cement) coming from the institutional segment of the
market, OPC production was increased from 20% of the
total in 2007-08 to 24% in 2008-09.
Power Consumption (Kwh per Ton of Cement)
7 5 . 1
7
7 3 . 4
5 7 3
. 8 7
7 9 . 3
5
7 6 . 7
2
80
70
78
76
74
72
04-05 05-06 06-07 07-08 08-09
Fuel Consumption (% of Clinker)
1 0 . 9
6
1 0 . 3
7
1 1 . 7 3
1 1 . 3 4
1 0 . 7 5
12
7
11
10
9
8
04-05 05-06 06-07 07-08 08-09
OPC & PPC Production (%)
100
004-05 05-06 06-07 07-08 08-09
41
54
7680
7680
60
40
20
59
46
2420
24
PPCOPC
Departmental Highlights
Cement and clinker production
Our production figures have outpaced the industry. Whilecement production in India increased by 7.8% in 2008-09
over 2007-08, Shrees cement production grew nearly three
times at 22.5%, from 63.4 lac tons in 2007-08 to 77.7 lac tons
in 2008-09. This has helped the Company get the most out
of growth opportunities in the market.
For the same period, the Companys clinker production
registered a higher growth than cement at 38.8%, from 46.2
lac tons in 2007-08 to 64.2 lac tons in 2008-09. The higher
clinker production supported higher cement production
and higher clinker sales.
ushkhera Grinding Unit
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Departmental Highlights
Cement and clinker dispatches
Open Wagon Loading
Cement and clinker dispatches have increased
substantially, by 27.7% - from 66.1 lac tons in 2007 -08 to 84.4
lac tons in 2008-09. A larger share of dispatches happened
by road, because most of them took place from our Ras and
Khushkhera works, which did not have rail sidings. Thus, rail
dispatches, as a percentage of the total, slid down from 27%
in 2007-08 to 17% in 2008-09.
Loading restrictions on trucks as well as relatively higher
truck freight charges have implications in terms of higher
per ton cost of dispatches by road. Since, 83% of dispatches
took place by the high-freight mode of roads, the logistics
cost per ton has increased in the year under review.
A major initiative this year has been rail dispatches by open
wagon, instead of covered wagon, to take advantage of the
huge differences in freight. Open wagon loading generally
takes a lot of time. However, by modifying loading chutes,the loading time has been improved to about 12 hours for
3835 MT of cargo weight. It takes about 9 hours to load 2700
MT of cargo weight in covered wagons. In a single hour,
nearly 320 MT of cargo gets loaded by open wagon, instead
of 300 MT by covered wagon. Since, loading efficiency was
higher in open wagons, faster dispatches were possible.
Also, since there were rebates on freight by open wagon,
huge logistics savings were possible.
Rail loading efficiency is also seen in the lower rake loading
times for cement and clinker.
Logistics
Freight saving from higher truck turnover
Larger dispatches from Khushkhera
Faster dispatches
In the year 2008-09, clinker freight from clinkerisation units
at Ras/Beawar to our grinding unit at Khushkhera came
down to Rs. 423 per ton from Rs. 477 in the previous year.
Such a significant reduction happened due to faster truck
turnarounds, which in turn speeded up the load-unload
cycle of clinkers between Ras/Beawar and Khushkhera, thus
making possible a higher frequency of trips. On an average,
a truck was able to increase frequency of trips between the
loading site (Ras) and unloading site (Khushkhera) to 9.1
every month during this year compared to 7.5 last year. With
higher revenue from higher trips, transporters willingly
provided freight bargains, which resulted in big freight
savings for the Company.
Proximity to prime north India markets makes cement
off-take from our Khushkhera grinding unit an attractive
proposition. Because faster delivery on their orders is
possible, customers prefer dispatches from this unit. In fact,
during the year under review, dispatches increased to 27.16
lac tons from 9.93 lac tons last year. An incredible three-fold
jump, it not only achieved larger sales volumes, but also
faster deliveries and more satisfied customers.
Besides increasing loading efficiency, faster dispatches
came about from other initiatives. Installation of an online
bag printing equipment did away with the need to wait for
pre-printed bags to arrive from the packing bag godown
before commencing packing. Uninterrupted availability of
printed bags made full use of the existing packing capacity,
instead of letting it remain idle. This initiative improved
average daily dispatches by 500-700 MT.
Rail & Road Dispatch (Cement)
80
0
60
40
06-07 07-08 08-09
20
40
0
30
20
10 1 3
. 6 7
3 4 . 3
7
1 6 . 8
4
4 6 . 5
5
1 2 . 9 0
6 4 . 7
22927
17 L a c
T o n
% o
f R a i l D i s p a t c h
Qty. - Road Dispatch (Lac Ton)Qty. - Rail Dispatch (Lac Ton)% Rail Dispatch to Total
Rake Load Time (hours)
35
30
20
10
06-07 07-08 08-09
32.53
19.05
12.2815
ClinkerCement
0
25
5
12.46
12.06 11.58
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PowerGreater generational efficiency during 2008-09 was also
indicated by the lower heat rate (fuel in calorific terms
required to generate 1 Kwh) of 2744 Kcal/Kwh in 2008-09, as
against 3005 Kcal/Kwh in 2007-08. Such a massive
reduction in heat rate is a rare achievement in the power
sector.
'Green' power is power generated from waste heat in the
cement plant. Because, it does not require additional fuel, it
does not leave any carbon footprint and is therefore,
environment-friendly.
Shree is already generating Green Power from its existing
green power plant (Waste Heat Recovery plant) installed at
Kiln 1. The Company has now undertaken work of setting up
such green power plants at all its clinkerisation units. Once
all these green power plants are completed (which is
expected by end of financial year 2009-10, the total capacity
of Green Power Plants will add up to 43 MW. Outside of
China, this would be the largest green power generation
capacity in the World.
A new development this year has been the opening of the
Indian Energy Exchange, the Country's national energy
trading platform. Sensing the immense opportunity, Shree
started leveraging its ramped-up captive power capacity to
engage in power sales.
It is not only fetching additional revenue for the Company,
but also resulting in greater operational efficiency all-
round. Operations in the power plant have been
streamlined to increase power generation. Power demand
both in the cement and power plants has been rationalised
and operating efficiencies therein improved to make
available more power for sale. For instance, Ash handling,
CHP and DM operations in the power plant, consuming a lot
of power, were confined to time bands matching off-peak
hours of power demand in the Country. Such operations,
curtailed during peak hours, freed additional power for sale
at high peak power tariff. In the cement plant, operations of
Crushers, Raw Mills, Cement Mills, Stacker/Reclaimer etc.
underwent similar optimisation.
'Greenpower
Power sales
Capacity
Generation
Shree is self-sufficient in meeting its 100% power
requirements. The Company's captive power capacity rose
by 17.7%, from 101.5 MW in 2007-08 to 119.5 MW in 2008-09.
This has not only supported larger cement and clinker
production, but also opened up the virgin opportunity of
power sale.
Gross power generation surged by 45%, from 540 Million
Units in 2007-08 to 783 Million Units in 2008-09. A greater
power demand came not only from the larger production in
the cement plant, but also from the increased opportunity
of power sales. In response to this, the power plant achieved
the higher PLF of 83.48% during 2008-09. The Company
generated efficiencies in the power plant operation and
thus brought down its auxiliary consumption. In fact,
auxiliary consumption during 2008-09 was the lowest at
7.36% against 7.92% in 2007-08 of gross generation.
Captive Power Capacity (MW)
3 9
. 0 4 5 . 0
6 5 . 0
1 0 1 . 5
1 1 9
. 5
140.0
0.0
120.0
100.0
80.0
60.0
40.0
04-05 05-06 06-07 07-08 08-09
20.0
Power Generation (Million Units)
800
004-05 05-06 06-07 07-08 08-09
226267
349
540
783700
600
500
400
300
200
100
Departmental Highlights
Power Plant, Beawar
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Capacity expansion
During the year, the Company completed its Turbine
Generator, TG-VI in record time. The TG, originally scheduled
for commissioning by November - December, 2008, was put
on fast-track implementation once it was felt that early
execution meant earlier revenue realisations from power
sales. Completed two months ahead of schedule, the new
TG stabilised operations fast, helping the Company touch
higher power generation and sales revenues before
anticipated dates.
An early mover in the field of Power Sales, the Company is
now planning to consolidate its presence in this high-
growth market with additional power generation capacity.
Projects to augment such capacity by 143 MW are already
underway. This includes the 43 MW of 'green' power
capacity mentioned above.
Installation of Power Management System (PMS) for
integrated power and load management from a single
location. This has yielded complete power system
stability with zero black-out
Putting into operation unmanned substation, made
possible by advanced equipment and PMS
VFD installation in various fans, WHRB Recirculation
Pump, etc
Optimisation in the operation of ACW pumps & CT fan
Adoption of latest technology for monitoring and
control like infrared camera, laser alignment kit, belt
alignment kit, electrical discharge detector
Replacement of solid F.R.P. with hollow blades in all the
C. T. Fans for better performance
Celebration of power plant safe year (including
inauguration of safety exhibition room showing best
housekeeping and best practices with latest safety
gadgets)
Energy efficiency, automation and safety thrust
n
n
n
n
n
n
n
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Plant rating
'Green' processes and materials
Our quality efforts are directed at monitoring and
improving equipment and processes. International cement
consultants, Whitehopleman, UK has furnished a 4 Star
rating for Shree's cement plant. This is the highest rating
received by any cement plant in the world. The Company
has been securing this rating for nine years in a row. This is a
fact that suggests the high level of plant quality.
R&D initiatives are aimed at 'greening' the process of
production as well as providing alternate materials that
could serve as inputs.
Experiments have yielded a high-volume flyash concrete
with attributes similar to that of ordinary cement. The high
flyash content obviates the need to produce clinker and
thus expend high energy. It also makes the cement a very
eco-friendly construction material.
Quality and R&DAny excessive reliance on a raw material carries with it high
risk of cost appreciation or supply shortage. Flyash is an
input that is likely to be in a scarcity in the long-run. To get
around that, we have started the use of alternate additives
like lead-zinc slag, effluent treatment plant (ETP) sludge, etc.
ETP sludge usually entails a cost of disposal. But, its use as an
additive in cement production is generating revenue rather
than incurring cost.
Departmental Highlights
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Departmental Highlights Knowledge systemsWith Shree's CMS (Content Management System), the
Company has entered the era of transparent knowledge
exchange. This means that users can share or publish
information faster, in a much more transparent and efficient
manner. Based on open source technology, the CMS over a
period of time is expected to serve as the Company's
knowledge bank.
Shree encourages the use of video conferencing to connect
people. Seamless connectivity has been rendered possible
with the use of MPLS VPN for online communication
between company locations, Kolkata, Beawar, Ras,
Khushkhera and all the stock points across the country.
Servers and network uptime at Shree has consistently been
above 99.99% allowing people to be more productive and
efficient.
Shree won the prestigious "Silver CIO" award in the category
of companies having a turnover in excess of Rs 1000 Crores
for the case study on "Implementation of Reverse Auction of
Cement Transportation" for the "CIOL - Dataquest
Enterprise Connect Awards 2008". These awards constituted
by "Dataquest" magazine are revered as the "Os cars" of the
Indian IT industry, and are conferred on CIOs for
demonstrating leadership combined with vision & mission
in deploying Information Technology for business benefits
through pioneering & innovative use. Shree is the first
cement company to be honoured with this coveted award
since the constitution of the awards in 2004.
To create a knowledge-driven company in tune with globalbusiness, Shree deployed the Oracle e-Business Suite ERP
solution. Imbibing the best practices of companies
worldwide, this ERP suite impacts all processes of the
Company, right from procurement, through all techno-
commercial operations, to sales and distribution. It involves
a complete re-engineering of business processes to make
them more high-performing and tuned towards global best
practices. While launching the suite, the Company went live
with all modules, all at once with zero downtime.
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Departmental Highlights Marketing and BrandingTurnover
Opportunity from capacity
Multiple brand strategy
Net turnover of the Company shot up by 28.7% - from
Rs. 2109 crore in 2007-08 to Rs. 2715 crore in 2008-09. This is
nearly 3 times the growth shown by the Indian cement
industry, which posted 8.4% growth in 2008-09 over
2007-08.
While there were delays in implementing new capacities by
other cement producers, Shree added capacities in record
time. This allowed the Company to take advantage of the
inevitable supply gaps in the market both retail as well as
infrastructure sectors.
The multiple brand strategy helped the Company achieve
higher sales by catering to different segments and creating
different price bands. Thus, the Company's diverse brand
portfolio creates different niches, appealing to a wider
customer base.
Sales Quantity (Lac Ton)
50
0
40
30
20
15
10
4 7 . 5
8
3 9
. 4 7
1 8
. 4 5
1 6 . 1
2
1 1 . 6
5
7 . 7 5
Bangur Rockstrong
2007-08
2008-0945
35
25
5
Shree Ultra
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Distribution network
Optimising ad spend
Market share
The dealer density of the Company is higher in its prime
markets compared to competitors because of its unique
multi-brand strategy. Shree's robust distribution backbone
of 4849 dealers, 11,993 retailers and 116 sales offices
ensures deeper penetration of its brands.
The Company planed its electronic media spends
judiciously through effective channel mix, which has
enabled it to achieve the lowest cost per GRP (Gross Rating
Points) in its prime markets. The Company invested Rs. 16.25
crore during the year in branding and advertising to further
strengthen its brand equity.
The result of all this was that the Company was not only able
to consolidate its numero uno market share status in
Rajasthan (23%), Delhi (18%) and Haryana (26%), but also
able to significantly improve its performance in Punjab
(10%) and Uttrakhand (13%). Overall, Shree remained North
India's premier cement maker with its share increasing from
16.4% in 2007-08 to 17.9% in 2008-09.
Rising Market Share (%)
30%
0%
25%
20%
15%
10%
5%
2 2 %
2 0 %
2 3 %
2 4 %
1 9 %
2 6 %
1 8 %
1 8 %
1 8 %
8 % 7 % 1 0 %
1 0 %
8 %
1 3 %
Rajasthan Haryana Delhi Punjab Uttrakhand
2006-07
2007-08
2008-09
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Departmental Highlights Human resourceOne of India's Top 20 Best Employers
Sustained policy of promotion
In a survey carried out jointly by Business Today, Mercer and
TNS in 2008, Shree emerged as one of India's Top 20 Best
Employers. Shree was the only cement company and one of
the five manufacturing companies to be considered in the
study. Such a finding only serves to bring out what we
already know the strong commitment of the Company to
its human assets.
Shree's score in Internal Employee Perception Survey and
Employee Engagement Index was higher than the averagescore of India's Top 10 companies in the study (referred as
The Best in the following graph). These two categories
together indicated the sense of ownership and belonging
Shree employees felt towards their company.
The above gets reflected in the attrition rate, which came
down from 7.5% in 2007-08 to 5.9% in 2008-09.
People at Shree can expect fast promotions on the strength
of their track record and leadership drive. The underlying
assumption is that competence rises to the level of
responsibility, i.e., the process of bestowing greater power
AttritionYear Attrition (%)2004-05 3.772005-06 5.282006-07 6.152007-08 7.532008-09 5.90
AverageScore
100
0
80
60
40
20
EngagementScore
9 3
. 2 0
8 5
. 0 8
7 8
. 1 9
Shree Cement Ltd.
The Best
The Rest 9 1 . 3
2
9 0
. 9 0
8 3
. 9 4
makes a person more responsible, enthusiastic, competent
and committed. It yields initiatives down the line. The
percentage of people promoted has been hovering around
a high 27% for the last three years.
The number of workers promoted to staff category hasincreased dramatically this year, from 97 in 2007-08 to 264 in
2008-09. More than the pay, such promotions endow
people with intangibles like pride of higher position.
In the face of rampant layoffs in the industry during the
recession, Shree has actually increased recruitment of its
people. Manpower increased from 2418 in 2007-08 to 2566
in 2008-09. Such figures illustrate more than words the fact
that the Company prizes its human assets.
The management believes that diverse skill-sets make the
Company more versatile, increase its in-house capabilities
and ultimately save costs.
For instance, the platform of Shree's robust IT infrastructure
was first laid by in-house talent. At present, the Company
has entrusted the activity of exploration and prospecting
for limestone deposits, not to outside specialists, but to our
experienced people in mining. Such endeavours not only
add new in-house capabilities, but also do away with the
need of engaging expensive outside help.
Recruitment during recession
Competency mix
PromotionsYear % of Promotions2004-05 29.312005-06 29.702006-07 27.672007-08 27.472008-09 27.50
No. of Workers promoted to Staff CategoryYear No. of Promotions2004-05 22005-06 72006-07 182007-08 972008-09 264
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Competency building
Impact of training
Knowledge sharing
At Shree, there is continual reinforcement, retooling and
renewal of skill-sets. Such an ongoing process not only
builds overall capacity and makes it versatile, but also hasnumerous impacts at the individual level. People not only
strengthen their domain experience, but also get to explore
and acquire domain skills other than their own.
In-house training programmes are conducted by both
internal as well as external experts. People can even go out to
programmes undertaken by reputed institutions. Training is
imparted to enhance technical as well as soft skills.
By boosting employee morale, developing the capacity to
absorb new technologies and methods and increasing the
appetite for innovation, such training programmes have
had numerous payoffs lower employee turnover, better
change management, higher operational efficiencies,
faster strategy executions and larger financial gain.
Every year, a number of students from prestigious
institutions like IITs and IIMs appear at our doorsteps to
undertake research and acquire industry exposure. We look
forward to this period of sharing our experience with them
and taking in their fresh approach to old problems.
Qualification Break-up
Qualification Nu mber of employeesEngineers 1013CA/CS/ICWA/CFA 63Legal (LLB) 18Post Graduates 177Graduates 301MBA 164MCA/MSW 12MBBS 3Others 565
I was particularly moved by your
sense of humility and commitment
to the welfare of the men and
women who work for your
organisation...The support given to
us by your senior management
went beyond the call of duty and a
testimony of the dedication and
calibre of staff who are associated
with your company.
- In a letter to Mr. H. M. Bangur from the
African-Nigerian Team comprising of thedaughter of Dr. Nelson Mandela
ParticularsIn-house External In-house External
Programmes 338 99 297 115Participants 6100 199 4304 217
Person days spenton training 2900 471 2233 667Person-hours of training 23206 3769 17867 5341
2008-09 2007-08
Details of Training Conducted
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Credit rating
Reflecting the high credit standing of the Company is the
high credit rating given for debt of different tenures. The
Company's MIBOR linked borrowing instrument enjoyed
the highest credit rating of CARE PR1+ for a larger short-
term debt of Rs.500 crore against the earlier limit of Rs. 250
crore in 2007-08.
Shree's long term borrowings have also secured a very high
credit rating of CARE AA+ even at a higher limit of Rs.500
crore as against Rs.100 crore in the previous year.
CARE AA+ rating has also been assigned for the purpose of
Basel II bank borrowing bench marks. In 2007-08 AA rating
was assigned for this purpose.
All these shall assist the company to access funds at a more
competitive rate. Being long in funds, such high credit
rating shall make the Company exploit the short term
versus long term fund arbitrage opportunities more
aggressively.
Departmental Highlights
The leverage to expand
The Company has leveraged its financial position well to
maintain an improving debt-equity scenario despite
aggressive capacity additions. The resources raised have
been gainfully utilised, as manifested by the improved
Secured Debt to EBIDTA ratio - from 1.24 in 2007-08 to 1.18
in the current year. This gives the Company enough room to
mobilise resources from lenders, thereby protecting the
shareholders value by obviating the need of raising any
additional capital.
Net Debt (Rs. Crore)
600.00
500.00
400.00
300.00
100.00
04-05 05-06 06-07 07-08 08-09
284.08
353.66
528.06
272.26
58.20
200.00
NetDebt
Secured Debt / EBIDTA
1.50
1.45
1.40
1.35
1.25
1.15
1.1004-05 05-06 06-07 07-08 08-09
1.461.45
1.39
1.24
1.18
1.30
1.20
SecuredDebt / EBIDTA
Net indebtness
The conservative policy of restricting the financial leverage
is also exemplified by continuous reduction in net debt
position of the Company. The surplus generated has been
gainfully invested in debt market securities and debt
oriented mutual fund schemes to maximize the arbitrage
opportunity. The net debt ( total debt cash & cash
equivalents) has reduced from Rs. 272.26 crore in 2007-08 t o
Rs. 58.2 crore in 2008-09.
FinanceConservative accounting policy
Depreciation is the erosion in the value of an asset with the
passage of time. In an accounting framework, depreciation
is the method by which the gross value of an asset becomes
progressively smaller every year over the assets useful life; it
is a rough estimation of wear and tear.
Although essentially an accounting convention,
depreciation in the account books gives a fair idea of the
cost of earning in terms of assets utilized. Thus, post a
depreciation charge, the approximate value of assets stillworking for the Company gets known. It is for this reason
that the Indian Companies Act has made it mandatory for
companies to charge minimum depreciation as per rates
prescribed in Schedule XIV of the Act. Companies are
however free to charge depreciation higher than the
statutory minimum.
A higher depreciation policy is part of a conservative
accounting approach. It assumes that assets have reduced
in value faster than normal. Being a cost, a higher
depreciation would tend to pull down book profit and net
worth. But, rather than blow up profit and net worth figures,
the Company decided to adopt the conservative policy of
charging higher depreciation. Such a company policy
underlines the confidence of the Company in its own ability
to perform and earn profit at high levels. It also reflects the
faith of the Company on its stakeholders and their
acceptance of relatively lower book value and net worth.
From the year 2004 onwards, Shree changed its
depreciation policy gradually across all its fixed assets from
Written Down Value Method (WDV) / Straight Line Method
(SLM) rates as per Companies Act 1956 to WDV Method at
the rates specified in the Schedule XIV of the Companies
Act, 1956 or Income Tax Act, 1961, which ever is higher.In
case of those assets, whose WDV as per Income Tax Act,
1961 was lower than the WDV as per Books, additional
depreciation was provided to align the book WDV with WDV
as per Income Tax Act, 1961.
This has resulted in a higher depreciation charge over the
last five years as under:
If Shree had continued its earlier depreciation policy, its net
worth would have been higher by Rs. 640.05 crore as on 31 st
March, 2009. Similarly, its book value per share would have
been higher by Rs. 183.73.
Particulars Total Depreciationover 2004-05 to 2008-09 (Rs. Crore)
If depreciation policy followedtill 2004 had been continued 764.08Based on changeddepreciation policy 1404.13Additional DepreciationCharged 640.05
Net Worth and Book ValueNet Worth Book Value
Pa rt ic ul ar s as a t 3 1. 3. 09 a s a t 31 .3 .09(Rs. Crore) (Rs./per share)
If depreciation policy followedtill 2004 had been continued 1850.06 531.06Based on changeddepreciation policy 1210.02 347.33
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Shareholder valuePerformance value
Growing intrinsic value
The Shree stock has generally outperformed the industry
because of its strong fundamentals. The Company has
made it a habit of notching up higher volumes and profit
over the years. Such consistency of performance has
resulted in higher value of the Company's share.
Take intrinsic worth of the company. The fact that it is on a
steady rise is amply indicated by the increase in Book Value
Per Share of the Company. Book Value Per Share spurted
79.8%, from Rs. 193.1 in 2007-08 to Rs. 347.3 in 2008-09.
Another indicator of the Company's rising intrinsic value
comes from the Return on Net Worth (RONW). This is a
metric that shows the rate of return on resources retained
and deployed by the Company in the business rather than
distributed as dividend to shareholders. RONW was an
incredible 48.43% in 2008-09 against 36.51% in 2007-08.
From the shareholders viewpoint, their investments in
Shree's equity were earning him accrued return of 48.43%. If
instead the shareholder had invested his funds in the bank,
he would have earned a maximum of 10%. Although, Shree
has been increasing dividend payout over the years, the
Company shuns the policy of very high dividends in an
effort to preserve high shareholder worth and return.
Higher scrip profile
Corporate Governance
Mirroring the rise in intrinsic worth of the Company is the
improvement in ranking in terms of market cap of listed
companies on the stock exchange. The Company has
improved its ranking in terms of market capitalization from
172 as on 31st March, 2008 to 154 as on 31st March, 2009.
On a five year horizon the ranking has substantially
improved from 231 as on 31st March, 2004 to 154 as on 31st
March, 2009. (Source: Capital Market Magazine Data Bank)
Shree follows an exemplary corporate governance
approach, which creates a transparent dialogue with
stakeholders and goes beyond compliance to impact
governance in a more fundamental way. Proactive thrusts
and clear foresight are the hallmark of the approach.
Sustaining value of the enterprise for stakeholders is a
prime goal. A robust risk management structure ensures
that all known risks are identified and contained.
Departmental Highlights
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The triple bottom line
Community focused
Shree has been a forerunner in adopting the sustainabilityparadigm. A reflection of the fact is that the companypursues a holistic growth agenda with emphasis on threemeasures, or bottom lines, of corporate performance economic, social and environmental. Economicperformance brings out the Company's contribution toproduction and profit; social performance highlights itscontribution to community; environmental performancebrings out the contribution to conserving the environment.
Shree was the first Indian and the third Asian cementcompany to join the Cement Sustainability Initiative (CSI) of the World Business Council for Sustainable Development,Switzerland. As a member of CSI, the Company iscommitted to pulling down its energy footprint,implementing best practices and sharing its knowledgewith other members. The Company has also joined theleague of seven nations, viz., the Asia Pacific Partnership onClean Development & Climate Change comprising of theUSA, Australia, China, Korea, Japan, Canada and India.
The Company is bringing out its fifth Corporate SustainabilityReport (CSR) this year. Prepared along the lines of the latestGlobal Reporting Initiative (GRI) guidelines, the Report isbeing assured by KPMG.
Shree excels in carrying out activities for the community. The Company generally takes up people and engagescontractors from the local population to create betteremployment prospects, livelihoods and ancillary enterprisebase.
The Company undertakes numerous projects onhealthcare, education, women empowerment, incomegeneration, infrastructure development and other social-need programmes, especially in the two districts of Ajmerand Pali, which are within the ambit of the Company's works.
Well-equipped dispensaries with a team of experienceddoctors at both plant sites provide free medicalconsultation to villagers in nearby areas. A health unit onwheels reaches out to villages at relatively distant locationswithin the local community.
Corporate sustainabilityHealth-related programmes conducted include Hepatitis Bvaccination for 500 children, free eye camps (1193 eyeoperations and 3304 people cured since 1996), free poliotreatment camp for 170 polio victims and 'Nukkad Nataks'or street plays to raise awareness on health and social issues.An anti-tobacco consumption drive and a 5-day yogatraining programme were taken up in our plant premises.
Industrial safety and health is integral to the Shree culture. Aworkshop and exhibition on the issue, organised at BangurNagar, Beawar, evoked a good response from the
participants.
Shree has been engaged in a focused campaign against thedreaded HIV / AIDS. Education and awareness programmeson the issue generally take the shape of intensiveinteraction sessions between trained doctors and potentialvictims and carriers like contract workers, truck drivers andschool children.
Shree has been active in developing infrastructure tobenefit surrounding villages. To improve connectivitybetween villages and spur development of rural enterprise,the Company has built about 15 kms of roads. Socialinfrastructure projects undertaken by the Company includewater storage tank, school building and rooms, communityhall, anicuts, check dams, etc., for rain water harvesting andirrigation.
Besides community benefit programmes in the vicinity of itsoperating facilities, the Company has also been active inreleasing financial aid for projects over a much wider area. The Company donated Rs. 21 lacs for Bihar flood victims,Rs. 15 lacs for Rajasthan's Chamunda Mata stampede victimsand Rs. 50 lacs for renovation of Budha Pushkar Ghat at Ajmer.
Since, culture is an important anchor in rural lives, projectsand programmes of religious and cultural significance forthe local populace are taken up. The Company's annualtemple function, 'Shri Sankatmochan HanumanVarshikotsav,' provides an occasion for cultural expressionand enjoyment. With performances by celebrated nationaland international artistes, this annual extravaganza is a bighit with not only Shree employees but also people whocome from far-flung areas to a ttend.
ee Hanuman Temple, Beawar
No matter how many plants you have visited, Beawar Plant offers you something new, something different.
Their commitment to sustainability, energy efficiency and innovations are simply unmatched. I hope that the
Shree Cement will continue its endeavour to be one the plant meeting Global Standards.
- Shashi Ranjan Kumar, Director DPP, Ministry of Commerce and Industry, GOI
Departmental Highlights
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Process improvements and energy conservation initiatives,by reducing the energy footprint ultimately help the cause of environment protection. Energy efficiency initiatives at Shreeincluded those that optimized operations, rationalisedequipment speed, cut down idle running, improved capacityutilization, replaced less efficient components, installed newequipment and even rearranged equipment positions.
CO emissions and energy use in mining equipment utilising2fossil fuel were slashed by modifying the equipment andconcreting haul roads. Fugitive dust emissions in material
handling areas were reduced by installing and upgradingdust bag collectors, creating walled enclosures, constructingunderground storages and concrete areas and installingbetter water sprinkling systems. To monitor and bring downstack emissions, opacity metres have been installed at boilerstacks and operational efficiency of ESPs improved.
A water conservation thrust in the power plant has resulted inthe installation of Air-cooled Fluid Cooler to partly replace theconventional water-cooled Cooling Tower.
Environment protection also comes from lower wastegeneration. We have adopted zero waste disposal practices inour cement and power plants. For instance, boiler ash in thepower plant is sent to grinding mill and afterwards fed as low-calorific-value fuel to the cement kiln. Waste land created bymining activity is reclaimed through tree plantation. Solidwaste from our sewage treatment plant (STP) is used asmanure. Waste water from STP and power plant is reused forirrigation of our green belt and sprinkling on roads to curbdust emissions. Waste lubricating oil and batteries are eitherrecycled for use within the plant or for sale to authorizedgovernment dealers. Waste gases are reutilized for power andsteam generation.
Trees protect both the ecology and climate of a region.Realising their importance, Shree has been making aconcerted effort to green its premises. The company planted334002 trees over 195 hectares till 31st March, 2009. Suchplants have had a healthy survival rate of 96%.
The Company's environment consciousness shows in thecontinued spurt in expenditure on environment. Thecombined figure for Beawar, Ras and Khushkhera sites hasincreased from Rs. 627 lac in 2007-08 to Rs. 871 lacin 2008-09.
Environment protection
Generation of energy using fossil fuels releases carbon
compounds into the atmosphere, which ultimately
precipitates climate change. Shree is committed to energy
conservation methods that not only result in higher energy
efficiencies, but also lower carbon emissions.
Flyash Utilisation and CO reduction (Lac tons)2
18
0
16
14
12
10
04-05 05-06 06-07 07-08 08-09
8
6
4
23
. 9 7
3 . 6
6
5 . 7
7
5 . 3
3
1 0
. 7 1
9 . 6
6
1 4
. 9 1
1 3
. 6 7 1
5 . 5
1
1 4
. 0 9
Flyash
CO reduction2
Expenditure on Environment (Rs. Lac)
1000
0
800
600
400
200
1 1 8
2 4 6 3
0 4
6 2 7
8 7 1
04-05 05-06 06-07 07-08 08-09
The Company was the first in the world to register a Clean
Development Mechanism (CDM) project, 'Optimal
Utilisation of Clinker,' with United Nations Framework
Convention on Climate Change (UNFCCC). This project uses
less quantity of the energy-intensive clinker and greater
quantity of additives like flyash to produce cement. During
the year under consideration, 1,00,043 Certified Emission
Reduction (CERs) were issued by UNFCCC (the third such
issuance for the company) for the project. CER is a tradable
credit representing greenhouse gas emission reductions
equivalent to one tonne of CO achieved through a CDM2project.
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AwardsAwards
n
n
n
n
n
n
n
Green-Tech Environment Excellence Award
Golden Peacock Award for Combating
Climate Change
National Safety Award awarded by the
Honourable President of India, Smt. Pratibha
Patil
First Prize for Energy Conservation at its
mines by Indian Bureau of Mines
Corporate Excellence Award by Rajasthan
Chamber of Commerce & Industry (RCCI) in
all four categories namely Corporate
Governance & Capital Market, Financial
Performance & Analysis, Business &
Qualitative Aspects and Annual Report
Presentation as well as Management
Award for Best Cost Management Practices
by Institute of Cost and Works Accounts of
India (ICWAI).
SILVER CIO Award by the CIOL Dataquest
Enterprise Connect Awards 2008
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Shri B.G. Bangur, Executive Chairman
Shri B.G. Bangur is a B.Com (Hons.) from Calcutta Universityand he brings with him a long experience in the industry.He is also the Director in The Didwana IndustrialCorporation Ltd., NBI Industrial Finance Co. Ltd., ShreeCapital Services Ltd., Khemka Properties Pvt. Ltd., DigvijayFinlease Ltd. and Marwar Textile (Agency) Pvt. Ltd. He hasalso been actively associated with various philanthropicand charitable institutions and trusts.
Shri H.M. Bangur, Managing Director
Shri H.M. Bangur is a Chemical Engineer from IIT, Mumbaiand he brings to the board technical insights which are adriving force of the technical excellence achieved by theCompany. Mr. Bangur is also a Director in The Kamla Co. Ltd.He is the President of Cement ManufacturersAssociation(CMA), the prime body for co-ordination, policy making andco-operation of the cement industry in India.
SittingDr. Y.K. Alagh,Director, Shri B.G. Bangur, Executive Chairman, Dr. Abid Hussain, Director Standing (From Left)Shri O.P. Setia, Director, Shri R.L. Gaggar, Director, Shri Amitabha Ghosh, Director, Shri Shreekant Somany, Director,Shri H.M. Bangur, Managing Director, Shri M.K. Singhi,Executive Director
(From Left)
Profile of DirectorsShri R.L. Gaggar,
Shri O.P. Setia,
Shri Shreekant Somany,
Dr. Abid Hussain,
Dr. Y.K. Alagh,
Director
Shri R.L. Gaggar is a B.A. (Hons) from Kolkata University andis a renowned solicitor and advocate based in Kolkata. He ispracticing as a solicitor and an advocate at the High Court of Kolkata for past 50 years. Mr. Gaggar is also on the Board of Somany Ceramics Ltd., Sarda Plywood Industries Ltd., TILLtd., Peria Karmalai Tea and Produce Co. Ltd., PaharpurCooling Towers Ltd., International Combustion India Ltd.,Subhash Projects & Marketing Ltd., Machino Plastics Ltd.,Sumedha Fiscal Service Ltd., Financial & ManagementServices Ltd., Machino Bassel India Ltd., Eastern Silk Industries Ltd. and Bhaskar Silicon Ltd.
Director
Shri O.P. Setia is an M.Com from Delhi University and is aneminent banker and Ex-Managing Director of State Bank of India and has held many key positions in its associate banks.
Director
Shri Shreekant Somany is an industrialist who holds aBachelor of Science degree from Kolkata University and iscurrently on the Board of Somany Ceramics Ltd., S.R.Continental Ltd, Somany Retail Ltd., Cosmo Ferrites Ltd.,Sarvottam Vanijya Ltd., Scope Vinimoy Pvt. Ltd.
Director
Dr. Abid Hussain is a retired IAS Officer and formerAmbassador of India to United States. He is the Chairman of India-China Trade Centre (ITCT). He was also a member of the Planning Commission and Secretary, Ministry of Industries, Government of India. In the year 1988, he washonoured with PADMA BHUSHAN for meritorious services.He is on the Board of Hyderabad Flextech Ltd., Nagarjuna OilCorp. Ltd., GVK Industries Ltd., GVK Taj Hotels & Resorts Ltd.,GVK Power & Infrastructure Ltd., Zodiac Clothing Co. Ltd.,Wockhardt Ltd., Havels India Ltd. and Gangavaram PortLimited.
Director
Dr. Y.K. Alagh is a noted Economist and visiting professor toseveral renowned national/international institutions. Heholds a Doctoral Degree and Master Degree in Economicsfrom University of Pennsylvania. He is currently theChancellor of Nagaland University, Chairman of Institute of Rural Management, Anand, Gujarat and Vice Chairman of Sardar Patel Institute of Economic and Social Research,
Ahmedabad. He is a trustee of Rajiv Gandhi Foundation,New Delhi. He is also Chairman of Institute of HumanDevelopment, Chairman of Advisory Committee of N.M.Sadguru Water & Development Foundation, Dahod. He wasearlier the Minister of Power and for Planning & ProgrammeImplementation with additional charge of the Ministry of Science & Technology. He has been member of PlanningCommission (in the rank of Minister of State). He has beenChairman, Bureau of Industrial Costs and Prices, Ministry of Industry. He has several books and over a hundred articlesto his credit, published both at home and abroad. He hastravelled widely and represented India in a number of high
level official delegations and seminars. He is on the Board of Tata Chemicals Ltd.
Director
Shri Amitabha Ghosh is a Fellow Chartered Accountant andFellow Member of Indian Institute of Bankers and hasconsiderable experience in Finance, Banking andAdministration by virtue of his association with importantinstitutions and committees. He is the former Dy. Governorof Reserve Bank of India. He was on the Board of importantinstitutions like IDBI, N.I.B.M., Exim Bank and also served asChairman of Deposit Insurance Corporation Ltd. He is alsoon the board of Centenary Leasing Company Pvt. Ltd.,Kesoram Industries Ltd., Joonktolle Tea & Industries Ltd.,Heidelberg Cements (India) Ltd., Peninsula Land Ltd., OrientPaper & Industries Ltd., Palit Consultancy Pvt. Ltd., SaharaIndia Life Insurance Co. Ltd., Sahara Prime City Ltd., ShreyasShipping & Logistics Ltd., Shreyas Relay System Ltd., XproIndia Ltd., Zenith Fibers Ltd., Sahara Infrastructure &Housing Ltd. and Sahara Hospitality Ltd.
Shri Amitabha Ghosh,
Shri M.K. Singhi, Executive Director
Shri M.K. Singhi is a fellow Chartered Accountant and aScience and Law Graduate. He joined the Company asPresident in January, 1995 and has 31 years experience of working at senior positions. He is the leader of IndianCement Sector Task Force for Energy Conservation,appointed by Bureau of Energy Efficiency, Ministry of Power,Government of India. He is a member of CementSustainability Initiative (CSI) of World Business Council forSustainable Development. He is also a member of Cement Task Force of Asia Pacific Partnership on Clean Developmentand Climate. He is the President of Rajasthan CementManufacturers Association. He is also on the Board of ShreeCement Marketing Limited.
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Shrees PoliciesSUSTAINABILITY POLICY
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ENVIRONMENT POLICY
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To produce quality cement in an eco-friendly, healthy &safe working environment in a socially responsiblemanner with continual improvement in performance andprofitability to the satisfaction of all stake holders byensuring:
Customer satisfaction.
Clean and green environment.
Sound health and safe working practices.
Compliance to the applicable laws and respecting theinternational instruments.
Implementation of the systems and continuallyimproving their effectiveness.
Adoption of cost effective technologies and practicesfor improved productivity and profitability.
Mutually beneficial stakeholders' relationship.
Human resource satisfaction.
AN ENERGY & ENVIRONMENT CONSCIOUS SUSTAINABLE ORGANISATION
To ensure:
Clean, green and healthy environment.
Efficient use of natural resources, energy, plant andequipment.
Reduction in emissions, noise, waste and green housegases.
Continual improvement in environment management.
Compliance of relevant environmental legislations.
CLEAN AND GREEN IS PROFITABLE
HEALTH & SAFETY POLICY
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HIV / AIDS POLICY
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QUALITY POLICY
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To ensure Good Health and Safe Environment for allconcerned by:
Promoting Awareness on sound health and safeworking practices.
Continually improving health & safety performance byregularly setting and reviewing objectives & targets.
Identifying and minimising injury and health hazardsby effective risk control measures.
Complying with all applicable legislations andregulations.
PROSPERITY THROUGH HEALTH & SAFETY
Being a socio-economic issue concerning stakeholders of the society Shree Cement is committed to:
Create awareness on HIV/ AIDS and its preventionamong all stakeholders of the s ociety.
Treatment of HIV/ AIDS infected patient in theCompany's Dispensary without any discrimination.
To provide products conforming to National s tandardsand meeting customers requirements to their totalsatisfaction
To continually improve performance and effectiveness of quality management system by setting and reviewingquality objectives for:
Customer satisfaction.
Cost effectiveness.
JO SOCHE, WOH PAAVE
SOCIAL ACCOUNTABILITY POLICY
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ENERGY POLICY
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INFORMATION TECHNOLOGY (IT) POLICY
To operate in a socially responsible manner and focus oncontinual improvement of workplace conditions by:
Conforming to all the requirements of SA 8000standard.
Respecting the international instruments for SocialAccountability and complying with all applicable laws.
To reduce to the maximum extent possible the
consumption of energy without impairing productivitywhich should help in:
Increase in the profitability of t he Company.
Conservation of Energy.
Reduction in Environmental pollution at Energyproducing areas.
Since Energy is the Blood of Industry, It is theresponsibility of all of us to utilize energy effectivelyand efficiently.
ENERGY SAVED IS ENERGY PRODUCED
To create a robust IT platform that would focus on betterefficiency & transparency in a constantly changing andcompetitive business environment.
HUMAN RESOURCE POLICY
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WATER POLICY
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We at Shree Cement are committed to:
Empower People.
Honour individuality of every employee.
Non discrimination in recruitment process.
Develop Competency.
Employees shall be given enough opportunity forBetterment.
None of the person below the age of 18 years shall beengaged to work.
Incidence of Sexual Harassment shall be viewedseriously.
Statute enacted shall be honoured in letter & spirit &standard Labour Practices shall be followed. Everyemployee shall be accountable to the law of the land& is expected to follow the same without anydeviation.
Management will appreciate observance of Businessethics & professional code of conduct.
To follow Safety & Health, Q uality, Environment,Energy Policy.
To provide sufficient and safe water to people & plantas well as to conserve water, we are committed toefficient water management practices viz:-
Develop means & methods for water harvesting.
Treatment of waste discharge water for reuse.
Educate people for effective utilisation & conservationof water.
Water audit & regular monitoring of waterconsumption.
WATER ADDS VALUE TO PEOPLE & ORGANIZATION,CONSERVE IT INTELLIGENTLY
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Five &
Five Years Financial Highlights
* Excluding Revaluation Reserve
# Return on Average capital employed has been calculated after adding additional depreciation.
Figures have been regrouped/rearranged whereever necessary
Particulars 2004-05 2005-06 2006-07 2007-08 2008-09
Total Income 72711.64 82743.26 163441.77 251715.99 318006.30
Profit after Tax 2906.59 1840.39 17700.23 26037.20 57796.94
#Return on Net Worth (%) 18.52 9.65 24.06 36.51 48.43Return on Avg. Capital Employed (%) 21.93 24.61 39.29 24.88 33.86
Production (in lac MT)
Clinker (in lac MT) 24.83 27.71 35.09 46.23 64.18Cement (in lac MT) 30.16 32.20 47.99 63.37 77.65
Sales (Clinker & Cement)(in lac MT) 30.71 32.75 49.43 66.05 84.50
Energy Consumption
Power (Kwh per ton of Cement) 75.17 73.45 73.87 79.35 76.72Coal (% of Clinker) 10.96 10.37 11.73 11.34 10.75
Sales - Gross 72302.60 82412.79 161314.44 244032.08 309716.69
Other Income 409.04 330.47 2127.33 7683.91 8289.61
Operating Expenses 55318.98 60963.58 102342.04 157791.11 214640.33Operating Profit 17392.66 22148.85 61099.73 93924.88 103365.97Interest 1982.73 1283.36 1037.37 5329.64 7443.18Profit before Depreciation & Tax 15409.93 21234.66 60062.36 88595.24 95922.79Less: Depreciation & Amortisations 12296.45 18520.68 43305.33 47875.86 20538.70Less: Exceptional items - - (2123.73) 3888.46 3093.05Profit before Tax 3113.48 2713.98 18880.76 36830.92 72291.04 Tax (including FBT) 244.14 286.24 8451.75 12265.32 13686.98Deferred Tax (37.25) 587.35 (7271.22) (1471.60) 807.12
Basic and Diluted EPS (in Rupees) 8.34 5.28 50.81 74.74 165.91Cash EPS (in Rupees) 43.53 52.98 154.24 207.94 227.18
Net Block* 41972.24 57530.85 49895.10 75995.86 62685.57Shareholders' Fund* 28948.89 29629.67 45454.52 67280.53 121001.69 Total Capital Employed* 58661.08 66903.11 138591.37 200350.35 270617.02
(Rs. Lac)
Fifteen Years Highlights
Fifteen Years Highlights
* Sales value includes amount of power sale.
Note: 1. Net Worth is net of revaluation reserve.
2. Figures regrouped and rearranged whereever necessary.
Sl. Year ClinkerNo. Production Production Qty.
MT MT MT (in Rs. Lac) (in Rs. Lac) (Rs. per share)
1 1993-94 858226 876150 889401 15652.65 7124.74 28.92
2 1994-95 893291 927233 927005 18144.30 8858.99 35.99
3 1995-96 887532 861964 867551 20765.88 13487.43 46.46
4 1996-97 (15 months) 1079242 1185426 1162086 25112.19 18202.76 52.25
5 1997-98 1435803 1725531 1662332 34278.00 19056.86 54.70
6 1998-99 1945418 2043609 2090715 44214.50 19654.48 56.42
7 1999-00 2284781 2312408 2310135 48456.13 21939.14 60.82
8 2000-01 2113279 2383366 2400270 55460.48 24705.98 66.61
9 2001-02 (9 months) 1624686 1806358 1802156 39721.69 21560.59 57.58
10 2002-03 2285091 2746880 2725485 58242.94 22239.73 63.84
11 2003-04 2293627 2840596 2841316 60692.88 25138.28 72.16
12 2004-05 2483247 3015593 3060994 72302.60 28948.89 83.10
13 2005-06 2770663 3219949 3202709 82412.79 29629.67 85.05
14 2006-07 3506064 4799088 4832851 161314.44 45454.52 130.48
15 2007-08 4623494 6337070 6334208 244032.08 67280.53 193.13
16 2008-09* 6418278 7765207 7767696 309716.69 121001.69 347.33
Absolute No. of 15 Years 7.48 8.86 8.73 19.79 16.98 11.89Times 10 Years 3.30 3.80 3.72 7.00 6.16 6.16
5 Years 2.80 2.73 2.73 5.10 4.81 4.81
CAGR 15 Years 14.35% 15.66% 15.54% 22.02% 20.78% 17.95%
10 Years 12.68% 14.28% 14.02% 21.49% 19.93% 19.93%
5 Years 22.85% 22.28% 22.28% 38.54% 36.93% 36.93%
Cement Sales Sales Value Net Worth Book Value
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Global Outlook
Indian Economy Outlook
Global economy witnessed one of its worst crises in the year gone by.What started as a credit crunch caused by misapplication of risk controlsin USA transformed into a full blown economic crisis unprecedented inrecent memory. The crisis led to collapse of large financial institutionsand wiped off massive values from balance sheets. Consequent de-leveraging of financial institutions led to global liquidity squeeze andloss of business confidence hampering international trade.
The economic situation in most of the developed nations is still fluidamidst a bleak economic outlook. All round efforts are beingundertaken to stimulate consumption and bring the world back toBusiness as usual. However the road to recovery will be slow and till
then the world economy will have to go through slowdown, if notrecession.
India was not a part of the origin of this crisis. However in an integratedglobal financial system, India could not remain insulated from theeffects of this crisis. The uncertainty in global economy has constrainedcapital flows into emerging economies including India. Indian economyis expected to clock a growth of 6-6.5% for 2008-09 against an averagegrowth rate of around 9% in the last four fiscals. However seen incontext of global economic situation where most economies are lookingat recession, the growth seems reasonable.
Global financial crisis coupled with high inflation, appreciating currencyand high interest costs led the economy to a rough patch by the middleof the financial year. Growth in the industrial sector plummeted due to
the impact of global slow down as well as slackness in local demand.The Index of Industrial Production (IIP) turned negative in the lastquarter of 2008-09 reflecting extreme pessimism in the economy. Thegrowth in the manufacturing sector slowed down to 2.7% for the year.Timely action from Govt. in the form of relaxing monetary policy andproviding fiscal stimulus packages lifted up the sentiments. Towards theend of FY 2008-09 the economy seemed to witness signs of revival
from the terrible mid year patch with sharp drop in inflation and revivalin demand.
Fiscal 2009-10 starts on a cautious note. The inherent strength of theIndian economy like high share of services in GDP, high domestic savingsrate, scope for relaxing tight monetary policy, ambitious plans forinfrastructure development etc. will act as a cushion in mitigating theadverse impacts of the global f inancial crises. Also the growth in Indianeconomy was mainly characterized by rising domestic consumption andincreasing infrastructure activity which continue to be relatively lessimpacted from external events. We feel that the resilience shown by theIndian economy in the last few years gives confident signals that it willsail through this uncertain period of global turmoil as well.
Cement Outlook
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Indian Cement industry is largely dependent on domestic market andhas a cluster market structure. It was thus less affected by the externalevents. However, signs of slackness in cement demand were felt in themiddle of the year as a result of fall in real estate, low infrastructure andprivate capital expenditure and overall gloomy economic environment.Cement industry also faced the challenges of ban on cement exports,zero duty imports from Pakistan and high incidence of taxes on cementwhich made it difficult for cement companies to protect their margins.Along with this, high fuel prices which reached their all time peak levelsduring the year increased the cost of cement production. It is worthmentioning that Power and Fuel cost comprises of more than 50% of
the total cost of cement production.
Towards the end of calendar 2008, industry got some relief in t he formof withdrawal of ban on cement exports and removal of import dutyexemption on cement imports. Further, as part of stimulus package,Govt. of India also lowered Excise Duty applicable on cement, providedsops to housing etc. Strong infrastructure and housing demandespecially in semi-urban and rural India ensured that cement demandgrowth rate was reasonable. As a result, the cement industry has clockeda good performance during the year. The highlights of the year were: -
Growth in Cement production by 7.8% to reach 181.4 million tons.
Growth in consumption by 8.4% to reach 177.8 million tons.
Capacity utilization dipped to 88% against 94% in the previous year.
Addition of new capacities to the tune of 18 million ton.
Several new capacities have come up and more are expected to comeupstream in the coming year. However current housing shortage anddemand from semi-urban and rural housing segment will lead toincreased demand for housing units, a major driver of cement demand.The implementation of recommendation of VI Pay Commission hasresulted in increasing the purchasing power in the hands of Govtemployees. A part of this is expected to be utilized in housing needswhich augurs well for cement demand. The governments ambitious
plans for infrastructure development especially the commonwealthgames and the dedicated freight corridor will also drive cementdemand.
Indias GDP is forecast to grow at a subdued 6.5 - 7% for FY 09-10 due to the global economic scenario. However, the resilience shown byIndian economy to global meltdown indicates that it will be able tosustain high growth trajectory in the medium term. Thus the medium
term outlook appears relatively better. Sometime ago, the Chief Economic Advisor, Ministry of Finance, Govt of India also said that themedium term potential of Indian economy is 9%. There is a generalconsensus that the world economy would start recovering from second
Management Discussionand Analysis
half of 2009-10 and once again attain a positive growth track. In India, the above 9% growth recorded during 4 years period from 2004-05 to2007-08 has brought about a structural transformation for attractingprivate investment both domestic and foreign, creating and upgradinginfrastructure and fostering open market economy. Thus Indiasfundamentals remain strong. Once the normalcy returns to the globaleconomy, the inherent strength of the Indian economy will lead it to arapid and sustained growth. Government both at center and state levelhave to play a proactive role for upgrading the infrastructure and
supporting the private investments through Public-Private Partnershipand liberal policy environment. High economic activity and focus on
SHREE CEMENT LIMITED
infrastructure development augurs well for the cement industry.
Fiscal 2008-09 was a landmark year for the company as it created aworld record by completing Unit VII (Clinkerisation unit) in just 367days clear demonstration of its project execution capabilities. ThisWorld Record achievement is the result of great team work,commitment to excellence and focus on achieving the unachievable.
Company Performance
Performance highlights for the year 2008-09:
Particulars Unit 2008-09 2007-08 +/- %
Turnover Rs. Crore 2,715.02 2,109.12 29%
Cement Production Lac MT 77.7 63.4 23%
Cement & Clinker Sales Lac MT 84.5 66.0 28%
Profit Before Interest, Depreciation & Taxes Rs Crore 1,033.66 939.25 10%
Operating Profit Margin % 38.07 44.53 -15%
Power consumption Kwh per ton 76.7 79.4 -3%
Fuel consumption kcal/ kg of clinker 766 773 -1%
Auxiliary Consumption of the power plants % 7.36 7.92 -7%
Heat Consumption / unit of Power generated Kcal/kwh 2,744 3,005 -9%
Financial Performance
Companys excellent financial performance during the year is the result of all round growth and improvement in efficiency levels. Snapshot of financialperformance:
Rs. Cror
Items 2008-09 2007-08
Sales 2,715.02 2,109.12
Raw materials Cost 246.13 210.99
Power & Fuel Cost 605.81 367.23
Staff cost 103.87 73.60
Freight on inter unit clinker transfer 80.66 34.91
Freight & Selling Cost 459.28 359.77
Profit before Interest, Depreciation and Taxes 1,033.66 939.25
Net Profit 577.97 260.37
TRUST DOES THE IMPOSSIBLE
TRUST DOES THE IMPOSSIBLE
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audit department works closely with outside audit firm to complementeach other in laying down and reviewing the existence, adequacy andeffectiveness of the internal control framework within the company.
Company has a well documented and comprehensive internal controlframework outlining operational and technological controls. The Auditdepartment charts out an annual audit plan, which is approved by topmanagement, and audit is conducted as per the plan. All control systemsare regularly reviewed to ensure financial propriety of business
transactions and compliance with relevant statutes and management
policies and procedures. All significant audit observations and follow-up actions thereon are reported to the Audit Committee w hich monitors
the implementation of audit recommendations including those relating to strengthening of the Companys internal control policies and systems.
Company considers R&D as an essential tool to achieve sustainablegrowth. Company has a strong and dedicated team of qualifiedprofessionals to undertake research activities. The activities of the R&D
team is focused on identifying alternative fuels, adopting newer technologies, improving product quality and optimizing availableresources. Some of the R&D activities undertaken during FY 08-09 wereoptimization of parameters to absorb Sox and to make value addedproduct from them, investigation on the use of additives to improvequality of cement, identification of various wastes to use as rawmaterials, fuels and blended materials etc.
Your company is known as an organization which follows the triplebottom-line approach in the conduct of all its business activities. TheCompany actively seeks to undertake business activities that createsustainable value for the society. Following the triple bottom-lineapproach entails reporting performance under the three aspects of economic, environment, and social. The same is detailed as under:
During the year 2008-09, company displayed commendableperformance in all sphere of business activities. Production of cementwas at all time high of 77.65 lac tons. Consequently turnover hassignificantly grown during the year. Companys innovative measures forcost rationalization and increasing market share have led to stronggrowth in its operating profits as well. Increased scale of operations hascreated a number of opportunities to all people involved in the valuechain of the companys activities.
Your Company ardently follows the maxim of Clean and Green isProfitable. It is committed to a low carbon economy and strives to
Research and Development
Sustainability Triple Bottom-line approach
Economic
Environment Green Initiatives
reduce its carbon footprint. It actively contributes at national andinternational platforms to