By failing to prepare you are preparing to fail.
Dear Shareholders and Colleagues
It is with this very appropriate and insightful thought that I would like to begin thismessage to you. This thought while basic and simple speaks volumes in the context of anorganisation. An organisation is like a human body and is a complicated assembly ofdifferent nerve-ends and parts that have to work together cohesively to function as asingle unit. Various functions and individuals have to come together in synergy and worktowards a common purpose. And when that common purpose is preparing and gearing up for thefuture the alignment of people and processes in the organisation with its future visionbecomes all the more important. I can proudly state that in your Company this alignment ofpeople and processes are in sync with the vision of future.
After a broad upwards movement in cyclical growth that lasted nearly two years theglobal economic expansion decelerated in the second half of 2018. The global businessactivity took a downward trend amid an increase in trade tensions and tariff hikes betweenthe United States and China decline in business confidence and higher policy uncertaintyacross many economies. After peaking at close to 4 percent in 2017 global growth remainedstrong at 3.8 percent in the first half of 2018 but dropped to 3.2 percent in the secondhalf of the year.
Amidst this global chaos India has emerged as the fastest growing major economy in theWorld and is expected to be one of the Top 3 Economic Powers of the World over the next10-15 years backed by its strong democracy favourable demographics and partnerships.India's GDP was at 7.2 percent in 2017-18 and about 7 per cent in 2018-19. With theimprovement in the economic scenario there have been investments in various sectors ofthe economy. Net Direct Tax collection has crossed र 14 trillion (US$ 200 billion) inFY19 and Goods and Services Tax (GST) collection stood at र 11.77 trillion (US$ 160billion) during the same period. India's Index of Industrial Production (IIP) rose to 4.4percent year-on-year in 2018-19 (up to January 2019). while Consumer Price Index (CPI)Inflation stood at 2.86 percent in March 2019.
The road ahead also looks brightly lit for India and India's Gross Domestic Product(GDP) is expected to reach US$ 5 trillion by FY24 on the back of strong leadership focuson digitalisation favourable global preference and reforms. A significant improvement of65 places in last 4 years in India's rank on World Bank's Global Index of 'Ease of DoingBusiness' should help India to emerge as global manufacturing and services hub in the timeto come. This would naturally mean more employment and more income in the hands of therising youth population of this country who have a greater propensity to consume. Anotherfactor that will add to the momentum as India races to the top will be the hugedemographic dividend of the Country. By 2030 India will account for almost 30 percent ofthe World's workforce. By 2030 the Nation is projected to have the largest middle classpopulation in the World which will reinforce economic growth through increasedconsumption and investment. With a stable and a forward-looking growth-oriented Governmentat the helm we will see many progressive and beneficial initiatives that will propel theIndustrial and Socio-economic Growth forward by leaps and bounds.
India is the second largest Cement Producer in the World with nearly 500 milliontonnes of cement Production Capacity. Cyclical in nature the Capacity utilisation isdirectly proportional to the demand being generated. The Industry witnessed a strongdemand growth of over 12% in the year gone by and hence the average capacity utilisationalso witnessed an upwards trend of over 70%. Housing and Infrastructure are two keysectors that account for more than 80% of total cement consumption in the Country and bothof these sectors saw a significant upwards trend during the last financial year. With theGovernment pushing for Infrastructure development with dedicated freight corridors andports and heavy focus on Housing for All under Pradhan Mantri Awas Yojna(PMAY) the upward trend for demand and the momentum acquired in the last fiscal looks setto continue.
I am quite pleased to share with you that your Company has stayed ahead of theIndustry both in terms of production and sales. We achieved a double-digit growth of 18%in cement production vis-a-vis a 12% industry growth while a 15% growth in Sales againstan Industry performance of 9% in the areas where your
Company operates. This resulted in considerable improvement in our capacity utilisationas we reached 77% of utilisation in FY 18-19 against 65% utilisation in FY 17-18. GrindingUnit at Odisha commissioning of which was adversely impacted in the previous quarter dueto cyclone Fenny is now nearing completion and is expected to be commissioned shortly. Weare also executing a Captive Thermal Power Plant which is expected to be commissioned byfirst quarter of FY 19-20 at Durg. These measures along with other important initiativestaken by the Company will further add to its growth in years to come.
Your Company believes that it is the people who are the key to take any movementforward. Whether it is the movement of the Country towards all-round growth where thecitizens of the Country and the Community-at-large play a collectively important roletowards Nation-building or it is the Employees of the organisation who propel the Companytowards growth and a bright future. At JK Lakshmi our CSR initiatives focused towardseducation environment and healthcare which contribute towards the Nation's efforts forbuilding a socially progressive society; while internally our employees across thefunctions are fully motivated as we work like one cohesive unit while pursuing theorganisational goals.
I would like to end this message by thanking all our customers shareholders channelpartners business associates financial institutions and all our employees who are anintegral part of our stakeholder community for their invaluable support and confidence.Their continued faith and support has enabled this Company to build a strong foundationand motivation us as we gear-up for a power-packed future.
BHARAT HARI SINGHANIA
Chairman and Managing Director