UltraTech Cement Ltd
Directors Reports
Dear Shareholders,
Your Directors present the 23rd Annual Report together with the audited
accounts of your Company for the year ended 31st March, 2023.
Overview and the state of your Company's affairs
The International Monetary Fund ("IMF") projects global growth to fall to
2.8% in 2023 before rising to 3.0% in 2024, where advanced economies are expected to see
an especially pronounced growth slowdown, from 2.7% in 2022 to 1.3%. The IMF projects that
in a plausible alternative scenario with further financial sector stress, global growth
could decline to about 2.5% in 2023 with advanced economy growth falling below 1.0%.
Global inflation is expected to fall from 8.7% in 2022 to 7.0% in 2023 and 4.9% in 2024,
which is yet above pre-COVID-19 pandemic range of average 3.5% between 2017 and 2019.
Elevated interest rates, financial sector stress compelling central banks to reconsider
policy actions, and the war in Ukraine continue to weigh on global economic activity.
Over the next two years India is projected to be the fastest-growing major economy, as
IMF projects India's GDP growth at 5.9% and 6.3% during 2023 and 2024 respectively, which
is expected to surpass China's 5.2% and 4.5% GDP growth in the same period. This is
despite the three shocks of COVID-19, the Russia–Ukraine conflict, and central banks
across economies led by the US Federal Reserve responding with synchronised policy rate
hikes to curb inflation, leading to appreciation of the US dollar and the widening of
Current Account Deficits in net importing economies.
The Indian economy appears to have moved on after its encounter with the pandemic,
staging a full recovery in FY22 ahead of many nations and positioning itself to ascend to
the pre-pandemic growth path in FY23. Yet in the current year, India has also faced the
challenge of reining in inflation that the European strife accentuated. Measures taken by
the government and the Reserve Bank of India ("RBI"), along with the easing of
global commodity prices, finally managed to bring retail inflation below the RBI upper
tolerance target in March 2023. In the process of arresting rising inflation, during FY23,
the RBI hiked interest rates by 2.5% in six tranches. India's economic growth is expected
to be brisk in FY24, as a vigorous credit disbursal and capital investment cycle is
expected to unfold in India with the strengthening of balance sheets in the corporate and
banking sectors. Direct tax revenue collections have been highly buoyant and so have GST
collections, which should ensure the full expending of the Capex budget within the
budgeted fiscal deficit. Further, support to economic growth will come from the expansion
of public digital platforms and path-breaking measures such as PM GatiShakti, the National
Logistics Policy, and the Production-Linked Incentive ("PLI") schemes to boost
manufacturing output.
The capital expenditure initiatives of the central government are another growth driver
of the Indian economy. A sustained increase in private Capex is imminent with the
strengthening of the balance sheets of corporates and the consequent increase in credit
financing it has been able to generate. The Mahatma Gandhi National Rural Employment
Guarantee Scheme ("MGNREGS") has been directly providing jobs in rural areas and
indirectly creating opportunities for rural households to diversify their sources of
income generation. Schemes like PM-Kisan and PM Garib Kalyan Yojana have helped in
ensuring food security in the country.
Despite strong global headwinds and tighter domestic monetary policy, the IMF expects
India to grow around 5.9% in 2023. This growth, without the advantage of a base effect,
reflects India's underlying economic resilience – its ability to recoup, renew, and
re-energise the growth drivers of the economy. India's economic resilience can be seen in
the domestic stimulus to growth seamlessly replacing the external stimuli. Structural
reforms implemented by the government have resulted in ease of doing business. The release
of Urban Real Estate demand was reflected in the housing market too as demand for housing
loans picked up. At Rs19,36,428 crores at the end of March 2023, outstanding housing loans
have grown by an absolute 14.9% and 42.2% compared to a respective Rs16,84,424 crores a
year ago and Rs13,61,880 crores at the end of March 2020. Consequently, housing
inventories have declined, prices are firming up, and construction of new dwellings is
picking up pace, and this has stimulated innumerable backward and forward linkages that
the construction sector is known to carry. The universalisation of COVID-19 vaccination
coverage also has a significant role in lifting the housing market as, in its absence, the
migrant workforce could not have returned to construct new dwellings.
Apart from housing, construction activity, in general, has significantly risen in FY23
as the much-enlarged capital budget of the central government and its public sector
enterprises is rapidly being deployed.
Cement Industry during FY23
The country's cement demand is expected to climb by around 10% over fiscal year 2023,
as reported by a leading ratings agency. The growing housing sector, which typically
accounts for 60% to 65% of India's cement consumption, will remain a key demand driver.
Also, continued large investments in roads and infrastructure projects will fuel cement
demand.
In the Union Budget 2023–24, the government has allocated US $1.8 billion for the
creation of safe housing, clean drinking water, and sanitation, and increasing road and
telecom connectivity, among other initiatives. The government has also allocated US $9.6
billion to address housing shortages. As per a post-budget report by a research affiliate
of a credit rating agency, cement demand is expected to witness third straight year of
growth with a 7% to 9% jump to ~425 million tonnes in FY24. In FY24, infrastructure and
affordable rural housing segments are expected to propel growth, where the highest
traction is expected from roads, where the total annual outlay for the Ministry of Road
Transport and Highways and the National Highways Authority of India ("NHAI") has
seen an increase of 25% and 14%, respectively. The government has also increased budget
outlay for affordable rural housing under the Pradhan Mantri Awas Yojana – Gramin
("PMAY-G") by 12.5% for FY24. Launched in 2015, PMAY-G is part of the Pradhan
Mantri Awas Yojana ("PMAY"), a massive government scheme promoting affordable
housing in India.
It is against this backdrop, that we share your Company's performance during FY23.
Business Performance
Production and Capacity Utilisation (Grey Cement)
| Particulars |
FY23 |
FY22 |
% change |
| Installed capacity in India (MTPA) |
126.95 |
114.55 |
11 |
| Production (MMT) |
99.43 |
86.98 |
14 |
| Capacity Utilisation |
84% |
77% |
7 |
MMTPA – Million Metric Tonnes Per Annum; MMT – Million Metric Tonnes
Cement production in FY23 was higher by 14% at 99.43 million tonnes as compared to
FY22, while capacity utilisation was at 84% as compared to 77%.
Sales Volume
|
|
|
(Figures in MMT) |
| Particulars |
FY23 |
FY22 |
% change |
| Grey Cement – India |
100.10 |
88.00 |
14 |
| Grey Cement – Overseas |
4.42 |
4.93 |
(10) |
| White Cement |
1.63 |
1.46 |
11 |
| Total Sales Volume* |
105.71 |
93.99 |
12 |
* after elimination of inter Company sales.
Domestic sales volume registered a growth of 14% in FY23. Your Company achieved the
unique distinction of registering over 100 million tonnes of production, dispatches and
sales in FY23.
Financial Performance
|
|
|
|
( Rs in crores) |
|
Standalone |
Consolidated |
|
FY23 |
FY22 |
FY23 |
FY22 |
| Net Turnover |
60,463 |
49,729 |
62,338 |
51,708 |
| Domestic |
60,236 |
49,479 |
60,192 |
49,528 |
| Exports |
226 |
250 |
2,145 |
2,180 |
| Other Income (Other Operating Income and Other Income) |
1,553 |
1,546 |
1,405 |
1,399 |
| Total Expenditure |
51,395 |
39,727 |
52,620 |
41,084 |
| Profit before Interest, Depreciation, and Tax (PBIDT) |
10,621 |
11,548 |
11,123 |
12,022 |
| Depreciation |
2,619 |
2,457 |
2,888 |
2,715 |
| Profit before Interest and Tax (PBIT) |
8,001 |
9,091 |
8,235 |
9,307 |
| Interest |
755 |
798 |
823 |
945 |
| Profit before Impairment and Tax Expenses / share in profit of Associates |
7,246 |
8,293 |
7,412 |
8,363 |
| Share in Profit / (Loss) of Associates and Joint Venture |
- |
- |
4 |
2 |
| (net of tax) |
|
|
|
|
| Profit before Tax Expenses |
7,246 |
8,293 |
7,416 |
8,364 |
| Normalised Tax Expenses |
2,329 |
2,744 |
2,343 |
2,708 |
| Reversal of Tax Provision of Earlier Years |
- |
(1,518) |
- |
(1,518) |
| Profit after Tax (PAT) |
4,917 |
7,067 |
5,073 |
7,174 |
| Profit Attributable to Non-controlling Interest |
- |
- |
9 |
(10) |
| Profit Attributable to Owner of the Parent |
- |
- |
5,064 |
7,184 |
Other Income
Other income is in line with the previous year.
Operating Profit (PBIDT) and Margin
PBIDT at Rs10,621 crores was 8% lower than the previous year. The lower operating
margin was attributable to higher input costs, partly offset by volume growth and better
sales realisations.
Cost Highlights i. Energy Cost
Overall energy costs increased by 36% from Rs1,240/t to Rs1,692/t mainly due to higher
fuel prices.
ii. Input Material Costs
Raw material costs rose from Rs531/t to Rs600/t because of an increase in additive and
fly ash prices. Increase in diesel prices impacted inbound transportation and mining
costs, resulting in higher raw material costs. Your Company is continuously working on
improving the share of blended and premium products in its product mix, which is expected
to result in an improvement in overall profitability.
iii. Freight and Forwarding Expenses
Logistics costs increased marginally from Rs1,214/t to
Rs1,248/t due to an increase in diesel cost as well as business season surcharges
levied on railway freight. Reduction in lead distance mainly on account of a change in the
market mix and synergies arising out of the integration of acquired assets aided in
lowering the impact of rising diesel costs.
Employee Costs
Employee costs increased to Rs2,562 crores as compared to Rs2,359 crores in the
previous year, primarily due to the annual increments.
Depreciation
At Rs2,619 crores, depreciation was higher by Rs162 crores, on account of
capitalisation of new capacities during the year.
Finance Cost
Repayment of borrowings led to a decrease in finance costs from Rs798 crores to Rs755
crores. However, an increase in the interest rate impacted interest costs. 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 financial obligations in a timely manner.
Income Tax
Normalised income tax expenses increased in line with an increase in taxable income.
Net Profit
Normalised PAT decreased by 11% from Rs5,549 crores to Rs4,917 crores.
Significant changes in key financial ratios, along with detailed explanations:
| Particulars |
FY23 |
FY22 |
% Change |
| Debtors Turnover (Days) |
18 |
18 |
- |
| Inventory Turnover (Days) |
34 |
33 |
(4) |
| Interest Coverage Ratio |
12.60 |
12.72 |
(1) |
| Current Ratio |
1.21 |
1.30 |
(7) |
| Debt Equity Ratio (Gross) |
0.17 |
0.20 |
(18) |
| Debt Equity Ratio (Net) |
0.03 |
0.07 |
(53) |
| Operating Profit Margin (%) |
16.4 |
22.0 |
(25) |
| Net Profit Margin (%) |
8.1 |
11.2 |
(27) |
| Return on Net Worth (%) |
9.3 |
11.3 |
(18) |
| Return on Capital Employed (%) |
12.1 |
14.4 |
(16) |
| Earnings Per Share (EPS) |
171 |
192 |
(11) |
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 per day turnover.
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 per day turnover.
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. Your Company's Interest Coverage Ratio decreased by 1% over the previous
year mainly on account of lower PAT during the year.
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
wholly 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 18% mainly on
account of reduction in debt 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. Your Company's
Operating Profit Margin decreased by 25% mainly on account of higher costs, partly set off
by higher volume and higher realisations during the year.
VII. Net Profit Margin (%) is equal to how much net income or profit is
generated as a percentage of revenue. It is calculated by dividing the profit for the year
by turnover. Your Company's Net Profit Margin decreased by 27% mainly on account of higher
costs and was partly set off by higher volume, higher realisations and lower interest
outgo 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.
IX. Return on Capital Employed ("ROCE") is a financial ratio that
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. For your Company, the EPS decreased on account of reduction
in Net Profit by 11.4% over that of the previous year.
Cash Flow Statement
|
|
(Rs in crores) |
|
FY23 |
FY22 |
| Sources of Cash |
|
|
| Cash from Operations |
8,789 |
9,237 |
| Non-operating Cash Flow |
482 |
286 |
| Proceeds from Issue of Share Capital |
5 |
4 |
| (Increase) / Decrease in Working Capital |
559 |
(567) |
| Total |
9,835 |
8,960 |
| Uses of Cash |
|
|
| Net Capital Expenditure |
5,831 |
5,422 |
| (Redemption) / Increase in Investments |
529 |
(7,734) |
| Investment in Subsidiaries, Joint Ventures, Associates, and Others |
875 |
1,809 |
| Repayment of Borrowings (Net) |
360 |
7,360 |
| Repayment of Lease Liability including Interest thereof |
167 |
160 |
| Purchase / (Sale or Issue) of Treasury Shares (Net) |
106 |
83 |
| Interest |
650 |
838 |
| Dividend |
1,091 |
1,065 |
| Total |
9,610 |
9,002 |
| Increase / (Decrease) in Cash and Cash |
225 |
(42) |
| Equivalents |
|
|
Sources of Cash
Cash from Operations
Cash from operations was lower compared to the previous year due to the rise in costs,
which was partly set-off by higher volume and sales realisation.
Non-Operating Cash Flow
Cash from other activities was higher on account of increased 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 inflationary impact on fuel inventory and higher sales,
respectively.
Uses of Cash
Net Capital Expenditure
Your Company spent Rs5,831 crores on various capex during the year. This was primarily
towards growth and maintenance capex as well as Waste Heat Recovery Systems
("WHRS").
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 Rs360 crores.
The loan repayments have been done out of free cash flows that your Company has
generated during the year. The aforesaid steps have resulted in an improved Net
Debt/Equity ratio and Net Debt/EBITDA ratio.
Transfer to General Reserves
Your Company proposes to transfer an amount of Rs3,000 crores to General Reserves.
Dividend
Your Directors recommend maintaining dividend of Rs38 per equity share of Rs10 each for
the year ended 31st March, 2023, aggregating to Rs1,097.01 crores. The
recommended dividend is in line with your Company's dividend policy, which is given in Annexure
I of this Report and is also available on your Company's website.
In terms of the provisions of the Finance Act, 2020, dividend shall be taxed in the
hands of shareholders at applicable rates of tax. Your Company shall therefore withhold
tax at source appropriately.
Unclaimed dividend for the year ended 31st March, 2015, aggregating to
Rs1.38 crores, has been transferred to the Investor Education and Protection Fund
("IEPF"). Your Company has also credited to the IEPF, set up by the Government
of India, 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
has also been transferred to the IEPF, pursuant to the requirements under the Act.
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 judgements
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 31stMarch, 2023, 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 program is progressing on schedule. It commissioned 12.4 MTPA
of new grey cement capacity during FY23 at the following locations:
| 1.30 MTPA |
| CEMENT CAPACITY AT DALLA, UTTAR PRADESH |
| 1.80 MTPA |
| GREENFIELD GRINDING CAPACITY |
| AT DHULE, MAHARASHTRA |
| 1.80 MTPA |
| BROWNFIELD CLINKER BACKED GRINDING CAPACITY |
| AT DHAR, MADHYA PRADESH |
| 1.90 MTPA |
| GREENFIELD CLINKER BACKED GRINDING CAPACITY |
| AT PALI, RAJASTHAN |
| 1.50 MTPA |
| BROWNFIELD CEMENT GRINDING |
| AT JHARSUGUDA, ODISHA |
| 1.30 MTPA |
| BROWNFIELD CLINKER BACKED CEMENT CAPACITY |
| AT HIRMI, CHHATTISGARH |
| 2.80 MTPA |
| GREENFIELD GRINDING CAPACITY |
| AT CUTTACK, ODISHA |
Your Company also commissioned a 2.2 MTPA brownfield cement capacity at Patliputra,
Bihar, in April 2023. Work on the next phase of growth of 22.6 MTPA announced during Q1
FY23 has already commenced. Civil work is in full swing at most sites. Commercial
production from these new capacities is expected to go on stream in a phased manner by
FY25/FY26.
Upon completion of these expansions, your Company's consolidated grey cement capacity
will grow to 160.45 MTPA, reinforcing its position as the third-largest cement company in
the world outside of China and by far the largest in India.
A third Birla White wall care putty plant was commissioned during the year at
Nathdwara, Rajasthan. The existing two plants are situated at Kharia in Rajasthan and
Katni in Madhya Pradesh.
Your Company now has a wall care putty capacity of 13 LTPA, further strengthening its
position in the markets. Along with your Company's existing white cement manufacturing
capacity in India and its investment in Ras Al Khaimah Company for White Cement and
Construction Material, United Arab Emirates (UAE), your Company is strategically
positioned to cater to the white cement and wall care putty market in the country.
Corporate Governance
Your Directors reaffirm their commitment to good corporate governance practices. During
the 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 15,498 equity shares of Rs10 each of your Company upon exercise of stock options
and Restricted Stock Units ("RSUs") by the grantees.
ESOS-2018
During the year, the NRC Committee:
granted 99,879 stock options at an exercise price of Rs6,130.70 per stock option,
exercisable into the same number of equity shares of Rs10 each, and 48,089 RSUs at an
exercise price of Rs10 each on 22nd July, 2022.
granted 39,963 stock options at an exercise price of Rs6,346.75 per stock option,
exercisable into the same number of equity shares of Rs10 each, and 4,733 RSUs at an
exercise price of Rs10 each on 27th October, 2021. vested 66,785 stock options
and 11,957 RSUs to eligible employees, subject to the provisions of ESOS-2018, statutory
provisions as may be applicable from time to time, and the rules and procedures set out by
your Company in this regard.
Your Company transferred 28,803 equity shares during the year upon receipt of
applications from some option grantees for the transfer of equity shares of your Company
in their account from the Trust account. This also includes 131 equity shares pending for
transfer for the year ended 31st March, 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") the details of the stock options and RSUs granted under the schemes are
available on your Company's website https:// www.ultratechcement.com/investors/financials.
A certificate from the Secretarial Auditors on the implementation of your Company's
ESOS will be available at the ensuing Annual General Meeting ("AGM") for
inspection by the Members.
Share Capital
During the year, your Company allotted 15,498 equity shares of Rs10 each to option
grantees upon exercise of stock options and RSUs in terms of ESOS-2013. As a result, the
paid-up equity share capital of your Company stood at Rs2,88,68,63,450, comprising of
28,86,86,345 equity shares of Rs10 each.
Transfer of unclaimed dividend and shares – the details relating to unclaimed
dividend and shares are given in the Corporate Governance section that forms part of this
Report.
Awards
Your Company's constant endeavour to optimise operational procedures and build greater
efficiencies continue to win recognition and prestigious awards. Here is a glimpse of some
awards received during the year.
Thirteen of your Company's limestone mines received five-star ratings in 2021–22
from the Indian Bureau of Mines at their 75th anniversary celebrations. This is
the highest number of five-star ratings awarded to any company in India across all sectors
Leader in ‘Climate Change' by the Carbon Disclosure Project ("CDP"), a
global non-profit environmental organisation, for its 2022 CDP disclosure. Your Company
received an ‘A-' score for implementing best practices and for taking concerted
action on climate issues, securing a place in the leadership category
Sustain Labs Paris (SLP) in partnership with BW Businessworld has ranked your Company
number one for Sustainability in the Infrastructure and Engineering Sector and 15th
out of the Top 200 companies in India
‘TERI-IWA-UNDP Water
Sustainability Award 2022' by The Energy and Resources Institute ("TERI") in
association with the International Water Association ("IWA") and the United
Nations Development Program ("UNDP") for the watershed project that aims to
protect and restore community water structures in rural Andhra Pradesh, and uplifting the
lives and livelihoods of the local population – Andhra Pradesh Cement
Three awards at ‘The EMVIES FY23'
• Gold – Ghar Ek Mauka Ek – Best Media Sponsorship
• Silver – Ghar Ek Mauka Ek – Best Integrated Campaign
• Silver – BGK 2.0 – Best Digital Strategy
The EMVIES Awards, considered the ‘Oscars' of media awards, introduced by The
Advertising Club, India, honours significant and effective contributions in the field of
media by advertisers and their media agency partners
Shared Service Centre (UKSC) awarded the Best Shared Services Team of the Year award at
the 9th edition Shared Service Summit and Award 2022 organised by UBS Forums
Third prize for ‘Total Quality Excellence in the Indian Cement Industry' for
excellence in total quality management for the three-year period of 2019–2022 from
National Council for Cement and Building Materials ("NCCBM") – Aditya
Cement
Three platinum and one silver award at the 45th Confederation of Indian
Industry ("CII") National Kaizen competition, organised by the CII Institute of
Quality – Rawan Cement
Top performer in Cement Sector in India PAT cycle – Rawan Cement
National Award for Excellence in Energy Management from CII – Reddipalayam Cement
National Award for Achieving Circular Economy in Indian Cement Industry by NCCBM –
Reddipalayam Cement
Research and Development
Your Company's Research and Development ("R&D") efforts are geared for
creating advance application value for customers by continuously discovering and
incorporating novel features and functionalities in newer cement and concrete variants and
exploring the technologies to achieve the net-zero carbon ambition. Enhancing customer
satisfaction and aiding sustainability are guiding principles for the researchers at the
R&D centre.
Devising solutions around themes for reducing water consumption for cement, improving
clinker content of cement/concrete in construction, improved durability of concrete,
improved environmental performance of cement and concrete products in terms of reduced
greenhouse emissions and natural resource intensiveness, and increasing use of alternative
raw material in cement manufacturing have resulted in significant progress in the
development of various newer types of cements such as Limestone Calcined Clay Cement and
other special-feature cement. Continuous product improvement through increased
customisation, enhancing productivity through systematic and structured intervention, and
new technology and advance material adoption are at the core of your Company's R&D
centre.
The resources at the R&D centre are engaged in closely monitoring and incorporating
the latest process technology developments, artificial intelligence ("AI")/
digital interventions, carbon reduction innovations, and advanced techniques in the field
of cement–concrete technology in your Company's product offerings. With this
objective in mind, your Company's R&D centre is committed to providing comprehensive
technological support to its policy of promoting sustainable construction and development.
Customers, Quality, Sustainability, and Cost are the governing attributes of all
R&D projects of your Company for achieving process optimisation and debottlenecking,
raw material conservation, and adaptation of alternative fuels/raw materials to build on
the circular economy. Towards this objective, your Company is actively developing
alternatives for minimising the usage of mineral gypsum and the development of cost
economic grinding additives and new generation chemicals while maintaining targeted
product attributes and functionality.
Your Company's R&D Centre has:
| Developed and filed for the patent of a new testing method to quickly identify and
detect adulteration in the concrete for better customer service; |
Designed a chemical process of upgrading the kiln bypass dust for increased Calcium
oxide percentage to reuse it in cement manufacturing; |
Two more IP generation opportunities in progress in the areas of converting cement
manufacturing waste into value-added industrial projects and powder classification
efficiency improvement; |
| Designed and developed value-added green concrete, significantly incorporating the use
of a higher content of alternative cementitious materials from the industrial waste for
enhancing the sustainability of concrete; |
Developed crack resistant concrete for industrial flooring applications; |
Developed 3D printable concrete formulation having excellent surface finish and
completed the field trials with large construction companies. |
The R&D centre has been granted patents for cement composition and a method of
preparing thereof – a method of achieving zero discharge in ready-mix concrete
("RMC"). The R&D centre is working on ultra-high performance concrete
formulations, which are typically required for infrastructure projects, the simulation and
modelling of process equipment for performance optimisation and energy reduction, and
using modern data analytics such as AI/machine learning ("ML") for optimising
manufacturing processes as a part of digitalisation initiatives.
Your Company has accelerated its efforts of employing performance enhancers for blended
multi-component cement to further reduce the clinker factor for lower carbon products
while enhancing sustainability. Your Company is also part of global initiatives for
converting the clinkerisation process using green electrical energy and has collaborated
with Coolbrook, a transformational technology and engineering company, to explore the
emissions from its
possibilities of the reduction of CO2
cement manufacturing operations.
Being a founding member of the Global Cement and Concrete Association
("GCCA"), your Company is also a key member in its R&D-focused consortia
efforts of the Global Cement and Concrete Research Network. This was formed by the GCCA to
accelerate global collaboration on cement and concrete innovation and is an important step
in taking climate action. Some initiatives of the above capture using an innovative
bi-phasic context include CO2 amine process and using an innovative low energy
drier for utilising non-usable materials like wet pond ash and slag. The efforts are
directed at adopting key trends driving the low-carbon emission initiatives for the Indian
cement sector by actively participating in the mission with other partners. This helps
your Company to keep abreast of innovation trends, the latest scientific developments in
carbon footprint reduction, and identify potential routes for adopting newer ideas in
sustainability objective with the following key areas of interest:
| Pre and post carbon capture and its usage technologies |
| Exploration of green calcination technologies in the cement manufacturing process |
| Life-cycle analysis of concrete value chain |
| Enhancing the use of construction demolition wastes in RMC concrete |
| Increase use of waste material to reduce the dependency on the traditional fuels |
Your Company is also closely engaged with Aditya Birla Science and Technology Company
Private Limited ("ABSTCPL"), for developing technological solutions to model the
cement process, devising predictive cement quality modelling and computational fluid
dynamics (CFD) modelling, enhancing equipment productivity using engineering simulations,
and devising special concrete products. ABSTCPL is the corporate research and development
centre for the Aditya Birla Group, which caters to the long-term research needs of your
Company through multi-disciplinary teams of expert scientists and engineers, who lead
fundamental and applied research projects.
Sustainability
Your Company's approach to sustainability is aligned with global goals, such as the
Paris Agreement, the United Nations' Sustainable Development Goals ("SDGs"),
Science Based Targets initiative (SBTi), Net Zero Commitment, and the GCCA roadmap. Your
Company has shifted from following traditional sustainability models to a more innovative
and technologically experimental approach that is consistent with its vision of building a
sustainable business while also balancing stakeholder expectations. Your Company adheres
to international standards such as the International Finance Corporation
("IFC"), the Organisation for Economic Cooperation and Development
("OECD"), and the Global Reporting Initiative ("GRI"), and its
Sustainable Business Framework is currently certified to 14 international standards.
Your Company's commitment to the World Business Council for Sustainable Development's
("WBCSD") Water, Sanitation, and Hygiene ("WASH") Pledge has resulted
in better hygiene standards and inclusivity in terms of the construction of female and
disability-friendly washroom facilities across units and stakeholder engagement
initiatives to help gain insights into potential opportunities and business risks, to be
leveraged for enhancing business models and strategies.
Your Company has integrated the findings of the Task Force for Climate-Related
Financial Disclosures ("TCFD") into its risk management, business planning, and
strategy, and has considered the impact of its carbon emissions on the environment as part
of its evaluation and decision-making process. Your Company's performance in the S&P's
Dow Jones Sustainability Index has improved significantly. It is ranked sixth in the
Global Sectoral ranking of the S&P Global Dow Jones Sustainability World Index
("DJSI"). Your Company is the only Indian company in the Top 10 in the
Construction Material sector for the second year in a row, aiding in benchmarking its
performance against the world's best companies. Your Company is also featured in the
S&P Global Sustainability Yearbook 2023. Only companies with a score within the Top
15% of their industry and having achieved an S&P Global Sustainability score within
30% of their industry's top-performing companies are listed in the Global Sustainability
Yearbook. The adoption of new, cleaner, and greener technology together with a constant
effort across all units and processes to become more energy efficient has bolstered your
Company's commitment to delivering Net Zero Concrete by 2050, working with its value chain
partners to accelerate decarbonisation. Your Company aims to achieve a 27% reduction in
Scope 1 carbon intensity by
31stMarch, 2032, against the carbon emissions from March 2017, with
assistance from SBTi. Your Company has also over-achieved on the target set by the
Government of India for the first Perform, Achieve, and Trade ("PAT") cycle.
Your Company's total electricity requirement is to be met using renewable sources by
2050 as part of its RE100 commitment. With this aim, your Company continues to increase
the use of renewable energy in its energy mix. Your Company has been striving to reduce
consumption of fossil fuels by escalating their substitution with wastes from other
industries. These efforts have resulted in 5.2% of its fuel requirements being met using
alternative fuels and wastes. Your Company aims to be five times water positive by 2024,
which means that it will replenish five times the amount of water it consumes.
As part of its continuing initiatives to ensure sustainable growth, your Company has
completed Life Cycle Assessment ("LCA") studies for four of its products and has
used these as input to identify hotspots over the value chain where the reduction of
environmental impact is possible. More than 70 products in your Company's portfolio have
GreenPro certification. Environment Product Declaration ("EPD") studies have
also been conducted to uphold its product stewardship agenda. Your Company's embarkment on
digital transformation has the potential to decouple emissions and resource use from
economic growth as well as to make its operations safer and more reliable.
Digitalisation
Your Company's digital solutions keep customers at the core of innovation to achieve a
connected and smart ecosystem. With a deep understanding of its customers, the business
teams learn fast and pivot rapidly, leveraging the best possible technologies to design
state-of-the-art digital solutions.
These solutions provide an enhanced customer experience by empowering internal
stakeholders and partners, improving efficiencies, and driving collaboration amongst
teams.
Your Company has further enhanced existing solutions and launched new digital solutions
for customers, partners, and employees.
Smart Manufacturing: Your Company continues to accelerate the adoption of
digitalisation in its operations, encouraged by incremental value delivered through
various initiatives. Your Company is investing in the setting up of cloud infrastructure
as a key foundation for smart and connected factories.
Reliable Operations and Process Stability: Industry 4.0 technologies have empowered
reliability teams by complementing existing preventive procedures and generating
predictive and early alerts. Along with mechanisms to monitor and sustain process
stability using combinations of software and AI solutions, your Company continues to beat
reliability records across plant operations. Efforts on validating advanced algorithms to
further improve process and equipment reliability are underway at your Company.
Energy Optimisation and Enhanced Productivity: Building on past efforts, your
Company continued to scale the adoption of algorithmic advisory solutions to improve
process stability and efficiency across all energy metrics, mainly focusing on increasing
alternative fuel consumption and improving WHRS power generation, among others.
Investments in expert control systems over the last few years have complemented these
results. Other initiatives around digital mining management and optimisation are also
underway to realise gains through better operational efficiencies.
Safer Operations: Each employee in your Company is a safety officer. The use of
digital tools allows for improved effectiveness and collaboration of efforts on safety.
Computer vision, augmented reality ("AR"), virtual reality ("VR"), and
other sensors are being adopted or scaled to support safety objectives at the units.
Empowering Teams: The use of digital solutions for dynamic planning and the
sourcing of packaging materials is improving central synergies and efficiency. An
end-to-end fuel sourcing planning platform is helping take optimal decisions, which
positively impacts the energy cost. Your Company's procurement team has adopted a
‘procure to pay' digital platform for engineering and packaging materials to drive
efficiency, over and above current capabilities.
Speed, scale, customer convenience, and operational efficiency have been the focus
areas of the digital transformation journey. In the last year, your Company has
accelerated efforts to provide superior value to internal and external stakeholders by
leveraging the best technologies with the successful roll-out and seamless adoption of the
digital solutions by your Company's employees, customers, and service partners.
Customer First: Over the last two years, your Company has successfully completed
the roll out of mobile app-based digital solutions to its channel partners and
institutional customers. Through these apps, it has replaced several paper-based
processes, helping to save time and improve the speed of operations for customers,
partners, and internal teams.
Continuous enhancements carried out through the deep understanding of customers has
enabled a high-level of adoption and use of these solutions.
UltraTech Trade Connect, a mobile app-based solution, provides unparalleled
convenience to dealers and retailer network across the country. By providing a single
interface it empowers channel partners to manage their day-today operations with ease.
More than 90% of dealers across India, regularly use the app for engaging with your
Company.
UltraTech Customer Connect, a mobile app-based solution, helps institutional
customers to plan their site operations better through visibility of supplies and test
certificates. The sites can provide electronic proof of delivery (ePOD) and access the
finance documents, which help in streamlining the payment processes. More than half of
your Company's institutional customers have adopted this solution.
Empowering Partners: Your Company counts on its drivers and transport partners as a
crucial link for delivering superior experience to customers. Eye-to-track, a multilingual
app launched for driver partners, has been well received among 50,000-plus drivers who
have downloaded the app which conveniently connects them with customers.
Empowering Internal Stakeholders: Your Company's integrated information hub,
Logistics Control Tower ("LCT"), provides a single version of the truth and
end-to-end visibility to logistics. It has also been extended on mobile phones ("LCT
Lite") to your Company's front-end sales teams for driving collaboration to improve
logistics efficiencies.
These solutions, with unified flow of information between them, and functioning
together as an integrated digital platform for the network of dealers, retailers,
transporters, and drivers, is enabling your Company to be a customer-centric partner for
its customers as well as the end consumers.
Your Company's Shared Services viz. UltraTech Knowledge Service Centre
("UKSC"), now in operations for around 4 years, has grown to a strength of
717 members processing ~1.9 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 of 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 serve as a best-in-class knowledge hub to
create future finance leaders. Representing at various Shared Service forums, UKSC has
recently been recognised with an award for the "Best Shared Service Team". The
digital adoption has been recognised by the Aditya Birla Group IT and UKSC has won the
"IT Digital Showcase 2.0 Award" for the Project -.SAP-AFC Implementation.
Continuing the collaboration with 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 cost, working capital and other levers to
optimise the ROCE. Creating an Analytics CoE for the future is in line with this. This
digital journey is expected to further accelerate in the coming quarters, yielding
significant benefits for your Company and its stakeholders.
Human Resources
Your Company continued to focus on employee core connect, engagement, learning, and
development to build a workplace that is safe, engaging, and productive. Your Company
undertook digitalisation of all talent management processes for regular communication. All
the employees of your Company were presented with various learning opportunities to
enhance career growth. Learning and development teams ensured the training of employees
and leveraged virtual mediums to organise learning sessions for them. Wellness sessions
that dealt with topics related to safety and health helped create awareness among
employees and their families about key areas related to their well-being.
Throughout the year, employees remained connected through planned events such as
seminars, learning programs, and self-learning modules.
Your Company's employee strength stood at 22,916 on 31stMarch, 2023
(compared to 21,921 in 2022).
Safety
Your Company accords the utmost importance to precious human life. Hence, the safety of
people associated with the business remains the fulcrum of your Company's operations. To
further boost the effectiveness of the already well-established safety management system,
your Company took a call to bring an emotional element into it. Consequently, numerous
interventions were launched and driven under an organisation-wide campaign coined
‘Suraksha, dil se…' ("Safety by heart"), encompassing almost all vital
elements that constitute organisational safety culture. Positive outcomes are reflected in
the lagging indicators – the best-ever Lost Time Injury Frequency Rate
("LTIFR") of -0.10 was achieved, a reduction of 28% compared to the previous
best.
Under the aegis of ‘Suraksha, dil se…', various interventions were driven
with an aim to make safety a way of life. These were related to four major components of
the safety management system: setting objectives and reviewing them through leaders
connect, building competence, facilitating implementation, and verifying compliance.
Setting Objectives and Reviewing Them Through Leaders Connect
Fatal risk prevention elements (working at height, conveyor safety, hot material
safety, and electrical safety) were included in the annual safety key performance
indicators ("KPIs"). There has been a positive shift in identifying and
reporting unsafe conditions, acts, and near misses related to these four fatal risk
prevention elements.
Fortnightly safety reviews were carried out by the Head of Manufacturing. Senior
managers were randomly selected from three units, who connected every week and had
interactions on various safety KPIs of their respective unit.
‘Pratibimb' – weekly reviews were carried out by Cluster Heads through
walk-through inspections done by employees across units. 576 employees connected through
144 sessions during the year.
The Unit Apex committee, headed by the Unit Head, reviews monthly the effectiveness of
six subcommittees' functioning on: i) standards and procedures, ii) safety observations,
iii) training and capability building, iv) incident investigation, v) contractor safety
management, and vi) logistics safety. Representatives of unit-level subcommittees apprise
status at the respective cluster-level subcommittee meetings, which are chaired by the
Cluster Heads. These meetings are held once every four months, where decisions are made to
act based on inputs/review outcomes. Finally, the Occupational Health and Safety
("OHS") Board, chaired by the Managing Director and Head of Manufacturing,
reviews organisational safety performance once every two months, and a further course of
action is communicated across units.
Building Competence
Around 750,000 man-hours of safety training were organised across units during the
year.
A brief description of the various safety training elements are as follows:
Standard Champions training: to build a pool of competent in-house resource as
trainers, 500 employees across all units were trained on 18 safety standards through the
‘Standard Champions training' programme.
VR-enabled safety training on 30 modules was organised for contract workmen and
employees at units to ensure that job-specific immersive training is provided to each
contract workman before deploying them to the job. VR puts learners in places and
situations they are likely to encounter on the job and allows them to experience how their
actions affect outcomes, all in a safe environment. Around 12,000 persons were trained
during the year.
E-learning modules on critical processes (such as use of a coal mill or boiler,
operations involving the likelihood of hot material exposure, and the management of
change) were developed and uploaded to the learning management system ("LMS")
platform. The system was institutionalised so that all employees involved in these
operations needed to mandatorily get themselves qualified through tests after going
through these courses. Around 5,000 employees completed these courses during the year.
Virtual training sessions in Hindi as well as regional languages were organised for the
contractual workforce on four fatal risk prevention elements: working at height, conveyor
safety, electrical safety, and hot material safety. Around 14,000 contractual workers
covered so far.
544 persons (employees and contract workers) engaged in rail yard related activities
across units have been trained on rail safety by an external expert.
Classroom safety training has been imparted to 1,800 contractor's supervisors across
all units.
Facilitating Adherence to Safety
Monthly safety campaign, driven by identified themes (based on analysis of past
incidents): Multiple activities/events are organised and supported by a variety of mediums
(3D animation video, creative posters, training through virtual platform etc.) to reach
out to all.
Safety toll-free number (available 24/7): As a deterrent against safety violations, an
exclusive safety toll-free number has been made available with communication to every
person (employee/contract worker) so that they can act as whistleblowers to save lives.
The concerns voiced are addressed, keeping the caller's identity anonymous.
60 seconds to think: This involves seven questions that have to be asked by each
individual before initiating any work. They must sign this and submit it along with
Permit-to-Work ("PTW") to the custodian. It also facilitates the ability of any
contract worker to say ‘no' if they feel they are not safe to execute the work or are
not convinced that the conditions to execute the work may cause an accident.
Safety behaviour observation: Safety observation—a structured, pro-active six-step
process—is in place to achieve positive change in people's behaviour towards safety
in the workplace. It aims to i) recognise and reinforce positive safety behaviour, ii)
identify and correct behaviour at risk, and iii) engage in conversation regarding safety
concerns or issues. During the year, over 4,00,000 observations were reported through this
across units.
Digitisation of walk-through inspection (WTI): A latitude-longitude-based unique QR
code was generated for each of around 50 locations of a unit. By scanning the specified
section's QR code, the user can view the WTI checklist of the section and report findings
by using the ‘speech-to-text' feature. Around 300,000 findings were reported through
WTI and closed during the year across all units.
20 Pictorial Standard Operating Procedures ("SOPs") in Hindi – with less
text and more visuals displayed at relevant locations for contractual workers to easily
understand and follow.
30 3D-animated videos in English and Hindi on past serious incidents are shown at units
for easy understanding by employees and contractual workers about how and why those
happened, to prevent recurrence.
A Behavioural Science-Based Safety ("BSBS") program was launched to address
the psychological issue of contractual workforce towards safety.
With the on-going capacity expansions, safety at project sites pose their own
challenges on account of timelines for execution and contract workmen attrition. To give
more thrust towards safe execution of projects, multilayer monitoring was introduced which
is over and above the existing safety management practices at your Company. Apart from
respective project HRC and Apex committees, safety experts were deployed at the sites.
Additionally, expert rigger and scaffolding experts were placed at each project site to
support safe execution.
Verifying Compliance
Assurance: An independent safety assessment was carried out by a third-party
expert agency to evaluate the degree of compliance to 17 safety standards (as applicable)
across of your Company. The result of this assessment has been shared with units to enable
them take corrective actions. The minimum score improved from 53% in FY22 to 72% in FY23.
Safety audit: Around 4,000 observations reported through first party safety
audit (FPSA) across units were closed. In addition, 8,000 contractor field safety audits
were carried out across units during the year. Safety audits at 62 RMC plants by safety
professionals of nearby manufacturing units identified 1,825 findings, all of which were
subsequently closed.
‘ - Contractor Connect Initiative': Unit Heads/Function Heads engage
through weekly sessions with contractors and workers to verify adherence to safety norms
while at work. This has been continued for 84 weeks so far since launch.
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 has 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/investors/corporate-governance#policies.
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 Rs115.99 crores on CSR activities and set off
Rs18.60 crores from the excess spent during FY21, aggregating to Rs134.59 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 Lime Stone Khanij Udyog Private Limited, Bhagwati Lime Stone
Company Private Limited, UltraTech Nathdwara Cement Limited ("UNCL"), 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. PT UltraTech Mining Indonesia and PT UltraTech Investments Indonesia
were struck off as subsidiaries with effect from 14th June, 2022. UCMEIL
entered into a Share Sale and Purchase Agreement with Seven Seas Company LLC., Oman for
acquisition of 70% equity shares in Duqm Cement Project International, LLC. Oman
("Duqm"). Duqm has allotment of limestone mines and other infrastructure that
would help your Company secure limestone supplies for its coastal-based plants. The Board
of Directors approved a Scheme of Amalgamation of UNCL (a wholly-owned subsidiary of your
Company) and its wholly-owned subsidiaries viz. Swiss Merchandise Infrastructure Limited
and Merit Plaza Limited with your Company. The Appointed Date of the Scheme is 1st
April, 2023. The transaction is subject to the approval of National Company Law Tribunal,
Mumbai and Kolkata and other regulatory authorities as may be required.
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
venture, 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
in excess of 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 and Sustainability Report
The Securities and Exchange Board of India ("SEBI"), by its circular dated 10th
May, 2021, introduced new sustainability-related reporting requirements to be reported in
the specific format of the Business Responsibility and Sustainability Report
("BRSR"). The BRSR forms part of this Report.
Contract and Arrangement with Related Parties
Related party transactions entered into 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 31stMarch, 2023, is provided in Note No. 38 to the
standalone financial statements of your Company.
Risk Management
Your Company recognises that every business encompasses risks that need timely
intervention and management. To achieve the ambitious business goals in a challenging and
dynamic environment, your Company is committed to proactively managing risks. While risks
can never be eliminated, effective risk management can help in avoiding, mitigating,
transferring, or accepting the associated impacts of risks.
At your Company, the Risk Management and Sustainability Committee ("RMS
Committee") is responsible for overseeing your Company's risks. It reviews the
Enterprise Risk Management Framework, analyses risks in depth, and defines mitigation
actions where necessary. Your Company aims to assess and prioritise risks based on their
significance in terms of impact and likelihood, considering the business environment,
operational controls, and compliance procedures.
Your Company has identified several key risks, including economic environment and
market demand; inflation and costs of production; legal and compliance; financial;
environment; climate and sustainability; information technology; and talent management.
Your Company considers the risk horizons, which includes long-term strategic risks, short
to medium-term risks, and single events. The risks are analysed based on their likelihood
and impact to determine the appropriate risk management strategy.
Key Business Risks identified by your Company:
Economic Environment and Market Demand
The demand for construction material is driven by the economic growth in the country.
Economic slowdown and subdued infrastructural development might lead to a slowdown in
construction projects, thus leading to a reduction in cement consumption in the country.
In a scenario where incremental capacity addition exceeds incremental cement demand, the
government's push for infrastructure and housing will aid the growth in cement
consumption.
Given that the cement industry in India is an aggregation of small and large companies,
the risk of protecting market share in such environment is optimal for your Company. With
the expanding capacities of existing players and the emergence of new entrants,
competition is a sustained risk. To mitigate this, continuous endeavours to enhance brand
equity through innovative marketing activities, enhancement in the product portfolio, and
value-add services have been the thrust areas for your Company. The engineering expertise
of your Company and its emphasis on quality also act as a significant counter measure to
the risk of market fluctuations.
Inflation and Cost of Production
Your Company faces the risk of inflation and price fluctuations in the cost of coal,
pet coke, power, and other fuels, since these are market-driven. The cement industry is
extremely energy intensive, and changes in fuel prices can significantly impact production
cost. To de-risk, your Company has established specific policies of long-term contracts,
and it continuously optimises its fuel mix and energy efficiency, while exploring the use
of alternative fuels.
The procurement of raw materials at an economical cost or of suitable quality faces a
high degree of inflationary certainty. Your Company mitigates this risk through the
establishment of exhaustive policies for procurement of specific raw materials and stores
those which are amenable to just-in-time inventories.
Limestone is the primary raw material required to produce cement, so its continuous and
long-term availability is critical, particularly under the dynamic regulatory environment.
Your Company currently possesses sufficient limestone reserves. However, securing
additional reserves is critical to address your Company's expansion plans. Apart from the
preservation and extension of existing reserves, a range of measures, including strategic
sourcing and changing input-mix, are adopted by your Company to mitigate the risk of
unavailability of limestone.
Legal and Compliance
This risk relates to any inadvertently violated laws covering business conduct. The
country's regulatory framework is ever-evolving, and the risk of non-compliance and
penalties may increase for your Company, leading to reputational risks. A comprehensive
risk-based compliance programme, involving inclusive training and adherence to the Code of
Conduct, is thus institutionalised by your Company. As a step to mitigate the legal and
compliance risk, your Company's management encourages its employees to place their
reliance on professional guidance and opinions to discuss the impact of any changes in
laws and regulations to ensure total compliance. Periodic and ad hoc reporting to various
internal committees for oversight ensures the effectiveness of such a programme.
Financial
This comprises the risk of exposure to fluctuations in interest rates, foreign exchange
rates and commodity prices. The risk management strategy is to identify the risk exposure,
measure and evaluate the financial impact, and decide on steps to mitigate the risks
together with ensuring regular monitoring and reporting.
With the objective of minimising risks arising from the uncertainty and volatility of
foreign exchange rate fluctuations, an elaborate financial risk management policy is
followed for every transaction undertaken in foreign currency. Your Company's policies to
counter such risks are reviewed periodically and constantly aligned with the financial
market practices and regulations.
Changing laws, rules, regulations, and standards relating to accounting, corporate
governance, public disclosure, and listing regulations are generating newer and unforeseen
risks for companies. The new or changed laws, regulations, and standards may lack
precedence and are subject to varying interpretations. Their application in practice may
evolve as new guidance is provided by regulatory and governing bodies. Thus, your Company
maintains a high standard of corporate governance and public disclosure to de-risk itself
from such dynamic regulatory changes.
Environment
Environmental risk pertains to the harm caused to the environment by pollution
resulting from waste discharge and greenhouse gas emissions. To prevent this, your
Company's operating units are equipped with Continuous Emission Monitoring Systems
("CEMS") in the major stacks and monitored in real-time by the Central Pollution
Control Board ("CPCB") and State Pollution Control Boards ("SPCBs").
The units have been in compliance with the regulations of the Ministry of Environment,
Forest and Climate Change ("MoEF&CC"), and no major deviation has been
observed.
In addition to CEMS, third-party environment monitoring is regularly carried out by
laboratories which are approved by the National Accreditation Board for Testing and
Calibration Laboratories ("NABL"), and the results are further substantiated by
monitoring carried out by SPCBs. Regular measures are being taken to maintain the
performance efficiency of Pollution Control Equipment at all the units. This year, the
performance efficiency study of Air Pollution Control Devices ("APCDs") in the
units was carried out by NCCBM. Internal environmental audits are also conducted to ensure
that the emissions are kept within or lower than the limits for the APCDs on a regular
basis.
For better control of fugitive emissions, your Company has initiated an emission
inventory dispersion modelling study for one of its units by the Indian Institute of
Technology, Mumbai. Your Company has also constructed covered sheds for various raw
materials and fuels at some units and concreted new roads at others.
Climate and Sustainability
Your Company has analysed climate change-related risks in its operations, including the
physical and transition risks it entails, which are aligned with the Task Force on
Climate-related Financial Disclosures ("TCFD") framework. The following
climate-related risks have been identified:
Physical Risks
Acute physical risks arising from longer-term changes in climate patterns causing
damage to assets or supply chain disruption, such as floods, heat waves, cyclones, and
droughts.
Chronic physical risks such as variations in temperature, precipitation patterns, and
water stress.
Transitional risks emerging from the transition to low-carbon business pathways that
involve regulatory changes, technology, and market changes to address mitigation and
adaptation requirements related to climate change.
Your Company has developed a risk mitigation strategy against each climate risk,
summarised as follows; Acute physical risks: Your Company diligently implements
disaster management plans, health and safety protocols, and adequate communication
protocols during extreme weather events to ensure site safety and minimise the impact on
the workforce. Annual weather forecasts are being considered in global supply chain
decisions to mitigate the risk of delays in sourcing fuels and machinery due to natural
calamities. Insurance coverage is in place to protect against damages to business assets
or loss of materials in warehouses or transit due to extreme weather events.
Chronic physical risks: Your Company has proactively installed rainwater harvesting
systems across sites. In addition, at several of the manufacturing sites, Zero Liquid
Discharge ("ZLD") plants have been installed to enable the reuse of 100% treated
water within the sites. As a result, your Company is 4.1 times water positive currently.
Measures to mitigate the risks of heat waves have been introduced across sites, making
your Company resilient to such risks. Some such measures include minimal work in mid-day
hours in warehouses or outdoor areas during peak summer days, flexible work hours with
early morning and late evening shifts to avoid exposure to heat waves, and compliance to
the WASH Pledge (ensuring the availability of drinking water).
Transitional risks: Emerging climate policies and the world carbon market economy
could significantly impact companies in the future due to their effects on the supply
chain, physical risk, shifting customer preferences, and the transition to a low-carbon
economy. Your Company has analysed physical and transitional risks using a scenario-based
approach and is aligned with the Representative Concentration Pathway ("RCP"),
ETP B2DS, and IPCC 1.5-degree scenarios. Your Company's resilience has been evaluated
under scenarios, and potential pathways for decarbonisation have been considered to ensure
compliance with policy mechanisms. Some key risks that may have financial implications for
the Company are the introduction of carbon pricing in India; the financing community is
expected to strengthen its climate-related financing mechanism; non-compliance to meet 1.5
_C pathway requirements; maturity and viable low carbon technology adoption, among other
developments. Your Company has committed to achieving net zero by 2050 and is capable of
adapting to new risks arising from climate policy changes by focusing on the green energy
transition, enhancing the circular economy, diversifying its low-carbon product portfolio,
and participating in new technology development and piloting with global companies in
association with the GCCA.
Information Technology
This comprises risks related to Information Technology ("IT") systems, such
as data integrity and physical assets. Your Company deploys IT systems, including ERP,
SCM, 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. To mitigate these
risks, your Company uses backup procedures and stores information at two different
locations. Systems are upgraded regularly with the latest security standards. For critical
applications, security policies and procedures are updated periodically, and users are
educated on adherence to the policies to eliminate data leakages. Your Company is also in
the process of beefing up information security around Plant Production Equipment.
Talent Management
Your Company's growth has been driven by its ability to attract and retain top-quality
talent while effectively engaging them in the right jobs. The risks in talent management
are mitigated by following a policy of 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.
Geopolitical Tension
The rising fuel prices in the wake of geopolitical tensions have had an adverse impact
on the cost of manufacturing cement 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. The anticipated rise in the procurement of raw materials
and high consumption of energy is likely to lead to the need to prioritise local
dependence for raw material and energy fulfilment in order 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 and continuing as Director
In accordance with the provisions of the Act and Articles of Association of your
Company, Mrs. Rajashree Birla (DIN: 00022995) retires by rotation, and being eligible,
offers herself for re-appointment.
Further, in terms of Regulation 17(1A) of the Listing Regulations, no listed Company
shall appoint or continue the appointment of a Non-executive Director, who has attained
the age of 75 years, unless a special resolution is passed to that effect. Mrs. Birla
having attained the age of 75 years, resolution seeking her re-appointment and
continuation as Director forms part of the Notice convening the AGM.
Meetings of the Board
Your Company's Board of Directors met six times during the year to deliberate on
various matters. The meetings were held on 6th April, 2022; 29th
April, 2022; 2nd June, 2022; 22nd July, 2022; 19th
October, 2022; and 21st January, 2023. 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 the business and relevant provisions of applicable laws and statutes:
Audit Committee
Nomination, Remuneration, and Compensation Committee
Stakeholders' Relationship Committee
Corporate Social Responsibility Committee
Risk Management and Sustainability Committee
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
Your Company's Independent Directors have submitted requisite declarations confirming
that they continue to 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 and
general management, 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.
Formal Annual Evaluation
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. The NRC Committee and the Board have
laid down the manner in which formal annual evaluation of the performance of the Board,
its Committees, and individual Directors are to be made. Separate evaluation forms are
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 comprises:
Board and Committee Evaluation
Evaluation of the Board as a whole and the Committees is 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 Director, 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, decision-making, action-orientation,
external knowledge, etc.
A brief summary of the evaluation exercise
The Board as a whole functions cohesively. The
Committees function well in their respective areas, and the recommendations of the
Committees are considered and have been accepted by the Board. The Directors bring to the
table their knowledge and experience. Independent Directors are rated high in
understanding your Company's business and expressing their views freely during
deliberations. The Non-Executive Directors score well in all aspects. Executive Directors
are action-oriented and good in implementing Board decisions. The Chairman leads the Board
effectively and encourages active participation and contribution from all the Board
members.
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 of your Company.
Audit Committee
The Audit Committee comprises 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. 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 31stAugust, 2016 (penalty of Rs1,449.51 crores)
and 19thJanuary, 2017 (penalty of Rs68.30 crores). Upon the National Company
Law Appellate Tribunal ("NCLAT") disallowing its appeal against the CCI order
dated 31stAugust, 2016, your Company filed an appeal before the Hon'ble Supreme
Court, which has, by its order dated 5thOctober, 2018, granted a stay against
the NCLAT order. Consequently, your Company has deposited an amount of Rs144.95 crores,
equivalent to 10% of the penalty of
Rs1,449.51 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. LLP), 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 AGM respectively. In
accordance with the provisions of the Act, the appointment of Statutory Auditors is not
required to be ratified at every AGM.
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, 2024, 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., Company Secretaries, as Secretarial Auditors
for conducting a Secretarial Audit of your Company for the financial year ended 31st
March, 2023.
The report of the Secretarial Auditor is provided in Annexure VIII, which does
not contain any qualification, reservation, or adverse remark.
Compliance with Secretarial Standards
Your Company is compliant with the Secretarial Standards specified by the Institute of
Company Secretaries of India ("ICSI"). 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 ICSI.
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.
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 six
complaints of sexual harassment, of which for two complaints, there was no evidence of
harassment, and two complaints have been resolved. Investigations are continuing for the
remaining two complaints.
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 on the basis of any subsequent development, information, or
events, or otherwise.
Acknowledgement
Your Directors express their deep sense of gratitude to the banks, financial
institutions, stakeholders, business associates, and central and state governments for
their support, and look forward to their continued assistance in the future. Your
Directors thank employees for their contribution and applaud them for their superior
levels of competence, dedication, and commitment to your Company.
|
For and on behalf of the Board |
|
Kumar Mangalam Birla |
|
Chairman |
|
(DIN: 00012813) |
| Mumbai, |
|
| 28th April, 2023 |
|
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