The year 2021 was a study in contrast for the Indian economy and the cement industry. While the government’s continued policy push for infrastructure and affordable housing bode well for a strong rebound in demand, the onset of a more severe second wave in the second quarter, the extended monsoon and rising input prices in the fourth quarter, partially offset the gains. The robust rollout of the world’s largest immunisation programme provided a boost to sentiments.
The volatile external environment notwithstanding, we delivered a robust set of numbers for 2021 across operational and financial metrics. We clocked our highest ever annual sales volume. Net sales grew 23% y-o-y to `13,794 crore, further aided by a favourable product mix. Operating EBIT stood at `2,656 crore, up 25% y-o-y, while profit after tax rose 16% y-o-y to `2,081 crore. However, margins came under pressure due to the increase in input costs. The operating EBITDA margin declined 40 bps while net profit margin declined 90 bps.
Despite restricted mobility of manpower and materials, the ontime commissioning of our hi-tech Marwar plant in September 2021 speaks volumes about the grit and determination of our people. The resilience demonstrated by the team is the true embodiment of our I Can spirit. The ‘Green’ plant is key to our strategic plan of strengthening our competitive position, especially in northern Indian markets, and managing operations with improved efficiency.
Digitalisation remains our key focus area and will continue to shape the way we operate – from running the plants and managing logistics and supply chain, to market and customer connect. Our objective is to effectively predict demand fluctuations, schedule maintenance, improve logistics and transportation capabilities. Under the Plants of Tomorrow initiative, being implemented across units, we expect to enhance operational efficiency significantly in comparison to conventional cement plants.
I am particularly happy to report a major development on the ESG front. We became the first cement company globally to make it to the ‘A’ list of CDP 2021 for water security, a testimony to our water stewardship. We intend to become a carbon-neutral building materials and construction solutions business by 2050. Accordingly, we are investing in a whole range of sustainability initiatives – from Waste Heat Recovery System (WHRS) to clinker factor reduction, energy efficiency (thermal and electrical), and the use of renewable energy, especially waste-derived resources/ alternative fuels. The positive changes made through our sustainability efforts positioned us 5th in the Dow Jones Sustainability Index (DJSI) 2021 among construction materials companies globally.
During the year, we had our 2030 carbon emission reduction targets validated by the Science Based Targets initiative (SBTi) and it is in line with a ‘well-below’ 2°C trajectory. What this means is that we have committed to reducing our Scope 1 and Scope 2 GHG emissions by 21% per tonne of cementitious materials by 2030 from the 2020 base year.
It is imperative for us to push the decarbonisation agenda. Today, we have the knowledge and the means to combat climate change. It is no longer about what we can do, but what we must do. At Ambuja, that is what we are doing. From mining for raw materials to shipping finished products, we are approaching every part of our operations from the sustainability lens. This is because we believe in profit and purpose, not profit or purpose. Business growth and sustainability can go together when there is consensus and commitment across the company, the industry, and society at large. We are targeting to achieve that.
We are extremely upbeat about the prospects of the Indian cement industry. The industry is coming out of a challenging phase triggered by the pandemic, but we expect to see a lot of tailwinds going forward, particularly from the housing sector and public spending on infrastructure. The longterm industry fundamentals remain unchanged, and cement will continue to play a pivotal role in shaping the India growth story. To better capitalise on the emerging growth opportunities, we have embarked on our next phase of capacity expansion with a 3.2 MTPA brownfield clinker capacity in Bhatapara and cement grinding units with a total capacity of 7 MTPA in Farakka and Sankrail (existing units), and Barh (new greenfield location). The estimated capex for these projects is `3,500 crore.
Under Holcim, one of the largest cement manufacturing groups in the world, we believe that tomorrow’s solutions cannot be designed on yesterday’s problem statements. To mainstream sustainability and effect impactful change for the benefit of the planet and its people, we have launched the ‘Change The Story’ platform. It showcases technology-led solutions that take us closer to realising our vision of a better tomorrow.
To begin with, we have taken the responsibility of addressing the pressing challenge of plastic pollution in India’s rivers. Using the ‘bubble curtain’ technology, the pilot project at Yamuna River (Mantola canal) in Agra is expected to remove 2,400 tonnes of plastic waste. Such bubble barriers can be extended to other rivers across the country.
At Ambuja, we will continue to focus on resource conservation, utilising green/ clean energy sources, driving energy efficiency in all our plants and building an inclusive and equitable world. We are on the cusp of exciting change, and we are happy to play our role in strengthening the nation’s ambitions while contributing to the concerted global efforts to create a sustainable future. I thank you all for being part of this exciting journey.
Managing Director and CEO