We are making remarkable strides in our ambitious endeavour to double our capacities. As a debt- free Company, we have been able to advance confidently in our growth plan.”
Dear Shareholders,
This reporting period is a very unique and exciting phase in the history of Ambuja Cements. We accomplished two milestones – one by becoming a part of the diversified Adani Group and the second by transforming the business through professionals of the highest calibre and experts in various fields for several decades. However, the journey of transformation is ever evolving which is laid on a solid foundation of strengths. As India’s infrastructure growth driver, our strengths emanate from our pan-India presence, diversified geographical presence, strong and wide dealer and retailer network, long-term source of raw materials and mines, robust balance sheet with AAA rating and above all the strong iconic brand – Ambuja.
We have implemented a blueprint of improvements through synergies, and capex for efficiency and decarbonisation whilst creating opportunities which will redefine the cement industry landscape. We are making remarkable strides in our ambitious endeavour to double our capacities. As a debt-free Company, we have been able to advance confidently in our growth plan. Recently, Ambuja and ACC have won 7 Coal & Limestone blocks with notified resources of over 1000 million tonnes spread across Karnataka, Maharashtra, Rajasthan and Odisha.
Robust Performance Amid External Headwinds
During the reporting period, we faced significant challenges, especially on the margin front. Although cement demand was largely buoyant, sharp increases in fuel and raw material prices, especially that of coal and gypsum, weighed on margins. While we actively sought alternative materials to reduce gypsum usage, the soaring price of coal remained a persistent challenge. Further, the series of interest rate hikes by the Reserve Bank of India to rein in inflation dampened sentiments to a certain extent.
The challenges notwithstanding, Ambuja Cement reported a robust set of numbers, thanks to its continued focus on efficiencies, cost, growth strategies and synergies with the Adani Group. Revenue for the reporting period (January 2022-March 2023) stood at `38,937 crore, while EBITDA stood at `5,860 crore and PAT stood at `3,024 crore. The growth in revenue was achieved despite a prolonged shutdown at our Himachal Pradesh unit and a breakdown witnessed at the Farakka plant.
We changed our fuel basket to reduce our import dependency, by ramping up the Gare Palma coal block production to 1.2 MT and leveraging the Group’s expertise in sourcing low-cost coal. These initiatives helped offset the negative impact of escalating coal prices, which enabled us to maintain EBITDA. We also demonstrated resolute determination in curbing our freight expenses throughout the year. Around 20% optimisation of warehouse network and efficiency has led to an estimated `40 crore consolidated savings in rent. Further, we achieved substantial reductions in the lead distance, resulting in an improvement in cost competitiveness. In addition to rail, we explored sea transportation alternatives within the Group.
Multiplying strengths, leveraging synergies
We witnessed the emergence of an infrastructure behemoth which brought together the three powerful brands - Adani, Ambuja and ACC, which I often refer to as AAA. The Adani Group, known for its diverse portfolio across energy, infrastructure, logistics and mining, brings extensive expertise and resources to continue driving innovation, operational efficiency and sustainable growth. Ambuja and ACC, renowned names in the cement industry, possess a combination of rich legacy and knowledge of more than 100 years of delivering high-quality cement and construction materials. Ambuja Cements epitomises ‘Strength’. With the Adani Group’s strategic vision, entrepreneurial prowess, and deep-rooted values (Courage, Trust & Commitment) coupled with Ambuja’s robust manufacturing capabilities and market presence, we are well-positioned to seize new opportunities and address the ever-evolving construction needs.
We have implemented a blueprint of improvements through synergies, and capex for efficiency and decarbonisation. We are making remarkable strides in our ambitious endeavour to double our capacities. Enhancing profitability remains a pivotal objective for our business and a key avenue for achieving this goal is by reducing other costs. By eliminating redundancies and fostering seamless collaboration, we have established a shared regional leadership structure. These regional heads are now incentivised to drive overall volumes, curtail costs, and optimise logistics, propelling the collective success of both entities. Ambuja and ACC are the most premium and iconic brands in India and have emerged as one of the largest cement entities in product leadership, sustainability, innovation and green offerings.
Sustainability
Being in the hard-to-abate sector, we work relentlessly towards reducing our environmental footprint. By consistently including sustainability across operational and growth planning, we continued to reduce the carbon footprint by lowering the clinker factor, reducing thermal and electrical energy intensity, installing additional capacities for waste heat recovery systems, increasing the use of green power and waste materials in the system and remained 8 times water positive. We are also undertaking concerted efforts to optimise our environmental footprint, emphasising our commitment to becoming an even more responsible organisation in the years ahead.
Ambuja ranks among ‘India’s Most Sustainable Companies’ by Business World and features among the ‘Best Companies to Work For’ in the Construction and Infrastructure sector by Business Today. Globally, Ambuja Cements is the only cement maker that has been recognised for its leadership in water security by The United Nations Global Compact Network India. The Company has also been recognised for its Customer Engagement, Safety, Sustainability Focus, Financial Reporting, CSR and Corporate Sustainability by leading awards and industry forums.
Sales & Marketing Strategy
Our sales and marketing strategy is aligned to drive growth and capture market opportunities. We are prioritising high-growth states with targeted efforts to expand our presence and meet customer demand in these markets. We aim to increase our share in the B2B segment by offering focused solutions. Focusing on premium products allows us to tap into higher-value markets and widen our margins. We plan to appoint new retailers to widen our market coverage. Our technical services team is being empowered to convert IHB leads. To amplify our brand presence, we invest in differentiated regional positioning and digital initiatives, and partner with leading advertising agencies. We maintain local outdoor visibility and leverage the Ambuja Knowledge Centre to engage influencers. Additionally, construction apps play a crucial role in improving brand visibility and customer experience.
Transition and transformation
Across cycles, the Adani Group has consistently delivered sustainable growth, diligently establishing a robust business foundation. As we transition to align with the Group’s core values and culture, we are on a transformation journey to fortify the future of our cement business, emerging as a global powerhouse to reckon with. This journey has enabled us to explore complementary strengths, reimagining efficiency across the organisation to maintain our competitive edge. Our purpose of being ‘Committed to building Nations with goodness’ envisages a world of possibilities for us moving ahead.
At the core of this transformation lies our steadfast commitment to customer-centricity. We recognise that to thrive in today’s dynamic business environment, we must place the needs and aspirations of our customers at the forefront of every decision. To accomplish this, we are revamping our technological infrastructure, implementing state-of-the-art systems and processes that enable us to better understand and respond to customer requirements. We are actively reconfiguring our teams and workflows, dismantling silos, and fostering an agile and collaborative culture.
Looking ahead with resolute focus
The Indian economy is well poised to sustain a high growth trajectory over the next couple of decades, led by the infrastructure and real estate sectors. Cement undoubtedly has a pivotal role to play in fuelling the nation’s growth while contributing significantly to its sustainable development commitments. The optimism stems from several structural factors, including India’s low per capita cement consumption compared to global averages, the Government’s massive infrastructure initiatives, and the emphasis on affordable housing projects.
We have announced plans to expand capacity by 14 MTPA for producing blended cement with a WHRS capacity of 42 MW, provision to utilise 50% AFR and increase the share of renewables. These projects, to be executed over the next 24 months, will be funded through internal accruals, which will generate substantial value for the existing business and enable more employment and growth opportunities. Further, securing reliable raw material linkages for our upcoming units has provided an added advantage. We are also focused on margin expansion to become the most profitable cement manufacturer in the country, to realise cost savings of close to H500/tonne on EBITDA across our operations.
I would like to thank all stakeholders, particularly our dedicated employees, for their resilience. It is through our collective efforts that we will undoubtedly achieve resounding success in the years to come. Together, we will forge ahead, surmounting challenges, and realising our shared vision of excellence.
Regards,
Ajay Kapur
Chief Executive Officer