We have implemented a blueprint of improvements through synergies, capex for efficiency and decarbonisation whilst creating opportunities which will redefine the cement industry landscape."
Dear Shareholders,
This reporting period is a unique and exciting phase in the history of ACC Limited. 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 – ACC.
Strong Performance Amid Headwinds
We have implemented a blueprint of improvements through Group 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, ACC along with its parent – Ambuja, have won 7 Coal & Limestone blocks with notified resources of over 1000 million tonnes spread across Karnataka, Maharashtra, Rajasthan and Odisha.
One of the major challenges faced by the sector was the unprecedented surge in the prices of coal, gypsum and other raw material. While we actively sought alternative materials to reduce gypsum usage, the soaring price of coal remained a persistent challenge. We mitigated this by changing our fuel basket and reducing our import dependency. This was accomplished by ramping up captive coal block production as well as using the Group’s expertise to source low-cost coal. These initiatives through captive coal have been instrumental in mitigating the impact of escalating coal prices and ensuring operational efficiency in the face of adversity, which helped in the consistent improvement of EBITDA over the last six months.
While the reporting period was propelled with growth and transformation, we also witnessed a multitude of challenges. Firstly the geo-political conflict causing global disruptions along with the stubborn inflation witnessed across the world, led central banks to increase policy rates. The cement industry in India, too was impacted owing to spiralling raw material and fuel prices. However, despite these challenges, ACC reported spirited performance, thanks to its continued focus on its efficiencies, cost, growth strategies and synergies with Ambuja and the Adani Group.
Revenue for the reporting period (January 2022 – March 2023) stood at `22,210 crore, while EBITDA stood at `2,267 crore and PAT stood at `885 crore. The revenue growth was achieved despite a prolonged shutdown at our Himachal Pradesh unit.
We also demonstrated resolute determination in curbing our freight expenses throughout the year. Around 20% optimisation of warehouse network and efficiency has led to estimated `12 crore savings in rent. Further, we achieved substantial reductions in the lead distance, resulting in an improvement in cost competitiveness. RMX & Construction Chemicals business is stable showing a positive uptrend due to improved market demand. We use the Group’s strength not only to strategise our railroad operations but also to explore sea transportation alternatives.
Sustainability
Being in the hard-to-abate sector, we work relentlessly towards reducing our environmental footprint. During the year, we installed additional capacities for the waste heat recovery system, increased the use of waste materials in the system, reduced the clinker factor and continued to remain water-positive.
Enhancing profitability remains a pivotal objective for our business and a key avenue for achieving this goal is by reducing other costs. The Master Supply Agreement (MSA) with Ambuja Cements has proven instrumental in boosting both our volume and profitability. Additionally, it has played a crucial role in facilitating synergies and economies of scale, leading to improved operational and logistics efficiencies. Furthermore, the partnership has reinforced our commitment to sustainability by promoting the efficient use of fuel and other resources, as well as the conservation of natural resources.
We will continue our proactive approach to developing low-carbon products and sustainable solutions. With the launch of ACC ECOMaxX, customers now have the option to choose concrete based on their desired level of CO2 reductions and sustainability objectives. Our emphasis is on expanding the range of sustainable solutions to accelerate the transition towards lowcarbon and circular buildings. Our product range expanded with the introduction of multiple new items, enhancing our selection of environment-friendly and value-added cement and concrete options for specific and customised uses such as ACC AEROMaxX and ACC ECOMaxX, along with ACC Coolcrete and ACC Bagcrete.
ACC ranks amongst ‘India’s Most Sustainable Companies’ by BW Businessworld and features amongst the ‘Best Companies to Work For’ in Construction and Infrastructure sector by Business Today. It has also been felicitated and recognised for its Customer Engagement, Safety, Sustainability Focus, Financial Reporting, CSR and Corporate Sustainability by leading awards and industry forums.
Sales and 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 highervalue 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.
Embarking on a Transformation Journey
Over the past few years, we have faced formidable challenges, including intensified competition, a shifting market landscape, and evolving processes. However, we have embarked on bold business transformation initiatives, not just for near-term gains, but to ensure the long-term sustainability of our business. Our objective is to fundamentally restructure our organisation, positioning it for long-term success.
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.
Despite our impressive recent achievements, we acknowledge the need to remain vigilant, embrace agility and adaptability, and perpetually seek innovative approaches to maintain our competitive edge. The transformational journey continues, driven by a clear destination: a thriving and enduring business that revolves around our valued customers.
Outlook
We are making remarkable strides in our ambitious endeavour to double our capacities. Furthermore, securing reliable raw material linkages for our upcoming units has positioned us advantageously in the market. We are also focused on margin expansion to become the most profitable cement manufacturer in the country. The aim is to realise cost savings of close to `500 per tonne on EBITDA across our operations. Our cutting-edge R&D centre is enabling the development of several value-added goods and solutions to anticipate client needs. Through innovative applications in design and construction, the adaptability and inherent advantages of concrete are still well suited to handle the problems facing the building sector.
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