Interview with the MD and JMD

Creating consistent value

Dr. S. Anand Reddy
Managing Director

Mr. S. Sreekanth Reddy
Joint Managing Director

“For us, ESG is very much a part of who we are. We have always accomplished business outcomes with a sense of purpose and responsibility.”

Q. What were the priority areas for the FY2020 and how did you deliver on your stakeholder commitments?

We can state unambiguously that the year saw continued focus on our investments, operational efficiency and expansion of our presence in the markets where we operate. Despite a lukewarm demand scenario owing to the existing volatility in the macroeconomic landscape and the unprecedented pandemic making businesses difficult to operate, we managed to navigate the challenges in the best way possible. Encouragingly, the reporting period witnessed a lot of initiatives undertaken on the environmental, social and people fronts.

Q. How do you expect the recent COVID-19 outbreak to impact the cement industry and SCL in particular?

The world is grappling with a pandemic of an unprecedented scale. While the full impact of COVID-19 is yet to be ascertained, we are already seeing disruption in global supply chains, manufacturing, international trade, travel, tourism and lives of common people across nations. It is heartening to note that the Government of India has already announced a ` 20 lakh crore economic relief package to support citizens during this difficult period.

Therefore, the problem is not restricted to one economy or a sector, and the
COVID -19 dynamics is still evolving. Undeniably, like all other industries, we also faced financial and operational challenges. There has been a temporary impact during the full lockdown, primarily owing to the halt in movement of people, equipment and goods. However, we have seen a recovery of action as the lockdown started to lift. We are evaluating the situation as it progresses and are optimistic about the medium and long term. We have always worked around challenges, be it micro or macro, and have emerged stronger. We can say with reasonable confidence that this time it will be no different.

Q. Can you comment on SCL’s financial and operational performance in FY2020?

FY2020 would have been a better year, had the recent disruptions not manifested in the final quarter owing to COVID-19. The pandemic has hampered our overall operations, specifically impacting capacity utilisation and cargo movement. That said, a strong performance in the first half of the year, combined with cost rationalisation efforts, cushioned this impact. This was further complemented by benign input prices in the market. Together, they significantly boosted our profitability, with the year registering an EBITDA of ` 189.53 Crores (24% y-o-y increase) and a PAT of ` 26.53 Crores (95% y-o-y increase). This is quite heartening.

Q. What are the emerging trends that you are observing in the market? How do you plan to capitalise on them?

We are happy to share that we can see significant demand emanating from eastern India. To address this incipient demand, we have undertaken two capex projects in Madhya Pradesh and Odisha. Interestingly, we are also witnessing encouraging demand for slag-based cement and are well-positioned to capture this with clinker from our existing mother plant in Mattampally and the grinding unit in Bayyavaram.

Q. ESG is the new priority area for businesses in India and the world. How do you view this in the context of SCL and how has been your ESG performance been?

For us, ESG is very much a part of who we are. While we have called it EHS or sustainability in the past, in essence, we have always accomplished business outcomes with a sense of purpose and responsibility.

On the environmental front, we are focusing primarily on energy, emissions and mining practices. We have set up solar energy plants and hydel power to fuel our non-kiln power needs, offsetting considerable reliance on thermal power for such requirements. To repurpose the waste heat from the kilns, we have also installed waste heat recovery plants, which, again, positively contribute to our energy portfolio.

Socially, we have always been a responsible corporate citizen and it’s our priority to understand the needs of the community with empathy and act upon them. In the past three years, we have contributed close to ` 3 Crores to these interventions and have actively participated in the community development initiatives.

Our social interventions also pertain to our relationships with other stakeholders, including vendors and dealers, transport partners, industry bodies, peers and so on. We engage with them regularly and focus on crafting win-win propositions. On the governance front, we believe we’ve always been among the industry frontrunners. Our Board is a good mix of independent, non-independent, executive and non-executive members, helmed by an independent Chairman. Together, they enrich us with useful industry insights. We are mindful of our priorities and continue to deliver on our strategy and commitments.

Q. What are your key focus areas, going forward?

We can identify four broad priority areas, going forward. First, we will continue to pursue our growth blueprint of doubling our capacity every 10 years. This positions us to constantly challenge ourselves, raise the bar and deliver industry-leading returns on our capital employed. Second, it’s important that we maintain razor-sharp cost focus on everything that we do, thus driving our margins and the overall profitability.

Third, we will continue to adopt best-in-class technology for our units to remain ahead of the curve. In our experience, advanced technology translates into better scalability and efficiency. Finally, and most importantly, we will continue to be responsible to our people, society and the environment, and create enduring value for all stakeholders.