Orient Cement Ltd:Annual Report 2023-24 Analysis

Orient Cement Ltd.: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History:

Orient Cement Ltd. (OCL) was established in 1936 as Orient Paper Mills, a part of the Birla Group. It was later demerged into a separate entity focusing primarily on cement production.

Headquarters Location:

The company’s headquarters are located in New Delhi, India.

Company Vision and Mission:

• Vision: To be a leading and responsible cement company, recognized for quality, innovation, and sustainable practices.
• Mission: Continuously strive to exceed customer expectations by providing superior products and services, while creating value for stakeholders and contributing to the community.

Key Milestones in Their Growth Journey:

• 1936: Established as Orient Paper Mills, integrated with Cement Production.
• 2012: Acquired a controlling stake in Bhilai Jaypee Cement Ltd, expanding its footprint in Central India.
• Continuous: Capacity expansion and technological upgrades across its manufacturing facilities.

Stock Exchange Listing Details and Market Capitalization:

Orient Cement Ltd. is listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). (Note: Market capitalization fluctuates and needs to be updated with current data from a financial source.)

Recent Financial Performance Highlights:

(Note: Requires real-time data from financial sources like annual reports or stock market websites. General areas to highlight include:)

• Revenue and Profit Growth
• Key financial ratios (e.g., EBITDA margin, debt-to-equity ratio)
• Recent quarterly or annual results compared to previous periods.

Management Team and Leadership Structure:

• (Note: Research and list key management personnel like the CEO, CFO, and board members, along with their roles and experience.)

Notable Awards or Recognitions:

(Note: This section needs to be populated based on research of industry awards and recognitions received by Orient Cement, focusing on areas like sustainability, quality, or innovation.)

Their Products #

Complete Product Portfolio with Categories:

• Ordinary Portland Cement (OPC): Commonly used for general construction purposes.
• Portland Pozzolana Cement (PPC): Ideal for mass construction and durable structures.
• Sulphate Resistant Cement (SRC): Designed for marine and coastal environments.

Flagship or Signature Product Lines:

(Note: Check if Orient Cement promotes a particular product line as their signature offering. This might be a specific type of PPC or a specially formulated cement for high-strength applications.)

Manufacturing Facilities and Production Capacity:

Orient Cement operates integrated cement plants located in:

• Devapur, Telangana
• Chittapur, Karnataka
• Jalgaon, Maharashtra

(Note: Find the total installed production capacity of these plants in metric tons per annum from company reports.)

Quality Certifications and Standards:

Orient Cement’s products are manufactured in compliance with relevant Indian Standards (IS) specifications set by the Bureau of Indian Standards (BIS).

Primary Customers #

Target Industries and Sectors:

• Infrastructure Development (roads, bridges, dams)
• Real Estate (residential and commercial construction)
• Industrial Construction
• Government Projects

Geographic Markets (Domestic vs. International):

Orient Cement primarily operates in the domestic Indian market.

Major Client Segments (agricultural, industrial, residential, etc.):

• Individual Home Builders
• Contractors
• Real Estate Developers
• Government Agencies

Distribution Network and Sales Channels:

Orient Cement utilizes a network of dealers and distributors to reach its customers. They also have direct sales to large infrastructure projects and institutions.

Major Competitors #

Direct Competitors in India:

• UltraTech Cement
• Ambuja Cements
• ACC Limited
• Shree Cement
• Dalmia Bharat

Competitive Advantages and Disadvantages:

• Advantages: Established brand presence, strong distribution network, focus on quality, and capacity to cater to various construction needs.
• Disadvantages: Subject to cyclical demand in the construction industry, regional competition, and fluctuating raw material prices.

How They Differentiate from Competitors:

Orient Cement aims to differentiate itself through:

• Consistent product quality.
• Strong customer relationships.
• Focus on sustainability and environmentally friendly practices.

Industry Challenges and Opportunities:

• Challenges: Rising input costs (fuel, raw materials), logistical bottlenecks, environmental regulations, and intense competition.
• Opportunities: Government infrastructure spending, growth in the real estate sector, and increasing demand for sustainable construction materials.

Future Outlook #

Expansion Plans or Growth Strategy:

(Note: Research any publicly announced expansion plans, capacity additions, or geographical expansion strategies.)

Sustainability Initiatives or ESG Commitments:

Orient Cement is focusing on reducing its carbon footprint through measures like:

• Increased use of renewable energy sources.
• Waste heat recovery systems.
• Water conservation initiatives.
• Promoting the use of alternative fuels and raw materials.

Industry Trends Affecting Their Business:

• Growing demand for eco-friendly cement.
• Adoption of digital technologies in manufacturing and supply chain.
• Focus on building material efficiency and sustainability.

Long-term Vision and Strategic Goals:

Orient Cement’s long-term vision is to be a sustainable and profitable cement manufacturer, contributing to the growth of the Indian economy and creating value for all stakeholders.

Orient Cement Limited: Financial Analysis Report (FY 2023-24) #

Based on Annual Report excerpts for the Financial Year ended March 31, 2024.

Key Performance Highlights & Operational Metrics #

• Financial Performance: Revenue from operations grew by 9% YoY to ₹3,185.09 Cr. EBITDA increased by 23% YoY to ₹464.75 Cr, driven by higher volumes and lower fuel costs, despite muted consumer demand and pricing pressures. Profit After Tax (PAT) saw a significant 42% increase to ₹174.85 Cr.
• Sales Volume & Mix: Total sales volume increased by ~6% to 61.3 lakh tonnes (LT). Non-trade (B2B) volumes grew 19%, compensating for a 6% decline in trade (B2C) sales. Blended cement sales constituted 55% (vs. 57% in FY23). Overall capacity utilization improved to 72% (vs. 68% in FY23).
• Premiumisation: Premium brand volumes grew by 31% YoY, constituting 21% of total trade sales volume (up from 15% in FY23). New premium product ‘Birla.A1 Dolphin’ (water-repellent cement) was launched.
• Cost Management: Efforts focused on operating efficiencies, alternative fuels, and strategic fuel procurement. Commissioning of WHRS Phase 1 at Chittapur contributed to lower power costs. Fly-ash rake handling system became operational, enhancing sourcing flexibility and cost savings.
• Sustainability Metrics:
  • Alternative Fuel & Raw Materials (AFR) consumption rate increased to 18% (FY24) from 14% (FY23).
  • Renewable Power + WHRS contribution to total power consumption increased significantly to 17% (FY24) from 7% (FY23).
  • CSR expenditure was ₹6.41 Cr (against an obligation of ₹6.24 Cr). Additional ₹11.56 Cr spent on R&R activities.

Comparative Financial Position (Balance Sheet Analysis: FY24 vs FY23) #

(Note: Full 3-year comparative data is limited in the provided excerpts. Analysis primarily focuses on FY24 vs FY23.)

Detailed Analysis #

Orient Cement Limited (FY 2023-24) Financial Analysis #

Revenue Analysis #

• Total income increased by approximately 8.5% YoY, reaching ₹3,200.61 crore in FY24 from ₹2,949.57 crore in FY23. Revenue from Operations grew similarly to ₹3,185.09 crore from ₹2,936.83 crore.
• Sales volume grew by ~6% YoY to 61.3 lakh tonnes in FY24 from 57.6 lakh tonnes in FY23. Capacity utilization improved to 72% from 68% in FY23.
• The Company operates primarily in a single segment: Manufacturing and Sale of Cement.
• Growth was driven by the non-trade (B2B) segment, which saw a 19% volume increase, offsetting a 6% de-growth in the trade (B2C) segment. This shift was attributed to strong demand from the infrastructure sector.
• Premium brand volumes grew by 31% YoY, reaching 21% of trade volume (up from 15% in FY23). However, the overall shift towards B2B led to a slight decrease in the blended cement sale proportion (55% in FY24 vs. 57% in FY23), as infrastructure projects typically require more Ordinary Portland Cement (OPC).
• Operations are focused in Maharashtra, Karnataka, Telangana, Andhra Pradesh, Madhya Pradesh, and South Gujarat. No export revenue was reported.

Cost Structure Analysis #

• Power and Fuel: Decreased as a percentage of revenue from operations to 28.0% (₹893.25 cr) in FY24 from 32.5% (₹955.21 cr) in FY23. This improvement was driven by lower petcoke prices, increased alternative fuel usage (TSR reached 17%), and contribution from the newly commissioned WHRS phase 1 at Chittapur and solar power at Jalgaon.
• Packing, Freight & Forwarding: Relatively stable as a percentage of revenue at 26.4% (₹841.86 cr) in FY24 compared to 26.6% (₹782.40 cr) in FY23.
• Cost of Materials Consumed: Increased slightly as a percentage of revenue to 14.4% (₹459.87 cr) in FY24 from 13.8% (₹404.53 cr) in FY23.
• Employee Benefits Expense: Remained stable at 5.7% (₹180.23 cr) in FY24 vs. 5.6% (₹165.78 cr) in FY23.
• Other Expenses: Increased to 11.1% (₹353.99 cr) from 10.3% (₹302.20 cr), potentially driven by higher advertising/promotion (₹49.5 cr vs ₹38.6 cr) and repairs.
• Finance Costs: Decreased significantly to 1.0% (₹30.73 cr) from 1.3% (₹37.13 cr) due to debt repayment.

Profitability and Margin Analysis #

• EBITDA: Increased by 23% YoY to ₹464.75 crore in FY24 from ₹376.56 crore in FY23. EBITDA margin improved to 14.5% (based on total income) from 12.8% in FY23, driven by volume growth and lower fuel costs, despite softer cement prices.
• Profit Before Tax (PBT): Grew by 47% YoY to ₹281.50 crore from ₹191.17 crore. PBT margin improved to 8.8% from 6.5%.
• Net Profit (PAT): Increased by 42% YoY to ₹174.85 crore from ₹122.82 crore. Net Profit Margin improved to 5.5% from 4.2%.
• Margins improved significantly YoY due to better operating leverage and cost management, particularly in energy. However, MD&A commentary notes that performance momentum slowed in the last four months of FY24 due to adverse market conditions.

Operating Leverage #

• The Company demonstrated positive operating leverage in FY24. Revenue growth of 8.5% translated into significantly higher growth rates for EBITDA (23%), PBT (47%), and PAT (42%). This was primarily facilitated by volume increases and successful cost control measures, especially concerning power and fuel expenses.

Non-Recurring Items #

• No major non-recurring items impacting operational comparability were explicitly highlighted in the provided report sections. A donation of ₹300 Lacs to an Electoral Trust was noted under Other Expenses. The softness in demand and prices during Q4 FY24 was mentioned as impacting the full-year results compared to earlier momentum.

GAAP vs Non-GAAP Reconciliation #

• Financials are prepared under Ind AS (Indian GAAP equivalent).
• EBITDA is a key non-GAAP measure used. A reconciliation based on the P&L statement shows: PBT (₹281.50 cr) + Finance Costs (₹30.73 cr) + Depreciation & Amortization (₹149.74 cr) = ₹461.97 cr. This closely approximates the reported EBITDA of ₹464.75 cr.

Earnings Per Share (EPS) Analysis #

• Basic EPS: Increased by 42.2% to ₹8.53 in FY24 from ₹6.00 in FY23.
• Diluted EPS: Increased by 42.2% to ₹8.53 in FY24 from ₹6.00 in FY23.
• The growth in EPS mirrors the PAT growth, indicating no significant changes in the share base. Potential dilution from ESOPs was minimal/anti-dilutive.

Quarterly Performance Commentary #

• The MD&A indicates significant fluctuations in demand and prices during FY24, with overall demand below expectations.
• Q4 FY24 performance was noted as sub-par, lacking the typical high-demand, high-price scenario often seen in that quarter. This weakness in the latter part of the year impacted the full-year results despite strong performance until November 2023.

Key Financial Ratios Summary #

• Return on Net Worth: Improved to 10.41% (FY24) from 7.93% (FY23).
• Debt Equity Ratio: Improved significantly to 0.07 (FY24) from 0.24 (FY23), reflecting debt reduction. The company is nearly net debt-free.
• Interest Coverage Ratio: Improved to 10.17 (FY24) from 7.39 (FY23).
• Current Ratio: Improved to 1.16 (FY24) from 0.93 (FY23).
• Turnover Ratios: Debtors Turnover Ratio worsened (14.09 vs 17.23), and Inventory Turnover Ratio slightly worsened (9.14 vs 10.93).

Orient Cement Limited FY 2023-24 Cash Management Analysis #

Cash Flow Analysis (OCF, ICF, FCF Components) #

• Operating Cash Flow (OCF): Net cash flow from operating activities for FY24 stood at H 42,943.42 lacs, a significant increase from H 11,568.08 lacs in FY23. This improvement was primarily driven by higher Profit Before Tax (H 28,512.57 lacs vs H 19,331.45 lacs) and favorable movements in working capital, particularly a decrease in inventories (H 1,819.54 lacs change vs H -16,141.08 lacs change in FY23) and an increase in Trade Payables (H 1,384.27 lacs change vs H -1,734.24 lacs change in FY23), offsetting an increase in Trade Receivables (H -5,603.40 lacs change vs H -4,620.92 lacs change in FY23). Non-cash adjustments like depreciation (H 14,879.92 lacs) remained relatively stable.
• Investing Cash Flow (ICF): Net cash flow used in investing activities was H -8,121.88 lacs in FY24 compared to H -12,004.35 lacs in FY23. The primary outflow was Purchase of Property, Plant and Equipment (PPE) and Intangibles amounting to H -7,820.87 lacs (FY23: H -13,006.17 lacs). FY24 included an investment in equity instruments of H 731.00 lacs related to the SPV for solar power plants. Interest received contributed H 640.58 lacs (FY23: H 600.38 lacs).
• Financing Cash Flow (FCF): Net cash flow used in financing activities was H -33,166.61 lacs in FY24, compared to net cash flow from financing activities of H 3,958.91 lacs in FY23. Key activities included repayment of term loans (H -16,100.00 lacs vs H -14,500.00 lacs), net repayment of working capital loans (H -13,483.36 lacs vs proceeds of H 13,483.36 lacs), dividend payments (H -3,585.21 lacs vs H -4,609.54 lacs), and finance costs paid (H -3,018.49 lacs vs H -2,936.02 lacs). Proceeds from borrowings were significantly lower (H 3,462.31 lacs vs H 8,483.36 lacs).
• Free Cash Flow (FCF): Calculated as OCF minus Capex (Purchase of PPE & Intangibles), FCF for FY24 was H 35,122.55 lacs (42,943.42 - 7,820.87), a substantial improvement over FY23’s FCF of H -1,438.09 lacs (11,568.08 - 13,006.17). This turnaround is attributed to higher OCF generation and lower Capex during FY24.

Working Capital Management Efficiency #

• Inventory Turnover Ratio decreased from 11.08 in FY23 to 9.25 in FY24 (-16% change), suggesting slower inventory movement.
• Trade Receivables Turnover Ratio decreased from 17.40 in FY23 to 14.21 in FY24 (-18% change), indicating slower collection of receivables.
• Trade Payables Turnover Ratio remained relatively stable at 11.05 in FY24 compared to 11.14 in FY23 (-1% change).
• The Current Ratio improved to 1.28 in FY24 from 1.03 in FY23 (+24% change), indicating better short-term liquidity.
• MD&A commentary noted that higher B2B sales (with longer credit periods) and petcoke imports stretched working capital. Despite this, overall working capital management shows an improved Current Ratio, though turnover ratios indicate some slowing in inventory and receivables cycles.

Capex Analysis #

• Total Capex (Purchase of PPE & Intangibles) for FY24 was H 7,820.87 lacs.
• The company operates in a single reportable segment: Manufacturing and Sales of Cement. A segment-wise Capex breakdown is not applicable based on reported segments.
• Key capital projects include the commissioning of the first phase of the Waste Heat Recovery System (WHRS) at Chittapur (10.1 MW), development of a fly-ash rake handling system at Chittapur, ongoing Colony expansion at Devapur, and preliminary work for the Rajasthan project. The Capex reflects investments in efficiency (WHRS), logistics (fly-ash system), and future growth (Rajasthan project).

Dividend and Share Buyback Trends #

• Dividends:
  • FY24: Paid an interim dividend of H 0.75 per share. Recommended a final dividend of H 1.50 per share. Total dividend for FY24 (if final approved) is H 2.25 per share.
  • FY23: Paid an interim dividend of H 0.50 per share and a final dividend of H 1.00 per share. Total dividend for FY23 was H 1.50 per share.
  • The total dividend payout for FY24 represents a 50% increase over FY23. The dividend distribution aligns with the company’s stated Dividend Distribution Policy.
• Share Buyback: The report indicates no share buyback activity during FY24 or the preceding five years.

Debt Service Coverage #

• Debt Service Coverage Ratio (DSCR) improved to 2.01x in FY24 from 1.68x in FY23 (+20% change).
• Interest Coverage Ratio improved to 9.90x in FY24 from 7.25x in FY23 (+37% change).
• The improvement in debt servicing capacity is supported by higher earnings (EBIT/PBT) and reduced debt levels following scheduled repayments and strong cash flow generation. The company is noted as being ‘almost net debt-free’.

Liquidity Position and Cash Conversion Cycle (CCC) #

• Liquidity: The Current Ratio improved significantly from 1.03 in FY23 to 1.28 in FY24. Cash and cash equivalents increased to H 7,466.15 lacs from H 6,679.97 lacs.
• Cash Conversion Cycle (CCC): While not explicitly stated, the underlying turnover ratios suggest a potential lengthening of the CCC. DSO increased (lower receivables turnover), DIO increased (lower inventory turnover), while DPO remained stable (stable payables turnover). A calculation based on average balances and P&L figures would be needed for the precise CCC trend.

Free Cash Flow (FCF) Yield Trends #

• FCF Generation: FCF showed a significant positive turnaround to H 35,122.55 lacs in FY24 from H -1,438.09 lacs in FY23, driven by stronger OCF and reduced Capex.
• FCF Yield: Calculation requires market capitalization, which is not provided in the report text. Therefore, the FCF yield cannot be determined solely from the provided information. However, the trend in absolute FCF generation is strongly positive in FY24 compared to FY23.

Orient Cement Limited - Financial Analysis (FY 2023-24) #

Profitability Analysis #

• Revenue & Profit Growth: Revenue from operations increased by approximately 8% YoY, reaching ₹3,185.09 crores in FY24 from ₹2,939.01 crores in FY23. EBITDA grew significantly by 23% to ₹464.75 crores (FY23: ₹376.56 crores). Profit Before Tax (PBT) rose 47% to ₹280.63 crores (FY23: ₹191.21 crores), and Profit After Tax (PAT) increased by 42% to ₹174.85 crores (FY23: ₹122.82 crores). This growth was attributed to a ~6% increase in sales volume (driven by non-trade/B2B sales which grew 19%, offsetting a 6% decline in trade/B2C sales) and improved realization per tonne due to a favorable product mix shift towards premium brands.
• Margins:
  • EBITDA margin improved to 14.59% in FY24 from 12.82% in FY23. This improvement was supported by higher volumes and lower fuel costs (lower petcoke prices, higher AFR usage, WHRS contribution), despite cost pressures from higher OPC sales mix required for infrastructure projects.
  • Net Profit Margin increased to 5.47% in FY24 from 4.23% in FY23, reflecting the strong PBT growth flowing through after tax.
• Return Ratios:
  • Return on Equity (ROE) improved significantly to 10.41% in FY24 from 7.93% in FY23, driven by the 42% increase in PAT.
  • Return on Capital Employed (ROCE) also showed improvement, rising to 14.28% in FY24 from 10.07% in FY23.
• Premiumization Impact: Sales of premium products (‘Birla.A1 OrientGreen’, ‘Birla.A1 StrongCrete’, ‘Birla.A1 Dolphin’) grew 31% YoY and constituted 21% of trade volume in FY24, up from 15% in FY23. This strategic shift positively impacted overall margins.
• Earnings Per Share (EPS): Basic EPS increased by 42% to ₹8.54 in FY24 from ₹6.00 in FY23. Diluted EPS followed suit at ₹8.53 (FY23: ₹6.00).

Liquidity Analysis #

• Current Ratio: The Current Ratio improved to 1.28 in FY24 from 1.03 in FY23. This indicates an improved ability to meet short-term obligations.
• Quick Ratio (Acid-Test Ratio): The Quick Ratio improved to 0.64 for FY24 from 0.47 in FY23. The improvement suggests better coverage of short-term liabilities by more liquid assets.
• Cash Ratio: The Cash Ratio improved to 0.15 for FY24 from 0.11 in FY23. While low, the ratio shows a slight improvement in immediate liquidity.
• Working Capital: Working capital was stretched due to higher B2B sales (longer credit periods) and pet coke imports late in the year.

Efficiency Analysis #

• Inventory Turnover: The Inventory Turnover ratio decreased slightly to 9.27 times in FY24 from 11.08 times in FY23. This suggests slower inventory movement during the year. Average DIO likely increased.
• Debtors (Receivables) Turnover: The Receivables Turnover ratio decreased to 14.20 times in FY24 from 17.42 times in FY23. This indicates a slowdown in collecting receivables, aligning with the MD&A comment about longer credit periods for B2B sales. Average DSO likely increased.
• Asset Turnover: Asset Turnover calculated as 1.11 times for FY24. (FY23: ₹2,93,901.

Orient Cement Limited (OCL) - Financial Analysis FY 2023-24 #

Revenue and Profitability #

• Revenue Growth: OCL reported Revenue from Operations of ₹3,185.09 crore in FY24, an 8% increase compared to ₹2,939.20 crore in FY23. Total income reached ₹3,200.61 crore (+9% YoY). This growth was primarily driven by a 6% increase in sales volume and improved realization per tonne due to a strategic shift towards premium products.
• Profitability Improvement:
  • EBITDA increased significantly by 23% to ₹464.75 crore (FY23: ₹376.56 crore). EBITDA margin improved to 14.59% from 12.82% in FY23.
  • Profit After Tax (PAT) grew by 42% to ₹174.85 crore (FY23: ₹122.82 crore). Net Profit Margin improved to 5.47% from 4.23%.
• Drivers: Profitability gains were attributed to higher volumes, enhanced realization from premium product sales, and effective cost management, particularly lower fuel costs. However, higher demand from the infrastructure sector requiring more Ordinary Portland Cement (OPC) partially offset cost savings due to higher manufacturing costs associated with OPC.
• Dividend: An interim dividend of ₹0.75 per share was paid. A final dividend of ₹1.50 per share has been recommended (Total FY24: ₹2.25 vs FY23: ₹1.50).

Market Share and Competitive Position #

• Market Dynamics: The company operated in a challenging environment characterized by muted consumer demand in core markets and volatile pricing, particularly in the latter part of FY24. Growth was largely supported by strong demand from the infrastructure segment.
• Competitive Strength: OCL maintained a resilient performance despite market headwinds. The strategic focus on premiumisation strengthened its market position, evidenced by the notable increase in market share for its premium brands. The company successfully penetrated the Mumbai infrastructure market despite logistical challenges.
• Industry Recognition: Multiple awards for operational excellence, safety, energy efficiency, and being a ‘Great Place to Work’ underscore its competitive standing.

Key Products/Services Performance #

• Premiumisation Drive: Sales volume of premium brands (‘Birla.A1 StrongCrete’, ‘Birla.A1 OrientGreen’) grew by 31% YoY. Premium products constituted 21% of total trade sales volume in FY24, up from 15% in FY23, commanding higher margins.
• New Product Launch: Introduced ‘Birla.A1 Dolphin’, a super-premium water-repellent cement, further diversifying the premium portfolio and addressing specific customer needs (waterproofing).
• Quality Validation: Product approval for the Ahmedabad-Mumbai bullet train project signifies high-quality standards.

Geographic Distribution and Market Penetration #

• Operating Regions: Key markets include Maharashtra, Karnataka, Telangana, Andhra Pradesh, Madhya Pradesh, and South Gujarat.
• Market Mix Shift: While Trade (B2C) sales saw a de-growth (-6%), Non-Trade (B2B) volumes grew strongly (+19%), driven by infrastructure demand. Blended cement sales constituted 55% (FY23: 57%) due to higher OPC demand from infra projects.
• Strategic Penetration: Focused efforts were made to leverage infrastructure growth in the Mumbai Metropolitan Region, overcoming distance constraints through cost-efficient logistics.
• Distribution Network: The company leverages a network of 2,209 dealers and 1,916 suppliers.

Capex and ROIC #

• Segment: The company operates in a single primary segment: Manufacturing and Sale of Cement.
• ROCE: Return on Capital Employed (ROCE) improved significantly to 14.28% in FY24 from 10.07% in FY23, driven by higher profitability.
• Capex Focus:
  • Commissioned Phase 1 of Waste Heat Recovery System (WHRS) at Chittapur (10.1 MW). Phase 2 commissioned post-FY end (April 29, 2024).
  • Operationalized fly-ash rake handling system and leased own rake at Chittapur, enhancing sourcing flexibility and cost savings.
  • Advanced stage of obtaining Environmental Clearance for doubling capacity at Chittapur.
  • Received approval for setting up a grinding unit in Madhya Pradesh (Sarni village), crucial for unlocking expansion at Devapur.
  • Executed deed for restoration of Rajasthan mines, enabling future greenfield capacity expansion in that region.
• Financial Position: Near debt-free balance sheet (Debt-to-Equity ratio reduced to 0.07 from 0.24) provides financial flexibility for planned expansions.

Operational Efficiency Metrics #

• Capacity Utilization: Improved to 72% in FY24 from 68% in FY23.
• Energy Efficiency:
  • Alternative Fuel & Raw materials (AFR) Thermal Substitution Rate (TSR) increased to 18% (FY23: 11%).
  • Renewable power (Solar) + WHRS contribution increased to 17% of total power consumption (FY23: 10%). Solar power meets ~59% of Jalgaon unit’s needs. Further solar capacities (3.7 MWdc for Jalgaon, 16 MWdc for Chittapur) planned for Q2 FY25.
  • Received ‘Energy Efficient Unit’ awards for all three plants.
  • Secured patent for a coal-saving system.
• Logistics: Focus on cost-efficient modes, operational fly-ash rake handling, and digital tools (Qlik sense, vendor collaboration software, e-POD) for improved logistics management.
• Safety: Maintained Zero Fatality record for the sixth consecutive year. Received multiple safety awards.
• Digitalization: Migrated to SAP S/4HANA Rise on the cloud. Implemented digital solutions across operations (hiring, hospital management, equipment tracking).

Growth Initiatives and Challenges #

• Growth Initiatives:
  • Aggressive premiumisation strategy and brand building.
  • Significant capacity expansion pipeline (Chittapur doubling, MP Grinding Unit, Devapur expansion enablement, Rajasthan greenfield).
  • Continued investment in WHRS and renewable energy for cost reduction and sustainability.
  • Focus on operational excellence, cost optimization, and digitalization.
  • Market diversification efforts (Rajasthan).
• Challenges:
  • Muted B2C demand and volatile pricing environment in core markets.
  • Managing cost pressures from energy and raw materials, despite recent moderation.
  • Overcoming historical delays in capacity expansion projects (though key approvals are now progressing).
  • Navigating potential impacts from geopolitical conflicts and global supply chain disruptions.
  • Balancing market mix shift towards lower-margin OPC due to infra demand.

Orient Cement Limited: Risk Analysis Report (FY 2023-24) #

This report analyzes the risk profile of Orient Cement Limited based on information contained within its FY 2023-24 Annual Report.

Overall Risk Profile #

The company demonstrated resilience against market headwinds, improving profitability (PAT up 42%, EBITDA up 23%) and significantly strengthening its balance sheet (Debt/Equity reduced from 0.24 to 0.07). Mitigation strategies focused on premiumisation, cost optimization (AFR, green energy), and operational efficiency appear effective. Strategic risks related to expansion delays and market volatility persist. Compliance and operational risks seem well-managed. Emerging risks related to climate change and cybersecurity are acknowledged and being addressed proactively.

Quantitative Risk Metrics Summary #

Risk Analysis by Category #

Strategic Risks #

• Identified Risks:
  • Delayed Capacity Expansion: Chittapur plant expansion (awaiting EC), Devapur grinding unit (MP site acquired, approvals pending), Rajasthan mines restoration deed executed but greenfield expansion pending.
  • Intense Competition & Market Volatility: Sluggish demand in core markets, weak pricing environment, overcapacity in Southern India.
• Severity: High
• Likelihood: Moderate to High
• Trend: Stable/Increasing
• Mitigation Strategies: Pursuing environmental clearances actively, securing land and approvals for grinding unit (MP), premiumisation strategy (Birla.A1 Dolphin, StrongCrete, OrientGreen), focus on cost leadership, planned geographical diversification (Rajasthan, MP).
• Control Effectiveness: Mixed. Expansion timelines remain uncertain. However, premiumisation is effective (21% of trade volume vs 15% last year, premium brand volume up 31%), contributing significantly to profitability despite market pressures. Cost controls are robust.
• Potential Financial Impact: Negative: Opportunity cost from delayed expansion, pressure on sales realisation. Positive: Higher margins from premium products, potential long-term benefits from diversification.

Operational Risks #

• Identified Risks:
  • Supply Chain Disruptions: Impact of geopolitical conflicts (Europe, Red Sea) on availability and cost.
  • Occupational Health & Safety: Inherent risks in heavy manufacturing and mining operations.
  • Operational Efficiency: Managing fuel mix, raw material quality variability, logistics costs.
• Severity: Moderate to High
• Likelihood: Moderate
• Trend: Stable/Improving
• Mitigation Strategies: Intensified AFR usage (18% vs 13% YoY), WHRS (10.1 MW commissioned, Phase 2 added post-FY24), Solar power expansion planned, fly-ash rake handling system operational, robust safety protocols (ISO 45001, SOPs, training, audits), Digitization (SAP S/4HANA, Qlik Sense, RFID), focus on logistics optimization (rail transport).
• Control Effectiveness: High. Sustained ‘Zero Fatality’ record (6 years), multiple safety and environment awards received, AFR and green energy usage significantly increased YoY, contributing to cost control and sustainability. Capacity utilisation improved to 72%.
• Potential Financial Impact: Positive: Significant cost savings achieved via energy efficiency (WHRS/Solar) and AFR usage, improved plant reliability. Negative: Potential cost spikes from unforeseen disruptions, costs associated with safety incidents (though currently well-controlled).

Financial Risks #

• Identified Risks:
  • Input Cost Volatility: Fluctuations in prices of petcoke, coal, and other raw materials. Energy cost inflation.
  • Interest Rate Risk: Exposure on any variable rate borrowings (though significantly reduced).
  • Pricing Pressure: Soft demand impacting cement price realisation.
  • Liquidity Risk: Managing working capital, particularly with higher B2B sales having longer credit periods.
  • Foreign Exchange Risk: Primarily from imported fuel/materials.
• Severity: High
• Likelihood: High
• Trend: Improving
• Mitigation Strategies: Strategic fuel procurement (timing, arbitrage, alternative options), increased AFR and green energy usage, focus on operational efficiency to manage costs, premiumisation to support realisation, significant debt repayment (nearly debt-free), working capital management, Forex risk management policy (though NIL outstanding hedges).
• Control Effectiveness: High. EBITDA margin improved to 14.59% from 12.82%. PBT grew 47%. Debt/Equity ratio drastically reduced to 0.07. Interest Coverage ratio improved by 37%.
• Potential Financial Impact: Positive: Lower finance costs, improved margins due to cost control. Negative: Margin erosion due to input cost spikes or sustained pricing pressure.

Compliance/Regulatory Risks #

• Identified Risks:
  • Environmental Compliance: Adherence to regulations regarding emissions, water usage, waste management, mining restoration (MOEF&CC clearances, CPCB norms, PAT scheme).
  • Safety Regulations: Compliance with Mines Act, OHSAS standards.
  • Corporate Governance & Listing Obligations: Adherence to SEBI regulations, Companies Act provisions.
  • Taxation Laws: Compliance with Income Tax, GST regulations.
  • CSR Obligations: Meeting statutory spending requirements.
  • Pending Litigations: Potential financial outflows from disputed tax/duty claims (Note 38).
• Severity: Moderate to High
• Likelihood: Moderate
• Trend: Stable
• Mitigation Strategies: Robust EHS policies, ISO certifications (9001, 14001, 45001, 50001), investments in emission control and green energy (WHRS, Solar), adoption of GCCA protocols, dedicated legal & compliance teams, online compliance tool (‘Kavach’), regular audits (Statutory, Cost, Secretarial, Internal), adherence to CSR norms (spending exceeded obligation), provision for mine restoration.
• Control Effectiveness: High. No material non-compliance, penalties, or strictures reported related to capital markets or major environmental/safety laws in the last three years. Secretarial and Statutory audits reported no major qualifications (except audit trail note). Zero product failure awards from BIS. Pending litigations are disclosed, and management assessment suggests low probability of adverse outcomes for major items.
• Potential Financial Impact: Negative: Costs of compliance, CSR/R&R expenditure, potential outflow from adverse litigation outcomes. Positive: Avoidance of penalties, maintaining license to operate, enhanced reputation.

Emerging Risks #

• Identified Risks:
  • Climate Change: Transition risks (meeting Net Zero 2070 target, carbon pricing) and physical risks (impact on operations/supply chain).
  • Cybersecurity: Increased risk exposure due to growing digitization (SAP S/4HANA, cloud usage, operational tech integration).
  • Technological Disruption: Need for continuous innovation in manufacturing efficiency and product development to maintain competitiveness.
• Severity: Moderate to High
• Likelihood: Moderate to High
• Trend: Increasing

Financial Analysis of Orient Cement Limited (FY 2023-24) #

Financial Performance Analysis #

Revenue & Profitability #

Orient Cement reported Revenue from Operations of ₹3,185.09 crore in FY24, a 9% growth over FY23 (₹2,939.16 crore). EBITDA increased by 23% to ₹464.75 crore from ₹376.56 crore in FY23. Profit After Tax (PAT) saw a significant rise of 42% to ₹174.85 crore compared to ₹122.82 crore in FY23.

Margins #

EBITDA margin improved to 14.59% in FY24 from 12.82% in FY23. Net Profit Margin also increased to 5.47% from 4.23% in the previous year. The margin improvement is attributed to higher volumes, better price realization (supported by premium product mix), and lower fuel costs, partially offset by higher OPC sales mix due to infrastructure demand.

Key Ratios #

• Debt-to-Equity ratio significantly reduced to 0.07 times (FY24) from 0.24 times (FY23), indicating a strengthened, nearly debt-free balance sheet achieved through efficient cash flow management and loan repayments.
• Return on Capital Employed (ROCE) improved to 14.28% in FY24 from 10.07% in FY23.
• Return on Net Worth rose to 10.41% from 7.93% in FY23.
• Basic Earnings Per Share (EPS) increased by 42% to ₹8.53 from ₹6.00 in FY23.
• Interest Coverage Ratio improved to 12.65 times from 9.26 times in FY23.

Dividend #

The company paid an interim dividend of ₹0.75 per share and has recommended a final dividend of ₹1.50 per share for FY24, totaling ₹2.25 per share (same as ₹1.50 total paid in FY23). This aligns with the company’s Dividend Distribution Policy.

Operational Performance Analysis #

Sales Volume & Capacity Utilization #

Total sales volume grew by ~6% to 61.04 Lakh Tonnes in FY24 from 57.6 Lakh Tonnes in FY23. Overall capacity utilization stood at 72%, up from 68% in FY23. Non-trade (B2B) sales volume grew by 19%, offsetting a 6% de-growth in trade (B2C) sales, indicating strong performance in the infrastructure segment despite muted consumer demand.

Premium Product Contribution #

The share of premium products (‘Birla.A1 OrientGreen’, ‘Birla.A1 StrongCrete’, ‘Birla.A1 Dolphin’) in trade volume increased significantly to 21% in FY24 from 15% in FY23, reflecting the success of the premiumisation strategy. Premium brand volumes grew by 31% YoY.

Cost Management & Efficiency #

Energy #

The company managed fuel costs effectively through strategic procurement, improved operating efficiencies (aided by digital tools), and increased use of alternative fuels (AFR). AFR consumption reached 18% of the fuel mix (estimated from Value Creation Model). Commissioning of the 10.1 MW Waste Heat Recovery System (WHRS) Phase 1 at Chittapur reduced reliance on coal-based power. Renewable power (Solar + WHRS) contributed 17% to total power consumption.

Logistics #

Operationalization of the fly-ash rake handling system and leased rake at Chittapur improved sourcing flexibility and reduced costs. The company is prioritizing rail transport for sustainability.

Innovation #

The company secured a patent for a coal-saving system and developed a municipal waste shredder in-house, indicating a focus on cost-saving innovations.

Manufacturing Footprint #

Operates three plants (Devapur, Chittapur, Jalgaon) with a cement capacity of 8.5 MTPA and clinker capacity of 5.5 MTPA. The company serves markets in Maharashtra, Karnataka, Telangana, Andhra Pradesh, Madhya Pradesh, and South Gujarat.

Strategic Initiatives & Outlook #

Capacity Expansion #

The company is focused on capacity addition after delays. Key projects include:

• Doubling capacity at Chittapur (awaiting final Environmental Clearance).
• Setting up a split clinker grinding unit in Madhya Pradesh (Sarni village, approval received) to enable expansion at Devapur.
• Restoration of Rajasthan mines to enable greenfield capacity expansion and market diversification.

Premiumisation #

Continued focus on increasing the share of high-margin premium products. Launched ‘Birla.A1 Dolphin’ (water-repellent cement) in FY24, adding to the existing premium portfolio. This strategy is mitigating operating challenges and weak pricing environments.

Digital Transformation #

The company is leveraging data analytics and digital tools (SAP S/4HANA, Qlik sense, Procure Engine) for operational efficiency, decision-making, supply chain management, and customer engagement.

ESG Focus #

Strong commitment to sustainability with a Net Zero Carbon target by 2070. Initiatives include increasing renewable energy usage (targeting 50% by 2030), expanding WHRS capacity (Phase 2 Chittapur commissioned post-FY24), enhancing AFR usage, water management (water positive index 1.6), biodiversity protection, and circular economy practices.

Market Outlook #

The company anticipates leveraging India’s strong economic growth and infrastructure push (Govt. capex, PMAY). While acknowledging near-term challenges like volatile demand and pricing, the long-term outlook remains positive. Product approval for the Ahmedabad-Mumbai bullet train project highlights product quality acceptance in prestigious projects.

ESG Framework: Orient Cement Limited (FY 2023-24) #

Environmental Metrics and Targets #

Energy Consumption & Efficiency #

• Waste Heat Recovery System (WHRS): Commissioned Phase 1 (10.1 MW) at Chittapur, reducing reliance on coal-based power. Phase 2 commissioned post-FY24 (April 29, 2024). Plans underway for WHRS expansion at Devapur and Chittapur.
• Renewable Energy: WHRS plus renewable energy accounted for 17% of total power consumption (up from previous years). Jalgaon plant achieved 53% renewable energy usage (13.5 MWdc solar). Planned expansion includes 3.7 MWdc solar for Jalgaon and 16 MWdc for Chittapur (captive arrangement).
• Energy Efficiency Initiatives: Plant modifications (e.g., Kiln-3 water spray, VFDs, mill modifications) led to reported power savings. Received ‘Excellent Energy Efficiency Unit’ awards (CII) for Devapur and Chittapur plants. Achieved targets under the Perform, Achieve and Trade (PAT) scheme.
• Target: Meet 50% of electrical energy requirement through renewable sources by 2030.

Alternative Fuels and Raw Materials (AFR) #

• AFR consumption reached 18% of thermal energy needs (up from 15% in FY23), substituting fossil fuels.
• Co-processed 1.11 lac MT of waste (including plastic, RDF, agri-waste) in kilns and 17,000 MT in CPP.
• Infrastructure enhancement: Upgraded AFR feeding systems (Devapur), new RDF feeding system (10 TPH capacity), installed in-house shredder (Chittapur).
• Target: Achieve 25% Thermal Substitution Rate (TSR) by 2030.

Emissions & Climate Change #

• CO2 Performance: Adheres to GCCA CO2 protocol; Scope 1, 2 & 3 (8 categories) emissions assured by TUV India.
• Net Zero Goal: Aspires to achieve Net Zero for Scope 1 & 2 emissions by 2070, aligning with India’s national target.
• Mitigation Measures: Focus on reducing clinker factor, enhancing TSR, increasing renewable energy, process optimisation, and exploring Carbon Capture Utilization and Sequestration (CCUS).
• Air Emissions (NOx, SOx, PM): Reported emissions within permissible limits; continuously monitored.

Water Management #

• Adopted GCCA water protocol for performance reporting; water performance assured by TUV India.
• Achieved a water positive index of 1.6.
• Focus on reducing freshwater withdrawal, increasing rainwater harvesting, maximizing recycled water usage, and Zero Liquid Discharge (ZLD) across all plants.

Waste Management & Circularity #

• Plastic Waste: Co-processed 7,968 tonnes (Chittapur & Devapur); adheres to Extended Producer Responsibility (EPR) regulations.
• Raw Material Substitution: Utilized fly ash (enhanced by new rake handling system and leased rake), sub-grade limestone.
• Hazardous Waste: Disposed through authorised recyclers.
• Innovation: Patented a coal-saving system for cement plants; retrofitted scrapped rollers saving significant cost.

Biodiversity #

• Afforestation drives conducted in collaboration with local forest authorities, planting ~45,000 saplings in FY24 with >90% survival rate. Mine pits used for rainwater harvesting.

Social Responsibility Programs #

Expenditure #

• CSR Spending (FY24): Rs. 6.41 crores (exceeding the statutory obligation of Rs. 6.24 crores).
• Rehabilitation & Resettlement (R&R) Spending (FY24): Rs. 11.56 crores (primarily related to Chittapur project socio-economic welfare commitments).
• Total Community Development Expenditure (CSR + R&R): Rs. 17.97 crores.

Focus Areas & Initiatives #

• Education: Running a school at Devapur (Rs. 3.87 crore allocated in FY24), infrastructure support to Zilla Parishad School (Jalgaon Khurd - mid-day meal room, toilet blocks), furniture for public library (Nashirabad). Benefitted 1,270 students.
• Healthcare: Established health & wellness center (Devapur, benefiting 3,000 locals), provided medical equipment to Kasipet PHC (benefiting 5,000 residents), organized health check-up camp (Jalgaon Khurd, 737 individuals). Spent Rs. 1.17 crores on safety practices.
• Rural Development & Infrastructure: Road/culvert construction (Devapur area), borewells, community halls (Saaleguda, Tudumgudem).
• Skill Development & Livelihood: Skill Centre established (Dharwad, Karnataka for women), agricultural training, support for women Self Help Groups (SHGs).
• Sanitation & Hygiene: Maintenance of Sulabh Complex (Devapur), construction of toilet blocks (Jalgaon Khurd, Nashirabad), Swachh Bharat programme focus.

Impact #

• Positively impacted 43,426 lives through CSR projects.
• 31,500 villagers benefited from healthcare and rural development initiatives.

Alignment with SDGs #

• Initiatives mapped across multiple SDGs, notably SDG 3 (Health), SDG 4 (Education), SDG 5 (Gender Equality), SDG 6 (Water & Sanitation), SDG 8 (Decent Work), SDG 9 (Industry & Infrastructure), SDG 11 (Sustainable Cities), SDG 12 (Responsible Consumption), SDG 13 (Climate Action), SDG 15 (Life on Land).

Governance Structure and Effectiveness #

Board Composition & Structure #

• Board comprises 9 directors: 1 Executive (MD & CEO), 8 Non-Executive (including Chairman). 6 Independent Directors (including 1 woman), 2 Promoter Directors (Chairman and spouse). Meets requirements of the Act and SEBI Listing Regulations.
• Separation of Roles: Chairman (Non-Executive Promoter) and MD & CEO roles are separate and held by unrelated individuals.
• Diversity: Includes 2 women directors (22% representation). Board possesses diverse skills including leadership, industrial operations, legal, finance, administration, and public policy.
• Attendance: High Board attendance (average 94% across 7 meetings).

Committees #

• Five statutory committees: Audit, Nomination & Remuneration cum Compensation (NRC), Stakeholders’ Relationship (SRC), Corporate Social Responsibility (CSR), Risk Management (RMC).
• Composition: Committees predominantly chaired by Independent Directors and comply with regulatory requirements regarding independent director majority where applicable.
• Effectiveness: Committees meet regularly (4 times for Audit, NRC, SRC, CSR; 2 times for RMC in FY24) with good attendance. All committee recommendations were accepted by the Board.

Risk Management #

• Formal Risk Management Policy approved by the Board.
• Oversight by RMC and Audit Committee. Management-level GRCC identifies and reviews risks.
• No risks identified by the Board threatening the company’s existence.

Internal Controls & Audit #

• Management confirms adequacy and effectiveness of internal financial controls (IFC) based on COSO framework.
• Statutory Auditor reported adequacy and operational effectiveness of IFC. Noted audit trail was not enabled at the database level, though enabled and operated at the application level without tampering noticed.
• Internal Audit function reports to Audit Committee; risk-based annual plan approved and reviewed.

Ethics & Transparency #

• Code of Conduct applicable to Board and Senior Management; annual compliance affirmed.
• Whistle Blower Policy in place, overseen by Audit Committee; no personnel denied access.
• Related Party Transactions policy in place; all transactions reported as arm’s length and in ordinary course of business.

Compliance #

• Complied with applicable Secretarial Standards.
• No penalties or strictures reported from SEBI/Stock Exchanges/Statutory Authorities on capital market matters in the last three years.
• CEO/CFO certification provided as per Regulation 17(8).
• Certificate obtained confirming no directors are debarred/disqualified.

Sustainability Investments and ROI #

• WHRS: Chittapur Phase 1 (10.1 MW) commissioned in FY24, contributing 16% of plant’s energy needs and generating savings of approx. Rs. 4 crore/month. Phase 2 (commissioned post-FY24) expected to increase contribution. Investment amount for Chittapur WHRS not explicitly stated, but loan taken earlier for WHRS/Fly ash system was Rs. 83.68 crore.
• Solar Power: Continued utilization of 13.5 MWdc captive solar at Jalgaon (approx. 59% of power needs). Further captive agreements signed for 3.7 MWdc (Jalgaon) and 16 MWdc (Chittapur), expected online Q2 FY25, increasing renewable share >85% for Jalgaon.
• Fly Ash Handling: Operationalization of rake handling system and leased rake at Chittapur improved sourcing flexibility and resulted in cost savings, besides reducing road traffic/pollution.
• AFR Infrastructure: Investments in shredder (in-house development at Chittapur saving capital cost vs. import) and feeding systems enhanced AFR utilization, leading to fossil fuel substitution and cost savings (1.4 lakh MT coal conserved via 17% TSR).
• Innovation: Patented coal-saving system offers potential future efficiency gains. Retrofitting scrapped rollers instead of buying new ones resulted in significant cost savings (fraction of cost for 20,000 hours usable life).
• R&D/Capex: 0.21% of total R&D and 55.86% of total Capex invested in technologies for environmental/social impact improvement in FY24 (significant increase in Capex % from 15.90% in FY23).

ESG Ratings and Peer Comparison Data Points #

Environmental #

• Specific Energy Consumption: Claimed to be among the lowest (especially Chittapur).
• CO2 Emission Intensity (Scope 1+2): 605 KG CO2 /MT of Cementitious material (FY24 & FY23). (Note: Marginal increase due to higher OPC sales).
• AFR Thermal Substitution Rate (TSR): 18.4% (FY24) vs 15% (FY23 industry average reference needed for comparison).
• Renewable + WHRS Power %: 17.5% (FY24).
• Water Positive Index: 1.6.

Social #

• Safety: Zero fatalities for 6 consecutive years. LTIFR reported as zero for FY24. Received multiple safety awards (Greentech, NSC Karnataka Chapter, Mines Safety Week).
• Employee Well-being: Certified ‘Great Place to Work’ (5th consecutive year, ranked 50 overall, Top 25 Mfg, Best in Cement/Building Materials). MD & CEO recognized as ‘Most Trusted Leader’. Employee turnover rate provided.
• CSR expenditure: 102.6% of statutory requirement spent (Rs 6.41 Cr vs Rs 6.24 Cr).

Governance #

• Board Independence: 6 out of 9 directors are independent (67%).
• Gender Diversity: 2 out of 9 Board members are women (22%). KMP: 1 out of 3 is female (33%).
• Audit Reports: No qualifications on financial statements; specific comment on IT audit trail logging. No qualification on Secretarial Audit.

Orient Cement Limited: FY 2023-24 Financial Analysis #

Financial Performance (FY24 vs FY23) #

Revenue #

Revenue from operations increased by 9% to ₹3,200.61 crore in FY24 from ₹2,949.57 crore in FY23. This growth was primarily driven by a ~6% increase in sales volume (61.3 lakh tonnes vs 57.6 lakh tonnes), mainly supported by the infrastructure segment (B2B growth of 19%), despite muted B2C demand (de-growth of 6%). Improved realisation per tonne due to a positive shift in product mix towards premium brands also contributed.

Profitability #

• EBITDA rose by 23% to ₹464.75 crore from ₹376.56 crore. EBITDA margin improved to 14.59% from 12.82%. Key drivers included higher volume, lower fuel costs (petcoke, increased AFR usage, WHRS/solar power contribution), and premiumisation, partially offset by higher costs associated with increased OPC sales for the infrastructure sector.
• Profit After Tax (PAT) increased significantly by 42% to ₹174.85 crore from ₹122.82 crore. Net Profit Margin improved to 5.47% from 4.23%.
• Earnings Per Share (EPS - Basic & Diluted) stood at ₹8.53, reflecting the 42% growth in PAT.

Balance Sheet & Cash Flow #

• The company is nearly debt-free, with the Debt-to-Equity ratio significantly improving to 0.07 times from 0.24 times, driven by loan repayments facilitated by enhanced EBITDA and cash flow management. The long-term loan for the Chittapur plant was fully repaid ahead of schedule.
• Interest Coverage ratio improved to 6.77 times from 4.95 times due to debt reduction.
• Return on Net Worth improved to 10.41% from 7.93%.
• Return on Capital Employed (ROCE) increased to 14.28% from 10.07%.
• Working capital appeared stretched due to higher B2B sales (longer credit periods) and petcoke imports. Debtors’ Turnover and Inventory Turnover ratios showed declines of 18% and 16% respectively. Current Ratio improved to 1.15 from 0.93.

Dividend #

An interim dividend of ₹0.75 per share was paid. A final dividend of ₹1.50 per share has been recommended, taking the total dividend for FY24 to ₹2.25 per share (vs ₹1.50 total in FY23), subject to shareholder approval.

Management Guidance, Assumptions & Market Outlook #

Management Guidance/Focus #

Management emphasizes continued focus on premiumisation, cost optimization (AFR, renewables, operational efficiency), capacity expansion, sustainability (Net Zero 2070 target), and digitization. The company aims to leverage infrastructure growth and penetrate the retail market further.

Assumptions (Implied) #

Management assumes continued government focus on infrastructure, eventual recovery in B2C demand, ability to manage volatile fuel costs through strategic sourcing and alternative energy, successful execution of expansion plans, and stable regulatory environment.

Market Outlook #

• Indian Economy: Positioned as one of the fastest-growing major economies (FY24 GDP est. 8.2%). Strong infra push and housing demand are key drivers. Construction sector grew 10.7% in FY24. Expected to reach USD 5 trillion by FY28.
• Cement Industry: India is the 2nd largest producer. FY24 volume growth estimated at 12% YoY. Demand driven by housing and infra. Capacity addition expected at 4-5% CAGR until FY28. Volatility in demand and prices was observed in FY24, with subdued pricing and weaker-than-expected Q4.

Planned Strategic Initiatives #

Premiumisation #

Continue driving sales of high-margin premium products (Birla.A1 StrongCrete, OrientGreen, Dolphin). Premium brands grew 31% in FY24, reaching 21% of trade volume (up from 15%).

Cost Leadership #

Enhance use of Alternative Fuels & Raw Materials (AFR), increase share of renewable power (targeting 50% by 2030) including WHRS (Chittapur operational, Devapur planned) and solar (Jalgaon expansion, Chittapur addition). Optimize logistics via rail (fly-ash rake system operational). Implement patented coal-saving system.

Capacity Expansion #

Actively pursuing significant expansion:

• Chittapur: Doubling capacity (EC awaited, construction to commence soon).
• Devapur: Grinding unit in MP approved to enable clinker capacity expansion.
• Rajasthan: Greenfield capacity planned post-mines restoration agreement.

Sustainability (ESG) #

Integrate ESG focus across operations. Target Net Zero (Scope 1 & 2) by 2070. Focus on circular economy, water management (GCCA protocol adopted), biodiversity, health & safety (Zero fatality maintained), and employee well-being (GPTW certified).

Digitization #

Leverage SAP S/4HANA for data

Financial Analysis Report: Orient Cement Limited (FY 2023-24) #

Auditor’s Opinion and Qualifications #

• The Independent Auditors, B S R & Associates LLP, issued an unqualified opinion on the standalone financial statements for the year ended March 31, 2024.
• The Auditors’ Report states that the financial statements give a true and fair view in conformity with Indian Accounting Standards (Ind AS) and the Companies Act, 2013.
• No reservations, qualifications, adverse remarks, or disclaimers were noted in the main audit report or the Corporate Governance compliance certificate.
• The report identified “Revenue recognition - discounts and rebates” as a Key Audit Matter due to the complexity and judgment involved in assessing various schemes in a competitive environment.
• The Secretarial Audit Report issued by Ranjeet Pandey and Associates also contained no qualifications, adverse remarks, or disclaimers.
• The Auditors’ Report on Other Legal and Regulatory Requirements (Annexure A, CARO 2020) notes minor exceptions regarding title deeds for one immovable property pending mutation and identifies specific statutory dues under dispute.
• The report under Rule 11(g) notes a modification regarding the audit trail feature in accounting software not being enabled at the database level to log direct data changes, although the enabled application-level audit trail was found to be operational and untampered.

Key Accounting Policies and Changes #

• The financial statements are prepared under Ind AS on a historical cost basis, except for certain financial instruments and defined benefit obligations.
• Key accounting policies include recognition of Property, Plant & Equipment (PPE) at cost less depreciation/impairment, Intangible Assets at cost less amortization/impairment, and inventories at lower of cost (weighted average) and Net Realizable Value (NRV).
• Revenue from contracts with customers is recognized upon transfer of control, net of variable considerations like discounts and rebates (identified as a Key Audit Matter).
• Leases are accounted for under Ind AS 116, recognizing Right-of-Use (ROU) assets and lease liabilities, with exemptions for short-term and low-value leases.
• Impairment of non-financial assets is assessed annually or upon indication, based on the higher of fair value less costs of disposal and value in use.
• Employee benefits include defined contribution (PF, ESIC) and defined benefit plans (Gratuity), with actuarial valuations performed for the latter. Equity-settled Employee Stock Options (ESOPs) are valued using the Black-Scholes model.
• Financial instruments are classified and measured at amortised cost, Fair Value Through Other Comprehensive Income (FVTOCI), or Fair Value Through Profit and Loss (FVTPL). Expected Credit Losses (ECL) are recognized for financial assets.
• The company adopted amendments to Ind AS 1 regarding the disclosure of ‘material’ accounting policies from April 1, 2023, which impacted disclosures but not the policies themselves.

Internal Control Effectiveness #

• Management acknowledged responsibility for establishing and maintaining adequate internal financial controls (IFCs) for financial reporting.
• The Board confirmed that IFCs were laid down, adequate, and operating effectively.
• The Independent Auditors issued an unqualified opinion (Annexure B) on the adequacy and operating effectiveness of the Company’s IFCs with reference to financial statements as of March 31, 2024, based on the criteria established by the Company considering the COSO framework and ICAI Guidance Note.
• The Company utilizes an internal audit function (Ernst & Young) reporting to the Audit Committee, employing risk-based plans and Continuous Control Monitoring (CCM).
• Digital initiatives (SAP S/4HANA, EPOD, automated workflows) are noted as strengthening the control environment.
• A Whistle Blower policy is in place, with oversight by the Audit Committee.
• The Auditors noted a specific area for improvement in the accounting software’s audit trail functionality (not enabled at the database level).

Regulatory Compliance Status #

• The Corporate Governance report confirms compliance with SEBI Listing Regulations (Regulations 17-27, 46(2), Schedule V). The Statutory Auditors’ certificate confirms this compliance without qualification.
• The Secretarial Audit Report confirms compliance with the Companies Act 2013, SCRA 1956, Depositories Act 1996, applicable SEBI regulations (Takeovers, Insider Trading, ESOPs etc.), applicable sector-specific laws (Mines Act, Environment laws etc.), and Secretarial Standards (SS-1, SS-2).
• The Board’s Report confirms compliance with applicable Secretarial Standards.
• No penalties or strictures related to capital markets were imposed by SEBI/Stock Exchanges in the last three years.
• Compliance with environmental laws (Water Act, Air Act, Environment Protection Act) is affirmed, with no significant non-compliances reported.
• Disclosures under the MSMED Act, 2006 regarding dues to micro and small enterprises are provided (Note 40).
• Compliance with ESOP regulations, including amendments and new scheme implementation, is noted, supported by a Secretarial Auditor’s certificate.

Legal Proceedings and Potential Impact #

• Note 38 details contingent liabilities arising from claims not acknowledged as debts, primarily related to Excise Duty/Customs, Sales Tax/Entry Tax, Income Tax, Electricity Duty, and GST, aggregating approximately ₹5,041.70 lacs (vs. ₹6,086.46 lacs in FY23).
• Specific disputed statutory dues totaling approximately ₹2,800.55 lacs (net of amounts paid under protest) are detailed in the CARO report, pending before various appellate authorities (High Courts, CESTAT, Commissioner Appeals etc.).
• The largest disputed item relates to Entry Tax (₹713.30 lacs) and Income Tax (₹1,697.09 lacs). The Electricity Duty matter (₹1,691.31 lacs) is pending before the Supreme Court, with ₹1,005.76 lacs paid under protest.
• Management believes, based on internal assessment and legal counsel, that the demands in these disputed cases may not sustain, hence no provision is made. The timing of potential outflows is uncertain.
• No significant or material orders impacting going concern status or future operations were reported. No proceedings under the Insolvency and Bankruptcy Code are pending.

Related Party Transactions #

• All transactions with related parties during FY24 were conducted in the ordinary course of business and on an arm’s length basis (Note 39, Board’s Report).
• No materially significant related party transactions requiring shareholder approval under Section 188 or Regulation 23 were reported.
• Transactions primarily include remuneration to Directors/KMPs, dividend payments, rent, and purchase of goods/services from group entities (e.g., Khaitan & Co., Orient Paper, Birlasoft, GMMCO, HIL, CK Birla Corporate Services).
• The Company has a Board-approved policy on Related Party Transactions available on its website.
• The transactions were reviewed and approved by the Audit Committee as required.

Subsequent Events #

• The Board proposed a final dividend of ₹1.50 per share for FY24 at its meeting on May 1, 2024, subject to shareholder approval at the AGM on August 5, 2024. If approved, the outflow will be approx. ₹3,073.04 lacs.
• Phase 2 of the Waste Heat Recovery System (WHRS) at the Chittapur plant was commissioned on April 29, 2024.
• Mr. Janat Shah ceased to be an Independent Director effective April 29, 2024, upon completion of his second term. Mr. Swapan Dasgupta was appointed Chairman of the CSR Committee effective April 30, 2024.
• No other material changes or commitments affecting the financial position between March 31, 2024, and May 1, 2024, were reported.

Accounting Quality Analysis #

• Accounting policies appear consistent with Ind AS requirements. The use of estimates for useful lives, provisions (mine restoration), defined benefit obligations, and ESOP valuation introduces subjectivity, but these are standard for the industry.
• The identification of Revenue Recognition (discounts/rebates) as a Key Audit Matter highlights a significant area requiring management judgment and carrying potential estimation risk, impacting the certainty of reported revenue.
• The Company’s decision to remain under the older tax regime, foregoing the lower Section 115BAA rate to utilize MAT credits, reflects a specific tax planning strategy impacting current and deferred tax calculations.
• Transparency is supported by detailed disclosures in notes, including segment reporting (though identified as single segment), related party transactions, contingent liabilities, and adherence to the BRSR framework. The modification noted in the audit trail function represents a minor gap in system controls related to accounting records.

Regulatory Risk Assessment #

• The Company faces regulatory risk primarily related to environmental laws and mining regulations, given its core operations and expansion plans (Chittapur expansion pending Environmental Clearance). Compliance with pollution control norms and mining restoration obligations is critical.
• Pending tax litigations across various statutes (Excise, Customs, VAT, Entry Tax, Income Tax, GST) represent a significant regulatory risk, with potential financial outflows if rulings are unfavorable, although management currently assesses the probability of loss as low.
• Adherence to SEBI Listing Regulations and Companies Act provisions, particularly concerning Corporate Governance, ESOPs, and related party transactions, is crucial to avoid penalties. The Secretarial Audit and Corporate Governance reports indicate good compliance levels.
• The requirement for accurate disclosures under MSMED Act regarding supplier dues carries compliance risk.
• Changes in regulations, such as the upcoming Code on Social Security, 2020, may necessitate adjustments in employee benefit provisions and compliance procedures.