Our Vision to Build a Safer, Smarter, and Sustainable World and your confidence in our abilities have propelled us forward. We are committed to nurturing this relationship and continuing our journey together towards achieving shared goals and greater successes.
As the Chairman of Nuvoco, I am pleased to address you in the Annual Report for FY 2023-24. Over the years, we have committed ourselves to developing the country’s infrastructure. Our journey tests our endurance and perseverance, which is determined by our resilience and determination. Understanding the lessons learned matters most and will help shape our future.
The global economy faced unparalleled challenges in FY 2023-24, stemming from geopolitical conflicts. The disruption of major trade routes, particularly in the Red Sea, led to significant logistical delays, which substantially impacted the cost and availability of raw materials, ultimately affecting commodity prices globally. These experiences underscore the critical need for robust and strategic management in the face of global economic volatility.
India’s economic narrative paints a much brighter picture, poised to continue remarkable progress. The provisional estimates of India’s real gross domestic product (GDP) stood at 8.2% in FY 2023-24 underlining robust momentum in the economy. The nation’s economy continues to exhibit strength fueled by stellar performances in critical sectors such as mining, manufacturing, and services. Notably, the Manufacturing PMI reached a 16-year high of 59.1 in March 2024* , marking its 33rd consecutive month above 50, which indicates an ongoing expansion in the sector.
Despite global economic challenges such as inflation and supply chain disruptions, India’s strong growth trajectory stands out positively. Additionally, proactive economic reforms and strategic trade partnerships are strengthening India’s position as a key global player, attracting significant foreign investment and strengthening the economy.
The Government of India continues to prioritise the infrastructure sector, which plays a critical role in the country’s economic framework. Investments in infrastructure drive economic growth by enhancing the quality of life and improving multi-modal connectivity. With a government-led initiative, India’s infrastructure development has experienced a notable increase, with total investments reaching ₹23 lakh crore from FY 2021-22 to FY 2023-24. The Interim Union Budget for FY 2024-25 has further increased the infrastructure budget by 11.11%, totalling ₹11.11 lakh crore. A considerable portion of this budget, nearly 40%, is dedicated to enhancing roads, highways, air and rail infrastructure. This commitment is supported by various government schemes such as the Sagarmala Pariyojana, focusing on port infrastructure, Bharatmala Pariyojana (road connectivity), and UDAN (airline routes), among others.
* Ministry of Statistics and Program Implementation
Riding on the current infrastructure momentum, the cement industry is advancing robustly. According to the CRISIL ratings1 , India currently ranks second globally in cement production, with a collective manufacturing capacity estimated at 596 million tonnes in CY 2023. This expansion is driven by the booming construction sector, which is fuelled by rapid urbanisation, growing middle class, and rising demand for affordable housing. Additionally, key government projects like the Mumbai-Ahmedabad bullet train corridor, Bharatmala, and Sagarmala have significantly propelled demand, sparking a surge in construction activities. These efforts are complemented by ambitious initiatives such as Pradhan Mantri Awas Yojana (PMAY), marking a transformative period in India’s infrastructure development.
Nuvoco stands as the fifth-largest cement group in terms of capacity and a leading player in East and positioning itself at the forefront of the building materials industry.
We are driven by a compelling vision of Building a Safer, Smarter, and Sustainable world, reflecting our deep-rooted values of Integrity, Entrepreneurship, Collaboration, Care and Operational Excellence (IECCO). In response to the profound and rapid changes in the external business environment, we have embarked on a transformative journey focusing on innovation, growth and profitability. We view this as an opportunity to realign our business objectives with the interests and aspirations of our stakeholders, which will Propel us towards a Better Tomorrow.
In pursuing our mission to be a leading building materials Company delivering superior performance, we made significant strides in our 3 business areas: Cement, Ready-Mix Concrete (“RMX”) and Modern Building Materials (“MBM”). Particularly in our cement business, exploring the opportunities within the infrastructural landscape, we strategically expanded our capacity to 25 MMTPA by commissioning a state-of-the-art 1.2 MMTPA grinding unit at the Haryana Cement Plant. Our capacity utilisation surged to over 60% within a single quarter of the unit’s successful commissioning, notably enhancing our North cement capacity share to 24% in FY 2023-24 from 20% in FY 2022-23.
We also completed debottlenecking projects at Risda and Nimbol Cement Plants, which has resulted in a notable increase in clinker capacity. Furthermore, we remain focused on advancing railway sliding projects at Odisha and Sonadih Cement Plants, enhancing our ability to serve the market efficiently. We have launched new initiatives to drive volume growth in response to increased infrastructure projects and affordable housing in the states of Chhattisgarh and Odisha.
Continuing our pursuit of premiumisation and innovation, we expanded our product portfolio and extended the market reach of our premium offerings. The introduction of ‘Duraguard F2F’ in West Bengal and Jharkhand, alongside the expansion of ‘Concreto Uno’ into the Jharkhand markets, underscores our commitment to providing superior and sustainable solutions. Furthermore, in a strategic move to align our Company brand with its sub-brands, we revamped our product packaging designs. With this initiative, we prominently feature the mother brand – Nuvoco, on the front of the bags, thereby elevating brand visibility and fostering confidence among our partners and customers.
In these challenging times, our RMX and MBM businesses thrived well. To efficiently serve our customers, seven new RMX plants were launched in FY 2023-24, expanding our RMX network to 58 plants pan-India. With a continuous thrust on premiumisation, our value-added product mix stood at more than 30% of total sales volume in FY 2023-24. In the MBM business, we have exhibited we have proactively aligned our operations to contribute to a sustainable future.
Expansion at Haryana Cement Plant
consistent growth, particularly in the tile adhesive category, and remain committed to introducing innovative products that enhance the customer experience
In FY 2023-24, we managed our cost levers exceptionally well. Notable reductions in operational expenses, coupled with robust EBITDA growth, underscore our operational efficiency and dedication to cost optimisation. By focusing on strategic levers like eliminating raw material losses, optimising inventories, and reducing power and fuel costs, we significantly improved our processes and achieved substantial cost savings. We remain dedicated to this journey, eagerly anticipating further opportunities to foster and enhance efficiency.
I would now like to highlight our Company’s steadfast focus on sustainability, a crucial element of today’s business landscape in India and globally. Aligned with India’s ambition to achieve net-zero emissions by 2070,
In FY 2023-24, the Company made significant strides in sustainability efforts with a reduction in carbon emissions to 457 kg CO2 per tonne of cementitious materials, reaffirming our position amongst the industry leaders in low carbon emissions.
Our cement-to-clinker ratio (C/K) of 1.76 continues to set an industry standard, significantly surpassing national and global averages. The Alternate Fuel Rate (AFR) mix saw an impressive improvement while there has been a significant increase in the solar power capacity of the Company. Additionally, we have shown a substantial reduction in freshwater consumption in FY 2023-24. These efforts demonstrate our commitment to environmental stewardship and mark significant progress towards a sustainable future.
Shifting focus from our business initiatives, I’m delighted to share our role as a socially responsible entity. Our Company has consistently contributed responsibly and sustainably to the communities where we operate. Committed to enhancing the quality of life in these areas, we have pursued ongoing initiatives in education, health, livelihood, and infrastructure through our Corporate Social Responsibility (CSR) programs. By collaborating with local communities, we foster significant and meaningful change, extending our impact beyond environmental initiatives.
Overall, the forecast for India’s cement industry in FY 2024- 25 remains positive, fuelled by increased spending on infrastructure, urban development, and government initiatives such as affordable housing. Despite challenges such as rising input costs and the need for capacity expansion and consolidation, companies will concentrate on enhancing operational efficiencies to sustain profitability. Demand is anticipated to grow consistently, supported by escalating construction activities across various sectors. At Nuvoco, we stay committed to increasing our revenue with a two-pronged strategy of expanding into new markets, extracting from existing channels, and further strengthening our cost-efficiency efforts. Additionally, we will continue to drive technology and will be looking forward to initiating AI-enabled projects in specific areas to drive efficiency.
I would like to express my sincere gratitude to each one of our valued stakeholders for your dedication, trust, and constant support. Your belief in our vision to Build a Safer, Smarter, and Sustainable World and your confidence in our abilities have propelled us forward. We are committed to nurturing this relationship and continuing our journey together towards achieving shared goals and greater successes.
Best Regards,
Hiren Patel
Chairman