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Managing Director’s Communique
Dear Members, As we reflect on the year gone by, I’m proud to present a comprehensive performance review of our Company Nuvoco Vistas Corp. Ltd. – India’s fifth-largest cement group and one of the leading cement players in East India, in terms of capacity.
In FY 2022-23, we maintained a comprehensive focus on operational excellence and financial prudence. This approach compelled us to modify our customer relationships, business model, and contract by renegotiating the way we do our business. We have maintained a clear focus to bring our debt to manageable levels and maintain a clear focus on financial stability.
Dear Members,
As we reflect on the year gone by, I’m proud to present a comprehensive performance review of our
Company Nuvoco Vistas Corp. Ltd. – India’s fifth-largest cement group and one of the leading cement
players in East India, in terms of capacity. FY 2022-23 period was highly dynamic for our industry,
filled with both positive and
challenging times. On the one hand, the industry witnessed significant mergers and
acquisitions in conjunction with robust announcements for the future, on the other, it
experienced substantial increases in the costs of raw materials and fuel as well as
volatility in distribution and supply chain operations.
Despite these challenges, the demand for cement, particularly in the East and North regions, sustained robust growth, propelled by rural housing and infrastructure projects. However, our overall sales volume was moderated by subdued demand growth in Bengal and Jharkhand. Nevertheless, our unwavering commitment to premiumisation, trade shares, geo-mix optimisation, and internal levers enabled us to maintain a commendable performance. It is important to acknowledge that cost pressures will persist in the foreseeable future. While the industry will experience softening of fuel prices, the other raw materials face availability issues and inflationary pressure, making the cost outlook uncertain.
Despite facing an almost 38% increase in overall costs, we successfully navigated the business challenges. Although the latter half of the year witnessed an upswing in industry prices, it was insufficient to fully offset the impact of cost escalation on our profit margins. Our utmost priority has been to safeguard our margins and sustain profitability throughout this period. In addition, we strategically prioritised our capital expenditures to ensure the continued progress of our growth initiatives. There are compelling reasons for optimism in both the economy and the infrastructure industry. The government’s emphasis on infrastructure development, coupled with renewed interest from consumers in real estate as an investment avenue, indicates the potential for an increase in demand in the real estate sector.
Our financial performance has showcased improvement, with cement volumes reaching an impressive 18.8 MMTPA on a full-year basis. Our revenue from operations increased by 14% year-on-year, to ₹10,586 crores, as we focused on delivering value over volume growth. The consolidated Profit After Tax (PAT) for FY 2022-23 stands at ₹15.86 crores.
in FY 2022-23
We have maintained a clear focus to bring our debt to manageable levels and maintain a clear focus on financial stability. Our net debt was reduced to ₹4,414 crores (a substantial reduction of ₹650 crores from March 2022), resulting in a more robust financial position for our Company.
Our commitment to innovation and premium-grade raw materials has earned us a reputation for providing best-in-class cement products. During the year, we successfully expanded our premium product portfolio with the launch of Duraguard Xtra F2F and Concreto Uno. These superior offerings provide unmatched construction strength, durability, and protection against environmental factors, ensuring that we remain at the forefront of the construction industry.
As for Cement sales, it is noteworthy that 36% of trade sales volume came from premium products. Markets in the North and East regions continued to be key demand drivers for Nuvoco. I am pleased to share that our flagship brand, Concreto Cement, received recognition as the No.1 Premium Cement Brand in the Excellence in Infrastructure Development Category at the prestigious Jagran Achievers Awards 2022 in Dubai. This recognition is a testament to our unwavering commitment to delivering high-quality cement solutions that surpass industry standards.
Brand building remains a significant investment for us. During the year, we took several initiatives to enhance our brand presence and enhancing customer service including the launch of NuvoNirmaan (A Direct-to-Consumer App) all-in-one digital platform that covers a wide range of information and points of guidance throughout the stages of home-building and construction; Concreto Dream Home Celebration 360-degree media campaign encompassing print, TV, radio, outdoor, digital, and BTL activities; Ghar Banao Apna special series with Network 18 group to impart knowledge and assist in the Home Building Process and introduction of 50 Tech Express (Technical Mobile Vans) value-added service offered to customers at various stages of construction at no additional cost.
Throughout the year, we maintained a comprehensive focus on operational excellence and financial prudence. This approach compelled us to modify our customer relationships, business model, and contract by renegotiating the way we do our business. We have maintained a clear focus to bring our debt to manageable levels and maintain a clear focus on financial stability.
In line with our strategic objectives, we have judiciously prioritised our capital expenditure on sustainability, debottlenecking, payback-based projects, and expanding our presence in the northern region. The expansion of our cement capacity through 1.2 MMTPA grinding unit at our Haryana Cement Plant (Bhiwani) is underway, with civil and fabrication work proceeding smoothly. We have already commissioned our alternate fuel co-processing and pre-processing systems at Risda, while Nimbol is scheduled for the first half of FY 2023-24. These systems will enable us to handle a wider range of fuels while increasing waste recycling tonnage. We are equally pleased to share that our railway siding projects at Odisha Cement Plant (Jajpur) and Sonadih Cement Plant in Chhattisgarh are progressing as planned, with commissioning anticipated later in FY 2023-24. These investments demonstrate our commitment to growth and expansion.
It’s worth mentioning, FY 2022-23 proved to be a truly ground-breaking year for our Ready-Mix Concrete (“RMX”) business. The RMX business saw a remarkable 24% increase in revenues, driven by premium and new products, accounting for nearly one-third of the business. Building upon this success, we have commissioned the all-women-led RMX plant in Pamohi village on the outskirts of Guwahati, Assam. We launched Concreto Glyde - a premium quality effective solution designed for interior and exterior flooring underlay in the year under review. Also, we received the prestigious “Greenpro Ecolabel” from Indian Green Building Council (IGBC-CII) for 6 (six) RMX Plants namely Patencheru, Miyapur (Hyderabad), Whitefield (Bengaluru), Sanathal (Gujarat), Noida (Uttar Pradesh) and Gurugram (Haryana) for producing Ecodure - Green Concrete that reduces carbon emissions by up to 60% as compared to conventional OPC mix. As a result, leading architects and developers consider it the first choice for sustainable and circular construction. In FY 2023-24, we look forward to enhancing the pan-India presence of RMX business thereby increasing our share of business.
Furthermore, our Modern Building Materials business (“MBM”) has recorded significant growth in revenue of ~20% in FY 2022-23, demonstrating our commitment to offering a diversified range of products to meet our customers’ construction needs. The business offers Construction Chemicals, Multipurpose Bonding and Waterproofing Agents, Waterproof Coatings, Wall Putty, Tile Adhesives and Grouts, Ready Mix Dry Plaster and Cover Blocks under Zero M and InstaMix brands.
Sustainability remains a key focus for us, and we have made significant progress in this area through our PROTECT OUR PLANET Program. With a focus on innovation and continuous improvement, we have implemented energy-efficient technologies, optimised our processes, and invested in alternative fuels and raw materials.
By striving to reduce carbon emissions by 2% annually, we achieved a Thermal Substitution Rate (TSR) of 9%, surpassing the 4.5% of the previous year. In FY 2022-23, we successfully utilised ~2,00,000 tonne of waste as fuel in plants as part of our circular economy initiative. Demonstrating leadership in alternative fuel usage, the Chittor Cement Plant demonstrated the capability of TSR > 24%. We also marked a >10% reduction in specific freshwater consumption over the last fiscal year. Furthermore, we took progressive steps towards carbon sequestration through a plantation of ~94,500 saplings of native plants. These steps helped us achieve a mark of one of the best in industry carbon emissions at 462 kg CO2/tonne of cementitious materials.
To amplify our sustainable development progress, we have partnered with the Global Cement and Concrete Association (GCCA) - India, which will assist us in identifying and facilitating steps to accelerate sustainable development progress. Furthermore, we have included aluminium body trucks in our logistics fleet marking a significant breakthrough, reducing indirect carbon emissions and preserving the environment by saving ~28 tCO2/vehicle in its lifetime. This accomplishment aligns with our commitment to reducing fossil fuel consumption and conserving natural resources.
At Nuvoco, we understand the importance of people and processes in maintaining agility and competitiveness. In FY 2022-23, we launched Nuvoco University, a platform offering world-class learning interventions to develop the skills of our employees and strive towards making them a Future Ready Workforce. It offers employees the flexibility to learn from Anywhere, Anytime, on Any device and fosters a culture of continuous learning.
Amid changing socio-economic conditions, our Corporate Social Responsibility (“CSR”) stayed focused on uplifting the areas in which we operate through various initiatives in Skilling & Livelihood, Education, Health, Infrastructure and Natural Resources Management. In line with our mission to be a Leading Building Materials Company, we launched NUVO Mason, wherein we trained 100+ Youths through a Masonry Skills Development Program in Rajasthan and Chhattisgarh. Through this initiative, we provide 300+ hours of comprehensive training, covering theoretical and practical aspects. The programme is certified by National Skill Development Corporation (NSDC) and aims at enhancing the masonry skills of youth and construction workers, empowering them, expanding their work opportunities, and improving their quality of life. Additionally, Nuvoco has also installed more than 250 solar lights across various locations, demonstrating our commitment to reducing carbon emissions and embracing sustainable practices.
At Nuvoco, we understand the importance of people and processes in maintaining agility and competitiveness. In FY 2022-23, we launched Nuvoco University, a platform offering world-class learning interventions to develop the skills of our employees and strive towards making them a Future-Ready Workforce. It offers employees the flexibility to learn from Anywhere, Anytime, on Any device and fosters a culture of continuous learning. Since its launch in October 2022, we witnessed a record-breaking adaption of Digital Learning with almost 90% of employees learning on LinkedIn within the first 15 days of launch with an average of 1.5 learning hours/employee which is the Best in the Industry. So far more than 1,000 employees participated in various soft skills and leadership programs and have completed 5,000 courses and viewed 1,00,000+ videos.
Our functional transformational LEAP (Lead. Energise. Accelerate. Perform) agenda continues to advance well and is helping the function to improve its processes and enhance performance. Taking as an example, LEAP for Operations is a new manufacturing mindset based on a continuous improvement approach to accelerate manufacturing excellence through Total Productive Maintenance with a Zero Breakdown Mindset involving employees at all levels.
Our Project DEN (Digitally Enabled Nuvoco) enables both internal and external stakeholders to leverage technological evolution by facilitating state-of-the-art infrastructure and IT solutions, which will accelerate operational efficiency with automation and standardisation, meet emerging customer demands, increase employee productivity, and enable accurate insight from our data, ultimately supporting our mission to become a Leading Building Materials Company. This includes four modules namely SAP IBP & Transportation Management for Logistics Optimisation; SAP C4C CRM for Sales Force Automation; SAP SuccessFactors for HR automation encompassing the entire employee lifecycle from hire-to-retire; SAP S/4HANA for process optimisation through Business Process Reengineering (BPR), which assists in identifying gaps in current business processes and sharing best practices.
As we move forward, we have ambitious growth plans for our Cement business, scaling up our RMX & MBM businesses in line with our business strategy. Upholding our values and adhering to our ORE (Operating Philosophy, Rules of the Journey and Expected Behaviours) remain non-negotiable. The strong processes like IBP (Integrated Business Planning), XQ (Execution Excellence) culture and focus on process and systems and people-centric transformation projects will drive the way to accomplish our mission - Leading Building Materials Company Delivering Superior Performance.
I extend my heartfelt gratitude to each one of you, our esteemed stakeholders, for your trust and collaboration. It is your commitment and dedication that fuels our drive for excellence and enables us to achieve new heights of success. Together, we will forge ahead, embracing a promising future marked by sustainable growth, innovation, and unyielding achievement.
Best Regards,
Jayakumar Krishnaswamy
Managing Director