Finance functions were activated in time for cost control and we were able to reduce our cost at all levels

01 Nov 2021 Long Read

SECTOR: Cement

Mangalam Cement

Mangalam Cement was promoted in the year 1978 by the famed house of Syt. BK Birla. It is a professionally managed and well-established cement manufacturing company with brands such as Birla Uttam and Mangalam PromaxX. The company produces PPC and OPC grade cements, and its manufacturing capacity stands at 4.40 million metric tonne (mt) per annum. It has plants at two locations: Morak in Rajashthan and Aligarh in Uttar Pradesh. It is 100 per cent dependent on its own power resources of a 35-MW captive power plant and 11-MW waste heat recovery plant as well as 13.65 MW of windmills. The company is progressing well under the chairmanship of co-chairpersons Anshuman Vikram Jalan and Vidula Jalan. Yaswant Mishra, President (Corporate) & CFO, Mangalam Cement, shares more….

  • Strategies to overcome COVID-19 and other challenges in FY2020-21: Immediate actions were taken to keep people safe at all levels and business functions started operations after the government authorities allowed the same. All measures such as safe distancing, use of masks and proper sanitisation at every department were taken care of. Apart from the regular clinic at plants, we started taking the services of a doctor for regular checkups of all people at plants. We allowed work from home to maximum staff and 100 per cent to the IT team. Senior leaders were asked to evaluate the market situation and take stock of finished goods and required raw materials for fresh production. Cost-control measures were strategised and targets monitored. We were able to determine how the crisis had stretched and broken our models but, finding opportunities, we decided to strengthen our existing model and went in for some innovation. In fact, we were able to launch a new value-added product, MangalamPromaxX, during the pandemic in October 2020 through an online launch. Fortunately, the strategy worked and operations are doing well. We could complete our ongoing capex of Rs.1.25 billion and raise funds at a competitive rate.
  • Major contributor to growth in FY2020-21: Finance functions were activated in time for cost control and we were able to reduce our cost at all levels. Our cost of funds had been brought down from 9 per cent per annum to an average of 7 per cent per annum for long-term borrowings and 5.25 per cent for short-term borrowings. The company paid 100 per cent salary and wages to everyone without a single deduction being made. Decision avoided/made that helped maintain top-line and bottom-line: Maintaining the realisations of cement sales in place of selling maximum quantity at reduced prices. And avoiding maximising stock levels of finished goods and raw materials.
  • Plans for growth in FY2021-22 and beyond: A target of 80 per cent utilisation has been made for FY2021-22. We have commissioned a waste heat recovery plant of 11 MW, which will mitigate the cost increase of power and fuels. Further, a production increase of 4 lakh mt of cement during the year will help increase both the top-line and bottom-line. We have arranged the availability of fly-ash at our Aligarh plant at a low cost, which will reduce cost and increase the production level there. Also, fly-ash utilisation at our Rajasthan plant has been increased from the nearby source at Jhalawar, 40 km from the plant. As it is difficult to gauge how long the pandemic will last, it is important to make short-term plans and monitor their execution at ground level. The most important factor will be transparent communication between the leaders and employees.
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