The Associated Cement Companies Limited Author(s): Dharamsey M.

Khatau Reviewed work(s): Source: Economic and Political Weekly, Vol. 3, No. 3 (Jan. 20, 1968), pp. 211-212 Published by: Economic and Political Weekly Stable URL: http://www.jstor.org/stable/4358163 . Accessed: 25/01/2013 17:33
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FROM THE CHAIR

The

Assocated

Cement

Companies

Limited

Summary of Chairman'sStatement
THE following is a summary of the statement issued to shareholders by Shri Dharamsey M Khatau, Chairman The Associated Cement Companies Limited, on the Company's working for the year ended 31st July 1967. The Annual General Meeting of the Company will be held on Thursday the 25th January 1968 at 4 pm at the Patkar Hall of SNDT Women's University, 1, Nathibai Thackersey Road, Off Queen's Road, Fort, Bombay.
POLITICAL AND ECONOMIC SITUATION

Our fourth General Election which saw the largest turn-out of voters in human history went off peacefully enough, and resulted in a radical change in the functioning of the federal pattern of Government inasmuch as several non-Congress Governments came to power in the States This has inevitably led to certain stresses between these Governments and the Congress Government at the Centre, which have been heightened by open exhortations to violence and disregard of all authority by disruptive elements of some of these coalition State Governments, notably in Bengal. Furthermore, the political imAND DESPATCHES PRODUCTION morality of large-scale and multiple floor The increase in production and descrossing in the legislatures not, except patches over the previous year would few cases, in defence of any in very have been even higher but for the basic principle but obviously to gain the restricted supply of electric power at loaves and fishes of ministerial office has some of the Works where we purchase done not a little to raise serious doubts power and the shortage of wagons. in the mind of the common man as it is encouraging to note that, of democratic institutions However, to the value at regular quarterly intervals, the which can be so shamelessly perverted. Secretary, Ministry of Industrial DeveIt is not surprising that in such con- lopment and Company Affairs and the ditions the law and order situation has Directorate General of Technical generally reached a low ebb and, in Development now look into the causes some States, has frequently deteriorated responsible for retarding produiction to the point of mob rule with no and growth in major industries with a security for the individual or for indus- view to eliminating bottlenecks. This is trial and business enterprises whether in a laudable step and should help in the private or the public sector. maximising the production of cement On the economic front, the past year and its transport to the consumer. has been a period of tremendous strain. WORKING RESULTS Millions of our countrymen have suffered Although the turnover and gross untold hardship as a result of food shortages and the continued inflatioi.ary profits were higher than last year, the trend of prices of all essential commodi- net profits, after making statutory transties. Almost all industries have been fers to reserves, are lower by as much seriously hit by the recession in demand as Rs 46 lakhs because substantial

on the one hand and soaring costs on the other. In many parts of the counfty, industrial discipline has virtually disappeared to add yet another obstacle to economic recovery. One looks for a clear lead from those at the h -lm of the country's affairs as to how this economic recovery is to be achieved and how unhealthy political trends are to be checked, but one finds only hopeful expectations that somehow, thanks to a bountiful harvest, all will be well. The predictable failure of the Plans which formulated investments vastly in excess of available resources, seems to have inhibited resolute action. The oft-repeated saying that the first duty of a Government is to govern was never truer than today, and I can only plead for firm Governmental policies firmly implemented and the restoration of conditions in whichi commerce and industry can flourish w-ithout undue control or interfereince. TIhis is the essential prerequisite of economic buoyancy which alone can provide improved living standards for our people.

increases iii the cost of production have eroded the Company's capacity to lay by the amounts required for statuitory reserves. The Cement Manufacturers' Association urged Government to review the cement price pattern. It was explained that the rise in the cost of production since decontrol would amount to Rs 16 per tonne, including freight on cement. As against this, the Industry has received the average price increase of Rs 13 per tonne from January, 1966 and a total increase of Rs 1.93 in freight on cement. Moreover, Rs 8 per tonne (before tax) has to be earmarked and used exclusively for expansion. It was pointed out to Government that the rise in the cost of production under various heads such as dearness allowance linked to the cost of living index, power tariffs and electricity duties, coal prices and transport charges is entirely beyond the control of the Industry. Devaluation and the larger provision for depreciation due to new factories coming into produictiort have also contributed to higher costs Furthermore, there are higher interest charges on increased borrowings for ac. celerated expansion, and these substantial borrowings have to be serviced from accruing profits. Government has so far declined to review cement prices on the plea of holding down the cost of essential commodities. If the Cement Industry is to operate purposefully and be capable ot large-scale expansion, the case for an immediate price increase will have to be considered on its merits.
MANAGING AGENCY

It is to be regretted that Government have issued a Notification declaring that as from 2nd April, 1970, all companies in the industries specified, including the cement industry, shall cease to have Managing Agents. The term of office of Cement Agencies Limited is therefore due to end on 1st April, 1970. It is generally recognised that efficient management is in very short supply to meet the growing needs of our developing economy. By discontinuing the Managing Agency system, a form of

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ECONOMIC AND POLITICAL WEEKLY proved, efficient management will be needlessly sacrificed. Why should nol Managing Agencies which have proved their value and worth over a period of years be allowed to continue for the benefit of the managed companies?
CEMENT SUPPLY AND DEMAND

January 20, 1968 by undertaking the manufacture of EOT Cranes, and items of paper and pulp machinery. This is yielding encouraging results. It must be borne in mind that one of the principal reasons for establishing this heavy engineering base at Shahabad was to create facilities so that the ACC's own large and expanding machinery block could be serviced efficiently. In this respect, the Engineering Works is proving to be of undoubted benefit to the Company.
LABGUR-MANAGEMENT RELATIONS

In the matter of packing materials also, steps were taken to rationalise both procurement and provisioning methods.
FINANCE FOR EXPANSIQN

I am happy to report that labourmanagenment relations generally conISSUE OF EQUITY CAPITAL tinued to be satisfactory. The fresh equity capital of nearly Relations with labour, howsoever Rs 4.75 crores proposed to be issued good, cannot remain unaffected by to the existing shareholders in the ratio extraneous events on the wider political of one new share to every five shares and economic plane such as the current will complete the external finances recession and the repercussions of unrequired for the first phase of the rest in other industries in adjacent expansion programme. These right areas. As an instance, industrial shares of Rs 100 nominal value will relations at our Sindri Works have been be issued at par, Rs 50 being payable seriously influenced by the couirse of orn application about the middle of events in Bihar State generally and in 1968, and the balance being called up the Sindri F ertiliser Factory in partilater in one lump sum or in instalments cular. The Manager of our Sindri as required. The new shares will rank Works and other senior staff were for dividend from 1968-69 in proportion recently subjected to a 'gherao' accomto the capital paid-up. panied by some demands. The 'gherao' This widening of its equity base will as a coercive method of enforcing strengthen the position of the Company industrial demands has rightly been the and improve the prospects of its growth subject of comment and condemnation in the years ahead. by various authorities, both in GovernGEOLOGICAL CONSULTING SERVICE mientand public life. The Vice President, COAL AND PACKING MATERIALS During the past few years we have Mr V V Giri, himself a reputed trade Economies in the procurement of built up a very useful geological union leader, has labelled the 'gherao' stores including engineering goods which consulting service for the benefit of new as "the enemy No 1 of the working are required in large quantities both entrepreneurs, mainly in the Cement classes and the worst trend in the hisfor maintenance and expansion are Industry. The service covers geological tory of the trade union movement." continuously under examination. surveys, proving of deposits of raw Mr Giri went on to say: "Workers Special attention was paid to selec- materials and undergroundwater investi- should realise that responsibilities go tive and rationalised procurement of gations. with rights.' coal on the basis of delivered cost In the context of prevailing tensions ENGINEERING WORKS, SHAHABAD equated with quality. Emphasis was laid Our Engineering Works, Shahabad, and unrest throughout the country, it OI1 inherent quality and individual is hoped that good sense will yet precharacteristics of the coals and their received orders from other manufacvail and that your Company will come performance in actual use, as cdistin- turers for four cement plants, each of guished from the quality or specifica- 2 lakh tonnes annual capacity. Despite through comparatively unscathed. Before concluding, I would like to tions borne on their official labels or this, production during the year under grades which often do not provide a review was hampered by the lack of express on your behalf, the managetrue index. These measures are yielding workable orders because imported raw ment's warm appreciation of thd loyahy, economies. The need for further ration- materials and components could not be hard work and whole-hearted co-operaalisation of our fuel purchasees has now obtained in time due to procedural tion of the Company's employees at the Works. Collieries, Offices and other become even greater consequent on the delays. In order to increase workable orders establishments throughout our far-flung increases in price which the Coal Industry has effected in the wake of to a safe level, efforts are being made organisation. to diversify production programmes Bombay, 12th December, 1967. its decontrol. 212

A regionwise assessment of future demands and capacities indicates that the capacities already planned and under way can be expected to take care of the demand for cement in the country upto about 1974. However, capacities are concentrated in certain regions and expansion plans are not such as to rectify the imbalance. To correct this, it is essential that future increases in capacity are properly located. During the last quarter of 1967, a surplus of cement is making itself felt, mainly in the South and in Saurashtra, and to a lesser extent in Madhya Pradesh and Orissa. Ordinarily such surplus production should have found an outlet in other areas, but it is now being realised that the capacity to absorb cement has shrunk appreciably; and it looks as if the total production of cement is beginning to outstrip the total demand. In view of this situation your Directors will carefully have to assess the future demand for cement and the Company's resources before the second and third phases of your Company's Five Million Tonnes expansion programme are taken in hand.

Out of the external finances of about Rs 15 crores required for the first phase of our Five Million Tonnes expansion programme, the consortium of four financial institutions had agreed last year to provide a term loan of Rs 10 crores. Against this, an interim advance of Rs 5 crores has been received from them. Further advances are being arranged from them pending execution of the Contributory Mortgage Deed.

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