Key Highlights – Financial Capital FY 2022-23
Revenue:
₹ 4,827.17 Crores
Expenditure in R&D:
₹ 4.35 Crores
Debt to Equity Ratio:
0.26
Net Worth:
₹ 4,038.95 Crores
Market Capitalisation:
₹ 7,081 Crores
Profit before tax:
₹ 406.25 Crores
Debts:
₹ 1,037.71 Crores
Debt Service Coverage Ratio:
0.74
Interest Service Ratio:
6.08
Operating Margin:
6.26%
Net Profit Margin:
5.51%
Revolutionising MMCF Knit Fabrics: Birla Advanced Knits Pvt. Ltd.
Introducing Birla Advanced Knits Pvt. Ltd., a ground-breaking initiative born out of a joint venture between Century Textiles and Industries Ltd. and Grasim Industries Ltd. Starting from 1st April, 2023, this state-of-the-art facility is commissioned to manufacture man-made cellulose fibre (MMCF) knit fabrics. With the MMCF vertical witnessing unprecedented growth and a significant demand-supply mismatch in India, this strategic partnership enables us to address the challenge head-on. By leveraging group synergies and tapping into the Indian and international knits markets, Birla Advanced Knits is set to revolutionise the industry, driving growth, innovation, and customer satisfaction.
SDG Linkages
Linkages with other Capitals
Natural Capital:
Strategic investments in energy-saving and conservation initiatives to optimise operational costs and enhance financial performance.
Intellectual Capital:
Allocating resources to research and development (R&D) to develop innovative products and technologies that drive revenue growth and competitive advantage.
Social and Relationship Capital:
Investing in community expenditure and corporate social responsibility (CSR) initiatives to strengthen brand reputation, and stakeholder trust leading to long-term financial stability.
Human Capital:
Prioritising investments in employee learning and development programs and attractive benefit schemes to attract and retain top talent, ultimately enhancing productivity and financial returns.
Manufactured Capital:
Upgrading technology and optimising production processes to improve operational efficiency, reduce costs, and maximise profitability.
Revenue Generation at CTIL
Revenue Generation in Crores (₹)
CTIL’s all three business verticals play a pivotal role in driving the Company’s overall revenue by leveraging innovative business practices and staying attuned to market trends.
The Real Estate business is currently engaged in five residential projects, exhibiting its dedication to providing trusted real estate solutions to its customers. In the fiscal year 2022-23, the business achieved a total revenue of ₹ 137 Crores, with a significant portion of ₹ 110 Crores stemming exclusively from the leasing of commercial projects. Additionally, the business recorded a total booking value of ₹ 2,183 Crores, reflecting a 14% increase compared to the previous fiscal year of 2021-22.
In FY 2022-23, the pulp and paper vertical achieved remarkable results, generating a revenue of ₹ 3,571.71 Crore, which represents a substantial year-on-year growth of 27%. These outstanding outcomes were primarily driven by robust demand observed in pulp and paper vertical. The continuous improvement of the business’ performance is owed to the maintenance of demand from sectors like schools, offices, etc. Additionally, there has been an increased emphasis on health since the pandemic, and hence, demand for tissue papers has been constantly on the rise.
The Textile division’s revenue has remained, more or less, constant at ₹ 951 Crores in FY 2022-23. Despite potential challenges such as raw material scarcity and supply chain disruptions, the textiles business has showcased resilience and adaptability, ensuring continued success. These financial achievements reflect the organisation’s dedication, and strategic decision-making.
EBITDA
EBITDA, or earnings before interest, taxes, depreciation, and amortisation, is a measure of profitability that is different from net income. EBITDA attempts to represent cash profit generated by the Company’s operations by excluding non-cash depreciation and amortisation expense, as well as taxes and debt costs based on the capital structure. The EBITDA for CTIL for 2022-23 stood at ₹ 687 Crores and portrayed an increase of 38% from the previous year.
EBITDA in Crores (₹)
Cost Management and Efficiency
At CTIL, we place great importance on cost management efficiency as part of optimising our financial capital. Within our diversified business verticals of Real Estate, Pulp and Paper, and Textiles, we recognise the distinct cost dynamics and challenges. In the Real Estate sector, we prioritise cost control in construction and development. For Pulp and Paper, our focus is on maximising the efficient use of raw materials. In Textiles, we strive for effective supply chain and production cost management.
Process:
In our efforts to optimise financial capital, we leverage cost analysis to identify significant cost drivers and areas for improvement. Through strategic sourcing, process optimisation, and efficient resource allocation, we continuously seek to reduce costs while upholding quality and productivity standards. By diligently monitoring cost structures, we enhance our competitive advantage and ensure the long-term financial sustainability of each business vertical.
Below are some of the examples highlighting how we are driving efficiency and cost optimisation across business verticals:
At Real Estates: Efficient Project Delivery through Scalable Outsourcing Model
At Real Estates, we have adopted a highly scalable outsourced model to ensure efficient project delivery. With a strong emphasis on timeliness, quality, and safety, we collaborate with Grade “A” execution partners. The execution of projects is entrusted to appointed contractors who operate under the vigilant supervision of CTIL. Rigorous planning, coupled with thorough internal checks and safety tests, guarantees the achievement of both superior quality and cost efficiency in our endeavours.
Pulp and Paper: Streamlined Cash Management and Enhanced Efficiency
At Pulp and Paper, we are committed to continuously enhancing our cash management practices and maintaining a lean and healthy financial position. Throughout the year, we have implemented several initiatives to achieve this objective. Our focus areas include:
Revolutionising vendor liquidity by introducing a novel bill discounting scheme
Enhancing Cash Flow Vigilance: In-Depth Analysis of Cash Flow Items to Bolster Refunds, Claims, and Non-Trade Receivable
Comprehensive reviews of project financials with long-term payback periods
To reduce costs, we have implemented strategic measures to increase efficiency in the pulp and paper business. One major focus has been on reducing chemical usage throughout the manufacturing process. By carefully analysing and fine-tuning our chemical application practices, we have achieved significant cost savings while maintaining product quality and integrity. Additionally, we prioritise making our packaging more efficient by experimenting with new designs and materials that reduce waste.
To improve working capital management, we have implemented robust systems and processes. Initiatives include just-in-time inventory management, optimum management of finished and semi-finished goods inventory and leveraging economical alternatives for non-core items.
Textiles: Power Purchasing Agreement for Operational Cost Efficiency
In the Textiles vertical, where energy is a significant input for operations, we have entered into a power-purchase agreement for the supply of 3 MW of renewable energy. This strategic initiative not only helps reduce power costs but also maintains operational cost efficiency and contributes towards our sustainable agenda.
Shareholder Value Creation
We focus on maximising shareholder profits through efficient use of our capital and resources. To achieve this, strategic choices are made with long-term sustainability, growth, and profitability as top priorities. It necessitates careful resource allocation, intelligent financial management, and a dedication to generating value for shareholders through effective operations, cutting-edge tactics, and astute financial decisions. In the end, shareholder capital maximisation ensures that shareholders’ interests and investments are given the highest respect, cultivating confidence, loyalty, and ongoing support from the investor community. Through our strategic efforts, our market cap is maintained at ₹ 7,082 Crores. We also improved our debt to equity ratio to 0.26 as compared to 0.34 of previous year.
CTIL undertook various initiatives to bring efficiencies in all elements of its working capital management during the year. The current ratio is improved to 1.16 as compared to 1.07 of previous year.
Economic Value Creation
Economic Value Creation (EVC) evaluates a business as an investment with a requirement to deliver a specific return on invested capital. EVC encompasses two main components: Economic Value Generated (EVG) and Economic Value Distributed (EVD). EVG measures the Company’s revenue inflows, while EVD represents the outflows in the form of payments to internal and external stakeholders. The fundamental principle of EVC is to assess profitability and quantify the additional wealth generated for shareholders by subtracting EVD from EVG. This approach enables organisations to gauge their ability to create value and generate returns that surpass the costs associated with distributing value to stakeholders.
| Particulars | FY 2022-23 ₹ In Crore |
|---|---|
| Revenue | 4,799.65 |
| Other Income | 27.52 |
| Direct Economic Value Generated (A) | 4,827.17 |
| Operating Costs | 4,149.39 |
| Employee Benefits | 344.83 |
| Payment to Providers of Capital | 53.89 |
| Payments to Governments | 141.70 |
| Community Investments | 5.18 |
| Share of Loss of JV | 1.84 |
| Economic Value Distributed (B) | 4,696.83 |
| Exceptional Items | 134.21 |
| Economic Value Retained (A-B) +Exceptional Items | 264.55 |
Table: Economic Value Generated
Tax and Financial Strategy
CTIL’s market presence has various economic impacts, both direct and indirect. The Company’s operations in the Real Estate, Pulp and Paper, and Textiles sectors have led to an increased sense of competition in these areas, leading to the advancement of these sectors. Moreover, paper and textiles are basic necessities for the operations of various businesses, and hence the products of the Company indirectly support the economy.
The Company ensures timely payment of all taxes and statutory payments and follows the letter of the law to the fullest. To ensure proper adherence to all tax matters and maintain regulatory compliance, CTIL has developed a well-functioning tax strategy, which is reviewed periodically by the finance committee. CTIL’s tax approach ensures that the Company follows all regulations pertaining to tax or compliances, which enables the Company to maintain a healthy business practice and good reputation in the market. The tax strategy is implemented across all business segments, and the Company ensures proper accounting of all taxation matters to reduce any tax related risks. The finance committee and the audit committee are responsible for monitoring any changes in regulations and the tax strategy is updated according to changes in regulations. Additionally, no benefits are derived from governments by CTIL.
CTIL recognises its role in addressing and engaging with its stakeholders on all matters, including tax related matters and business conduct. To this end, we have open communication channels with our stakeholders through which they can provide us with feedback, address topics of concerns, and other grievances. They can do this through reaching out to authorised company representatives or through channels on the Company website. The only tax jurisdiction for CTIL is India, where the entity also pays advance tax. The Company’s annual report has a tax disclosure that is assured through statutory auditors. Monthly statutory payment compliance certificates are provided by a practicing-chartered accountant to ensure that all reporting and tax payments are accurate and compliant with the laws.
Concluding remarks:
By employing strategic financial planning, CTIL has consistently upheld a strong financial position. Our focus on optimising resource allocation, coupled with prudent risk management, has resulted in sustainable growth and resilience within the highly competitive market we operate in. The Company’s robust financial performance is a testament to our ability to generate significant revenue, improve profitability, and enhance cash flows. These achievements reflect the soundness of our financial management practices and underscore our commitment to delivering long-term value to our stakeholders.
Looking ahead, we remain steadfast in our commitment to optimising financial capital for sustainable growth. We will continue to closely monitor market trends, embrace emerging financial technologies, and proactively adapt to potential risks and opportunities. By doing so, we are confident in our ability to maintain our competitive edge and drive long-term success.
