Ladies and gentlemen, good day, and welcome to the Birla Corporation Q3 FY 2024 Results Conference Call hosted by HDFC Securities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rajesh Kumar Ravi. Thank you. And over to you, sir.
Thank you, Sagar. On behalf of HDFC Securities, I welcome you all to the conference call with the management of Birla Corporation to discuss the financial results for the quarter and nine months ended December 2023. From the management team, we are hosting Mr. Sandip Ghose, MD & CEO, and Mr. Aditya Saraogi, CFO. I now hand over the call to the management for their opening commentary, which will be followed by Q&A. Over to you, sir.
Very good afternoon, and thank you so much for joining. This is indeed heartening to see so many of you on the line. I think now we have more than 70 people, and we really appreciate taking out the time for us. This is Sandip Ghose, Managing Director and CEO of Birla Corporation. I have with me Mr. Aditya Saraogi, our CFO. Also Mr. Arun Agarwal, who is our CFO for Reliance RCCPL. I have Mr. Rajat Prusty, who is our Chief Manufacturing Officer, and Projects Head. And I have Mr. Kalidas Pramanik, who is our Chief Marketing Officer. This is actually the third conference call we are doing. We started doing it from Q1 this year.
In these nine months or three quarters, I think we have come a long way, both in terms of our conversations with the investor and analyst community, as well as what's been happening inside the company. There has been a lot of change. Again, we appreciate a lot of you analyzing and recognizing some of those progress which has happened and as is reflected in many of the reports you circulate. I would like to again record my thanks in that regard. We'll keep this conference from our side pretty focused and specific. I will make a few initial comments and then hand it over to my colleagues to add especially the financial and the elements of costs and other things, and also the marketing part, which will be discussed by the respective colleagues.
We as a company issue a fairly detailed press release in which we cover most of the aspects that usually people talk about in the conference calls post result. We cover most of it in the press release itself. You would have all seen the press release, so I would not like to cover those points again in the interest of time. We can take up any questions you have on those at the end of our initial intervention. I would like to emphasize essentially on two things. First, a major point of interest has been the progress of our Mukutban project. I hope you have noticed the steady progress which we made in the three quarters since I said we started talking to all of you. You would also, I suppose, appreciate that we have not predicted something ahead of expectation.
Whatever we have indicated to you, it has been either met or exceeded. Like we had told you, we will exit the year at 2 lakh tons, whereas we have touched 2 lakh tons in January end itself. We have reported positive EBITDA all three months of Q3, which again, I think not many people had expected. When we started the year, I had told many of you that there was probably some communication gap, either from our side or the understanding from the other side to think that the Mukutban was running behind schedule and it was going to be a drag on the company. I had clearly mentioned that, no, we are moving as per a plan and a particular trajectory. We clearly understand what are the challenges and how we are going to mitigate them.
You see that reflected, translated in the results. Essentially, we were driving on two levers. One was cost. Today we can say with great deal of pride that we are one of the most efficient and lowest cost producers of cement, not only in that region, perhaps in the industry itself. Equally, we were ramping up production and I think there was, again, some misperception or miscommunication in terms of what is the ramping up and how we would do it. There we had given you a clear understanding, and we had also clarified, I think, the understanding before that Mukutban was meant to supply entirely into Maharashtra, which was never really the plan and intention. Mukutban has to supply to its natural markets around Mukutban.
As a result of which, today we have reached 60% capacity utilization, which a lot of people had doubted that we will reach at this point in time. What I'm calling the natural adjacent market, that was very much part of our plan. As a result of that, today, I am selling— my presence in Gujarat has increased substantially. Today, I'm selling more than 1 lakh tons in Gujarat to become a significant player in Gujarat. A large part of that quantity is actually coming from Mukutban servicing south Gujarat, where there is a huge growth happening because of the activities of things like bullet train, the corridor. Surrounding that, there is a lot of economic and construction activity, and we are today in a position to take advantage of that.
Similarly, Southern Madhya Pradesh, which was not particularly economical for us, not the most profitable for us to tackle from Maihar. We are able to do that and release the Maihar clinker towards the more profitable markets in our core areas where we needed additional clinker, additional volumes, to be able to ring-fence ourselves from the newer capacities which we are putting up there. That is the concern people had that how are we going to retain our market shares in those parts in view of the newer capacities coming in. These were very much part of our plan. As a result, we do not get into the specific details, but in those markets which are key for us, Eastern U.P., Madhya Pradesh, we have not only retained our market share, but we have actually enhanced our premium in those markets and secured our position.
Talking of premiums, this is something which I have said in the past. It is probably not as well appreciated. This is a company, while everybody else is now talking of increasing the premium share and they consider taking it to 10% or 12% premium share. We have been above 50% for a long time. But the significance of that is not just 50% of premium. The significance of that is we have almost an equal presence in both the premium category as well as in the popular category, the value category, as we say. Very few company or I do not know of any company who can say that kind of a portfolio distribution between the premium brands and the value brands, which gives us a very unique position in the markets where we are present. Secondly, another point I have emphasized.
Part of the strategy has been to tackle our go-to-market supply chain in the most cost-effective and optimal manner. By go-to-market supply chain I mean, that is the examples I gave you, that whether I have to supply Gujarat from Mukutban or South Madhya Pradesh from Mukutban. These are very much part of our strategy. So when our plants have been created, we kind of encircle our core markets from all on a 360-degree basis with Mukutban there taking care of the south reach. We are going out there from Maihar, Satna, and then to Kundanganj, which takes care of the core and Raebareli, which takes care of that core area. Then from Chanderia we are able to service the North as well as Western MP. So this is part of our, again, a very clear go-to-market strategy.
When we are operating in the popular segment, there too, we follow a segmented approach wherein we have got a whole bouquet of brands which we can position them at various price points. So we have a Samrat, but we have a Samrat Advanced LPP bag in the same market, in the value segment, which has sold at a premium, but we are able to tackle our popular brands with a Samrat or a Chetak. So these are very much part of our overall strategy with which we have been working, and that is how we would like to go forward. Our future plans have been clearly indicated to all of you as to how we would like to first augment our grinding capacity and then move towards our next expansion of the clinker line, which will be Maihar Line 2 in FY 2027.
So that is broadly the picture which I would like to leave there. Last comment. Two things is we have indicated in this, I think we are probably the first company to indicate that there is reason to exercise caution in terms of the growth happening in the first quarter of this calendar year. In this quarter, what we are seeing, January has not been a particularly good month for the industry. Even right now, we are not seeing any kind of sharp firming up of volumes. Prices have slipped a little bit in the last week or so. So we are viewing this quarter in a cautious way from the marketing and pricing point of view. Therefore, we have only place where we are kind of revising our projection, as we had indicated, a 15% growth in volume.
But right now we are taking a call to say it will probably be in the region of 13%, and that is owing purely due to market conditions, not anything to do with our ability to service the market or our ability to compete out there. But we are sticking to our projection of INR 850 per ton EBITDA for the year, and Mr. Saraogi will elaborate on this further. But I want to really make a categorical statement that that is something which we are still confident of, and we are not revising our estimates there. With that, I will leave it for Mr. Saraogi, Mr. Prusty and Mr. Pramanik for initial comments, and thereafter we will move straight into the question and answer.
Thank you, sir. So, as Mr. Ghose said, that we are maintaining our guidance of EBITDA per ton of around INR 850. In this year, the factor been incentive coming in December month. So that EBITDA will be inclusive of December. Now, Mr. Prusty, if you have any comment.
So good afternoon to all, and thank you, Saraogi sir and our MD, sir. As rightly said by sir, yes, we are working on the cost reduction initiatives in all fronts, starting from the variable and fixed costs. We have optimized the fuel mix. Though the fuel cost reduction has helped a lot, apart from that, we are optimizing the fuel mix also, kiln by kiln, that is also helping us further to reduce our cost. As a result, you can see that our cost has reduced by INR 400 plus compared to year-over-year basis, and it is around 8%, which shows that the continuous efforts are on to reduce further the cost and to be one of the best costs in terms of total variable and fixed costs delivered to market.
Apart from that, there are some initiatives which already we have taken which, that is the six projects, which is mainly, it is driven for the manufacturing excellence project, which is really helping us for keeping the team together and working in small, very small initiatives, which really the team is working at the field, at the site, for helping us. In this quarter also, we could be able to achieve around INR 55 saving per ton of cement. Continuously we are working on all these areas, including Mukutban ramp up volume and reducing the Mukutban cost. All these initiatives are helping us to improve our volume and reduce our cost.
Thank you. Now I request Mr. Kalidas Pramanik.
Good afternoon to all of you, and thank you our MD and CEO, CFO, and Rajat, and our colleagues. If you look at the quarter three, our growth already has been published over there. Our main focus was in Mukutban. All of you have seen that in the Mukutban we are able to increase the volume. The volume increase, it is mostly concentrated in the natural markets of the Mukutban. If you look at the location of the Mukutban, it is not only just entire Maharashtra. There are certain parts of the Maharashtra where we are not getting, particularly the South Maharashtra. Whereas the MP, South MP is coming under this Mukutban's purview, where we have improved our volume.
Similarly, as our MD said that like Gujarat, that Saurashtra , these are the parts if you look at where the relation is good, and it comes from Mukutban point of view as a natural market. These are the markets where we have, Gujarat specifically if I talk about from Mukutban, almost 10% sales there happen. Looking at the price realization, yes, we are almost at par with the industry price realization in the quarter three. Particularly in our addressable markets, which are our factories' natural market. These are the markets we are able to take our realization better. In quarter four, if I look at outlook, yes, in the month of January, if you look at industry first day, there was some dip. But February, we are expecting that it will pick it up from mid of February.
March, focus would be there on primary as well, since a lot of infra projects are there. Most of the focus would be on the infra and commercial sides. But as we said that our focus still remain on the individual house segment. Though there is not much demand we are expecting in quarter four. But overall, if you look at, this will help us in terms of, particularly in the Maharashtra infra projects, it will help us to ramp up further the Mukutban volume. I am sure we are expecting very good volume with respect to quarter three from Mukutban. Realization, yes, realization, if I look at, there are pressure, but as manufacturing has taken the project. Similarly from the marketing side, we have our Project Unnati.
In the Unnati, basically our focus is on the cost reduction, how we can reduce our logistic cost. Second focus is on how we can increase further our premium products percentage out of our total PT. Third focus will remain on that, whichever is our high contribution zone markets, which is identified, and we are focusing on those areas. Another focus will remain as the network optimization, as Mr. Ghose already explained in terms of factory specific, like Mukutban, if I talk about which are the areas, which are the weak points we have to cater so that our logistic costs would be optimized. That is how these are the projects have been taken. Even if price doesn't go up in the market in absolute terms of bag, but these are the efficiencies I believe it will help in terms of taking an incremental or marginal improvement in realizations.
Thank you from Sales & Marketing team.
We now request questions from the-
Just one minute. Rajat, you may like to add something on our alternative energy and
Yeah
the renewable energy and green initiatives. What I'd like to point out is nowadays I find a fashionable term has become green cement. Everybody is manufacturing green cement. But the proportion of blend, which I understand as a layman, as blended cement, and the proportion of blended cement in this company has been close to 85%.
We would like to stay that way if necessary. If, as and when we can, we would like to take it up more than 85%. What we are calling blended cement, probably going forward, we should be calling it as green cement for better understanding or popular understanding, because I don't think we get enough credit for what we've been doing for a long time. Thanks.
Yeah. As you know, we are at around 23% to 24% . Last quarter, it was 23% on the WHRS and solar energy total consumption of that. Continuously, we are working to improve the efficiency, both in terms of reducing the auxiliary consumptions on the CPP and WHRS. This green energy contributes around 23. 3% last quarter. Going forward, we are working on further augmenting our WHRS capacities, plus the additional capacities in three plants on the solar, specially at Mukutban, then Kundanganj, and Maihar. These three plants we are working again for increasing the capacity of the solar installations. So that will help us, in fact, by FY 2026, we should be able to reach the level of 29% to 30%.
I'd like to compliment both the commercial and the manufacturing teams of the very dynamic fuel mix optimization they have done, due to which our fuel costs, our cost levels, we have, I think, bettered the industry.
Yeah.
Because for this quarter, it was INR 1.58 per thousand kcal, as compared to INR 1.75 in the immediately preceding quarter. So there was a reduction of 10% sequentially.
This is noteworthy, and I think a lot of credit goes to my colleagues in manufacturing and the commercial colleagues who secure the fuel. Thank you. We would welcome questions now.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets only while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is on the line of Shravan Shah from Dolat Capital. Please go ahead.
Thank you, sir, and congratulations on better profitability. Sir, the first question is on the volume front. As you mentioned, you have already reduced the guidance from 15% to 13%. But then also in terms of the, if I look at the ask rate for the fourth quarter, it seems like a 12.3 %. That is kind of a 5 million ton, kind of a number that we need to do for the first quarter. Are we confident to achieve that? On the profitability front, though we are maintaining INR 850 for the full year of the year 2024, that means for the first quarter, we need INR 1,100 kind of EBITDA margin versus first quarter we have achieved INR 903. Are we confident, and how are we going to achieve that? As you are mentioning, the prices have already reduced.
That kind of a cost saving is possible, INR 200 kind of a QoQ improvement in the fourth quarter.
First, let Mr. Pramanik answer your question on the volumes, for the fourth quarter volumes, and then we'll take up the EBITDA point.
Yes. As far as the volume is concerned, if you look at so far, we are 13% and overall year we have talked about 13%. In the quarter four, basic increase will come from our Mukutban site. If you look at our Mukutban volume in the quarter three, and vis-a-vis if I look at quarter four, the way we have projected. There's a major growth will come from the Mukutban plant. Then I'm coming to our existing addressable market of what, which is already established markets. There also, I'm expecting the growth would be around, say, almost 8% to 9% we are expecting. If I can get this kind of
Volume, then definitely whatever the projection we have given, we will achieve that projection. Basically, even the market subdued, major volume is from Mukutban, because already we have stated the market, Maharashtra and the surroundings. From those markets, our volume will come.
I want to add on Mukutban one point. Again, it may be of interest to all of you and to preempt any question. 60% of Mukutban volume is from Maharashtra.
65%.
65%, and that is something which we have indicated all through. We are maintaining, and we have achieved that. We have said 40% of our premium volume of our trade volumes, even that we are consistently maintaining, and we expect to improve upon it. Our premium prices are at par with the market leaders, the other brands. In U.P., M.P., our core markets, we can safely say that today our Perfect sells either at par or INR 1 or INR 2.
Or more than, yeah.
Well, a rupee or two higher than the mother brands of the leading A Category players, as you would call them. I pass it on to Mr. Saraogi to answer on the
EBITDA.
EBITDA.
We are mindful of the fact that we need to record high EBITDA in the fourth quarter. We are also cognizant of the fact that there has been some pressure on the pricing front. While giving this guidance, we have factored in some drop in prices to the extent of 3% to 4%. Still, our guidance is based on the fact that we will be recording higher volumes, which will yield higher contributions. Our various measures on the cost front are going to reduce the cost, which is also going to add to our EBITDA. Our Mukutban plant, the profitability continues to improve with each quarter, so that is also going to yield higher profits. Closely, the point that I shared about the incentive of Mukutban coming in.
Because of these factors, we feel that we should be able to achieve our guided EBITDA of around INR 850 per tons on an annual basis.
Okay. That is great, sir. If you can allow me, I can ask one more question.
I think we should not have follow on. I am sure these questions will follow many people.
Okay. Thank you, sir.
The EBITDA question, I hope, has been answered for everybody, because this question would have come up later. Please, let us not go back to that question.
Thank you. Mr. Shah, do you have any more questions?
No. Sir has said that you will take the next question. Thank you.
The next question is from the line of Amit Murarka from Axis Capital. Please go ahead.
Hi. Thanks for the opportunity. Coming up, incentives, firstly, could you kind of spell out the incentives booked in Q3 from Kundanganj and Mukutban?
Mukutban we have not started recognizing incentives. Amit, was it not?
Okay. Since the capitalizing is what I understand, which got mentioned earlier.
Kundanganj is INR 33 crores for this quarter.
Sorry, how much?
INR 33 crores.
I see. By when will Mukutban approval to P&L start?
That is what we said no? In this quarter, we are expecting that approval.
In the fourth quarter, we will start recognizing the Mukutban incentive, and that is something to repeat, is factored into our EBITDA projections for the year.
All right. The Kundanganj incentive expires in this quarter, right? Has it already expired or
No, no. It will expire in March.
Understood. Lastly, on the Maihar Line 2, you mentioned that it plans to commission in FY 2027. When will the work in the CapEx for the same start?
Next financial year.
Earlier, I remember you had said that there is a debt target you have in mind before you start to work on it.
Sorry?
I remember in the earlier call.
That debt target still remains. As we have shared in the past, we have a clear policy of maintaining debt to EBITDA ratio at a maximum level of three on a sustainable basis. On that basis only we make the capital allocations. On that basis only, we are going to start this project of expansion next year. And we are confident that we will be able to maintain our debt within the mattresses that we have considered as a policy.
Okay. Thank you very much.
Thank you. The next question is from the line of Aman Agrawal from Equirus Securities . Please go ahead.
Yes, sir. Thank you for the opportunity, and many congratulations on this event. First, wanted to understand on the lead distance for company as a whole and for the Mukutban plant.
Lead distance, it is around 350 km, and Mukutban is also coming around 300 km to 310 km.
Understood. Understood, sir. Second, on the RM cost side, we have already seen a kind of 10% kind of sequential improvement. If you can explain what has majorly contributed into this, and how do we see the RM costs going forward?
What sir?
Raw material.
Raw material cost.
Raw materials. Raw material cost is kind of behind, so we do not expect any major change as far as raw material is concerned. As far as fuel, I do not know if you mean fuel also within raw material. As far as fuel is concerned, as I said, we have had a sequential drop of 10% in fuel prices compared to Q2. In Q4, we expected the price to be at levels of Q3, which is around INR 1.58.
Understood, sir. Lastly, on the Uttar Pradesh expansion, which we are expecting by second quarter of 2025. That guidance still sticks? Any progress on that?
Actually, I do not think we mentioned second quarter of 2025. I do not think we have guided for that second quarter of 2025.
We said commencement of first production. Commencement of the project.
By the end of next financial year, around that time, we should be having that commission.
Understood, sir. Thanks, sir.
Thank you. The next question is from the line of Mangesh Bhadang from Centrum Broking. Please go ahead.
Good afternoon, and thanks for the opportunity. Sir, I have two questions. First is on the cost front. Basically, very evident reduction in cost that you have reported. Just wanted to understand the steps taken by you under the Project Shikhar, and how much more cost saving because of this initiative is possible going forward.
As rightly said, there are two things. One is the majorities of fuel cost, and we have optimized the fuel cost and obviously the WHRS plus our CPP operations also because the fuel costs are lower. We can see that from 12% of the CPP operation to it went up to 60% of the CPP power contribution. That shows that whatever the opportunities were there for the cost reduction with respect to the fuel, we are already doing that, and it will continue further also in this quarter also. In the Shikhar projects, yes, we are working and continuously our team is working, identifying the ideas, small ideas, small savings. This quarter also, we are sure that we will continue to maintain this INR 55.
Just to add to a point in regard to fuel, our composition of imported fuel in third quarter of last year was 43%. In immediately preceding quarter, that is second quarter, it was 31%. In this quarter, it is now down to 25%. That is the kind of change in the fuel mix that we have been able to achieve, and that is also contributing to the reduction in fuel cost.
Great. Sir, and similarly on captive coal blocks. We already have one captive coal mine, and we had got three under the auction. Just wanted to check on the timelines on when the different coal blocks and the others will start coming into the overall production.
Bikram Coal Mine we expect to start production in the second quarter of next financial year.
That should add almost 20% of total central capacity. It should basically take care of central region 20% requirement?
Yes, yes.
Okay, great. Thank you. I will come back in queue .
Thank you. The next question is from the line of Tushar, who's an Individual Investor. Please go ahead.
Yeah, hi. Congratulations on the good set of numbers. Just need a quick clarification on your statements. Like you said, Bikram Coal Mine , you expect to be starting second quarter of next financial year?
That's right.
Okay. One more clarification on Mukutban incentives. They're coming in Q4. Are they in Q3 as well?
No. In Q3, we have not recognized any incentive. We expect to start doing that in Q4.
Okay. [audio distortion] , in last quarter, you talked about improvement in NSR through geo-mix and it is an improvement of 2% in Q3. Should we expect further improvement going forward?
We would not like to quantify that number, but yes, there will be improvement on a sequential basis.
Okay. My last question is still on the fuel cost. You said to be in line at the level of Q3.
Yes. INR 1.58 is what we have achieved in Q3, and we expect the number to be in that stage in Q4 as well.
Thank you, sir.
Thank you.
Thank you. The next question is from the line of Sanjay Nandi from VT Capital. Please go ahead.
Hello.
Yes, please go ahead.
Thank you, sir, for the opportunity. Sir, [audio distortion] . What is the future of this project? Like in terms of points of cost savings we can actually take in with in coming two to three years down the way?
See, as we rightly said, this project was launched in last first quarter of this financial year. Continuously, our teams are working in each and every plant. This is the bottom-up approach project, and it is the involvement of all the team members who are working at the site. It is a project for the plant, by the plant, by the people. This concept of improving the manufacturing efficiencies and excellence in manufacturing, both in terms of improving the KPIs and reduction of the wastages. All these things are small step projects people are working. Continuously, our aim is to reach to the level of INR 100 in two years, which already we have seen a result of INR 55. So another INR 45 is the target is there.
Which we are working, but it will take time to really materialize because there are small step projects and the savings are also small. The CapEx are also very low CapEx or it's a nil CapEx projects.
Got it. Okay, sir. That's it from my end, sir. Thank you very much. Wish you all the best.
Thank you.
Thank you. The next question is from the line of Saket Kapoor from Kapoor & Company. Please go ahead.
[Non-English content] sir, and thank you for this opportunity. See, sir, as usually in your past cities wherein you have articulated the fact that demand has remained subdued for January due to extreme winter and fog across the country. Is this the only reason for which the sales have not kicked off, and now with the weather getting cleared, we can see the ramp of execution in the projects where we are supplying cement will check up? How should one understand the situation?
You see that in the month of January, yes, there are some fog area, mostly in the northern part. Because of that, there are some drop in sales. But as far as in the industry perspective, if I look it from our side, we did not have much drop. Rather, we have maintained what we used to last. In the month of even January also, what's the growth we have maintained, that is mostly from our Mukutban plant. As already it is mentioned in the, or already published that 2 lakh tons, we have done more than 2 lakh tons from Mukutban. So that gives us the overall growth in our case. But yes, overall, if you look at industry percent, the demand, except top northern part, there was subdued demand.
Okay. Sir, when we mentioned 2 lakh tons for month March, what was our quarterly numbers from Mukutban and what are we penciling in for the first quarter in terms of the sales? I think, sir, there is some threshold after which the benefits will start including. So if you could give some color on that also.
2 lakh was what we achieved. The next quarter we will do at least 6 lakh tons in terms of volume.
We had indicated 2 lakh tons on the exit of March. We have achieved it earlier. We expect, therefore, to maintain the same rate and come somewhere close to 6 lakh tons in the fourth quarter. That's basically what we could say right now. In terms of there is no threshold. Fourth quarter, we will start recognizing the incentive. That's the plan.
Okay. What would be the amount, sir? How much we will achieve?
We will not indicate the amount right now. That's not-
Yeah. We can't say-
Say that's not proper.
Okay. One more point on the transport and the forwarding expenses on the finished product. On a QoQ basis, our volume has risen from 4.18 million tons to 4.2 million tons, wherein our transport cost has gone up from INR 453 crores to INR 488 crores on a QoQ basis. What expenses increase and how has it been rationalized going ahead? Any one-off item in here?
If you look at the total delivered cost, that has gone up because of the business driven surcharge. Whatever the increase happened, that is not totally added. Whatever the projects we have taken, small projects in logistics, like digitalization as well as that automation process, that helped us in terms of reducing that TPD, what it should be if I add the surcharges.
We have not had the full impact, negative impact of the surcharge. The business driven surcharge would have affected everybody. That's where, to answer your question, is the jump. But the jump is much lower than what would have been had we not put in our cost savings or cost efficiencies in place. Back to you next person, please.
Yes. Thank you, sir, and all the best to the team.
Thank you.
Thank you. The next question is from the line of Shravan Shah from Dolat Capital. Please go ahead.
Thank you, sir. Sir, how much CapEx we have done for till nine months and for full year and for next year FY 2025, how much CapEx are we planning to do? At the same time, what is the gross and net debt as on December?
CapEx we have done till December, INR 415 and by-
INR 415, and within March, we will do less than INR 700 crores. Our net debt as on December 31 was INR 3,470 crores, and we expect to end the year with a figure less than INR 3,400 crores.
Okay. Got it. Then, sir, you mentioned this 1.4 MTPA grinding unit at Prayagraj to start by fourth quarter FY 2025 or fourth quarter FY 2026?
Exactly. We expect to start that by the end of next financial year, which is FY 2025.
The production will start from fourth quarter FY 2025.
Yeah.
The next expansion, definitely the Maihar Line 2, and then the further grinding units also in the coming years, whenever we will be announcing. But our plan is to reach a 30 MTPA by FY 2030. That will remain. But any intermediate guidance, if we have any, after three year, how much capacity we-
No, by FY 2027, we expect to reach a capacity of 25 million tons.
These are very clearly stated in the press release as well.
This 25 million tons was already mentioned.
I mentioned, yeah. Thank you.
Okay. Got it sir, and all the best.
Thank you. The next question is on the line of Prateek Kumar from Jefferies. Please go ahead.
Yeah. Congratulations on good results. Clarification, you said CapEx for FY 2024 as INR 415 plus INR 700 or complete CapEx of INR 700 crore?
Total CapEx till December is INR 415. We expect to end the year with a figure less than INR 700.
Okay. We were looking at INR 1,000 crore earlier in the year.
Yeah. We will be spending less than what we have indicated earlier.
Sure. Okay. On volume, so including the ramp-up of volume, total Mukutban volume for the year, how much? Like expected how much, and what is the expectation for next year?
I don't think we can give that detail, but as we have indicated, we expect to end this quarter, in Q4, we are expecting a volume of 6 lakh tons. In Q3 it was 4.9 lakh tons, so there will be a sequential improvement of 22% in volume.
Thank you, sir. These are my questions.
Thank you. The next follow-up question is from the line of Mangesh Bhadang from Centrum Broking. Please go ahead.
Hi. Thank you, sir. My question was regarding the Chittorgarh Stone Mines . We have got an approval now to do blasting. Just wanted to know, just because have we already started and stopped the mechanical mining there? Or in case if we do, what kind of cost saving would it entail for us?
See, your perception is not correct. What the court has, or the Honorable Supreme Court of India has ruled, they have asked four months study to be conducted by Indian Institute of Technology (Indian School of Mines), Dhanbad, and to assess if at all the blasting has got any impact on the Chittorgarh fort . Once that study is completed, the report will be submitted to the Honorable Supreme Court of India, and based on the findings of the report of the study, the court is going to take up the request.
Okay. Since during this period, you are only allowed to do blasting for the study purpose and not commercially.
Yes. Right.
Okay. So probably it is a long matter. So there will be a report to be filed, and then it will go again to the [audio distortion]
Yeah, but four months timeframe has been given. So in that sense, it is not such a long timeframe.
Understood. And sir, just one more thing. You mentioned you are tapping certain Gujarat markets from Mukutban, which is almost 800 km away. So just wanted to understand how the economics look in that respect. Is the realization much higher there, which can take care of the additional freight, or is it because of better connectivity, or just because we are getting some volumes there?
No, we are not doing it any incremental way. It is definitely profitable. Prices, as well as our connectivity by rail, makes it very lucrative for us to sell in Gujarat. It is a natural market according to us, South Gujarat, and in due course, the Bombay region. But the Bombay region has a different material requirement, and that we will take care in due course.
Understood. Thank you.
Thank you. The next question is on the line of Keshav Lahoti from HDFC Securities. Please go ahead.
Sir, congratulations on good set of number. Was the Kundanganj incentive in similar range what it has been in Q3 for Q4 also?
Yes, around the same range.
Okay. And whether the fuel costs have reduced due to higher linkage and captive in this quarter? What is the number for linkage and captive for Q3?
No, that is not the reason. The reason is the change in the fuel mix and the drop in the fuel prices, procurement and fuel prices.
Okay. What is the percentage of linkage and captive?
Linkage and captive, I cannot give a separate figure, but as I indicated, our component of imported fuel on a sequential basis has come down from 31% to 25%. So the procurement of domestic coal is to the extent of 75% in this quarter, and domestic coal is the cheapest source of coal fuel in most of the regions, especially in the plants located in the central part of the country.
Okay, understood. Good. And sir, on Mukutban incentive you highlighted it will come from Q4, but from which month? Have you started accruing from January?
We are not trying to get into that, but in Q4 you will find out.
Okay, so it would be more like a back end of Q4, like maybe last quarter.
It does not matter whether it is back end or beginning. That is a matter of-
The position. Exactly.
ecognition and putting there. It does not change anything in terms of declaration or anything.
No, the question is more on the side of, I am talking more from Q4, the guidance of EBITDA per ton. So if Mukutban incentive also does not come in a major way, then the 4% uptick in realization, would it be a tall task in the market when the market is muted?
As we said, we have factored it very clearly in. So when we are giving you a guidance of INR 850, obviously, we are factoring in how much will come in and whether that allow us to meet our guidance. That is where you have to either trust or-
Do your own interpretation.
Do your own independent view on the management guidance. We cannot give our own guidance.
Yeah, understood. That is quite helpful. Thank you.
Thank you. The next question is from the line of Raghav Maheshwari from Asian Market Securities. Please go ahead.
Sir, can you please little bit elaborate about all the three Bikram, Sial Ghoghri, and Brahampuri . Whenever the mining will start at all three, what is the 1,000 per kcal cost will come from these all three mines?
Yeah, Sial Ghoghri is already in production.
Yeah, I know, sir, Sial Ghoghri. That will be covered in Brahampuri, what will be the estimated cost of the 1,000 per kcal ?
Bikram will be around INR 1, not Brahampuri. Brahampuri, we are not pursuing currently. Maithili by itself, the one we are pursuing. So that will be around INR 1.25.
And for the Sial Ghoghri, sir?
Sial Ghoghri, it is INR 1.45.
Sir, whenever all the three mines will start, how much it will cater for our all the clinker capacity increase including Mukutban as well as Sial Ghoghri?
60% of the enhanced capacity after Maihar Line 2 of-
Yeah
Maihar starts.
60% at the company level for a clinker, right?
Yeah, correct.
Including CPP.
Including CPP.
Okay, including CPP. All the three mines have a clean grade coal or any one have only CPP grade?
No, mostly. We will be able to use it in clean as well as CPP.
Okay. Got it, sir. Okay, sir. Thanks.
Thank you. The next question is from the line of Uttam Kumar Srimal from Axis Securities Limited. Please go ahead.
Yes, sir. Thanks for the opportunity and congratulations on good set of numbers. What is our volume growth guidance for FY 2025?
We cannot do that. Maybe we will be able to give that guidance in the next conference call.
You must leave some material for us to talk in the next conference. As it is, your speeches are becoming shorter and shorter.
Okay, sir. And sir, what has been our borrowing cost for this quarter?
7.98% in Q3.
Okay, sir. That's all from my side, and all the best.
Thank you. The next question is from the line of Vipul Kumar Anopchand Shah from Sumangal Investment. Please go ahead.
Hi. Thanks for the opportunity, sir. My question is, you said by 2027 we will be reaching 25 million tons. So 5 million tons, where we are adding and what type of CapEx we are incurring on that, and it will be only clinker or there will be grinding capacities as well? Thank you.
As Mr. Pramanik has indicated, it will be a mix of I.U. The clinker capacity will come at Maihar, doubling of capacity at Maihar from 10,000 TPD to 20,000 TPD. Grinding will be straight grinding unit that will be coming in the state of Bihar, couple in Uttar Pradesh, and maybe one in the West.
What will be the CapEx for this 5 million tons?
That we are not able to share at this juncture. Once we get the board approval, which we intend to get in the beginning of next financial year. Once we have that, then we will be able to share specific details.
Okay, thank you.
Thank you. The next question is from the line of Anupam Jain, who is an Individual Investor. Please go ahead.
Yes. Hello, sir.
Yes, please.
Hello.
Yes, please.
What I wanted to understand is, how is the regional demand going on? As you are expanding the capacity and you are saying there is a cautionary side. So how is the demand looking from two to three years perspective?
The caution which we have given is only for this quarter. Two to three years projection, we will give it to you as we said, leave something for the next conference call.
You are just, as the elections are coming up and you are saying this is much more in the marketplace, not majorly just to weather. Is there any phenomena that you are experiencing apart from that? That is my primary question.
We are giving you by the trend. We are giving you by the trend of what January has happened. When people were expecting the quarter, there's obviously the past trends of January were factored in. We've seen that, we have seen softening of prices. That's what we can comment at the moment. We are not really looking into elections or how elections will affect. That's a subsequent change. So right now, we have taken a free call and Mr. Kalidas Pramanik has very clearly said our growth will come primarily from Mukutban, and where we are making steady progress. So we are practically sold out in our other plants. So we are not really looking at volume increases, substantial volumes to come, additional volumes to come from there.
Okay, thank you.
Thank you. Ladies and gentlemen, we would take that as our last question for today. I would now like to hand the conference over to the management for closing comments.
That was a great conversation. Thank you so much for your interest, continuing interest in the company. Thank you for your words of encouragement. We really appreciate that, and we continue to look forward to your support, and your confidence and faith in us. Thank you.
Okay, sir. We can now conclude the call.
On behalf of HDFC Securities, that concludes this conference. Thank you for joining us. You may now disconnect your line.