Ladies and gentlemen, good day and welcome to the Earnings Conference Call for the Quarter Ended 30th June, 2026 on JK Lakshmi Cement Limited, hosted by PhillipCapital (India) Pvt Ltd. As a reminder, all participants lines will remain in the listen only mode, as there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing star then zero on your touch-tone telephone. Please note that this conference is being recorded. I will now hand the conference over to Mr. Vaibhav Agarwal from PhillipCapital (India) Pvt Ltd. Thank you, and over to you.
Thank you, Ryan. Good evening, everyone. On behalf of PhillipCapital (India) Pvt Ltd, we welcome you to the Q1 FY 2027 call of JK Lakshmi Cement Limited. On the call from JK Lakshmi Cement, we have with us Mr. Arun Shukla, President and Director, and Mr. Sudhir Bidkar, Deputy Director, Corporate Affairs and CFO of the company. I would like to mention on behalf of JK Lakshmi Cement Limited and its management that certain statements that may be made or discussed on this conference call may be forward-looking statements based on current management expectations, and also something that relates to future expected business developments by JK Lakshmi Cement's management. Such statements are subject to a number of risks, uncertainties, and other important factors which may cause the actual developments and results to differ materially from any management decision made on this call.
JK Lakshmi Cement Limited and the management of the company assumes no obligation to publicly update or alter these forward-looking statements, whether as a result of new business development or information or future events or otherwise. Also, the participants of the call can download a copy of the Q1 FY 2027 results presentation from the company website. I will now hand over the call to the floor of JK Lakshmi Cement management for their opening remarks, which will be followed by interactive Q&A. Thank you and over to you, sir.
Yeah. Thanks, Vaibhav. Good afternoon to all of you. Thanks for joining this call of JK Lakshmi Cement, which we are going to discuss quarter one results. Before we take questions, I'll just give you a brief update, though we have already uploaded our results and also all the parameters. Still, I think there's a couple of things which are important to note here. Of course, I think if you really look at demand side, quarter one FY 2027 was reasonably all right despite having a lot of issues externally, and one of them was the geopolitical situation which we are in. Despite that, I think demand was better. Industry has grown by about 8% or so. Supply side, around 11 million tons has been added. That is what I think information which we have.
Overall addition is going to be about 52 million tons as per the estimation which we have with us. Overall installed capacity of cement in India after 11 million ton addition is about 725 million ton. Capacity utilization last quarter industry level was on an average about 73%- 74%. A couple of players higher than that and some of them were lower than that. This is on the supply side. If you look at cost side of it, all of us know that cement industry is being impacted by geopolitical situation which is existing in different parts of the world and the major being Middle East conflict which is happening. That has disrupted the entire supply chain and the impact of that is on the import which we do, particularly fuel from outside and coal and petcoke.
Those players who are there in northern part of India, I think they were dependent more on imported coal and petcoke. So that has impacted our cost part of it. Even related other products also because of geopolitical situation, be it explosives, chemicals, other things also, prices have gone up. If you look at the price side of it, price increase has happened but not to the extent cost has gone up. Pass-through has happened partially. In our market where we operate, non-trade prices have gone up. Trade largely were kind of flat. In some of the market, even trade also improved a bit, but overall, pass-through has not happened to the extent cost has gone up.
Internally, JK Lakshmi Cement, we have been working on various ways to mitigate this external situation by working on different levers which we have within our control and, of course, how we can really readjust to the reality of fuel situation or energy situation which is existing. How we can use, let's say, little more of indigenous coal and replace petcoke which was getting imported. Similarly on renewable energy front, on logistics front, and even on top line elements like volume, premium products, geo mix and all. Which I have been kind of telling all of you that this is what our focus is. We focus internally and externally wherever we can mitigate with our internal action. That is what we have been doing in the last quarter.
This is just a brief.
This is a kind of uncertainty in terms of cost landscape and particularly on the fuel part of it. Now we are through this cyclicity, so of course, I think this is going to be a kind of double impact this quarter. One is on a leverage part of it, and second, cost impact, it is going to be a little more in quarter two than what it was before. This is what is there from my end as of now. Now this is open for question and answer from you.
Yes. Before we take up the question answers and throw the floor open, I would like to make a mention that all investors would know that we had an AGM last week, and in which we had proposed various resolutions.
Unfortunately, despite the fact that all these resolutions were in full compliance of the law and as per the SEBI (Listing Obligations and Disclosure Requirements) Regulations guidelines, the proxy advisors had proposed a negative voting for some of the resolutions. Some of the investors, just based on the negative recommendation of the proxy advisor, had casted a negative vote on some of the resolutions. Fortunately for us, very many mutual funds and FIIs took a pragmatic view based on the representation made by the company to these proxy advisors. Though they issued the addendum attaching the company's response to their recommendation, they did not change their recommendation. You would be surprised that even the re-election of the professional director, Mr. Shukla, was recommended to be negatively voted by some international proxy advisors.
Fortunately for us, as I mentioned, very many mutual funds and FIIs took a pragmatic view and casted the vote in favor of these resolutions, and all these resolutions were passed with overwhelming majority and whatever majority was required to be passed to get these resolutions through. We expect our investors take a pragmatic view in the matters, discuss the matter with the company, and take a conscious view rather than just basing it on the recommendations of the proxy advisors. That is the opening comment I wanted to make, and we can now throw the floor open for question answers, please.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Sanjeev Kumar Singh from Motilal Oswal Financial Services. Please go ahead.
Thank you for the opportunity, sir. My first question is on realization. As you mentioned that trade prices did not move up materially. There was some improvement in non-trade prices. Overall, your realization seems to be up by around 9% on a sequential basis. What is this related to? Is this related to some sort of market mix, some sort of product mix? Can you throw some light on this?
Yes. Non-trade prices went up in some markets, and even trade prices also went up in few markets, not all markets. But major increase was there in non-trade, so that has helped us. But the major impact has come about through our focus in geomix, the material where we are going to sell, and that has impacted our realization a bit. So one, of course, non-trade, because we are little heavy on non-trade, you know that. Even last quarter also, 41% is our non-trade, right? So non-trade price increase in markets like Gujarat and Mumbai area. Even east also, it went up, and north as well. Trade was kind of stable in north, went up a bit in the west and also in east. So that has helped us to improve our realization. So geomix and the price increases which we had.
And of course, I think other levers which we keep on working on. For instance, if you really look at our lead. Lead has gone down by 20 km last quarter. So combination of all these parameters has helped us to improve our realization.
Would it be possible to share some more colors on the geomix change, like in which markets you have seen some improvement in your volumes or where have you reduced your volume?
No. I think that is evident because if my lead is moving down by 20 km, so my sales have increased in nearby areas. I think I do not have that breakup geography-wise as to where we have sold how much. But yes, of course, I think far off market, we have reduced quite a bit in the last quarter.
Okay. Second question is on your variable cost. This also looks higher than what the peers have reported. Can you give some information on per Kilocalorie cost in terms of fuel in this quarter versus what was in Q2 and currently what is it as of now?
Yes. Last quarter, fuel cost was INR 1.65, which went up from INR 1.54 preceding quarter. There is an increase of about INR 0.11 . That is one of the major element, I think. Fuel per kilocalorie increase is one of the major contributors to this.
What is it currently, sir, in this quarter, in Q2?
Quarter two, I think we are just close one quarter, so it is going up for sure. I think it is more than INR 1.65.
Okay, thank you. I will come back in the queue.
Yeah, thank you.
Thank you. To ask a question, please press sharp and one. We take the next question from the line of Amit Murarka from Axis Capital. Please go ahead.
Hi, good evening, and thanks for the opportunity. Could you share the number of other operating income which you had in the quarter?
Other operating income, yeah. Treasury.
Treasury ones. Yes, sir. Not much. No, the other operating income is basically other income, which we have shown separately. Other income. Not the other operating income. It is the income from the treasury.
Yeah, I know. Other income, I know it's there in the results. But there are also other kind of non-revenue related operating incomes also, right? Which are booked in revenue.
Other operating income. We do not have any other non-operating income.
Sure. On this price improvement of 8%-9%, I understand that you say that it is geo-mix optimization, but could you still explain what are the markets where, let us say, you sold more? This is a really meaningful increase, as you would also agree. Just to kind of better understand.
Yeah. Major, I think we have four major markets where we sell. Gujarat, Rajasthan, Chhattisgarh, and Haryana, and part of Western U.P. Just to give you a sense, we have sold about close to 90% sales in these markets.
Okay.
Yeah.
Last quarter, what was the number for that?
Sorry?
Last quarter, was that number lower, as in for Q4?
Yeah. Of course lower. It must be about at least 10% lower than this. That has impacted our lead also. If you look at our lead, it has gone down from 388 to 368.
Okay. Understood. How much CapEx has been spent on the Durg expansion so far?
Total in this quarter, we have spent about INR 300 crore in this three-month period. If you want to know separately on how much has been spent on Durg only for that expansion, it is about INR 400 crore.
INR 400 crore in aggregate so far, you mean?
Yeah. INR 400 crore in aggregate so far, including what has been spent in the previous year. Total for FY 2027 in 12 months period, we expect a total CapEx of about INR 1,500 crore. Thereafter next year, slightly higher at INR 2,000 crore, and then again INR 1,500 crore. This is without taking into account the expenditure to be incurred on land acquisitions for Kutch and Nagaur, which is slightly going slow. That is what guidance for as of now is.
Right. This guidance includes the Northeast expansion also?
Yeah. Northeast, this does include the Northeast also of INR 1,500 crore.
Understood. Also, could you share the number for the non-cement revenue in the quarter?
Non-cement revenue in this quarter was INR 185 crore, I think. Yeah, INR 185 crore.
Okay.
INR 185. This included-
Yeah.
The RMC of INR 93 crores and other products, AAC 67, BOP 23. That is what was made up of INR 185 crores.
Got you. While fuel cost, you said, will increase a bit in Q2, is there any other area of cost inflation which will be there? I believe packaging would be moderating now.
No. Packaging cost also, the recent trend is now the granule prices have gone up. I was just kind of looking at it. It went down little bit, INR 134 crore or something. Now it has gone up to INR 145 crore. So that is also going up, and the impact of that to my calculation, in in-sell calculation is about, on bag itself is about INR 3.5 to INR 4 per bag.
Over and above Q1, you mean?
Yes. This is the reason. So this cost has gone up, packing cost is going up. Pet coke was kind of softening a bit, little bit in between, but it has gone up, shot up once again. It is gone up more than INR 140 crore-INR 145 crore now. Same goes with imported coal also, about INR 130 crore-INR 135 crore per ton.
Okay. Understood.
Yes, the clinker factor is constant. It has not gone up with respect to last quarter, but fuel cost, packing cost, this is definitely, I think, is on increasing trend now.
Correct.
Again, if something happens, something positive externally, then I think things may improve, but this is what it is as of today.
Sure. Would you be able to share a number, let's say, for cost inflation for Q2 then in aggregate as in important basis?
I think the major contributor is going to be fuel cost. From 1.65x to maybe it can touch even above 1.8 + or even 1.85x .
Understood. Got it. Just a last data question also. On the non-cement business, what would be the EBITDA margin in the quarter?
5%.
Okay. That's it from me. Thank you.
Thank you. Press star and one to ask a question. We take the next question from the line of Rajesh Ravi from HDFC Securities. Please go ahead.
Hello. Am I coming?
Yeah, Rajesh. Good afternoon.
Hi, sir. Good evening. First, starting with what was the clinker sales volume in Q1 out of this INR 35.98 lakh .
Yeah, just hold on. I will let you know.
INR 1.63 lakh.
INR 1.6 lakh , am I right?
INR 1.63 lakh.
INR 1.63 lakh.
INR 1.63 lakh . Okay. So there is a fall in the clinker sales volume quarter-on-quarter. Is this understanding correct?
Yeah, absolutely.
Okay. Second, the reported cement realization which you share, that number is up by almost INR 20 per bag, quarter-on-quarter. You mentioned that trade sales or trade realization barely moved and non-trade would have improved. There is a sharp INR 20 increase.
Yeah, go ahead.
On a like-to-like basis, what was the price improvement seen in the trade and non-trade segments? I just want to split the benefit on account of price movement and on account of geomix optimization.
I do not have granular figure, but I will just let you know. Based on geomix, the reduction is about 20 km. That translates to about INR 60-INR 70 per ton. Rest is your price increase. See, if you really look at west prices like Gujarat and even Mumbai where we sell a little bit. Our non-trade proportion is very high. Their prices went up and that has helped us.
Okay. Understood.
Trade prices went up in the East, so that has helped us. North was almost kind of constant, little bit here and there, not much. Non-trade even North also has gone up.
Mm-hmm. Understood. If I look at your, you have mentioned in the presentation that your lead distances come off, but if I look at the freight cost, that number has inched up by INR 30 per ton. Obviously, there would be some impact of diesel price increase for a month.
Right.
We haven't seen the benefit of the lead distance in the freight cost.
Yeah. We kind of hold on to freight for some time, but in certain routes, certain lengths, we had to increase this because diesel prices went up. But the reduction has been much more than what inflation we gave in terms of freight.
Sorry, I didn't understand the last part.
The reduction which we have taken 20 km-
Is then surpassed the cost inflation or the freight increase which we had given to our transporters. That is what I am trying to tell you.
Okay. You are saying that your freight operators have taken a larger increase, but that impact is moderated because of the lead distance reduction which you have seen. Were there any maintenance shutdowns at cross plant which would have inflated the other expense numbers in this quarter? Because even that is at very high, at INR 77 per ton.
Yeah. No. Packing cost and reload. Packing cost.
Packing cost and reload. That is why they-
Right.
No, we took maintenance also in some of the plants.
There was some maintenance part, not major, because major maintenance is happening annual shutdown this quarter. But packing cost is one cost which has gone up. And some of the plants, I think we had some shorter shutdown also to work on few things.
Understood. Now between Q1 and Q2, you are looking at your fuel cost going up by INR 0.20 , which would be like INR 100 per ton. And even packaging, you are implying INR 3 - INR 4 per bag, means around INR 80 increase in packaging cost. Even if I take it further, at least INR 50 to INR 60 impact. So we are talking about INR 150+ variable cost increase. Additionally, there will be an op level loss sequentially and also maintenance-related expenditure piling up in Q2. And obviously, cement prices have not moved up, rather they would have a negative bias versus Q1. So are we looking at margins tapering off significantly in Q2 versus Q1 based on current cement prices?
See, typically July, September is cyclical, demand cyclicality.
Got it.
All of us take maintenance during this time. That definitely impacts our margin, right? Now, as I said before, on energy front, fuel front, there is an uncertainty. If things improve, then I think it is going to be good. Also, this is impacting across industries and pass-through also definitely will happen. That is what I believe.
Okay.
It is not going to hit our margin. We will try to pass it on to our customers because absorbing this much cost is not possible. I think we will have to pass it on.
The only challenge would be that this is falling or coinciding with demand cyclicity. How much pass-through of that is going to happen, that is a big question mark, how much we will be able to pass it on. That is what the crux is. Otherwise, definitely pass on will happen and cyclicity will impact. That is something which is every year phenomena.
Understood. But so far in July and early August, what has been the pricing trend versus average of Q1?
July, August, if you compare, I think I have not seen much upward trend, but prices have not gone down even.
Understood.
Prices are stacked in all markets till now because we are just sixth of the month, August.
July has just passed. Prices have not gone down. Maybe I think if you know that July has been a little wetter than July previous years.
Understood.
I think demand will improve or maybe I think a little bit upward in demand will definitely help us to take up some price increase also.
Understood. Lastly, on the CapEx, what is the equipment ordering status on the eastern and central expansions and on the railway siding phase two as well as on the conveyor belt in the Durg?
On ongoing projects, major equipment ordering we have already done. For instance, like Durg, our second clinker 9 plus grinding facility plus grinding at our Patratu and Madhubani.
They are. So that major equipment ordering we have already done.
Okay.
This railway project, which I said before also, that is contingent to the kind of collaboration with Steel Authority of India Limited and other stakeholders.
And even since we are just passing through some road also, PWD road, I think that has to kind of a collaborative approach with all those stakeholders also to take it forward. But that is no way impacting our operations because we are operating our railway line full phase, no issue. And whenever that kind of collaboration happens, then we will take this railway project forward, whatever is remainder.
Mm-hmm. And the overhead conveyor belt project?
Overhead conveyor belt, as I said that this approval was pending with Steel Authority of India Limited. Has been approved. Now this is, proposed agreement is now lying with Steel Authority of India Limited, and they have to go ahead to do this agreement and contracting. So we have reached to that level till now.
Understood. Sir, that is really great. I will come back into you. Thank you and all the best.
All right. Thank you.
Thank you. Press Star and one to ask a question. We take the next question from the line of Girija Ray from Nirmal Bang Securities. Please go ahead.
Hello, sir. Good evening. Thanks for this opportunity. I have few questions. One number related question that is first. What is our total thermal capacity? If you can provide me RE component installed capacity as of today. What is our progress towards increase of RE capacity and for power and cooling cost savings purpose? This is my first question.
Okay. You are so right. Last quarter, we have renewable energy 49%. Whatever energy we consume, 49% is our renewable energy, and that includes solar, wind, and WHRS. This is in terms of our renewable energy, 49%. Of course, I told you that our plan is to take it up. We are working on some other projects also, and going forward, maybe six months, eight months down the line, we'll further improve this percentage. This is part one of your question. Part two was what? Just I am listening to-
Point is, thermal capacity and renewable component capacity like solar, wind, and WHRS. Installed capacity.
Yeah. I can give you that data. Solar is 129 MW, WHRS is 45 MW and wind is 4 MW.
And the thermal capacity?
74 MW.
Okay. Coming back to my second question. See, if we talk about the regional pricing, right now if we see North and East, generally these prices are very high cement prices, I can say, as compared to other regions. If in case there is a price hike across geography, do you think that we still have some kind of potential of a price hike? In fact, in a different way, if we see, if there is a price correction, there might be significant chances that the North and East can impact much rather than other regional price. How to see when already we are in a very high price in North and East regions. Please correct me if I'm wrong or just give me some view of yours.
I have a different view. I don't know where from you're coming prices are high, because North cost is also the highest. As I told you, one of our investors, they were asking impact of these geopolitical situations. I explained in my opening remark also, that North has been impacted the most because we were importing coal and pet coke. Right?
Yes.
To my mind, I think pass-through has not happened in North. North has a better headroom to increase prices than other zones. This is what my take is, which is a little different than your understanding.
Okay. Fair enough.
If you look at the lowest price, perhaps, which is existing in entire India is eastern part of India, and particularly in Chhattisgarh.
Okay.
Perhaps prices have not really gone to the level by which cost has gone up.
And look, this industry is so capital-intensive. And you know that kind of ROC or ROI different players are getting. I don't think that prices have gone to that level that there is no headroom. I feel other way, that there is a headroom because cost has gone up drastically.
Last question, if I may. So our non-trade segment share is 41%. So a few years before, most of the players, they were trying to increase their trade segment. Now, do you see for next two years, non-trade segment is going to work out more rather than trade?
So in general, I think it is very difficult to really see non-trade or trade, because this segmentation is also based on the margins, to my mind, and other segmentation, of course, B2C and B2B. But when you really focus on margin part of it, you have different landscape in different states. In general, I think, if you ask me, then yes, of course, trade is better than non-trade on two things. One, of course, overall margin is better, and second, in trade, you sell mostly blended cement. So that is anyway beneficial. But if you go to that regional nuances, then I think you have a different kind of thing. So a player like us, I think we will have a different strategy in different market with respect to trade and non-trade. Right?
But overall, if you ask me, yes, of course, I think effort is going to be there on trade even going forward, more so because mostly blended cement gets sold in trade segment. And that gives you a better equivalent realization than selling other products. Right? Maybe I think absolute price for the margin, if you look at them, maybe other product will look a little higher. If you really look at equivalent contribution considering clinker factor, then blended is always better. Overall, I think trade is going to kind of focus area in coming future also. I do not see that it is going to change maybe in couple of years.
Got it. Thank you, sir. Thank you very much, and all the best.
Thank you. Press star and one to ask a question. We take the next question from the line of Aditi from Abakkus. Please go ahead.
Hello, sir. Could you share some more color on the SPV that you guys have done for the solar power purchase?
Yes. We have taken about captive power route for having this 42 MW of the solar power in an SPV, in which we are likely to invest about INR 20 crores. That will give us a payback of less than two years. We have contracted that solar at a fixed tariff of INR 4.10 , which landed to us, it will cost us about INR 5.85 . So, it will substitute the grid power, which is currently costing INR 7.50 . So per unit INR 1.65 saving would be there. So that gives it.
Okay, sir. Thank you.
Thank you. Press star and one to ask a question. We take the next question from the line of Prateek Kumar from Jefferies. Please go ahead.
Yeah. Hi, sir. Good evening. My first question is, can you discuss how after reported 8% growth in volumes, what would be your region-wise or regional growth or regional utilization for the company?
Utilization is at 76%. I do not have the regional growth. I think it's difficult now. Maybe, I think we can give you a little later, but right now I am not having it.
Also, can you discuss the progress on your Northeast expansion program?
In the Northeast, yes, two mines which we have got through auctions, now mining plan [audio distortion].
Sorry, you are not audible.
Am I audible? Hello.
Yeah. You are now better.
Yes. What I said was, as you know that we had got mines in Northeast through auction. These mines is at different stages of approval. Mining plans are missing, getting environment clearance and things like that. That we are doing. Parallelly also, we have a plan to put up, of course, initially 1.5 million in Northeast. For that also, we have started activities. Of course, branch land and then getting all those clearances before identifying locations for grounding stations. Those things are happening. We are on track now. Northeast project has come back on track. Maybe in next quarter, I will give you some discreet details, because how different activities are at different stages of approval. When we achieve some milestone, then we will update you further in, perhaps a next quarter or a quarter later.
The related CapEx of INR 1,500 crore- INR 2,000 crore over next three years is not including this expansion, right?
It does include that.
It does include that.
Okay. My last question is on your opening remarks. You said that annual shareholder resolutions were opposed by proxy advisors and some investors also voted against them. Could you share how company engages with these proxy advisory firms? We also got similar query, and institutional shareholders for such key resolution, and any changes in the process that you think so to reduce the likelihood of such outcomes.
We directly don't get engaged beforehand with the proxy advisors. What these proxy advisors do, they have their own set of guidelines for various resolutions. There they are having their own regulations, which is over and above what the Companies Act or the SEBI (Listing Obligations and Disclosure Requirements) Regulations guidelines are. It's two days before the voting starts, they issue their report, recommended report, and give us 48 hours to comment on that. Beforehand, they don't give. They make it public and then they give us. Once we submit our representation based on their recommendation, then if they feel right, they issue an addendum. Generally, addendum, they just attach the company's response and may or may not change their recommendation. For last several years, where maybe we have been engaging with these proxy advisors, they just attach the company's response and don't change their recommendation.
Fortunately for this, when we made the representation this time, the proxy advisors, I don't want to name, said, "Yes, we agree to what the company says, but our guidelines doesn't allow us to change the recommendation. So we think that what the company says is right." That is one of the proxy advisors response there too was. The second proxy advisory said, "Yes, we fully agree." Earlier they had said, "Your resolution is non-compliant legally." Then they changed that to, "Yes, the resolution are fully legally compliant," but still they are not changing their recommendation. We don't have any mechanism, nor do they entertain any direct interaction of the company beforehand. It's only after they release the report, they give us either 24 hours or 48 hours to comment on that, then they issue addendum, attaching the company's response there too, without changing their recommendation.
That is what it is. Then we expect the mutual funds and the FIIs, based on the company's response, to take a pragmatic view. Fortunately for us, as I mentioned in my opening remarks, very many mutual funds and FIIs were able to understand the company's point of view. Despite there being a negative recommendation by these proxy advisors, voted in favor of the resolutions, these came out. All these resolutions was passed with the requisite majority, whatever was required, including the special resolutions.
Thanks for the detailed-
Yeah, as far as proxy advisor is concerned, they don't even give us an opportunity. You know I don't want to name the international proxy advisor based on whom some of the FIIs and very many Indian mutual funds which have some foreign linkage, base their opinion or cast their vote on.
Sir, thank you. This is from my side.
Yeah. Thank you.
Thank you. Press star and one to ask a question. We take the next question from the line of Aditi from Abakkus. Please go ahead.
Hello, sir. Just a follow-up question on the solar power purchase. You said that the cost saving is around 1.5. When can we see that reflected, in which quarter exactly?
We expect this to take about eight to nine months for the project to get implemented. So the real benefit will start flowing from the fag end of the fourth quarter. Nine months from now is almost to year-end. So hopefully from the first quarter of next financial year, or if we are lucky, the project gets implemented in January, February, then we get some benefit in the fourth quarter, but otherwise, for sure, in the first quarter of the next financial year.
All right, sir. Thank you so much.
Thank you.
Thank you. Participants, this is a final reminder and no further reminders will be allowed. To ask a question, press star and one. We take the next question from the line of Harsh Mittal from Emkay Global Financial Services. Please go ahead.
Yeah. Thank you. Thank you for the opportunity. Good evening to the management. My first question is your response to earlier participant's question of change in geo mix, which was the reason for the higher realization this quarter. If I just look back in quarter three also, there was a 10% sequential decline in the realization and now 8.5%. My question is, frequent change in geo mix, doesn't it lead to a loss of market share temporarily in that particular zone? How is the response from your stakeholders, your channel partners in that particular market? This is my first question.
The geo mix is not about doing this knee-jerk. This is a very systematic approach. Perhaps you may be hearing from me that we are working on this for the last more than couple of years. During demand months, I think we have an opportunity to further improve our geo. So that also you need to understand. Maybe I think in lean months, since you want to utilize your capacity, then you go to some other market also. But during demand months, you have an opportunity to maximize that. For that, you need to have that channel capability to maximize. This is what has happened. It's not a kind of knee-jerk thing that, last quarter we did something else and this quarter is something else. No, that is not the case.
That I think we need to understand that a little bit of demand support helps you to speed up your actions which you are intending to take. This is what my response is and all those core markets and still I'm telling you, I think we have four or five states where our concentration is. During demand months, you improve your presence in those markets and when demand is not supportive, you go little wider dispersion as well. We track our market share in our core market. Core market, I told you four or five states. We just see that we are maintaining our core market. That is what our strategy is.
Got it, sir. Okay. Sir, given our timelines of achieving 30 million tonne by FY 2030, are we still maintaining that guidance or there is some recalibration in that capacity target?
No, we are maintaining that. We are on track and track of achieving 30 million tonne by 2030.
Okay. What would be a threshold of net debt to EBITDA going ahead till you achieve your 30 million tonne goal?
Yeah, we would not like to cross net debt to EBITDA 2.5x to at best 2.75 x. You are right. Based on our plan which are slightly bullish and aggressive to achieve 30 million tonnes by 2030, we may towards the end, maybe 2029, 2030, we will see that level touching that. But so long as the roadmap for tapering it down is clear, we will pursue our plans.
Got it, sir. Sir last question, what was the clinker utilization in this quarter?
Clinker utilization. 95% I suppose last quarter. Just see the
95%.
Yeah, 95%. Yeah.
Sure, sir. Thank you, sir. These were my questions. Thank you, sir.
Thank you. We take the next question from the line of Milind S. Raginwar from BOB Capital Markets Limited. Please go ahead.
Thank you, sir, for the opportunity. My first question is on the raw material cost we see a spike. Is there any specific reason that you'd like to call out on?
Raw material cost you're talking in,
Yes, sir. I was on the raw material cost.
Sorry?
Yes, I did ask about the raw material cost. We see some inflation there, both sequentially as well as on a year-on-year basis. Would you like to call out on what would be the reason for that?
Yeah. So I tell you one is of course, higher cost because during April, May, June, some of the plants go shutdown and during shutdown we are required to procure fly ash from far off places. So that has impacted a bit. This is one. And in case of gypsum also, at times, gypsum availability. So combination of various gypsum which you use like chemical gypsum, mineral gypsum, coal gypsum. So sometimes, based on the availability and that has happened in last quarter, our cost has gone up.
[inaudible]
Yeah. And of course, I think since our footprint has gone up in case of SPS business or non-cement business, and since that raw material cost also is included in this. And I said that our last quarter turnover was INR 185. It's gone up, right? So raw material consumption has been SPS, and that has impacted overall raw material cost inflation.
Sir, did I hear that the fly ash availability was an issue or the cost went up?
No. So, combination. In some of the places, I think, issue was some of the thermal plant went for shutdown, which they do every year. Since fly ash is something which is necessity for our operations, we procure this from other source, which is, I would say, A2 source. So temporarily that cost goes up. In some of the places we also took part in auction, and where fly ash cost has gone up little bit.
Yes, sir. I am asking this because our blending on a Q1, Q2 basis has gone up from 62%-64%.
Also along with this, diesel price impact has also been there. So combination of diesel price, temporary increase in fly ash cost and some of the auctions which we participated, this has impacted and non-cement business raw material requirement. That has added up to this increase in raw material cost.
Yes, sir. The blended
Yes.
cement mix has gone up from 62% to 64%.
Yeah.
This is when our availability of other things were slightly tighter. How do we try to calibrate this?
Come again, I think I didn't get you properly. Your voice was not so clear. Yeah, go ahead.
Sorry. Am I audible clearly?
Yeah, you are.
I am saying the blended cement percentage has gone up from 62% to 64%.
Right.
How do we try to, when we were having issues procuring certain raw material, our blended cement product proportion is going up. Would you like to throw some light on this?
Yeah, I will do that. Our trade percentage has gone up last quarter. It went to 59%. Grade mostly goes blended cement. Blended cement, you need other than clinker, other cementitious material and majorly fly ash and slags. When your trade volume goes up, your raw material cost goes up, then whatever fly ash availability is there, cement source, I think you may have to go to A2 source to cater to your increased demand. Getting me? Create sales increase necessitated us to procure more fly ash or more cementitious material, which asks us to go little A2 source to kind of fulfill our demand. I think everything is connected.
Fair enough, sir. The invoice rate is built in the raw material cost or in some other source line item?
Yeah.
Okay. Sir, what would be our petcoke mix vis-à-vis year-on-year and Q1, Q2?
Okay. Petcoke was last quarter-
Last quarter it was 16%.
If you compare that with earlier quarter, it was 14%.
Sir, I did miss the earlier number. Last quarter was 14%. This quarter it was?
14% petcoke. This quarter, means quarter which has ended on 30th June.
Okay. I understood. Sir, the third thing is that we hear some litigation issues in Assam land procurement. Would you like to call out on that some in detail?
Yeah. So we had acquired land from Autonomous Council in Assam government for setting up plant in northeast. Some of the nearby villages, they have gone for PIL claiming that this land belongs to us. Or maybe I think they are inhabitants somehow for so many years. This happens everywhere you go and this is what the hassle across India is. So they filed one PIL in the High Court of Gauhati, Assam. This was Mahabal Cement, I think you know that we were planning to set up a branding with a plant in the name of Mahabal Cement, which is our subsidiary. Now, since Mahabal Cement was subsidiary or is subsidiary for JK Lakshmi Cement, they have kind of made us also one of the recipients of the notice of that CRA. This is what the case is. This case was going even from before, right?
This time they have added JK Lakshmi also because Mahabal Cement is a subsidiary of JK Lakshmi Cement.
Okay. On the lead distance that we are highlighting on, is this going to be a permanent improvement or this can go back typically in the monsoon quarters, we try to phase-
In monsoon, it will go up. I just told we go because it will go up a little bit in monsoon, though we are trying to contain it because we need to kind of give target to our team members. But it will go up during rain months like July, September. But nine months, we do have an opportunity to kind of squeeze in.
Thank you. Participants, due to time constraint, we request you to restrict to one question per participant. We take the next question from the line of Nilesh Sharma from Monomer Capital. Please go ahead.
Hello.
Nilesh, please. Yes, go ahead.
Sir, my question is, what will be the company's installed and operational capacity by the end of this financial year?
18 million tons.
Thank you. We take the next question from the line of Tushar Chaudhari from Prabhudas Lilladher Private Limited. Please go ahead.
Hi, sir. Thanks a lot for the opportunity. Sir, I missed your CapEx number. Did you say INR 1,500, INR 2,000, and INR 1,500 for next three years, which is like only INR 5,000 crores?
Yeah, you are right.
Correct?
You are right.
Are we going slow on CapEx because our Durg and Kutch are ahead in order than North East and Nagaur? Durg, we have only spent INR 400 crore till now out of INR 3,000 crore. Do you think by FY 2028 end we will be able to complete Durg?
It does include Durg because out of INR 5,000 crore CapEx numbers given, we are talking of about INR 3,000 crore for Durg and INR 1,500 crore for North East. This CapEx number doesn't include the land acquisition cost, which we are presently doing for Nagaur and Kutch. In any case, Nagaur and Kutch would come later than North East and Durg. Right? Your number what you have noted are correct.
Thank you. We take the next question from the line of Philip Mathai from Geojit Financial Services Limited. Please go ahead.
Thank you, sir, for taking my question. Just with regard to your recent acquisition of STLC RE 1 Limited, you had mentioned you are going to set up a 28 MW battery energy storage system. Just want your rationale on that.
This is based on the demand supply balancing which we do, right? What happens is, in case of plant, you can set up solar power to extent of twice of your contract demand, right? Based on the demand pattern we have within our plant, we see that how much we can store this without losing even a unit. Because if you, let's say, produce excess unit, this goes back to the grid, right? Maybe perhaps the banking facility which Rajasthan government has given, you can set it off within one month. Based on the demand pattern, how much we are going to solar power, how much consumption is there within the plant, and over and above, how much we are required to store within storage so that we are not wasting energy which is being produced out of it. Right?
Based on that, we have decided on 28 MW battery.
Thank you. We take the last question from the line of Uttam Kumar Srimal from Axis Securities. Please go ahead.
Yeah, thanks for the opportunity, sir. Sir, with regards to non-cement revenue, how do you see full year non-cement revenue this year?
Non-cement revenue for the whole year, you're talking?
Yes, sir. Yes.
Projected figure, right?
No.
Or last year.
Non-cement revenue. Entire non-cement revenue for this year.
Okay, this year. So last year it was how much?
INR 600 crore.
Perhaps I think we will be around INR 800+ crore , right. This is what I think our estimation is. So we will be closer to about INR 800 crore top line in case of non-cement revenue by end of this year.
Thank you. Ladies and gentlemen, with that, we conclude the question and answer session. I now hand the conference over to Mr. Vaibhav Agarwal from PhillipCapital (India) Pvt Ltd, for closing comments. Please go ahead.
Yeah, thank you. Sir, just one small question from my side. Sir, in the Q1 FY 2027 results, what I see is there is a sharp jump in other expenses also on a year-over-year as well as quarter-over-quarter basis. Any specific reason for this sharp jump in other expenses? I do not know whether we have explained this on the call earlier or not. Sorry for that question.
Any other expense?
Yeah.
We mentioned in the response to one of the question, Vaibhav.
Yeah
that it was basically because of the increase in the packing costs and the normative increase because of the wages, that is all. Other than that, it is not there.
Okay, sir. Got it. Thank you, sir. On behalf of PhillipCapital, I would like to thank you for the call opportunity. Also, many thanks to your participants who joined this call. Thank you very much, Ryan. You can now come off the call. Thank you.
Thanks, Vaibhav. Thank you, everyone.
Thanks, everyone.
Thank you. On behalf of PhillipCapital (India) Pvt Ltd, that concludes this conference call. Thank you for joining us, and you may now disconnect your line.