Ladies and gentlemen, good day and welcome to the JK Lakshmi Cement Q1 FY 2025 earnings conference call hosted by PhillipCapital India Private Limited. 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 this conference, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vaibhav Agarwal from PhillipCapital India Private Limited. Thank you and over to you, Sir.
Thank you, Darwin. Good evening, everyone. On behalf of PhillipCapital India Private Limited, we welcome you to the Q1 FY 2025 call of JK Lakshmi Cement. I need to highlight that JK Lakshmi Cement is also the holding company of its associated entity, Udaipur Cement Works Limited, and therefore this call is also open for discussion about the performance of Udaipur Cement Works Limited. On the call we have with us Mr. Arun Kumar Shukla, President and Director, and Mr. Sudhir Bidkar, CFO at JK Lakshmi Cement. I would like to mention on behalf of JK Lakshmi Cement and its management that certain statements that being made or discussed on this conference call may be forward-looking statements related to future developments and which are based on current expectations.
These statements are subject to a number of risks, uncertainties and other important factors which may cause actual developments and results to become material from the statements made. JK Lakshmi Cement Limited and the management of the company assumes no obligation to publicly alter or update this or update the statements, whether as a result of new information or future events or otherwise. I will now hand over the call to the management of JK Lakshmi Cement for their opening remarks, which will be followed by the Q&A. Thank you, and over to you, Sir.
Good evening to all of you, and welcome to this conference call for our quarter one result. Before we go to question and answer, I will just give you a brief glimpse because a lot of data is there with you and you may have a lot of questions, so I will allocate more time for questions and answers than kind of giving a commentary. Last quarter, as an organization, I think we are satisfied the way market has behaved in terms of demand and pricing. JK Lakshmi Group has done reasonably well. You must have seen that the trend which has emerged so far is lower realization and operating deleverage, which has impacted profitability for all the companies. Same goes with us as well. I would like to give you some glimpse of the highlights of the organization.
Volume-wise, we are almost flat and the reason being that some of the market where we operate post Holi and followed by this longer lay-off during this election that has impacted some of the geographies where we are there and those geographies are dependent on the migrant labor. While we have done quite well in east versus in the west and north where dependency is more on migrant laborers, things have impacted construction sites and hence our volume. In terms of pricing, I think pricing was under pressure because you must have observed, we are witnessing the price level, which is the lowest in the last three years' time. That has impacted us as well and hence our realizations have gone down.
What we have done quite well is, of course, I think being very focused on some of the performance levers, which we have been focusing for the last couple of years. Of course, on geo mix and then supply chain efficiencies and using digital to drive efficiency in our supply chain and value chain, working on renewable energy and non-fossil fuel usage and things like that. We have been continuously focusing on that, and that has resulted into a significant improvement on those parameters. For instance, AFR, if you take AFR, in case of JK Lakshmi Cement, it was close to 12% last quarter, which is much higher than last year average of 10%. In terms of renewable energy, last quarter, we have closed at about 48%, which is much higher than the overall average of last year, which was 39%.
We have done quite well in lead also. Lead has gone down by 12 km. 384 km was the average for last year. We have achieved 372 km quarter one of this year. So there also I think things have turned out to be well. In terms of premiumization, our premium product was at close to 30%, which is a good moment and that has impacted our bottom line to an extent. So these are the highlights which I will say is there at our end to kind of let you know. I will now give time to all of you to ask questions because you may have questions on lot of things. The recent development which we have proposed in our recently concluded board meeting that is in a merger of UCWL and JK Lakshmi Cement.
I'll leave it to you and now we are open for questions and answers. Thank you.
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 telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. The first question comes from the line of Gautam Rajesh from Everflow Partners. Please go ahead.
Hello. Good evening, Sir. Can you hear me?
Yes.
Yes, Sir. I have two questions. My first question was, can you talk a little bit more about our limestone reserves at our plants and how many years of reserves do we have there and when do they come up for renewal?
At Sirohi, our renewal is due in the year 2030, and the residual reserve is for about 15- 20 years now with us. At Udaipur, we have a requisite reserve for another 40- 50 years. Just to let you know, we have recently got a lease of adjacent mines, and that is also going to further our life of limestone at that location for at least another 10 years. This is what is there already operating. In terms of future programs, you must be knowing that we have already acquired a limestone lease, rights at Nagaur. There also, I think we are going to put up, let's say, around 5 million - 7 million ton plant. That is going to last for at least 45 - 50 years.
We have got requisite limestone reserve with us to continue our operation for at least 35 - 50 years, depending upon the phasing of the different expansion plans which we have.
Okay, Sir. Thank you. My next question was, how much time would it take for us to ramp up the volume for the Udaipur Cement expansion and achieve, let's say, optimal or high utilization and volume growth?
Unfortunately, because of general election during quarter one, that impacted overall demand. You know that because industry has not grown the way it was expected. In fact, because of this quarter one subdued demand, overall forecast for the demand for this year also has down revised. Yes, nevertheless, our plan was, and still we stick to that at least 60% utilization we will achieve by end of the year of our line two. Overall, maybe around 70% - 75%, that is what our plan is. Around 75% for both the lines.
60% by end of FY 2025 and 75% at peak utilization. Am I right?
Yes.
Okay. Thank you, Sir.
Thank you. Participants, you may press star and one to ask a question. The next question comes from Nigel from Leo Capital. Please go ahead.
Hi. Good evening, Sir. My first question was about how do our current profit margins in the east region compare versus the ones we have in the north and west? Is there a substantial difference in profits as of now?
Yes. There is a difference. At least we are doing well. Last quarter, if you look at our EBITDA is at least INR 200 higher than north and west. Around INR 200 higher than north and west. If you look at industry, I think we have done better than industry in terms of really driving all those priorities which we have. Being very focused on the market which are nearby to our plants, that has resulted into a better margin in east than north last quarter.
Right. Also, I wanted to know if you could talk about the thought process behind this expansion in the east, given the high capacity being set up by competition in the region. Also, we have the railway sidings and split grinding units. How much can those add to the profitability in the east on a per ton basis?
Yes. I guess, pick up from your last question. I told you that east has done well than north and western operations last quarter. During peak periods last year also, we struggled to cater to the demand which our customers has with us, right? That really prompted us, two things. One, I think we were short of capacity during peak period, one. Second, also the top-line strategy and the distribution strategy which we have in this, and profit margin almost kind of near to north. We thought of expanding. Further this kind of gets accentuated from the fact that now we have railway siding also within our premises. Some of the market where we are unable to go now, we can go from those plants, right? These are the three reasons.
One, of course, I think we were lack of capacity to cater to the demand during peak period, and peak period means at least six months of the year, one. Second, the strategy which we have for top line, which is kind of optimizing our distribution in the area where profitability is more. Third, now we have avenue to reach out to the market where we were not going. These are the three things which really prompted us to kind of go for expansion.
Got it. Thank you, Sir. All the best.
Thank you.
Thank you. Ladies and gentlemen, please press star and one to ask a question. We have the next question from Aman Agarwal of Equirus Securities. Please go ahead.
Hi, Sir. Thank you for the opportunity. First question was on the realizations front. For JK Lakshmi Cement, we have the sequential drop in realization appear a bit higher than for broader industry. Just wanted to understand, has this got something to do with increased clinker sale from the new Udaipur capacity?
No. I think I would not say that. Maybe distribution of mix also to an extent. I think prices were under pressure, you know that. And some of the market, our realization went down drastically because of the distribution cost, because we cannot leave market.
During the period when prices are down, because we have a strategy where we pursue that strategy of being in the market forever, wherever we are and wherever we have chosen to be. That is one. Second, also, little bit increase in clinker sale as well. That has also impacted our lower realization. So two reasons, maybe distribution mix to an extent because some of the markets become more, I would say, not favorable, and second, the lower realizations of clinker.
Understood, Sir. And Sir, on the merger proposition itself, if you can just quantify in terms of savings that you are directly expecting on this proposed merger.
It is difficult to quantify the exact quantity of the savings which would emerge post-merger, because some synergetic benefits we were already driving. But more importantly, merger will help to make a stronger balance sheet with all the capacities consolidated into a single entity. Cash flow also in a single entity will help us to grow faster, organic or inorganic. But there will certainly be some add-ons in terms of savings in the fixed cost, economies of scale through common procurement, additional common procurement, some logistic alignment, time to reach the market faster benefiting the customer. All these benefits would increase as they were already in the pre-merger regime. But it is difficult to quantify that, put a number there too.
Understood, Sir. And Sir, 1Q already going a bit subdued for the industry. What is the demand expectation for FY 2025 for the industry and for the company as well?
Industry, we see that earlier the forecast was 7%-8% of demand this year, FY 2025, for the industry. This has been down revised to 6%-7% and we feel that we are going to do better than this at least by a percentage or two. That is what we expect. We are going to do better than industry for sure.
Understood, Sir. Sir, lastly, just a couple of data points. If you can provide with the net debt numbers on consolidated basis as on June 24, and second on the non-cement revenues for 1Q.
On a standalone basis, the gross debt on a standalone was about INR 700 crores and about INR 375 crores of cash flow. That leaves a net debt of INR 325 crores. That is on a standalone basis. As far as on a control level is concerned, about INR 2,050 crores of gross debt and INR 400 crores of cash means INR 1,650 crores of net debt. That is as far as the gross and net debt on standalone and control basis are concerned. As regard your other question on the non-cement revenue, it is about INR 132 crores for this quarter, almost flattish or the same as it was in the corresponding quarter last year.
Understood. What would be the EBITDA margin on this? Is it still maintained at somewhere around 5%?
Yeah, 4% in this quarter, slightly subdued, which was the same as in the corresponding quarter last year.
Understood. I will follow back with you, Sir.
Yeah. Thank you.
Thank you. Participants, you may press star one to ask a question. The next question is from Amit Murarka of Axis Capital. Please go ahead.
Yeah. Hi, good evening. I just wanted to understand the realization a bit better. I see that the quarter-over-quarter drop in realization is much higher than industry. I think it is close to about 6%. I understand pricing was down 2%-3%. What is the reason for the higher decline? Is it because the traded volumes are lower? Is it something like that?
As I told you, a little more clinker sales, because of that is reason number one. Second, some of the geographies, price drop was more, and where our reliance is a little bit on higher side. For instance, West. West prices were much lower than other geographies. Third, I think in some of the market, other market, other than West also, competitors were quite aggressive. So there also prices went down a little more than our co-market. These are the reasons why our realization is lower than average of the industry last quarter.
Could you share the split between the cement and clinker volume in a quarter?
Yes, we can. In this quarter, our total sales were INR 23.26 lakh tons, out of which INR 21.68 was cement sale and INR 1.58 was the clinker sale.
And the same number last year?
I am sorry. Corresponding quarter, same number were INR 23.7 for cement, INR 1.61 for clinker. Total, INR 25.31.
Okay. Versus Q4, it was higher, you mean the clinker volume?
Yeah, volume is higher.
Marginally only. Sequentially, in the fourth quarter of last financial year, it was INR 1.4. It has marginally gone up to INR 1.58. You are right.
But percentage wise, if you see, I think it's a little more, and that is why the impact is more on revenue.
Okay. But still, also, is it something like the dealer discounts are adjusted in the quarter? Is there something, some of that factor as well?
No. I think we don't do that.
Okay. All right. On cost per se, is there any cost reduction target that you are working on or what are the initiatives that you are working on to get it down?
On cost, I will divide that into three parts. One, of course, I think in manufacturing, our major focus is on two things. One, renewable energy and second on AFR. So that we keep on doing. We are trying to find avenue for putting more solar power so that we can reduce our power cost. We are working on that, and once that gets kind of finalized or we roll it out, we will let you know. Second also on WHR power. WHR power first phase, we have already commissioned at Sirohi, and we have already reached to 14%, I told you. The ramp-up was quite fast. There also, I think we are planning to go for now second phase. That is going to take our WHR power proportion to 17%, 18%. In those, we have already reached about 10%.
We will try to take it to another percentage or two more. These are the things which we are working on there. Third thing, in manufacturing, we are using technology now to optimize our pyro process. So that project we have taken. It is very difficult to quantify how much saving we are going to have from this project, but definitely, I think we will have some savings from there as well. So this is from manufacturing part of it. Of course, I think product mix and other things that is part of top line. So that is being separately driven. On top line part of it, again, I think our strategy is very clear. We are not changing. So selling more in the area which is more remunerative. Working more on premiumization. Of course, blended cement proportion. Third part is supply chain.
Supply chain, I told you that we have improved quite a bit. Lead has gone down by 12 km if we compare this from the AP of last year of 384 to 372. But we believe that still there is a scope, and we are working on that aspect. So these are the areas where we are working on cost reduction. Okay. I am not saying the drastic cost reduction is going to happen, but I think all those things are going to put together definitely INR 50 to INR 75 are definitely good.
Got it. And lastly is a bit of a qualitative question. We are seeing an intense fight for market share that is going on across regions, with larger players wanting to grow even bigger. We are in fact seeing pricing drop in some of the markets to unheard levels in the last 10 years. In this kind of a situation, given that you still sell cement maybe INR 20 lower or more than the larger guys in some of the markets, how are you being able to compete, or what's your strategy? Are you still trying to compete in such regions or pockets where there is really intense competition, or you're choosing to maybe let go of certain volumes in some of such markets?
So if you really look at our distribution strategy has been quite consistent for the last couple of years. We choose our market that where we need to be, and we are there, and we are going to be there. Our strategy is not going to change much. We are going to reinforce in the market where we are already a relevant player. Or let's say Rajasthan. Rajasthan, we have our installed capacity of 10 MTPA there. So we are quite a relevant player. Even some big players also, I think we are not far behind. Similarly, if you go to East, and somebody asked this question. We are going to consolidate our position in East also. I told you that during peak time, we do not have cement to give to our customers. So, our strategy is going to be focused and undifferentiated.
We are not going to scatter ourselves everywhere. In North also, if you look at, we have a grinding station in Haryana. We are going to still sell in and around that area. Gujarat, I think we have got two plants. We are a prominent player out there. If you look at our strategy also, I told you that somebody asked about our lime reserve and our resource capability. So, we have already acquired limestone lease in Nagaur in Rajasthan. So that is our core market, and where further we are going to consolidate ourselves. Similarly, in fact, Gujarat also, we have got that limestone rights. So, Gujarat, we are already there. We are going to further consolidate.
In East, I told you, we have announced and last time also we told you that we are going to put up 4.6 MTPA in Eastern part of India. That is our strategy is to consolidate our position. So, we are not venturing into new market. First, we want to consolidate, make ourselves relevant, and then maybe, I think we'll look for opportunity when things are conducive, and we'll go to other markets. So, I think that strategy is consistent.
And all those actions, whether it is brownfield or greenfield, is consistent with our overall strategy of being a prominent and relevant player in the market where we operate.
Got it. Because just this quarter itself, if I see, your volume has dropped, when others have actually grown volumes. So, I was also thinking in that context.
We definitely don't want to really dilute our price positioning. That's very important because we look this for an opportunity for us to reduce the gap with the leaders. Right? So, to an extent, I think that is also our strategy because, during this time when everybody is dropping prices and trying to push volume, which is perhaps not there in the market, our strategy is little different. That how we can really bridge that gap up and improve our positioning. So, I think it's a kind of balance we play, right? And that will keep going forward even, because that is a long-term kind of incentive which we learn.
Sure. Thanks for the detailed response.
Thank you. Ladies and gentlemen, you may press star and one to ask a question. We have the next question from the line of Raghav Malik from Jefferies. Please go ahead.
Yeah. Hi. Thank you for the opportunity. I just wanted to follow up on the pricing question actually. In July so far, could you give us any color on how region wise pricing is looking across Northeast and West?
Prices have slipped further in the month of July. This pattern is across. I would not say that any region is less drop in terms of prices, but I think all regions are consistently behaving, and that is being driven by the fact that demand is low and of course, I think players are aggressive to take a pie of that. They are, I would say, conducting same across market. This is not the kind of selective market which is there. It is across; prices have even further gone down in the month of July.
Okay. Would it be possible to quantify maybe at least on a pan-India basis what the drop is and if possible, region wise?
Region-wise would be difficult, but my sense is, actually prices have gone down by INR 5 - INR 7 in different markets.
INR 5 - INR 7. Okay. My next question is on CapEx. What has been our spend so far? Are we still on track to do INR 1,200 crores like we discussed last quarter, FY 2025?
Yeah. Basically, we are working in this year on two, three major projects. One is the grinding unit, split location grinding unit, Surat, which is going to cost us about INR 220 crores. Then also on the railway siding, which is costing us about INR 225 crore-INR 235 crore. Apart from these two projects, we also announced the greenfield-brownfield expansion at Durg, involving a CapEx of INR 2,500 crore over the next three years. As far as actual CapEx is concerned in the first quarter of the current financial year, we have done about INR 90 crores. Going forward, we expect another INR 800 crore-INR 900 crore in the remaining three quarters. That is FY 2025.
Okay. Thank you, Sir.
Yeah, thank you.
Thank you. Participants, please press star and one to ask a question. We have the next question from the line of Aman Agarwal from Equirus Securities. Please go ahead.
Yeah, thank you for the follow. Sir, just a request, if you can provide the sales breakup between cement and clinker on a consolidated basis as well. You have already provided on the standalone basis.
You want also on a?
Consolidate basis, Sir.
Consolidate basis. We have done a total sales of 30.37 on consolidated basis, out of which 27.89 is the consolidated cement number and 2.48 is consolidated clinker. That is in the current quarter. Corresponding quarter it was 30.36 total, 28.31 cement and 2.05 clinker.
Thank you.
Thanks.
Participants, you may press star and one to ask a question. The next question is from the line of Shravan Shah from Dolat Capital. Please go ahead.
Hi, Sir. Sir, actually many data points are needed. First, to start with, just to correct, Sir, you mentioned that in terms of the CapEx, we have done INR 90 crore. This is on the consolidated basis and INR 800 crore -INR 900 crore on consolidated basis that we are looking at for nine months. Broadly around INR 1,000 crore we are looking at consolidated level in FY 2025, because last time we have spoke about around close to INR 1,700 crore.
The number which I gave in response to the previous question was on a standalone basis, not on a consolidated basis.
At consolidated level, how much we have spent in first quarter and for full year? Last time you said INR 1,700 crore, so that number remains intact?
Yeah. The first quarter in JK Lakshmi, as I mentioned, about INR 90 crore, another INR 70 crore, INR 80 crore got spent in Udaipur. That makes it around INR 150 crore -INR 160 crore on a consolidated basis in the first quarter. Going forward, anywhere between INR 1,500 crore -INR 1,650 crore would be spent on consolidated basis in the current financial year. It broadly remains the same as I mentioned in the last call.
Okay. For FY 2026, broadly, and FY 2027, last time we spoke around INR 1,300 crore -INR 1,400 crore, and in FY 2027, around INR 1,200 crore. That also number remains the same.
That remains the same, barring any spillover, that is all.
Okay. Second, Sir, still further harping on the pricing front. If I broadly look at this quarter realization for us, if I compare with the last full year, FY 2024 is close to 9.5% down and further as we are saying, the prices are INR 5, INR 7, INR 10 are lower. So whatever the benefit we may have gained through the geo mix, optimization, everything, do we think that most of that has been gone? Because if you broadly look at whatever the current price trend, unless we see a price improvement in the second half on year-over-year business for us at console level, a significant drop in terms of the realization will be there, 8%, 9%, so would be a significant versus the industry. That would be the major in terms of impacting the profitability.
Your question, a lot is covered in what, I think, then therefore what you are asking. That is what it is. But your question is what then?
My question was, I was trying to understand in last two years, whatever price increase we were able to gain because of our distribution strategy, does that got impacted or it is only the in general price decline, and that is what we are also facing the same issue?
I think this is a general market trend and price which I see. That is what is there. Second quarter, definitely once demand goes up, prices are going to go up. That happens. If you remember last year, even April, June was very good, but July, September was better. Demand also supported those months. Typically last year, July, September was better than the traditional month. This year, I think we are, April, June was not good other way. Maybe I think, once demand improves a bit, prices will inch up and we will be back to having original month. What we are witnessing is the normal trend in the market. Nothing specific to us only. If you really, because we do compare ourselves with our competitors in the market where we operate.
If I compare myself with our company with other competitors or even leaders in that particular market where we operate, I think we are just in alignment with them. The trend which was there, either increase or decrease, that impacts them, that is impacting us as well. There is nothing specific there only.
Yeah. Sir, couple of data points in terms of that console level, trade, non-trade share. Premiums, Sir, I think you have mentioned 25% blending ratio, clinker-to-cement ratio for this quarter.
Yeah. I will tell you. So blended proportion was 64%, 65% on a console basis and stand-alone 64%. Trade overall is 54%, 55%. Premium product I told you. Lead I told you 372 km. What else you want?
Clinker-to-cement ratio, Sir.
64% blended.
Okay. I was talking about the cement to clinker ratio which was, I think, 1.46 last quarter.
Clinker ratio in our case is 1.45. 1.45. Overall consumption.
Okay.
Yes, Sir.
Okay. In terms of the timeline for all the ongoing and plus expansions, whatever we have spoke in the last con call, that remains the same. Is there any change, anything coming up early or is there any delay?
Broadly, as of now, the timeline remains the same.
Okay. In the presentation, Sir, just wanted to clarify, we have highlighted that the North East will be coming up by 1.5 MTPA by FY 2026. Last con call, we said that it will be coming by end of FY 2027.
Come again, please. I think we just. Sorry to miss that.
North East, the company that we have acquired where 1.5 MTPA to come up. Last time we said it will come up by March 2027 or April 2027, but in presentation we are showing as part of our FY 2026 capacity addition.
It will spill over to the next financial year. There is some time being taken for that. You are right.
Okay. And Sir, the RMC revenue was how much in this quarter?
Out of the total non-cement revenue of about INR 132 crores, RMC got about 72.
72. Okay. In terms of the broadly, but to reach a 30 MTPA by 2030-2033, we are mentioning in there. Broadly, if you look at in terms of the kind of a CapEx on an average would be INR 1,300 crore-INR 1,400 crore kind will continue till FY 2030. Will it not be kind of concerning us in terms of the net debt going up? Any idea in terms of how we look at a console net debt? Is there any ballpark that we will not try to breach that? If with that, then maybe we can delay the expansion plans.
In between when we are going in series of expansion, obviously there are years when you would see our debt to EBITDA level crossing a certain norm. But that is only and only because of the fact that the debt gets contracted earlier and the commensurate EBITDA flows a year or a couple of years later. But once you factor the corresponding EBITDA, those will always be in line when the norms which we are. It is incorrect to see on an isolation only at the year-end debt to EBITDA level. Either add corresponding EBITDA or reduce the debt for which the EBITDA is not yet there in the books.
But we don't see, in spite of these all expansion, which are going to happen over the next five, six years, we don't see our gross debt to EBITDA crossing anywhere between three- 3.5 on it, and in net debt to EBITDA, about two- 2.25.
Thank you. To ask a question, ladies and gentlemen, you may press star and one. The next question is from Rajesh Kumar Ravi from HDFC Securities. Please go ahead.
Yeah. Good evening. My question pertains to first again on the realization front. If I look at sequentially on standalone basis, your realization are down INR 200 per ton, and on console basis it is down about INR 300 per ton. So obviously, this is to do with ramp up in Udaipur or the nature of sales mix in Udaipur. Can you explain what exactly the concern is that this realization is almost more than two year low, and will that not from this level, if this is a normal realization level, so will this keep our margin subdued in subsequent quarters?
Yes. So in case of Udaipur, clinker was little more because we had some mismatch in terms of clinker capacity and grinding capacity, because clinker we commissioned in the month of October 2023.
That is right.
The grinding was there in March 2024, right? So there was a gap and hence, clinker sale was more. That is why you see more reduction in realization at Udaipur than JK Lakshmi, right? So that is the reason. This is a most temporary phenomenon.
Sure. What was the clinker sale on console level in Q4?
1.58.
Console level, Sir.
On console level in Q4 it was 2.32.
Two point.
Which had increased to 2.48 in current quarter, April, June.
Okay. So, 2.32 on a base of INR 32.62 lakhs, and on a lower base, sequentially, it has further increased. Okay, so partly to explain with this. What else would have gone for such weaker realizations? It is just the clinker, or is there anything like a geographical mix changed dramatically in this quarter versus Q4 and hence such a major fall in realization? Because Q2, you are saying that there will be further pressure on realization. So, are we looking at a case where the INR 730 may come down to below INR 600 in Q2, and thereafter, even in Q3 or Q4 to go back to 900,000, you would require pricing support of as high as INR 300, INR 400 per ton?
Yeah. So I think this is a most temporary phenomenon. There is no change in geo mix as I repeat. If you look at the lead is lower than average of last year and as good as quarter four. Quarter four was also at 372 km. You just see the timing. Yeah. So there is no change in geo mix. I think the distribution which we do from Udaipur remains same. There is no change. The only thing is more clinker and at a lower realization. That is what has impacted realization at Udaipur.
So what is the exit margin you are looking at EBITDA per ton for FY 2025, and in that, what sort of price increase you are building in in Q3?
I think this is going to be speculative. I think as of now, I would not really comment on this.
Okay.
Any day you forecast during lean month, then I think your forecast is going to be on other side of it. And if somebody forecasts in the peak month, then again, you are going to forecast in the other side of it. I think we'll let you know. I think how this train goes, we'll come back to you. But as of now, it's very difficult to really forecast something which I'm not reasonably sure about.
No issue. Sir, on this Northeast expansion, you mentioned that it will spill over to FY 2027. So what are the timeline you're guiding for Udaipur, sorry, this Northeast project? Is it early FY 2027 this project would be up and running? And if so, what is the current status on the project?
So in the Northeast you're talking about, right?
Yeah. Northeast project, Sir.
Northeast, we are moving as per the plan. The first and foremost thing is, of course, land acquisition for plant. Though we do have one lease deed already signed for one of the mines. We are now almost concluding this land acquisition for the plant, one. Second is, we are also applying for now environment clearance for the plant. All these processes take time because-
Right.
Approvals through MOEF and we have to follow the processes before like public hearing and things like that. All those activities are happening. Once those approvals are in place, then we are not going to take more than 14 - 16 months to put up the plant. I think this was expected. Initially, taking approvals and putting action at the ground level takes some time. That is a normal one. But we are well on track. Whatever we have committed, we will achieve that, Sir.
Just again, by when do you expect like two-year timeframe for getting all the approvals in place? Or they will be conclus Sorry.
What we believe that you know by-
Hmm.
We are in July, so by end of this year, we are going to have approvals in place. Somewhere quarter four of this year, we will start-
This will work.
Yes.
Okay. Great, Sir. I will come back. Thank you.
Thank you. Participants, you may press star and one to ask a question. We have Parth Bhavsar from Investec with the next question. Please go ahead.
Yeah. Hi, Sir. Thank you for the opportunity. My first question is, can you help me with the fuel consumption cost on kcal basis for the quarter?
Last quarter it was 1.63 at the, yeah, JKLC level.
At JKLC. What was this at last quarter?
Last quarter it was 1.638.
Okay. And Sir, where do we see this going in the coming quarters? Is there any room for improvement?
Around that only. Around that. 1.63 - 1.65. This level.
Okay. Sir, my next two questions are related to the restructuring that we are undertaking with Udaipur Cement Works. So I believe that we will take over. We give shares to the minority interest in Udaipur. So can you help me with the number of shares that will be issued? Because as per my calculation, according to swap ratio, promoters stake gets diluted to 43.9%. The presentation that we have given out says it will be like 45.12. So what am I missing over here? If you could help me out with the number of shares you will be issuing.
There we would be issuing additional about number of shares. We have mentioned in our investors presentation, which we have uploaded on the website.
The ratio is 100 : 4, right? 4 : 100.
That ratio is 25, four shares for every 100 shares held in Udaipur. The post-merger, promoters holding is likely to be about 45.12.
Okay.
Yeah.
Sir, the other question is like, so four shares of JK Lakshmi would be issued for 100 shares of UCWL, right?
Right.
The value, like the surrender value for UCWL now comes to around INR 4,400 on current market price, and JK Lakshmi's value comes down to around INR 3,500. Isn't it a little unfair to the minority of UCWL? What's your take on that?
No, their valuation has in any case been done by independent valuers. What is important is while UCWL has still not fully commissioned the project, so the full benefit of that expansion will come in subsequent years. Whereas in case of JK Lakshmi, it is a matured capacity, only additional investment which has been factored is the Sirohi expansion which is there and likely to come in the current year, which is less than 10% of the total existing operating, fully matured capacity. Whereas in case of Udaipur, it is almost more than 50% capacity has just plugged in, which is not yet fully been realized. So the market also takes into account, the valuation also takes into account the fact that JK Lakshmi also holds a major portion of almost 71 odd percent in UCWL.
So that is not fully reflective in the present market price of JK Lakshmi. It is wrong to say that it is unfair to the minority shareholders of UCWL. In any case, the parent's holding in this merger gets canceled out. Whatever shares are being issued is being issued only to the non-JK Lakshmi shareholders only.
Perfect, Sir. Thank you for the explanation.
Yeah.
Those are my questions. Thank you.
Thank you.
Thank you. The next question is from the line of Saket Kapoor from Kapoor & Company. Please go ahead.
Yeah. Namaste, Sir, and thank you for this opportunity.
Namaste.
Yes, Sir. Firstly, if you could explain, why our PBT numbers are lower or the EBITDA numbers are lower on console when comparable with standalone?
Standalone, sorry. Come again. Can you repeat your question?
Sir, when we look at our standalone results, the EBITDA number is INR 277 crore. When we look at the consolidated, it is lower by INR 35 crore to INR 235 crore. On consolidation, why is that we are making losses on the same? If you could just explain firstly.
Just a second. On a console basis it is INR 235 you said, no?
Yes. We have two set of results, the standalone and the console numbers. On console-
Yeah. I will explain that.
Yes.
You see, if you were to exclude and see from before the other income, right? But before the other income, if you exclude from JK Lakshmi standalone, you will see that JK Lakshmi standalone EBITDA without other income is INR 185, right?
Right.
UCWL standalone without other income is INR 39. So that adds up to INR 222. But with the other income, because other income, a major portion, almost INR 80 crores, is emanating from a sale of some stake in this quarter of Udaipur which JK Lakshmi did. When you console that, within the company can't have the inter unit profit on the sale of the inter unit holding. That's why it got eliminated. That's why with other income; you are finding that anomaly.
Correct.
It has been eliminated in the console numbers. INR 277 on a standalone, including other income, INR 40 for UCWL. But the moment you eliminate the inter unit sale and profit, which is to be rightly done as per accounting standards, obviously it comes down. So, you see that number before other income, you will get the answer you are looking for.
Yeah, I got the answer. You mentioned about INR 40 crore sale from Udaipur. What is the sale pertaining to the other income? What is the nature of this other income? You mentioned INR 40 crore sale from-
Sir, some inter promoter transfer which took place of some holding during the quarter.
Udaipur Cement?
Market transaction.
Okay, Sir. Can you give me the CWIP number, the current capital work in progress for 31st March 2024? Also, for the June.
Add up the various CapEx which you have incurred. That is all going till the time these are capitalized. Whatever CapEx we are incurring is all going into CWIP. Nothing has been commissioned post-March.
Right. As we have done INR 170-
INR 90 odd crores for JK Lakshmi and INR 70 odd crores for UCWL. That has all gone into CWIP without there being any capitalization. Whatever numbers are in public domain as of March balance sheet, which is in public domain and uploaded on the website, you have to add that as the CWIP as of 31st June.
Right. Lastly, Sir, regarding the investor presentation and the operational performance, if we could just enrich our investor presentation, I think so the basic questions which we investor community has been asking during the calls, these can be very well articulated in the investor presentation. What we found in the presentation was that these basic numbers or the question which we are asking can very easily be answered through presentation. So, I want that if we can work with a revamped investor presentation with these all-basic numbers, that would have really helped us in spending more time in this discussion.
Investor presentation, we don't update on a quarterly basis. We do on an annual basis generally. Number one. Number two, we give a detailed press release in which all these numbers which some of the callers have been asking, what is the sales volume, what is that? Debt number, debt to EBITDA number, debt to equity numbers, are all given in our press release quarter after quarter. So together with the investor presentation, which is there, if you can see the press release also, most of the guest questions get answered therein. Your question, distinction is good. We'll dwell upon it.
Right, Sir. Last point, if I may, Sir. Taking into account all the CapEx that we are doing in the different geographies in the country, what are we eyeing in terms of capacity two, three years down the line from the current consolidated capacity, Sir? If you could just give the color on the same.
We are today sitting on a capacity of 16.5 million tons together with Udaipur Cement Works Limited. Then immediately we have 1.4 million of Surat coming in, so that takes us to 18. Then another 4.5 coming in three years' time for Durg Brownfield expansion in two phases. That takes us to 22.5. Another 2.5 coming from Northeast makes it almost 25. Thereafter we have in the offing, the Nagaur expansion and Greenfield as well as Kutch together with the possibility of adding another line in Udaipur.
So, this 25 million, what is the extended timeline we can expect to reach from the existing 16.5? Or if you could give phase by.
Come again?
Sir, if you could give me phase wise for every year, what will be our closing capacity, Sir? The 16.5 was the console number for last year, 1.4 we added. We are closer to 18 for this year. What would be the next year number? And if up to 25, by what time we will be reaching 25 million?
As I mentioned, we are sitting at 16.5 MTPA. I will repeat for your benefit. We will be adding Sirohi and FY 2025 will be 18 MTPA. Thereafter, we can have immediately the Durg line phase one coming in, which will be maybe by FY 2027, in between that. Then another two million coming in for the expansion at Jharkhand and Bihar that can come in. In between, the Northeast 1.5 MTPA can also come in. So, all this would come starting from FY 2027 onwards. Every year, broadly, you can take about two- 2.5 MTPA capacity gets added.
Thank you. Ladies and gentlemen, this is the final reminder to press star and one to ask a question. There will not be any further reminders. The next question is from the line of Gautam Rajesh from Everflow Partners. Please go ahead.
Yes, Sir. Just for a follow-up question, you said therefore your ideal capacity utilization would be 75%. So, by when can we expect that ideal utilization to be achieved by the company?
FY 2026 quarter four, I think we will achieve that.
End of 2026?
Yeah.
Okay, Sir.
This is the first year, in fact just a couple of months back only we have commissioned that project. I think this year we will reach on an average about close to let us say 55, 60 what we mentioned, reaching a peak to about 70, 75. Then next year on, I think we will have it.
Next year onwards, we will reach that 75% if I am-
75%, yeah.
75%.
Yes.
Thank you, Sir.
Thank you. Ladies and gentlemen, due to time constraints, we will now take the last question, which is from the line of Tushar, an individual investor. Please go ahead.
Yeah. Hi, thank you for taking my question. My question is, what is the status of conveyor belt at Durg plant?
We are still awaiting approvals. That is in the final stages, and we are expected to get that maybe in another couple of months' time. That we are waiting. You know that this approval from authorities takes a lot of time because of decision-making process with layers. We are just waiting. I think that is in the final stages of approval.
Okay, Sir. Thank you so much.
Thank you. I would now like to hand the conference over to Mr. Vaibhav Agarwal for closing comments. Over to you, Sir.
Yeah, thank you. On behalf of PhillipCapital India Private Limited, we'd like to thank the management of JK Lakshmi Cement for the call and thank participants joining the call. On that note, we now conclude the call. Thank you, Sir. Thank you.
Thank you. On behalf of PhillipCapital India Private Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.