Ladies and gentlemen, good day and welcome to the JK Lakshmi Cement Q3 and nine-month FY 2024 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 the call, please signal an operator by pressing star then zero on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vaibhav Agarwal from PhillipCapital. Thank you, and over to you, sir.
Thank you, Rio. Good evening, everyone. On behalf of PhillipCapital (India) Private Limited, we welcome you to the Q3 and nine-month FY 2024 call of JK Lakshmi Cement. I need to highlight that JK Lakshmi Cement is also the holding company of 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 of JK Lakshmi Cement. I would like to mention on behalf of JK Lakshmi Cement and its management that certain statements that we made or discussed on this conference call may be forward-looking statements related to future developments 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 differ materially from the statements made. 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 information or future events or otherwise. I will now hand over the floor to the manager of JK Lakshmi Cement for the opening remarks, which will be followed by interactive Q&A. Thank you and over to you, sir.
Thank you, Mr. Vaibhav, and good afternoon, good evening, rather, ladies and gentlemen, for this Q3 call for the JK Lakshmi FY 2024. You would have already seen the results and our press release. Nothing much to talk on that you would have observed. We will now throw the floor open for question and answers.
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 touch tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. We take the first question from the line of Shravan Shah from Dolat Capital. Please go ahead.
Thank you, sir. First of all, congratulations on good set of numbers. Sir, before asking a question, just a clarification needed. We have removed our outsourced volume from our numbers. If you can help us with the revised volume number for last four quarters of FY 2023, third quarter we already have, and the two quarters of Q1 FY 2024 and Q2 FY 2024, because it seems because of that, the realization seems to be a much higher QoQ. Just wanted to understand the revised numbers and is it that now this is the new normal volume number, so despite the volume reducing outsource, there is no impact on the revenue front?
You are right. This is going to be new normal, first and foremost, to answer your question. The first, you should all analysts understand the reason as to why we have done that. For last almost seven, eight quarters, we on all our con calls have been talking of seeing the profitability in numbers, but especially the pattern numbers on consolidated basis. Still I find most of the analysts are publishing standalone pattern analysis. That distorts the figure, I will tell you why. You see, for the simple reason, if UCWL is procuring some cement from us and then selling it to market, that volume when you report on a standalone basis gets counted as sales both for JK Lakshmi as well as Udaipur. Ultimately, from market we realize only X profit, which gets divided in two companies.
What we have decided, the company which ultimately sells in the market should show that as the sales. That is why when you would see, when you add the standalone reported number of JKLC plus standalone reported numbers volume, I am talking sales volume of UCWL, earlier there used to be huge inter-unit sales which used to be knocked off for doing the consolidation. This time there would not be any need for doing that because we have taken at one place. So it is going to be the new normal. Regarding your question of past data, we will share that separately. You can put up the mail and our team will answer. It will be difficult for you and for other people who are in the queue to note down all the numbers for four quarters which you want. You can send the mail, we can answer that.
But as you rightly said, going to be the new normal. Going forward, you would have also seen in our press release and in our reporting to the stock exchange that the board has decided to form a committee of executives to consider and evaluate the possibility of the restructuring. We have been talking of this consolidation of the two businesses, UCWL and JKLC, for quite some time. But now the opportune time has come that we start seriously having a look at it, and hopefully next year, somewhere next year, we will announce at appropriate time the plan to consolidate the businesses. So once that happens, then obviously there will not be any reason and the need for any inter unit sale because UCWL and JK Lakshmi will be one company, and UCWL will be another plant or division of JK Lakshmi only as a part of the company.
Only a little bit of outsource which we are doing from some third party outsource, that is very negligible and will not distort the figures. But yes, this is going to be the new normal going forward. We will share the numbers. You send us the mail what you want. Right? Thank you, Shravan.
Yeah. Sir, now in terms of coming to the volume, so nine month, 6.6% volume growth, and we were looking at last time say 12% - 15% volume growth. So what kind of a new growth we can look at for FY 2024? So particularly fourth quarter, how much kind of a volume growth we are looking at? So for that also we need a fourth quarter of FY 2023, the revised volume number. So that is the first one.
Yeah. So the volume growth number which we had told before was based on some assumptions and market growth and there has been the area where we operate some disruption like north we had severe cold and this GRAP restrictions, construction activities were not happening. So that has impacted quite a bit. So that is why in the last call also we had told that we are going to moderate our numbers. So yes, our volume growth in the last quarter, volume growth was 8%. And going forward, we see that growth is going to be because January, March typically is the high month, right? And the base is very high so I see that growth is going to be almost in the similar pattern what we have achieved in the last nine months. So maybe around 8% - 10% kind of range I give.
Okay. Sir, now coming particularly on the expansion and the CapEx and the debt things. If you can help us in terms of how much CapEx in the nine months we have done, what is the new number for this year, FY 2025, FY 2026, and also at the same time in terms of the expansions that we have announced at the Durg also and the acquisition in the Northeast. There also we are looking at expansion. If you can help us in terms of when each and every grinding unit and the clinker unit in terms of the timeline will be coming and how much CapEx we will be doing in the fourth quarter, FY 2025, FY 2026. That would be helpful and ultimately the net debt which we were looking at the peak net debt at that control level, closer to INR 1,800 odd crore.
Now what kind of a peak debt we can look at?
Yeah. We have announced some projects in this board meeting. One is apart from the normal CapEx which is happening, we are already in the two, three things which we are doing. One, we have announced a railway siding project of INR 325 crore, that will be implemented in two phases. First phase by September of 2024 and the second phase by March of 2026. So out of the INR 325 crore about INR 105 crore will be part of the phase two. So balance that is around INR 200 crore -INR 220 crore would get spent by September of 2024. That is number one. As far as railway siding is concerned and the balance of INR 105 crore in about 12 - 18 months time thereafter. Then we have also announced the expansion of our Durg plant which involves adding a clinker line of 2.3 million and four grinding units with an aggregate capacity of 4.6 million tons.
Again, that will be in phases. The first phase would involve about 1 million tons in U.P. and another 1.2 million in U.P. and 1.2 in Durg. So that will take about two years' time. We are talking a CapEx of close to, for the entire project of INR 2,500 crore. So maybe INR 1,500 crore - 1,600 crore get commissioned or get incurred in those first two years by March of 2026. Release maybe about 40% coming in the first year, which is FY 2025, and 60% in the next year. Broadly, I am telling you. We have to just do the fine numbers there on a quarterly basis. That involves fundraising of close to about INR 2,500 crore, which is basically INR 1,750 crore for the Durg project, INR 250 crore for the railway siding, and for our other aspirations, about INR 500 crore.
Which includes the ongoing projects like the AFR project and the waste heat recovery project where we are adding plus also some solar power plant which we are doing at Sirohi. So all that will be about INR 500 crore. So we are talking of a fundraising of INR 2,500 crore over the next three years' time, maybe about INR 500 crore-INR 700 crore that's in this FY 2025, and another maybe INR 1,000 crore in FY 2026 and balance thereafter.
Okay, got it. Sir, if you can still help us in terms of the total combined everything put together, CapEx for fourth quarter FY 2025 and FY 2026 would be how much?
We need to work on. Broadly, I've given the high level numbers. We have just announced the project. We have to break it down quarter wise, and maybe next call I will be able to give the exact numbers. Broadly, I've given you broad indication of the quantum of the CapEx as well as the term loans.
Thank you. Before we take the next question, a reminder to participants to press star and one to join the question queue. The next question is from the line of Prateek Kumar from Jefferies. Please go ahead.
Hello. Yeah. Good evening, sir. I am Prateek Kumar from Jefferies. My first question is on your expansion. Will you be able to give any reason for choosing East over North or any other market for a first round of expansion basically?
Sir, I could not get your question. Can you repeat it? It was echoing.
Can you just highlight any specific reason we looked at Durg expansion earlier than some of your North expansion, which we were also talking about earlier, in terms of order expansion, is it related to the readiness of the site or any other reason which you can cite here?
We are in the process of completing a North expansion. Udaipur will be completing hopefully towards the end of this quarter. They will need some time to stabilize before we embark on next expansion in the northwest. That is why we chose, and considering the demand-supply mismatch there in the eastern side and the expected growth in the demand in that region, we chose East as the preferred market to go for the next round of expansion. Yes, once this expansion gets stabilized at Udaipur, maybe then we will have a look at the expanding in the northwest.
Yes. Adding to that what Mr. Bidkar said, you must have seen that capacity utilization of our Durg unit is almost done, exhausted. The highest growth from the entire India is eastern region. Typically, I am talking of those markets where we operate because we do not operate in the entire East. That was one reason. If you can look at our 30-30 plan, our plan was to expand Durg, our plan was to put up next line in Udaipur and then Nagaur and Kutch. We are just on the track. The roadmap which we prepared for ourselves, we are following that. I think this is almost as to the plan which we are kind of going ahead with.
Sure. For the Northeast acquisition, we have talked about only mine, as of now around INR 300 crore, and initial capacity of only 1 million ton, for which we have not cited any CapEx. You said INR 2,500 crore CapEx is for East operation, INR 325 crore is for rail siding, maybe INR 100 crore annually. INR 100 crore is adding up to three years of CapEx, excluding Northeast. Including Northeast is close to INR 5,000 crore of CapEx for us in next three years.
Yeah, we are talking of a CapEx of INR 2,500 crore for the Durg expansion, which will take about two to three years. Ongoing project is about INR 200 crore, then the railway siding, INR 300 crore. That is INR 3,000 crore, maybe INR 1,000 for the Northeast to INR 4,000 crore over the next three years.
All right. Just related to previous question, can you just give for the benefit of everyone, I am sure everyone is looking for your restated volume numbers of past three quarters, and maybe annual FY 2023 volume.
Yeah. We will provide you that. Yeah. I think what you want is net of that in outsource rate.
That we have already given in the press release, both for nine months as well as this thing. Quarter-wise we will share.
Sure. Okay. I will get back to this. Thanks.
Yeah. Thank you.
Thank you. Participants who wish to ask questions, please press star and one on your touch-tone telephone. The next question is from Noel Vaz from Union Mutual Fund. Please go ahead.
Yes. Thank you for the opportunity. I had a question about Udaipur Cement. My information might be a little incorrect, but I just wanted to know, is there any issue of limestone availability or limestone shortage at the Udaipur Cement plant? That's all.
There's absolutely no shortage of limestone reserves. In fact, there was one additional mine which we have recently acquired. In fact, there's reserves after this expansion also would be good enough for another 40- 45 years. We are thinking going forward, as I mentioned in response to earlier question, could be possibility of another line. There's no any paucity of limestone reserve at that plant.
Okay. Just to clarify, I think, the company is planning to finish off with the Udaipur expansion, then Durg, then at Udaipur Cement Works. Is that timeline correct?
Yeah.
Okay. Thanks for confirming that. That is all from my side.
Thanks.
Thank you. Participants who wish to ask questions may press star and one. The next question is from Rajesh Kumar Ravi from HDFC Securities. Please go ahead.
Hello. Good evening, sir. Am I audible?
Yeah.
First, could you share on the trade non-trade mix and blended cement and the fuel cost for this quarter, and then Q3 restated volume for Q2, if it is available, please.
The quarter-over fuel cost was INR 8,700, which is around INR 1.78 /kCal. Regarding your question on the—
Trade mix and blended cement.
Trade quarter three was 58%, which is up by 3% from previous quarter. 58% here, and blended is 65% and 35% is—
Are these numbers standalone or console, sir? Blended and trade?
Console numbers.
Console numbers. Okay. Second, what is your thought process on the Udaipur ramp-up with the clinker plant now operational? Why are you still looking at 7%- 8% sort of volume growth? For next year, what sort of ramp-up you are looking at, given that even your grinding unit also will be available by March end?
Yeah. So I will just clarify. Whatever industry is growing at, we grow higher than them. As I told you last quarter also, we have grown by 8% in volume, which is better than industry. Industry is about 6%, 7%. One. Even in this quarter also, our growth is going to be better than industry.
Okay.
Once that Udaipur capacity comes 2.5 million ton, our growth is going to be much higher. So next year, I think we are going to grow, industry growth is in retail to be about 8%. Our growth with additional capacity at Udaipur, we are looking at somewhere around early two digit number.
Okay. And two last questions. Q2 volumes, if you have handy, the like-to-like volumes in Q2. And why are your console volumes when you need to knock off again outsource volume because it will be your console numbers have come down by 5% versus the prior reported numbers.
That I told you because of that outsource is minimal, and the second quarter we had for JK Lakshmi, the volume was 21.7 million tons, and for UCWL 5.6 million tons. Total 27.32 million tons.
Okay, sir. And lastly, in thought process on this entering into the Northeast and by when do you expect this project to be on stream, and what is your thought, given that that market is quite consolidated between two players, Dalmia and Star ?
Northeast, I think we have, and you know by now that we do have interest in Northeast. And because Northeast is one of the markets which form part of Eastern India, and we want to consolidate our position there. This is one reason. Second, of course, I think the demand supply situation also favors going to that market, apart from the price which is prevailing in that market.
Okay. By when you are looking to start work on that project, sir?
I think we are just working out the timeline. We'll come back maybe next time.
Sure.
It's premature for us to give a timeline. Next call, we should be hopefully able to answer that.
Sure. Great, sir. All the best. Thank you.
Thank you.
Thank you. Participants who wish to ask questions may press star and one. The next question is from Narendra from RoboCapital. Please go ahead.
Yeah. Hi. Thanks for the opportunity. Am I audible?
Yeah. Thanks.
Yeah. Hi. My questions are specifically pertaining to UCWL. What would be our peak utilization levels there, and by when do we expect to reach those levels, if you could throw some light on that?
Talking of the existing capacity which we have at Udaipur?
No, the expanded capacity.
The plan is right now, whatever capacity we have, we have gradually ramped it up to about 75% now. The plan is the new line which is coming up, maybe first year is going to be about 60%, next year 75%, and later on 80%.
Okay. So 2025 would be 50% and by 2026 would be around 75%, right?
Yeah.
Yeah. Okay, got it. I believe you had a target at UCWL to reach top five players in terms of EBITDA per ton. What is the target on EBITDA per ton for UCWL?
Yeah. I think we look at UCWL and JKLC combined because that is what matters to us, right?
Okay.
We have seen in the last two quarters. I think we have been improving with respect to our EBITDA. If you also look at the gap which we had before with the leaders, we have squeezed that up to an extent. Going forward also, our plan is to consolidate at this level, whatever we achieve because we have been talking about a INR 1,000 EBITDA per ton, which we have achieved now. We need to consolidate this on a consistent basis. Going forward, yes, the kind of plan and the actions which we have in place, the top five companies, EBITDA earning company in the industry, yes, that looks quite feasible. We are happy the way we are progressing. All those actions are getting realized, and we are progressing well. We are satisfied with it.
Okay. Got it. Thanks so much, and all the best.
Thank you.
Thank you. Participants who wish to ask questions, please press star and one. The next question is from Aman Agarwal of Equirus Securities. Please go ahead.
Yes, sir. Thank you for the opportunity and congratulations on strong performance once again. Sir, my question was once again on the reason why we went up the eastern market, especially with the split grinding units in U.P., Bihar, and Jharkhand. While we are aware that U.P. market is doing quite well in demand sense, Bihar and Jharkhand we hear that it has been demand-supply subject for quite a few quarters now. Further, this I think will also have some impact on our geo mix improvement target which we have set for ourselves. Just wanted your views around this.
Yes. So I think Bihar also you have to divide that market into further geographies, like North Bihar and South Bihar, right? If you look at North Bihar geography, that geography is better in terms of demand and supply situation and also on pricing front. So our plan is to move somewhere in North Bihar, right? And Jharkhand also where we plan to go moving forward. I think we are choosing an area where from I think, yes, it is going to be better to serve our customers. Second, I think demand-supply situation is good, and third also the price trajectory is also favorable. So I think we have done our homework and groundwork before deciding on this. Another issue was that we have been capturing part of the growth of eastern market which is Chhattisgarh and neighboring areas.
But I believe that individual home builder segment which is the highest in case of east I think that is going to drive the growth going forward, right? And perhaps individual home builder segment in that geography where we plan to go moving forward is quite sizable. Right? So that was the rationale as to why we chose to go to that market, right? If I look at eastern market growth, I think growth of eastern market is the highest in all zones in India, be it north, central, south or west, right? Going forward also, I believe that this is going to be there for some time as to individual home builder segment which is ever-growing. And that is going to really consume all those capacities which are going to be installed going forward.
If you look at demand-supply gap also I think though capacity has been added in east, but still I think the gap is reducing. If you look at maybe 1.5 years how industry has performed, gap has gone down. And going forward, I think it will further go down despite capacities are being added. This is what our estimation or the, I would say, presumption for that market is.
Understood, sir. That is really helpful. And sir, as we expand pretty aggressively for our own capacities, would that mean we would be trimming down our dependence, obviously which is low already, but we will be further reducing our dependence on outsourcing?
Yes. I think strategy is we are going to be dependent on ourselves, our capabilities to produce clinker, our capability to grind it. And if you see our 30-30 roadmap which we have told to all of you, I think the clear-cut roadmap is there at least now for 24 million tons- 25 million tons. Nagaur and Kutch already I think work in progress which will take some time because of all those prerequisite processes are going on. Right? Yes, we are going to be self-dependent in terms of grinding and producing clinker.
Understood, sir. Then sir lastly, for Jharli we will continue to purchase clinker from external market? Any plans around that?
Jharli I think we have in-house clinker only. We do not purchase from outside.
Okay. I accept that. Sure, sir. Thank you.
Thank you.
The next question is from Navin Sahadeo from ICICI Securities. Please go ahead.
Yeah, good evening and thank you for the opportunity. Shuklaji, congratulations on INR 1,000 + EBITDA per ton as you had promised. So great to see.
Good evening. I think we had discussed over this, I think now we are there.
Absolutely. I just recall that as soon as you had joined, you had said INR 1,000 EBITDA per ton is the mark, so congratulations on that. Sir, a couple of questions. The volume growth of roughly 8% that we have seen, is it fair to assume that it was more biased in favor of north region because east would have been slightly slow? Or how should one look at the breakup between north and east?
I think growth is in favor of east. I told you that east is growing at a faster pace than other geographies of India. Little bit more skewed towards east.
Even in the current quarter it was more skewed towards the east, you're saying?
Yeah.
Understood. And sir, realization wise, how should one look at? Because in February, we believe there has been recent corrections in grant in February. How would you look at realizations as on date versus the previous quarter, what kind of impact would you suggest would have happened?
I think January, March, usually, yes, demand is good and it's going to be good in the remainder of the February and March. Price-wise, year sizing, there has been softening in the prices in different market, for sure. It would be difficult to quantify as to how much softening has happened. But yes, softening has definitely happened in the month of January to an extent, and even in February.
Understood. Sir, just one or two more questions, if I may. These split grinding units, I was just checking the distance, let's say Durg to Madhubani, Bihar is roughly 900 + kilometers. With that kind of a huge distance, would it not impact profitability? How should one Because it's almost 1,000 km, I am saying, from Durg, that location. How should one look at it? And in the same breath, do we have this arrangement with Kanodia Cement, if I'm not wrong, in the same market and which will replace that, or that's in a different market? Thanks.
No, I think we do not have any association with a third party in that market, in the market which you are talking about. As far as that kilometer and other things you mentioned, I think we have done our calculation and that makes sense. Because, even today, from our Durg unit, wherever we are selling, I think some of the markets are as good or as bad as the market which you mentioned, right? We have done our calculation, that makes sense to go to that market because we are also betting on the future. Because I personally see, we see that that market is going to grow at a much faster pace than others, and once market growth is there, then price also comes along with that.
Understood. Just one last question. We purchased or we have agreed to purchase 85% in this northeast entity, and it is for conceptualizing a cement plant. The balance 15% would also, I think it's the existing promoters, so would they also put in any equity, anything for the proposed CapEx or it is us who will lead the entire expansion?
Yeah, obviously, they would put in if they are partners in that.
So up to 15% in proportion to the equity that there is being shared, right?
Yes.
Great. Thank you so much for this and once again, congratulations on very good set of numbers.
Thanks very much. Thank you.
Thank you. Next question is from Mudit Agarwal, from Motilal Oswal Financial Services. Please go ahead.
Hello. Good evening, sir. I have some questions and some clarifications. Just wanted to know about this Surat grinding unit brownfield expansion. Is that plan intact or any changes on that side?
There is no change in that plan. That is going as per the plan.
Okay. And sir, you mentioned INR 4,000 crore of total CapEx, including Northeast. Is it the right
Yeah.
Okay. And one more clarification, sir. Clarification, sir, about this Amethi grinding unit, which is on a tolling basis. Is it for exclusively for JK Lakshmi or is it shared with other industry players?
This grinding unit is being shared by other industry players also.
Okay. Sir, can you just throw some light, I mean, how this arrangement is for the JK Lakshmi particularly?
I did not get what you—
I mean, what are the capacities which we are sharing and how much is the JK Lakshmi share?
I think we do have a tolling contract with them. I think those other players, they must be having a different contract. We are having our own contract with them, and based on that database costing, we have worked out some contracting arrangements. Right. That is how we operate, right.
Okay sir, in simple words, like how much volume we are getting from that unit?
So we are sharing about maybe 50% of it.
Okay. Understood. Thank you, sir. That's all my questions.
Thank you. The next question is from Uttam Kumar Srimal, from Axis Securities. Please go ahead.
Yeah. Good evening. Thanks for the opportunity and congratulations on good set of numbers. Sir, my question pertains to EBITDA per ton. This quarter we have done over INR 1,000 EBITDA per ton, and we have achieved our target earlier than what we had envisaged. So this EBITDA per ton sustainable going moving ahead also, sir?
Our endeavor, Uttam Ji, is to be among top five players because market dynamics keep on changing, right? Our effort is, EBITDA goes to even INR 1,500-INR 1,600 also for others, we should also be moving in the same direction. If it goes down because of the regions, then I think it will go down for us also. Although what we can do, what is within our control is to get all those internal drivers of margin. That, I think we are driving that. I would say we have accomplished part of those levers, right? Going forward, also, we are going to work on those levers and further consolidate on those ends. I think I would put like being top five amongst EBITDA-certain company, that is what our endeavor is. If others go up, then we will go up more than them.
This is what I would say.
Okay, sir. And sir, what was the lead distance and premium cement sale as a percentage of trade sale during this quarter?
Yeah. The lead was 377 km, I believe. Yes.
377 km?
Yeah.
Premium cement, sir?
Premium cement was 12% of the overall volume.
12% of overall volume. Out of trade?
25% of trade, right.
25%. And sir, how was VAP sales during this quarter? Value-added product.
Here also, I think we have done quite well. Value added has contributed about—
INR 134 crore.
INR 134 crore this quarter.
Okay.
The major contribution is from RMC, which is INR 67 crore, followed by U.P. and AAC block.
Okay. Because sir, one question. Last quarter, in FY 2023, our volume was 2.32 million tons, and this quarter it is 2.36 million tons. So there is a growth of only 2%. If you can clarify on the same.
Come again, can you repeat your question?
Sir, last quarter, Q3 FY 2023, volume on a standalone basis was 2.32 million tons. As per your press release. This quarter, this is 2.36 million tons. There is a growth of only 2%. We are seeing around 8% growth. If you can clarify on that.
Consolidated is 8%, right?
Okay.
If you take only cement, the growth is 5%. Degrowth is there in case of clinker sale, which we kind of not encourage, right?
Okay. Sir, that's all from my side, and all the best to all of you. Yeah, thanks.
Thank you.
Thank you.
Thank you very much. Before we take the next question, a final reminder to participants that you may press star and one to join the question queue. No further reminders will be announced. The next question is from Parth Bhavsar with Investec. Please go ahead.
Okay. Thanks. I only have the opportunity to ask two questions. I wanted to understand, sir, Durg will be serving your split government announcements, right?
Durg is equally serving [inaudible].
Hello? Yeah. You can hear me now? Hello?
Slightly better.
Yeah. Just wanted to understand that Durg will be supplying clinker to your split grinding units, right?
Yeah.
Sir, what sort of minable reserves do we have at Durg?
With additional 2.3 million tons, which we plan to add, it's going to be about 50 years. 45-50 years.
45-50 years. Okay. But this is on the base of the 8 million ton grinding you've announced, right?
Correct. Yeah.
Okay.
Because typically all these markets, they are heavy on blended cement, right? So blended cement is to the extent of about 80%- 85%.
Can one assume the clinker factor would be around 1.67 x? 1.67x?
Yeah.
Okay. And sir, the other thing is, again, to maybe target East in the future, wanted to understand if we are bidding for any limestone auctions in the East or have we recently won any limestone mines in East?
No, not in the near future.
In this East, we have not won any. We have only two won in the recent past.
Are we bidding for any?
Other than that, we have not.
Are we bidding for any?
There is nothing in the offing as far as my information goes.
Okay. Perfect, sir. Those were my questions, sir. Thank you.
Thank you.
Thank you.
Thank you. The next question is from the line of Devesh Agarwal from IIFL. Please go ahead.
Yeah. Thank you for the opportunity, sir. Sir, just to understand a bit better, this exclusion of outsourced volumes, is it because, are we planning to scale down the outsourcing operations, or was there any double counting and that's the reason we have now decided to exclude this?
Two reasons. Broadly, you are right. One, there was double counting for UCWL, that's why we have done that. Number one. The other one is we are scaling down considerably going forward the outsource. So effectively, that will be negligible. It doesn't make sense to consider them. Udaipur was a case of a double counting, which we have been saying for quite some time now. So ultimately, we decided to do it ourselves rather than you seeing it on a console basis.
And if we were to just make number comparable, sir, this quarter compared to the previous reported numbers, what would be the volume addition that we have to do for the quarter in terms of what was the volume from outsourced units?
It is better to exclude the outsourced model from the earlier one, rather than clubbing it again and running into the same problem for which we have decided to start the new practice. In any case, going forward, as we mentioned, we are seriously considering a consolidation next year. So obviously this double counting, et cetera, will go away, and the volume from the outsourcing will considerably get reduced.
Right. And sir, any number that you can share in terms of the profitability that was getting added because of this conversion or tolling volumes, or any cost that we are paying to the tolling operator?
That is why it was very negligible, and just because of the volume getting distorting the actual real profitability of the company. So it was negligible only.
Understood.
Low volume, negligible profitability does not make sense to add, and double counting obviously was the main reason for the UCWL.
Understood. Thank you.
Thank you.
Thank you. Next question is from the line of Keshav Lahoti from HDFC Securities. Please go ahead.
Hello. Thank you for the opportunity. Sir, congratulations on four-digit EBITDA pattern.
Thank you.
Firstly, coming on the CapEx side, what is the CapEx for the nine months and FY 2024? I think that number might be handy right now.
Yeah, that's true. We can share that with you. In nine months period, we have done about INR 250 crore of CapEx in JK Lakshmi, and in UCWL in nine months, about INR 450 crore. INR 250 crore for JK Lakshmi and INR 450 crore for UCWL.
Okay. Got it. The green power share, you said 35% for this quarter?
Green power share, what we are saying is, after the Durg arrangement, Durg has already touched 80% thereafter. In this quarter, the green one is about 44%.
Okay. 44%. This quarter, Durg was fully operational, right? For the entire quarter or so.
Yes. Yeah, almost fully operational.
Okay. Got it.
It was almost we reached 70% in the Durg.
What I want to understand, this 44% might increase in next quarter due to Durg. Is it a possibility in Q4?
Marginal, because they already touched 70%. It might at maximum go up to 80%. So marginal increase could be there. Our aim is to first graduate to 50% on a company basis and take it forward from there.
Okay, got it. How is the fuel cost expected to be in Q4?
This quarter it was about INR 1.78/kCal, maybe marginally lower, around INR 1.7 /kCal or so.
Okay. Last question from my side. As you are expecting 8%-10% volume growth in Q4, have we seen similar volume growth in January, like January has already passed?
Yeah. January was good. Yeah, I think around that only. I told you, I think we are doing better than industry in terms of growth. One thing I think you should remember that during peak period, it was almost I think we feel very high. Capacity is almost exhausted, so you do not have headroom to grow further. January-March is something which comes out of other lever, like more of blended cement, more of other things. So that your throughput goes up and production goes up. So that is what we are saying. January-March, I think is muted growth because of these reasons, because we have already achieved our capacity utilization at a given product ratio.
Okay. Understood. One thing in call you highlighted that East volume growth is faster than North because our assessment is North is growing faster than East, at least in the near period, because of other issues in the East. Is it due to JK Lakshmi Cement doing better in East, or you would say the industry is also behaving in a similar manner?
I am talking of industry. Industry, if you see FY 2024, East growth has been better than all other zones.
Okay, understood. Thank you. That is it.
Thank you.
Thank you. Next question is from the line of [Tushar], who is an individual investor. Please go ahead.
My first question is, am I audible?
Yes.
My first question is, what is the current status and timeline for Durg conveyor belt project?
There are some approval and procedural issues, that is why this is getting delayed. We are working on that. Difficult to give a timeline, but hopefully, I think we will resolve this very quickly within this quarter. Difficult to give a timeline as of yet.
Okay. And sir, my second question is on the 7 MW solar power project at Sirohi. It was reported earlier in quarter two and quarter one concall and was to be commissioned in March 2024. What is the expected commissioning timeline for this project? Also if you can, is this project company owned or tie-up?
Yes. Solar power at Sirohi is on track, and that will get 7 MW of solar power plant. That will get commissioned somewhere around middle of March. You are right. That is what we told last time also.
Okay. Is this project company owned or it is a tie-up, sir?
Yeah. It is company owned. In Rajasthan, unfortunately, the state government policy doesn't allow any other mode other than the CapEx mode. So obviously, unfortunately, it has to be that, as opposed to a possibility where it is pro-industry policies in Chhattisgarh. Rajasthan government doesn't have that policy. So even in fact, in Udaipur, what was a third party solar power, we had to convert that into a CapEx mode by buying that out. Otherwise, they impose those crop subsidy charges and the electricity duty and all that, which doesn't make sense. So that's why it is in the CapEx mode.
Okay, sir. Just one last question. Can you please give us the timeline to reach from 4% TSR to 16% at Sirohi, and our savings through this?
Sirohi, good news is that AFR project, which we told you that we are putting, that is almost getting accomplished now. In the last month, we have clocked about 11% of TSR. Right? Sirohi, I think there has been a good improvement in terms of TSR improvement. Right? One entire thing is, it gets commissioned, then we'll reach about 13%, and that is what I think we planned for phase one. Phase two, our plan was to go to 16%- 17%, which we'll take it up later.
Any timeline to reach 16% to 17% by when?
We I think we'll come back to you with the timeline once kind of we Plan was to do it in FY 2025. That is what I think we still believe that we'll be able to do that.
Okay, sir. And our sir?
Sorry, you are not audible.
Sir, our savings after reaching 16% TSR now, sir.
I think saving, I think we will give you—
It will be saving of INR 28.
Around INR 25 -INR 28 saving we together.
Okay, sir. Thank you so much. That's all.
Thank you. Next question is from the line of Ronald Siyoni from Sharekhan Limited. Please go ahead.
Yeah. Good evening, sir, and congratulations on good set of numbers. Sir, I have only one question. If you can share Q4 of FY 2023 restated numbers, after excluding the double counting of UCWL and outsourced volume. That would greatly help.
We will share it separately. Don't have readily for the fourth quarter.
Okay, sir. Thank you very much.
Thank you.
Thank you. Next question is from Navin Sahadeo from ICICI Securities. Please go ahead.
Yeah. Thank you for the call. Just one question, sir. This phase two or this expansion that we are doing in Durg now is a brownfield unit. So I was just curious to know why we still budget at least two years for the completion of it. Is it possible that we advance it by at least a couple of quarters since it is brownfield and change from that perspective? Just wanted to know your thought. Is there a reason why we are budgeting two years, or there is a possibility we can do it in 1.5 ? Thanks.
Yes, I think effort would be there to do it as fast as possible. The only critical activity is that equipment supply. Execution and other site work, we can do it very fast, no doubt about it. The only thing is how fast we can get all those equipments and accessories to put that plant up. That is what is going to be on critical path. Though our endeavor would be to do as fast as possible.
Understood. I am assuming orders are yet to be placed for equipment.
Now, we are going to start that process because we took that board approval just in the last board meeting only. The team is working on it. Once we get the timeline and other things, I think next call and thereafter, we'll be updating you.
Great. All the very best, sir. Thank you. Thank you so much.
Thank you. The next question is from the line of Prateek Kumar from Jefferies. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity again. My question is on incentives. I think partly is what you answered earlier. What is the annual incentive like you are looking currently, and all you are looking at incentives on sanctions in Northeast and West?
As of now, we do not have any incentive for our existing operations. Going forward, Durg also does not going to have anything, but for the split location, we will be doing the liaising with the government and trying to get the incentive wherever in those states, U.P., Bihar and Jharkhand, those are available as per the state policy.
And Northeast population?
Yeah, there also, as per the state policy, whatever is available, we will try to get those.
Sure. Thank you. This is our only question.
Thank you.
Thank you. Due to time constraints, we will be able to take the last two questions. We take the next question from the line of Rajesh Kumar Ravi from HDFC Securities. Please go ahead.
Hi, sir. Rajesh here. Sir, this value-added products, RMC and AAC blocks, they are manufactured captive or external?
We are doing on a, some are captive, some are outsourced also.
Okay. When I look at your console purchase of trade goods, close to INR 130 crore- INR 150 crore on a quarterly basis, it's almost 8% of top line. How much of these would be cement, traded goods, and how much would be the value-added product, broadly?
For which you are talking of?
Last quarter, if you look at the console figure, purchase of goods, the P&L item, which is INR 130 crore - INR 140 crore every quarter. That would have only smaller amount from the value-added sales, isn't INR 30 crore would be coming in from the value-added products?
We'll confirm that. I don't have the figure ready here.
What I am trying to understand, purchase of goods, does it include cement purchases from outsourced?
We will come back, but you are right. It primarily would be the value-added product, but some could be this also because the purchase of clinker or cement, that could also be there.
Okay. How much was the margin and top line for the value-added you mentioned? Sorry, I missed that.
Top line I mentioned in this quarter was INR 134 crore. Margins are around 5%.
5%. RMC, how much in that?
RMC was about INR 67 crore.
INR 67 crore. Okay. That's all for my own firm.
Thanks. Thank you.
Thank you. The next question is from Shravan Shah from Dolat Capital. Please go ahead.
Yeah, thank you. Just a curiosity or maybe a request or a complaint. I post my first question, I pressed the star one, but the people who asked a question after me were also given a question, an opportunity to ask a question, but I was allowed to ask at the last. That's the request or complaint in whatever way you want to take it. My question is, in the fourth quarter, how much CapEx are we planning to do?
Shravan, you were the first and also the last. I do not know how it incidentally happened also. But it is around—
Sir, it happened incidentally, sir. It is purposefully done. No issues, sir. You please answer my question.
You purposefully, I don't know, but it is I don't know. I'll let the operator comment on that, wherever on his team. I won't comment on that. As per your question is concerned, how much CapEx. JK Lakshmi, we would be doing around INR 250 crore in this quarter, mostly going for the projects which remain to be completed, especially some major CapEx will go for the railway siding out of that INR 250 crore. Another, about INR 300 crore would go for the Udaipur. So maybe INR 500 crore in this quarter. INR 300 crore as I mentioned, INR 250 crore to around INR 300 crore, and INR 250 crore JK Lakshmi and INR 300 crore Udaipur.
Okay. And sir, as on December, standalone console gross debt and gross cash?
As of December?
Yeah.
Standalone, we have a total debt of about INR 700 crore, and on a standalone basis, INR 720 crore, and cash about INR 675 crore, so net debt is around INR 50 crore. On a console basis, this number stands at close to INR 2,000 crore for the gross debt. Cash of about INR 850 crore. So INR 1,150 crore is the net debt on 31st December 2023.
Yeah. This Durg 4.3 million tons split grinding units. So 4.3 million tons, is it fair to assume that one can divide by four, so it will be a 1.08 million tons grinding unit for each locations?
It is not 4.3 million tons, it is 4.6 million tons. First and foremost. Secondly, it will be 1.2 million tons at three location and 1 million tons at one location.
1 million tons at which location, sir?
1 million tons at Jharkhand, I think. In Jharkhand we have done 1 million tons. And rest all other three places, 1.2 million tons into three.
Okay, got it. In terms of the timeline, everything will be, as you mentioned, the two years, so across all the grinding and the clinker will be mostly coming together at the same time?
No, we did not say that. We said the clinkerization and two grinding units will come in first phase in two years' time, and two grinding units split location would come one year later.
Thank you very much.
Thank you.
That was the last question. I would now like to hand the conference back to Mr. Vaibhav Agarwal for closing comments.
Thank you. Just to clarify the issue or the query highlighted by one of the participants on the call. We, as a host of the call, we have to monitor the call as per the question queue, and we cannot allow long questions by a single participant and for any participant to take on the call for long minutes. We have to handle the entire question queue, and we need to give a call to everyone in the queue. That is the reason that a few participants might find that they were not given sufficient time for asking their questions. This is as per the question to build on the online platform. This was the clarification for one of the queries by one of the participants on the call.
Just one sir, just wanted to know that coming on console basis, what is the peak net EBITDA you are targeting once you start commencing all your CapEx plans?
Vaibhav, are you asking any question to us?
Yeah, I am asking a question that what is the peak console net debt you are targeting, and what is the peak net EBITDA that you are, as per your assessment, would be there for JK Lakshmi Cement?
We are talking of peak debt because we are talking of contracting a debt of about close to INR 2,500 crore over the next three years. We expect the debt to increase by about INR 1,000-INR 1,500 crore because over the three years period, about INR 1,000 crore will get repaid also.
Right, sir.
Additional INR 1,500 crore, that would be there on a console basis. If it is INR 2,000 crore today, the peak would be anywhere between INR 3,500 crore or so thereabout. Our target for this would be to keep it net debt to EBITDA close anywhere less than 2.5x max.
Okay. That answers the question. Thank you so much, sir. Thank you, sir. On behalf of PhillipCapital (India) Private Limited, I thank management JK Lakshmi for the call and many thanks to participants joining the call. Thank you very much, sir. With that, we may now conclude the call. Thank you, sir. Thank you.
Thank you, Mr. Vaibhav.
Thanks, everyone.
Thank you, everyone.
Thank you very much. On behalf of PhillipCapital (India) Private Limited, that concludes this conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.