Ladies and gentlemen, good day and welcome to the JK Lakshmi Cement Q1 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 conference, please signal an operator by pressing star then zero on your touch-tone telephone. 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, Mr. Agarwal.
Thank you, Melissa. Good evening, everyone. On behalf of PhillipCapital India Private Limited, we welcome you to the Q1 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, the CFO of JK Lakshmi Cement. I would like to mention on behalf of JK Lakshmi Cement and its management that the statements that will be made or discussed on this conference call may be forward-looking-
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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 management of JK Lakshmi Cement for their opening remarks, to be followed by an hour of Q&A. Thank you, and over to you, sir.
This is Sudhir Bidkar from JK Lakshmi, along with my colleague Mr. Arun Kumar Shukla, welcoming you for this Q1 FY 2024 call. You would have seen the results and I don't have any comments to add other than that now the floor open for question answers so that we can take maximum questions.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question can enter star then one on their touch-tone telephone. If you wish to withdraw yourself from the question queue, you may enter star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the questions assemble. We have the first question from the line of Shyam Sriram from Franklin Templeton. Please go ahead.
Yeah. Hi, good evening. Thanks for taking my question. You had highlighted in our press release clinker capacity utilization almost touching 97% and cement utilization at 85%. With such strong utilization and our geo-mix strategy, it appears that operating performance could have been better. So in this journey of improving EBITDA that we have embarked on, what according to you could have been better on the realization cost front, and where lies the scope for EBITDA improvement?
Yeah. Thanks, and good evening to all of you. I'm Arun Shukla from JK Lakshmi Cement. Yes, I think a couple of points I think we could have done better because if you look at volume, which is all right, our ADR realization also looks all right, which is in line with what others are doing. Two, three points where I feel we could have done better, of course, first volume. I think we have grown, right, 95% specifically utilization of cement, so we could have done better on volume, one. Second is we could have done better on operating cost, which is a little bit higher. And third, I think I'm looking at what others have published till now, employee cost, I think. These are the three elements which I feel I think we have more literally away.
Thank you for that. As we talk about volumes, if you can share some regional perspective between North, East, and West, which were some regions from our utilization, how were the utilizations in these regions for us? Any perspective that you can share and how that has improved either sequentially or year-on-year, or declined, that would be helpful to understand, sir.
Right. I think our players about and I think it's lower than 90% overall is actually. I really kind of give you a sense as to where we could have done a better volume in the West, because as I told you during my last call also that we have also formed geo-mix strategy, wherein we plan to sell more in the areas where our realization is better. If you recall, I suffered a setback on account of the cyclone which came in Gujarat during the latter part of it. In the month of April also, March end, there was Holi, and there are issues of labor unavailability in part of Gujarat because day off during post-Holi is a little higher than other parts of India. I think there I could have done better volume than last quarter.
Also, I think because post this cyclone impact, Rajasthan was also impacted quite heavily. There also, I think our volume went down. If you know, hands-on volume is about 35% in north and western part of India. I think that is what has impacted our volume. Just to give you a sense, whatever information I am having, we have grown better than industry. As per my estimation, I think growth is about 16% in eastern part of India, and we have grown more than 16%. But in case of north and western part, west, if you take in that, we are in line with the central part of India, which is in our case, Rajasthan and western part of MP, we have grown more than the industry.
I think what the impact is, because if northwest volume goes down, then overall volume goes down, one, and it also impact our realization because realization in northwest part is better there. I think I would say the regional nuances which impacted our performance in quarter one of this year.
Sure. As we look forward, while I understand we are getting into a seasonally weak quarter with the monsoons setting in. But post that, do we anticipate this situation to get remedied as we get into Q3, Q4?
Yeah, for sure. I think this is just post phenomenon. Being kind of too heavily on north and west, that was natural to realize. But I am pretty sure this is post phenomenon. We are going to just come back to original self, right?
Understood. On the OpEx cost, other than the employee cost, we leave aside the staff cost, where else do we think there lies some scope for betterment?
Yeah. I think we could have done little better on our WHR, I think, because we had one breakdown in one of our plants. So west heat recovery production was lower than last. That is one area I think we could have better, but unfortunately, I think we had one breakdown that impacted our power cost little bit. One area I see, I think, which we need to really work on going forward. Apart from that, I think, power and fuel, we have done all right in line with industry. In fact, better than some of these groups. So we are better than them. But the power and fuel, I think is going to give further, maybe leeway going forward, right? We are fine in that part. Power cost also we are little bit higher because of the reason I told you, lesser WHR production.
This is what it is, I think, in summary.
Understood, sir. Thank you very much for that. On the capacity expansion, post the UCWL expansion that is underway, is there an inorganic strategy as well? If so, what are the white spaces from a regional mix that we would like to address and your thoughts on the upper bound on valuations, if you can share on those aspects. Thank you.
See, after UCWL expansion, our capacity will be close to about 18 million tons. We have the vision of going up to 30 million tons, as we mentioned in our earlier calls also. That gap is to 30 through brownfield and the greenfield expansion, which can happen at 6% and then all the plants lying over there. As we mentioned in the past calls, we have two mines recently been awarded, one in Rajasthan and Kutch in Gujarat. Those greenfield can take us to 30 million tons by 2020.
Sure, sir. I was more trying to understand if there is any thoughts on inorganic acquisitions which is also part of this, and if so, how would we think on the valuations there?
Yeah, we have plans to reach 30 through. I think we always evaluate that, always if it comes at the right valuations, we evaluate.
Okay. What would be the upper bound, sir, for such valuations? Anything internally that you would think of and you can share?
There is no limit as such. It has to make synergical sense to us. That is all.
Okay. Understood. Thank you very much, sir. Best wishes. I will call back in the Q&A.
It is, I think one thing which we see is because we are not going to grow that has to make sense and what Mr. has to really add value at the right value. These are the two primary criteria which we apply.
Understood. Thank you, sir.
Thank you.
Thank you. Management, before we move to the next question, we would like to reconnect your line, sir. The audio from your line is breaking. Participants, please stay connected while we reconnect the management.
Ladies and gentlemen, may you have the line for the management team connected. We will take the next question from the line of Prateek Kumar from Jefferies. Please go ahead.
Hello. Yeah. Good evening, sir. My first question is on your guidance. Last quarter, we discussed targeting around 19% volume growth and [Inaudible] by the end of this year, exit of this year. Where are we in terms of that? And after a very weak first quarter results, would we want to revisit the guidance?
Yeah. I think this is what the target we have taken, 19%. Typically, I think the one used to be always good, right? But I told you before, our geographies, I think we had some situations like the cyclone and little bit longer layoff. So that impacted our this thing. But still, I think we hold on to our volume growth what we planned at the beginning of the year. There is no revision as such.
But we are already operating at very high utilization on clinker and cement. How would the growth pan out like in following quarters which will result into such kind of volume growth?
Yeah. The plan is clinker works limited, right?
That year minus is not clear, I think so it's a lot of disturbance there.
Audible, no?
Sir, one moment. Let me try this again. One moment. Please go ahead. Sir, could you repeat your question, please?
Yeah, I was asking that with high utilization of cement and clinker, how do you plan to achieve the guidance volume growth?
Yeah. So UCWL will be taking out the clinker from October this year. Right? I said during last call also that, one, I think we are going to use clinker out of the grinding till we have that another 10% capacity, I think, headroom. That is one. Second, we do have some tie-ups with external parties where from we can grind cement. We do have some tie-ups and even now also we take little bit volume out of that, right? That grinding capability will complement with outsourced units which we have already tied up. Second. These are the two I would say levers which we are going to use to reach to that level of growth which we have envisaged for this year. Our own grinding is certain capability utilization, and second, outsource utilization out of the clinker which we are going to produce from Udaipur Cement Works.
What is the run rate of our unit EBITDA from current quarter to INR 10- INR 1,000 by the end of this year?
Here I think the INR 1,000, this is what I think our plan is and all factors which we have kind of put in place is internal, right? We are moving, I think, in a right direction in terms of geo mix. We have kind of moved in a right direction. I think I told you that high realization area, 75% volume we are selling now. It used to be about 70-30 in favor of Northwest before. Now it is 75/25. There we have moved very well. Second, I think within the regions also we are optimizing our volume. Let's say within northwest areas where I think, let's say western market where we get better realization, so selling more volume in that area. Within north, wherever I think those markets which are closer to our plants and remunerative, we are going to sell volume.
That I think we are doing all right. Second lever, I think I mentioned you on premium product. We are progressing very well now. We have reached to about 26%, 27% of premium product, which was the last year we closed at about 21%, 22%. There also we have improved very well. That is second. Third was blended. I mentioned you that we want to go to about 75%. We have reached to about 67% now. That is because of the higher volume in western market, which is predominantly OPC market. That is what the reason is. But still I think we are working on reaching to 75% of our blended cement volume. Next, I think on lead and other supply chain efficiency which we had envisaged. That we are working on, we are using technology.
Putting vehicle transport management we have deployed recently. That has started giving benefit now. Probably in the coming quarter, I think we'll get benefit from logistics end also. Another thing which I mentioned before was that we are working on AFR, alternate fuel capabilities at different plants. I think I'm sure that by October we'll be commissioning our AFR capability at Sirohi. Our plan is to take our TSR from currently 4% to about 10% very quickly once I think that facility is there. That is another action which I told all of you before. Of course, I think we are coming up with AFR capability at our Udaipur Cement Works Limited as well. We are putting up some improvised capability at our Durg plant with very low CapEx.
That is also going to give us the benefit in terms of increasing our AFR. These are the actions which we are taking. Some of the actions have already, I would say, partially satisfied, and some of the actions I think will get realized in coming months. One of the examples is AFR capability, which we are going to commission at Sirohi in the month of October. Parallelly, we are also working on renewable energy. I told you that within a captive mode, we are putting a 56 MW solar power plant in Durg, with a third party, with 26% equity from our end. That is also going to get commissioned in the month of October.
All these things put together, I think I feel that we are on right track and we will hit that target which we have set for ourselves to achieve INR 1,000 EBITDA. When I spoke to you about six months back, that timeline was two years. Still, I think 18 months are there, and we will reach there.
Sure. Thank you. One more question on your capital enabling resolution for INR 2,500 crore of capital. By what time period we are looking to utilize this capital, and is there a time lapse for this?
There is no time lapse. Once we have taken that enabling resolution, we can do the fundraising within a year.
Within a year. Okay. Sure. Thank you.
You are welcome.
Thank you. We would like to remind participants, if you have a question, you may enter star and one. We have the next question from the line of Kamlesh Bagmar from Lotus Asset Managers. Please go ahead.
Sir, with regard to this enabling resolution, INR 2,500 odd crore. I know we are in active discussion for Sanghi acquisitions. Like say based on that enabling acquisition, it says that we are looking for around INR 4,500- INR 5,000 odd crore acquisition or configuration, assuming like, say INR 2,000 crore debt at Sanghi. What is the thought process there? And if we are positive or if we can get that particular asset, then what about the organic expansion? Because if you see East market, we are the smallest player there. Like say all the players who added capacities at your time when your plant came in Durg, all have almost are at around 3x of their capacity. There we have not expanded capacity and at Jaipur also we are looking at the second line. What is the progress or what is the thought process there?
Because if we go for this particular INR 5,000 or INR 4,500 odd acquisition, we would reach now on the capacity of the funds to fund our organic expansion. If you can share some thought process on that particular part.
You are right, Kamlesh, that we have not grown that much as others have grown in the eastern. The reason which we have been saying for quite some time has been that due to the non-clarity on the railway siding, we have not been able to expand our capacity. Now, the good news which we would like to share with all of you is that finally we have got the approval for setting up the railway lines. Whatever was the impediment, those have all been cleared and the approval is in place. So that gives us an opportunity to expand at a fast pace with the railway siding in place in the eastern region and reach out to the markets which are having high realization markets with movement of clinker through the railway sidings.
That should be in place in about 90- 12 months time now that the approval is in place, and the visibility of that coming up in the near future is quite clear now. Yes, that was the reason as to why we have not been able to grow. Yes, then once we complete this UCWL expansion, then there could be a possibility of another brownfield there at coming in. So you are right to that extent that we have fallen back. We have not been able to grow in the east as fast as others have grown. Now that clarity has come, we will be in line with the other growth of the other players.
If this Sanghi acquisition goes through, then how this whole organic expansion will shape out? Because the entire capital would get blocked there. So how would we do our expansion, organic expansion? Because honestly, like say INR 4,500 or INR 5,000 crore spending like that particular inorganic acquisition, like say you would be around your Gujarat would be around 50% of your capacity. On top of that there are no backup plans in case of Sanghi for that movement to the western, like the Maharashtra or the Mumbai market. You would have to spend another INR 500 to over there. So how we are looking at that, because for the size of ours, we should only be focusing on the organic expansions.
We are focusing on the organic expansion only. In organic, we evaluate the quantity, and if it comes at the right cost and makes synergical sense, we do take into account. Our focus has always been, in the past also, on the organic growth only.
Lastly, for the last three, four quarters, we have been so upbeat, or we have been so vocal about this GEO and GEO mix and then optimizing our NR. Honestly, for the last three quarters, it's nowhere visible. If I compare it with all the peers, be it in east or the Gujarat market, they are way ahead of us in terms of margin. Like on the consolidated margins, we have done hardly around INR 615. Our, like say, the gap with all other peers now that has extended to around INR 650. What's happening on that particular part? Because if we are affected by the whole storm or the flood, other players are also impacted. If you see Ambuja Cements, their volumes have increased by around 18% year-over-year, while in our case, like say, we have expanded, our growth is hardly around 5% year-over-year.
What, Kamlesh, you are saying is absolutely right, that we have been talking much on bridging the gap. Barring this quarter, especially this quarter has been pretty bad for us. If you see our gap between the peers, we were able to narrow it down from almost INR 500 + to close to about INR 200. This quarter was a setback for us. You are right that the rains and cyclones impact everyone. But for us, it was slightly different in the sense that it hit two regions which account for almost 70% of our sales, Rajasthan and Gujarat. So that was the reason as to why, while others were able to balance it out with increase in sales from their other regions, for us, there was no backup from the eastern or the northern side.
The impact has been severe for us, more than other players because of Rajasthan and Gujarat accounting for almost 70% of our sales. But we are confident that going forward, we'll be able to again bounce back and bridge this gap. Your concerns are well-founded, that we have been talking big and not have been able to deliver. Barring this bad quarter, which unfortunately was for external reasons, we are quite confident we'll be able to bounce back and bridge that gap going forward, as Mr. Shukla has explained in detail on various parameters through which we'll be able to narrow that gap and reach that magic figure of at least four figures of EBITDA in about 12 months time. 12- 18, whatever we have projected.
Thanks, Sudhir sir, for very straightforward answers. Very, very good. Thank you.
Thank you. Participants, if you have a question, you may enter star and one. We have the next question from the line of Shravan Shah from Dolat Capital Market. Please go ahead.
Yeah. Thank you. Sir, just reconfirming when we are saying a 19% volume growth, so this is on the console volume that we have done in FY 2023. On that, we are saying a 19% growth still we can achieve.
Yes. Over FY 2023 only.
Yes. Yes, sir.
Yeah.
Yeah. So that means for the next nine months, a 23% plus kind of a growth that we have to do. Just to reconfirm, at least in June, July, have we seen that kind of a run rate, that kind of a growth?
That is what we are trying. I think arithmetically, we cannot put on a pro rata basis because you know July, August, September, typically lean months. I told you that October we are going to have clinker also in play. From October, I think we will have a good impetus on volume growth because we will have clinker. You know that 97% clinker utilization we have already done. Grinding is about 85%. So once, I think clinker is available and we have grinding capability which is available at different locations, we will hit that. Maybe I think rate growth is going to be much more beyond October. But July, August, September, typically I think are low months. Definitely we will do better than others, but I would not say that we are going to kind of run at the rate of 23%.
Okay. Got it. Second aspect in terms of the, though definitely Sudhir Bidkar sir has mentioned in the previous reply, INR 1,000 EBITDA that we are reiterating to reach in next, let's say, 18 this year considering the first quarter broadly. Just trying to understand in terms of the full year FY 2024. Last time we said broadly, where one can see and on the full year FY 2024 we can look at
I think I will let you know. I think we are not ready with that, what is the landed kind of return by end of the year, but maybe I think I will let you know.
Okay. Sir, I need many data points for this quarter. Just starting with if we can share the consol stand-alone clinker sales, then trade share for this quarter, lead distance for this quarter, rail mix for this quarter, gross debt and cash, stand-alone and consol as on June.
I will start with the reverse order. The debt numbers. The stand-alone, our debt as of June on a stand-alone basis, INR 770 crore, and on a consol basis, INR 1,950 as of June. Right?
Yeah.
The cash balance, about INR 900 on a stand-alone, INR 950 on a consol basis.
Okay.
Other questions regarding the sales. You had asked about the railroad mix and the scale.
Yeah.
Then maybe-
I think we are very heavy on road percent. It's about 10% is rail and 90% is road.
Okay. Trade share for this quarter, sir?
Trade is quarter 55%.
Yeah, 55%.
55%.
Okay. The same, because for last three quarters, we were saying that we want to reach to 60%, and then last call we said that in March we reach to a 60%.
But that's not being bothered about trade non-trade. We are focusing more on the, as we have been explaining, on the geo mix.
Correct. Okay.
In certain markets is higher than the trade in the other zones, obviously we will sell more in non-trade. Right? That was the reason.
Okay.
Geo mix is a better parameter for us.
Right.
Anything which adds to the ultimate EBITDA.
Okay.
We give priority to geo mix than to a trade non-trade. Ultimately, yes, if in a particular market that non-trade is higher, our focus will be to focus, take their trade and non-trade, and then go to the other market where the trade is lower than the non-trade of the same size market.
Okay. Sir, lead distance, non-cement revenue, and then finally the volume clinker sale, stand-alone and consol.
It tells you about 400 overall.
Overall is 400 km lead.
430 odd in the northern side and about 300 in the eastern side. About your clinker sale, we have done a total clinker sale of about 2 lakh tons out of the total in this quarter of 32 lakh tons. 2 lakh is the clinker sale.
Okay. Non-cement revenue and RMC revenue for this quarter.
You are doing a very detailed analysis.
INR 133 crore is non-cement revenue.
133, sir?
133, out of which 63 is the RMC.
Okay, 63 is RMC. Broadly, in terms of the margin for that last quarter, it was 5% for non-cement revenue. Will it be the same or has it improved?
It is fallen to 4%.
4%.
On the sale of INR 133 crore, out of the total sale of INR 1,633 crore, about INR 1,500 is our cement sales and INR 133 is the non-cement sales. On the non-cement, the operating margin is 4%.
Thank you. Ladies and gentlemen, to ask a question, you may enter star and one. We have the next question from the line of Parth from Investec. Please go ahead.
Yeah, hi sir. Thank you for the opportunity. I had a few questions. The first one is on, you mentioned earlier that you have won a few leases in Gujarat and Rajasthan. I wanted to understand, what is the reserve size like, what is the premium paid over there, and by what time do we plan to exercise this growth opportunity?
Premium is a little bit low. You can see I do not have the figure readily available, but it has not been exorbitant premium which we have paid. It has been almost a year that we have acquired those mines. That is number one. Number two, we are focusing initially on the Nagaur mines in Rajasthan. We have started the land acquisition process, and Kutch will be after some time.
What are the reserves like over there?
Reserves also we will let you know separately. That is all in public domain.
Hello? Hello?
We do not have the figure right now with us in the call.
Okay.
But both the data on the premium at which those mines have gone as well as the reserves available are in public domain. Still, you can send a mail. I will respond to that.
Okay.
I do not have ready available here.
Okay, sir. So the second one was regarding, how should one read into this enabling resolution of INR 2,500 crores? What this will be used for?
Sorry, come again.
The INR 2,500 crores that we are planning to raise, this will be used for organic and inorganic expansion?
Yeah, it is an enabling resolution because if we have to grow organically or inorganically, we do not have to rush back either to the shareholders or to the board for that approval. It is enabling, and we have the levy of doing the fundraising in about a year's time. We are not doing it tomorrow.
Right. Okay. Sir, just one question on related party transactions. If I look at H1 FY 2023 numbers that we have shared, there is a number of INR 300 crores, which is under purchase of cements. This is pertaining to what exactly?
INR 300 crores, sorry, come again.
There's a number of INR 301 crores, INR 302 crores under purchases of cements and others. This would be pertaining to what?
Just give me a second.
Yeah.
Purchase of cement. Purchase of open trade is there.
Purchase of cement.
No.
Under related party transaction. INR 3,019 is the figure.
You are talking of which report you are reading? Sorry.
This is related party transaction where we have disclosed on H1 FY 2023 basis.
Yeah. That is basically the normal purchase of clinker or the cement purchase which we are doing from our subsidiary, Udaipur Cement Works Limited.
Okay. Sir, can you help me with the clinker and cement volume, both in value and volume terms, related to this transaction? Is it possible?
Yeah. Primarily, it is cement which we are sourcing from Udaipur. It is about 2.35 lakh tons.
And-
In this quarter. I will explain it. JK Lakshmi on a standalone basis have done a total sales of 29.25, right? You can note down. Right? 29.25 is the total sales of JK Lakshmi in this quarter on a standalone basis.
Right.
Which includes 27.64 of cement and 1.61 of clinker, right?
Right.
And you add that to 5.15 lakh sales of UCWL.
Okay.
That again, Parth, you can note down. Out of 5.15, 4.71 is cement and 0.44 is clinker, right?
Right.
The total of JK Lakshmi, 29.25 and 5.15 is 34.
34.
But in the consolidated, we are reporting 32.05.
Okay.
The difference between the summation and the console number is the inter unit sale of 2.35 for which that 300 odd figures you are talking of against the related party transaction of the inter unit sale of cement between JKL and UCWL, which is now docked in console numbers. So on console basis, it is 30 lakh tons of cement and 2.05 lakh tons of clinker, making a total of 32.05.
Okay. And this would be all cement?
It is all cement.
It is all cement.
Going forward, as we see the production from the clinker line of UCWL coming in from October, there will be an increase in the clinker sale from Udaipur to JKL in the third and fourth quarter.
Okay. Until the time grinding unit at UCWL comes up.
Yeah, you are right. That is still maybe six to eight months away from their clinkerization line. Till that time their grinding unit comes up, we will be using that clinker for grinding at our location.
Okay. Sir, would it be possible to share the same numbers in an FY 2023? I could write a mail to you, and you can share it with me.
Here I don't have it ready, but you can mail it. I'll respond to that.
Okay. Thank you so much.
Thank you.
Thank you. We have the next question from the line of. Please go ahead.
Yeah. Good evening. I just wanted to clarify, the target of INR 1,000 per ton is including the fuel cost benefit that you are seeing, or it is excluding that?
As I told, I think this is excluding, right? All internal efficiency, because we wanted to bridge that gap of about INR 300- INR 350, right?
Industry, I understand, is having or estimating like a INR 300 cost benefit from fuel cost. Then basically we should expect INR 1,300. Is that understanding correct?
I think our estimation is little lower on fuel cost, because we are already there at about 2.3 around. Right?
Yeah.
It started going up. Right?
Okay.
Yeah. I don't think INR 300 headroom is there for fuel cost. This is what my estimation is.
Okay. But whatever industry will get, this still adds the additional over and above 1,000.
Yeah.
Earlier I know you had given a roadmap for reaching 1,000. It's been, I think, almost a year since we had spelled out that roadmap. How much progress do you think we have made on geo mix and other aspects around cost and all?
That is what I was trying to explain that on geo mix, we have been able to optimize to an extent. About 2%- 75% of volume in North and West part of our geography. And within North and West, I think in core areas, that is one. Second, on premium products, we have improved quite a bit. We have gone to about 27%. That is second. Third, I think I told you that logistics, using technology, we can take some advantage and revisiting our distribution network.
That project is in progress. Probably, I think we will get these benefits in coming quarters. And third was on alternate fuel capability, which we are setting up at Sirohi and some kind of improvisation at Durg, capability at Udaipur. This is what I think progress we are making. Some of these actions which I explained you before are work in progress. Maybe another three, four months' time, some of the actions will get justified.
Then we will start getting benefit out of that. We are also working on renewable energy as to how we are going to improve our renewable energy proportion in our total consumption. Right now, we are close to about 15%. Our plan is to go to about 37%-40%. For that, we are setting up a 50 MW under capacity mode in east and another 7 MW at Sirohi. These projects also will get concluded in the next three months' time at Durg and about another three, four months time at Sirohi. That will also give some benefit.
Got it. But would it be possible to have some numbers around it? Because on realization, if I am not wrong, you had mentioned INR 150, INR 175 will come from realization. So have you got maybe INR 50 -INR 100 out of that already, possibly think on number terms on these things?
Definitely, I think we have got out, I think I mentioned about 250+ around on realization. So definitely we have got about INR 50-INR 75 out of that. If you look at our realization, I think we are reasonably placed with the leaders in the industry.
Okay. Sure. Also on this clinker purchase that you would do from Udaipur. Just to understand, how will the cost work on that purchase cost? How will the margin be split, basically, between the two for the entire reflection on that?
They will be doing it on a cost-plus basis.
Okay. Sure. Lastly, any calls or clarity around merging UCWL, FY 2025 or FY 2026, anytime we can expect?
We will be certainly doing it once we graduate in JK Lakshmi to the new regime of 25%. For us to graduate, we need to first exhaust the MAT credit outstanding, which earlier used to be INR 200 crores, has narrowed down to now INR 140 odd crores. So maybe in a couple of years, we will exhaust that MAT credit entitlement, and then we can graduate to 25% and collapse the structure. So maybe two years away, may still.
Sure. Thank you. I will come back in touch with you.
Thank you.
Thank you. We have the next question from the line of Rajesh Ravi from HDFC Securities. Please go ahead.
Yeah. Hi. My question pertains to first, could you share the clinker production at Udaipur and standalone entity?
Production of clinker in the standalone entity in this quarter, our clinker production was 16.65 lakh tonne.
Okay.
And for Udaipur it was 3.88 lakh tonne.
What was the fuel cost per tonne on a console basis per kilo cal?
Our fuel cost in this quarter on kilo cal basis was INR 2,326.
What number was this in Q4?
In Q4, it was 242.
Okay. How are these numbers trending as we in month of July?
In the coming quarter, we expected to further go down from INR 226 to about INR 215 or so.
Okay. But why is this softening you're looking at a very smaller number because the coal prices and all have come down significantly. So the current spot prices, by when do you look them to reflect in your numbers?
The time lag between the cost reduction and its impact in the P&L is ranging between four to six months, depending on which you are carrying.
Okay.
Eventually, it will come. Based on the inventory levels in the coming quarter, it will be slightly lower at 2.15, likely to be that.
Okay. This 50 MW solar capacity which you talked about, this is only installed capacity basis 50 MW, which would have effective 10 MW availability, or it is actual 50 MW which you would be sourcing?
You are right. You are right on the installed basis. Based on the PLF, about 20%-25%, you are right. Effective availability could be made to 10 MW only. But the big advantage in that arrangement, especially in the state of Chhattisgarh, is that they allow the banking of that power generation and can be used in the non-generation hours. That is the biggest advantage.
What would be the costing would be? Just overhead cost?
No, costing. Since we are not making an investment, our land cost would be about close to INR 5.
Oh, INR 5.
Yeah. Great as opposed to, we are not making any capital investment, only a 26% equity stake costing us.
Okay. And sir, what would be your grid cost currently?
It is about INR 7.5 in east.
Okay.
If we are getting at INR 5, already there is a INR 2 + saving.
Sir, given that the solar power plants have such a strong effect period, would it not make better business sense to have it captive than going through? Is there any other cost which gets, like any incentives which, like you said, the banking and all, which prevents you to having on your own books and just with the overhead cost?
Do you have adequate land? For 25, 40 MW, you have to have huge land bank available. First and foremost requirement. But ultimately, yes, it makes sense if you can have that sort of a land to do it in a CapEx mode, as we are doing in Rajasthan, where they are imposing even on the captive 26%. They are putting the cross-subsidy and the electricity duty, et cetera.
Oh.
Yeah, in Rajasthan, it is not allowed. We are in fact, doing the reverse thing in Udaipur. There is a 780 MW of power project which we had started in the captive third-party route. Now, eventually, we are forced to buy it and put it under the CapEx mode.
Okay.
Because of policy of the Rajasthan government. Yes, ultimately, it makes better sense to put, if you can, and have the necessary resources and the land to put it as the captive or the CapEx mode. But the policy of the government has to support that.
Right. Then last question. On the balance sheet, we are netted to a bit of 1x, and given the market chatter of you bidding for Sanghi, while you may not confirm yet, I accept that. Could you give us a sense to the minority shareholders, what are your key netted targets or leverage factors which you would be following or a no-go area? At least because given that JK Lakshmi has repaired its balance sheet after long, and this has helped the stock move up. Could you give us a sense what sort of leverage number you are looking at while you are pursuing your growth?
First and foremost, we do not distinguish between a majority shareholder and minority shareholder. We take all the shareholders together. They are part of the shareholder's family. That is number one. Do not treat anybody as a minority shareholder, even if they are not part of the promoters group. We have never made that bifurcation or distinction.
That's number one. Number two, whenever you are doing any expansion, for a temporary period, you may sacrifice certain ratios. So long as you have a clear visibility that going forward in the next couple of years, whenever the commensurate EBITDA from either the new plant or the expansion which you have done comes in, or any acquisition which you have done. Like take the case of Udaipur. They have just completed the rights issue of INR 450 crores. Prior to that, their EBITDA used to be in the range of about INR 150 crores.
They have contracted a debt of INR 1,100 crores for the expansion. Now just see, just before the start of the expansion, the existing debt of INR 500 crores together with the INR 1,100 crores of the expansion debt. The debt number looks like INR 1,500, INR 1,600 crores on an EBITDA of INR 150 crores, which looks haywire. But moment that expansion EBITDA starts flowing in, that number gets narrowed down and comes within the visible range.
So also whenever, at a console level, you also see either you go for the expansion or any inorganic growth. For a couple of years, one or two years, it may be haywire, but so long as we have the clear plan that it will be narrowed down to the range of about not EBITDA, not more than 3.0 or 3.5, 4 max. That should not be of concern being a temporary phenomenon.
So long as the clear visibility is there. Talking on a potential norm, yes, you're right. 3 - 3.5 is the outer limit, but can be sacrificed for exceptional cases.
Thank you. Ladies and gentlemen, this is the final reminder. If you have a question, you may enter star and one. We have the next question from the line of Milind Raginwar from BOB Capital Markets. Please go ahead.
Yeah, thank you so much for the opportunity. Sir, can you please guide us on the inventory you are holding as of now? Like what kind of three months inventory or what has been the shipment as of now?
Sorry, come again, please. Can you repeat?
Yeah, sure. Can you please guide us on the core inventory or the three months inventory for cement? What kind of three months inventory or what is the shipment that they've done for this quarter? If you can throw some lights on that.
We are holding an inventory of about 100 bps.
Okay. Thank you so much, sir.
Thank you. We have the next question from the line of Mudit Agarwal from Motilal Oswal Financial Services. Please go ahead.
Yeah. Good evening, sir. Thank you for the opportunity. Sir, my question is again on the organic growth opportunity. What valuation plan comfortable to acquire any assets for the acquisition? What's your thought on this?
We have not assigned any number for any acquisition value. It depends on what benefit that asset drives to us and whether it makes synergical sense. So it could be different figure for asset located at a different place. Ultimately, it has to be seen on a case-to-case basis. There is no fixed number there too.
Okay. Just this last question on the net debt side, what is the current consolidated net debt? I missed the number, sir, earlier.
No issues. I will read out that. Net debt is INR 1,000 crores as on date. INR 1,850 is the gross debt and INR 950 is the cash.
Okay. Thank you, sir. Thank you so much.
Thank you.
Thank you. We will take one last question from the line of Uttam Kumar Srimal from Axis Securities Limited. Please go ahead.
Yeah, thanks for the opportunity. Sir, what is your CapEx guidance for FY 2024 and FY 2025 on a standalone level?
We have CapEx on two, three counts, which is presently under way. We are working on a waste heat recovery, as we mentioned, of about 3.5 megawatts. Then there is an AFR project going on. We are doing some AAC blocks at Alwar, plus the solar power also. All in all, about INR 300 crore-INR 400 crore of CapEx is lined up. Now that the approval, as we mentioned in response to our earlier call, the approval for the railway siding and the conveyor belt having been there could be some CapEx of about INR 100 crore odd, INR 100 crore-INR 250 crore, maybe around in that range on that. So maybe INR 300 crore plus INR 100 crore, around INR 400 crore in this year.
INR 400 crore in FY 2024?
Yeah. Out of which we have already done about 50 odd in the first quarter.
Okay. Sir, what has been our fuel mix in this quarter? Petcoke, coal and alternate fuel.
We have done about 40% coal, 43%-odd petcoke, and the balance is the other biomass and others.
Okay. Sir, you said about the premium cement is about 25% on overall sale or trade sale? 27%.
Trade sale. Trade sale. That is only always on trade sale.
Trade sale. Okay.
Yeah.
Okay, sir. That's all from my side, and all the best to you.
Thank you.
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference back to Vaibhav Agarwal for his final remarks. Please go ahead.
Yeah, thank you. On behalf of PhillipCapital India Private Limited, we would like to thank the management of JK Lakshmi Cement for the call and many thanks to everyone joining the call. Thank you very much, sir. I am very much looking forward to the call. Thank you.
Thank you, Vaibhav, and all the participants.
Thank you. Ladies and gentlemen, on behalf of PhillipCapital India Private Limited, I would like to close this conference call. Thank you for joining us, and you may now disconnect your lines.