Good day everyone, and a warm welcome to Sagar Cements Q2 and H1 FY twenty-five analyst and investor conference call. We have with us today on the call Mr. Sreekanth Reddy, the Joint Managing Director, Mr. K. Prasad, the Chief Financial Officer, Mr. Rajesh Singh, Chief Marketing Officer, and Mr. R. Soundararajan, Company Secretary. Before we begin, we will begin this conference call with opening remarks from the management, following which we will have the floor open for an interactive Q&A session.
Before we begin, I would like to point out that some statements made in today's discussions may be forward-looking in nature, and a note to this effect was stated in the con call invite sent to you earlier. We trust you've had a chance to go through the results and the communication documents. I would now like to hand over to Sreekanth for his opening remarks. Over to you, Sreekanth.
Thank you, Gavin. Good morning, everyone and welcome to Sagar Cements' earnings call for the second quarter and first half year ending September thirtieth, twenty twenty-four. Let me begin the discussion with a brief overview of the market in terms of demand and pricing, after which I will move on to Sagar-specific developments. Overall, Q2 was a soft quarter for the industry at large. Demand decelerated on back of extended monsoons and sluggish project executions. Volume offtake on the back of it remained restrained during the quarter. Pricing environment remained competitive across the regions. While the near-term outlook remains challenging, we believe structurally the trend remains positive from medium to long-term point of view on back of robust housing and infrastructure initiatives, coupled with technological advancements and persistent focus on green energy. Let me now move on to our quarterly performance.
As indicated in our previous calls, Q2 performance has been muted amidst demand and pricing challenges. Our overall volumes for the quarter stood at 1.16 million tons. Lower volumes and utilizations more than negated the benefits of steady input prices. For the full year, we believe our overall volumes to be in the range of around 5.75 million tons. Moving to the headline numbers, our revenue for the quarter stood at INR 475 crores, as against INR 587 crores during Q2 FY 2024, lower by 19%. EBITDA for the quarter stood at INR 20 crore, as against INR 60 crores generated during Q2 FY 2024. Margins for the quarter stood at 4%, as against 10% in Q2 FY 2024.
EBITDA per ton stood at INR 172, as against INR 459 in Q2 FY 2024. Despite existing challenges related to demand and pricing, we are steadfast in our commitment to long-term objectives of cost reduction and operational environments enhancements. Anticipated improvements in the business margin profile and profitability in the coming years are expected to stem from enhanced energy mix, increased reliance on renewables and improved efficiencies and utilization rates across our facilities. Loss after tax stood at INR 57 crore for the quarter, as against a loss of INR 11 crore generated during Q2 FY 2024. Power and fuel cost stood at INR 1,446 per ton, as against 1,626 per ton reported during Q2 FY 2024.
Freight cost for the quarter stood at INR 830 per ton, as against INR 848 per ton during Q2 FY 2024. From an operational standpoint of view, Mattampally plant operated at 42% utilization, while Gudipadu, Bayyavaram, Jeerabad, Jajpur, and Dachepalli plants operated at 83%, 52%, 59%, 20%, and 27% respectively during the quarter. As far as the key balance sheet items are concerned, the gross debt as on thirtieth September 2024 stood at INR 1482 crores, out of which INR 1169 crores as long-term debt, and the remaining constitutes the working capital. The net worth of the company on a consolidated basis as on thirtieth September 2024 stood at INR 1921 crores. Long-term debt equity ratio stands at 0.61:1.
Cash and bank balances were at INR 163 crore as on thirtieth September 2024. In summary, we believe our enhanced capacities position us well to capture the growing infrastructure and real estate demand over the coming years. Furthermore, our efforts towards diversifying the revenue streams and increasing our regional footprint should help us in improving the overall profitability profile of the company. That concludes my opening remarks. We will now be glad to take any questions that you may have. Thank you.
Thank you, Sreekanth. We will start the Q&A session. I request all those who have questions to please raise your hand. We'll wait a minute. We'll take the first question from Nitin Dharmawat. Nitin, please go ahead.
Yeah. Thank you, Gavin, and thank you for the opportunity. Am I audible?
Yes, sir.
Yes, you are audible.
Yeah, good morning. Yeah, yeah. So a couple of questions: So, see, as we know that consolidation is happening in the cement industry, and the recent one announced by Orient Cement also. So what do you think will be the impact of this consolidation on the industry in general and company in particular?
Yeah, Mr. Nitin, I think consolidation generally is a good sign for a sector. It could be any sector from pricing power and the number of competitive intensity also gets reduced. That, in general, is good for a medium to long term. Short term, there could be some impact in terms of, you know, when people try to reorganize themselves in terms of brand position and consolidation of brands or any of that, things could always be slightly on sidewards for some time. But on a medium to long term, we believe that it's going to be beneficial.
Now, the market footprint that we are in, I think the impact of consolidation is going to be very, very limited, I think, because if you look right from Orissa to north coastal markets of AP, and to certain extent in Madhya Pradesh, the impact so far of the acquisitions, the M&As that have happened or the consolidation that has happened, has a very, very limited footprint in those areas. It definitely is going to have some impact in South Andhra and half of Telangana, Karnataka markets and Telangana markets. So our view is that consolidation is good, but short term, it could have some impact, but it could be marginal one.
Got it. Thank you. My next question is: So now, how is the demand and price trend in our market, and, what is the capacity utilization overall that we are running with now?
Yeah, nothing, nothing much has changed from Q2, because we believe that, post Diwali, it is likely that the demand outlook is going to improve. Till the demand comes, I think, prices more or less remain, either, on a similar ground or if there is some pressure. In some pockets of south, in fact, from exit of September to now also, there has been some price correction downward.
MP and Orissa, we have seen some price increases, sir, anywhere between INR 10-INR 15 per bag price improvement we have seen in, eastern market as well as in, Madhya Pradesh market. But in south, some pockets, we did see some pressure on the price, even post, September exit to, now. But this month being two festival month, and at the same time, unfortunately, weather-wise, it looks like it is an extended kind of difficult weather. We see demand improving only from first week of November onwards, not before.
Got it. And my final question is about the debt. You mentioned gross debt at INR 1,482 crores. What is the net debt that we have? Hello?
Yeah, yeah. Yeah, we did. We did present it, but it's around 1,293, sir.
Got it. Thank you so much, and wish me-
Thank you.
Thank you, Nitin. Next, we take a question from Shravan Shah. Shravan, please unmute yourself and go ahead.
Hi, sir. Just continuing the previous one. So, you mentioned that in MP, Odisha, we have seen a 10-15 rupees per bag price hike from exit of September. And for South, if you can specify how much decline we have seen, and also, if possible, state-wise.
Yes, good morning, Shravan. See, I think the price decline in South is across the market, sir. And, whatever price increases that was there for some time in September got eaten away, and on top of it, we actually lost 10-15 rupees, primarily in South Tamil Nadu, as well as in Andhra and Telangana, sir. I think it is uniform across the market, Mr. Shravan.
So broadly, if I have to understand from the Q2 average, then one can say kind of a 2%-3%, still the prices are lower?
See, it is June exit to September exit is INR 10-15 rupees.
Okay, June to September, INR 10-INR 15, up or down?
Down. It is down. Though, in between for some time, for two weeks, there was some price increase, but it got taken away. From September exit to now, that is still, as we speak, it is INR 5-INR 10 across the markets in South. See, Bangalore, which was doing very well, unfortunately, it got hit in the October month with heavy rains, so that actually put some amount of pressure on the pricing, Mr. Shravan.
Okay. But do we expect that post Diwali, once the demand picks up, that's the hope across all the players, they are expecting-
No, no, Shravan, what do you want me to add? How do you want me to address? I think, our belief is that, demand, the lower demand actually put pressure on the price. Or else, when the price was taken up somewhere around middle of September, it actually got absorbed for some time. But since demand did not... You know, the entire market expected demand to slowly start ramping up, that did not happen. So price immediately, there was a pressure on the price immediately, Mr. Shravan. So our understanding is that at least if not by first week of November, I think by exit of November, we do expect prices to start slowly moving up. May not be in huge quantities, but at least some amount of, price upward movement is likely to happen.
Okay, got it. Now, coming to specific to our company, so, in terms of if I just do the math, 5.75 million ton volume, that for FY 2025 we are looking at, so I hope this is purely the cement sales and not the clinker one.
No, as always, we have indicated only the cement sales, Mr. Shravan, so that, that, that's the,
Yeah, so the ask rate for the second half is kind of a 9.5%. So, that should be a doable, or, or-
See, I think weather supporting, we should be very close to that number. I don't see major challenge with that, because last year itself, we have done close to five point five.
And then, broadly, if I have to look at FY 2026, how do we look at for ourself in terms of the volume?
I think it is too soon, but I think we should go back to the growth numbers, what we have indicated before. Because this time it is long election year, coupled with the weather-wise, it was always a challenge. But I think close to 6.5-6.75 should be doable for the coming year.
Got it. And this quarter, have you received INR 23 crore incentive for MP?
Yeah, we did. You're talking of Q2?
Yes, yes, Q2.
Sir, we did receive, sir. I think we did inform. We did receive in the month of July itself.
Okay. So if we, if I remove that, then the price decline for us is 5.7% kind of for core.
Yes, sir. Yes, sir. If you see, I think you are talking of EBITDA. EBITDA is flat to negative, if you remove that.
Got it. Got it. And now, this will be every year we will be receiving this,
Yes, sir. Yes, sir.
Will it be in every second quarter? That's the way one can look?
No, it is due from start of last year already, sir. What we received is year before one, so last year is already due, so we should receive some. Receipt is subject to government having money. We are also hopeful that we should receive it sooner, because whenever there is an investment made in the state, they are trying to, you know, push this money. I believe there is one which is happening right now, so likely that we might receive the second one also sooner.
Okay. And then, on the costing front, from now onwards, how much one can look at in terms of cost reduction, at least for third and fourth quarter.
I think third quarter, we are not expecting anything, Mr. Shravan, but fourth quarter, because our fuel procurement, what was it? 105-108, now it is averaging close to 95-98. So the benefits of that, which roughly translates to 75-100 rupees, are likely to get in Q4.
Okay. Got it. Just in terms of the CapEx, so we have in the H1 done INR 69 crore. Previously, we were looking at INR 300 crore for FY25. So that number remains intact?
Yeah. Now, let me give you the breakup. At Sagar standalone, we indicated it is INR 83 crores, out of which we spent INR 24 crores during H1. Yeah, likely that we may spend only INR 10 crores into H2. One of the changes that we have done is we are implementing solar at Gudipadu, which is almost, I think, by end of November, we should commission a six megawatt solar. That should get added up, but it may not truly reflect in, because we went with a lease option. So from what we thought, we should infuse some company, we actually switched to the lease option. So that will get implemented. So only INR 10 crores will be spent further in Sagar Consol in H2. At Jajpur, what we have indicated at six is already spent. Sorry, Jeerabad.
At Andhra, what we have indicated is 240. Out of that, 39 is spent. Likely that we might spend close to around another INR 100-INR 150 crores for H2, sir, so that is continuing. We are happy that what we have indicated as March 2026 commissioning, we are running a couple of months ahead of schedule as far as Andhra is concerned, so from a civil standpoint, out of 10 floors, 5 floors are already completed at Andhra. So the progress on the Andhra expansion project is going at a brisk pace.
Okay. Okay, great. Thank you, and all the best, sir.
Thank you, Mr. Siva.
The next question we take from Jyoti Gupta. Jyoti, if you could unmute yourself, please, and ask your question.
Just wanted to have your, what have you budgeted for third quarter volume growth and EBITDA and fourth quarter? Where do you see the second half going for Sagar Cements?
Yeah, we are looking at close to 1.75 million to 1.8 million for Q3.
Okay.
And the rest two come from Q4...
Okay. And the kind of EBITDA numbers that you have penciled in for the second half, do you see that?
Uh, yeah.
I mean, the industry expects-
Jyoti, at this point of time, I think our struggle is to look at what kind of EBITDA numbers are likely to happen I think we will have a lot more clarity by end of Q3.
Okay.
At this point of time, yeah, it's kind of flat kind of EBITDA. I think end of this month, when the demand starts getting normalized, yeah, we will be in a much better situation to comment on.
I believe the demand will start picking up from the second half of November, and the industry is expecting a double-digit growth. Do you see booking at least re-registering high single digit, or you expect something like a double digit? Of course, there will be some setback, some-
See, Jyoti, I'm sure you are tracking the market. If you look at Andhra, Telangana, almost dropped by 30% year-on-year kind of an environment. So even a small surge would make it look very, very high. But we do expect the momentum to be a lot faster, because in our business, as you know, the demand doesn't get vanished, it only gets postponed. So our belief is that most of the weather-wise demand, which was challenging, for the last couple of months with the weather improving, I think all of that should come back and added up with the new investments and the new projects. Yeah, we do expect things to be a lot better compared to what went on so far.
Any status update on Amaravati, sir, now that the-
See, I think the best part of Amaravati is that the financial closure is aggressively happening. I think the central government loan of INR 3,000 crores, followed it up with another hardcore loan of INR 15,000 crores, and I think government also is talking to few other large financiers to pump in some more. All this is extremely good news from a demand perspective. That is one of the reason why we believe we do expect second half, rather, coming one and a half quarters to be extremely strong.
But the international player, which is going to be a financier, any update on that, apart from the-
I have no idea on that.
Okay, sir. Thank you so much, sir.
Thank you.
That's it from my side.
Thank you. We take the next question from Amit Murarka. Amit, you can unmute yourself.
Yeah, thank you. Yeah, hi, good morning, Sreekanth. Yeah, so just, while you've already spoken a lot about the situation on demand and probably the ramp-up of the acquired capacities, but I was just thinking more from a, like, medium to longer perspective. So, Amaravati, I think by when you think it should start contributing to demand, and could there be a meaningful pickup in demand once Amaravati comes in? Just could you provide some sense on that?
Yeah, Amit, I'm sure, see, this is a long-term, medium to long-term kind of a project.
Right.
But the best part is, I think they are restarting some of the projects which were, you know, muted for last five years. So that should take fairly quick time. And at the same time, the neighborhood of Amaravati, I mean, that's where the bulk of the demand would come, which is more private driven. I think there, the green shoots are already visible. So we do believe that that should be a quick start. I think weather improving, the neighborhood of Guntur and Vijayawada already the real estate prices are slowly coming back to what they were.
Thank you.
So given that scenario, I think even construction is likely to take good shape.
Mm-hmm.
Coupled with that, you know, Telangana government, as well as Andhra government, is talking of low-cost houses. So that, the good news is they are asking us not to talk about the pending money from the previous regimes. They are talking of something which they want to discuss, going forward. So-
Uh.
Those discussions already we are engaged with them. So these are some of the things we believe should add up to the demand on a medium to long-term stuff.
Okay, understood. And in terms of the capacity additions, so, I think UltraTech's capacity got added recently, and I think only pending one is the second line, clinker line, right?
I think clinker line is already commissioned. We are waiting for their grinding capacity to be operational anytime soon. I do not have the exact timeline, but our understanding was it should be ready by December, is what we are made to understand on that, and actually, the clinker line of My Home also was commissioned. Some portion of grinding also was commissioned, but I think there is one other line which is pending, which is likely before end of this financial year. These are the few projects which got commissioned during last few quarters.
Deccan clinker line is commissioned, is it?
Yes, sir. I think it is. It got commissioned a couple of months back, if I, if I'm not mistaken.
Okay. So then, at least in the next twelve months, no more clinker lines are pending then.
Yeah, I think, except for line four of Tadipatri UltraTech.
Yeah
nothing is due over next twelve to eighteen months. Of course, Andhra's expansion is likely-
Yeah, yeah.
to get commissioned by-
Yes.
March twenty-six, but we don't expect a huge volume jump. It is more from an operational standpoint.
Understood. Understood. I just missed your commentary on debt. What do you think your exit debt will be this year, if you could provide some guidance on that?
I think our exit debt is going to remain very similar to what it has been, Amit. I think that is what we have narrated, that the gross debt position would not be significantly different. But we did present in our quarterly presentation. I think our exit debt likely going to be somewhere around 1,500 crore. On a net debt basis, we should be somewhere around close to 1,300-odd crore.
Okay. Even though you will see pickup in CapEx in Andhra, even-
Yes, sir. I think our idea is that whatever would have been paid, that is what we would like to borrow. Though we are running slightly ahead of time in terms of the project, so it might slowly blip up, small blip up might happen, but I think our commitment to keep the debt levels very similar remains intact, Mr.
Sure, sure. That's all from my side. Thank you.
Thank you.
Thank you. Next question we take from someone going by the name of Ironman. If you could identify yourself and ask your question, please.
Hi, sir. This is Ritesh from Investec. Sir, couple of questions. Sir, how do you see supply side of the equation in South India and at India level for, say, this fiscal and next two fiscals?
Yeah. South, I think, the demand-supply equation, probably since the demand actually took a bigger hit, the gap naturally is going to widen up, for the current year. But I think going forward, we expect a very similar situation, how it has been for over last one to one and a half decade, Mr. Ritesh. Those specific numbers I would be happy to share, offline, but I think broadly, the demand-supply equation, was more skewed towards, supply than demand, in South historically. I think the equation, demand by supply, probably is going to be very, very similar for a few more years in South. Because whatever incremental demand, I think, matching supply has already come by.
There may not be a significant change in the overall kind of demand-supply equation in South India. India is too big for us, so yeah, I would rather share the numbers, what has been compiled by the team, which I'm sure you are also reasonably well equipped to have those.
Sure, sir. Sir, my second question was, how do you see pricing for fly ash and slag, for the regions that we operate in?
See, Ritesh, now we have slag supply regions, only two of them. One is in Vizag, and the other is in Jajpur. Vizag, at this point of time, we have not seen any major changes in the slag prices for last few years. So and we don't expect it to be very different. But there are clouds hovering around, the RINL asset itself in Vizag. So given that scenario, the likely supply for Vizag would change from the current Vizag centric to somewhere around Jagdalpur kind of area. So the landed cost of slag, we don't expect major savings to happen. We would be very happy if prices remain where they are. We slowly started sourcing some amount of slag even from Jagdalpur area, from the NMDC blast furnace.
The landed cost, more or less, they matched with Vizag. But we have to see if Vizag plant closes down for whatever reasons, then we have to see how it will shape up. But the good news in Jajpur area is, there are quite a few blast furnaces that got restarted, and a few more are getting added up. So with that, we see slag prices slightly going down than what they are. Our average acquisition cost of slag, over last year or so, there has been a drop of almost 10%-15%. So we are very happy to state that, even with the low capacity utilization at Jajpur, we are much, much above the water as far as Jajpur asset is concerned, thanks to the slag pricing itself.
Right. Sir, thanks for the answer. Just a follow-up over here. Have we ever factored imports of fly ash and slag? Is it viable, or is it just a no-go zone?
See, I think for the assets that we have both in Vizag as well as in Jajpur, we keep getting quite a bit of supply offers, but at this point of time, they're almost 25%-30% at a higher price than what it is. Fly ash is ruled out, Mr. Ritesh.
Correct.
Fly Ash, the current supply, what we have, is very, very compelling. I don't think import could be an option for us at this point of time.
Sure, sir. Thank you so much, and all the very best. Thank you.
Thank you, Mr. Ritesh.
Thank you. We take the next question from Raman KV. Raman, if you could unmute yourself.
Hello, can you hear me?
Yes, sir. Good morning, Mr. Raman.
Good morning, sir. I just want to know the guidance for FY 2025, either in terms of revenue growth or volume growth.
No, I think we did indicate to be around 5.75 million in terms of volume. Revenue, it is still a challenging position for us to take a call on the realization, Mr. Raman.
So five point?
5.75 million.
Okay. Thank you.
Thank you. The next question we take is from Rajesh Ravi. Rajesh, you can go ahead.
Hi, sir. Good morning. My first question is on the incentives. You mentioned 23 crore was booked in Q2, right?
Yes, sir.
This is pertaining to before FY 2024.
Yes, sir.
Okay. And, sir, are we not booking these incentives on accrual basis?
Yeah, we are booking on a No, no, on receipt basis only, Mr. Rajesh.
Okay, and are this 23 number fixed in terms of value or?
Yes, sir. I think there is a marginal gap, but I think that number should be around INR 21 odd crores for sure.
Okay.
That is INR 150 crores divided by seven.
Okay.
Some amount of electricity and all, which is a variable one, but that should be less than INR 1-1.5 crore per year, Mr. Rajesh. FY 2024 also, you're expecting to come through Something similar number is expected.
It's to anytime it can
Yes, sir, it should hit us any time in H2.
Mm-hmm. Okay, and second, sir, you know, if how are we looking at the scenario X of these incentives? We are at EBITDA loss, and Q3 prices are further down from Q2 in your pool.
See, I think, Mr. Rajesh, it's more an issue of demand. Because in our case, if you look from a cost side, we are doing reasonably well.
Correct.
It's more an operating kind of. I think we come back to, on an average, at a group level, 55%-60% capacity utilization. I think INR 400-INR 500 EBITDA per ton is given, Mr. Rajesh.
Yeah, for that, the pricing need to improve, but
No, I think, more, more than that, our operating leverage itself should help us get to that number, Mr. Rajesh.
Okay. And, if I look at-
Because if you look at salary figures, you know, if you look at wage bill itself if we kind of improve, that should itself contribute close to INR 150 straight away.
Sorry, what will contribute INR 150?
If salaries and wages on an EBITDA per ton number should come down by half or close to that number, just if we increase our group level capacity utilizations 55%-60%.
Okay. Okay, and the net debt to EBITDA number, now we are north of six times, six X. You know, what is-
No, I think that you should look at a more linear number rather than one-off number, Mr. Rajesh.
Correct. Correct. No, no, I'm looking at, you know, you know, how will this trend lower? What is the-
I think we should come down. I think in a normal year, we should have come down to sub three. I think this time it has been a very difficult year, so-
Correct.
We expect this year it to come down sub three number, Mr. Rajesh.
Okay, because FY twenty-five seems to be on a slippery slope for everyone. You know, even UltraTech and all could hardly manage this quarter. If I look at the gray cement margin, would not be north of INR 650. So obviously, everyone is under pressure.
Yeah, Mr. Rajesh, if you look at our EBITDA per ton number in Jajpur, without doing much also, is at INR 1,700, thanks to the incentives, Mr. Rajesh.
Correct.
These are all optical. I think more a linear number would be sub three is the target internally, so we would come down to that number. I think FY twenty-five has always been a challenge for us. So I think this should be an exceptionally exceptional year for us. In a normal course, we should come back to less than three kind of a number.
Okay. And sir, lastly, on the land parcel, this Andhra Cements land sale.
Yeah, we would wait to give clarity by Q3 results, Mr. Rajesh.
Okay.
Because, yeah, the government slowly started working, so we have out of three, one we completed, we have two more steps to cover.
Okay.
So, I think we do expect some amount of infrastructure to get increased now. We'll be in a much better situation to give update on that by end of Q3.
Okay. And last question, sir: What would be the total CapEx target for this year and next year?
Yeah, I think this year we should end up. So far we did close to around INR 69-70 crores so far in H1. So likely, from what we have indicated at INR 329, we should end up close to INR 200-odd crores, Mr. Rajesh.
Okay. Next year, how much you are targeting, sir?
Around INR 300 crore.
200 this year, 300 next year.
Yes.
Okay. Great, sir. Thank you. All the best. I'll come back in queue.
Thank you.
Thank you. We take the next question from Kamlesh Jain. Kamlesh, you can go ahead.
Yeah. Thanks for the opportunity. Second, just one question on the part of your CapEx. Like, say, you are, like based on the timelines which have been provided in the presentation, so the waste heat recovery at Dachepalli is expected to come around, like, say, four years from now. So why such a big timeline over there, and.
It's all to do with the cash flow, Mr. Kamlesh, so it's all to do with the CapEx planning. See, the whole idea is that, in Dachepalli, so we would want to stabilize the kiln two first, because it's under construction, the preheater is under construction, Mr. Kamlesh. That is likely to complete by March 2026, though we are running a couple of months ahead of time. So after a year of stabilization, only then we would want to start the waste heat recovery on that. And also it is to do with the overall kind of cash flow planning.
Okay. Great, great, great. That's, that's all my other question. Thanks.
The next question we take is from Parth Bhavsar. Parth, you may go ahead.
Yeah, hi, sir. So thank you for the opportunity. I have a few questions. The first one, sir, I wanted to know, like, when do we expect Andhra Cements facilities to, you know, become efficient at par with our units?
March twenty-six, Mr. Parth.
Okay, March twenty-six. And sir, what sort of EBITDA, like, would it be at par with our facility, like EBITDA per ton?
Yeah, slightly better than Sagar and Mattampally, Mr. Parth, because realization is same, because it's the same brand.
Okay.
The cost impact is what, the reason for this upgradation is to save on the overall kind of overall costing, primarily to improve the efficiency of it, so it should get aligned or become better than Mattampally, because this is a new generation preheater that is being used in Andhra.
Okay. And, sir, like all these cement mills, they are, you know, mentioning that, you know, they are looking at, you know, cost savings in the range of INR 150-INR 200 or INR 300, depending to company to company, over the next two to three years. Do we have any such internal target?
Yeah, Mr. Parth, I think we definitely have a target, sir. I think numbers may not be as high as most of the other people, because fortunately, in our case, most of the assets barring Andhra's current this thing are all upgraded and relatively new. So our ability to save is minimal, not as aggressive. The other saving potential that we are looking at is the investments that we are doing on the renewable side, which again, we have indicated the timeline. Once they get implemented, sir, it is spread over a time. So-
Okay.
By 2027, FY 2027 to FY 2028, likely that we should have a good saving on power and energy.
Mm-hmm. Sir, sir, can we, like, give numbers on this, like, cost, cost?
I think at this point of time, it's a challenge, Mr. Parth, because,
Okay.
We would definitely revert as soon as we compile on those. We would work on that, and we'll be happy to share as and when ready.
Fair enough. And, sir, one last question. So given the weak cement pricing in Andhra and Telangana, and also weak demand, are there any low-hanging fruits in terms of, you know, assets that can, you know, get acquired?
Mr. Parth, I think, we don't know whether there are so many sellers or there are so many buyers.
Yeah.
But the buzz in the market is that everybody is talking to everybody. We don't know who is selling and who is buying. That is the current situation.
Okay. Okay, sir. Thank you so much for answering my questions.
Thank you.
Thank you. We have a follow-up question from Raman KV. Raman, do you want to go ahead?
No, no, no. Thank you. Sorry.
Okay. Okay, sure. Okay, we have a follow-up then from Shravan Shah. Shravan, do you have a que- do you want to have a question?
Yeah. Sir, just wanted to check in presentation, slide number 16, the 68 kilowatt hours for metric ton and kcal 714, which was there for Q2, and even Q1 also the similar, but for FY25, the same number is decently higher. So from 68-
No, it's all to do with the operating leverages, Shravan. It's because we did not run full for most of the time.
No-
And this being monsoon season, usually it gets played up.
No, so that's what I'm saying. So once it increases, it should reduce while for FY 2025, we are saying it is on the higher side.
Sir, these are all averages at a consolidated level, sir, so that's how it is presented. But I'm sure we should be much lower. But we did do some improvements in Andhra that actually helped us to be slightly better.
Okay. And similar for green share. So Q1 was 14%, and now 11.43%. So close to 12-13% for 1H. And for FY25, we are saying a 20%. But if I look at in terms of the new capacities that will be coming for solar is not there. So how this number-
Sir, hydro. See, Mr. Shravan, you should understand that our hydro stations are operational right now, which they were not available for H1. Because post-monsoon, our hydro stations start generating, Mr. Shravan.
Okay.
They are available from now all the way up to March.
Okay, okay, okay.
Which were also not operational for last year because the reservoirs were empty. But fortunately, this time, I think reservoirs are full, and for next two years, the outlook on hydro, hydro assets is extremely good for us.
Okay. And lastly, sir, lead distance this quarter, 269 km versus 255 in Q1, is there any specific reason? And is it fair to say once again it will come back to the 255 level?
No, our target is sub 275. Our target was below 300, Mr. Shravan. We are not going to most parts of South Tamil Nadu at this point of time because the prices are not viable. I think if we go back to those markets, lead distance probably would move up more to the volumes, because at this point of time, we withdrew from some of these opportunistic markets which are not remunerative. So once market slowly improves, there is a possibility that lead distance also would move up. So then, our target is to be below 300.
Okay.
I think I would stick to that number. At this point of time, we have not done much into South Tamil Nadu or the far off places, because those markets were not as remunerative. Most of those opportunistic orders, we did not fulfill.
I got it, sir, but I didn't understand. In Q2, though, despite the volume was lower, the lead distance has increased decently, close to fourteen odd kilometer.
Yeah, we did service, sir. See...
Okay.
No, it decreased, Shravan. I think, you, you're reading it slightly lower. It actually got reduced.
Okay. Because that's what...
It decreased, Shravan. It decreased.
Okay, okay. Okay, okay. My mistake. I got it. Thank you, sir.
Thank you.
Thank you. We have the next question from Thoma K adavil. Tom, can you go ahead?
Yeah. I just wanted to know about the, land monetization. Approximately, how many months we will take to get the monetization done?
Yeah, Mr. Tom, as I mentioned, I think we would be in a much better situation to give a clear update only in Q3, by end of Q3, Mr. Tom, on, in that regard. Because the government approvals, out of three major approvals, we only received one. Two more are pending.
Okay.
But we'll have a lot more clarity by end of Q3.
Okay. Okay, that's it. Thank you.
Thank you.
Thank you, Tom. We have the next question from Shreyans Jain. Shreyans, you can go ahead.
Hi, sir. Can you just share the demand outlook for the southern market and the pricing environment for the next, like, let's say, H2 and FY 2026? What are you expecting it to be?
Yeah. Yeah, Mr. Shreyans, at this point of time, we are not in a situation to talk of outlook for the coming year. We would want to wait for the demand to shape up. But we do have a huge expectation for the coming year, because we believe in our business, most of the time, when the demand gets muted, especially because of difficult weather, we believe that gets postponed. So we believe in the last quarter, most of the demand got muted purely because of difficult weather. That is likely to get spread over coming few quarters as well as into the next year.
At this point of time, we believe it's too soon for us to take a call for the coming year, but Q3 for half of Q3, it has been absolutely very similar to how it has been in Q2 because of the weather, and especially in the current month, where the October month has two festivals, so it is likely going to be very low. But we do expect from November onwards, it to pick up. We believe it is going to be at least 15%-20% higher compared to the first half or the second half, and most of it is likely to happen starting from November all the way up to March. Next year, we would be happy to comment on that, probably middle of Q4.
By then, we would have had a lot more clarity on some of the important projects that are happening in the markets that we are in.
All right. Thank you so much.
Thank you.
Thank you, Shreyans. We have no further questions, so I request Sreekanth to conclude with his closing remarks. Sreekanth, will you go ahead, please?
Yeah, thank you. We would like, we would once again like to thank each of you for joining us on the call. I hope you have got all the answers you were looking for. Please feel free to contact our team at Sagar or CDR should you need any further information or have any further queries. We'll be more than happy to discuss them with you. Thank you, and have a good day, and Happy Deepavali!