Good morning, ladies and gentlemen. Welcome you all to the Q1 FY24 results conference call of Sagar Cements Limited. We have with us from the management, Mr. Sreekanth Reddy, Joint Managing Director, Mr. K. Prasad, CFO, Mr. Rajesh Singh, Chief Marketing Officer, and Mr. Soundararajan, the Company Secretary. We will start the session today with an opening remark from the management, and then we'll be open, followed by a Q&A session. I request all the participants to be on a mute mode during the course of the call. I would now like to hand over the call to Gavin Desa of CDR for the, for his opening remarks. Over to you, Gavin.
Thank you, Manish, and thank you for the introduction. Just to add that I would like to point out that some statements made in today's discussion may be forward-looking in nature, and a note to this effect was stated in the conference invite sent to you earlier. We trust you've all received the presentation and the communication on the results. I now request Mr. Reddy to commence his opening remarks. Over to you, Sreekanth.
Thank you, Gavin. Good morning, everyone, and welcome to Sagar Cements' earnings call for the quarter ended June 30, 2023. Let me begin the discussion with a brief overview of the market in terms of demand and pricing, post which I will move on to Sagar specific developments. Overall, the industry in general has been good volume growth during the quarter on the back of steady demand from both housing and infrastructure segments across regions. Input prices as well continue to trend lower, offering well for the business and the sector. Higher utilizations levels amidst steady demand, coupled with lower input prices, should help improve the overall profitability of the industry over the coming quarters. Despite stable demand, realizations though have remained more or less benign, in turn, capping the overall benefit from the moderating raw material prices.
On the whole, we remain optimistic about the sector's prospects as we believe demand and eventually pricing both should improve on back of government's infrastructure push, coupled with demand from urban housing. Yeah, let me now move on to our quarterly performance. I would just like to highlight that Q1 performance was largely impacted owing to the maintenance shutdown undertaken for Mattampally's line to clinker production. That, coupled with competitive pricing environment across our key markets, weighing on our quarterly performance. With that, let me call out our headline numbers, starting with the revenue, which came in at INR 540 crore, as against INR 558 crore during the quarter, lower by 3% on a YOY basis. EBITDA for the quarter stood at INR 30 crore, as against INR 61 crore generated during Q1 FY23, lower by almost 50%.
Margins for the current quarter stood at 6%, as against 11% reported during the corresponding period last year, and 6% generated during the previous quarter. Lower utilization rate, coupled with high cost inventory and benign pricing environment, result in profitability compression for the quarter. As mentioned in our earlier call, Q1's profitability was expected to be muted, owing to the higher cost inventory on our books. However, going forward, though we believe the business will start reflecting the benefits of lower input prices, in addition to lower input prices, we believe higher utilization levels and geographical diversification should assist in improving the margin profile. Although the overall advantage may be restricted due to the overall benign pricing environment. Furthermore, we are hopeful that our investments towards strengthening our operational infrastructure in recent times should help us further improve the profitability.
In terms of key operational activities, as mentioned earlier, our efforts are directed towards improving the overall efficiency and ramping up the utilizations levels of our recently acquired units. The Jeerabad and Jajpur units are performing as per our expectations, and we believe we will be able to achieve 80% utilization levels for the former, and the EBITDA breakeven for Jajpur during this fiscal. Average fuel cost stood at INR 1,735 per ton, as against INR 1,827 per ton reported during Q1 FY23. Freight cost for the quarter stood at INR 862 per ton, as against INR 798 per ton during Q1 FY23. On a sequential basis, though I had mentioned earlier, we see moderation in fuel and freight costs.
Loss after profit for the quarter stood at INR 42 crore, as against loss of INR 13 crore reported during Q1 FY23. From an operational standpoint of view, Mattampalli plant operated at 52% utilization, while Gudipadu, Bayyavaram, Jeerabad, Jajpur, and Jajpur plants operated at 89%, 59%, 81%, 14%, and 6% respectively during the quarter. As far as the key balance sheet items are concerned, the gross debt as of June 30, 2023, stood at INR 1,507 crore, out of which INR 1,300 crore as long-term debt, the remaining constitutes the working capital. The net worth of the company on a consolidated basis as on June 30, 2023, stood at INR 1,647 crore. Debt equity ratio stands at 0.79:1.
Cash and bank balances were at INR 151 crore as on June 30, 2023. During Q1 FY24, the blended cement sales improved to 55%, as against 50% reported during Q1 FY23. On the ESG front, Company has acquired electric trucks and electric wheel loader to be used in the operations at the plants. Also, Company has started using biomass fuels as alternate fuels in the kiln. In summary, we believe that our efforts towards cost rationalization, better product mix, and presence across the established and faster growing regions, position Sagar us well to create value for our stakeholders. That concludes my opening remarks. We would now be glad to take any questions that you may have. Thank you.
Thank you, sir. We will now begin the question and answer session. A reminder to all participants, you can ask your question by raise of hands in the participant tab of the Zoom platform. The first question is from Shravan Shah. Please go ahead.
Thank you. Sir, the first question is coming on the volume front. This quarter, definitely, volume is just a 1% or a flat, I would say, yoy. We were looking at 6.5 million ton, 35% growth for this year. How do we now look at console volume for this year? If you can also help us, though we mentioned that 80% utilization for Jeerabad and Jajpur to break even. If you can help us in terms of how the volume will come, particularly all the plants, including the Andhra, that we were looking at 1 million ton. That is our first question.
Yeah. Good morning, Mr. Shravan. As indicated, our outlook remains very close to 6.5 million, what we have indicated. I think we should, we should be very close to 6.4 million, with an EBITDA of. We are, we are expecting an EBITDA of around INR 400 crore for the current fiscal. Yeah, this is not new to us. As, as indicated, sir, this quarter we had a shutdown. Unfortunately, the shutdown took longer, almost by 10 days extra, because we were trying to fine-tune the kiln to it at Mattampally for additional biomass fuel feeding, which was long overdue. We took, it almost took 1 month, complete shutdown at Mattampally.
In spite of that shutdown, I think the outlook for the current year remains very close to what we have indicated as we are at 6.4 million, and close to INR 400 crore of EBITDA is what we have believed would come. Specifically to each of the units, sir, as indicated, we more or less ramp up at Jeerabad is almost complete. Jajpur, we are more than confident that in the current year, we should more than break even. From earlier, we thought it should take longer, I think the ramp up at Jajpur also is taking a good shape.
We are very happy to tell that at Andhra Cement Dachepalli unit, the clinker, we are almost at 80% of the rated output, and it is hitting historical high numbers. As indicated, the capacity at Dachepalli, as we speak, is at 2.25 million tons cement. We, we, we should able to achieve 750,000 tons of sale for the current fiscal from Andhra Cement, sir. With that, we are more than hopeful to achieve 6.5 million volumes, Mr. Shravan.
Okay. So Andhra for, for full year, previously we were looking at, 1 million tons, so now, INR 7.5 lakh
INR 7.5 lakh as a minimum is what we are indicating, sir. Because we are
Okay.
We are also believing that some amount of clinker also we should able to transfer to Vijayaram. With all that in, I think 750 is a definitely a doable number for Andhra.
Okay. Have we just to elaborate further on that, so have we started seeing the now the volume growth from June, July to achieve this number?
Yes, sir. I think, except for the month of April, and partially to first week of May, the rest of the monthly performance run rate has been in line with, what we have indicated, Mr. Shravan.
Okay. Okay. Secondly, secondly, on the profitability front, still we are seeing that INR 400 crore kind of EBITDA, it seems definitely difficult task on that front. How do we broadly?
Yeah, Mr. Shravan, Mr. Shravan, except for the month of April, because which, which was negative EBITDA for us, the other run rate has been very close to the number what we have indicated, sir. That's what I would like to highlight at this point of time.
Does that mean from, from Q2, we will be seeing a significant improvement? Largely, this will be the third and maybe the fourth quarter where we
No, I think it's across, sir. It is across. We, we definitely have 9 more months, so it is spread, I would say eight more months, because even, even in the current month, things are not bad. What we have been very cautious is we are not chasing the volumes, everywhere where there is a very difficult pricing. We have been very cautious even on that. The advantage for us has been on the costing side, Mr. Shravan, so.
For this, in terms of to achieve this INR 400 crore kind of EBITDA, now, on the, I'm just trying to understand on the pricing and the cost up front. From the exit of or the average of 1 cube, have you seen any, any price decline where we are operating on an average?
Sir, sir, for us, Q1, as I mentioned, our volumes were not significant, so we have not seen a major downward revision in our realization, 'cause as I mentioned, we are not chasing the market share related. The exit of June to July, for us, the price has been very, very flat, sir. Except for certain pockets of Tamil Nadu, where the price there has been a small correction. The Karnataka and AP Telangana markets, which are significant markets for us, they, they remained flat, I would put it. We have not seen any downward revision as far as the pricing is concerned. The only concern area for us is the Tamil Nadu market.
Unfortunately, there is the price region from June to July, there has been a slight downward revision, but it did not impact much. In our case, most of our margin actually is happening from the ramp up itself. Mr. Shravan, I'm sure you would appreciate, as and when the capacity utilization is moving up, the spread on the fixed cost would itself add up for the number that we have indicated to you. Q1 definitely looked very depressive for a simple reason that we shut down, and we also did buy the clinker from an external district, which was 1,000+ compared to the internal sourcing of clinker, Mr. Shravan. But I think we have hit the bottom with the Q1. From here on, we should look up, is what we strongly believe.
Okay. lastly, on the, on the, on, on the date front, so, so INR 1,500 crore plus date, and we were looking at peak date of INR 1,200-1,250 crore. By end of this year
Mr. Shravan, Mr. Shravan, yeah, that's a gross date at INR 1,500, sir. The net date, what we have indicated earlier, around INR 1,250-INR 1,300, I think we, we remain committed that we would not exceed the number what we have indicated earlier, Mr. Shravan.
And, and
This, this is also from a fact that Sagar would become by middle of FY26, a 12 million company. With the expansion of Andhra from a 2.25 million-3 million. There is also an investment that is getting into the brownfield from a 1.25 million-1.5 million at Gudipadu. At Jeerabad, from 1 million-1.5 million. This includes the CapExes that are associated with all these brownfield expansions. Yeah, we believe that we should not cross INR 1,250 crore-INR 1,300 crore, net debt, kind of a thing for company over the next two years, for sure.
Sir, just to clarify further on what right now we mentioned in terms of the expansions. two things. One is how much CapEx we are going to do for this year and next year, and when this all the capacity expansions that we mentioned will be, will be coming in?
Yeah, Mr. Shravan, we would, we would come back by end of this Q2 with a clear-cut plan in terms of each CapEx and how much it is costing. We'll be very happy to revert to you. We, we just received the quotations, which is still in negotiation stage, so we will be very happy to come, come back by the Q2 results time about the overall structure in terms of the overall CapEx. What I would like to assure is that we would not exceed the current net debt as indicated, even for those projects getting implemented, Mr. Shravan.
Okay, last is on the sale of the Vizag land. Previously we were saying, it will take 15, 18 months, so, it has already.
I think we will stick to that. Nothing much has changed on that, sir. We just applied. We, we, we believe that it should take that long for us to revert. If there is any revision in terms of the timeline, we would be happy to come back to you on that.
So by, broadly by, by next, December, we should be able to, monetize the, this land?
We will. As indicated, it's a 15, 18 month issue. If there is any reduction in time, I'm sure we would be happy to revert back to you on that, Mr. Shravan.
This 15, 18 months starts from when? Ends when?
Yeah, I, I, I think in April we have indicated that, sir. That remains there, Mr. Shravan.
Okay, okay. Thank you. Thank you, sir.
Thank you, Mr. Shravan.
Thank you. The next question is from Rajesh Ravi. Please go ahead.
Yeah, hi, sir. Good morning. My question pertains to first, you know, the INR 400 crore EBITDA target, which you have, you know, penned for this financial year. If I look at the 9 months AS rate, you know, given that you have a 6.5 million volume target, the AS rate for the 9 months is close to INR 700 per ton. Obviously, Q2 would be a dull period because of rains and, you know, ongoing pricing pressure. How do you look this number working out? Second, from your detailed presentation, what we see, the Jajpur and Andhra. The Jajpur has been, you know, the utilization has been quite low, sub 15% for long now. What is the trajectory you're looking at?
Yeah. Mr. Rajesh, you are right. It is the run rate for us is not very different, except for the April month was very difficult. It was negative EBITDA, as indicated earlier. The volume outlook, as indicated, is 1.2 million for Q1, which we are very close, we have achieved. For Q2, it's 1.4, for Q3, 1.8, and for Q4 is 2 million. That should, that should add up to 6.4. But for the April month, all the other months' run rate has been quite healthy in terms of the margin. We don't look at as a very, very difficult challenge. This in spite of the fact that we have not been very optimistic on the price outlook.
We believe that prices more or less should remain very, very similar. The seasonality would definitely impact the volumes. May not be a margin very, very significantly, Mr. Rajesh, that's what we believe.
Jajpur, sir, how are you looking at Jajpur, you know?
Yeah, Jajpur, the current outlook is from current operating rate of close to around single digit number or slightly higher double digit number. We believe we should, we should achieve 40% capacity utilization for the full year, for the current full year. Our target is to achieve 0.6 million for the current year, Mr. Rajesh. We are more than hopeful to break even in the current year itself.
Okay, okay. Coming to this, you know, CapEx number. Let me complete the PNL first. This Andhra team cut expansion, which you would be, you know, doing it in Q2 start, assume. This INR 50 crore depreciation mandate, how would that change Q2 onwards and same for interest? Is interest fully capitalized in PNL on a consolidated level?
Sir, I think everything is done. I think the new depreciation would only kick in once we start the expansion and commission it, sir, and we are good 18 months away from when we start. I, I think all these projects should get commissioned by, by end of FY25 to early part of FY26. Till such time, I think the depreciation would, would be very, very similar to what you are seeing at this point of time.
Okay. Okay. Andhra is already fully capitalized in terms of depreciation and interest?
Yes, sir. Yes.
INR 4 crore interest is also fully reflecting all the data on books.
Yes, sir. Yes, sir.
Okay, great. CapEx number, did you mention, I think I missed
We are yet to, we are yet to mention the CapEx number, because this entails two greenfield expansions, both at Gudipadu and Jirampal, and also in Andhra Cement. We will be happy to come back along with the Q2 results, exactly the CapEx outlay and the timelines for those CapEx also, we will be indicating with the Q2 results, Mr. Rajesh.
Okay, any broad numbers, I know you can
I think, I, I, I think let us wait.
Okay.
We just, are in, in finalization stage, so once it is firmed up, we'll be very happy to revert back.
Okay. Okay. Okay, sir. I'll come back in queue. Thank you. All the best, sir.
Thank you. Thank you, Mr. Rajesh.
Thank you. The next question is from Ritesh Shah. Please go ahead.
Yeah, hi, sir. Am I audible?
Yes. Good morning, Mr. Ritesh. Yes, you are.
Good morning, sir. Sir, I have three questions. First is specific to your comment on the EV thing. Sir, can you highlight from a CapEx perspective, OpEx perspective, and basically, if one had to look at a payback, how should we look at this particular investment? I think I can look at the image. I think we have BYD trucks and something called SOLG or SDLG. Was there any specific reason to zero down on this guys?
Yeah, good morning, Ritesh. See, the EV truck, the SDLG is actually Volvo. It's actually the wheel loader that we have taken it on lease from the Volvo itself, so the CapEx impact is negligible. From an OpEx perspective, it is aligned with the more or less the same wheel loader which is diesel operated. From an OpEx perspective, it is neutral, I would put it. We, we are turning green. We ended up having 2 SDLG loaders at Mattampally, and we've also signed contract for having 2 more in Andhra Cement. This is neutral on a CapEx as well as on OpEx, as far as the wheel loader is concerned.
Specifically, going back to the EV truck, which we are going to operate, we received 2 trucks of BYD after a long delay of more than one year. Unfortunately, because of the COVID, the BYD trucks just landed exactly one year later than what we have anticipated. Yeah, those trucks we did buy. The break-even for us, for us is around 3.5 years. The only reason why it is break-even fast is because we are able to put this at only the Vizag unit. The range, as indicated by them, is around 200 km. In our case, the market as well as one of the primary raw material source, which is the Vizag steel plant, is less than 100 km. We, we could, we could, we could deploy these trucks there.
It's more or less loaded on all the directions. We take cement to the godown, except for 10 kilometers from godown to the slag loading site. That is the only time when it is actually empty, and it comes back with the slag back to the plant. Since it has a two-way load, the break-even is less than 3.5 years, in spite of paying almost two-thirds of the conventional truck, Mr. Ritesh. The way we have structured this, the truck would be operated by the authorized contractor, but owned by the company. This is for the first time the company is owning the truck, but would be operated by the contractor, the authorized transport contractor, from an operational standpoint, Mr. Ritesh.
Sir, can you give, sir, tonnage for the truck? When we say two ways, the normal cost, can you please quantify the numbers?
Yeah, I, I think it is close to around INR 1.1 crore, because there is no life tax. Life tax is exempt in Andhra. By virtue of it, it is exactly two-thirds of the overall ownership of the truck, because there is a tractor which has come from BYD, the trailer is locally made by.
Tonnage?
Tonnage is 45 tons, sir.
Okay.
I'm talking of this tonnage.
That tonnage. Okay. Sir, plans to increase the fleet further?
No, I think this we would want to try, because as I mentioned to you, this is very useful only for that leg of our logistic, because the range is not much. Range looks to be somewhere around 200-220 kilometers. Rest of the areas, it is not looking feasible because the break-even also is partly due to the turnaround time. In other cases, the turnaround time is not as quick. But we wanted to look at this. The reason for choosing BYD is, at that point of time, there were not much of trucks in this range, sir.
Now, I believe, there are a few options available, so our team is evaluating them. Basis that, we would like to do it, but we would want to wait for this experience for next six months before taking a call. We have been extremely happy with the EV loader, because this is very much part of the in-plant kind of an operation. Though we are operating for close to 1 month now, people are extremely happy operating it, and of course, from, from an OpEx standpoint and a CapEx standpoint, it is very neutral.
This is very useful. Sir, just I have two follow-up questions that's more industry related. There has been one large transaction in the region where we operate. I'm referring to, between Prism and Ramco. Sir, how do you read at this? There has been some transfer of lease if the transaction is successful. Would it essentially imply that the new buyer will have to come up and set up a plant, or is it that they could potentially get an exemption? I'm trying to make a read on demand supply for the region.
See, I think, Mr. Ritesh, the news that we have is exactly the press news and from interactions with good friends like you. It looks like they were trying to consolidate their limestone deposit. I, I think it entails the start of the mine, which we don't see a challenge here. Do they have to come up with the investment? I think, the regulation now states that you have to operate the mine within three years or two years, and with an extension possible of one additional year. But for that, I don't think there is any regulation which will state that if you buy a mine, you should put up a plant. I think the regulations currently state that you should operate the mine in that two-year timeframe, Mr. Ritesh.
Sure. That's helpful. Sir, I'll just squeeze in one more. Sir, there has been other, industry event, potentially OMDC giving away a mine, to one of the companies, which is looking for a small asset in your region.
Mm-hmm.
Is something of this sort possible at no cost, or is it something like OMDC will look at options as the only way out? The reason to ask is, again, the OpEx or operating economics could actually vary significantly.
If I'm not mistaken, you're talking of the Sialijodi JK.
Yes, sir.
Mr. Ritesh. I think, most of the governments, would be happy giving away as long as, they are helping the industry to come up, which in turn should help the economy. The cost implications, we are not aware, sir, so I cannot comment much, what is involved in the overall kind of a transfer. I think it is always a possibility. I think it's the prerogative of a mine owner to transfer the mine to the other people. At what cost is happening, I think it is mutual. From that perspective, we have nothing much to add other than the comments that I've already made.
Sure, sir. Thank you so much. Sir, congratulations on excellent disclosure scope one, two, and three emissions separately. I think it's, it's, commendable. Thank you.
Yeah. Thank you, Mr. Ritesh.
Thank you so much. The next question is from Keshav. Please go ahead.
Hi, sir. It's good to see improvement in blended cement share. Have you seen the same in trade share, too? What is the trade share for Q1?
I think we are more or less very similar pattern, sir. I think around 60%-65% is our trade share. That more or less remains uniform, because we do have government exposure, Mr. K. Prasad, so that, that puts that much extra into the non-trade. As a company, we don't believe that these two are very significantly very different, because we don't chase low cost on either side. Both are very similar on the margin side for us, Mr. K. Prasad.
Okay. If you see your EBITDA pattern, guidance has significantly reduced in this quarter, versus what was guided earlier. Last quarter, you were bearish on prices. You were expecting it to remain flattish. This reduction is due to lower prices or some sort of operational efficiency which might be missing in some of the ramp-up units which you are planning? How should we read this?
Yeah, Mr. K. Prasad, last time we did indicate 6.5 million and INR 410 crore kind of an EBITDA. Now we are talking of 6.4 with INR 400 crores of EBITDA. I don't think there is a significant reduction, because since there is a drop in almost 100,000 tons, the matching number has come down, Mr. K. Prasad.
Okay, you told INR 400 EBITDA. EBITDA per ton would be INR 625 only, what you guided earlier.
Yeah, it's a, it's a very simple arithmetic.
Okay, okay. I missed it. I thought you said INR 400 unitary EBITDA. Okay, okay. Okay, fuel cost reduction should be sort of INR 100 in Q2?
Yes, sir. I, I think we, we did indicate in the past. It should remain very close to that number, Mr. K. Prasad.
Okay, okay. Thank you. That's it.
Thank you.
Thank you. The next question is from Bhavin Chheda. Please go ahead.
Yeah, good morning, Sreekanth. A few questions. First, on, slide number 16, where you're mentioning your capacities, what would be your current, clinker capacity be?
I think we did indicate that Mr. Bhavin. I, I don't mind giving you those numbers.
Total is fine.
Yeah. Total clinker capacity. Yeah. Yeah, we, we would revert Mr. Bhavin. You have any other question?
On the same thing, except for the Satguru, where you have 65% stake, the rest of the units, you have 100% stake?
Sir, Andhra is 95, and the rest are all the 100% whole owns, wholly owned subsidiary. The only other asset that remains outside is the Jajpur Cement, sir, which also is due for merger. I think, by, by end of this August, I think we should have merged Jajpur. That leaves 95% stake in Andhra and a 65% stake in Sagar Cements M Private Limited, which is formerly Satguru Cement. How much, Sandy?
Sure. sir, also congrats on very strong guidance you are giving. To just more understand on that from the opening remarks, as you said, that April you made a loss and then you have been operating as per your expectations only. Can we assume you have exited June more or less at the EBITDA per ton of INR 600- INR 700 per ton, what you're expecting for the year?
Yes, sir. Except for the month of April, rest of all the other run rate is very close to that number, Mr. Bhavin.
Right. Also, can we assume that the majority of the delta is coming from reduction in fuel prices? Because you commented that
Sir, as, as indicated, it is only INR 100 from the fuel, sir, but it is more to do with the ramp-up.
Okay.
With the ramp-up, what will happen is your fixed cost spread, whatever is the EBITDA items, would, would also help us get over. Yeah, we are at 6.4 million, the clinker capacity, Mr. Bhavin.
You also said that you plan to go to 20 million, and you will soon give the CapEx guidance on the same. You are already at 10.85. Apart from that, any other CapEx you are planning, or if you can give us a guidance on maintenance CapEx number. Apart from that, is there, is there any other CapEx for
Mr. Bhavin, we, we just acquired and we are, we are ramping up Andhra, sir. At this point of time, we are more or less focused on ramp-up and operational efficiency improvement. The maintenance CapEx across all the units, we did indicate that it would be close to INR 30 crore on a consolidated basis. The other CapEx, we would be happy to come back with the Q2 results, Mr. Bhavin.
Sure. Last question, if you can, share, your, sales volume mix, between different states, roughly?
Yeah, we'll be happy to revert on that, Mr. Bhavin. We'll be happy to share that number. We are run that reading out. I would be happy to share that with you.
Sure. Thanks, Sreekanth. Thanks.
Thank you.
Thank you. The next question is from Sanjay Nandi. Please go ahead.
Yeah, am I audible, sir?
Yeah. Good morning, Mr. Sanjay.
Yeah.
Yes, you are good.
Good morning. Good morning, good morning, sir. Thank you for the opportunity. Hope you are well, sir. Sir, just guide us on the power and fuel cost front. Like you told, we have a high cost inventory in the last quarter, which is why the overall cost got, like, stretched. Going forward, what kind of guidance can we expect in the coming quarters?
See, the power cost, fuel cost, as indicated, sir, we did get a INR 50 benefit, which in spite of having one full month shutdown. Going forward, for the next quarter, we are indicating close to around INR 100 per ton, kind of a drop from the current level on the power and fuel cost. Q3, we are yet to start booking the fuel, because there is some amount of ambiguity in what's happening. We would be happy to revert once we reach close to, you know, procuring fuel, which fortunately looks like it is lower than the earlier procurement what we have done. We are not able to give a specific number, because we are still in the negotiation stage for the fuel.
Got it, sir. Thank you so much, sir. Wish you all the very best, sir.
Thank you, Mr. Nandi.
Yeah.
Thank you. Anyone who has a question may please go ahead. Viba, you can go ahead with your question.
Hi, good morning, sir. Sir, can you please share the renewable energy share in your total mix and any targets that you are planning?
Yeah, Viba, can you repeat the question, please? Sorry, I could not hear you well.
Yeah. Sir, can you hear me now?
Yes.
Am I audible?
Yes, yes, now.
Okay. sir, can you please share the renewable energy mix in your total fuel mix? What is the share of renewable energy and any targets that you are having?
Viba, at this point of time, we are at 27%. I, I would, I would rephrase my this thing. It's not just the renewable, it is green power, because waste heat recovery still is not classified part of the renewable, so we call it as green power. So waste heat recovery plus all the renewable energy that we have. We have all the possible sources, that is the hydro, wind, and solar part of our portfolio, along with the waste heat recovery. Today, we are at consult basis, close to 27. The guideline is to go up to 50% by FY30. We, we do have plans to, to, to, to ramp up the solar and some more additional waste heat recovery.
As indicated, we would be happy to come back with the breakup in terms of what we are likely to come going forward, along with the CapEx and the timelines we would be coming back by Q2 results, Viba.
Okay. Thank you.
Thank you. Sir, a couple of questions from the chat window. Can you please brief us about the significant CSR initiatives during the quarter and approximate spending?
Yeah, I think, Manish, we would be happy to revert because it, it makes no sense to read out those numbers. We, I think we will revert for the circulation, and we'll put it at the corporate kind of a thing for this query. Quarterly, we have, we, we just implemented the ISO 26,000, so part of that discussion, we would be happy to come back. We will be sharing the CSR spend, spread across various sectors that we do. We'll be happy to revert on that. Kindly bear with us for 1 month. We will be happy to come with that number.
Sure, sir. Thank you. The second question is on fuel prices have experienced fluctuation in the recent times. How do you see the next few months, the likely impact on the future projects, and what plans do you have to tackle its adverse effects?
Yeah, I think, we, the prices did fluctuate. Fortunately, they are trending down for most part of the last quarter. Only during last 15 days, what we have seen is, the spot price looks to have indicated at $105, but we have never seen any quote at less than $118. In fact, as we speak, people are talking of $120 on the imported pet coke. Manish, now, how do we address this issue? I think this is not an issue that we could address in the short term, but the internal policy is to make that much more efficient, efficient in terms of the process, wherein we consume less. We did stop the plant at Mattampally to upgrade the plant for consumption of higher percentage of biomass.
We did indicate, in the current quarter, we started using new generation grass, which we did on a trial production. For us to be very successful, it should take a year. Instead of bamboo, we actually started growing a grass, which is rapid growing grass, which is, which is effectively very close replacement to single any coal that we use. It has anywhere between 3,600 to 3,800 GCV fuel. With a one week drying itself, we are able to achieve. The grass actually from harvest to, from cropping to the harvest, it should take only 60 days. It's a very, very rapidly growing grass. That's what we have tried. We have been very successful from the first crop, so we did make some modifications for the process to accept it.
Given that scenario, we should, we hope to mitigate some amount of these inflationary kind of things on the hydrocarbon fuels, Manish. Hope I could address. I think we would revert back with few more initiatives that we have taken in due course of time, sure.
Sure, sir. Thank you so much.
Yeah.
The next question is from Pathanjali Srinivasan. Please go ahead.
Hi, sir. Am I audible?
Yeah. Good morning, Mr. Pathanjali Srinivasan. Yeah, you are very much audible.
Sir, firstly, I want to know the pricing trends in the region. Some of the things that we heard from regional leaders and all of that, is that the pricing gap between AP and TNS kind of shrunk a lot and all of that. What kind of impact did you see on your business with respect to this?
See, as indicated in my earlier comments, sir, the, the pricing in most part of South, except for Tamil Nadu and Kerala, remained flat. Unfortunately, the Tamil Nadu, we have never seen Chennai prices being very close to, to Hyderabad prices historically ever. I think the gap has quite significantly shrunk, which we have never seen, at least in my career, I have never seen that happen. But the Tamil Nadu prices are very, very close to the Andhra prices at this point in time, Mr. Srinivasan. Now, how do we mitigate? I think it's a, it's a question of, we, we have to sell, and fortunately, in our case, we are going more blended. We are trying to mitigate the risk by putting whatever is the volumes that we have to put.
That is, those are the volumes that we are putting in those markets. The rest everything, we are trying to sell at the places where we could comfortably divert and, and not lose those margins quite significantly, Mr. Srinivasan.
Have we seen a dip in volumes in the region, sir, for us?
See, Q1 was a depression because we, we, we never had volumes, because we, we shut the plant. That also helped us to reposition ourselves relatively better. As volumes, as I, as we have indicated, sir, we should do INR 6.4 million. We cannot, we cannot quite significantly alter our market mix. We are only trying to ensure that we don't go to far off places, and we are trying to avoid those few orders which are extremely negative, Mr. Srinivasan.
Just one last question.
We are trying to optimize.
Okay. Just one last question on our fuel mix. What kind of alternate fuel mix do we have currently in our system? What is the kcal price for the alternate fuel that you're trying to get into your system, sir?
See, the ASR historically, we were very aggressive on the pharma waste and all. With the net zero commitment, and in the net zero commitment, most of the alternate fuels which are abundantly available, some of them are negatively priced. We started avoiding, because that may not offset the CO2. We typically follow the net zero standards in terms of our competition for the CO2 emissions. If you are using those alternate fuels, the CO2 that is coming out is not offset, sir. We slow, slowly started for more than one year, 1.5 years, we have been working on the biomass, wherein there is enough offset mechanism. Most of this would happen at less than INR 1 per kcal, Mr. Srinivasan.
Yeah. What is the contribution currently, and where would you like to see this at, percentage of fuel?
Yeah, we are at 5%, sir. Our alternate fuel is at 5%. At some point, we were almost anywhere between 15%-18%. As I mentioned, we slowly started moving away from those complex alternate fuels, because we don't want to act like an incinerator. We have put a cap on what percentage of those alternate fuels from pharma waste and all we have to use, we have capped it at less than 5%, Mr. Srinivasan. For us
Thank you.
This jump has to happen only from biomass and some of those fuels which could offset the CO2, you know, as per the guidelines given in net zero.
Okay, sir. Thank you, sir.
Thank you, Mr. Srinivasan.
Thank you. The next question is from Amit Morarka. Please go ahead. Yeah, hi. Can you hear me?
Yeah. Good morning, Mr. Amit. I can hear you, sir.
Yes. Hi, hi, good, good morning, Sreekanth
Now just a couple of questions. Sorry, I joined the call a bit late. The fall in volumes is your because of plant maintenance, or, like, demand is also a concern?
No, I think demand has been very healthy, sir. I think in our case, it's, it's a more an issue of a shutdown at the plant. Most of these volumes that we have fulfilled also is partly from clinker purchase. Margin was an issue for us with the clinker purchase, but for that, I think volume, as indicated earlier, yeah, we believe that the markets that we service would grow anywhere between 8%-10% even in the current year. This is in spite of having Telangana elections in Q3 of this current fiscal year. I, I don't think demand is an issue, but of course there are some ramp ups that have happened in the region, so that has been adjusted.
I don't think demand was an issue for our lower volume. In our, in our case, it's very specific that we took a shutdown and there were no volumes available for us.
Okay, also, like, some capacities are coming here, like My Home was supposed to start, that's still not started, right? Even then Shree Cement will have its Guntur plant.
I believe, I believe in the current year, the, the only supply which is likely to ramp up is the Ramco's Kalinganagar plant, sir. We, we do expect My Home, both My Home and Shree Cement to, to come somewhere around Q4, and their volume ramp up to start impacting from next year, Q1 onwards. Fortunately, the, the ramp up time is happening at a time when we believe that demand is reasonable.
Okay, understood. Just on the point which we were just discussing around for the first time, like, Andhra or Hyderabad prices coming to Chennai price levels. Is there a case of like, the, the Tamil Nadu-based companies kind of losing some market share to Andhra companies or like, basically a ploy to kind of discourage the Andhra companies from getting into Tamil Nadu?
Mr. Amit, Mr. Amit , you should understand that all the players who are servicing Chennai have all, all the plants on either side. Now how do I address this question?
No, why I ask that question is because, we know the issue of low limestone reserves in, in, in
The fact is that Chennai, Chennai gets service from both the regions, you know, you, and, and, fortunately, all the players have all the plants on either sides.
Okay. Okay.
There is no exception there. I mean, if you look at ICL, you look at Ramco, you look at Dalmia, you look at UltraTech, and Chettinad. All these players who have plants deep south, also have plants on this side. I don't think it's a question of somebody gaining a market share or not, but I think it's strange, but we have never seen in the past, but that is happening. We wish we knew why and we had a solution for it, but it's something which we are seeing it happen for the first time. I think with this experience, probably we'll have better learnings to improve. At this current pricing in Chennai, it doesn't make commercial sense to anyone.
Any, any clarity or resolution to the limestone auction issue in Tamil Nadu?
I have no idea, sir. We, we are not very active in that aspect, so I have nothing to comment because I am not, not know of any of those issues.
Okay. Okay, thanks a lot. That's it. Thank you.
Yeah. Thank you, Mr. Amit.
Thank you. Sir, a couple of questions from the chat window. Company has excess land at Andhra Cement. Any plans to monetize it?
Yeah, I think that I, I have stated. We, we, we, we, we applied for the government for the conversion and permission to sell, because, that's how the previous agreement was. We, we hope to get the resolution fairly quickly from the government. The monetizing also involves, you know, how do we do that? Should we go into joint development or, As a company, I don't think we would be getting into any of those land developments, sir. Either it would be an outright sale or getting to joint development, but we do have time. The first step is that we have applied for the government, for conversion as well as, seeking permission for the, potential sale. It should take, probably 15 months from now. I have to be cautious in using my timelines.
We did indicate in April that it should take 15 to 18 months. We believe that it should take 12 to 15 months from now. That's what is the potential time it could take, and we'll be happy to come back if there is any progress that is happening. Of course, Company is also monetizing some amount of sale lands that are there historically. Those are small parcels, sir, but these are not significant numbers for us to report to. Company do own few acres of land in Jayanthipuram, which is very close to UltraTech and Ramco site. Historically, Andhra Cement used to own some lands in that region. Around 5 to 10 acres of land parcels do exist in that region.
Those areas we are trying to identify the buyer and monetize them, but those are very, very small and on the financial side, it's very insignificant, Mr. Manish.
Thank you, sir. The next question is, What one element is going to be the most important focus for the company?
I, I, I wish there, there was one reason, sir. I think there's multiple reason. The very existence of the company is for the business, sir. I think, we, we, we have been in the business for over 40+ years. There are multiple reasons for us to be that long, and I, I'm sure it's a conversation which can go on. I, I would leave it there at this point of time, Mr. Manish.
Thank you. Anyone who has a question may please indicate by raise of hands. Sir, as there are no further questions, I would like to hand over the call to you for your closing comments.
Yeah. Thank you, Manish. Yeah, we would, we would once again thank each of you for taking your precious time off and hearing us, and joining in the call. I hope you, you got all the answers that you are looking for. If not, please feel free to connect with us at CDR or at Sagar Cements. We'll be more than happy to revert. Thank you again. Have a good day.
Thank you so much. We will now conclude the call.
Thank you.