Good morning, ladies and gentlemen. Welcome you all to the 3Q FY 2022 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 will join us shortly, the Company Secretary. I would now like to hand over the floor to Gavin Desa of CDR. Over to you, Gavin, please.
Thank you, Manish. Manish has introduced the management. I'd just like to add that some statements made in today's discussions may be forward-looking in nature, and no note to this effect was stated in the con call invite sent to you earlier. We trust you've had a chance to look at the presentation. I would now like to hand over to Mr. Reddy. Over to you, Sreekanth, for your opening remarks.
Thank you, Gavin. Good morning, everyone, and welcome to Sagar Cements earnings call for the quarter ended December 31st, 2021. Yeah, let me begin the discussion with a brief overview of the market in terms of the demand and pricing, post which I will move on to the Sagar specific development. Demand and pricing both were expectedly soft during the quarter owing to external factors. Heavy and unseasonal rains, non-availability of sand in the east and even the unavailability of the labor for most part of the last quarter due to the festive season resulted in lower offtake during the quarter. Pricing trajectory subsequently trended lower in line with the subdued demand. However, we did witness gradual pickup in demand towards the end of the quarter, which augurs well for the coming quarter.
While the demand and pricing were relatively benign, as I mentioned, raw material prices, though, continued to remain stubborn, in turn impacting the profitability and the margins during the quarter. We have seen a steady increase in the prices of petcoke and coal over the last few quarters, which in turn has contained the overall profitability growth. On a long-term basis, though, we remain positive on the business and believe greater government allocation to infrastructure into the low-cost housing projects would provide the requisite fillip to the demand growth. Moving on to Sagar specific developments, we reported a revenue of INR 334 crore during the quarter, largely owing to better rate allocations. EBITDA for the quarter stood at INR 46 crore as against INR 104 crore generated during Q3 FY 2021.
While margins for the current quarter stood at 14% as against 29% reported during the corresponding period last year. As mentioned earlier, not only did we had to contend with lower demand and realization, we also had to operate in a rising input price environment. Owing to which we registered margin compression of almost 1,500 basis points. The overall impact on the profitability would have been even more severe, but for our prudent procurement and cost rationalization strategy. We have been working towards increasing the share of the domestic coal to better manage our power and fuel expenses. Moving on to operational development, yeah, we are pleased to announce the commissioning of Jashpur plant on 10th of January 2022. As many of you would be aware, yeah, the heavy rains resulted in a slight delay in commissioning of the plant.
Jajpur plant, along with the Bayyavaram plant, which got commissioned during the Q3 FY 2022, should help us in diversifying our sales outside our existing markets. We are also hopeful of attaining utilization of 60%-65% and 75% respectively for these plants by the next year. Average power and fuel costs stood at INR 1,452 per ton as against INR 865 per ton reported during Q3 FY 2021. Elevated prices of coal and coke resulted in higher per ton cost of fuel for the quarter. Fixed cost for the quarter stood at INR 751 per ton as against INR 741 per ton during Q3 FY 2021. Profit after tax for the quarter stood at INR 5 crore as against a profit of INR 50 crore reported during Q3 FY 2021.
From an operational point of view, Mattampalli plant operated at 44% utilization level, while Gudipadu and Bayyavaram plants operated at 56% and 55% respectively during the quarter. As far as the key balance sheet items are concerned, the gross debt as on 31st December 2021 stood at INR 1,390 crore, out of which INR 1,257 crore as a long-term debt, and the remaining constitutes the working capital. The net worth of the company on a consolidated basis as on 31st December 2021 stood at INR 1,338 crore. Net equity ratio stands at 0.94:1. Cash and bank balances were INR 490 crore as on 31st of December 2021. That concludes my opening remarks. We would be now glad to take any questions that you may have.
Thank you again.
Thank you, sir. We would now like to begin the question and answer session. Anyone who has a question, please signal by a raise of hand on the Zoom platform. We have the first question from Shravan Shah. Please go ahead, Shravan.
Thank you, sir. Sir, the first question is on the pricing front. We are seeing the other companies who have reported, Ramco, Dalmia, actually a QOQ decline in realization. However, we have seen a increase. The difference is too much. If you can help us, maybe state wise, where we have seen a realization increase for third quarter. Second, in January, how much increase now we have seen across the different states.
Good morning, Mr. Shravan. See, in our case, there has been a 4% increase in realization, sir, on the quarter-on-quarter. The primary reason being that we restricted our movement into some of the non-trade, and we also limited some volumes flowing to the east because the realizations there were lower. I think it's a more relative kind of thing. Just to give you an update, sir, from the exit price of Q2, October there was some increases in the pricing. Yeah, which actually tanked again into November, and further tanked into December. The overall from a quarter-on-quarter, except for some optimization of flow of volumes, yeah, we have not seen a major shift in the realization.
In our case, the relation increases purely because we restricted some volumes into those markets where the drop was lot more severe. Now getting into specific demand as well as the pricing, this time the November month was exceptionally lower. We have never seen such a bad November for many, many years, sir. As mentioned earlier, the November was very difficult. I would not say it was contraction in the conventional demand, but I think the weather-wise it was a challenge for us to supply. For that event probably we should have been a normal demand. The reason why we are saying that statement is, in December, we have seen a normalization of the demand on a relative scale compared to what we have seen in October and November.
December looked very normal to a usual December that we have seen in the past. Our assumption is that there was not much of a shift in the fundamental kind of a demand structure. For the seasonality and the unseasonal kind of rains that we have seen during that time, it did impact demand is what we strongly think. Actually when the demand was not very normal, it actually took a toll on the pricing. From December exit, what we have seen into January, yeah, we have seen INR 5 increase in the pricing for most of the south markets or the markets that we operate. From middle of January, we started seeing the increase in east by almost around INR 20-INR 25 per ton.
We hope that for the Q3, what we have seen, the price should have bottomed out. We hope prices to move up. If not move up, at least we believe that prices may not come down is what we strongly think. Though in our view from the way the cost structure has moved up, we do expect prices to move up, but for us to realize that, probably we may have to wait. Just to give you a quick summary of what I mentioned. Yeah, we have seen an INR 5 increase from December exit into January for most of the markets that we operate, both south as well as to some of the Maharashtra markets that we operate.
In Orissa, we have specifically seen a INR 25 hike, but that is from the middle of January, sir. We are hoping to increase further prices in our own case to ensure that we don't do the contraction of the margin. For the survival, we hope to increase the prices by INR 20-INR 25 from tomorrow for most of the markets that we operate. We strongly believe that it should sustain. Worst comes to worst, probably we would have hit the bottom. That's what we strongly think.
That's great. Hopefully the prices, the increase that we are expecting should sustain. The related one is previously we were talking about or guiding the 3.6 MTPA volume and INR 1,000 EBITDA per tonne. Now how do we see? Definitely the both is related in terms of the EBITDA is pricing and also on the costing front. How do we see the even the costing on overall basis in the fourth quarter? Will it inch up further?
In our case, we guided for a 3.6 million ton, with an assumption that we would be doing around 400,000, 200 each at Jashpur as well as Dhirabam. Unfortunately, with the delayed commissioning, we are not anywhere close to those numbers, what we aimed for. The silver lining is that we could do better numbers at the other places where we have been operating. We should end the year with 3.5 million, very close to that number. We will be falling short of 100,000. Going into the specific EBITDA, we did guide for INR 1,000, but now I think, with only 2 months left, we think anywhere between INR 850-INR 900 per ton is a possibility.
Very specific to cost-related issue, sir, as we have guided Q2 and Q3 where we consume the imported coal. We consume the entire high cost imported coal in our case. We do expect a reduction in our power and fuel cost since we are switching over completely to the domestic. The overall average domestic coal landed cost is at INR 1.75 per kilo, vis-à-vis to INR 2.80 for an imported coal or INR 2 for an imported pet coke. We believe that the power and fuel cost not only should moderate, but it should start inching down for us for the current quarter is what we are guiding for, Mr. Shah.
Net-net, the overall operating cost likely to see some reduction in the fourth quarter?
Yes, sir. Yes, sir.
Okay. Lastly, on the debt front, will this be the peak debt that normally we were talking about INR 800 crore-INR 850 crore odd?
Well, just let me clarify here. I think our peak debt would not reach beyond INR 850 crore. Yeah, there is a one-off event that we actually have taken a structured debt instrument. Even in anticipation for a potential kind of an acquisition opportunity. Even that cash is sitting with us. I don't think we should be crossing INR 850 crore for our existing assets and what we have done so far. Yeah, I think the peak debt should not be more than INR 850 crore what we have targeted here, sir.
Lastly, sir, on the acquisition as you mentioned. We are at 8.25 MTPA capacity. We are looking at 10 MTPA by FY 2025. Will it be inorganic, and that too, the last time you talked about the Andhra Cements that we are looking at. Is it the only one? If it doesn't materialize, in terms of organic, we can still add 1.75 by FY 2025.
Mr. Shravan Shah, I'm sure you would appreciate our guidance for 10 MTPA FY 2025. We see a definite possibility, if not earlier. Would it be organic or inorganic? I think, please bear with us. We are working on couple of options. We will be quick to revert. Probably by any part of next year, yeah, we should have come back with the news whether it is a inorganic or an organic kind of expansion plan. At this point of time, what I can say is that we are prepared ourselves very well. We are evaluating on couple of options. Unfortunately, it is too soon for us to go out to the market because it's not yet ratified as we speak.
We are hoping that one of that should turn around fairly quickly. We are not very far, sir. I think by Q1 to Q2, coming Q1, Q2, yeah, we should come back to the market with a good news about our acquisition plan.
Thank you, sir. All the best.
Thank you.
Thank you. The next question is from Saket Kapoor. Saket, please go ahead.
Yeah. [Non-English content], sir, and thank you for this opportunity. Just slightly repetitive questions maybe. Kindly bear with me. Which are our key markets, sir? What is our 9 months clinker and cement volume?
Yeah. Mr. Saket, I think we did disclose the cement numbers and everything part of our presentation.
All right, sir. I'll go through it then.
Okay. We'll be very happy to give those numbers. Now, what are the key markets? is a good question. For the assets that we are operating, sir, we have been primarily into the South AP Telangana, Northern Tamil Nadu, certain pockets of South Tamil Nadu, Karnataka, Maharashtra, and South Orissa. With commissioning and ramp up of both Samburu and Jashpur. I would say Jeerabad and Jashpur, we would be getting into the Malwa region, with Jeerabad. That is Indore in the Southern parts of South Western parts of Maharashtra. Jashpur would be the coastal and the Northern part of Orissa, sir.
These are the two additional markets we would be addressing with these two assets getting commissioned and on the ramp-up stage, sir, yeah.
Sir, when we hear players like Dalmia Bharat having pan-India presence, players like ACC and Ambuja and their ambitious plan for this decade, how do companies of our scale are looking for their existence and their market share, say, 5 years, 10 years down the line when mammoth players like Dalmia are eyeing 130 million ton. If Adani, if there is even 90% of what they are contemplating, what kind of market share will players like smaller players, if I may use the word, marginal players will like you and others in the South will be left over with? What is your strategy going ahead to be relevant in this sector when such a big expansion drive is on the cards?
Yeah. Mr. Saket, our stated objective is to double every 10 years, sir. Yeah. We have completed 41 years of our existence. I think we have reached to a stage where I don't think we should be struggling for our existential issues. Yeah. We should stay relevant. As you rightly said, we have to stay relevant. Yeah, some of the players obviously are growing at a much faster pace than the market. We have always kept pace with the market, sir. I'm sure we would not ignore the aspect that staying relevant is very, very important. In the markets that we operate, sir, we are one among the top five players. That's what I would like to highlight. In any region that we operate, we are one among the top five players. Yeah.
On a pan-India we might be irrelevant, but in the places where we operate, yeah, we still are relevant. I'm sure in times to come, we would stay even more relevant than what we have been obviously. Our strategy is to double ourself every 10 years. Yeah. That remains irrespective of how others come up with their growth plans. Fortunately, yeah, this is one commodity which actually doesn't offer. Yeah. Big is not only beautiful, even small sometimes is also very, very beautiful, sir. We are here. As I mentioned to you, 41 years back when we started, we were 200 tons per day player, sir. Yeah.
Today, I think that was the case. We're large players who are becoming much larger, but we have grown from 200 tons per day to almost close to 30,000 tons per day. We are also looking to grow. We may not be at a pace which is to be like, you know, the market or in line with most of the other large players. I'm sure we would stay relevant is what I can comment at this point in time. Thank you.
Sir, couple of past points, sir. What is our current market shares in the key geographies which we are operating and what portion is trade and non-trade, sir?
Sir, that's not a KPI for us in terms of the market share, sir. As I mentioned to you, in all the markets that we play, we are one among the top five players. Non-trade, in our case, is around 30%-35%, sir. It keeps changing from season to season, around 30%-35% is the non-trade market share in the product in our portfolios.
Right. What explains this huge inventory build, sir? Is it the market conditions only and does this even out? I mean.
That's a good season, seasonal related issue, sir. See, as I mentioned to you, yeah, we did not see a major shift in the structural demand related issue. Yeah, we were producing normally, or else we would have calibrated. We did not expect unseasonal rains, so which actually pushed us to sell lower. The entire inventory got pile up, sir.
What is the status now, sir? As on the first month we are exiting January today. What are the inventory December itself was extremely good, sir.
January is also better. We are back to what we generally do in usual Decembers and January, sir.
No, sir, because when we look at your September numbers for inventory as well as the December numbers, it, the pile up, looks at INR 40 crore inventory for the 9 months. That was not the case last year. Maybe because of various other factors also.
You plan for an off-season.
Yes.
You don't plan for the season, sir.
The season, right, sir. Right.
As I mentioned to you, we were hoping it to be a very good November, but unfortunately because of the weather-related issues, we could not dispatch, so everything adds up. That is not the case in an off-season, because you obviously go through the annual maintenance and you know that it's an off-season, so you don't end up having inventory. That's not the case for the November month, sir. As I mentioned to you, I would say that the unseasonal rains did impact the overall kind of flow of the material. Everything remained as inventory.
Right, sir. About your power and fuel mix, sir. What is our current power and fuel mix? What portion comes from WHRS? What is our investment there? Or what are we contemplating in terms of increasing the WHRS share? If you could give the mix breakup.
Sir, right now we are at around 15%-18%, the waste heat recovery. The waste heat recovery plant at Sabguru is due for operation in the current quarter. With that it will inch up to 20%. But we, our portfolio is green, sir. We have hydro stations. Yeah, we have solar. The overall mix is to have around 25% at a group level. For every 5 years, we intend to have 500 basis points added up to the green portfolio for existing assets. Because waste heat recovery, the only possibility is at Guripal, but unfortunately we have a captive power plant there. We have to look at the commercial feasibility also. We would add up 500 basis points for each 5 years.
Eventually we intend to have 50% in our portfolio, the green power. That includes the waste heat recovery.
What is the cost per unit, sir? Power consumed, if you take the blended cost?
Yeah, it should be around INR 3.50, sir.
Right, sir. Sir, there were earlier some issues with Andhra players about these wheeling charges and this, Andhra Pradesh Power Generation Corporation. Are we in that template?
Our exposure into grid is very minimal, sir. We are self-sufficient, so.
Right, sir.
We're not connected with the grid, sir.
Connected with the grid, sir. Okay, sir. About the lead time, sir, what is our lead distance, sorry?
Lead distance today is at around 281 km for the last quarter, sir. Let me pull numbers. We are worse than last quarter. Going forward, it could even become lower, because with Jashpur and Jeerabad, Zerabad becoming operational, the lead distance is likely to come down even further, sir.
Okay. Sir, I have not completely gone through the presentation. Sir, I mean, how much is the clinker sale for this quarter and the 9 months, sir?
Sir, we don't sell clinker outside.
Okay. Right. Are we purchasing clinker and selling cement or to?
No, we don't. In this quarter we did not buy clinker nor we sold clinker.
Okay, sir. Lastly, about the sand part of the story, sir. What has actually happened that has resulted in the sand issues in the eastern, and where are we in midst of that, sir?
Sir, for us, we are not into Bihar market as we speak, so we did not get directly impacted. Usually sand becomes difficult during the monsoon time, because as you know, the rivers swell, so you cannot do sand mining. Coupled with that, some states sequentially have been what they call as rationalizing their mining related regulations. Whenever these regulations come, and unfortunately these are not happening all the states together, sir. They're strangely following a sequential mode. Whenever these regulations keep happening at each of the state for a very short term, the sand mining gets impacted, sir. I think that was the case even in Bihar.
No, sir. How were we affected, sir? I mean,
We did not get impacted because of sand mining, sir.
Okay. Because you articulated to the fact about sand mining.
That was a general market narration, sir.
Right, sir, how do we explain this power and fuel mix quarter-on-quarter increase in their expenses from INR 77 crore to INR 91 crore? What factors attribute to the coal prices currently or the pet coke.
Sir, I would encourage you to look at the presentation. I think it is.
Okay.
Sir, we have.
Okay. Right.
We mentioned the landed costs. Everything has been detailed, so we'll be accurate and correct. If you need any further clarification, we would be very happy to answer that.
Correct, sir. You told that we are contemplating a hike by tomorrow of INR 20-INR 25. That was, if I heard correctly.
Yeah. It's a season that we are getting in.
In which markets are we looking forward to?
Across the markets that we operate in South and Maharashtra.
In South and Maharashtra. Sir, you have told that we are in the first five league in all the markets where we operate.
Sir, when you look at Maharashtra, don't look at Maharashtra, sir. Each district that we operate is what you should look at. It's not that we are big in Tamil Nadu or Karnataka, but in each of the district that wherever we operate in each of the place, yeah, we are one among the five players.
I'll come in the queue.
Yeah. Thank you, Gavin.
Thank you so much.
I'll come in the queue.
Thanks, sir. Thanks a lot.
Thank you. We have the next question from Prateek Kumar. Please go ahead, Prateek.
Yeah. Good morning, sir. Couple of questions on your acquisitions. Now we have both of them online. How do we see logistics savings or a product mix savings flowing through to the profitability? Is this something which you would like to retain or, like, pass through in lower pricing for better volumes?
Yeah. Good morning, sir, Prateek. Generally, we are not market share player, sir. As I mentioned, this would not save on the existing costs, sir. It should overall reduce the overall kind of logistic cost because these plants are not in the footprint areas of where we operate. So the issue of saving from where we are, it doesn't arise. The overall optimization is likely to happen. That is, reduction is a possible thing. That would be my statement, though it's very subtle, but that's where it remains, Mr. Prateek.
I mean, you're not expected to save anything in terms of per unit cost?
Sir, it's going to reduce the overall cost, but see, if I'm entering certain freight costs today for each of these unit, these new assets were not going to reduce any of those burdens, sir, because the footprint areas are not common. Each of the overall contribution of each of them could reduce the distance. In turn it could reduce the freight on an overall kind of a number. That would be the case even with the product mix, sir. Right now, as you know, for the markets that we service have kind of 55%-60% OPC. These two new assets, both at Zerabad and Jashpur are heavily into the blending. The overall mix is going to change dramatically more towards the blended material.
Now, would that lead to the saving at a group level when you consolidate? Yes, it looks like that, but it's not at the expense of the current assets that replacement is happening, sir. These are all new additions, Prateek.
Okay. Your central plant, it's been now 4 months of it commissioning. So how is the utilizations there? The other plant is just started, so it would be low, I guess.
Yeah. Utilization is close to 20%, for the quarter that went by. We are hoping it to ramp up to 40% for the current quarter, sir.
40% of Q4?
No, no. For February and March, sir. January is already done. It is trending along with the seasonality, Mr. Prateek. Technically we have reached clinker to around 2,500 TPD. It has already been reached. So dispatches are there. Yeah, we are not putting heavy material into the market. We are very conscious about where we want to place, so we are not changing the volumes there also. It's a question of ramping up smoothly. That's what we expect for the next 2 months. Anywhere between 35%-40% capacity utilization is a possibility. Now, Jeerabad we just commissioned, sir. So I think Jeerabad dispatches should start getting in from middle of February. This month, February month as well as March is more for the ramp-up.
In the next year we are expecting around anywhere between 60%-65% capacity utilization for both these assets, for the coming year.
Now, with the Odisha unit, we'll be using more of slag also in the market. How are we positioned there, and how are the general slag pricing trend, given we have seen the reduction in demand in East? Is there any softening in slag price as well?
Sir, slag prices are fixed by the sellers, sir. We have not seen a substantial reduction in the slag prices. Yeah, they remained what it was for Q2 as well as Q3. We have not seen any major shift in the slag offtake at Jashpur. I think this quarter onwards we will be buying even more. Our stock up was primarily for the initial kind of a thing. Our aggressive procurement should start from this quarter. So we did not get volume discounts obviously because we did not pick up the volumes. We have not seen any major changes in the slag prices on a landed basis so far, Prateek, sir.
One last question on industry pricing. Now January is behind. Anything on like February, like, industry will be, like, sort of thinking of.
I cannot comment about the industry, Mr. Prateek. In our case, we have decided to increase INR 25 from tomorrow for the markets that we operate in South and Maharashtra.
Thanks, sir. These were my questions. Thank you.
Thank you.
Thank you. The next question is from Amit Murarka. Please go ahead, Amit.
Yeah, hi. Good morning, Sreekanth. The first question is on volume. While Q4 last year had a high base, is it right to say that on a last year basis, probably we'll still see maybe a flat or declining volumes?
You're talking of state or you are looking at our own volumes?
Your numbers. I'm looking at your numbers.
We have guided for a 3.6 million for the full year, sir. We might end up at a 3.5 million. As we speak, we did 2.5 million for the up to Q3, so we are hoping to do 1 million tons in this quarter, sir.
Yeah, but that will include contribution from new plants also, right? In that sense, from the existing plants, in that sense, probably we are looking at a decline YoY.
I would say a slight expansion.
Okay. Fine. also on the cost side, you mentioned that, you expect power and fuel costs to drop in Q4. How much will be the domestic coal sourcing in Q4 for you? Roughly what is the estimate?
70% of our fuel mix would be the domestic coal, Amit, and the other would be the domestic pet coke.
Got it. No imported coal in Q4 then?
Yeah. We have exhausted, sir. In fact, it got rolled over. We were hoping to use it in Q2 itself, but it got rolled over into the Q3. That did impact some amount of cost for us during that quarter vis-à-vis. We totally exhausted. It is going to be domestic and the domestic coal and domestic pet cokes.
Sure. Just lastly on incentives, do these plants in Jashpur and Dhor carry any incentives?
Yeah. Jashpur, yeah. We are going with the incentives what is there on paper, which are very low. Jeerabad definitely has incentives, sir.
I remember in the last quarter you mentioned that you're changing the policy to, or like booking incentives on a receipt basis, if I'm not wrong.
Yes, sir.
Yeah. Going ahead and like just on a receipt basis, do you expect something to be booked or you'll have to wait for
No, not in Q4, sir. I think going forward, from next year onwards for sure, because we have not done substantial volumes at Jeerabad or Jashpur, so we are not likely to receive anything from which got accumulated. That's the call. We wish it comes, but we are not expecting any majorly the accumulated incentives in Andhra and Telangana to roll into the books so soon. For the other two assets, we do expect from the coming year, not in the current year as well, sir.
Got it. Got it. These were my questions. Thank you.
Thank you.
Thank you. The next question is from Kashvi Dadiya. Please go ahead.
Yeah. Hi. Good morning, everyone. What is the effect on account of WHRS? Like, how does it help to reduce costs? How much savings per ton is done on account of WHRS?
Yeah, I think it's an open-ended question, Kashvi. Basic recovery typically contributes to the power generation to the source of electricity. If you are connected with either a CPP or a PNG, the basic recovery, except for the CapEx and a very, very small OpEx, the cost is very, very limited. Whatever you are generating from basic recovery, the electricity cost would be very, very low coming from this particular source vis-à-vis to either captive power plant or the grid. That would be an effective contribution to the top, bottom line. Now that's very, very generic question that you have had.
It's very, very specific to each of the size of the waste heat recovery and the capacity of the kiln line and, or the clinker line. So it's very specific to each of the asset, I would put it, Kashvi.
Okay. Thank you, sir.
Thank you.
Thank you. Anyone who has a question may please raise your hand and go ahead with your questions. Yes, Saket, you may go ahead with your questions.
Yeah. Thank you, sir. Sir, as we have seen in the presentation, the blended cement total proportion is now 50%. Sir, with the Jashpur unit being getting commissioned and ramped up, what are we eyeing, sir, in terms of the blended.
55% for the coming years.
55%. The Jashpur will be having the higher contribution because of the availability of.
Jashpur is 100% blended, sir.
100% blended. Okay. Sir, where will be this blended part improve, sir? Which other units this increase will come?
Jeerabad would be 90% blended and 10% OPC.
Okay.
Both the assets are heavily towards blended, Mr. Saket.
Okay, sir, where there is a higher of OPC? I mean, if we have these two units at 90% and 100%, there would be others that would be significantly lower.
Sir, our existing things as you have seen, the revenue to be OPC, sir. We don't expect a major shift in the existing operations. What we are expecting is a contribution coming from those two assets itself.
Okay. Sir, in that case, is it the market itself that they're in only?
Sir, what we should remember is, sir, we don't make the choice, sir. If you have the government part of your portfolio and you have some of the institutional buyers, and some of these south markets are more even the retail markets are more towards OPC, sir. It's market which actually guides us to do what we do, not other way around.
Okay.
If it was our choice, w e would have gone 100% retail, but that's not the case. We go with what market we want.
Okay. Sir, for the limestone availability, sir, what portion is it captive and what is the way forward for that? How much are we sourcing from market?
Sir, everything. Limestone is 100% captive in our case. We have fairly large resources, Mr. Saket Kapoor. I would encourage you to look at our IR report, which is available on the website, the Integrated Report.
Right, sir.
It's exhaustive and self-explanatory. Anything further, we will be very happy to address you.
Okay. Last two points will be that firstly, how have the cash flows looked for these 9 months? When we look at your cash balance, they have gone up vis-à-vis March. If you could explain, sir, what have been the utilization of cash for these 9 months, that would very helpful.
Sir, our cash balance is partly because we did borrow a structured debt instrument in anticipation for an acquisition, sir. That is to the tune of around INR 500 crore.
Okay, sir. That acquisition, when we will be hearing about it sooner, that is what you have informed us earlier.
Yes, sir.
That will be a domestic acquisition only, sir, in the current year?
We have always been a domestic player, sir.
Okay. What have been the CapEx for the 9 months? This INR 500 crore we should include then in the CapEx that should consummate by March?
No, sir. It is definitely not going to reflect in the current year. As I mentioned to you, we will specifically come back to you during the Q1 or Q2 in the coming year, sir.
Correct, sir. Sir, did we participated in the other NCLT cases, sir?
Sorry to in.
Which have got.
Sorry to interrupt, Saket.
Yeah, I'll come back to you.
Yeah, please.
No issue, sir. Thank you.
Thank you. Shravan, you may go ahead with your question.
Sir, two things just wanted to know, sir. You said that in the fourth quarter, the domestic coal share will be 70%. Did I hear it rightly?
Yes, sir. You are correct.
Okay. Currently, the pet coke, which is, I am looking at the number, it is 60%, it will then reduce significantly in the fourth quarter.
It's 30%. Yeah.
Okay. Second thing is, when we, sir, talk about you said that from tomorrow we are taking a INR 25 hike in South and Maharashtra, and Odisha, you already mentioned that in the mid of January, already INR 25 hike has happened. Any further hike in the East, are we looking at?
Yeah, Shravan, I think let us take one step at a time, sir. Yeah, we would want to see how this is shaping up and then talk about how it is likely to happen. Yeah, East we are just consolidating our position there. We would want to see how the market is shaping up and then take a call further.
I know.
There are these markets we are already there, so we would want to try to increase the cost and see how the market will shape up and then take the further call.
Okay. The hike is even in terms of the non-trade also the same hike would be applicable?
Our position is, we slowly started reducing our exposure to non-trade. We would prefer to increase the prices even in non-trade. Most of the time when you increase the price in non-trade, sir, if there are some others who are chasing it may not come by that fast. We are not worried about it. We would want to take increase both in trade and non-trade as far as we are concerned.
Okay. Post this 25 hike tomorrow, what would be the difference between trade and non-trade for us?
Sir, in our case, it's a case to case effect, sir. It has a very specific. There are some non-trade orders which are very close to the plant where we have taken very, very aggressively. Some we have to leave. It's a very specific case to case kind of an. There are government orders, yeah, which have been a contracted kind of a price, so it doesn't move. The realization gap what we have seen in the past tend to continue is what we believe. Yeah. The realization gap is around INR 250 in our case, sir, for petcoke. At a blended level, sir. See, there are some non-trade orders which have contributed higher than the trade, but most of them are lower than the trade, sir.
Oh, got it. Got it.
The difference is around INR 200-INR 250.
Okay. Yeah, what's the actual number for CapEx for till now, 9 months and likely for the fourth quarter? Maybe if you can help us for the next year, the CapEx number?
See, we have done the 3-year. What we have announced 3 years back, the CapEx cycle, we have already completed, sir. There is nothing new that is due in the current Q4. We completed the entire CapEx, as I mentioned to you, by Q3. Barring maybe very small, INR 4 crore-INR 5 crore kind of a thing, which is the regular maintenance CapEx that we do. That part is done. Kindly bear with us for the next 3 years cycle in terms of a much larger CapEx to be announced, which we will be announcing either in Q1 or Q2 in the coming year, sir.
Okay. Thank you and all the best, sir.
Thank you, sir.
Thank you. The next question is from [Manjirit] Agarwal. Please go ahead.
Hi, Mr. Reddy. Good morning. A couple of questions from my side. One is, can you give us some flavor of some of the government projects or non-trade institutional demand? How are those shaping up? Are those projects in full flow or are you seeing some kind of slowdown in those sectors?
Yeah. Now our exposure, as I mentioned, is limited, Mr. [Manjirit], so I can only comment about where we are servicing. Yeah, the flow of the projects were on. I mean, nothing much got disturbed except for the weather-wise related issue. Now, very specifically to the government, sir, I did mention even during the last quarter call. Yeah, government outstanding actually increased. Though the order flow was there, but we curtailed the orders because the outstandings were going up. They did normalize quite a bit during the end of last quarter itself and even in the current quarter. For the weather-wise, we could have done something more. Yeah, we expect those things to come back to normal.
There is not a big shift in what we have seen in the trend lines over last year or the last few quarters. There has not been any new major announcements that have happened. The projects which were ongoing continue to be at the same pace, but for the weather-related issues is what we see, sir. Yeah, this again is where we have exposure, sir. We generally don't try beyond what we generally do. That's what I would like to limit to these projects. Yeah, we have not seen any slowdown. Except for the weather-wise, we could not service them. But for some of the payment related issues, we could not service for the most part of Q2 and Q3.
We expect them to normalize now in the current, which have normalized now is what I would say. Even in January and some part of December we started supplying to government again.
Sure. Thank you. My second question is on WHRS. After the current round of expansion, how much more scope do we have to expand on WHRS?
Sir, we have four clinker lines, sir. Two of them are with waste heat recovery. One is due for ramp up. One is already existing. The other two, one at Gudipadu, and the old line of Mattampalli, they don't have the waste heat recovery. Now our investment into waste heat recovery, we would want to take a call judiciously because there is a large captive power plant in Gudipadu. Once we go for expansion in Gudipadu, that's when probably we would want to invest into waste heat recovery, both for expansion as well as the existing one. Yeah. Kiln one at Mattampalli, as you know, with the Jashpur wrapping up, we do expect kiln one also to start operating at a much higher capacity utilization.
Probably in the coming year, we would want to take a call on the investment in the waste heat recovery on that particular asset, sir.
On a ballpark, what would be our CapEx per megawatt for a waste heat? Is it more like INR 8 crore-INR 10 crore or higher numbers?
We have not seen anything lower than INR 12 crore per MW.
INR 12 crore. Is it fair to assume somewhere around 3.5-4.5 years kind of payback or is it too generalization you think?
No, I think it is too generalization, sir. It again depends on what is the source of power you have and which state you have. Some of the states are rich in device for the power, some are not. Our experience is less than 3 years looks like a possibility, sir.
Looks like a possibility? Okay.
Yes.
That's good to know. Thank you so much.
Thank you.
Thank you, sir. The next question is from Dharmesh Shah. Please go ahead.
Yeah. Thank you, sir. Sir, just one question. Sir, can we guide on the profitability guidance on the recently commissioned capacities? Is it possible, sir?
Dharmesh, I'm sure you'll bear with me. We are just starting up. Market is in a fluid situation. Kindly bear with us. We will revert to you as soon as things stabilize.
Sure, sir. Thanks. Thanks.
Thank you. Anyone who has a question may please raise their hand and go ahead with the question. Rajesh Singh, please go ahead with your question.
Sir, just one question on debt front. What is your debt repayment schedule for next 2 years, barring this INR 500 crore on debt, sponsored debt instrument which you have raised?
Yeah. Around INR 200 crore per year is the principal payout, sir, in that case for...
For this year or next year?
Yeah, next year, sir.
Okay. Yeah. Thank you.
Thank you. Sir, a couple of questions from my side. Sir, can you explain the demand scenario in East? Like last 2 months were pretty rough, I think December onwards. Are we seeing some improvement there? And what is your outlook for Q4 and Q1?
Yeah. Manish, we have not seen the problem with the demand. As I mentioned to you, it is purely because of the weather-related issues that the demand could not be serviced. Yeah, in East the problem is with supply. I think too many people are trying to think that there is a lot of supply vis-à-vis to shrinking of demand. We have not seen shrinking of demand, sir. But for the weather-related issues and some events that have happened, like availability of sand in Bihar and manpower availability, we have not seen fundamentally any structural change in the demand. It remains robust. That we have not seen. We do expect East to grow consistently about 10% for next couple of years. So we don't see that as a challenge at all.
Yeah, December month was a strong month for us even in East. January also our flow into East did not get disturbed. Yeah, the flow was very, very strong. The East, the only struggle was with the pricing. Yeah, fortunately, during the middle of January there was a good correction, but that is not enough. Some more is needed. East, the issue is only on the pricing front, sir. Nothing to do with the demand. Demand looks good and it looks strong.
Okay. Thank you. Thank you, sir. Anyone who has a question may please go ahead. Sir, as there are no further questions, we would now like to hand over the call to you, sir, for your closing comments.
Yeah. Thank you. Thank you for taking your time out and joining on the call. Yeah, I hope you got all the answers that you were looking for. Please feel free to connect with our team at Sagar or at 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 again. Stay safe. Thank you. Thank you, Manish. Thank you.
Thank you so much. We will now conclude this call. Thank you everyone.