Q1 21/22

Jul 29, 2021

Good afternoon, ladies and gentlemen. We will welcome you all to the 1Q FY 'twenty two results conference call of Sagar Simmons Limited. We have with us from the management, Mr. Srikant Reddy, joint managing director Mr. K Prasad, CFO Mr. Rajesh Singh, chief marketing officer and Mr. Saundra Rajan, the company secretary. We will start today's session by with the opening remarks from the management, and this will be followed by a q and a session. I request all the participants to be on mute only mode during the course of the call. I would now like to hand over the call to mister Gavin Disa of CDR for his opening remarks. Over to you, Gavin. Thank you, Mahesh, and welcome all to the Sagasmin's q one FY twenty two earnings call. As Maurice mentioned, we have with us mister Sheikh Raj Reddy, the joint managing director, mister Prasadh, CFO, and mister Rajesh Singh, the COO chief marketing officer besides mister Asanda Rajan, the company's secretary. 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 phone call invite sent to you earlier. We trust you've seen the communication and the presentation on the results. I would now like to hand over to mister Reddy to make his opening remarks. Over to you, Shrikanth. Thank you, Gavin. Good afternoon, everyone, and welcome to Sagar Siemens earning earnings call for the quarter ended 06/30/2021. Let me begin the discussion with the brief overview of the market in terms of the demand and pricing trends, post which I will move on to the server specific developments. Volumes during the quarter were understandably low given the impact of the second wave of pandemic. The utilizations levels along with the restrictions on the material movement resulted in lower sales during the quarter. However, the demand and volume started improving by the end of the quarter following the relaxation of the restrictions in light of the ebbing of the second wave. Despite lower volumes, realizations though remained largely steady, in turn helping to offset the impact of the lower volumes. In terms of demand, starting with South, while the retail demand was largely benign, the demand from real estate players and the government projects, especially in Hyderabad, remained steady. In terms of West as well, pickup in demand from non trade segment negated the impact of the lower retail sales. Demand in Eastern market as well improved following the easing of the restructure restrictions. In terms of pricing, as as I said, overall trend in realizations were was positive. While Southern and Eastern markets witnessed a steady pickup in realization, pricing environment in Western market was largely steady during the quarter. One of the key reasons behind the improved realization trend was the persistent increase in the input material prices, which in effect warranted a price hike. Going ahead, we remain positive on the business and believe the steady demand from housing, industrial and infrastructure provides a strong visibility both in terms of the demand and well also the pricing trajectory. Moving on to Sagar specific developments, we are pleased with our performance during the quarter, especially when one considers the challenge one had to operate in the in given the second wave. While the large part of the quarter was disrupted owing to the second wave, we did see things improving by the end of the quarter, following the relax relaxation of restrictions, which in turn helped us deliver steady growth in our revenues and profitability. Volumes were understandably lower during the quarter. However, supportive pricing environment helped helped us to offset the impact of the lower volumes. EBITDA for the quarter stood at Rs. 107 crore, higher by 23%. However, margins declined by 600 basis points owing to the higher input prices. As indicated in the previous call, the prices of the most of the input material, namely the thermal fuels, coal, pet coke, diesel had been trending upwards over past few months, in turn impacting the margins. Furthermore, lower capacity utilizations during the quarter as well as contributed to the margin compression. Irrespective of the price movements of the key input material, we remain focused towards improving the efficiencies and rationalizing our expenditure. Average fuel cost today is rupees thousand 138 per ton as against rupees 802 per ton reported during q one f y twenty one. Increasing fuel prices have resulted in the higher cost of fuel. Trade cost for the quarters stood at rupees 762 per ton as against rupees 704 per ton during the quarter q one f y twenty one. Profit after tax for the quarter stood at rupees 50 crores as against a profit of rupees 36 crore reported during q one f y twenty one. From an operational point of view, Matampeli plant operated at 56% utilization level, while Gurupadu and Bayivaram plants operated at 7859% respectively during the quarter. As far as the key balance sheet items are concerned, the gross debt as of June 30 stood at rupees 844 crore, out of which rupees 731 crore is long term debt, and the remaining constitutes the working capital. The net worth of the company on a consolidated basis as on 06/30/2021 stood at rupees 1,308 crore. Debt equity ratio stands at point five six is to one. Cash and bank balances were at rupees hundred and 72 crore as on 06/30/2021. That concludes my opening remark. We would now be glad to take any questions that you may have. Thank you again. Thank you, sir. We will now begin the question and answer session. Anyone who wants to ask a question may raise their hands on the Zoom platform. We'll wait for a moment. The first question is from the line of Shavanshra. Please go ahead. Sir, first of all, congratulations on good set of numbers. Couple of things. First is if can elaborate more in terms of the pricing first, if possible in the state wise, if it Tamil Nadu, Karnataka, how it was? And now in July, are the prices versus the average for the quarter, quarter, is this steady or have you started seeing a decline? So that is first, and then I will have a second question. Yeah. Thank you, Shivan. See, let me address the first question. From q 4 exit, Hyderabad was at $3.50. It steadily increased to almost three sixty in April, and by May, it reached to three seventy. June, of course, there is a small compression, primarily owing to the monsoon and and seasonality. Yeah. Yeah. It it it is at $3.65. I'm talking of the retail price. Now Bangalore, the exit price for the q four was around $3.50. Yeah. It slowly increased to $3.70 and $3.85. Yeah. Same is the case we see for our brand at $3.80 in Bangalore. Yeah. Chennai, again, we we we look at Tamil Nadu in two parts. That is the North North Tamil Nadu and South Tamil Nadu. Yeah. The Tamil Chennai, yeah, which is in the North Tamil Nadu, the exit price during q four was $3.75. Yeah. It increased to $3.85, 3 90 5. Yeah. Right now, our trading in by by June to to July is around $3.90 prices. Okay. Okay. Secondly, in terms of the two things, the volume, what we last time guided in terms of the 3,600,000 ton. And, Sadh guru, in the presentation, we mentioned it is commissioned. So first, a clarification. When the actual commercial production will be starting? And is there any upgrade in term even if the marginal upgrade in the volume guidance that we are looking at? And, also, secondly, on on the gross date, we were looking at peak date of 800 crore, but now it marginally is is at higher rate, 44 crore. The PO $2.38 crore has increased. So how do we see the gross rate now? Yeah. Thank you, mister Shivan. See, our guidance for the current year stays at 3,600,000, with 3,200,000 coming from the existing plants. And a point 4,000,000 ton is what we have factored from both Sadhguru as well as Rajput. Yeah. Both the plants are in advanced stage of commissioning. We we we would be commissioning before end of this September. And most of the work, the cement the the packing side of the sub Sadhguru is already commissioned close to a month back. So we we are we are in the trial stage. By August 15, we are hoping to start the first dispatch, the first commercial invoice to start from August 15. But the full commercial production, as mentioned, would be for the September for both Rajput as well as Sadhguru. Going specifically back to the gross debt scenario, as mentioned, there has been an overrun for for the Sadhguru project for various reasons. We see the gross debt close to around $8.50 to $8.75 crores, but that includes the working capital also. Yeah. The net debt should be close to around 700 crores, at least for for for the short period of time. And we we see that getting lower in the coming q one of next year. I think it should start coming down rapidly because there would be quite a few payouts for the existing debts, mister Sharma. Sir, lastly, on the power and fuel, I understand it what we last time are told, I think, slightly higher than what we were expecting per turn on power and fuel. So how do we now see when we will continue to maintain two two months of two quarters of inventory? And what the change in terms of the fuel mix of we were looking at, once again, starting The US coal and the pet coke also. So now what's the fuel mix, and how do we see from 11 hundred 30 8? Will it remain at this level, or can we see further INR $4.50 increase per ton for at least next two quarters? Yeah. No. Shivan, as as as told before, our hedging is for the two quarters. We we know for sure from from exit of q one to to the entire q two, we are expecting an increase of almost hundred rupees on the account of power and fuel purely because the high cost fuel is being consumed. For for Matapeli, of course, it's a Fedcorp plus domestic coal combination. We would be using it for the current quarter. So for the current quarter, we we see a increase of close to a hundred rupees incremental cost increase on the account of power and fuel. But that means we look from a context that there is some amount of product mix changes. As you would have seen from q four to q one, the blended cement ratio has gone up. So that should also help us offset some amount of it. Our bigger worry is on the diesel price, though it looks like it has stabilized. As long as it remains here, we don't see major kind of a cost changes for from q one to the q two. But internally, we think that diesel price might move slightly higher, which would in turn start putting pressure on some amount of input material cost also because in order to freight also, there are some corrections that are being made to the freight. All said and done, internally, we have factored hundred and 50 rupees both on account of fuel, freight, and the other input material cost to move up from q one to q '2, Shivan. Sir, last just a clarification in the presentation, second last page, key enablers. There is a significant decline in terms of the limestone reserves for Metapoli from 800,000,000 ton to 404. Is it a a printing mistake or anything to be clarified? Yeah. Mister Shivan, this is purely on account of MMRD Act as as you would know. We we we were sitting on what we call as the mining memo, though it is subjudice now. But in our case, cautiously, we have put that kind of a reserve outside the thing because as you know, the MMRDA act and I'll most of the mining leases which are not executed. You know, the mining lease is not executed. Yeah. Most of that was canceled. But in our case, we actually crossed beyond that. The local government did not end up executing the mining memo for more than ten years. So we we it's it's a legal issue, so we would not like to comment. So as a as a cautious kind of a thing, we have reduced that much of limestone resources from the earlier statement, mister Shah. Okay. Thank you, sir, and all the best. Thank you. Thank you. The next question is from the line of Manghesh Parang. Please go ahead. Good afternoon, sir, and congrats on good set of numbers and the amazing annual report that you published. Sir, I have couple of questions. First one is on the demand side. So if you can touch base on how much has been the FY '21 demand in the stage that you operate in, and what is the outlook for '22 in terms of growth provided that no further setbacks are there? That's the first question. And the second one is, sir, you mentioned that the because of the cost push, you've been you have increased the prices and which is the which is what we're hearing from most of the management. But it has actually resulted in increased margins. So is it that you expect that the cost will actually catch up and that's the reason in the ongoing quarters, and that's why the price hike has been taken already to cover that. So do you see margin contraction here on because of the cost that we have seen? Yeah. Good afternoon, mister Gundesh. Yeah. Now let me first address yeah. Our annual report is an integrated report, sir. It is the second integrated report that we have published. Thank you that and appreciate that you have liked it. The the second part of the question was regarding the demand. The sales that we have operated did contract by 15% from previous year to last year. Yeah. Q1, as you know, is a mixed bag with most of the Q1 was under strict lockdown in most of the markets that we operate. So we are not keeping any guidance at this point, giving any guidance at this point of time. Yeah. Because COVID third wave is impending at least. Mhmm. We wish and hope that the impact of it is very, very negligible. Given that scenario, our internal assessment is that it could still grow by 2% last year. Because last year, it said they grew by 15% a year before. So but internally, for our own estimations, as as indicated earlier, yeah, we need close to 3,150,000 from the current operations that we have. So we are only going up to 3,200,000. We have we did not factor much internally. Not that we we we are anticipating COVID three to be very severe, but some amount of supply also is there in the market, and there is a ramp up. And if demand remains the way it is, we have been cautiously trying to to estimate the similar kind of a demand for ourselves like last year for the markets that we saw. Now now the other part of the question was regarding the increased price added to the margin. I I do not think the increased price added to the margin, sir. If you look at year on year kind of a margin, there was a compression. It is true that quarter on quarter, there is optically, it looks like there is a margin increase, but it is only optics, sir. The the reality is that input cost is going up phenomenally high. Fortunately, the market supported us to pass on the incremental kind of a cost. We wish and hope similar kind of a trends continue. Issue is not that it added up to the margin, sir. That is not true that it did not add up to the margin, sir. It only OPEX make you do think that it is added. It's only from q four to q one, you you think that margin got increased. But if you look from a year on year number, it actually contracted by almost 600 basis points, first of all. Right. Right. And, sir, just one more if I can squeeze in. Do you think that with the, you know, hold of capacity coming in in the Eastern Region and large part of it also clinker back, it's heading like the South way in terms of the utilization in East. Do you foresee that, or do you think that demand is gonna take care of the increased supply that is coming in? Yeah. Mangesh, as as mentioned even earlier, our outlook for East is that East consistently has been growing for more than two decades or one and a half decade consistently on 10% year on year. So we strongly think that East would East growth would continue. Yeah. It's true that a lot of supply is due, but most of it is not backed by clinker, sir. Again, yeah, only some portion of it is backed by the clinker. But all said and done, yeah, supply is likely to get increased. Our own internal assessment is it should match up with the demand increase. But for ourselves, since we are for certain parts parts of yeast, are going for the new. Internally, we did factor some amount of lower capacity inflation for the SM that we are coming up with. But we I I think it's only going to be a short term kind of a phenomenon. But over next couple of quarters or maybe a year next year same time or few quarters thereon, everything that the demand supply equation still would be skewed more towards demand rather than supply, especially in the Eastern side, St. Kangesh. Thanks a lot, sir. Thanks a lot, and congrats once again. Thank you. Thank you. The next question is from the line of Gaurav Girmuwai. Please go ahead. Hello, sir. Thank you for the opportunity, and congratulations on good cost control. Sir, I have two questions. One, you mentioned that we expect INR 100 impact from higher fuel cost going forward. So that this hundred rupees factors in the price that you locked in earlier, or is that from spot versus spot? It is from our cost, mister Durov. Spot looks scary because if you if you look at the imported coal or pet coke, yeah, the sea freight is actually moving extremely fast. So so we this is purely on the account of the price that is logged in by us. Any assessment on what the number will be versus what I know the number will be quite scary, but any assessment on what the gap will be versus our one q average consumption? You're talking about the current spot price Yeah. Yeah. Versus the current spot, please. That is up by almost 15 to 20%, mister Gaurav. Fair enough, sir. Second question, can you throw some light on what this inventory adjustment is, sir? Like, in your consolidated number, you have INR 16 crores of stock adjustment. What does that stem from? That's the stock that you produce, but we're not able to sell at the end of the month, or is that mark to market of some commodity that you have? No, sir. It is very simple straightforward. The closing stocks to the incremental stocks that get added up is actually adjusted. Okay. Fair enough. Thank you. Thank you. The next question is from the line of Pitesh Shik. Please go ahead. Yes, sir. Thanks for the opportunity, and congrats on the great set of results. Firstly, can you repeat the utilization for each of the plan you highlighted in the initial part of the commentary? Yeah. We were close to around 5056% at Matanpali, seventy eight percent at Gulpado, and 59% for our WiSAG training stations. Yes. Okay. One. Yeah. Yeah. Yeah. Thanks. And my question on demand. So what were the very trend you noticed in q one across the states that you cater to? For sure, this does indicate that for you, Andhra market did quite well because from the competitors' results, what we have seen till now, Tamil Nadu and Kerala were not as good. So can you highlight the trend across the states you saw in Q1? Yeah. Mister Pratish, I think irrespective of the the other cement companies, I think it's a fact that some states in South went for a very deep kind of restrictive kind of a thing. It again depends on what kind of exposure each of us have to those states actually is reflecting on the current supply that we have done to those markets during q one. If you look at the the today's press, Kerala is going for very strict weekend lockdown because they they are seeing some spike of COVID. So our exposure to Telangana and Andhra is close to around 55 to 60% of our volumes. Both these states were relatively under less pressure because they were less restrictive compared to Tamil Nadu, Kerala, Karnataka. So that probably is making you think that we did more or our volumes are higher. It's purely because of the each state's restrictions that were imposed during the q ones. But just in terms of what would be underperformance be for for the states like Tamil and Kerala versus Sir, our exposure is limited. Sir, our exposure is limited, so it did get impacted. You if you look at q q four of our volumes was more than a million, sir. That itself shanked by 15%. So my assumption is that the other states probably had that kind of an impact. But please be mindful of the fact that our exposure to Kerala is very, very minimal. So that should not be translated in any which way, the current statement that I'm making. For somebody who has a bigger exposure into Kerala, I think the restrictions were lot more severe there. So probably the that kind of a supply probably would have not happened for people. In our case, we don't have. So in our case, it was 15% lower. For some, it was more than 30%. So so that's how it is, mister Pradish. And one last one on the pricing. So we have already seen prices reach at a material high, obviously, given the cost pressures. So for now, we are seeing hundred and 50 rupees per ton further increment in the cost. And then looking at this cost spot prices, there's another hundred $1.50 per ton pressure if if this they hold on to this level. So is the market ready to accept for the hike in prices? Yeah. Mister Priti, I think see, I think what we should understand is when we talk of multi multiyear high, sir, it is not true. Yeah. If you make an inflationary adjustment, I don't think we are anywhere close to the prices where they need to be. Some of us, margins might make you think that the prices have reached to very high, but it's primarily on account of cost management and and the effort that has gone in in terms of the CapEx and all to manage that, sir. But prices per se, if you make the inflationary adjustments, they are not anywhere close to where they need to be or they should be. But the reality is here. So so so far, we were fortunate that market did absorb, though there was some amount of compression on the margin. We wish and hope that the margin compression would go away. And whatever is the additional cost that is likely to go up, we we should hope to pass it on to the markets. Will it take you something which you would want to wait and watch? But we are more than hopeful that at least a portion of it market should absorb. I I don't think cement is is a single commodity, which is into the similar kind of a thing, sir. It is across the commodities. And in fact, the cement is still at the lower end in terms of the inflationary price pass through into the market. So if you look at steel, if you look at any product, copper, aluminum, I mean, most of the commodities have gone up much, much ahead of curve. Cement is still in the early part of that curve is what we think because this product is a bulk product. It's such a low cost product, and the inflation inflationary impact on cement is much higher compared to any other bulk commodity or rather heavy commodities like steel and all. Because for us, it's a transportation is a very key cost item, and you know the inflation impact on that. The diesel price is just going up one way. We are not even tracking how much percentage it has gone up year on year. Though it remained steady for a couple of years back, but that's not the case, sir. I think it's an everyday it is going up. So so we still see still see some gap where the market should absorb the incremental cost that that is happening, mister Pradesh. That's what we think. But but from what we think to what we want to what market will behave is something which which is staged. But last quarter was was comfortable from the past due. So we hope and wish similar thing is should happen and likely to happen in the coming few quarters. And lastly, when would your next set of fuel ordering will happen? Like, already It's it's a continuous process, sir. See, it's it's we we we we we are doing quite a bit of hedge. Yeah. We just paused because the price is moving up quite sharply, but alternate fuel arrangement is being made. Like, we we are increasing the higher domestic coal consumption now. So it's a continuous process. We though we have paused for some time on the imported coal and the pet coke, but but we need to make the decision quickly so that the hedging formula or the principle that we follow comes back to normal. Yeah. We just passed for fifteen days to twenty days. So but we I think we should be comfortably making it over. The hope was that some amount of sanity would come in terms of the price. But, unfortunately, the sea freight is just moving one way up. But, fortunately, the domestic coal in our case still is holding up. So we are looking at a possibility of increasing the domestic coal consumption going forward. But then you have stopped reporting this Fedco ten coal mix. You were used to you report two quarters back. And it yeah. I I I don't think it was a deliberate attempt. It was miniscule precokes, sir. It is % imported coal. Since it was just a fraction or close to zero, can you be happy sharing it, mister Prashant? Yeah. I'll take it offline. It was all it was all imported coal from the last quarter. Sure. Sure. Thank you. Thanks for answering my question, Krishnaji, and all the best. Thank you. The next question is from Ritesh Shah. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity. Sir, first of all, congratulations on integrated report. Honestly, it's setting a new benchmark on disclosures, a big positive overall for the industry as well. Sir, I have two questions. We have indicated our expansion plans to 10 milliTons by 02/00/2025. Any sense on how should one look at the geographical footprint that you are looking at going forward? And do we have any aspiration to have, say, percentage of our capacity or sales, which will be x, south, and east if one has to look at, say, three years, five years out? Yeah. Good afternoon, mister Ritesh. Thank you. Sincerely appreciate your appreciation for the integrated report. Yeah. That that I think our journey into the ESG reporting has been quite long. Thanks to the IFC participation in us for more than a decade. Yeah. The that's an in house work. The team did work hard for the disclosure side. We will be very happy to improve for any feedback that you might have for the further improvement. Now going back to the we we did state our ambition to be a 10,000,000 company by 2025 and every ten years to double thereon. Now we are color blind from a perspective of green, brown, organic, inorganic, or region, it it should not matter. At this point of time, we are looking at we are not looking at Northeast, but any other region, say, which offers us for the growth and the cardinal rules that we follow, yeah, we we would we would end up doing in those regions. Yeah. We we we do not have any policy to to have a regional kind of a presence, sir. I think it is very asset driven. Yeah. For each of the asset, we are very conscious of the moment of the material not going beyond certain distance. So it's asset specific and region specific, but we are not ours to be in any region at any given point of time. The only thing is that the Northeast is something which we we are not looking at at this point of time. We are we are regional and color agnostic is what I would like to point, mister Vitesh. Sure, sir. Sir, any color on the incentives of the expansion plans which are in in the plans which will get commissioned and the incremental expansion plans that we have. Any any color on the incentive trajectory? Have you already negotiated with the state governments? How should one look at this variable? Sir, I think for our size, the issue of negotiation doesn't arise. It's we stated the incentive plan is what we have followed. Madhya Pradesh, are very clear. Madhya Pradesh state, we did sign the agreement which would which would kick in as soon as the COD is done. But as indicated, it's a hundred and 50 crore incentive, which is capped to the total investments that we have done for that particular asset to be paid over seven years. Seven years would be compensated. The and there are some small incentives in form of the electricity duty exemption. These are the in in Orissa, the the incentive is in the transit. So the levy commission, yeah, that is when we need to go and apply, and whatever is applicable, incentives at that point of time would be given out to us. The incentive as given by the state is still under preparation. So by, I think, October, that is when we will be reaching out. So we will have lot more clarity for the incentives in all this asset. Perfect. And, sir, just last one question. Any scope or plans to increase stake in Sadhguru? Do we have the optionality to or when will we consider this? At this point of time, sir, from a clinkerization perspective, I don't think we we see a big scope because the limestone more or less in the neighborhood is between between us and Algertec, so we don't see anything new happening. Of course, there are few mines which are still open. But given that scenario, we don't see a big in a short to medium term, we don't see a big opportunity for us to go in Madhya Pradesh on the clinker side. Though we do see some opportunity for us to go for incremental cement kind of a thing, it is purely based on the blending, sir. So that gives a point two five incremental kind of a sub supply incremental supply possibility. Right now, we have given it as a point nine nine million ton capacity. There is a possibility that we might increase cement capacity going forward. It's purely based on the product mix. We we see that happening. But that, we don't see it happening over the next one year. Probably beyond that, once we stabilize the operations, we see a possibility on incremental capacity on the cement side at Madhya Pradesh. And Orissa, yeah, the the layout permits us to add up double up, but that I think we will take a call once we once we reach to a certain distance in in this particular asset. Though the other assets that we have at Matampelli and Gurupadu offer huge opportunity for us to double, but we have always been more than double. We have always looked at market wise kind of a scenario. So we don't see that happening for next two years for sure. But we do look at options that are available in the neighborhood. If any of them come at a reasonable price, yeah, we don't mind looking at them very, very closely, mister Ritesh, from an inorganic perspective. Okay. Sure, sir. Thank you so much for the answers. Thank you. Thank you. The next question is from Rajesh Raviv. Please go ahead. Yeah. Hi, sir. Good afternoon, and congratulations My question pertaining to you on the two CapEx. How much has been spent in this q one toward those two expansions? 70. Yeah. $75.75 crores would be the right number, mister Rajesh. But what you have to mindful is there has been a slowdown, as you know, because of the COVID second wave. Yeah. Another hundred and crores needs to be spent, yeah, which is which will happen in the current quarter itself. So because both the projects are due for commissioning before September. Okay. Okay. So $70.75 crores spent in Q1 and the pending $1.50 crore will all get completed in September. Right? Yes, sir. Okay. And secondly, what sort of impact the new policy would have on your employee cost? No. Most of it is already in the. Yep. Mister Rajesh, can you repeat the question, sir? Sorry. Sir, on the employee cost number, because of these fee expenses, what sort of impact it will have? Yeah. I think, sir, it's a usual practice for us is to take eight to 10% incremental hike every year. I think q one q one is not yet factored that kind of a thing. I I think going forward, that is the additionality. But what you have to be mindful is that q one, the capacity utilization was way below. So the spread was not very high. Going forward, I think that spread should give us the similar kind of a number, though there could be absolute number increase. But but per ton number probably could be something very, very similar, mister. Okay. No. I was asking for the new two two plans, Are the employee expenses already part of the Yes, sir. I think the recruitment recruitment is already done for all the plans. It is for commissioning. So so but but it will be capitalized pre commissioning and post commissioning, it'll start getting reported in. Yeah. So broadly, how much of that number will get capitalized, sir, in? Sir, I think it is too soon for us to comment. I think a couple of quarters later, we should be in a much better situation to report. Okay. Okay. The the reason is the absolute numbers we do have, but specific per ton, I think it will take some time. Yeah. Sure. Okay. And on the demand front, c q one is also a steep quarter in terms of extended lockdown and all. So, you know, if we had to look at from a perspective of a normal quarter, so what sort of volume loss would have been there? You know, I'm just trying to understand how is September 14. But but, mister Rajesh, I think I I I I think given the pandemic impact and likely kind of still, it is not out, sir. So I would not like to keep my neck out for any soothing when it comes to demand. Yeah. There is nothing called normal, sir. So we have we have seen many abnormal times volumes did move. And in normal times, well, volume shrank. So it would be a challenge for us. As stated earlier, we are not adding any specific guidelines for market in general. Yeah. Our internal assessment, as I told you, we are trying to factor in similar kind of a number what we did last year for the assets that are in operation already. Okay. So last year, September quarter numbers is what you're looking at. That is that much can be achieved in September. Yeah. But but the carrier there is, again, we need to be watchful of how the impact is going to be, sir. So Sure. Sure. That is, like, the the other impact, it may go lower, but at least that much is achievable if things remain where they are. So I I we are giving only annual outlook, mister Harish. We have quarterly outlook. So Oh, so Yeah. Yeah. Please please be mindful of that. Sure. Sure. Sure. And, firstly, what we talked about, I'll come back in queue. Thank you, sir. Thank you. Thank you. The next question is from Amit Moraka. Please go ahead. Hi. Good afternoon, Sheikh and everyone. So a few questions. Firstly, on the debt. So I understand that the debt has gone up in this quarter versus March. So one, I wanted to understand the reasons. I believe one would be inventory, but is there any other reason for the debt expansion? Debt expansion? See, I think it's we're talking about inventory cost, sir, or is the debt debt expansion is on account of the money that we are spending for the projects. No. So but we have generated good cash flows of, like, I mean, hundred crores of EBITDA this quarter. So from that point of view, like, the debt has still talking about the cash flows. So I I as mentioned earlier, sir, the the inventory pile up itself is to tune off around the additional 37 course. So so it's all in the inventory, sir. So the the cash that got generated, most of it is also into the the Okay. Yeah. Inventory and as well as receivables. If you if you just for the clarity, yeah, q four is usually the time when most of the dealers would want to give away the entire this thing because of the annual incentives that they would have. Q one onwards, slightly, the receivable days go up. So it's it's a usual practice. So it's a combination of inventory. Yes. The total quantum of receivables would have pushed some amount of overall cash flows being slightly lower, mister Amit. Okay. So what will be the peak debt number now? Like, earlier, remember you guided for 800 crores. So Yeah. I think it is $8.50 is what we are looking at, sir. This includes the working capital provision for both the new assets, and we should be anywhere between $8.50 to $8.75. But that number probably would be for a very short period of time because we do have payout for the existing debt. So so we should we should pick out at 850 to $8.75 on a gross side. Sure. And off late, like, we have seen couple of announcements being made even in South, like, Dhania made an announcement. And so what is your view on the way of capacity expansion? Like, as we see cash flows actually improving for the industry, better margins we are seeing, like, are you seeing next wave of capacity additions happening in the space? Yeah. Mister Amit, they never stop, sir. They pause. So let us keep it in mind. So are they going to come? Yeah. I think at this point of time, it will be too soon for me to comment much. Yeah. Because the announcements are just announced, so we would want to review before taking any comments on that. K. Okay. And, also, like, on the m and a side, like, you see too many I mean, many opportunities now left in the space because I believe all the larger assets have been taken out. So what is your outlook or view on the m and a potential in the sector now? Well, I think m and a potential always exists. There we we have seen Ambuja and ACC now. So so merge in a sense, they became part of the same parent. So nothing can be ruled out. Yeah. There are a lot of assets in this space. So we don't know when who would want to make a sale or who would want to buy. So opportunities do exist. Fortunately, even the new IBC regime also prompted some of those assets which actually were closed for either, you know, for want of working capital or because of any of that. Here, we see some of the revivals keep happening in those market space. So it's a it's a work in progress, sir. So opportunities do keep coming. Will it happen? It's something which we have to be mindful of. Usually, when the market is euphoric about the margins and the cash flows, we see a lot of discussions about them. And when market is under some stress and especially the market prices are under stress, yeah, people don't talk. But but it's always work in progress, mister Amit. Okay. Okay. Sure. Understood. And just on the power and fuel side, if I understood you correct, you said that the spot prices are basically 10 to 15% above the one q up for the numbers that I'm not keeping my neck on. I I think even 20% is not a bad number, miss Amit. But it's true what you're looking at. See, it's exactly what fuel you are looking at It would but for sure, the overall 15% is the overall increase in the thermal fuel, sir, both in the and the So so I remember in the earlier calls, you mentioned that you you switched to US coal now. I mean, now so from that point, back to The US. We are back to pet coke because US coal is exhausted, and the price of it also has moved Yeah. Yeah. Coke. So we moved back to pet coke, and we are also looking at a possible blend of domestic coal with the pet coke. Okay. Okay. But isn't pet coke on a calorific value basis still higher compared to, let's say, some of the coal grades? Yeah. This I mean, if you if you look at our presentation, we did indicate on a per k cal. Yeah. Yeah. I saw that. Yes. Yeah. Yeah. So so yeah. It's it's per cookie is higher. But what it offers is if you can blend with domestic coal because the when we talk of domestic coal, in our case, it is Sigirimi. The quality of our domestic coal is reasonably lower. So blend with Metco could overall reduce the per k cal kind of a cost for us. So that's what we are planning to do now for our. Okay. Okay. Understood. Thank you. Best of luck. Thanks. Thank you. Thank you. The next question is from Sanjay Nandi. Please go ahead. Sanjay Nandi, you may please go ahead. Yeah. So thank you for the opportunity, sir. Sir, what would be the debt repayment for this current fiscal? Debt less I mean, principal less interest put together would be hundred and 85 crores, sir. $1.85 crores. Okay. And so just to mention, like, we have a potentiality of doubling our capacity for the Jajpur plant, so which is currently 1,500,000 tons. So what would be the clinker supply for that thing if we go for the planning for the expansion thing, sir? Yeah. We we are only talking about the layout potential, sir. We are not talking looking at that for some more time. Because at this point of time, we have enough clinker to support 70% capacity utilization at Yajpur, Seventy Percent capacity utilization at WiZag, and 65% capacity utilization at Matapeli. So any any configuration changes, we will be short of clinker. So till till there is a clarity on our clinker listing, I don't think we would be in any way situation to increase the capacity of Rajput. Sir, currently, are feeding the clinker for, like, for From Matambili, sir. From Matambili plant. Right? Both the for Vizak and the Jasper plant. Yes, And we are going by the sea route, sir. Right? No, sir. We are going by the land route itself, sir. By rail and by road. By rail. So Vizak, we are feeding by rail. Right? No. By road and rail, sir. Rajput will be feeding by rail. Rajput will be feeding by rail. Okay. Okay. And, sir, what is the outlook for your Rajput and that Sadhguru plant going forward in FY twenty three? Like, what kind of utilization levels we are eyeing into? Yeah. We we are looking at 75% capacity inflation at Sadhguru. Mhmm. Because that would be the first full year. So we still are trying to look at the market. So we are not in a hurry to push too much of material till the brand is positioned well. Rajput, we are looking at 60 to 65% for the coming years. A year later, we are looking at 85% for Sadhguru and close to 75% for Jajpur. So this I mean, to say, for FY twenty three. Right? Yes. Okay. Okay. Okay. Got it. And what is the current scenario, sir, like, feel from the consider from the exit of q one twenty two? Like, the has the demand improved in the southern part? Already you mentioned, like, Mister Sanjay, we I I think it is too soon. We we are still assessing, and this is a season where you have monsoon impact. Mhmm. So it will be too short for us to take any any call in any which way, sir. Yeah. Let us look at the annual kind of an outlook. Okay. As stated earlier, we are we are looking at something which is very similar as last year. Mhmm. In our own case, though the market could grow a bit, but we are just trying to be cautious because we are trying to make provision for the incremental supply that is expected from some of the people either by ramp up or some new commissions that are likely to happen. Okay. Thank you so much, sir. Wish you all the best. Thank you. Thank you. The next question is from the line of. Please go ahead. Hello. Hi. Good afternoon, sir. My question is related to the this Panayam cement, which was recently the resolution plan submitted by RB Consulting and Sagar Power Limited. This was approved by the MCLB. So just want to know your comment. Is there any anything related to the Sagar segment? Because Army Consulting and power Sagar Power is the promoter group of Sagar Cement. So any comment you would like to do? Yeah. Mister Mudit, I think as stated I think if you have seen the press release pertaining to that also, it's a consulting assignment, sir. It has nothing to do with Sagar Cement. Are we did does build lot of capacities for others, it is part of that. Cyber cement has nothing to do with finance cement. Okay. And and by any any chance we are looking for that from your trying to get this get this company, the finance cement? I stated we have nothing to do with it, sir. If you were to get it, probably, Sagar would have been and got the asset. Right? So Okay. We are not looking that asset at all. Okay. Okay. Thank you, sir. Thank you. Thank you. The next question is from Indrajit Agarwal. Please go ahead. Hi, sir. Thank you for the opportunity. One question I had is the inventory buildup that you have, is it more finished goods inventory or fuel inventory in terms of It's a it's a combination of it's a combination of all, sir. Now where do I place clinker is a question. So we it's a clinker place finished goods along with the fuel and the other raw material. So the finished good inventory that has been built up, is it higher than what we see in the first quarter in normal course of action? I'm not talking about last year. Sir, if you if you if you remember, our March, we did close to a million. So most of the stocks were close to zero. So the buildup typically happens for this time. Even the clinker level, I said everything was very, very negligible for the closing of q four. So from then on, it's only built up, sir. So that's the difference, I'm saying, Raji. So this entire thing will be drawn down in the rest three quarters. Right? I mean, effectively, there should not be any stress on working capital on a full year basis? Sir, I think it's a it's a it's a function of how this event industry behaves. We typically run for three thirty days. Blocks of two fifteen days or eighteen days blocks are for the maintenance. So those schedules are appropriately planned where we need to build the inventory for the shutdown, which would happen for fifteen to eighteen days for the. So it is in anticipation, sir. At the end of the year, everything will come back to similar kind of situation. Sure. Thank you so much for your answers. Thank you. Thank you. Ladies and gentlemen, if you have a question, you may indicate by a raise of hands. I repeat, anyone who has a question may indicate by raise of hand. Sir, as that as there are no further question, we would like to hand over the call to mister Shikanth Reddy for for his closing comments. Thank you, Manish. As always, we would like to thank each one of you for participating here and joining in our call. I hope you got all the answers that you are looking for. Please feel free to connect with our team at Sagar or CDR should you need any further information or you have any further queries. And we'll be more than happy to discuss them with you. Thank you. Have a good day, and stay safe. Thank you again. Appreciate your time and interest in us. Thank you. Thank you. We may now disconnect. Thank you.