Ladies and gentlemen, good day and welcome to Orient Cement Q4 FY 2024 conference call hosted by ICICI Securities. I now hand the conference over to Mr. Navin Sahadeo. Thank you, and over to you, sir.
Thank you, Manuja. Good morning, everyone. On behalf of ICICI Securities, I welcome you all to the Q4 FY 2024 earnings call of Orient Cement. Today, we have with us from the management, Mr. Deepak Khetrapal, who is the Managing Director. Without any further ado, I hand over the call to Mr. Khetrapal for his opening comments, followed by the interactive Q&A. Over to you, sir.
Navin, good mention. I must say, as always, I am grateful to all of you for your interest in our company and to continue to find time to be with us on this call. Thank you. Coming to the earnings for the quarter and for the full year, I am sure all of you would have gone through the results and formed your opinion about them. The way we see the quarter that has gone past is like this. For us, honestly, it has been a challenging quarter. There is no doubt about it. Challenging in the sense that the typical volume push and volume or rather the demand pull that we expect in Q4 in the market remained elusive. I would say January, February was not so bad, but the month of March proved to be really the most difficult month. Not that we had lower volumes than last year.
The challenge was in terms of very little growth or demand available in the markets that we service. To that extent, because the demand was not there, we also saw the pricing. In fact, March slide in prices is what I would call brutal, and throughout the month, almost every single day, the prices kept falling, and by the time we were exiting the month of March on 31st March, the prices were nothing to talk about. So it impacted, I would say our earnings, our EBITDA, in the month of March dramatically. If you ask me, internally, how was January, February for us, January, February was pretty good. Where we fell short over last year, in terms of our own expectations for growth, was largely in the month of March.
Because of the momentum that we were carrying from January, February, the overall quarter doesn't look as bad as March would have made it look if January, February also were equally bad. Frankly, it didn't turn out to be the usual Q4 rush for volumes and better prices. It didn't happen. All of us know it. Our volumes in Q4 have been, I will call them flat. They're very marginal growth. The realization for Q4 also, I think in our case, at least now that we've seen the results coming out for a few competitors, at least we are one of those companies who had the realization in Q4 as a whole, slightly higher than realization in Q4 last year. Whereas we've seen many companies slipping on that as well. In terms of volumes, sequentially we saw fairly strong growth. We are 24% higher than Q3 volumes.
But in this sequential, when we say the growth was there 24%, but very surprisingly, the realizations went down for us by 5% and for some of our competitors, even more than 5%, which is where the real pain point really comes. For the full year, again, sorry. Our volume for the quarter itself, as you know, 17.2 lakh tons that we reported already represent overall company level is 81% utilization. But really speaking, our challenge has been basically our old plant at Devapur, because our Chittapur, Karnataka plant once again has operated at more than 100% capacity. Jalgaon also has been fairly okay, although Jalgaon pressure was there earlier, but I think we managed to sort of claw back our market share even in the market, which are serviced by our Jalgaon grinding unit. But Devapur continues to struggle in terms of overall capacity utilization there.
I'll come to the reason, but like I said, overall 81%, but we do have one of our most important plants doing more than 100% capacity utilization, and that will bring us to the need for immediate capacity addition in due course, and I'll come to that as well. The net revenues, as you've seen, are at INR 894 crores, at INR 895 crores. It's 1.6% higher. It's definitely better than volume growth because we had a higher blended realization, and that largely has been contributed by the share of premium brands that we have in the market, and they keep getting us, I would say, somewhat higher value growth compared to the volume growth. The realizations for the quarter blended basis at INR 5,130. Sequentially, as I mentioned, there's a drop of nearly 5% from INR 5,400 that we had in the preceding quarter.
Over last year, they are higher just by under 1%. EBITDA at INR 155 crores, INR 156 crores is up from INR 117 crores in Q3. Again, a significant jump. But on year-on-year basis, the growth is there. It's a modest growth, I would say just about INR 10 crores, INR 12 crores overall. But the important part here is that we have growth in EBITDA, which again, like I said, the industry, some of the players that we see, they managed to perhaps do a volume growth much better than us, but their improvement in profitability or rather improvement in sales came at the cost of profitability, because profitability in some cases have gone down despite high volumes. I'm talking about gross EBITDA level. At the EBITDA per ton level, and we are definitely, and the way we calculate, I know there's a difference between how the analysts calculate.
In our calculations, and we do it every year, so we know we are calculating our EBITDA per ton at INR 900 a ton, which is higher than INR 840 a ton from the preceding quarter and INR 843 which was the same quarter last year. Roughly, the growth is about INR 60 a ton in our EBITDA per ton over Q3 and over Q4 FY 2023 as well. Given the kind of growth that we had had in EBITDA in the first three quarters, our full year EBITDA, as you would have seen, is at INR 465 crores, which is higher from the previous year of INR 377 crores, which reflects a jump of nearly 23%, with volumes barely going up 6%. That's the important part.
Our volume growth are barely 6%, but the EBITDA growth is at 23%. The annual per ton EBITDA is at INR 758, which is higher by more than INR 100 over the full year FY 2023. This I thought I'll just highlight in terms of what happened in Q3 and also roughly the full year. When you sort of full year, you've seen including our revenue, INR 23,200 crores roughly, which is 8.5% growth. Like I said, the volume growth still Q3, if you recall, was at 9%, but with the lack of enough growth in Q4, the total volume for the year is down to growth of just about 6%.
In terms of the indications that we had given to the markets, we ended up doing about 97% of the volume that we had indicated to the market that we'll do about 6.3 millio tons. We ended up short by about 3%. Realizations for the full year are better by about INR 86 per ton or 1.6%. Like I said, the EBITDA per ton has gained more than INR 100, despite not so great volumes or prices. As I mentioned to you earlier, the large, I would say, dent in our performance as we see it internally, has come from our Devapur plant, which largely services markets which are in Telangana and also in some parts of Maharashtra, mainly the Vidarbha markets which are serviced by us from our Devapur plant. Those markets have been underperforming. Non-Telangana market, I think, has underperformed for everyone.
I think in the last two quarters, I'm repeating this trend that Telangana demand somehow has not been where it needs to be. In Vidarbha, we have the other challenge of the new capacity, new competition having come up, and some of them are using their incentives to, if I can call, subsidize their customers. They're selling their cement at cheaper price, which makes it impossible for players like us who worry about their profitability, to be able to compete with them and sell more. So Devapur remains a pain point, and we'll have to find some solution how to utilize that capacity better. Whether the solution would be perhaps to quickly build a grinding unit which takes us to a newer market from Devapur painter itself. That's what we are working on the plans.
Just to sort of in a way flag it off, in terms of if you look at pure Q4, as everybody would expect sequentially over Q3, Telangana also has improved by 12%. It is not that it is not grown in Q4 over Q3. But if you look at the real Q4 last year, we are down 26% in Telangana itself. So that is one of the flags. In our largest market, Maharashtra, which actually is becoming larger with every month passing, with every day passing. In Maharashtra, let us say we have grown 32% quarter-on-quarter, that is sequentially, and we also grown 13% year-on-year in this particular quarter. In Maharashtra, the main consumption centers are there, and they are actually taking a lot of our cement, which we are happy about.
Fortunately, like I said, those markets are helping us in terms of retaining the volumes where they are and growing there. The impact on that, as you would see, would perhaps be seen in terms of our freight costs, which seem to have gone up because the freight for us within the Telangana market or Vidarbha market is lower than the current markets in which we are selling more of our cement in Maharashtra. The full year sales, you have seen are 61.3 lakh tons, which I mentioned is nearly 3% lower than what we would have wanted them to be. They are below our expectation. I mean, I have already mentioned the Q3 sales were 9% higher, which was in line with the industry, but I think in Q4, we have fallen behind the pan-India rate.
I am quite sure that the growth in our own markets that we have are almost flat in line with other players in other markets. I think if we compare our performance with the industry in our markets, I do not think we are worse off, but definitely at pan-India level, 6% growth on the whole makes us look poorer than what the rest of the industry pan-India has done. For us, due to our, let us say, more sales happening in Maharashtra and including in Mumbai and Pune markets. That has pushed us into our B2B sales have kept going higher compared to what we have done traditionally, I would say a few quarters back. In the Q4 per se, we say they are at 55%, slightly lower than what we had reported in Q3 when we had actually gone up to 56%.
Within that, the good news is that we are beginning to now sell more of our blended cement also in the B2B market. We are able to satisfy a few of our very important customers to buy our StrongCrete, our premium brand, which is sort of in a way, it is the blended cement. As a result, despite the B2B sales being 55%, our OPC sales are at 46% in Q4, and it was 48% in the previous quarter. Last year, it was 43%, right? So it has been, let us say, I would say, trend towards OPC, mainly because large customers in Mumbai and Pune somehow remain OPC buyers. The one good thing that I would like to just mention here, we are one of the few companies who also got our product approved for the bullet train project that is between Mumbai.
As it starts opening up, the people who have the contract to building that train, they will be buying cement from us, and with some of them, we already have been sort of in touch and we agreed on a supply of cement to the bullet train project. It is a very prestigious project, and we are really delighted that we will be participating in that project as well. On the premium brands I keep mentioning all the time, the good news here is that, in this particular year, we have managed to increase or rather grow our premium brands volumes by 31% in the year. They are now in the region of 22% of total paid sales, and they are increasing consistently.
What I would like to remind everyone is that when we say our premium cement, the premium that we charge on our premium cements over PPC is perhaps the highest in the market by any other brand. I will just remind you, on StrongCrete, we do charge a premium INR 45 per bag over PPC. In Dolphin, actually, we have taken it further. We are in excess of INR 55 a bag over PPC, and Birla A1 OrientGreen discuss about INR 25, INR 27 a bag. So there are different price points with different value propositions, but each of these three cements have been positioned to meet specific demand of the consumers.
Because we are selling them with enough support at the ground level, we are able to get margins like this and still keep growing at 31% growth year on year in premium cement is very, very heartening for all of us. The other good part is that we reported that the first phase of our waste heat recovery at our Karnataka Chittapur plant had been commissioned in the early second half of this financial year. The second phase of that which had been pending has finally got commissioned on 29th of April, that is just a couple of days back. With that, the total availability of power from there will exceed 10 MW of power, which is great news for us. This investment, as you know, is hugely beneficial for us.
If I were to quantify just the gain just from the first phase of waste heat recovery, in Q4 itself, the gain for us has been over INR 11 crore. Phase two obviously will increase the savings for us. So you can imagine how beneficial this investment is. We do expect that the annual gain from waste heat recovery for us would easily be minimum INR 50 crores, INR 55 crore a year. We are also, in a way, expecting the supply of solar power. If the investors recall, we have signed up with the solar power players to put up a grid, what we call the captive project. So Jalgaon is going to be getting more solar power within the month of May. I think our Karnataka Chittapur plant will start getting solar power in the month of June.
In this particular quarter, those investments will also start paying off, which should make our power that we use a lot more green and I think also cost beneficial from the shareholders' perspective. For Q4 per se, the power and fuel costs are at INR 39.50 per ton, as you would have seen, and they are down from INR 14.21 in the preceding quarter and from INR 15.71 in the Q4 of last year. Here is an interesting point. As I mentioned to you, our B2B sales and OPC has been going up. As all of you would know, OPC actually, because it is not blended, it consumes more power and it consumes more coal. But the impact of that we have been able to mitigate through improving our efficiency and also through now the contribution which is sort of keep increasing from the waste heat recovery plant.
In terms of fuel mix that all of you always remain interested in, by weight, our fuel mix in the quarter has been 45%, I would say, domestic coal, 34% pet coke, and alternative fuels 21%. For the year as a whole, the same domestic coal is 49%, pet coke 33%, and AFR is at 18%. That is our fuel mix by weight. In terms of blended fuel costs, this inquiry always comes in for the company as a whole in Q4 has been INR 1,776 per million kilo calories, but I think many of you are more used to seeing INR 1.776 down from INR 2.113 last year. Even sequentially in the preceding quarter, it was at INR 1.890. So that there are the numbers that I know always there are questions around them, so I thought I will be upfront.
With the waste heat recovery and the solar power, which is already existing and operating for the last few years at Jalgaon plant, the total renewable power in Q4 has actually become 23% of power consumed in Q4, and 11% from last year. As I did mention, with the second phase kicking in and the more solar power coming in both at our Jalgaon plant and our Chittapur plant, this obviously will increase even further. But in Q4 itself it was 23%, it was just 11% last year in Q4. In terms of alternate fuels, I have already told you as a fuel mix that we have had. In terms of market mix, as I mentioned, our growth in West, which has been making up for our Southern Indian market. Today in Q4 we end up at West being a market where we sold 67% of total volumes.
In South, it has come down from over 27%- 24%, and balance 9% central, largely in Madhya Pradesh and some parts of Chhattisgarh. That continues to be constant. In terms of our other, I would say, consistent performance in terms of efficiencies, we gained. I mean, there is not too much room left for us to further improve on our either power consumption per ton of cement or heat consumption per ton of cement. But I think we keep making some efforts, and small little gains keep happening all the time on a continuous basis. In terms of costs, I have already mentioned, you people have seen.
But in that, again, one of the key elements that we have to remember is while pet coke prices have been softer and obviously our profitability has gained from that, the domestic coal prices which form a significant part of our total fuel basket because our Devapur plant which is dependent on domestic coal from The Singareni Collieries Company Limited, those costs actually have been going up rather than coming down. So we've been able to achieve the overall blended cost savings in fuel cost despite the fact that domestic coal is not quite in the same trend. So I thought that's an important differentiation to keep in mind. And power cost obviously with the solar and the waste heat recovery coming in, the significant savings are there and they will increase. On freight, as I've mentioned, it's higher, about 5% over the same, I would say, same quarter last year.
Largely driven by the fact that we are shipping a lot more of our cement to Western India market compared to our Southern India markets which happen to be closer to our plants. And also, some change over frequency does happen due to some change in the railway fares and the incentives that become available and things like that. Rail dispatches in Q4 have been at 16%, same as last year in Q4. But slightly higher in Q3, where it had gone down to 14%. In terms of key highlights, again, I would say our efficiency, our power mix that is changing, our fuel mix management, and most importantly, our premium product share rising consistently in our sales mix is helping us, I think, in coping with the difficulties that the markets pose to the whole industry.
That's broadly, I think, on Q4 and I would say in the full year how that looks. A quick update on the expansion projects that we've been promising the investor for a long time. Last quarter, I had said that public hearings had been scheduled in the month of February. Both at our Chittapur Karnataka plant and Devapur Telangana plant, public hearings have been held peacefully and successfully. The files have started moving. They need to move from the district headquarters to the pollution control department who will then forward it to Delhi for processing. I do believe that the clearances from MoEF may be held up till the new government gets formed in the month of June and new ministers get appointed. But as far as the ground work is done, that has been done, and now it's a question of we being able to get the permission.
And frankly, with all the public hearings and all the other, I would say, studies that we had to do and we have already completed them, typically it's a matter of just a few weeks when the MoEF in Delhi starts processing our application. The season starts processing. So I guess sometime in June we'll try and get those clearances, and then we can start talking about actual construction activity. So I'll stop here and wait for the questions that come up, and I'll provide more answers to the questions. Thank you.
Thank you very much. The first question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Yeah. Good morning, sir, and thank you for the opportunity. My first question is, on your opening remarks, you were mentioning that March has been quite brutal, and gradually it was a declining trend. Is it possible to share some more, or quantify a little bit in terms of how was March exit prices versus the average of 4Q in our key markets? And how has been April? Have you seen some bit of reversal of this correction in the month of April?
Well, often I am not carrying all the details with me when I am on this call, but obviously we have in the MIS. But more important part is that the reduction in price in the month of March went down to INR 15-20 a bag by the time March ended. As we have been hearing about various parts, some people have said that in March, exit prices were the same prices that we had two years back. You have heard about that. I think more important is in terms of how April has been. April, because of very soft volumes, we did see some improvement in prices in the first two weeks of April. But by the time April ended, I think most of the gain over March had been lost already.
My own fear is that till the demand picks up, and demand, as we know, April and even May is going to remain weak, due to multiple factors. The most important at this time being the elections which are on. The migrant labor who actually forms the bulk of the construction workers, they go back to the villages to cast their vote, and when they go back to the villages, they do not come back in a hurry. They take their own time. Second is, we are seeing in large parts of India, the heat that is on, it definitely creates additional challenges for the activities to be pursued at the required pace. The heat is also leading to some of the markets already feeling the pressures of water supply.
When the water supply, if you recall from past years, whenever the water shortages become acute, many of the district authorities have just banned construction activity. So election, heat, water scarcity, overall put together, I personally am afraid that even May would be a soft month. Until the demand picks up, any noticeable increase in price I think is difficult to expect. But certainly April is better than March, I can tell you overall, in the sense that we did get about two weeks. As of now also, if you say our April current price is somewhat better than March, exit March, because exit March was very poor. We are somewhat better than that, but very small. Maybe INR 3, INR 4 a bag in many markets.
Understood. This commentary, sir, is more for the south market or both Maharashtra, south, across our regions?
I think overall trend in terms of, is across the regions. South is a little more acute, but I would say the softness in prices in March was suffered more across markets.
Understood. Sir, you shared the mix of west, south, central. I believe that was for 4Q. Is it possible to share how was the full year?
Full year would be Let me just check whether I can provide you. No, full year number I will have to again look up. But I think the trend will be somewhat, when we are saying 67% west in Q4, so the year as a whole also it will be about 64%, 65%, it wouldn't have differed. So maybe, 2% more has happened in west from third, and that has been taken away from south. So 67%, 24% might be 65%, 26%. That's the change.
Got it. That's very helpful. Sir, any full year guidance on the volumes for FY 2025?
Full year volume, I think we are dependent on how the markets behave. Q1 is proving to be difficult. If you talk to our industry colleagues, general sense is everybody is saying between 6% and 8%. Market 6% is very poor. If it's 8%, it will be somewhat encouraging for all of us. But I guess, at least when we start a year, we start with a lot of, not just optimism in the market, but also in terms of the new strategies and what we are going to be doing. So I would say we are gunning for 8% growth. If the industry is talking about 6%, 7%, 8%, we will gun for 8% growth.
Got it. Just one last question, if I may. On the expansion. So two things. One, with respect to Rajasthan mines, have you started land acquisition there? Then on our south expansion, you shared that June is where you can basically start discussing about construction activity. So any full year guidance on CapEx? I believe the first year would be largely announcements and ordering. So, any sense on guidance on CapEx for FY 2025?
All things put together, I would like to frankly, I would like us, our company to spend around INR 1,000 crores within the financial year FY 2025. Made up largely because, as I said, every MoEF clearance is going to happen around June. In the meantime, we will be obviously gearing up for completing our own internal work in terms of the configuration, the equipment, and maybe floating a tender and getting the quotations in also. So that as soon as we get the MoEF clearance, we will start placing the orders. We will not place the orders before the MoEF clearance is received, but I think rest of the activities internally we will be completing. As a result of that, at the Chittapur expansion, I would say around INR 500 crores. I think that is what I would expect to happen within this financial year.
Same thing, there is progress with our, that in Sarni, where we had been impacted, Madhya Pradesh Power Generating Company Limited. The board had cleared the proposal. The energy minister also has signed it. There is one little change in term that they imposed, which we are negotiating, and we will sort that out hopefully within the next six weeks and inform the stock exchange. That happening would actually mean that we should be able to start some work on the greenfield grinding unit in Sarni on the command of the Madhya Pradesh Power Generating Corporation. That will be another, I would say, INR 150- 200 crores. Balance will be divided. About INR 150 crores, I have been saying, would go towards the forest clearance for Devapur, and again, another INR 100 crores for Rajasthan land acquisition.
That is my current, I would say, ambition to spend money so that our capacity addition starts coming together in FY 2026.
Okay. We have not started any land acquisition so far? I mean-.
We started the negotiations. As you know, initially quotations come at all kinds of crazy prices. If you scare too much of the high if people are talking about the agricultural land being available at 1 crore per acre, you have to be just holding your nerve and then in a small way, start the activity. Because the first quotations are just frightening if you go by them. But that process is normal. Every time we go through the same process. Have we acquired any land as of now? No, but we are in close discussions.
Understood. Thank you so much for all the explanation, sir, and all the best.
Thank you so much.
Thank you. The next question is from the line of Amit Murarka from Axis Capital. Please go ahead.
Hi. Good morning. Just on pricing, what you mentioned that the pricing fell continuously, and what we understand is that even the price hike attempts in April have not been too successful. I was just wondering where do we go from here and now, probably a month down the line, we will be staring at monsoon. How do you think pricing should pan out in this context of a sharp decline earlier and now still struggling to take price hikes?
Well, Amit, to be honest, actually, when you say where do we go, as an industry, we have no choice where we go. It is all driven by the market demand and market supply. We have to take whatever it is. We cannot go anywhere. We are part and parcel of the cement industry. Your question of where do we go, I do not know. We will be with the industry. We cannot go. Investors can go somewhere else, not people who run the business.
Yeah. I was wanting to kind of understand your perspective. I know that it is an industry thing, but Q4 generally was a good quarter for volume to the point that a lot of companies reported 90%+ utilization, and still pricing was weak. Which is a bit surprising to see.
Absolutely.
I was just trying to understand your view in that context, like how do you think it will pan out, and particularly given that monsoon, which is kind of 1.5 months away.
Amit, my personal view as of now is that expecting a price increase till about mid-June, perhaps is not realistic. While the fear of monsoon kicking in does remain, but monsoon also has seen pricing relative to that time to become better, which is fine with us. At least if we start gaining over what we had in the previous monsoons, would be certainly a good sign. In fact, I do not know whether you heard in the morning, I was on CNBC, and there also same question I told them. I said, "Look, when have we been able to see consistent trends in the way cement is priced in the market?" The challenge is in this industry, and my question, very simple, is, who could have predicted that the March pricing will keep sliding as it is, despite the growth that you mentioned? Who could have predicted that?
Which trend tells you that in March the pricing will be like this? So for us to extrapolate trends has been very difficult. It is more from the perspective of saying, so where is the industry and where is the, let us say, likelihood of we being able to expect some increase in prices. All I mentioned is post-election, post the government formation, and currently, I think the large consensus is that there will be stability at the political leadership level. So we are hopeful that as the stability comes in and the government after the election gets back to normal course, demand should pick up. Typically, again, in March it did not happen, but it cannot continuously keep happening the way that March was. That is where the hope is coming because March became pathetically low, and we know as an industry that it does not help anyone.
Thanks for the insight. Also on volume, like generally the absolute volume was also supported by higher activity on the infrastructure side, and mostly it is expected that there will be some slowdown in that, or at least the base itself is quite high. So is it fair to think that the volume growth from here will be kind of mid-single digits or possibly even lower in the near term? Or based on the undercurrents or let us say generally the urban electric pickup which is there, do you expect that growth should continue to trend higher? Also some thoughts on that.
So, Amit, again, what I think all of you also have quoted, the industry growth is likely to be 6%-8%. We are definitely talking single digits. I do not think we have heard even from the industry that the industry will grow at double digits. When you say 6%-8%, the number of six itself tells you what the mood is. Is not that so? Because when did we talk in cement industry about next year, how much we will grow by 6%? It is unheard of. So obviously the mood right now is a little somber. Let us hope that most the monsoon water availability season becoming better. All these, let us say, announcement that you had from our Prime Minister, assuming that he will be back in power, he is actually been promising a lot more of activity.
And I've been in some forums where he came in, I'm talking of business forums, he very clearly said to wait till June, and we'll get huge announcement from the government to encourage the economic activity. So we are all hopeful that these promises are stacked up, and we are able to participate in the growth.
All right. And the last question is on the Rajasthan plant. I don't know, it's already discussed, but any update on that?
No. Update only is that, as we mentioned, for a long time, for some reason, government authorities were not registered. The supplementary mining lease had been signed, but it was not getting registered, which was coming in the way of acquiring land also. So that is registered now. That happened during the Q4, and now that's why we could very seriously start discussions with some of the large holders of land now, because if you start dealing with every small holder, it takes too long. So there are a couple of opportunities where people who have large chunks of land. So we are in negotiation with them. Hopefully, we'll be able to start closing them soon. But as of now, we are still in discussions.
All right. Thanks a lot for all the clarity. Thank you.
Thank you.
Thank you. The next question is from the line of Anupama Bhootra from Spark Capital. Please go ahead.
Yeah, good morning. I just wanted to ask if there are any plant maintenance schedules and if yes, when?
Pardon me.
Plant maintenance.
Plant maintenance. Plant maintenance is a regular activity which needs to happen every year. Are there any schedule? Of course, they are scheduled. They are the part and parcel of our running operations. During the year, they will spread out. Typically, there will be about three kilns which will need maintenance during the year out of the 44 that we have. They will be scheduled. One perhaps will be happening in the first quarter itself, and after that there will be two more taken up more towards the second half.
Okay. Thank you, sir.
Yeah.
Thank you. The next question is from the line of Keshav Lahoti from HDFC Securities. Please go ahead.
Hello. Hi. Thank you for the opportunity. Sir, some sense on how will be the fuel cost in upcoming quarters?
Fuel cost in the upcoming quarter. Look, as of now, I think the prices have been, I would say, staying a little soft and stable there. I am not seeing them rising in a hurry, but it also could be due to the low demand that the industry would have if the demand for cement stays low. Obviously, the plant production slows down and that puts pressure on even pet coke prices. Domestic coal prices are beyond anybody's comprehension to predict how the miners or largely public sector company, how will they behave. But I personally think the fuel cost should stay benign during this financial year. That is what my reading and current hope is.
Got it. What about Q1? Should we expect some relief in fuel cost?
Look, in Q1, it depends on if I am going to be largely We as a company are going to be using the pet coke supply which arrived with us toward end of March. So in the current quarter, I will be consuming the pet coke that I have already bought. Domestic coal price as of now are stable. So for us, no, but I believe there has been a decrease of $10 a ton of international pet coke prices from the time we bought the coke and somebody ordering now. But the catch here is somebody ordering now will not get the coke for four to six weeks, right? Because the shiploads of coal coming in, four to six weeks are your typical time from the time you place the order and you get the coal in your warehouses.
My own sense is unless somebody has ordered already four to five weeks back at a lower price of $10, that may come in for some of the players, but it is all a function of how their fuel stock was around in March. We had a full shipload which had arrived there, so we need to consume that in the current quarter.
Okay, got it. Fuel cost for Orient Cement should be similar in Q1 like Q4.
Correct.
Got it. On premium cement, we have a target to reach 25%. Should we expect by year-end or maybe earlier?
We already have done 22% in Q4. Yes, definitely 25% should happen in FY 2025. Absolutely. We are very close to that. We are actually making faster progress than anybody expected from us.
Understood. One last question from my side. If the cement prices stays over here during the entire quarter, should we expect a decline like 4% in this quarter, QoQ ?
Sorry, come again. A 4% decline from the Q4 prices?
Yeah.
I hope not. That is certainly not something that we are expecting.
Because the prices has been weak in March also.
Yeah, they were weak in March, but still some recovery has been there. You are saying 4% going down from here, that is a huge hit. Very, very large hit. I personally do not expect that to happen.
Okay, so it should be more like 2%, 3%?
Even that is very high.
Okay. Okay. Thank you. That's it from me.
Yeah. Thanks.
Thank you. The next question is from the line of Surya Nayak from Sunidhi Securities. Please go ahead.
Yeah. Thank you for your sir. One question is that due to the land acquisition things which is getting delayed, maybe the majority of the CapEx for the current year, which is around INR 1,000 crores, could be aligned to the second half. So what kind of debt we see to come into books?
Debt, is obviously going to be impacted by our cash flows and pricing and volume, because obviously whatever cash flows generate, we want to consume the cash flow ourselves. My own guess is if I am able to spend INR 1,000 crores on CapEx in this financial year, my own guess is we will collect around INR 600 crores of debt by that time, is what might have estimated. If things remain as we want them to remain in the current year.
Okay. If that is the case, then obviously FY 2026 will be having a larger budget of our CapEx.
Yes, correct.
What would be the ballpark figure? What would be the CapEx budget for FY 2026?
If I were to complete these two projects, that is Chittapur complete commissioning in FY 2026 and also this upcoming grinding unit coming up. Put together, that is about INR 2,000 crores of CapEx, right? Out of which I am taking this particular is the INR 600-700. So that is about INR 1,400-1,500 CapEx that should happen in FY 2026 for us to have the capacity in FY 2026. Both at Chittapur and also at the grinding unit, which can support the Jalgaon capacity utilization more.
Next year, again, we could be having a debt of at least INR 700-800 crores?
If we have at the end of this quarter about INR 600 crores , sorry, at this financial year, about INR 600 crores , the debt products could be even higher. Do not forget, we do have a net worth today of close to INR 1,800 crores. So there is no debt on our books, practically no debt on our books as of now. So even if we have that debt equated, it is still about [INR 600 crores]. Our debt to EBITDA ratio will be just about 2.5. I think this is fair. Nothing to worry about.
But are we not interested to time the accretion of the debt to the interest at declining scenario?
Look, I need capacity to sell in the market. If I try to arbitrage an interest rate and keep losing the opportunity in the market, I do not think the shareholder will be served well by me.
Correct. Sir, another point is that, are you seeing the interest rate scenario as the major impediment in the pricing because more of the OPC consumption is happening and that is actually not giving us a player like us who are focusing on the retail B2C side. So that is actually creating an issue. Because all the major players are operating at a healthy level at 80%+. Even you are also saying that you are also at organization level at 81%. So normally it is seen that above 75% the pricing powers generally comes in, but that is not materializing. So what is your stance with regard to the interest rate scenario vis-à-vis the pricing?
See, I personally do not think the interest rates have impacted cement pricing in the market. Let's say even for the decision on when to put up capacity is driven more by strategic reasons than by interest rates. Even at the current rate of interest, I think normally the expectation is that with the all very hawkish policies being followed by the monetary authorities, they should be able to get the inflation under control and then interest rates would soften. My own guess is by the time we start borrowing from the banks, interest rates would have started softening. That's what my stance is.
Okay. And sir, what is your outlook on the pet coke prices for the second half?
My own guess is they would stay within a range of about $115-$125 a ton.
Okay. So it will have more because the crude is also quite volatile and, I mean, a little bit.
Mr. Surya, I request you to rejoin the queue for your follow-up.
Okay. Thank you.
Thank you. The next question is from the line of Sanjay Nandi from VT Capital. Please go ahead.
Hello. Good morning, sir. Thank you for the opportunity. Sir, can you please share the lead distance for this quarter?
Lead distance, it has gone. We're just over 300- 310 in that range. in this particular quarter because of more dispatches into Maharashtra, it has gone up by another 10 km, maybe within the region of 315- 320 in that range.
Got it. Sir, just a second question that you mentioned, we have a significant huge chunk of our premium sale in our order portfolio. What has led to that significant jump in our premium share? What kind of products you're offering which the other peers cannot, so as to increase our overall premium sharing trend?
Please visit our website orientcement.com. You'll see our premium brand starting with Dolphin, which is the most premium brand right now. That is a water repellent cement. Then there is StrongCrete that we call it the forever cement. The beauty of StrongCrete is the-- I did mention that our cement is approved for the bullet train, and for the bullet train project, we have the approval for the StrongCrete. Just for your information. So it's that good a cement that when it's compared by with the OPC of other companies are strong, it actually comes out to be better. So it has its own unique properties. I don't want to go through a full technical lesson on what each of the cement does differently.
Obviously there is a very clearly defined, user value proposition for the cement, and that's why the customers are preferring to buy our product despite it being very expensive compared to what cement industry expects it to be. There's a good value proposition supported by us through our engineering consultancy services, and that's the reason why more and more customers are buying our cement.
Sir, what about specifications required for the bullet train projects, like which you-.
Look, I can't convert this into a bullet train specs. I mean, that you please go to your website, you'll see them.
Okay.
That's kind of a question I can't answer in an earnings call. What are the specs that bullet train is facing for cement and how do I tell you that on this conference?
Well, any general topic, sir, if you can.
No, they obviously need faster setting time. They need much stronger performance from the cement. All those things, long specs could have been given, which I don't think in an investors call we can discuss. For that, we will need a special workshop on technicalities.
Got it. Got it, sir. Yeah, thank you, sir. Thank you.
Thank you.
Wish you all the best.
Thank you. The next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Yeah, just one follow-up, sir. You said 23% renewable. What was it for the full year last year? Where do you see it going in FY 2025? Also, what is maybe some unit cost saving versus existing mix that you can share?
Let me just check. Prakash, our CFO is in the line. Prakash, do you have the number for total number for the full year? Our full year will not be obviously as much simply because our waste heat recovery system kicked in only in the last five months of the financial year. The first seven months we didn't have that. But Prakash, do you have the number? Can you share that please?
It was 15%.
15% overall. For the full year. That's why the sharp gain is from the time the waste heat recovery kicks in. This year, not only is the waste heat recovery, another, let's say, nearly 2.5 MW, 3 MW coming in. Plus we have more solar coming in both at Jalgaon and Chittapur.
What is any medium-term target of solar mix?
No, medium-term, by 2030 we are saying we will be 50% renewables of total, including expanded capacity. That's the target we're working towards.
2030, okay. All right, thank you.
Yeah, thank you.
Thank you. The next question is from the line of Prathamesh Deo from Tiger Assets. Please go ahead.
Sales volume for FY 2024.
Sorry?
What was our volumes for FY 2024 overall?
Thanks for waking up so late to ask the volume for the full year. It is about 61.3 lakh tons.
Okay. And sir, as the fuel costs are muted right now as you said, how are we looking at our EBITDA per ton for the coming?
Look, as I mentioned, they are muted. Now we are talking about a scenario where the fuel costs have actually softened and I have already reported significant fall in this year compared to last year. I have already mentioned that. As of now, we are assuming that the prices of fuel will remain around this level. Would they go down from here? It is very difficult to say. There is no trend in the market which says it goes down with any significant manner from the current cost. I will be happy if they stay the way they are and do not get disturbed by all the geopolitical disturbances that are going on.
Okay. Sir, by looking at the current scenario, as you told, not going down, what EBITDA per ton you are guiding or you are looking at for coming, let us say, FY 2025?
EBITDA per ton is going to be impacted by two things. One, how quickly from June onwards can the prices improve? That is always the biggest differentiator in EBITDA is coming from the pricing of the cement, right? Then we have the internal strategies of increasing our premium product sales as a proportion of our total sales. That is one lever that we are using. Second lever that we are using will be no matter what the fuel price in the market are, if we are able to get more power from our waste heat recovery plant and from solar, that is the other lever that we are pulling. Again, on internal levers, I would expect that a gain of INR 70-80 come on EBITDA.
The INR 70-80 . Thank you, sir. That is it from my side.
Yeah, thank you.
Thank you. The second last question for the day is from the line of Rajesh Kumar from HDFC Securities. Please go ahead.
Hi, sir. Good afternoon, and congrats on the cement numbers. Sir, I wanted to understand what would be your clinker production in FY 2024.
FY 2024 clinker production you want? That's a new question. I've never heard this question before on this. But if you want, if you give me a second, I'll pull on. Prakash, again, since you have all the numbers, would you total clinker production FY 2024? A new question, completely unexpected. Out of syllabus, as they say.
Yeah. So FY 2024, total clinker production FY 2024 was 47 lakh, 4.7 million.
Thank you.
4.7 million, okay. Sir, if I look at your clinker-to-cement ratio, this seems to be slightly around 1.3x. Do you see a chance of this improving from 1.3x to closer to 1.4x? Your clinker utilization is already 90%.
Yeah. No, it will happen with the B2C demand picking up. As I mentioned to you, B2C demand has been very soft for us, at least in the state that we run our business in. The only way for us to improve that ratio is by selling less of OPC and more of blended cement. Right?
Okay.
Certainly we want it because our B2B business growing 55%, 56% is a fairly recent phenomenon. It has happened only in the last few quarters. Before that, we have always been selling more to B2C customers. Unfortunately, the B2C demand in this particular market that we service in the last few quarters has been poor, and that is how OPC has gone up and the clinker-to-cement ratio has become adverse. We are trying to improve, but also it is a function of how quickly the consumer market picks up in cement.
Okay. The Chittapur project, INR 1,600 crore, you had earlier guided the CapEx. Because of these delays and all, do you expect this CapEx amount getting increased? Is it fair to say that by, say, June, July, you get it, 18 months you have guided, it will take 18 months from there. So the project will be up and running early FY 2027?
I would say before end of FY 2026 will be my target, so that the first quarter of 2027, we can get the full capacity after stabilization. Our target would be last quarter FY 2026.
Right. This MP grinding unit, this can be completed in one year, early, mid-FY?
One year is difficult, but 15 months for sure we will try.
15 months. By year-end also, you are targeting this.
Around the same time, a quarter here and there, around the time Chittapur clinker capacity and grinding capacity comes up. Grinding unit, again, like I said, at least fourth quarter of FY 2026, our attempt will be in quarter three of FY 2026.
Just to understand, for next two years, 2025 and 2026, focus will be only these two projects, Chittapur, MP.
Correct.
The CapEx would be spread out equally between 2025 and 2026.
It will be less in 2025, more in 2026.
Okay. Most of it will be backended in FY 2025, because only when you get the clearances in place.
Correct. Absolutely.
Any risk you are looking at, like in FY 2024 or CapEx guidance initially, which you had started off the year with a thought of INR 1,000 crore, but we ended up just spending some INR 100 crore.
Yeah. Right. The problem has been the, let's say, slow progress that we've had with the various clearances.
Right now it's hurting us at the Chittapur plant, where I said the demand is a lot more than we're able to service in Chittapur. So that obviously is hurting us now. I wish we could have done better, but we are where we are.
Okay, great. That's all from my end. All the best. Thank you.
Thank you so much. Thank you.
Thank you. The next question is from the line of Navin Sahadeo from ICICI Securities. Please go ahead.
Thank you, sir. Thank you for patiently answering all the questions. I just had one question, more from a longer term point of view, that if I were to take a five, six-year view for Orient Cement, of course, you have already kickstarted the expansion at Chittapur and a grinding unit in M.P. as such. From other CapEx or growth point of view, the priorities, how do they stack up? Will it be a Devapur or will prefer a Rajasthan, or can these two together go hand in hand? How should one look at a slightly longer, five, six-year point of directional sense, if you can get that will be really helpful. Thanks.
Navin, it is more a question of our capability to have the land in hand to start construction in Rajasthan. As you know, anybody who had Rajasthan mining lease, the desire would be to put up the capacity first in Rajasthan, because all of us know that we need diversification of the markets for us, right? That takes us in northern markets and other more lucrative markets. Unfortunately, a greenfield project these days, no matter how much we want to do it, will take its own time. In that sense, even earlier when you asked me the question, I have the same answer. I wish I could get the land in a hurry at a reasonable price and start that construction first of all. Unfortunately, that is not possible.
Understood. So in line of, at least as of now, the visibility is, let us say, Chittapur expansion-.
Chittapur, Madhya Pradesh grinding unit, Devapur, and Rajasthan in parallel, whatever we can do. But at the moment, we are able to push Rajasthan, we will because we need to be there.
Understood. That is very helpful. That is it from my side, and look forward to yet again another interaction. Thank you.
Thank you.
Thank you. As there are no further questions, I would now like to hand the conference over to management for closing comment.
Thank you. I think all the comments that I needed to make have already been made while answering the questions that people have had. So thank you for asking some probing questions again and giving us the opportunity to give you our side of the story fully. Always thankful for your support and look forward to talking to you soon again. Thank you very much.
Thank you.
On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.