Ladies and gentlemen, good day and welcome to Orient Cement Limited Q2 and H1 FY 2024 Earnings Conference Call hosted by ICICI Securities. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Navin Sahadeo from ICICI Securities. Thank you, and over to you, sir.
Thank you, Nirav. Good afternoon, everyone. On behalf of ICICI Securities, I welcome you all to the Q2 FY 2024 Earnings Call of Orient Cement Limited. From the management, we have with us MD and CEO, Shri Desh Deepak Khetrapal. Without any further ado, I hand over the call to Mr. Khetrapal for his opening comments. Over to you, sir.
Thank you. Thank you, Navin, and a very good afternoon and very warm welcome to all of you on this Q2 earnings call of Orient Cement. Let me start by first wishing all of you a happy Dhanteras and a very happy Diwali, which is coming in two days' time. I am grateful to all of you for finding time for us even on a day like this, which is basically a festive day. But I think given the schedule that we had, we are here today, and thanks for being here. In my own way, lots of people are wishing each other to acquire gold. My little bit twist on that is that my wish is for all of us to acquire a heart of gold and become better human beings, even as we have a fulfilling and enriching life.
All the very best to all of you. Coming to the performance and the highlights of Q2, I think I will rather start with perhaps the news that people have been waiting for. We have been saying that our waste heat recovery plant is under commissioning, but finally, towards the end of the quarter, in the last two days only, we were able to commission the waste heat recovery plant to the extent that it is 80% of the target power is already available and that we have used in the month of October, and obviously we are using it.
A balance 20% work which is still going on should be ready for us to get power in the month of January. As all of we know that it is the overall benefit to the company in terms of costs that we have been projecting it will be more than INR 60 per ton of cement. So which, like I said, as of now because 80% is commissioned, so maybe it's about INR 45 a ton, and I'm saying in Q3. In Q4, the full benefit of INR 60 some plus and maybe perhaps hopefully more than that will start flowing in. That has been a pending thing from our side. I thought I will first tick that off.
We have also been doing some really good work in terms of creating a really rich brand portfolio of obviously the regular brands which exist in the market, which we have been operating, and then the newer brands that we have been adding to our portfolio. In that, we have added one more brand, which we have called Birla A1 Dolphin. Dolphin because it's a water-repellent cement. Obviously, Dolphin for all of us who know how water-repellent the skin of dolphin is.
Dolphin really represents the nature of the product that we have launched under this brand. Hopefully, slowly, gradually it will start finding its space in the market. It's very early days still. The advantage of our brand portfolio today that starting with Birla A1, which continues to be the mother brand for our PPC cement and OPC 53, 43. We have added, as we all would recall, StrongCrete that we did a few years ago. Thereafter, we launched OrientGreen about a year back. Now Birla A1 Dolphin, which is I would say the laddering of the brands because, from the normal price of PPC, OrientGreen, it is about INR 25 premium, StrongCrete about INR 45, and Dolphin even higher than that.
It's a full, a s of now, I think we have all the brands in our portfolio the way we wanted to create under the brand architecture that we had planned. Also just to sort of make sure because our Birla A1 brand was being, I would say, used in different logo forms across our brands, so that also we have standardized, we have aligned them. Today we have an aligned identity for Birla A1 wherever it's used by us. You would see the change in the bags and the colors and all those things have been done. With the benefit of these new launches and all the good news is that within the trade sales, which we call B2C sales, the percentage of our premium brands put together, which is largely StrongCrete is the biggest obviously, followed by OrientGreen.
We are in excess of 20%, 21%, 22% in that range is the volume we are selling under the premium brands out of our total trade sales. Which is something which I thought all of you will be happy. As Birla A1 Dolphin finds its place in the markets, we do believe that by end of the year, we should be exiting with about 25% premium cement sales with the prices of our premium cements are far higher than what the industry has seen from other players. On the quarter per se, all of us do know that traditionally, Q2 happens to be a relatively soft quarter compared to Q1 because of monsoons. Last year Q2 was horribly bad for the whole industry, and we all know what we went through.
This year, the monsoon, we know it was an early start and monsoon really started off with a bang. It also ended strongly towards the end in many parts of the country. But we had a rather lean middle, and then we were all getting worried whether we will have enough rainfall in the country or not. But thankfully, like I said, August being a worrying month from monsoons perspective, gave us the opportunity for construction activity to go on, not impacted by heavy monsoons as is the norm. So August in this particular quarter was a very strong month, with July and September being not as strong as August. But despite the monsoon, which was heavy in periods, our total volume in the quarter is 14.25 lakh tons, which is a 15% year-on-year growth.
Sequentially, yes, there is a 10% de-growth, which I think is normal from Q1 to Q2. But with 15% growth YoY, I think we are in line with industry growth in our served markets and there is no risk of we losing any market share despite the fact that we have not added capacity in the meantime unlike some other players who have added capacity in the markets. In terms of the target for the year, we are still chasing. I think in the previous earnings calls, I have been mentioning that our target for the year would be to be between 63 lakh- 65 lakh tons of cement sold in this particular financial year. We should be in that range, given the fact that we have already done more than 30 lakh.
To do 33 lakh, 34 lakh in second half should be feasible unless there is a complete surprise in the market. The only thing which has not been good in H1 as a whole, I would say, is that despite such strong demand and 15% growth, the prices in H1 have stayed largely flat. That has been a bit of a dampener. Because the prices were not stronger, so the sales in Q2 for us, which are at INR 720 crores, are 17% up YoY, but they are -12% QoQ because there was a little dip that we experienced in our realizations from the preceding quarter. At H1 level, we have done total sales of INR 1,550 crores, which is a 16% growth over last year, as I am sure all of you would have seen the numbers.
The skew has been towards for us in our markets where they are servicing, it has been more towards B2B sales. Although that skew has gone on, but we have also found some relief that in this particular quarter our B2C sales are again back to being 50%+ , which had actually in the previous quarter dipped to below 50%. So that is a bit of a relief. In terms of, I would say the overall good news that we have is that within this subdued consumer sentiment, I am talking of trade sales, our B2C sales, we have kept increasing our share of premium products, which should stand us in good stead.
It also perhaps is an evidence that our strategy of having multiple brands at multiple price points with each one brand having its own specific advantage or as we call it in the marketing jargon, the value proposition for each of these brands is very clearly defined and communicated and delivered to the consumers. We are quite happy with the work we've been able to do on the premiumization of our cement, besides obviously using benchmarks for prices which are higher. That's helping us in terms of maintaining our sales growth and maintaining our profitability compared to what the circumstances otherwise would have dictated. Even in B2B sales, although they continue to be higher than what we would like them to be, typically in terms of the impact they have on cost.
The relief for us has been that even in the B2B sales, we have managed to still prefer and choose customers who I would say respect and prefer our product even when we claim a premium on pricing. Many markets in the OPC segment we are able to get a price where the contributions in OPC continue to be remunerative for us and even better than PPC in many markets. That's why although we should be selling more of blended cement, we're not completely unhappy because the market and the large customers have been demanding OPC, and we've been happy to deliver because we're recovering our costs plus. In terms of product mix, the PPC cement in Q2, PPC I'm including, I shouldn't call it PPC, I would say blended cement.
Blended cement which includes our premium brands, and that's as high as 59% versus the unblended cement, which is OPC at about 41%. Market mix wise, in this quarter again, West for us has been a stronger market. In Q2, out of total sales that we have done, about 64% of our volume has actually gone to West and about 27% in South, which basically is a result of the fact that South especially the main states for us which is Telangana and Karnataka and partly Andhra, they continue to see fairly low demand. If not low demand, they continue to see very low prices. We choose to sell at a price which is higher than what some of these markets are seeing. So in South it's 27% and balance 9% is largely Madhya Pradesh, Central India market.
Efficiencies, I think we continue to maintain our efficiencies quite well. We continue to do at the company entity level, including all our old plants, new plants put together, our power consumption stays at about 62, 63 units per ton. Our heat consumption we've managed to maintain at about, I would say under 690 whereas the newer plant being significantly lower than that. So that's on the cost side. On the realization front, in Q2, I would say we have a realization of a little under INR 5,050 and at H1 level, at about INR 5,100 per ton. We will call them largely flat. There could be a fraction of a percent up and down, but largely flat. EBITDA, as all of you have seen for Q2, has been at INR 88 crores.
Given the fact that last year was extremely poor and we had an EBITDA of nearly INR 37 crores, it looks like 136% growth. I don't think we should draw too much from the fact that 136% growth because we do have the benefit of the low base last year of only INR 37 crores, which was one of the worst quarters that we saw. For Q2 EBITDA per ton, it is at about INR 620 a ton in Q2, which last year in Q2 had fallen to under INR 300 a ton. Obviously, even on per ton basis, we more than doubled. Sequentially, we are a little lower at about INR 617 Q2, because in Q1 we were at about INR 650 a ton. So that's a bit of a fall, but it does happen when you have lower volumes, and that's why the lower operating leverage was there.
There's a little bit of decline there. Power and fuel costs for us have come down, as you would have seen, down to about INR 1,508 versus last year of INR 1,647. Even sequentially, there's a lower power and fuel cost. This is despite the fact that power cost actually, we are combining power and fuel and reporting a decline. But the fact is power cost, I think for us, it has gone up and I'm sure it will be true of most of the industry, because for power, when we are using our captive power plants, we use domestic coal where we know Coal India and Singareni have been increasing their prices and also supplying very poor quality coal. So that has led to about INR 30 per unit cost of power to us at least.
That means in fuel side, we have had savings which are bigger. Another reason for power cost being higher is also because some of the states, I'm sure you've gathered, have been changing the rules of supply and increasing their, if not the cost per unit, at least a fixed cost for staying connected to them. Which obviously we have to recover from whatever volumes we do. As a part of, I would say, the mix in power, even if you don't use the fixed cost of being connected to the grid, it keeps going up. I think that the state electricity board do to maintain their own profitability, I would say. The domestic coals, as we know, Coal India and Singareni have been announcing the higher prices despite the fact that the overall energy cost basket has been lower this year.
But in Chittapur, where we largely end up using the petcoke, there we've seen a decline of nearly 14% compared to same quarter last year, Q2 last year, 14% decline on petcoke cost used by us. All of you always remain curious about our blended cost of fuel. So in terms of rupees million kilocalories, we are at about INR 1,800 at our Devapur plant, which largely is driven by domestic coal. We would be at about INR 2,140-INR 2,150 at Chittapur, which uses imported petcoke. Given the location of Chittapur is far away from the coal mines as we know. But at Chittapur, the blended fuel cost that I'm talking about is lower by about 14% over last year.
It is also better at Devapur, largely driven by the fact that we have been changing our fuel mix and trying to maximize the alternative fuels that we have been using and obviously as a percentage they keep going up all the time. Petcoke procurement price improvement, AFR usage being increased and our efficiency drive that continues. We have seen, I would say, appreciable benefit in the fuel cost in the current year. With the waste heat recovery and with the solar power for which we have taken the approval from the boards, and they have been announced, I think with the capacity that we are putting up for solar power here at Jalgaon and at Chittapur, we continue to be on track towards using about 50% of renewable power in our operations as we go.
At Devapur, unfortunately, we are not in a position to use renewable power because of the state government's policies, which are not making it viable for us to use. Unfortunately, renewable power drive continues to be more at Jalgaon, which is where we started first and at Chittapur. Devapur, the only renewable power which is on our agenda is to put up a waste heat recovery plant for which I think we have started the work and hopefully will be finalizing the project for waste heat recovery plant at Devapur as well to reduce the thermal power consumption. In terms of, I think updates on costs to markets, everything I have already covered. Obviously, curiosity remains on our expansion plans. They continue to be on track. Although, we know that given the number of steps that we have to go through before we get the environment approvals.
Many of them are driven by the state governments. As a result of that, elections that were announced a few weeks ago will get over the end of this month, and the results come out in early December. Telangana government process has been slightly slower than what we had anticipated for the forest clearance. Although it is on track, and every step is being taken, but obviously, you know when election happens, what happens to the government processes. There we are a little, I would say, a couple of months behind schedule. What I was thinking that by January or so, we should be able to take up some construction activity at Devapur. It is looking to be at risk purely because the file for forest clearance has not moved from the state government to central government, although processes and steps are proceeding all the time.
For Chittapur as well, we have already received the, what they call Terms of Reference, ToRs, from the central government for the expansion project at Chittapur. We have already applied to the State Pollution Control Board to conduct the public hearings to grant based on which our environment clearance application will be considered by the Ministry of Environment, Forest, and Climate Change.
We are driving that too. Although we are trying our best, but like I said, a few weeks, couple of months delays here and there keep happening at every step. But we stay committed to our growth plans that we have announced, and we will keep doing that. Yeah, I have already covered EBITDA in terms of totals. I think most of the things I have covered so far. Let me open the. If I missed something, I am sure that will come out in the form of questions.
Total debt is normally asked for. I think in terms of term debt, we are down to barely INR 170 crores, which is financing our projects. And working capital borrowings from the bank. Recently, we paid for a shipload of petcoke, so obviously we borrowed some money. So total working capital borrowings would be between INR 90 crores and INR 100 crores as I speak today, which again is a function of when we start using that coal, inventory starts coming down, and that working capital keeps jumping up and down. At times it is negative, at times we borrow money. But more pertinent debt is the term debt, which as I mentioned to you, it is under INR 170 crores now. Because in the first half of the year, we paid about INR 74 crores from what we had borrowed from the banks.
That is on the debt, which is the other thing it occurred to me that I have not covered so far. So I will stop now and answer specific questions as they come to me. Thank you very much.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. The first question is from the line of Raghav from Asian Market Securities. Please go ahead.
Sir, my question is for the CapEx side. Basically, Devapur expansion primarily is delayed because of the forest clearance. But at the same time, we have applied for a forest clearance for plant as well as the new limestone mine also. Is my understanding correct?
That's right.
Sir, new limestone mines reserve. Can you let us know what the reserve in the new mine is, and how much is sufficient for the current operations?
In the new mines for which all the clearances have been given except for forest clearance now, which is in the process as I said. Just to give you a perspective, the old mines that we've been using from 1982, from the time we started running the plant, we had only 210 hectares with us. The new mines are 588 hectares. Okay?
Okay.
The limestone reserves in 588 hectares that are coming to us is good enough to run the plant for 40- 50 years, even after doubling the capacity at Devapur. There's no worry on the limestone reserves.
Got it, sir. Our plan is still the same 2 million tons clinker at Devapur and the 3 million ton cement combination, 2 million ton probably in the MP grinding unit and one in the Devapur itself, cement grinding.
Absolutely correct.
What is the status for the MP land for the grinding unit?
MP land for the grinding unit. As I mentioned to you, this land that we are having is with a state electricity board who have their own government processes. We had given them our letter in terms of wanting to set up a grinding unit there. After that, as you know, they had to invite competing bids for if any other person was willing to put up such a unit and offer them better terms than us. The date for that, as far as we know, for people to submit, for any competing bid to come in, has expired just this week. We are now expecting that as the date, no more time available for any competing bid to come in. The board at their next board meeting will consider our sole proposal which is available with them to put up the grinding unit there.
We are going through the process where we seem to be getting close. If their competing bid had come in, I would have been a little worried. But within the deadline, no competing bid has been available. We should be fine. I think the next board meeting they will confirm that our bid is accepted, and we will be allowed to put up a grinding unit there.
Sir, at the Devapur site, do we need more land acquisition for the new clinker line, or we have the sufficient land for the current?
No. On the Line 4, as we call it, Devapur—
Yes, okay. Line 4, right.
We didn't want to go out of our current premises that we own because, as you know, Devapur is in a tribal forest area.
Yes.
Any new land acquisition creates problems. What we have done is, when the land was enough and we had only one line, we put up a colony and school without really thinking that we might need more space. What we are doing is, as we speak, in preparation for Line 4, we already started the work on relocating. We are building a section within the existing land for the new colony, which earlier the colony was either ground floor. In fact, most of it was just ground floor. We are actually converting that to one plus four floors in a more compact area, but giving new apartments to our employees. That land will become available to put up Line 4. We are managing within the land. No acquisition, but we are spending money on building a new part of the colony, a new colony.
If my understanding is correct, can we put up this Devapur plus the MP project within the INR 2,000 crores?
Yes.
What are your estimates?
Come on, now how many questions will one participant be allowed? I've given you that we have the land with us within which that will be built. The overall cost of doing that, you said is within INR 2,000 crores. Yes, it's within INR 2,000 crores. I've already answered. Our own number is INR 1,950. That's why I said yes, it's within INR 2,000.
Okay. Got it, sir. Thank you.
Yeah. Thank you. Thank you very much.
Thank you. Next question is from Aashav Patel from Molecule Ventures. Please go ahead.
Thank you for the opportunity, sir. Sir, we have seen price rise, and all our peers have also been reporting the numbers. QoQ, there have been improvements slightly in realization and more so with regards to the power and fuel cost softening, which you also mentioned. Many companies are already posting numbers which are much better than Q1. Our numbers were in fact slightly lower than Q2 when it comes to absolute EBITDA. Can you please sort of clarify what led there?
You mean to say our numbers from Q1 to Q2 are lower?
Yes, sir.
Yeah. Okay. For us, it happens every year. If you look at our costs, if compared to last year, the only difference is last year, this quarter didn't have any major maintenance costs. This year, we've undertaken one more kiln maintenance. That gets added to the total cost, right? In terms of fuel costs, sequentially also they have fallen, but we have other costs which we have incurred.
Sir, can you please quantify it roughly, the maintenance cost for this quarter?
Maintenance cost in Q2, one are the regular maintenance costs that we don't even count. The costs which are periodic. As we mentioned in Q1, we had undertaken the maintenance of one kiln at Chittapur, which obviously was a long pending thing, and that also costed a lot more money for us to transfer clinker from Devapur to Chittapur to feed the market. in this particular quarter, we've undertaken one line at Devapur under maintenance, which was completed in Q2, and there's just one more that has been completed in the month of October that will come in Q3. Each kiln, typically the cost of annual shutdown or maintenance shutdown is ballpark INR 10 crore, at times INR 9, at times INR 11, INR 12, so in that range. Ballpark INR 10 crore depending on the size of the kiln.
Sure, sir. Got it. Sir, only one constructive feedback from my side would be to please, along with the results, you can also post all the operating metrics because that eats up a lot of time in concall and it is very difficult for us analysts to note down all the key metrics which are mentioned by you, sir.
Okay, thanks. I take note of that.
Sure. Thank you, sir.
Thank you.
Thank you. Participants, you may press star and one to ask a question. Next question is from the line of Rajesh Ravi from HDFC Securities. Please go ahead.
Hi, sir. Thank you for taking my questions. Am I audible?
Yes. You are.
Yeah. Thanks for the detailed opening remarks. Quite useful. The blended fuel cost, can we consider it for this quarter around INR 2, INR 1.8 and INR 2.15, simple average?
You can do it, but unfortunately, I can't use that. I go plant by plant because the coal supplies are different. But the numbers that I've read out to you are the numbers. Obviously, if the production is similar, you can call the average. At times, Devapur produces a lot more. The capacity at Devapur is more. I've not calculated weighted average. But yeah, largely, you can take your number.
Okay. Are you looking at any savings quarter-on-quarter in Q3 or if at all?
Well, honestly, even the previous question that came that people are seeing lower fuel costs. While lower fuel costs, we did see for ourselves also, as I have reported, that power and fuel cost is lower. Within that fuel cost is even lower if we take away the increase in power cost, right? But lately, if you people have noticed, the international petcoke prices have been firming up again. All of you are aware of that, right?
Given the fact that the later procurement of petcoke from the international markets is happening at a higher price, that will start impacting the costs in the other direction. I mean, all of you are aware of that, right?
Correct.
Similarly, price increases on Coal India Limited and by petcoke increases by whether it is Reliance Industries Limited is actually the company which announces the price increases. So this particular month again, they have increased their petcoke prices once again. You have seen that, right?
That you have to factor in.
Okay. Incrementally, your savings will accrue more from the WHR Q3 and Q4 on and the solar power that you mentioned.
Waste recovery and to the extent we can improve the fuel mix using alternative fuels.
Okay. And sir, how much was that?
That's the other lever also.
12% it was in Q1. How much was that in Q2, and what is the target for this year, by end of this year?
You see, at Devapur, on volumetric basis, we are targeting 20%, but on thermal substitution, it will be about 12%, 13%. At Devapur, Chittapur, we are struggling to get enough of alternative fuels, which makes sense. There we are using lesser volume and thermal TSR substitution, but we are getting at a lower price because there we are using more of a municipal waste and RDF.
There are different fuel profiles at both our plants, given the location and given what alternative fuels are available. Right?
Right.
On a blended basis of a TSR, target does remain 11%, 12% on thermal substitution. Much more at Devapur and less so at Chittapur.
Okay. So earlier also, the numbers which you have shared, 12%, 13% in Q4, Q1, there also the blended TSR only, right?
Look, anything which is looking closer to 20% is based on volumes. In thermal substitution—
Okay.
—where typically it will be low to two digits.
Okay. Understood, sir. That's great. And on the CapEx, you detailed out that there are multiple approvals which are pending, and once they come through, the work will start. So any ballpark? Because first half, the CapEx has been subpar versus your annual CapEx guidance. So as we stay in October or mid-November, what is the current understanding for the second half? How much CapEx you are looking at for this financial year?
Rajesh, given the situation that we have today, it doesn't seem as if in this particular quarter we'll be able to spend anything significant on CapEx for expansion of capacity. In the last quarter also, even if we start some work, it will be fairly moderate. Unfortunately, every quarter we report the same thing. The CapEx is slightly behind schedule. I don't think there's any significant amount that we will be able to spend this year. But we are preparing everything to make sure that as soon as possible, if we can start in January, February, March, early next year, as soon as we have the approvals in hand, go full steam ahead. Obviously, that would mean that what we had forecasted for this year gets shifted to the next financial year. But it's a month after month after issue.
It's not a question of year to year. Year to year looks as if we are going from FY 2024 to FY 2025, but we had always said that we'll be more in second half, which unfortunately is, again, disappointingly for us also, is not happening at the speed at which we wanted, because we do need capacity, as I mentioned. So let me work that through based on the approval that I get, and in a few weeks' time, if required, I'll inform all of you as to when are we. But the moment the approvals come, I'll send out information to all of you, and then I can talk of specific dates for starting work.
Thank you. Rajesh, I would request you to come back for a follow-up question. Participants, you may press star and one to ask a question. Next question is from the line of Sanjay Nandi from VD Capital. Please go ahead.
Hello.
Yeah. Hi.
Yeah. Thank you for the opportunity, sir. Just one question from my side. Can you just guide what—
Sanjay, your audio is not coming clear. Can you speak through the handset, please?
Now it's fine?
Yes.
Yeah. Sir, can you please guide us, what kind of incremental price hikes has happened in last 40 days from the exit of the September month in our areas of operations?
On our markets, we have been able to see a price increase of nearly INR 20 a bag or INR 400 a ton gross of GST. Out of that, if you take away GST, perhaps more around INR 300 a ton. But INR 20 per bag on an average for us is the impact. Obviously, the impact is slightly higher in southern markets because there the prices are very low. In markets like Maharashtra, where prices were not that low, the impact was a little lower, but I am giving you a blended information.
Sure. That is it from my side. Thank you so much.
Yeah.
Wish you a happy Diwali.
Thank you. Happy Diwali.
Thank you. Ladies and gentlemen, you may press star and one to ask a question. A reminder to all the participants, you may press star and one to ask a question.
I think, one, perhaps most of the questions that come to us have all been answered. Secondly, I am sure being a festive day probably the people also may not be wanting to spend too much longer on this call, so we will go by whatever the sentiment of the participant says.
Sir, we have next question from the line of Navin Sahadeo from ICICI Securities. Please go ahead.
All right. Yes, Navin.
Navin, your line is on top. Please go ahead.
All right. Thank you for the opportunity.
Yeah. Hello.
Yeah.
Yeah. Thank you for the opportunity, sir. Sir, you mentioned that environment clearance and other approvals are being sought for the expansion announced, which is Chittapur. Just to understand, once we get all these approvals, will it be fair to expect the commissioning in about 15- 18 months timeframe, or you think it can take slightly higher?
No, not more than 18 months at all.
18 months.
I said not longer than 18 months. We are trying to do some part of it within 15 months. Whereas the split grinding unit that we are saying to support Devapur, that may take about 18 months because greenfield always takes longer. Brownfield can be done within 15 months.
Understood. That is helpful. Thank you.
Yeah. Thank you.
Thanks.
Thank you. Next question is from the line of Parth from Investec. Please go ahead.
Yeah. Hi, sir. Thank you for the opportunity. Sir, you hinted that Coal India has increased prices in the last few months, and even Reliance petcoke prices have gone up. Sir, what sort of inventory are we carrying? How much time will it last for? The second question is, do we see power and fuel cost, the increase of these prices will have its impact in Q3 or Q4?
It depends on each company. Your first question actually has the answer hidden within itself.
Okay.
A company like us, we actually procured a shipload of petcoke from international market just a few weeks ago, which landed at our place. That we managed to buy at about, I would say, $131 a ton, right? Already the prices of those things are looking higher. Somebody like us who is covered for nearly three months. It will be higher than what we were using in Q2, but still lower than what the market prices are. Okay? When we start booking coal for Q4, we will have to see at that time what the market prices are, because petcoke prices in international markets have been going up and down. Fortunately, we ended up buying two shiploads at a cost, which is now proving to be favorable to us. It will depend.
If other companies have booked their coal for two, three months already at a lower price, they will benefit. If some people are buying coal now at a higher price, obviously they will see the impact within Q3. Hopefully, we will see marginal impact in Q3 on our costs.
But significant, if there is any impact that we will know only when we have the time to book the new petcoke ship.
Right. The new—
It's a moving cost always, as you know.
Right. The new shipload will have some impact in Q3 and some in Q4, I believe.
Correct.
Okay. About coal, even coal, how much, if you could just help us understand what would be the change be over maybe Q2 versus in the last one month.
No. The impact largely on domestic fuel price that we have seen in Q2 for us is about 8% over last year. On sequential basis, it is thankfully very marginal.
Okay. Coal is not, and maybe petcoke is much higher.
Yeah. No, petcoke actually so far has been lower than last year. If you remember, around this time, petcoke prices in international market last year started coming down.
Right. Year-on-year it would be lower.
Then we saw Q1, Q2, we have seen significant savings over last year.
Right.
Now, when the prices are going up, let us see how far they go compared to last year, and that will determine the cost that we have to book.
Right. Okay. Got it, sir. Thank you so much.
Yeah. Thank you.
Thank you. Next question is on the line of Raghav from Asian Market Securities. Please go ahead.
Thanks, sir. Follow-up. Sir, I wanted to understand, do we have any plan to set up WHRS at Devapur also at any line out of three?
Yes. I did speak in my opening remarks that the only renewable power at Devapur we can plan for is waste heat recovery. For that, we have our internal project report already done, and we are in a sense already talking most probably to the vendors who are doing their waste heat recovery plant too. They've started visiting our site for them to submit commercial bids to us. Yes, it's very much on. We would like to set it up at least on Line 3, which seems to be a line where the layout and all permits has a good access to the waste heat. We are also looking at Line 1 because it's an old line and the waste heat is higher, but somehow the CapEx of putting it up on Line 1 is making me a little, I would say, confused whether it should be.
Line 3, certainly we'll put up a waste recovery plant. Hopefully on Line 1 as well. I'll tell you the challenge comes in is that Line 1, when I put it up, the CapEx is higher than what it'll be for Line 3. That increases my payback period. Typically, we want the payback on waste recovery within three years. If I go on Line 1, it may go to about five years, which is what is worrying me. So although the benefit is there, I'm still debating. Line 3 for sure. Line 1, maybe. Line 4, certainly when we put up the Line 4, we'll build it along with the waste heat recovery plant for Line 4 separately.
Got it, sir. Last question for Chittapur fuel consumption rate and Devapur, which is primarily on the Singareni Coal Fields. On the 1,000 per kcal , what is the difference between primarily within the Chittapur and Devapur generally?
As I mentioned to you, in Q2, it has been more than INR 200 or 0.2 as many of you calculated. It was 1,800 and 2,000+ at Chittapur, as I read out to you. That is a blended cost of fuel at both the plants. Devapur continues to be lower fuel cost purely because we have the freight cost, which is much lower. Even if the fuel costs go up, thankfully, our location in Devapur, which is close to Singareni Coal Mines, makes it cheaper for us purely because the freight cost is for us is lower at Devapur. Please remember that. It is not about the procurement cost of coal, it is about the blended cost of coal.
Got it. Okay, sir. Thank you.
Thank you.
Thank you. Next question is from the line of Uttam Kumar Srimal from Axis Securities. Please go ahead.
Yes, sir. Good afternoon, and thanks for the opportunity. Sir, you have guided for this year volume guidance of around 6.3 million- 6.4 million tons. That comes around 12% on a Y-on-Y. So what would be, sir, our guidance for volume in FY 2025? We should take the same 10%, 12%?
Why would it be the same? We would look for another 10% growth in FY 2025. It goes without saying that. We have the capacity to go up beyond 6.5 million. We have 8.5 million in capacity. We certainly will be looking at another, if the industry growth rate is around 10%, we will also then go for 10%, for sure.
Okay, sir. That's all from my side, and happy Diwali to all of you.
Very happy Diwali.
Yes. Thanks.
Thank you. As there are no further questions, I will now hand the conference over to management for closing comments.
Thank you. My closing comments always, because I do so much in opening comments, the closing comment largely happens to be just a very heartfelt thanks to all of you who keep showing their interest in our company and ask us very relevant and constructive questions. Thank you. Constructive suggestion also has come today in terms of sharing more KPI-led information through the circulation. I will consider that, too. Before finishing, I once again want to wish all of you a very happy and prosperous Dhanteras. I will repeat, may even while you acquire more gold, let's also try and acquire a heart of gold. All the very best wishes for the Diwali festival. Thank you very much.
Thank you very much. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.
Thank you. Thank you, everyone. Thank you.