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, Yusuf. On behalf of ICICI Securities, I welcome you all to the Q3 FY 2024 earnings call of Shree Cement Limited. From the management, we have with us MD, Mr. Neeraj Akhoury, Senior Advisor, Mr. Ashok Bhandari, and CFO, Mr. Subhash Jajoo. Without any further ado, I hand over the call to Mr. Akhoury for his opening comments. Over to you, sir.
Thank you. Thank you, Navin. Good afternoon or good evening, ladies and gentlemen. Welcome you all to the earnings call of Shree Cement for the quarter ending December 2023. You know, this quarter has been quite exciting for us on many things. We've just started a new plant in Rajasthan, Nawalgarh, which is one of the largest plants in the country and most probably even in the world. But, combined with that, we also like to inform you that Shree Cement has been able to roll out what we call our revamped brand strategy to develop and become a more preferred brand for the markets.
I would like to, at the very beginning, take you through what have we done with our new brand strategy and how we believe it will help us to further strengthen our market position. Last one year, we have been researching, we have been asking a lot of questions in the market, doing formal and informal research, and we found that there are areas where we need to redefine our business objectives. One of the business objective was, and as we have said in the past calls as well, was to enhance our consumer pull in the market, as well as our grow our premium product business. In, in...
While doing so, we were very convinced that, as a brand, we need to become stronger in the ISB business by offering them a superior, innovative and a differentiated product, and that was one of the objectives that we took. And all this required us to review our brand architecture, and based on that, we have revamped our brand strategy with a master brand approach. We have launched in the month of January the master brand for all product categories of Shree, which will be under the master brand of Bangur. This will be across the markets.
There has been a lot of investments to create a new visual identity, to modernize the brand, with a new logo, as well as with what we do believe is one of the most modern packing designs. In addition, we have now streamlined our premium offering with one premium in the market across the country. We call it Bangur Magna, which is a product with very superior formulation and also a very unique packing design. What we are doing today is a heavy multimedia ad campaign showcasing the new brand, Bangur master brand, and very happy to say that our Sunny, our brand ambassador, for the first phase is Sunny Deol.
And with him, we have been able to bring some clutter-breaking advertisement campaign in the market. The first level response, though, is too early, has been encouraging. We have exposed our ad campaign to about 50% of the target group within the first week itself, and received very positive feedback through our follow-up research in terms of the creative quality as well as in terms of interest of the consumers in our brand. In addition, we are doing a lot of parallel activities. We have connected to over 150,000 contractors within the three weeks, and received encouraging report from them in terms of our product and packing quality.
Very happy to say that, as we are moving, Magna share in our total sales is also going up sharply, and we believe that we will be able to meet our objectives in the coming months. Going back to... I'll be very happy to take more questions on our brand in when we start the Q&A. Going in the results, the broad features of the results, both YOY and QOQ basis, this is how we would like to summarize this. So December 2023 was one of the better quarters, if not the best quarters in last 2-3 years. This was a quarter where we fired all cylinders, volumes was up, realization was up, and cost was down.
Sales have increased from about 8 million tons in December 2022 to about 8.9 million tons in December 2023. We are achieving a growth rate of roughly about 11%. But more importantly, our utilization rates are now increasing from 72% last year to 77% in the last December. Also, the sales realization was up by about 3% from 4,854 to roughly about 5,006 INR per ton. Very encouraging to see that the average fuel cost is reduced by about 15% from about 2.46 per CV last year to about 1.78 per CV in the last quarter. This contributed to increasing the total EBITDA from INR 708 crore in December 2022 to INR 1,234 crore.
INR 123.4 crores, a growth of roughly about 74%, while EBITDA per ton was recorded at INR 1,387 per ton, against INR 881 in the last year, same quarter. Even on a sequential basis, we see improvement. Volumes were up by about 9% from 8.2 million tons to about 8.9 million tons in December 2023. Realizations improved by from INR 4,843 per ton to again, INR 5,006 per ton, up by 3%. And fuel prices continued their downward trend and were at INR 1.78 per CV, compared to INR 2.05 in the September 2023 quarter.
Total EBITDA increased from INR 870 crore to INR 1,234 crore, raising a growth of roughly about 42% on sequential basis. EBITDA per ton also increased from 1,062 per ton to what I said, 1,387 per ton. Very happy to say we already commissioned our 3.5 million ton Nawalgarh plant. Another plant of 3 million tons at Guntur is likely to be commissioned by this quarter end. We have ordered one more cement mill of 3 million tons at our Pali, Rajasthan plant. Accordingly, we are on a target to achieve a capacity of about 75 million tons by March 2027. A further step to reach 80 million tons, over 80 million tons cement capacity by March 2028.
On energy front, our capacity stands at 977 MW, very close to 1 GW now, and green power capacity of 73 MW has been commissioned in January 2024, and another 133 MW is likely to be commissioned in phases over 2024-2025. This shall take our total power capacity to 1,110 MW, giving us a power sufficiency of about 65% from the current levels of 61%. This is another step towards a sustainable business model. I have Mr. Ashok Bhandari and Mr. Subhash Jajoo with me, along with Mr. Khandelwal, our company secretary, and I would request them to take you through our financial performance. Mr. Ashok Bhandari.
Good afternoon, everyone. I suggest that if you have any questions on the brand strategy or brand thought process, you may please go ahead and ask the question directly to MD. Otherwise, if you may want to go into the financial integrity, we can start it now itself.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Mr. Navin Sahadeo from ICICI Securities. Please proceed.
Good evening, sir, and congratulations on a great set of numbers. On the branding part of it, revamping this entire brand exercise which has been done, I had two questions. One is: Do we have a milestone or a target to reduce the price gap of three, or now, of course, Bangur versus a benchmark, let's say any particular benchmark, large company or an average. Do we have a target in mind to narrow the price gap? And over what period of time we are looking at? That's my first question. And second is: Apart from this brand revamp, are we also looking to touch upon some of the other technical aspects, such as, let's say, setting strength of the product or even the Blaine kind of thing?
Are we looking to do some changes with that as well? Thank you.
Thank you, Navin. Navin, as you said, this is the first phase of the exercise, in which the objective is to improve our brand awareness. This is technically what we call the top of mind awareness or TOM, where we have a very definite range that we should go above 50 in the top of mind awareness of our brands in the market. Price is a subsequent topic. We believe as we are, we have now established very firm standards on quality of our product. Combine this with marketing, we should be able to improve our price position.
Having said that, our first target is to make sure that our premium product, Magna, sells at a better price in the market, in line with the quality which we are offering, in line with the differentiation that we are offering, in lines of, be it initial strength or be it final strength that we are offering in the market. So that is the first level goal, Navin, and I'm sure brand development is a midterm topic, is a long-term topic in fact. Many brands have invested over the years and to create the kind of position that they today command, internationally as well as in India. We will also continue to invest in our brands.
with the objective that our brand should get a position in the market, which is in line with the quality that we offer and in line with the products and differentiation that we are offering.
Thank you, sir.
Thank you. Next question is from the line of Parth Bhavsar from Investec. Please proceed.
Hi, sir. So thank you for the opportunity, and congratulations on the good set of numbers. Sir, I have two questions. One is on power and fuel, which has, you know, improved significantly quarter-on-quarter basis. And you also mentioned that your consumption cost has, you know, declined to INR 1.78 per Kcal. So wanted to know, like, if there's any further room of improvement and if this number would sustain going ahead in coming quarters?
I'm requesting my colleague, Mr. Bhandari, to answer your question. Go ahead, sir.
Hi. Look, you have to appreciate two things. Number one is that the consumption is based on weighted average cost of inventory we carry. The decline from INR 2.05-INR 1.76 quarter-on-quarter is because the weighted average inventory carry cost has come down. Though the pet coke prices yesterday showed a declining trend from $120 to $110, yet as per our contract and pipeline, the fuel cost for this quarter on a weighted average basis, based on the inventory and pipeline inventory, would remain almost same at about 1.76%. 1.76 INR per kcal. Am I clear to you?
Okay. Okay. So it wouldn't go down further, at least in Q4.
No, it will.
It is-
That is what I wanted to caution in. If the pet coke prices have come down, our procurement prices in future will also come down. However, as I explained, the consumption is based on weighted, weighted average cost of inventory. So my inventory in last quarter was at about INR 1.76 or INR 1.77, and based on the inventory which we have and the pipeline we have, it remains the same for this quarter. Next quarter it will come down, but that will move in tandem with how the international prices of coal and pet coke changes. Another very interesting development is that the South Africans, because of the Red Sea turmoil, are not being able to ship it to Europe. So like Russia, they have started offering South African coal at a discount to international price to Indian consumers.
Okay.
So that may also play out, but it will all be next quarter. For this quarter, you please take my fuel cost at about INR 1.76 per kcal.
So the reason why I ask this is, I just wanted to know if we are off the hook, we won't again see, like, INR 1,650 burden of power and fuel cost. And I understand the inventory thing, and it will come down.
Yeah, that's what I am saying. There are two, three levers in that. Please understand that increase in capacity utilization from 72% to 77% has its own cascading benefits on operating efficiencies.
Right? So, saying that it will go to INR 1,650 or INR 1,540 or INR 1,450, I can't say that. I can say the general trend of a declining fuel cost because of increasing operating efficiency, which is linked to capacity utilization, and as MD was suggesting, we are confident that 77% should go upward. It cannot come down. So what kind of efficiency benefit we get by uptick in capacity utilization is very difficult to determine as of now. I can only assure you that two things will help in Q4. One is the fuel cost, but the consumption may decline because of increasing operating efficiency. And the power cost will go down because the 73 MW of green power capacity commissioning in January will start giving us benefit in next two months.
Right.
So I must have better operating efficiency, better capacity utilization, and lower fuel costs, fuel and power cost. Now, how much, how it will play out, what will be the plant load factors of the renewables? It's very difficult to ascertain, but, I'm fairly confident that at least this quarter performance should not deteriorate. It may only improve.
Okay. Perfect. Got it, sir. And just wanted to understand. Wanted to know the CapEx guidance for 2024, 2025 and 2026.
Now, listen, let us put it like this. Post Guntur commissioning, but I'm not considering Guntur in this plan, we should be having a CapEx about INR 12,500 crore, up to 2027.
Okay.
I have INR 6,000 crore cash in my hand, so I will be needing about INR 6,000-INR 6,500 crore, which should come from internal accruals only.
Okay. Perfect, sir. That answers my question. Thank you so much.
Thank you.
Thank you. Next question is from the line of Shravan Shah from Dolat Capital. Please go ahead.
Thank you. Congratulations on great set of numbers. Sir, is it possible this way we have set the power revenue and EBITDA for the last quarter? Or can you share for this quarter?
Yes, the revenue is at about, is INR 350 crore, and the EBITDA is about 10%. This is power only.
Okay, and for nine months?
Nine months, figure ..., I have it, just give me a second.
Okay.
[crosstalk] Hello.
Hello?
Yes, sir.
Yeah, the power revenue is INR 1,173 crore.
Okay.
The EBITDA will be in the range of 10% only, 9%-10%. Last quarter it was about 9%, but some benefit has come up because of lower fuel cost, so it should be at about 10%. You can take 10% as a benchmark.
Okay, got it. And sir, cement realization, you mentioned 3% up to for Q2. So, it should be INR 4,988 for this quarter, cement realization.
My dear friend, what is happening is because you did not have the power revenue number, you must have used the consolidated revenue divided by cement only. You knock off INR 350 from there and then see. The numbers are INR 5,006.
Okay. Okay, got it. And if you can help us in terms of the timeline for what all the ongoing expansion. So, Guntur, will it be starting this March, April?
Yes, this March 6, not April.
Okay. Okay, and,
I'll take you broadly through the numbers.
Yeah.
We should be 56 million tons by March 2024.
Okay.
62 million tons by March 2025.
Okay.
65 million tons by September 2025.
Okay.
March 2027, I should be 75 million tons.
Okay. Okay, got it. So, in terms of this, for the latest 3 MTPA Ras expansions, what would be the CapEx for that?
The CapEx for 3 million ton Ras will be about INR 600 crore, because it's a brownfield.
Got it. I got it. So, nine months, how much CapEx we have done in-
Sir, may we please request you to rejoin to the-
Hello?
As there are several participants waiting for their turn.
Hello?
Yeah, sir.
Yeah, it is INR 2,600 crore.
Okay. Okay, thank you, sir.
Thank you. Ladies and gentlemen, in order to ensure that management is able to address questions from all the participants in the conference, please limit your questions to two per participants. Next question is from the line of Prateek Kumar from Jefferies. Please proceed.
Hi, Prateek.
Hi, sir. Good evening.
How are you?
Good evening. Sir, congratulations for great set of results,
Good. I'm happy you like it.
Yeah, so on your said volume growth, we have, like, clearly outperformed the industry growth in this quarter at 11%.
One second, my dear friend. If you have a doubt on that number, please ask so. Or we are the best.
Yeah. So you are the best.
Thank you. Thank you.
Yeah, so, how do we look at, like, next year is expected to be slightly relatively duller for the volume growth, because of one or two quarters of impact of demand because of elections. How do we look at demand growth for our ourselves?
Let me put it like this. March 2024, we should be certainly 35 million+ tons. March 2025, we expect to touch the magic number of 40 million tons. The industry should go between 8%-10%. So if I'm 35.2 million tons or something, I may be hardly 1% higher than the industry average growth rate.
Okay. 8%-10% for this year, you, you meant?
No, no, 8%-10% next year. This year is gone year. You want the number of this year? I can give you. Add 9 million to the number we have already published, and you will understand what the growth is. It will be 35+. So we will be at a number about 12%, 11%-12%.
Okay, good. 35, and next year, 40 million tons. Okay. So we'll be growing a tad higher than the industry, if industry growth are 8%-10%.
More in line with the industry, in fact. We should be about 12% this year, yeah? Hopefully.
And just on profitability, so we understand there's some price rollback in the current quarter, Q4. So why-
Look, Prateek, let us understand like this. After all, it's a cyclical business, and it is completely demand dependent on the demand and supply in the market. And we, you, you must not have, you might not have interacted with me earlier. We have never given any price guidance because price is not in the control of any manufacturer. We have always given cost guidance. I have already stated that my cost should tend to be lower because of the factors explained on fuel and other things. Now it is your call completely as an equity analyst or a cement industry analyst, to take a call on where the prices will go. We have never given any EBITDA guidance. We have never given any price guidance, because EBITDA is a result of price minus cost.
We give you cost guidance and we give you the general trend of cost. So please, excuse me, I will not be in a position to give you a top line or a bottom line number. I can tell you how my cost should move.
Certainly. And just on, while this question was discussed slightly earlier, on your premium product mix, how is that expected to flow into your EBITDA per ton?
Well, let us understand. The incremental revenue reflected in this quarter is because of a better product mix, lower logistics costs, and the higher capacity utilization. The same factors should play out, because whatever game we have learned in last six to nine months should only get improved, isn't it? Learning is a long learning curve, so it should improve. And we feel that on the cost front, we should not be... We should-- There is no reason for us to believe that we'll let you guys down. On the revenue, let the market take a call.
Sure, sir. These are my questions. All the best.
Thank you.
Thank you. Next question is from the line of Jashandeep Singh Chadha from Nomura. Please proceed.
[Foreign language] Arre, Chadha Saab, precise karke karo, conference call to aapko yahi mil jata hai, con call transcript.
Thank you so much, sir. I'll, I'll be soon, you know, recover fully and come back. Congratulations on great set of numbers, sir. Sir, you have explained the power and fuel costs. I just wanted to understand the logistic costs. I think a couple of quarters back, a lot of initiatives were told to us that we'll be taking to reduce the logistical costs, one being the putting up railway siding at various plants. So how is the progress on that, if, you know, we can get an update?
Thanks a lot. So now, [Foreign language] Pehli baat toh, all of you have to appreciate that when there is a churn in the organization, it takes its own time to settle down and become stable.
Right.
On logistic front, what has really happened is that because of induction of professional managers, we have been able to cut on lead time, lead distance rather, and we have been able to optimize the cost also to some extent. As far as railway siding is concerned, we are progressing on it. I am on record with you that by March 2027, we should be 80%-90% dependent on our own railway siding. We are working on it. The progress is going on. Railway siding, the biggest hassle is acquiring that particular parcel of land, which becomes pricey because people know that you need that land. So we are working on it. Purulia, we should be able to, which is in East India, we should be able to complete it before September this year, and balance, I'll keep you updated.
This is a quarter-on-quarter progress kind of a number, you can't pin me down, please. March 2027 is the target.
Right, sir. Thank you so much for that. And sir, one clarification I want, so by March 2026 on 75 million ton capacity, you should have around 20, 20.5 million ton in east. And on back of that, you have around-
[Foreign language] Nahi, nahi, nahi, nahi, nahi, nahi, nahi, nahi, nahi. Thoda sa galat ho. Kya 25 million toh nahi hai isme? Yeh kya hai isme?
Around 21 million.
[Foreign language] Haan, thik hai, bhai. You are, you are right. I am sorry. 21 million tons.
Right, sir. And on back of that, the backing of clinker is around 9.2 million-9.5 million ton. So will we have a situation of clinker shortage, even 1.8 C, C to C also present-
You have to, you have to understand. [Foreign language] Duniya khatam nahi ho gayi hai na?
No, right, sir.
[Foreign language] Thik hai na? Toh aur INR 80 million ka target hai mera.
Right. And is there any preferred pecking order on that, or you are still on that front?
[Foreign language] Pecking order toh, are pecking order toh clear hai na, bhai. Kodla is number one.
Yes.
And, second is, of course, Ras, my north plant. And balance of grinding units, clinker ka, we will reassess the position because [Foreign language] samajho ke jo east mein clinker add ho raha hai, woh 25, 26 mein ho raha hai.
Right.
[Foreign language] Toh usmein, usmein apne pas time hai. Woh toh brownfield hai. Limestone ka toh koi kami nahi hai. 18 mahine mein kiln lag jata hai toh problem kya hai, dost?
No, I completely understand, sir. Thank you so much for this, sir, and I'll get back on with you. Thank you.
Thank you. Thank you.
Thank you. Next question is from the line of Rajesh Kumar Ravi from HDFC Securities.
[Foreign language] Arre ja.
Please go ahead.
Rajesh, how did you like the numbers?
Sir, fantastic numbers, sir. That is what I was trying to start with. It's a great set of numbers. Congratulations to the team. And, sir, could you share what was the trade mix and blended cement production in this quarter?
It was about 76%, 24%, if I remember correctly.
Trade mix, okay. And blended?
Blended, blended cement?
Yeah, blended cement share.
One second, yeah.
Also fuel mix.
[Foreign language] Arre bhai, dekho aisa hai, ke fuel mix ka paper toh mere pass... Eh? Yeah, yeah, I'll ask Mr. Jajoo to reply.
Sure, sure, sure.
Yeah. So blending ratio was around 72%, and our fuel mix for this quarter is 73% Pet Coke, coal 15%, and alternative fuel around 11%.
Thank you. And sir, this year, nine months total CapEx you mentioned?
We, I said INR 2,600 crore.
INR 2,600. Full year, how much will we spend, sir, this year? The remaining three months, how much CapEx we are reserving, and this INR 12,500 crore, which will be subsequent for next two to three years, how will that-
In this quarter, we expect about INR 600 crore-INR 700 crore of CapEx.
Okay. And this INR 12,500 crore for next three years? Mm-hmm. Mm-hmm. Okay.
Into 6 million ton next year.
Okay.
9 million tons, 25, sorry, 60, 25, 26, and yeah, you understand, 26, 27. So one third, one third, one third.
Okay. Okay. And sir, yeah, this logistics cost, which you mentioned, you already addressed that this is now, because of your various initiatives, and this number, should stay, remain steady?
For this quarter, yes, I am telling you that this number should remain steady.
Okay.
It's not-
Okay. Incrementally, it can only go down. Is that understanding right?
Look, the most important element is fuel, power, and logistics.
Okay.
Fuel,
Mm-hmm.
Power, energy, renewable energy,
Mm.
difficult.
Great. Great, sir. And lastly, could you share what is, what has been the demand trend in these, east market and north market during the quarter? Your assessment of demand, industry demand.
Mr. Jajoo will address this. I'm handing it to him.
Sure. Hi, sir.
Yes, the demand trend in the last quarter was the best, was there in North India. East was a bit weak. So, like the demand grew by around... For our sales, grew by around more than 10% in north, and in East it was around 2%-3%.
Okay.
South, the growth was around 10%.
South including west.
South and west is-
South and west together. Okay.
Yes.
And, uh-
This is on a sequential basis, and if you consider on a year-on-year basis, also, North was the best performing market, at around 12%-13% growth.
Okay.
Similar was south, and east was a bit down at around 7%-8%.
Okay, but-
Overall, the growth was around 11%.
Great, great. So east also, you witnessed 7%-8% growth?
Yes.
Okay. And industry, what would have been the numbers, sir, broadly, if is there any understanding on the industry for east?
I don't have the individual region-wise number, but I think overall the growth is around 8% or so.
8%, both south and west together.
Great. Great, sir. I think that's all from my end. Thank you, and all the best.
Thank you.
Thank you. Next question is from the line of Satyadeep Jain from Ambit Capital. Please go ahead.
Hi, thank you. A couple of questions. One on just, I'm not sure if I missed it, but, any comments on the, the income tax demand, that we saw the notification. Can you provide any, any comments from your side?
Mr. Jain, you will appreciate that we are covered under LODR. Any development on that part, legally requires me to send a disclosure within 24 hours to stock exchanges. If we have not sent a disclosure, then obviously we don't know, and not... No development has taken place to the best of our knowledge.
Hmm, okay. Secondly, on the cash position, can you given some of the details on-
INR 6,000 crore as on 31 December.
INR 6,000 crore? Okay. Thank you so much.
Thank you. Next question is from the line of Gagan P, an individual investor. Please go ahead.
Yes, please.
Mr. Gagan, your line is unmuted. Please proceed.
Hello, Gagan here.
Hi, Gagan
Hello. Very good set of numbers, sir. I'm a very long-term investor, for 33 years in your company. I appreciate the company because due to capacity increase, the sales should grow, not due to the price increase. And I find the depreciation is about INR 1,104. It has decreased for the nine months from INR 1,104 to INR 986. What are the reason?
Uh-
What is the cost per unit of the cement produced? Have you started reducing like that?... And then, what will be the current year, current next quarter also will be much better than the present one, that is what I believe. And I appreciate the dividend aspect of it. A company like ours, I should, it's difficult when, when I ask for split, something like that. See, okay, in the dividend front, you have given a good dividend. I appreciate that. I wish you all the best, sir. I don't have any questions.
Okay.
Cash conversion cycle also, how many number of days can you tell me that?
Just give me two minutes. Let me address one question at a time.
Yeah, sorry.
As far as depreciation is concerned, please note that Nawalgarh got commissioned officially, commercial production started on 22 January. So no depreciation has been reflected in the nine-month period. For the period, for in this quarter, you will have a much lumpier, depreciation number because of Nawalgarh and commissioning of Guntur.
Right.
Okay? This is one part of the story. The second one was, can you please repeat your questions because I tend to forget what all you had asked.
That is, per unit of cement, how much current is electricity units consumed?
Units is about, you, you mean to say power units?
Oh, yeah, power units.
About 68.
About?
68.
68. Very good, very good. Fantastic. No doubts. And what about the cash conversion cycle? I mean, how many number of days?
We should be at about 72.
That is the industry standard or.
Well, we have not compared, and we'll get back to you, Mr. Jashandeep. If you can send a mail to the CFO of the company.
I'm not Jashandeep, I'm Rangan from shareholder.
Oh.
Jashandeep, okay? Sorry.
I'm sorry, Mr. Rangan, because we had introduced somebody as Jashandeep. Never mind.
Yeah, yeah. Okay, I'm Rangan. R-A-N-G-A-N, okay? I'm a shareholder.
Yes, Mr. Rangan, because I was also wondering, Jashandeep is a North Indian name, and your accent was South Indian, so I was kind of confused, but I kept silent.
Very good. Very good.
Mr. Rangan, the cash conversion, please send a mail to CFO, and you'll see that you'll get replied tomorrow, because you want me the industry norms also, which I don't have with me.
Thanks. Thank you.
Welcome, sir. Welcome.
Thank you. Next question is from the line of Devesh Agarwal from IIFL Securities. Please go ahead.
Thank you for the opportunity, sir. So, couple of questions. First, on the branding, if you could share, are we kind of holding some of our brands into this new brand strategy that we have of Bangur and Bangur Magna? So some of our premium brand, are we holding into that?
[Foreign language] Arre, ek minute. Aap zara sa pehle clear ho jaiye. MD sir aapne explain kiya, ki jo humare woh Jungrodhak tha, jo Rockstrong tha, woh Shree Rockstrong, Shree Jungrodhak, Bangur something, aisa tha. Abhi class bane, sab products toh wahi hai, but instead of the name Shree, we are using Bangur as the main, as the generic name, and then we are classifying all these products. Magna is a new introduction. Magna is only for premium quality cement.
Roofon will continue, sir?
No, at the moment, we have three variants at one price point, which is Jungrodhak, Powermax and Rockstrong. We have then premium as Magna.
Understood. Understood. And, sir, second question, if you could share the geo mix in the quarter, that will be helpful.
Yes, Mr. Jajoo will give it to you.
Yeah, the geo mix for the current quarter is roughly 60% from north, around 28%-29% from east, and roughly 12% from south.
Okay, sir. Lastly, sir, we see this stock purchase of INR 50-odd crore in the quarter. In the past, you had told us that there are some coal shipments that we have on sale, which gets reflected in this line item. What was in this quarter?
Some purchase.
Yeah, for last quarter, it was pertaining to some coal sale, but this time the INR 52 crore, yes, it is some for some clinker purchase.
For clinker purchase?
Yeah.
Understood. That's it. Thank you so much.
Thank you. Next question is from the line of Amit Murarka from Axis Capital. Please go ahead.
Yeah. Hi, good evening. So, on the cost per se, there is obviously a big decline in freight. You've mentioned that it is because of lead distance. What was the lead distance in the quarter, and what would have been in the previous quarter last year?
Look, I think previous quarter was about 472, and this quarter it has come to about 448.
Okay. And, is there any expectation of it to come down further?
Obviously, everybody is working on that, my friend, and biggest advantage will be when we commission our grinding units in diverse geographical locations. The idea, you see, grinding units are wheel and spoke only, so the number of spokes you increase, your lead distances go down.
Right. Got it. Also, on this power as well as the coal trading that has happened. So on coal, we believe it was a one-off, right? I mean, so going ahead,
It was a one-off only. We belong to the philosophy that money doesn't make anybody's pocket heavy. We got an opportunity, we did it. If we get another opportunity, we'll try to do it, but that is not the focus area.
Okay, sure. Power car, what was the sale in this quarter? Number of units.
Number of units, INR 350 crore. So data
Okay, okay. And lastly, you just showed me, the plants that are coming up, the Kodla and all, so what will be the target market? Because why I ask that is generally, like, those markets in Andhra and all have been earning lower margin per se. What will be the pricing or branding strategy when you go into those markets?
Amit, two things, one is Guntur. So around Guntur, draw a circle of 450 km-500 km. With a diameter of 500 km. That is the natural market. My lead distance is 448 km. So assume 2 million ton, 3 million ton, whatever I produce in Guntur, if I do 500 km, it will be within the average of 448 km. It won't make much of a difference. But the idea is, when you try to access the market of any cement plant, so 450 km-500 km is the maximum lead distance you can transport economically. Am I clear to you?
Yeah, yeah, I get it, yeah.
So according to that, the market is defined. Now, if you want specific details state wise, I will ask the marketing people and let you know. We just know that the lead distance cannot be more than 500, because then cost economics deteriorate. So the plant is there to make money, what to do?
Sure. And just last question, so you are close to reaching 80 million ton now. So based on your current limestone reserves and all, like what is the further scope for brownfield left now, like, in all regions combined?
Amit, sometime...
You take it, you take it, I will walk.
Come to the site. I will show you a mountain. What is that mountain? Nothing, it's limestone.
Mm.
So if you come and see, then assume that we do not work without 50 years of limestone reserve. 50 years is the minimum benchmark to set up a capacity, because you make much more money by multiplying at the same, the same site, that becomes a brownfield expansion. So if I have a reserve of 50, then I have to work according to that. So if, for example, Guntur comes, then we are putting a kiln of 2 million, it is 3 million cement. So the limestone is according to that, if I want to expand, it will take 1 or 2 more million. 2 million, 1.5 million, I have not studied this. So generally, we do not work without a reserve of 50 years. You do not worry about limestone.
Sure, sure. Okay, I'll, I'll connect with you once again later.
Yeah, sure.
Thank you. Next question is from the line of Rashi Chopra from Citigroup. Please proceed.
Thank you. Just, most of my questions are answered. Just on the green power, what was the percentage in this quarter?
We are at about 58%.
58%, and the 73 MW that you've added is, how is it-
January only. This is in January only, Rashi.
So this is waste heat or?
No, no, these are renewables.
Renewables.
Yeah. Sorry, Nawalgarh is there, so Nawalgarh waste heat is there, which is 33... No, 33 MW is the solar in Nawalgarh. Okay, 33 MW, sorry. I stand corrected. 33 MW of waste heat recovery in Nawalgarh. And 40 is solar.
And 40 is solar. And, again, I missed this in the beginning. How much more is getting added over the quarter next year?
Well, we are going to add about 133 MW of additional capacity, out of which whatever is tied up with the kilns, they would be there, and I, I can give you the exact numbers. One second. In 2025. In 2025, solar will be 44.5, 6.1, 52 MW... In 2024, 2025, 52 MW of solar.
Okay.
Nothing in wind, and 33 MW of waste heat.
Okay.
This is it. There is one, here too, 24 MW, 24. This is. And please remember that 73 is not the end of for this financial year. We are expecting commission of 6 MW wind power at Maharashtra. So this year, total addition on green energy, sustainable energy, whatever you want to call, will be about 80 MW.
Hmm.
133 next year.
Sorry, the 133 next year, I just have a breakup of 52 as solar and 33 as-
No, no, no, no, no. One second, one second, one second. 52 + 33.
Mm-hmm.
Yes. ... 33, no? The total is 25, 33, and 52.
Yeah, [Foreign language] jo samajh ye, 133 ke andar mein ye commission ho gaye na bhai hamare.
Okay, total. Okay, I understand.
Uh, uh.
Okay, got it. And just one more question: What was your premium product percentage this quarter?
It was north of 11%, I think.
Okay. And the FY 2025, the target is 15%?
Yes, please?
FY 2025 is 15%, the target?
15 ho jaye toh kisko bugaya, bhai?
One would hope and one would try, but we can't give you numbers at this moment.
Got it. Okay. Thank you. That's it.
Bye, thank you.
Thank you. Next question is from the line of Prateek Maheshwari from HSBC Securities. Please go ahead.
Thank you, sir, for the opportunity. Congratulations on very good set of results. Sir, I had a question on the premium brands, and the Bangur-brand revamp that has happened recently. So one of the comments you earlier made was that there is first of all the Bangur-brand recall that is increasing. The other thing is also the quality that has improved. So on the quality aspect, I just wanted to ask, like, what has changed, and like, if that could also result in an increase in cost making the final cement or something like that? That is one aspect.
Also, sir, when I see the brand Magna versus your base brands, the price difference is closer to INR 55-INR 60 per bag, and when I compare it with the other players, they have a premium brand over 30, 35 rupees per bag higher. So about double the gap distance. So is that sustainable? How, how, how are you guys looking at it, sir? That was my first question.
So the, you know, the premium price gap with your base product across geographies is based on what kind of a market pool you are able to create. We are today anchoring it at a certain level. You have seen that, about INR 50-odd, 50, 55 rupees higher. And we are seeing some, I would say, encouraging the results. And this is a journey. This is a journey. As the brand equity develops, we would also be continue investing in what more we can do on the product quality, what more we can do on the services, what more we can do on other aspects. And as it develops, then, over a period of time, this price will stabilize.
So, what we have, what we are seeing today is the first level anchoring of that price in the various markets. But, this question would be better answered in about one year time of where it is settling, where is it that we are able to create a better value of both volumes and the price. Okay?
Yeah. So on the same line, sir, I want to ask on the quality question, sir. Does that quality improvement also driving price-
Of course, the quality is a continuous journey. It's a journey which, as we said in the conference call last time also, now what we have done is to create a very strong set of proper function of R&D at our head office. And the purpose is to initiate those actions by which we are able to improve quality while not increasing the cost. Increasing the cost and improving the quality is a very easy one.
But our challenge is that and that we are addressing through our R&D of how do you increase quality, going beyond what has been done by many others for many years without increasing the cost of the product. Yeah.
Okay, okay. Sir, the other question that I wanted to ask was on your capacity footprint, which will kind of increase from around 50 to 75 million tons. This likely fact that increased grinding unit footprint will drive down the lead distance. As of the moment, sir, you know what the footprint is and what, how the footprint is changing. So any targeted reduction in lead distance from the current 470 levels that you guys have already mapped?
Look, my friend, we have already reduced it by about 25 km. Major reduction will come on commissioning of our various grinding units. However, we have got a highly professional logistics team now, who are continuously trying to improve on the lead distances. It is also dependent on what is the trade-off or delta in profitability between premium cement and our standard quality cement. If I'm making... The name of the game is make money. It is the lead distances and other things are explanation to cost. If by sending to a higher distance, we are making more money because the realization is better, we are not averse to that. Neither you should be, because the bottom line of symmetry matters.
So here too, today, all these finer details, as the business model of premium cement itself is evolving, you will have to keep on checking with us on these parameters, quarter-on-quarter, and we'll be happy to report. They will get reflected in our bottom line. But abhi kya aap target kar rahe hai, kaise jayega, kahan jayega? Ye bhaiya itna bolna bada mushkil hai. India is one, but each region has its own dynamic, own market, own kind of premium and non-premium cement. Abhi yadi main aapko, if I tell you, you'll be surprised, the highest percentage of premium cement being sold in India is in a state called Bihar. Of all manufacturers, they sell highest premium cement in Bihar.... अभी तो सरप्राइज ही गया ना, है!
Sir, okay sir, and just on the AFR targets, I think you mentioned interim target of 15%, just where are we on AFR, you see, like now?
Look, alternative fuel or TSR, whatever you want to call it, is completely, completely dependent on the cost economics. By doing TSR, whether we save, we don't save or what kind of risk are associated with handling those AFR, it depends on period to period. Yes, we are committed towards a better or a more sustainable operation environmentally, but we, we were nothing five years, in my previous innings with the company, we did not even think of alternative fuel and all these things. As soon as the model develop, we also started getting adjusted to all this and we have started working on it. Now let us see.
I think, TSR as it's fallen to 1.8 or something, is it kind of not making or making much less sense now, because lot of other players have-
No, no, no, please understand, you grant us only this much that we have enough commercial prudence to do an AFR only if it is commercially viable.
Yep. Okay, sir, thank you, sir. Those are my questions. Thank you so much for your objective.
Navin, Mr. Lakhotia has to leave for airport. Is it okay? Navin?
युसूफ।
Ladies and gentlemen, due to time constraint, we will take this as a last question for the day. I now hand the conference over to the management for the closing comments.
Thank you very much, my dear friends. It was a pleasure interacting with you.