Ladies and gentlemen, good day, and welcome to the Shree Cement Q2 FY 2024 earnings call, hosted by ICICI Securities. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star and 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, Gavin. Good afternoon, good afternoon, everyone. On behalf of ICICI Securities, I welcome you all to the Q2 FY 2024 earnings call of Shree Cement. From the management, we have with us Chairman, Shri H.M. Bangur-ji, Managing Director, Shri Neeraj Akhoury-ji, Senior Advisor, Shri Ashok Bhandari-ji, and CFO, Shri Subhash Jaju-ji. Without any further ado, I hand over the call to Hari Mohan Bangur for his opening comments. Over to you, sir.
Thank you, Navin. Good afternoon, ladies and gentlemen. Welcome to our earnings call. I will be giving few highlights, they may be sequential in importance or otherwise, and then we are open for questions. I will leave more time for that. Half year 2024 registered an increase of 11% in production and 14% in sales over half year last year. Capacity utilization also stood at 76%, against 66% last half year. Net profit stood at INR 1,072 crore compared to INR 505 crore. All this is due to increase in selling price, better product mix, reduction in cost, and better operating efficiency.
Cement realization during the quarter improved from INR 4,771 to INR 4,843 per ton sequentially, and INR 4,805 to INR 4,843 per ton on year-on-year basis. That is respectively 2% and 1%. Share of green power in total power consumption increased to 58% in September 2023, which is with 51% last year. We are likely to increase it to 62% by June 2024. We expect cement demand to remain robust in the coming years on account of rising expenditure on infrastructure and housing development. Our capacity should increase to 56 million tons by 2024.
The company is on the track to attain a capacity of 80 million tons by March 2028, achieving a CAGR of 12% in capacity in next five years. The company has decided to merge its two cement subsidiaries with itself for better synergy, simplicity, and compliance. With this, I would now open the floor to question and answer. Thank you.
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 their 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. The first question is from the line of Amit Murarka from Axis Capital. Please go ahead.
Yeah. Hi, good afternoon. Thanks for the opportunity. Sorry, I missed the opening comment, but just wanted to check, like, if you could just tell us, like, what was the cement realization like on a QOQ, YOY basis?
Yes. Cement realization in this quarter is INR 4,843, which is 1% better year-on-year and 2% better quarter-on-quarter.
Okay. Okay, sure. And, could you, like, also be able to guide us something on EBITDA? Like, how much of the EBITDA came from cement?
About 1,650. 1,062 is the exact number, which is coming from cement per ton.
Okay. No, I believe that would also have some benefit of power sale and all that.
Of course, benefit of power sales, everything is there, but if you mean power EBITDA, that will be INR 30 crore. That is separate.
Okay, okay. That's included then in this reported EBITDA, right? INR 30 crore.
No, this is not. The power EBITDA is not included here in 1,062. Sorry, it is included.
Yeah. Yeah. Okay. Okay. Got it. No, thanks for that. So it will be great, actually, if you can restart, like, sharing the power details. It just helps in better understanding actually of the cement business.
... Our turnover in this quarter was INR 324-343 crore, and EBITDA will be around INR 30 crore. 8%-9% of the turnover is EBITDA. Basically, our power unit is based on imported fuel, 100% imported fuel, and this is coming from Gujarat port. Cost of the fuel is higher, so average EBITDA will be only 8%-9%. This year, it—this quarter, it is INR 30 crore also, from INR 3-42 crore.
Got it. Got it. So also possible to give H1 numbers similarly?
H1 numbers, Sir? INR 882 crore is the revenue from power business, so about INR 75 crore will be the, is expected to be EBITDA. I don't have the exact number right now, but it will be around INR 75 crore in the two quarters put together.
No, that's, that's very helpful. That's very helpful. And the second question for me is on the capacity addition that you've announced of 3.4 million tons in Baloda Bazar. My understanding is that after that, you'll go to 21 million tons for cement grinding in east, whereas the clinker is 9.2 million tons. So like, when can we expect the fourth clinker line then to come at Baloda Bazar?
Fourth clinker line will take some time. In Eastern India, we have certain capacities which are underutilized, like Odisha plant. Somewhere it is... Then the capacity mismatch, what it seems is not the real fact, because in East India, conversion factor is much higher, more or less like 1.9 or 2, because of Composite Cement, also because of slag cement. So all put together, between 10-20 or 9.2-21 looks unjustified, but because of the east and because of the conditions, they are highly justified. Fourth part, clinker line, will be part of the capacity increase between 2027-2028.
Okay. Okay, understood. Understood, and lastly, any guidance on power and fuel cost? Like, what was the INR/kCal in Q3 and in Q2, sorry, and what can we expect in Q3?
This quarter it was, we are doing it next kilocalorie. This is INR 2.05 was the cost per kilocalorie, and which is going to be less than INR 2. INR 1.9 is what we are expecting.
Got it. Thanks a lot for all the replies. I'll come back in the queue.
Thank you.
Thank you. The next question is from the line of Satyadeep Jain from Ambit Capital. Please go ahead.
Hi, thank you. One question, on the IT survey that happened back in June. Just wanted to see what has happened since then. Any updates, any progress on that?
The survey apparently completed. No more questions have been asked for last one month or two months. Few questions, few re-clarifications we are needed, that we have given. After that, we have also not heard anything about that.
Okay. Thank you so much.
Thank you.
Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead.
Hi, sir. Thanks for the opportunity. So my first question is pertaining to water as a commodity. I did ask this question in the last conference call as well. Given Rajasthan has a lot of water stress regions, what is our risk mitigation strategy, specifically for the assets that we have in Rajasthan, if one takes a longer term tenure? That's the first question.
Right. So first question is regarding the new plant at Nawalgarh, which we are starting. We have purchased the obligation of clearing all the municipal waste of Nawalgarh. So there we will be water surplus by a huge margin. We have put the total unit for this improvement of water quality, and there will be lot, lot surplus will be there. Regarding Dhawarinjas, for last five years, we are collecting the water and harvesting, not as water harvesting, but rain water, which comes into the area. We have selected the lowest spot, so rain water is collected not only from our area, but from the far distant area also.
We have made the profile such, and about 24 million tons of water is collected, which will be lasting us for about eight months, and then for four months, sometimes the rain comes, or we are also continuously reducing water consumption. There is no problem for last 10 years.
... Sure, sir. So my second question was: How would you reflect on our UAE operations? And I think when we had ventured into UAE, we had indicated that we will look to cater into the western coastline by setting up bulk cement terminals. That was our thought, I think, a couple of years back. So where do we stand on that particular aspect? That's the second question. Thank you.
Regarding Union Cement, we are not at present coming into India in a meaningful way. There, the handling cost of Indian ports is very high. Roughly INR 150 per bag or INR 3,000 a ton is the handling cost if we bring it to GNPT. So it doesn't make much business sense, as the similar margin can be attained from other sides. Somehow, this is the cost which we are thinking how to reduce it. So though our plan remains same, handling cost is abnormally high.
Sure, sir. I'll just squeeze in a last question. Sir, if you look at our annual numbers, there is a significant difference between the cash tax rate and the effective tax rate. So in the annual report, there is a line item which says that items not deductible for tax, not liable for tax, and this has always been a pretty significant number from, say, around INR 150 crore to INR 400 crore on an annual basis. So just wanted to understand how should we look at the differentiate between cash tax rate and the effective tax rate, and how should we reconcile, say, past data?
He will be able to talk about it. It is highly technical question.
What you have to appreciate is that the tax rate, you are taking the declared tax rates, whereas the tax is calculated on an income derived from the tax statutes. Please appreciate that under Ind AS or any other accounting standard, we have to provide full tax, whatever is applicable to the company. Basically, where is the disconnect? The tax which has been provided takes care of tax, which is leviable under the tax statutes. Now, where is the confusion, sir?
Sir, there are deductibles which the company is enjoying, and we have been enjoying that over a good tenure. So if I just give you a number from CY 2017 to, say, FY 2023, the cash tax rate, which is there on the cash flow statement, is around INR 2,100 crore, and tax as per P&L is INR 2,600 crore. So there is a differential of 5% over here. So over time, this should merge with each other, but, there is still a differential which was there. Probably I'll drop a line, to seek clarification over here, but it would be good to have some understanding on this particular aspect.
I will tell you, normally, the company has a policy to pay aggressively the tax or provide aggressively the tax, and you will see year after year, every year, we get some refunds. So if it is sufficient to put the question or my understanding is wrong, because the difference will be INR 400-500 crore. Next year, if the tax is more, it will from 500, it will go 600. Two years back, what was paid is aligned now because of it, the refund has come and other things. But next two to three years, till the refunds come, our tax paid will be continuously higher. We are taking a very conservative policy of paying high taxes.
Sure, sir. Just a follow-up. Why is this change in policy? Because historically, we have been a smart capital allocators, and we have realized the benefits of taxation and fiscal incentives. So is there any change in the thought process?
No, no, no. No change in policy. This we have been doing for many years and continuously from the beginning, that we are very conservative as far as taxes to be paid. And then we fight our cases, we fight our views. Sometimes we won, sometimes we lose. It is for the tax authorities to decide whether our claims are right or wrong.
Sure, sir. This is very helpful, sir. Thank you so much.
Thank you.
Thank you. The next question is from the line of Milind S. Raghunath from BOB Capital Markets Limited. Please go ahead.
Hi, sir. Thank you for this opportunity. Just wanted to,
Sorry to interrupt, but you are not very audible. I request you to please use the handset and come closer to the mic, please.
Better now?
Slightly better, sir. Please go ahead. Yeah.
What would be the contribution of, you know, the blended and non-blended?
Uh...
Also, if you can share the trade, non-trade mix.
Our 75% of the production is blended, 25% is OPC.
One more is this, in the-
He is talking about it.
As the chairman said, blended cement is 75%, whereas trade is, we are currently at about 80%.
What would be this, you know, in the comparable quarter?
I didn't get you, please. Comparable with what?
I mean, what would be this number in the last year and, I mean, year-on-year and sequential?
So on green mix, we have been continuing at about 80%. Even last September, we were 80%, yeah. 18 to September. On the blended ratio, we are almost there, 76% last year, 75% this year.
So actually, you know, coming to this jump in the receivables that we see from March to September, any specific? Can you just throw some light there in the balance sheet?
Yes. March to September is not comparable. Every year in March, the outstanding dips, everybody wants to be there. We have to compare from March to March or September to September. Otherwise, in March, the outstanding is the minimum. Everybody wants to pay and make their books clean.
Is it safe to assume that this will normalize over the next six months?
Yes.
Yes.
Again, depending on the increase in sales volume, only proportionate increase in outstanding will be there. Number of days by decrease is almost same.
Okay. What would be, you know, explaining this overall increase in the power and fuel cost on a year-on-year basis on a percentage, if I calculate it on a percentage basis? Any specific reason that we are seeing this increase for?
Power and fuel cost also increases because you are seeing the blended purchase. If our percentage of power sale increases, where about 80% will be the fuel cost. So the power cost, the fuel cost will be on a blended basis, increase or decrease, depending on the amount of sale of power which we have done. That is one part. Secondly, it is the power cost, the, the fuel cost. Fuel cost sometimes, normally we are booking about three-four months in advance. So whenever the prices increase or decrease, our effect will be 3%-4 %, three-four per month later. Yeah.
So I think, sir, even the previous participant also indicated to you, if you can share this power sale numbers beyond, you know, the data and also.
About INR 342 crore is the power sale for this quarter.
I'm seeing the number of units, sir, so that, you know, exactly where, so that-
Units also, we will be telling you what is the average realization. Just a minute. I will give you on this quarter... Just a minute. 8,810 lakh kWh. This is the generation. 4,028, that is about 40 crore units we have sold this quarter.
What is the external sales for of this proportion, sir?
External? It is only for sale.
Or, this was only for captive purpose.
Captive purpose is about, again, 40. We have generated 88 million, 88 crore units. 40 crore is for sale, 44 is for internal consumption. 48 for internal consumption, 40 for sale. 88 is the total generation.
Okay. And if you can please share the number in September 2022.
Yeah, Mr. Bhandari will be talking.
Milind? Milind?
Yes, sir. How are you?
Fine. Milind, you send me a mail, I'll send you all the details here.
No problem. No problem. Yeah.
All right.
Yeah, that is it from my side. Thank you.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, we request you to please limit your questions to two per participant. The next question is from the line of Jashandeep Chadha from Nomura. Please go ahead.
Hi, sir. Thanks for the opportunity. I, my first question is regarding power and fuel costs. So, in the presentation, you know, the press release you have mentioned, that the green power mix has increased from 50% last year to 58%. However, I see this 2% decline in power and fuel costs. So I just wanted to understand, you know, once we reach the 63% green power mix by the end of FY 25, how much costs are we, you know, you are building in? Just wanted to understand, you know, since, with such a drastic increase in the green power mix, but it's, power and fuel costs are decline just 2%. Let's just say 2%.
Yes. About INR 85 crore per megawatt is the solar power cost, which we are adding, and part of it will be coming down, the percentage, because of more efficient motor, which we are changing. So the overall power consumption also is expected to be lower per ton. So it is a blend. Because of the new extra capacity... And because of the lower consumption of power, this 58 will become 63.
Sir, how much saving are you seeing from this, I mean, this increase?
Roughly the payback period, depending on the grid rate, is between six-eight years. On average, seven years is the payback period. 14% return on the capital employed is expected.
Okay, sir. And sir, my next question is regarding, you know, raw material costs. We have seen in the entire industry, the raw material costs have escalated very sharply. However, Shree Cement saw, raw material costs actually decrease substantially, like by 13%. So what was the reason for that? And, you know, what is a sustainable number that we should build in, for, you know, coming quarters for raw material?
Raw material, we will be talking about ourselves, but I will not be able to know why others' costs have increased. We are using in raw material, gypsum and fly ash is the two principal raw materials. Rest is our own limestone. So gypsum cost has come down in one year from INR 90 to INR 75. Fly ash cost for us have come down from INR 200 to INR 190. And, that's it. How others' cost is increasing, I don't know.
Understood. If I can squeeze in one last question. I'm sorry if you might have answered, but I just wanted to understand on the... whether there will be any clinker shortage in the east post the September, you know, on grinding another 3.5 million tons?
The question is regarding the grinding unit of east. So which we have about 10% extra capacity, 9.2 will require us to have 19 million tons minimum. When we have 21 million tons, depending on the market, sometimes market A, B, C, this 10% or so capacity, additional capacity, gives us the freedom to sell in the highest realization market. So this is a policy which has been purposely kept to increase the flexibility.
Understood, sir. Thank you so much, and I'll join back with you, sir. Thank you.
Thank you. The next question is from the line of Prateek Maheshwari from HSBC Securities. Please go ahead.
Hello, sir, thank you for the opportunity. Sir, I was just looking at your comment on the first half utilization for the company, which is around 70%. The much larger player is kind of operating itself at larger capacity at 90% utilization levels for the same period. Just wanted to understand from you, what's stopping the utilization levels from improving to a marked improvement - to see a marked improvement on utilization levels now? What would be your target, and which are the regions where you're probably seeing that utilization levels are much lower? That's one question.
Mm-hmm. Neeraj, the outcome?
So, it is true that utilization this month with the last what we have reported is 71. But do also remember that the quarter before that, we were reporting around 80%. Yeah. So because of the little lower demand last quarter, so it came down a bit, but also we added a new capacity in Purulia. Going forward, we are coming up with new facilities in the next six months, both in Rajasthan and in, and in south in, it's, so in Guntur. So I think the current utilization for one year will deteriorate a bit, and again, we should be able to catch up as we go forward. Yeah? We should be able to catch up. This is how I would like to respond. Is that okay?
Yeah. Yeah. So, sir, can you provide us the utilization levels, regionally also, so for this quarter or for the first half?
Can you ask the question once more? Sorry, I'm just not very clear.
Sir, I was just checking if you could also provide the utilization levels for this quarter regionally or for the first half period, regionally versus what is the need on-
We are at 71% this quarter. Yeah. And, for the half year, we, we will be at about 76%.
Sir, I was just checking what if you could just tell east, what is the East India for the capacity in the east, what would be the utilization level?
In June quarter, our East India utilization level was 92%, which has gone down to 74% in this quarter, mostly because sometimes the rains are very heavy in some areas, and so overall-
Mm-hmm.
The second thing is, when new capacity is being added, so certainly the capacity utilization will come down. So overall volumes were not that much lower. Purulia capacity got added, which brought down the utilization immediately. It will take time to ramp up.
Okay, sir, got it. Thank you so much. Sir, just lastly, if you could repeat your comment on the per kcal unit cost that you incurred this quarter, second quarter. And you're expecting, I think you said, it is INR 1.9 per kcal for the next quarter, right?
Yes. In the previous quarter, it was INR 2.34. In September quarter, it is INR 2.05, and in the last year, it was INR 2.80. So compared to that, this year we are expecting INR 1.90. For coming six months, not for the whole year, but for the coming six months, it is expected to be INR 1.90.
Okay, sir. Thank you so much, sir, for the answers.
Thank you.
Thank you. The next question is from the line of Rajesh Ravi from HDFC Securities. Please go ahead.
Yeah, hi, sir. Good afternoon. Am I audible?
You are audible, sir. Please proceed.
Okay, great. Sir, could you share how much incentive has been booked in P&L in Q2 and H1? So fully, you have guided around INR 130 crore-INR 140 crore.
It is about the incentive, incentive to whom?
Incentive on the various projects that you receive. Where I understand you book incentive on the receivable on cash basis.
Oh, the incentive. The ready numbers are not there at how much, but it is also an integral part of the realization. It is all merged into realization. We are never focusing on what incentives and what is not incentive. We will just calculate and let you know.
Sure, sir. And volume, for this full year, what sort of volume number you are looking at? And on the costing, when you mentioned, your fuel price, your fly ash and different costs has come down. Could you share how much is your slag usage and what is your cost trend, please?
The volume for volume cement. Yeah, cement. So as we said that, on cement volume this quarter, we have grown by about 10%. Yeah, 9.9. And, 1/2, for 1/2 year, we have grown by about 14%, sir, yeah?
Mm-hmm. Correct.
Percentage for half year.
So for full year, what is the number you're looking at? Any target, that you want to share?
The next six months, it's difficult to, you know, but looking at our plans and the way we are working, we should be around 12%, yeah, for the full year.
Okay. Okay, sir. And on the slag prices, how much... what is the price trend and, what is the usage? How much of slag cement you are producing in the blended cement?
Can you ask the question again, please? You're saying price?
Sir, slag price trend, which is around you may be using, and how much of your product is slag-based cement?
Slag. Slag-based cement will be around 10%, where we are talking of slag cement as well as composite cement, which is the modern trend.
Okay.
Around 10% will be the total volume.
Out of this 26%, 10%, the 75% blended cement, 65% will be normal PPC, and 10% is slag plus composite.
Slag-based composite. Slag-based composite.
Yes.
Yeah, right.
Yes. And lastly, on the slag price change-
Could you please rejoin the queue for follow-up questions? Thank you. Ladies and gentlemen, we request you to please limit your questions to two questions per participant. You may rejoin the question queue for follow-ups. The next question is from the line of Indrajit from CLSA. Please go ahead.
Hi, sir. Thank you for the opportunity. I have two questions, both on eastern market. If you can give us some qualitative indication, how different is profitability in east versus north for you?
Yes. East profitability is quite low compared to north at present, but this keeps changing. Sometimes east is better, north is more better. So right now, at this point of time, or the last quarter, north was about 30%-40% more than the east.
The recent price hikes have been more prominent in east, so post that, has that gap reduced meaningfully?
Yes, that is expected to reduce, but we will be talking it in, about it when we talk in January after October, December results, because a lot of things change in between in a commodity market. Right now, the difference has come down. Your observation is perfectly in order.
Sure. My second question, again, on the east market. Given that there's so much capacity that is being added and the growth has not really been blockbuster, at least in the last two, three quarters, do you see an oversupply situation in that market, and hence competitive intensity can be much sharper than what we have seen in the past?
No. East market, because of the low base, all over India, the growth will be such, that is what our expectation is, that gradually the differential will come down. That means the, where the per capita income is low, those places the percentage growth will be better. So I feel that east needs more capacity, and Odisha is doing very well. Unfortunately, the limestone is there only in Chhattisgarh for whole of east. So east, the whole east has to be catered from the Chhattisgarh region. Very small limestone is in there in Odisha, and somewhere something in the northeast. Otherwise, Bihar, Odisha, Bengal, Chhattisgarh, Jharkhand, everything has to be served only from one place. So east definitely needs more capacity.
All right. Thank you so much, sir. I'll join back.
Thank you. The next question is from the line of Kamlesh Jain from Lotus Asset Managers. Please go ahead.
Yeah. Thanks for the opportunity, sir. Sir, just one, two questions broadly, like, one on the capacity addition timeline, like, when are we expecting or when we are, when are we commissioning the Rajasthan plant and the Punjab grinding unit, and lastly, your Andhra plant?
Hmm. So this year, Andhra plant, Guntur, will be completed in quarter four of financial 2024. The something like March or maybe April, May, Guntur will be completed. Nawalgarh also will be completed in quarter four, 2024. It is delayed by about three months. And these are the two units which you are talking about. Rest is the Etah grinding unit in UP, we are coming up. This will be just started. We have got the permissions now, and we are starting the work. Cement grinding unit, Baloda Bazar, also the work has started. It will take about eight months, nine... eight to-- It will take about 18 months before it is completed, and we are putting up a integrated unit in our Pali district, that is Raj PRP.
So all these things put together, by this year end, we will be 56 million tonnes plus, and by 31st March, again, six million more. 31st March 2025, it will be 62 million tonnes. So these two are the timelines, and then in the next three years, 62, we want to make it 80.
Okay. So just on the power side, like, you just said the math, like 75 what in, 75 paise per unit is the EBITDA which we have made. Like, even in the worst years, we have not made such a low EBITDA. So like the INR 30 crore EBITDA, which we have just told on the call, that INR 30 crore EBITDA on a sale of around 30 crore units. So it seems to be very low, like, and with the realization of INR 8.5 on the revenue side.
Right. Right. So this is because the power coal rates have come down very fast. We were stuck with the old coal, which was there for the long, so which we had contracted earlier. So as the coal rate has come down this year itself from INR 2.80 in September 2022 to INR 2.05 for the quarter. So this is the fuel cost, which is through pet coke, which is a fast moving item, and coal, which we have to see that pet coke is not allowed in the in the power. So coal prices are such that the profitability changes by to this extent.
Okay. Sir, lastly, like, Shree Cement has been the pioneer in the cost side, but the way the, like, say, now Adani has acquired Holcim assets, they are also becoming very competitive. Over the next two-three years, they would also be having 50%-65% renewable, and rest entire, entire industry is moving very, very fast on the cost side. So how do we see Shree Cement? Because over the years, cost has been a big advantage to us in terms of profitability and every other aspect, project execution. So now, like, say, in order to, like, to have a supremacy or to have a far better advantage over the industry, do we think that all those potential have already been explored, or is there further potential available for the Shree Cement on the cost side?
Because on the realization side or on the pushing volumes, we have not performed at par with the industry, which has been the case, like, say, prior to five years. But in terms of volumes, we are almost at par with the industry. So what are the parameters?
Our volume, where we are doing better, industry growth is not 14% for the first half. It is much less. We are better off in volume. Secondly, the volume gives lower fixed cost and all other, that is a small advantage. Overall, we are saying we are already 58% renewable power, and it will come to 62%, 63% in the coming six- to eight-month period. Is it not a big cost advantage? Which company has even 50%. We talk of not marginally lower, I am talking of 50%. So any company, at least I don't know, you people track all the companies much better. So 30% renewable power, and we have 58% renewable power. That is quite a big advantage. That should give us cost leadership.
Secondly, one of your colleagues were talking about our raw material costs have come down. So is it not that we are doing something smarter compared to the industry?
Yes, sir.
I was not doing that, other raw material costs has increased that much.
Yes, sir. Thanks a lot, sir, and best of luck.
Thank you. Ladies and gentlemen, we request you to please limit your questions to one question per participant. The next question is from the line of Shravan Shah from Dolat Capital. Please go ahead.
Thank you. Sir, first, a couple of data points. First is, lead distance for this quarter is how much, and, fuel mix for this quarter, pet coke, coal, and AFR?
This quarter, the lead distance is 472 km.
Oh, it has increased significantly versus last quarter.
Yes, last quarter it was 456. So 16 km, the distance has increased. That, that is one part, because in Eastern India, as I was explaining, everything comes from Chhattisgarh, whether you want to sell it to Odisha, you want to sell Bengal, anywhere. Now, when our Bengal plant has started, it is going to increase our distances, as the base material is coming from Chhattisgarh only. So Chhattisgarh to Bengal means that much extra freight, but that is will be on par with the others who are selling in Bengal. Whether our freight in the various markets have increased, that is not the case. It is a new geographical location which has increased the freight, increased the distance.
Okay. What's the-
Sir, you were asking question about Pet Coke-
Oh.
And-
Yeah, coal. Fuel mix.
Fuel mix. So Pet Coke and coal put together is 90%.
Alternate fuel.
Alternate fuel, including hazardous, which is very low cost, is 10%.
Sorry, sir, Pet Coke is how much you said? 90%.
Pet Coke and coal put together is 90%, and alternate fuel, that is municipal waste or agro waste, hazardous chemicals, which are to be burnt or in the kiln and only, those put together is 10%.
Okay. And TSR for this quarter is how much? Because we were looking at to increase to 15%. So where we have reached, and by when we will be reaching our 15% TSR?
The TSR, it will be increasing to 15% by the year-end. Little delay is there, but that is the time we are thinking. Suddenly, unexpected problems come when TSR is used. Everywhere TSR is totally different. They are not consistent in nature, so we are having some delays in the TSR.
Currently for second quarter, TSR are how much?
I request you to please rejoin the queue for follow-up questions. The next question is from the line of Atharva Bhutada from Apurvasta Investment Advisors. Please go ahead.
Hello, sir. So I just wanted to understand how our power cost per ton is in line with the industry over the last two quarters, whereas our green power energy mix has gone up to 58% of the total power, being the highest in the industry.
Yes. Just a minute. Green Power cost. We will not be talking about the industry, what is their blended power cost, but I will be talking about- Just a minute.
What was the question again? The power cost, right?
Yeah, power and fuel cost per ton.
So, power cost is, for last quarter, is at INR 259 per ton. It is down to, last year from INR 295 per ton. Compared to last quarter, it has slightly gone up from INR 248 per ton.
Half year, it will be around 250.
Okay. So why is it so that, like, green energy has been going up and our power fuel cost hasn't been coming down so significantly per ton?
... The volume effect of the production also will come, but basically, if you see the per unit power cost or per ton power cost, that will be INR 253, the per ton power cost for cement. Last year for the same period, it was INR 295, it is INR 253. So INR 40, the power cost has come down.
Thank you.
Thank you.
The next question is from the line of Abhishek Verma from Fidelity International. Please go ahead.
Yeah. I just want to understand on this power cost. I'm sort of unable to make sense of this number of around INR 250. I think the power and fuel cost per ton is around INR 1,700, and it has not declined on a YOY basis as well. Just unable to reconcile the numbers.
Now, fuel power cost has come down to this extent, but fuel cost is totally bottom out item. So fuel cost of INR 1,500 is in line because if 700 kcal is used per ton of clinker, INR 2 is the charges, INR 2.05 also, so INR 1,400, but it can be about INR 1,200 also. The rest, INR 200 or INR 300 will be incurred for the power generation. INR 380 crore-INR 340 crore is the power of-
Same.
Power sale. For that power sale, this will be around INR 290 crore or INR 280 crore of fuel will be used.
So but then there has to be a sequence, sorry, a YOY decline, because for all your peers, there is a meaningful decline in the power and fuel cost per ton. And whereas for you, I cannot see. In fact, there is a sort of an increase. It's just not-
The number which you are talking about is the composite power and fuel. Mr. Bangur was trying to explain you that the power... That the coal used for power generation is also included there. If you exclude that, then you may not, then, and then you add power and fuel, you will find the savings. Otherwise, what I suggest is, you send a mail to Mr. Jaju or me, and we'll explain you in detail how it is, it, it has worked out, right?
Yes, yes, yes. Sure, sure, I got it.
I will give you by numbers. Last year, same quarter, power sale was INR 46 crore, and this year it is INR 343 crore. So INR 300 crore increase in power sale, means around INR 250 crore increase in the coal and power, power and fuel cost.
Mm-hmm, mm-hmm. Yeah.
This is the reason when we are talking of the totality.
Okay. Okay, okay.
Thank you.
Thank you. The next question is from the line of Raghav Maheshwari from Asian Market Securities. Please go ahead.
Sir, my question is firstly from the southern market expansion plant. Our current southern market clinker capacity is at 2.4 million tons, where we are expanding in the Kodla is approximately 3.32 million ton clinker, as well as 1.5 in the Guntur. But if we-- I see same time at the cement expansion plant, it will be somewhere around nine million ton expansion plant, as well as the six million ton existing cement capacity, including the Kodla. It will give the CC somewhere around 2.06, where the rest of the industry for south is the below 1.4, but below 1.3. How it will work for the CC of the 2.06, particularly in the south?
South, to... There will be some mismatch in timing, but we will be also putting, more lines in Kodla. Some grinding units may come a little early, but that has to be followed by when our 80 million ton plant is there, one unit in Kodla will be there, one unit in Raipur will be there, and we are so sure about it because the land and everything is there. So when we put the grinding clinkerization next, we don't have to put the grinding unit. Grinding units, we are putting a little bit in advance.
Is it my understanding correct, we are ahead sometimes for the cement side and clinker we will follow by then?
Yes, sometimes we are ahead in the clinker, sometimes in the cement, but overall, in a next two years period, it will all be evened out. Your understanding is correct.
Sir, one thing, what is the clinker production number for this quarter as well as the sequentially Q1 for this? Can you provide that number?
So we did about 59.61 lakh tons of clinker, 5.9 million tons, 5.96. This was 46.16 lakh tons last year same quarter, which is roughly about 30%, 39% increase.
Sir, sequentially, Q1 number?
... This is September to September. This September to last September. Sequentially, we are 11% high. Last year we were at 1,153.71 last quarter, and from 3.71, we have gone up to 59.61.
Sir, if my understanding is correct, the last quarter our CC is somewhere around 1.60, where now it's what your number you are telling it is 1.6, where you are you told before your blended cement ratio is at 75%. Then what is the reason to drop in the major CC and it's not reflecting in the material cost side? Can you just throw some light on that part?
So we have given you our blended cement ratio, remember?
Yes.
What is happening is that on some part of the products now is CC, where the conversion are better versus only BBC.
But sir, the clinker production number you are sharing, that's showing that you had reduced the clinker factor from 1.6 to 1.46.
Hmm. Yes.
Then, sir, what is the reason? If your blended is at the same level, then what is the reason to drop in the CC, and it's not reflecting in any cost side?
It is reflecting in cost side as per ton, your raw material cost has come down. It may be because of volume. Sometimes the production number and the consumption numbers are not same.
Okay.
Part of it may be in the stock. We have maybe higher stock we have of the clinker, that numbers are not ready. Secondly, area to area, this is the all composite area. When we see the east or the other areas, the difference is very high because if the east consumption is low, then the conversion factor high is high. In this quarter, if east percentage has come down, overall conversion factor will be changing to lower side, because in north the same, blended cement, the percentage may be same, but blended cement in north is 1.6, 1.7. In east it is more than two. So if you are replacing by two to 1.7, average will come down. So those are all details that we will be... We have to discuss point by point. Overall, it cannot be discussed.
Thank you. The next question is from the line of Chirag Sidhwa from Emkay Global. Please go ahead. Chirag, your line has been unmuted. You may proceed with your question.
Yeah. Thank you. All my questions have been answered. Thank you.
Thank you. We have the next question from the line of Navin Sahadeo from ICICI Securities. Please go ahead.
Thank you for the opportunity, sir. So just one question. Couple of quarters, I mean, in the previous few conference calls, the management has focused or highlighted the importance on premiumization, so to say. Now, it's clearly heartening to see that our capacity expansion announced so far is among the highest in the industry at 13%-14% CAGR, and there is more to come, as you said, 80 million tons being the target. So in this backdrop of significant capacity addition, how should one look at volume versus value? That's my only question. Thank you.
Regarding premiumization, our focus is on the right pricing. The volumes will come later, but if the prices are diluted to get the volume much faster, then you win the sprint race, but you lose the marathon race. So our volumes will grow very gradually, but our prices and premiumization is at the level at which we wanted. EBITDA is better. Premiumization for the sake of premiumization by investing more, giving a better higher cost material with lower realization, lower EBITDA is not the idea. So we are focusing on the right pricing, which is there, and right now it is around 10%, 9.5%-10%. In three months, in the six months time, it should be around 12%. This is all what we are expecting now.
Understood. Thank you so much.
Thank you.
Thank you. Ladies and gentlemen, we will take that as our last question. I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Thank you, everybody, for getting the better understanding. This year, this quarter, the results were good, and next quarter we expect them to be still better. Because of what is expected, you all asked about the prices, past and more distant past, but compared to July, September quarter, October realization is higher by INR 200 and the fuel cost is lower. Rest is all calculation. That's the my closing remarks. Thank you.
Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.