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Dalmia Bharat Ltd
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Ladies and gentlemen, good day, and welcome to the earnings conference call of Dalmia Bharat Limited for the quarter ended 30th June 2023. Please note that this conference call will be for 60 minutes. [Operator Instructions] This conference call is being recorded and the transcript may be put on the website of the company. [Operator Instructions]
Before I hand over the conference to the management, I would like to remind you that certain statements made during the course of this call may not be based on historical information or facts and may be forward-looking statements. These statements are based on expectations and projections and may involve a number of risks and uncertainties, such that the actual outcomes may differ materially from those suggested by such statements.
On the call, we have with us Mr. Puneet Dalmia, Managing Director, Dalmia Bharat Limited; Mr. Mahendra Singhi, Managing Director and CEO; Dalmia Cement Bharat Limited; Mr. Dharmender Tuteja, CFO, Dalmia Bharat Limited; Mr. Rajiv Bansal, President and Chief Transformation Officer; and the other management of the company.
I would now like to hand the conference call over to Ms. Aditi Mittal, Head, Investor Relations. Thank you, and over to you.
Good morning, everybody. Welcome to the quarter 1 earnings call of Dalmia Bharat Limited. I also wanted to let you know that the earnings release has been uploaded on our website today morning. So in case you've not had a chance to look at it, you can download it from our website.
With this, I'll hand over the call to Mr. Dalmia for his opening remarks. Thank you.
Thank you, Aditi. Good morning, everyone. It gives me immense pleasure to welcome all of you to the Q1 FY '24 earnings call of Dalmia Bharat Limited. Let me briefly share my outlook with you and after which Mr. Singhi and Dharmender will give you more details about our performance.
As I've been sharing with you over the last few quarters, the economic environment in our country has been resilient. Our sector is doing well with the cement demand being robust and the cost curve is moving in a favorable direction. But this quarter, the operating performance of our company has been below my expectations. We are introspecting and working diligently to implement improvements.
During the quarter, our sales volume has grown 12% on a Y-o-Y basis, but we believe that we could done much better. And while we remain one of the lowest total cost producers of cement in the industry, I also believe that there's a lot more headroom to improvise on the cost front as well. So this quarter has been a learning for us in terms of performance and we will take up -- take it up very seriously amongst ourselves.
On the capacity growth front, we have delivered on the committed expansion numbers and added 3.1 million tons in East during the quarter. We have commenced the trial run production at the Sattur plant in Tamil Nadu, which adds another 2 million tons to our capacity. We are on track to complete the organic expansion target of cement capacity and reached 46.6 million tons in March 2024.
With regards to the acquisition of JP in the central region, I would like to share with you that we are awaiting certain external approvals which are taking slightly longer time than we had originally anticipated. And considering the external exigencies, we will try and close the transaction before the end of this financial year. Nevertheless, we will keep you posted in the interim for updates with regard to the same. This excludes the JP Super Dalla tranche, which is entirely dependent upon the outcome of arbitration between UltraTech and JP.
As was mentioned by Singhi Ji during our last earnings call, we have started the tolling arrangement from some of the plant locations of JP in central regions so that we do not lose time and make some headway into building the Dalmia brand in the region. We have started empaneling dealers, and this also gives us an opportunity to gradually establish our market share in the region.
On the overall cement industry outlook, the demand growth looks robust, prices remain range bound and costs are coming down in line with the fall in fuel prices. The costs will further show a positive delta due to the implementation of our ongoing levers of long-term cost savings such as renewable power, low carbon cement and recycled fuel amongst others.
With this, I would like to hand over the call to Mr. Singhi for his opening remarks.
Thanks, Puneet Ji. Happy morning friends. As Puneet Ji has mentioned, the cement demand in the country is growing at a very healthy rate. Towards Q1, we do expect that the demand on the all India basis maybe between 8% to 10%.
During the quarter, we delivered a volume growth of 12% on Y-o-Y basis to 7 million tons. The growth was visible across regions, the performance in South region was better and continues to be encouraging where we have been strengthening our market share over the last couple of years. In fact, our low carbon cement percentage is also growing in South at a healthy rate with last quarter being at 75%. For the company as a whole, our low carbon cement percentage for the quarter has gone up to 88%.
Revenues for the quarter improved by 10% Y-o-Y to INR 3,624 crores led by volume growth, but adversely [indiscernible] by lower prices. From the exit price of June '23, prices to some extent, has weakened as the future sectors have started to set in.
In terms of our -- the cost, our raw material cost has increased by around 9% on a Y-o-Y basis to INR 768 per ton, a ton of cement production, which is primarily due to increase in rates of Slag and Fly ash and some transportation cost, which has gone up by almost 20% and 9% respectively. The purchase of stock in trade goods has shown an increase during the quarter as this item captures the cost of cement purchased, which is being manufactured under the agreement with JP, and that cost too is coming in is accurate, which is slightly higher than our existing cost of production.
Coming to the power and fuel costs. During the quarter, our power and fuel cost has marginally increased by 1% on a Q-o-Q basis to INR 1,293 per ton of cement production. As mentioned in the previous earnings call, our fuel cost has realized the benefit of around $10 per ton of petcoke [indiscernible] during the quarter. However, it may not be visible on a sequential basis due to increase in power rates in few of the states where the fuel surcharge has gone up as well. We had to also go for grid power in place of CPP power because the CPP power became expensive at that time on account of higher fuel prices. There has been also the change in CC ratio, which is driven by change in the regional mix.
To give you some color on the ongoing fuel prices, the current spot rates are now hovering around $115, and the benefit from such reductions should start stepping from the mid of quarter 3. With a reduction in the fuel costs, now our CPP will also become viable, and we are now able to switch to our captive power plant from the grid power. We will also see the benefit of this in coming quarters.
With regards to the freight cost, the cost has increased by 6% on Y-o-Y basis to INR 1,156 per ton primarily due to a levy of busy season surcharge by Railways and some [indiscernible] movement because of some planned [indiscernible]. Our EBITDA per ton during the quarter has come to INR 872 per ton.
On the growth side, our CFO, Dharmender, will give you the detailed update on CFX and cash outflow. I would like to update that during the quarter, we have commercialized the new cement line at Bokaro, Jharkhand, of 2.5 million ton and also successfully debottlenecked our facility at Bengal by 0.6 million ton, which took our East region capacity to 31.1 million ton and overall capacity to 41.7 million ton.
As Puneet Ji has already mentioned, we have also commenced the trial runs at our 2 million ton plant -- grinding plant at Sattur in Tamil Nadu, which was a green field grinding unit project of the company.
With regard to proposed growth in Northeast, we have achieved the necessary [indiscernible] of approvals and have mobilized the field contractors and have also placed major orders with top technology suppliers for the equipments. We are targeting to complete this project by FY '25, '26.
During the quarter, our RE capacity has increased to 170 megawatts, which is 10x of the capacity we had in FY '19.
Friends, for the rest of the details and the key financial updates, I would now like to hand over the call to our CFO, Mr. Dharmender, and I'll also be happy to answer all questions in the Q&A following this -- following his remarks. Thank you and best wishes.
Thank you, Singhi Ji. Good morning, everyone. Let me quickly get into the key financial updates before we open the floor for Q&A.
With regards to the incentives, we have accrued INR 77 crores of incentives during the quarter. The collection during the quarter has been INR 39 crores. The average receivable on this account as on 30th June stood at INR 730 crores. For FY '24, we expect incentive accruals to be around INR 275 crores to INR 300 crores.
Moving to the fixed costs, our employee cost has increased by INR 24 crores to INR 222 crores on a Y-o-Y basis primarily due to annual increments and increase in number of headcounts on account of adding new capacity at different locations. Other expenses have increased by INR 51 crores to INR 515 crores on a Y-o-Y basis, primarily on account of plant shutdown costs, increase in [indiscernible] and sales commission increase. Our depreciation during the quarter has increased by INR 87 crores on a Y-o-Y basis. Let me explain to you why is that.
See, as part of our overall debottlenecking projects to increase cement and clinker capacities, certain components of plant and equipments will be replaced. Accordingly, an accelerated depreciation of INR 57 crores has been charged on these components during this quarter. This is basically a one-off expense with another about INR 54 crores of charge to be taken on this account in the next 2 quarters. Excluding this onetime write-off or charge, [indiscernible] annual depreciation for the year will be higher by about INR 120 crores to INR 150 crores on account of recently added capacity and new capacity to be further capitalized during the rest of the year.
On the debt side, our gross debt has increased by INR 623 crores and the closing gross debt as of 30th June stood at INR 4,386 crores. The net debt-to-EBITDA ratio as of 30th June was 0.52x.
With regard to the capital expenditure, we have spent INR 907 crores during the quarter. As mentioned by Singhi Ji, we have closed this quarter with the capacity of about 41.7 million tons and have recently commenced the trial production at the new split grinding unit at Sattur in Tamil Nadu. Within next 1 to 2 months, we expect to commence the commercial production of this unit also. For the full year, we expect the CapEx to be about INR 6,300 crores, including acquisition of JP plant.
With regard to the recent divestment of the noncore businesses, as you'll remember, the company had entered into a binding agreement to divest its equity stakes in the factory company at a consideration of INR 800 crores.
With regard to the same out of total receivable, 20%, that is INR 160 crores has been received in this quarter as part of the transaction and for the rest of 80% consideration, [indiscernible] have been allotted to distribute. These debentures will be redeemed in 2 equal tranches with the first one to be redeemed in December '23, and the remaining 40% will be redeemed on September '24. Beside this, we will also be receiving the INR 120 crores, which is due from the redemption of debentures of [indiscernible] stores by December '23.
With this, I now open the floor for question and answer. Thank you very much.
[Operator Instructions] We have a first question from the line of Indrajit from CLSA.
Can you help us understand the cement during operations with JP once again, what was the volume? What kind of revenue we have generated? And is it sold under Dalmia brand itself?
So we -- this is Puneet. We have a tolling arrangement currently with JP, where they are contract manufacturing cement for us, and we are selling it under the Dalmia brand. So we are setting up our distribution. We are establishing our brand, but the manufacturing is currently being done by JP. So I think this gives us headroom in the market to establish ourselves before the acquisition is completed because, as you know, this is a new market for us. And we are in the process of establishing the distribution network, establishing the brand and establishing the full logistics infrastructure to service the market. So I think broadly, that is the arrangement. And I think it is helpful for us that we can do this even before the deal gets done.
And what is the kind of volumes we have done and any outlook for the year as a whole? How much we can do?
So we are not sharing our regional numbers. Right now, we share numbers on an aggregated basis. But all I can say is that this will help us ramp up this capacity faster compared to if we would not have done tolling.
And secondly, in the opening remarks that you mentioned, you could have grown faster barring some issues. So if you can elaborate on it, what were those issues? And are those now behind us? And have we lost market share as a result of those issues?
Yes. So I think we did an experiment in Eastern India to improve price discipline amongst our dealers and I think it has not worked to the extent that we wanted it to. And we have learnings from this experiment, we have definitely lost market share in that region. And I think it will take us some time to correct it, but we are very clear about what we have to do. And in the -- during the year, I think we are definitely going to take corrective measures. And I'm absolutely confident that we are going to see a rebound in our volumes to the expectations that we have.
So is it fair to assume that, that led to the decline in CC ratio?
Yes, absolutely, because our regional mix changed.
Did that have any impact on the power cost as well? Sorry, that's my last question. And because of the mix...
Singhi Ji, can you answer that? I just want to say one more thing since we discussed these. I think our performance in South and Northeast has been exceptional. We are very happy with the growth there on all parameters, whether it is our trade mix, whether it is our premium product mix, whether it is our Y-o-Y growth, I think it is really very encouraging. I think if there's one region that we have to focus more on, it is East. And all hands on deck, we are completely focused on it.
So Singhi Ji, over to you on the power cost.
Yes, please. So on power and fuel, because of change and lower CC ratio, yes, it has affected to some extent. And on that account, power and fuel cost is seeing a higher number.
We have our next question from the line of Rajesh Ravi from HDFC Securities.
First question pertains to this incentive that you announced that we have won again from Supreme Court regarding the West Bengal incentives. So would you suggest this plant is still accruing an incentive in your total number?
Now the incentive period has already expired. It is a pending amount, which was due for which honorable High Court has given orders to pay this amount to us.
Okay. So we have -- is there any other incentives approval, which is happening from West Bengal government?
No.
Not yet. And coming to this JP tolling arrangement, out of this purchase of traded goods number for last 2 quarters, INR 46 crores and INR 96 crores, do they pertain mostly to the JPA or are there other products also which you are reflecting in purchase of goods?
It is only from JP.
And coming on the fuel cost, could you share on the per kilo cal what was the average costing in Q1? And how was it in Q4?
Yes. So it was -- per kilo calorie it was INR 1.98 and last quarter, it was INR 2.06.
Okay. INR 2.06. And how are the numbers looking at the current stock price basis?
So we expect that, yes, this quarter, there should be a benefit of $20 on [indiscernible] basis. And in future also, maybe around $5 to $50.
Okay. So on a quarter-on-quarter basis, you're looking at a fall of $20?
Yes. Yes.
So around 15% savings is what could get reflected?
Yes. Yes.
And this freight cost also, is there any one-off in this quarter and hence you see that the normalization of the current freight cost would be more normalized number?
One, on the rate increase, which is on account of busy season surcharge by Railways, that is still continuing though normally, they used to discontinue in rainy season, but this time, it is continuing. So from that point of view, the cost will be there. But then whatever is an extra cost, which we have incurred on some [indiscernible] movement of clinker that will come down.
And lastly, on the depreciation part, which DT sir was explaining, I missed it, this quarter, there is a INR 57 crore additional because of the accelerated depreciation on kilns or plants with equipments which you're replacing?
Yes.
And similar number, you're looking at each of Q2 and Q3?
Not similar number, the total INR 54 crores should come in the next 2 quarters, INR 40 crores in Q2, another INR 14 crores in Q3.
Okay. Understood. And thereafter, it will be normalized level.
We ask you to join back to queue, Mr. Ravi, for a follow-up question. [Operator Instructions] We'll take our next question from the line of Amit Murarka from Axis Capital.
So just on JP again. So you are not sending clinker to them for grinding, right? Just buying cement straight from them and selling it in the market? Just to clarify.
Yes it is.
Okay. So the inter unit clinker freight that has increased, so that would be on account of what reason then?
Mainly it comes when 1 unit, which is under shutdown because of the debottlenecking or otherwise, and if there is some shortage of cement or clinker, then from one unit to another unit, this clinker is being [indiscernible] so that we can continue to serve that market.
That's temporary only, then, right?
And sometimes because of some brick shortage in the area.
And JP deal completion in March '24 is for entire 9.4 million tons or the 5.2 million tons in the first Phase 1?
As Puneet Ji has highlighted that, yes, other than the JP Super which is under arbitration, the rest would come.
Right. And I just had one more question on the Northeast expansion. So it's coming in FY '26, but I was just looking through the numbers. So you seem to have 5.8 million in capacity in Northeast and broadly, the volume would be like closer to 2.5 million, 2.6 million tons. So is there any need to expand right away, given that it's almost a 50% or lower utilization right now?
Yes, you're all -- like Northeast, if you look at GDP, growth of Assam state, then it is going more than, I think, 15% or so, as well the demand which is expected in Northeast of cement, it may also be around 20%, 25%. So want to have captured the market in right time, we are preparing ourselves for the capacity so that we can capture more market share. And this is a good market to be -- ready to be with the capacity.
So the expectation for 2025...
Mr. Murarka, I request you to join back the queue, sir.
We have our next question from the line of Sumangal Nevatia from Kotak Securities.
The first question is continuing on this JP acquisition. Is it a delay in both the branches? I mean the initial [indiscernible] and the next one. And do we see any risk in the -- in the entire deal, because of these delays? Or are just purely regulatory delays and eventually get confident of closing the acquisition?
I think these are regulatory delays. It takes time for us to get approvals from banks and the various authorities, which are internal to them, they have to do a lot of compliance-related stuff. And I think we are quite confident that we should be able to get this done during this financial year. But a little bit of delay here and there because of how the process works cannot be ruled out. But it doesn't risk the deal itself.
Sir, second question is with respect to our FY '27 target of 75 million tons. Is it possible to share some more color from 55 to 75 journey? What could be the potential mix of greenfield, brownfield, inorganic? And any new regions, we'll be seeing some increase?
Rajiv, do you want to take that?
Sumangal, at this point of time, we are still drilling it out. So at this point of time, unfortunately, we are not able to give any color.
No worries. And just one last clarification. I mean overall, if you see last few years, we've cleaned up most of our noncore assets. So there is still 1 or 2 quoted investments in our balance sheet. So any time line towards divesting journey of these noncore assets?
So in the [indiscernible] also, as we have said in the past, this will remain a noncore and will be divested. Of course, we cannot give a time line, but should happen sooner than people may expect.
Got that. Thank you, and all the best.
We have a next question from the line of Pinakin Parekh from JPMorgan.
My first question is...
Sir, you are not clearly audible. Can you use your handset, please?
Yes. My first question is going back to Puneet's comments on the loss of market share in Eastern India. And Dalmia's volume growth of 12.4% is materially lower than some of the industry leaders that we have seen. Going forward, how do we plan to address this in terms of regaining the market share? Is the company willing to trade cement prices to retain market share, especially in Eastern India?
So we have taken certain steps as well as we have done certain restructuring in our marketing strategy also as well as in our team also and -- but definitely, at the same time, we'd not be compromising on prices.
Sure. So just to understand that historically, Dalmia has grown sharply faster than the industry, will that trend continue? Or given the preference of pricing over volume, Dalmia's volume growth should be more in line with industry volume growth going forward?
Yes. Our growth for the whole year would be compared to the leaders of the industry. So we would be definitely growing around, say, 15% to 17%.
Sure. And the last question is on leverage. So the gross debt over the last 1 year has gone from roughly INR 3,000 crores to INR 4,300 crores. We have the JP acquisition, which should come through. So what is the target debt for the exit March '24? How high will this number go?
This may touch close to about INR 6,500 crores to INR 7,000 crores, depending upon timing of the acquisition.
So this INR 7,500 crores would include the JPA related costs and the organic CapEx, whatever the company incurs, both of them?
That's everything.
We have our next question from the line of Satyadeep Jain from AMBIT Capital.
For the first question, a follow-up on the market share loss. So to clarify the strategy of maybe more discipline in dealers was tried in East. If I understand, has Dalmia lost some share in the other Tamil Nadu, Kerala markets as well or is it mainly East for now? And what is the strategy to gain both market share without disrupting pricing? Thats the first question.
First, I would like to say that we have gained the market share in South as well as in Northeast also. And in terms of East, we would not definitely again compromising on pricing strength. And we have some strategies which definitely cannot be shared on this call.
Okay. Secondly, on cash on taxes, the cash taxes for Dalmia have been low for the past few years is obviously all these assets [indiscernible] just want to clarify, is there any other reason apart from this maybe ATI or any other incentives that also needs some lower cash taxes and with JP also coming and -- coming in would also bring some losses on its own? So maybe some clarity on the taxes for the next couple of years.
The current quarter cash -- current tax rate is higher because of the recognition of the tax on the sale of DBRL shares, so about INR 50 crores. So this was already provided in March accounts as deferred tax liability because when we kept this asset as held for sale. So the deferred tax liability was created. So this quarter, it moved to cash and reversal in the deferred tax liability. So on the whole, in the current year, the cash taxes apart from the sale of investments should be around 10%. And in ATIA and DCBL, we have not given the ATIA benefits because we were always in the losses due to the merger of the units and the losses arising out of the depreciation.
And tax losses on JP, any guidance or numbers?
Yes. The current year, of course, we'll have the advantage of the past [indiscernible] losses, which should continue partly in the current -- next year also. Thereafter, we can presume to be normal tax rates.
Just one more quickly, if I can squeeze in on the -- you said the grid power and CPP, CPP was more expensive, so switched to grid power. Was that also specific to certain regions or was it across the region that you saw that trend?
Mainly, that was in South. So again, now because of softening of prices of [indiscernible] coal or invest in coal, now CPP have become viable, and then we have reduced the power consumption of grid power and CPP has now started.
We have a next question from the line of Prateek Kumar from Jefferies.
My question is also on JPA transaction, last quarter we said that we are looking to complete this transaction by first quarter...
I'm sorry, you're not audible, sir. Please use your handset mode.
Hello, is that audible?
Yes.
Yes. So my question is, the last quarter, we did say that we are looking to complete the transaction like in first quarter '24. And now we're talking about like completing by end of FY '24. So I just wanted to understand what came so much that we are delaying that deal's closure time line by 9 months for this transaction?
There's a delay on the bank side. There are compliances that they have to do. And I think there are 35 banks involved. So it just -- it's taking some time to get that process in place.
Sorry. So these are like general delays or there were any specific lender approval or some regulatory approval, which is pending because last time I remember you were saying like lender's approval was spending.
I think it is lender's approval.
Mr. Kumar?
I mean by last year -- last quarter, you were expecting some volumes to flow from this deal in this year, but what would be the volume expectation for -- from this deal for like FY '25 from JPA overall 9 million tons?
I mean -- let us come back to you on that as to how much we can do overall. I don't think we will share numbers on a region by region basis.
Okay. And I missed your CapEx for the current quarter and the FY '24 outlook. Can you just repeat that again?
Can you repeat the question, please?
The CapEx number for current quarter and the full year expectation for FY '24?
Yes. Full year will be about INR 6,300 crores. And current quarter should be also around INR 600 crores or so, INR 600 crores to INR 700 crores. Yes, previous quarter was INR 900 crores, the quarter 1.
We have our next question from the line of Raashi Chopra from Citigroup.
Just on pricing, you indicated that the exit prices are weaker. Is that across regions?
Sorry?
You indicated that cement prices are weaker from the exit of June? Is that across all regions?
Mainly it's in east and in some part of south.
And are you expecting any sort of reversal because your press release says that you're expecting stable prices through the year. So from here on, what do you expect them? This trend to continue or some sort of an increase post the monsoon?
Post monsoon, it should be better.
Okay. Then on the cost side, just to be clear, you said that -- this is the part I missed that while your fuel consumption cost was actually lower, the benefit was invisible because of lower CC ratio and you had some power rates go up in some states, is that correct?
Yes, it is.
Okay. And what was the lead distance during this quarter?
[indiscernible].
So the lead distance actually fell sequentially, but your freight costs got impacted because of the inter-unit clinker transfer?
[indiscernible]
Sorry?
Railways busy season surcharge which were not there in the corresponding quarter last year.
No, I'm talking sequentially.
Yes. Sequentially, it was not because of busy season surcharge.
Right. And last question for me. What was the proportion of trade volumes during the quarter?
63%.
63%?
Yes.
We have our next question from the line of Shravan Shah from Dolat Capital.
Sir, just to understand further in terms of the pricing, when you say it has weakened from the June. So broadly, if you can help us whether it is INR 5 for that kind of a decline and related to that, considering when we say a 15% kind of a power and fuel cost benefit to come in the 2Q, is it fair to assume that the Q2 FY '24 that this quarter, profitability on Q-o-Q basis likely to be INR 100 kind of improvement?
So what I would say on price front, yes, it's around INR 5 and that too in East and some parts of South. There would be benefit on account of lower power and fuel cost.
So we mentioned a 15% kind of a benefit on Q-o-Q. So is it fair to assume that the Q-o-Q profitability to improve in the second quarter by a decent number?
We don't give any guidance on specific improvement in EBITDA as such.
Directionally, I'm not seeing any specifics, but directionally, this INR 872 EBITDA. So when we say a 15% decline in power and fuel costs in Q2. So that should be close to INR 240 kind of a decline. So just trying to broadly understand the Q-o-Q profitability to improve.
So naturally, it will be better, on quarterly basis naturally it will be better.
Okay. I needed a number on the CC ratio, rail road mix and the premium set for this quarter?
The premium product has been 21% of total shares. And [indiscernible] has been 63%.
Yes. CC ratio and rail road mix?
CC ratio 1.71.
And rail mix? Rail road?
84% road, 16% rail.
And broadly, the CapEx for FY '25, if you look at the INR 6,300 crores this year, then the next year should be close to INR 3,500-odd crores for FY '25?
Yes, actually around INR 3,000 crores, INR 3,500 crores. [indiscernible]
Yes, definitely. But considering that when we say that our gross rate by end of FY '24, likely to increase to INR 6,500 crores to INR 7,000 crores. So does that -- are we not factoring the IX to disclose off currently. So without that, we are saying that our gross rate likely to increase to that?
I will not specifically comment on that whether it is including IX or excluding IX. Broadly whatever guidance I give, I think we should be able to achieve it.
We have our next question from the line of Jashandeep Chadha from Nomura.
Am I audible?
Yes, please.
Just wanted to ask you the trade sales. We understand that you said your experiment of maintaining price discipline in each sales. Sir, does that indicate that the trade sales for the -- demand from the trade segment is weaker than what we were expecting? Because a lot -- demand push dictates pricing. So if you were not able to maintain pricing there, it means that trade volumes are lower and with erratic and unseasonal rainfall happening that might continue into the quarter 3 years. Just wanted to understand your view on that.
To some extent, yes, in the Eastern part, it had impact on our split percentage but as far as the future is concerned, and both monsoon is concerned, it would be better.
Okay. And sir, just related to that, you said you gained market share in the southern market. Just wanted to understand what portion of that incremental volume is to non-trade segment? And how much of the trade demand you saw in that? Directionally will do, I know you don't give specific numbers, but directionally will also do.
So mainly our trade percentage has gone up, market share has gone up in trade market also.
Okay. And lastly, sir, can you please provide the breakup of INR 6,700 crores CapEx that you have guided for FY '24? How much of that will be for -- related to JP?
Up to about INR 3,500 crores out of INR 6,300 crores.
INR 3,700 crores?
INR 3,500 crores.
We have our next question from the line of [indiscernible] from Bandhan AMC. Sir, we cannot hear you.
Am I audible now?
Sir, it is very low.
Okay. I'll try and speak a little louder.
So on the non-rate segment, could you give some perspective as to how have been the realizations and how has been the profitability in first quarter?
We don't share specific numbers.
No. I agree. But even at least qualitatively?
Qualitatively non-trade prices were better. It had not fallen to that extent.
So non-trade prices would have been flattish quarter-on-quarter?
You're talking [indiscernible], yes, yes.
Your profitability in the non-trade segment would have been better than the trade segment. Would that be a fair understanding, at least for the southern region?
So like on Q-o-Q basis if we look, it is almost same in trade and non-trade.
We have our next question from the line of Mudit Agarwal from Motilal Oswal Financial Services.
My question is related to the alternative fuel. So what is the current alternative sales share and your thoughts how it will be improved going forward?
[indiscernible] basis.
Hello? Am I audible?
Yes, yes. We don't share this [indiscernible]
On alternative fuel, sir?
Yes.
We have a next question from the line of [indiscernible] Investment Advisors.
So my question was that in the last phone call, it was mentioned by [indiscernible] has been approved by NHIA. And according to my research, PPC and OPC are the most used cement in construction activities. So according to the quarter 4 FY '23 segment data that was given, we have only the 60% revenue coming from these segments. So what are our plans to increase this in the near future?
Sorry, I could not get your question, please.
Sir, PPC and OPC is only contributing 60% in segment revenue, right?
Yes, yes.
So it is the most used cement in construction activities. Are we going to increase this in the near future?
In fact, now NHAI and other various important projects in the country, they have also started using blended cement to low-carbon cement on account of carbon awareness also. And at the same time, we are going to increase our share only in blended cement and low-carbon cement.
Okay. And there was some data that there was a pledge by [indiscernible] so why was this done?
[indiscernible]
1 lakh shares was pledged by [indiscernible].
Yes.
So why was this done?
So she must have the requirement of fund for some other purpose, and that's why.
We have our next question from the line of [indiscernible] from ICICI Securities.
Yes. Am I audible?
Yes, sir.
Two questions. One, on the tolling arrangement with JPA. So is it fair to assume that of course, you clarified that the deal will happen more towards end of the fiscal. But through the year, the volume intensity of that will only increase as we like create a dealer network and a brand presence there. So is it fair to assume that the volume intensity from JPA will only increase through the quarters? Contributing to overall volume growth even though the contribution at the EBITDA level because of high cost of production or maybe a little low prices that we get in the market since we are a new entrant there will be low, but volume contribution could intensify quarter-on-quarter.
Yes. Volume will slowly grow up.
Correct. So if you could have -- it will really help because in the current quarter, the 12% volume growth that also includes share from this tolling arrangement. So you could have just given some indication that how much run rate roughly because these assets initially are operating at very low utilization of sub 20%, 25%. Some color on JPA volumes would really help here.
As we have highlighted earlier, it won't be possible to share a separate number or region-wise number.
Sure, sure. My last question was about the 7 markets. If you could just help us understand what is the total volume share that Dalmia had broadly in states of Tamil Nadu, Kerala, because as we understand, pricing seemed to be severely impacted there, if I'm not wrong, Chennai prices are now almost at par to Hyderabad. Usually, they are INR 30, INR 40, INR 50 higher. Also the gap between the Andhra players and the large players like you in the region has narrowed down considerably to just about INR 10, INR 15. Normally, it is much higher.
So how should one look at competition in these 2 markets? Is it fair to say that structurally now while volume growth will continue, but pricing this sort of thing is the new normal here?
One, we don't share specific market share number of any state. But at the same time, I think after some time, again, the prices should be better in South because it has been such a low price on account of which for a few companies, these prices are not viable also.
Yes, exactly. So it's gone so low that it's unviable now for Andhra players to come into that market, which is great for us. But I think it also dents the profitability comparatively. In the past, these were high-margin markets for us. So is that a fair thing to say that this is the new normal, as in profitability will be a little bit impacted but volume continues?
No, it's not new normal, but things do change, and it's just not 1 quarter or 2 quarter decides whole thing. It's not new normal. Things should come back. Prices will come back.
We have a next question from the line of Raghav Maheshwari from Asian Market Securities.
Singhi Ji, can you please share the number for the trade volume and the CC ratio for the Q4 FY '23?
Last time it was 64% trade sales and CC ratio was 1.74.
And sir, what is the company's strategy for the [indiscernible] complex, which is the stake of the sale is also in that. What is our view on that?
I think let the deal get done and then we will talk to you about it. We think it's an attractive region that we are entering in. And I don't think we are going to give [indiscernible] strategy.
Okay, sir. Sir, last question is from my side, what is the realization drop, the primarily thing because of the higher infra demand in the non-trade segment? Or there is with the -- because of the primarily the lower prices of Tamil Nadu, Kerala this time on the sequential basis?
I would say lower prices of Tamil Nadu, that maybe also, as well as some part of East.
We have a next question from the line of Bhavin Chheda from Enam Holdings.
So in the initial opening remarks, you said we were looking at 14%, 15% volume growth. I assume that includes JP assets volume in your volume, which you will be contracting?
No.
Sorry?
That will be an addition.
That will be an addition. So basically, organic, you are looking at 14%, 15% and whatever you plan to get it from JP that would be over and above that number?
Yes, I said about 15% to 17%.
15% to 17%. Sorry, 15% to 17% is your organic and over and above that, contracting volumes?
Maybe.
Sure. Second, we are not though sharing the JP volumes, but can you roughly share what would have been a cost or EBITDA impact due to contracting volumes of Jaiprakash in order to understand how we will benefit in future as the Jaiprakash volumes, operational efficiency improves over future? Any ballmark number in percentage term, INR per number you would like to share?
So presently we would not be able to share these numbers because it's just the activities which we have started.
Right. Because on the higher volumes, your EBITDA per ton has given a negative surprise in this quarter, and I'm assuming this would have partly been because of the contracting volumes of Jaiprakash so it has a lot of sensitivity when we try to compare it with peers. So any clarity on the same would be highly appreciated.
There's not a major impact on account of that part. This is what I can say.
We have a next question from the line of Kamlesh Bagmar from Lotus Asset Managers.
Sir, one question on the [indiscernible] JP net acquisition. So with regard to that, like, is it required that the clinker should be sourced from that Babupur clinker unit?
And secondly, how much dues we need to pay? Like say, I believe INR 500 crores to INR 600 crores odd dues are there, which are to be paid by this unit to sale for the client. So is the INR 666 crores the acquisition price includes those?
And secondly, on the clinker supply, is it required to have the supply from the Babupur clinker unit?
So like we have said that we would be sharing the details once we complete the deal but otherwise, we had already shared that the...
The saturation price is for a 0 working capital basis. So if any negative working capital is there, that has to be subtracted.
Okay. And if any dues, those dues, would those be -- need to be paid over and above the INR 666 crores or not?
As I said, it is on 0 debt and 0 working capital.
And secondly, with regard to that Babupur clinker unit, would that clinker -- would that grinding unit need to be sold only the clinker through Babupur or you can supply it from other branding -- other clinker units, like say, [indiscernible] or anywhere?
So all these details, we'll be able to share once we conclude the deal and then we can share our strategy that what it is.
We'll take our last question from the line of Ashish Jain from Macquarie.
Sir, we are not -- unable to hear you. No, sir. Can you use your handset mode, please? Can you speak again?
Is it better?
Sir, are you able to hear it?
It is quite low. Speak louder. Not able to hear.
Mr. Jain?
Am I audible now?
Better.
So sir, my question was on the volume growth. [indiscernible] the last, let's say, 4, 5 years, we have grown our capacity, from 25 million tons to 40 million tons, which is, let's say, 50%, 60% capacity growth. But our volume growth in the same period has lagged quite substantially, right? We used to sell 17 million, 18 million tons in 2018, '19. Today, we are doing 24 million, 25 million tons. And in this period, we have also went into newer regions like West and all.
So what is, let's say, 2 year 3 year outlook in terms of new growth. Because now again, we are looking to add capacity in Northeast where I see merit in North going back to growing faster, but we have substantial excess even today. So let's say, from a 2-, 3-year perspective, what kind of volume target or utilization number, anything you want to comment on that?
One, I would say that we have grown better than the industry in the last 3 years also. And at the same time, for FY '24 also our growth would be what the growth would be of industry leaders, and we would also be growing higher than the overall India average.
I would now like to hand the conference over to Mr. Puneet Dalmia for closing comments.
Thank you very much. I really appreciate all of you taking time to join this call, and thank you for your support as always. Have a great day.
Thank you.
Thanks, everyone.
On behalf of Dalmia Bharat Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.