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Earnings Call Analysis
Summary
Q1-2024
HeidelbergCement India Limited exhibited an 8% volume growth and achieved a 75% capacity utilization this quarter, maintaining an exclusive production of blended cement. The company increased its green power usage to 33%, with a future target to surpass 40%. EBITDA per tonne saw a 10% decrease compared to last year, but adjusted for sales tax benefits, the drop was about 6%. Revenue rose by 4%, and the company managed its costs effectively, leading to healthy financials despite a slight decrease in EBITDA. They have also maintained a strong focus on CSR initiatives. Looking ahead, the company anticipates sustained decrease in fuel prices while managing higher interest costs, amid projections of a steady but competitive market environment.
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Ladies and gentlemen, good day, and welcome to the Q1 FY '24 Conference Call of HeidelbergCement India Limited, hosted by PhillipCapital India Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vaibhav Agarwal from PhillipCapital India Private Limited. Thank you, and over to you, sir.
Thank you, [ Michelle ]. Good afternoon, everyone. On behalf of PhillipCapital India Private Limited, we welcome you to the Q1 FY '24 call of HeidelbergCement India Limited. On the call, we have with us Mr. Joydeep Mukherjee, Managing Director; and Mr. Anil Sharma, Chief Financial Officer of the HeidelbergCement India Limited. I would like to mention on behalf of HeidelbergCement India Limited and its management that certain statements that may be made or discussed on this conference call may be forward-looking statements related to future developments and current performance. These statements may be subject to a number of risks, uncertainties and other important factors, which may cause the actual developments and results to differ materially from the statements made.
HeidelbergCement India Limited and the management of the company assumes no obligation to publicly update or alter these forward-looking statements whether as a result of new information or future events or otherwise. Also, HeidelbergCement India Limited has uploaded a copy of the Q1 FY '24 investor presentation on their website and the stock exchanges. Participants are requested to download a copy of the presentation from these websites.
I will now hand over the floor to management of HeidelbergCement India Limited for their opening remarks, which will be followed by interactive Q&A. Thank you, and over to you, Joydeep sir.
Thank you very much, Vaibhav. And I welcome everyone on the call for this session. I should start with the key messages that we have. And our key messages for this call are that we have had a volume growth of 8%. And we are at a [ 75% ] capacity utilization for this quarter. We continue to provide 100,000 [ blended ] cement and we are as of now not manufacturing any [indiscernible] at all. Our share of [ green power ] has increased to -- [indiscernible] happy to report that it's increased to [ 33% ] and this is looking very good, and we also look forward to improve on this.
Our [indiscernible] today is at 6% of our [indiscernible] mix. And we have, obviously, as you know, from the document, which is provided to you an EBITDA of INR 772 per tonne, which is 10% growth minus year-on-year. But if you take like-for-like and take out the sales tax benefit impact that we had, it is about minus [ 6% ]. Our net cash and [ bank ] balance [indiscernible] at INR 4 billion, and we are continuing to operate on net -- negative net operating [indiscernible].
Moving on on an ESG overview. As I already mentioned, we are at 100% [indiscernible] cement. On CO2 footprint, we are at a number of 504 kg per tonne of cement, and this has been a continuous improvement. If you look at [ CY '20 ], we were at about [ INR 519 ] and that has now come down to [ INR 504 ] CY '23. On water positivity index, we are at 6.9x. We touched 25,000 plus lives for our [indiscernible] initiatives. And as mentioned, we have more than 30% green power actually currently at [ 33%. ]
Moving on to the [ CSG ] footprint slide, which has been shared. As we said, that our green power right now is at [ 33% ]. We have an ambitious target to cross 40% next year. At [indiscernible], we have a long-term agreement of 15-megawatt solar power supplies. At [indiscernible], we are operating through [indiscernible] megawatt basic recovery plant and [ 5.5 ] megawatts solar plant. And [ Ammasandra ] is consistently operating at more than 90% green power. This is something which we are pretty proud of, and we would like to focus on this going forward [indiscernible] increase -- continues to increase our green power percentages, which is [indiscernible] part.
On our [ CSR ] initiatives, we cover a wide spectrum of initiatives. We do work with [indiscernible] to whom we have distributed educational [indiscernible] to hospitals, we've provided air purifiers and renovated government catholic school [indiscernible] and also, we involved ourselves in a lot of [ steel ] development trading. Around our [ plants ] here, we have communities [ between ] we have to involve them and [indiscernible] activities.
Moving on to the operational and financial performance. As you can see, our revenue is up by [ 4% ]. On operating expenses, 1.6% and EBITDA stands at minus 2.3% over the corresponding period. On sales volume, we are up by 8.2%. So realization is down by about 6.7%, but we managed costs well and cost also looks healthy at a 6.1% lower number.
Moving on to the EBITDA rate. June [indiscernible] quarter like-for-like EBITDA per tonne. So we have come down from [ 855 ] in June '22 to [ 772 ] in June '23. There was a significant element of -- so this is a 10% drop. But if you take out the impact of the incentive that we had, the sales tax incentives, it is actually a 3% drop. We lost about INR 298 in price. And raw material impact was if you look at it around INR 26 per tonne. However, on Power and [ CL ], we had an advantage of INR [ 332 ]. Freight, we had a negative impact of INR 62 per tonne, and this was primarily because in this quarter, like in the earlier quarters of the corresponding period, we did not have the [ railway ] freight [ incentive ]. And there's been a very marginal increase of around 10 meters in -- or 7 or 10 kilometers in [indiscernible]. And that's the explanation of the EBITDA [indiscernible].
On our cash and [ bank ] balances, we are -- we have more -- this is [indiscernible]. INR bank balance [indiscernible] June is INR [ 6.03 ] million, and net cash is INR [indiscernible] million, and we have INR [indiscernible] million in debt. And we have a comfortable [ repayment ] schedule. So there is really nothing to comment on that.
On the June '23 quarter share of volume, we have [ 43% road dispatches ], which is kind of flattish over the corresponding period. 6% is our [ AFR ], as we mentioned before, which is up by 3% year-on-year. And premium products that we sell in the market consisting of about 30% of [ freight ] volume, which is again up by about 8% year-on-year. This obviously provides us better realization and better brand equity in the market. And out of our total sales, we are about 82% [ trade ] sales, which is again about flattish as compared to the similar period. So we are moving on a strategy of increasing premiumization, and we are optimizing the sales mix.
On the outlook, we have the low [indiscernible] elections in 2024, and therefore, we do expect the rapid execution of infrastructure projects. We are also noticing very strong traction in rural affordable housing segments and real estate, but of course, competition is intensifying between capacities and specifically around our plants also, we are seeing new competition come up very aggressive. We anticipate that the fuel prices, which have softened considerably, and this trend would continue. We see inflation getting under control. And at the same time, we do have elevated interest costs.
On the [indiscernible], we see that the [indiscernible] crop had a good start. However, there have been a few [indiscernible] rain [indiscernible] here and there, which might lead to slightly lower output. So that's all I have on my opening remarks. And Vaibhav, [indiscernible] over to you right now.
Sir, shall we open the floor for the Q&A session?
Yes, please.
[Operator Instructions] We have the first question from the line of Shravan Shah from Dolat Capital.
Thank you Sir, before asking any questions point as last quarter, we did not do the con call and no [indiscernible] a couple of data points for fourth quarter FY '23. Our trade share, the [indiscernible] [ lead ] distance for last quarter and for this quarter.
You're not very clear. We lost you for a while.
Mr. Shah, can you please [indiscernible] last time, please?
Yes. Yes. Sir, I'm saying I need a data point for fourth quarter FY '23, a trade share, road share, premium share, lead distance for this quarter, Q1 and fourth quarter, end up fuel mix for this quarter and the last quarter, for fourth quarter.
That's a long list. So we have to go one by one. Which one was the [ first quarter ]?
[indiscernible] mix was 3% in the March quarter. So we can say almost [indiscernible] compared to March quarter. Yes. So -- and then the [indiscernible] product in March quarter was around [indiscernible]. So in this [ one ] quarter, it is around 30% [indiscernible] mix almost similar 45% growth, 55% [ rate ]. And with respect to our lead distance, [indiscernible] increase or decrease.
So what's the number lead distance for this quarter and the fourth quarter?
So this quarter, it is [ INR 361 ]. What was it last quarter?
Last quarter, Q4 FY '23, was it the same, INR 361?
INR 351.
351.
Yes. [indiscernible] remarks, it's increased by [indiscernible].
Okay. And fuel mix for this quarter and the last quarter of Q4?
You want the fuel cost or fuel mix?
How much was coal share and [indiscernible] share for this quarter?
[indiscernible] about flattish. That's around -- it was 32%, which is now 33%.
Okay. This quarter is 33%. So now the main question is, sir, on the volume front. So after the sixth quarter of [ new ] growth this quarter, we definitely grew 8% plus. But even if I look at on the yearly basis, since FY -- I would say FY '16, we did a 4.4 million tonnes in FY '23. Also, we did a [ 4.3 ] and so on [ 7, 8 ] years perspective also, actually, we did not grew when we actually kind of lost our market share. So 2, 3 aspects on that front. So how much volume are we looking for this year, FY '24? Second, in terms of the expansion plan, so I think Q3 of '23, we had talked about 0.3 million tonne [ branding ] and 0.2 [ clinker debottlenecking ] would come up in FY '24. So what's the status on that? And going forward, in terms of the long term, we had a [indiscernible] expansion of 2 million tonnes in [indiscernible], 3.5 million tonnes [indiscernible] that's likely to come in FY '27, too. Is it the same stand? Or is there anything which can come up early?
We do have a [ debottlenecking ] exercise which is going on. And that exercise would be over by 2024, December. And this is in our central [ Damoh ] area. And that's going to give us about 200,000 tonnes of cement.
Slightly [indiscernible].
Yes. So that initiative is pretty much on. And as far as [ Gujarat ] is concerned, as we mentioned, I think the last time [indiscernible], Director, Mr. [ Jamshed ] has also mentioned in his last call that we are now [indiscernible] the environmental [ periods ] and posted environmental [ periods we shall start ] other necessary activities. But there's no material change from what [indiscernible] last time.
Okay. Okay. And are this debottlenecking, so the [ binding ] capacity will increase by 0.3 million tonnes and [ incur ] by 0.2 million tonnes?
[indiscernible] we are trying to -- we are trying to reach to that [ level ].
Okay. Okay. And in terms of the [indiscernible] cost for this quarter, last quarter and how do we now see in terms of the overall cost to come down in the next quarter? And let's say, the [indiscernible] remains [indiscernible]. So for FY '25, how much broadly we can see because it will -- in terms of the reduction from Q2, Q3, Q4. But overall, if somebody looks at from FY '25 perspective, so from FY '23 to FY '25, if the current price is [indiscernible] [ backlog ] remains, how much one can see in terms of the reduction in the power and power fuel costs?
Okay. [indiscernible] a little bit far [ period with the ] projection, but everybody knows that the fuel prices, especially [indiscernible] we started reducing and during June quarter, the major benefit [indiscernible] from the [indiscernible] reduction. And hopefully, this [indiscernible] continue for in the coming quarters, especially September and December. There must be some further benefit when it comes to [indiscernible] price reduction.
So how much [indiscernible]?
That would be [indiscernible] to comment on [indiscernible] 2025 because that depends a lot on the global situation on demand supply on our [ role ] initiatives to augment [indiscernible] and there's just too many variables to give you a real meaningful insight into what's going to be the number that [indiscernible]. But what we can tell you is that we do foresee that at least in this quarter and the coming quarter, the fuel prices, the input cost, which is what we're trying to talk about in pure shall show a further [ softening ].
So how much reduction can we see? So what was the [indiscernible] cost in 1Q FY '24 and some [indiscernible] reduction in Q2 and the same way a reduction in Q3?
You're asking which period, please?
This quarter, what was the [indiscernible] cost? And in Q2, how much more reduction can we expect? In Q3, how much?
So this quarter, it was [ INR 2.01 ]. [indiscernible] talking about coal cost, [indiscernible] right? So this is coal [indiscernible] and [indiscernible] was [ 2.38% ] this quarter. Now if you look at last quarter, coal was [ 2.30 ] and [indiscernible] was [ 2.7 tonnes ]. Already, you can see about [ 15% ], around that benchmark number reduction. And while our view is that coal, going forward in the next couple of quarters, will remain flattish, we do [indiscernible] a further reduction in [indiscernible].
Last year pricing, how much -- have you seen any price reduction in July? And any further price likely to happen in the remaining months of this quarter?
What prices?
Cement prices?
Yes.
Cement prices, traditionally in this season are always under pressure. And in our relevant markets, there are obviously a lot of [indiscernible], et cetera. So yes, right now, as we see the prices are under pressure, but it's nothing alarming. I mean we see similar trends as last year. And this typically, I mean, goes back and gained as the [ rains abate, and that's ] what the history has been. But right now, we don't see there is -- I don't see any reason for alarm.
Have you seen a INR 5 kind of a reduction from the average of Q1 FY '24 in July?
Yes, actually [indiscernible].
[Operator Instructions] We have the next question from the line of Sanjay Nandi from [indiscernible] Cap.
Just would like to...
[indiscernible] you have to speak a little louder. We can't hear you very clearly. I'm sorry.
Can you hear me, sir, right now?
Yes, please. Yes, go ahead.
Yes.
So we could see some significant drop in your [indiscernible] fuel cost in this quarter. So can you please guide us what kind of drop can we expect in coming half part of the year [indiscernible] things are softening down. So if you can give some like guidance in terms of [indiscernible] what we can expect in next 6 months or next month [indiscernible].
I think we don't want to give this kind of guidance because we don't know what is going to happen. At this moment, as we speak, we can see there is some maybe further softening of the domestic backdrop and the [indiscernible] prices are more or less [indiscernible] part. So [indiscernible] at this moment, we can [indiscernible] price movements in the coming quarters.
Got it. Obviously, you mentioned, sir, like a lot of competitors coming in your areas of operations. Can you please mention specifically [indiscernible] of the companies [indiscernible] coming out with significant [indiscernible] operations?
Yes. So [indiscernible] has already taken over the [ JP ] assets, which were not operating in our area. So that is going to hit our market. And [indiscernible] Cement has already started their operations around 100 kilometers from our plant.
Okay. So what is the pricing difference between us and the [indiscernible]? So what price [indiscernible] what price we are selling in that market?
So this is a very difficult question to answer because there is no one answer to this. It will depend on market to market. [ Shipment pricing ] changes every district and even in parts of district. So it will be unfair for me to tell you that we have [ INR 5 ] higher or [ INR 7 ] lower because it's not really the same situation in everyone.
Got it, sir, but a central part of the country, sir, where we are operating mostly. So which grade we're catering in that market? Is it [ B grade ] or is it in the [indiscernible] grade?
I mean, there are markets that I sell higher than the so-called A-grade cement [indiscernible] in India and there are markets that are lower. So that's why I'm saying it's very difficult to answer that question. The answer would [indiscernible] you can see the annual results of the company and see the gross price, then you will be able to get an average. But as I said, typically, in your home markets where realizations are higher, every competitor would come and try to push down the price. And in certain markets, you have an advantage which is not the same for another competitor, and there you can hold a high-priced [indiscernible]. So I would not get into a classification of A-grade pricing and B-grade pricing. It doesn't work like that.
Got it, sir. So just [indiscernible] from the [ Dalmia ] and [ JP ], are there any [indiscernible] areas of operations in Central India or these 2 are the [ major things ]?
No, there is -- there was the [indiscernible] expansion of [indiscernible], which is there. And in our tertiary market, somewhere near [ Hyderabad ], [indiscernible] we don't sell much. There is expansion.
Right. All right, sir. So we could also find some [ spike ] in our raw material cost. Is it because of some spike in the highest pricing? So if you can kindly throw some colors on that [indiscernible] pricing [indiscernible] would be very helpful.
The raw metal prices, if you see during the last 1 year because of the beginning of the [indiscernible] increased in the [indiscernible] cost as well as the [indiscernible] cost has increased because of [indiscernible] maybe [indiscernible] by the [ railway ]. So that is also the reason the cost has increased. We have been [indiscernible] we have been [indiscernible] the raw material prices have increased.
So sir, what is the current prices of [indiscernible] basis?
[indiscernible] we use [indiscernible] cost is around [ INR 650, INR 700 ] and the [indiscernible] cost almost [indiscernible]. And another part of this [indiscernible] related cost is the [ transportation ] cost.
Yes. I mean that's also our mix. One tends to go from different sources. So depending on from which source you are buying in a particular amount at the [indiscernible].
[indiscernible] average price, sir? You're talking about [indiscernible] average cost, right?
Yes. Yes.
And what [ would this give something ], sir?
This one, we consume [indiscernible].
And it is around [indiscernible] if you can guide us with the cost per tonne [indiscernible].
Around [ $2,200, $2,300 ].
[Operator Instructions] The next question is from the line of [ Anush ] [indiscernible] from [indiscernible] Mutual Fund.
Good afternoon, [ Joydeep ] [indiscernible], and good afternoon, [ Anil ] [indiscernible] and congratulations on your quarterly results. The [ profit debts ] are up 50% as well. Sir, my question is you're having a cash of around INR [ 400 ] crores. Are you looking to increase your capacity to -- like currently, you have around 13.4 [indiscernible], are you looking to increase your capacity by around 1,700 or 17 to 18 [indiscernible]?
Our total capacity is at [ 6.25 ]. You are talking about the group total capacity [indiscernible]. [ INR 600 crores ], you rightly said that [ INR 200 cores ] we have the [ debt and book it will be said in ] coming 2 years. And at the same time, if you have seen our -- the last [indiscernible] board meeting, our [indiscernible] that we are bringing before the shareholders for approval of the dividend of INR 7 per share. [indiscernible] amount is around INR [ 134 ]. So if the shareholders appreciate then thereafter we will distribute the dividend out of these [ cash ] balance.
At this moment, we are trying to put this money for the [indiscernible] our existing [ ongoing CapEx ] on account of alternative [ fuel ] and also like we have also shared with you about our ongoing [indiscernible] and we have estimated the total CapEx required in coming 15 to 18 months on the project is around INR [ 74 ]. So [indiscernible] also we are going to use our [indiscernible].
And obviously, it has a [indiscernible] because of regular CapEx [indiscernible].
Regular CapEx. But having said that, we are always exploring possibility to increase our capacity. We are trying to expedite [indiscernible]. And this [indiscernible] work we think that some of the [indiscernible] will be used for the capacity increase and some maybe in future [indiscernible] we need to [indiscernible].
[Operator Instructions] The next question is from the line of Rajesh Ravi from HDFC Securities.
First off, my first question pertains to your volume growth strategy. We have seen volume growth for the last past 4 to 5 years. And now in your market, there is intense competition from existing [indiscernible]. So what is your thought on volume for this financial year? What sort of volume growth you're looking at? And what strategy are you adopting to drive that volume growth?
So we have several initiatives in the market. I mean we -- if you ask about strategy, we are obviously looking at where we are not present. We have a clear [indiscernible] and looking at covering those markets. We are looking at a very solid premium product strategy, which is already doing well in certain markets. So market -- defending our core markets and growing in profitable markets are basically the focus areas.
Okay. So do you see that your [indiscernible] or your tangible [indiscernible] of delivering [ 7%, 8% ] volume growth in FY '24, is that a possible number you're looking at?
As of now, your question is for the entire year?
Yes, yes, for full year FY '22. What sort of number you're working with in terms of growth?
We are certainly looking at [ 7%, 8% ] one.
Okay. And could you also share your power cost, [ consumption ] cost in rupees per unit, which you had in Q1? And how are they [ faring ] with the coal prices coming down?
[indiscernible] has been [indiscernible] is about INR [ 6.6 ] per unit. [indiscernible] the first [indiscernible].
Okay, INR 6.6, INR 6.7. So now [indiscernible] power [indiscernible] has also increased. So how is that -- what is the average cost of your green power? I assume a good part of that, you are [indiscernible] it to some [indiscernible] where the cost could be around INR [indiscernible]?
We would not be in a position to give you an exact number, but yes, it's [ statically ] lower than the [indiscernible].
Okay. And do you see this power cost number also coming down with the steel prices coming off in subsequent quarters, 10%, 20% sort of reduction? Is that a possibility?
Are you talking about [indiscernible] now?
Yes, your average power cost, the INR 6.6, INR 6.7 [indiscernible] Q3 or Q4, do you see a case of this number coming down to around INR 5.5?
No, not [indiscernible]. No. We have initiatives in place which will start yielding fruit possibly next calendar year.
[indiscernible] also has been increasing their price like the other [indiscernible] also increase their prices and then you see the [indiscernible] every year, they try to increase the [indiscernible] prices. Our target is that whether [indiscernible] prices increase are there, we should get at least offset by increasing our renewal power and try to keep the [indiscernible] areas of the power costs remain in the company.
Okay. Okay. Understood. So even if you are able to maintain the cost, that is also a good strategy given the inclusion on the grid side. And lastly, on the other expense, what led to this Q-on-Q fall in the other expenses, which are down almost 8% to 9%?
The other expenditure, the [indiscernible] few things. [indiscernible] cost is there, like we [indiscernible] there then the [indiscernible] maintenance, repair. And some of the [indiscernible] of things like [indiscernible] and consumers. And those expenditures, you might have noted that in quarter-to-quarter sometimes 10% plus, sometimes 10% minus, depending upon our 2 plant [ shutdown ] as well as that [indiscernible] depending upon the various initiatives on account of brand building and advertisement. So during this quarter, when we compare with the last March quarter, slightly, it is reduced on account of lower [ replacement ] maintenance costs.
The next question is from the line of Mangesh Bhadang from Centrum Broking.
So a couple of questions from my side. First...
I'm sorry to interrupt, sir, your audio is not clear. Your voice is breaking.
Hello? Hello?
Yes, sir.
Yes. Go ahead, please.
A couple of questions. Firstly, on the capacity. So I just want to understand, is there any [indiscernible] for us to go [indiscernible] more volumes beyond, say, 5 million tonnes, even though we have [ 6.25 ] items of capacity because [indiscernible] now we have seen that our volumes have been made [indiscernible] below 5 million tonnes. And secondly, even if I know when I see across projects like [ JK Cement ] came up with a plant [indiscernible] achieved a significant utilization in the [ market that we operate ].
You're breaking up once again. I'm sorry. You're breaking once again.
So the question was is there any capacity [indiscernible] there which [indiscernible]?
Is there any capacity [indiscernible] 5 million tonnes?
No, there is no capacity [indiscernible] to reach 5 million tonnes. I mean, it's a market situation and our strategy is in the market, which is going to lead an increase in the volume. So it's not like that there is any problem in the plant or anything like that. We have a 75% utilization, which is maybe about 10-odd percent lower than that [indiscernible] like to be.
And sir, [indiscernible] we will be at?
Sorry, your audio is break, sir.
Hello?
Sir, your audio is breaking. Can you rejoin the queue, please?
Is that better now?
Yes.
[indiscernible] what kind of utilization we will be [indiscernible]?
I have not understood your question. Can you repeat it once again?
[indiscernible], what would be our utilization?
[indiscernible] plant is very small. Our capacity [indiscernible] is around 400,000 tonne cement, and we have been running similar to what the [indiscernible] the capacity.
I'll just ask the last question. So as you mentioned, [indiscernible] other participants also mentioned that competition probably should increase given the capacity, the expected capacity [indiscernible] [ ICC, JK Cement ], what do you -- how do you see pricing behave in that [indiscernible] from here on? Do you think that it could have a negative impact on it?
Pricing would be under pressure, yes. No doubt about it.
Okay. And sir, the 8% growth that we have achieved...
[indiscernible] any market that there is an expansion. But it's also limited for a period of time. Is it very -- there is very healthy growth in cement demand in our relevant market. So yes, but sometimes the pricing would be under pressure.
That was the question. I just wanted [indiscernible] that the incremental [indiscernible] would be able to absorb faster the capacity addition and won't have the [indiscernible]. I definitely [indiscernible].
The next question is from the line of Prateek Kumar from Jefferies.
[indiscernible] my question is just taking over what's helping [indiscernible].
I'm sorry to interrupt, sir. [Operator Instructions]
[indiscernible] So since you're taking over, I think what has been and probably what would be our like focus areas in near to medium term on market share, market positioning, target premium, premium segment mix or merger with [indiscernible]. Are there any material changes directionally covered [indiscernible] leadership [indiscernible] some of the [indiscernible] partner [indiscernible]?
I think these are very generic questions. Obviously, I can't discuss my -- I can't explain my entire strategy in [indiscernible] investor call. But it is very clear that the focus areas would be on improving efficiencies, capacity utilization. Those would be the top of my mind initiatives. And as far as worry is concerned, we are looking at it. It's -- we will certainly move when the time is opportune. That is something which is in our regard, but the timing has to be right. And I can't give you an exact time when we shall move on that, but that's definitely something which is in our [ consideration ].
But any specific [ reason ] which could be holding it back [ is related ] to competition commission or your parent approval or what?
There's no competition [indiscernible]. That's not the reason. We'll have to see what is the right time to do this merger, which would benefit us as a company and also be of benefit to the shareholders.
And the company also like looking for any growth in terms of CapEx [indiscernible]?
Unfortunately, I will not be able to discuss the strategy of [indiscernible] on this call. This is regarding our listed companies [indiscernible] and I would appreciate if all the questions are limited to this operation, please.
Ladies and gentlemen, this would be a final reminder, and no further reminders will be announced. [Operator Instructions] The next question is from the line of Devesh Agarwal from IIFL Securities.
My first question is could you also share the number of the incentives that you would have earned from [ Damoh ] plant in the fourth quarter, the way you shared for the last quarter?
So in fourth quarter, March quarter, the incentives are applicable for 1.5 months, and the [indiscernible] amount was, I think, it is around [ INR 3 crore ]. .
So is it [ INR 3 crores ]?
[ INR 3 crores ].
But that's over.
That's over. [indiscernible] March quarter.
We had the benefit only for 90 days in the quarter.
Understood. And sir, incrementally, you said that possibly this year, you would target a growth of 7% to 8%. So do you think that's like an inline industry growth for your region? Or it will be slightly lower than the industry growth for the region and in India?
See, across India, the outlook is that the industry would be growing at that kind of percentage. So if we -- if you talk about what is our position on that vis-a-vis competition, it will be a difficult question to answer. The reason being that we are pretty much operating in those [ Central Area ] 2, 3 [ states ], right? Whereas when you look at our competition, if you look at all the big names, they are spread across India. So I will not have any visibility on what exactly their growth would be in our relevant region. But if I would [indiscernible] a guess, I would say, yes, we should be pretty much in line.
Okay. So I was trying to understand, sir, some of the competition who has started [indiscernible] are seeing a very fast ramp up. So in that regard, I would assume that we may be losing some market share to date. So in such a scenario, would these focus more on improving our [indiscernible] through different means. And if that is the strategy, what would be those factors that would help us to improve our EBITDA [indiscernible] if you're not able to grow our volumes in comparison to what our peers would be able to?
No. I mean, there are people who [indiscernible] companies which [indiscernible] set up plants, right? And they would obviously ramp the plants up, the volumes up as soon as they can. If you look at our sales mix in [ trade ] and [ nontrade ], we are pretty much focused on as is evident from the numbers that we shared, right? So we do believe that in the trade retail segment, there is enough and abundance for us to grow. There are strategies employed by certain companies who focus on non-trade growth in the infrastructure segment, et cetera. That's not a segment in which [indiscernible] participate because that's primarily [ OPC ], okay? So a lot of these new plants are selling [ OPC ] to the [ non-trade ] segment. That's not a segment in which we operate at all. So [indiscernible] question is, are we comfortable looking at the future in the segment that we operate? The answer is yes.
Sir, I also wanted to understand if we would be focusing more on the profitability and not only volume. And to that extent, we will only focus on increasing our premiumization or possibly reducing our cost. Will that be a key driver for the management? .
[indiscernible] we're also -- yes, that's obviously one of the key drivers, which is always improving profitability. But as we mentioned, we are also looking at a [ 230 ] expansion next year, right? So it's not that we'll only be talking about [ profitability ]. Volume and pricing and costs are obviously the 3 points of a triangle, which need to be managed in a cement business, and we are going to try and do that to the best of our ability. Yes, it's not that it's because of the -- focused on EBITDA improvement and no focus on volume. No, that's not [indiscernible].
The next question is from the line of [indiscernible] from [indiscernible] Limited.
So many of my questions have been answered. But I just wanted to [indiscernible] what is the average pricing in the central [indiscernible] in July so far? And is this stable or lower month-on-month basis?
When you say -- can you please repeat your question? I don't think I've understood it to properly.
Okay. So just wanted to [indiscernible] like what is the average pricing right now in central region in July so far? And is this stable pricing is stable? Or is there any decline in pricing on month on month, this is June, July? .
Are you talking about the industry? Or are you talking about Heidelberg?
Heidelberg.
So as we look at July, we should be in the ballpark region of around [ INR 4,900 ]. And the prices would be...
I'm asking the pricing -- cement price per bag.
No, no, that -- there is no one answer because the prices vary from every district. Yes. So I'm talking about [indiscernible]. And we are maybe around [ INR 50-odd per tonne, INR 55 odd per tonne ] lower than June right now.
And what is the difference -- different pricing between this [indiscernible] cement and this premium product -- premium cement?
Well, we have a few premium cements. We have a couple. And the difference would be anywhere between INR 10 to INR 40 a bag, which is around [ INR 200 ] to INR 800 a tonne.
The next question is from the line of Shravan Shah from Dolat Capital.
Yes. Also just wanted to clarify. We mentioned that we want to do a INR 70 crore CapEx for 15 months for AFR and INR 45 crores regular CapEx, so is it fair to assume that INR 100 crores, [ INR 110 ] crores kind of [indiscernible] to see for FY 2024?
Well, we mentioned the INR 70 crore number for expansion CapEx, which is around 200,000 tonnes of cement, which is going to come in the next 15 to 18 months. And of course, there is a normal maintenance CapEx and operating CapEx of about INR [ 42.5 ] crores.
[indiscernible] financial year 2024, you will have this INR [indiscernible] crores, which is, of course, this will come in the same fiscal year, the [ INR 70 crore ] [indiscernible] fiscal years. So some part will come in '24, some part will come in '25.
Correct. Yes.
Okay. But you mentioned that this debottlenecking to start by December '23. So this [ INR 70 crores ] [indiscernible] is different from the one we need to spend on the debottlenecking?
So the INR 70 crores is the debottlenecking.
Yes.
Okay. But the debottlenecking [indiscernible] by this December. And the CapEx, you are mentioning that it will spill over to FY '25. Is it so? .
[indiscernible] Again, we can repeat what we actually [indiscernible] the INR 70 crores is the debottlenecking project. [indiscernible] 2023 and then the [indiscernible] are not going to happen [indiscernible] the 200,000 tonnes cement is coming in December 2023. It takes around 15 months' time. So the benefit will come in financial year 2025.
'24, yes, '24, '25.
Sorry, sir?
So is it now clarified?
Not 100% still, I'm confused. The simply, what would be the total CapEx for FY '24? .
It will be around [ INR 75 crores ], [ INR 45 crores ] [indiscernible] CapEx and the [ INR 34 ] out of debottlenecking. So [ INR 70 crores ] [indiscernible] debottlenecking project has started now. So [indiscernible] 2024, around [ INR 34 ] which will come from out of [ INR 70 crores ] and the remaining [ INR 44 ] will come in '24, '25.
And just to clarify, our total grinding capacity is 6.6 million tonnes. Will you please help me in terms of the plant-wise, do I have -- I just wanted to clarify because we mentioned that [indiscernible] plant capacities of 0.4 million tonnes. Actually, I have a number of 0.51. So in terms of the Damoh [indiscernible] and [indiscernible], if you can split the grinding capacity?
So in Central India, it is 5.75. You rightly said that 0.5 [indiscernible]. We [ speak ] into the 2 locations, 5.75 and 0.51, 400,000 [indiscernible] grindability, we need to see that, okay, how much we can [indiscernible] on the plants. So rated capacity 0.51, we can disperse 400,000 tonnes. And here in Central India is 5.75.
Okay. And in terms of the clinker, Damoh, clinker capacity, is it 3.5 or 3.1?
3.1.
[indiscernible] volume.
3.1. and [ Karnataka ], what's the -- that is 0.3?
0.3%. At this moment, we purchase clinker [indiscernible] don't [indiscernible].
Ladies and gentlemen, this would be the last question for today, which is from the line of Rajesh Ravi from HDFC Securities.
I have 2 follow-up questions. First, could you share [indiscernible] in FY [indiscernible] in Q1?
In production? [indiscernible] already given this total cement production [indiscernible] cement production in our [indiscernible] 62% of the cement [indiscernible].
So this 2% is what?
[indiscernible] factors.
Okay. And in Q1, what was the number clinker factor?
Q1?
Yes.
[indiscernible] because we don't manufacture [indiscernible] 100% [indiscernible].
Okay. And you had started this digital strategy, whereby you had started to [indiscernible] reaching out to dealer [ life ] pricing. How is that working out, sir?
It's too early to say. I mean we are in the midst of a new program that we have launched ourselves and we have a digital -- all we can say is digital would be a significant part of our strategy going forward. And this do not only be through messaging, it will be through various channels.
Okay. Because the [indiscernible], we're taking 2, 3 quarters back, the management [indiscernible] also -- so [indiscernible] what we noticed is that the pricing will [indiscernible] the different [indiscernible] at least 5 to 6 month [indiscernible] basis. So just wanted to check if there is any focus over there or it was -- it is not being pursued [indiscernible]?
I'm sorry, but your voice is not very clear. Can you [indiscernible], please?
I'm sorry. Am I audible now?
Yes, better.
Okay. So the digital [indiscernible] where you could put different imports [indiscernible] the pricing for [indiscernible] brands of HeidelbergCement, what I noticed is that the pricing, which is being displayed on the [indiscernible] 5 to 6 months of [indiscernible] like currently shows [indiscernible]. So I just wanted your view that are we pursuing this [indiscernible] at least from the customer facing [indiscernible] aggressively or he has a relook on that?
-No, no, we are in the process of a complete revamp in our digital strategy. The pricing communication through [indiscernible] is not something that we are pursuing right now. But we have a very holistic approach to digital communication and marketing, which -- and as of today, not in a position to deal, but once the entire program is in place, and maybe at a future date, we shall [indiscernible] a little bit more about it. [indiscernible] to be only focused on [indiscernible], it's going to be on our entire CRM and different social networking channels.
Thank you. As [indiscernible] the last question complete, I would now like to hand the conference over to Mr. Vaibhav Agarwal for closing comments. Over to you.
Yes. Thank you, [ Michelle ]. Sir, before I close the call, I just have one question for [indiscernible] in particular. Sir, firstly, best wishes from all of [ PhillipCapital ] [indiscernible] Cement in India. Sir, I just wanted to know from you as to you take charge of the company before Heidelberg Group in India, what would be your vision for the group forward in India? And have you already identified any areas of incremental improvement which you can do [indiscernible] as we are [indiscernible] on this call. And any change of stance from the earlier leader or anything which you can say that we can improve on [indiscernible]? I just want to know your vision for Heidelberg [ Group in ] India, sir.
Okay. So no -- there is no significant difference in our stand. We [ are a company ] which remains at fastly focused on reducing our carbon footprint. So that is obviously at the core of our strategy. And that is why you see us in the relevant market. If I were to start producing [ OPC ] and [indiscernible] the market, my volumes would suddenly start looking very good. But we've intentionally stayed away from that because that's something which, as a company, we, at least in this market are very averse to. If you look at our carbon performance, we are pretty much up there with the best in the industry, and we would like to ensure that we continue on that journey. That's pretty much at the core of our DNA and company vision.
As far as the company performance is concerned, we have done well in this quarter. We would like to continue doing well, and there are various initiatives that have been taken in reducing our cost of manufacturing as well as achieving excellence in all our commercial functions and in sales and marketing. And right now, that is our focus. We would like to establish ourselves as an ethical and environment-focused company, achieving excellence in our operational and sales activities.
But to answer your first question, no, no significant departure from [indiscernible] was in the past. There are only some certain strategic and tactical initiatives that have been started by me, and we would like to see over the next 3 to 4 quarters what kind of results [indiscernible].
Sure, sir. Sure, so that answers my question, I think so. All the best and thank you very much once again for the opportunity call. On behalf of PhillipCapital India Private Limited, I would like to [indiscernible] HeidelbergCement India Limited for the call and also many thanks to [indiscernible] doing the call. Michelle, you may now conclude the call. Thank you very much, sir. Thank you.
Thank you.
Thank you.
Thank you. It's been our pleasure.
Thank you very much, sir. Ladies and gentlemen, on behalf of PhillipCapital India Private Limited, [ that ends ] this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.