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Ladies and gentlemen, good day, and welcome to the Heidelberg Cement Q3 and 9 Months Fiscal '23 Call hosted by PhillipCapital India Private Limited. As a reminder, for the duration of this conference, all participant lines will be in a listen-only mode, and there will be an opportunity for you to ask questions at the end of today's presentation. Should you need assistance during the conference call, please remit an update by pressing star on your touch stone phone. Please note that this conference is being recorded. I would now like to hand the conference over to Mr. [ Veba ] Agarwal from PhillipCapital India Private Limited. Thank you, and over to you, sir.
Thank you, Aman. Good afternoon, everyone. On behalf of PhillipCapital India Private Limited, we welcome you to the Q3 FY '23 and 9-month FY call of Heidelberg Cement India Limited. On the call, we have with us Mr. Jamshed Naval Cooper, Managing Director; and Mr. Anil Sharma, Chief Financial Officer of Heidelberg Cement India Limited. Due to certain unavoidable medical circumstances, Mr.[ Joji ] Mukerjee, Chief Operating Officer, has not be able to make on this call and very [ greatful ] for this inconvenience. I would like to mention on behalf of Heidelberg Cement India Limited and management that certain statements that may be made or discussed on this conference call may be forward-looking statements see to future developments and the current performance. These statements are 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. Heidelberg Cement India Limited and the management committee is under no obligation to update or publicly alter these forward-looking statements, whether as a result of new information or future events or otherwise. Also, Heidelberg Cement India Ltd has supported a copy of the Q3 FY '20 presentation on the stock exchange and its website. Participants are requested to downward a copy of the presentation from these websites. I will now hand over the floor to the management of the Heidelberg Cement India for the opening remarks, which will follow a Q&A. Thank you, and over to you, Cooper, sir.
Thank you, Web, and a big thank you to all the people who have joined the conference today. I hope you have received and read the presentation, what we have uploaded on our website. But let me take you through this presentation, taking you to on the highlights of our December quarter key messages. I'm very happy to say that the green power .. Share of green power has increased substantially. And I think this is one of the bright side of it because this will help us in the future in a very big way. There is a 33% increase in green power, and I'm delighted that the team has done a good job. We continue to produce 100% blended cement. So this is one of the major highlights for us as we remain focused on our CO2 commitment here. So this continues as such. For volumes have increased on a quarter-on-quarter basis, although there is a drop of a decrease on a year-on-year basis, but the reason is very simple, that we had some [ announcing ] problems also other than the these things. So but I think that is behind us. I think that we have work on that. So these volumes, unfortunate got a hit. Now we should be coming out of these [ wood ]. The cost increase has been about 9%, which has been partially offset by the price increase. So a long way to go for us to go. Now in this quarter, the costs would have come down-- Somewhat cost because of the power fuel cost has come down. So we should be able to get warmer a little bit of momentum on this account and do better here. EBITDA dropped to 339 this is mainly because of the power and fuel cost which has increased, which is almost significant impact on this. Other highlights, which is a positive side is that Heidelberg continues to operate on a negative working capital. So this is one thing which we have with the distinction. So other -- And net cash is about INR 1.5 billion. Coming to the next point in the presentation, you can see how the green power has increased. So the team is doing a fantastic job of focusing on green power, taking a very responsible action, a very responsible behavior to ensure that we are compliant. And we remain compliant and we prepare our organization, which is future ready for an CO2 becomes one of the major elements where we have to really take -- we have to bite the bullet.Ă‚Â Coming to the next thing is that we have on a CO2 to just to support our CO2 and also to support the clean and green environment. You can see the way we have done our plants greenery. We say now we have [ plants in plants and plants in plants]. So this is why we say that we have made a difference to the whole organization. And I think this has helped us in reducing the Indian temperature in our plant, which is a target to come to 2 degrees lower. So we are in many of our plants, we have reached that target, and we will continue to do better. The happiness quotient in the plant is better. The employee productivity goes up. So all these things have helped us in one way or the other.Coming to the next slide, you can see the biodiversities which are there. So being passionate about environment, I had to put these things in front of you so that you see that we also make cement, but we also ensure that the environment around us is kept in the best of its position. And we are seen by the society also as responsible corporates when it comes to maintenance of environment is concerned. CSR, our obligation to the society continues unabated. We are doing so much of work with our neighboring schools. You can see these pictures on health camps or whether it is cool buildings whatever we are doing. Now let's get to the focused area, which is our bread and butter and also your interest area of interest, much more of interest for you I think you have gone through all the figures. We can discuss these figures, how they have impacted us. As I said that the volumes are basically impacted because of a little bit of disruption. And the impact we've seen, the cost elements which have been circled in red, they are a cause of worry for us because of the other elements of cost, but now I think we will be able to pull it out. We ran -- let me put it while we are here. Let me put it during the last year, that is calendar '22. We ran a program which was called Mission possible. Every plant was given a target which was with 10 years of historic data where we had done the best of our performance is the BDP, that is the Best Demonstrated Practice was taken as a benchmark. And then we gave these targets and we worked along with our teams to see that how we can receive -- we can reach and replicate the same performances this year. And I'm very happy to say that our cement plants have done a fantastic job both in terms of power and fuel. And these results will be permanently embedded. So this is not a onetime change, which has happened, but this change is permanent in nature, and we should be able to do lower Visa [ Juncos ] to about 3.37, 3.06 power also goes to about 70 units. So, we should be able to start doing this in the future also. Turning to the next slide. You can see in this -- the waterfall, which we have created here, the major impact is on account of power and fee. Despite consumption factors improving, the cost of the input costs have been higher and because of the inventory we carried for a higher cost inventory. So that has impacted us.Ă‚Â But I think this is temporary in nature, nothing to worry. This will get reversed very soon as because we are fully focused and committed on being to that business, we can reduce our consumption sector.Coming to the next slide on the same, Net cash is about INR [ 1.2 billion ], INR 1.5 billion, which I mentioned and how it comprise and how it piles up from -- in this year, 2 tranches of payments, which we have given to the UP government, which as there is a loan which is an interest loan to us. So INR 336 and 629 will go out in this financial year. So, this is where we stand. Coming to the Slide 11. Happy to inform you that under the government of [ Maat ] state government had announced that the auctioned certain mines, which were adjoining to our mines. Since it was a close to our mine, we were joining to our existing mines. There was interest for us to have it. And we did also -- we had to bid aggressively against this bid. But then finally, we ended up paying 100% premium on that. But still, I would say it will extend the life of this plant significantly, and it will add more value and it will open up additional scope for us to expand this plant in the near future, which we are taking we have told you already that on line number 3 we have to do a debottlenecking. So now the team has been given the go head. So now this year, we will be doing some work on it and placing orders of the equipment. So the next year, we should be able to bring this on steam. Coming to Slide 12. Our old volumes have been -- percentage has been almost still 49%, 50%. We always manage between road and rail. So nothing much changed here. Premium products has always been a focus for us. Luckily, we were good enough with our teams [ thought- processing ], we could launch a new bag in between, like power is on the upper end side. And in between, there was a vacuum. So we wanted to fill up this vacuum in between because power now from 1st January, it is INR 45 a bag higher than the normal bank, and this is about INR 15 a bag of [inaudible] which is there. So we position one more product in between, and that has seen good traction happening in the brand area. I think the team will be able to get more and more volumes. There is no [ cannibalization ], I would say, on [ Mysen ] power by introduction of this. [ Mysen ] Power continues to run its sinister. -- and myself, Primo is creating a new segment of reaching out or building a new customer segment for us. Coming to whole percentages, I don't want to talk too much on this because this is a technical issue.Ultimately, the team has to manage the lower possible cost on whether it is coal or [ tech ] today, coal and petcoke are close to about 60 to 70 for [ VisaJune ] which is almost -- now you can switch over between each of them. But then there are economically advantages and disadvantages of using coal and petcoke higher ratio of petcoke has its own advantages and disadvantages in [ Fiserv ] for coal also. So that we -- internally, we manage this, and we see to it that we can help to get the lowest possible of fuel cost for our quarter of clinker. Trade continues to be around 75,76 which is there. But the focus in future will be to more focus on trade and not on nontrade. Despite that, we're knowing very well that the next year in 2024, there will be a government push more and more push on infrastructure, and there will be more and more cement, which will be required under nontrade. But since it is a price difference. Today, this last quarter also, the price difference has been more than INR 600 crore to INR 650 a tonne between trade and nontrade in realization. So I would say that it is our duty to see that we sell our product available at the best possible price. But anyway, we can always [ revisit ]. Happy to inform you that the FX India safety award was conferred on our [ Thai ] plant, and this is a fun most ever in our cap. And now coming to the outlook.India remains -- we all know that it is the fastest-growing economy in the world, and I think it will continue to stay like this. Cement demand in government projects will increase in '23 because coming seen that in '24, you are having the election and the budget has also been supporting that. It is complementing this by the government's allocation the way they have come under our [ Sikand ] whether it's infrastructure or it is logistics, transport, 100 logistics excellence projects have come in. So I think this is one area where we will see [ Radico ] has been good. So it will get to [ perp up ] the rural demand. Fuel prices are softening. So there is a little better improvement in this which we have. And the only fear is that if the government demand does not come up, then we can have a little bit of a problem, but I don't see it relenting in any way in this quarter or the quarters to come in the future. The GST, there is one silver lining here that is a probability of GST reduction. But yes, I said that there will be a reduction, but it will be responsible. The cement manufacturers will be responsible for giving away this GST back to the consumers. So it might have its own, I don't -- cement will become more affordable it becomes more affordable if we can increase the consumption alone by this method, I think we should not become greedy about taking any share out of the GST, and we should look at increasing the consumption of cement that will be my way of looking at it. Last but not the least, let me inform you that this will be my last address to you as a Managing Director of the organization, as I have decided to demit office on 31st March, it has already been announced in the [ study ] and to the stock exchanges, we have announced it. The Board has approved my resignation, accepted my resignation and agreed to relieve me from 31st of March. Post that, [ Jodi ] will take over as the Managing Director of the organization. And right now, [ Jodi ], the Chief Operating Officer already appointed for there. There is a period of over, and I will ensure that the entire support is given to him, and then he takes over very smoothly, the transition becomes smooth on this. So this is all I have to say, and a big thank you to all of you for being supportive you all the time and look forward to your continued support in the future, too. Any questions here, I'd be happy to answer.
We will now begin the question-and-answer session. Anyone who wishes to ask a question is requested to use handsets while asking a question. The first question is from the line of Shravan Shah from Dolat Capital.
Sir, just wanted to know in terms of the volume decline that we have seen. So not only for this quarter, even if I look at for the 9 months also, we are seeing a 9.5% volume drop at the same time. In terms of the trade share for this quarter has also declined significantly to 76% versus last quarter, Q2 FY '23 was 83%. So 7% decline there. And in terms of the premium share also has declined from 30% to 40% from the 55%. So just wanted to understand what is going wrong and how do we -- one can see what's your outlook on this?
Let me answer your question in the reverse order. In terms of our premium, there was an accounting change, we had introduced this new brand and there was some method of computing, which we were doing. So that is not actually 57%. Now this is the picture, which is on the total trade volume. So you can now take this figure as a correct figure rather than taking the 57%. There was a computing in which the way it was completed as one was different, and this kind of consultation is a bit different. But you can see that there is a consistent growth in the lender in the premium products, which has been there. If you look at the volume that has been on a consistent growth. So if you take the absolute volumes also, you can see that difference. Coming to the volumes of last 9 months, yes, I agree with you. And last month, the last quarter, we lost -- of course, as I mentioned to you because of some warehousing issues, some small issues, which we were not able to manage some changes in the warehouses has happened, so people have come and moved in here. Some days of loss of sales will have us I mean in earlier quarters, yes, but now you should also look at how we have improved over quarter-on-quarter. On quarter-on-quarter, we have improved by almost 10%. So there is a trajectory of an improvement. I would say that the past has relevant, but the trend also has much more to be looked at it, that is the company doing its job to ensure that it comes back on it brings its trajectory that in of growth. So I think that the organization is there. And now we are working with more inputs with some more adviser and consultant on market issues where in this quarter, the work has begun. I think in the quarters ahead, you will see some very positive results coming out of the efforts of the management. I'm sure you will see that. I'm not concerned about --- Worried about this. But yes, as I mentioned to you that capacities have increased. So, sometimes what happens, some competitors become very aggressive.Ă‚Â So some people are there who have hit our volumes adversely by bringing the prices at a very, very low prices. The team was not prepared all of a sudden to change its product mix or, I would say, the pricing strategy, and that is how we get impacted. But these are all temporary, I would say, these are not -- These are technical issues, any new brand comes whether the -- sometimes we are unlucky, somebody else will be unlucky, somebody will focus in my market, somebody next time, I will focus in their markets. So it's a battle which keeps going on in a fair and competitive working environment. There is no harm in being competitive and trying to protect your share, either I'm sure the Heidelberg has a history [ testimony ] at that high level has always remained on a good trajectory. We have delivered years on years of continuous improvement in volumes. And we will bounce back and should not be a problem.
So sir, continuing on this, so how does one see the fourth quarter in terms of the volume. So this quarter, we did $1.1 million in terms of the volume. So fourth quarter, how do we see -- I just wanted to understand as a full year, how much decline one can see. And at the same time, when we are seeing there is an accounting issue in the premium set. Is it possible for you to release the historical quarterly premium share with the revised accounting to make it more comparable.
Shravan, we will give you that not a problem. How we completed it and how would we arrive at it that we'll give you that detail.
Yes, so in terms of the fourth quarter, how do we see in terms of the volume?
In the fourth quarter, I'm sure that there will be a positive improvement. I don't think we should be anywhere in the need..
Okay. And then in terms of the pricing, so there also this quarter, we have seen a decline in realization. So 2 things, have you seen any price increase post December and the current prices are they are still lower than the average of the third quarter? And the last is on the costing power and fuel [ KKL ] basis, what's the cost for the third quarter on [ KKL ] and how it is trending currently?
On the cost on the side of the cost, we are better off than last year. So we will see a positive impact on the cost side. On the price side, I think the price should start looking up, have started looking up in some places. In South, it has started moving up. Now I can see that this trajectory will continue in Central India also.
Is it possible to see the [ KKL] cost for the third quarter? And what it is currently trending?
I can give you...
In the December quarter, this closeness value, it was around 25%. And we have seen that in December quarter, it was slightly lower than our September quarter. And considering the taking of the imported petcoke and coal price in the port market, we also foresee that there may be some slightly reduction in the coal and secoprices in the March quarter.
. Okay. Got it. And on the Gujarat expansion, anything you want to highlight, sir?
On the Gujarat expansion, the or we have not yet won that all, but we have started the data collection. So the December -- the schedule will end by February end, we will get. And by March, we should be able to apply good [inaudible]. So, this is on the right path, which we are doing, we are talking to the government also on this. Hopefully, we should see that the project -- we collect the data and we can get our [ core ] and start some activities there.
You mentioned debottlenecking. So what would be the -- in terms of the quantification, how much increase in the capacity of branding or [ the clinical level ] are we looking at? And what kind of CapEx are we looking at?
Of 250,000, 200,000 tons of clinker should be additionally available to us.
Sorry, sir, 200... Okay 2 like by when?
That will happen in only 24 now... Because the placement of equipment and the delivery period of the equipment itself is long. Construction is not a problem. The project is ready with us. Now we have to get it because if the capacity goes up, we have to apply for some approval, also for the license also to put the capacity to increase. These are the problems which are statutory in nature. We cannot [ succement ] that.
So currently, what's the clinker capacity? So are we operating the Karnataka on clinker or we are not operating. So what's the current linker CapEx taking?
Karnataka is not operating only [ Damor ] is operating.
So the capacity is 3.5 million or 3.1 million tonnes?
3.1
In India at 3.1.
Sorry, sir, I didn't hear.
Not including Karnataka, the total capacity, [ income ] capacity of the company is 3.5, and Central India is 3.1 million tonnes, which we try to increase by per annum clinker capacity to doing the debottlenecking at Central India.
The next question is from Ritesh Shah from Investec.
Thank you so much for all your insights so far. You have been pretty awesome. Sir, just 2 questions. One is on the industry. Do you see that [ LCC ] will actually see light of the day. That's the first question. Like is it the industry which is against it? How should we understand that?
Which... I could not get you. Repeat your question.Ă‚Â I think you know that [ LCC ]Ă‚Â is a good option, but the amount of type of [ calcine ] available in our country are consolidated at certain locations. So getting calcine through cement making for everybody is not an easy task, okay? So it is not an economical solution, first number one. So you have to get closer to that because terms of these 3 blocks that are available are not homogeneous in nature. They are here very heavy and [ heterogeneous ]. So to get a good [ clear ] is also equally difficult. Another thing is when we talk about calcine clear cement, we have to also understand the demographics in which we operate. The quality of cement is a little different from the normal cement. So you can use that -- those types of cements for masonary cements. But if you start casting concrete and things like that, then we may have a problem there. I would say very simple that at the moment, we may make hundreds of products abroad, but the literacy level has to be equally scaled up because you use the wrong product at the wrong place, then you will only blame the company that -- and the person don't know to read and write, the mason, the user community is very, I would say, not educated or they don't take care of those things. Responsible behavior on the field is very lucky. I think for us, right now, there is not an option. Anyway for us also in Heidelberg, it is difficult to make [ LCC ] cement because we are not closer to the clay blocks. For some other people who are trying and testing, but nobody has so far placed the product in the market as per my information. In case if you have some information, somebody has placed it, happy to learn and understand from that.
Sure. Sir, I'll connect with you separately for that.Ă‚Â Sir, my second question was, when should we expect any corporate action when it comes to Heidelberg and Zuari as a single entity in Asia? I think worries at the more that there could be a lot of synergies which are there at the same top level management, which is running both the units. How should we look at this going forward?
Ritesh, as I mentioned, I'll repeat the same thing, there is nothing new which has happened in this. But yes, the group is working on this to merge these 2 units. It's a question of time. So we will merge these 2 units under one entity so that we have the financial fungibility, and which makes sense for us rather than running 2 units. But that will happen. It might take 1.5 years or so, I would say, on the safe side, I'm telling on 1.5 years.
Sure, sir. And sir, just last question, I'll just squeeze in. Sir, what is the rationale behind the new limestone lease? Are we looking at lease expiries in Central India? That is why we went for this incremental lease? Or is it the basic augmentation of resources? How should you read this?
Ritesh,Ă‚Â these licenses are valid till 43. Existing ones also and this [ news ] is the top of...
But sir, any reason...
Because it was joining to us in... We not take it.
Okay. So do we have...
Our presentation representation also, we have given the rationale about this mining lease. It's not only increase in life of the mines or the existing operation but also gives us a kind of opportunity to further expand our clinker capacity as well as the cement capacity. So at this moment, we are selected as a successful leader. Now we need to complete the entire documentation part and process part usually takes around 2 years and 2.5 years to complete and get the mining lease execution and thereafter, we need to sign off this mining development and production agreement. And once we complete all these process, then in the meantime, we'll export possibility, whether we want to go for the higher life of this plant, which is currently maybe around 25, 27 years, which we have other [ eg ] by 20 years or we can also have the opportunity to increase the clinker capacity. So, it is the kind of win-win situation for the company that not only it will save into limestone reserve, but at the same time, it increased the capacity of the company.
Sure, sir.
Thank you Anyone who -- The next question is from Prateek Kumar from Jefferies.
Sir, my first question is on your volume numbers. So can you just explain a bit more on the volume loss in this quarter because of logistics issues and how much -- how many days of impact or there are during the quarter?
About 10 days of impact is there in some local areas, which are high-volume areas out there. There was an impact. I mentioned it earlier also. I have nothing more to add on this.
Sure. Okay. And in terms of other expenses in the quarter, while on a year-on-year basis, it looks like sort of stable. But what does [ Heidelberg go ] into other expense on a quality basis which is impacting other expense more in third quarter versus later the quarter?
You're right that other expenditure is compared to December 21, it is more or less on similar amount. September as compared to September, it has increased. But you will also appreciate that during the December quarter, early, we take our [ plants ] are down. So this amount has increased on account of the stores and spares and consumables. During this time, generally, we changed our reflective, we changed our branding area. So this course in December quarter over, we will see that, okay, other expenditure as compared to September quarter is high. Part on basis, yes, because of different volume impact of 2% to 3%, it looks like, certainly is higher by maybe INR 10, INR 12 to INR 20. But in absolute terms, this is more or less of the fixed nature or maybe 6 [ nature ]. So this amount is similar to what we incurred in December '20 quarter.
And one last question on capacity. So we are looking at raising 3.1 million tonne capacity -- or 3.5 million ton capacity by 0.3 million tonnes by 25 and cement capacity goes up from 6.2%.
These 200 tonnes or 200,000 tonnes of incur will result into close to about 3.5 net tons of cement.
But is it incremental as just setting the capacity more current capacity more?
Its current capacity will be incremental capacity on this is added now...
No. I mean, putting more names, I mean, we have like 6.26 million tonne capacity, which seems less high versus your...
By addition of this, the capacity will go up.
Okay.Ă‚Â So, 0.3 million tonne expansion in cement and Ă‚Â [1.2 ] in [ clinical biolife ]?
Yes, almost. Can be better because the project report is given this, but normally, we try to always over-exceed this because the manufacturer stands to guarantee to a certain amount based on the equipment. But normally, we -- if you look at our film also 5,000 PPD, but we suited at about INR 5,700 consistently. I don't want to give you those figures because normally, these are the benefits, which we are as a management are supposed to derive out of an equipment. That is where the technology, can give you a certain amount of assurance, but again, your management capability can drive to a better living.
And on the [ Van positioning], your [inaudible] you said INR 45 higher by versus a normal brand in North and [ Central ], how does Mysen Power compare to like other graded brands in your markets like the [ Celltech ] maybe JP payment plans might be new for the market.
I cannot tell you because this is a premium product. Every company has a different placement. So not many companies are into this, but there are different people who are there, their share of volumes is some companies are doing more volumes. Some companies are doing lesser volumes. Today, I would say the most of the brands in this premium segment should be anywhere INR 20 minimum above their normal brand. 20 and anything, it can go to 60 also. So this is [ the way ]. Some brands will price their product INR 20 to INR 20 higher than the normal, and some companies may go up in between 20, 30, 60, like that also.
I was asking regarding Mysen Power [inaudible] normal brand in your market.
And for us, [ Ultratech ] will be the normal to normal. If you're talking about it is we will be close to about INR 20 crores, INR 3, INR 5 difference here and there.
So, Mysen Power [inaudible] than normal brand?
Yes, yes... Anyway, At least INR 30 crores, INR 35 more. Even if you are supposing some markets, we will be INR 5 or INR 10 lower than UltraTech in some markets where we are stronger. I would say you reduce this INR 10 from the INR 45, and it will be close to 35.
Next question is from [ Jas P Aurora from Equens ].
The fuel cost inflation for the quarter is well understood from the slide. Is it possible to give the similar spike in the 9 months, 9 months, raw material cost is up -- overall cost is up INR 700, how much would that be fueled and the others?
To calculate that 9 months I have to come. I don't have it readily available. But I think in Public, we have given the 9 months also figure is already there.
That's why I'm saying the gross realization total cost, EBITDA per tonne all is there. So total cost has gone up INR 700 per tonne 9 months, over 9 months. How much of that is fuel. So for the quarter, fuel is up 300 out of 370 for the quarter. I was just trying to understand. I mean I can just look at the last 3 quarters, I just asked in case you have it handy.
Average fuel cost is like previous quarter was the cost per full cost per tonne of cement was INR 1, 357 prior to that in June, March, it was INR 1,096 about 1,400 then 1,350. And then this is 1,260 price close to the December quarter. 42 over last year because March to December quarter 980 was the December quarter. And this year, it is [ 1,260 ].Ă‚Â We need to calculate part on this. Per tonne fuel cost per tonne of INR 175 crores... 98% last year. So almost 50% maybe 40% 50% increase is there, 9 versus 9 months. When we compare the 9 months it is December 2022 as compared to December 2021, fully on the face of the public, it comes around 40% increase on patent basis. Just on account of inventory change, but the inventory can also not significant in 9 months, which is last year 1. So we can take -- fairly, we can take a 14% increase in the fuel cost in there.
Okay, sir. Possible to share what's the current trend versus the last quarter average? How much softening if at all, we would have seen?
Remember, it has softened over September. And I think in the end of March quarter, it will further soften.
Maybe we can take the ballpark either a single may mid-digit figure of the percentage of reduction in the pet coke and fuel prices in March quarter. If things look like because we have seen that okay, imported petcoke and imported coal prices has reduced. And this would also translate into the domestic market. And we have also seen that Coal India also increased a little bit the availability of coal for the cement company. So I think on the fuel side, on the power and fuel side, we should not foresee any no further increase rather it should be the other way around, which will be beneficial for the company.
At 10% reduction you should expect in this quarter of next quarter.
Quarter-on-quarter, you think it could go down by 10% average? What do you say. Okay. Got it. And on the realization front, anything you can share how the current -- at least a month, year till date, gentle date, is there any improvements in realization?
No, I would say that just recently, there was a little bit of shake up in the price -- we are almost flattish right now as of now. January was a little flattish.
Okay. And lastly, sir, this Gujarat, this new greenfield project would mean that it's -- I'm just trying to understand what are the -- Where are we in terms of the so-called clearances and equipment ordering and subsequent orders.Ă‚Â So it's more like a 4-year project or it's much at a much advanced stage?
No, it will take its time because right now, the data collection, environmental data collection is going on. So that takes about 3 months of data collection, so that will get over in February, we will be able to get the report by March, we will be able to go for [ touring ] the month of May or so. And once all is completed, that will take us about some more time about a year time to get the results. In the meantime, we will have to start working on the project. And we'll have to do a little bit of -- now right now, so far, we have not bought any land or anything, but maybe in the next year, we'll have to look at in this next financial year, we'll have to look at doing something there. This is a long time process will take place. It will not happen overnight. Although the project is -- we want to be ready to go on this. But then there are certain limitations always there because statutory clearances and all these things are not within our hands. Our June application is still pending with the government, and we will be getting it done in this rear we may get some hearing from them, and we will be able to convince them on certain things. So we can move. So it takes its own time. It's putting up a greenfield project is not a [ Kal ]. It's quite up into..
Yes, I'm sure. But I guess the team has been working on it for a fair amount of time also. So it's not that it's the preparation started a year ago.
We cannot go -- we can go from mining plant until we get the approval from the June application, once it comes to me, then I will go for a mine it will take another 6, then I will go for a [ tour ]. And I will go... So it's a chain of events which just are nested inside. So if you make a bar chart for the time line, we see that at any one point we get stuck up, everything comes to a halt.
Sure. And would you be able to comment on the size or it will only...
3 million tonnes.
3 million tonnes you're saying, right? Okay. Now typically, the way -- I mean, we have seen companies do it that like the plan for a much bigger... Obviously, I was just trying to understand, could it be a 3 plus 3, that's the way you could ultimately envision it? Or are you just saying it would be only 3 million tonnes for is it is obviously expandable to another 3 years after a couple of years.
There is no [inaudible] the limestone reserves are huge. You can go 3 plus 3 plus 3, no problem.Ă‚Â But just to look at first is the later first across the first stage of 3 million. I would say I will not give you some assurances which because today, there is a -- because it comes closer to the coastal area. So you can't go below the C level. I mean C level, you can't go below that. The government does not approve so easily. But in future they will approve. I think that time you'll have more reserves out of it. It's a 3 million tonne going, which will take us another 4, 3.5 years to 4 years to go, I would say.
Got it and best wishes for you for your career ahead.
Anyone who has a question, fast. Next question is from Sanjay Nandi from Ratnabali Investments.
Sir, can you throw some light on the current pricing of the petcoke.
Current pricing of pet coke Maybe around INR 20,000, 21,000 per tonne.
And what has been this level on the exit of last quarter?
Last quarter, it was expensive by around INR 2,250...
Next question is from Utkarsh Nopany from Haitong Securities.
Sir, first question is that like we observed that the cement demand in the central region has been quite weak for the past few quarters. Can you throw light like why the demand is weak in the central region and how it is likely to shape up in this current March quarter in FY '22 over a fees?
I think the MP government was a little weak on government demand. Now I think we soon start. After the investors meet recent investors, we called by the Chief Minister, I think there is some traction which we are going to see in the near very future. Plus there are state elections also there. So we can see -- We can expect some good movement to happen on cement. This year, the [ Rabi crop ] is good. So I can really for 100% tell you that the rural demand is going to be significantly when you can see this going to happen very soon. So post Holli, you can say that after this fully takes place and the green starts coming to the market, April should see a very good movement. March government should do the spending part of it. I think the budgets will expire. So in February and March, we should see by end of -- between end of February to March. And I think and even until first fortnight of April because the supply will keep going, I think we should see a very good demand coming up.
Sir, can you quantify what will be the demand growth rate in central region in FY '23? And what is our expectation for FY '24?
The expectation for 24 is about 7%.
Despite the weak base of FY '23.
Yes.
Okay. And what would be for FY '23, sir?
FY '23 should definitely checkup, it should be about 6%, 5.5%, 6%.
Sir, second question is that like our realization has gone down by 2.5% on a quarter-on-quarter basis in December quarter. Can you give some sense like how the cement prices have behaved in central region in December quarter, sir?
December quarter 4 has been okay. I think there was some volume pressure was there because of the festivities. So there was a price pressure was there. But now I think that is easy enough.
So, whether the cement prices in the entire region has gone down?
The biggest problem is the capacities are coming in on steel. Every [inaudible] place their product in the market. And I don't blame anybody for that if the competition is becoming severe. The first victim of this is the price. Any region we see significant capacity add up. You look at it, this market in 2020 was close to about 60 million tonnes. By 24, 25, it is going to be about 90 million tonnes of capacity, which is going to come between 65% to 90%. It's almost a significant jump in the capacity is getting added into central area. And this is building up a pressure. I think -- but for Heidelberg Cement, I always tell my team that we should not be bothered about what the competition comes in. We are the senior citizens of this state we have been here. We should not be able to -- or we should be able to retain our channel partners and our customers better than anybody else can do. A newcomer should not be a threat to us. I would say it's a welcome to us, at least, they will bring some prosperity to the state. But as a member of -- as a senior person operating in this region, as an organization, we are senior, I would say, in this market, and we should not be worried about that. We have a brand equity. We have a good placement of product. We have got a good channel partners. I think a little bit of [ tweaking ] with them, a little bit of working with them. This is during the Covid period, we did not do many of the things like meeting dealers, the dealers conferences were avoided, some gift schemes had to come down. Advertising has not happened. Now all that is gone. And now this -- from now onwards, we have started set sales to see to it that we come back with a vengeance in the market.
Okay. Sir, like if I understand correctly, you are saying that the regional capacity is likely to go up from 65 million to 90 million tonnes, whereas the demand is just likely to grow at 7% rate. So does this mean that this pricing pressure, which we saw in December quarter is likely to persist over the medium term, sir, because of oversupply situation?
This is the capacity almost 3 million tonnes of capacity getting 4 million, 5 million tonnes of capacity getting added every year. So that is not 30 to 31 is not becoming 1 year. It has happened in the last 4 years.
And maybe it will continue not years, it will continue 4 million, 5 million tonnes every year.Ă‚Â So I would say that -- okay, but if you look at the mark sort of like today, the market is running short of clinker in this year. People are selling clinker more finer than cement.
Okay. And sir, lastly, like we were planning to come up with a greenfield unit in Zuari Cement in Karnataka. Can you throw light on that, sir?
That you're talking about Zuari part
regarding Zuari cement sir.
[inaudible]Ă‚Â from commenting on a call for HCI.
Next question is from [ Leish Bagmar ] from Lotus Asset Management.
Sir, one question with regard to our tax incentives or GST incentives, which is -- which are going to expire in February-- so can you highlight how much was the incentive which we had booked in the 9 months and the last quarter?
I would say it will set us back once it is withdrawn, it will settle back by about INR 40 a tonne.
Okay. So INR 40 of per tonne margins would not be there post February provided the prices remain the same?
It is considered INR 2 a bank.Ă‚Â Nothing big. You can [inaudible]
And sir, secondly, like it's as you mean like in Gujarat, over the next 6 to 12 months now, like I said, large capacities get announced, so would we be very committed on our Gujarat projects or not? Because I believe that there are, let's say, 3, 4 -- 2 to 3 big projects are going to come up on the capacity addition in Gujarat. So would we be committed on the projects which we are looking at? Because anyway, over the last 2, 3 quarters, we have been saying that this particular project is going to take more than 3 to 4 years of time. So, would we be committed on that? Let's say, like 8 million, 10 million tonnes of new capacity get added or announced by our peers in the Gujarati market?
No problem. We still, everybody is putting capacity. We also put capacity where is the problem. I don't see any reason for us to shy away from this.
And like, sir, on the mine, which we have won, sir, adjacent to our current location in the central market. So, would we be announcing any capacity addition? Or would it be just replacing our current mine?
No, our current mine is there. This is in addition to that, which Mr. Sharma also explained in the presentation is there that we are looking at that can -- we have 3 lines in the Line 1, 2 and 3. Line 1 is an old one, which is now very old, it is 1,500 PPD line. It is a very good opportunity for us to look at scrapping that line and building a new line in that place in place, which will be more fuel efficient and everything, plus these mines will support that to accelerate us in the Central India. Because Central India, we enjoy a better synergy than anywhere else. So, we will take a call on this, but it is, again, as I said, 24 months down the line. First, let us get the agreements done paper done. This now line -- we will start buying the land in that area. This is not a problem because it is joining and we have to open up the mine and no sooner this consent is given to us and papers are where we will do that. I think this will be a good occasion for us to add capacity and a capacity of a better quality.
And sir, the current mine, how much reserves do we have or how much years of life can it support for the current capacity?
Current capacity is right now, the existing mines, what we have, it comes close to about 24, 25 years of [ capable ] limestone reserves we have. As I mentioned in my earlier comments also that we are using a very significant amount of limestone rejects which comes out by supplementing it by sweetener. We are using that to extend the life of the mine. If I might have spoken to you or you might have heard me about 4, 5 years or so earlier there, when I mentioned to you that we have been able to increase the life of our mines by almost 7 years... By using the [inaudible] So -- and now only problem is a little bit of problem is managing the -- as the mines are -- as the mines we are approaching the end of the mines on certain sites where the mining plan has been made, maybe there was a little bit of geological miscalculation, which has happened. So we are getting a little bit of more improvement on LSS when we do it. So we have to buy more sweeteners. But in this quarter, the sweetener has gone up a little bit. Now we will try to control that sweetener also in the mid this quarter and the course subsequent quarter also.
This is a final reminder for questions. Next question is from the line of Harsh from ICC Securities.
I have just one small question. What is the CapEx budget we have planned for this ongoing [ Pascon ] for FY '21?
Then we keep the CapEx into 2 part. One is the sustainable CapEx, and that is around INR 40 crores for this fiscal year as well as the next fiscal year. And on top of that, next year, there will be around INR 15 crores CapEx on account of this clinker debottlenecking. We can consider that next year, this CapEx will be around INR 55 sales for the fiscal year and full... Including [inaudible]
Next question is from [ Vishal Periwal from IDBI Capital. ]
I think 2 questions on particularly on the pricing front. How has been the pricing so far in January and February for us in our region? And second, you mentioned South region has seen a bit of price hike. So which region and what, if possible to quantify that, sir?
The entire region south below, I think the prices have gone up by about INR 100, INR 125 to INR 130 a tonne on an average has gone up very recently. I can see that there is this sort of movement when it happens in South Central also start seeing it. January was flattish, February should improve. So far, we are not seeing too much of an improvement in Central India. But let us see. We expect that some price hikes we should be able to take now -- it all depends on -- because today also the market is running at a little softer end. You would say that the capacity utilization in Central India are a little better off than say in the South, but then Central India was operating at 80% plus capacity utilization. Right now, it is subdued to around 75%, 73%. So I think what the capacity utilization starts improving. So we will see -- for your company, for Heidelberg Cement, we are doing a relatively good capacity utilization so far as of now.
Next question is from [ Thanos Pandia ] from Dolat Capital Markets.
What is the CapEx for quarter 3?
[inaudible]Ă‚Â We need to say because we do not report on a quarterly basis but it is a very normal CapEx. -- million on both a Crores we have done it. INR 7 crores. But not so significant during this quarter...
Yes, sir. And what was the lead distance for third quarter? [Technical Difficulty]
Next question is from [ Kapariah ] Investor. This will be our last question for today.
Thank you for giving this opportunity. Can you hear me? I just have a follow question that looking at 3- to 5-year horizon, what is the compounded growth that you see in tin terms of top line revenue?
That's 3 to 5 years top line. Not less than 5% -- even if we grow as per the market as well as there will be some inflation on account of pricing for... Can 5 plus 5 should be yes easily. Also at this point last year when we'll talk about the calendar year 2022, the cost has increased significantly. It was not less than 20% for -- the price has not increased in the direction growth... [inaudible] works in the same direction, there should be with the lag effect of 6 months, 12 months, price must increase. So, we are very much hopeful that and pretty convinced that next 3 to 5 years, the 7 top lines would increase more than 10% compounding out.
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference back to Mr. [ Veba ] Agarwal from PhillipsCapital India Private Limited for closing comments.
Thank you, and over to you, sir. Yes. Thank you. On behalf of PhillipCapital India Private we'd like to thank the manual Heidel Books India Limited for the call. And we'll also like to take the opportunity to wish Mr. Jim senior all the very best for his future endeavors. We also thank all the parties who join the call. Aman, you may now conclude the call. Thank you very much, sir. Thank you.
Thank you very much, everybody. Thanks a lot.
Thank you very much. Ladies and gentlemen, on behalf of PhillipCapital India Private Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines. Thank you.