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J K Cement Ltd
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Ladies and gentlemen, good day, and welcome to the J.K. Cement Q1 FY '23 call 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.
Yes. Thank you, Inba. Good evening, everyone. On behalf of PhillipCapital India Private Limited, we welcome you to the Q1 FY '23 call of J.K. Cement Limited. On the call, we have with us Mr. Ajay Kumar Saraogi, Deputy Managing Director and CFO; Mr. Sumner Khandelwal, Deputy CFO; and Mr. Prashant Seth, President, Business Information and Investor Relations.
I would like to mention on behalf of J.K. Cement Limited and management that certain statements that we make or discuss on this conference call may be forward-looking statements related 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 the results to differ materially from the statements made.
J.K. Cement Limited and the management of the company is under no obligation to publicly alter or update these forward-looking statements, whether as a result of new information or returns or otherwise. I will now hand over the floor to the manager of the J.K. Cement for the opening remarks, followed by the Q&A. Thank you, and over to you, Saraogi sir.
Thank you, Vaibhav. Good evening. The Board of Directors met on 13th of August to review the working of the company during -- for the first quarter ended 30th June, 2022. The major highlights were: the revenue from operations stood at INR 2,066 crores as against INR 2,269 crores in previous quarters and last quarter FY '22, a drop of 5%. The other income was lower by 46% at INR 22 crores as against INR 41 crores. The operating expenses were lower by 6% at INR 1,766 crores as against INR 1,886 crores.
The EBITDA number during the quarter was INR 405 crores, higher by 2% as against INR 397 crores. The depreciation was higher by 19% at INR 90 crores as against INR 76 crores. For this depreciation, we have reviewed the life of some of the power plants, and accordingly, the additional depreciation has been provided for. The finance cost was lower by 10% at INR 62 crores as against INR 69 crores. The profit before tax was INR 271 crores as against a drop of 3% as against INR 279 crores. The profit after tax was INR 271 crores as against INR 149 crores, an increase of 81% because in the previous quarter, impairment of Fujairah was considered.
The provision for tax was INR 90 crores as against INR 63 crores, and the profit after tax was INR 181 crores as against INR 86 crores. The EPS during the quarter was INR 23.44 as against INR 11.16. The EBITDA margin for the quarter was 19.08% as against 17.87%.
If we compare to working with year-on-year, the revenue from operations were higher by 33% at INR 2,166 crores as against INR 1,634 crores. And the EBITDA was INR 405 crores as against INR 402 crores, almost flat, just higher by 1%. The depreciation was again higher at INR 90 crores as against INR 66 crores. The finance cost was INR 62 crores as against INR 56 crores and the profit before tax was INR 271 crores as against INR 305 crores in the year -- last year, a drop of 11%. And the profit after tax was INR 181 crores as against INR 208 crores, a drop of 13%. The EPS, INR 23.44 as against INR 26.95. The EBITDA margin was lower at 19.08% as against 25.11%.
These are the major financial highlights. As regards the project is concerned, the greenfield expansion at Panna is at advanced stage. And the company expects that this will be commissioned within this year, though efforts are done, and it may be possible that the plant goes onstream in the third quarter itself. Up til now, we have spent about INR 2,072 crores on the project.
If we look at the debt profile, the gross debt during -- as of 30th June was INR 2,785 crores as against INR 2,850 crores. The net debt was INR 1,727 crores as against INR 1,606 crores. Net debt to EBITDA is 1.12x as against 1.05x as on 31st March, and the net debt to equity is 0.39 as against 0.38. These are the major highlights. If you have any questions, we'll be pleased to address the same. Thank you.
[Operator Instructions] We'll take the first question from the line of Shravan Shah from Dolat Capital.
First of all, congratulations on relatively better performance, particularly on Q-o-Q improvement in EBITDA per tonne. So now coming to the questions. First, in terms of the pricing, so post June, how much price decline we have seen in north, central?
So in the north, there's a drop of about INR 10, INR 10 to INR 12 a bag. Central India is not our main market so it's very difficult to say what is the real fall in that market. But the major one has been the north.
And in south, sir? South and West Karnataka and Maharashtra?
South and -- South has not much change, about INR 5 to INR 6.
Okay. So the second now the question is on the power and fuel front. So our consumption cost, what was for Q1 FY '23? And how do we now see cost in the -- particularly in the Q2? So are we now starting to see the cost, power and fuel, to decline from the Q2 or it will be from the Q3?
So actually, we still got benefit of the low-cost fuel in the first quarter. So the full impact of the high-cost fuel, which we had procured has not -- I mean, the full impact is not still there and that would be seen in the second quarter. So we see that in the second quarter, our fuel cost would be higher than the first quarter. So no question of any decline right now, but the second quarter would be the highest fuel cost for many -- for I think all times to come.
Okay. And any ballpark number, 10%, 15%, so INR 100, INR 150 kind of...
INR 10 to INR 12 should be higher as compared to the power fuel cost could be higher by about INR 200 a tonne.
Okay. Got it, okay. And in terms of the -- a couple of data points, so OPC, PPC, share, railroad mix, lead distance of fuel mix for this quarter?
Yes, the OPC, PPC, like PPC was 64% in this quarter. Rate ratio was 69%. Railroad was 70% to 83% and lead distance was 475 kilometers.
Okay. Lead distance have increased.
Yes, it has increased because of the new markets, because we are feeding these new markets of Central India from the existing plants. Lead distance has increased.
And fuel mix?
Fuel mix is around 50% petcoke and balance is the imported coal and the alternate fuel.
Okay. Got it, got it. Sir, just to clarify, when we said that we have reviewed the life of power plant and that's why the depreciation has increased INR 14-odd crores this quarter, so this INR 90-odd crores quarterly is the normal run rate that we can see now?
Yes. I think because this would be the run rate because this is impacted only in this quarter. So annual impact of review of life of the various power plants is around INR 60 crores.
Okay. And lastly on the CapEx front and the debt front. So now as you mentioned that most likely we will be starting Panna by this quarter. So this will be both...
Not this quarter. I said quarter 3.
Q3. Sorry, sorry by December.
We are trying. Yes, initial was by FY '23, but we are working on it, and we are hopeful that maybe in quarter 3, we are able to start Panna.
So this will be both even grinding also the entire 4 MTPA.
Yes, yes, there could be a manner, both during the quarter itself, this is what we feel that barring any unforeseen, we should be able to do. So well we -- as we said, definitely, I mean in all circumstances, the plant would be onstream during this fiscal year. So what our working is that we are still -- we are -- our work is at a very advanced stage and satisfactory stage, and we are hopeful that maybe in the third quarter itself we commission it.
Okay. So for the full year in terms of the CapEx now, how much we will be spending so if we including the Panna, what is left that to be spent? And apart from that, even the paint and maintenance, so what would be the full year CapEx this year and then the next year?
Yes. As we have conveyed, the annual plan is for INR 1,700 crores of CapEx. So in all, there will be around INR 1,150 crores of CapEx for the Panna and INR 150 crores for the paint, then INR 325 crores for the sustenance CapEx. And the balance is what we are planning, maybe some expenditure on the future plan of the 2 split grinding units. It would be in the range of INR 1,700 crores.
[Operator Instructions] The next question is from the line of Rajesh Kumar Ravi from HDFC Securities.
I have a few questions. First, would you share the UAE product sales volume, total sales from your facility?
Yes. Yes, UAE volume in this quarter was 1,25,000 tons.
Okay. And you missed out on the fuel cost on a per kilo, what was the number for Q1 on consumption basis.
Consumption basis, the average mean fuel cost for the Q1 is around INR 10,000 per tonne.
No, it is actually on par -- it's about INR 2.30 as the consumption.
And how did this change versus Q4, sir? And where do we stand in Q2?
So Q2 should be around INR 2.75.
And Q4, it was how much, sir?
Q4, INR 2.30, I think, -- it was -- it was about INR 2.20 to INR 2.30. It was more or less in the same range like Q4 versus Q1 was more or less same.
Okay. So this is surprising. While we even faced a 15% to 20% inflation, you have been able to manage with flattish sort of a number on a Q-on-Q basis.
That is the benefit which we are seeing, but it will not be visible in the second quarter.
Correct. So everyone is in the REIT in Q2 for sure. But do you see this [ INR 225 ] Q3 onwards tapering down?
See, the fuel prices have come down. We have not, but partially, yes, it would be seen in the third quarter, but there would be some impact of the high cost inventory even in the third quarter. So not for the full quarter because by that time -- by the time the low-cost fuel inventory reaches the plant, so we have a blended thing. I think if the average can come down to something closer to Q1 or something.
Okay. In Q3, you're looking some tapering of back to Q1 numbers?
Yes.
Okay. Sir, what is the total project cost for the central expansion, Panna and Hamirpur?
So it is INR 2,070 crores -- INR 2,970 crores.
Okay. And you said how much is spending on this for this financial year FY '23?
INR 1,150 crores will be in this financial year.
Okay. INR 1,150 crores because -- from the presentation, okay, end of Q4, you have -- depending -- you have already spent...
See up til now we have spent INR 2,072 crores. INR 1,900 crores needs to be spent. So some of -- there will be a spillover because again, payments and performance guarantees, there will be some shift on and the waste heat may get shift to -- we are trying to do it within this fiscal, but maybe partially in the first quarter of next fiscal. So there would be about INR 300 crores to INR 400 crores CapEx, actual cash outflow, which may be there in next FY -- FY '24 but balance majorly about the expenditure of INR 2,600 crores should be spent in this year broadly.
Okay. And one last question. What is the status on the paint project, sir? How much you mentioned you're spending CapEx in this year? So what is the status in terms of the planned finalization of land and all?
So we have acquired -- we have got the permission for land and the land has been allotted to us. It is at Matra in UP so the land has already been identified. Now we are in the process of getting the land acquisition and other approvals. And in the meantime, we are also getting the quotations for plant and equipment and other things. So we should be finalizing that all these things by -- within the next 2, 3 months' time.
Okay. And by when this plant would be up and running?
Now the schedule remains the same that by March '24, we should commission the paint plant.
Okay. And the CapEx in first 2 years -- total CapEx, not your investment, that will be done for next 2 years?
Yes. So it is -- the INR 600 crores is spread over a period of 5 years as we said earlier.
Okay. So this plant will be up and running by spending this 2 years, this year and next year, around INR 250 crores, the plant should be operational?
No, no, no. So next year. We are planning to spend INR 125 crores this year. The expenditure is higher. It's about -- next year expenditure would be about INR 200 crores because the plant will be commissioned. And then we spend on the branding and other things. So the balance INR 300 crores to get spread over the next 3 years.
[Operator Instructions] Our next question is from the line of Navin Sahadeo from Edelweiss Securities.
A couple of questions. First of all, I'm just looking at your presentation, which says the CO2 emissions in per kg terms, like, kg per tonne terms, they have gone up slightly in Q1 '23 over the average of '22. Is it because of any change in the sales mix per se in the sense did we produce higher -- or the share of OPC or like unbranded...
No, no, Navin. This is actually relating to the emissions on account of the power and the usage of the alternate fuel. So this is a minor variation, which keeps on coming. So it is not very significant also.
No, it's not significant. I was just a little confused with the fact that...
It is on account of the solar power and the alternate fuel relating emissions, which is seeing some variation.
And Navin, just to add to Mr. Prashant. Like last year, we had been operating like some thermal power plant in some of the months. And this year, we have not operated thermal power plant. And unfortunately, for this calculation thermal power plant generation is not considered basically and that much power, we had bought from wholesale because of that, like basically it has gone up. So it is like issue of mix of power source.
Yes. No. Sorry, I was just looking at it, a little confused because green power mix just a charge below that, there that exposure from 32% has gone up to 41%.
That is the reason, as Sumnesh ji is telling because captive power, the coal-based captive power is not a green power. Now we have stopped the captive power, and we are procuring the solar power, which is coming into the green power. And in case of the solar power, which we are buying, the carbon emissions are being added. And for the coal was captive part, those who are not being added as per this system. So that is why increase of the green power has resulted into increase in the emission.
Sure. And just staying on this a little bit, once we start operations in Panna, what kind of change like on a fully ramped-up basis, what kind of change can we expect on the blending ratio or the CT ratio per se because I believe Central India per se is a much higher blended cement region versus, let's say, north or even west, south or west for that matter. So how much should that improvement be?
So see, that will depend. Today, all the new markets we are entering is all vendor cement. We have to see for initial ramp up, what is the institutional sale, which comes and we have to see what -- on the blended cement -- it will depend on the institutional demand. Yes, as far as trade is concerned, it will mostly be only blended cement.
And just to add to Saraogi ji basically like from Hamirpur, it will be like there will be a substantial increase in blended cement because it will be producing only PPC. But as far as Panna is concerned, like since we will -- our focus will be to capture the market first, basically. So initially, there might be like some higher quantity of OPC, but gradually like it will keep reducing and blended cement will increase.
Understood. Just 1 more question, if I may slip in, please. Staff costs sequentially has seen an increase of almost about 17.5%, 18%. So just wanted to -- is this because of like salary increases and in general, the entire impact coming in because -- and post-Panna then this is set to -- this should ideally then improve further post-Panna comes?
So see, for the staff, yes, the impact of the increment is there. Also, the additional marketing staff, which we have taken for the new markets. So the additional manpower, which is required for the new market is also built in the staff cost. So there would be only the plant staff which is presently being capitalized, that should come in once the plant starts. So going forward, on the per tonne basis. Yes, absolute amount would be higher, but we will get after the Panna production. The per tonne cost will come down.
Sure. Just one last question, if I may. The grinding units, which you said there's going to be some CapEx identified for at least 2 more split grinding units in Central India. Have you finalized their location?
Yes. So one is in MP and the other one is in UP.
Okay. And if I may just ask, eastern part or western part, some color here or maybe we can share it for the next time if you come...
We have in the Eastern UP and the west towards Indore and Ujjain is the place closer to that, we have other option that is the MP location it would be -- we're just finalizing on that.
[Operator Instructions] The next question is from the line of Sanjay Nandi from Ratnabali Investments.
Sir, like as we already closed with the start of Panna plant. So can you just share the demand-supply dynamics, which are prevailing in Madhya Pradesh like what kind of production we are in for the start-up at Panna plant?
So as far as production is concerned, we expect that we should be doing in the next fiscal, anything between 50% to 60% of the capacity. So the capacity is 4 million tons. So that is the number which we expect in the first full year of operation.
Going forward, we will be clocking to the industry standards norms, right?
Going forward, yes, yes.
Our next question is from the line of Sumangal Nevatia from Kotak Securities.
First question, just on clarification on the prices. You said around INR 8 to INR 10 decline. Is it possible to compare the prices versus 1Q as an average?
Q1 as an average?
I mean, what are the current prices versus 1Q average?
The current prices would be on an average lower by about INR 15 to INR 18 a bag.
Okay. And this is gross price, right, I mean, at the retail level?
So retail level, see the pricing today, different distributed range from anything from INR 360 to INR 380 a bag presently.
Okay. And this is not -- if I'm not mistaken, with respect to south?
South, it will be about INR 20 lower.
Understood, understood. Sir, next question, you said in the earlier question that around 50% to 60% utilization in the first year, given that it's going to be a significant ramp up and growth, I mean, any sort of marketing selling expense, et cetera, which would be front loaded in the first year?
I didn't follow.
I'm asking with respect to Panna expansion, we are expecting around 50%, 60% volumes, 50% to 60% utilization of the plant in FY '24. It's a very sharp increase in the overall volumes and it's a new region. I mean any front-ended marketing or selling expense, which we will see or it will be a normalized -- or it will spread over a period of a few years?
It will spread over, we have already started. We have already started opening up of the new markets, which we have to feed from Panna. And so presently, also around in the new markets itself, we are selling around 40,000 to 50,000 tons a month. So we are already feeding all the markets. And as when we see all of our the branding spend and other things is part of that. So there would be additional branding spend would be there, but it will get compensated by the additional volume.
Understood. And one last question, the future split grinding units. What sort of contribution, I mean, overall size, would it be? And should we expect that to be commissioned sometime in FY '25?
Yes, before FY '25. And it should be additional what we have a plan, not yet approved by the Board. So we are working at a stage of additional to add up, which is also given in our annual report, if you see that we intend to do additional around 6 million tons. This would come by way of one, we are also working more on possibilities of revamping of some of our existing grinding capacities and installation of new grinding capacities.
Our next question is from the line of Prateek Kumar from Jefferies.
My first question is on your trade mix, which has sustainably remained now in the higher end of -- higher range of 60%, 70%. So post-stabilization of Panna operations, are we looking at like stabilizing it here? Or are we also targeting like higher than 70% for overall company?
So our ultimate target is for the company, we want to achieve a 70%-plus as a trade volume. And even for Panna presently, we are feeding all the markets and like from the grinding station, it should be mostly trade volume. It should be -- it will be blended cement and mostly catering to the trade market. And from the integrated plant because normally, if you see the non-trade segment is only more of OPC rather than on blended cement.
So even with Panna, we expect that we should be able to maintain the range of -- initially the range of 65% to 70% and then increase further beyond 70%. Also, I mean, one other important factor is this is definitely subject to how the future demand, if all incremental demand comes from institutional, where there is a need to get the market share, one has to sell more in the non-trade segment, then definitely, there would be some correction on the trade, non-trade ratio because in any case, trade, we are increasing. We are working towards an increase of the trade numbers, but there is a limitation to increase in the trade, if the demand is not increasing in that segment.
One more question. On cost of operations once the Panna commissions, so how would the cost of operation at Panna compared to the overall grey cement operation cost for the company?
So the Panna costing would be similar. I mean as a new plant, it will be more efficient, but the initial, first 3 to 6 months, maybe a stabilization period. And thereafter, 4, 6 months, say, from the third quarter onwards next fiscal, we should see one of the best costs coming in out of Panna operations.
And lastly, sir, on demand trends, how is the -- I mean, now we are probably hindering during second half of monsoon. So how are we looking at demand on a year-on-year basis like going forward like post monsoon as well?
So we are expecting a good volume growth for monsoon. So in fact, we expect that even from September itself, there should be some improvement in the volume numbers.
Our next question is from the line of Tejas Pradhan from Citigroup.
Sir, I just wanted to check. You mentioned in your annual report that you have started toll operations for Wall Putty. So could you give a sense of what sort of volumes can be expected from this method?
So not big volumes, but this will be a small 1,000 to 1,500 tons coming from each location per month and then step up to 2,000, 2,500 tons max. And then go to different more locations where you're having a distributed manufacturing as in faster development of the market. I mean, you are able to service the market better because these areas, everything covering from a Katni or from Gotan once you have more lead distance your service factor gets affected.
So we are -- ultimately you are able to do better servicing, and it is only the servicing which matters now in marketing. The very important thing besides the quality and other parameters which we are, in any case, maintaining, but service has become very important.
Okay, okay. And would the cost be for this be similar to your own plants or it will be...
So ultimately, distributed manufacturing should also result in -- over a period of time would also result in savings and costs.
Okay, okay. And just finally, sort of as a follow-up to what was discussed earlier as well. You had mentioned 25 million tonne gray cement capacity road map by FY '25. So for this clinker would largely come from existing operations or any debottlenecking, et cetera, would be planned for this thing?
Yes. So we do see some -- once the Panna stabilizing. So Panna would net out the -- whatever is the balance requirement of clinker that will be met out of incremental production, which we see we will get from Panna. Presently, all our things have been -- we have marked at 8,000 TPD from Panna, but we see a definite potential of 10,000 TPD from the Panna kiln.
Okay. So Panna can go from 8,000 to 10,000. And that should -- that itself should be enough for the 25 million tons?
Yes.
[Operator Instructions]
We will take our next question as a follow-up from Shravan Shah, Dolat Capital.
Sir, a clarification in terms of the employee cost when we mentioned, so this quarter, INR 143-odd crores kind of employee cost for the quarter on stand-alone. So this run rate, as you mentioned, it also includes the increment also. So from next quarter, this is the standard and once Panna will start, maybe we will see another INR 5, 10 crore increase in that. Is the understanding right?
As of now, the Panna cost will not appear because J.K. Cement is doing the marketing of the products. The employee cost for marketing is appearing. So Panna would unless because we have a merger plan unless Panna gets merged with J.K. Cement, it will not be in a stand-alone audited results. It will only come in the consolidated results.
Okay. So let's assume if it gets merged, then this quarterly run rate will be after the Panna gets starting from Q1...
Whatever is the plant cost that will come additional. There will be some additional marketing costs also because a few more depos are being opened to cater to the whole market because this Panna, we shall be covering the entire state of MP and UP. So that will be the ultimate market with Panna. With Panna, we shall -- our market reach, we will be a whole, we will be covering the entire state of UP, we shall be covering the entire state of MP.
Got it. But still -- so this -- from the Q2, this INR 143 crores, this run rate will continue -- and...
For Q2 and Q3, I don't think so there should be any major change.
Okay. But once the Panna gets merged, then this employee cost will increase by how much?
So whatever we see, we are talking about is INR 143 crores. So you may have an additional about INR 10 crores, I mean, 10% on this amount.
Okay. Got it, got it. And second clarification. So currently, this Panna clinker plus 4 MTPA grinding. So these 2 grinding is one is that integrated to MTP and 2 MTPA it is at Hamirpur and additional the 6 MTPA we are talking about. This -- we have identified one location Indore and second one is Eastern UP.
One is in MP, not Indore yet. The location is not again finalized and approved by the Board. So, I'm not taking the exact location. One is in MP and one is in UP. Near Indore I said, I didn’t say Indore, it’s around and so the location has not been announced yet so we'll let you know. One location is there, one location is in Eastern UP.
Okay. And so there, broadly though, we have not finalized, but in terms of the additional branding, which will come would be 2 MTPA at future locations. So 6 MTPA when we are talking maybe max, we can look at 3 locations.
So there will be these 2 locations -- 2 new locations, plus we are revamping some of the existing grinding at our existing grinding stations across integrated plant and the grinding plant. So there, some grinding enhancement would be there. So with all that the total incremental across would be about 6 million.
Okay. And then only the 2,000 TPD increase in clinker at Panna would be sufficient for the entire 6 million tonne extra grinding that we are looking at? And this entire 6 MTPA would be starting by FY '25 or it will start from FY '25?
Should start within FY '25.
Okay. So we will add an entire 6 MTPA by FY '25. And only the clinker of extra 2,000 TPD clinker from Panna would be sufficient?
See, we already have excess clinker today after the modification, which we had done in Nimbahera. We have clinker, we are not operating the older kilns as of now. So we have sufficiency and collaboration. So as and when -- as you know, we have the grinding capacity and when -- and as the demand picks up, we shall be utilizing all our clinker facilities.
Okay. And broadly, roughly on a rough basis, this 6 MTPA, the CapEx would be per MTPA would be how much, INR 200-odd crores?
INR 200 what crores?
INR 200 crores per 1 million tonne grinding units. So I'm just trying to understand the capacity...
It should be well within that. Yes, yes. I'm not giving any numbers because the numbers have not been, we are only discussing certain theoretical numbers that yes you said 200 crores per million. You're talking about maximum up to 1,200 crores I say yes well within this is what we feel that it should be done within that.
Okay, okay, okay. So then the maximum peak debt, if we factor that, how much maximum peak debt are we looking at? So from here on, can we see another INR 700 crores, INR 800 crores or INR 1,000 crores of max increase in the peak debt?
When we talk about peak debt today, we have standalone gross debt of 2,785 or net debt of 1,727. We are yet to draw about 800 crores has to be drawn from the bank and there could be some additional borrowing. Yes, I think the net peak debt should be around 3,300 to 3,400 maximum.
The next question is from the line of Girija Ray from Systematix Group.
These INR 2,970 crores of CAPEX, so that includes WHRS also, on Panna?
Yes INR 2,072 crores on Panna this includes and the project cost of INR 2,970 includes WHRS.
We are setting up WHRS in Karnataka also? That also includes in that, right?
Panna WHRS, there is a 22-megawatt WHRS which is included in the project cost. It is being installed at the Panna site.
But in annual report you have mentioned in Muddapur Karnataka also we are setting up?
It is not in this project cost. That will be part of the normal sustenance CapEx.
That will be somewhere around INR 250 to INR 350 crores in that subsidiary?
No. What is talked in the annual report is, one, this 22 megawatt is part of the Panna project then we have a plan to put up a WHRS at Muddapur, the south plant at Karnataka where we do not have a WHRS. So that details are being worked out. That would be an additional CAPEX of around INR 175-odd crores to INR 200 crores that would be separate.
Regarding solar and wind power, 38.5 we are adding up so in which location we are adding?
Solar and wind is across all our locations and it is more on a group power basis. It is not based on capital as on yet where we are only investing marginally in the equity of the group power provider. We only invest in the equity and we get that power. So, it is across all the locations we are working out.
We'll take the next question from the line of Prateek Kumar from Jefferies.
My questions are answered.
We'll take our next question as a follow-up from Rajesh Kumar Ravi from HDFC Securities.
I have 2 follow-ups. First, on the CapEx guidance for FY '24 across all projects on a consol basis?
It will be INR 1,100 crores.
So that would primarily be towards the Muddapur WHR and 6 million tons grinding expenses.
Lower CapEx of the Panna plus the normal CapEx, including the WHR, then whatever is there for the grinding locations plus paint, everything.
Okay. Understood. And what is the volume guidance for FY '23?
So FY '23 we have about 10% increase in the volume numbers...
This is on consol or grey cement you are looking at, sir?
This is consol.
Okay, consol 10% volume, okay. Now coming to this Panna expansions, we are adding 2.5 million tons clinker which obviously will increase to 3.3. This 22 million, this WHR capacity is for this capacity or inclusive of future expansions?
No. See the WHRS is linked to the kiln capacity. It is based on the present kiln capacity. There is only one kiln at Panna at this point of time. Unless we come up with Line 2 at Panna then there would be additional WHRS. Otherwise, there's no additional WHRS.
Why I'm asking, isn't the number too high from a kiln through put perspective 2.5 or 3 million tons we are yielding a 23 megawatt of WHR?
Not too high.
Okay. And what...
This is the norm now.
Okay. Good to know that, sir. And sir, for this Muddapur again, what sort of capacity you're looking at in terms of WHR because it's INR 200 crores CapEx? Is it close to a similar number, 18, 20 megawatts?
Close to 20 megawatts, yes.
Close to 20 megawatts. Last question on the clinker capacity. You said these 6 million tons with this debottlenecking of 0.7 million tons you would be able to fund that. Because if I look at your total capacity -- clinker capacity today, this is around -- even with this Panna project getting commissioned, 13-odd million tons clinker capacity. If I take a blending of 1.5 times cement-to-clinker ratio so 25 million tons you would require around 16 million tons so still 3 million tons would be required. Are we looking at debottlenecking opportunities across all those 3 locations?
No, I said we'll get an incremental clinker coming in from Panna at 2,000 TPD so that you will get and then when we talk about 25 million tons capacity you never see 25 million, you don’t achieve your average capacity utilization unless you have that capacity. So, you have to take 85% of capacity as a target on a production within the clinker. You cannot take on a peak production. It doesn’t happen, the plant doesn’t run on that basis. The demand is also not there on that basis.
Understood, understood. Sir, so more of a distribution side you're looking at? Great, sir. I think that's all from my end, all the best.
We'll take the last question from the line of Ram Chakravarthy, an individual investor.
My question is very simple that with the rise in the fuel and other input costs on a percentage basis, what do you think would be the effect on EBITDA for Q2 if you compare it with Q1?
So our EBITDA in Q1 is 19%. And if we see the effect of the cost increases and also some fall in the prices, there should be a reduction of about 6% to 7% on the EBITDA on this count.
Okay, 6% to 7% from 19%?
Yes, it could be the drop around 30%, 35% would be the drop in the EBITDA.
Okay, okay. 30 to 35 basis points.
Yes, 35%, yes. So about close to around INR 400 a tonne could be the drop in EBITDA.
Okay, okay. And this will be temporary. So by Q3, things would look up, right?
Hopefully, yes.
Thank you. I would now like to hand the floor back to Mr. Vaibhav Agarwal for closing comments. Over to you, sir.
Yes. Thank you on behalf of PhillipCapital India Private Limited, I'd like to thank the management of J.K. Cement for the call and many thanks to the participants joining the call.
Thank you very much sir. Inba you may now conclude the call. Thank you.
Thank you, Vaibhav, and thank you, everyone, for joining.
Thank you.
Ladies and gentlemen, on behalf of PhillipCapital India Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect.