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J K Cement Ltd
Earnings Call Analysis
Q1-2025 Analysis
J K Cement Ltd
In the first quarter of FY '25, J.K. Cement reported a net sales of INR 2,555 crores, marking an 11% decline from the previous quarter and reflecting a slight increase of about 1% year-on-year. This indicates that while the company faced quarterly headwinds, annual performance remains steady. The EBITDA also saw a significant drop, falling 13% quarter-on-quarter, though it represented a remarkable increase of 19% year-over-year, reaching INR 479 crores.
The profit before tax was recorded at INR 292 crores, down 19% from the prior quarter, yet up 51% compared to the previous year. Similarly, profit after tax decreased by 14% to INR 203 crores but showed a strong recovery of 60% year-over-year. The earnings per share stood at INR 26.2, down from INR 30.5 in the previous quarter but up significantly from INR 16.3 a year prior. Despite price pressures, gross margins were relatively resilient, reported at 18.7% for this quarter, compared to 19.2% last quarter, and markedly higher than 15.8% year-on-year.
On a positive note, the grey cement volumes exhibited growth of around 6% year-on-year, indicating a robust demand in this segment. Central India's expansion reached impressive capacity utilization of 93%, suggesting that the company is capitalizing on regional strengths. The commissioning of a new 2 million tonne grinding unit in Prayagraj was a significant achievement, completed in just ten months.
J.K. Cement is targeted towards an ambitious expansion plan, aiming for a total capacity of 30 million tonnes by FY '26. Currently, the company stands at 24 million tonnes, with plans for six million tonnes additional capacity underway. This includes new clinkerization and grinding units in multiple locations, with completions expected on schedule. Notably, the company reaffirmed its commitment of INR 600 crores on the paints business despite recent competitive pressures.
Management expects further improvements in cost structures to materialize over the next few years, suggesting a potential reduction of INR 150-200 per tonne through logistics and fuel savings. While Q2 may exhibit challenges due to increased overheads and branding expenses, a recovery is anticipated in Q3, with management expressing confidence in stabilizing pricing as demand improves post-monsoon.
The company indicated that pricing could decline by about 1-1.5% compared to Q1 levels, with Q2 anticipated to remain under pressure. However, this situation is expected to rebalance by September, with a potential uptick in demand and pricing behaviors projected for October. This anticipated demand recovery is crucial as it may bolster profit margins moving forward.
The balance sheet remains stable, with gross debt reported at INR 4,515 crores. Net debt stands at INR 2,830 crores, translating to a net debt to EBITDA ratio of 1.36 as of June 30. This balance positions the company to manage expansion while maintaining financial discipline.
Looking ahead, J.K. Cement appears well-positioned to navigate current challenges and capitalize on growth opportunities within the cement market. Management has set internal targets aiming for improved performance, leveraging expected increases in demand and strategic expansions. However, investors should remain cautious and closely monitor how pricing trends and demand dynamics affect the company’s profitability in upcoming quarters.
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Ladies and gentlemen, good day, and welcome to the J.K. Cement earnings conference call for the quarter ended June 30, 2024, 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 Capital India Private Limited. Thank you, and over to you, Mr. Agarwal.
Yes. Thank you, Sagar. Good evening, everyone. On behalf of PhillipCapital India Private Limited, we welcome you to the Q1 FY '25 call of J.K. Cement Limited. On the call, we have with us Mr. Ajay Kumar Saraogi, Deputy Managing Director and CFO; and Mr. Prashant Seth, President of Business Information and Investor Relations.
I would like to mention on behalf of J.K. Cement Limited and its management that certain statements that may be made or discussed on today's conference call may be forward-looking statements related to future developments and based on current expectations. These statements are subject to a number of risks, uncertainties and other important factors, which may cause actual developments and results to differ materially from the statements made. J.K. Cement Limited and the management of the company assumes no obligation to publicly alter or update these forward-looking statements, whether as a result of new information or future events or otherwise.
I will now hand over the floor to the management of J.K. Cement for their opening remarks, which will be followed by an interactive Q&A. Thank you, and over to you, sir.
Thank you, Vaibhav. Good evening, and welcome to this call for Q1 results. The Board of Directors met on 20th of July to review the working for the first quarter ended 30th June 2024. And the major highlights are that the net sales for the quarter was INR 2,555 crores as against INR 2,856 crores in previous quarter, a drop of 11%. However, the same was about 1% higher on year-on-year basis. The year-on-year number was INR 2,541 crores as against [ INR 2.55 billion crores ] in this quarter.
The EBITDA during this quarter was INR 479 crores, a drop of 13%, as against INR 548 crores in the previous quarter. However, the same was up by 19%. And the year-on-year, it was INR 402 crores. Margins, competitive margins are, this quarter, it was 18.7%; previous quarter, 19.2%; year-on-year, 15.8%. The profit before tax is INR 292 crores in this quarter as against INR 358 crores, a drop of 19%, up by 51%. And as of -- it was INR 194 crores previous year. The profit after tax was down by 14% at INR 203 crores as against INR 236 crores, and up 60%. And the previous year, it was INR 126 crores. The EPS for the quarter was INR 26.2; previous quarter, INR 30.5. And last year, it was INR 16.3. These are the major financial highlights.
If we look at the business performance highlights, the grey cement volumes grew by about 6% year-on-year. Central India expansion achieved 93% capacity utilization. We commissioned a 2 million tonne greenfield grinding unit at Prayagraj of 2 million tonnes, and this was completed in record time of 10 months from start of work. As far as the expansion is concerned of 6 million tonnes, and which is our journey for 30 million tonnes by FY '26, so we are already now at 24 million tonnes and work on the 6 million tonnes, which is at Prayagraj, to set up the clinkerization unit Line 2 at Prayagraj and brownfield expansions at Prayagraj, Hamirpur and Panna, whereas a greenfield expansion at -- in Bihar.
So at Panna, the work has already started. We are on stream. The orders for main plant and equipment have already been placed. And we are -- we expect that in third quarter FY '26, this should get commissioned. Similarly, in case of the grinding unit at Bihar, the greenfield grinding unit, we have just finalized the land acquisition, now moving in for the various approvals. In the meantime, we have already placed orders for main plant and equipment, and we are hopeful here also that we should be able to start work post-monsoon and then complete within the time schedule for the main -- along with the main plant. So that was the major highlights of the working.
And if you look at the balance sheet, then our -- our gross debt was INR 4,515 crores, and the net debt was INR 2,830 crores. And net debt to EBITDA was -- as on 30th June is 1.36. That is the major thing on the balance sheet.
If you have any questions, we'll be happy to address the same.
[Operator Instructions] Our first question is from the line of Amit Murarka from Axis Capital.
The first question is on cost. Your other expenses as well as your raw material cost has dropped a lot in this quarter. Could you help understand what the reasons for this drop?
So the other expenses are lower because we are yet to -- if you look at quarter-on-quarter, last year, there were certain annual adjustments that were pertaining to S/4 HANA, certain expenses which we had done. And the branding expenses, whatever is our branding plan, that to take off is still not there. Mostly the branding expenses, we shall be taking up beginning this quarter and in Q3. So that would be the major branding spend. All the annual dealer tours and all will be done in this quarter. So it is actually a timing difference, you could say.
As regards to the raw material, Amit, actually, the volumes are down by around 7% in this quarter. And second, there were some extraordinary item, which was in the purchase of traded goods and in the sales also in the previous quarter, amounting to around INR 30 crores. So that is the impact in the raw material cost.
Okay, sure. Also in the annual report, I think this time we have laid out a plan to build capacity heading FY '29, FY '30, and you've laid out some units also, Muddapur and Orissa and all. So could you just set up -- I mean, explain the priorities as to what will be the order of expansions if you have any in mind?
So see, as of now, we have not frozen which would come first. But in all likelihood, the not -- we as a step because we feel that Jaisalmer part -- unit Line 1 may be the first one to come up, which may be followed by Karnataka, and then, afterwards, it could be Panna Line 3 and followed by -- I mean, along with Panna Line 3, it could be Orissa. Whatever the 4 options which we have given, how we will reach out around 45 million to 50 million tonnes, it will be in that sequence.
Sure. And land is in place at every location, right?
No. See, Jaisalmer, yes, the land is in possession. In case of Karnataka, it is a brownfield expansion. Again, in case of Panna, it is in -- it would be a brownfield expansion. In case of Orissa also, the land is there. So for the -- all the clinker units, I think I would say the land is already there. If going forward, we may have 1 or 2 more grinding stations. That land is still not there, that we will go as we have -- we are already planning for that. But that land -- pending the grinding locations land, all other land is in possession.
And also lastly, on the Orissa unit, I believe the limestone was -- is not owned by you or lease is not with you, you have an arrangement of purchase. So you are saying that you would be working to get the lease in your name. So is there any progress on that?
No. So actually, there has not been much progress because of the elections. And now we had been in dialogue with the previous government. So we need to initiate the dialogue with the new government. And we would take up that -- in any case, there is no -- we are not going to take it up immediately. So we have a plan that in -- by September '25, we should be able to close this in any case.
The next question is from the line of Navin Sahadeo from ICICI Securities.
Sir, a couple of questions. First was, how far are we from ordering or considering like placing the order for Jaisalmer because the last couple of times, my understanding was that we needed more support from state infrastructure to be developed in that belt because it's not just us, I think several other cement players have bagged limestone mines in that belt. So I just wanted to get a sense as to how far are we because if we can do it, then obviously, other companies may also consider putting up a plant or -- infrastructure is ready to -- for material evacuation.
Yes. So, Navin, we added -- a lot of work has already been initiated over there. As a timeline, see normally, what we do is that when we take up another expansion, it is -- at the time of when our existing expansion is about to get completed. So you could say that we are in July, if we have to take up Jaisalmer, the right time would be sometime end of next year or so. And definitely, while placing the order, we would see that the infrastructure -- the work has begun and it is in that stage that it will coincide with our plant commissioning. So only we will take up, and we will commit; otherwise, we have other options we may -- shift to the other options for an expansion.
Yes, certainly. I'm saying certainly a brownfield expansion, it's far easy and faster to convert.
But if you now, looking to the North market, there are very few sites available in the north. And the North is a growing market. So that is the only area which is now there for -- to feed the North market.
Yes, exactly. So that's what my question was, sir. That is it fair to say that Jaisalmer is now soon to be developed as the next...
I would say, yes. And I think not only us, the other cement manufacturers who have limestone deposits over there are all pursuing with the state government. I mean we -- see every -- the state government has also -- till one stage has also granted us certain incentive schemes also, which we have put, and that has also been granted to us and to some other cement players also. So they are -- they also want that area should be developed and the manufacturing facilities should come up. One of the ways how you can develop any area is when the industry comes over there.
Understood. Understood. Sir, my second question was on the white segment per se. So I was just observing that the volumes for the quarter have been, I think, down. Since the past 2 quarters, there is a degrowth of sort seen in the overall white segment, so to say. The question was, are we growing slower than the market? Or how should one look at it? And in the same breath, RAK White is now a subsidiary of the largest cement company in India. So does that have any impact or positive rub-off so to say -- positive-negative rub-off, so to say, on the prices of white cement imports into India?
So your first question that the white business revenues are going down, see, it is mainly because of some -- I mean, the -- it's not actually volume numbers to that extent are not going down, it is the value which is going down because the putty realizations are going down. So the paint manufacturers are very aggressive, especially Asian Paints. And I would say today, Asian Paints, whatever, has become the largest distributor of putty in the country. So the position which we and UltraTech sometimes have -- we were ahead of -- in the putty or sometimes UltraTech was ahead, so it is now Asian Paints.
And so they are really very, very aggressive in terms of the pricing and other things. The growth of putty for them is more than us, though it is not that we are also growing year-on-year. And that is -- but we are not able to -- as of now, we are working out our strategies how to ensure that we grow in tandem with the competition. But at least if -- maybe if we are not able to catch up with Asian Paints, definitely, otherwise, our growth will be in line with the average industry growth or we are seeing at least in line with UltraTech.
With regard your second question, regarding RAK, so UltraTech has acquired a stake in RAK White about 2 years back. It is now that they have acquired balance 25%, by which they become 54%. They were already -- I mean, they were effectively in control of the plant, but now they are also -- I mean, with their effective -- with the equity control, so they are -- in terms of ownership and management, they have a control. This is definitely -- going forward, it would be a good sign for it. White cement has always been on a duopoly situation. But -- so I don't think so it is a negative thing for us.
[Operator Instructions] The next question is from the line of Ritesh Shah from Investec.
Couple of questions. Sir, first is on cost savings. Earlier you had given a target of INR 150 to INR 200 per tonne over FY '25, '26. Sir, is it possible? So is the target the same? Are we looking to upward revise the numbers over here?
Secondly, if you can bifurcate it between freight, power and fuel and others, and if you can also help us understand what part of it will be achieved in '25 and then in '26? That's the first question, sir.
So on the cost savings, yes, we see an opportunity of, what I said, about INR 150 to INR 200 a tonne over the next 2, 3 years. And the areas are, one, on the logistic cost, we think that we should get about -- if not INR 50, about INR 30 to INR 40 in the logistics costs. We should get something about INR 20 to INR 30 in the power segment by increasing the green power. And some in the AFR substitution. So all in all, we could get anything ranging between half of that, about INR 70 crore, INR 75 by this year. But it would not be the -- I would just say we are working on it. We will not get -- this would be -- the average may be lower, but our exit of FY '25 should be around INR 75.
Sir, you indicated INR 30, INR 40 for logistics and power around INR 20 to INR 30, the stakes are around INR 70, INR 80. How should we bridge this versus the number that you have indicated, say, up to INR 200?
So this is year one. And then I think we could -- we are doing something similar thing that is on -- these are the 3 areas which remain and which we will be working in year 2 or so.
Sure. That's helpful. Sir, secondly, let me just go through the annual report. We find the cash tax rate for the company at 13%. This is against an effective tax rate of 33%. Sir, how should we understand this gap? So there is one of the schedules in the annual report, which says tax exempt income and incentives, and there's a negative element of around INR 52 crores over there. So is there a better way to appreciate the difference in cash tax rate and the effective tax rate?
So we are still in the old regime. And so our cash tax rate, you could say is about 17%.
Okay. Sir, still, if there is a gap, like that would be on back of what?
I will get back to you on that, what you said on the annual report.
Okay. Sure. Sir, I have just 2 more questions. Sir, any update on Toshali mining lease, anything over there?
So I just said about in Toshali, there were elections in the North, there has been a change in the government, so we are going to -- now we need to have a dialogue with the new government. And I've already indicated that the arrangement which we have that over next 1 year, by September '25, we should have a proper long-term arrangement for the limestones. And preferably, we can get a lease; otherwise, a long-term supply agreement, on which -- on the basis of which we can plan investment in that region.
Sure. And sir, last question is on paints. Can you quantify the revenue EBITDA contribution? And secondly, the competitive intensity in the space of late has been pretty steep. So what is our market strategy over here? Are we also reducing prices, increasing discounts to penetrate the market? How should we understand that?
So see, one, on the paints, yes, the pricing is as per the competition. Today, as we gave an indication of a topline of about INR 300 crores in this fiscal, we are on track for that. In the first quarter, we have done about INR 57 crores of net turnover, so -- and yes, on the EBITDA front, there was a loss of about INR 10 crores because mainly on account of the branding spent on the paint business.
[Operator Instructions] The next question is from the line of Prateek Kumar from Jefferies.
My first question is on pricing in the North market has been really weak versus historical trends what we have seen in the market. Can you discuss on the pricing how it is -- I mean, how do we see it going forward? Also, how it is looking for second quarter versus average of first quarter?
So actually, the prices are under pressure. And I would see that the second quarter, the pricing could be around -- would be lower than the first quarter. It's already -- I mean, we are seeing some price off, about 1%, 1.5% already in this month vis-a-vis the first quarter. So the prices should -- I mean -- and I don't see a possibility that this quarter we could -- we will definitely have a lower pricing as compared to this quarter 1. However, there is a -- we do expect that by September, the demand should -- really, there should be a step-up in demand. And hopefully, the prices should get corrected upwards in the month of October.
Sure. Okay. And is there like all players are like sort of ramping up capacities or -- UltraTech has added like some capacities in North, is it like -- how is the players positioning in the market in terms of market share?
So see, as far as we are concerned, see, we are also expanding and we have not lost market share in any of the regions. Maybe some in a particular, we do monitor that on a month-to-month basis. So we are maintaining our market share. And it could be some producers may have a marginally higher -- and that, too, is amongst the top 4, 5 players. We are really not monitoring. We compare ourselves with the 3, 4 players in the region. And we see that our growth is in line with them or not.
Sure. My other question is on the profitability. Obviously, it depends on pricing. But we had like close to 1,090, 1,100 unit EBITDA like last year for sign-on operations. Are we looking to outgrow that number in FY '25?
It will depend on the pricing. See the first half, we have -- the second quarter -- I mean, as it looks now, should be -- would be lower than the Q1, and then, how the prices take up. So definitely, when we could do our internal target, maybe if not on per tonne basis, absolutely -- definitely on absolute numbers. We have an internal target to do better than last year.
[Operator Instructions] The next question is from the line of Pathanjali Srinivasan from Sundaram Mutual Fund.
Am I audible?
Yes.
Yes, sir. Sir, I just noticed one thing, like our RM plus fuel cost has kind of been flagged for the last 3 quarters. So did we get some kind of an inventory benefit or something? Or could you explain why it has been flat?
So see, the RM and -- I mean what has happened that looking though the volume numbers in this quarter are lower, but we have definitely built up some inventory of clinker looking through the maintenance of the kiln, which is likely to come up in this quarter. So it's a combination -- I mean, yes, as we see as a benefit, the fuel pricing has been going down. So -- I mean quarter-on-quarter over last 3 quarters when we are seeing, we are seeing definitely a drop in the main pet coke pricing. So that is the reason.
In mine, we have not got...
Other raw materials is -- the price variation is more or less flat.
Okay. Okay. Because the fall is pretty steep in the last 6 months, but I don't see much of it getting translated into our numbers, so -- or did we kind of get it front-ended in the first quarter itself, which is like December?
No. See, when you're looking at the raw material, it is also -- as we said in the last quarter, there were certain purchases of traded goods. So that entry is also there. So, otherwise, we are seeing major if you see raw material and fuel, and the fuel cost has been going down.
Okay. Any guidance for the next few quarters, sir, for this?
So the fuel prices are softening. So we are seeing that the pet coke pricing, which was around the consumption rate, which was around $160 at the plant in last year -- last quarter, that is January-March quarter, should be about $10 cheaper in this quarter. And going forward also, it should be about $10 cheaper.
Okay. So we will get some benefit in the subsequent quarters in terms of fuel cost?
Yes, for sure.
And one more thing on realization, can you give us some color on reason why intensity on weakness in pricing or demand?
See, region wise I think the major -- you have to say our major volumes presently are in the North, where there has been a dip in the -- Central is more or less -- Central and North are also about the same though Central, the prices have been flat for last -- in the last quarter. But South is something which does fluctuate on and off quarter-on-quarter quite high. So South pricing is sometimes -- I mean, 2 quarters back, it was quite lower then it picked up. So the South pricing is something which fluctuates a lot. Otherwise, Center and North are some -- prices, the fall is also -- even a drop or increase is within particular limits only.
Okay, sir. Sir, like large part of our fall should come in from North, would that be a correct statement?
Yes, yes.
Okay. Okay. And just one last question, sir, like employee costs, will it stay at this level for us? Or was there any one-offs or anything of that sort?
No, it should remain the same at this level. There should not be any further increase in the employee's cost.
[Operator Instructions] The next question is from the line of Mangesh Bhadang from Centrum Broking.
Sir, a couple of questions. So firstly on the paints business, given the competition that we are seeing with new players entering, would we revise that CapEx guidance for this business anytime soon? Or do you think that once we move out of paint, the rest of the state would need more CapEx obviously?
I didn't follow.
Sir, on the paints business, will we be revising our CapEx guidance supports? So would any more further CapEx would be required in this business as we are moving?
Yes, yes. So as of now, we are sticking to our plans on the paint business. So what we had said that, one, we are committed to about INR 600 crores of limit -- our investment in paints is limited to INR 600 crores. And with -- to that, there is no change in that guidance. And in any case, we are not going to increase that on any account. And we are well on track on the plans which we had made on the paints business, both in terms of whatever investment -- annual investments and the growth of the paint business.
Okay. Sir, on the power and sales side, what is the average of the current pricing in rupees per kcal was compared to 1Q average?
Yes. This quarter, the rupees per kcal is INR 1.62. In the previous quarter, it was INR 1.80.
And with the pet coke coming down, how much it would be, around INR 1.55?
That will be about INR 1.55 or so in this -- in Q2, maybe between INR 1.50 to INR 1.55 in Q2.
Okay. And sir, with regards to our CapEx of Panna as well as the Bihar grinding unit, so we are having almost 6 million tonnes of grounding capacity additional by December '25 and 3.3 million tonne of clinker. So any plans to increase clinker capacity further? Or do you think this clinker would be sufficient for the...
Clinker is sufficient. See today as on -- with the present grinding capacity and the clinker ratio, we are still not operating Line 1 and Line 2 of Nimbahera. We had sufficient clinker.
Sir, in Central, sir, and Bihar would be furnished by...
By Central India.
Central India. Right. So there you would be requiring, right, at least?
Yes, yes. So see, ultimately, what you have to see -- it goes on a -- when we make -- it is on a basis of 85%, 90% capacity utilization, average. So when we see -- when we talk about a capacity of 30 million tonnes or -- if we take Central India specifically, when we say 6 million tonnes, it means 3.3 million tonnes of clinker for 5.4 million tonnes of grindings, average, 90% capacity utilization. So 3.3 million tonnes of clinker is sufficient for 5.4 million tonnes of grinding.
Understood. And sir, finally, how much are the incentives for this quarter?
So the incentives for this quarter is about INR 69 crores.
[Operator Instructions] The next question is from the line of Rajesh Kumar Ravi from HDFC Securities.
Am I audible?
Yes.
My first question is if you can explain the sequential price decline average to be almost 5%, whereas the margin decline seems to be nominal. So is it that grey cement has higher amount of clinker [indiscernible] Q4?
So yes, see, with the price decline, one, you are taking a market -- our average mix price, that is lower. When we talk about the blend of trade, non-trade and different regions, so the price drop is not 5%, it is lower. Secondly, on an average, when it reflects on the cost on the margin part, it definitely takes care of the reduced costs. So the fuel cost reduction and all is reflected in the margin part.
[Technical Difficulty] in total sales volume in Q1?
Sorry to interrupt, Mr. Rajesh Kumar, you're sounding a bit muffled. If you are using the speakerphone, maybe use the handset mode, please?
Yes, sir, I am only having handset only. Is it better now?
Yes, yes. It is better now.
Yes, yes.
Okay. Sir, how much clinker sales till now? And then second...
Clinker sale was around 24,000 tonnes. But in the previous quarter, because you are comparing the margin, the prices dropped in previous quarter. So previous quarter, there was the one-off sale of around INR 30 crores, which was in the purchase of credit goods, and then, sale was also there. You have to exclude that for the comparison purpose on raw material cost and the sales.
[Technical Difficulty]
Sorry, you are not clear, Rajesh. Your voice is breaking.
Maybe if you can hear it [indiscernible] I'm saying is that in the December quarter, there is INR 138 crore program, maybe there was stock adjustments. What was that pertaining to?
In December quarter?
Yes, December, INR 138 crore.
So December quarter, we'll checkup and -- because we don't have all the December quarter data readily with us.
No issues, sir. That's all from my end.
I'll get back to you separately.
[Operator Instructions] The next question is from the line of Shravan Shah from Dolat Capital.
Congratulations on better profitability. Many questions answered, a couple of data points and maybe a clarification. So firstly, in terms of the volume growth guidance last time you said 10%, so that remains the same?
Yes. As of now, yes. See, the first quarter was an exceptional quarter where with elections and intensive heat, we could not get those numbers. But we're still there with the annual numbers.
Okay. Okay. Great. Second, if you can share the railroad mix and fuel mix for Q1 FY '25?
The rail movement was 9%. And the fuel, the pet coke by the heat is around 68%.
Okay. [Technical Difficulty] in the first quarter and last...
Sorry to interrupt, Mr. Shah, your line is breaking up in between.
Hello?
Hello?
Yes, sir, CapEx, how much was in 1Q FY '25? And last time, you said INR 1,900 crores for FY '25 and INR 1,800 crores for FY '26 at consol level, so that number remains the same?
Yes, yes. That remains the same because our projects are onstream and going as per the schedule.
Okay. And in 1Q FY '25, how much we have spent on CapEx?
We have spent around INR 125 crores on this project, the Panna expansion, plus we have around INR 50 crores of the normal CapEx.
Okay. Okay. Got it. And broadly, sir, if you look at -- by FY '30, we are looking at 20 MTPA to be added to retail 45, 50 MTPA. So roughly, if you look at INR 13-odd crores kind of a CapEx, obviously, Jaisalmer is likely to have higher versus others. So just on a broader direction, in terms of the -- given the kind of a cash flow, will -- don't you think the CapEx on a yearly average basis will be higher than the CFO and we can see increase in absolute net debt, though it may remain in control in terms of the 2x -- less than 2x net debt EBITDA?
So actually, while we have worked out our plan, we have ensured that our net debt to EBITDA is not increasing. So see, what you have to understand that when we are taking up expansion, we already have expanded -- when we are taking up our next expansion, say, at Jaisalmer of 5 million tonnes, so we are taking up expansion at a capacity of 30 million tonnes. So we will have profitability from higher volumes. So there will be incremental cash improve, which is coming from the higher volumes. So after a particular capacity -- I mean, I think after -- once you do it, your debt to equity -- I mean, net debt to EBITDA is only going to improve upon.
Okay. Okay. And in terms of -- given the price decline, I understand you have already mentioned that 1.5% further decline is there in the second quarter for [indiscernible]. Do we think that there will be a decent price increase from the third quarter and will it sustain in the fourth quarter itself?
So broadly still, our understanding is that we can see a 3% plus kind of, on full-year basis, a price decline. So just trying to understand, given that, as you mentioned, that our other expenses now will again start increasing, so in terms of the profitability, trying to understand given the pricing pressure and the cost may -- though we have a cost saving, but we don't [ ticked ] -- nullify the other expenses increase will nullify whatever the cost savings we will see?
See, again, price is something which is an expectation and which is a trend which everybody expects. And I think you all are also visiting the markets, and the same field you are getting that the prices -- price increase should happen in Q3. On -- yes, Q2 will definitely be a tough quarter because, a, the prices have reduced; b, there would be incremental overhead in -- other expenses on account of branding.
We are also going to take -- because we had to start branding prior to the festival season. And the main market season, there is a maintenance cost, higher maintenance cost because all maintenances are also due in this quarter. So yes, Q2 may be -- would be, rather, a tough quarter. But otherwise, I think things -- we hope to recover everything from Q3 onwards.
Okay. And lastly, sir, if you can help me in terms of the paint EBITDA for full year? Because this quarter, a INR 10 crore EBITDA loss. So full year last time, we talked about INR 35 crores, INR 40-odd crore EBITDA loss. So will it remain the same and the INR 500 crores revenue for FY '26?
So see, one is FY '25, we had given about a top line of about INR 300 crores. So net, that is we are on track for that. Yes, there would be a INR 40 crore net loss in FY '25.
The next question is from the line of Tejas Pradhan from Citi Group.
Just a bookkeeping question, actually. So the INR 30 crores revenue that you mentioned which was one-off in the last quarter, is this recorded in the Grey Cement revenue that you disclosed in the presentation or...
Yes. Yes.
The next question is from the line of Jyoti Gupta from Nirmal Bang.
Congratulations on a good set of numbers. Just a few clarifications. I saw that the volume decline was -- on a Q-on-Q basis, was around 6% and a price decline on a Q-on-Q basis of 3%, and the total expenses per tonne basis was 2%. And therefore, there was a decline in your EBITDA. Within EBITDA per tonne, it was only to the extent of 7%.
Now in the next quarter, since the cost that you just mentioned, your total expenses on a per tonne basis is likely to increase by 6%, which will again be -- and we will see some sort of a decline in price as well, by 3%. So can I comfortably consider that EBITDA, however not bad, based on the assumptions; we will see if not a marginal decline of maybe [ 9 72 ], regarding -- as per assumption...
Yes. [indiscernible] final and exact number, I'm afraid it's very difficult to say yes or no for that. But see, I still feel that the decline, it's just beginning of the quarter. And to have -- definitely our attempt would be to see that there is a minimum dip in the EBITDA. But we will have to really see how things go in the quarter.
No, because if I consider on a per tonne basis the [ grinding ] expenses and maintenance, which is obviously part of the operations, and this is totally on the operational aspect and completely understandable. In fact, I would say these numbers are quite commendable. And even if on that basis, it -- even if I take, I think, last 3, 4 quarters, the way I see, J.K. Cement has performed quite well.
So based on the second quarter, given that this quarter is going to be a very -- is going to be a tough quarter, both in terms of, again, you see a dip in volume by almost like -- on a Q-on-Q basis, on around 5%, again, pricing, a dip of 2% to 3% because your major portion is in the North. And the South, you see a certain amount of volatility.
And then you have this entire maintenance and branding costs nullify. Consider all of them together, we should be fairly sitting at a very, very decent EBITDA per tonne. One more question is the logistics cost that the reduction that we are having, which part of the reasons are we really consolidating, in the sense that where are we really seeing that improvement in terms of lead distances?
So we are working on our lead distances mainly in Central India. See, one other reason what happens when you open up new markets, to have their own -- grinding units have started, Prayagraj has come in. When you are opening up new markets, you -- first, you have to feed that market irrespective of the logistic [ cost ]. So you can't control the cost and then say "I will only supply at a particular cost."
So to open a market, you have to start -- as the market stabilizes and your production -- so you are able to reduce the logistic -- I mean, the lead distance and the logistic cost. Though in logistic cost, region-wise, the freight cost per tonne per kilometer are different. They behave differently. While in the North, it is the cheapest per tonne per kilometer, Central is higher and South is still the highest.
Could you give me that -- could you just give me a ballpark figure in terms of the logistics per tonne? Because what you're saying is [indiscernible] and obviously, the spend that we do in this quarter will -- actually, the likely benefit will start accruing in the third and the fourth quarter. So while -- I think it's a value for money.
So whatever the logistics journey which we are doing, each quarter, we should get about INR 10 each quarter. So what we are planning, INR 30, INR 40 in the year, so we will get about INR 10 in each quarter, not -- and that will flow. So the exit becomes INR 30 or INR 40.
Okay. And sir, in terms of that you mentioned that Central is cheaper, the cost per -- the lead distance -- I mean, the cost per tonne per kilometer, how much would that be in Central compared to...
No, no. The North is cheapest.
Sir, if North is cheapest, then...
Yes, so North is 1, Central is 2, and number 3 would be -- the cost base is South.
Okay. Yes. Understood. And the other question is that with the Jaypee deal, now that [ fall ] off between Dalmia, and even at the tolling agreement is also discontinued between Dalmia and Jaypee, and with the new entity, which would likely happen maybe in the quarter -- coming quarter, how do you see the competition intensifying for you -- for all the companies in Central -- in the Central region?
See, the competition was, in any case, intensified because Jaypee -- Dalmia was already -- has a plan. So they had a definite plan, and they were seeding the market and trying to build their positioning in the market. Now, we have to see who gets -- and the -- that Jaypee assets and how he -- whether it's a new player or it is an existing player, and what is his strategy. So I think -- see, at least for -- when it has gone to the NCLT, I don't think so it can take a decision in a quarter or so. This may drag along until at least the year-end.
Okay. No, actually, my [ guess ] is that even if Dalmia -- even when Dalmia was in a tolling agreement, the exposure, let's say, the amount of exposure that Dalmia should have gone, it's really didn't go that well because of Jaypee [ dealership ]. So there were certain pushbacks for Dalmia. So the new entity may not -- if you maybe [ address ] at a different scenario.
[indiscernible] who is the new entrant and how it is -- see, again, they will have to deal with the same set of dealers. See, again, a new entrant comes, even if it's an established player, they have to -- you have to increase that volume with your existing network, what will you do with the network of Jaypee. So all those questions come because we have seen UltraTech taking over earlier Jaypee assets. And they also took some time to rebuild their position in the various markets.
[Operator Instructions] We have our next question from the line of Sanjay Nandi from VT Capital.
Sir, if what will be your incremental clinker capacity for a...
Sorry, Sanjay, your voice is not clear.
Sir, what would be your clinker capacity, [ on 50 million tonne ] happening over [indiscernible]?
Clinker capacity would be above 18 million tonnes.
Okay. And so just [indiscernible]?
Pardon? Pardon? Sanjay, we cannot understand.
Sanjay, you are sounding a lot muffled.
Now it's fine?
Yes. yes, it's better now.
Sir, just to mention in the -- in the next quarter, we'll be incurring some additional costs in terms of [ branding ] and also the overhead cost for those maintenance and shutdown [ times ]. So can you please quantify like what kind of incremental total cost per tonne we can anticipate in the next quarter, from the exit of this quarter?
Yes. Anything, maybe INR 50 to INR 70 a tonne.
Ladies and gentlemen, we will take the last two questions. The next question is from the line of Siddharth [ Mahotra ] from Kotak IE.
Sir, just a couple of small questions. I see there's a subsidiary contributing to volumes in the Grey business. Could you just tell me which subsidiary is this?
This is Toshali Cement. [ Dominant ] -- Toshali is still -- they have the operating [ plant ]. So it did contribute to some volume. On consolidated, it's about 16,000 tonnes -- 30,000 tonnes, sorry.
Okay. Understood. Understood. And I just noticed that the White Cement volumes for the previous quarters have been sort of reduced margin by around 4%, 5%. So any color on that, sir?
Yes. Actually, in the White business, we have done two changes. One is that we have excluded the self-convention of the White Cement for the putty. So we have excluded those volumes. And second, there are mean complementary products of the wall putty, like putty advance, et cetera, which we were actually, earlier, not including in the putty volume. So we have included that, the entire putty family volume.
Okay. So like can you tell me from which quarter you've made these changes?
So we have given the previous figures, also restated the figures on the same basis.
Okay. So this has been done starting in 1Q '24, right?
Yes, yes. We have actually started from this quarter. But we have restated the figures of the -- all the previous 4 quarters.
The next question is from the line of Ajay Kumar from COE Capital Markets. As there is no response from the line of current participant, we'll move on to our next question. Our next question is from the line of Amit Murarka -- sorry, our next question is from the line of Navin Sahadeo from ICICI Securities.
Sir, two quick questions. Your green power, I think you've done a very commendable job in a short span of time. From 19%, we're already at 57%. Target being 75% by FY '30, my question is, is there a possibility that we meet this green power target much sooner? And if so -- and also, I mean, what is the cost savings that we get per unit in green power?
So see, the -- per unit, the saving is around INR 3 per unit, approximately. So definitely on that -- so green power is our priority. And when we gave -- that was in 2020, when we gave the target for 75%, it was -- we were not very clear on whether we can reach that number earlier. Having said so, we now feel confident that we will be able to achieve that number at least maybe 2 years in advance, maybe by FY '28, if not earlier.
Understood. And last question, sir, the Toshali volumes, you said, in the quarter were about 0.3 million tonnes. So...
No, no, no. 30,000 tonnes. 30,000 tonnes.
Okay. 30,000 tonnes, my bad. So what is the full-year volumes that we can expect there?
So we are -- Navin, we are working on that plant. There's some [ augmentation ], and everything was required. So we would definitely like, on a quarterly basis, to achieve a number of about 1 lakh a quarter, which could be from maybe fourth quarter onwards.
Ladies and gentlemen, due to time constraints, we would take that as a last question. I would now like to hand the conference over to Mr. Vaibhav Agarwal for closing comments.
Thank you. On behalf of PhillipCapital (India) Private Limited, we'd like to thank you management of J.K. Cement for the call. And many thanks to the participants for joining the call. Thank you very much, sir. Sagar will conclude the call.
Thank you. Thank you, Vaibhav. Thank you, everyone, for joining. If any questions are left, you can write to us and we'll be happy to address the same. Thank you.
Thank you. On behalf of PhillipCapital (India) Private Limited, that concludes the conference call. Thank you for joining us. You may now disconnect your lines.