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J K Cement Ltd
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Ladies and gentlemen, good day, and welcome to the JK Cement Q4 FY '23 and 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, Aman. Good evening, everyone. On behalf of PhillipCapital India Private Limited, we welcome you to the Q4 and FY '23 call of JK Cement Limited. On the call, we have with us Mr. Ajay Kumar Saraogi, Deputy Managing Director and CFO; Mr. Sumnesh Khandelwal, Deputy CFO; and Mr. Prashant Seth, President, Business Information and Investor Relations.
I would like to mention on behalf of JK Cement Limited and its management that certain statements that we've made or discussed on this conference call may be forward-looking statements related to future developments and 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 defer materially from the statements made. JK 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'll now hand over the floor to the management of JK Cement for the opening remarks which will be followed by interactive Q&A. Thank you and over to you Saraogi sir.
Yes. Sir [indiscernible] take the call, please.
[Technical Difficulty]
Good evening. And sorry, there were some [hand up]. So -- because we just go ahead, the Board of Directors met on 27th of this month to review the company's operations for quarter ended March '23 as well as for the year. Though we have posted everything on our Investors Presentation and also on the site, but still I will just read out some of the major achievements.
The quarter-on-quarter, the net sale was INR 2,332 crores as against INR 2,224 crores in the previous quarter, an increase of 4%. And the EBITDA during the quarter was INR 372 crores as against INR 257 crores, an increase of 39%. If you look at further year, so this year, our net sales was higher by 17% at INR 8,726 crores as against INR 7,529 crores. And the EBITDA was, however, lower because of exceptional high cost mainly was INR 1,346 crores as against INR 1,536 crores. The earnings per share was INR 72.80 paisa, as against INR 81.60 paisa.
This year, as a whole, has been quite achieving year for the company. The company, as you know, commissioned the greenfield project of 4 million tons, the sizes have also increased grinding capacity at different locations by 2 million tons. So 6 million tons have been added in capacity this year. By this, the company is now a 20 million ton capacity company.
A further 3.5 million tons greenfield grinding is under installation, 1.5 million at Ujjain, where the work has already started. And within this fiscal, this would be get commissioned. Also, at Prayagraj, we have acquired the land and are awaiting for the other approvals. However, we have finalized the plant and equipment, and we hope that by second quarter FY '25, this would also be on stream.
So I would think we should not go on any other details. We would go straight to the question and answers. So I would like, if you have because we lost some time.
[Operator Instructions] The first question is from Shravan Shah from Dolat Capital.
Just of one data point in terms of the lead distance is how much for this quarter?
It is 438 kilometers.
438 kilometers. So it has reduced sizably from 470-odd versus last quarter. So I think that was we were trying to do. So is there any further scope since the Panna now is at 58% utilization. So can we see 10, 15 kilometers further reduction from here on?
Yes, yes. We are working towards that, and we are hopeful that maybe we may settle around 425 to 430 kilometers.
Okay. Okay. That's great, sir. Second, broadly, in terms of now the entire growth, particularly in the gray is driven by the Panna, which is already at 58%. So how much we can expect the utilization for this year? So broadly, I'm trying to looking at -- can we see a 2.5 million, 3 million tons coming from the Panna. So that would be the major growth for this year. So net-net, kind of a 15% plus kind of volume growth on the gray front, can we expect?
Yes, yes, I think you are bang on that thing. We should expect this is a 15% growth in volumes this year. And when Panna should, anything will definitely be around 2.5 million to 3 million tons.
Okay. Okay. Great. Thirdly, if I heard it correctly on the media, our Kcal cost for this quarter was 2.4, what was in terms of the value terms. Last quarter, it was, I think, 12,400 kilometer and how much more reduction we can expect in the third -- in the first and second quarter?
No. See, because this quarter, if we see we are close to INR 12,000 the average fuel cost. And looking to the reduction in the fuel cost, we expect that the petcoke price should come down by, say, around $20 every quarter in the current quarter and the next quarter and the spot price is, say, $120, $130. So I mean, overall, we have a visibility of, say, reduction in the fuel cost gradually in every quarter by -- so this will have effect on the overall cost, which is presently INR 2.40 paisa. And that can come down to, say, INR 1.80 paisa, INR 1.85 paisa in the Q3.
By end of Q3, so we stress in around INR 75 per ton saving coming in each quarter as we go forward.
Okay. So at least for 2 quarters, we can see INR 75 kind of a reduction?
Yes. So what will happen, the prices have started reducing, but we have placed orders, so the lowest price, what we get present which is around 120, 125, that shipment will come sometime by end of Q2. So we'll get the benefit of that. So is that. So whatever we have ordered earlier which will get consumed in Q1 and whatever we ordering now will get consumed in Q2.
Okay. Okay. So broadly, sir, the thing was I was trying to understand from the perspective that now in terms of the pricing, I don't think we would have seen any increase in this April and May or maybe could we have some decline. So the overall in terms of improvement in profitability of INR 100, INR 120 each quarter...
Anything between INR 75 to INR 125 should be the range. It depends on many factors. So if you look at that, it could be anything in the range of INR 75 million to INR 125.
Okay. Okay. Lastly, on the CapEx, so how much for this year so everything, if you can break it up in the paint also and whatever ongoing is there for this year and next year?
So on the paint business, as I said earlier, I mean see, we have already acquired the plant. So now there's only nominal expenditures which we are going to do this year, which may be anything around INR 50 crores, INR 60 crores typical and balance the CapEx.
We will have the spin over CapEx of the Ujjian, which we expect to commission in this fiscal from INR 50 crores. And the main -- and the main CapEx of around INR 325 crores to INR 350 crores on the Prayagraj grinding units plus we have some spillover of the existing...
Prayagraj and Ujjain is spillover of Panna.
I think last time, we were looking at close to INR 1,400-odd crores CapEx, including everything but the numbers...
I can -- yes, I can give you the breakup on that. Because see, one is the basic recovery, which we are doing in the house plant. So around INR 150 crores, INR 60 crores is the balance CapEx which we do in this year, then we have some spillover CapEx of the Panna and the Hamirpur plant which would be in the range of, say, INR 150 crores, INR 200 crores like the WHR is being commissioned now. Then we have the main CapEx of the Ujjian, which is to the tune of INR 300 crores in the current year, and we will do some, say, INR 125 crores, INR 150 crores on the Prayagraj in this year.
So this is the overall spend -- so overall -- and the normal CapEx of, say, INR 250 crores, INR 300 crores. So we expect something INR 1,200 crores to INR 1,400 crores of CapEx in this fiscal. And then in the next fiscal, we will have the spillover CapEx of the Ujjian of INR 50 crores, what I was telling. And then the main CapEx of the Prayagraj of INR 325 crores, INR 350 crores and normal CapEx of INR 30 crores. So again, we will be in the range of INR 700 crores, INR 800 crores in the next fiscal.
[Operator Instructions] Next question is from Navin Sahadeo from ICICI Securities.
Also, congratulations on a good set of numbers. My first question was about realization. So simple arithmetic suggests your stand-alone realizations are up almost 2.9% or nearly 3% quarter-on-quarter. And from the presentation, if I include Panna even then I think sequentially, there is a movement or improvement of almost 1.6% or over 1.5% and saying improvement in realization.
So my question basically was most of the industry peers have actually reported a flat to marginal declining trend in realizations. But I also understand this is a year-end quarter. So are there any year-end adjustments related to the thing which should -- factor in which we should not take this realization as a base? Or is it got to do more with the efforts of BCG and others that we were trying to narrow the gap? How should one look at realization?
Navin, I will answer this. Like basically, it includes 2 parts. Like there are certain year-end adjustment of around INR 30 crores on -- at a business level, both business basically white and gray. And the rest, the second part is like related to that in quarter 3, if you recall, like we had impact of regional price increase. So we did not get advantage in quarter 3. But fortunately, in quarter 4, like the sector where we are operating like had good price increase. There is other sector like East and West part the prices were under pressure. So that advantage also we got. So these are the 2 impacts basically which bettered our realization.
No. Actually, one other factor, one in this quarter, we have a lower clinker sale. The trade sale has increased so mix, whatever it is not a year-end adjustment as well, what did you say. It is not that we have written back anything. So actually, what we are trying to be it is there is a mother year when we take it as a retention, there is no figure pertaining to previous quarter, which has been adjusted in this quarter.
It is basically, one, because of the trade percentage has gone up, there is a change in the mix and the clinical sale, which was there in the previous quarter, in this quarter, because of the good demand, we have been only selling. So there is no finer sales. clinical sale is also at a lower realization. So all that has affected marginal, we could say about INR 70 as an improvement in the order realization when we compare quarter-on-quarter.
So quarter-on-quarter, you think the realization improvement as I said not a price improvement is not exactly as a result of any price improvement.
It is a result of a bit more trade and lower clinker sale.
Sir, my second question was about Panna. So as mentioned in the presentation, you said that Panna has turned EBITDA positive at such a low utilization of 60%. So my question there was, are we then already started factoring in the subsidy related to that because I leave waste feet recovery and all those things are less to commission. So the EBITDA turning positive is a function of subsidy approval also?
No. See, only we have taken -- we have accounted for the subsidiary, which will account for , which is the NPA subsidy. But we have not yet accounted for any subsidy pertaining to UP, which is yet to be -- which will get accounted only or from June onwards.
But even Panna, it will be accruing from April onwards. So logically, like Saraogiji has mentioned, like there has not been any much impact of subsidy on ...
He's asking for the last quarter. So I'm saying -- so last quarter, we have just been at a 60 per, we have just been EBITDA positive marginally. And we have -- there is no adjustment of subsidy in that quarter.
Yes, yes. In that quarter, there's no adjustment of subsidy. There's no benefit of subsidy, yes.
Understood. And just one more question, if I may. The difference then because in the previous quarter, I could understand the difference between control numbers and stand-alone numbers were more got to do with probably the starting losses at Panna. But in this quarter, it is positive rather than looking on -- still then the difference is almost like a INR 12 crore kind of a loss between console and stand-alone. So what could this be on account of?
Yes. This is actually{,UH Navin, on account of the paid business. So we have done -- because of the acquisition, so [indiscernible] ...
So we were actually the plan was to set up a plant and we have gone ahead with the land acquisition and started work at the site. And interim, we got this opportunity for acquisition of the paint which we did acquisition. So now we have actually shared the project. So it is the whatever amount which has been spent on the project. When we had surrendered the land. So there was some land surrendering costs. We have done some -- all the base in uniting work and other things future done for the project. All that has been -- and the fleet expenses, including salary for that project period, all that is accounting for that expenditure, which has been taken as a revenue during this quarter.
So, it's a one-off, onetime cost?
Yes, it's a one-off.
Next question is Amit Murarka from Axis Capital.
Just in continuation of the point where you mentioned that the prior quarter included pain loss. So could you just quantify what was the revenue EBITDA for plans as well as the even Central India operation separately?
Yes, we have to send you the data. I think the paint turnover, which was mainly of Acro Paint. So that we'll send you the details of the turnover of the Acro Paints because -- and separately. But I think it will be more around INR 20 crores. I don't have the exact numbers here.
You're right, sir, it is around INR 20 crore and EBITDA around INR 1 crore, INR 1 crore -- paint is INR 1 crore.
And the Central India top line is about INR 277 crores.
Okay. EBITDA would be how much there?
Yes. EBITDA is about INR 2 crores.
Okay. So the negative number is just on account of this one-off? Is it how much was the one-off? Can you quantify that?
Yes, one-off is about INR 12 crores, INR 13 crores.
Okay. Got it. Okay. And also on the deduction of the power and fuel costs, you mentioned that there should be a $20 fall every quarter. But then in rupees per ton, you said INR 75. So I can't reconfirm that. But generally, every $10 gives about INR 50 or so kind of reduction. So like should it not be that higher, INR 100 every quarter or INR 300, INR 350 in total?
No. Because, see, it is not 100% petcoke consumption. So we will get only benefit to that percentage, which is the main mix of the petcoke.
And also, we will have some carryover inventory also. So like the entire $20 effect might not come in the same quarter. So there will be some overlapping of the quarter and the next?
I'm not so bothered about quarter-on-quarter, but as an overall number, if you just look at the ...
Yes. Yes. So presently, broadly, our mix of petcoke is around 75% and balance is AFR and other fuel. So when we -- if you look at that, then it comes to around INR 75. See, whether INR 75, INR 80 of ballpark if we can't have a standard $20 [indiscernible] INR 100. This is our theoretical adjusted calculation.
Okay. But in total, like it's fair to say that about INR 250 decline over three quarters.
Yes. So as I said, it's INR 75, it could be INR 100 [indiscernible] The reduction is INR 20 turns into INR 100, it could be INR 300. I just said on a ballpark, whatever so we see that this is a trend. It could be like a trend. Others are saying, we are talking about INR 300 a reduction, INR 250 to INR 300 reduction in fuel costs or your next question will be how we are seeing INR 400 reduction.
Also, just on this merger of JK Cement Central into stand-alone by when will it complete? And the next question would be like, would it also lead to some fixed cost savings once the merger is done?
So hopefully, everything should be done in the second quarter.
Okay. Would there be any cost savings?
Not really because, again, being a subsidiary, the marketing and it's all on agent, yes, it will a lot of ease of work would be there because you have to maintain to that extent, whatever savings are there Otherwise, you do accounting and everything at 2 countries, another building. And so all those ease of work would definitely be there.
[Operator Instructions] Next question is from Rajesh Ravi from HDFC Securities.
First question pertains to the incentives that would accrue into P&L. How much would that be on a per ton basis? And by when that would start flowing through P&L?
So we expect in case of Central India, about INR 200 a ton. It's a total subsidy benefit, which we should be seeing for the Central India volume.
Okay. On the Central India volume, okay? And by when which quarter you would start accruing that because you would have.
Is from the second quarter onwards.
Okay. from second quarter onwards, it will start coming up. And sir, talking about your gray cement margin, despite having strong blending ratio close to 70% and higher usage of green power and all -- is it fair to say that margins are still closer to INR 600 per ton for full year in the gray cement? And if so, how do you see that scaling up over the next 1 year and also want some clarity on the white cement on consol basis, what sort of margins one should look at?
No, we have already reported the margins of 17%. So our -- that is for the year. And the -- so that's the consolidated margins. And we expect this margin to improve, and that is all. I don't agree with what INR 600, we have not given any figure of INR 600 for the gray cement.
Yes, I'm sure that you have not guided any INR 600. I'm saying when we work out the white cement business margins, we were close to north of 2,000 even if we -- even they would have come off have implied working suggests that the margin would be low?
On a consolidated FY '23 is 15.3% is the EBITDA margin. I would -- as we said, we are not giving separately for business confidential is the numbers of wide similar. So I will not like to comment on that. You are taking your own assumption, I will not say yes or no.
But what is the outlook on the white cement margins? Do you see that improving back to what it were closer to what they were pre-COVID of numbers?
No, no. That number, we have already said, the right business is -- there is a lot of competition, especially in the poultry business, the same tide. As a result, yes, we have been able to maintain our market share and our volume numbers, but definitely, the pricing, there is a big fit on the pricing. And now I think we are going to see overall whatever is the company EBITDA for both the product broadly because it's not that the prework covered. We had said that the right business to 25% to 30% margin. But that scenario is not there today. You have to -- it's a common -- it's the same margin for the gray and white business broadly.
And for full year, any, as you give a volume guidance, any understanding in terms of margins, what do you see for full year it can be achievable. If current fuel price projects?
We have closed about 15.3%. Do you expect the margin to definitely go by another 10%. So around 17% should definitely be our what 17% should be our margins for this year.
Next question is from Prateek Kumar from Jefferies.
So my first question is on your paint business. What would you have any guidance on expectation of year 1 in terms of sales in the year 2 of sales? And now as you have started the operations?
Yes. So on the paint business, we expect this in the current fiscal, a range between INR 10, INR 150 crores to INR 180 crores of top line. And going forward, in the coming next fiscal should be closer 0 crores, INR 300 crores INR 50 to INR 270 crores to INR 300 crores in the next fiscal FY '25.
And this is EBITDA positive top line or which will be EBITDA positive or like looking at like -- because we are looking at like INR 10 crore investment in form of operating losses or working capital.
Yes. So see, again, as we were looking earlier but now after the acquisition, this would definitely be lower -- and in this year, we do not expect in terms of whatever is the investment in the paint business, including the losses could be anything around more than INR 50 crores.
Okay. And sir, for the central operations, as we have now turned EBITDA positive and flat EBITDA, and we are expecting INR 200 of subsidy benefit. So for full year, like, is it okay, I mean, for modeling purpose to assume like INR 600 to INR 800 EBITDA per ton for those -- that plant or first full year of operation?
Yes, definitely. Yes, definitely.
Sure. And a related question, when we say that we are looking at 15% grade volume growth with 65% utilization of central plant. That hardly means that the ongoing stand-alone operations tile operations are like flattish on a year-on-year basis? But we have added also some capacity?
It is not flattish. When we take the volumes of the current year, it includes volume of the Central India also. So Central India, 1 full quarter volumes are there and also even in the initial in the gray numbers the stand-alone, we were seeding to the Central India markets, which actually gets now converted into Central India. And now if you look at only gray markets, definitely, we are not -- there is no stagnancy or anything. We are growing in the northern existing markets also by around 10%.
Okay. And that INR 20 crores or like in that ballpark, we were looking at investments in advertisement in this market. which was earlier aggressive, is that behind? Or we are looking for aggressive spend in FY '24 versus 23 for overall company?
I didn't follow that.
As there was this INR 20 crore loss, which was booked in stand-alone operations last quarter, third quarter related to investment in the central operations, which is not there probably in this quarter? So that was, I think...
So in the previous quarter, when you were talking about it was -- it just got rejected as an expenditure. And there was no top line. So this year, I mean, this quarter, not it's an ongoing investment in publicity, which has to be done on the brand building and other things. So our CTS and brand building activities will have to be -- we'll have to continue if we have to grow in the market. In fact, we are opening up as going forward, more and more new markets in the regions in Eastern UP and whatever tear parts of entry, which are left. So we have to capture all the new markets then only we will be able to dispense the entire volumes of Central India.
[Operator Instructions] Next question is from [ Sanjay Nandi ], as an individual Investor.
Sir, can you please guide us on the pricing scenario from the exit of the March quarter as on date In different areas of operations?
Are more flat or there is some pressure, there may be marginal reduction in pricing if you talk March, there has been no increase in the pricing?
Got it. Got it. So any expectations there of any price hikes down the line or we exit after the monsoons?
Yes, exactly, we foresee that the demand is good. But again, on the onset monsoons, I think now the major pricing should only. There could be, I don't know if something happens in June. Otherwise, it would be post monsoon only.
Next question is from [ Keshav Lahoti ] from HDFC Securities.
So great to see that the lenient have come down by 8% in this quarter. So that is actually not visible in your transportation cost per term, which is marginally higher quarter-on-quarter. What is the reason for that sir?
So actually, the lead distance has come down, but I know the per ton per kilometer cost in that region, every region has a different button for filament loss. So the new market, you know where all the developments are taking place and all the fleets will get attached. So initially, Yes, the patent perimeter cost at Panna and at the Hamirpure site are higher than the existing markets.
Got it. So the right way to see that you listen to transportation costs will remain were, right?
So we are working that another immediately is very difficult to say, but I think it should be flat.
And when is Panna WHRs coming?
The testing is going on. So I think it should be on stream and we have already some -- it has started and I think by end of this month, end of June should be normal.
You had a plant of clinker also at Panna [indiscernible]
No, see the clinker line at Panna is 8,000 TPD. And we have a plan to step up and this as the plant is stabilizing, we are already doing -- and we are hopeful by post monsoons, and we should be able to get that 10,000 TPD clinker capability from Panna.
One last question from my side. We can see a great shot up in new green for any this bucketing between WHRS and renewables from where the increase is coming?
Yes. So we will send you the details of WHRS and the solar and the power separately.
Next question is from Navin Sahadeo from ICC Securities.
Sir, my question was on the working capital. So is there a release that we are seeing in the working capital? And how sustainable is this? Or I see almost like INR 300 crore kind of a reduction in net working capital year-on-year? Is there temporary thing or it could reverse back?
No, no. So working capital has reduced. I mean see, what has happened, yes, some -- there could be marginal increase in terms of lift. There are 3 areas where the working capital has increased, which net one is the coal inventory. So earlier due to uncertainty in the market availability of the loading ports and all. So we had gone up to a coal inventory of as high as 4 to 5 months. And after things have normalized, we don't feel so that there is any need to have inventory of normal inventory of around 2 months. So that's a normal. So the coal inventory has been.
Similar was in case of inventory for the chemicals. So because of uncertainty and that inventory was also on the higher side. So it has reduced has become a normal inventory. So you have to see that what has happened during this period that because of uncertain market in the last 2 years, the inventories had increased. It has come to the normal level. And also the clinker is a gold adjusting factors this year at any point of given sometimes you may have higher in last year at the year-end and if you compare our last quarter the clinker inventory was high, which is lower now. So these are the 3 areas where it has gone down.
So it's not as well within not that we have reduced or anything. Yes, we have worked on, there is no need or whatever the normalized capital working capital, do you keep to that. it is the current levels are maybe another INR 50 crores, INR crores more. But beyond that, the inventory should not increase. Sure. So what was the benefit of optimization of working capital, we've got a benefit of close to INR 300-odd crores I mean INR 200 crores or INR 250 crores is definitely sustainable.
Sure. My second question was about synergies with Panna. So -- and of course, on its own, there will be operating it regains and waste recovery is comes and incentive subsidies those benefits would accrue. But beyond that, would there be some more synergies on the late distance as well in the sense that at least from a regional perspective, I think there busting there could be at least significantly lower than what it is for the mother plant? Would that be the case? Or overall new distance will not really change much with Panna coming?
No, see, what I would say that Panna as a plant partner overall lead distance, which should be lower than the northern plants the business. at Northern plant where we are feeling from Rajasthan to the entire northern region. Panna when we are seeing the whole market, the distance is lower as compared to North market. So now we have markets in north and maybe South where the lead distance is lower. North is again, as a stand-alone, not lead distance remains higher because that is the structure of the market and the limestone reserves it's all Rajasthan based producers, which are feeding that market of Northern India.
Right. So just to put numbers in perspective, you said you -- the first question, I think, was about lead distance and you said it's about 438 kilometers. Does that include Panna benefits into it or Panna will be separate?
No, it is inclusive of Panna. It is inclusive of Panna 470 was also inclusive of whatever we were selling from North in the Panna market, 438 is console inclusive of Panna. For the consolidated company.
Understood. Understood. And just one clarification. For paints, you said you're looking at a top line of INR 150 to INR 180 in FY '24. But did you also say you're looking at a loss of INR 550 crores in operation?
That investment, loss in that investment. Investment will improve, we are going to -- we are planning about INR 30 crores of CapEx. So INR 30 crores will go into CapEx and INR 20 crores, is that matter, it's a loss or you say a brand building or whatever you may call it. So there should not be any operating loss, the gross margin is what we are expecting even on that, so we don't expect the gross margins to be lower than the paint companies. So all the paint companies have a gross margin ranging from different companies from 28% to around 35%, 37%. So we should be in the same vicinity.
[Operator Instructions] Next question is from Tejas Pradhan from Citigroup.
Just wanted to check your share of blended cement seems to have gone up significantly this quarter. Is it a sustainable increase? And any particular target you have over here?
No. So see, we are working on maintaining and improving our paid share. It is always is an ongoing, but also, it depends on what is the demand supply situation. But at any point of time, though our internal target is that we should be able to ideally have a 70% and 30%, but it's a bit all challenge. But anything between 65% to 70% would always be the range. And we will definitely try to see that we maintain the present share we don't lose. But again, it's very difficult to say with all the volume and whatever how the market behaves.
Okay. Okay. Just to follow up a bit. I think versus last quarter to this quarter, I think it is -- there's a 4% or 6% swing in the share of blended cement.
4% is in the blended ratio. And in the trade nontrade, it is 2% from 67.3% to 69.3%.
Okay. So anything specific that has happened in this quarter because of which there was a 4% improvement or maybe reading too much into it?
No. See, again, when Panna has come a new grinding unit has come in, so all when new grinding stations are coming in that failure from the grinding patients will all be blended cement. Thank you. Anyone who has a question, -- next.
[Operator Instructions] Next question is from Amit Murarka from Axis Capital.
I just wanted to get some status update on the Jaisalmer limestone lease. What is the position on clearances and all that?
So we are just working. We are in the process of the land acquisition and we'll shortly have the -- we'll execute the mining lease agreement. So I think within this fiscal, we should be able to do this.
Land acquisition has already started or will you start it?
Yes, it already started. It's already started.
Okay. And then time lines for the completion of the land and...
We, of course, we should do it in this fiscal.
Okay. Okay. And in terms of priority, like will Panna Phase II be a priority? Or do you think this would take the precedence over that?
The Board has not taken a view on that, but I would -- maybe it looks like as the Panna market is already growing, it should be up on. First is , but immediately, as you say, we are going ahead with the Prayagraj grinding, which is -- which will be catered from Panna. So we have Panna from present 4 million to 6 million tons is coming from that. And then we will see as a next step, whether it is a brownfield expansion at Panna or greenfield at not, but most likely should be Panna, but it has to be seen. Everything depends on the market and the balance sheet.
[Operator Instructions] Next question is from Shravan Shah from Dolat Capital.
Yes, sir. Just to follow up on the same. So whenever we finalize a broad idea in terms of whenever we want to go for the next leg of expansion. So as you mentioned, maybe the preference with the Panna. So maybe by year-end FY '24, we should have a clear idea that we are going for and we will start the CapEx for that. That is a better way one can assume?
So I would say end of FY '20 or early '25, that should be the period. So once we are through we see the market, we see at that point of -- see, normally, on anything, we review a situation every 6 to 12 months on what is our balance sheet like and what we are doing. So we take a call, it's not done every quarter or anything. So you take a stock and then you review every 6 months down the line, okay, now whether what needs to be done. And depending upon a long medium-term view on the industry and our balance sheet and then on that basis, then we'll take a call on that.
So on balance sheet front, so what we look at, so mid debt of close to INR 2,900 crores to INR 3,000-odd crores now. So at what level and given the profitability to improve now. So at what level it will give confidence that, let's say, now the net debt is INR 2,000 crores we will start spending for the next expansion.
So see, in any case, we would not like net debt to EBITDA more than 2% going forward. So we have to see on a medium-term basis, but when we take any expansion, expansion we made the borrowing, whether how we are going to cross what will be the position of net debt to EBITDA.
Okay. Okay. And second, sir, just wanted to understand when we say that our margin in gray and white is same, and now when the reduction in the coal and petcoke is going to kick in. So is it fair to assume that maybe 6 months, now and months down the line, maybe the gray margin would be higher than the white margin?
Very difficult to say, see, yes, if the gray margins improve better than why it trades our coal business. So that will give us better cost to the company. when only buys improves and grade does not improve. I would like to be happy with gray margin improving. So that is the better thing for the company. because 80% of our turnover or profits are coming from the gray business.
So in that sense, I was trying to understand.
Again, everything is definitely for both the businesses, market plays a very important role. Yes, ingredient also in my estimate, again, when we talk about fuel pricing, so fuel has an impact on the white production also. So even in the white business as we see that is -- we are expecting improvement as things are becoming normal, the chemical cost will also reduce. But at the same time, then we are depending on so much import whether imported fuel as well as imported chemicals, there is a concern on the dollar on the rupee devaluation. So though we may see the prices of fuel and et cetera, coming down in terms of dollars. But we have to stay in rupee what is the position? Because if rupee is depreciated, that is also a concern.
And just a last clarification. When we say that INR 50 crores, you clarified that INR 30 crore will be investment and ones when we pursue INR 150 crores, INR 180 crores revenue. So just trying to get a number at EBITDA level, there will not be a loss?
Yes, yes. So there could be initial EBITDA lest we lost INR 20 crores would be that brand building. There would initially some brand bending cost would be -- which would form part of expenses, and it may get reflected I said, let us look at the margins. So the paid business works on a margin ranging from 28% to 35%, 37%. We should not be an Yes, definitely, it is -- it will take time to reach on the higher end of margins, but our margin should be around -- between around 30%. So we are working towards that to maintain a margin of 30% in the paint business. With that top line, it is a good achievement.
Yes. So that is the gross margin. So I was looking from the EBITDA margin perspective.
See, EBITDA margins, as I said, if there is a branding cost, which will go into the expense. So that may be -- which is a long term, it's an investment. But as for accounting, it is part of the expense. So which you may say as an EBITDA loss, but actually it is a brand building investment.
Next question is from Uttam Kumar Srimal from Axis Securities.
Sir, my question parts to the competitive intensity. With this expansion gets completed when this expansion gets completed, we will have around more than 9 million-ton of your capacity located in the central base. That is around 40% of your entire capacity. So what kind of market share you are in the central vision and along with the competing inventory that because Ultra is already market paper over there. So any color on that?
See, normally, if you look at what we are in the Central India, new markets, gradually, we are seeding all the markets. And our objective is that in each of the markets we should have a double-digit market share, which is -- but we are not satisfied with it or we can say between 8% to 12%. That is a range which we should have a market share each of the areas of dispersed by are located. This is what we are working at. And gradually, as we raise that number then first, you did one milestone and then you try and see what is the next milestone.
Due to time constraints, we'll be able to take the last question. That is from the line of Navin Sahadeo from ICICI Securities.
Thank you. Just one clarification about the gross debt and net debt levels. So your presentation says gross rate is INR 2,534 crores at the console level and net debt is about. What is this number including working capital loans?
So working capital loan may be around INR 400 crores.
Understood. So that much markup...
Normally, if we buy, we don't include working capital in that because, again, that is supported by that is supported by the current assets and also normally, we are not including and that is not the terminology. And I think that's a tool which is being followed across.
Fair. Sir, my second question was slightly more the industry broader thematic levels. wherein we see large players focusing now on branding like or like focusing more on premium offering. So some of the largest players in North who have been earlier very volume-driven now are at least attempting to see a change in strategy in terms of their overall brand positioning. So is there an opportunity for us in that then that the market is used to a particular like price gap versus between players. So if the players who have been earlier aggressive and now looking to like really up the game in terms of improving their pricing point? Is there an opportunity for us? Do you see it in the sense to improve prices or that's now how the market really works just on top?
Yes, on the brand journey. I think, see, we started our journey, we realize this, and I think we are better placed than many other players because we started our brand journey about 2.5, 3 years back. And as a result, as you see over the last few quarters, we have been continuously being able to improve upon our trade share we have been able to get good growth in the market in terms of volume higher than the industry and not lose on market share on the price or on the pricing. In fact, we have been able to improve on our pricing.
See, price in cement is definitely -- is not in our control, it is the effect of the demand and supply. But definitely, we are not the leaders in the pricing. So there is definitely a scope where we can improve upon our leaders today, if you say, UltraTech is a leader is a basket estate and we are working to bridge that gap. So that is our price improvement journey. And we have started, and that is coming as a result of all our branding activities, all our CCS activity and is helping us not only is improving on the pricing also on maintaining and improving the trade ratios.
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference back to Mr. Vaibhav Agarwal for closing comments. Thank you, and over to you, sir.
Yes. Thank you. On behalf of PhillipCapital India Private Limited, we'd like to thank the management of JK Cement for the call. Thank you very much. Aman, you may now conclude the call.
Thank you. Thank you, everyone. Thanks for joining.
Thank you. 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.