JK Lakshmi Cement Ltd

NSE:JKLAKSHMI

Earnings Call Analysis

JK Lakshmi Cement faces demand challenges but maintains market share.

In Q2 FY25, JK Lakshmi Cement experienced a 9% decline in volume due to subdued market demand exacerbated by the election cycle, with prices dropping by 8%. Despite this, the company holds strong market share in key regions and has successfully cut consolidated variable costs by 11%. Looking ahead, guidance suggests industry growth of 4% to 5% for the year, with hopes to align with this trend. The company aims for significant CapEx of INR 900 crores in FY25, focusing on expansion and efficiency improvements to recover and outperform in FY26.

An Overview of Q2 FY 2025 Performance

In the second quarter of fiscal year 2025, JK Lakshmi Cement Limited experienced significant challenges, reflecting broader industry trends. The quarter was marked by a 9% decline in volume on a consolidated basis. This downturn can be attributed to cyclicity effects from the monsoon season and a sluggish demand due to the general election period. The company reported a notable price drop of approximately 8%, with the largest decreases happening in key markets like East and West India, although South and Northeast regions remained relatively stable. Despite this, the company's market share in its core areas was maintained and improved in some segments, reinforcing its strategic focus on consolidation.

Strength in Market Position

Management confirmed that although overall sales volume declined, they did not lose market share in critical markets. The management made a deliberate decision to abstain from unprofitable sales in noncore markets where the price realization fell below variable costs, opting instead to solidify their presence in key regions. The company currently commands about 70% of its sales within strategic markets in Western and Northern India, successfully increasing their market presence there.

Future Outlook and Guidance

Looking ahead, management provided industry growth estimates, projecting a modest growth of 1% to 3% in Q2, followed by 4% in Q3, and 9% to 10% in Q4. Overall, this leads to a forecast of 4% to 5% growth in all-India cement demand for the fiscal year. This guidance aims for JK Lakshmi Cement to align its growth with the industry as they transition from a challenging first half to a more favorable second half.

Financial Highlights

Financially, the company showed a decrease in variable costs by about 11% year-on-year, with overall costs down by 5%. Power costs decreased by 9% and fuel costs by 22%, with fuel cost standing at INR 1.62 per kilo tonne. The management also mentioned continuous efforts to improve operational efficiency, expecting further cost reductions of INR 50 to INR 100 per tonne in the coming quarters. EBITDA figures for industry peers also reflected a similar decline, situating JK Lakshmi's results within expected parameters.

CapEx and Expansion Plans

In terms of capital expenditure, the management disclosed that they had spent INR 440 crores in the first half and expect to allocate approximately INR 900 crores for FY 2025, including INR 500 crores on a standalone basis and an additional INR 200 crores for subsidiary Udaipur Cement Works Limited. Future expansions include a project at the Durg plant and another in the Northeast, which are expected to bolster capacity significantly over the next two to three years.

Merger with Udaipur Cement Works

The anticipated merger with Udaipur Cement Works is in process, following necessary approvals from stock exchanges and SEBI. The merger is projected for completion in the second half of 2025, subject to regulatory timelines. This consolidation is expected to yield operational synergies and enhance market positioning.

Innovations and Efficiency Improvements

On the operational front, the company highlighted a commitment to enhancing its brand recognition and premiumization strategies, indicating that about 25% of product sales are from premium lines. Additionally, initiatives integrating AI and advanced technologies are underway to further improve efficiency across their operations, ensuring a continued focus on profitability amid evolving market conditions.

Conclusion

JK Lakshmi Cement's results for Q2 FY 2025 paint a picture of resilience amid industry-wide challenges. Despite facing volume declines and price pressures, the company's strategic focus on core markets, planned efficiency improvements, and robust future guidance point towards a constructive outlook. Investors should note the ongoing efforts in market consolidation and innovative expansions as key drivers for potential recovery and growth ahead.

Earnings Call Transcript 2025-Q2

[Operator]

Ladies and gentlemen, good day, and welcome to the Earnings Conference Call for Quarter and Half Year Ended 30th September 2024 of JK Lakshmi Cement Limited, hosted by PhillipCapital India Private Limited.

[Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Vaibhav Agarwal from PhillipCapital India Private Limited. Thank you, and over to you, sir.

[Vaibhav Agarwal, analyst]

Yes. Thank you, Michel. Good evening, everyone. On behalf of PhillipCapital India Private Limited, we welcome you to the Q2 and H1 FY '25 call of JK Lakshmi Cement. I need to highlight that JK Lakshmi Cement is also the holding company of its listed entity Udaipur Cement Works Limited and therefore, this call is also open for discussion about the performance of Udaipur Cement Works Limited. On the call, we have with us Mr. Arun Kumar Shukla, our President and Director; and Mr. Sudhir Bidkar, CFO JK Lakshmi Cement.

I would like to mention on behalf of JK Lakshmi Cement and its management that certain statements that may be made or discussed on this conference call may be forward-looking statements related to future developments and which are 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. JK Lakshmi Cement Limited and the management of the company assumes no obligation to publicly or update the statements whether as a result of new information or future events or otherwise.

I will now hand over the floor to the management of the JK Lakshmi Cement for the opening remarks, which will be followed by interactive Q&A. Thank you and over to you, sir.

[Arun Shukla, executive]

Okay. Vaibhav, thank you so much. And good afternoon to all of you. Welcome to this Quarter 2 FY '25 call of JK Lakshmi Cement Limited along with Udaipur Cement Works Limited.

Quarter 2 has been quite volatile, quite challenging, not only for JK Lakshmi Cement, but overall industry-wise also, if you look at typically in July, September is low in demand because of cyclicity and monsoon factor. But this time around, this was also coupled with the general election and is really what happens after this general election is some kind of sluggishness, which creeps into the market. So that triggered very low demand in different geographies. But as I think all of you know that the demand was quite subdued in the quarter 2 of this year.

And because of various sluggishness demand, there was a lot of pressure on prices also. My estimation or our estimation goes that prices have dropped by about 8%. And this time around, I think drop has been quite substantial in case of East, West and followed by North. For a change at this time, a drop in prices in South and Northeast were the least. So since our geographies are limited to western part of India, part of it north and east, yes, I think there has been an impact on us in terms of subdued demand and depressed pricing.

Nevertheless, I think, yes, of course, I think results would have been much better. But I think what we are really taking confidence from is that wherever, whichever market we operate, we are holding on to the market share, like just to get you part of West, part of North and East, where we are there, we sell about 70% of our cement. And there, our market share is intact. And also price-wise, also we have done better than others. So that is what the -- that gives us the confidence that directionally, we are all right. Yes, there was a pressure because of external environment, which we cannot control fully. But whatever we could have controlled, I think we have tried every bit to change that in our figures.

Just to give you a very brief performance update. Of course, volume and all you know that our volume is down by about 9% on a consolidated basis. But the leading indicator, if you look at, I think that gives us a lot of confidence that directionally, we are all right. So trade, think we are at about 53%, 54% quarter-wise. Blended cement is at 66%. Lead also, we have substantially reduced. Lead was at 374 kilometers, which is about 13 kilometers lower than last year's same quarter.

We have done quite well in terms of renewable energy also. Renewable energy last quarter stands at about 40% and out of that, about 20% is solar and wind. So that way, I think we are progressing very well. If you look at other performance parameter, variable cost on a consolidated basis, we have done better, we are lower by about 11% Y-o-Y basis. Overall cost also has been down by 5%. Power was down by 9%, fuel by 22%, and fuel cost was about INR 1.62 per kilo tonne.

On TSR front, we have done quite well. TSR was at about 13%, and operating cost also was down by about 4%. If you look at EBITDA drop of top players in the industry, in last quarter Y-o-Y basis, that ranges right from INR 225 per tonne to about INR 400 per tonne. And we also fall within that range only. We just kind of -- we get carried away if we look at percentage. I think whenever price drops, I think that similar kind of drop happens for every player, right? So our drop was also in line with the industry. And if you look at because we have also done comparisons ourselves within the players who are there in our geographies because at times also, we carried away looking at the larger player who operates 3 different geographies.

I told you that price drop in different geography was different this time. Overall drop was 8%. But our geography somehow, I think for a change was a little higher drop, and that is what has impacted our EBITDA, right? But we are confident that I think, directionally, we are all right. Leading indicators are favoring us, and I don't see any issue going forward also. Of course, I think there is also always scope of improvement. And definitely, I think whatever levers we have on top line or on cost front, we keep on working on that. And hopefully, I think we'll bounce back in this quarter and going forward.

So this is what the brief update I just wanted to give you, and now we are open for question and answer.

[Operator]

[Operator Instructions] The first question is from the line of Nigel Mascarenhas from Leo Capital.

[Unknown Analyst]

A couple of questions. Firstly, by when is the merger with Udaipur Cement Works expected to be completed?

[Arun Shukla, executive]

Yes. Go ahead with your second question.

[Unknown Analyst]

My second question was, by when do you expect the expansion in the East to be completed? And how much of CapEx will be spent towards it?

[Arun Shukla, executive]

To answer your first question regarding the approval and the completion of the merger. So the Board had approved in consolidation of the cement business by merging the 3 subsidiaries of JK Lakshmi on 31 July in their Board meeting. Thereafter, the process is that we have to first approach the stock exchanges. And once the stock exchange, both the stock exchange, which is BSE and NSE give their approval, then they forward their joint recommendation to SEBI. And only when SEBI approves it, then we can approach the NCLT team. So that is the process.

The approval from BSE and NSE together with SEBI takes anywhere between 3 to 4 months. For us, the stock exchanges as we understand, have forwarded their recommendation, cleared that application and have forwarded it to SEBI. SEBI the BSE people and NSE people are saving them, we don't -- can't approach them directly, and there have not been any queries there so far. And we hope in the month of December, SEBI would clear it, hopefully. And thereafter, we'll approach NCLT. NCLT based on the past experience with different companies and different players have, take anywhere between 8 to 9 months.

So as we have mentioned in our press release, which we put in and also the presentation, which we have put in the website after the Board approved the merger, anywhere in the second half of the calendar year 2025, we expect that to be in place. Though we are trying to expedite it as much as possible, but things are not in our control. NSE -- NCLT take their own sweet time. They are already overloaded with other cases. But we are trying to push it. And our endeavor would also be to do it as fast as possible. That is as far as the timing for the merger of UCWL is concerned.

Now your second question regarding the expansion in the East. Yes, we have embarked on an expansion of 4.6 million tons of cement together with about 2 million to 2.3 million tonnes of clinker at our Durg plant. And initially, we'll take up the Durg clinkerization along with the grinding unit in UP first and follow it out with the other 2 grinding units at the other location, as we mentioned. So somewhere in FY '26, '27, we expect that to be on stream. The first phase, which will include the clinkerization and half of the cement capacity followed in the next financial year by that.

Expenditure, we have not incurred much as of now on the Durg expansion. In the current year, we expect anywhere between 100 to 150 million on that, primarily on account of some initial placement of orders, et cetera. And thereafter, the pace of expansion as well as the CapEx will gather pace in the next FY.

[Operator]

The next question is from the line of Ashish from Himalaya Capital.

[Unknown Analyst]

So I have 2 questions. Firstly, why has there been a delay in the ramp-up of our expanded facility in Udaipur Cement Works? And secondly, what sort of utilizations are we seeing operating for both clinker and cement in the UCWL expansion?

[Arun Shukla, executive]

Yes. On the first question of ramp-up, we commissioned our grinding station at Udaipur on 28 of March and as you know that this first quarter was marred by general election and followed by this slow impact of cyclicity and sluggish demand, which I mentioned during my opening remarks. So that has impeded our progress a bit, but I think that now we're taking place. And the way we see it trend now, I think we are on the right track. And whatever plan we have for this year, hopefully, we'll end up [indiscernible].

[Unknown Analyst]

On the second question, the utilization for both clinker and cement in the UCWL plant?

[Arun Shukla, executive]

Yes. So utilization, just let me know -- so clinker utilization was at 83% and at Udaipur 58% and cement 65%, JK Lakshmi cement, and...

[Unknown Analyst]

37% in UCWL....

[Arun Shukla, executive]

Both the lines put together, right, yes. About 37% of Udaipur Cement utilization. And on a consolidated basis, it is 57%.

[Operator]

[Operator Instructions] The next question is from the line of Keshav Lahoti from HDFC Securities.

[Keshav Lahoti, analyst]

Sir, some data point, non-cement revenue and RMC in this quarter? And what was the margin?

[Arun Shukla, executive]

So noncement revenue in this quarter was INR 126 crores, and margins were lower as has been generally. It was down to about 5%.

[Keshav Lahoti, analyst]

Okay. And how much is RMC on this?

[Arun Shukla, executive]

Out of INR 126 crores, RMC is, I think, INR 66 crores.

[Keshav Lahoti, analyst]

INR 66 crores Okay, understood. Sir, firstly, this quarter, our volume have degrown by 9%. So how our guidance stands, which was 8% for this year? And secondly, 9% degrowth, should we assume the company has lost market share? How you read it, like it's a regional thing or how should we read it?

[Arun Shukla, executive]

So first, I'll address you the question [indiscernible] your latter part of it. So none of the core market, we have lost our market share. And in fact, in some of the market, we have increased our market share. The volume growth, which we talked about, I told you that prices were quite depressed. And some of the noncore markets where we were selling, I think it was not advisable to sell in those markets because we were going below variable, right? So that was a conscious call not to sit in those markets, but to kind of be consolidate in the market, which is our core market. And in those markets, we have improved market share a bit rather than kind of losing it.

So that was a conscious call not to send in those part of market. And that is what is reflecting in our lead also. If you look at, our lead was 374 kilometers, which is 13 kilometers lower than the same quarter last year. So that was a well thought strategy because as we sold in those markets just to go after the volume, I think you would have achieved a little better volume, but our losses would have been more. So that was a conscious call not to sell. So that was on this 9% thing, which we have [indiscernible] level.

Other thing, the guidance about in the next 2 quarters, I'll just give you industry estimation, whatever our estimation is. Quarter 1 was almost flat. Industry-wise all India well. Quarter 2, we estimate that the growth is about 1% to 3%. Quarter 3 is estimated industry I'm talking about is about 4%. And quarter 4 is going to be about 9% to 10% kind of thing. This is what our estimation is, right? And if you go by that, then overall all India cement demand is going to be about 4% to 5% for a full year basis, right? So 2 quarters, I think our endeavor would be to go in alignment with the industry growth. That is what we see.

[Keshav Lahoti, analyst]

Understood. So tell me one thing, if I see your freight cost, which has increased sequentially by 50 per tonne. Why is that so? Sequentially, I'm talking freight costs have increased by INR 50 per tonne. Last Q1 was INR 1,040 per tonne. This quarter, it is looking INR 1,085 per tonne.

[Arun Shukla, executive]

No. So it will -- year-on-year basis, it has gone up by about 4%, which is in alignment with the inflation rate. And I think that has gone a bit up because of some amount of increase in clinker sale also, right? Lower clinker because clinker what happens is on [indiscernible].

[Operator]

The next question is from the line of Rajkumar Das from Navodaya Enterprises.

[Unknown Analyst]

Sir, my question is regarding your conveyor belt project, which has been delayed for a long time. Could you please update the current status of conveyor belt at Durg plant?

[Arun Shukla, executive]

So conveyor -- you're talking about Durg 5 conveyor, right? Yes. So as I said before that there are some approvals, which are pending, and that is on the last stage of approval. And so you know that government approvals, it takes a little bit more time, and some of the things we cannot control. But we are actively working on that. And hopefully, I think we'll be able to resolve this very quickly. Yes, this is taking a little longer time because of again, election was also one of the factors because entire machinery was not really that focused on those kind of jobs, which are not important for them. So because of that, this got delayed, but we are working on this. Probably, I think we'll have some solution very quickly.

[Operator]

The next question is from the line of Amit Murarka from Axis Capital.

[Amit Murarka, analyst]

Firstly, I joined the call a bit late. So if you could just share the volumes for the cement and clinker at stand-alone and consolidate level?

[Arun Shukla, executive]

Clinker volume for this quarter was -- cement volumes -- cement sales was 17.82 and clinker was 0.84. Total was 18.66.

[Amit Murarka, analyst]

17.82, I'm sorry, how much?

[Arun Shukla, executive]

17.82 and 0.84 clinker. Total was 18.66.

[Amit Murarka, analyst]

Okay. And this is stand-alone, right?

[Arun Shukla, executive]

Sorry?

[Amit Murarka, analyst]

So this is at the standalone level. And what would be consol?

[Arun Shukla, executive]

This is certainly on a standalone level. And on a consol basis, it is 23.60 for the cement, 1.33 clinker, and total 24.93.

[Amit Murarka, analyst]

Got it. So about the comment that you made that a lot of markets, your naturalization or a few markets where naturalization...

[Arun Shukla, executive]

Your are not audible, please. Your are not audible. A little louder.

[Amit Murarka, analyst]

Yes. So on your comment, which you made, that in few markets, your variable cost was higher than the realization and hence, you kind of did not participate in that market. So just wanted to understand like which markets would these be and like given that pricing seems to be staying subdued since quite some time, what is your strategy to combat the situation and get the volumes back up again?

[Arun Shukla, executive]

So our strategy is to reinforce in the market or the battleground, which we have. And battleground for us is all those markets, which are near to our plant, right? So we keep on reinforcing our position in those markets. And during quarter 2 also, we have done the same thing. So I think in all those markets, our trade sales have gone up and overall market share also in some market, it is intact and some markets, we have done better, right? And those far off market like, I would say, falls in secondary market is deep into Central India, then it's the UP, Eastern part of UP and those markets.

So there, I think we did not participate because our prices were not remunerative and realization was lower than even variable. So that was a concept. So those market I'm talking about. Otherwise, all those core markets like Rajasthan, Gujarat, Eastern market, Chhattisgarh, Orissa, Vidarbha part of it, Eastern MP and Western MP. These are the markets where we keep on consolidating also -- then that will keep on kind of effort will be further on to consolidate in these markets even better.

[Amit Murarka, analyst]

Understood. Understood. And generally, also a thought like, I think, 1.5 years back, 2 years back, you had said that we are embarking on a journey of improving the brand in the market and improving that in realization as well. So how far have we moved on the journey? And like if that could also help address this problem.

[Arun Shukla, executive]

We are probably quite far. And if you look at the EBITDA per tonne difference between the leaders and JK Lakshmi Cement last year and even first quarter also was reducing, right? So that has come about because of the actions, which we took and which I elaborated in my previous call, right? So on levers on top line, on cost, which I mentioned some of them during my opening remarks. So that journey is, I would not say fully accomplished, but I would say definitely 75% we have accomplished, 25%, yet to be done. The major portion still, I think, we are further working on brand and premiumization.

So we are working on brand realization also. And perhaps when next quarter when we meet, I'll update you on what actually we are going to do with the brand. So that is a very ambitious project, which we have already started. And hopefully, we'll have some updates during next quarter. So I would say about 75% journey we have traveled and that has resulted into reduction in the gap between leaders and JK Lakshmi Cement, and about 25%, 30% still remains and that is not the final thing because we keep on exploring different revenues, different opportunities, and we embarked upon them.

And of course, I think digital also will help us to improve our efficiency further. And some of the plants, we have already deployed some AI tools and algorithm, which is going to improve our efficiency in different value chain in the operating plant. So I think 25%, 30% from the previous one. And even going forward, we will explore further all those avenues, we'll just try to realize the technology with our experience and equipment, which we have with us.

[Amit Murarka, analyst]

Understood. And also lastly, pricing, has it improved versus Q2 averages, what you're seeing now?

[Arun Shukla, executive]

Prices have improved a bit for sure. Prices have started going up from September. October was more or less stagnant a little bit upward trend. But now since the post Diwali demand will improve, hence, prices are also likely to go up. So definitely prices will go once demand improves.

[Operator]

The next question is from the line of Raghav Malik from Jefferies.

[Raghav Malik, analyst]

Just a few housekeeping questions. Actually, what would the premium product mix be? I don't think you mentioned that? And the premium product mix even as a percentage of just the trade volumes?

[Arun Shukla, executive]

So premium product proportion is about 25% and on our trade sales base is about 30% -- 12%, 13% on a overall basis, right.

[Raghav Malik, analyst]

Okay. Okay. Got it. And just on the cost side, the fuel cost per kcal this quarter, what would that be?

[Arun Shukla, executive]

Fuel cost, rupees per kilo cal you're asking?

[Raghav Malik, analyst]

Yes, yes.

[Arun Shukla, executive]

It was 1.62.

[Operator]

The next question is from the line of Sanjit Tambe from Centrum Broking Limited.

[Sanjit Tambe, analyst]

Sir, I just wanted UCWL volume for this quarter and previous quarters.

[Arun Shukla, executive]

UCWL volume, they did 5.74 cement sale and 0.84 clinker sale. And in the preceding quarter, you wanted?

[Sanjit Tambe, analyst]

Yes, yes.

[Arun Shukla, executive]

6.41 was their cement sale, and 0.9 was their clinker, total 7.39.

[Operator]

The next question is from the line of Jatin Chhaparwal from Chhaparwal Enterprises.

[Unknown Analyst]

I have just one question. I need to know about the CapEx plan you are planning. What's the stage of it?

[Arun Shukla, executive]

CapEx, as I mentioned in response to some earlier question, we are having 2, 3 projects on hand. One is the Surat grinding unit. We expect that to be commissioned towards the end of this financial year, wherein we are adding 1.35 million capacity therein. And there is a Durg expansion, which will take 2 to 3 years therein. The Udaipur expansion is virtually complete. Some small jobs are left. So that is as far as the CapEx are concerned. Railway siding project is on. So we expect that to be in place in the first quarter of the next financial year. Partly we have already started using that sliding, railway siding there at Durg.

[Operator]

[Operator Instructions] The next question is from the line of Uttam Kumar Srimal from Axis Securities Limited.

[Uttam Srimal, analyst]

Sir, what is our CapEx guidance? You just give the number of the CapEx. So we just want CapEx guidance for FY '25 and FY '26.

[Arun Shukla, executive]

Current year, we expect -- we have done about INR 175 crores in the first 6 months. We expect in this year FY '24, '25 for the full year, we can do about INR 500 crores, then INR 700 next year, followed by about INR 800 crores to INR 850 crores in FY '27.

[Uttam Srimal, analyst]

And sir, power per kl cost has come down to 1.62. So do we expect more decline in the coming quarters? Or it will remain at the same level?

[Arun Shukla, executive]

Around the same level, it may be. We don't see any substantial drop therein.

[Operator]

This will be the last question for today, which is from the line of Shravan Shah from Dolat Capital.

[Shravan Shah, analyst]

Yes. Sir, I think the CapEx you mentioned, it is for stand-alone. So on consol basis, in 1H, we have done INR 440-odd crores. So for FY '25, '26, '27 put together at consol level, what the CapEx are we looking at?

[Arun Shukla, executive]

Whatever -- you are right, what figures I've given is for the stand-alone. So we may have another INR 200 crores for Udaipur, whatever INR 500 crores, as I talked about, for FY '25 on a stand-alone basis and about another INR 200 crores for the Northeast project. That is as far as in the subsidiaries are concerned in FY '25. Going forward, Udaipur maybe not there, maybe only 30, 40 normal CapEx there, including some leftover of the expansion and another INR 200 crore to INR 250 crores for the Northeast project. And thereafter, in FY '27, nothing for Udaipur, but Northeast may have about INR 400 crores to INR 500 crores.

[Shravan Shah, analyst]

Sorry sir, I still want to you me the number for FY '25, so INR 500 is standalone, plus INR 200 crores Northeast, so put together would be INR 700 crores full consol level -- FY '25?

[Arun Shukla, executive]

Another INR 200 crores for UCWL to add.

[Shravan Shah, analyst]

Okay. So INR 900 crores total. And for FY '26, total would be INR 700 crores standalone. And Durg expansion would be how much? So...

[Arun Shukla, executive]

INR 700 crores includes Durg expansion. Northeast assets, when I say Northeast, that is the Assam project [indiscernible] not in the Durg. Northeast doesn't mean Durg. It means the Assam project, which is in the subsidiary, right? INR 700 crores includes Durg expansion, right?

[Shravan Shah, analyst]

Okay. Okay. So Northeast in FY '26 would be INR 300 crores, you said. And this Durg expansion, so just to clarify, first Surat expansion, last time we said we will be doing 1.35 in a half by October and March, but now we will be doing the entire 1.35 by March end.

[Arun Shukla, executive]

Yes, around that.

[Shravan Shah, analyst]

Okay. And for Durg expansion, the first phase also previously, we were looking to start by FY '26, the clinker and 2.4 million tonnes grinding. So now this will be...

[Arun Shukla, executive]

Yes. It may be spilling over to the first half of the next financial year.

[Shravan Shah, analyst]

And then the second phase would be in FY '28?

[Arun Shukla, executive]

Yes, FY -- yes, 1 year later.

[Shravan Shah, analyst]

Okay. Okay. And then the Northeast will also -- will be in FY '28 will start?

[Arun Shukla, executive]

Around that, you are right.

[Shravan Shah, analyst]

Okay. Okay. And just a data point, CC ratio for this quarter was how much?

[Arun Shukla, executive]

What ratio?

[Shravan Shah, analyst]

Clinker -- cement to clinker ratio.

[Arun Shukla, executive]

1.45%.

[Shravan Shah, analyst]

1.45%. And this [indiscernible], which is a 47%. So by March end, this will increase to, last time we said, 50-odd percent. So that remains the same?

[Arun Shukla, executive]

Yes. So yes, I think we will be closer to 50% because we are still working on some of the solar projects. If that gets commissioned, then we will reach there.

[Shravan Shah, analyst]

Okay. And in terms of the overall consol level cost reduction at per tonne basis now, how much one can look at?

[Arun Shukla, executive]

So as I said, Shravan, yes, we are working on now one thing, which is big chunk premiumization, which we are working on. So that exercise is going on. And perhaps that will give us some good leeway. Apart from that, I think this operational efficiency is a continuous journey. So we'll keep on getting something as we progress. So definitely, I see INR 50 to INR 75 a tonne that is what I see -- INR 50 to INR 100 a tonne going forward [indiscernible] taken.

[Shravan Shah, analyst]

Okay. Okay. And then once, as you said in the second half, we will be doing in line with the industry growth, but in FY '26 will it -- probably we will be growing much better than the industry growth?

[Arun Shukla, executive]

That is what we wish, Shravan, because now till that -- by that time, I think our capability improvement plan, which we have taken for Udaipur expansion that will come in full force. So definitely, our ambition, our plan is to grow faster than industry next year.

[Operator]

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Vaibhav Agarwal for closing comments. Over to you, sir.

[Vaibhav Agarwal, analyst]

Thank you on behalf of PhillipCapital India Private Limited, I'd like to thank the management of JK Lakshmi for the call, and many thanks to all the participants joining the call. Thank you very much, sir. You may now conclude the call.

[Operator]

On behalf of PhillipCapital India Private Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.