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JK Lakshmi Cement Ltd
Earnings Call Analysis
Q3-2024 Analysis
JK Lakshmi Cement Ltd
The company has been actively investing in its growth, with significant capital expenditure (CapEx) being reported. For JK Lakshmi, approximately INR 250 crores have been expended, while UCWL saw a CapEx of around INR 450 crores over the span of nine months. Forward-looking CapEx is projected to be around INR 500 crores for the current quarter, with substantial investments directed towards completing various projects, including a railway siding.
A green energy initiative has led to the Durg plant achieving 80% of its green power share. Overall, the company's green power share stands at 44%. However, a significant improvement is not expected in the short term as Durg has nearly reached its potential at 70% capacity. The aim is to push the green power share to 50% across the company in the future. Additionally, a solar power project in Sirohi is on track to be commissioned, showcasing the company's commitment to sustainability.
Operational advances at Sirohi, including a Thermal Substitution Rate (TSR) project, have yielded positive results, with the TSR reaching around 11%. Upon full commissioning, TSR is expected to rise to 13% and potentially to 16% in a subsequent phase.
Financially, the company's stand-alone net debt is quite low at around INR 50 crores, with gross debt close to INR 700-720 crores, offset by substantial cash reserves of around INR 675 crores. On a consolidated basis, gross debt approached INR 2,000 crores, but with cash reserves of INR 850 crores, the net debt is maintained at INR 1,150 crores. Looking ahead, debt is expected to rise by INR 1,000 crores to INR 1,500 crores over the next three years due to repayment of existing debts, aiming for a net-debt-to-EBITDA ratio of less than 2.5 maximum.
The company achieved a top line of INR 134 crores this quarter from value-added products, with margins around 5%. The Ready Mix Concrete (RMC) business contributed INR 67 crores to this segment.
With an eye on expansion, the company is setting up 4.6 million tonnes grinding units across four locations - 1.2 million tonnes at three locations and 1 million at Jharkhand. The strategic location of these units aligns with the company's growth and distribution goals.
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Ladies and gentlemen, good day, and welcome to the JK Lakshmi Cement Q3 and 9-month FY '24 Earnings Conference 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. Thank you, and over to you, sir.
Thank you, Rio. Good evening, everyone. On behalf of PhillipCapital India Private Limited, we welcome you to the Q3 and 9-month FY '24 call of JK Lakshmi Cement.
I need to highlight that JK Lakshmi Cement is also the holding company of the 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, President and Director; and Mr. Sudhir Bidkar, CFO of JK Lakshmi Cement. I would like to mention on behalf of JK Lakshmi Cement and its management that certain statements that we made or discussed on this conference call may be forward-looking statements related to future developments 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 update or alter these forward-looking statements whether as a result of new information or future events or otherwise.
I will now hand the floor to the management of JK Lakshmi Cement for the opening remarks, which will be followed by interactive Q&A. Thank you, and over to you, sir.
Thank you, Mr. Vaibhav, and good afternoon -- good evening, rather, ladies and gentlemen, for this Q3 call for the JK Lakshmi FY '24. You would have already seen the results and our press release. So nothing much to talk on that, you would have observed. So we'll now throw the floor open for question and answers.
[Operator Instructions] We take the first question from the line of Shravan Shah from Dolat Capital.
First of all, congratulations on a good set of numbers. Sir, before asking a question, just a clarification needed. We have removed our outsourced volume from our numbers. So if you can help us with the revised volume number for last 4 quarters of FY '23 -- third quarter, we already have, and the 2 quarters of Q1 '24 and Q2 FY '24 because it seems because of that the realization seems to be a much higher Q-o-Q.
So just wanted to understand the revised numbers and is it the -- now this is the new normal volume number? So despite the volume reducing outsource, there is no impact on the revenue front?
Yes, you're right. This will be going to be new normal first and foremost, to answer your question. And the first, you should all analysts understand the reason as to why we have done that. For last almost 7, 8 quarters, we on all our con calls have been talking off seeing the profitability in numbers, but especially the per tonne number on consolidated basis. Still, I find most of the analysts are publishing standalone per tonne analysis. That distorts the figure. I'll tell you why.
If you see, for the simple reason, if we have -- if UCWL is procuring cement from us and then selling it to market, that volume when you report on a stand-alone basis gets counted as sales both for JK Lakshmi as well as Udaipur.
Ultimately, from market, we realized only x profit, which gets divided in 2 companies. So what decided, the company which ultimately sells in the market should show that as the sales. That's why when you would see when you add the stand-alone reported number of JKLC plus stand-alone reported numbers -- volume I'm talking, sales volume of UCWL. Earlier, there used to be huge interunit sale which used to be knocked off for doing the consolidation. This time, there would not be any need for doing that, but we have taken at one place. So it is going to be the new normal.
Regarding your question of past data, we'll share that separately, you can put up the mail. Our team will answer. It will be difficult for you and for others, of course, for people who are in the queue to note down all the numbers for 4 quarters, which you want. You can send the mail, we can answer that. But as you rightly said, going to be the new normal.
Going forward, you would have also seen in our press release and in our reporting to the stock exchange that the Board has decided to form a committee of executives to consider and evaluate the possibility of the restructuring. We have been talking of this consolidation of the 2 businesses, UCW and JKLC for quite some time. But now the opportunate time has come that we start seriously having a look at it. And hopefully, next year -- somewhere next year, we will announce at appropriate time, they plan to consolidate the businesses.
So that is -- once that happens, then obviously, there will not be any reason and the need for any interunit sale because UCWL and JKLC will be one company, and UCWL will be another plant or division of JK Lakshmi only, as a part of the company. Only a little bit of outsource, which we are doing from some third-party outsource, that is very negligible and will not distort the figures. But yes, this is going to the new normal going forward. We'll share the numbers. You send us the mail what you want, right? Thank you, Shravan.
Yes. Sir, now in terms of coming to the volumes of 9 months, 6.6% volume growth, and we were looking at last time, say, 12% to 15% volume growth. So what kind of new growth we can look at for FY '24. So particularly fourth quarter, how much kind of a volume growth we are looking at. So for that also, we need a fourth quarter of FY '23, the revised volume number? So that's the first one.
Yes. So the numbers -- the volume growth number, which we have told before was based on some assumptions and market growth and there has been the area where we operate has some disruption like, north, we had severe cold and [ graphite-gypsum ], construction activities were not happening. So that has impacted quite a bit. So that is why in the last call also, we had told that we are going to moderate our numbers.
So yes, our volume growth in the last quarter, volume growth was 8% to 10%. And going forward, we see that growth is going to be -- January-March typically is high months, right? And the BSE is very high. So I see that growth is going to be almost in the similar fashion what we have achieved in the last 9 months. So maybe around 8% to 10% kind of revenue ad, we will do.
Okay. Sir, now coming particularly on the expansion and the CapEx and the debt things. So if you can help us in terms of how much CapEx in the 9 months we have done? What's the new number for this year, FY '25, FY '26? And also at the same time, in terms of the expansions that we have announced at the Durg also and the acquisition in the Northeast. So there also, we are looking at -- looking at expansion.
So if you can help us in terms of when each and every -- our branding unit and the clinker unit in terms of time line will be coming and how much CapEx we will be doing in the fourth quarter FY '25, FY '26? That would be helpful. And ultimately, the net debt, which we were looking at the peak net debt at consol level or to INR 1,800-odd crores. So now what kind of net debt we can look at?
We have announced some projects in this Board meeting. One is apart from the normal CapEx to be happening. We are already in the -- 2, 3 things which we are doing. One, we have announced that railway siding project of INR 325 crores, that will be implemented in 2 phases. First phase by September of '24 and the second phase by March of '26. So out of the INR 325 crores, about INR 105 crores will be part of the Phase 2. So balance, that is around INR 200 crores to INR 220 crores would get spent by September of '24. That is number one, as far as the railway siding is concerned and the balance of INR 105 crores in about 12 to 18 months' time thereafter.
And then we have also announced the expansion of our Durg plant, which involves adding a clinker line of 2.3 million tonnes and for grinding units with an aggregate capacity of 4.6 million tonnes. So again, that will be in phases. First phase would involve about 1 million tonnes in U.P. and another -- 1.2 million tonnes in U.P. and 1.2 million tonnes in Durg. So that will take about 2 years' time.
And we are talking a CapEx of close -- for the entire project of INR 2,500 crores. So maybe INR 1,500 crores to INR 1,600 crores debt commissioned -- debt incurred in those first 2 years by March of '26. We need, maybe about, I would say, 40% coming in the first year, which is FY '25 and 60% in the next year -- broadly, I'm telling you. You have to just do the fine numbers there in quarter-wise.
And that involves fundraising of close to about INR 2,500 crores, which is basically INR 1,750 crores for this project, INR 250 crores for the railway siding and for our other aspirations about INR 500 crores, which includes the ongoing projects like the AFR project and the waste heat recovery project, where we are adding plus also some solar power plant, which we are doing at the Sirohi. So all that will be about INR 500 crores. So we are talking of a fundraising of INR 2,500 crores over the next 3 years' time. Maybe about INR 500 crores to INR 700 crores, that's in this FY '25 and another maybe INR 1,000 crores in FY '26 and balance thereafter.
Okay. Got it. Sir, if you can still help us in terms of the total combined, everything put together, CapEx for fourth quarter FY '25 and FY '26 would be how much.
We need to work on. Broadly, I've given the high-level numbers. We have just announced the project. We have to break it down quarter-wise, and maybe next call, I will be able to give the exact numbers. But broadly, I've given you a broad indication of the quantum of the CapEx as well as the term loan.
[Operator Instructions] The next question is from the line of Prateek Kumar from Jefferies.
My first question is on your expansion. So will you be able to give any reason for choosing east over north or any other market for your first round of expansion of UCW?
Sorry, I couldn't get your question. Can you repeat it? It was going?
Can you just highlight any specific reason we looked at Durg expansion earlier than some of your north expansion, which you're also talking about earlier in terms of order expansion. Is it like related to the readiness of the site or any other reason which you can sight at?
We are in the process of completing the north expansion. Udaipur will be completing, hopefully, towards the end of this quarter. So they will need some time to stabilize before we embark on next expansion in the northwest. That's why we chose and considering the demand supply mismatch there in the eastern side and the expected growth in the demand in that region, we chose east as the preferred market to go for the next round of expansion.
But yes, once that expansion gets stabilized at Udaipur, maybe then we'll have a look at the expanding in northwest.
Yes. Adding to that what Mr. Bidkar said, you must have seen that capacity utilization of our Durg unit is almost done, exhausted. And the highest growth in the entire India is eastern region. Typically, I'm talking of those markets where we operate, because we do not operate in the entire east. So that was one reason.
And if you look at our [ 30-30 ] plan, our plan was to expand Durg, our plan was to top next line in Udaipur and then Nagore and Kutch. So we are just on the track. Whatever we -- the road map, which we prepared for ourselves, we are following that. So I think this is almost as per the plan, which we are kind of going ahead with.
Sure, including -- I mean, we have -- for the northeast acquisition, we have talked about only mine, I think, as of now around INR 300 crores and initial capacity of only 1 million tonne for which we have not cited any CapEx. So you said INR 2,500 crore CapEx is for east operations, INR 325 crores is for rail siding, maybe INR 100 crores annually spent [Technical Difficulty] INR 300 crores is like adding up to 3 years of CapEx, excluding northeast. So including northeast, we are close to INR 5,000 crores of CapEx for us in the next 3 years?
Yes, we are talking of a CapEx of INR 2,500 crores for the Durg expansion, which will take about 2 to 3 years. About ongoing project is about INR 200 crores. Then the railway siding, INR 300 crores. So that is INR 3,000 crores. Maybe INR 1,000 crores for the northeast. So INR 4,000 crores over the next 3 years.
All right. And just related to previous question. Can you just give, for the benefit of everyone. I'm sure everyone is looking for your volume number -- stated volume numbers of past 3 quarters, and maybe annual FY '23 volume?
Yes. We'll provide you that, yes. So I think -- what you want is net of that in outsource, right?
That we have already given in the press release, both for 9 months as well as this thing. Quarter-wise, we'll share.
[Operator Instructions] The next question is from Noel Vaz from Union Mutual Fund.
So I had a question about Udaipur Cement. Now my information might be a little incorrect. But I just wanted to know, is there any issue of limestone availability or limestone shortage at the Udaipur Cement plant?
There's no -- absolutely no shortage of limestone reserves. In fact, there was one additional mine which we've recently acquired. So in fact, their results at the present remains -- after this expansion also will be good enough for another 40, 45 years. And we are thinking going forward, as I mentioned in response to your earlier question, could be a possibility of another line. So there's no any paucity of limestone reserve at that plant in Udaipur.
Okay. And just to clarify, so I think the company is trying to finish off with the Udaipur expansion, then Durg and then the Udaipur Cement Works. [indiscernible] alright?
Yes.
The next question is from Rajesh Prasad Ravi from HDFC Securities.
First, could you share on the trade/non-trade mix and blended cement and the fuel cost for this quarter? And then Q3 volumes -- restated volume for Q2 if it is available, please?
In the quarter, fuel cost was INR 8,700, which is around 1.78 KKL. And regarding your question on the...
Sales mix and blended cement.
So trade quarter 3 was 58%, which is up by 3% from previous quarter. So 58% here and blended is 65% and 35% is...
Okay. And these numbers are stand-alone or consol, sir? Blended and sales?
Consol number.
Consol numbers, okay? And second, what is your thought process on the Udaipur ramp-up with the clinker plant now operational. Why are you still look at 7%, 8% sort of volume growth? And for next year, what sort of ramp-up you're looking at, given that even a new grinding unit also will be available by March end?
Yes. So I just clarify, whatever industry is growing at, we'll grow higher than them. And as I told last quarter also, we have grown by 8% in volume, which is better than industry. Industry, to my estimate, is about 6%, 7%, one. Even in this quarter also, our growth is going to be better than industry. If the Udaipur capacity from 2.5 million tonnes, our growth is going to be much higher, right? So next year, I think we are going to grow -- industry growth is envisaged to be about 8%. Our growth, with additional capacity at Udaipur, we are looking at somewhere around early 2-digit numbers.
Okay. And 2 last questions. Is Q2 volumes, if you have handy, the like-for-like volumes in Q2? And why is your -- in the consol volumes, when you need to [ knock off ] in outsource volume because even your consol numbers have come down by 5% versus the prior reported numbers?
That I told you because of that outsource is minimal. And the second quarter, we had for JK Lakshmi, the volume was [ 21.7 tonnes ] and for UCWL [ 5.6 tonnes], total [ 27.32 tonnes ].
Okay. Okay, sir. And lastly, thought process on this entering into the northeast and by when do you expect this project to be on stream and what is your thought given that, that market is quite consolidated between 2 players, Dalmia and Star?
Northeast, I think we have kind of you know by now that we do have interest in northeast and because northeast is one of the markets which on part of Eastern India, and we want to consolidate our position there. This is one reason. Second of course like demand/supply situation also favors going to that market apart from the slide which is prevailing in that market.
Okay. And by when you're looking to start work on that project, sir?
I think we are just working out the time line. We'll come back, maybe next time.
Sure, sure.
It's too very premature for us to give a time line. Next call, we should be hopefully able to...
Sure, sure.
[Operator Instructions] The next question is from [ Narendra ] from Robocapital.
So my questions are specifically pertaining to UCWL. So what would be our peak utilization levels there? And by when do we expect to reach those levels if you could throw some light on that?
Talking of the existing capacity, which we have at Udaipur?
No, no, no, the expanded capacity.
So the plan is, right now, whatever capacity we have, we have gradually ramped it up to about 75% now. And the plan is new line, which is coming up, maybe first year is going to be about 60%, next year 75% and there on 80%.
Okay. Okay. So '25 would be 50% and '26 would be around 75%, right?
Right.
Yes, yes. Okay. Got it. And I believe we had a target at UCWL to reach top 5 players in terms of EBITDA per tonne. So what's the target on EBITDA per tonne for UCWL?
Yes. So I think we look at UCWL and JKLC combined, because that is what matters to us, right? You have seen in the last 2 quarters, I think we have been improving with respect to our EBITDA ramp-up. If you also look at the GAAP, which we had before with the details, we have squeezed that up to an accent. Going forward also, our plan is to consolidate at this level whatever we achieved because we have been talking about INR 1,000 EBITDA per tonne, which we have achieved now.
We need to consolidate this on a consistent basis. And going forward, yes, the kind of plan and the actions which we have in place, the top 5 company, EBITDA-earning company in the industry, yes, that looks quite feasible, and we are happy the way we are progressing. So all those actions are getting realized and we are progressing well. We are pretty excited with this.
[Operator Instructions] The next question is from Aman Agarwal from Equirus Securities.
Congratulations on strong performance once again. Sir, my question was once again on the reason why went up the eastern market, especially with the splint grinding unit in U.P., Bihar and Jharkhand. Now while we are aware that the U.P. market is doing quite well in demand sense, Bihar and Jharkhand we hear that it has been -- the demand has been subdued for quite a few quarters now. Further, this -- I think we also have some impact on our geo mix improvement target, which we have set for ourselves. Sir, I just wanted your views around this?
Yes. So I think Bihar also, we have to divide that market into further geographies, like North Bihar and South Bihar, right? So if you look at North Bihar geography, that geography is better in terms of demand and supply situation and also on pricing trend. So our plan is to move somewhere in North Bihar, right? And Jharkhand also where we plan to go going forward. I think we are choosing an area where from, I think, yes, it is going to be better to serve our customers.
And second, I think demand/supply situation is good. And third also, the price trajectory is also favorable. So I think we have done our homework and groundwork before deciding on to this. Another issue was that we have been capturing part of the growth of eastern market, which is Chhattisgarh and neighboring areas. But I believe that individual homebuilders segment, which is the highest in case of east, I think that is going to drive the growth going forward, right?
And perhaps individual homebuilders segment in that in a geography where we turn to go going forward, is quite sizable, right? So that was the rationale as to why we chose to go to that market, right? If I look at eastern market growth, I think growth of eastern market is the highest in whole zones in India, be it north, central, south or west, right?
Going forward, also, I believe that this is going to be there for some time as to individual homebuilders segment, which is ever growing. And that is going to really kind of consume all those capacities which are going to be installed going forward. If you look at demand/supply gap also, I think though capacity has been added in east, but I think -- still I think the gap is reducing. If you look at maybe 1 year, 1.5 years, what -- how industry has performed, that had gone down. And going forward, I think it will further go down despite capacities that are being added. This is what our estimation of the, I would say, presumption for that market is.
Understood, sir. That's really helpful. And sir, as we expand pretty aggressively for our own capacities, would that mean we would be trimming down our dependence -- obviously, it's low already, but we would it be further reducing our dependence on outsourcing?
Yes. So I think the strategy is we are going to be kind of be dependent on ourselves, our capabilities to produce clinker, our capability to grind it and if you see our [ 30-30 ] road map, which we have told to all of you. I think the clearcut roadmap is there, at least now for 24 million tonnes, 25 million tonnes. Nagore and Kutch already I think work in progress, which will take some time because of all those pre-requisite processes are going on, right? So yes, we are going to be self-dependent in terms of grinding and producing clinker.
Understood, sir. And sir, lastly, Jharli will continue to -- for Jharli, we'll continue to purchase clinker from external markets? Any plans around that?
No, Jharli, I think we have in-house clinker only. We don't purchase from outside.
The next question is from Navin Sahadeo from ICICI Securities.
Shuklaji, congratulations on INR 1,000 plus EBITDA per tonne as you had promised. So great to see.
I think we had a discussion over this. So I think now we are there.
Absolutely, sir. I just recalled that as soon as you had joined, you had said at INR 1,000 EBITDA per tonne in the market, so congratulations on that. Sir, a couple of questions. So the volume growth of roughly 8% that we have seen, is it fair to assume that it was more biased in favor of north region because east would have been slightly slow or how should one look at the breakup between north and east?
I think growth is in favor of east. I told you that east is growing at a faster pace than further geographies up until now, a little bit more skewed towards east.
Even in the current quarter, it was more skewed towards east?
Yes, yes.
Understood. And sir, realization wise, how should one look at -- because in February, we believe there has been recent corrections in brand in February? So how would you look at the realizations add-on date versus previous quarter? What kind of impact would you suggest would have happened?
I think January-March, usually, yes, demand is good, and it's going to be good in the remainder of the February and March. Price wise, yes, I think there has been softenings in the prices in different markets for sure. It would be difficult to quantify as to how much softening has happened, but yes, softening has definitely happened in the month of January to an extent and even in February.
Understood. Sir, just 1 or 2 more questions, if I may. The split grinding units, I was just checking the distance, let's say, Durg to Madhuban in Bihar is roughly 900-plus kilometers. So with that kind of a huge distance, would it not impact profitability? How should one -- because it's -- like it's almost 1,000 kilometers I'm saying from Durg, the location. So how should one look at it?
And in the same breath, do we have this arrangement with Kanoria, if I'm not wrong in the same market and which will displace that? Or that's in a different market?
No, no. I think we do not have any association with the third party in that market -- in the market which you are talking about. As far as that kilometer and other things you mentioned, I think we have done our calculation, and that makes sense. Because even today from our Durg unit, wherever we are selling, I think some of the markets are as good or as bad as the market which you mentioned, right?
So we have done our calculations. That makes sense to go to that market because we are also betting on the future. Because I personally see -- we see that, that market is going to grow at a much faster pace than other. And once the market growth is there, then price also comes along with that.
Understood. Understood. And just one last question. We purchased -- our -- we have agreed to purchase 85% in this northeast entity, and it is for conceptualizing cement plant. So the balance 15% would also -- I think the existing promoter. So would they also put in any equity, anything for the proposed CapEx? Or it is us who will lead the entire expansion?
Yes, obviously, they would put in if they are partners in that.
Up to 15% in proportion to the equity that has been shared, right?
Yes.
Next question is from Mudit Agarwal from Motilal Oswal Financial Services.
I have some questions and some clarifications. Just wanted to know about this Surat grinding unit brownfield expansion. Is that plan intact or any changes on that side?
There's no change in that plan. That is going as per the plan.
Okay. Okay. And sir, you mentioned INR 4,000 crores of total CapEx, including northeast. Is it right? I mean INR 3,000 crores for...
Yes, you're right.
Okay. And one more question clarification, sir, about this Amethi grinding unit, which is on a tolling basis. So is it for exclusively for JK Lakshmi or is it shared with other industry players?
So this grinding unit is being shared by other industry players also.
Okay. So sir, can you just throw some light how it is -- how this arrangement is for the JK Lakshmi particularly?
I didn't get what you are saying?
I mean what are the capacity which we are sharing and how much is our -- the JK Lakshmi's share?
I think we do have a tolling contract with them. I think those other players, they must be having a different contract. We are having our own contract with them. And based on that zero-based working, we have worked out some contracting arrangements, right? So that is how we operate, right?
Okay. Sir, simple word, like how much volume we are getting from that unit?
So we are sharing about maybe 50% of it.
The next question is from Uttam Kumar Srimal from Axis Securities.
Congratulation on good set of numbers. Sir, my question pertains to EBITDA per tonne. This quarter, we have done over INR 1,000 EBITDA per tonne and we have achieved our target earlier than what we had envisaged. So this EBITDA per tonne is sustainable going moving ahead also, sir?
So our endeavor, Uttamji, is to be amongst top 5 players because market dynamics keep on changing, right? So our effort is if EBITDA goes to even INR 1,500, INR 1,600 also for others, we should also be moving in the same direction. If it goes down because of the regions, then I think it will go down for us also. What we can do, what is within our control is to [indiscernible] all those internal drivers of margins. So that, I think we are driving that.
I would say we have accomplished part of those levers, right? Going forward also, we are going to work on those levers and further consolidate on those things. So I think I would like being top 5 amongst EBITDA per tonne company, that is what our endeavor is. If others go up, then we'll go up more than them. This is what I would say.
Okay. Okay, sir. And sir, what was the lead distance and premium cement sale percentage as a percentage of trade sale during this quarter?
Yes. So lead was 377 kilometers. Yes.
And premium cement, sir?
Premium cement was 12% of the overall volume.
12% of overall volume, not an out of trade?
25% of trade, right?
25%. And sir, how was the VAP still during this quarter, value-added product?
So here also, I think we have done quite well. So value-added has contributed about...
INR 134 crores.
INR 134 crores this quarter. And the lever contribution from RMC, which is INR 67 crores followed by POP and AAC growth.
Okay. Bidkar sir, one question. Last quarter in FY '23, our volume was 2.32 million tonnes. And this quarter, it is 2.36 million tonnes. So there is a growth of only 2%. So if you can clarify on the same?
Come again, can you repeat your question?
Sir, last quarter -- quarter 3 FY '23, volume on stand-alone basis was 2.32 million tonnes as per your press release. And this quarter, this is 2.36 million tonnes. So there is a growth of only 2%. So we are seeing around 8% growth. So if you can clarify on that?
Consolidated is 8%, right? If you take only cement, the growth is 5%. So degrowth is there in case of clinker line, which we kind of not encouraged, right?
[Operator Instructions] The next question is from Parth Bhavsar from Investec.
Sir, I have 2 questions. So I wanted to understand, sir, Durg will be [indiscernible] government announcement, right?
Your voice is echoing. Can you repeat it?
Just a second. Can you can hear me now?
Slightly better.
Yes. Sir, just wanted to understand that Durg will be supplying clinker to your split grinding units, right?
Yes.
So sir, what sort of mineable reserves do we have at Durg?
With additional 2.3 million tonnes, which we plan to add, it's going to be about [ 50 million tonnes ], yes -- [ 45 million tonnes to 50 million tonnes ].
Okay. But this would be like -- this is on the base of the 8 million tonne grinding you've announced, right?
Correct. Yes. Because typically, all these markets, they are heavy on blended cement, right? So blended cement is to the extent of about 80%, 85%.
So can you -- one assume like the clinker factor would be around 1.6x, 1.7x?
Yes.
Okay. Okay. And sir, the other thing is like -- again, to maybe target east in the future. I wanted to understand if we are bidding for any limestone auctions in the east? Or have we recently won any limestone mines in east?
No, not in the near future -- near past, sorry.
In the east, we have not won any. We have only 2, one in the recent past...
And are we biding for any?
Other than that, we have not done.
Are we bidding for any?
And there is nothing in the offing, as far as my information goes.
The next question is from the line of Devesh Agarwal from IIFL.
Sir, again, just to understand a bit better this exclusion of outsourced volumes. Is it because are we planning to scale down the outsourcing operations? Or was there any double counting? And that's the reason we have now decided to exclude this?
Two reasons broadly, right -- you are right. One, there was double counting for UCWL. That's why we have done that, number one. And the other one is we are scaling down considerably going forward the outsource. So effectively, that will be negligible. It doesn't make sense to consider them. And Udaipur was case of a double counting, which we have been saying for quite some time now. So ultimately, we decided to do it ourselves other than you seeing it on a consol basis.
If you were to just make number comparable, sir, this quarter compared to the previous reported numbers, what would be the volume addition that we have to do for the quarter in terms of what was the volume from outsource units?
Better to exclude the outsource model from the earlier one rather than clubbing it again and running into the same problem for which we have decided to do -- start the new practice. And in any case, going forward, as we mentioned, we are seriously considering this consolidation next year. So obviously, this double counting, et cetera, will go away and volume from the outsourcing will considerably get reduced.
Right. And sir, any number that you can share in terms of the profitability that was getting added because of this conversion of tolling volumes or any cost that we are paying to the tolling operator and that will help us...
That's why, it was very negligible and just because of the volume getting distorting the actual real profitability of the company. So it was negligible only. No volume of negligible profitability doesn't sense to add and double counting, obviously, was the retail, meaning for the UCWL.
Next question is from the line of Keshav Lahoti from HDFC Securities.
Congratulation on 4-digit EBITDA per tonne. Firstly, coming on the CapEx side, what is the CapEx for the 9 months in FY '24? I think that number might be handy right now.
Yes, that we can share that with you. In 9 months period, we have done out about INR 250 crores of CapEx in JK Lakshmi and in UCWL in 9 months about INR 450 crores. INR 250 crores for JK Lakshmi and INR 450 crores for UCWL.
Okay. Got it. Sir, the Green Power share, you said 35% for this quarter?
Green Power share. What we are saying is after the Durg arrangement, Durg has already touched 80% thereafter. And in this quarter, the Green one is about 44%.
Okay. 44%. So this quarter, Durg was fully operational, right, for the entire quarter?
Yes. Yes. Almost fully operational. So there, it's almost -- we reached 70% in the...
Like what I want to understand like this 44% might increase in next quarter due to Durg. It is the possibility in Q4?
Marginal, because they have already started 70%. It might -- maximum go up to 80%. So marginal increase could be there, but our aim is to further graduate to 50% on a company basis and take it forward from there.
Okay. Got it. And how is the fuel cost expected to be in Q4?
This quarter, it was about 1.78 KKL, maybe marginally lower, 1.7 KKL -- around 1.7 KKL or so.
Okay. Last question from my side. As you're expecting it to 10% volume growth in Q4. So have you seen similar volume growth in Jan, like Jan has already passed?
Yes. So Jan was a good, yes, I think, around that only. So as I told you, I think we are doing better than industry in terms of growth. And one thing I think you should remember that during peak period, because almost, I think rate is very high, right? And capacity is almost exhausted. So you do not have headroom to grow further, right? So January-March is something which comes out of other levers, like more often a blended cement, more often other things, right? So that your throughput goes up and production goes up. So that is what we are trying, right? January-March, I think, is muted growth because of these reasons because we have already achieved our capacity utilization at a given product ratio.
Okay. Understood. Sir, one thing in call, you highlighted that east volume growth is faster than north because our assessment is north is growing faster than east, at least in the near period because of other issues in the east. So is it due to JK Lakshmi doing better in east? Or you would say the industry is also behaving in a similar manner?
I'm talking of industry. Industry, if you see FY '24, east growth has been better than all other zones.
The next question is from the line of [ Tushar ], who is an individual investor.
Sir, my first question is, what is the current status and time line for those conveyor belt projects?
So there are some approval and procedural issues. That is why this is getting delayed. So we are working on that. It's difficult to give a time line, but hopefully, I think we will resolve this very quickly within this quarter, but difficult to give a time line as of yet.
Okay. And sir, my second question is on the 7-megawatt solar power project at Sirohi. It was reported earlier in quarter 2 and quarter 1 con call and was to be commissioned in March '24. So what is the expected commissioning time line for this project? And also if you can clarify if this project company-owned or tie-up?
Yes. So solar power at Sirohi is on track, and that will get -- 7 megawatts power -- solar power plant. That will get commissioned somewhere around a bit of March. You're right. That is what we told last time also.
Okay. Is this project a company owned or just a tie-up, sir?
It's a company owned. In Rajasthan, unfortunately, the state government policy doesn't allow any other mode other than the CapEx mode. So obviously, unfortunately, has to be that as opposed to a possibility where it is pro industry policies in Chhattisgarh, but Rajasthan government doesn't have that policy. So even in fact, in Udaipur, what was the third-party solar power, we had to convert that into a CapEx mode by buying that out. Otherwise, they impose those cross-subsidy charges and the electricity duty and all that, which doesn't make sense. So that's where it is in the CapEx mode.
Okay, sir. And just one last question. Can you please give us the time line to reach from 4% TSR to 16% at Sirohi and our savings through this?
So Sirohi, good news is that TSR project which we told you that we are putting up. So that is almost getting accomplished now. And now in the last month, we have clubbed around 11% of TSR, right? So Sirohi, I think that has been a good improvement in terms of TSR improvement, right? One entire thing, it gets commissioned, then we will reach about 13%. And that is what I think we plan for Phase 1. Phase 2, our plan was to go to 16%, 17%, which we'll take it up later.
Any time line to reach 16% to 17%, sir, by when?
So we -- I think we'll come back to you with the time line once we -- our plan was to do it in the FY '25. So that is what I think we still believe that we'll be able to do that.
Okay, sir.
Sorry, you're not audible. Some...
Sir, our savings after reaching 16% TSR level, sir?
Savings, I think we'll review. Around INR 25 to INR 28 saving which we have done.
Next question is from the line of Ronald Siyoni from Sharekhan Limited.
Congratulations on a good set of numbers. Sir, I have only one question. If you can share quarter 4 of FY '23 restated numbers after excluding the double counting of UCWL and outsourced volume, that would greatly help?
We'll share with you separately. We don't have readily for the fourth quarter.
Next question is from Navin Sahadeo from ICICI Securities.
Yes. Just one question, sir. This Phase 2 or this expansion that we're doing in Durg now is a brownfield as you've noted. So I was just curious to know why would you still budget at least 2 years for the completion of it? Is it possible that we advance it by at least a couple of quarters since it is brownfield chain from that perspective. Just wanted to know your thought. Is there a reason why we are budgeting 2 years? Or there is a possibility we can do it in 1.5 years?
Yes, I think effort would be there to do it as fast as possible. Now the only critical activity is that equipment supply. Execution and other site work, we can do it very fast, there's no about it. The only thing is how fast we can get all those equipments and accessories to put that plant up. That is what is going to be on critical path, though our endeavor would be to do as fast as possible.
Understood. And I'm assuming orders are yet to be placed for equipment?
Now we're going to start that in a processible way. We took that Board approval just in the last Board meeting only. Now team is working on it. So once we get the time line and other things, definitely, I think next call and thereafter, we'll be updating you.
The next question is from the line of Prateek Kumar from Jefferies.
My question is on incentives, partly you answered earlier. What is the annual incentive you receive currently and how you are looking at incentives from expansions in northeast?
As of now, we don't have any incentive for our existing operations. Going forward, Durg also does not going to have anything. But for the split location, we'll be doing the liasioning with the government and trying to get the incentive wherever in those states, U.P., Bihar and Jharkhand, those are available as per the state policy.
And northeast operations?
Yes, there are as per the state policy, whatever is available, we'll try to get those.
Due to time constraints, we'll be able to take the last 2 questions. We'll take the next question from the line of Rajesh Prasad Ravi from HDFC Securities.
Sir, Rajesh here. Sir, this value-added products, RMC and AAC blocks. Are their [Technical Difficulty] captive or estimate?
So we are doing on a -- some are captive, some are outsourced also.
Okay. So when I look at your consol purchase of [Technical Difficulty] close to INR 130 crores, INR 140 crores on a quarterly basis, is almost 8% of our top line. So how much of these would be cement traded goods and how much would be the value-added products broadly?
For which you are talking of?
So last quarter, if you look at the consol figure, right, purchase of goods, the [indiscernible] which is INR 130 crores to INR 140 crores every quarter. So that would have only a smaller amount on the value-added [indiscernible] would be coming in from the value-added products?
We'll confirm that. I don't have the figure readily here.
Why I'm just trying to -- what I'm trying to understand is that the [Technical Difficulty]?
We'll come back. But you're right, it primarily would be the value-added product, but some could be this also because the purchase of clinker or cement. That could also be there.
Okay, Okay. How much was the margin and top line for the value-added you mentioned. Sorry, I missed that.
Top line I mentioned in this quarter was INR 134 crores, margins are around 5%.
5% RMC of how much in that?
RMC was about INR 67 crores.
INR 67 crores.
The next question is from Shravan Shah from Dolat Capital.
Yes. Just a curiosity or maybe a request or a complaint. I, post my first question, I pressed star 1 and -- but the people who ask a question after me were also given a question -- again, opportunity to ask a question, but I was allowed to ask at the last. So maybe one can think of. So that's the request or complaint in whatever way you want to take it. My question is in the fourth quarter, how much CapEx are we planning to do?
Shravan, you were the first in and also the last. I don't know how it incidentally happened or so.
Sir it happened incidentally, sir. It is purposefully done. No issues, sir. You please answer my question.
Even purposefully, I don't know, but it is -- I don't know. Let the operator comment on that, Vaibhav and his team. I won't comment on that. But as far as your question is concerned, how much CapEx? Now JK Lakshmi, we would be doing around INR 250 crores in this quarter. Mostly going for these projects, which remain to be completed, especially major CapEx will go for the railway siding out of the INR 250 crores and another about INR 300 crores would go for the Udaipur.
So maybe INR 500 crores in this quarter. INR 300 crores, as I mentioned, INR 250 crores to around -- INR 250 crores JK Lakshmi and INR 300 crores Udaipur.
Okay. And sir, as on December stand-alone consol, gross rate and gross cash?
As of December?
Yes.
Stand-alone, we have a total debt of about INR 700 crores on a stand-alone basis -- INR 720 crores and cash about INR 675 crores. So the net debt is around INR 50 crores. And on a consol basis, this number stands at close to INR 2,000 crores for the gross debt, cash of about INR 850 crores. So INR 1,150 crores is the net debt on 31st December '23.
Yes. And this Durg 4.3 million split grinding units. So 4.3 million, is it fair to assume that one can divide by 4, so it will be a 1.08 million grinding units for each locations?
It is not 4.3 million to 4.6 million, right, first and foremost. Secondly, it will be 1.2 million at 3 locations and 1 million at 1 location, right?
1 million, at which location, sir?
1 million at Jharkhand, I think. I think Jharkhand we have done 1 million tonnes.
And rest all other 3 places, 1.2 million x 3.
Okay. Got it. And in terms of the time line, everything will be, as you mentioned, the 2 years. So for across all the grinding and the clinker will be mostly coming together at the same time?
No, we did not say that. We said the clinkerization and 2 grinding units will come in first phase in 2 years' time and 2 grinding units split location would come 1 year later.
That was the last question. I would now like to hand the conference back to Mr. Vaibhav Agarwal for closing comments.
So just to clarify the issue or the query highlighted by one of the participants on the call. So we -- as a host of the call, we have to monitor the call as per the question queue, and we cannot allow long questions by a single participant and for any participant to take on the call for long minutes. So we have to handle the entire questions and we need to give opportunity to everyone in the queue. So that is the reason that few participants might find it that they were not given sufficient time for asking the questions. This is as per the questions we built on the online platform. So this was the clarification for one of the queries around the participants on the call.
So just wanted [Technical Difficulty] I just wanted to know as per [Technical Difficulty] company on consol basis and what is the peak net to EBITDA you're targeting once you start [indiscernible].
Vaibhav, I think -- are you any question to us.
Yes. I'm asking a question, sir. What is peak consol net debt you are targeting and what is the peak net debt to EBITDA that, as per your assessment, would be there for the JK Lakshmi?
We are talking of peak debt because we are talking of contracting a debt of about close to INR 2,500 crores over the next 3 years. And out of -- so we expect the debt to increase by about INR 1,000 crores to INR 1,500 crores because over the 3 years period, about INR 1,000 crores will get repaid also. So the original INR 1,500 crores, that would be there on a consol basis. So if it is INR 2,000 crores today, so the peak would be anywhere between INR 3,500 crores or so, thereabout. And our target for this would be to keep it -- net debt to EBITDA close -- anywhere between -- less than 2.5 max.
Hope that answers the question.
On behalf PhillipCapital India Private Limited, I thank the management of JK Lakshmi for the call, and many thanks to participants for joining the call. Thank you very much, sir. You may now conclude the call. Thank you, sir. Thank you.
Thank you, Mr. Vaibhav.
Thanks, Vaibhav, and thanks, everyone.
Thank you, everyone.
Thank you very much. On behalf of PhillipCapital India Private Limited, that concludes this conference. Thank you for joining us. Ladies and gentlemen. You may now disconnect your lines.