JK Lakshmi Cement Ltd

NSE:JKLAKSHMI

Earnings Call Transcript 2023-Q4

[Operator]

Ladies and gentlemen, good day, and welcome to the Q4 FY '23 and FY '23 call of JK Lakshmi Cement 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, Aman. Good evening, everyone. On behalf of PhillipCapital (India) Private Limited, we welcome you to the Q4 FY '23 and FY '23 call of JK Lakshmi Cement. I need to highlight that JK Lakshmi Cement is also the holding company of 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 may be made or discussed on this conference call may be forward-looking statements related to future performance based on expectations. These statements are subject to a number of risks, uncertainties and other important factors, which may cause the actual developments and results to differ materially from statements made. JK Lakshmi Cement Limited and the management of the company assumes no obligation to update or publicly alter 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 Lakshmi Cement for their opening remarks, which will be followed by interactive Q&A. Thank you, and over to you, sir.

[Sudhir Bidkar, executive]

Thank you, Mr. Vaibhav, and good afternoon, ladies and gentlemen, for this Q4 FY '23 call for JK Lakshmi Cement. We have already seen the results and also our press release where we have also given the volume numbers, both for the quarter as well as on the -- for the full year, along with the stand-alone and the consolidated one.

So without wasting any time, I'll leave the floor open for question-and-answers, so that we are able to take maximum question-and-answers from you. So over to you for the question-and-answers.

[Operator]

[Operator Instructions] First question is from Shravan Shah from Dolat Capital.

[Shravan Shah, analyst]

Sir, before asking any questions, just a couple of data points. So what was the trade set for this quarter, our premium share, blending ratio, lead distance, rail road mix?

[Sudhir Bidkar, executive]

And this for you -- for this financial year as a whole, our trade was 55%, blended was also incidentally 55%. And premium product, it was -- overall, it was about 11% and lead distance of 398.

[Shravan Shah, analyst]

And for this quarter?

[Sudhir Bidkar, executive]

Broadly, the same. But clearly, for the quarter, lead distance was around 400.

[Shravan Shah, analyst]

Okay. Lead distance were 400. And what was the non-cement revenue, so RMC for AAC and POP?

[Sudhir Bidkar, executive]

In this quarter, it was INR 128 crores. And for the full year, INR 478 crores.

[Shravan Shah, analyst]

And RMC revenue was?

[Sudhir Bidkar, executive]

This quarter product all taken together.

[Shravan Shah, analyst]

Yes, yes. INR 128 crores combined, but for RMC revenue for the fourth quarter was?

[Sudhir Bidkar, executive]

RMC, separately, it was INR 62 crores for the quarter and INR 225 crores out of INR 478 crores for the year.

[Shravan Shah, analyst]

And in terms of the margin for non-cement, it was around same 7%, 8% kind of EBITDA margin for non-cement revenue.

[Sudhir Bidkar, executive]

5%.

[Shravan Shah, analyst]

5%. Okay. Okay. So now coming to the base main questions in terms of the -- we were looking at to increase our trade share to more than 60% for this we are seeing for the last 2 quarters, still the number remains at the same 55%. So how do we see it?

And I think in terms of the overall EBITDA margin also last time, we said we are looking at close to INR 1,000 crores kind of EBITDA per tonne over 18 to 24 months. So that is from INR 300 crores improvement that we have mentioned, INR 200 crores from realization, 50 from manufacturing and 50 from supply chain. So what's the stand there?

[Arun Shukla, executive]

So on trade percentage, I think we have progressed well. January, look at our trade portion was 52%; February, it was 54%; and March, it was 60%. We are hovering around 55% as of today. And as I told you in the last call also, I think our order of priorities are as follows. One, -- first, we want to optimize the geo mix. Since we operate in 3 distinct geographies, which are materially different in terms of EBITDA margin, like where in central or north part of it and Eastern part of India, right? So our effort is to maximize our sales invest, be it trade or non-trade because non-trade EBITDA margin also is much better than trade EBITDA margin of Central or East, right? So the first priority of the lever of margin improvement is, of course, geo mix optimization, and that goes in favor of the Western market. And that is what we have been able to do successfully, right?

Now if you look trade percentage per se overall basis, I think we are improving. We are at 55%. But within the Western market also, we are now trying to improve further trade margin, which will -- proportion, which will further improve our overall trade percentage at BU level.

[Shravan Shah, analyst]

Okay. And in terms of the EBITDA per tonne, which we were looking at INR 1,000 crores that -- INR 300 crores kind of an improvement over 18 to 24 months, would that stand or remains the same?

[Arun Shukla, executive]

Yes. So I think you know that market condition also like prices are not going up. And what we were trying to do was all those internal improvement. If you really analyze entire year the way we have progressed margin-wise, our gap with the leaders has gone down significantly, right? If you look at 1 year back, our margin -- GAAP margin was more than about INR 500 crores or INR 600 crores, INR 700 crores. Now we are around INR 200 crores, INR 250 crores with respect to the leader, right? So that is what has come about on account of our internal efforts, and that internal effort will continue, right?

Now if prices go up, then definitely, I think we are going to catch up this INR 1,000 crores very quickly. But what we are looking at definitely is how we are going to build that gap up in leaders in the industry and where are we today, right? And I'm happy the way we are progressing. The whole year, if you really look at the gap, which has really trended over a period of time is significant, more than INR 500 crores to INR 700 crores a tonne. And that journey is going to continue going forward as well.

[Shravan Shah, analyst]

Okay. Okay. So now in terms of the fuel cost, so for how much it was on the basis and also the fuel mix and how now one can look at in terms of the -- for Q1, Q2, how we can see in terms of the decline in the fuel cost?

[Arun Shukla, executive]

Yes. Fuel cost is going down because we were carrying some inventory before. So I think the impact of this softening of fuel cost is going to come about, right? So that is going to come. Last quarter, we have a fuel ratio of kilocal is 2.31?

[Sudhir Bidkar, executive]

2.42, overall.

[Arun Shukla, executive]

Overall 2.42.

[Sudhir Bidkar, executive]

Likely to further go down to about 2.31 in the coming quarter.

[Arun Shukla, executive]

Yes, yes. So the forecast is 2.31, 2.3 around this quarter. And what we have achieved so far is 2.42, which is lower than previous quarter.

[Shravan Shah, analyst]

Okay. And the fuel mix for fourth quarter was?

[Arun Shukla, executive]

30% fuel, 53% petro and 17% others.

[Shravan Shah, analyst]

Okay. And last, on the other expansion just trying to understand. We have preponed the clinker deadline. So previously, Q4, now we are looking at December this year and grinding unit 2.5 at WCL. We have actually postponed by 1 quarter. So I'm not able to understand how we will utilize this clinker, which we are commissioning 1 quarter before and the clinker -- grinding is coming at Q3 FY '24?

[Arun Shukla, executive]

So Shravan, before that I think one just small correction. So last quarter, the fuel ratio was 40 in favor of coal, 44 pet coke and 16 others, right? 40, 44 and 16, okay? And kilocal is 2.42.

Now coming to your next question as to how we are going to manage mismatch between clinker capacity, which is going to come back in the month of October and grinding capacity in the month of March 2024? So our plan is like the ramp-up is going to be about 50% during first year, so whatever clinker we are going to get in between. So typically, October to March about 6 months' time. And if you take 25% of clinker volume operated capacity of 1.5 million tonnes, that we plan to take it to our grinding station where we have that headroom of further improving our capacity utilization.

So we have 2 grinding stations in Gujarat, 1 near Ahmedabad and Surat. So that clinker will go there. And we do have 1 outsourced unit within Gujarat, near Palanpur. So that grinding station also we are going to utilize in the [indiscernible]. So we do have plan to consume this clinker, which we are going to get during these 6 months before our grinding capacity.

[Operator]

[Operator Instructions] Next question is from Kamlesh Bagmar from Lotus Asset Managers.

[Kamlesh Bagmar, analyst]

Sir, one question on the part of this M&A activity. Like say, like based on some media reports, one of the company is for sale, and it's in your core market that is Surat. So any thought process? Like would you be interested in that? Or how does it patch with you? Does it synchronize with your thought process or the reason to expand the capacity to, like, say, 20, 25 million tonnes, which you have been highlighting that there's a reason or the plan in the coming years?

[Sudhir Bidkar, executive]

You are talking of which opportunity, please?

[Kamlesh Bagmar, analyst]

Sanghi Cement.

[Sudhir Bidkar, executive]

Yes, there was some news item which is there in the news. So we'd not like to comment on that. It's something we would not like to comment on that.

[Kamlesh Bagmar, analyst]

But say likely -- just hypothetically, if it's available at $90, $90 to $100-odd and which we are trading at, let's say, $70-odd. Would we be assessing that given the long-term opportunity, which we have, while the market is factoring the short-term issues over your stock price? So would we be looking at that facility or the operations?

[Sudhir Bidkar, executive]

We are already operating at around $100, barring these last 2, 3 days drop in the price. And certainly, if that comes at a much lower cost, why not? But the numbers which are being talked off are much higher, so that's what. You're right, if it comes at a value lower than what we are traded at, certainly, why not? It does make sense.

And we are always open to any acquisition opportunity provided for 2 things. One, if it comes at the right value, one; and two, it makes synergical sense for this. So the asset, which you are talking of, yes, does make a lot of synergical sense. But if it comes at the right price, certainly, why not.

[Kamlesh Bagmar, analyst]

And on the debt side, like say, would it be -- what eventually debt -- net debt-to-EBITDA would we be looking to, let's say, absorb those capacities or those opportunities?

[Sudhir Bidkar, executive]

That depends. But broadly, we are at -- on a net debt basis, we are negative as far as on a stand-alone basis is concerned. Overall, anywhere -- you see, whenever you do an acquisition opportunity for some period in the beginning or when you go for an expansion like we are doing in the report, what happens, generally, the debt get contracted whereas the commensurate better flows much later.

So initial period, yes, there are distorted numbers you may see. But once the underlying EBITDA flows -- start flowing in, then obviously it gets tapered down. So any acquisition or for that matter expansion would have initial period were under implementation or stabilization, you will have some ratio which may go off maybe even 4x to 5x of net debt-to-EBITDA. But once the underlying EBITDA flows in, it will be back to -- normatively, it should be between -- not more than 3 to 3.5 net debt-to-EBITDA. That is the prudential norm which we generally follow.

[Kamlesh Bagmar, analyst]

Okay. Okay. And sir, lastly, on the -- let's say, what we have been highlighting for last 3, 4 quarters that our gap with our peers in terms of pricing or NSR is going to narrow down. So what's the progress on that? Because when we analyze the market prices, your gas has yet not building. Let's say, it continues to remain a little bit at the similar levels, which was there at like, say, 6 to 9 months back.

[Arun Shukla, executive]

Yes. So I think if you look at margin level, we have built that gap to an extent. There is no doubt about it. But as I think you must have done your analysis, right? And that is majorly coming out of some of the actions, which we have taken and which we are continuing to take, okay?

In the recent quarter, I think because of some very temporary disturbance like during, let's say, last quarter or fourth quarter of last year, right? I told you that the Western market is one of our markets where we want to optimize our sales, I think, because of only and temporary disturbance on account of rains. So that has impacted a bit, but that is the most temporary thing. And we are pretty confident that the plan, which we have 18 to 24 months to raise this gap of margin by INR 250 crores with respect to top line. So that will come through.

[Operator]

Next question is from Niraj Mansingka from White Pine Investment Management Limited. [Operator Instructions]

[Niraj Mansingka, analyst]

I wanted to ask a few questions. Can you elaborate on how the cash will flow through the full year subsidiary? Because we are right now a net cash company, and so how will it flow like will you raise money in terms of rights and as were announced? And will you -- that's 1 question.

And secondly, in the cost cut -- reduction in the operating cost, can you share how much is it come from like a subsidy like Udaipur, which has been increasing our scale or some other locations where you're trying to put more scale activities and grinding units? Just wanted to know.

[Sudhir Bidkar, executive]

Cash flow-wise, whatever money we have to induct into UCWL will ultimately be by way of our contribution in the rights issue of UCWL. They are planning to come up with the rights issue somewhere in June, July. And we being the 72% holders thereof in UCWL stock, so we'll be subscribing to that. The size of the issue is expected to be around INR 450 crores. And what we are also submitting or giving the confirmation that in the event, unlikely event of the public remaining 26%, 27%, not fully subscribing to that, then also we'll be making up for good for the unsubscribed portion or shortfall in the public subscription of 27%.

So that is how that money will flow in. And pending the launch of the rights issue, about INR 85 crores have already been deployed in UCWL by way of unsecured loan, which will be adjusted against our rights entitlement in the rights issue. So that is as far as how the money will come. And we won't be required to borrow anything for investing in the rights issue, our treasury corporate of INR 800 crores will take care of that.

And regarding your other question on the grinding units, et cetera, as Mr. Shukla mentioned in response to earlier question, once that clinker flows in, so it will be grounded at the -- our grinding units in Gujarat and other places.

[Niraj Mansingka, analyst]

No, my question was that whenever you said that you're looking at increasing the EBITDA by INR 300 crores per tonne, so what are the major cost-cutting factors that are going to play out?

[Arun Shukla, executive]

So this app, I think, is going to come from 3 places. One, of course, is the improvement in top line efficiency, which is about premiumization, price positioning, right, setting in the right market, premium product and direct dispatches. So more than half is going to come from this. And logistics efficiency also, we feel that we are working on reducing our lead further because we are at around 400 kilometers now. Our plan is to take it to 375 kilometers, right? So that is going to give us savings of about, let's say, 25-kilometer, means about INR 70 crores, INR 75 crores a tonne.

And third, of course, is from a manufacturing wherein we are going to -- we are establishing that Udaipur facility or solid West facility -- handling facility. So that is also going to give a good benefit, like our plan is to take it to 16% in a daily-wise manner. Right now, we are at 4%. We are going to take it to 16%. But in the near term, let's say, around by end of this year, like calendar year around October to December, we'll be reaching about 10% of AFR, right? So that is another saving we are going to have.

So I think the all-round activity, which we are planning, and we are very clear as to where to attack and which area we need to focus on. So more than half is going to come from top line, Logistics about INR 70 crores, INR 75 crores not only lead reduction, but also a lot of logistics efficiency like significant improvement and wheeler oil freight and a lot of levers we have using technology to an extent, kind of getting rid of some of the warehouses in the vicinity of the plants, some of the actions which we have already initiated. And planned efficiency majorly from AFR and also some minor, I would say, contribution from heat consumption improvement, specific power consumer improvement and things like that.

[Niraj Mansingka, analyst]

And what was the peak debt in UCW subsidiary?

[Sudhir Bidkar, executive]

UCWL, their existing debt is about INR 500 crores. And they will be contracting INR 1,100 crores, INR 1,600 crores would be the peak debt minus repayment of debt goes, so maybe 1,500-odd would be the peak debt.

[Operator]

[Operator Instructions] Next question is from Amit Murarka from Axis Capital.

[Amit Murarka, analyst]

So I just wanted to check, like when you will take clinker from UCW to JK Lakshmi plant, what will be the formula for that transfer? Like, will it be cost? Or how will it work?

[Sudhir Bidkar, executive]

It will be at arms-length pricing.

[Amit Murarka, analyst]

Okay. But just to understand, like how does it really -- I mean, will it work in a cost plus margins or cost plus ROC? What is the feedback for that?

[Sudhir Bidkar, executive]

Cost plus whatever is their total cost, they'll retain some -- add on there some margin, and that will be the cost to us.

[Amit Murarka, analyst]

Okay. Sure. Also on the CapEx front, like how much CapEx is spent already on this plant? And how much is pending? And what's the planned outlay for FY '24?

[Sudhir Bidkar, executive]

We have spent about INR 850 crores on this project up to now, which includes about INR 630 crores, which we incurred during the FY '23. And we think the balance about INR 800-odd crores would get to spend about INR 500 crores in the coming year and INR 300 crores in the next financial year.

[Amit Murarka, analyst]

Okay. Sure. Also, just wanted to check, is there any further update on the wall putty business you were setting up a plant at Aligarh?

[Arun Shukla, executive]

Yes. So for putty, we are putting up our own plant at -- all over in Rajasthan. And we plan to roll it out from the month of October onwards, right? So that is in progress, and we are hopeful of commissioning it by October.

[Amit Murarka, analyst]

Sure. And that would need a separate new distribution network, am I right, to sell the putty?

[Sudhir Bidkar, executive]

Can you speak a bit louder...

[Arun Shukla, executive]

I think your voice is quite feeble, if you can speak...

[Amit Murarka, analyst]

Sorry, I was asking, you would need a separate distribution network as well for the business, right? So that's already being done now?

[Arun Shukla, executive]

Yes. So putty, we are already there in the putty business through outsourced unit. So we do have an established network already, right? That, we are going to use. And furthermore, we are going to add channel partners, and the activity has already started. We have already recruited manpower also. And we are enhancing our channel reach and exception for putty businesses.

And I think we have a big advantage of our cement channels because this is B2C, and that goes very well with our cement distribution. And that is falling in our footprint of cement distribution. So I think distribution channel-wise, we are well placed in every sense.

[Operator]

[Operator Instructions] Next question is from Navin Sahadeo from ICICI Securities.

[Navin Sahadeo, analyst]

A couple of questions. So for FY '23 year as a whole, our consolidated volumes grew more like 5.5%. So what kind of growth because clinker as we -- like we are all well aware that clinker is coming in Q3 and grinding unit for that is coming a little later, a couple of quarters down the line. So what kind of volume growth are we looking at for FY '24?

[Arun Shukla, executive]

Okay. So I think our demand sales grew by about 12% last year, right?

[Sudhir Bidkar, executive]

Yes, cement grew by 12%.

[Arun Shukla, executive]

Clinker, I think I told you during the last call also that clinker is something which we are not encouraging to say until unless we have some good proposition, right? The cement sales grew by 12% last year. And what we plan, we have taken a growth of 19% this year, okay? FY '23-'24, cement sales growth, we have taken at 19%. And we are pretty confident because that Udaipur also is going to contribute in terms of clinker active, which we are going to get during the last 6 months' time.

[Navin Sahadeo, analyst]

Apologies, my bad. Can you please share the breakup of the clinker and cement volume for the quarter and the year? I'm so sorry, I missed it.

[Arun Shukla, executive]

Yes. Yes, we can give you that. So cement sales is 91.16 lakh tonnes. And...

[Sudhir Bidkar, executive]

That was last year. This year, it was 102.05.

[Arun Shukla, executive]

Right. Yes. So this year, in the year which we have closed was 10.2 million tonnes. And last year, it was 9.1 million tonnes, right? So 12% growth. And clinker last year was 5.53 lakh tonnes -- sorry, 9.78 lakh tonnes. And this year -- last year, it was 5.53 lakh tonnes. So there is a degrowth of about 43%.

[Navin Sahadeo, analyst]

Understood. Understood. No, that's encouraging. And this year, you said for cement sales, we have a target of 19% volume.

[Arun Shukla, executive]

19% growth, this is what we have taken as part of our business.

[Navin Sahadeo, analyst]

Right. Second question was about prices. Like so far into the quarter, almost done with me. So directionally, the pricing trend, are we down versus March so far into the quarter or we will be higher?

[Arun Shukla, executive]

So this quarter, I think prices are more or less flattish. So there is decrease as such.

[Navin Sahadeo, analyst]

Understood. The...

[Arun Shukla, executive]

Because I think some of the market -- if you go to micro market, there is some reduction as well, I would say. So some reduction, but definitely no increase. There will be some reduction.

[Navin Sahadeo, analyst]

Right. And would it be more in trade or -- because typically, like there's a decent gap between trade and non-trade. So would it be both or non-trade has slipped more?

[Arun Shukla, executive]

Typically, this happens in both ways, trade and non-trade because, typically, there is a correlation between trade and non-trade prices in different geographies. So that moves in tandem.

[Navin Sahadeo, analyst]

Sure. Sure. My next question was about putty plant capacity that you said is coming up at Aligarh. So what is the capacity you're looking at? And the white cement for putty will be then sourced locally or are you planning to import it?

[Arun Shukla, executive]

No. So white cement, we are going to produce there itself, right? So we'll have mill also for white cement. And if at all, we want some additional white cement and then that will get imported as well.

[Navin Sahadeo, analyst]

Produce itself in the sense the same plant that you're saying we have a white cement manufacturing unit also?

[Arun Shukla, executive]

Yes, yes. We have that manufacturing.

[Navin Sahadeo, analyst]

What is the CapEx for this putty and white cement units are we looking at?

[Arun Shukla, executive]

Around INR 65 crores, INR 70 crores.

[Navin Sahadeo, analyst]

Okay. And what is the capacity for putty you said? How many lakh tonnes will that be?

[Arun Shukla, executive]

So I think putty capacity is about 1.5, 2 lakhs? I'll just confirm you. Just give a sec. Okay, I'll just get you the right figure.

[Navin Sahadeo, analyst]

Sure, sure. Meanwhile I could just move on to the next question, which is fuel mix. You mentioned 44% is pet coke for the quarter, right? And you said the balance is 40% coal. So that balance, 40%, is it imported coal or domestic coal?

[Arun Shukla, executive]

So this is a combination, like in Eastern part of India, we have all domestic. And in the Northern part of India, we have imported.

[Navin Sahadeo, analyst]

Sure. So if you just get this slightly better because East, I think, we could be closer to coal mine. So is it fair to assume that in East, bulk of the consumption is domestic coal and then in North, bulk of the consumption is pet coke?

[Arun Shukla, executive]

I'll further modify this. So 100% is domestic in East and 100% imported in case of North.

[Sudhir Bidkar, executive]

And you're right, in eastern market, coal is more as compared to the northern plant, means Sirohi plant, where 65% is almost domestic coal. And here, the 60% is imported pet coke in Sirohi.

[Navin Sahadeo, analyst]

Sure, sure. And just one last thing I'll confirm. You said that the cost of fuel as in Kcal term is going down from 2.42 to 2.31 in Q1. So we are roughly, let's say, looking at a cost saving of INR 60 crores, INR 70 crores per tonne?

[Arun Shukla, executive]

Yes, around that. Yes, yes.

[Navin Sahadeo, analyst]

So that also means with prices being flattish to marginally down, that also means that prices being flattish to marginally down. Huge benefit is there, but we'll not have the operating leverage benefit because typically June quarter volumes are lower than March. Though on a year-on-year basis, it could be growth. So your staff costs and other expenses typically on a per tonne basis could be higher. So June quarter EBITDA per tonne, directionally, at least could be lower as compared to March. Is that a safe thing to look at, at this point in time?

[Arun Shukla, executive]

So yes, I think price-wise going to be flattish or a little lower, and we'll have some leverage on account of this, right? So more or less flattish kind of thing that is what we see.

[Navin Sahadeo, analyst]

Right, right. Look forward to more improvements on trade, percentage and all the other initiatives that -- like you've mentioned. So really look forward to your more progress on that front.

[Arun Shukla, executive]

So on putty plant, I think it's about close to 1 lakh tonne of capacity, yes.

[Operator]

[Operator Instructions] Next question is from Rajesh Ravi from HDFC Securities.

[Rajesh Ravi, analyst]

First of all, could you give the clinker production for Q4 and FY '23?

[Sudhir Bidkar, executive]

Clinker production, you want?

[Rajesh Ravi, analyst]

Yes, in consol...

[Sudhir Bidkar, executive]

Full year?

[Rajesh Ravi, analyst]

Yes, full year and in Q4 also?

[Sudhir Bidkar, executive]

Clinker production in this quarter was 17.28 lakh tonnes. And for the year as a whole, it was 67.16 lakh tonnes.

[Rajesh Ravi, analyst]

Okay. And I would believe your clinker utilization would be close to peak now?

[Sudhir Bidkar, executive]

Yes, almost full, 100%.

[Rajesh Ravi, analyst]

Okay. So the volume growth that you're looking at 19% cement volume growth this year. For this, I could understand that 5 lakh tonnes clinker, which you have sold in FY '23, that may get converted into cement, right? That will be a major driver. And is it fair to understand that because your new clinical line will be available by end of Q3, you will have some surplus clinker coming in Q4 from Udaipur?

[Sudhir Bidkar, executive]

Yes, you're right. It will be available in Q3.

[Rajesh Ravi, analyst]

Okay. And second, when you say that you'll be inching up to INR 1,000 crores per tonne. And given that, is it Q4 and Q1 also you're not looking for margin improvement versus INR 700-odd that we have delivered in March? And so what are the levers you're looking at whereby your full year numbers could inch up to INR 1,000 crores for FY '24?

[Arun Shukla, executive]

So I think I just mentioned a gentlemen who has this question. This -- about INR 300 crores flows more than half, around 60%, 70% is going to come from top line improvement, which is about premiumization, segment mix, geo mix or some of the levers like direct dispatches, right? So price, I think, price positioning, which anyway we have already started working on, so about 60% is going to come out of that.

And the second important lever is logistics wherein one is lead reduction, warehouse distribution optimization and technology usage. I think from there also, we are planning to have at least INR 70 crores, INR 75 crores. And the third major contribution is going to come from our plant efficiency. And the major element out of that plant efficiency is [indiscernible] or the alternate fuel, which we are going to use because we are setting up capability also at our locations, right? So that is the third one, which is going to contribute towards -- inching towards INR 1,000 crores EBITDA.

[Rajesh Ravi, analyst]

Okay. So you mean that it will be a gradual move from INR 700-odd crores to INR 1,000 crores, right?

[Arun Shukla, executive]

Right.

[Rajesh Ravi, analyst]

Okay. So -- but given that this premiumization and this lead distance reduction, they would take by which quarter, 3 quarters, 4 quarter or 8 quarters? What is the timeline that you are looking at? Because last 3 quarter margin, we see have been largely been flattish between INR 650 crores to INR crores 700?

[Arun Shukla, executive]

So I think we gave a plan of about 18 to 24 months, right? So -- and that is what we are sticking to, right? Some of the actions which we have taken, that will take some time to get realized, right? And a little bit of, let's say -- I would say, market support, I think all those actions will further happen, right? So I think that plan is still intact. So 18 to 24 months, that is what we promised last time that we are working on, right?

[Rajesh Ravi, analyst]

So 18 to 24 months from now or from -- no, I'm saying like...

[Arun Shukla, executive]

Out of 24 months, you take out 6 months, 2 quarters.

[Rajesh Ravi, analyst]

Okay. So by exit FY '25, you're targeting close to INR 1,000 crores margin, and of which 60% would come in from top line improvement and rest to your lead distance and for other productivity improvement.

[Arun Shukla, executive]

Yes, that's right.

[Rajesh Ravi, analyst]

Okay. And this cement plant, the white cement plant, which you're saying, when you said that you are setting up a captive mill, is it grinding mill or you are setting up a keel for white cement?

[Arun Shukla, executive]

No, no, no. It's a grinding one.

[Rajesh Ravi, analyst]

This is just -- so you will buy the clinker from market and grind at your factory?

[Arun Shukla, executive]

Right. Right. So different wholesale that...

[Rajesh Ravi, analyst]

Right, right. Okay, okay. Yes. And the fuel mix, also sequentially this quarter from last quarter, your fuel prices have come off by, if I recollect, by 12% to 13% quarter-on-quarter. So why have they not reflected into margin improvement sequentially because that would have added some number in -- because this quarter, you have healthy volumes also. So there's an operating leverage plus fuel cost savings, but they have not percolated into margin improvement sequentially.

[Sudhir Bidkar, executive]

Yes. Basically, you're right, that has not resulted in because in this quarter, despite there being volume increase, as you rightly mentioned, purchase in stock and trade has been higher in this quarter. So that's the result. It is not fully reflected in the margin, but it is flattish on that pound basis.

[Rajesh Ravi, analyst]

Just for this purchase in stock of trade, which is the only grinding unit is what you would be referring to?

[Sudhir Bidkar, executive]

We do have an arrangement with -- in East UP, we have made that arrangement. That is their contributor for that in the current quarter.

[Rajesh Ravi, analyst]

Right, right. So for that clinker availability is made by -- clinker availability is done by you?

[Sudhir Bidkar, executive]

Yes. We may -- we supply the clinker to them and buy the cement.

[Rajesh Ravi, analyst]

Okay. And this clinker sale, which you reported 5 or something that does not include the clinker sold to all these units?

[Arun Shukla, executive]

No, no. That doesn't include. Yes, we have started avoiding that double counting for...

[Rajesh Ravi, analyst]

And also for full year, what was the traded volume we bought from all these units?

[Arun Shukla, executive]

About close to 2.5 lakh tonnes.

[Operator]

Next question is from Uttam Kumar Srimal from Axis Securities.

[Uttam Srimal, analyst]

Sir, any RMC plan that you are looking to set up?

[Arun Shukla, executive]

Yes. So I think we do have plans, and we are going to set up for our -- as per our strategy, set up our RMC plant in the areas where we operate, we are in cement. So for instance, I think we have put up 2 plants in Gujarat, Bhavnagar and another plant in [ Baroda ]. We are setting up another plant in Sonipat in the NCR region. And Lucknow, Raipur, also we have planned to put up our RMC plant. We do have plans to set up RMC plants in the market where our cement availability is there, and we find a good synergy between our different product lines.

[Uttam Srimal, analyst]

Okay. Okay, sir. And one more question, sir. This year, we have done EBITDA tonne of around INR 655 crores, so what kind of EBITDA tonne we are looking in FY '24?

[Sudhir Bidkar, executive]

Sorry, can you repeat your question, please?

[Uttam Srimal, analyst]

Sir, this year, we have done EBITDA -- in totality, we have done EBITDA tonne of INR 655 crores. So in FY '24, what kind of growth we are looking at this?

[Arun Shukla, executive]

Yes, I think it's not very clear.

[Sudhir Bidkar, executive]

EBITDA is close to about [ INR 700 crores ] in this year.

[Arun Shukla, executive]

Right.

[Sudhir Bidkar, executive]

Yes.

[Uttam Srimal, analyst]

So what kind of growth we are looking at in FY '24?

[Arun Shukla, executive]

So on EBITDA front, you're asking, right?

[Uttam Srimal, analyst]

Yes, yes.

[Arun Shukla, executive]

Yes. So I told you, I think we do have a plan to go to closer to INR 1,000 crores by FY '25, okay? And we do have plan working on top line, logistics area and operations areas. So yes, we do have plan. And if you look at budget, then I think we are taking a growth in EBITDA as well, okay? The exact number, we'll give you maybe a little later at what kind of EBITDA target we have kept. But definitely, I think we have taken a growth over -- whatever we have achieved this year.

[Uttam Srimal, analyst]

So actually, sir, we are looking at INR 800 crores per tonne in FY '24?

[Arun Shukla, executive]

Yes, definitely that much, I think we will look at.

[Sudhir Bidkar, executive]

You see, basically, the gap is INR 300 crores. And out of that, as we mentioned earlier, 60% will come by FY '24 by the fourth quarter and balance will come in the first 2 quarters of FY '25.

[Operator]

Next question is from Sumangal Nevatia from Kotak Securities.

[Sumangal Nevatia, analyst]

My first question is just continuing on one of the previous questions on Sanghi Cement. Just I wanted to understand...

[Operator]

There is disturbance from your line, please bring the handset closer to your mic -- sorry, please use the mic closer to you.

[Sumangal Nevatia, analyst]

Yes. Is it better now?

[Operator]

Yes.

[Sumangal Nevatia, analyst]

Yes, sorry. So my first question is with respect to one of the previous questions on Sanghi cement. Just want to understand where has the divestment process reached. And given our interest, I mean, where -- how does it fit into our strategic priorities and our plan to reach 30 million tonnes over the next 5, 7 years?

[Sudhir Bidkar, executive]

Our plan is to go up to 30 million through our organic growth only. We'll be close to 18 million once this Udaipur expansion comes in. And then after, from 18 million to 30 million will be a journey of 12 million tonnes which will be partly done by brownfielding, 3 million tonnes at Durg, 3 million tonnes at Udaipur. And then the 2 mines, which we have recently been allotted in Nagore and Kutch, so 3 million each year those 2 sites greenfield expansion. So that is where we are. But yes, we are always looking for opportunities in organic way also if it comes -- as I mentioned to Mr. Kamlesh question, if it comes at the right price.

[Sumangal Nevatia, analyst]

Okay. Sir, where are we in terms of timeline for these divestment process? And have you done the due diligence, et cetera?

[Sudhir Bidkar, executive]

I am not aware of the divestment process, what is going on. So...

[Sumangal Nevatia, analyst]

Okay. Understood. Understood.

[Sudhir Bidkar, executive]

We've not done any due diligence over.

[Operator]

Next question is from Mudit Agarwal from Motilal Oswal Financial Services.

[Mudit Agarwal, analyst]

Sir, I have 2 questions. Number one is about the clean bond we are about to issue up to 2 billion for the green projects. Can you please highlight which green projects we will be taking under these funding?

And the second question is on the -- you have mentioned about the Palanpur grinding unit. So what is the capacity of this Palanpur grinding unit and from when this plant we are using or the arrangement is it?

[Sudhir Bidkar, executive]

Mudit, to answer your first question regarding the green projects, as we mentioned last time also, we have taken up several green projects for implementation. One is waste recovery project of debottlenecking it and adding about 3.5 to 4 megawatts.

Second is the increase in the TSR and the usage of the AFR. So there, it has been gradually increased the TSR from 10% to 16% in phases. Then we also tied up through -- under the captive mode 40-megawatt of solar power for our Durg facility, and we are also planning another 7-megawatt of solar power at Sirohi. All these projects would entail an investment of close to about INR 200 crores to INR 250 crores for which this fundraising through green bonds of INR 200 crores is envisaged. Now regarding your other question -- regarding Palanpur, yes, what was that question exactly?

[Mudit Agarwal, analyst]

From Palanpur grinding unit we are using and what is the capacity of this grinding unit.

[Arun Shukla, executive]

Yes. So Palanpur grinding station, which is outsourced one is of small capacity, about 15,000 to 20,000 tonne a month, right? But good thing is that falls into our main market of North Gujarat, right? So in a way, we have been using this plant occasionally before. Once we have clinker capacity, then we'll use this footprint. And the output would be about 15,000 to 20,000 tonne a month.

[Mudit Agarwal, analyst]

Okay. And up to what period this arrangement we have made, sir?

[Arun Shukla, executive]

So there is no -- I think, I had envisaged kind of we have not entered into some kind of permanent agreement. So I think on and off, we have been using. And once we have this capacity the same way because, in a way, they have promised us to dedicate this plant to us once clinker is available with us after autumn. So they are with us occasionally. We don't find any issue even after that.

[Operator]

[Operator Instructions] Next question is from Shravan Shah from Dolat Capital.

[Shravan Shah, analyst]

Sir, this TSR, you mentioned that by December, we are looking yet to increase to 10% and 16%, we will reach by March, June.

[Arun Shukla, executive]

No, no. 16%, I think, Phase 2. So Phase 1, we are through with the Phase 1 part of it, it represent that [indiscernible]. I think end of this calendar year, we'll reach their October, November kind of that, right? And Phase 2, I think, next year, that will come 16%. So Phase 2, we have not yet started. We are just working on Phase 1.

[Shravan Shah, analyst]

Okay, okay, okay. Second, sir Bidkar, sir, has mentioned that for all the solar and everything, we are looking at this INR 200 crores, INR 250 crores CapEx. So just to come back to the main question in terms of the CapEx at the consol level for FY '24 and '25, how much one can look at?

[Sudhir Bidkar, executive]

It will be about INR 200 crores in the company, main company, JK Lakshmi. And as I mentioned, about INR 500 crores of the expansion CapEx there in UCWL in FY '24.

[Shravan Shah, analyst]

And for 25, you see JK Lakshmi would be the similar INR 150 crores, INR 200 crores?

[Sudhir Bidkar, executive]

Around that INR 150 crores or so. INR 300 crores to INR 350 crores, UCWL.

[Shravan Shah, analyst]

Okay. Got it. Got it. And sir, you mentioned previously last time, I think we mentioned that railways siding at Durg. So if that comes, then we can think of first prioritizing the mix expansion at Durg or the Nagore, Rajasthan and then we can look at Kutch, Gujarat. So that remains the same thing. And because you mentioned 3 MTP at Durg and Udaipur, so that is the same one.

[Sudhir Bidkar, executive]

You're right. Exactly, you're right. Absolutely. Once the railway siding visibility is there, we'll immediately announce the expansion at Udaipur or Durg.

[Shravan Shah, analyst]

Okay. And sir, just to get you the number again. So premiums share, we mentioned 11%, but that it seems out of the total. But in terms of the -- out of the trade volume last time, we said around 21%. So what was the number for fourth quarter?

[Arun Shukla, executive]

So fourth quarter number was about 26% of trade volume. For January, we were at 24%; February, 26%; and March 27%.

[Shravan Shah, analyst]

Okay. Okay. And road-rail mix would remain the same around 90-odd percent would be the road.

[Arun Shukla, executive]

Around 90 is about road.

[Operator]

Next question is from [indiscernible] from [indiscernible] Investments.

[Unknown Analyst]

Yes. Sir, most of my questions have been answered, just one clarification. So you mentioned we are looking for about 18%, 19% growth -- volume growth. Is it on consol level or the stand-alone level?

[Arun Shukla, executive]

Consol level. Even [indiscernible] JKLC is also at the same level...

[Sudhir Bidkar, executive]

Around the same level. Both are -- both at JK Lakshmi as well Udaipur, broadly the same, plus/minus 1%, 2% at each place.

[Operator]

Next question is from Vishal Periwal from IDBI Capital.

[Vishal Periwal, analyst]

Yes. Sir, one clarification. I think in the call, you did mention that a non-trade EBITDA margin is better in West vis-à-vis like the tradings...

[Arun Shukla, executive]

Please, speak louder. Sir, if you can please...

[Vishal Periwal, analyst]

Is this better now?

[Sudhir Bidkar, executive]

Yes, I think slightly better.

[Vishal Periwal, analyst]

Yes. Yes, sure, sir. So I think in the call, you did mention like the non-trade EBITDA margin that you get in some of the regions like including West. Is it better than the margins that you get in trade side in the centers that you get? Now is this has any role to play when you're targeting EBITDA margin improvement from INR 700 crores to INR 1,000 crores EBITDA tonne?

[Arun Shukla, executive]

Yes. This has got a role to play. So I told you the hierarchy of optimization of levers. So first goes with geo mix. Second on then trade optimization. And then you have got premium product, then segment mix and then so on, right? So the first lever is, of course, I think optimizing geo mix, irrespective of trade and non-trade where from we get the better margin.

[Vishal Periwal, analyst]

Okay. Okay. So basically, the NSR that you mentioned is a part of all 3, 4...

[Arun Shukla, executive]

Right. Part of that.

[Operator]

Due to time constraints, we'll be able to take the last 2 questions. Next question is from Nishant Bagrecha from Incred Equities.

[Nishant Bagrecha, analyst]

So I have 2 questions. So firstly, so you have mentioned that...

[Operator]

Nishant, can you please speak up a bit, you're not audible, clearly?

[Nishant Bagrecha, analyst]

Am I audible now?

[Operator]

Yes, slightly better. Please ago ahead.

[Arun Shukla, executive]

Yes, go ahead.

[Nishant Bagrecha, analyst]

Yes. So as you have mentioned, sir, our plan is to go to around 30 million tonnes by, let's say, next 6 to 7 years. So when are we likely to decide on this incremental capital allocation decisions? And so any timeline there or by '25, '26...

[Sudhir Bidkar, executive]

As far as Durg is concerned, we will do in this current financial year, for sure. And maybe 1 year later, we'll take a calling on UCWL. As regards to the greenfield projects at Nagore and Kutch, we already started the land acquisition activities at those 2 places. And as you would know, we have to first acquire the land, minimum some portion of percentage of land and then go for the environmental clearances and all that. So that process will take its own time. Right now, we are focusing initially on the brownfield and to start with Durg this year and maybe take a call on UCWL next year.

[Operator]

Next question is from Navin Sahadeo from ICICI Securities.

[Navin Sahadeo, analyst]

Right. Sir, previously, you just said the volume takeup for the stand-alone entity. Can you also please share the cement and clinker number for the consolidated entity?

[Sudhir Bidkar, executive]

On a consolidated entity, yes, sure. In this quarter, we have -- in this quarter, I'm talking of total sales is we did about 30 lakh tonne, UCWL did about 5.92. But on a consol level, netting of the interunit sales. Total sales of cement was, in this quarter, 31.56 and clinker, 2.32. So that makes it on a consol basis, 33.88. And a similar figure for the year is 112 lakh tonnes. JK Lakshmi is 107 on a stand-alone. UCWL is 20. So that makes it 127. But net of the interunit sale, it is 118, 112.36 of the cement and 5.79 of clinker on a consol basis, netting of the interunit.

[Navin Sahadeo, analyst]

Right. So on a consol basis, the cement growth is how much, sir? Just one question here.

[Sudhir Bidkar, executive]

On a consol basis, it's 6%.

[Navin Sahadeo, analyst]

Yes, that's total. But only for cement, this 112 number which you gave that was last year on...

[Sudhir Bidkar, executive]

11% growth. Stand-alone is 12%, consol 11%.

[Navin Sahadeo, analyst]

Consol, 11%. Understood. Sir, one observation I just had was with regards to your receivables. They seem to be like at 65 -- INR 60 crores at a stand-alone level this year and last year also at just about INR 34 crores, INR 35 crores. So compared to the size, they are among the lowest in the industry. The other peers could be at least, if not more, 7x, 8x higher than that. So is there anything different that we do here? Is it only against advance that we signed or exactly we get our receivables that so lower number?

[Arun Shukla, executive]

So in our standard, I think still this is on the higher side, let me tell you. Our plan is to go a little below that, right? And in fact, I think on receivable front, this all receivable only on account of where from we have got BG or LG, right? Otherwise, from everywhere, we have got our cash back, right? So we have a special driver. I think we work quite incessantly and focused manner on receivable on a monthly basis. And of course, on quarter end, I think that focus gets further intensified. So that is what we do, and the team is quite -- and they know what they need to deliver. So to our standardizing, this is on -- a little bit on higher side.

[Operator]

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

[Vaibhav Agarwal, analyst]

Yes. Thank you. On behalf of PhillipCapital (India) Private Limited, we'd like to thank the management of JK Lakshmi Cement for the call and many thanks to the participants joining the call. Thank you very much, sir. You may now conclude the call. Thank you.

[Sudhir Bidkar, executive]

Thank you. Thank you, Vaibhav. And thank you, ladies and gentlemen.

[Arun Shukla, executive]

Thanks, everyone. Thank you so much.

[Operator]

Thank you very much. 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. Thank you.