Ramco Cements Limited
NSE:RAMCOCEM
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Walmart Inc
NYSE:WMT
|
Retail
|
| US |
|
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
730.9
1 047.65
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Mastercard Inc
NYSE:MA
|
US |
|
|
UnitedHealth Group Inc
NYSE:UNH
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Walmart Inc
NYSE:WMT
|
US |
|
|
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
Ramco Cements Limited
Earnings Call Analysis
Summary
Q3-2024
In Q3 FY '24, Ramco Cements faced challenges from heavy rains affecting cement demand, yet managed a 10% increase in sales. The company reported a 5% growth in net revenue, with EBITDA rising to INR 402 crores, achieving a 19% margin. Premium product share grew to 27%. With ongoing debottlenecking efforts, Ramco plans significant expansions: clinker capacity will double at Kolimigundla, and total CapEx guidance for FY '24 has increased to INR 2,000 crores. The company expects to maintain a net debt of INR 5,000 crores, with projected volumes for FY '25 between 19 to 20 million tonnes.
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to Ramco Cements Q3 FY '24 Earnings Conference Call hosted by Batlivala & Karani Securities India Private Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Amit Srivastava from B&K Securities India Private Limited. Thank you, and over to you, sir.
Yes. Thank you, Manav. Good afternoon, everyone. On behalf of B&K Securities, welcome you all to the 3Q FY '24 Earnings Conference Call of the Ramco Cements. We would like to thank the management for giving us the opportunity to host the call. We have with us from the management, Mr. M.F. Farooqui, Chairman; Mr. A. V. Dharmakrishnan, CEO; Mr. S. Vaithiyanathan, CFO.
So we will start the call with the opening remarks from the Chairman, Mr. M.F. Farooqui, and which will be followed by the Q&A. Over to you, sir.
Thank you very much. A very good afternoon to all of you. On behalf of Ramco Cements, I very warmly welcome you all to the earnings call of the Ramco Cements to discuss the unaudited results for third quarter for the year 2023-'24.
We hope you would have seen our results and updates by this time. The cement demand was affected due to heavy rain in Tamil Nadu and Andhra Pradesh due to cyclone in December '23. The cement prices have been under pressure during this quarter.
The key highlights of our performance for the current quarter is, sale of cement has improved by 10%. The share of premium products have improved to 27% from 26% in the corresponding period. The cement utilization rate for the current quarter is 74% as against 70% in the corresponding period.
Net revenue for the current quarter has grown by 5%.
EBITDA for the current quarter is INR 402 crores as against INR 294 crores in the corresponding period. EBITDA margin for the current quarter is 19% as against 15% in the corresponding period. Blended EBITDA per tonne for the current quarter is INR 1,007 as against INR 808 in the corresponding period with a growth of 25%.
Coming to fuel prices. The current spot CIF price of pet coke is $118 to $120. The pet coke prices are key to watch. Our pet coke consumption for the current quarter stands at 51% for the current quarter. The reduction in fuel prices and change in utility of sale of wind power to captive use has helped us to reduce the overall power cost.
During the quarter, the company had increased the clinker capacity by 0.65 MTPA at Kolimigundla and 0.35 MTPA at Ariyalur through pyroprocess optimization. With this, the installed capacity of clinker stands at 16 MTPA. Our in-house team had carried out the debottlenecking activities that included design, engineering and execution. The company has identified the opportunities for debottlenecking of cement capacity aggregating to 1 MTPA.
The company proposes to establish a WHRS of 10-megawatt capacity at its R R Nagar plant at a cost of INR 153 crores, which is to be commissioned by March 2025. The company is in the process of getting necessary statutory permissions. With the establishment of WHRS at R R Nagar, the aggregate installed capacity of the company's WHRS would increase from 43 megawatt to 53 megawatt by the financial year 2025.
The company proposes to double the clinker capacity in Kolimigundla to 6.30 MTPA and double the cement capacity to 3 MTPA with 15 megawatts of WHRS at an estimated project cost of INR 1,250 crores. This expansion is scheduled to be commissioned in the financial year 2026.
Consequently, the aggregate installed capacity of the company would reach 19 MTPA for clinker and 26 MTPA for cement. The aggregate WHRS capacity would further increase to 68 megawatts by FY '26. In Kolimigundla, TPP of 18 megawatts will be commissioned in March '24 and railway siding will be commissioned in June '24. The capacity of dry mix products in AP and Odisha will be commissioned during March '24. The expansion of grinding plant from 0.9 MTPA to 1.8 MTPA in Odisha will be commissioned in March '24.
During Q3 FY '24, the company has incurred INR 385 crores towards ongoing CapEx. Earlier, we had guided INR 900 crores for FY '24, which was subsequently revised to INR 1,600 crores consequent to the acquisition of mining lands from Prism Cements, among other CapEx. Now the guidance is further revised to INR 2,000 crores for FY '24, given the CapEx incurred for debottlenecking and increased momentum of land acquisition for Bommanahalli project. The CapEx guidance for FY '25 will be INR 1,700 crores, which will be funded predominantly through internal accruals.
The net debt as on 31 -- '23 is INR 4,993 crores, including working capital borrowings and the net debt to EBITDA is at 3.22x. The average cost of debt for the 9 months financial year '24 is at 7.82% as against 6.16% in 9 months of financial year '23 due to the increase in the market rates.
So with this brief opening remarks, I hand over to my other colleagues to take you further on the details of the current quarter's performance. Thank you very much.
Yes, sir, this is Vaithiyanathan. I would like to give you a brief note on borrowings for the benefit of the all. Our peak borrowing was around INR 3,000 crores in the year FY 2013 and '14. At the time, our capacity was [indiscernible] per annum. Our sale was 9 million tonnes per annum. Our average EBITDA for the 5 years period, that is FY '10 to FY '14 was INR 840 crores. Our average net debt to EBITDA was 3.5x for a 5-year period.
From FY 2019 to '24, we started spending CapEx for the capacity additions. We have spent so far about INR 9,800 crores towards that. Now our capacity is 22 million tonnes, an increase of about 83% from the level of 2014. Our sale volume is 17 million tonnes, an increase of 88% from the year FY '24 -- '14. Our average EBITDA for a 5-year period, that is FY '20 to FY '24 is INR 1,400 crores. Our average net debt to EBITDA is still 3.5x only, has not increased yet.
To increase the capacity from 12 million tonnes to 22 million tonnes, we have spent about INR 9,800 crores so far. Out of INR 9,800 crores, INR 7,800 crores were from free cash flow from operations for the entire period. Whereas our borrowings have increased only by INR 2,000 crores since 2013, '14. This, I would like to bring to your notice of all.
Over to question and answers, please.
[Operator Instructions] We have our first question from the line of Parth Bhavsar from Investec.
Sir, considering the -- sir, I have two questions. Considering the CapEx that you announced in Kurnool, taking that into consideration, what would be our peak net debt going ahead?
See, the peak debt will be -- will continue to remain same because we have planned to meet the CapEx through internal accruals predominantly.
So it would be INR 5,000 crores?
Yes. Because we expect free cash flow of around INR 1,700 crores in this financial year, that is FY '25.
And the other thing is on volumes. Sir, what is your volume guidance for Q4 and FY '25?
Q4 will be around 5 million tonnes. So 17.5 million tonnes for the full year.
Sir, how much?
17.5 million tonnes for the full year, and 5 million tonnes for Q4.
Got it. And FY '25?
'25, around 19 million to 20 million tonnes.
Okay. Okay. And sir, at current -- so I guess our Kcal cost has declined to INR 1.64. So how do we see that going ahead in Q4?
Q4, it will remain same or moderately come down. So for all practical purposes, you can assume the same cost per tonne.
Okay. And sir, so there wouldn't be any benefit coming from -- like so PLF was 25%, won't that increase going ahead from captive wind?
See, the wind power capacity, 25% is the normal PLF for the wind power. So that will not increase. So we mentioned that 25% of PLF is only from wind power.
Okay. So this won't increase going ahead?
That remains the same because the wind pattern for over a long period of time, the PLF -- average PLF is coming only at 25%.
[Operator Instructions] We have our next question from the line of Shravan Shah from Dolat Capital.
Sir, again, coming back to the -- on the CapEx front, I listened to your opening remarks where you mentioned about the historical numbers. I just wanted to add my numbers to that.
So in last 7 years, so from FY '19 to FY '25, if I look at the CapEx, we have -- we will be spending or the spend, so INR 12,173-odd crores. So -- and the capacity that we will be adding by FY '25 would be a 7.2 million tonnes. So that is close to INR 1,700 crores per year and INR 1,700 crores per million tonne. So -- and this will be the third year where we are increasing our CapEx guidance.
So if you can help us in terms of why this is happening so in FY '22, '23 and this '24, and then what gives us the confidence that for whatever the CapEx we have said for FY '25 also will not further increase.
See, the increase in CapEx for the current year is mainly due to the addition of Prism land, mining land, [ INR 500 crores ]. And we started buying land for the Bommanahalli project.
Sorry to interrupt Mr. Shravan there is a lot of disturbance at your end.
Is it fine now?
Yes, yes.
Better.
Sir, my point was I'm trying to tell is that the kind of CapEx we are doing per year or per million tonne is one of the highest in the entire industry. And I understand the pricing and the volume is not in our control. It is the market driven. But in terms of the cost efficiencies, if somebody has to look at that if we are spending so much, then our efficiency or the OpEx per tonne should be much, much lower, which is not the case. If we look at the historical numbers, our costs have rather increased, definitely because of the power and fuel cost, that is the case. But despite that also, it is not reflecting.
So just trying to understand why we are doing such a high CapEx and versus we are not able to -- and compared to the street. So in terms of the per tonne if you look at it is at $200 per tonne versus all other players are putting at $70 to $80 [ per million ] tonne. So at least it should result in a better efficiency. Our profitability has to be much better, which is not the case. So that's the point I just wanted to put forward.
So you have to see whether $200 or $70, you have to see what are the facilities you are creating at the day number 1. See in [ genuine ] cases, if you see our CapEx is much lower because, for example, the railway siding, the [ colony ] as well as the [indiscernible], thermal plants, all these things are added over a period of time. Whereas the Kurnool plant, all the facilities are created the day number 1. See, that is why the initial CapEx seems to be high compared to others because other -- normally, the companies will add all these capacities over a period of time, not the day number 1.
But since at the point of time, the coal prices were very high, all these things, unless now this is -- now the trend is for green energy, all these things, unless I invest that, I can't be competitive. So you should understand that. That is why even though for first phase, we spent over INR 3,000 crores for the same capacity. Second phase is going to be only INR 1,250 crores because already all the infrastructure have been created.
See, most of the benefits we can see in the coming years and most of the benefits accrue in full because the benefits are accrued only partially during the current year. All the benefits will be accrued during the year '24, '25.
We have our next question from the line of Navin Sahadeo from ICICI Securities.
Sir, I would request if you can give the breakup of the CapEx, like this year, the revision, I can understand, as you said, is for the land that you are buying. So INR 1,600 crores becomes INR 2,000 crores. But next year, what is the breakup for INR 1,700 crores? Because if the CapEx is INR 1,400-odd crores -- I mean, INR 1,250 crores for Kurnool line 2, which is again spread over 2 years, which is '25, '26. So broadly, let's say, INR 700 crores each year, then what is the extra INR 1,000 crores that you are budgeting for? If you could just help me understand that.
See, next year, for Kurnool second line, we have budgeted INR 750 crores. Land for Bommanahalli, we have budgeted for around INR 200 crores. Maintenance CapEx, INR 300 crores. Balance leftover Kurnool line 1 project, INR 200 crores. R R Nagar WHRS, INR 100 crores. [ INR 10,700 crores ].
Understood. That's really, really helpful. But one important point which you said is that the net debt has peaked out at INR 5,000 crores. Is that the commentary that you are firm on that net debt is peaking out at INR 5,000 crores?
Yes, yes.
So which also -- can I request your comment on the same thing sustaining even if we were to look at Bommanahalli project because there, if the land acquisition is at a blazing pace, would it also mean that we are looking at that project announcement in the coming 1 to 2 quarters? Or it could be keeping in mind that net debt does not really go beyond this? How is the thought process on that?
First, we will complete the land acquisition for Bommanahalli. The announcement with regard to plant thing will come after the Board approval...
It will take minimum 18 months.
18 months.
Not 1 or 2 quarters, it will take minimum 18 months. Announcement will come minimum 12 to 18 months.
So that is -- so in that case, there is fairly fair amount of certainty that net debt will remain in this range. And as the company improves on EBITDA, net debt to EBITDA will only improve from here on. Is that a correct understanding?
No, debt to EBITDA will not increase.
See, Navin, that is what our plan is to make sure that our free cash flow from operations will be used for CapEx. So we don't propose to add more borrowings for CapEx. That is the idea that we are carrying on.
So Navin, apart from that, as we told you many number of times, there are certain noncore assets we want to monetize. So already, we identified certain noncore assets to monetize, but because of, okay, the political situation, all these things, we have not got the right value.
If we get the right value, definitely, we can monetize to the extent of INR 500 crores, INR 600 crores. Okay? If necessary, I will use that for my projects. So with that, we are very, very confident that the net debt will not go beyond INR 5,000.
Yes, sure. And I think the Kurnool line 2 will also have some more efficiency because the mines that we are trying to utilize for.
You are right. You're right. That is why we are confident. That is why Mr. Vaithiyanathan is very confident that free cash flow will meet the CapEx requirements.
Understood. Very helpful. Just one last question. This shift from wind mill to captive purpose, so are all the benefits captured into the base for the quarter or there is.
Some more benefit -- no, no. This quarter, unfortunately, that quarter is not, say, a season. See, the benefit -- definitely, even the second quarter, normally full benefits might have come, but we got the permission to transfer to captive mines, captive consumption only a little later. So next year, you get the full benefit.
Navin, this year, 3 quarters benefit only we got it because we started doing it from July. Okay. Last -- next year, we'll get the full benefit.
I appreciate that. I was only checking because it's seasonal. I believe that business is seasonal. It's Q2 and Q3 heavy or how should one look at it?
No. See, anyway, whatever power generated is bank there. So as and when it is available, it is used.
No, no. The power generation normally is between May 15 to July -- sorry, July 15 to September 15. May 15 to September 15. May 15 to September 15.
Understood. No, no, fair point. So we can expect better performance. Thank you so much for the clarification on CapEx.
We have our next question from the line of Amit Murarka from Axis Capital.
So just on the question of the peak debt and CapEx. So while I see that your EBITDA is about close to quarterly EBITDA is about INR 400 crores. So like if I just take annualized of that, INR 1,600 crores plus. I mean -- and out of that, you have to pay about INR 400 crores in interest, about another INR 100 crores in dividend, taxes and all. So, INR 150 crores. So INR 500 crores, INR 550 crores actually gone. So we are actually left with like INR 1,000-odd crores in terms of, like I can say, maybe OCF.
So how will we manage with same level of debt? And are we either expecting prices to go up? Or like we can think of like big noncore assets, as you said, maybe INR 400 crores, INR 500 crores.
Next year, volume will also go up. Next, definitely, we are also -- we like to increase volume by another 2 to 2.5 million tonnes volume...
But you don't have capacity to do that. You have clinker utilization is 90%...
No, we have capacity for the quarter, but capacity for 9 months is still capacity. We can go up to 22 million tonnes cement capacity. So this year, we will reach 17.5 million, another 2 million, 3 million tonnes capacity is still available.
So what would be your clinker utilization for 9 months, I mean clinker volumes, production...
Clinker volume production is around 10.5 million.
Okay. Okay. Sure. And also, could you quantify the impact due to the flooding in Tamil Nadu, how much volume was lost because of that?
Around 300,000 tonnes.
Not necessarily only flood alone because there was a flood, then Diwali holidays, Puja holidays. So all these things come together also monsoon. See if you take first 6 months, we have done almost 4.5, 4.5 each. And the third quarter, we done 4.4 or...
4.
So the difference is only because the floods also holidays and monsoon. And fourth quarter, we are confident we will do 5.
Right. And generally, like what we have been hearing is that prices have corrected very sharply actually. So like what is exactly the problem there? Like now we are in the peak demand period actually. So any sense you can give on that? Why?
We'll be doing better. The prices are depending upon players, this one. So don't worry, we will take care that people can't sell at this price all the time. So there are other people should worry about return on investment, all these things. We are confident the prices will come back because at these prices, the company can't sustain.
[Operator Instructions] We have our next question from the line of Satyadeep Jain from AMBIT Capital.
First question on the CapEx. You outlined the details for FY '25. As we look at FY '26, given you won't have any pending CapEx from Kurnool 1, I believe land acquisition should more or less be complete. So do we see a steep drop in CapEx in '26? Or do you have continued land acquisition and any other pending CapEx for maybe...
'26, we will discuss a little later, Satyadeep. So '25, we have given guidance. '26, we will discuss a little later.
The time line for completion, I think in the previous call, you had mentioned that the new line can come in 12 to 15 months. We're looking at now about 2 years, is it maybe possible...
We are ready to get environmental clearance. So we get environmental clearance. Nowadays, it's taking a little a lot more time than before.
Elections are also there.
Elections are also there. So, one, with elections in 3 months, nothing will happen. So considering all these things only, just we are telling outer limit we are giving because this time, we don't want to go wrong telling that, okay, 15 months, I don't want to take 18 months, then people think, okay, this is a delaying project. Now we want to be very practical.
Satyadeep, we are also planning aligning our CapEx to our cash generation. That is also to keep it in mind. If we speed up the CapEx, the borrowings will go up.
Just lastly on the volume that you've seen in January, have you been able to recoup some of that loss in -- how is the trajectory been so far in Q?
I told you now we'll do 5 million tonnes, then you can understand whether we can recoup or not.
[Operator Instructions] We have our next question from the line of Vikram from Vikram Securities.
Congratulations again on a great set of margins, at least. Just one question. I think everything...
Thank you. You're the first person to congratulate before asking about CapEx and borrowings. Thank you very much. Thank you for all your compliments.
I saw some things which were very, very nice to me. Sir, just one -- all these questions were answered about the volume. Only one thing then is I've noticed that you would have introduced ESOP program. Is that a first for the company? Or is it first for the year?
No, no. Already, we have ESOP program. See, that almost 70% already we have, say, last 5 years, we are running that. 70% -- we have first to 12 lakh options -- 12 lakh options were reserved. Out of that, to my knowledge, we have given around 7 lakhs options have already been granted, 7, 7.5. So this is over 5, 6 years, not today, just over 5, 6 years, we will be giving.
We have a next question from the line of Hrishikesh Bhagat from Kotak Mutual Funds.
Just want management sense. Was -- did we ever consider probably pushing back this CapEx in the sense of urgency? I just wanted to understand the sense of urgency because if I take your earlier comment, we have a reasonable runway to reach 22 million tonne volume.
I'm trying to -- if you can help me understand why take such a -- why this so urgency in this CapEx in sense that had we done it 1 year down the line the delay, the balance sheet would have been much better. So if you can help me understand, that would be helpful.
No, that is why we are very clear. We told -- we are not going to complete in 1 year. We told we'll complete in 2 years. Now see, I got to make application for environment clearance. If I have to make application for environment clearance, Board resolution is necessary. If I make -- if I pass the Board resolution, I have to integrate the stock exchanges.
So unlike before now, the regulatory information such that, see, all these things follow in a flow. So unless I pass the Board resolution announced today, even I can't complete the project in 2 years' time.
So I'm not rushing. In fact, these things are necessary today because the environmental clearances take a lot more time than used to before. So that is why clearly we told it will be completed by '26.
Till '26, we have enough capacity to cater the market needs. So from '26 onwards, we should be ready now. So that is why. In fact, it is not that we are rushing in. It is well planned and well organized only.
No, I just feel that probably it's considering brownfield, gestation period should be shorter. So we could have...
Gestation period, environment clearance is same. See, gestation period, only land purchase is not there. That's all. But in fact, now the environmental clearances, the public hearing, all the procedures are same, if not less.
[Operator Instructions] We have our next question from the line of Sumangal Nevatia from Kotak Securities.
Just a few clarifications. With regards to the time line, we are expecting end of FY '26 for this expansion completion?
Yes.
Okay. And in this INR 1,700 crores CapEx for next year, which you've guided, how much of this INR 1,250 crores will be included in that?
I've already mentioned about INR 750 crores for next financial year.
Okay. Okay. And sir, generally, for our asset base, what sort of maintenance CapEx should we expect on an ongoing basis?
INR 200 crores to INR 250 crores per annum.
So last year, the maintenance CapEx also a little bit more because we have debottleneck almost -- we created capacity almost 1 million tonnes. We have proposed to...
1 million tonnes.
We've proposed to create another 1 million tonnes also. That is why even whatever CapEx, CapEx whatever mentioning is a little high.
We have our next question from the line of Raghav Malik from Jefferies.
Just wanted some color if you could be a bit specific on what you're seeing on pricing, maybe overall as well as specifically to the South and the East, if you could give us some color on that?
Sorry, it's not audible, sir. Can you please?
No, the prices are a little volatile. So I can't give a proper guidance on the prices. So you -- in fact, we are one of the last to give the con call. So whatever guidance given by my colleagues in different industry -- sorry, in different companies, that will be my guidance. It's not -- cannot be different from others.
We've the line disconnected with the participant. We have our next question from the line of Parth Bhavsar from Investec.
Sir, I didn't catch the number that you mentioned on the sales volume lost during the quarter, the potential sales volume. Was it 3,000 tonnes?
Sorry, you're -- I couldn't understand your question.
You mentioned a number of potential volume lost during Q3 because of cyclone and rain.
Rain...
See, first quarter, we had done 4.5. Second quarter, we had done 4.5. Now, I mean, that quarter also, we had done 4.5. That was our plan. We could not do that because rains in Chennai, not only in Chennai, also entire southern districts, which is our core market that was under water almost for 15 days. So there is one of the reason. Then general monsoon across our markets. There is number of holidays in the East as well as South, Puja holidays as well as Diwali. These things affected our sales.
But if you see the corresponding year of last year, definitely grown. Inspect of rains, inspect of holidays, all these things, if you see year-on-year, definitely we have grown, even though the monsoon was very vigorous and our core market has affected.
Sir, second question is on the debottlenecking. We debottlenecked approximately 1 million tonne of clinker. So what would be the cost like what have we spent on this?
Difficult to identify, sir, because we have spent it in the other -- all the factories, different factories. So it will be difficult to...
No I told you it will be around INR 40 crores INR 50 crores.
INR 40 crores INR 50 crores.
INR 40 crores INR 50 crores. That is why I told you that normal -- this one will be around INR 200 crores. This year, we spent more, around INR 250 crores to INR 275 crores, we'll be spending.
Okay. And sir, correct me if I'm wrong. I just pulled this one presentation from Q2 FY '23. So there we had spelled out like our CapEx plans, and that included approximately INR 250 crores of -- towards Bommanahalli land acquisition. So when we revised our CapEx to INR 1,600 crores, didn't that include Bommanahalli land acquisition? Am I missing something?
Continuous. Land acquisition in Bommanahalli is...
Sometimes you get threshold to buy the [indiscernible]. Sometimes some people offer, okay, I want to give you 100 acres, then you may have to grab. Otherwise, it is impossible.
See, these are the land purchases, sometimes even 2 months, 3 months, we may not be able to buy. Sometimes some people rush, okay, buy the land because maybe some daughter's marriage or niece's marriage. See, these things won't happen.
So exact guidance is difficult, maybe INR 100 crores here and there because we would buy huge land, almost 3,000 acres of land. So the effort is continuous. And whenever the opportunity comes, we have to grab the land.
Okay. So sir, this INR 500 crores that you've mentioned, would this be over and above INR 250 crores?
Yes.
Or it is over and above INR 250 crores.
Sorry, please come back again.
This INR 500 crores of incremental spend that is towards Bommanahalli's land acquisition. Is this over and above your INR 250 crores mentioned earlier?
See, earlier, we've mentioned about 100 -- earlier we have mentioned about INR 100 crores.
In H2 FY '23?
I think so. I don't have the numbers right now.
[Operator Instructions] We have our next question from the line of Rajesh Prasad from HDFC Securities.
This is Rajesh, sir, here from HDFC Securities. Sir, my question pertains to your clinker utilization. Clinker utilization, you mentioned 10 million tonne production, which is 9 months works out to be 90% utilization. And this year, you are targeting around 17.5 tonnes cement production, right, full year.
Okay.
Next year, at what sort of volume number you're looking at? Is it 20 million tonnes, so around 15%, 20% volume growth?
19 million to 20 million tonnes we have projected...
Okay. So there, you would be close to 100% clinker utilization. Is this understanding correct? Because for 9 months, the blending...
It depends on the blending ratio.
Correct. So 9 months, it is coming out close to 1.3x.
Okay.
So how do you plan to take your blending ratio up?
See, it depends on the market condition.
Debottlenecking capacity has come up now.
Debottleneck capacity is 1 million tonne is coming up now, which we have completed only now that is available for us.
So for next 2 years, you will be having this 16 million tonne clinker to rely upon?
See, this till 2026, this 19 million tonnes will be good enough to meet the market demand.
Okay. And sir, this premium cement share ratio came down to 20% in this quarter. Any...
It has not came down. It has increased.
I think in the preceding quarters, you have given 28% number. June and September quarters?
Rajesh, please go through my presentation. Everything I have covered. Clearly covered.
Okay. Because I have noted around 28% for June and September. That is why I was surprised. Maybe I'll recheck my numbers.
I'll read out. 1 minute. Please hold on.
Sure, sure, sir.
See, the premium products have improved by -- improved to 27% for the third quarter as well as for 9 months.
27%.
27%. For Q3 as well as 9 months, for both.
Understood. Okay. Great, sir. And so just lastly, on the balance sheet, you are comfortable with this INR 5,000 crore net debt to EBITDA. Because why I'm looking at, you said in 12 months, you will be coming up 12 to 18 months, you will be coming up for the Karnataka expansion, the [indiscernible]. So that is, I assume somewhere in FY '26, this project may start. So that year also, you may have major CapEx coming through. So this net debt-to-EBITDA number may not meaningfully come down. Is that understanding -- you may be comfortable close to 2.5x, 3x...
Net debt to EBITDA in percentage terms will come down, but absolute number will remain same [indiscernible] So at the last 50 years, we never -- not even single day, there was a delay in the repayment of loan or.
No, that is for sure, right?
We are fully 100% we are conscious of our leverage. So we'll maintain. That is why I was telling to you again and again, so we have noncore assets necessary, I can monetize that.
And what is your potential of those noncore asset monetization, sir? If you're able to do that.
For example, I tell you I have 175 megawatt wind power. We have 100% ownership. 100% ownership is not necessary. Even with the 26% ownership, I can consume that power, wind power captively. 74% if necessary, I can monetize.
Like there are a lot of opportunities available within the company already created. Those things are already within the balance sheet. There's no need for any new expenditures. So that is why we confidently Mr. Vaithiyanathan is telling that maintaining that INR 5,000 crores, we are conscious about that. if necessary. That is why I'm qualifying if necessary, we'll monetize that. Otherwise, there's no need.
So this power asset monetization, which you're talking about that you will remain at 26%. So that would then -- if you sell out the 74% stake, will this not increase your green power costing then?
No, it will not because 100% I'll be consuming. It's enough you have 26%. Green power cost, you are telling?
Windmill cost, which is negligible today because it is captive, fully captive.
Again, I have to see the opportunity cost. Suppose I'm selling to the grid, I used to get INR 3. Today, I have to pay -- see there are certain charges already are paying. See, you'll see the billing. If necessary, that is why I qualify if necessary, if we compare with the cost, all these things, we will do that. Even otherwise, I have -- see, the windmill what we are managing before, I have thermal plants.
So even today, 100% of our production capacity is backed by thermal plant. Because I have wind power, even I have shut down some of my thermal plants. If I sell my wind power also if the coal prices comes down. See before '21, '22, my cost of generation was less than INR 3. That is why we are selling to the board and making some profit also. Now the cost of generation has gone up because the coal price has gone up. See these are all the opportunities already been created enough assets. So I'm qualifying if necessary, we don't mind monetizing some of the assets, our core assets.
Enough cushions are available within the company to take care of the liquidity problems. And it is easily monetizable also. See there's now the green energy being became the best topic for everybody. So monetization is not a problem. Any point of time, at least even 5, 6 people are offering me, why don't you do that? Already proposals are with me.
We have our next question from the line of Aditya Chheda from InCred Asset Management.
So if I've understood correctly, monetization of these noncore assets will not be a priority. You will do it only if you feel the requirement to do so.
You're right, you're right. You're right. Raise big concern, we'll do that. If you don't raise any concern, then I will not do that.
Got it. Got it. Got it. And the next one, we've seen a sharp bump in other expenses. So is there any one-offs there? Or if you could highlight what led to this?
There is no one-off items. If you look at the absolute expenditure, it is about INR 15 crores, INR 20 crores more. That's all. In some quarters, certain expenses will be there. In some quarters certain expenses may not be there. So on a per tonne basis, if you look at because of the lower volume in the quarter, it looks a little higher. Whereas if you look at the absolute value, it is more or less the same. If you look at second quarter and third quarter, it remains almost close.
We have our next question from the line of Shravan Shah from Dolat Capital.
Sir, this 1 million tonne debottlenecking, so will it be at any one or two plants specifically or like across the plants?
We have mentioned in the report that it is done in two plants.
No, no, sir, not clinker. I'm saying grinding, we said 1 million tonne grinding debottlenecking we are looking at. So this will be across our plants or any specific plant?
Not all plants, a few plants.
See, also the opportunities are available. Even in last call also, I told you, see in at least two plants raw mill is available, which is not running. So any point of time, if necessary, I can convert the raw mill also into cement mill with small CapEx expenditure. I got because whenever we have gone for example, R R Nagar third line, we have gone for big raw mill with most modern and fuel efficient, power-efficient raw mills. In the process, we have own raw mills. Same thing in [indiscernible]. So if necessary, I can convert those raw mill into cement mill with lease cost.
Okay. Got it. And sir, this -- in the presentation, we have said so currently, we have 22 Odisha, 1 million tonne will take us to 23, then 1 million tonne now will be debottlenecking. And then in FY '26, we have written a 2 million tonne, but Kurnool, we have mentioned 1.5...
[indiscernible]
Okay, understood.
I'm saying that even then we can do that happen. See, Vaithiyanathan, told you with some blending ratio changes, not even 0.5, we can go 1 million also can be increased.
Okay. Okay. I thought maybe 0.5 million tonnes will be further debottlenecking. That's what I was asking.
No, no, it is available. That is why I told you, whatever I told you, I can convert raw material into cement, that is not taken into account. If necessary, we will do that.
Please ignore this 0.5 million to round off. Leave it to us.
Yes, yes, I got the point. Sir, just one clarification. You said 3,000 acres you need to buy for Bommanahalli land. So total, how much we have already spent on that? And what would be the likely total cost or how many acres we have already acquired?
See the total cost is...
There is little confidence to that pick. What is the cost per acre, all these things we can't give. Please appreciate that. I tell you what is the total number of acres. So what is the cost per acre, all these things we can't give.
Okay. Okay. Got it. Got it. And then lastly, on the -- in terms of the prices, so currently in January until now February, broadly, if I have to look at in South and East where we operate, how much prices would have declined versus the average of the third quarter? Broader range would be fine.
The price drop is around INR 5 to INR 10 across the market. Different markets have different...
That is why what is drop or what has gone up depends upon relative terms. See, sometimes we increase invoices, that matter, that is also drop. That is why I told you cement price is very, very difficult to give the guidance. And tomorrow, even tomorrow, the prices can go up depending upon the demand and supply, depending upon different markets.
Yes. No, I was not asking the guidance. I was asking till now broadly the range, how much it has already done a decline...
Some markets have gone up, some markets has come down.
We have a next question from the line of Navin Sahadeo from ICICI Securities.
First, on the volumes, the mix between South and East has broadly remained same at about 75-25. And the overall volume growth is 10%. So does this imply that we are gaining market share in East because that region, I think, is not showing a positive trend. At least for Q3, I think there was a dip. That's what our market...
All markets, except West Bengal, only West Bengal, we have some degrowth. All other markets, we've grown.
Navin, to add that, don't look at 1 quarter to see the market share along that. Look at the larger picture. Larger picture.
Year-to-date.
25%.
Till today, only in Bengal, we have small degrowth, small -- very small degrowth, always all markets we have grown. Every state, it is Tamil Nadu, Kerala, Karnataka, Andhra Pradesh, Telangana, Odisha, we have grown. Northeast also.
Yes, helpful. And just last question. Sorry, I didn't follow the previous participant's question very clearly. My point just to ask was the 16 million tonne clinker that we are saying, so does it have more scope of debottlenecking over a period? Or that...
No, no, there's no big scope, another 0.5 we can do. Yes, another 0.5 million to 1 million we can do. We are exploring another 0.5 million to 1 million.
That was the last question for today. I now hand the conference over to management for the closing remarks. Over to you.
Thank you very much for all the participants for their participation, and we hope that now could have -- we would have given all the reply clearly and transparently. I wish you all the very best. Thank you. Thank you very much.
Sorry, I was expecting so much questions also because Mr. Vaithiyanathan has given very detailed press report as well as presentation.
Thank you. On behalf of Batlivala & Karani Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.