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Sagar Cements Ltd
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So good afternoon, ladies and gentlemen. Welcome you all to the 2Q FY '23 Results Conference Call of Sagar Cements Limited. We have with us from the management, Mr. Sreekanth Reddy, Joint Managing Director; Mr. Kolluru Prasad, CFO; Mr. Rajesh Singh, CMO; and Mr. Shri R. Soundararajan, the Company Secretary. We will start the day session with opening remarks from the management and then will be followed by a Q&A session. [Operator Instructions] I would now like to hand over the call to Mr. Gavin Desa of CDR for his opening remarks. Over to you, Gavin.
Thank you, Manish, and thank you for introducing the management. I'd just like to add that some of the statements made in today's discussions may be forward-looking in nature and a note to this effect was shared and we invite that is shared with you earlier. We e-mailed the communication [ to make sure ] that you receive them. I'd like to now hand over to Mr. Reddy to make his opening remarks. Over to you, Sreekanth.
Thank you, Gavin. Good afternoon, everyone, and welcome to Sagar Cements' earnings call for the quarter ended 30th of September 2022. Let me begin the discussion with a brief overview of the market in terms of the demand and pricing, both which I will move on to other specific developments. Overall, external environment for the business remained a bit challenging while Q2 is seasonally a soft quarter given the monsoons.
The business had come to operating an inflationary environment. When the demand momentum was expectedly soft, we did witness some reversal towards the end of the quarter, aided by a pickup in infrastructure and low-cost affordable housing segments. As far as pricing is concerned, while the same remained relatively steady across our key markets, we could undertake requisite revisions to offset the rising input prices amid benign demand.
As far as the trend between trade and nontrade segment is concerned, prices were relatively stable in the former rather than the later. However, we are respecting some softening in prices of key raw materials, whether the trend would continue going forward or we will once again see firming up of into projects only time will tell. But as far as the realizations are concerned, we expect the sale to improve with the pickup in demand over the coming months and quarters.
Moving on to target-specific developments, our revenue for the quarter stood at INR 475 crores as against INR 369 crores during the quarter, higher by almost 29% on a Y-o-Y basis, driven largely by volumes, following commissioning of the new capacities. Average utilizations remained largely stable during the quarter. Overall demand, as I mentioned, was relatively softer largely owing to monsoons. However, we did witnessed some pickup towards the end of the quarter. The EBITDA for the quarter stood at INR 6 crores as against INR 61 crores diluted during Q2 FY '22, lower by 91%, largely owing to higher input prices. Margin for the current period stood at 1% as against around 16% reported during the corresponding period last year.
The raw material privates were fairly stubborn during Q2, which resulted in margin compression of almost 1,500 basis points. We have seen an unprecedented surge in prices of key raw materials, which were eluted following the Russia, Ukraine crisis. All of the prices of few raw materials have started to trend lower, one needs to see the moderation continuous in coming months. Average fuel cost stood at INR 2,066 per ton as against INR 1,263 per ton reported during Q2 FY '22. Evaluated prices of coal and coke resulted in higher per ton cost of fuel for the quarter. Freight cost for the quarter stood at INR 797 per ton as against INR 795 per ton during Q2 FY '22. Not after tax for the quarter stood at INR 49 crores as against a profit of INR 20 crores reported during Q2 FY '22.
From an operational point of view, Mattampally Plant operated at 50% utilization, while Gudipadu and [ Jeerabad ], Jeerabad and Jajpur operated at 93%, 64%, 30% and 10%, respectively, during the quarter. Overall capacity utilization at the group level stood at around 49%. As far as the key balance sheet items are concerned, the gross debt as on 30th of September 2022 stood at INR 1,486 crores, out of which INR 1,275 crores is long-term debt and the remaining constitutes working capital. The net worth of the company on a consolidated basis on 30th of September 2022 stood at INR 1,581 crores. Debt equity ratio stands at 0.81:1. Cash and bank balances were at INR 308 crores as on 30th of September 2022.
To conclude, I would just like to reiterate that rising government prices pose near-term challenges with regards to profitability in non-run, though we believe the anomaly will correct with pickup in demand and improving realization. As far as Sagar is concerned, we believe our diversified presence, higher scale, better product mix and strong balance sheet position, help to create a value for our shareholders over the long term. That concludes my opening remarks. We will now be glad to take any questions that you may have. Thank you.
Thank you, sir. We will now begin the Q&A session. [Operator Instructions] The first question is from Shravan Shah.
The first question is just to complement guidance. So INR 5 million volume guidance that we gave and that INR 3.5 million to INR 3.6 million tons from the existing and the remaining from the new plants. But if I look at till now, our old plant sales is giving a better volume. So do we maintain the same INR 5 million ton volume guidance and in terms of the share from the new plants for the [ MPN ] Orissa plant can be slightly lower?
Yes. Shravan. Sir, now talking about the overall target, I think we achieved INR 2.2 million for the first half. So INR 5 million for the overall year, probably it is too soon for us to rule out. It looks high probability. Having said that, yes, we are maintaining the same stance for subgroup plant that is in MP plant at close to INR 6 million so INR 0.6 million. But Jajpur looks to be difficult, but we have indicated around INR 0.4 million. Probably we should be doing close to around INR 0.25 million.
Having said that, the other assets did perform reasonably well. So we would want to take the corrective steps or know exactly what we will do end of this current quarter, that is the end of Q3, we will be in a better position. But first, we expect that we would not go below INR 4.75 million at this point of time. This is a challenge on EBITDA. This is a challenge more on the EBITDA. It looks like the possibility of close to INR 400-odd crores that we have indicated at the start of the year, could see be a challenge.
The numbers we would probably revise downward by how much you would probably take some more time before we could guide it, but we definitely expect the EBITDA generation to be a lot lower than what we have indicated. On the volume front, as I mentioned, I think we should be very close to INR 5 million. But I think end of the current quarter, we will be in a much better situation to narrate the numbers that are likely to happen in a financial year.
Yes. So I was about to come on the EBITDA part. So in terms of particularly, as we mentioned, it is [ difficult ] guidance can be revised downwards. But still, in terms of the power and fuel, the increase sales to be significantly higher because last time we said it should not be that much. So now how do we see this…
Now let me reiterate what we have indicated at that point of time. The drop in fuel prices are expected middle of this current quarter. So we are more than hopeful that we should definitely save around INR 250 per ton on the power and alone for the current quarter because the mix what we have indicated earlier, the domestic [indiscernible]. Now we started firing at 60-40, so we are more than hopeful and we do have the domestic coal pipeline with a lot more clarity. And we are very sure that we would be saving around INR 250 per ton only on this fuel for the current quarter itself.
And this will further increase in the fourth quarter in terms of the savings.
Sir, I think let us take one quarter at your time because as I mentioned even in my opening remarks, though some of the pet coke prices has been -- they tended down for a very brief [ weight ]. I think they are trending upwards. So at this point of time, our inventory for this is for the current quarter. We know the -- with a lot more clarity about what we can do for the current quarter. So we are very sure that we would be - we will be achieving around INR 250 per ton on a power and fuel within for the current quarter at INR 200 is for minimum [indiscernible] for the current quarter alone. Next quarter, I think we will take it as we come close to those.
And just to come from in terms of the net of INR 850-odd crores, that would be the operational [ net rate ] guidance we will maintain and…
Yes. I think on the balance sheet items, I think the [ narration ] remains very similar to what we have maintained even in the past.
And sir, any update on the Andhra Cements [indiscernible] because last time we paid mostly.
Yes, I think we see, we did mention that in this end of Q3, I think we are hopeful that it should get resolved before the end of Q3. So we are maintaining the same [indiscernible].
And as a couple of points, what was the trade share for this quarter? And in terms of the post-September, have you seen any price increase in any of our markets?
Yes, the stage sales got reviewed for the current quarter. Obviously, because of the monsoon, so there was a bit of more than nontrade sale. We are maintaining around 55% - 57% will be trade and the rest constitutes the nontrade. Going forward, again, we'll revert on back to 65%, 75% a trade on sales mix.
Now coming to the realizations, there has been a good uptick, again, on a related scale across the markets that we service. [ Higher rate ] market alone, we have seen almost INR 18 to INR 20 a jump or back. [ Virbac ] is around INR 15. Bangalore is INR 25. We have not seen major shift in [ Karnataka ] markets, North Tamil Nadu and South Tamil Nadu is around INR 25. [ Mattampally ] markets, we have seen INR 20 an increase per asset. Orissa, we have seen close to INR 10. [ Indore ], we are ready to see any major shift in our realizations.
So this is from the September…
It is the exit of September to the first 15 days of October.
[Operator Instructions].
Manish, I think there is a question in the chart, which... If you could…
Yes. So the question is from [ Rituparno Ghosh ]. Can you please elaborate your fuel mix going ahead? Are you exploring Russian coal? If so, how is it affecting in terms of production and can you give your views on thermal versus pet coke usage?
Yes. Sir, I mentioned we are primarily using the domestic coal, along with the domestic pet coke. We -- of course, we did receive an imported pet coke shipment recently. But as you have noticed, probably what we are seeing is that the imported pet coke prices only started going upward. The large shipment that we received close to around a month back or close to 20 days back where the landed cost was around $169. Now we are seeing the smart changes and the 1 month November deliveries are already at 195.
So we are, again, going back to the domestic pet coke. The mix, as indicated, we will be 60% domestic coal and the 40% pet coke. We are not using any Russian coal, basically sticking to the domestic along with the domestic pet coke at this point of time. We did indicate even in our presentation, the prices typically the landed price at Mattampally, that's not our part, the indicative spot prices, which we have estimated part of our presentation, where we did indicate the imported pet coke prices per taken to the domestic and imported. Yes, it's on Slide [ #14 ].
Yes, we have indicated that the imported pet coke is at INR 253 per [ take ] on a landed basis. Indian pet coke is at [indiscernible]. Imported coal is at INR 337. Domestic is at [ 82,000 ] on a landed basis at [ Mattampally ]. More indicative prices just to come up some of the questions when we have time.
The next question is from [ Ana Marijana ]. Apart from Andhra Cements, are you targeting any other inorganic acquisition?
It is too soon for there for me to comment that, yes, we really identified a couple of assets, but we would want to take one step at a time. So currently, we are more focused on Andhra. [ We also hope that would decide ] for other options that we have. The target is to reach to 10 million. Based on the progress of Andhra, we would want to pursue the other options that we have.
Yes, we did have at least another asset in our radar, but the outcome of Andhra would decide how we would focus on the other one. There was also another questions from the same management on the PIL. I think there is no PIL, sir. It is [ Dalmia who will present ] and there is no stay-on in process. They will just stay on holding. So that I think is for the outcome of that would be known only end of this month. But somewhat, I cannot comment anything beyond that. We are more than hopeful that the under transaction should get concluded there is a possibility that it should get completed before end of Q3 is what the inflation that we have.
The next question is from [ Abhistha Jain ].
Sir, just continuing from your comments on the realization part, as you mentioned that you're seeing some uptick in some of the markets. So as things stand today, sir, what realization per ton improvement do you expect on a quarter-to-quarter basis for Q3?
We just know the last 15 days trends services. I didn't read out the indicative gross prices at the retail [ rate ]. If you knock off close to around 30-odd percent of that, that should get added up again on a weighted basis, but it's too soon for us to comment on that. Fortunately, except for insurers present flat, and we are hoping the realizations to move in there. The realizations have been in the range of anywhere within INR 15 to INR 20 on an average per bag. So INR 200 to INR 250 per ton can be expected if we present in a similar kind of a thing, but this is not enough. A lot more has to happen. But the last 15 day [ trending ] that it is around INR 15 to INR 20 on an average per bag increase in relation is what we have done.
Right, sir. Okay. Understand. And sir, on the cost side, while you mentioned that the savings on the power and fuel, what you're expecting on a sequential basis, for the other cost line items, including freight and RM, do you expect to drive any savings for H2 versus H1?
Sir, [ Mr. Abhistha ], raw material, again, is a question of blending. It does not increase our path, but since the since the blending portfolio went up, which is a good sign for us, that much increase in raw material we've seen. The offsetting price reaction, power and surpass reduction is likely to happen going forward. Freight, as we have indicated in the -- in our presentation, we are solely coming down and with the more volumes ramping up both at Jajpur and Jeerabad nicely that the frieght costs should come down well for us. So by how much is only time will tell but definitely, there will be trending down for us.
Yes. Sir, actually, I just wanted a little bit of understanding that where should the freight stabilize when we really reach that INR 5 million and then for the next year, INR 5.5 million run rate because you have had new plants, which will ramp up okay. And I think now you must be seeing some trends of the fuel prices stabilizing, which impact the freight cost. So if any indication and versus today's level of around INR 800 per...
Sir, right now, we are at INR 797 I mean -- we don't know if diesel patterns will stabilize. But the current trend, what we are looking at it, it remained at INR 797. There was a small increase purely because of a small increase in the lead distance. But once both the assets ramp up, we are reasonably sure from earlier INR 300, we have indicated that we will be going close to around INR 280. I think that is where we might land up.
How much potential savings we would have, again, diesel demand where it is, probably we should expect around INR 50 to INR 60 for some saving, but that is very subjective. It again depends on the route map and the tolling and all, but the indicative number is close to around INR 50 savings should be expected once only new capacity gets ramped up, make good shape.
Sure. And sir, just the last thing on the Andhra, I said and the overall debt number that we have of around INR 1,170 crores, just wanted to get the right sense on exactly how much of that is earmarked for the Andhra asset and may be deposited by us?
Yes, INR 500 crores is what we have earmarked for acquisitions that is what you need to exclude from the overall long-term debt of what we have.
You have indicated in the past that if it fall in an unforeseen scenario of this asset not coming to you by -- because of any whatsoever reason, I'm not going into the [ lighting ] matter and Dalmia coming into the picture, et cetera. But for any reason whatsoever, if it doesn't come through and you're saying it will get decided within this quarter and what's the equity upside on this INR 500 crore that you may have?
Sir, I cannot comment anything on those issues. What -- there is always a possibility that the asset would go in one of us -- how much, what is all? Only time will get up. So it is too soon for us to comment on that. I will be very happy coming back to you as soon as we reach to a point where we could disclose those numbers.
Okay. But sir, only one clarification. If it were to go into a bidding thing, are you open...
So, it is in that process only, sir. it is not. It is actually into that process.
Okay. And so now you have the option to, of course, increase your bid or walkaways?
Sir, the process is ongoing. So nothing is concluded as we speak. So sure hoping or doubling doesn't device. We are still part of the process. So the market is yet to conclude if you understand.
The next question is from Shravan Shah.
A couple of things that are first in a finance cost. So stability, this is increasing because of the INR 500 crore debt that we have taken from that. So for the third quarter also, we will see the same run rate and the fourth quarter, let's say, materializes then subject is…
It's a subjective issue. So we have not find for the acquisition, sir. It mineralize that bit of portion will get reduced in the [indiscernible] happen. So that's what I would like to highlight, Mr. Shravan.
But at least for third quarter, is 1.5 months, 2 months...
I think it's a subjective issue, as I mentioned, from the outcome of the event, the line basis that outcome, we are hopeful that we should conclude this by end of Q3. If that happens, I think the interest in the debt structure will get transformed the current.
Perfect. Second, sir, our CapEx for the first half is INR 63-odd crores I can see from the cash flow, but we are looking at only INR 30-odd crores. So what's the new number towards the full year of FY '23?
No, I think we have indicated the same serve because partly rollover of both the sets, that's what got indicated here, but we are sticking to INR 30 crores for our maintenance CapEx.
So in the cash flow, though, it is an INR 63-odd crores or so…
Majorly because of the rollover that has happened from last year. But when you have commissioned, not everything has been capitalized. So those capitalizations have happened even in the last quarter or the first half. So maintenance CapEx is not definitely not cross more than INR 30 crores.
Perfect. And the third clarification needed, in terms of the [ trade ], whatever the percentage we are having, so [ 55, 56 ]. So in that 70-odd percent will be the domestic one? Is it outside that you look at?
Yes, Mr. Shravan. We definitely got one shipload of 50,000 just 15 days to 20 days back. The landed cost is around $159. That includes the hedging cost and everything. But for that, the rest of the thing is domestic pet coke. If you look at [indiscernible], the entire thing is domestic is coming from [ IC Yali that is part of our plan ].
The next question is from Parth.
I just had one question. So I wanted to know what is the optionality at each of our 5 plants that we have from there on, from current capacity, is there any room for to increase our capacity?
Yes, Mr. [ Park ], each of our assets, again, Mattampally and Gudipadu [indiscernible] the company has a huge scope. We have a say [ large limestone ] resources. Gudipadu [ is comfortable ]. [indiscernible] is scope for a small increase at least to an extent of INR 0.5 million on the cement side. But the Clinker, we are uncomfortable if it is less than 40 years or 50 years on deposit line.
So Clinker scope is very limited at the group. But in Mattampally as well as in Gudipadu, as I mentioned, Gudipadu for million, we could comparably got close to INR 4 million. In Mattampally scope is huge but we have taken a conscious call that we will only do it after some time because given the South adding a brownfield or a greenfield in-house, not only would put pressure on us, but also on the market growth. That is what is the continuation that we have not to look at those options at this point of time.
Hello.
Yes, go ahead.
So basically, we can add -- if we would want to add at Gudipadu, rather than Mattampally.
Sir, you have to add, the first priority would be a Gudipadu.
Gudipadu. Fair enough. And sir, just wanted to understand what would be the brownfield CapEx cost at current…
It is very, very difficult to address that -- it is -- it could be anywhere between $80 to $100 at this point of time. So it's an innovated level. So it's the services part.
Okay. And sir, just like to quantify a number at Mattampally would be how much optionality?
It's huge, sir. So all …
The land and everything is [indiscernible] every availability is there.
Yes, sir.
Like just to still put a number, if possible?
Sir, I think see, we have indicated close to around 40-odd million tons of limestone is there, which is revenue all. With the potential increase, it could go up to Asia than we had. So even as 800 million limestone, you can see in the growth [ rate ].
So a couple of questions on the chat window. So what is your lead distance for the quarter, railroad mix? And what is the demand potential from Telangana and Andhra Pradesh? And what is the fuel inventory?
Now I think we disclosed in our presentation reasonably in a detailed fashion amount we railed on mix and bill distance, but let me read out in regards. We currently lead the sense for Q2 is at 271 kilometers. The railroad mix, yes, we did indicate the Jajpur movement is mostly by rail in terms of the outward. But for that - except for the Clinker moment, we have not done any real movement on the outward rate.
Only the -- I mean the invert, which is primarily to do with the Clinker and all is going only by rail, both to Jajpur as well as 80% of by [ where ] and by rail. Coal invoices from signing mostly is by rail. So that sums up. Now looking at our own volumes in terms of -- for each of the states, yes, we did close to INR 1.04 million. Out of that, close to 50-odd percent is for Telangana. We did close to 16% in to Tamil Nadu, 9% into Karnataka, 6% in the Maharashtra, 7-inch for Orissa and Andhra Pradesh, and there is a 1% to all the other remaining states that would supplies [indiscernible].
Sir, one more question. What is the fuel inventory that you're carrying on?
Yes, the fuel inventory, we are running at -- for the full quarter, we have the inventory set. The import domestic as well as reported and the domestic pet coke, we are running with 1 quarter.
Sir, next question is from Virat Kohconi. Our Indian coal mix was 30% for this quarter. Despite this, the power and fuel cost was in excess of INR 2,000 per ton, which seems to be quite high compared to the others who have reported.
I cannot compare with the others. In our case, the power and turn costs got limited surely because the CPP which consume coal, where we had to go for the expensive goal. We have taken a conscious desi to switch off the CPP and go back to the grid because it was costing close to around INR 12 per unit. That also has increased the overall a power and floors. We hope that these trend lines would put us in a better stage in terms of the coal availability as well as the pricing. That is not the case, sir. So that probably has pushed us to be slightly higher compared to some of the peers.
Also, you have to look at the lending ratio. Though we did slightly higher, but still we are close to 50-50. I think the minute we get aligned, which is not very fast that once will get aligned with most of our peers in terms of same blended cement ratios as new. Our parent fuel costs, although we looking at a lot lower than the others. But in our case, it definitely impacted power and fuel cost for the last quarter did impact the overall the coal usage and the availability did impact the overall cost but we have made those decisions now, and we are more than one that in the current quarter, is we are expecting INR 250 saving on the account of power and fuel costs.
Okay. Sir, the next question is from Rashesh Shah. Can you please give us the volume breakup between the existing and the new units?
Gabriel will be sharing that. We did for the quarter, yes, we did close to around quarterly half year for sure yes, we did close to 0.25 million, which in bone units, around 70-odd tons from Jajpur and 190,000 tons from again for the cost half. Yes, the monetization unit for Guntur is 77,000 and for Jajpur 35,000 tons from Odisha.
The next question is from Rajat. What is the CapEx left to be done? And by when this will be complete, how much capacity expansion will happen because of that? And also what is the capacity that we are looking to add from Andhra Cement?
The CapEx has indicated that for both the assets, it is completely done that more or less concludes the CapEx spend on the assets that we have at both Odisha. The only small operational CapEx that we are doing is around INR 30-odd crores. I think we did close to INR 10 crores, INR 12 crores probably would add up in the next 6 months on this account as well as a large share that is under regimentation at Mattampally. So that is what we are looking at, at this point in time. Now from a diligence perspective about what we have looked at Andhra Cement 2.6 million tons. That's what we are hoping to get added up soon as it gets at demand.
[Operator Instructions]. In meanwhile, I have a couple of questions. So last time, you had mentioned about Sagar coal that was -- there were some certain issues on supply. So have they been sorted now?
They have been more or less started. Though the rents are still coupling a bit. But from a connectivity perspective, we did receive good volumes in the last month. And we are hoping most of the FSA signaling start fulfilling the entire SFA obligations from there and going forward.
Sir, your view on the new capacities that are getting added plus the M&A activity that is happening in the central region per se. Do you think that over a period of next 1 to 2 years, you might see a lot of CapEx there with also older plants getting revived and things like that, that might add pressure to the central vision?
Yes. Mr. Manish. I think the central region is more of [ rupee safe the action ] is in terms of -- we are expecting a huge demand to pick up in rupee. Fortunately, the demand looks to be far higher compared to the potential supply that is likely to happen. So a lot of people assume that the JP is not working, but the fact is that JP is working probably at a lesser one. So the incremental volume that is expected from ramping up of that is probably should get absorbed in no time because the demand looks to be in a very, very high scenario.
Of course, Jajpur plant, both are likely to happen probably in the coming year. But by the time of the assets come up, we believe that demand should be in a good situation to absorb whatever is adding up. Usually, the supply and demand equation in central was always hovering more demand and less supply. Probably the gap probably will get narrowed down when all these things get commissioned. But from the way the demand is shaping up. We think that the old trends might probably continue even with the new supply year, things look to be promising than ever before.
Sir, any particular segment that is driving demand there?
I think it is governing both on infrastructure side.
That's it on my side. So that next question is from Shravan.
Sir, just wanted to understand that do you -- are our gearing or has this played in terms of the [indiscernible] this to structure being slightly modified by the large players or some of the competitors in your [indiscernible]?
Mr. Shravan, I think it's an ongoing effect. People keep changing the name some of those discounts. But the reality is that as some amount of the RD/PV or whatever people would call some amount of retaliation we put it. A lot of marking out has happened on this front. But it's not just now it was the case for the last couple of quarters now. We are seeing some reductions on those RD/PVs in our region we have to.
[Operator Instructions]. The next question is from [ Divatro Pivan ]. Another initiative master plan of Government of India is launching the Unified logistic interface platform, which promises to reduce the overall logistics cost by 10% to 12%. What is the impact of on Sagar Cements freight cost and cement industry as a whole?
So I think it's a great platform and a great policy document, but it's on the overall logistics, what impact it will have on cement. I think it is very limited. In case, we are not expecting that to save in a big way because it's a multi-modal. The problem is not with the fright alone but the problem is with the handling costs. So in a multi-model scheme, typically, if you have more number of handling, it may not come to our SQ. So we would rather see we have been looking at it. I would not say that we have looked at it completely, but we would want to take some more time before we could make a country to a remark.
But from the brief overview that we have had and some discussions we had with the experts in the procure segment, in our sector, the bigger challenges are the handling side. So on that front, we are not expecting a major selling for our set. I cannot speak about the industry. There are some things that we have seen with the bunker transport, container transport will be rail. We do think that there is some savings, but we have not really done calculation for assets because that may not be a fix case for us. At the industry level, we do believe that Bharti just launched one of its model.
This is that. I'm sure if they have launched my assumption is that it definitely has some advantages. That's the reason why they have latched. In our own case, we do not have assets which would add value from that perspective at this point of time. So from our side, I don't think we have it adds value to us at this point of time. That's what we would like to comment on that.
The next question is from Nikhil. What is the outlook on demand, especially in the South region?
The outlook on demand, typically, again, I have to go back to the history, 2 years before the election, it peaks. So we are just getting into that second year from next year onwards. So we will believe that we are in good time as far as demand is concerned. But for the current year, sir, most of the states have actually performed 20% higher than last year. We do think that by next year, first half, we should be crossing pre-COVID levels for demand in most of the southern states.
The next question is a follow-up from Rajat. For Andhra Cement acquisition, how are we looking to finance that and if it was to come to us.
Sir, I think we did raise equity as well as I did, I think that should more or less help us with the internal access acquire the assets. So we are reasonably fully funded for the potential acquisition. And most of from an Andhra perspective, I think we are fully funded from that perspective. We took a INR 100-odd crores of structured debt. We also raised INR 350 crores of equity from rating, and we do have some internal across. I think these 3 should help us acquire the assets.
Sir, does that mean that the current debt level should be the...
Yes, more or less, the debt levels are fixed because there is a final INR 50-odd crore of debt, which is more from an acquisition that we have borrowed that should help us the EBITDA.
And the next question is from Prakhar Porwal.
Like as you mentioned, demand outlook in South India. So basically I had a follow-up question regarding in that, as we have seen in the last decade, demand in South has been stagnant and not as increased on an overall, it's a normal level. So I just wanted to know with the capacity utilization that target currently as of 49% overall in India. So basically, the current consolidations that are not happening, how does Sagar into what actions or what has thought to maintain or to increase those utilizations amid this segment demand in South India?
Sir, I think what you are looking at 49% is very specific in the last quarter better, [indiscernible] 65. Let me take 1 year forward, not go beyond that. We do expect more of a capacity dilation to the main way they have been for last 4 years, we are not expecting a major shift in that purely because there is an incremental demand.
Contrary to what most of the things, South did grow sir. It's not that it remains stagnant, but supply also has atopic. So given the supply position at this point of time, for at least next year, we do believe that the capacity is more or less will be very, very similar to how it has been for the last few years. Beyond that, we do expect an incremental demand unless some unusual supply companies in the market, it is likely that there could be a small surge or increase in the capacity utilization.
But I think 80% capitalization is 100% -- near 100% in outlet point of time. Just to reiterate sir, in FY '11, '12, the demand in South was INR 65 billion. Pre-COVID in FY '19, the demand reached to INR 81 million. So it's not that it remains static. It grew, but so is the supply. So that's one of the reasons why the capitalization more or less remained static, not that demand was bad, but supply was more than the demand that got added up.
And we do believe that next 2 years, we should go back to the stat number that we have witnessed at around INR 81 million. Probably, if not this year, at least by halfway through next year, we should start seeing those numbers in working because that was the trend. Looking at the historical patterns, a year, 2 years before the actions. So most of the supply starts -- the demand starts picking up quite sharply. So that's what we are expecting even this time around.
Sir, the next question is from Arun. Does the upcoming Delhi, Mumbai expresser hold helps a group plan to supply cement at the lower cost for the catchment area?
For sure, sir, but I think our group area has been low. And [ Baroda and had are also not faster ]. So it will definitely help. We don't see a challenge in the demand in those regions. It's a question of realization. We are not seeing any issues with the demand for our asset because it's just a real time plant. And the capital markets are reasonably strong there. So this will definitely add up. Will it make a difference? Yes, but to what extent is the question to ourselves?
Sir, the next question is from Rajat. Do we have any target for rail dispatch mix, lead distance blended cement mix for the next 2 to 3 years?
Yes, we do not have a target for the rail dispatch mix, but we will definitely have a target for the recent, as indicated, we are targeting at 275 kilometers for us to achieve that number. Fortunately, the current assets even the road mix should help us reach that number. From a blending perspective, sir, we were always sub-40 all these years. We are looking at a 70-30 of [ miz ] but 70% would be blended over the next couple of years. 70% will be [indiscernible] and 30% to be the OPC.
The reason why we believe that OPC will still be there is because some of the large institutional buyers would still prefer an OPC for them to do the lending. So that's one of the reasons why we are not rolling out completely the OPC. Our internal target is to achieve 70% blended with a 30% OPC mix. Rail space again is subject to the markets that we service and the overall the logistics cost that it is likely to see. So we go with the overall a cost, not fixated on the [ rail dispatch ]. Most of the markets that we are servicing and the assets that we have, I think, really is not a big option for us. Road typically has given us the less freight rates into the market. That's one of the reasons why we are one of the lowest-cost freight operators in India for this kind.
The next question is from Jashandeep Chadha.
I just wanted to ask and understand what limestone results are we getting with [indiscernible]. Also on the basis of the land package that we are getting in limestone, what brownfield optionality do you see in other cement?
Yes, Jashan, we are in to get it. So we are one of the other person who is big for it. Andhra, as indicated, has close to around 155-odd million tonnes of limestone sets.
The next question is from Rajan Shah. What is the market share of Sagar Cement in India?
Yes, I think I will discuss Manish to address that question rather than myself or my trends were strong and if you look at all India market, our assumption is that we are INR 5 million or INR4 million to INR 5 million supply sir. Is it supply-driven or the demand-driven? I have never understood, but we would be close to INR 5 million with close to around 0.9% to 1% share in the overall demand in...
Sir, the next question is from Rajan Shah. With the improving road infrastructure across the country, have you seen consistent efficiencies coming in way in terms of overall logistics cost?
Sir, I think the issue there is the efficiency of [indiscernible] turnaround times have come down quite heavily. That obviously indirectly helps us to reduce the overall freight cost. But what one has to keep in mind is most of this infrastructure is happening with storage. So there's a [ meddle ] effect on the overall cost even on that. Turnaround times definitely have come down sir.
Earlier, when I started my caller with us to take close to Iran, we hear from our plant to [ Hedevag ], which is 200 kilometers away. Today, it takes less than 5 hours to reach. So there is a huge, huge -- the carrying capacity definitely has gone up from what was sub-2025. So the people are talking of near 50-ton to 60-ton carrying capacity. So these things would definitely add up but unfortunately, on a shorter town. The infrastructure buildup also is happening with the tollages, so that more or less is the gating of cost but this could be a short term, but medium to long term, we definitely think it is [indiscernible] say quite a bit.
The next question is from Vincent Andrews. How much would be the cash outflow for Andhra Cement towards acquisition and subsequent CapEx on that?
Sir, it is too soon. So we are in the bidding process. We will be very happy as soon as it reaches to some point. We'll be happy discussing that. At this point of time, it's individual process. So it's too soon for us to comment on that.
[Operator Instructions] There are no further questions. I would now like to hand over the call to you for your closing comments, please.
Thank you. We would like to once again thank you for joining on the call. I hope you have had all the answers you are looking for. Please feel free to contact Sagar or CDR, should you need any further information or you have any further query, we'll be more than happy to discuss them with you. Thank you, and have a good day. Thank you, Manish.
Thank you. Have a good day.
Thank you. That concludes the call for today. Thank you, everyone.