Shree Cement Ltd
NSE:SHREECEM
| 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 |
23 935.05
29 560.8874
|
| 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.
Shree Cement Ltd
Earnings Call Analysis
Q2-2025 Analysis
Shree Cement Ltd
The current economic situation in India presents mixed signals. The recent implementation of the FY '25 union budget has caused delays in government spending on infrastructure, which is a significant driver for cement demand. Alongside, an unusually long monsoon season has detracted from construction activities, evidenced by a softer manufacturing PMI and a 1.8% contraction in core sector output in August. As a result, urban demand has dipped, leading to a 7% year-on-year decline in volumes for Shree Cement in this quarter. However, the outlook isn't entirely bleak, with signs of recovery in rural areas, thanks to improved agricultural conditions and government initiatives like MGNREGA, which could catalyze demand in the coming months.
In this tough market, Shree Cement has proactively adjusted its strategy to prioritize value over sheer volume. The company has maintained discipline in pricing, enabling a slight 0.4% contraction in revenue per tonne against a broader industry trend of declining prices. By emphasizing premium products, Shree Cement has successfully increased its share in the trade segment to 15%. The operational efficiency measures have driven an 8% reduction in total costs, showcasing the management's capability to navigate challenging market conditions productively.
Shree Cement reported a cash EPS of INR 200 per tonne, with net EPS at INR 25 for this quarter. Despite the challenging environment, cash EPS only saw a marginal decline of 15%, signaling strong underlying performance fueled by internal cash generation rather than reliance on external borrowings—indicative of a cash-centric operational philosophy pursued by management. Notably, other operating income improved to INR 66 crores from INR 45 crores in the previous quarter, highlighting an ability to enhance profitability amid adverse conditions.
The company achieved a notable reduction in total costs per tonne, from INR 4,503 to INR 4,122 year-on-year, driven by lower fuel costs due to favorable international rates. Average CV fuel costs fell from INR 2.05 to INR 1.71 per year, enhancing margins further. The management's continued focus on operational efficiency is expected to support Shree Cement in capturing demand recovery and achieving a favorable pricing environment in the future.
Looking ahead, Shree Cement aims to navigate the subdued construction demand through a robust focus on infrastructure-related projects anticipated to materialize as government spending ramps up post-monsoon. The company has reiterated its commitment to maintaining a growth trajectory aligned with industry trends, targeting capacities of over 80 million tonnes by 2028. The upcoming quarter is anticipated to witness a revival in demand, with projected cement realizations trying to stabilize reflecting improved demand dynamics.
Shree Cement's capital expenditure remains on track at INR 4,000 crores annually over the next four years, aimed at fueling growth and capacity enhancements. Future commissionings slated for April to June 2025 will include significant new capacities that should not only cater to expected demand rebound but also strengthen the company's competitive edge in the cement sector.
On the sustainability front, Shree Cement has accomplished a significant milestone, with green power constituting about 54.8% of total energy consumption, the highest in the cement industry in India. The company is on pace to further enhance its green energy capacity by adding 90 megawatts by March 2025, bolstering its commitment to sustainable practices and further supporting long-term profitability.
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the earnings conference call for the quarter and half year ended September 30, 2024, of Shree Cement Limited, hosted by PhillipCapital (India) Private Limited.
[Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vaibhav Agarwal from PhillipCapital (India) Private Limited. Thank you, and over to you.
Thank you, Yashaswi, Good evening, everyone. On behalf of PhillipCapital (India) Private Limited, we welcome you to the Q2 and H1 FY '25 Call of Shree Cement Limited. On the call, we have with us Mr. Neeraj Akhoury, Managing Director; Mr. Ashok Bhandari, Senior Adviser; and Mr. Subhash Jajoo, Chief Financial Officer at Shree Cement.
I would like to mention on behalf of Shree Cement Limited and its management that certain statements that may be made or discussed on this conference call may be forward-looking statements related to future developments, and these statements are based on current management expectations.
These statements are subject to a number of risks, uncertainties and other important factors, which may cause actual developments and results to differ materially from the statements made. Shree Cement Limited and the management of the company assumes no obligation to publicly alter or update these forward-looking statements, whether as a result of new information or future events or otherwise.
I will now hand over the floor to the management of Shree Cement for their opening remarks, which will be followed by interactive Q&A. Thank you, and over to you, Neeraj sir.
Thank you. Thank you, Vaibhav, and good afternoon, ladies and gentlemen, and thank you for joining Shree Cement's earnings call for quarter 2 of FY '25.
While we are one of the late companies that are announcing results, let me summarize our view in terms of both the -- our view on the economic performance of -- for the cement industry, but also covering up the company performance as well.
So in terms of the overall country economic outlook, as you all know, the union budget for FY '25 was passed sometime in August '24, post the Lok Sabha elections. This led to a bit of a slower rollout of the government expenditure on capital and infrastructure projects. Also, the country witnessed for this year a very prolonged and intense monsoon. While this augured quite well for the agricultural sector, I'm sure, it had a calming impact on the cement this industry.
Consequently, there was some softening in the manufacturing momentum as well. Reports suggest that the manufacturing PMI hit an 8-month low in September and the core sector output shrank by almost about 1.8% in August. These conditions created a weaker demand scenario across sectors, including in building materials and cement. Housing sales and new launches fell during Q2.
Overall, urban demand moderated due to the softening of the consumer sentiment. However, the good news is that the RBI's survey indicates improved business expectations for the upcoming quarter. Rural demand is improving as reflected in increasing FMCG volume sales and a rise in the 3-wheeler and tractor sales. This has been supported by above normal monsoon boosting Rabi sowing and an increase in minimum support prices as well and the government initiatives like increased allocation to MGNREGA scheme.
Overall, the outlook for the Indian economy continues to be positive, if not good, underpinned by a stable external sector, positive agricultural outlook, expected improvements in demand, supported by the festive season and the likelihood of an increase of government spending.
For us at Shree, it was a very challenging demand environment. We adopted very deliberately a strategy of value over volume with a higher focus on the high EBITDA, high-value products. While all industry level cement prices declined on a sequential basis, we were able to keep it -- contain it with our disciplined pricing and focus on premium product strategy.
Our revenue per tonne dropped to just about 0.4%, outperforming the industry average. Premium products were central to our strategy and with the share in the trade segment reaching last quarter to about 15%.
In line with the industry-wide phenomenon, our volumes declined by 7% year-on-year in the last quarter. We, however, kept a sharp focus on efficiency in our operations, which helped us achieve about 8% increase -- reduction in the total cost, excluding depreciation and interest, from 4,503 per tonne to INR 4,122 per tonne on a year-on-year basis.
Supported by favorable international fluid prices, our average CV fuel cost reduced from INR 2.05 to INR 1.71 on a year-to-year basis. This operational focus positions us well to capture future demand and the price recovery.
Going forward, we are very confident that government-led infrastructure projects will play -- continue to play a key role in demand growth. With monsoon, good monsoon, higher demand is expected on the back of good Kharif crop and improved farm prices.
However, sustained price improvement depends on -- also on the steady demand recovery across segments. We believe that despite the current pressure, we are navigating these conditions by strengthening our brand, focusing on key optimization and continuing operational excellence.
Very happy to report that on sustainability, we have made strong progress with green power comprising about 54.8% of our total power use, which is the highest in the cement industry. Work on adding 90 megawatts of green power capacity is going on, while we expect to complete the same by March '25. All our facilities remain 0 liquid discharge. We achieved over 7x water positivity last year. With plenty of rains this year, we aim to improve this further.
Our commitment to sustainability is reflected in our improved score of 73% on the Dow Jones Sustainability Index, which is the highest in the construction material sector in India and a significant increase from last year's 62%.
Our ongoing expansion projects in Jaitaran, in Kodla, in Baloda Bazar, in Etah are running on track, and we expect all of them to be completed between April, June next year. We remain committed to reaching our goal of over 80 million tonnes capacity by '28 and are actively identifying growth opportunities to meet the target.
Thank you very much to give me a patient hearing, and now we can go to the question and answers as well.
[Operator Instructions] We'll take a question from the line of Jyoti Gupta from Nirmal Bang.
Well, my numbers quite satisfied the results. But I just wanted to know, have we lost market share by any chance? Because there's a stark decline of almost 7% in the East market or anywhere? Or has been some change in the strategy in terms of volume sales?
No. So as I said that we were quite aware that in Q2, the demand for cement was very subdued, if not negative. And hence, we were very clear that we should try to retain and give more importance to price over volumes. And this is why you saw that while we have lost on the volume, but we were able to deliver a better result -- a relatively better result in terms of price, yes.
I do not have the market share figures, so I will not really quote there. I'll not go in that direction. But what we are aware that by all the reported figures that even the country demand has been negative in the last quarter.
Okay. Sir, my next question is how do you perceive the company -- second half for your company? And what is -- what would be your guidance in terms of volumes? And is there any increase in prices, which you are seeing in your key markets? And how do you see that -- will -- do you see a substantial improvement in EBITDA per tonnes or are we going to be in the same range in the third and the fourth quarter as well?
So ma'am, as we are speaking now, just about Diwali and Chhath festivals are over. On the macro side, we believe there is every reason for demand to be better in the next 6 months versus the last 6 months, largely because most of the budgetary allocations will now get converted into purchase orders in across states. That is the hope and optimism that with which we are working.
So demand growth should be positive in the next 3 months and 6 months. If that were to happen, then, as you know, in cement, our industry demand growth has a close linkage with also the price evolution. If this were to happen, then we believe if demand is good, then we should see a better pricing environment. How much of that will translate into actual price is a difficult topic. But my sense is that if demand goes up and improves the way it should improve now, then we should be facing a better price environment.
[Operator Instructions] We'll take the next question from the line of Amit Murarka from Axis Capital.
My first question is what was the cement realization in the quarter?
Cement realization was INR 4,447 per tonne.
Right. And so this is better on a Q-on-Q basis? Because what I have is INR 4,469 for -- or it was flattish on a Q-on-Q basis? INR 4,469 was the number in Q1, right?
Okay. In Q1, the figure was INR 4,464.
So in that sense, the cement realization actually was flattish for you on a Q-o-Q basis?
Flattish. This is what I was saying that our focus has been to maintain the realization knowing fully well that in Q2, demand was subdued. The larger focus was how do you manage your realization.
Okay. Sure. And also in terms of the clinker sales, like what would have been -- how much was the clinker sales in the second quarter?
So clinker sales was also at about 3.1 lakh tonnes, yes. This is also low compared to 4.2 lakh tonnes in quarter 1.
Got it. And lastly, on the capacity expansion. So what I understood, you said that all the units will get commissioned between April to June next year. So till March, then there's no commissioning that is planned, is it?
So our estimate, as we speak in November, is that the commissioning should be happening in April to June. Of course, as management, we will try if we can prepone few things. But I am reasonably sure that commissioning should happen between April to June next year.
And this is both for clinker and cement units, right?
Absolutely, absolutely.
[Operator Instructions] Next question is from the line of Keshav Lahoti from HDFC Securities.
Sir, may I know what is the regional sales mix for this quarter and the realization region-wise?
I can give you a regional sales mix. We were -- we've done about 58% in the North, about 31% in East and 11% in South. Remember that our North constitutes both also Gujarat as well as parts of UP, right? So 58%, 31%, 11%. I don't have the realization breakup, so I will not be able to give figures. I'm asking my CFO, Mr. Subhash Jajoo, if he can share those numbers with you later.
Understood. And can you give an idea about how has been the growth region-wise in this quarter year-on-year volume growth?
So North growth has been about negative -- you're talking about Shree, right, not the industry, yes?
Yes, yes, Shree I'm talking about Shree.
It is minus 6% for North, minus 8% for East and about 10 -- minus 10% for South yearly, yes.
Understood. Got it. It's good to see -- heartening to see 15% premium sales mix. So how will this number shape up in upcoming quarters?
So as we speak now, we would like to stabilize in the -- going forward also at around the same numbers. Once we stabilize, then we will take the next jump to a higher level.
And what was the lead distance for the quarter?
433 kilometers. Again, it is down from 453 kilometers or 475 kilometers last year, yes, 475 kilometers last year. Current -- this year is 433 kilometers.
Okay. So the company has possibly sold less in far off markets?
Absolutely because that's where lead distance has come down.
So identity this lead distance will stay over here or possibly in upcoming quarters as the prices will pick up, this lead distance might increase?
Too early to say. Our intent would be to manage the lead distance around the same numbers. But in case there are some markets where we find that attractiveness of prices is high, we might try to go back to those markets.
[Operator Instructions] Next question is from the line of Ritesh Shah from Investec.
Sir, first on working capital, specifically on current...
Mr. Shah, can you use the handset mode, please? Your audio is not very clear.
I'm on the handset. I'll just repeat the question. Is it possible to provide some color on the credit days, which has been increasing consistently over last several years?
I'm sorry, sir, your voice is little -- not coming very clearly. Can you repeat the question?
Hello.
Yes. Your voice is not coming very clear, yes.
Sir, my question is on credit days. It has increased [Technical Difficulty]. My question is on credit days. It has increased for first half as well as last couple of years. How should one read into this?
Your question is about credit days increasing, right?
Yes, sir. So March '21, it was 20 days. If you look at March '24 and even for the quarter ended, it's like 36 days. So the number has increased continuously. So is there some change in strategy? How should we understand this?
We'll get back to you on this, yes. Our numbers are a little different than what we are quoting. Let me -- we'll get back to you on this. But having said that, no, there is no change in strategy in terms of market approach. We still operate on the same terms with which we operated in the last few years. And it is possible that last quarter, the demand being low, the outstanding has gone up slightly. Otherwise, but there is no change of strategy, yes.
Sure. And sir, my second question is, if I look at last 2 years or the last 5 years, the discounts that we offer on a per tonne basis, it has increased significantly. So if I look at the CAGR the last 2 years, the number is nearly INR 600 per tonne, which in FY '19 used to be INR 330 per tonne. Again, is this a conscious measure to increase the discounts as we widen the spread or as we try to push more volumes? How should we understand this variable?
No, no. Wait a minute. This is Ashok Bhandari here. Please understand that we are saying that our rebate and discount are better than how our EBITDA is increasing. There is some disconnect in the understanding itself. You will appreciate that this quarter, amongst the peer book, we have the highest EBITDA per tonne. We have a realization, which has a minimal drop. We have taken a large volume drop. But that doesn't mean that we have to do a rebate and discount increase also. And if that would have been there, then our EBITDA would not have been INR 780 a tonne. It is highest in the industry. Will you acknowledge that?
Yes. Yes, sir. But sir, my question was from FY '19 to FY '24. If we look at the last 5 years, 6 years...
Wait a minute, my friend. My friend, please appreciate that '19 to '21 is not comparable at all because of COVID years. '21 to '24, if I have an increasing EBITDA trend, then irrespective of rebate and discount by NCR is keeping on increasing, or my cost is going down far at a much higher pace than the NCR. You appreciate that. So we'll do the analysis. As you have pointed out, we must know. But then how is it possible that I'm having an increasing EBITDA with an increasing rebate and discount. It can't be.
Yes, sir, that's why I asked the first question.
Yes, if the market dynamics have changed or if my market geographies have changed, then the discount might have got adjusted. But then ultimately, my ultimate profitability is increasing.
Sir, I'll agree to what you say, had the credit days been steady, but the credit days have also increased besides the discounts.
As I said, one of the topics that we covered is that last quarter has been a difficult demand month. Therefore, outstanding has -- may have gone up. I have -- I don't have the last 5 years figure. But last 3 years, if I look at it, that figure I have, that we are operating at a discount of roughly about the same range of 600 to 650, and that is not really changed. So I don't have the 5 years figures, so I'm not giving you that. But last 3 years, I'm not finding any change.
Ashok Bhandari here. What I suggest is that you exactly word your query and send it to either Mr. Subhash Jajoo or me, and we will give exact calculation. There may be some different ways of calculating things.
We'll take our next question from the line of Rahul Gupta from Morgan Stanley. [Operator Instructions]
Sir I just want to understand one thing. In this quarter, you've prioritized premium products versus volumes. If I remember right, in the first quarter, you shifted some volumes from North to East, where prices are relatively low, right, and you gained market shares on volume. So just trying to understand what is your strategy on volumes going forward? Can you just help us guide how you will fare versus the industry over the next couple of years?
Yes. So what we have done in -- if I compare last few quarters, it is true that last to last quarter, quarter 1 of this year, we had taken certain strategy. For now what we have done, let's say, in North that we have considerably reduced our non-trade sales.
So our trade sale, as an example, in North has gone up to plus 65% ore, which was up from 59% in quarter 1. And in non-trade, we were at 41% in quarter 1, we have come down to a level of 35%, yes. So that's the kind of approach that we have taken, which I told you in the very beginning, that price was more important for us than volume in this -- in the last quarter. And hence a number of actions were taken of right geography, right segment, right product to make sure that we are able to deliver a better result on the realizations, yes.
Got it. So just one follow-up. Assuming that -- given that you have reached your initial target of 15% premium products and you'd want to normalize this going forward, how should we look at volumes over the next couple of years?
Volumes performance, I am convinced we should be in line with the industry demand growth, yes. Sometimes a little higher, sometimes a little lower. But we should be broadly in line with the industry demand growth.
[Operator Instructions] Next question is from the line of Satyadeep Jain from AMBIT Capital.
I wanted to follow up first on the question asked by previous participant. I just want to understand the strategy a little better, and then I'll ask a follow-up question. There was a strategy of taking market share, improving utilization and improving pricing. And quarterly, it seems -- we're not able to figure out what exactly is the strategy because it seems like the goalposts are changing every quarter, if I'm not mistaken.
I just want to understand, when you say market, you expect volumes to grow in line with the industry. You have dropped the utilization market share guidance and focusing on maybe improving pricing? And how do you plan to improve pricing from here on? And then I'll ask a follow-up question, but that's the first question.
This is Ashok Bhandari here. Please understand that there is a classic disconnect between increasing volume and increasing pricing. If you want to chase volume, you have to give up on pricing because everybody else will drop the prices to chase the same value. That is one part of the thing.
Number two, as Mr. Akhoury pointed out, we were seized of the fact if you recall my con call of June '24, I said 2 quarters I find the industry to be in a difficult phase. We were seized of the fact that the volumes will be lower, a, because of delayed union budget, b, because of monsoon season. Both got aggravated. The budget ultimately got presidential accent on 16th of August.
So we were anticipating practically no demand from government, who is the major buyer for infra. If you think that 60% is [Technical Difficulty], 30% is infra and 10% is the industry, and if we have operated at about 60%, then we have operated -- we have catered to the housing. But 30% demand was just not there. This is all a dynamic situation, my friend.
Tomorrow, if the government demand comes up, if the pricing moves in a different manner, we will not be hesitating in increasing our non-trade share. It was well thought out, well understood that there will be very low infra demand, and that is why the strategy was adopted. We don't -- you have to be dynamic enough in the business to make more and more money, whichever sale mix really gives you the best results, you will move to that. So what is the strategy? The strategy is to maximize profits come what so may.
Are you, Mr. Bhandari, saying the industry volume growth was minus 7% for the entire industry in this quarter Y-o-Y when you said...
No, my dear friend, one second. You are forgetting a major data point. Q1, the entire industry was negative, and we were 1% plus. And we had, at that time, thought that no other demand should be robust enough.
And when we realized the delay and the elections and the monsoon, we have changed the strategy. We are lowest in growth in volume terms. But then our EBITDA has become highest. There is nothing -- please understand that we are in a -- we are running a business empire -- business. We'll try to maximize profits. Back to Mr. Akhoury.
No, I think you have explained very well. Let's not use the word strategies, more of a tactical term [indiscernible] what kind of macro environment we are facing and therefore would be the right thing to do.
Second question, I just wanted to ask on a follow-up to that. Mr. Akhoury, the guidance of growing in line with the industry for the next 2 years. I just want to understand why the urgency to add so much capacity if you want to grow in line with the industry. Because you are adding capacity, new capacities are coming up. What is the [indiscernible] for all these capacities you're going to grow in line with the industry?
No, we are talking about next 6 months. We are talking about projects that are already in the pipeline under construction. In fact, now in the last part of the construction, yes, which will be now commissioned in the next 5, 6 months, yes, 7 months, yes, kind of.
What we are saying if the demand were to grow at the CAGR what we have observed in the past, it makes sense for us in order to conserve and maintain our market share to go up to 80 million tonnes by 2028 is what the guidance we have given to all of you, yes.
[Operator Instructions] Next question is from the line of Raashi Chopra from Citigroup.
Just on the premium product, you mentioned that you wanted to stabilize at these levels. Are we talking about like a 15% for a stable level for premium products?
For next few quarters, 15% is what I have said, yes.
And the last quarter was about 8%, right, 1Q?
8%, I believe, yes.
9% around.
9%, yes.
9%.
Okay. And what was the overall trade sales proportion you mentioned for the North, but just your overall trade sale?
We are at about 74% plus, ma'am, yes. Total is 74% at all India level.
Okay. Then just moving to the cost side. You mentioned that the second quarter costs are about INR 4,122. So that's essentially the total cost dividing by your cement volumes, right? That's not just cement cost?
Total cost, ma'am.
So the decline that you see in the EBITDA on a sequential basis despite having a flattish realization is attributed to both cost as well as some other income going down, correct? Power or other miscellaneous income?
Well, let's not put it like that, Raashi. Yes, the realization has dropped. The power is -- we don't give any separate figures. So we are talking of blended EBITDA. And obviously, if there is a dilution in margin, it is because of a relatively lower reduction in cost. Other income is more or less the same. Other operating income has also slightly gone down.
So revenue from operations have deflated more because of other operating income. My other income, which is treasury income, is about INR 130 crores, INR 135 crores. And costs, though we have some declining trend -- if you want, I can exactly quote you the numbers.
Quarter-on-quarter, the capacity utilization went down to 56%. So obviously, the recovery of fixed cost has gone lower. Our total clinker rate is 76% versus 96% Q-on-Q. Our cement production is 70% vis-a-vis, 91.6%. So you can undermine that this -- all these reductions have led to lower recovery of fixed costs and lower contribution. Am I clear to you, Raashi?
Yes, sir. Clear. And on the fuel pricing, the INR 1.71 the consumption cost, where are we at now?
We are -- this quarter, we will be at about INR 1.65, INR 1.64 because of the pipeline inventory, which we are carrying. But today, we are purchasing at INR 1.51. So the effect will come only in Q1 '25 or maybe partly in Q4 '25 -- Q1 '26, I'm sorry.
Understood. Then on the -- again, on the green energy you indicated you are adding 90 megawatts by March '25. And beyond that, what is the plan for March '26?
Let me make it clear to you. We have seen and we feel that 60% of the total energy max can be attained from green energy sources. We are trying to optimize this by having a combined -- a hybrid kind of a thing where wind and solar can also be done at the same site to have better PLS. But then these are all in working. We'll get back to you. We are at 54.8% We'll certainly reach 60% by June '25 or something. Back to Mr. Akhoury.
Got it. Sir, one last question on the capacity expansion. Everything is in 1Q FY '26, the 3 million tonne Bangalore expansion, when is that coming, the grinding?
Ma'am, we are still working on it. We are trying to clear some of the -- getting some of the clearances done. Once that is done, then we will be able to be more accurate about when will the Bangalore facility come.
We'll take our next question from the line of Prateek Kumar from Jefferies.
My first question is on this other operating income or like the numbers you mentioned. So does your reported realization of like this INR 4,400, INR 4,700. Does it include the impact of subsidies? And has subsidies number changed on a quarter-to-quarter basis?
Prateek, what I suggest is that Jajoo has these details. Let him answer you and subsidy, I have explained you that we recognize only on a receipt basis, which is allowed in income tax also. So we don't want to unnecessarily take, say, the INR 130 crores of subsidy recognized by Ambuja is one-off. Let Mr. Jajoo give you exactly the number of other operating income and subsidy included therein.
Prateek, first of all, the realization number that we have given of INR 4,447 does not include the other operating income.
Sure. Okay.
And, do you want the number of other operating income?
Yes, if you can give, that would be great.
It's roughly INR 66 crores as against INR 45 crores last quarter.
So other operating income at INR 66 crores in 2Q versus INR 45 crores is quarter-on-quarter? That's what you said?
Yes.
Okay. Other question is we got some channel feedback like versus January. We had a big event in January regarding consolidation of brands into one brand and then focusing on premium brand, et cetera. That was a big event and a push there.
So -- and then there was like some -- in 2Q, particularly feedback suggested there was some discontinuation of certain premium products. But you mentioned that payment mix have actually gone significantly higher. So just wanted to cross check there was no change versus what was launched in earlier part of this calendar year?
So the January initiative, I do not know much about the event, but for the initiative. It was an initiative of the mother brand of the umbrella brand, which is Bangur. That strategy of continuing with the Bangur master brand continues, yes.
We have, of course, introduced some new products in the market. Having said that, we also have -- once we have stabilized the volumes of the new premium brands, then we have also bought back some of our most tested brands back to the market, yes. So that is a study that we are following. And I think it is working quite well, given that in premium, we have been able to deliver a better result than last quarters.
Okay. So what specific products have we got back, generally asking?
So Roofon was, for example, one product, Roofon was, one of a very time-tested premium product in the market for Shree, and that is what we have now reinstated, yes.
Similarly, Jung Rodhak was one of the iconic products in India and iconic brands in India. Now it is coming back as Bangur Shree Jung Rodhak, yes. So we have made some tweaks, some changes, some alterations, more to suit the market, but overall, the results have been to our estimates quite favorable.
And then last question on depreciation. This quarter also for a very high depreciation. So what is the expected depreciation number for this financial year and next financial year?
If you look at -- Prateek, Bhandari here. If you look at the half year number, it is at about INR 1,360 crores. So if you just double it because we expect to commission new plants only in April, June. This year, depreciation number should be INR 2,700 crores kind of.
However, I -- you have given me the opportunity to explain that I had always been maintaining, vis-a-vis, Shree that please look at cash profit numbers and not net profit numbers. And I'm very happy to say that in spite of whatever we have done, the cash profit still stands at about INR 200 a tonne, vis-a-vis, INR 259, INR 260 in last quarter. So INR 200 a tonne is the cash -- sorry, I'm very sorry.
INR 200 is the cash EPS. Net EPS is INR 25. And It is nothing but because of an aggressive depreciation policy, which we have been following. We don't -- we have -- we are cash centric, we are not net profit centric.
And cash, you'll appreciate as the cash EPS has gone down marginally only. 15% cash EPS decreased, vis-a-vis, 24% overall or 21% number is quite good. And yes, we'll be at about INR 2,700 crores of depreciation for the year.
And one more thing I want to point out, that the half year depreciation number is almost double of last year's half year depreciation number because of commissioning of 6 million tonnes of new capacity and some waste heat recovery and other small capitalization. Am I clear?
Sure. So we'll be commissioning like a lot of more capacity like in next year also. So that number of INR 2,700 crores will remain as same number at breakeven next year?
Look, I will really get back to you on the predicted depreciation numbers because it all depends on when, whether we commission it on 1st April or 1st June or 30th June. So we'll -- as far as next year depreciation number is concerned, please give us some time.
However, please understand, I'm again repeating that I always maintained that Shree is cash profit centric, not net profit centric. And I shall be indeed very, very happy if you pass the same message to the investors that please don't look at net profit of Shree, look at cash only.
By doing such accelerated depreciation, I am at a faster rate, changing the nature of my non-fungible fixed assets to fungible cash assets. And over a period of time, that makes a big difference. That is the reason why we are being able to finance all our expansions from our own internal generations. We don't borrow.
Mr. Prateek Kumar, does that answer your question?
Yes, sure.
[Operator Instructions] Next question is from the line of Shravan Shah from Dolat Capital.
Sir, first is on the CapEx of 1H. We have done close to INR 1,860-odd crores. So for full year and maybe in the next 1 or 2 years or previously, we said INR 4,000 crores CapEx. So that number remains intact?
Yes, it does. We will be roughly INR 4,000 crores every year for next 4 years...
Got it. And sir, in terms of the October until now November, broadly in our regions East, South and North in terms of the prices, how are they versus the Q2 average?
Marginally better -- very marginally better.
Got it. And a couple of data points are needed. Blended cement sales in Q2, road share in Q2 and fuel mix pet coke in Q2?
Mr. Jajoo will give you the data, please.
The blended sale ratio is 70% for this quarter. And you wanted what other things?
Road share and fuel mix, pet coke.
Roll rate is around 88% by road and 12% by rail.
Okay. And pet coke, sir, fuel mix?
Pet coke is 88% was the pet coke and balance was alternative fuel.
Okay. Okay. Got it. And then this 2028, when we say we will be having a more than 80 MTPA. So is it FY '28 or calendar year 2028?
Yes. This is stretching too far, my friend. Let me -- let us commission Q1 '25, '26, and we'll get back to you. There are, say, the Bangalore unit, Mr. Akhoury has said, we are awaiting regulatory approvals.
Now how does it matter if the commissioning is delayed by a quarter? You say March [Foreign Language], December [Foreign Language], this is -- at this stage, it is extremely difficult to answer.
We'll take our next question from the line of Lakshminarayanan K G from Tunga Investors.
A couple of questions. I just want to understand what is your [indiscernible] utilization you'll target for the year across your central, East and South markets?
You are asking for full year guidance on capacity utilization or you are asking regional guidances?
I'm asking 2 parts. Firstly, I just want to understand for the first half, what has been our utilization across the 3 regions, and yes.
I'm giving it to Mr. Jajoo. He will answer it.
Well, the overall utilization, as Mr. Akhoury said, it is 56%. In North, it was 58%; East, 63%; and South, 40%. This is for the September '24 gone by last quarter.
All right. And in the next 6 months, among the three markets, which market you perceive that there will be relatively a better growth among -- I mean, if you just [indiscernible]?
Better growth as in -- better degrowth you are saying, right?
I mean, volume growth. I mean, if you're looking at the next 6 months quarterly growth, which market among these three would give us better growth?
Are you talking of last quarter or future?
Just looking at the next 6 months. Among the three markets, which markets do you think will grow better?
See, the effort will be to grow, as I said, in order to maintain our market share that will require us to grow across geographies depending on each geography's market demand growth, yes. So -- but my expectation would be that we should see in a relatively better growth in North and South and somewhat more muted in East.
Got it. Our non-India unit, what is the cash EPS that has been generated for the first half? For this year, for the first half, what is the cash EPS for the Middle East unit?
Let me repeat the numbers for you. Q2, my cash EPS is INR 196, INR 197. Q1, my cash EPS was INR 260. Half year '25 is INR 456. Half year '24 was INR 478. Irrespective of such bad market conditions, we are almost maintaining our cash EPS as per last year. That is why I'm telling everyone of you, please judge us on cash profits, not on net profit.
Okay. Sir, my question is that our Middle East unit is making cash profits now?
Yes, it is.
We take our next question from the line of Prateek Maheshwari from HSBC.
Since there is no response, we'll move on to the question from the line of Amit Murarka from Axis Capital.
Just one more question on the other expenses. So I think the Y-o-Y, there is a 70% drop in other expenses when volume is dropped 7% and 2 new clinker units are also in the base this year. So just wanted to understand like why there's a big drop in other expenses.
No, no. Wait a minute. You have to please appreciate. Other expenses as a group includes what? Number one, in last quarter, we had royalties included in other expenses. This quarter, we have reclassified and other expenses have been reduced by an amount of royalty and added to the raw material cost as is being done by most of the cement companies. That is a major reason [Foreign Language]. INR 100 crores is because of that.
Secondly, the logistic costs have also slightly improved because of the drop in lead distance. Number three, as the units are getting stabilized, the stabilization expenses, which were high in quarter 1, has also got sobered down and is likely to remain around this level.
All right. Also like you mentioned that every year, there will be a INR 4,000 crore CapEx that you plan to do. So given that most of the expansion plans, at least announcements are getting over in Q1. So could you just explain...
[Foreign Language]
We'll take our next question from the line of Prateek Maheshwari from HSBC.
Okay. Just one book-keeping question. What would be the power revenue for the September end quarter?
We have stopped giving power revenue separately, and we don't intend to. I made it very clear in last quarter that we'll be giving you blended revenue from operations and blended EBITDA.
We'll take our next question from the line of Uttam Kumar Srimal from Axis Securities.
Sir, what is the current status of our RMC plant? How many plants currently we have got and how many plants we have commissioned [indiscernible]?
So on RMC, as you know, so this is the first year of our RMC foray into this industry. We started with in more in the Western South in Hyderabad as well as in Mumbai, where we had -- we have taken 5 plants in Bombay and 2 in Hyderabad, that makes 7 plants to date.
We are also constructing plants in other regions now. And our -- what we had assured to the investors was 5 plants in year 1. We have already crossed that to 7, as I said. And I hope we will be in double digit by this financial year-end.
We'll take our next question from the line of Prateek Kumar from Jefferies.
Just one question on your stand-alone and consolidated operations. So one of your -- a couple of your plants are now in subsidiaries. So is this meaningful volumes and revenue and EBITDA output in those plants? And would you be reporting like a consolidated volume sometime in the future?
Look, Prateek, what I suggest is that you send your exact query and we will reply. It is -- these figures since we are standing -- we are sitting with stand-alones and consolidated, we don't have these numbers together at the moment. You send us a query, and we'll get back to you.
We'll take our next question from the line of Ritesh Shah from Investec.
A quick one. Sir, you did give a number on blended cement. Is it possible if you could bifurcate it into PPC, PSC, composite cement? And if at all, we have any plans for [indiscernible].
Your voice is not very clear, Mr. Shah? Can you use your handset mode, please?
Ma'am, I'm on the handset. Am I audible now?
Yes, better. Please go ahead.
I don't know the reception at our end is very bad.
Sir, my question is on blended cement, you indicated 70%. Is it possible if you could break it up between PPC, PSC, composite cement. And if at all, we have any plans for LC3 or calcine clay?
And a related question over here is any trends on flash and flag sourcing costs? And if you have any contracts in place, which would be -- which is longer duration and it helps us on the cost curve?
Let me put it like this, that our flyer cost quarter-on-quarter has come down. And PSC, CC or calcine or whatever you are asking, we may like to keep it within ourselves.
We'll take our last question from the line of Rahul Gupta from Morgan Stanley.
Can you just help me understand what was the lead distance in first quarter? I understand it would have come off. But can you please help me with the numbers?
453 kilometers and 433 kilometers.
So 453 kilometers was last quarter, right?
Right.
Ladies and gentlemen, that was the last question for today. I now hand over the call to Mr. Vaibhav Agarwal for closing comments. Over to you, sir.
Yes. On behalf of PhillipCapital (India) Private Limited, we thank the management of Shree Cement for the call and many thanks for the participants joining the call. Thank you very much, sir. Yashaswi, you may now conclude the call.
On behalf of PhillipCapital (India) Private Limited, that concludes the conference call. Thank you for joining us, and you may now disconnect your lines.