Star Cement Ltd
NSE:STARCEMENT
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Estee Lauder Companies Inc
NYSE:EL
|
Consumer products
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Church & Dwight Co Inc
NYSE:CHD
|
Consumer products
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
American Express Co
NYSE:AXP
|
Financial Services
|
| 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 |
|
Target Corp
NYSE:TGT
|
Retail
|
| US |
|
Walt Disney Co
NYSE:DIS
|
Media
|
| US |
|
Mueller Industries Inc
NYSE:MLI
|
Machinery
|
| US |
|
PayPal Holdings Inc
NASDAQ:PYPL
|
Technology
|
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 |
163.95
244.75
|
| 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 |
|
|
Estee Lauder Companies Inc
NYSE:EL
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Church & Dwight Co Inc
NYSE:CHD
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
American Express Co
NYSE:AXP
|
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 |
|
|
Target Corp
NYSE:TGT
|
US |
|
|
Walt Disney Co
NYSE:DIS
|
US |
|
|
Mueller Industries Inc
NYSE:MLI
|
US |
|
|
PayPal Holdings Inc
NASDAQ:PYPL
|
US |
This alert will be permanently deleted.
Star Cement Ltd
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the Q2 FY '23 Earnings Conference Call of Star Cement hosted by PhillipCapital India Private Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Vaibhav Agarwal from PhillipCapital India Private Limited. Thank you, and over to you, sir.
Thank you, [ Ruthika ]. Good morning, everyone. On behalf of PhillipCapital India Private Limited, we welcome you to the Q2 and H1 FY '23 call of Star Cement.
On the call, we have with us Mr. Tushar Bhajanka, Executive Director; and Mr. Manoj Agarwal, CFO of the company.
At this point of time, I'll hand over the floor to the management of the company for their opening remarks, which will be followed by interactive Q&A. Thank you, and over to you, Manoj, sir.
Hello. Yes. Good morning, all. My name is Tushar Bhajanka, I'm the Executive Director of Star Cement. I'd like you to -- I'd like to welcome you all to the earnings call of quarter 2. I have Mr. Manoj Agarwal with me, who is the CFO of the company. He will take you through the numbers of quarter 2. And after that, we can have a Q&A session. Thank you.
Yes. Very good morning. Again, on behalf of Star Cement Limited, welcome you all to our con call for discussing our number of Q2 FY '23 and half year ended September 22.
I would like to clarify that we will be discussing on the historical number, and there is no invitation to invest.
Having said that now, I will just take you through the Q2 number followed by half year number. Starting from clinker production during the quarter ended September 22, we have produced 5.11 lakh ton of clinker as against INR 5.49 lakh ton same quarter last year.
So far as cement production is concerned, we have produced 8.91 lakh ton this quarter as against 6.18 lakh same quarter last year. This quarter, we have taken a shutdown in both of our product field at limestone and [indiscernible].
Now I will take you through sales volume. During the quarter, we have sold 8.91 lakh ton of cement as again 6.17 lakh ton of cement, a negligible quantity of clinker same quarter last year. This is as far as cement and clinker sale is concerned.
As far as geographical distribution of cement is concerned, in Northeast, we have sold around 6.54 lakh ton as against 4.93 lakh ton were during same quarter last year. And as far as outside of Northeast is concerned, we have sold 2.38 lakh ton of cement in this quarter as against 1.25 lakh same quarter last year.
In terms of blend mix, it is almost 6% of OTC and rest is PPC. These are the quantitative numbers of the quarter.
Now I will take you through to the financial. Total revenue figure this quarter is around INR 593 crores as against INR 406 crores same period last year. As far as EBITDA figure is concerned, this quarter, we have done an EBITDA of around INR 83 crores as against INR 80 crores last year. That is INR 49 crores as against INR 44 crores in the same period last year. This is an account of increased tax expenses due to subject of tax exemption period in respect of our company in Guwahati Grinding Unit and its subsidiary Star Cement Meghalaya Limited. However, the cash outflow will be that only.
On the per ton EBITDA front, it is INR 934 during this quarter as against INR 1,302 per ton same quarter last year. This is whatever quarterly numbers of this quarter.
The total revenue figure for the half year ended September '20 is around INR 1,258 crores as against INR 917 crores same period last year.
As far as EBITDA figure is concerned, during half year ended September 22, we have done an EBITDA of around INR 221 crores as the rates would be INR 182 crores last year.
PAT is INR 99 crores as against INR 115 crores in the same period last year. PAT is down due to increased income tax expenses as explained before.
On the per ton EBITDA plan, it is INR 1,183 during this half year ended September 22 as against INR 1,317 per ton the same period last year. These are the quarterly and half yearly number.
Now I request all of you that if you have any query, you can ask the same, and I will ask -- request weber to moderate the query wherever it requires. Thank you.
[Operator Instructions] The first question is from the line of Shravan Shah from Dolat Capital.
Yes. Sir, first on the volume front. So last time you said we are looking at close to 17% growth, that is up 4 million ton volume for this year and the next year, double digits. So does the spend remain same or maybe likely to slightly better in this year?
For the volume growth that is higher than quarter 2. And basically been about -- it has been about 42% [indiscernible] actually very much better than what we had actually projected earlier. And this, a lot of our growth has come from outside Northeast. So we have grown about 91% Y-o-Y and outside Northeast. And in Northeast as well, our volumes have grown by 33%.
So we do stick to the numbers that we had earlier projected. And we do expect that the numbers will be better than what we had said.
Okay. Secondly, in terms of the geographical mix. So this quarter, since the Northeast is slightly lower, but we were looking at close to 65% share in Northeast. So will we remain the same?
Yes. So I think even if you look at the numbers at this time, we have made more than 65% of our sales in Northeast compared to any of the previous quarters. Of course, the growth in outside Northeast has better this quarter, but even the North had grown. So in that sense, we are trying to maintain a 25 -- 75-25 or 70-30 issue between Northeast and outside Northeast sales.
Okay. And what would be the number in terms of the trade, sir, for this quarter and lead distance?
Yes. So the trade sales, the overall, so we have actually increased our trade sales to about 93% of our overall sales, if you compare it to previous numbers, it was about 85% last quarter and 88%. So we have increased. So we have not only increased -- led to a higher overall number, we have actually increased the proportion of our trade sales. The proportion on trade sales right now is about 92.4%.
And regarding the lead distance, the lead distance has increased slightly from 213 kilometers last quarter to 233 kilometers this quarter. So only increase very slightly.
Okay. So in terms of the premium share this quarter, how much and we were looking at to increase to 10% this quarter. So for this quarter, has that increased to 10% from 8% in June?
Of premium product?
Yes.
So premium product sale has not shown that kind of a growth. So it has broadly remained at about 7% of our overall sales, which was very similar to the number last quarter.
So in terms of the now pricing, so how the pricing has moved in East and Northeast in second quarter and post-September, how the prices has increased in both the region?
So the pricing has broadly remained the same in Northeast. It has probably fallen by [ INR 20 ], but not significantly. The pricing outside Northeast has, of course, taken a hit. So if you talk about North Bengal area, the pricing has fallen by about INR 20 in August month. But then in September month, it has been increasing. So even in October or November, we have taken price increases in outside Northeast.
So the Northeast prices have broadly remained the same, whereas the prices outside Northeast has fallen by about INR 20, so now they have again picture.
So broadly post-September on an average outside Northeast, the price increase would be how much, sir, INR 15, INR 20, both Bihar and West Bengal?
Can you repeat that, please?
I'm saying post-September, Bihar and West Bengal price increase would be around INR 20-odd post-September?
Yes. So yes, so we have taken a price increase in early September. And then the price has actually fallen again in October because October was not a good month for any of the clinkers because all the festival actually took place in October.
But now in November, again, we have increased the prices by INR 10 and we expect that, again will be the price of INR 10 to INR 15.
So INR 10 to INR 15 more we are expecting?
Yes, yes, in the month of November.
Lastly, on the expansion and the CapEx on the debt front, so in terms of the time line for 3 million ton clinker, 2 million ton grinding in Goa, again 2 million in Assam. So previously, we mentioned December '23, January '24 and March '24, so that remains intact? Or do we see any delay in terms of combination in the plant have, because last time we said from August, the full construction will start. So has it started? Any update in terms of the CapEx, though this is 1x in the CapEx volume, only INR 120-odd -- INR 127 crores versus where we are looking at INR 1,000 crores, INR 1,000 crores this year, next year. So what's the new number?
So we have, of course, embarked on the CapEx that you were discussing. The commissioning of the plant has already started in Silchar for the 3 million-ton plant.
We have also started our commissioning of the grinding unit in Guwahati. We have started buying the land that we require in filter for our gridning unit filter. So the CapEx is going on in full front and we still stick to the time line that we had discussed earlier. In terms of the CapEx outlay, the CapEx outlay has just started.
So overall, we must have in terms of projects, you must have spent about INR 100 crores. So I think the major spending, which will happen will start from the fourth quarter of this year, and that's where we expect most of the CapEx outflow to happen.
So INR 1,000 crores this year, while we are looking at in the next year also INR 1,000 crores CapEx under...
Yes, it may be. It may not be about INR 1,000. It may be INR 700 crores. But if we carry forward to the next -- to the CapEx that we don't do this year, will carry on to the next financial year, which as we do in -- that our capacities would come by December or January -- December 2023 or January 2024.
Okay. So the peak net debt, we were looking at INR 500-odd crores, so that remains intact?
I'm sorry?
Peak net debt, we were looking at INR 500-odd crores so -- versus currently the...
That remains intact, yes.
Okay. And lastly, if you can help on the power and fuel cost. So in terms of the ECL, how was it for this quarter? And how do we see? Because previously, we were looking at 10% increase in the second half of this year. So any color on that?
Yes. So the power and fuel costs have actually Increased. The power in terms of -- sorry, the fuel cost that we had has increased from about INR 1.5 per DC that we were averaging out earlier to about INR 2.1. The main reason for this is, of course, that the FSA contract that we have, are only partially been obliged by the ECL, I think mainly because of the shortage, which is happening throughout the country.
So because of that, we had to buy a few rates from spot contracts, which is leading to a higher price in the fuel costs. And the power cost has broadly remained the same. It may have increased by about INR 0.5 per unit.
And yes, so that is basically the situation that we have on power and fuel costs at the moment.
So in second half, we see further increase by how much in terms of both power and fuel costs combined put together?
So in second half, we see a basic increase of about 30% in terms of the fuel cost. And the power cost because it rely on IEX and IEX is not fluctuating as much in this quarter 2. So the price -- the power cost has not increased more than 10%.
[Operator Instructions] The next question is from the line of Uttam Kumar Srimal from Axis Securities Limited.
Sir, my question pertains to our WHRS plant. When this plant is going to commission, that's 12-megawatt WHRS plant?
So good question. The plant was supposed to commission by about November, but there is a 1 month delay to the commissioning of the plant. So now, it will be commissioning end of December. That is our time line. The revised time line for the WHRS plant. So it should be coming up very soon by next month.
Okay. And sir, what has been our power and fuel for this quarter? Because last quarter, it was around 90% domestic oil and 10% biomass. So it remains the same or there has been some change in the [indiscernible] this quarter?
So basically, last quarter, we, of course, had 10% of biofuel, which we also have this quarter. But the domestic coal was basically coming from the FSAs that we had. But because FSAs this quarter won't oblige, although we were eligible that we will get it because of the shortage, which is happening in Coal India. We had to rely on buying spot auction. We had to participate in spot auction and buy outside coal at a higher price.
And so yes, we have been importing. We have been using the domestic coal, but the domestic coal is coming from a different coal than what we had earlier.
Okay. So now the situations are normalized or still you are buying from outside rather than getting from the FSA?
So we are -- we still get whatever we are trying to get as much as we can from the FSA, because the FSA contract that we had was of INR 1.5 per GCV. So we are trying to make sure that we get as much as from FSA, but we have to -- we have started buying coal from spot contracts other than FSA as well, which, of course, is coming at a rate of INR 2.9 GCV to the plant.
Okay. So that's why in third and fourth quarter power and fuel cost will be highest record, because you are importing from outside?
Yes. So that is correct. Our units have definitely changed between FSA and auction. And I think the fuel cost that we saw in quarter 2 will also be passed on to quarter 3 and quarter 4.
Okay, okay. And sir, when the grinding unit will be commissioned? This year or next year?
So the grinding unit -- so we are coming with 2 grinding units. One has been in Guwahati and the other one has been Silchar. The one in Guwahati is due to the commission in October next year. And one in Silchar should be commissioning by June 2024.
Okay. Okay. And clinkerization plant will be commissioned this year only, from Meghalaya 3 million tons?
No. So the Meghalaya's clinkerization plant will also be commissioned by December next year, not this financial year.
[Operator Instructions] The next question is from the line of Shravan Shah from Dolat Capital.
Sir, again, just trying to reconfirm because previously when I asked, you mentioned the deadline of all the plants are same, but now since a slight change. So 3 million clinker at Meghalaya will start by?
December 2023 or January 2024.
Okay. And 2 million ton Guwahati will start by?
October 2023.
October, okay. So that 3 million is preponed and 2 million ton Assam, Silchar will be June versus last quarter, we were looking at March 24.
Yes. Sure.
Okay. And the second thing is in terms of this quarter, in terms of the Siliguri utilization was how much?
So Siliguri utilization this quarter was of about 50%. If you compare to last year same quarter, it was about 30%.
Okay. And so we were looking at for the full year. So last quarter, Q1 was 67%. Now, 50%. So for full year, we were previously looking at 65% to 70%. So this would be now -- would be in the 60% to 65% for the full year?
So yes, so I think we should still touch a 65% because we all know that quarter 2 is the worst quarter in terms of volume that we have. So quarter 3 seems better. Quarter 4 should be the best. So in terms of utilization, I think we can average about 67% or above.
Okay. And on the premiums you are just trying to continue. So now 7% share. And so how much we can increase the premium there? And also previously, we are looking at the price gap between the normal and the premium was kind of INR 20 or INR 400 per ton. And we were looking at to increase this from INR 20, INR 200 crore to INR 200. So when that can be possible, any color on that?
Yes. So I think we have -- so our shares, we are right now launching policy and we are giving schemes, which would lead to an increase in our share. We are basically focusing outside Northeast because Bihar has a good market for premium cement. That's where we are trying to push the RPM sales. So we can target that by end of this financial year, we are targeting premium sales proportion of about 11%.
And as per the gas, the price gas between the team and the CPC, right now, the price gas of about INR 25. Of that, we have to give about INR 5 as discount. So the impact on the NOD, the net of the front price is about INR 20 still. And we are working towards creating the difference between the PPP and the premium, but we have to follow the market trend. So we have other players as well and the difference that we have between [indiscernible] and the normal CPC.
Okay. Okay. And just a follow-up, to get it right, in terms of the fuel mix, you mentioned that the auction coal that you purchased was higher. So from this quarter, Q2, 10% you said, biomass. So in terms of the fuel mix, if you can help us, what was the FSA and the spot or maybe the Nagaland whole share?
So this quarter, we had about 10% is still coming from biomass and we had about 45% of our coal coming from coal contracts, which are higher -- it has a high cost. And the other 30% to 35% is mainly coming from the FSA contract and the 10% coal coming from Nagaland.
Okay. Just a second. Yes, mostly done nothing remains.
[Operator Instructions]
The next question is from the line of Amit Murarka from Axis Capital.
So just on the expansion program, I just wanted to have some clarification. So the size of clinker is 3 million-ton and what is the size of each of the grinding units?
It is about 2 million-ton each.
Okay. And the CapEx, what's the CapEx outlook for each of those?
So it is about -- so the clinker plant is basically for about INR 1,250 crores. And the grinding unit would be about INR 400 crores. For the Guwahati plant, because that's a downfield expansion and about INR 450 crores to INR 475 crores for the future plant because that will be greenfield.
Okay. Okay. So in total about close to INR 2,100 crores CapEx?
Yes, yes.
Got it. Got it. And what is the plan, like why you're saying that long term, you're looking for 70% Northeast and 30% East, but a lot of the incremental expansions are also happening. I mean at least some of the companies like UltraTech is also looking to be more aggressive in the Northeastern market. So do you think that this kind of -- you will be able to sustain your volume market share and grow these capacities given this inflow of new volumes?
So I think the belief is that we can sustain these margins, plus we're actually trying to increase our market share now. The main reason is that the cost of fuel has increased throughout the country, right?
And earlier, what we used to -- what you could basically happen is that a lot of the payments from outside used to be done in Northeast, right, by UltraTech plants or other plants. Whenever they had the capacity or whenever the demand is not picking up in the Mainland India.
So I think now because the -- again, the variable cost has really increased, they're not finding it that profitable to actually dump in Northeast.
So from that perspective, I think even the higher costs are leading to less of dumping in Northeast from outside companies. So I do not think -- and that has been the trend in quarter 2 as well. So there actually has been less seen coming from our [indiscernible].
[Technical Difficulty]
Ladies and gentlemen, please stay connected. The line of the management got disconnected. Ladies and gentlemen, thank you for patiently holding the line. The line of Mr. Tushar is reconnected. Thank you, and over to you, sir.
Yes. Sorry about that. I was just saying that the arrival of outside companies in Northeast has actually reduced in quarter 2, and we see a similar trend in quarter 3 as well. From our perspective of what is going within Northeast, there are smaller players in Northeast, which had put up the capacity about 2013, but no one is really expanding at the moment.
And I think we'll again get the first mover advantage in terms of expansion and 2, 3 years that we'll have, where others are still setting up the capacities, and we have already set it up. It would really give us the advantage to get a higher market shares. So that's what we really aiming at.
[Operator Instructions]
The next question is from the line of Mangesh Bhadang from Nirmal Bank.
Sir, a couple of questions. Firstly, on the demand side, we've seen good volume growth in this year. I just wanted to know your view on how the demand could shape up in this year as well as next year in [indiscernible] as well as outside Northeast [indiscernible]?
Sorry to interrupt you, Mr. Bhadang,, but your voice is muffled and there is a lot of disturbance from your background, sir.
Just hold on. Is it okay now?
Yes, it is better.
Yes. Sir, I just wanted to take your views on what your outlook is in the Northeastern and Eastern region?
So I think this year, the market in Northeast has really supported. So even though outlook seems positive from a Northeast perspective, even Eastern markets have really grown in quarter 2. So it -- so I think we are optimistic about how the market is behaving. Of course, we have cost pressure that every company is clearly facing in cement, and that will remain a problem. However, we are looking for a good season ahead. And we do think that we'll be able to pass on some of the costs in the price. So I do see a good season ahead, and I do expect not to keep growing the way.
So the number you can assign to the demand growth expectation in this region?
Yes. So I think Northeast, it's showing trends of going about 10% to 11%. Whereas the outside Northeast market is showing a growth of about 12%.
And outside Northeast, I just mean the places that we are serving. The area that we serve, which is basically North Bengal and East Bihar.
And sir, last year, I think Bihar market, because of the sand issues, the demand was slightly lower. So you think this time around, there will be demand because of that and could see higher number? And even in Bengal, I think because of floods we had seen that time, the demand gets lower. So all these effects -- would this affect the overall demand growth that will pick up in this year from the low base of last year. Or do you think that 10% to 12% is the number that is basically -- which is prominent?
Yes. So I do not think that we had the problem of the sand problem that we had last year. I don't think we had it at that extent this year, and that's why the numbers look better. In Bihar, we have actually achieved a lot in terms of sales. I think we have increased our sales in Bihar by about 120% this quarter. That's clearly a sign of the sand issue or the floods issue is not affecting us that much.
Okay. Sir, next question is on the profitability in the Northeastern and the Eastern region. Can you just give a broad outline on -- highlight how our profitability would look like in these 2 regions, specifically because the next leg at least since Siliguri starts expanding to 70%, 80% utilization. Largely, the sales will be more towards outside of Northeast. So if you can give some color on profitability in terms of EBITDA margin in Eastern region and Northeastern region. [indiscernible]. Any broad guidance, will be useful.
Yes. So I think because time is so uncertain, it will really be hard to give a number to it. But we -- last time, we said that we'd like to maintain an average EBITDA, overall EBITDA per ton for the company to be about INR 1,200 to INR 1,250 and we would like to stick to it.
Of course, pricing here. So I do not -- but I would still say that we'll aim for INR 1,200 per ton EBITDA overall. In Eastern Region, we, of course, run lower than what we earned in Northeast. Northeast margins are about INR 1,400 on an average. And Eastern region, it is about INR 400 to INR 500. So for the weighted average comes to about INR 1,200. And that's the distribution of our margins between the 2 regions.
The next question is from the line of [ Chandresh Malpani from Nevis ].
Firstly, on the Waste Heat Recovery Plant. Is it commissioned and what cost savings do we see from this plant?
So we have set up a 12.3 megawatt waste heat recovery, which should commission by next month. And with that, currently, on an average, we pay a type of power is about [ 6% ]. So we can actually back-calculate and it should be a saving of about INR 45 crores to INR 50 crores.
Okay. Okay. And secondly, sir, at what is your dealer network stand around rates? So we increased our network?
Yes. So we have increased our network. And actually, our focus right now is not that much in outside Northeast, which is actually at Northeast, right? Because there are still many areas in Northeast that we, of course, can serve better that we can have a higher market share in. The [indiscernible] markets in Northeast there are white spaces where we indoor micro markets we aren't serving. And our focus right now is entirely Northeast, because the capacity that we're getting are of course in Northeast. And so, in order to utilize the capacities better, we definitely have to focus in Northeast. So we are focusing on dealer point. And that primarily will be in Northeast.
The next question is from the line of [indiscernible] an individual investor.
Yes, since glad to know regarding that coal, you set your sourcing from the FSA and also the Nagaland coal. The Nagaland coal belongs to Coal India or some others? And what is the lended cost for the coal?
So the Nagaland coal is actually not belonging to Coal India. It is actually is the state of Nagaland authorizers individual mine owners a company to mine in Nagaland and we buy from those sources. So they aren't owned by Coal India. They are owned by private individual company in Nagaland. And the lending cost of Nagaland coal is about INR 2.05 to INR 2.15 per Btu.
Okay. And regarding the Meghalaya coal, has any auction been conducted? Or still when will we see any outcome of that coal of Meghalaya?
So I mean, that's a very good question. So I mean we -- right now, of course, Meghalaya coal, we can't -- no one can mine Meghalaya coal, because there's no structured mining deals which have been allotted in Meghalaya. But there are individuals who are local to Meghalaya who are applying for mining leases in Meghalaya. And if they are successful in getting those mining leases operation, then the operating coal in Meghalaya will open up. And that, of course, is a very -- that should be a very big saving for the company going ahead.
Okay, sir. So right now, no [indiscernible].
[Technical Difficulty]
As there is no response from the line, we'll move to the next question, which is a follow-up question from the line of Amit Murarka from Axis Capital.
So on your current capacity, I just wanted to check, like I understand you have 2.75 million in clinker and 5 million ton in grinding. Is that correct?
So we have about 5.6 million ton in grinding, and we have about 2.65 million ton to 2.7 million ton in clinker.
5.6 million ton grinding, does it also include some of the strolling arrangements which you had? Or this is your own capacity, 5.6 million?
No, our own capacity. Right now, we're not renting out or leasing any other rented -- any other plants. This is our own capacity.
Okay. Okay. So those arrangements are no longer being done?
Yes. So we had earlier 2, 3 years back, we had a plant in [ Devalapur ] and we had a plant in Siliguri as well, that we stopped supplying to [ Devalapur ]. So we aren't serving that market anymore. And in Siliguri, we got our own plant so we've stopped renting the plant that we are renting as well.
Got it. Got it. So in the future, also, you don't plan to now get into these arrangements with these expansions that they are doing now?
Not really. I don't think we are trying to cover a market where we need to do that. Yes. So not really.
Okay. And if I got your EBITDA per ton kind of outlook, right, you said that in Northeast, you are making 1,400 per ton. In East you're making 400 to 500 per ton.
Yes.
Great. So the lower margin is what a large part of it because of the logistics cost rate? And also, yes, the pricing is lower, of course.
Yes, exactly. But it's mainly because of logistics. It's mainly because of logistics. And of course, the pricing outside Northeast is lower than in Northeast. So that was a traded factor. So it's both actually. It's higher EBITDA cost coupled with lower pricing.
And it's not lower prices for -- I mean, of course, the prices in general outside Northeast is lower. It's not that our brand charges a lower price. We actually charge the same prices as UltraTech, outside of Northeast.
We'll take the next question, which will be the last question, which is from the line of Shravan Shah from Dolat Capital.
So continuing the previous question, sir, broadly, let's say, for this quarter, whatever our realization was there. On an average for outside Northeast, what would be the realization? In the Northeast, what is -- so I'm just trying to understand the pricing difference between Northeast and East, West and what we sell?
So I mean the difference in realization between outside Northeast, mostly could be about INR 1,100 on per ton, on NOD basis, network discount basis.
Okay. So net of GST and everything what we booked in our accounts, so that difference would be INR 1,100?
Yes. So it will be basically about INR 800 to INR 700.
Okay. INR 700 to INR 800 in terms of the -- what we book in the -- report in the P&L.
Yes.
Okay. Okay. Second, the thing just wanted to understand in terms of the lead distance. So what the max we can say in terms of the further reduction is possible, let's say, Siliguri full utilization of 65% and maybe next year if it increases. So, to what extent we can reduce the lead distance from currently 233 kilometers?
So we -- so in this year, expecting that our capacity -- so right now also, our main focus is in reducing the reductions and kind of market closure in Siliguri. Because at that point, we are focusing much more on profitable and sustainable growth rather than just selling anywhere and every year.
Year. So I think from next quarter as well, you'll see that the lead difference will be coming down. And that will be primarily our focus. I cannot give a number just now about when the future lead difference is going to be, but the focus is definitely to serve closer, serve to a higher profitable market and do not go very far in terms of this -- for the sake of this utilization.
No. I understand that we can't give the number. But broadly, can it be 10, 15 kilometers more than that reduction is possible or the reduction would be in the 5, 10 kilometers on the just on the full blended basis for us, just trying to understand that, directionally.
So again, I really -- I won't be able to comment on that really, because I really have to do the market, it won't be fair for me to give the number, but definitely, we'll see a reduction, is what I can see.
But then the lead difference also sometime, in seasons because of a lot of other things. Sometimes one way about working and the other some should be other route and sometimes [indiscernible] because of that. So I mean that is very, very common, right? Because the infrastructure is not as good as in Mainland India.
We have to comment the promise any number for this quarter. But yes, I think we should be looking at it decent production in our new business. And then we've already started asking upon it internally feeling the right market and to get out of markets where we are not earning much and not spending much.
Okay. Lastly, sir, the data point on the trade subsidy, how much units scoring in this quarter?
So we don't have any freight subsidy this quarter, but that I think the CFO can share with us.
Yes, we don't have any subsidy because it has been long back, it has been -- in there is no trade subsidy because this is for 5 year only, and it has gone all at once. So there is no freight subsidy in books at all.
Ladies and gentlemen, as this was the last question for today. I would now like to hand the conference over to Mr. Vaibhav Agarwal.
Tushar, I had a couple of questions from mine for in particular. So firstly, because Northeast is a very kind of a -- or player market dominated by very small player as well there a number of small players in Northeast and given the consolidation happening in the industry. So do you see any potential of further consolidation happening within Northeast by the larger players? What your comments around that, if possible?
So I don't think, right now, in Northeast, there is any potential for consolidation mainly because the smaller plants because I think Dalmia would also be aiming to set up a brownfield expansion. Of course, right now, they haven't progressed with it. I don't know of the progression in Northeast in terms of setting a plant. So they, I'm sure, will aim at setting a plant. Even us, we are setting our own plant. So it doesn't make sense for us to necessarily go for acquisition and own capacity, which will be much more efficient than the smaller units, is coming up.
So I don't think there's any scope in Northeast for consolidation at the moment. So after we did the capacity and there is some pressure on the smaller unit then there may be some [indiscernible].
But do you believe that some of the larger players of the country where players they would be looking at Northeast or geography, they would be targeting some of the existing players? Any thoughts around that? There's a lot of capacity is coming from Mainland to Northeast now. If you want...
I think the trend of actually cement coming from outside Northeast to Northeast, and a similar trend of cement going from Northeast to outside Northeast. I know that we have capacity, we will have a tendency to go far out. So I think that way -- and significantly has been very prominent Northeast for 10 years. This is not the first time [indiscernible] trending clinker to -- cement to Northeast.
And the current phase that is the amount of quantity which was coming earlier from outside has actually has reduced.
So from the actually targeting Northeast from outside is not possible. Now if you come to the point of when acquiring a plant, a smaller plant in Northeast, I don't think it is very normal for them because simpler plants are of 0.7, 0.6 million tons. I don't think [indiscernible] would be interested in something that small.
And also that's the reason, why this time the kind of problem that we -- one faces and setting up a plant is very different. So I think for them to kind of invest enough time in a smaller plant and then growing it is something that's -- I don't know, it's still worth the time, I guess.
Understood. And one more question with regards to [indiscernible] particular. So despite all the expansions on our [indiscernible] now, we would be quite -- in terms of we will be having a quite a healthy balance sheet. So what's your road map for Star Cement in the medium to longer term over the say, next 5 to 7 years? And do you look Star Cement being restricted to only East and Northeast or you are looking at other geographies, are you willing to evaluate opportunities organic inorganic across other parts of the country beyond the East and Northeastern. Any thoughts on that?
So that's a good question. So I mean, in 1.5 years from now, we are planning to set up about 4 million tons of cement and about 3 million tons of clinker in Northeast, right? That will take care of Northeast not for the next -- for our marketing Northeast for the next 5, 6 years, right?
And as a company, we are already very careful. And we, of course, with these capacities and the benefits for subsidies that we will get from these capacities will have an even richer cash flows. So we definitely have to get out of Northeast and probably target other areas as well for us to use those cash flows in the best possible manner. So we are right now also considering other areas outside Northeast, just so that once as the packages come in Northeast, we can keep on with the expansion phase and go outside Northeast as well.
So any reasons which you are currently shortlisting in terms of your future longer-term growth plans?
So, we are exploring NPAs because that, of course, is a natural expansion to where we are in Northeast and setting our plant in NPA will definitely help us for Bihar, but it will also help us serve other areas which we didn't serve at the moment.
We are also looking at Rajasthan because it is broadly is part of North India and North India, of course, is growing at a faster rate. And then we look at other areas as well. It just depends on what is also available because of the availability of good assets in cement right now for something that we can acquire given our size is also limited. So it really comes -- it really depends on what is coming our way yet.
So just an extended question to what you just said. So when you're looking at places outside East and Northeast, is it when you evaluate such opportunities, is it necessary for you that they would synergize with your current operations? Or are you willing to enter a new geography in always possible or it's compulsory that should have a synergy with the current opportunities?
That's again a fair question, right? So I think it just depends on the possibility to come, right? We have to evaluate whatever is coming without any buyers. Yes, of course, we would have loved if it was a natural extension to where we are at the moment.
But cement, I don't think the synergy is that strong that we need to bother too much about that synergy, because the market that we will try to enter support by setting up a plant in NE, which would we continue new, any which way we have the brand, we'll have to do the entire effort as a greenfield project. So from that perspective, the synergy is fairly limited. So we not be bothered about that synergy too much. So you remain indifferent from that perspective. It's fair to say.
Yes. Thank you, Tushar. Thank you, Manoj. Thank you for your time. Ruthika, we can now conclude the call. Thank you very much for all the participants joining the call. Thank you very much. On behalf of PhillipCapital, that concludes the call. Thank you so much.
Thank you. On behalf of PhillipCapital India Private Limited, that concludes the conference call. Thank you for joining us, and you may now disconnect the lines.
Thank you.