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Star Cement Ltd
Earnings Call Analysis
Q2-2025 Analysis
Star Cement Ltd
In the second quarter of FY '25, Star Cement reported significant production increases, with cement production rising to 9.55 lakh tonnes compared to 8.95 lakh tonnes in the same quarter last year. Sales volumes mirrored this growth, achieving 9.62 lakh tonnes versus 8.96 lakh tonnes from the previous year. Total revenue also saw a healthy rise at INR 642 crores, a notable increase from INR 585 crores year-on-year.
However, despite the revenue growth, EBITDA fell to INR 96 crores, down from INR 104 crores in the same period last year. The profit after tax (PAT) dropped significantly to INR 6 crores compared to INR 41 crores in the prior year. This decline is primarily attributed to increased depreciation costs associated with new capital expenditures, particularly from a new 2 million tonne grinding unit. Additionally, per tonne EBITDA decreased to INR 995 from INR 1,164 year-on-year.
Star Cement's capital expenditures (CapEx) for H1 FY '25 stood at INR 337 crores, with plans to allocate an additional INR 377 crores in the second half of the fiscal year. This includes investments in ongoing projects in Silchar and Jorhat, and the anticipated delays for these plants will push commissioning dates to December 2026 and FY '27 respectively. Overall estimates for total CapEx for FY '25 are lowered to approximately INR 720 crores.
The company faced operational hurdles due to technical difficulties in their new clinker plant, impacting production capabilities. Current capacity utilization is around 70% but is expected to rise to about 85-90% during favorable seasonal conditions in Q4. Leadership anticipates that overall operational improvements will lead to upward revision in profitability starting Q4 as the new clinker plant stabilizes.
Looking ahead, Star Cement is optimistic about achieving overall sales volume growth between 10% to 12% for Q3 and Q4. Despite recognizing a general slowdown in the demand landscape, particularly in West Bengal and Bihar, management is focused on capitalizing on the Northeast region's higher growth rate, which reached 11% in Q2. The pricing strategy remains cautious, with the current price in Northeast at INR 460 per bag anticipated to increase by INR 15 to INR 20 by December as demand strengthens.
The company is working on obtaining various GST benefits, with expectations to record between INR 50 to INR 60 crores in incentives for Q3 and Q4 as production ramps up. Despite lower expected profits in Q3 due to ongoing operational challenges, Q4 is projected to be significantly improved, driven by higher production levels and market demand.
Investor sentiment remains cautious, given operational disruptions and declining profitability ratios. The management asserts their commitment to transparency and improving investor relations, ensuring that stakeholders have the necessary support to make informed decisions. They have acknowledged previous issues in communication and are taking steps to rectify them.
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Ladies and gentlemen, good day, and welcome to the Earnings Conference Call for the Quarter and Half Year ended 30th September 2024 of Star 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, Mr. Agarwal.
Thank you, Michelle. Good evening, everyone. On behalf of PhillipCapital India Private Limited, we welcome you to the Q2 FY '25 and H1 FY '25 of Star Cement. On the call, we have with us Mr. Tushar Bhajanka, Deputy Managing Director and Mr. Manoj Agarwal, CFO of the company.
I will hand over the floor to Mr. Manoj Agarwal for his opening remarks, which will be followed by interactive Q&A. Thank you, over to you, Manoj, sir.
So good afternoon, all. My name is Tushar Bhajanka, and I'm the Deputy MD of Star Cement. I would like to welcome you all to the earnings call of quarter 2. I have our CFO of the company with me. He will run you through the numbers of quarter 2, and then we can have a Q&A session. Thank you.
Yes, hi friends, very good afternoon. I, on behalf of Star Cement Limited, welcome you all to our con call for discussing our number of Q2 FY '25 and half year ended September 2024. I would like to clarify that we are discussing on the historical numbers, and there is no invitation to invest.
Having said that now, I will just take you through the Q2 numbers followed by half yearly numbers. Starting from clinker production during the quarter ended September 2024, we have produced 6.58 lakh tonnes of clinker as against 6.48 lakh tonnes same quarter last year. So far as cement production is concerned, we have produced 9.55 lakh tonnes this quarter as against 8.95 lakh tonnes same quarter last year.
Now I will take you through sales volume. During the quarter, we have sold 9.62 lakh tonnes of cement as against 8.96 lakh tonnes of cement same quarter last year and we have also sold 0.16 lakh tonnes of clinker during this quarter. 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 7.49 lakh tonnes as against 6.72 lakh tonnes during same quarter last year. And as far as outside Northeast cement is concerned, we have sold 2.13 lakh tonnes of cement this quarter as against 2.24 lakh tonnes same quarter last year.
In terms of blend mix, it is almost 10% of OPC and the rest is PPC. These are the quantitative numbers of the quarter. Now I will take you through the financials. The total revenue figure this quarter is around INR 642 crores as against INR 585 crores same period last year.
As far as EBITDA figure is concerned, this quarter, we have done an EBITDA of around INR 96 crores as against INR 104 crores last year. Profit after tax is INR 6 crores as against INR 41 crores in same period last year. The decrease in PAT on account of increased depreciation due to capitalization of our new 2 million tonne grinding unit at Guwahati and our clinker plant at Lumshnong, Meghalaya,.
On per tonne EBITDA front, it is INR 995 during this quarter as against INR 1,164 per tonne same quarter last year. This is what our quarterly number of second quarter. The total revenue figure for the half year ended September '24 is around INR 1,393 crores as against INR 1,346 crores same period last year. As far as EBITDA figure is concerned, during half year ended September '24, we have done an EBITDA of around INR 215 crores as against INR 242 crores last year. PAT is INR 37 crores as against INR 134 crores in same period last year. The decrease is on account of the increased depreciation as explained earlier. On per tonne EBITDA front, it is INR 1,007 during the half year ended September '24 as against INR 1,176 per tonne same period last year. These are the quarterly and half yearly numbers.
Now I request all of you that if you have any queries, you can ask the same, and I will request Vaibhav to moderate the query wherever it requires. Thank you.
[Operator Instructions]
The first question is from the line of Keshav Lahoti from HDFC Securities.
I wanted to know the status of Meghalaya clinker GST benefit have been recorded in this quarter and how much?
So for the Meghalaya clinker plant, the GST benefit that we are supposed to get, we have recorded some part of it. But because of Line 3, the new clinker plant, we are having some problem with the clinker plant, so did not manufacture much. So because it did not manufacture a lot, the overall benefit was very small compared to what we expected.
Understood. And how much incentive has been recorded for this quarter overall?
So overall incentive this quarter -- INR 37 crores is the incentive, which has been booked in the books for this quarter.
Okay. And lastly, on the CapEx, what is the CapEx for this year? And how are your expansion at Silchar and Jorhat working? Is it running on track?
Yes. So the CapEx for this year in the H1 '25 was about INR 337 crores in which a large portion went in completing our new clinker plant and also the WHRS. For the H2 of this year, we are -- we plan to spend about INR 377 crores, out of which we will -- a major part is going in the Silchar project and some part of it is going in the clinker plant, the new clinker plant, WHRS.
So there is an overall cutting CapEx earlier, the total year CapEx was INR 835 crores. Now it is broadly INR 720 crores type.
Yes. So now it is -- yes, you're right. It's at about INR 720 crores, yes.
So is the time line delayed for either of the Silchar plant or be it Jorhat plant?
So I think the Silchar plant, earlier, we were expecting it to commission by September, October '26. Now we are expecting it to commission by December '26. So there is a 2-, 3-month delay. But besides that, there's no significant delay. In Jorhat plant, we are expecting by FY '27 end.
[Operator Instructions]
The next question is from the line of Pratik Shah from Klein Capital.
I have 2 questions. First is, what is the difference between Northeast cement market versus rest of the India cement market? And second is, how much incentive do you expect to get in balance 2 quarters and for next full year on a consolidated basis?
So the Northeast markets are basically the 7 states in Northeast, right? That is what consolidated -- that is what contributes, the Northeast market. The outside Northeast market is basically West Bengal and Bihar for us. So that's how we differentiate, I think, in our results as well. And the subsidy that we expect in quarter 3, we were having some -- we are again having some problems at new clinker plant. It was having some problems stabilizing. And by 20th or 21st of November, we finally expect to light up the kiln again and be able to run. So because of that, the generation of subsidy till now has been quite poor. But in whatever is left for Q3 and in Q4, we do expect a good generation of GST. The exact numbers, I will quantify and I'll let -- I will probably ask -- I'll ask my CFO to get back to you. But I think about INR 50 crores to INR 60 crores quarterly is what we expect in the coming quarters.
The next question is from the line of Sahil Solanki from Dialwealth Securities.
My first question is what capacity utilization do you expect for Q3 and Q4 of current year? And what is your expectation for FY '26?
So in Q3 and Q4, I expect to grow at about 11% to 12%. That is what the expectation is, right? So I think with that, of course, in Q4, we do expect the utilization to significantly improve because Q4 is in Northeast season time, right, when the rainfall is the lowest. So we do expect to operate at about 85%, 90% capacity during season time in Q4. In Q3, I think the capacity utilization will be at about 70%.
Okay. And for FY '26?
FY '26, I think on a year average, I think our capacity utilization will be at about 75%.
Okay. And my second question was how much EBITDA do you expect for balance part of the year and for FY '26?
So I mean, as I told, we are having some problems in our Q3 because of the clinker plant. There has been -- there have been some technical difficulties that we've been facing and because of which there is a problem in production of the new line. But in Q4, our expectation is good. I think it should definitely be much higher than last year. So it should be about INR 220 crores to INR 230 crores in Q4.
The next question is from the line of Uttam Kumar Srimal from Axis Securities Limited.
Sir, last time you had guided for 11% volume growth for FY '25. So are we sticking with that kind of volume growth?
Sorry, how much did I suggest?
11% for the full year.
Okay. So this year also, we grew in Northeast by about 11%. In outside Northeast, we grew by about minus 5%. So that's why the weighted average is about 7%. And the -- in Q3 and Q4, we do intend to grow by 11% overall. So I think for the coming 2 quarters, we do expect to grow by about 10%, 11%. That will still be our estimate. But we are focusing more in Northeast. So the growth rate in Northeast is going to be higher and growth rate in outside Northeast, which is basically West Bengal and Bihar for us will be a bit lower.
Okay. And sir, how is the current pricing and demand scenario in both Northeast as well as in rest of the region?
So in Northeast, the pricing scenario is definitely much better than outside Northeast. In Bihar and West Bengal, the prices have seriously crashed. And compared to the earlier 2 quarters, I think in Bengal and Bihar, the prices have not improved. So whatever the average was of Q2 still remains the price currently. In Northeast, the prices have increased by about INR 10 compared to the quarter 2. So the Northeast, the prices are a bit more stable than outside Northeast.
Okay. And sir, how is the capacity utilization for your new grinding unit in Guwahati and where we see the capacity utilization by the end of this year?
So given the capacity utilization for Guwahati is at about 77%, that is also primarily because we are utilizing our old line a bit lesser, and we are focusing on a new line. Overall, between the 2 plants in Guwahati, the Line 1 and Line 2, the overall utilization will be at about 70%. By the end of quarter 3 and in quarter 4, we do expect full utilization of both lines.
Okay. Sir, a couple of data points. Trade mix and nontrade mix, premium cement sales, lead distance and fuel mix.
Okay. So the trade percentage was 85% compared to Q1 '25, 84%. That, of course, means the non-trade was 15% as to 16% in Q1. The lead distance is about 218 versus 207 in Q1, and share of premium -- sorry?
Lead distance has increased from earlier quarter.
Yes. So the lead distance was 218 this quarter, right? And last quarter in 2025 Q1, it was 207. The share of premium is about 10.6 this Q2 compared to 9.1 in Q1.
Okay. And sir, lastly, fuel mix for this quarter?
Fuel mix. So fuel mix, most of our coal has come from FSA. So about 55% of the coal has come from FSA Coal India, coal agreement. Then about 18% has come from biomass and the rest of it has come from spot contracts and Nagaland.
Okay. And sir, what is the CapEx guidance for FY '26, we have given for FY '25? And for FY '26, if you can quantify?
Yes. So for FY '26, we basically intend to complete our Silchar plant, which will be the main CapEx. And besides that, there will be operational CapEx. So I think in total, we estimate overall CapEx of about INR 450 crores.
The next question is from the line of Amit Murarka from Axis Capital.
Just wanted to check like you mentioned that the Line 3 faced some issues. Could you just help us better understand like what issues? And like after the resumption, like will it be a normal run rate? Or will it take time to kind of ramp up the unit?
Yes. So I think there were some incidents in the plant where there were some faults in the panel. So because of that, we had to replace the panels in the electrical room. And so it was just taking time for those panels to come. So now on the 17th, those panels will be received. And on the 22nd, we will erect those panels. And I think after that, we should have a smooth functioning. So this is broadly what...
And what kind of ramp-up is expected on this unit?
I mean, ideally, it is has the capability of producing about 10,000 tonnes a day, which is almost about 2.8 lakh to 3 lakh tonnes a month, which is actually more than our current clinker capacity of the Line 1 and Line 2. So we expect that in November, whatever teething problem there would be will rest out. And by end of November, we are able to at least operate at 7,000, 7,500 TPD tonnes per day. And from there on, we can stabilize it to 8,000, 9,000 tonnes a day. So I think once it ramps up, we should not have any problem of clinker, and we'll also be in a position to sell clinker to rest of the plants in Northeast and also players in North Bengal because there will be a very acute shortage of clinker in Northeast in the coming season, and there will be a huge demand for it.
Understood. And just generally, understanding like the industry has seen so much consolidation in the last year or so. Generally, what are your thoughts about it? Like how does it impact the industry? I know in Northeast, there has not been much. But then like JK Lakshmi, I believe, is trying to enter the market and even UltraTech has been trying to do that. So what is your outlook on these new entrants as well as what is your thought on this wave of consolidation in the industry?
So I mean, particularly to Northeast, I think JK Lakshmi is attempting, they have also bought something in Northeast to put up a plant. So I think the process is a bit more complicated in Northeast, right, because of the land acquisition, the possession, the local and even the legality of the mines, right, is a bit more complicated than in other areas. So I think anyone who attempts to put up a plant will at least take 4, 5 years to put up a plant, given that they have now finalized the land and finalized the mines.
So I think UltraTech and other players, I wouldn't like to name, but they are, I think, all looking for something, but they're not really being able to put a finger to a particular site or to a particular mine. So given that, I think it's at least whoever comes will take 4, 5 years to come. And so I do not see the situation like rest of India repeating in Northeast anytime soon.
In terms of consolidation in other parts of the country, I think it's good for the industry overall because, I mean, most of these areas were highly fragmented. And for any pricing discipline and for decent profitability, I think there was a need for consolidation, which is happening.
Sure, sure. And you are not in anyways into the M&A market in terms of either thinking of acquiring something or anything like that?
No, we are not in the M&A market right now because we were earlier looking at South, but South for kind of size of the company that we are and the kind of margin there is in South and the variability in the margins, it did not look like the right kind of market.
We have acquired mines in Rajasthan in auction recently, about 65 million tonnes of reserves. So we are conducting geological survey. It is in Nimbol. It is very close to Nuvoco's Nimbol plant in Rajasthan. And we have -- we are conducting surveys there, and we are awaiting the geological reserve and the quality. And once we are sure of the quality, then we will start the land acquisition in that area and put up a clinker plant -- look to put up a clinker plant there. But that I will confirm in the next quarter. But there are already details. I think we had also some materials in SEBI, the details of mines that we had participated and won.
[Operator Instructions] We'll take the next question from the line of Shravan Shah from Dolat Capital.
Sir, fuel cost on clinker for Q2 was how much?
So the fuel cost -- the fuel cost is at about INR 1.5 per GCV.
Okay. And likely to remain similar in the third and fourth quarter?
Yes, yes. I think it broadly will remain the same only. So I think in Q1 also, it was INR 1.5. Right now also, it's about INR 1.5. And I think it should remain INR 1.5 in the coming quarters as well. I think there could be some reduction, but no increase.
Okay. And sir, this 12-megawatt WHRS, which was supposed to start in October and November, has it started?
So it should start by end of November. So we phased it out in 2 sets. So one part of it, which will produce about 6 megawatts will start by end of November and the second one will start by December end.
Okay. Got it. And in terms of the CapEx, so obviously, for FY '25 and FY '26 also previously, we were saying the INR 670 crores and now INR 450 crores. So for the year, we are reducing the CapEx. So just trying to understand the delay, what you have mentioned is the Silchar plant will be now by December will be starting and Jorhat will start by end of FY '27.
Yes. So the Silchar plant, we should be able to commission by December, Jan next year. And the Jorhat plant will be a year after that, a year or 15 months after that.
Okay. Okay. So both is kind of delayed by 3 to 6 months delay is there on that part.
Because we are also trying to timing up with the market, right, because we don't -- because we are just making sure that we are timing it with the pace of the market, right, at the market demand. So we are buying land, we are taking all the permission, right? Like for example, we have already taken the -- we have already done the public hearing, and we are in the process of taking the environmental clearance for Silchar. The same we will do for Jorhat. And we are just trying to pace it depending on how the demand situation is.
Got it. Got it. And in terms of the volume also, you mentioned that in the second half, we are looking at 10%, 11% kind of a growth in the second half. So once this clinker will restart in the November and then for the next year, broadly, just trying to understand how one can look at on the volume front. So trying to understand how the Northeast would be growing in the next year and how we will be growing in the next FY '26?
So basically, the main problem, at least in Northeast was that the government expenditure in Northeast in the first half was a bit low, right? And because of that, the demand was a bit subdued. Even despite that, we had grown at about 11% in Q2 of this year, in Northeast, right. So we do expect the demand to pick up because there is signs of government releasing its schemes in Northeast at least from December, Jan onwards.
So I think that will definitely positively affect the demand, right, for the coming 2, 3 quarters. And we have to see what the scheme they bring in to boost up housing and all. So in case the schemes are lucrative and they are effective, then I think there could be a surge in demand again. In Q2 -- sorry, in next year, it's hard to predict right now because there's a lot of fluctuation at the macro level, right? But I think by the next quarter, I think we'll be better placed in giving a forecast about next year.
Okay. And you mentioned that in the third quarter, our profitability will be lower. So just trying to understand given that the -- as you mentioned, the Northeast prices are INR 10 up and outside Northeast is flattish on a Q-o-Q basis. So just trying to understand on Q-o-Q basis, given the incentive, how the incentive, as you mentioned, INR 50 crores, INR 60 crores. So still there will be a decent Q-o-Q improvement should be there in the third quarter on the profitability front?
Yes. So I think there should be, but it also depends on the price. And that INR 40 crores, INR 50 crores, we have not been able to get because our Line 3, the new clinker plant was not producing, right? So we'll only get some part of the quarter 3 will get that benefit. But the entire benefit should be visible in the books from quarter 4 onwards. right?
So because of the Line 3, the new clinker plant problem, we also had to buy clinker from outside, right? So that will also affect the profitability. But from end of November onwards, we should start building up the clinker stock. And then I think by quarter 4, we should have enough stock for ourselves. Also at the same time, we should have stock to sell, right? So Q4, I see -- should be a drastic improvement in the profitability compared to last year Q4.
Okay. And lastly, Manoj, sir, in terms of the depreciation, so this quarter, INR 82 crores, INR 83 crores. So how one can look at the second half and what kind of a reduction one can look at in FY '26?
We are on the WDV method, okay? So the depletion will get diminished -- keep on decreasing on the year-to-year basis because the first year is the highest one. And then the second year onwards, it will start getting decreased, okay? So this quarter, whatever depletion has come because you know because last year, in March, we have capitalized our Guwahati unit. And April, we have capitalized this clinker plant, okay? And part of WHR will also get capitalized in the Q3. So this year, depletion will be higher, but next year onwards, it will start diminishing.
Okay. Okay. Got it. And lastly, what was the PPC share in the second quarter?
PPC share?
Yes, PPC, OPC.
Yes, 10% IS OPC, balance all PPC.
We'll take the next question from the line of Prateek Kumar from Jefferies.
I have couple of questions. Firstly, the startup -- starting of this large clinker unit, has this have like any major start-up cost, which can also hit your performance in next quarter? Or is this only related to the other factors which you have mentioned on the profitability for 3Q?
I'm sorry, can you please repeat that? It wasn't too clear.
Is there any specific one-off start-up cost, which also like is going to hit the cost performance or like any specific marketing cost over the next 2 quarters, which can have an impact on your profitability?
No. So I think those kind of marketing campaigns we have already undertaken. And so that already has hit the profitability in the Q1 and Q2. And unfortunately, we had this technical problem of panels in our plant due to which we were not able to support the sales team in doing the best, right? So I don't think there should be any hit in terms of the marketing cost or start-up cost or start-up of the kiln cost, right? I think it should -- there should be no cost as such.
Of course, the first 1 or 2 months when the kiln operates, it is still trying to reach its efficiency. So I think there will be not a surge in the fuel or power costs, but there will definitely be over time a decline in these costs as we stabilize the kiln 3, and we are able to operate our new and the latest more efficient kiln.
Sure. And on demand, you talked about East demand minus 5% for last quarter. In October, has the things improved like in terms of demand because we have a low base overall for East in the month of October?
So I don't -- the demand has been subdued in East. But in Northeast, I think overall, our volume may have been growing in single digit. And Northeast, we've seen an uptick, but in East, we haven't seen really an uptick. And we've not been also focusing that much in East because right now, the pricing is such, and there's so much work that we have in Northeast itself and the profitability in itself is so high in Northeast that our focus is normally in Northeast, and we don't focus on East as much.
Particularly on Northeast with your commissioning of plant and Dalmia Bharat also commissioning of plant later in this financial year, do you see any specific pricing pressure into next year?
I mean there could be a pricing pressure. But I think Dalmia from what they have announced is coming in the next financial year, not this financial year, according to their investor presentation, right? So I do not think that we should be facing a pricing pressure at least in quarter 4. Probably there could be a pricing pressure in Q1, Q2, next year, but quarter 4 should be quite smooth because I think in Northeast, no one really has a clinker to serve the demand, right, which comes in quarter 4 this time. So I think the pricing should be higher just because of the demand supply gap.
We'll take the next question from the line of Uttam Kumar Srimal from Axis Securities Limited.
Sir, what is the current status of our AAC block in Guwahati?
AAC block in Guwahati should be commissioned by December -- in the first 2 weeks of December. And with that, we're also launching construction chemicals, right? So we will be getting into motor, waterproofing chemicals and all these segments. And so I think that should start, and we've already started with advertising. And I think by first 2 weeks of December, we should be able to launch it.
So we will also receive incentive for this AAC block?
I'm sorry?
We are also receiving -- we are also going to receive incentives for stabilizing this AAC block?
Yes. We will be receiving incentives for the AAC block as well. I think it is eligible in both the central subsidy and also the state subsidy.
Okay. And sir, what was the cost of clinker purchase during this quarter?
In quarter 2?
Quarter 2, yes.
In quarter 2, I don't think we have purchased that much clinker. Well, I'll get back to you. In quarter 2, we did not purchase much clinker. I think it is only in quarter 3 that we purchased clinker. In quarter 2, we may have purchased like less than 5,000, 6,000 tonnes of clinker.
The next question is from the line of Keshav Lahoti from HDFC Securities.
Your employee cost run rate will remain at this level, INR 60 crores in upcoming quarter also, INR 60 crores, INR 65 crores.
This quarter, there is a ex gratia payment of around INR 3 crores. So that will be out in the coming quarter. The rest will remain the same. Only the ex gratia payment will not be there in the quarter 3 and quarter 4. That is a one-off cost.
Got it. And Jorhat land is acquired for this expansion?
The Jorhat land has been identified, and we still have to buy the land. But I think it has been identified and the team is working to acquire it. And the cost of manpower on a running rate basis should be on an average about -- the increase should be about INR 42 crores to INR 43 crores.
Okay. Got it. One last question on CapEx side. Can you give a broad breakup for CapEx for FY '25 and '26 for which project, how much you are allocating?
Yes. So in FY '25, the H2, we are allocating about INR 60 crores to the clinker plant and the WHRS.
Preferably, we give FY '25 only rather than H1 and H2.
Okay. So in FY '25, we are almost spending about INR 170 crores in clinker and WHRS, out of which a lot has already been spent. In future, we are spending about INR 110 crores in AAC and the construction chemical, we'll be spending about INR 67 crores. In Jorhat, we are spending about INR 26 crores to acquire the land.
We have bought about 120 trucks of our own fleet, which is about -- which costed us about INR 52 crores. We are putting -- we have put up AAC system, which should be commissioning in November, which has costed us about INR 32 crores. And we have gone for a good capital project with JSW Energy, which we had also notified in SEBI. That has costed us -- that will cost us about INR 12 crores. So -- and the OpEx -- operational CapEx should be about INR 170 crores. So in total, it is coming to about INR 600 crores.
Coming to around, sorry?
It's coming to about, I think, INR 650 crores around.
Okay. Because the CapEx guidance is INR 720 crores for this year and the remaining part?
The remaining part, we have -- for example, in Silchar, we had actually -- I will have to -- I think I'll have to revise these numbers. But I think in Silchar, we had reduced some of the CapEx because it will be getting postponed by 2, 3 months. And I think in Jorhat, I think there's some CapEx reduced. So I think the CapEx sheet, I think I'll add it in the investor presentation and it will be submitted.
Okay. That is helpful. Do you have CapEx ready for FY '26? Or should...
I have a tentative CapEx ready for FY '26, which I'll also ask the CFO to kind of put in the investor presentation. So it is -- Silchar, it is about INR 300 crores, Jorhat it is about INR 100 crores and operational CapEx is about INR 100 crores. And so in total, it is about INR 500 crores. And then there's group capital, which INR 12 crores. In total, it's about INR 480 crores to INR 500 crores.
The next question is from the line of Hemant, an individual investor.
I have a couple of questions. First question from my side is regarding the recent promoter stake sale and especially it comes at a time when the plan of the company is very, very robust. We are finally moving towards, I mean, 2 million tonnes of capacity by FY '30. So there has been a couple of stake sales by Suchita Agarwal, Gayatri Chamaria. So can you please elaborate on that? And I mean, this is, I think, considered as a negative sign and especially at a time when the plans are very, very robust when the growth plans are very, very strong.
Yes. So I think that, honestly, is not -- in Star Cement, there are about 4 families as the promoter group, right? And out of that, one family is actually the one who is selling the stake. And the other 3 families normally are seen as picking up the shares in the market rather than selling, right? So I think it is just a personal situation for them to sell the stake and not a situation which is respective of the future of the company. And you would also notice that in the last 1.5, 2 years, the other promoters have also increased the stake, right? So I think that is also there. So I think it's not necessarily something related to the company, but there's just personal requirement and personal preference.
So sir, the Agarwal family and the Chamaria family, they are not the promoters of the company right now because I saw it -- I mean, I saw their name in the promoter list.
Yes. No, the Chamaria family and the Agarwal family -- so Chamaria family mainly is the one which is selling. I think the Agarwal family is just part of the Chamaria family. So I think the Chamaria family is selling the stake right now, and they are part of the promoter group, but they are one of the 4 families in the promoter group, right? So what I'm trying to say is that there may be that Chamaria family is selling the stake for their own personal reasons. So it is not reflective of the overall promoter group, right?
So it doesn't affect the -- I mean, the sort of growth and road map of the company, right? They are quite...
Can you repeat that?
Yes, yes. So I mean -- so it is just a personal thing, and it has nothing to do with the future road map of the company and the growth.
No, I don't think it affects the future road map of the company. It's just a personal choice that they feel that they need to carry.
There has been a recent pledge by Chamaria family again sir, Amritansh Chamaria, the recent pledge created by him, so what was the reason behind it?
So all these things are, again, they're personal, whatever there -- because you have to understand that in Chamaria family also the share equity is quite divided, right? Because they're also having like 4 brothers and 4 brothers are now having their children and so on and so forth. So I really do not know what is going on and they together constitute a family which may be owning about 14%, 15% of the company, right?
So I do not know what goes around in that 14%, 15% really. But my point was that 67% is the promoter holding, the rest 52% is actually not the ones who are buying or selling, right? So it is this 15%, which is actually selling and buying. So I think it should just be looked at as the personal choice rather than something which is a bit more serious.
So one more thing I wanted to ask you is, in the previous quarter, I mean, in Q1, we had some issues like clinker, we had to buy from outside. And we were supposed to get the benefit of GST, then the FSA benefit. So ideally, Q2 should have been much better, right? Because I think we were also expecting the logistics cost to get reduced as we were introducing 100 new trucks and the power and fuel cost should also must be going down as we had decided earlier. So I -- don't you think that Q2 should have been much better.
No, our expectation, honestly, was also that the Q2 should have been better. And that is mainly -- the unfortunate part was the clinker, right, that we were not able to stabilize the clinker plant till now. And that was giving us a hiccup. And it has kind of given us the hiccup for the last 5, 6 months, and that is where we have kind of suffered.
But having said that, I am confident that by end of the month, right, we will be able to stabilize the plant, and we should be able to get the benefits of having a new setup in terms of the GST also in terms of the availability of clinker as well and in terms of the heat rate, power and all those other aspects, right?
And the reduced freight and all, you're completely right that we also expected a reduction in freight, but the freight costs and all those things could not reduce as much and have increased because there was a lack of availability of clinker. So the entire logistics and the entire movement of clinker just changes and it increases and puts pressure on the logistics, right?
So I think that is what we were struggling with in the last quarter 2. And I continue to respect and agree to the fact that, yes, we were expecting better results, and we should see it, right, given the price supports us, right, because price is something which is not in our control. So -- and given how East prices have been behaving, it's very, very -- yes, it's not great, right? So given the...
Sorry to cut you, so sir, the clinker plant, which is, I mean, troubling us, right, from Q2, right?
Yes. The clinker plant is basically something which we are looking to stabilize. By end of the month, it should stabilize. But there's nothing long-term wrong with the plant. It is just that some parts of the plant, like the crusher and the , we are waiting for it to come, right? So once -- now that the plant is completely ready in the sense that some aspects of the plant, which needed to be completed are also completed, I think we'll be able to stabilize it in a much better way, right? And it is just a hiccup of running the plant now, right? So I think that we should be able to do, and we should be able to come out with better results. That's the expectation.
It's the same clinker plant, right, sir?
Sorry?
It's the same clinker plant, right, which was troubling us in Q2, right?
Yes, the same clinker plant, same clinker plant.
So sir, shall we expect a sequential recovery from Q3 or Q4, because I think the dispatches are also less because of monsoon season and all. So shall we expect a sequential recovery from Q3 or Q4?
I think a better recovery in at least the profitability would be from Q4, right? Because I mean, I'm talking about November end to kind of stabilize the plant, right? I've already crossed October and November, right? So the recovery of getting up -- getting a new plant and be able to sell clinker and all those things will actually start coming and the GST also, because the GST will also come for the clinker plant when you produce clinker, right?
Correct.
So that benefit, I think, will be from Q4 right? Q3 will still be a struggle, but Q4 is where we actually see the benefit coming.
And sir, as per annual report of 2024, you were guiding for 20% growth in revenue with higher EBIT in FY '25. So are we some sort of lowering guidance for FY '25 given the kind of problem we are facing for clinker unit?
No, I think the problem is not only of the capacity. The problem is also demand, right? Like as we have seen for other cement companies also, they most -- some of them have degrown, right? And some of them have actually grown in only single digits, right? So entire India, I think there is a problem of demand, right, that we are facing. So my expectation will still be double digits, right, that we should be able to do Q3 and Q4 well. But I do not think that the number will be touching 20%, right, because the demand also needs to support for that to happen.
So maybe early double digits, we can say, right?
Yes, early double digits. Like I think 12%, 11%, 12% would be a good estimate.
And sir, one more thing I have a concern and it is very, very disheartening. We as an investor and we are also doing equity research, no one picks up the call. And I mean, the number which are there in the website and the number which was there in the investor presentation, we were unable to reach the Investor Relations department.
No one picks up the call, neither the sales team nor any replies to e-mails. So this is very, very disheartening, sir. And one, two numbers are not working also, sir. Like the Guwahati number, I just got a chance to connect to the Delhi team, and there -- I mean, there something like the sales department or someone else, they took the call, and they were unable to get me connected to the Investor Relations department. So it is very, very disheartening. Please note this as a concern, sir.
Which fund are we speaking from?
No, I am an individual investor, sir.
Okay.
I do my own research and I invest and do most of the numbers.
Okay.
it is very, very disheartening sir actually.
No, I get it. So I will do one thing. I will -- in this investor presentation that there is, I will make sure that all the numbers are working and you don't have this problem. And I will also ask the team to be a bit more responsive to such queries.
The next question is from the line of Jinesh Shah, an individual investor.
Once our clinker plant will be established by end of November, how much cost saving in terms of operational cost saving we are expecting on a monthly basis? If you can elaborate on this, please?
So once the clinker plant does come end of November, then we expect to shut our Line 1, the first line that we have of clinker, where the heat rate is almost touching 780 kCal and the power is 65 to a bigger kiln, which has a power consumption of about 50 units and a heat rate of about 710. So there will be a substantial saving of about -- I'm expecting a saving of -- just from the operational -- operations perspective, I think we should be saving about INR 50, right, from operating the new kiln.
And then also the SGST benefit, the GST benefit of the central subsidy that we'll get, right, which should be another about another -- weighted average, it should be about INR 100 of benefit on cement. So I expect about INR 100 to INR 150 of benefit from operating the new kiln.
And then, of course, the new kiln will also give us a benefit of selling clinker and availability of clinker, which is a huge benefit, right? Because as I said, the demand in Northeast for clinker is also going to be very high. It's still high and it's going to be very high, especially in the season time. And at that position, if you are able to sell clinker, then I think that will generate additional income for us.
Okay. And what is current market price of cement OPC, PPC there in Northeast? And how do you see trend in Q3, Q4?
So sorry, can you repeat the question?
What is the current cement price in Northeast? And how do you see the cement price trend in Q3, Q4 in Northeast?
So the current price in Northeast is about INR 460 per bag, right? And we -- like in November, I do not see an increase in the pricing. But I think going ahead, hopefully, I think we should be -- I think by December, I think normally the prices do increase. So we do see like a INR 15 to INR 20 scope of increasing prices, but that we don't know.
It depends on how the demand behaves and how the pricing behaves. So I think a few -- like the experience from last year is that normally the price increased by about INR 15 to INR 20 in December leading to the season.
Okay. Sir, we have a production plant in Northeast and if the demand in Northeast is not increasing and if we are selling our products outside the Northeast, are we still entitled for the central subsidy?
In clinker, yes, but not -- so basically, there are 2 benefits. One is the SGST benefit. That is, of course, the state of Assam benefit and that we only get that we only get for sales in Assam. Then there is a GST benefit that we got from the clinker that is for overall GST. That is a central subsidy benefit, right? So the central subsidy in clinker, we get for all our sales, but for the sales from grinding unit, the benefit is only for Assam.
Ladies and gentlemen, due to time constraint, we will take the last question for today, which is from the line of Prachi Kadam from Dolat Capital.
Can you help me with the EBITDA per tonne for East and Northeast and outside Northeast?
Yes. So the EBITDA per tonne for Northeast was about INR 1,300 per tonne and the EBITDA per tonne for outside Northeast was about minus INR 200.
Sorry, sir, minus INR 200?
Minus INR 200 per tonne was the EBITDA for outside Northeast. And for Northeast, it was about INR 1,300.
As that was the last question for today, I would now like to hand the conference over to Mr. Vaibhav Agarwal for closing comments. Over to you, sir.
Yes. Thank you. On behalf of PhillipCapital, we'd like to thank management for the call and many thanks to the participants joining the call. Thank you very much, sir. Michelle, we will now conclude the call. Thank you.
Thank you, sir. Thank you, members of the management. Ladies and gentlemen, on behalf of PhillipCapital India Private Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.