HeidelbergCement India Limited (500292) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the HeidelbergCement India Limited Q4 FY '22 and FY '22 Call 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.

Yes. Thank you, Stephen. Good afternoon, everyone. On behalf of PhillipCapital (India) Private Limited, we welcome you to the Q4 FY '22 and FY '22 call of HeidelbergCement India Limited. On the call we have with us Mr. Jamshed Naval Cooper, Managing Director; and Mr. Anil Sharma, Chief Financial Officer, HeidelbergCement India Limited. I would like to mention, on behalf of HeidelbergCement India Limited and its management that further statements that we make or discuss on this conference call may be forward-looking statements related to future developments and the current performance. These statements may be subject to a number of risks, uncertainties and other important factors, which may cause the actual developments and results to differ material from the statements made. HeidelbergCement India Limited, under management the company assumes no obligation to update or alter these forward-looking statements, whether as a result of new information or future events or otherwise. Also, HeidelbergCement India Limited has uploaded a copy of [indiscernible] for FY '22 and FY '22 presentation on the stock exchanges and its website. Participants are requested to download a copy of the presentation from the website . I will now hand over the floor to the management of HeidelbergCement India Limited for their opening remarks, and following that we'll have a Q&A. Thank you. And over to you [indiscernible]

Thank you, Vaibhav, and -- for hosting this investors call. And first of all, let me thank all the participants who have joined and taken out the time for to attend this call. I suppose you would have received our presentation, which has been posted already. Coming to the first page of it, which you have already read, which is about -- we are talking about ESG projects, alternative fuel projects and solar power plant, which we have commissioned very recently. And we are on the path -- on a trajectory towards greener and a much more efficient energy utilization system, so which we had planned on a long basis. And we are continuously -- as of now, today, we are close to about 23%, 24% of our total is green power for the company, and future it is targeted to grow to about 30%-plus. Cement capacity utilizations, we have increased, and we are now talk about later on also, we are right now at hovering around 76% utilization. Last time you had this delay issue that we had dropped down, but yes, because of the capacity issue now we are recovering that. Continue to produce the 100% blended cement. As you are aware that we do not produce OTC, which is one of the rare companies which -- in the cement Indian cost space, which believes that we have to take care of our planet also. Today, many constructions don't require it. Anyway, we can talk about it later on also. Green power, which I said already 23%, EBITDA is 910 per tonne. We have tried to do our best. We could have still done better had fuel and coal power, and fuel had been a little sympathetic towards. We repaid our third finance transfer of nonconvertible, so we are now a debt-free company. You will see the interest of cost coming down to 0 now. Then we have a good amount of cash balance, close to about 380 crores. Am I right? INR 380 crores is in the cash. And we continuously augment that also in the -- we'll talk about that later. Then the Board has recommended -- based on the cash flow -- future anticipated cash flows, the Board has recommended to the -- for the AGM to the shareholders, a dividend of INR 9 per share. We'll talk about this later also in detail. And we continue to operate on net negative net working capital. Turning to moving to the next slide, which is yes. So on the clinker factor, we are [ 61.4% ], being a blended cement company. I think this is a rare distinction in the cement industry. Those people who are making slack for them, it might be a little better. But in the PPC space, this would be probably one of the best we are trying to do over -- in this. On the CO2, we are at right now, 511 kg per tonne of cement, which is also, I would say, you will appreciate except that also that we are here doing the company with its best foot forward. Coming to the water positive, we are about 4.4x on exporter positive. And CSR on -- well touch the lives of almost 35,000 people. And we believe that our CSR activities are bringing the smile on the faces of the local society. In terms of Green Power, we have spoken about 23%. Taking you to the next slide, which is 5, we have the target to reach about 500 kgs CO2 -- of emission from 511 to 500 kgs by 2025. The task is uphill, and it cannot happen without the use of AFR and renewable energy. So our focus is there. You can see a beautifully laid down solar power plant, which is now operational. And we are getting a very good plant load factor from this. And I'm sure that it will go a long way in giving us the carbon credits for this, and it will be almost 250,000 tonnes of CO2 will get reduced or conserved because of that. So this is a very important steps in the direction of becoming green, from green to greener. Coming to this footprint of the slide, you can see on Slide 6, at Jhansi, we have just started our drawing power from a renewable, which is about 22 gigawatt hours. And nothing we are already -- because we offered WHR and sales level, we are almost close to 40% is Green Power, plus we have added 5.5 megawatt of solar power to it. Ammasandra is 90% here. We are writing on the sale side, but it is close to 95% plus, I would say, of power is green. Maybe it varies sometimes, but coming average will surely be 95% and above. So when it comes to our growth of how we have grown in our Green Power, you can see that we have reached 23% of our total power in HeidelbergCement India. And we have a target and ambition to cross 35% in the near future, which is -- and I would say the road map is clear, and the company has been working on it. So it is not a project we will see and we will come back to you in '25, and say that, okay, it does not happen or that did not happen, it will be delivered to the world. The next slide is towards Slide #7. We have our website that is a very unique website, which is called friends of -- hcfriendsofearth where anybody who plants a tree and he can -- he or she can geo tag it with their name and pictures. So right now the maximum contribution has come from the employees and business associates for us. But in future, we are wanting that more and more people should come and contribute to the greening of this Earth. And I think as a generation, we need to contribute more and more to our planet mother Earth. So this is one of the initiatives in this direction. We can, if anybody has questions, happy to answer them. Coming to the -- now the business results are concerned. So if you look at Slide #8, there were questions that why are you dipped in your capacity utilization, which has dipped from 91% to 87% and because we did an expansion work and '20 was a hit. So we had a hit in '20 because of the COVID, but then it's -- again, we got the capacity. It came a little -- timing was a little odd. But now again, we are into back and trying to lift the bar, and see to it that we have reached back our 90%, but we are today at 76% given the market conditions and demand are there, and we do not want to put too much pressure in the market, although we can sell it, but ultimately it will come at a cost. On the Slide #9, you can see our 12 months of performance. We have compared it on December-on-December, quarter-on-quarter, and how it will sail. So from that, we are back on the trajectory, we pulled up our numbers in the month of March. This is only a flattish come back. And I think this trajectory will further improve in the months to come, in the next quarters. Coming on the profitability. What should I say on Slide #10. It's a very clear message that this [ point ] growth has been power and fuel. Had it not been there on with the parameters, the company has -- the team has done a very good job. They have tried to conserve, they have tried to recycle, reuse whatever their limit, and that is visible in our every effort of it. But sometimes, certain things are beyond the control. And as we talk about also, we are -- our team is working on -- in some of our plans to how to switch fuels with maximum efficiency. So earlier, the lag time would be about 2 days or 3 days from switching over of fuel. Now we have come to a stage where we are able to reduce this time to almost 36 hours. And within 36 hours, with fuel change, we can do without impacting the balancing of the kiln or disturbing the kiln. So this is what is happening there. If you look at the Slide 11 of the slide, you can see very clearly now it is much more refined. From the micro numbers you can see, the fuel is the power, and fuel has gone down. Others you may have some questions, we will answer them, but these are the one-off items, some of them, which are the tax incentive we've got from the MP government. So that is one part of it. But yes, that was due to us. It has long been coming. So now it has come. So from -- now we are standing at an EBITDA of INR 961 crores. And I'm sure that if the market has some good sentiment built up, which will go up in the future. For the whole year, you can see again, power and fuel is one of the areas, which is bad. But still, we delivered INR 910 crores on this -- for the full year, so April to March from INR 910 crores. For the quarter, it was INR 961 crores. The balance sheet has been placed in front of you. If you have any questions on that, we can -- Anil can answer on the balance sheet part also. I think it is fair and simple. I don't think there are too many surprises in this or anything. It's a clean, very clean, neatly done balance sheet audited by the [indiscernible], our auditor. The question comes now on Slide #14, you can see the bank balance is what we have. The net cash is about INR 11.3 billion -- INR 1.34 billion of cash as we are sitting on as of 31st of March. There is a UP government to bring more transparency to 0 interest loan, we have with the transparency on the UP government for development of our expansion, and that will be repaid in the -- till '26. And how the payment year-by-year, it is going to go. It's a very transparent place in front of you what was the money which we will be taking off, and which are the ones we are right now in the debt position, we have a INR2.346 billion repeated the right-hand. Dividend, coming to Slide 15, I think, your company has delivered from -- starting from the first dividend after 20 years in 2017, gradually improving, not letting the investors feel let down. I think there was interim dividend, so that was in 1 place. We have placed it as 90% -- and the dividend. I'm sure you may have questions about it. But based on our future cash flows and things like that, we recommended to the Board. The Board has now recommended to the shareholders for their approval. Slide #16, the story is that little bit has been reduction on our road that is on the 50-50, but now as the circumstances changes, rail becomes cheaper. So we went to rail. We will be able to change this blend faster, not only 46% is by road and 62% of our coal -- if you look at it, we have gone to 62% coal. What to do? Because petcoke becomes much and much costlier. Today, the petcoke price -- domestic petcoke price is hovering around INR 20,000 a tonne. So -- but on the vis-a-vis basis, when it becomes a cheaper one source, then we switch to -- again, it's not a question of this petcoke, it is also availability, which is a major issue. Many a times, we are running into problems of getting, sourcing our coal from domestic market also. So sometimes you have to use a costlier coal to keep the plant running as long as you are able to keep your nose up-float, we are doing that. On blended -- premium cements, we have now reached 21%. There is an improvement on the previous quarter. And on the trade side, there is a minor deterioration of -- because our trade has declined to 80%. Earlier, it was of around 85%, 86%. But I think this will keep going on, and the markets are little softer over here, we'll have to keep changing, but it does not really matter too much on our results. Coming to Patharia, from the awards we would like we even shared with you how our evolving our team takes pride in receiving the awards. So awards are -- from CSR, we have got an award for our rural education. There's a lot of transformation we have done. We have done a lot of schools, [ Anandpur ] on education, rural education, we have really. And it is very heartening to see the smiles on the faces of the children who want to come to school. Normally school -- not many people would like to come, but we have made the school so inviting that the teachers would like to come there, even that children would like to come there because now they are not -- no longer the government schools, which the government was -- government also has limited and as a corporate, we have contributed just only supported given helping hand there to refurbish the tools and make them look decent and livable and happy. So happiness portion has gone up. There on the integrated community development projects also we have gotten a global award or CSR award. Coming to Patharia mines, which is again feather in our cap is fixed for success year-after-year, the Indian Bureau of Mines has been appreciating our efforts for sustainable mining. Very safe mining, sustainable mining. In fact, in the use of [indiscernible] lime stone ridges, the way we refill, we reuse reclaimed land and then we do the forestation on that. These are some of the areas which are a question of joy for us by our team also as a matter of pride that we try to make our workplace much more better. And that gets recognized by the government, then it feels further more nice. So on the demand situation, we are talking about demand situation. So you can see this pandemic. I think when we talk about the pandemic, when I move around in the market when I see people without masks, I feel that India is the -- pandemic has gone. So it is of no meaning. Corona is gone from here. But yes, there is always a worry we become complacent, and then it strikes back. So that's the thing that I think right now it's okay. The issue you feel -- the danger is how the Russia-Ukraine conflict disruption go. And as it is right now had an impact on [ pulp ] for fuel, what's next, we do not know. So one has to really tread very carefully on this. I do not expect in future the coal prices to be coming down below $150, ever in future. That's what my feeling is. And then too also, if it comes, it may be somewhere around after '24 or so, it may come down to that below that level. But right now, it does not seem to be easing out. Fuel availability remains a challenge for us, and we try to see that we get the most optimum source of fuel. Cost pressures are there. What should I say, today, when these prices of coal, that is almost -- and fuel and petcoke, it is almost, some things have doubled, somethings have tripled. So heat and other, these are temporary things because you will have questions that how is this quarter going on and forward. Yes, I'm just rewarning, cautioning that fortunate even because of the heat there could be a little bit of impact on sales in the little bit of this month or previous month. marginal impact will be there. And because there's a slowdown of construction because also of -- we must appreciate that the steel has gone through the roof, and other building materials have gone through the roof. There is a liquidity crunch at the dealer end. There is a little bit of concern there. A little bit of outstanding has increased marginally, but nothing to worry about it. This is a -- we have a very strong, robust channel. We are sure about them. They have securities with us. So nothing to worry on the side of going -- thinking about any bad debt for I think the company is fully secured and covered. Government is taking its measures. You will have some questions. Definitely, I will answer to you what happens after the reduction of coal -- after the price reduction of diesel and petrol, how does it impact us? That I can answer to you as and when you want it. But this is as of now from our side. Anil is with me as our CFO, Amit and [ Sanjana ] are there to answer your questions whatever they are to the best of our ability, we will give you a most transparent view of whatever you need to know. Thank you very much, and thank you once again for all the support you people have been rendering to our company.

[Operator Instructions] The first question is from the line of Shravan Shah from Dolat Capital Markets.

Sir, first, on the demand front. So as you mentioned, the other building material costs, which has increased, including steel, and the heat also impacting. So in this April and May, how do you see the demand? So will it have impacted 10%, 15%? Any number you want to throw? So just trying to understand, so including normally, fourth quarter remains robust, and the first quarter, normally, we see a decline in the volume. So just trying to assess the decline on Q-o-Q in the volume front for this quarter?

I would say it is -- there is a negative impact on volumes, as of now, as we speak. We were expecting that just a little bit of shower comes in, and then it should again boost. There is a little bit of slackness in the government demand because some of the monies the government had spent during March. I think they are still able to not -- and the next flow of funds has not come from the franchise and other places, which draw a significant amount of cement. So there could be a 15% to 20%, you can say, [indiscernible]. Seems to be on an industry basis. I cannot tell you -- I will give you more on an industry basis. That is what I can figure out. It can -- for some, it will be ranging [indiscernible] even also. But let us see because the month is not yet over. Today, we are just -- as we speak, demand seems to be somewhere going up. In some markets, it is coming up, some markets it is becoming stagnant. Let's wait and watch. I think June will be good.

Okay. Okay. Good sir, on pricing. So post March, how much price increase we have taken in April and May or from there? Or maybe from average how do we see how much price increase we have taken? And any further price hike attempt would be there in the remaining 1.5 and 1 month so?

Price is more or less flat as of now. Minor increases comes here and there. Some cost increases will definitely be there in -- because June, if the business starts a little bit better.

The recent price to final about March quarter [indiscernible]

The March quarter [indiscernible] there will be an increase.

Sorry, sir, how much increase since March?

How much increase, Anil, is there as of now?

[indiscernible] Around INR 20, INR 25 per bag price increase as compared to March quarter.

So since March average INR 20, INR 25 price increase, is that right, sir?

That's right.

Okay. Sir, now coming on the costing front. So definitely, it is difficult to answer, particularly on the petcoke and coal. But still trying to understand what kind of a further increase because this quarter, definitely a significant increase we have witnessed. But still, at least for this quarter, how much more impact, we can see, another 10%, 20% Q-on-Q power and fuel cost. Is it fair to say that, that kind of increase will be there?

Petcoke and coal prices even higher than 10%. So we have seen that there is significantly petcoke prices increase. Just to give you a little bit idea about the petro prices in the March quarter, it was around INR 20,000 per tonne. It is now coming around INR 27,000, INR 27,500 as we see currently in the month of May. So the petcoke domestic supply, they took many hikes during the last few months, and the landed cost is coming around INR 27,500.

So for us, including the kind of gains that we are trying to increase. So for us in terms of the per tonne, how much likely increase to happen?

Well, see, it depends upon how the power prices by the grid increase during this quarter. Because Madhya Pradesh government has already taken a few hikes in the grid prices. UP, we have not seen that kind of things. And at the same time, we have been working on this renewable power. So during this quarter, debt benefit also flow to bottom line. So there are mix, petcoke and the coal prices increased significantly as compared to March quarter. Power, maybe we will not see that kind of increase because the initiatives on renewable power. So let us see that, okay, how much cost increase happened during this quarter and how much we will further pass on the market.

Okay. Lastly, sir, on the CapEx and the expense. So previously, we were talking 0.5 million tonne of kind of a debottlenecking and the Gujarat expansion, environmental clearance. So what's the status? When can we start spending on the Gujarat expansion? And then when -- what would be the capacity by when it -- once you start, will it come in 2, 3 years? .

On the -- first of all, there is a debottlenecking and a little bit of improvement for this, which we are doing, that will get all triggered and all started coming by March, April next year. So this year, we are doing some CapEx on that. We are working on this, and I think the ordering will happen by June, July. And we'll get on that. The second phase will happen of that in '24. It's line 2, where there is a small debottling, but there is some study which is going on because whatever the benefits we are getting are -- right now those were not to our expectations. So we are doing still more additional study into that. And it is a 22,600 PPD line. We want to take it to 31,000 right now, 31,000 or 32,000 or 33,000. But let's see how it goes to technical study is necessary in that. But line 3, we will up this year. Coming to the Gujarat project, I mean, Gujarat project that is -- it is under now environmental clearances. So we have moved there. And I think it will take another 2 years -- 1.5 years to get all the clearances and then we start building the plant. So it may take another 2, 2.5 years, 2 years, another [indiscernible] there after to get the plant up and running.

[Operator Instructions] The next question is from the line of Prateek Kumar from Jefferies.

My first question is related to a prior question on CapEx in Gujarat. You -- while you mentioned like it may take some time to start. Can you just elaborate a bit more on like where we are currently exactly -- I mean a bit more details on that project? Are we expected to start that in FY '25 or '26?

We will do anything not before '24 mid or so. About '24 you can say -- By '24 mid you can say. It depends on the clearances, how fast we get the approvals. But these are not within our control. These are all government-controlled, and clearances and approvals we have to get. So let us -- right now it is at a very nascent stage. Once we get approvals, then we will start investing on this.

Okay. So '24 mid, we may get approval after that [ 22 ] years...

'24 end, we may start earlier on this, 20 -- or maybe earlier also, it depends how fast efficient the government system is.

All right. And sir, as we know that the global group has like sold assets in India for the reason of relating to ESG and carbon emission, et cetera. So is this something which our parent also worries about, and which may restrict growth in India or our M&A opportunities in India?

As of now, Prateek, I don't see any reason to worry for our company, at least, okay? Our company on the ESG is very, very strong. In terms of our -- if you look at our carbon footprint at 511 kgs, who will be able to compare that? Among the -- today, among the global -- out of entire listing. This company is doing a marvelous job -- so I don't think there should be a concern for -- plus we have invested into all ESG-related CapEx gradually over the period of time. So today, we have shielded our company from the spikes of becoming environment-compliant. So today, the company is in a much better point in a situation. I don't think the group will ever think of an emerging market, at least HeidelbergCement, I don't think it is looking at any of these type of discussions at any point of time.

And sir, regarding cost, which you mentioned, the petcoke price to INR 27,000 from INR 20,000 per tonne. So this INR 27,000 will hit us in terms of realization in our income statement in Q2 or straight away in Q1?

It will incur in Q1 also, some impact will come now because since we are buying at that price, that will impact -- because the inventory of fuel nowadays with any cement company is not more than upward limited 25 to 30 days.

[Operator Instructions] The next question is from the line of Peter Agnal from [ KCMA ] Wealth.

My first question is that, sir, so what has been the petcoke prices during FY '22, '21, '20 and '19? Just to get an idea of what has been the increase?

So I'll tell you that petcoke prices, petcoke cost, if I look at it quarter of March '20, petcoke price was just INR 8,000, okay? Then you look at March '21, this went to INR 13,500, almost INR 13,600. And now this March, it was INR 20,000. And now the next slot is INR 20,000, INR 27,000. So if you look at these jumps, this is where it is. So I mentioned to you that some of the things that almost doubled and some have tripled.

Okay. Sir, in terms of raw material, sir, what are the -- so what is your raw material basket costs? What are the major raw materials? And where are you sourcing them from?

Yes. Raw material, maximum is limestone, which is our own limestone, okay [indiscernible] are small 3%, 4% is additive, which is for gypsum, and raw material is another small laterite bauxite. That is not [indiscernible]

Fly ash.

Fly ash that is our standard supply contracts are there going on for years together. I think that is not be about it because those are more tied up sources. Fly ash is a more tied up source compared to other variables.

Sir, just to understand, because of the raw material cost pressures which are expected, are there any initiatives in place to reduce the raw material cost pressure going forward in the light of keeping margins afloat?

Yes. I cannot reduce raw material costs. I can only reduce consumption. But consumption also has to be to an extent that you can remove the flesh from the bone, but you cannot cut the bone.

Got it. And sir, so you had mentioned about the diesel price decrease you mentioned it and asked to throw some light on how it would affect.

I could not get you.

So, the new diesel price, which has come down. So [indiscernible]

Diesel price. Okay. That will -- that is a small element that only goes into our yellow machines, diesel, and a little bit on our logistics cost. So it's about INR 2. At best INR 2 added, it will reduce.

And sir, last one, you have mentioned that there are a lot of road contracts are given. So any light color on Heidelberg, is it getting any major orders from road contractors?

We are not into OPC manufacturing. So we do not bid for that. We have agreed we are a green cement manufacturer. So PPC in road projects are not preferred as per the government regulations. Also, you can use it in a -- there are projects which have been done in this country with 100% PPC, also highway projects. But here as of now, the growth projects are using only OPC as mandated by the CPWD. So we don't supply this.

Sir, my final question is any CapEx guidance for FY '23 and '24, that would be what?

CapEx is -- Anil how...

Your question is 2023 or '24?

The next 2 fiscal years.

So we only do around INR 50 crores to INR 60 crores per annum CapEx as a sustainable CapEx. That will continue for the next 2 years. And as well, next 2 years, we are going to do this debottlenecking project in the Madhya Pradesh, and that will be the additional amount. So we expect that maybe there will be around INR 40 crores to INR 50 crores additional CapEx in the fiscal year '23. So put together around INR 100 crores in '23 and another INR 80 crores to INR 90 crores is in the fiscal year 2024.

The next question is from the line of Navin Sahadeo from Edelweiss.

Sir, just 2 quick questions. One is, with this reduction in diesel price that has happened, are we likely to announce any price cuts? We have just, I think, seen cement promoters have made some interview statement some time back. So I just wanted to know if this is a general industry trend that since the diesel price was cut by the government to contain the inflation. So is there an obligation for the industry to pass on that to the consumers, at least, to begin with? That was my first question.

So Navin, this amount, as I mentioned to you, the impact is only INR 2. In cement industry prices fluctuate by anywhere between INR 20 to INR 30. So I don't know, even if I tell today that I have reduced prices, nobody will come to know also that what I've reduced. So I can't make any comment on that. Today, in a day, you can have a variation of INR 10 crores to INR 15. Today, I dropped by INR 15. Tomorrow, I will change it to increase by INR 3. It's a very difficult situation to tell you whether this is going to impact cement prices. And let me put it for the benefit of all the listeners here. Cement as a component, okay? Cement as a component for the builder -- as a builder is just the impact of cost, which has increased for a builder is 13.5% for all the building materials. Steel is one of the largest, which contributed about 24% or 25% -- 35%. And cement as the constitute -- as a component in that is just 0.1% of the 13% of cost increases, which has gone. And if you want to see that report, I saw this report by one of our -- by one of the builders, I think it is [indiscernible]. The group, which has used that report, which have made our report before, saying that how their building material costs have gone up. And what is the -- and there, you can see that cement is just only 0.1%.

Sir, my question was more on the general mood in the industry in the sense at a time when the underlying cost is shooting up, but the industry is not really able to take enough price hikes, and that's where the margin compression that we are seeing. So I was just trying to understand if there is a general inclination that's in the underlying cost is up. We can continue to see some price hikes? Or there is not enough...

Navin, prices right now should touch across INR 500 a bag, according to me. Today, cement still is at INR 300 -- on an average INR 370. This the price ruling in 2018, '19 also, and 2020 also, and '21 also. We are still at the same place.

Correct, correct. Sir, just one last question. Then given the underlying costs that we are likely to because if we're halfway through the first quarter, so given where the current prices stay where they are and the cost that we are largely likely to budget in for Q1, directionally, the margins should continue to be under pressure in Q1 over the previous quarter, right?

That is under pressure, which will continue to be under pressure if the prices don't go up, how much can you get from what is now -- you're using your optimal resources, what else can you do with petcoke goes up today -- petcoke earlier used to cost us something like just about INR 300 a gigajoule, INR 270, INR 320 to INR 360 INR gigajoule. That is costing, today, INR 780, INR 790 are now, even some of them are INR 900. So you have to pass on to the market. It's unfortunate, the other commodities have gone up, it is -- in this industry because of the excess capacity, it has not been able to take increases because everybody wants to run the show, and wants to keep the price. So any way to public has anyway benefited by the competition, which is happening in the industry.

And Navin, no doubt, the cost has increased, but a good thing that during the last 1, 1.5 months is light cost we could pass on to the customers. Now we are in middle of this quarter, and we'll see that, okay, how this costed or especially the petcoke price development happened in the remaining 45 days, as to how the prices will move. If the demand sluggishness will continue, yes, there will be some pressure on the margin. But let us see because March was also not the very good quarter, although it was better than December quarter, but not as compared to postponing part of last year. So we will -- let us wait and watch how the margin improvement or the margin development happened during this quarter. For our other company, yes, there are many good things happened during this quarter. Sorry happening, renewal power is supporting our cost. We have been increasing our alternative fuel consumptions, also. So there should be some good things, but at the same time, cost pressure no doubt is there.

The next question is from the line of Ritesh Shah from Investec.

Sir, couple of questions. First is, sir, can you indicate the fuel cost in Rupees per KL basis for the quarter, and on spot basis?

Kilo can per -- for this quarter for the coke cost?

Yes, sir. Blended, coke plus coal.

Coal, I have got is about INR 2.54 per [indiscernible] -- petcoke is INR 2.54. And coal is about INR 2.34 per [indiscernible], which -- in the previous quarter last year, it used to be -- coal used to be INR 1.33, and petcoke used to be INR 1.72.

Okay. And sir, on spot?

Pardon?

Spot basis, on the current rate?

Current rate will be much more. Current rate would be much more. We'll have to check it out. INR 2,700, INR 27,000 [Foreign Language] on INR 8,200 crores.

Corresponding to INR 2.54 is INR 20,000, right?

It is now INR 3.38. Actually, INR 2.54 reduced to -- increase to INR 3.38 per KL.

Okay. And on coal, sir?

Coal, it is also now it is coming around INR 15,000. So that is also an increase significantly.

[Foreign Language]

INR 2.80. INR 2 around [Foreign Language] When we compare the March quarter, the coal sector and the coal prices in any case, increased by around 20%.

Correct. Correct. Correct. sir, how should one look at basic pricing when it comes to offsetting this cost given we have also in front of us. Are we confident of the demand you indicated that we have increased prices after March. Will we be in a position to actually cover up for the cost inflation?

So Ritesh, you must understand that when the prices go up, significantly, then there is always a pushback from the customer end, okay? So I always call it as a stabilizing phase. So it's like climbing a 100-ladder step. In fact, every 25, you will have a stop to get up and stop there. So this is the industry going through this phase. Soon or later, customers will realize that now cement is not going to be available less than INR 380 to INR 400 a bag. And then they will again come back. Today, they don't expect who will expect that steel prices will come to INR 55. I doubt very much. Okay, the steel prices will remain anywhere above INR 75 or at least INR 70 and above. So it is a question of wait and watch. With these type of fuel prices, you cannot afford to reduce prices any further.

Correct. Correct. Correct. Sir, a bit of a hypothetical question. So what the government did is actually at least around the [indiscernible] steel. Obviously, the fear of next could be aluminum and cement I understand vitally you stated a 0.1% impact out of 13.5% increase in construction costs. Do you think there is any risk of government potentially intervening to curb pricing on cement. The INR 900,000 is also not a bad number if one looks at. So the price before the government might be a bit different at this juncture. Is there any risk over here where the government can potentially intervene?

Why should the government intervene when they cannot stop the prices of all other commodities going up, how can you ask one type of industry to just be only becoming the weeping boy.

Okay. Sure. Sure. And sir, last question is, sir, Gujarat CapEx have been pending since quite some time I think our commentary has been that clearances are taking longer. Sir, can you provide some more color on what less clearances are still pending given I think our financial parameters is perfectly placed. Balance sheet is awesome. I think the only thing which is the question was in growth organic or inorganic. If you could provide some more color on clearances on Gujarat? And will we be open for inorganic expansion given our balance sheet shape is pretty good?

So inorganic -- answering your last one, inorganic, yes, always open. Coming to Gujarat, it's environmental clearance. We have to get it off, okay, and done. So that has got now approval. We had got -- because the plant is coastal in nature. So see that our coastal regulators know regulations are there. [indiscernible] is there. So this we have to clear, and now we have almost brought it over. So we have got the approval for that also. Now it will take about further environmental study to take. It will take about a year. One season they will require to measure the impact of putting up a cement plant. So they will do all the studies through an agency, and then they will come up with the solution because we have told them what is the size of the plant, what is the water requirement, what is the power requirement, everything is there. So we have given that in the store, and it will then let the study happen. We will take about a year 1 full year to study it, and then report will take about 3 months or 4 months. And by the time it gets finalized, and we get the final about in 1.5 years. In the meantime, when we see things are moving in the direction, then we will start working on our internal side also, for land procurement and boundary creations and things like that. So those deals are going.

Sure, sir. This is very helpful. Sir, just last question. Any update on the Zuari merger? Is it something which is possible? How should 1 understand this, if not now, say, 2 years out? -- a simplified structure. I think historically, if I look at the history of the group also, I think the [ Bidogil ] have simplified structure. Sir, how should we to understand this?

I think Ritesh every time I have mentioned this that yes, it is a doable project. It's only a question of financial, how do you cover -- or how do you engineer it financially. So once that engineering is done and there is no loss to the shareholder value, then we will take it. But yes, in the coming -- you can expect it will another 2 or 3 years, it will happen at best.

The next question is from the line of Uttam Kumar Srimal from Axis Securities Limited.

Yes. My first question pertains to our mix. You said on our coal mix is around 62%. So how much is imported coal and how much is domestic in this?

In our case, it is 100% domestic.

Domestic. And sir, what about petcoke? How are the petcoke mix during the quarter?

So petcoke is also total domestic. And the petcoke is around INR 20,000 a tonne for the quarter.

Okay. No, sir, I want the petcoke mix, so 62% is coal and balance is petcoke in that?

62% is coal, and petcoke is -- the balance is petcoke.

Okay. And sir, what has been our dependence on grid power because last quarter, it was 32% on the state grid and 68% was outside state grid. So what is the position right now?

So it is -- as we said that as we talk about almost 20 -- almost Damoh runs at 40% -- close to 40% on WHR. Then we have the 5.5 megawatt of solar. And then this is, I would say, 55% would be from the grid. Correct, Anil? Yes. 55%.

55%, okay. And sir, what has been our lead distance during this quarter?

Lead distance. Lead distance nothing has changed. It is the same. 400kms.

360kms and 375kms.

Between 360kms, 375kms it will.

There is no change in this. We continue selling in the same market.

Okay. And sir, one last question on other expenses. Other expense is down quite sharply this quarter. So what has been the reason for that?

So you see in our case, in last time we explained the December quarter, there was a big shutdown and that's why the shutdown cost has increased during March quarter generally we do not go for any shutdown. So that's why you see the expenditures compared to quarter-on-quarter, there is reduction. When you compare with the year-on-year, it is on the similar range. The fluctuation in the other expenditure from quarter-to-quarter only because of the -- plants are down of the kiln.

Okay, sir. And sir, what was the amount of incentive that we have received in this quarter?

Our incentive?

Yes.

This, we have already given in our public result in notes. The total amount we have accounted for during this quarter is INR 300 million, and out of that, INR 200 million is pertaining to the earlier period.

[Operator Instructions] The next question is from the line of Rajesh Ravi from HDFC Securities.

I have a few questions. First on the -- could you share for the Q4, what is the trade mix -- trade sales mix?

Trade sales, Q4?

In Q4.

Q4, it was 80%.

No. That was for FY '22, I suppose, the PPT mentions. For Q4, it will be?

75%. In Q4, 75% at...

75%. Okay. And sir, are we seeing any pressure in -- because steadily our trade mix has been coming off, if you look at the trend in last few quarters from more than 80%, the trade mix is now from 80 -- yes, it was 80%, 85%. And then till FY -- March and June quarters, it was 83%. And now you are seeing it is close to 75%. So any reasonable pressure that you are witnessing from other peers that is why more push in the non-trade.

So Rajesh, this is a little bit of technical area. What happen when we supply -- there are certain rates we have supplied, okay? On a fixed mean prices, but the material is the trade material only. It is a branded bad lease sold to a bigger wholesaler, which who retail. But as a segment, since we have a separate methodology, it is not on any [ far ] bag. So we have not classified as for this, otherwise, there is also a trade. So this is a bit of correction which we will do it in the statistics because the quantity in those categories have increased. [indiscernible] being measured into non-trade. So we will change those just [indiscernible] later. Otherwise, more or less, I would say that it will not go -- 80% will remain -- trade will remain, or a little plus only it will remain. Last month also, we sold about INR 25,000, INR 26,000 tonnes in this type of a transaction, which we'll correct it in the next quarter.

Okay. Okay. And second, in terms of utilization, on the expanded capacity this year, we have around 76% utilization. So what sort of number you're looking at -- you have operated at 90% utilization earlier. So what sort of number you're looking at? And are there any risks to operating at 90% utilization?

I don't see any risk. The risk would be only that run out of fuel.

Okay. And a few more follow-up. In terms of the fuel, sequentially, you mentioned that fuel cost for you have gone up by 20-odd percent. First of all, what sort of alternative fuel we have consumed, or we expect to consume this quarter?

In Damoh, we have set up of an AFR, which has started operating from December. Gradually, it is ramping up, which is right now about 3%, 3.5% of PSR, [indiscernible]. For figure, it is likely to be around 5%. That is what we have factored in. Going forward, next year, we were going to take 11% and 12%. And thereafter, we will try to go to 22% and 23% of AFR in the '23, '24 and '25. So the [indiscernible] to put it very clearly that AFR is a difficult business because AFR availability itself is a big issue. Even bringing it to the plant itself is a challenge.

And given the cost inflation in 2020 -- of second, is there any inflationary pressure you have seen even the electricity which you're purchasing from outside, 70% of your total consumption would be external power, right, on a company basis?

Grid power will go up. But since we have got up for now tie up for other sources are from third party, I think this will reduce our -- or keep our cost at least lower. I would say, if it is not negative on an adverse side, it will not -- it will be a little better [indiscernible] going forward.

So you're saying for the 70%, which you are buying electricity from outside, you have a fixed price contract?

Not 70%, we are talking about this 22 gigawatts of energy which we are...

No. No, that is obviously will help you. I'm saying, the power which you are purchasing from grid and all, there is because of the rising fuel prices, what sort of cost inflation are there in the electricity cost? Purchased electricity cost [indiscernible]

[indiscernible] So Madhya Pradesh government has already revised the grid prices. They have purchased around 3% hike, and this 3% hike will impact in this current quarter. But at the same time, there will be some saving. You rightly said that, yes, the renewable power will support us. So we don't foresee any significant increase in the electricity price in the coming quarters [indiscernible] in share [ unhesitant ] be significant hike taken by the state government so far at this point.

Okay. So whatever impact you and other players would be witnessing would largely be on the fuel side?

That's right.

Okay. And lastly, in terms of the central market because you don't have any major expansions in the market, whereas Ultratech, VCC are coming up capacities, and a few other players would also -- your capacity in Gujarat will also be not be operations before FY '26. So what sort of business impact you're looking in terms of market share loss that you're looking at. How do you assess those situations?

So till another coming 2 years, we do not expect any market loss here. So if you look at it, we are operating -- we have added capacity. We were running at 90%. Now we went down to operating capacity. It appeared to be additionally, it became to 72%. Today, we are getting back to 76%. If we are going to -- market is growing at about 6% and 7% or 8%. If we keep adding to it, we have got an over 2-year opportunity to even about 90%. [indiscernible] sharing that.

The next question is from the line of Kamlesh Bagmar from Prabhudas Liladar.

Yes. Sir, one question on the part of incentives. So these incentives are expected to expire in Feb 2023. So is it the case? Or our expansion would be able to, let's say, get it extended further?

You're right. Our incentive is going to expire in February 2023 after completing 10 years. And thereafter, we don't expect that it will be extended by the government.

Okay. And sir, like I missed on the part of your debottlenecking expansion in Central region. So can you please repeat the figures and quantity on that?

It is about 300,000 tonnes of additional capacity we come out of this -- our changes in Line 2 and 3. And it will be about something like total investment over INR 40 crores.

In Phase 1. And then there are maybe equal amount or maybe higher in the Phase 2. Secondly, in 2024 calendar year.

So 3,000 TPD of clinker addition.

It is clinker.

Okay. 3,000 TPD, which is around 1 million tonne additional clinker, we will be able to get around there.

0.5 million. 0.5 million cement.

I thought...

300,000 tonnes of clinker will be added.

300 tonnes or 3,000?

300,000.

300,000 per annum clinker debottlenecking, and equal to 450,000 to 0.5 million cement grinding capacity. And at the same time, when we talk about the debottlecking, we are talking about the -- some allied also process on account of picking or dispatching those also gradually we are taking up so that tomorrow, once we have the grinding once we have the clinker [indiscernible] investment only on the display side or packing side. So the figures if you're talking about the CapEx amount of around INR 100 crores in the coming 3 years including all these kind of small debottlenecking on the old processes.

So INR 100 crores would be including your maintenance CapEx? Or it would be primarily on these debottlenecking projects?

Debottlenecking. To about INR 100 crores in Debottlenecking. In addition to our normal CapEx of INR 50 crores to INR 60 crores, which is per annum of sustainable CapEx.

Okay. Okay. And we expect it to commission by mid of CY '24 or like when we expect it to...

It is mid of '23, early '23. And then the next one in '24.

Okay. And in total around -- like say, 300,000 tonnes of clinker, and 0.5 million tonne of grinding capacity.

Yes.

The next question is from the line of Aman Shah from Jeetay Investments.

Sir, I just wanted to ask...

Sir, can you take the phone off speaker, please?

Yes. I just wanted to ask, from an organizational standpoint, sir, on a medium-term basis, we are seeing a change in the industry structure with the addition of a new player, and the exit of the existing player. The price at which the assets are bought, do we think -- this should lead to change in the sectoral profitability from a medium-term point of view, given that the buyout is also possibly on a leverage basis for them.

If I'm understanding your question, you're talking about the recent acquisition of [indiscernible]. Am I right?

Yes. Sir, yes.

And the emerging scenario post that. Correct? .

Yes. On a medium-term basis, just on a qualitative basis, do you feel that assets have been bought at some $160 a tonne. Will this lead to improvement in sectoral profitability?

So if you say higher, then you have to earn higher also to get the cost of capital there. You'll have to require, really require a very high level of EBITDA coming out of it. So the responsibility on the player itself would be enormous. I would say it is -- it will be a -- what should I say, to the sleepless nights like a person like me if I would spend this money, then I would be in a hurry to get the money out of it. Prices should look up.

Okay. Counter to this, would it be like since EBITDA is reasonable enough for the players, the new capacity are being created on a brownfield basis, so -- which reduces ultimately capital cost, which would keep in check the current prices, just the changes would be commensurate to the cost increases. Would that also be a counter to any improvement in profitability?

Aman, we have to understand, we have to first arrive at a solution that what is the EBITDA required per tonne, okay? So There's no consensus on it. Is INR 200 EBITDA per tonne good or it is INR 1,300 is good. We have to understand that. We have to first come to that conclusion. According to me, in at INR 910 or INR 961, I'm not comfortable, okay? The EBITDA should be crossing somewhere -- today, if you want to really grow your industry and you really want to do some innovation in future. Look at it from 2030, when you get to ESG, will be totally on your head. The type of carbon capture, and what you will require, what sort of not what not, okay, then you require in your step combustor then you require in your pulse jet bag houses. All these are high capital-intensive equipment, which we'll have to start putting into the plant. Where will that CapEx come from when you don't have it? And the government is not going to profit that and says, okay, now we are 10 milligrams, I'm not going to -- I'm excepting a 10 milligram and you, I don't know. 10 milligrams at the moment you know what is the CapEx required. So you have to start building your organization now only -- and you have to start investing in it. In my view, the INR 1,000 EBITDA is, I would say, on an average.

We take the last question from the line of Shravan Shah from Dolat Capital Markets.

Sir, a couple of data points. First, the Gujarat plant in terms of the capacity, clinker and grinding would be how much? Yes, whenever it will come.

It will be about 6,000 TPD still.

And the grinding would be?

Grinding, we'll have to segregate into 2 plants because ultimately, if I'm putting up that line, it will be close to about 3 million, 3.5 million tonnes of capacity, cement.

Okay. Okay. And sir, is it possible in terms of the green serine presentation, we said that we want to a -- 35% to 40%, sir, by FY '25. So by end of FY '23 and '24, this share from 23% Green, sir, it will increase to how much?

About 35% -- we have mentioned 35% to 40%. Between 35% and 40%. So a lot of the side [indiscernible] already.

Yes. Sir, I'm saying the same thing, 35% to 40% by FY '25. So I'm just saying, currently, it is 23%. So by FY '23 -- and how much it would be likely? And by FY '24, how much it will be? So just trying to understand on a yearly basis, how it will increase?

So I think right now, we will -- we are not -- that will take its own time because unless we put up some solar -- more solar power plants or we invest into further solar power plants, then it's a different thing. But right now, our focus will be to reduce the heat consumption or do the thermal substitution changeover. That will be our focus for '22 and '23 right now.

Okay. And sir, the way you said the trade share data number for the Q4, the same way the presentation is for the full year on the road and the premium, so if you share the number for road share, premium share for the fourth quarter.

Road share, I cannot tell you -- how the parallel -- how the road share will work because whether -- how the diesel prices will move, and what is the...

Sir, I'm talking about Q4 FY '22. So in presentation, we mentioned for FY '22 number -- that number 46%. So for Q4, what was the number?

Total -- 1 minute. The total lead distance year rate and what is the total component of [indiscernible] [ 50%, 60% or 46%? ]

So road share during Q4 is 46%, rail 54%.

Okay. Okay. And the premium share, will remain at the -- because 21% is for full year. So for Q4, how much was the number?

Q1 -- Q4 '21.

Q4 FY '22.

This is road share?

No. No, no. Premium share, what was the number for Q4 FY '22?

Q4, it was also 22%.

22%. Okay. Okay. Okay. Got it. And sir, just the last clarification in terms of the date when we say in the presentation, so what number we are improving? Because the -- if I add the balance sheet number, the number comes on the lower side to INR 235 crore debt is the total of what numbers?

INR 235 crores is the actual loan amount -- interest to debt loan amount. This amount is slightly different than the balance sheet because balance sheet is built on the discounting of the present value of the interest on loans. So first, you receive the loan, and get amount when you repay and as per index, you need to discount it. And therefore, this amount has been shown separately under the government grant. Pre-payment amount will reach to INR 235 crores, which is total.

Thank you. I now hand the conference over to Mr. Vaibhav Agarwal for closing comments. Over to you, sir.

Yes. Thank you. On behalf of PhillipCapital (India) Private Limited, we would like to thank HeidelbergCement for the call, and also many thanks to department joining the call. Thank you very much, sir. This will now conclude the call. Thank you.

Thank you.

Thank you. Bye-bye.

Thank you. Ladies and gentlemen, on behalf of PhillipCapital (India) Private Limited, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.