HeidelbergCement India Limited (500292) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '24 Conference Call of HeidelbergCement India 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, sir.

Thank you, [ Mishal ]. Good afternoon, everyone. On behalf of PhillipCapital India Private Limited, we welcome you to the Q1 FY '24 call of HeidelbergCement India Limited. On the call, we have with us Mr. Joydeep Mukherjee, Managing Director; and Mr. Anil Sharma, Chief Financial Officer of the HeidelbergCement India Limited. I would like to mention on behalf of HeidelbergCement India Limited and its management that certain statements that may be made or discussed on this conference call may be forward-looking statements related to future developments and 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 materially from the statements made. HeidelbergCement India Limited and the management of the company assumes no obligation to publicly 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 the Q1 FY '24 investor presentation on their website and the stock exchanges. Participants are requested to download a copy of the presentation from these websites. I will now hand over the floor to management of HeidelbergCement India Limited for their opening remarks, which will be followed by interactive Q&A. Thank you, and over to you, Joydeep, sir.

Thank you very much, Vaibhav. And I welcome everyone on the call for this session. I should start with the key messages that we have. And our key messages for this call are that we have had a volume growth of 8%. And we are at a 75% capacity utilization for this quarter. We continue to provide 100% blended cement and we are as of now not manufacturing any OPC at all. Our share of green power has increased to -- happy to report that it's increased to 33% and this is looking very good, and we also look forward to improve on this. Our alternative fuel today is at 6% of our fuel mix. And we have, obviously, as you know, from the document, which is provided to you, an EBITDA of INR 772 per tonne, which is 10% growth minus year-on-year. But if you take like-for-like and take out the sales tax benefit impact that we had, it is about minus 3%. Our net cash and bank balance stands at INR 4 billion, and we are continuing to operate on net -- negative net operating working capital. Moving on, on an ESG overview. As I already mentioned, we are at 100% blended cement. On CO2 footprint, we are at a number of 504 kg per tonne of cement, and this has been a continuous improvement. If you look at CY '20, we were at about 519 kgs, and that has now come down to 504 in CY '23. On water positivity index, we are at 6.9x. We touched 25,000 plus lives for our CSR initiatives. And as mentioned, we have more than 30% green power actually currently at 33%. Moving on to the ESG footprint slide, which has been shared. As we said, that our green power right now is at 33%. We have an ambitious target to cross 40% next year. At Jhansi, we have a long-term agreement of 15-megawatt solar power supplies. At Narsingarh, we are operating through a 12-megawatt basic recovery plant and 5.5 megawatts solar plant. And Ammasandra is consistently operating at more than 90% green power. This is something which we are pretty proud of, and we would like to focus on this going forward as we increase -- continue to increase our green power percentages, which is of total power. On our CSR initiatives, we cover a wide spectrum of initiatives. We do work with government schools to whom we have distributed educational kits; to hospitals, we've provided air purifiers; and renovated government primary school, Pali Pahadi; and also, we involved ourselves in a lot of skill development trading. Around our plants here, we have communities with whom we have to involve them and execute these activities. Moving on to the operational and financial performance. As you can see, our revenue is up by 1%; on operating expenses, 1.6%; and EBITDA stands at minus 2.3% over the corresponding period. On sales volume, we are up by 8.2%; though realization is down by about 6.7%; but we managed costs well and costs also look healthy at a 6.1% lower number. Moving on to the EBITDA bridge. June '23 quarter like-for-like EBITDA per tonne. So we have come down from 855 in June '22 to 772 in June '23. There was a significant element of -- so this is a 10% drop. But if you take out the impact of the incentive that we had, the sales tax incentives, it is actually a 3% drop. We lost about INR 298 in price. And raw material impact was also if you look at it around INR 26 per tonne. However, on power and fuel, we had an advantage of [ INR 334 ]. Freight, we had a negative impact of INR 62 per tonne, and this was primarily because in this quarter, like in the earlier quarters of the corresponding period, we did not have the railway freight incentive. And there's been a very marginal increase of around 10 kilometers in -- or 7 or 10 kilometers in [ lead ]. And that's the explanation of the EBITDA bridge. On our cash and bank balances, we are -- we have more -- this is [ brilliant ]. INR bank balance as of 30th June is INR 6,103 million, and net cash is INR 4,093 million, and we have INR 2,010 million in debt. And we have a comfortable repayment schedule. So there is really nothing to comment on that. On the June '23 quarter share of volume, we have 45% road dispatches, which is kind of flattish over the corresponding period. 6% is our AFR, as we mentioned before, which is up by 3% year-on-year. And premium products that we sell in the market consisting of about 30% of trade volume, which is again up by about 8% year-on-year. This obviously provides us better realization and better brand equity in the market. And out of our total sales, we are about 82% trade sales, which is again about flattish as compared to the similar period. So we are moving on a strategy of increasing premiumization, and we are optimizing the sales mix. On the outlook, we have the Lok Sabha elections in 2024, and therefore, we do expect the rapid execution of infrastructure projects. We are also noticing very strong traction in rural affordable housing segments and real estate. But of course, competition is intensifying between capacities and specifically around our plants also, we are seeing new competition come up that are very aggressive. We anticipate that the fuel prices, which have softened considerably, and this trend would continue. We see inflation getting under control. And at the same time, we do have elevated interest costs. On the crop, we see that the rabi crop had a good start. However, there have been a few unseasonal rain episodes here and there, which might lead to slightly lower output. So that's all I have on my opening remarks. And Vaibhav, over to you right now.

Sir, shall we open the floor for the Q&A session?

Yes, please.

[Operator Instructions] We have the first question from the line of Shravan Shah from Dolat Capital.

Thank you, before asking any questions, the point is last quarter we did not do the con call and no presentation. So needed a couple of data points for fourth quarter FY '23. Our trade share, [indiscernible] share, [ lead ] distance for last quarter and for this quarter.

You're not very clear. We lost you for a while.

Mr. Shah, can you please [indiscernible] last time, please?

Yes. Yes. Sir, I'm saying I need a data point for fourth quarter FY '23, a trade share, road share, premium share, lead distance for this quarter, Q1 and fourth quarter, and of fuel mix for this quarter and the last quarter, for fourth quarter.

That's a long list. So we have to go one by one. Which one was the first one?

Trade mix was 80% in the March quarter. So we can say almost [indiscernible] compared to March quarter. Yes. So -- and then the premium product in March quarter was around 32%. So in this June quarter, it is around 30%. For road mix, almost similar 45% growth, 55% [ road ]. And with respect to our lead distance, we don't think there's a major increase or decrease.

So what's the number lead distance for this quarter and the fourth quarter?

So this quarter, it is INR 361. What was it last quarter?

Last quarter, Q4 FY '23, was it the same, INR 361?

INR 351.

INR 351, yes.

Yes. As I mentioned in my opening remarks, it's increased by over 10 kilometers.

Okay. And fuel mix for this quarter and the last quarter of Q4?

You want the fuel cost or fuel mix?

How much was coal share and petcoke share for this quarter?

Coal share is about flattish. That's around -- it was 32%, which is now 33%.

Okay. This quarter is 33%. So now the main question is, sir, on the volume front. So after the six quarters of new growth, this quarter, we definitely grew 8% plus. But even if I look at on the yearly basis, since FY -- I would say FY '16, we did a 4.4 million tonnes. In FY '23 also, we did a 4.3. And so from 7, 8 years perspective also, actually, we did not grew when we actually kind of lost our market share. So 2, 3 aspects on that front. So how much volume are we looking for this year, FY '24? Second, in terms of the expansion plan, so I think Q3 FY '23, we had talked about 0.3 million tonne grinding and 0.2 clinker debottlenecking to come up in FY '24. So what's the status on that? And going forward, in terms of the long term, we had a plan of Gujarat expansion of 2 million tonne clinker and 3.5 million tonnes grinding that's likely to come in FY '27, too. Is it the same stand? Or is there anything which can come up early?

We do have a debottlenecking exercise which is going on. And that exercise would be over by 2024, December. And this is in our central Damoh area. And that's going to give us about 200,000 tonnes of cement.

Slightly [indiscernible].

Yes. So that initiative is pretty much on. And as far as Gujarat is concerned, as we mentioned in the last [indiscernible], Director, Mr. Jamshed Cooper has also mentioned in his last call that we are now readying the environmental clearance and post environmental clearance, we shall start other necessary activities. But there's no material change from what was [indiscernible] last time.

Okay. Okay. And this debottlenecking, so the grinding capacity will increase by 0.3 million tonnes and clinker by 0.2 million tonnes?

Yes, Shravan. We are trying to -- we are trying to reach to that level.

Okay. Okay. And in terms of the [indiscernible] cost for this quarter, last quarter and how do we now see in terms of the overall cost to come down in the next quarter? And let's say, if the [indiscernible] remains [indiscernible]. So for FY '25, how much broadly we can see because it will -- in terms of the reduction from Q2, Q3, Q4. But overall, if somebody looks at from FY '25 perspective, so from FY '23 to FY '25, if the current prices, coal, petcoke, remains the same, how much one can see in terms of the reduction in the power and fuel costs?

Okay. Shravan, you are talking about little bit far period with this [indiscernible] projection, but everybody knows that the fuel prices, especially petcoke has started reducing and during June quarter, the major benefit came from the petcoke reduction. And hopefully, this [ scale ] should continue so in the coming quarters, especially September and December. There must be some further benefit when it comes to petcoke price reduction.

So how much is the deduct would be?

[indiscernible] to comment on what will happen till 2025 because that depends a lot on the global situation on demand supply on our role initiatives to augment AFR in our [indiscernible]. There's just too many variables to give you a real meaningful insight into what's going to be the numbers of [indiscernible]. But what we can tell you is that we do foresee that at least in this quarter and the coming quarter, the fuel prices, the input cost, which is what we're trying to talk about is fuel shall show a further softening.

So how much reduction can we see? So what was the [indiscernible] cost in 1Q FY '24 and [indiscernible] reduction in Q2 and the same way a reduction in Q3?

You're asking which period, please?

This quarter, what was the [indiscernible] cost? And in Q2, how much more reduction can we expect? And Q3, how much?

So this quarter, it was 2.01. You're talking about coal cost for [indiscernible], right? So this is coal [indiscernible], and petcoke was 2.38 this quarter. Now if you look at last quarter, coal was 2.30 and petcoke was 2.7 [indiscernible]. Already, you can see about 15%, around that benchmark number reduction. And while our view is that coal, going forward in the next couple of quarters, will remain flattish, we do anticipate a further reduction in petcoke.

Lastly on pricing, how much -- have you seen any price reduction in July? And any further price likely to happen in the remaining months of this quarter?

What prices?

You're talking about cement prices?

Yes.

Cement prices, traditionally in this season are always under pressure. And in our relevant markets, there are obviously a lot of rains, et cetera. So yes, right now, as we see the prices are under pressure, but it's nothing alarming. I mean we see similar trends as last year. And this typically, I mean, goes back and is gained as the rains abate, okay, that's what the history has been. But right now, we don't see there is -- I don't see any reason for alarm.

Have you seen a INR 5 kind of a reduction from the average of Q1 FY '24 in July?

Yes, it could be in that ballpark.

[Operator Instructions] We have the next question from the line of Sanjay Nandi from [ VT Capital ].

Just would like to...

Speak a little louder. We can't hear you very clearly. I'm sorry.

Can you hear me, sir, right now?

Yes, please. Yes, go ahead.

Yes.

So we could see some significant drop in your power and fuel cost in this quarter. So can you please guide us what kind of drop can we expect in coming half part of the year like as you mentioned that things are softening down. So if you can give some guidance in terms of cost [indiscernible], what we can expect in next 6 months or next few months, it will be very helpful.

I think we don't want to give this kind of guidance because we don't know what is going to happen. At this moment, as we speak, we can say there is some maybe further softening of the domestic petcoke and the coal prices are more or less flat in the June quarter. It will be at this moment, we can say about usual price movements in the coming quarters.

Got it. Obviously, you mentioned a lot of competitors coming in your areas of operations. So can you please mention or specify some of the companies which are coming out with significant [indiscernible] operations?

Yes. So Dalmia has already taken over the Jaypee assets, which were not operating in our area. So that is going to hit our market. And JK Cement has already started their operations around 100 kilometers from our plant.

Okay. So what is the pricing difference between us and those guys? You're actually telling like Jaypee is to a [indiscernible]. So what price they used to sell, and what price we are selling in that market?

So this is a very difficult question to answer because there is no one answer to this. It will depend on market to market. And the shipment price changes every district and even in parts of districts. So it will be unfair for me to tell you that we have INR 5 higher or INR 7 lower because it's not really the same situation in every market.

Got it. But you're in central part of the country, where we are operating mostly. So which grade we're catering in that market? Is it a B-grade or is it in the mid of A-, B-grade?

I mean, there are markets where I sell higher than the so-called A-grade cement manufacturers in India and there are markets where I'm lower. So that's why I'm saying it's very difficult to answer that question. The answer would lie if you can see the annual results of the company and see the gross price, then you will be able to get an average. But as I said that, typically, in your home markets where realizations are higher, every competitor would come and try to push down the price. And in certain markets, you have an advantage which is not the same for another competitor, and there you can hold a higher price than them. So I would not get into a classification of A-grade pricing and B-grade pricing. It doesn't work like that.

Got it. Just clarify me apart from this Dalmia and JK, are there any upcoming capacities in those areas of operations in Central India or these 2 are the major themes?

No, there is -- there was the [ EBITDA ] expansion of one, which is there. And in our tertiary market, somewhere near Agra, where any which we don't sell much. There is expansion.

Right. All right. So we could also find some spike in our raw material cost. Is it because of some spike in the [indiscernible] pricing? So if you can kindly throw some colors on that [indiscernible] pricing train [indiscernible], which is -- would be very helpful.

The raw metal prices, if you see during the last one year because of the weakening of the Indian rupees, it has increased in the gypsum cost as well as the gypsum cost has increased because of -- now, no -- maybe [indiscernible] by the [ railway ]. So that is also the reason the cost has increased. We have been [indiscernible], we have been [indiscernible] these weakness so to some extent, the raw material prices have increased.

So, what is the current prices of [indiscernible]?

[indiscernible] we use has a landed cost around INR 650, INR 700, and the [indiscernible] cost almost [indiscernible] because we transferred [indiscernible]. And another part of this [indiscernible] blended cost is the transportation cost.

Yes. I mean that's also a mix. One tends to grow from different sources. So depending on from which source you are buying in a particular amount, it varies.

[indiscernible] average price? You're talking about [ 650 ] is the [indiscernible] average cost, right?

Yes. Yes.

And what about the gypsum [indiscernible]?

Gypsum we consume in terms of the imported mineral gypsum. And it is around...

What's the [indiscernible] if you can guide us with the cost per tonne [indiscernible] you're incurring?

Around $2,200, $2,300.

[Operator Instructions] The next question is from the line of Anuj Kapil from Taurus Mutual Fund.

Good afternoon, Joydeep. And good afternoon, Anil, and congratulations on your quarterly results. The profit PATs are up above of 50% as well. Sir, my question is you're having a cash of around INR 400 crores, so you looking to increase your capacity to -- like currently, you have around 13.4 MTPA, are you looking to increase your capacity by around 1,700 -- or 17 to 18 MTPA?

Our total capacity is at 6.25. You are talking about the group total capacity, it is at 13 million tonnes. And this INR 600 crores, you rightly said that INR 200 crores is the -- we have the debt in [ books ] and it will be repaid in coming 2 years. And at the same time, if you have seen our -- the last board -- after the board meeting, our intimation to the stock exchange that we are bringing before the shareholders for approval of the dividend of INR 7 per share. The total amount is around INR 150 crores. So if the shareholders, they appreciate, then thereafter we will distribute the dividend out of this cash balance. At this moment, we are trying to put this money for the -- our existing ongoing CapEx on account of alternative fuel. And also like we have also shared with you about our ongoing debottlenecking project and we have estimated the total CapEx required in coming 15 to 18 months on that project is around INR 70 crores. So that also we are going to use -- our [indiscernible].

And obviously, there is INR 40 crores to INR 45 crores of regular CapEx.

Regular CapEx. But having said that, we are always exploring possibility to increase our capacity. We are trying to expedite Gujarat as well. And these [ in turn ] equals [indiscernible] homework, we think that some of the [ internetworks ] will be used for the capacity increase and some maybe in future that we need to borrow a little bit [indiscernible].

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

First off, my first question pertains to your volume growth strategy. We have seen volume growth for the last past 4 to 5 years. And now in your market, there is intense competition from existing players plus new entrants. So what is your thought on volume for this financial year? What sort of volume growth you're looking at? And what strategy are you adopting to drive that volume growth?

So we have several initiatives in the market. I mean we -- if you ask about strategy, we are obviously looking at where we are not present. We have a clear [indiscernible] and looking at covering those markets. We are looking at a very solid premium product strategy, which is already doing well in certain markets. So market -- defending our core markets and growing in profitable markets are basically the focus areas.

Okay. So do you see that your case or your tangible case of delivering 7%, 8% volume growth in FY '24, is that a possible number you're looking at?

As of now, your question is for the entire year?

Yes, yes. For full year FY '24, what sort of number you're working with in terms of growth?

We are certainly looking at a 7%, 8% volume growth.

Okay. And could you also share your power cost, consumption cost in rupees per unit, which you had in Q1? And how are they faring with the coal prices coming down?

Power costs have been flattish. It increased about INR 6.6 per unit -- INR 6.7, but that's flattish.

Okay, INR 6.6, INR 6.7. So now your green power mix has also increased. So how is that -- what is the average cost of your green power? I assume a good part of that, you are sourcing it to some [ JV ], where the cost could be around total INR [ 5 ]?

We would not be in a position to give you an exact number, but yes, it's significantly lower than [ grid ] power.

Okay. And do you see this power cost number also coming down with the fuel prices coming off in subsequent quarter, 10%, 20% sort of reduction? Is that a possibility?

Are you talking about grid power?

Yes, your average power cost, the INR 6.6, INR 6.7, and by, say, Q3 or Q4, do you see a case of this number coming down to around INR 5.5?

No, not [indiscernible]. No. We have initiatives in place which will start yielding fruit possibly next calendar year.

[indiscernible] to state that the grid also has been increasing their price like the other state with Madhya Pradesh and Uttar Pradesh, they are also increase their prices and then we will see they [indiscernible] 5% to 7% every year, they try to increase the grid prices. Our target is that whatever grid prices increases there, we should get at least offset by increasing our [ renewable ] power and try to keep the weighted average of the power costs remain in the company.

Okay. Okay. Understood. So even if you are able to maintain that cost, that is also a good strategy given the inflation at the grid side. And lastly, on the other expense, what led to this Q-on-Q fall in the other expenses, which are down almost 8% to 9%?

So other expenditures are a mix of few things. Fixed cost is there, like the [indiscernible] cost is there, then the [indiscernible] [ recurring ] maintenance, repair. And some of the semi [indiscernible] type of things like [indiscernible] and spares from consumers. And those expenditure, you might have noticed that in quarter-to-quarter sometimes 10% plus, sometimes 10% minus, depending upon our [ total ] plant shutdown as well as the total depending upon the various initiatives on account of brand building and advertisement. So during this quarter, when we compare with the last March quarter, slightly, it is reduced on account of lower repairs and maintenance costs.

The next question is from the line of Mangesh Bhadang from Centrum Broking.

So a couple of questions from my side. Firstly [indiscernible]...

I'm sorry to interrupt. Sir, your audio is not clear. Your voice is breaking.

Hello? Is this better?

Yes, sir.

Yes. Go ahead, please.

A couple of questions. Firstly, on the capacity. So I just want to understand, is there any constraint for us to go or sell more volumes beyond, say, 5 million tonnes, even though we have 6.25 [indiscernible] of capacity because for -- even now we have seen that our volumes have remained below 5 million tonnes. And secondly, even if -- I don't know, when I see across the market like JK Cement came up with a plant, and then achieved a significant utilization in the market wherein we operate there. And now we are going to see a [indiscernible] ACC coming up. Do you see a [Technical Difficulty] any capacity...

You're breaking up once again. I'm sorry. You're breaking once again.

So the question was is there any capacity constraints are there which restricts us from getting [indiscernible] at 5 million tonnes or more volume?

Is there any capacity constraint to reach 5 million tonnes?

No, there is no capacity constraint to reach 5 million tonnes. I mean, it's a market situation and our strategy is in the market, which is going to lead to an increase in the volume. So it's not that there is any problem in the plant or anything like that. We have a 75% utilization, which is maybe about 10-odd percent lower than that where I'd like to be.

And sir, what kind of utilization we will be at there?

I have not understood the question. Can you repeat it once again?

The Karnataka plant, what would be our utilization?

Karnataka plant is very small. Our capacity there is around 400,000 tonne cement, and we have been running similar to what the other [ South India ] plants are running in the capacity.

I'll just ask the last question. So as you mentioned, in fact other participants also mentioned that competition probably should increase given the capacity, with the expected capacity, additional -- Dalmia, ACC, JK Cement. What do you see -- how do you see pricing behave in that market from here on? Do you think that it could have a negative impact on it?

Pricing would be under pressure, yes. No doubt about it.

Okay. And sir, the 8% growth that we have achieved...

[indiscernible] any market that there is an expansion. But it's also limited for a period of time. It is very -- there is very healthy growth in cement demand in our relevant market. So yes, but sometimes the pricing would be under pressure.

That was the question, I just wanted to check. Do you think that the incremental demand would be able to absorb faster the capacity addition and won't have the...

I think so. I definitely think so.

The next question is from the line of Prateek Kumar from Jefferies.

[indiscernible] So since you're taking over, I think what has been and probably what would be your key focus areas in near to medium term on market share, market positioning, target premium, premium segment mix or merger with [indiscernible] cement. Are there any material changes directionally versus [indiscernible] leadership? Some of these questions, I know you answered partly but.

I think these are very generic questions. Obviously, I can't discuss my -- I can't explain my entire strategy in 5 minutes or on an investor call. But it is very clear that the focus areas would be on improving efficiencies, capacity utilization. Those would be the top of my mind initiatives. And as far as [indiscernible] is concerned, we are looking at it. It's -- we will certainly move when the time is opportune. That is something which is in our regard, but the timing has to be right. And I can't give you an exact time when we shall move on that, but that's definitely something which is in our consideration.

But any specific reason which could be holding it back, is related to competition, commission or your parent approval or what?

There is no competition, [indiscernible] issues right now. That's not the reason. We'll have to see what is the right time to do this merger, which would benefit us as a company and also be of benefit to the shareholders.

And is the other company also looking for any growth in terms of CapEx if you can [indiscernible]?

Unfortunately, I will not be able to discuss the strategy of the [indiscernible] on this call. This is regarding our listed companies which [ CIL ] run and I would appreciate if all the questions are limited to this operations, please.

Ladies and gentlemen, this would be a final reminder, and no further reminders will be announced. [Operator Instructions] The next question is from the line of Devesh Agarwal from IIFL Securities.

My first question is could you also share the number of the incentives that you would have earned from Damoh plant in the fourth quarter, the way you shared for the last quarter?

So in fourth quarter, March quarter, the incentives are applicable for 1.5 months, and the total amount was, I think, it is around INR 3 crore.

Sorry? INR 3 crore?

INR 3 crores.

Yes. But that's over.

That's over. [ That is ] March quarter.

We had the benefit only for 90 days in the quarter.

Understood. And sir, incrementally, you said that possibly this year, you would target a growth of 7% to 8%. So do you think that's like an inline industry growth for your region? Or it will be slightly lower than the industry growth for the region, Central India?

See, across India, the outlook is that the industry would be growing at that kind of percentage. So if we -- if you talk about what is our position on that vis-a-vis competition, it will be a difficult question to answer. The reason being that we are pretty much operating in those Central India 2, 3 states, whereas when you look at our competition, if you look at all the big names, they are spread across India. So I will not have any visibility on what exactly their growth would be in our relevant region. But if I would hazard a guess, I would say, yes, we should be pretty much in line.

Okay. I was trying to understand some of the competition who has just started [ plant ] there, seeing a very fast ramp up. So in that regards, I would assume that we may be losing some market share to them. So in such a scenario, would these focus more on improving our EBITDA portion through different means. And if that is the strategy, what would be those factors that could help us to improve our EBITDA portion if you're not able to grow our volumes in comparison to what our peers would be able to?

No. I mean, there are people who have set up their companies which have [ gone ] and set up plants. And they would obviously ramp the plants up, the volumes up as soon as they can. If you look at our sales mix in trade and nontrade, we are pretty much focused in trade as is evident from the numbers that we shared, right? So we do believe that in the trade retail segment, there is enough and abundant scope for us to grow. There are strategies employed by certain companies who focus on non-trade growth in the infrastructure segments, et cetera. That's not a segment in which we participate because that's primarily OPC, okay? So a lot of these new plants are selling OPC to the non-trade segment. That's not a segment in which we operate at all. So your question is, are we comfortable looking at the future in the segment that we operate? The answer is yes.

I also wanted to understand if we would be focusing more on the profitability and not only volume. And to that extent, we will only focus on increasing our premiumization or possibly reducing our cost. Will that be the key driver for the management?

No, we're also -- yes, that's obviously one of the key drivers, which is always improving profitability. But as we mentioned, we are also looking at a [ 200 kg ] expansion next year, right? So it's not that we'll only be talking about profitability. Volume and pricing and costs are obviously the 3 points of a triangle, which needs to be managed in a cement business, and we are going to try and do that to the best of our ability. Yes, it's not that it's only going to be focused on EBITDA improvement and no focus on volume. No, that's not what we are saying.

The next question is from the line of [ Girija ] from Smiths Limited.

So many of my questions have been answered. But I just wanted to check what is the average pricing in the central region in July so far? And is this stable or lower month-on-month basis?

When you say -- can you please repeat your question? I don't think I've understood it to properly.

Okay. So just wanted to check what is the average pricing right now in central region in July so far? And is this stable, the pricing is stable? Or is there any decline in pricing on month on month basis, June, July?

Are you talking about the industry? Or are you talking about Heidelberg?

Heidelberg.

So as we look at July, we should be in the ballpark region of around INR 4,900. And the prices would be...

I'm asking the pricing -- as in cement price per bag.

No, no, that -- there is no one answer because the prices vary from every district. So I'm talking about [ total ]. And we are maybe around INR 50, INR 60-odd per tonne lower than June right now.

And what is the difference -- difference pricing between this gray cement and this premium product -- premium cement?

Well, we have a few premium cements. We have a couple. And the difference would be anywhere between INR 10 to INR 40 a bag, which is around INR 200 to INR 800 a tonne.

The next question is from the line of Shravan Shah from Dolat Capital.

Yes. Also just wanted to clarify. We mentioned that we want to do a INR 70 crore CapEx for 15 months for AFR and INR 45 crores regular CapEx. So is it fair to assume that INR 100 crores, INR 110 crores kind of a CapEx to see for FY '24?

Well, we mentioned the INR 70 crore number for an expansion CapEx, which is around 200,000 tonnes of cement, which is going to come in the next 15 to 18 months. And of course, there is a normal maintenance CapEx and operating CapEx of about INR 40 crores to INR 45 crores.

[indiscernible] for financial year 2024, you will have this INR 40 crores, INR 45 crores of course, this will come in the same fiscal year, the INR 70 crore will be split into 2 fiscal years. So some part will come in '24, some part will come in '25.

Correct. Yes.

Okay. But you mentioned that this debottlenecking to start by December '23. So this INR 70 crores [indiscernible] is a different from the one we need to spend on the debottlenecking?

No. The INR 70 crores is the debottlenecking.

Yes.

Okay. But the [indiscernible] the debottlenecking by this December. And the CapEx, you are mentioning that it will spill over to FY '25. Is it so?

Shravan, again, we can repeat what we actually mean to say. This INR 70 crores is the debottlenecking project that will start in this calendar year 2023, and then the total capacity is [ not ] going to happen, the 200,000 tonnes cement is coming in December 2023. It takes around 15 months' time. So the benefit will come in financial year 2025.

'24, yes. '24, '25.

Sorry, sir?

Shravan, is it now clarified?

Not 100%. Still, I'm confused. The simply, what would be the total CapEx for FY '24?

It will be around INR 75 crores, INR 45 crores will be the sustainable CapEx, and the [ INR 34 ] out of debottlenecking. So INR 70 crores, that's why I was saying that is debottlenecking project has started now. So in financial year 2024, around INR 30 crores will come from out of INR 70 crores, and the remaining INR 40 crore will come in the financial year '24, '25.

And just to clarify, our total grinding capacity is 6.26 million tonnes. Will you please help me in terms of the plant-wise, though I have -- I just wanted to clarify because we mentioned that Karnataka plant capacities of 0.4 million tonnes. Actually, I have a number of [ 0.51 ]. So in terms of the Damoh, Jhansi, Karnataka, if you can split the grinding capacity?

So in Central India, it is 5.75. You rightly said that 0.51 is the Karnataka. So you speak into the 2 locations, 5.75 and 0.51. 400,000 tonnes [indiscernible], 0.4 million of Karnataka we are talking was the grindability, we need to see that, okay, how much we disperse from the plants. So rated capacity of 0.51, we can disperse 400,000 tonnes. And here in Central India, it is 5.75.

Okay. And in terms of the clinker, Damoh clinker capacity, is it 3.5 or 3.1?

3.1.

3.1.

3.1. And Karnataka, what's the -- that is 0.3?

0.3. But at this moment, we purchase clinker, we don't produce clinker..

Ladies and gentlemen, this would be the last question for today, which is from the line of Rajesh Ravi from HDFC Securities.

I have 2 follow-up questions. First, could you share what was the clinker production in FY '23 and in Q1?

Clinker production? We have already given this total cement production -- total cement production in our [indiscernible]. And we can consume around 62% of the cement that [ clinker factor ].

Sorry, 62% is what?

Clinker factors.

Okay. And in Q1, what was this number, clinker factor?

Q1?

Yes.

[indiscernible] because we don't manufacture an OPC [indiscernible]. This is all 100% PVC.

Okay. And you had started this digital strategy, whereby you had started to WhatsApp, reaching out to dealer, [ live ] pricing. How is that working out, sir?

It's too early to say. I mean we are in the midst of a new program that we have launched ourselves and we have a sort of digital hall. We can say is digital would be a significant part of our strategy going forward. And this will not only be through messaging, it will be through various channels.

Okay. No, because this WhatsApp, that [ includes ] 2, 3 quarters back, the management -- you should also -- [indiscernible]. So what we noticed is that the pricing [indiscernible] so, so different pin codes is at least 5 to 6 month backdated. So just wanted to check if there is any focus over there or it was -- it is not being pursued aggressively?

I'm sorry, but your voice is not very clear. Can you just [indiscernible]?

I'm sorry. Am I audible now?

Yes, better.

Okay. So this digital WhatsApp, this -- where you could put different pin codes, you could check their pricing for different brands of HeidelbergCement, what I noticed is that the pricing, which is being displayed on the WhatsApp is 5 to 6 months -- like currently, it shows [indiscernible]. So I just wanted your view that are we pursuing this digital thing at least from the customer facing, WhatsApp and all, aggressively, or we have a relook on that?

No, no, we are in the process of a complete revamp in our digital strategy. Pricing communication through WhatsApp is not something that we are pursuing right now. But we have a very holistic approach to digital communication and marketing, which -- as of today, not in a position to reveal, but once the entire program is in place, and maybe at a future date, we can talk a little bit more about it. This part where we be only focused on [ WhatsApp ], it's going to be on our entire CRM and different social networking channels.

Thank you. 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.

Yes. Thank you, Mishal. Sir, before I close the call, I just have one question for Joydeep in particular. Firstly, best wishes from all of us at PhillipCapital as the new [indiscernible] HeidelbergCement in India. Sir, I just wanted to know from you as to -- as you take charge of the company before Heidelberg Group in India, what would be your vision for the group forward in India? And have you already identified any areas of incremental improvements which you can do for both -- the entire group of [indiscernible] HCIL, as we have [indiscernible] on this call. And any change of stance from the earlier leader or anything which you can say that you can improve on or -- I just want to know your vision for Heidelberg Group in India.

Okay. So no -- there is no significant difference in our stand. We are a company which remains steadfastly focused on reducing our carbon footprint. So that is obviously at the core of our strategy. And that is why you see us in the relevant market. If I were to start producing OPC, and then push it out into the market, my volumes would suddenly start looking very good. But we've intentionally stayed away from that because that's something which, as a company, we, at least in this market are very averse to. If you look at our carbon performance, we are pretty much up there with the best in the industry, and we would like to ensure that we continue on that journey. So that's pretty much at the core of our DNA and company vision. As far as the company performance is concerned, we have done well in this quarter. We would like to continue doing well, and there are various initiatives that have been taken in reducing our cost of manufacturing as well as achieving excellence in all our commercial functions and in sales and marketing. And right now, that is our focus. We would like to establish ourselves as an ethical and environment-focused company, achieving excellence in our operational and sales activities. But to answer your first question, no. No significant departure from [indiscernible] was in the past. There are only some certain strategic and tactical initiatives that have been started by me, and we would like to see over the next 3 to 4 quarters what kind of results they yield.

Sure, sir. Sure, so that answers my question, I think so. All the best and thank you very much once again for the opportunity to call. On behalf of PhillipCapital India Private Limited, I would like to thank you and HeidelbergCement India Limited for the call and also many thanks to the participants joining the call. Mishal, you may now conclude the call. Thank you very much, sir. Thank you.

Thank you.

Thank you.

Thank you. It's been our pleasure.

Thank you very much, sir. Ladies and gentlemen, on behalf of PhillipCapital India Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.