JK Lakshmi Cement Limited (500380) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q2 and H1 FY '24 Earnings Conference Call of JK Lakshmi Cement Limited, hosted by PhillipCapital India Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vaibhav Agarwal from PhillipCapital India Private Limited. Thank you, and over to you.

Yes. Thank you, Yashashwi. Good evening, everyone. On behalf of PhillipCapital India Private Limited, we welcome you to the Q2 and H1 FY '24 call of JK Lakshmi Cement. I need to highlight that JK Lakshmi Cement is also the holding company of Udaipur Cement Works Limited, and therefore, this call is also open for discussion about the performance of Udaipur Cement Works Limited. On the call, we have with us Mr. Arun Kumar Shukla, President Director; and Mr. Sudhir Bidkar, CFO of JK Lakshmi Cement. I would like to mention on behalf of JK Lakshmi Cement and its management that certain statements that we made or discuss on this call may be forward-looking statements related to future developments based on current expectations. These statements are subject to a number of which are uncertain entities and other important factors, which may cause actual developments and the results to differ materially from the statements made. JK Lakshmi Cement Limited and the management of the company assumes no obligation to publicly alter or update these forward-looking statements whether as a result of new information or future events or otherwise. I will now hand the floor to the management of JK Lakshmi Cement for the opening remarks, which will be followed by interactive Q&A. Thank you, and over to you, sir.

Thank you, Mr. Vaibhav, and good afternoon, ladies and gentlemen, and welcome to this Q2 FY '24 call for JK Lakshmi Cement. We had announced the results on Thursday, so you would have had sufficient time to go through in detail about the results. So nothing much to mention. And I can now -- we can throw the floor open for question and answers so that we can accommodate more questions.

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

Congratulations on a good set of numbers. So the first question is on the volume front. So if you look at the 1H, we have done 9.4% volume growth on a consol basis, I'm talking, and we are looking at 19% kind of a growth for this year. So if I do the math, then for the second half, we need to do close to more than 27% kind of growth. So just trying to get your sense of how are we looking at this number for the full year?

Thanks, Shravan During last call also I had mentioned that, yes, 19% was the projection to start with. But last call, we mentioned that somewhere we are going to be going in a double digit, right, in about, let's say, 12% to 15% kind of things. So I'll give a range of 12% to 15% of volume growth for the year continued.

Second, on the pricing and the profitability front. So we have seen a decent increase in the East prices, particularly in September and also general facts just some rollback that has happened. But for our thing Chhattisgarh particularly that we have a sizable presence there, we haven't seen that much increase. So broadly from the average of Q2 in North and particularly East, how are the prices currently versus the Q2 average? And in terms of the profitability where we are looking at INR 1,000 kind of EBITDA per turn over 12 to 18 months. So is the deadline remains the same? Or can it be done even earlier also?

Shravan, I think the last question I would answer bit later. So yes, I think 18 to 40 -- 24 months time period, INR 1,000 EBITDA that remains intact. So that is what I think we are working, and we are -- we'll be inching towards that because a lot of actions which we have taken now all those actions will get fructified. So this is part 2 of your question. Part 1 was about the price increase in the East -- eastern part of India and also, as you know, north and western part of India. So as you know that prices have increased at different points in time, right? So I think -- East, I think we will have some improvement in this quarter because the price increase happened somewhere around September, mid and then October, right? So benefit will come as far as East [ goods ] in this quarter, this is one. Second, as far as North and West [ goods ] prices are going to be above ground level because number is going to be low month in terms of building because of the Diwali. But December onward, I think should be all right. So demand also will improve and so would be the pricing. So on an average, I see an increment about INR 5, INR 50 to about INR 100, I will give a range increase over last quarter.

Sorry, sir, INR 50 to INR 100 increase on Q-o-Q basis one can expect.

Yes.

Okay. Got it. Got it. Understood. Second, in terms of the expansion. So far, definitely clinker, we have started at Udaipur, the grinding 2.5 million tonnes previously we were looking at Q2 FY '25. Are you planning to prepone this one?

Yes, we hope to do that. And towards March or April, we'll be able to commission the 2.5 million tonnes grinding in it Udaipur.

Okay. Okay. And then in terms of the -- for the next phase from currently post the Surat that we have announced, 1.35 million tonnes. So there also, if you help us in terms of 2 years, we have mentioned, but will it be a 1H of FY '26 where we are looking at to start. And post the next expansion in terms of the reach of 30 million tonnes, we were looking at first Durg plant and then the Udaipur. So when we will be going to announce that expansion?

That you are right, it will be in first half of '25, which is a 2-year time line from now and that we are trying to see if we can do it in phases instead of entire 1.3 million tonnes coming in 1 shot. And do initially at half of that and then within 6 to 8 months, we do complete 1.35 million tonnes. Yes, we'll be at appropriate time announcing the brownfield expansion, which are in the pipeline. As you rightly mentioned, those and followed by Udaipur and for by the greenfield at [ Nagore and Paschim ].

Okay. Last couple of data points for this quarter. So trades share, premium share, lending ratio, lead distance, roll rate or mix of fuel mix and [ KKL ] cost. And also the non-cement one?

That set of your questions and maybe I will ask you one by one [Technical Difficulty] I would say we had 62% and then...

I'm sorry. I didn't hear.

62% of trade.

Okay. 62%.

Yes. Lead distance is 387 kilometers. So we have brought it down further, right? And blended is about 65%.

Sorry, 65% is what sir?

Blended.

Blended. Okay. And the railroad will be the -- 90% will be the road that will remain the same. Same store will be -- last time, it was 27%.

So overall, I think the rail depends because most of that if you reduce your lead to go by road than rail, right? Okay? And that is what has our lead goes down, I think dependence on rail will decrease. But once that 2.5 million tonnes comes then...

Sir, I was asking the premium share and the non-cement revenue for this quarter.

Premium is 23% right, for our trade sales. And the noncement is the INR 130 crores.

[Operator Instructions] We'll take the next question from the line of Rajkumar Das from Navodaya Enterprises.

Sir, my question is, in the last conference call, you have given information about the approval for your railway siding and conveyor belt. So can you give the current status and time line by when it will be competitive?

So on the railway siding, we have already started our job, we got that approval. We have started our job and that is going to get commissioned somewhere around quarter 2, quarter 3 of next year. So this is what the plan is. On conveyor belt, that approval process is still in progress. We are progressing well. Maybe when we talk next, I think, we'll have some update on that.

Okay, sir. So now the next question is what is your view about the expansion of those plants? And when can you announce the new expansion...

On the railway siding. Once we have done some concrete steps have been taken then we'll announce that. Presently, we are evaluating various options of -- because the clinkerization while it will happen at the mother plant at Durg, the grinding, we are trying to look for in the various split location places. Once those are firmed up and then will announce. And if things go as per plan, then hopefully by next -- in this financial year, we'll certainly do that.

Sir, we are a very old shareholder of JK Lakshmi Cement and there are so many times, we asked so many questions on your e-mail, but there is no one who replies. So this is my humble request, please reply our e-mails, whether you want to -- if you want to reply on your NSE, BSE or public domain, we don't mind. So this is my humble request to you.

The dedicated e-mail for all the investor queries. And if you put in your request on that dedicated e-mail, it will get answered immediately. I'm not sure whom you are sending your request to but there is a dedicated email. You can see that it is available on the website as well as on our annual report. I don't remember the full e-mail ID, but it is there. And if you upload your questions on that or send an e-mail on that, certainly all questions, all the investors are getting responded too. But certainly, the only thing we can't give specific information to one particular shareholder. If there are any data points which you require, certainly share that with you as we are doing with the other investors.

[Operator Instructions] We'll take our next question from the line of Mangesh Bhadang from Centrum Broking.

Congrats on the set of numbers as well as commissioning of the Udaipur unit.

Thank you.

Sir, my question was now we have reached 10 million tonnes of clinker capacity. But after the clinker and the grinding unit coming up, there is almost a gap of, say, 5 to 6 months. So I was just wanted to understand that would we be selling clinker to them? And if it is so that would it impact the profitability?

Yes. So yes, you are right, there is intervening period, there is a gap between our clinkerization and grinding capabilities. So whatever clinker we are going to produce in the intervening period, part of that will be utilizing in some of our outsourced units, one. And of course, I think our clinker sales will go up a little bit because we'll have availability of clinker. And since we are kind of through this phase of kind of stabilizing our scale, we want to kind of produce clinker whatever we can. So the plan is to, one, outsourced grinding systems which we have within our full. And second, also selling a little more clinker during this time.

So which are these outsourced grinding units? Is it Amethi?

No. Amethi, I think is part of which we are taking from it. So Amethi -- it will not go to Amethi, but we have one outsource unit in Gujarat and one in north part of India, Punjab.

And what would be the capacity? So I just wanted to understand how much incremental volume it can generate from?

So, see, I think what we see that we are going to produce clinker to the capacity of about 50% because this is the stabilization phase, right. At 50%, if you take half of that or maybe about 40% will be grinding it because could Rajpura, Punjab I think we have a good capacity. So this is up to us how much we can really consume out there. There is no limit as such in terms of grinding. So that capacity is available there. And Gujarat also, I mentioned you, yes, I think we can increase not to a great extent, but a little more there as well. And third option also, I think our Surat unit, right? So I feel that we can further improve our utilization out there. So we'll use there as well. So combination of these 3 is going to consume about 40% to 50% of clinker, which will be producing during this intervening period.

And secondly, we mentioned that we are currently operating at almost 100% clinker utilization. And the clinker capacity that has come in, are you basically the matching, grinding capacity is going to come later. So that 75% cement utilization and 100% clinker utilization, would it remain the same for at least this and next quarter? I think the new capacity comes only increase probably could be higher clinkers, but overall cement volume should remain the same that we did in this quarter?

There is some turbulence. There is some earth quake in -- yes, we have -- hold on for a moment. Just hold on for a moment. Yes, it has stabilized. Please -- sorry, can you repeat your question.

I hope everyone in -- not very severe.

Yes.

So sir, my question was that we did 75% cement utilization and 100% clinker utilization in this quarter. So this would remain the same, right, because we will not be able to use the new clinker from Udaipur to cover, is there any arrangement where through which you can utilize some of the clinker inside and still be able to produce more cement. That's what I want to confirm.

So if you look at our capacity utilization of cement grinding was 73% last quarter, right? That is what I mentioned to you that we do have scope within our system to consume clinker. If something is still left over, then the growth rate.

[Operator Instructions] We'll take our next question from the line of Sanjay Nandi from VT Capital.

Sir, can you please throw some lights on your pet coke consumption, like what kind of inventories we are holding as on date? Or what is the kind of the consumption?

You have asked about inventory there?

Yes, inventories or whether we have added something in this particular quarter or we are holding something from last quarter. Like what is the exact inventory missing as on date?

Inventories. Especially, we have about 3-month consumption available with us. And in this quarter, the KKL was about 2.04 overall, and we expect it to be about 1.9 in the next quarter.

Okay. So which means we can expect some price drop from the [indiscernible] pet coke.

Right, about 5% in terms of the cost of business.

[Operator Instructions] We have a question from the line of Ritesh Shah from Investec.

Couple of questions. Sir, first, I wanted to understand our accounting policy. A couple of quarters back, you had indicated that whatever transition with UCW, we do recognize with the expenses as well as on the revenue line. I think in the subsequent quarters, you have indicated that we will only treat it as one line somewhere of the conversion costs. Sir, can you please highlight what's the status is like over here? I just wanted to understand that. So that's the first question.

Yes, that is basically earlier what we were doing there was to -- that is clinker converted into cement on the grinding units of JK Lakshmi. Earlier what was being shown as clinkers initially and then they purchase back the cement. In the process, to the extent of the clinker, it was getting double accounting. So now we have not -- they are not showing any clinker sales for any conversion from clinker to cement and whatever cost we are charging, they are loading that as part of the cement cost. So there is no duplicacy as far as the clinker. So that has been done with effect from 1st April, '22. That was done. So that is what we have done. Now there is no duplicacy. But we are also sourcing some cement from UCWL for which we are not supplying any cement -- any clinker then obviously, that is shown as clinker or cement purchase from that. So the better way of seeing and analyzing the results, as we have always been mentioning on the call is to see on a consol basis, which we are giving in our press release, both -- numbers, et cetera. So that will give you a fair idea of what the overall picture looks like in terms of EBITDA per ton on a consol basis.

Right. Just as a follow-up. I was looking at the related party transaction, what we have put out. When I look at that number, the number is around INR 264 crores. That is the process of cement/others from UCWL. So even if I look at JK Lakshmi on a consol basis, this number is like nearly 35% of the total raw mat, including inventory change. How should one interpret this because 35% is a pretty steep number given the intercompany with UCW.

This we are talking of which figure and for which period we were talking of?

Sir, I'm referring to the first half numbers. The related party transaction would be published. We just look at the numbers on the purchase that JK Lakshmi had from UCW. This is only purchase for cement and others. This does not include, I think, fuel -- and this number is INR 264 crores. So what is the total raw mat plus inventory change on a first half basis is INR 763 crores. Of the percentage of total, even on a consol basis, this number looks very high at 35%.

35% of what? 35% can be seen on a total turnover basis, not on a cement or a raw material basis. Linked it to the turnover, not to the cost of the material consumer. Linked it to the turnover you got the answer.

Sir, why would that be so because you are purchasing something from UCW, which is a subsidiary. So you are saying that this is all cement, there is no clinker over here?

No, no, this is -- there is no clinker, obviously, there is no clinker. See it gets eliminated, if you see on that consol basis, it will get eliminated.

Sir, the net -- if I look at it on a net basis, also there's a difference of INR 150 crores. Because sale of cement and clinker was the difference is INR 114 crores. The purchase of cement is INR 264 crores. So the difference is INR 150 crores.

Can you repeat that, please?

Sir, if we look at on a first half basis, the purchases from UCW for cement/others is INR 264 crores. The sale amount is around INR 113 crore...

Can you tell me?

Sir purchase of cement/orders is INR 264 crores. Sale is INR 113.7 crores. So the difference is still INR 150 crores, INR 150.9 crores.

I'm not able to see where are you reading it from.

Sir, I'm referring it to the related party transaction, probably I'll drop you an email, sir.

You see the P&L, please? The purchase of cement and read our purchase of stock in paid for JK Lakshmi, what figure you have INR 404 crores?

Yes, sir.

UCW stand-alone is INR 113 crores.

Sir, I'm looking at it on the first half basis.

Yes, first half, I'm also talking about first half only please.

Right. So on a consol basis, the raw mat consume this INR 227 crores purchase of...

INR 276 crores, please.

Its INR 227.5 crore sir, raw mats consumed.

I don't know where are you reading. It is published at INR 276 crores.

So what I do is probably I'll drop your email. We have the numbers from the press release.

If you have my number, you can speak to me also or maybe to ask after this call. I'm not aware of the number which you are talking about, where are you referring it from. No worries. You talk to me after the call.

[Operator Instructions] We have a next question from the line of Prateek Kumar from Jefferies.

Yes. Sir, my first question is on your profitability improvement. In the past, you have talked about several measures which will drive improvement in profitability unit EBITDA by around [ INR 1000 ] or higher over like 18, 24 months as you highlighted earlier today also. This quarter, we did see that around INR 140 kind of improvement in profitability. What particular like element would have driven this on a Q-on-Q basis?

It's a combination of things. So of course, I think our volume this year were better than last year same quarter on second improvement in realization, which is a combination of pure price increase, what we call it, and then the top line levers like I told you about trade sales, mix and premium products. So these are the contributor. Of course, I think on manufacturing and logistics also, we have done quite a bit. So we have reduced our lead. Last quarter, it was 387 kilometers, which is around 13 kilometers less than before. And apart from lead, I think there has been some actions at manufacturing in, okay? So I think on, a, improvement, this is though I think we will not have still in a full-capability at our plant, which we are working on. So there also, I think we have increased the need for reduction in fuel calls. And of course, I think softening of fields also helped. So combination of them, something which is external, which we got benefited and some access internally on top line and cause wins, which we are going to.

But trade mix has largely remained in -- cement mix has largely remained similar Q-on-Q. That particular -- not has contributed?

So trade sales has gone up, 68% from 58% -- 62% to 58%, right? The booking fees raise. And what is not visible on the figure is, which I think anyway, we won't internally is mix, like selling the material in the low-paid zone area where our realization is better. So there are a set of actions on logistics costs, on direct dispatches on warehouse costing, on trade sales. So all these actions put together, I think that has really helped us. And maybe I think we are not to fully realize all these actions as it some of the actions are still work in progress. So you'll see that gradual improvement and that is why I took that time of 18 to 24 months.

Okay. And span of -- I see, like we have done for improvement this quarter, but span of pricing the next 2 quarters should look better than this quarter, right, based on spot pricing and cost benefit?

See the demand is going to be better and some of the actions, which is working well. That will also be certified. So my belief also is that it's going to be better than last quarter.

Okay. And what is your net debt position as of now? And what would be like peak net debt which you are looking at on a consolidated basis with the expansion projects which we are undertaking?

Yes. We are today as far as JK Lakshmi on a stand-alone, we are having a debt of -- gross debt of about INR 680 crores and net of cash is about INR 140 crores. So on a consol basis, it is INR 1,975 crores as of September on a gross debt basis and about INR 1,175 crores on a net debt basis. Going forward, seeing various projects which we are doing, we feel our gross debt in JK Lakshmi would reach out to about INR 880 crores from presently in the coming 6 months and then that is FY '24 and to about INR 1,000 crores by March 25 on a stand-alone basis. And net of cash will be around the same level, INR 140 crores, INR 150 crores and around the same level as of March '25 also. So there will not be any major increase in the net debt on a stand-alone basis from the present level of September to March '24 or March '25. But yes, on a consol basis, certainly, the number would be larger because of the fresh loans which we are taking for UCW expansion. So there, we'll see from the present gross debt of INR 1,975 crores will peak out to about INR 2,400 crores by March '24 to '26 by -- INR 2,600 crores by FY '25 and a net debt position on a consol basis from the present INR 1170-odd crores to about INR 1,600 crores and the INR 1,800 crores by FY '24 and '25.

Okay. And FY '24, '25 on a consol basis, how much CapEx we are factoring in this coming year by year?

Yes, we are talking of CapEx in -- as far as JK Lakshmi is concerned, in the current year, we are talking close to about INR 500 crores and INR 700 crores for UCW. Next year, JK Lakshmi, another INR 500 crores and INR 100 crores remaining for UCWL. So we are talking of INR 1,200 crores on a consol basis, the CapEx in the current year, INR 500 crores for JK Lakshmi and INR 700 crores for UCW including their expansion. Next year, again, INR 500 crores for JK Lakshmi and INR 100-odd crores remaining for UCWL, INR 600 crores. So INR 1,200 crores in the current year, including whatever has been spent in the current 6 months and INR 600 crores in the next financial year.

And any new projects which we take up may reflect in FY '25 number, if there any new...

In addition to that if we announced as in well these numbers which I shared with you talk of only the announced projects like Surat grinding unit, conveyor belt, railway siding. But once -- as and when we announce the expansion at Durg, that will be in addition to that.

Right. Conveyor belt has been made sticky in terms of clearances for years. So has that been now like sort of sorted I can do?

Yes. Broadly, yes, because there are 2 parts to that approval, which were required. The bigger one approval, which are more time consuming was the railway siding. So that has come and hopefully, in this quarter, the conveyor belt green signal would also come for that. So thereafter, we are talking of about 8, 9 months for conveyor-belt and about a year for the railway siding.

And one last question on Gujarat market. So after like while the Ambuja acquisition has not completed, but is an expected increase in materials from Sanghi industries in your all 4 markets in post like that acquisition completed?

Sanghi, therefore I have not seen that in quantum has increased. A little bit increase, yes, of course. The kind of demand which is there in the market is not at all is many dynamics. Not much increase, a little bit increase. I think I would say they have gone back to the normal level, which they were doing, right? So nothing beyond. So once they are coming full fledged let's say, to 6.1 million tonnes then I think that we need to see. So as of today, I think things are business...

[Operator Instructions] We have a next question from the line of Rajesh Ravi from HDFC Securities.

Congrats on good set of numbers. First on this noncement revenues INR 130 crores, how much was the RMC? And on this INR 130 crores, what was the EBITDA margin, please?

This is basically -- the margins are low here in the non value-added business in this quarter, it was 3%. And out of the INR 130 crores, which we told you, INR 60 crores was this RMC, INR 50 crores [ ASC ] and INR 20 crore was [ PFD ].

Sir, on company to all these sales nontrade and blended you shared those numbers were all on a consol basis or stand-alone?

Standalone, JK Lakshmi.

Okay. Okay. Pursuant to share these numbers on a consol basis because as you say, we should consider this company more on a consol basis?

Yes, we'll share that with you.

Yes, we'll share that. It will be the same level.

Broadly it should not be a material difference.

Plus minus 1%, 2%.

Okay. And this quarter, yes, we have seen the strong sales improved from 55% in Q1, which remains overall single level for FY '23 about 62%. So some conscious refer to trade share? Or is just a non-cement volumes have been lower and that is why the trade share is north of 60%.

No, Ravi. I think this is a design one, not something which has happened by default,right. Yes.

And even on your green power, how much was the convention sales 50% in Q1 and in Q2 what is the outlook? .

We have sound of that we are now sourcing the 40-megawatt of green power or the solar power from our -- for our Durg plant. So by a virtue of it, it will be on a renewable basis jumping up for to 80% from the present 36% as far as Durg is concerned. On a consol basis -- or sorry, on all the plants of JK Lakshmi taken together, then we are talking of about close to about 35% by way of renewal in this quarter.

Okay. And this will incur when we do the sourcing increases? And road transfer?

October obviously, this will go up.

Yes. Yes. AFR share was how much in volume metrics?

What? Sorry.

AFR. Alternative.

AFR, I'll give you in terms of TSR on subsidiary rate. See, we have taken up that project for increasing the TSR. So that will increase our TSR from 4% to 12% and nearing to 20% increases.

Okay. And this year, what is the target from 4% FY '23?

So do we do not have any capability set and more so because we always compare other fuel costs versus AFR. So we will be around 6% around that growth. It will be around close to overall 6% in Sirohi as well because Sirohi right now is doing less than 4%. So first phase of AFR maybe will start during the last quarter of this financial year. So by end of this year, I think we will reach were about 6% there.

Okay. And sir, last question. First off, you have dropped 10% volume growth for the second half year support into now that your clinker plant is operational in October. So what sort of volume number, I mean and my understanding would be that you are already in shortage of clinker. So given the surplus clinker maybe able to ramp up the repo second line much faster, maybe reaching 70%, 80% utilization in Q4?

Yes. So the effort is that only is will have wherever new capacity utilization has to go up, that will go up, and we'll try to expedite that upcoming grinding sessions as well. That is what the effort is. And let's see how much we can see it there.

We have our next question from the line of Uttam Kumar Srimal from Axis Securities.

Congratulation on a good set of numbers. So what has been our fuel mix this quarter? The input in imported coal.

We -- in this quarter, we had a total book of about 46%, 38% and balance of the other.

Okay. And sir, what is the current state of INR 150 crores plant in Alwar and A block in Aligarh we are setting up?

Yes. So Aligarh, we have already commissioned and we have a capacity of about, let's say, 75% of utilization. So we are already doing about 11,000 cubic meter a month, more or less, we have stabilized our Aligarh plant. As far as Alwar INR 150 crores plant goes is -- it will take some time because now the job is not happening because of the band. NCR entire construction activity has been banned, right? So this is going to be a little bit delayed on account of this right. So -- but our target is to do this trial by end of quarter 3.

Okay. Okay. And sir, any target that you have faced for your VAP business value-added product business earlier I think it was around INR 500 crores. And I think this year, we will cross that INR 500 crores in terms of our value-added product. So any new target you had utilized for the value-added product business?

So value-added product, I think our ambition is to take it to INR 1,000 crores level, and the end of '27, '28, right? This is what the plan is. So right now, we are at INR 500 crores level. So another maybe 3 will go to INR 1,200 crores.

We have our next question from the line of Raghav Maheshwari from Amsec.

I just wanted to know the new proposed grinding unit at Surat. So what is the clinker so it's from the imports from the Middle East or we have the surplus clinker available at above the Sirohi location?

So we'll have, I think, a combination of them. So of course, I think Sirohi also we are contemplating if we can really increase further efficiency with that lease CapEx involved and a little bit more clinker from Sirohi. So that is one. Second, of course, I think we'll take some clinker out of Udaipur. And third is going to be improved if at all we call.

Sir, what is the cause difference on the landed at a plant? What is the call difference between import and transferring from the either Dabok or Sirohi?

So that depends. I think if you talk to me like maybe 6, 9 months back, then import were cheaper, right? But now since now costs and other things have softened a bit, then how clinker is a little better. But I think import has always been comparable. The import is not as high. So if you really want to run your turn and you do not have clinker, then that also offers a very good first.

Okay. And sir, last question from my side for the Gujarat market, particularly. Gujarat market is primarily after the Sanghi operational vendor. It will go for the Adani management, i.e., what we are hearing Adani will introduce ACC as a new brand. How will you see the Gujarat market and particularly South Gujarat market, which is one of the strongest market of retail because this is my understanding most of the material execution from the Sanghi is practically possible for only the South Gujarat and Mumbai market because of the sea route availability. So it will impact sizing pressure on this market? How will you see particularly?

So my reasonable agents that this will not impact and maybe a little bit, but I don't think because -- see the market is big that some of the markets which you name some competitors, they are supplying to other markets also, which is as lucrative as Gujarat is, right? I don't think that price dynamics is going to change drastically. That will happen to the extent of it normally and because of the cyclicity and demand supplies [indiscernible]. But to not for say that additional volume is going to really disrupt the market prices.

Got it, sir. And sir, just wanted to check one thing. One, why we are -- why the plant for the UCWL for cement grinding is delayed so much compared to the clinker because we have already commissioned the clinker in the current quarter. And we are proposed to the commissioning for the cement is approximately of the -- after the 3 quarters. Why this gap because of there isn't any environmental clearance issue or something else?

So I think this is what our project plan was. If you recall all those calls, we have been telling that around October, our clinkerization will come and give last quarter of this financial year, grinding value. If you remember, I think we also had in the intervening period, COVID issues, global supply chain issues, right? So this was the project plan itself like this that will install that clinkerization first and then we'll go to cement. So there is [indiscernible].

Yes, yes. There is a lag from the start only, from the project planning, I guess.

At that point in time, based on the global situation and supply chain issue, we plan that way. And that was a prudent thing at that point in time.

So meanwhile, that will -- clinker produced by -- the UCWL will produce internally or we will go for the clinker sale from the UCWL plant?

I told, I think some of the gentlemen, they ask this question. So the order is like this. So first, we'll consume whatever clinker will add to our internal grinding situations, which we have, one. Second, we will go to some of the outsource unit where we have some surplus grinding capability. And third is going to be clinker sale. But of course, I think clinker sale is going to be a little higher during this integration thing.

We have our next question from the line of Aman Agrawal from Equirus Securities.

Yes. Is this audible now?

It is very low.

Hello. Is this audible now?

Yes, please go ahead.

Two questions from my side. First was with respect to demand in the Eastern region. A couple of peers have highlighted some subdued demand growth mainly in the Eastern region. What's the kind of situation that you are facing? And going ahead, what's the kind of growth that you see for that market?

So whatever information I have got the demand during last quarter is towards the highest in terms of percentage growth Y-o-Y, right, followed by other markets like North, West and South. So my information and my intelligence is a little different than what you are saying. Even going forward, also, I see that East is going to grow in double digit because East we need to understand this is predominantly ISV-driven market, right? And I think this market is going to grow in double digit going forward also. 8% to 10% growth I see going forward as well.

Understood, sir. And sir, second question was with respect to our expansion plan. Now we already tried for acquiring a much more sizable capacity in the Western region. And now recently, we have announced 1.3 MTPA expansion in another invest season. So going ahead, can we expect more of this expansion to be announced with the Western region itself for JK Lakshmi?

That call will take depending on the demand supply. But as of now, we don't have anything in the offering.

[Operator Instructions] We have a question from the line of Navin Sahadeo from ICICI Securities.

Am I audible?

Yes, please go ahead.

Sir, 2 questions. One is, what is the rationale to choose the new 1.35 million tonne grinding unit in Surat. Is it that demand? Because I'm saying that if your existing unit at Kalol is much closer to Ahmedabad, which is a buzzing center as such. And also, it will have a lesser lead if it all clinker has to come from Sirohi or even a job for that matter. So my question was just trying to understand what is the rationale? Is it higher demand? Is that market more profitable for you? Is it -- is there an outlook that you see is much better because we could have also maybe -- we had Kalol as an option, we could have also had Jharli as an option for the grinding unit or some new grinding unit location in NCR. So just trying to understand why Surat?

So there are a couple of reasons, Navin, why did we choose Surat. One, of course, I think the demand -- projection demand, the way demand is going up. So Surat was already touching to its capacity. So we thought of putting there because we have almost exhausted our capacity at Surat, one. Second, if you know the geography of Gujarat, South Gujarat is a better price market than other parts of it, though I think you will need it a little bit more. So I think price-wise, this is quite stable and prices are also better. And the third and important consideration is that this also gives us an opportunity to enter into that Mumbai market, right? Because the way Mumbai market also is growing, I think Surat is going to be a good source of supply in the levering area of bordering area of South Gujarat, right? So these were the 3 considerations, right, why did we choose Surat.

So does this unit also have intent and benefits of would have incentive on units related incentives and a GST refund something?

Yes, we are trying to see if -- we are not -- we are already applied. We have not got the confirmation, but we are trying to see if we can get some incentive there for this additional grinding unit. Hopefully, we should be able to get that.

Okay. So concluding on this question for say, Surat is a better realization market for us net of freight from clinker from anywhere, but Surat is a better, at least as of now, we see it as a better realization of profitability market for us.

Yes. Yes.

Understood. Sir, second question then was you mentioned about the railway sidings that are coming, I think, next year, as you say, Q3 or Q4 and the conveyor belt. So these will lead to what kind of savings do you anticipate?

So of course, I think we'll be able to reach out to some of the high-priced market 1 because right now, we do not have access to some of the high price market of this. Second, I think is going to be incoming wrong deal also is going to be cheaper, right? Third is we also transfer clinker to our branding stations of Cuttack, right, and Amethi. So that is also going to really help in reducing cost. So these are the immediate benefit, which I see we can get out of this railway siding.

Helpful. Helpful. Great. Congratulations on a good set of numbers. I think sequential improvement is really something that we are very happy to see. So thank you so much for the opportunity and all the best.

Thanks, Navin.

Thank you.

The next question is from the line of Mr. Shri Kirloskar from BOB Capital Markets Limited.

I have 2 questions actually. Number one, if you can share the differential for premium products and normal increase in cement in terms of pricing and EBITDA.

So the normal and premium, the difference at EBITDA level is about somewhere depending upon the market on an average about INR 250.

Okay. And on the pricing, sir?

Sorry?

On the pricing front, what's the differential? In terms of EBITDA, it's INR 250?

In different market, different gap right from INR 20 to INR 25, INR 27 of that basis.

Okay. Got that. So my second question is, in our last conference call, we had spelt out on our key net debt to EBITDA, which is around 3x. Does that guidance remains the same right now?

Sorry, can you repeat your question?

Sir, in our last con call, we had spelt out debt-to-EBITDA ratio of around 3x. Does the guidance for that 3x to remain the same?

The guidance is a long-term guidance. When we do projects and future expansion or acquisition. We try to keep that within that low. So no that guidance doesn't change on a quarterly basis that we may see.

Due to time constraints, we have last question from the line of Mr. Parth Bhavsar from Investec.

So I wanted to know what was the clinker production and cement sales at UCW for the quarter?

UCW clinker production in this quarter was 3.84 lakh tonnes. And what was the other question?

What was the cement sales?

Cement sales was total was 4.68 lakh tons and clinker sale of 0.92 to total sale of 5.59.

5.59.

5.59.

I would now like to hand over the conference to Mr. Vaibhav Agarwal for closing comments. Please go ahead, sir.

Yes. Thank you. On behalf of PhillipCapital India Private Limited, I'd like to thank the management of JK Lakshmi Cement for the call, and many thanks to participants joining the call. Thank you very much, sir. Yashashwi, you may now conclude the call. Thank you.

Thank you.

On behalf of PhillipCapital India Private Limited, that concludes the conference call. Thank you for joining us, and you may now disconnect your lines.