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

Ladies and gentlemen, good day, and welcome to the JK Lakshmi Cement Q1 FY '25 Earnings Conference 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.

Thank you, Daven. good evening, everyone. On behalf of PhillipCapital India Private Limited, we welcome you to the Q1 FY '25 call of JK Lakshmi Cement. I need to highlight that JK Lakshmi Cement is also the holding company of its listed entity 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 and Director and Mr. Sudhir Bidkar, CFO at JK Lakshmi Cement. I would like to mention on behalf of JK Lakshmi Cement and its management, that certain statements that we made or discussed on this conference call may be forward-looking statements related to future developments and which are based on current expectations. These statements are subject to a number of risks, uncertainties and other important factors, which may cause actual developments and 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 over the floor to the management of JK Lakshmi Cement for their opening remarks, which will be followed by interactive Q&A. Thank you and over to you, Sir.

Good evening to all of you, and welcome to this conference call post our quarter 1 results. Before we go to question and answers, I'll just give you a brief glimpse because a lot of data is there with you, and you may have a lot of questions so I'll allocate more time for questions and answers, than kind of giving a commentary. So last quarter, as an organization, I think we are satisfied the way market has behaved in terms of demand and pricing. JK Lakshmi Group has done reasonably well. You must have seen that the trend which has emerged so far, there is lower realization and operating deleverage, which has impacted profitability for all the companies. Same goes with us as well. I would like to give you some glimpse of the highlights of the organization. Volume-wise, we are almost flat and the reason being that some of the markets where we operate post Holi and followed by the longer layoff during this election that has impacted some of the geographies where we are there. And those geographies are dependent on the migrant laborers. So while we have done quite well in East, but in the West and North, where dependency is more on migrant laborers, things have impacted in the construction side and hence our volume. In terms of pricing, I think pricing was under pressure because you must have observed we are witnessing the price level, which is the lowest in the last 3 years' time, right? So that has impacted us as well and hence our realization has gone down. What we have done quite well is, of course, I think, being very focused on some of the performance levers, which we have been focusing for the last couple of years, of course, on geo mix and then of supply chain efficiencies and using digital to drive efficiency in our supply chain and value chain, working on renewable energy and non-fossil fuel usage and things like that. So we have been continuously focusing on that, and that has resulted into a significant improvement on those parameters. For instance, AFR, if you take AFR in case of JK Lakshmi Cement, it was close to 12% last quarter, which is much higher than last year average of 7%. In terms of renewable energy, last quarter, we have closed at about 48%, which is much higher than the exit, overall average of last year, which was 39%. We have done quite well in lead also, lead has gone down by 12 kilometers, 384-kilometer holds the average for last year. We have achieved 372-kilometer quarter 1 of this year. So there also, I think things have then -- turned out to be well. In terms of premiumization, our premium product was at 30% or close to 30%, which is a good moment, and that has impacted our bottom line to an extent. So these are the highlights, which I will say is there at our end to kind of let you know. I will now give time to all of you to ask questions because you may have questions on a lot of things, the recent development which we have proposed in our recently concluded Board meeting that is in the merger of UCWL and JK Lakshmi Cement. So I'll leave it to you, and now we are open for questions and answers. Thank you.

[Operator Instructions]. The first question comes from the line of [ Gautam Rajesh ] from Everflow Partners.

So I have two questions. My first question was, can you talk a little bit more about our limestone reserves that how far -- our plant in North. And how many years of reserves do we have there? And when do they come up for renewal?

Yes. So at Sirohi our renewal is due in the year 2030, and the residual reserve is for about 15 to 20 years now with us. At Udaipur, we have a requisite reserve for another 40 to 50 years. And just to let you know, we have recently got a lead of adjacent mines. And that is also going to further our life of limestone at that location for at least another 10 years. So this is what is there already operating. In terms of future programs, you must be knowing that we have already acquired limestone lease rights at Nagaur. And there also, I think, if we are going to put up, let's say, around 5 million tonne to 7 million tonne plant, so that is going to last for at least 45 to 50 years. So we have got requisite limestone reserve with us to continue our operation for at least 35 to 50 years depending upon the phasing of the different expansion plans which we have.

And my next question was, how much time would it take for us to ramp up the volume for the Udaipur Cement expansion and achieve, let's say, optimal or high utilization and volume growth?

So unfortunately, because of general elections during quarter 1, that impacted overall demand, you know that because the industry has not grown the way it was expected. And in fact, because of this quarter 1 subdued demand overall forecast for the demand this year also has down revised. So -- but yes, nevertheless, our plan was and still we stick to that, that at least 60% utilization will achieve by end of the year of our line 2. And overall, maybe around 70% to 75%. That is what our plan is, around 75% for both the lines.

60% by end of FY '25 and 75% at peak utilization, am I right?

Yes. Yes.

[Operator Instructions]. The next question comes from Nigel from LEO Capital.

My first question was about how do our current profit margins in the East region compare versus the ones we have in the North and West? Is there like a substantial difference in profits as of now?

Yes. So there is a difference, if we are doing well. Last quarter, if you look at our EBITDA is at least INR 200 higher than North and West, right? Around INR 200 higher than North and West. And if you look at our industry, I think we have done better than industry in terms of really driving all those priorities which we have. So being very focused on the market, which are nearby to our plant, that has resulted into a better margin in East than North last quarter.

And also, I wanted to know if you could talk about the thought process behind this expansion in the East, given the high capacity being set up by competition in the region. How much do you think -- also we have the railway sidings and split grinding units, so how much can those add to the profitability in the East on a per tonne basis?

Yes. So I'll just pick up from your last question. So I told you that it has done well than North and Western operations last quarter. And during the peak period last year also, we struggled to cater to the demand which our customers had with us, right? So that really prompted us two things. One, I think we were short of capacity during a peak period, one. And second, also the top line strategy and the distribution strategy, which we have in is and profit margin almost kind of near to North. We thought of expanding. And further this kind of gets accentuated from the fact that now we have railway siding also within our premises. So some of the markets where we are unable to go, now we can go from those markets -- those plants -- that plant right? So these are the 3 reasons. One, of course, I think we were lack of capacity to cater to the demand during the peak period and peak period means at least 6 months of the year, one. Second, the strategy which we have for top line, which is kind of optimizing our distribution in the area where profitability is more. And third, now we have revenue to reach out to the market where we were not going. So these are the 3 things which really prompted us to kind of go for expansion.

We have the next question from Aman Agarwal of Equirus Securities.

First question was on the realizations front. So for JK Lakshmi if we see, we have -- the drop in -- sequential drop in realization appeared a bit higher than for broader industry. Just wanted to understand, has this got something to do with increased clinker sales from the new Udaipur capacity?

No. I think I would not say that. Maybe distribution of mix also to -- I think prices were under pressure, you know that. And some of the market, our realization went down drastically because of the distribution cost because we cannot leave market during the period when prices are down because we have a strategy where we pursue that the strategy of being in the market forever, wherever we are and wherever we have chosen to be, right? So that is one. Second, also a little bit increase in clinker sales as well. That has also impacted our lower realization. The two reasons maybe distribution mix to an extent because some of the markets become more, I would say, not favorable and taken the lower realization of clinker.

Understood, sir. And sir, on the merger proposition itself, if you can just quantify in terms of savings that you are expecting -- directly expecting on this proposed merger?

It is difficult to quantify the exact quantity of the savings, which would emerge post merger because some synergical benefits, which we were already driving. But more importantly, that it will -- merger will help us to make a stronger balance sheet with all the capacities consolidated into a single entity. And cash flow also in a single entity will help us to grow faster organic or inorganic. But there will certainly be some add-ons in terms of savings in the fixed cost, economies of scale through common procurement, additional common procurement, some logistic alignment, time to reach the market faster benefiting the customer. All these benefits would increase as they've already in the premerger regime. So -- but it's difficult to quantify that and put a number there to.

Understood, sir. And sir, 1Q already going a bit subdued for the industry. What is the demand expectation for FY '25 for the industry and for the company as well?

Industry, we see that earlier the forecast was 7% to 8% of demand this year FY '25 for the industry. Now this has been down revised to 6% to 7%. And we feel that we are going to do better than this. At least by a percentage or two. So that is what we expect. So we are going to do better than industry for sure.

Understood, sir. And sir, lastly, just a couple of data points. If you can provide with the net debt numbers on consolidate basis as on June '24. And second, on the non-cement revenues for 1Q?

On the stand-alone basis, the gross debt on a stand-alone was about INR 700 crores and about INR 375 crores of cash. So that leaves a net debt of INR 325 crores that is on a stand-alone basis. And as far as on a consol level is concerned about INR 2,050 crores of gross debt and INR 400 crores of cash means INR 1,650 crores of net debt. That is as far as the gross and net debt on standalone and consol basis are concerned. And as regard to your other question on the non-cement revenue, it is about INR 132 crores for this quarter, almost flattish or the same as it was in the corresponding quarter last year.

Understood. And what would be the EBITDA margin on this? Is it -- still maintained at somewhere around 5%?

Yes, 4% in this quarter, slightly subdued which was the same as in the corresponding quarter last year.

[Operator Instructions]. The next question is from Amit Murarka of Axis Capital.

Just -- I wanted to understand the realization a bit better. So I see that the Q-o-Q drop in realization is much higher than industry. I think it's close to about 6%. I understand pricing was down 2% to 3%. So what is the reason for the higher decline? I mean, is it because the traded volumes are lower? Is it something like that?

So as I told you, a little more clinker sales, so because of that, that is reason number one. Second, some of the geographies, price drop was more and where our reliance is a little bit on higher side, for instance, West. West prices were lower -- much lower than other geographies, right? And third, I think in some of the market, other market other than West also, prices were quite -- competitors were quite aggressive, right? But there also prices went down a little more than our core market. So -- these are the reasons why our realization is lower than average of the industry last quarter.

Could you share the split between the cement and clinker volume in the quarter?

Yes, we can. So, in this quarter, our total sales were 23.26 lakh tonnes, out of which 21.68 lakh tonnes was cement sales and 1.58 lakh tonnes was the clinker sales.

And the same number last year?

I'm sorry -- corresponding quarter, same number were 23.7 lakh tonnes for cement, 1.61 lakh tonnes for clinker. Total 25.31 lakh tonnes.

Okay. Versus Q4, it was higher, you mean the clinker volume?

Yes, clinker volume is higher.

Marginally only. In the -- sequentially, in the fourth quarter of last financial year, it was 1.48 lakh tonnes, it has marginally gone up to 1.58 lakh tonnes, you are right.

But percentage wise, if you see, I think is -- and that is why the impact is more on revenue.

Okay, okay. But still, like, also, is it like something like the dealer discounts are adjusted in the quarter. Is there something -- some of that factor as well?

No, no. I think we don't do that and we haven't done.

And on cost per se, like, is there any cost reduction target that you're working on? Or what are the initiatives that you are working on to get it down?

On cost, I'll divide that into 3 parts. So one, of course, I think in the manufacturing, our major focus is on 2 things: one, renewable energy and second, on AFR, right? So that will keep on doing, right? We are trying to find revenue for putting more solar power so that we can reduce our power cost. So we are working on that. And once that gets kind of finalized or we roll it out, we'll let you know. And second also on AFR. AFR first phase, we have already commissioned at Sirohi, and we have already reached 14%, I told you, and the ramp-up was quite fast. And there also, I think we are planning to go for now second phase that is going to take our AFR proportion to 17%, 18%. And in Durg, we have already reached about 10%. We'll try to take it to another 1% or 2% up. So these are the things which we are working there. Third thing in manufacturing, we are using technology now to optimize our pyroprocess. So that project we have taken. It's very difficult to quantify how much savings we are going to have from this project. But definitely, I think we'll have some savings from there as well. So this is from a manufacturing part of it. And of course, I think product mix and other things that is part of top line. So that is being separately driven. On the top line part of it, again, I think our strategy is very clear. We are not changing. So selling more in the area, which is more remunerative, working more on premiumization, right? So -- and of course, blended cement proportion. And third part is supply chain. Supply chain, I told you that we have improved quite a bit. Lead has gone down by 12 kilometers. If you compare just from the AFT of last year of 384 kilometers to 372 kilometers. But we believe that still there is a scope and we are working on that, right? So these are the areas where we are working on cost reduction, okay? And I'll not say that drastic cost reduction is going to happen. But I think all those things are going to put together definitely INR 50 to INR 75 definitely [indiscernible].

Got it. And lastly is a bit qualitative -- of a qualitative question that we are seeing an intense fight for market share that is going on across regions with larger players wanting to grow even bigger. And we are in fact seeing pricing drop in some of the markets to like unheard levels in the last 10 years. So in this kind of a situation, like given that you still sell cement maybe INR 20 lower or more than the larger guys in some of the markets. How are you being able to compete or what's the strategy? Are you still trying to compete in such regions or pockets where there is really intense competition? Or you are choosing to maybe let go certain volumes in some of such markets?

So if you really look at our distribution strategy has been quite consistent for the last couple of years. So we choose our market that where we need to be, and we are there and we are going to be there. Now our strategy is not going to change much. We are going to reinforce in the market where we are already a relevant player. For let's say, Rajasthan. Rajasthan, we have an installed capacity of 10 million tonne around, right? We're quite a relevant player. Even some big players also, I think we are not far behind. Similarly, if you go to East and somebody asked this question, we are going to consolidate our position in East also. I told you that during peak time we do not have cement to give to our customers, right? So our strategy is going to be focused and undifferentiated, right? And we are not going to scatter ourselves everywhere. So in North also if you look at we have a grinding station in Haryana. We are going to sell in and around that area, right? Gujarat, I think we have got 2 plants. We are a prominent player out there. And if you look at our strategy, I told you that somebody asked about our line reserve and the capability of -- resource capability, right? So we have already acquired limestone lease in Nagaur in Rajasthan, right? So that is our core market and where further we are going to consolidate ourself. Similarly in fact Gujarat also we have got that limestone rights, right? So Gujarat, we are already there, we are going to further consolidate. In East, I told you we have announced last time also. We told you that we are going to put up a 4.6 million tonne in Eastern part of India. That is our -- again, our strategy is to consolidate our position. So we are not venturing into new markets. First, we want to consolidate, make ourselves relevant. And then maybe I think we need to look for opportunity when things are conducive and we'll go to other market. So I think that strategy is consistent and all those assets whether it is brownfield or greenfield is consistent with our overall strategy of being a prominent and relevant player in the market where we operate.

Because this quarter itself if I see your volume has dropped, I mean, when others have actually grown volumes. I was also thinking in that context.

We definitely don't want to really dilute our price positioning. That's very, very important because we look this -- for an opportunity for us to reduce the gap with the leaders, right? So to an extent, I think that is also our strategy because during this time, when everybody is dropping prices and trying to push volume which is perhaps not there in the market, our strategy is little different that how we can really bridge that gap up and improve our positioning. So I think it's kind of a balance we play, right? And that we'll keep doing going forward. Because that is a long-term kind of incentive, which we will have.

[Operator Instructions]. We have the next question from the line of Raghav Malik from Jefferies.

I just wanted to follow up on the pricing question actually. In July so far, could you give us any color on how region-wise pricing is looking across Northeast and West?

So prices have slipped further in the month of July. And this is -- this pattern is across. I would not say that any region is less for drop in the -- in terms of prices. But I think all regions are consistently behaving. And that is being driven by the fact that the demand is low and of course I think players are aggressive to take pie of less. So there, I would say, conduct is same across markets. This is not the kind of selective market which is there. So it is across, prices have even further gone down in the month of July.

Okay. Would it be possible to quantify maybe at least sort of pan-India basis what the drop is and if possible, region-wise?

Region-wise would be difficult, but my sense is, at least prices have gone down by INR 5 to INR 7 in different markets.

And my next question is on CapEx. So what has been our spend so far? And are we still on track to do INR 1,200 crores like we have discussed last quarter for FY '25?

Yes. Basically, we are working in this year on 2, 3 major projects. One is the grinding unit. Split location grinding unit at Surat is going to cost us about INR 220 crores. And then also on the railway siding, which is costing us about INR 325 crores. Apart from these 2 projects, we have also announced the green -- brownfield expansion at Durg involving a CapEx of INR 2,500 crores over the next 3 years. So as far as actual CapEx is concerned in the current -- first quarter of the current financial year, we have done about INR 90 crores. And going forward, we expect another INR 800 crores to INR 900 crores in the remaining 3 quarters, that is FY '25.

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

Sir, just a request, if you can provide the same breakup between cement and clinker on a consolidated basis as well. You've already provided on the stand-alone basis?

You want also on a?

Consol basis, sir.

Consol basis, we have done a total sales of 30.37 basis on a consol basis, out of which 27.89 is the consol cement number and 2.48 is consol clinker that is in the current quarter. Corresponding quarter, it was 30.36 total, 28.31 cement, and 2.05 clinker.

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

Actually, many data points needed. First, to start with, just to correct. Sir, you mentioned that in terms of the CapEx, we have done INR 90 crores. So this is on the consol basis and INR 800 crores to INR 900 crores on consol basis that we are looking at for 9 months. So broadly around INR 1,000-odd crores we are looking at a consol in FY '25, because last time we have spoken about around close to INR 1,700-odd crores?

This is the number which I gave in response to the previous question was on a stand-alone basis. Not on a consol basis.

So at consol level, how much we have spent in first quarter and for full year last time, you said INR 1700 crores, so that number remains intact?

Yes. In the first quarter, in JK Lakshmi, as I mentioned, about INR 90 crores, another INR 70 crore, INR 80 crores got spent in Udaipur. That makes it around INR 150 crores to INR 160 crores on a consol basis in the first quarter. And going forward, anywhere between INR 1,500 crores to INR 1650 crores would be spent on a consol basis in the current financial year which broadly remains the same as I mentioned in the last call.

And for FY '25, broadly in FY '27 last time, we have spoken around INR 1,300 crores to INR 1,400 crores and in FY '27, around INR 1,200-odd crores. So that also number remains the same?

So that remains the same. It's barring any spillover. That's all.

Second, sir, still further harping on the pricing front. So if I broadly look at -- so does this quarter realization for us, if I compare with the last full year FY '24, is close to 9.5% down and further as we are seeing the prices are INR 5, INR 7, INR 10 or lower. So whatever the benefit we have kind of gained through the geo mix, optimization and everything, do we think that most of that has been kind of gone? Because if you broadly look at whatever the current price trend and unless we see a price improvement in the second half on a Y-o-Y basis for us at consol level significant drop in terms of the realization will be there 8%, 9%. So would be of significant versus the industry. So -- and that would be the major in terms of the profitability -- impacting the profitability.

So your question [indiscernible] what I think, then therefore, what you are asking? Yes, that's what it is, you question is [indiscernible].

So I was -- my question was I was trying to understand in last 2 years, whatever price increase, we were able to gain because of the -- our distribution strategy. Does that got impacted or it is only the in general price decline, and that's what we are also facing the same issue?

I think this is a general market trend and price which I see, right? So that is what is there. And second quarter, definitely, once demand goes up, prices are going to go up, right? So that happens. If you remember last year, even April, June was very good, but July, September was better. Demand also supported in those months. So typically, last year, July, September was better than the traditional months. So this year, I think we have -- April, June, was not good other way. Maybe I think once demand improves a bit, prices will inch up and we'll be back to having an original month, right? So what we are witnessing is the normal trend in the market, nothing specific to us only. And this -- if you really -- because we do compare ourselves with our competitors in the market where we operate. And If I compare myself with -- our company with other competitors or even leaders in that particular market where we operate, I think we are just in alignment with them. So the trend which was there either increase or decrease that impact them, that is impacting us as well. There is nothing exclusive about it.

Yes. Sir, a couple of points data in terms at consol level, trade, non-trade, sir, premium, sir, I think you've mentioned 25% blending ratio, CC ratio for this quarter?

Yes. I'll tell you. So blended proposal was 64%, 65% on a consol basis and standalone 64%, trade overall is 50%, 55%. Premium products I told you, right? Lead, I told you, right, 372 kilometers. What else you want?

CC ratio, sir?

64% blended, right?

I was talking about the clinker -- cement to clinker ratio. Which was, I think, 1.46 last quarter.

Clinker ratio in our case is 1.45.

Okay. And in terms of the time line for all the ongoing and plus expansions, whatever we have spoken in the last con call that remains the same? Or is there any change, anything coming up oddly or is there any delay?

Broadly as of now, the time line remains the same.

Yes. And in the presentation, sir, just wanted to clarify, we have highlighted that the Northeast will be coming up by 1.5 MTPA by FY '26 because last con call, we said that it will be coming by end of FY '27. So...

Come again, please. I think we just -- sorry, we missed it.

Northeast, the company that we have acquired, where 1.5 MTPA to come up. Last time, we said it will come up by March '27 or April '27, but in presentation, we are showing as part of FY '26 capacity addition.

It will spill over to the next financial year. There is some time being taken for that. You're right.

Okay. Okay. And sir, the RMC revenue was how much in this quarter?

Out of this total noncement revenue of about [ INR 132 crores ], RMC was about INR 72 crores.

And then in terms of the broadly to reach 30 MTPA by '30, '33 we are mentioning in there. So broadly, if you look at in terms of the kind of CapEx on an average would be a INR 1,300 crores, INR 1,400 crores kind will continue until FY '30. Will it not be kind of concerning us in terms of net debt going up. So any idea in terms of how we look at a consol net debt? Is there any ballpark that we will not try to and breach that. And if with that, then maybe we can delay the expansion plans?

In between when you are going in series of expansion, obviously, there are years when you would see our debt to EBITDA level crossing a certain norm. But that is only and only because of the fact that the debt gets contracted earlier and the commensurate EBITDA flows a year or a couple of years later. But once you factor the corresponding EBITDA, those will always be in line with the norms which we are. So it is incorrect to see on an isolation only at the year-end debt EBITDA level, either add corresponding EBITDA or reduce the debt for which the EBITDA is not yet there in the books. But we don't see -- in spite of these all expansions, which are going to happen over the next 5, 6 years, we don't see our gross debt-to-EBITDA crossing anywhere between 3 to 3.5 and a net debt-to-EBITDA about 2 to 2.25.

The next question is from Rajesh Kumar Ravi from HDFC Securities.

My question pertains to, first, again, on realization front, if I look at sequentially, on stand-alone basis, your realization are down INR 200 per tonne. And on consol basis, it is down by almost INR 300 per tonne. So obviously -- so this is to do with a ramp-up in Udaipur or the sales mix, nature of sales mix in Udaipur because if I -- can you explain what exactly -- the concern is that this realization is almost more than 2-year low. And will that not -- from this level, if there was -- if this is a normal realization level, so will this keep our margin subdued in subsequent quarters?

Yes. So in case of Udaipur, clinker was a little lower because we had some mismatch in terms of clinker capacity and grinding capacity because clinker we commissioned in the month of October 2023 and grinding was there in March 2024, right? There was a gap and hence clinker [ sale ] was more. And that is why you see a lower -- more reduction in the realization at Udaipur than JK Lakshmi, right, that is the reason. And this is the most temporary phenomenon.

So what was the clinker sale on console level in Q4?

1.5 [indiscernible].

Consol level, sir?

On console level, in Q4 it was 2.32. It has increased to 2.48 in the quarter 1, current quarter, April June.

Okay. So 2.32 on a base of [ 32.62 lakhs ] and on a lower base sequentially it has further increased. Okay. So partly to explain with this. But what else would have gone for such weaker realizations. It is just the clinker or is there anything like a geographical mix change dramatically in this quarter versus Q4 and hence such a major fall in realization. Because Q2, you're saying that there won't be -- there would be further pressure on realization. So I'll be looking at a case where the INR 730 may come down to below INR 600 in Q2. And thereafter, even in Q3 and Q4 to go back to INR 900,000, you would require pricing support of as high as INR 300, INR 400 per tonne?

Yes. So I think this is a more temporary phenomenon. There is no then change in geo mix [indiscernible]. If you look at the lead. Lead is lower than average of last year and as good as quarter 4. Quarter 4 was also at 73-kilometer, 72-kilometer [indiscernible]. Yes, so there is no change in geo mix in the distribution, which we do from Udaipur remains the same. There is no change. The only change is more clinker ant at a lower realization that is what has impacted realization at Udaipur.

So what is the exit margin you're looking at EBITDA per tonne for FY '25? And in that, what sort of price increase you're building in Q3?

I think this is going to be speculative. So I think as of now, I would not really comment on this. then I think your forecast is going to be on other side of it. And if you -- somebody forecasts in the end of these months and again you're are going to forecast on the other side of it. So I think let's have a -- We'll let you know. I think how this trend goes, we'll come back to you. But as of now, it's very difficult to really forecast something which I'm not sure about -- reasonably sure about.

No issues sir. On this Northeast expansion, you mentioned that it will spill over to FY '27. So what are the time lines you're guiding for Udaipur -- sorry, this Northeast project? Is it early FY '27, this project would be up and running? And if so, what is the current status on the project?

So, in Northeast, you are talking?

Yes. Northeast project, sir.

So Northeast, we are moving as per the plan. So the first and foremost thing is, of course, land acquisition for plant, though we do have 1 lease deal already signed for one of the mines, right? We are now almost concluding this land acquisition for the plant, one. Second is we are also applying for now environment clearance for the plant. And all these processes takes time. Because [indiscernible] MoEA , we have to follow the processes before like public hearing and things like that. So all those activities are happening. Once those approvals are in place, then we're not going to take more than 12 to -- 14 to 16 months to put up the plant. So I think -- this was expected. Initially taking approvals and putting action at the ground level takes some time. So that is a normal one. But we are well on track to whatever we have committed, we'll achieve that target.

So just, again, by when do you expect -- like a 2-year time for getting all the approvals in place or they will be -- sorry?

What we believe that by -- we are in July. So by end of this year, we are going to have approvals in place. And somewhere in the quarter 4 of this year we'll start...

The civil work.

Yes.

[Operator Instructions]. We have Parth Bhavsar from Investec.

My first question is, can you help me with the fuel consumption costs on Kcal basis for the quarter?

Last quarter, it was 1.63 at JKLC level.

At JKLC. And what was at the last quarter?

Last quarter, it was 1.638.

Okay. And sir, where do we see this going in the next -- in the coming quarters? Is there any room for improvement?

Around that only. Around that 1.63 to 1.65. This level.

Sir, my next 2 questions are related to the restructuring that we are undertaking with Udaipur Cement Works. So I believe that we are -- we'll take our -- we'll give shares to the minority interest in Udaipur. And so can you help me with the number of shares that will be issued because as per my calculation, according to swap ratio, promoter stake gets diluted to 43.9%. And what we've -- the presentation that we've given out is, it says it will be like 45.12%. So what am I missing over here? If you could help me out with the number of shares you'll be issuing .

There, we would be issuing additional about number of shares -- we have mentioned in our investor presentation, which we have uploaded on the website.

So the ratio is 100 is to 4, right? First...

That share is 25, 4 shares for every 100 shares held in Udaipur and the post merger promoters holding is likely to be about 45.12.

And sir, the other question is like so 4 shares of JK Lakshmi would be issued for 100 shares of UCW, right?

Right. .

So the value, like the surrender value for UCW comes to around INR 4,400 on current market price. And JK Lakshmi value comes down to around INR 3,500 crore. So isn't like -- it's a little unfair to the minority of UCW. What's your take on that?

No, that evaluation has in any case been done by independent valuers. And what is important is while UCWL is still not fully just commissioned the project. So the full benefit of that expansion will come in subsequent years whereas case of JK Lakshmi, matured capacity, only additional investment, which has been factored in the Surat expansion, which is there and likely to come in the current year, which is less than 10% of the total existing operating fully matured capacity, whereas in case of Udaipur it is almost more than 50% capacity has just plugged in, which is not yet fully been realized. . So the market also takes into account, the valuation also takes into account the fact that JK Lakshmi also holds a major portion of almost 71-odd percent in UCW. So that is not fully reflective in the present market size of JK Lakshmi. So it is wrong to say that it is unfair to the minority shareholders of UCW. And in any case, the parents holding in this merger gets canceled out, whatever shares are being issued is being issued only to the non-JK Lakshmi shareholders only.

The next question is from the line of [ Saket Kapoor ] from Kapoor Company.

[Foreign Language]. Firstly, if you could explain why our PBT numbers are lower or the EBITDA numbers are lower on consol when comparable with stand-alone?

Stand-alone -- sorry, come again. Can you repeat your question?

Sir -- when we look at our stand-alone results, the EBITDA number is INR 277 crores. When we look at the consolidated, it is lower by INR 35 crores to INR 235 crores. So on consolidation, why is that when we are making losses on the same if you could just explain firstly?

First the second, on a consol basis, it is INR 235 crores you said, no?

Yes, yes. We have 2 set of results, stand-alone and the consol numbers on consol...

Yes, yes. I'll explain that. You see if you were to exclude and see it before the other income, right? But before the other income, if you exclude from JK Lakshmi standalone, you will see that JK Lakshmi stand-alone EBITDA without other income is INR 185 crores, right? And UCWL stand-alone without other income is INR 39 crores. So that adds up to INR 222 crores. But with the other income, because other income, a major portion, almost INR 80 crores is emanating from sale of some stake in this quarter of Udaipur which JK Lakshmi did. So when you consol that, within the company can't the interunit profit on the sale of the interunit holding. So that's where it got eliminated. That's where -- with other income, you are finding that anomaly which has been eliminated in the consol numbers. INR 277 crores on a stand-alone, including other income, INR 40 for UCWL, but the moment you eliminate the interunit sale on profit, which is to be rightly done as per accounting standards, obviously, it comes down. So you see that number before other income, you will get the answer.

I got that, sir. But you mentioned about INR 40 crores sales from Udaipur. What is the sale pertaining to?

Sorry?

What constitutes -- what is the nature of this other income you mentioned INR 40 crore sales from Udaipur.

First, promoter transfer, which took place of some holding during the quarter.

The Udaipur Cement?

The market transaction.

Okay, sir. And sir, can you give me the CWIP number, the current working -- capital work in progress for 31st March '24? And also for the June?

Head of the various CapEx which we have incurred that is all going till the time these are capitalized, whatever CapEx we are incurring is all going into CWIP. Nothing has been commissioned post March.

Right, sir. So as we have done INR 170...

We still have INR 90-odd crores for JK Lakshmi and INR 70-odd crores for UCWL. That has all gone into CWIP without there being any capitalization. So whatever numbers are in public domain as of March balance sheet, which is in public domain and uploaded on the website you have to add that as the CWIP as of 30th June.

Right. And lastly, sir, regarding the investor presentation and the operational performance, if we could just enrich our investor presentation. I think so the basic questions which we investor community have been asking during the call these can be very well articulated in the investor presentation. What we found in the presentation was that these basic numbers or which we are asking can very easily be answered through presentation. I want that -- if we can work with a revamp investor presentation, with these all basic numbers that would have really helped us in spending more time in this discussion.

Investor presentation, we don't update on a quarterly basis. We do on an annual basis, generally, number one. Number two, we give a detailed press release in which all these numbers which some of the callers have been asking what is the sales volume, what is that, is all given. Debt number, debt-to-EBITDA number, debt-to-equity numbers are all given in our press release quarter after quarter. So together with the investor presentation, which is there, if we can see the press release also most of the questions get answered there. But your suggestion is good, we'll dwell upon it.

Right, sir. And last point, if I may, sir. Taking into account all the CapEx that we are doing in the different geographies in the country, what are we eyeing in terms of capacity 2, 3 years down the line from the current consolidated capacity? If you could just give the color on the same?

So we are today sitting on a capacity of 16.5 million tonnes together with Udaipur. And then immediately, we have 1.4 million tonnes of Surat coming in so that takes up to 18 million tonnes, then another 4.5 million tonnes coming in 3 years' time for Durg brownfield expansion in 2 phases. That takes us to 32.5 million tonnes and another 2.5 million tonnes coming and Northeast makes it almost 25 million tonnes. And thereafter, we have in offering the Nagaur expansion as greenfield as well as Kutch together with the possibility of adding another line in Udaipur.

So this 25 million, what is the extended time line we can expect to reach from the existing 16.5 million tonnes, if you could give phase wise?

Come again?

Sir, if you could give me phase-wise for every year, what will be our closing capacity, sir? 16.5 was the consol number for last year, 1.4 we added, we are closer to 18 for this year. What would be the next year number and up till to [ '25 ], by what time we will be reaching 25 million?

As I mentioned, we are sitting at 16.5. I'll repeat for your benefit. We will be adding Surat by end FY '25 it will be 18. Thereafter, we can have immediately the Durg line Phase 1 coming in, which will be maybe by FY '27 in between that. And then another 2 million coming in for the expansion at Jharkhand and Bihar that can come in. In between the Northeast 1.5 can also come in. So all this would come starting from FY '27 onwards. Every year broadly, you can take about 2 to 2.5 line capacity gets added.

[Operator Instructions]. The next question is from the line of Gautam Rajesh from Everflow Partners.

Yes, sir. So just for a follow-up question. You said, therefore, your ideal capacity utilization will be 75%. So by when can we expect that ideal utilization to be achieved by the company?

FY '26, quarter 4, I think we'll achieve that.

So end of 2026.

Yes.

Okay, sir.

So this is the first year, in fact, just a couple of months back only we have commissioned that project. I think this year, we'll reach on an average about close to, let's say, 55%, 60%, what we mentioned, reaching peak to about 70%, 75%. Then, next year on I think will have this.

Next year onwards, we'll reach that 75% if I heard you right?

. Right 75%.

Ladies and gentlemen, due to time constraint, we will now take the last question, which is from the line of Tushar an individual investor.

My question is, what is the status of conveyer belt at Durg plant?

So we are still awaiting approvals. That is in the final stages, and we are expecting to get that maybe in another couple of months' time. That we are waiting. You know that this approval from authorities takes a lot of time because of decision-making process, it may have, right. So we are just waiting. I think that is in the final stages of approval.

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

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

Thank you.

On behalf of PhillipCapital India Private Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.