Orient Cement Limited (ORIENTCEM) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Orient Cement Limited's Q2 and H1 FY '24 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Navin Sahadeo from ICICI Securities. Thank you, and over to you, sir.

Thank you, Nirav. Good afternoon, everyone. On behalf of ICICI Securities, I welcome you all to the Q2 FY '24 earnings call of Orient Cement Limited. From the management, we have with us, MD and CEO, Shri Desh Deepak Khetrapalji. So without any further ado, I hand over the call to Mr. Khetrapal for his opening comments. Over to you, sir.

Thank you. Thank you, Navin, and a very good afternoon and a very warm welcome to all of you on this Q2 earnings call of Orient Cement. Let me start by first wishing all of you a happy Dhanteras and a very happy Diwali, which is coming in 2 days' time. And I'm grateful to all of you for finding time for us even on a day like this, which is basically a festive day. But I think given the schedule that we had, we are here today, and thanks for being here. In my own way, I mean, lots of people are wishing each other to acquire gold. And my little bit twist on that is that my wish is for all of us to acquire a heart of gold and become better human being even as we have a fulfilling and everything life. So all the very best to all of you. Coming to the performance and the highlights of Q2. I think I'll rather start with perhaps the news that people have been waiting for. We have been saying that our waste heat recovery plant is under commissioning. But finally, towards the end of the quarter and in the last 2 days only, we were able to commission the waste heat recovery plant, to the extent that its 80% of the target power is already available and that we've used in the month of October. And obviously, we're using it. The balance 20% work, which is still going on, should be ready for us to get power in the month of January. And as all of we know that it's the overall benefit to the company in terms of costs that we've been projecting it will be more than INR 60 per tonne of cement, so which, like I said, as of now, because 80% is commissioned, so maybe it's about INR 45 a tonne, but -- and I'm saying in Q3. And in Q4, the full benefit of INR 60 per tonne plus, plus, and it will be perhaps hopefully more than that. So that will start flowing in. And that has been a pending thing from our side, I thought I'll first tick that off. We've also been doing some really good work in terms of creating a really rich brand portfolio of obviously these regular brands, which exists in the market, which we've been operating, and then the newer brands that we've been adding to our portfolio. And in that, we have added one more brand, which we have called the Birla A1 Dolphin. And Dolphin because it's a water-repellent cement. And this obviously Dolphin, for all of us who know how water-repellent the skin of Dolphin is, so Dolphin really represents the nature of the product that we have launched under this brand. And hopefully slowly, gradually, it will start finding its space in the market. It's very early days still. But the advantage of our brand portfolio today that's starting with Birla A1, which continues to be the mother brand for our PPC cement and OPC 53, 43. We have added, as we all would recall, StrongCrete that we did a few years ago. Thereafter, we launched OrientGreen about a year back and now Birla A1 Dolphin, which is the, I would say, laddering of the brands. Because from the normal price of PPC, OrientGreen, it is about INR 25 premium, StrongCrete at INR 45 and Dolphin even higher than that. So it's still -- as of now, I think we are -- we have all the brands in our portfolio the way we wanted to create under the brand architecture that we have planned. So that's -- and also, just to sort of make sure because our Birla.A1 brand was being, I would say, used in different logo forms across our brands, so that also we've standardized, we've aligned. And today, we have an aligned identity for Birla.A1 wherever it's used by us. So you would see the change in the bags and the colors and all those things are being done. With the benefit of these new launches and all the good news is that within the trade sales, which we call B2C sales, the percentage of our premium brands put together, which is largely StrongCrete is the biggest obviously, followed by OrientGreen. So fairly, we are in excess of 20%, 21%, 22% in that range is the volume we are selling under the premium brands out of our total trade sales, so which is something which I thought all of you will be happy. And as Birla A1 Dolphin find its place in the market, we do believe that by end of the year, we should be exiting with about 25% premium cement sales with the prices of our premium cement seen are far higher than what the industry has seen from other players. On the quarter per se, we all do know that -- all of us do know that traditionally, Q2 happens to be a relatively soft quarter compared to Q1 because of monsoons. Last year, Q2 was horribly bad for the whole industry. And we all know what we went through. This year, the monsoon, we know, it was early start and monsoon really started off with a bang and also ended strongly towards the end in many parts of the country. But we had a rather lean middle and then we were all getting worried whether we'll have enough rainfall in the country or not. But thankfully, like I said, August, being a worry month from a monsoon's perspective, gave us an opportunity for construction activity to go on, not impacted by heavy monsoons as of the month. So August in this particular quarter was a very strong month, with July and September being not as strong as August. But despite, let's say, the monsoon, which was heavy in periods, our total volume in the quarter is 14.25 lakh tonnes, which is a 15% year-on-year growth. Sequentially, yes, there's a 10% de-growth, which I think is normal from Q1 to Q2. But with 15% growth Y-o-Y, I think we are in line with industry growth in our served markets. And there's no risk of losing any market share despite the fact that we've not added capacity in the meantime, unlike some other players who have added capacity in the markets. In terms of the target for the year, we are still chasing. I think in the previous earnings calls, I've been mentioning that our target for the year would be to be between 63 lakh tonnes to 65 lakh tonnes of cement sold in this particular financial year. We should be in that range, given the fact that we've already done more than 30 lakhs. And to do 33 lakhs, 34 lakhs in the second half should be feasible unless there's a complete surprise in the market. The only thing which has not been good in H1 as a whole, I would say, is that despite such strong demand and 15% growth, the prices in H1 have stayed largely flat. And that's been a bit of a dampener. And because the prices were not stronger, so the sales in Q2 for us, which are at INR 720 crores, are 17% up Y-o-Y. But they are minus 12% Q-on-Q because there was a little dip that we experienced in our realizations from the preceding quarter. At H1 level, we have done total sales of INR 1,550 crores, which is a 16% growth over last year as I'm sure all of you would have seen the numbers. The skew has been towards -- for us in our markets with servicing, that's been more towards B2B sales. And although that skew has gone on, but we've also found some, I would say, relief that in this particular quarter, our B2C sales are again back to being 50%-plus, which had actually in the previous quarter dipped to below 50%. So that's a bit of a relief. And in terms of, I would say, the overall good news that we have is that within the subdued consumer sentiment, I'm talking about trade sales, our B2C sales, we have kept increasing our share of premium products, which should stand us in good stead. And it also perhaps is an evidence that our strategy of having multiple brands at multiple price points with each one brand having its own specific advantage, or as we call it in a marketing jargon, the value proposition for each of these brands is very clearly defined and communicated and delivered to the consumers. So we are quite happy with the work we've been able to do on the premiumization of our cement besides, obviously, using benchmarks for prices which are higher. So that's helping us in terms of maintaining our sales growth and maintaining our profitability compared to what the circumstances otherwise would have dictated. Even B2B sales, although they continue to be higher than what we would like them to be typically in terms of the impact they have on cost, but the relief for us has been that even in the B2B sales, we have managed to still prefer and choose customers who, I would say, respect and prefer our product even when we claim a premium on pricing. So many markets in OPC segment, we are able to get a price where our contributions in OPC continue to be remunerated for us and even better than PPC in many markets. So that's why we -- although we should be selling more of blended cement, but we're not completely unhappy because the market and the large customers have been demanding OPC, and we've been happy to deliver because we are recovering our cost plus. In terms of product mix, the PPC cement in Q2 -- PPC, I'm including -- I shouldn't call it PPC, I would say blended cement, blended cement, which includes our premium brands. And that's as high as 59% versus the unblended cement, which is OPC at about 41%. Market mix-wise in this quarter, again West for us has been a stronger market. And in Q2, out of total sales that we have done, about 64% of our volume has actually gone to West and about 27% in South, which basically is a result of the fact that South, especially the main states for us, which is Telangana and Karnataka and partly Andhra, they continue to see fairly low demand. And if not low demand, they continue to see very low prices. And they choose to sell at a price which is higher than what some of these markets are seeing. So in South, it's 27% and balance 9% is largely Madhya Pradesh, the Central India market. Efficiencies, actually, we continue to maintain our efficiencies quite well. We continue to do at the company entity level, including all our old plants and new plants put together. Our power consumption stays at about 62, 63 units per tonne. Our heat consumption, we managed to maintain at about, I would say, under 690, whereas the newer plants being significantly lower than that. So that's on the cost side. On realization front, in Q2, I would say we have a realization of little under INR 5,050 and at H1 level at about INR 5,100 per tonne. And we will call them largely flat. There could be a fraction of a percent up and down but largely flat. EBITDA, as all of you have seen for Q2, has been at INR 88 crores. Given the fact that last year was extremely poor, and we had an EBITDA of nearly INR 37 crores, it looks like 136% growth. But I don't think we should draw too much from the fact that 136% growth because we do have the benefit of the low base last year of only INR 37 crores, which is one of the worst quarters that we saw. For Q2, EBITDA per tonne, it is at about INR 620 a tonne in Q2, which last year in Q2 had fallen to under INR 300 a tonne. We obviously on per tonne basis have more than doubled. Sequentially, let's say, we are a little lower at about INR 620 in Q2 because in Q1, we were at about INR 650 a tonne. So that's a bit of a fall, but it does happen when you have lower volumes. And that's why we operate -- the lower operating leverage was there. So it has a little bit of decline there. Power and fuel costs for us have come down, as you would have seen, down to about INR 1,508 versus last year of INR 1,647. And even sequentially, there's a lower power and fuel costs. And this is despite the fact that power costs, actually we are combining power and fuel and reporting a decline. But the fact is power cost, I think, for us, it has gone up. And I'm sure it will be true of most of the industry. Because for power, when we are using our captive power plants, we use domestic coal, where we know Coal India and Singareni have been increasing their prices and also supplying very poor-quality coal. So that there -- that has led to about 30% -- sorry, about INR 30 per unit cost of power to us at least. That means the fuel side, we have savings which are bigger. Another reason for power costs being higher is also because of some of the states, I'm sure you've gathered, have been changing their rules of supply and increasing their, if not the cost per unit, at least a fixed cost for staying connected to them, which obviously we have to recover from whatever volumes we do. So as a part of, I would say, the mix in power, even if you don't use, the fixed cost of being connected to the grid keeps going up. And I think that the state electricity boards do to maintain their own profitability, I would say. The domestic coal, as we know, Coal India and Singareni have been announcing higher prices despite the fact that the overall energy cost basket has been lower this year. But in Chittapur, where we largely end up using the pet coke, there, we've seen a decline of nearly 14% compared to same quarter last year, Q2 last year, 14% decline on pet coke costs used by us. All of you always remain curious about our blended cost of fuel. So we are -- in terms of rupees million kilocalories, we are at about INR 1,800 at our Devapur plant, which largely is driven by domestic coal. And we would be at about INR 2,140, INR 2,150 at Chittapur, which is -- which uses pet coke -- imported pet coke and given the location of Chittapur is far away from the coal mines as you know. But at Chittapur, the blended fuel cost that I'm talking about was lower by about 14% over last year. It's also better at Devapur, largely driven by the fact that we have been changing our fuel mix and trying to maximize the alternative fuels that we have been using. And obviously, as a percentage, they keep going up all the time. So pet coke procurement price improvement, AFR usage being increased and our efficiencies drive that continues. We have seen, I would say, appreciable benefit in the fuel cost in the current year. With the waste heat recovery and with the solar power for which we've taken the approval from the Board and where we announced, I think the capacity that we are putting up for solar power here at Devapur -- sorry, Jalgaon and at Chittapur, we continue to be on track towards using about 50% of renewable power in our operations as we go. At Devapur, unfortunately, we are not in a position to use renewable power because of the state government's policies, which are not making it viable for us to use. So unfortunately, renewable power drive continues to be more at Jalgaon, which is where we started first, and at Chittapur. Devapur, the only renewable power which is on the -- on our agenda is to put up a waste heat recovery plant for which I think we have started the work, and hopefully we'll be finalizing the project for waste heat recovery plant at Devapur as well to reduce the thermal power consumption. In terms of, I think, updates on costs and markets, everything I have already covered. Obviously, curiosity remains on our expansion plans. They continue to be on track, although we know that given the number of steps that we have to go through before we get the environment approvals, many of them are driven by the state governments. And as a result of that, this election that were announced a few weeks ago, will get over the end of this month and the results come out in early December. Telangana government process has been slightly slower than what we had anticipated for the forest clearance. So although it's on track and every step is being taken, but obviously, you know when election happens, what happens to the government process. So there, we are a little, I would say, a couple of months behind schedule. But I was thinking that by January or so, we should be able to take up some manufacturing -- sorry, some construction activity at Devapur. It's looking to be at risk purely because the file for forest clearance has not moved from the state government to central government, although processes and steps are proceeding all the time. For Chittapur as well, we have already received the, what they call, terms of reference, TOR, from the central government for the expansion project at Chittapur. We have already applied to the State Pollution Control Board to conduct the public hearings to grant based on which our environment clearance application will be considered by the Ministry of Environment and Forest. So we are driving that, too. And although we are trying our best, but like I said, a few weeks, a couple of months delays here and there keep happening at every step. But we stay committed to the -- our growth plans that we've announced, and we'll keep doing that. Yes, I've already covered EBITDA in terms of total -- I think most of the things, I've covered so far. But let me open the -- and then if I missed out something, I'm sure that it will come out in the form of questions. Total debt is normally asked for. I think, in terms of term debt, we are down to barely INR 170 crores, which is financing our projects. And variable costs, variable -- sorry, what I'm saying, working capital borrowings from the bank. Recently, we paid for a shipload of pet coke. So obviously, we borrowed some money. The total working capital borrowings would be between INR 90 crores and INR 100 crores as I speak today, which again is a function of when we start using that coal, inventory starts coming down and that working capital keeps jumping up and down, at times, it is negative. At times, we borrow money. But more pertinent debt is the term debt, which, as I mentioned to you, it's under INR 170 crores now. Because in the first half of the year, we repaid about INR 74 crores from what we had borrowed from the banks. That's on the debt, which is other thing that I think that I have not covered so far. So I'll stop now and answer specific questions as they come to me. Thank you very much.

[Operator Instructions] The first question is from the line of Raghav from Asian Markets Securities.

Sir, my question is for the CapEx side. Basically, Devapur expansion primarily is delayed because of the forest clearance. But at the same time, we have applied for a forest clearance for plant as well as the new limestone mine also. Is my understanding, is that correct?

That's right.

Sir, new limestone mines reserve, can you let us know what is the reserve in the new mine? And how much is sufficient for the next -- for the current operations?

See, in the new mines that for which all the clearances have been given, excepting for forest clearance now, which is in the process as I said. Just to give you a perspective, the old mines that we've been using from 1982, from the time we started running the plant, we had only 210 hectares with us. The new mines are 588 hectares, okay? So the limestone reserves in 588 hectares that are coming to us is good enough to run the plant for 40 to 50 years, even after doubling the capacity at Devapur. So there's no worry on the limestone reserves.

Got it, sir. And our plan is still the same, 2 million tonnes clinker at Devapur and the 3 million tonne cement combination, 2 million tonne probably in the MP grinding unit and one in the Devapur itself, cement grinding?

Absolutely correct.

What's the status for MP land for the grinding unit?

MP land for the grinding unit, we are -- let's say, see, as I mentioned to you, these are -- the plan that we are having with state electricity boards who have their own government processes, so there, we have given them our letter in terms of wanting to set up a grinding unit there. After that, as you know, they had to invite competing bids if any other person was willing to put up such a unit and offer them better terms than us. The date for that, as far as we know, for people to submit for any competing bid to come in has expired just this week. And we are now expecting that as the date, no more time available for any competing bid to come in, the Board at their next board meeting will consider our sole proposal, which is available with them to put up the grinding unit. So we are going through the process. We seem to be getting close. If there is a competing bid had come in, I would have been a little worried. But within the deadline, no competing bid has been available. So we should be fine. I think the next board meeting will confirm that our bid is accepted and we'll be allowed to put up a grinding unit there.

And sir, at the Devapur site, do we need more land acquisition for the new clinker line or we have the sufficient land for the current?

No. So on the Line-IV, as we call it, Devapur...

Yes, okay, Line-IV, right.

We didn't want to go out of our current premises that we own. Because as you know, Devapur is in a tribal forest area. Any new land acquisition creates problems. So what we have done is, we had -- when the land was enough and we had only one line, we put up a colony and school without really thinking that we might need more space. So what we are doing is, as we speak, in preparation for Line-IV, we already started the work on relocating the -- we are building a section within the existing land for the new colony, which earlier, the colony was either ground floor -- in fact, most of it is just ground floor. So we are actually converting that one plus four floors in a more compact area but giving new apartments to our employees. And that land will become -- we will be able to put up Line-IV. So we are managing within the land with no acquisition. But we are spending money on building a new part of the colony as new colony.

If my understanding is correct, can we put up this Devapur plus the MP project within the INR 2,000 crores?

Yes.

What's your estimate?

I mean, I've given you that we have the land with us within which that we will build the overall cost of doing that. You said it's within INR 2,000 crores, we had said it's within INR 2,000 crores, I have already answered. Our own number is INR 1,950 crores. That's why I said, yes, it's within INR 2,000 crores.

Next question is from line of Aashav Patel from Molecule Ventures.

Sir, we have seen price rise and both -- all our peers have also been reporting the numbers. And Q-o-Q, there have been improvements slightly in realization and more so with regards to the power and fuel cost softening, which you also mentioned. So many companies are already posting numbers which are much better than Q1. But our numbers were, in fact, slightly lower than Q2 when it comes to absolute EBITDA. So can you please sort of clarify what led there?

You mean to say our number from Q1 to Q2 are lower?

Yes, sir.

Yes. Okay, no, that -- I mean, for us, it happens every year. If you look at our costs, compared to last year, the only difference in last year, this quarter didn't have any major maintenance cost. This year, we've undertaken one more kiln maintenance. So that gets added to the total cost, right? In terms of fuel costs, sequentially also, they have fallen. But we have other costs which have been incurred.

Sir, can you please quantify roughly the maintenance cost for this quarter?

Maintenance costs in Q2, one has the regular maintenance cost that we don't even count, the costs which are periodic. So as we mentioned, in Q1, we had undertaken the maintenance of one kiln at Chittapur, which obviously was a long pending thing. And that also costed a lot more money for us to transfer clinker from Devapur to Chittapur to feed the market. In this particular thing -- this particular quarter, we've undertaken one line at Devapur under maintenance, which was completed in Q2. And there's just one more that has been completed in the month of October that will come in Q3. Each kiln, typically the cost of annual shutdown, the maintenance shutdown which is ballpark INR 10 crores, at times, INR 9 crores, at times, INR 11 crores, INR 12 crores, in that range, but ballpark 10 crores, depending on the size of the kiln.

Sure, sir. Got it. Sir, only one constructive feedback from my side would be to please after -- along with the results, you can also post all the operating metrics because that eats up a lot of time in con call and it is very difficult for us analysts to note down all the key metrics which are mentioned by you, sir.

Okay, thanks. I take note of that.

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

Am I audible?

Yes, you're audible.

So the blended fuel cost, can we consider it for this quarter around INR 2, 1.8, 2.15 simple average?

You can do it. But unfortunately, I can't use that. I'll go plant-by-plant because supplies are different. But the numbers that I've read out to you are the numbers. Obviously, if the production is similar, you can call the average. At times, Devapur produces a lot more capacity and Devapur is more. So I'm not calculating weighted average. But yes, largely, you can take a number.

Okay. And are you looking at any savings quarter-on-quarter in Q3 if at all?

Well, honestly, even the previous question that came that people are seeing lower fuel costs, while lower fuel costs, we did see for ourselves also that as I have reported that power and fuel cost is lower. Within that, fuel cost is even lower if we take away the increase in power cost, right? But lately, if you people have noticed, the international pet coke prices have been firming up again, all of you are aware of that, right? So given the fact that the later procurement of pet coke from the international markets is happening at a higher price, that will start impacting the costs in the other direction. I mean, all of you are aware of that, right? Similarly, price increases from Coal India and -- or by pet coke increases by whether -- Reliance is actually the company which announces the price increases. So this particular month again, they've increased the pet coke prices once again. You've seen that, right? That, you have to factor in.

Okay. So incrementally, your savings will more accrue from the WHR Q3 and Q4 and the solar power, that will be...

And waste heat recovery and to the extent we can improve the fuel mix using alternative fuels.

Okay. And sir, how much was -- yes, 12%, it was in Q1. How much was that in Q2? And what is the target for this year by FY end of this year?

At Devapur, we would want to use -- if you -- on a volumetric basis, we would be targeting 20%. But on thermal substitution, it will be about 12%, 13%. At Devapur, we are struggling to get enough opportunity in fuel, which makes sense. So there, we are using lesser volume and thermal -- TSR substitution. But we are getting at a lower price because there, we're using more of a municipal waste and RDF, the different fuel profiles at both our plants, given the location and given what alternate fuels are available, right? So on a blended basis, our TSR target does remain 11%, 12% on thermal substitution, much more at Devapur and less so at Chittapur.

Okay. So earlier also, the numbers which you have shared, 12%, 13% in Q4, Q1, they are also the blended TSR only, right?

Look, anything which is looking closer to 20% is based on volumes, in thermal substitution where typically it will be low two digits.

Okay. Understood, sir. That's great. And on the CapEx, you detailed out that there are multiple approvals which are pending. And once they come through, the work will start. So any ballpark because first half, the CapEx has been subpar versus your annual CapEx guidance. So as we -- in October, mid-November, what is the current understanding for the second half, how much CapEx you're looking at for this financial year?

Rajesh, given the way, situation that we have today is we -- it doesn't seem as if in this particular quarter, we will able to spend anything significant on CapEx for expansion of capacity, right? And in the last quarter also, even if we start some work, it will be fairly moderate. So CapEx is -- I mean, unfortunately, every quarter, we report the same thing that CapEx is slightly behind schedule. I don't think there's any significant amount that we will be able to spend this year. But we are preparing everything to make sure that as soon as possible, if we can start in January, February, March, early next year, as soon as we have the approvals in hand, we will go full steam ahead. And obviously, that would mean that what we had forecasted for this year gets shifted to the next financial year. But it's a month-after-month issue, it's not a question of year-to-year. Year-to-year looks as if we're going from FY '24 to FY '25. But we had always said that it will be more in second half, which unfortunately is again disappointingly for us also is not happening at the speed at which we wanted. Because we do need capacity, as I mentioned. So let me work that through based on the approvals that I get. And in a few weeks' time, if required, I'll inform all of you as to when are we -- at the moment, the approvals come, I'll send out information to all of you. And then I can talk about specific dates for starting work.

[Operator Instructions] Next question is from the line of Sanjay Nandi from VT Capital.

Sir, just one question from my side. Sir, can you please guide us like what kind of incremental price hikes has happened in the last like 40 days from the exit of the September month in our areas of operations?

On our markets, we've been able to see a price increase of nearly INR 20 a bag or INR 400 a tonne gross of GST. Out of that, if you take away GST, you'll perhaps see more around INR 300 a tonne. But INR 20 per bag on an average for us is the impact. Obviously, the impact is slightly higher in southern markets because there, the prices are very low. In markets like Maharashtra, where prices are not that low, the impact is a little lower. But I'm giving you a blended information.

[Operator Instructions] So we have the next question from the line of Navin Sahadeo from ICICI Securities.

Sir, you mentioned that environment clearance and other approvals are being sought for the expansion announced, which is Chittapur. So just to understand, once we get all these approvals, will it be fair to expect the commissioning in about 15 months to 18 months time frame? Or do you think it can take slightly higher?

No, not more than 18 months at all. I said not longer than 18 months. We will try and do some part of it within 15 months, whereas the split grinding unit that we are saying to support Devapur, that may take about 18 months because greenfield always takes longer, brownfields can be done within 15 months.

Next question is from the line of Parth from Investec.

Sir, you hinted that Coal India have increased prices in the last few months and even Reliance pet coke prices have gone up. Sir, what sort of inventory are we carrying? How much time will it last for? And the second question is like do we see power and fuel cost, what the increase of these prices would have its impact in Q3 or Q4?

It depends on each company. Your first question actually has the answer hidden within itself. A company like us, we actually procured a shipload of pet coke on international market just a few weeks ago, which landed at our place. That will -- we managed to buy at about, I would say, $131 a tonne, right? Already, the prices of those things are looking higher. So somebody like us who's covered for nearly 3 months, so we may -- it will be higher than what we were using in Q2 but still lower than what the market prices are, okay? When we start booking coal for Q4, we'll have to see at that time what the market prices are. Because pet coke prices in international markets have been going up and down. So fortunately, we ended up buying two shiploads at a cost which is now proving to be favorable to us. And it will depend. So if other companies have booked their coal for 2, 3 months, they're already at a lower price, they will benefit. If some people are buying coal now at a higher price, obviously, they will see the impact within Q3. Hopefully, we will see marginal impact in Q3 on our costs. But significant -- if there's any impact, that we will know only when we have the time to book the new pet coke shipped. It's a moving cost always as you know.

Right. So the new shipload will have some impact in Q3 and some in Q4, I believe?

Correct.

Okay. And about coal, even coal, how much -- if you could just help us understand what would be the change over maybe Q2 versus in the last 1 month?

No, the impact largely on in domestic fuel price that we've seen. In Q2, for us, it was about 8% over last year. On a sequential basis, it's thankfully very marginal.

Okay. So coal is marginal and maybe pet coke is much higher?

Yes. No, pet coke actually so far has been lower than last year. See, if you remember, around this time, pet coke prices in international market last year started coming down. Then we saw Q1, Q2, we've seen significant savings over last year, right? Now when the prices are going up, let's see how far they go compared to last year. And that will determine the cost that we have to book.

Next question is from the line of Raghav from Asian Markets Securities.

Sir, I wanted to understand, do we have any plan to set up WHRS in Devapur also at any line?

I did speak in my opening remarks that the only renewable power at Devapur we can plan for is waste heat recovery. For that, we have our internal project report already done. And we are, in a sense, already talking most probably to the vendors who are doing the waste heat recovery plant to -- they started visiting our sites for them to submit commercial bids to us. So yes, it's very much on. We would like to set it up at least on Line-III, which seems to be a line where the layout and all permits have good access to the waste heat. We are also looking at Line-I because it's an old line and the waste heat is higher. But somehow the CapEx of putting it up on Line-I is making me a little, I would say, confused whether it should be -- but Line-III, certainly, we'll put up a waste heat recovery plant, hopefully, on Line-I as well. I think the challenge comes in is that Line-I, when I put it up, the CapEx is higher than what it will be for Line-III. And that increases my payback period. Typically, we want the payback on waste recovery within 3 years. If I go on Line-I, it may go to about 5 years, which is what is worrying me. So although the benefit is there, I'm still debating. Line-III for sure, Line-I, maybe, yes. But Line-IV, certainly, when we put up the Line-IV, we'll build it along with the waste heat recovery plant for Line-IV separately.

Got it, sir. And sir, last question for Chittapur fuel consumption rate and the Devapur, which is primarily on the Singareni Collieries, on the 1,000 per kilocal, what is the difference between primarily within the Chittapur and the Devapur generally?

As I mentioned to you, in Q2, it's been more than INR 200 or 0.2 as many of you calculated. [indiscernible] it was 1,800 and 2,000-plus at Chittapur as I read out to you. That's a blended cost of fuel at both the plants. Devapur continues to be lower fuel cost purely because we have the freight cost, which is much lower. Even if the fuel costs go up, thankfully our location in Devapur, which is close to Singareni coal mines, makes it cheaper for us purely because freight cost for us is lower at Devapur. Please remember that. It's not about the procurement cost of coal, it's about the blended cost of coal.

Next question is from the line of Uttam Kumar Srimal from Axis Securities.

Sir, you have guided for this year, volume guidance of around 6.3 million to 6.4 million tonnes. That comes around 12% on a Y-o-Y basis. So what would we be, sir, our guidance for volume in FY '25? We should take the same, 10%, 12%?

Why would it be the same? We would look for another 10% growth in FY '25, it goes without saying. We have the capacity to go up beyond 6.5 million, right? We have 8.5 million tonne capacity. We certainly will be looking at another -- I mean, if the industry growth rate is around 10%, we will also again go for 10% for sure.

As there are no further questions, I will now hand the conference over to management for closing comments.

Thank you. Closing comments, always because I do so much in opening comments, the closing comment largely happens to be just a very heartfelt thanks to all of you who keep showing their interest in our company and ask us very relevant and constructive questions. Thank you. Constructive suggestion also has come today in terms of sharing more KPI-led information through the circulation. We'll consider that, too. And before finishing, I once again want to wish all of you a very happy and prosperous Dhanteras. I'll repeat, even while you acquire more gold, let's also try and acquire a heart of gold, and all the very best wishes for the Diwali festival. Thank you very much.

Thank you very much. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.

Thank you. Thank you, everyone. Thank you.