Orient Cement Limited (ORIENTCEM) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Orient Cement Q4 FY '24 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. Thank you, and over to you, sir.

Thank you, Manisha. Good morning, everyone. On behalf of ICICI Securities, I welcome you all to the Q4 FY '24 earnings call of Orient Cement. Today, we have with us from the management, Mr. Deepak Khetrapal, who is the Managing Director. Without any further ado, I hand over the call to Mr. Khetrapal for his opening comments, followed by the interactive Q&A. Over to you, sir.

[indiscernible] and I must say, as always, I'm grateful to all of you for your interest in our company and to continue to find time to be with us on this call. Thank you. Coming to the earnings for the quarter and for the full year revenue. I'm sure all of you would have gone through the results and seen the opinion about them. The way we see the quarter that has gone past is like the -- for us, obviously, it's been a challenging quarter. There is no doubt about it. Challenging in the sense that the typical volume push and volume -- rather the demand pool that we expect in Q4 in the market remain the nuisance. I would say January, February was not so bad, but the month of March seem to be probably the most difficult month. Not that we had lower volumes than last year, the challenge was in terms of very little growth or demand available in the markets that we service. And to that extent, because the demand was not there, we also saw the pricing impact. March [ slide ] in prices is what I would call [indiscernible] throughout the month, almost every single day, they see the prices get falling. And by the time you're exiting the month of March -- 31st March, the prices are nothing to talk about. So it impacted I would say, our earnings, our EBITDA in the month of March, If you ask me how was -- internally how was Jan-Feb for us, the results are pretty good. Where we fell short over last year in terms of our own expectations for growth was largely in the month of March. And because of the momentum that we were carrying from Jan-Feb, the overall quarter doesn't look as bad as March would have immediately looked. Jan-Feb also were equally [indiscernible]. So in terms -- I mean, frankly, it didn't turn out to be the usual Q4 [indiscernible] volumes and better prices, it didn't happen, all of us saw it. Our volumes in Q4 have been -- I will call them, flat, very, very marginal growth. And the realization for Q4 also, I think in our case, at least, now that we've seen the results coming out for a few competitors, at least we are one of those companies which had the realization in Q4 as a whole, slightly higher than realization in Q4 last year, whereas we've seen many companies sitting on that as well. In terms of volumes, sequentially, we saw a fairly strong growth. We had 24% higher than Q3 volumes. But in these sequential, when we see the growth was there [indiscernible] very surprisingly, the realizations went down for us by 5% and for some of our competitors even more than 5%, which is where the real pain point really comes. For the full year, again -- sorry, volume for the quarter itself has [ 17.2 lakh tonnes ] that we reported already. [indiscernible] overall company level at 81% utilization. But really speaking, our challenge has been basically our old plant at Devapur because our Chittapur, Karnataka plant once again has operated at more than 100% capacity. [indiscernible] has been fairly okay, although [indiscernible] pressure was there earlier, but I think we managed to sort of claw back our market share in [indiscernible] market, [indiscernible]. But there are 2 continents which struggle in terms of overall capacity utilization there, I'll come to the reasoning that, like I said, the overall 81% that we do have one of our most important ones [indiscernible] to be doing more than 100% capacity utilization. And that will bring us to the need for immediate capacity addition in due course, I'll come to that as well. The net revenue, as you've seen, are at INR 894, INR 895 crores, it's 1.6% higher. It's definitely better than volume growth because we had a higher blended realization, and that largely has been contributed by the share of premium brands that we have in the market, and they keep us -- keep getting us, I would say, somewhat higher value growth compared to the volume growth. The realizations for the quarter blended basis at [indiscernible]. Sequentially, there was, as I mentioned there is a drop of nearly 5% from 5,400 that we had in the preceding quarter. And over last year, we are higher just by [ 1% ]. At the entire INR 155 crores, INR 156 crores is up from INR 117 crores in Q3, again a significant jump. But on a year-on-year basis, the growth at [indiscernible]. It's a modest growth, I would say, just about INR 10 crores, INR 12 crores overall. But the important part here is that we have growth in EBITDA, which again, like I said, the industry, some of the players that we see, they managed to perhaps do a volume growth much better than us. But the improvement in profitability or all of the improvement in sales came at the cost of profitability because profitability in some cases have gone down despite higher volumes. And I'm talking about gross EBITDA level. The EBITDA per tonne level, we are definitely -- and the way we calculate. I know there's a difference between how analyst calculate, we are -- in our calculations, and we do it every year. So we are calculating our EBITDA per tonne in [indiscernible], which is higher than [indiscernible] from the preceding quarter, [ INR 843, ] which was the quarter, same quarter last year. Roughly the growth is about [ INR 62 ] tonnes in our EBITDA -- EBITDA per tonne over Q3 and over Q4 FY 2023 as well. And given the kind of growth that we have had in EBITDA in the first 2 quarters, the full year EBITDA you would have seen over INR 465 crores, which is higher from the previous year of INR 377 crores, which reflects approximately 23%. With volumes, they've been going up 6%. And that's the important part. Our volume growth of over 6% but the EBITDA growth is at 23%. And the annual per tonne EBITDA is at [ INR 758 ], which is higher by more than INR 100 over the full year FY '23. I'll just highlight in terms of what happened in Q3 and also roughly the full year. Revenues for the full year, you've seen, including our other income is INR 3,200 crores, roughly, this is an 8.5% growth. Like I said, the volume growth in Q3, if you people recall, was at 9%, but with lack of growth in Q4, the total volume for the year is down to growth of just about 6%. In terms of the indications that we have given to the markets, we were actually -- we ended up doing about 97% of the volume that we have indicated to the market that will do about 6.3 million tonnes, we ended up short by about [ 3-odd percent ]. Realization for the -- in the full year are better by about INR 86 per tonne or 1.6%. And like I said, the EBITDA per tonne was already -- has gained more than INR 100 despite not so great volumes or prices. And as I mentioned to you earlier, the large, I would say, dent in our performance as we see has come from -- our Devapur plant is largely servicing markets, which are in Telangana and also in some parts of Maharashtra, mainly the [indiscernible] markets, which are service buyers from our Devapur plants. These markets have been underperforming. Telangana, North Telangana market, I think has underperformed for everyone. I think in the last 2 quarters, and [indiscernible] this trend that Telangana demand somehow has not been where it needs to be. And in [indiscernible], we have the other challenge of the new capacity, new competition having come -- come up and some of them are giving their incentives to -- if I can call, the subsidized customers, they're serving the [indiscernible] which make it impossible for players like us who worry about the profitability to be able to compete with them and sell more. So there is a -- to reduce the pain point, then we'll have to find some solution how we utilize that capacity better. And whether the solution will be for us to quickly gain a grinding unit, which takes us a newer market from Devapur [indiscernible] itself. So that's what we are working on the plans. Just to sort of flag it. In terms of -- if you look at pure Q4, as everybody would expect sequentially over Q3, Telangana also has improved by 12%. It's not grown in Q4 over Q3. But if we look at the real Q4 last year, we're down 26% in Telegana itself. So that's one of the flags. The largest market, Maharashtra, which actually is becoming larger by -- with every month and with every day passing. We -- in Maharashtra, we have grown 32% quarter-on-quarter there sequentially. And we've also grown 13% year-on-year in this particular quarter. And in Maharashtra, the main consumption centers are there, and they are actually taking a lot of our cement, which we are happy about. And fortunately, like I said, those markets are helping us in terms of retaining the volumes where they are and growing there. And the impact on that, as you would see, would perhaps -- we have seen in terms of our freight cost switching to have gone up because the freight for us within the Telangana market, [indiscernible] market is lower than the current markets in which we are selling more of our cement in Maharashtra. The full year sales, you've seen our [indiscernible] tonnes, which I mentioned is nearly 3% lower than what we would have wanted them to be, they're below our expectation and -- the -- I mean, I've already mentioned the Q3 sales was 9% higher, which was in line with the industry but I think in Q4, we're falling behind [indiscernible]. I'm quite sure that the growth in our own markets that we have are almost flat in line with other players in other markets. I think if we compare our performance in the industry, in our markets and I don't think we ever saw. But definitely, [ pan-India ] level, 6% growth on the whole mix would be greater than Europe [indiscernible] industry [ pan-India ] [indiscernible]. For us, we -- due to our, let's say, more sale happening in Maharashtra and including in [indiscernible] markets, that has pushed us into -- our B2B sales have kept going higher compared to what we've done traditionally, I would say, a few quarters back. In Q4, per say, they are at 55% and slightly lower than what we had reported in Q3 when we had actually gone up to 56%. And within that, the good news is that we are beginning to sell more of our blended cement also in the B2B market, and we are able to satisfy a few of our very important customers to buy our concrete premium brand, which is [indiscernible], it is the blended cement. And the result despite the B2B sales being 55%, our OTC sales are at 46% in Q4, which was 48% in the previous quarter. And last year, it was [ 43%, ] right? So it's been, let's say, I would say, change towards OTC mainly because large customers in Mumbai and Pune somehow remain OTC buyers. The one good thing that I would like to just mention here, we are one of the few companies who also got a product approved for the bullet-train project that [indiscernible] in Mumbai.[indiscernible]. The people who have the contract to building the train, they will be buying cement from us and with some of them, we already have been sort of in touch and we agreed on a supply of cement to the bullet-train project in that market. It Is a very prestigious -- rather than we are really delighted that we'll be participating in that project as well. On the premium brand, I keep mentioning all the time. The good news here is that in this particular year, we managed to increase or rather grow our premium brand volumes by 31% in the year, and they are now in the region of 32% of [indiscernible] sales, and they are improving consistently. But I would like to remind everyone is that when we see our premium cement, the premium that we charge on our premium sales or PPC is [indiscernible] of the highest in the market by any other brand. I'll Just [indiscernible] on [indiscernible], we do charge a premium INR 45 over -- per bag over PPC. In [indiscernible], actually, we've taken it further. We are in excess of INR 55 a bag over PPC. [indiscernible]. So there the different price points with different value propositions. But each of these 3 cements have been [indiscernible] to meet specific demand of the consumers. And because we are selling them with enough support of the ground level, we are able to get margins like this and still keep growing by 31% growth year-on-year in premium cements is very, very heartening for all of us. The other good part is that we've reported that the first phase of our [indiscernible] power Karnataka, Chittapur plant has been commissioned in the second -- or the second half of the financial year. The second phase of that, which has been pending has finally got commissioned on 29th of April, just a couple of days back. And within that, the total availability apart from there will exceed 10 megawatts of power, which is great news for us. And this investment, as we know, is usually beneficial for us. And if I were to quantify just the gain -- just from the first phase of [indiscernible] recovery, in Q4 itself beginning for us has been over INR 11 crores. And Phase 2, obviously, will increase the savings for the [indiscernible], how beneficial this investment is. We do expect that the annual gain from waste heat recovery for us would be easily be minimum INR 50 crores, INR 55 crores a year. We're also in a way expecting the supply of solar power. If the investors recall, we have signed up in the solar power players to put up a group on what we call the captive projects. So [indiscernible] is going to be getting more solar power within the month of May. And I think we -- our Karnataka, Chittapur plant will start getting solar power in the month of June. So in this particular quarter, those investments will also start paying off, which should make our power that we use a lot more green and I think also cost beneficial from the shareholders' perspective. For Q4 per se, the [ power and fuel ] costs are at [ INR 39.50 per tonne ], as you would have seen, and they're down from [ INR 14.21 ] in the preceding quarter and from [ INR 15.71 ] in the Q4 of last year. Now here is an interesting point. As I mentioned to you, our B2B sales and OPC has been going up, and as all of you would know, OPC actually -- because it's not blended, it actually is -- it consumes more power and it consumes more [indiscernible]. The impact of that, we've been able to mitigate through improving our efficiency and also through now the contribution is sort of keep increasing from the [indiscernible] plant. In terms of fuel mix that all of you always remain interested in, by weight our fuel mix in the quarter has been around 45%, I would say, 45% domestic coal, 34% pet coke and alternative fuels, 21%. And for the year as a whole, the same domestic coal is 49%, pet coke 33%, and AFR is about 18%. So that's our fuel mix by weight. In terms of blended fuel costs, and the inquiry always come for the company as a whole, in Q4 has been [ INR 17.76 ] [indiscernible] but I think many of you are more used to seeing 1.776 down from 2.113 last year. Even sequentially, in the preceding quarter, it was at 1.890. So those are the numbers that I know always, there are questions around them. So I thought I give you upfront. The waste heat recovery and the solar power, which is already existing and operating for the last few years to build our plan, we do the removal [indiscernible] in Q4 has actually become 23% of power consumed in Q4, and 11% from last year. As I did mention with the second phase kicking in and the more solar power coming in at both at the [indiscernible] plant and Chittapur plant, this obviously will increase even further. But in Q4, it is at 23%, it was just 11% last year in Q4. In terms of alternate fuel, I already told you a fuel mix like that we've had. In terms of market mix, we -- as I mentioned, our growth in West, which has been meeting of the Southern India markets today. In Q4 we end up at West being, let's say, market where you sold 67% of total volumes. In size, it has come down from over 27% to 24%. And balance 9% [indiscernible] largely in [indiscernible] some parts out of these levels that continues to be constant. In terms of our other, I would say, the consistent performance in terms of efficiency we gained, I mean, there is not too much room left for us to further improve on our either power consumption per tonne of some [indiscernible] per tonne, but I think we keep making some efforts on smaller to [indiscernible] keep happening all the time on a continuous basis. In terms of costs, I have already mentioned, people have seen. But in that, again, one of the key elements that we have to remember is, while pet coke prices have been softer and obviously the profitability we have gained from that, the domestic coal prices, which forms a significant part of our [indiscernible] because our Devapur plant, which is dependent on domestic coal from [indiscernible], those costs actually has been going up rather coming down. So we've been able to achieve the overall blended cost savings in fuel cost despite the further domestic coal is not quite in the same trend. So [indiscernible] that's an important differentiation to keep in mind. And power costs, obviously, the solar and the [indiscernible] coming on the significant savings are there, and that will increase. On freight, as I've mentioned, it's higher, about 5% over the same, I would say, same quarter last year, largely driven by the fact that we are shipping a lot more of our cement to Western India market compared to our Southern Indian markets, which are a little bit closer to our plants. And also some change over [indiscernible] does happen due to the -- some change in the railway [indiscernible] becomes available and things like that. Rail dispatches in Q4 have been in 16%, the same as last year in Q4, but slightly higher in Q3, where it had gone down to 14%. In terms of key highlights, again, I would say, our efficiencies, our mix that is changing, our fuel mix management and most importantly, our premium products sales rising consistently and our sales mix is helping us I think, in main [indiscernible] will be difficult to what the markets pose to the whole industry. That's broadly, I think, on Q4 and the -- I would say, in the full year, how that looks. Quick update on the expansion projects that we've been promising the investor for a long time. Last quarter, I said the public hearings have been scheduled in the month of February. Both at our Chittapur, Karnataka plant and Devapur, Telangana plant public hearing have been held peacefully and successfully. The price has started moving. They need to move from the district headquarters to the pollution control department or who will then forward it to [indiscernible] for processing. I do believe that the [indiscernible] may be held up to the new government that formed in the month of June and the ministers get appointed. But as far as the [indiscernible] that has been done, and now it's a question of who will get the commission. And frankly, with all these new public hearings and all the other, I would say, studies that we had to do when we have a [indiscernible], then typically, it's another just a few weeks when the [indiscernible] very fast process in that application. This is [indiscernible] process. And so I guess sometime in June, we'll try and bend this clearance. And then we can start talking about actual construction activity. So I'll stop here and I'll wait for the questions that come up. And I'll provide more answers to the questions. Thank you.

[Operator Instructions] The first question is from the line of Sumangal Nevatia from Kotak Securities.

My first question is on your opening remarks, you were mentioning that March has been quite brutal and gradually, it was a declining trend. Is it possible to share some more or quantify a little bit in terms of how was March exit prices versus the average of 4Q in our key markets? And how has been April? Have you seen some bit of reversal of this correction in the month of April?

Well, often, I'm not carrying all the details with me when I'm on this call, but obviously, [indiscernible]. The most important part is that the reduction in price in the month of March went down to about INR 15, INR 20 a bad at the time, by the time March ended. As we've been hearing about previous parts. Some people have said that in March, [indiscernible] were the same prices that we had 2 years back. We heard about that. I think more importantly in terms of how April has been. April, because of very soft volumes, we did see some improvement in prices in the first 2 weeks of April. But by the time April ended, I think most of the gain over March have been lost already. And my own fear is that still the demand picks up. And demand as we know, April and even May is going to remain weak due to multiple factors. The most important thing is understanding the elections, which are on, the migrant labor who actually forms the bulk of the construction workers. So they go back to the villages across the [ world ] and when we go back to the village, they don't come back in a hurry, they take their own time. Second is, we are seeing in large parts of India, the heat that is on. It definitely creates additional challenges for the activities to be pursued on the required base. The heat is also leading to some of the markets already feeling the pressures of water supply. And the water supply, if you recall from past years, whenever the water shortages become acute, the liable district authority, which has done construction activity. So election, heat, water scarcity, overall put together, I, personally, am afraid that [indiscernible] would be a softening. And until the demand picks up, any noticeable increase in price, I think is difficult to accept. But certainly, April is better than March. I can tell you overall in the sense that we did get about 2 weeks and as of now, also, if you say our April current price is somewhat better than [indiscernible] March because our [indiscernible] March is very poor. We have somewhat better than that, but very small [indiscernible] in the new markets.

Understood. And this commentary, sir, is more for the South market or both Maharashtra, South, across the region?

I think the overall trend in terms of [indiscernible] across the region slightly a little more acute, but I would say the softness in prices in market [indiscernible] across markets.

Understood. Understood. And sir, you shared the mix of [ West, South, Central ], I believe that was for 4Q. Is it possible to share how was the full year?

Full year I would be -- I think we -- let me just check whether I can provide you. No, I tell you a number, I'll have to again look up, but I think the trend would be somewhat -- I mean when we are saying 67% West in Q4. For the year as a whole also it will be about 64%, 65% [indiscernible]. Maybe 2% more has happened in the Western trade, and that has been taken away from South. 67, 24 might be 65, 26. That's it.

Got it. That's very helpful. Sir, any full year guidance on the volumes for FY...

Full year volume, I think we are -- depending on how the market behaves, Q1 proving to be difficult. If we talk to our industry [indiscernible] everywhere can become 600%. [indiscernible], very poor, [indiscernible] to be somewhat encouraging for all of us. But I guess with -- we always at least when we start the year, we started a lot of not just optimism in the market, but also in terms of the new start, the new [indiscernible] and what we're going to be doing. So I would -- I would say we are winning for 8% growth in the industry, is talking about [ 6, 7, 8 ] [indiscernible] 8% growth.

Got it. And just one last question, if I may. On the expansion. So two things. One, with respect to Rajasthan mines, have you started land acquisition there? And then on our South expansion, you shared that June is where you can basically start discussing about construction activity. So any full year guidance on CapEx? And I mean I believe the first year would be largely announcement and ordering. So any sense on guidance on CapEx for FY '25?

All things put together, I would like to frankly [indiscernible] as a company to spend around INR 1,000 crores within the financial year '25, made up largely because as I said, as the [indiscernible] is going to happen around June, in the meantime, we will always be -- obviously getting up for completing our own internal work in terms of the consideration, the equipment and maybe floating a tender and getting the quotation in also. So the [indiscernible] in the orders. . We did not close the orders before the [indiscernible], but I think rest of the activities internally, we've been completing. So as a result of that, at the Chittapur expansion, I would say, around INR 500 crores of [indiscernible] I would expect to happen within this financial year. Same thing, we progress with our [indiscernible] where we had been impacted, power generation organization. The Board had cleared the proposal, the Energy Minister also has signed [indiscernible]. One little change in terms of what they impose, which we are negotiating, we'll sort that out hopefully in the next 2, 3 weeks, and then [indiscernible]. That happened, actually, we should be able to start some work on these. [indiscernible] corporation. So that is the another, I would say, INR 100 to INR 200 crores and balance will be divided about INR 150 crores I've been saying would go towards with what is clearance for the [indiscernible]. And again, INR 100 crores around Rajasthan land acquisition. So that's my current, I would say, condition to spend money so that our capacity addition start coming together in FY '26.

Okay. So we've not started any land acquisition so far?

We started negotiations, as you know initially quoations come at all kinds of crazy prices [indiscernible]. If people are talking about the agricultural land being available at the [indiscernible] and then in a small activity, because the first quotation is frightening if you go by them. So -- and then that processis normal, every time we go [indiscernible] process. Have we acquired any land at this time? No, but we are in [indiscernible] discussions.

The next question is from the line of Amit Murarka from Axis Capital.

Just on pricing, what you mentioned that the pricing fell continuously and what we understand is that even the price hike attempts in April have not been too successful. So I was just wondering like where do we go from here and now probably a month down the line, we'll be staring at monsoons. So how do you think pricing should pan out in this context of a sharp decline earlier and now still struggling to take price hikes?

Well, Amit, the honest [indiscernible] answer, where do we go as an industry, we had no choice where we go. It's all driven by the market demand and market supply, we have to take whatever it is. We can't go anywhere. We are part and parcel of the cement industry. So then your question is where do we go? I don't know. With the industry. We can't go. Investors can go somewhere else, not people who run the business.

I mean, wanting to kind of understand your perspective. And I know that this industry is a thing. But I mean, Q4 generally, it was a good quarter for volume and to the point that a lot of companies reported 90% plus utilization and still pricing was weak. So which is what is a bit surprising to see. So I was just trying to understand your view in that context, like how do you think it will pan out? And particularly, given that monsoon will come 1, 1.5 months so if...

Amit, my personal view is that expecting a price increase, it's still about mid-June, but it's not realistic. While the fear of monsoon beginning does remain, but monsoon also has seen pricing relative to that time to become better, which is fine with us. And at least as we start gaining over what we had in the previous monsoon, would be such a good sign. And I think, in fact, I don't know whether you heard in the morning, I was on CNBC, and there's also same question [indiscernible]. When have we been able to see consistent trends in the [indiscernible] on this price in the market. Our challenges in this industry. And my question very simple is who could have predicted that the March price will keep sliding as in despite the growth that you mentioned? Who could have predicted? Which [indiscernible] tells you that in March the prices will be like this? For us to extrapolate trends has been very difficult. It's more from the perspective of saying, so where is the industry and where is the, let's say, likelihood have we been able to -- being able to expect some increase in prices. And I mentioned is post elections, post the government formation. And currently, I think the large consensus is that there will be stability at the political leadership level. So we are hopeful that as the stability comes in and the government after the election gets back to normal course, demand should pick up. And typically, again, in March, it didn't happen, but it can't continuously keep happening the way March was. And that's where the hope is coming, but March became pathetically low. And we know as an industry that it doesn't help anyone.

And also on volume, like generally, actually, volume was also supported by higher activity on the infrastructure side and mostly, it's expected that there will be some slowdown in that or at least the base itself is quite high. So is it fair to think that the volume growth from here will be kind of mid-single digits or possibly even lower in the near term? Or you based on the undercurrent or, let's say, [indiscernible] real estate pickup there. Do you expect that growth should continue to trend higher? So also some thoughts on that?

So, Amit, again, what I think all of you also have got in the industry growth is likely to [ 6% to 8% ]. We are definitely talking single digits. I don't think we have heard in the industry that the industry will grow in double digits. When said, 6 to 8, the number of 6 itself tells you what the mood is, isn't it? Because when we talk in some industry next year, how much should we go by 6%. It's unheard of. So obviously, the mood right now maybe it is somber. . Let's hope that post the monsoon, water availability season becoming better. And all the, let's say, announcement that we had from our Prime Minister, assuming that he will be back in power. He's actually been promising a lot more of activity. And I mean in some forums where we came in there -- I'm talking about business for over year, it is very clearly to [indiscernible]. And we will get a huge, huge, huge announcements from the government to encourage the economic activity. So we are all hopeful that those promises are kept up, and we are able to participate in the growth.

And the last question is on the Rajasthan plant. I don't know it's already discussed, but any update on that?

Update only that, as we've mentioned for a long time, for some reason, government authority does not reduce the [indiscernible]. Supplement mining [indiscernible] lease has been signed but it was not getting registered, which was coming in the way of acquiring them also. So that is registered now. That happened during the Q4. And now that's why we could very seriously start discussion with some of the large holders of land because if you start doing every small holder, it takes too long. So there are a couple of opportunities that people who have large chunks of land. So there's a negotiation with them, Hopefully, we will be able to start closing very soon. But as of now, now we are still in discussions.

The next question is from the line of Anupama Bhootra from Spark Capital.

I just wanted to ask if there any plants that [indiscernible]?

Any?

Plant maintenance.

Plant maintenance. Plant maintenance is a regular activity, which needs to happen every year. Are there any schedule? Of course, there scheduled They are part of -- part and parcel for any operations. And during the year, that is spread out, typically, there will be about 3 periods, which will [indiscernible] maintenance in the year out of the [ 44 ] that we have. And they will be scheduled, 1 product will be happening in the first quarter itself and after that, there will be 2 more takeup in more towards the second half.

The next question is from the line of Keshav Lahoti from HDFC Securities.

Some sense on how it will be the fuel cost in upcoming quarters?

Fuel costs in the upcoming quarter. And look, as of now, I think the prices have been, I would say, staying a little bit soft and stable growth. We're not seeing them rising in a hurry, but it also could be due to the low demand that the industry will have in case the demand for cement stays low. Obviously, the [indiscernible] production slows down and that puts pressure on pet coke prices. Domestic coal prices is beyond anybody's comprehension to indicate how -- the miners were largely public that the company, how will they behave. But I personally think the fuel costs should stay benign in this financial year but [indiscernible] quarters.

Got it. And what about Q1? Should we expect some relief in fuel cost?

As -- look, in Q1, it depends on -- it's -- I am going to be largely -- we as a company are going to be using the pet coke supply, which arrived with us towards end of March. So in the current quarter, we will be consuming pet coke that have already bought. The coal prices as of now are stable. So for us, no. But if there are -- I believe there is a -- there has been a decrease over $10 per tonne of [indiscernible] pet coke prices from the time we bought the coal and somebody ordering now. But the [indiscernible] somebody ordering now will not get the coal for 4 to 6 weeks, right, because the ship loads of coal coming in 4 to 6 [indiscernible] typical time from time, [indiscernible]. So my own sense is, unless somebody has ordered already 4, 5 weeks back at a lower price of $10 by $10, that may come in for some of the players, but it's all a function of how their fuel stock was around in March. We had a full ship loaded, which had arrived as [indiscernible] we need to consume that in the current quarter.

Okay. Got it. So fuel cost for Orient should be similar in Q1 like Q4.

Correct.

Got it. And on premium cement, we have a target to reach 25%. So should we expect by year-end or maybe earlier?

We already have done 22% in Q4. So yes, definitely 25% should happen in FY '25, absolutely. We are very close to that. I mean, we're actually making faster progress than everybody is expecting from us.

Understood. One last question from my side. If the cement prices stays over here during the entire quarter, should we expect a decline in like 4% in this quarter Q-on-Q?

Sorry, come again? A 4% decline from the Q4 prices?

Yes.

I hope not, that's certainly not something that we're expecting.

Because the prices have been weak in March also, like so...

Yes, that was weak in March, but April, strong recovery has been there. [indiscernible] 4% from going down from here. That's a hugood evening hit. Very, very large hit. I personally don't expect that to happen.

Okay. So it should be more like 2%, 3%.

Even that is pretty high.

The next question is from the line of Surya Nayak from Sunidhi Securities.

So sir, one question. Is that due to the land acquisition things, which is getting delayed maybe the majority of the CapEx for the current year is around INR 1,000 crores would be aligned to the second half? So what kind of days we see to come into books?

That is obviously going to be impacted by our cash flows and pricing and volume because obviously, whatever cash flow is entered, we want to consume the cash flow ourselves. My own guess is if I'm able to spend INR 1,000 crores in CapEx in this financial year, my own guess is the current -- around INR 600 crores of debt by that time is what might have estimated, if things remain as we want them to remain in the current year.

Okay. So if that is the case, then obviously, FY '26 will be having a large deposit of CapEx?

Yes. Correct.

So what would be the -- I mean, ballpark figure, what would be the CapEx budget for FY '26?

[indiscernible] if I were to complete these 2 projects that is Chittapur complete commissioning in FY '26 and also the [indiscernible] coming up. Pit together, that's about [ INR 2,000 crores ] of CapEx, right? Out of it, I'm taking this particularly with the [ 600, 700. ] So that is about [ 1,400 to 1,500 ] CapEx that should happen in FY '26 for us to have the capacity in FY '26, both at Chittapur and also [indiscernible] which can support the Devapur capacity utilization more.

So next year, again, we could be having a date of nearly at least INR 700 crores, INR 800 crores?

If we have at the end of this quarter about 600 -- sorry, this financial year was [ INR 600 ] [indiscernible]. ForEx could be even higher, but don't forget, we do have a net worth today of close to INR 1,800 crores. So there is no debt on our books, practically no debt on our books as of now. So even if we have that equity, it is still about [indiscernible] and our debt to EBITDA ratio will be just about 2%, 2.5%. I think it is fair. Nothing to worry about.

But are we not interested to time the accretion of the debt to the interested declining scenario?

Look, I need capacity still in the market. If I try to [indiscernible] interest space and keep moving the opportunity in the market. I don't think the shareholders will [indiscernible].

Got it. And sir, the -- another point is are you seeing the interest scenario as the major impairment in the pricing because more of the OPC consumption is happening and that is actually not giving us a player like us focusing on the retail B2C side? So that is actually creating an issue because all the [indiscernible] players are operating a healthy level at 80 plus. Even you're also saying that you are also at organizational leval at 81%. Normally, we've seen that about 75% of the pricing power generally comes in but that is not naturalizing. So what is your stance with regard to the interest scenario vis-a-vis the pricing?

See, I personally do not think the interest rate has impacted some pricing in the market. Even, let's say, even for the decision on when to put up capacity is driven by more by strategic reasons than the interest rates. Even in the current rate of interest, I think normally, the expectation is that will be all [indiscernible] policy has been followed by the [indiscernible] authorities. They should be able to get the inflation under control and then it's interest rate would soften. My own guess is by the time we start borrowing from the banks, interest rates would have started softening. That's what my stance is.

Okay. And sir, what is your outlook on the pet coke prices for the second half?

My own guess is they would be, say, within a range of about $115 to $125 a tonne.

Okay. So it will have more -- because the crude is also quite volatile. And I mean little bit [indiscernible]

Mr. Surya, I request you to rejoin the queue for your follow-up. The next question is from the line of Sanjay Nandi from VT Capital.

Sir, can you please share the [indiscernible] for this quarter?

[indiscernible] I mean, it has gone -- we always [indiscernible] just over 300 in that range in this particular quarter because of more dispatches into Maharashtra. It has gone up by another 10 kilometers. Maybe within the region of [ 15 to 20 ] in that range.

Got it. Got it. And sir, just a second question that you mentioned, you have a significant new [indiscernible] in your project portfolio. So what has led to that significant jump in our premium share like what kind of products are offering which [indiscernible] cannot, like so as to increase our overall share in the premium [indiscernible]?

Please, please visit our website, orientcement.com. You'll see our premium brand, starting with Dolphin, which is the most premium brand right now. There is also the [indiscernible] cement. Then there is StrongCrete that we call it the forever cement. And the beauty of StrongCrete is that -- I mean just, I did mention that [indiscernible] approved for the bullet train. And for the bullet train project, we have the approval for the StrongCrete. Just for information. So that would estimate, that when it's completed by will be [indiscernible] for the company, StrongCrete actually comes actually better. It has its own unique properties. I don't want to go through a full technical lesson on what, which of the cement does differently. But obviously, there is a very clearly defined -- we use a value proposition for these cements. And that's why the customers are preferring to buy our product despite it being very expensive compared to what the cement industry expects it to be. [indiscernible] good value proposition supported by us through our leading [indiscernible] services. And that's the reason why we -- more and more customers are buying our cement.

Sir, what about specifications required for the [ product ] projects? [indiscernible]

I can't [indiscernible] this new into bullet train. If you will go to website, you can see them. And that's kind of a question I can't answer on earnings call. What are the specs on bullet train, [indiscernible] cement. I mean how do I tell you that on this conference.

Any [indiscernible] sir, if you can.

They obviously need faster [indiscernible], they need much stronger performance from the cement. All those things. Along those specs could be given, which I don't think that investors call, we can discuss. So that's [indiscernible] special workshop on technicalities.

The next question is from the line of Sumangal Nevatia from Kotak Securities.

Just one follow-up, sir. You said 23% renewable. What was it for the full year last year? And where do you see it going in FY '25? And also what is the -- maybe some unit cost savings versus existing mix, if you can share?

Let me just take, Prakash, our CFO. on the line. Prakash, do you have the number for total number for the full year? Our full year [indiscernible] obviously as much simply because our [indiscernible] because some kick in only in the last 5 months of the financial year. The first 7 months, we didn't have that. But Prakash, do you have the numbers? Can you share that, please?

It was 15%.

15% overall. Okay, for the full year. And that's why sharp gain is from the time the [indiscernible]. And this year, not only is the waste heat recovery. Let's say, nearly [indiscernible] was coming in, plus we have more solar coming in both in [indiscernible] and Chittapur.

Okay. So [indiscernible] any medium-term target of mix?

The medium term, by [ 2030 ], I think we will be [ 50% ] renewable of total -- including [indiscernible] capacity. That's the target we're working towards.

The next question is from the line of [indiscernible] from Tiger Asset.

Sales volume for FY '24?

Sorry?

What are your volumes for FY '24 overall?

Thanks for making absolutely [indiscernible]. It's about 61.3 lakh tonnes.

Okay. And sir, like as the fuel costs are muted right now as you said. So how are we looking at our EBITDA per tonne [indiscernible]?

Look, as I mentioned, muted. Now we're talking about a scenario where the fuel costs have actually softened and have already reported a significant fall in this year compared to last year. I've already mentioned that. As of now we're assuming that the prices of fuel will remain around this level. Would they go down from here? It's very difficult to say. There's no trend in the market [indiscernible] around any significant manner from the current cost. So I will be happy with the state the way they are and don't get this solved by all the geopolitical [indiscernible] are going on.

Okay. So sir so by looking at the current scenario, as you've told, not going down. So what EBITDA per tonne you are guiding or you are looking at for coming, let's say, FY '25?

The EBITDA per tonne is going to be impacted by 2 things. One, how quickly, since from June onwards, can the prices improve? That's been always the biggest differentiator in EBITDA is coming from the pricing [indiscernible], right? . When we have the internal strategy of increasing our premium product sales as a proportion to offer total sales. So that is 1 lever that we are using. Second lever that we are using is no matter what the fuel prices in the market are, if we are able to get more power from our waste heat recovery plant and from [indiscernible], that's the other lever that we're pulling. So I wouldn't -- so given our internal levers, I would expect that a gain of INR 70, INR 80 a tonne on EBITDA.

So INR 70 to INR 80.

The second and last question for the day is from the line of Rajesh Kumar HDFC Securities.

And congrats on decent numbers. Sir, I wanted to understand what could be the clinker production in FY '24? What would be your clinker production in FY '24?

FY '24 clinker production, you want? That's a new question. I never had this question before on this. But if you want, I think [indiscernible]. Prakash, again, since you have all the numbers with you, can you talk to clinker production FY '24? A new question, completely unexpected, out of syllabus I will say.

If I may say, total clinker production FY '24 was [indiscernible].

4.7 million, okay. And sir, if I look at your CC ratio, this seems to be slightly on the around 1.3x. So do you see a chance of this improving from 1.3x to closer to 1.4x? The current inflation is already [ 90% ].

Yes. No, it will happen with the B2C demand picking up. As I mentioned to you, B2C demand has been very soft for us, at least in the rate that we run our business in. And the only way for us to improve that ratio is by selling lots of OPC and more of blended cement, right? So certainly, we want them because our consumer, the B2B business growing 55%, 56% are fairly [indiscernible] has happened only in the last few quarters. Before that, we [indiscernible] more to B2C customers. Unfortunately, the B2C demand in this particular market that we service in the last few quarters has been poor, and that's how OPC has gone up and the [indiscernible] situation has become worse. We are trying to improve, but also it's a function of how quickly the consumer market picks up in financial.

Okay. And the [indiscernible] project [indiscernible] guidance, the CapEx guidance. Because of these delays and all, do you expect this CapEx amount getting increased? And is it fair to say that by, says, June, July, you get it and months, you have guided, it will take 18 months from there? So the project will be up and running early FY '27?

I would say before end of FY '26 is my target so that the first quarter of [indiscernible], we can get the full capacity of the stabilization. So our target would be last quarter FY '26.

Right. And this [indiscernible] unit, this can be completed in 1 year?

One year is difficult, but 15 months for sure, we'll try.

15 months. So by year-end, also your target is...

Around the same time, a quarter here and there, around the time Chittapur clinker capacity and grinding capacity comes up, grinding unit, I want -- again, like I said, actually fourth quarter FY '26, attempt will be in quarter 3, FY '26.

So just to understand for next 2 years, '25 and '26 focus will be only these 2 projects, Chittapur and [indiscernible]? The CapEx would be spread out equally between '25 and '26?

Little less than '25 more in '26.

Okay. And most of it will back ended in FY '25 because only when you get the clearances in place.

Correct. Correct. Absolutely.

Any risks you're looking at like in FY '24, or CapEx guidance initially, which you have started off the year is of [indiscernible] INR 1,000 crore;, but we ended at just [ INR 700 crores ].

Right; the problem has been the, let's say, slow progress that we had that is [indiscernible] clearances. And right now, it's hurting us at the Chittapur plant where I said the demand is lower than a [indiscernible] in Chittapur. So that obviously is hurting us now. I wish we could help it and we could have done better, but we are where we are.

The next question is from the line of Navin Sahadeo from ICICI Securities.

I just had one question, more from like a longer-term point of view that if I were to take a 5-, 6-year view for Orient Cement. Of course, you have already kick started the expansion at Chittapur and a grinding unit in [indiscernible] as such but from other CapEx or growth point of view, the priority is how do they stack up? Will it be a Devapur or we'll prefer Rajasthan and -- or can these 2 together go hand in hand? How should one look at a slightly longer 5-, 6-year point of a directional sense, if you can get that, it will be really helpful.

Navin, it's more a question of our capability to have the land in hand to start construction in Rajasthan. As you know. Can you believe you had [indiscernible] desire would be to put up the capacity first in Rajasthan because all of us know that we use diversification of the market product, right? That takes us in other markets and other more lucrative markets. Unfortunately, greenfield project these days, no matter how much we want to do it, it will take its own time. So and in that sense, and even earlier when you asked me the question, I had the same answer. I wish I could get the land in a hurry at a reasonable price and start the construction first of all. Unfortunately, that's not possible.

Understood. Understood. So in line of -- at least as of now, the visibility is, let's say, at Chittapur? Expand a little a bit...

[indiscernible] Devapur and Rajasthan, in parallel, whatever we can do. But at the moment, if we are able to push Rajasthan, we will because that need to be there.

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

Thank you but I think all the comments that I meant to make have already been made in -- while answering the questions that people have had. Thank you for asking some -- posing questions again and giving us the opportunity to give you our side of the story. Always, thankful for your support and look forward to talking to you soon again. 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.