Sagar Cements Limited (502090) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to Sagar Cements' Q3 and 9-month FY '24 Earnings Conference Call. Please note that this conference call is now being recorded. So we have with us today from the management, Mr. S. Sreekanth Reddy, Joint Managing Director; Mr. K. Prasad, Chief Financial Officer; Mr. Rajesh Singh, Chief Marketing Officer; and Mr. Raja Reddy, Company Secretary. We will begin the conference call with opening remarks from the management following with -- which we will open the floor for interactive Q&A session. Before we begin, I would like to point out that some statements made in today's discussion may be forward-looking in nature, and a note to that effect was stated in the con-call invite sent to you earlier. We trust you have had a chance to go through the result communication and documents. I would now like to hand over the call to Mr. Reddy for his opening remarks. Over to you, sir.

Yes. Thank you, Manish. Good morning, everyone, and welcome to Sagar Cements' Earnings Call for the quarter and the 9 months ending December 31, 2023. Let me begin the discussion with a brief overview of the market in terms of the demand and pricing, post which I will move on to Sagar specific developments. Overall, we have observed easing of demand, primarily attributed to the state elections and also due to the festive season. Despite benign demand, realizations remained relatively stable for us. The overall demand trend, however, remains resilient buoyed by ongoing housing and infrastructure activities. Input prices are generally held steady with the advantage of lower power costs, being offset by higher freight rates. The quarter saw increased profitability, thanks to a combination of lower raw material prices and consistent realizations. Let me now move on to our quarterly performance. We have had a good quarterly performance, both operationally and financially. Pickup in volumes, coupled with steady realizations resulted in healthy top line and profitability growth. Volumes during the quarter stood at 1.4 million ton, higher by almost 14% over the quarter Q2. We believe we can achieve overall volumes of around 5.6 million ton for FY '24. Shifting focus to profitability. EBITDA per ton has seen a meaningful improvement largely on expected lines. As I have indicated in our previous call, we expect the trend to continue, supported in part by higher utilization levels of recently acquired units and strategic initiatives aimed at promoting the use of green power, alternate fuels as well as deployment of electric truck and wheel loaders. EBITDA for the quarter stood at INR 87 crores as against INR 48 crores generated during Q3 FY '23, higher by 83% and INR 60 crores garnered during the sequential previous quarter, higher by almost 45%. EBITDA margins for the current period stood at 13% as against around 8% reported during the corresponding period last year and around 10% generated during the sequential previous quarter. After considering the interest outgo and the depreciation expenses, loss for the quarter stood at INR 10 crores for the quarter as against a loss of INR 24 crores during Q3 FY '23. In terms of key operational activities, as mentioned earlier, our efforts are directed towards more improving the overall efficiencies and ramping up the utilization levels of our recently acquired units. The average fuel cost stood at INR 1,700 per ton as against INR 1,858 per ton reported during Q3 FY '23. Freight cost for the quarter stood at INR 864 per ton as against INR 795 per ton during Q3 FY '23. From an operational point of view, Mattampally plant operated at 52% utilization, while Gudipadu, Bayyavaram, Jeerabad, Jajpur and Andhra Cements operated at 97%, 67%, 69%, 28% and 37%, respectively, during the quarter. As far as the key balance sheet items are concerned, the gross debt as on 31st December 2023 stood at INR 1,557 crores, out of which INR 1,257 crores as a long-term debt and the remaining constitutes the working capital. The net worth of the company on a consolidated basis as on 31st December 2023 stood at INR 1,618 crores, debt equity ratio stands at 0.78:1. Cash and bank balances were at INR 157 crores as on 31st December 2023. Another noteworthy development is that Board of Andhra Cements has approved proposal to implement a new 6-stage pre-heater for cost optimization and to enhance the clinker and grinding facilities at its Dachepalli unit. The estimated project cost will be around INR 470 crores. The entire project is going to be commissioned by end of financial year FY '25-'26. In summary, we believe our diversified regional presence, improving product mix and consistent focus towards lowering costs and improved operational efficiencies position us well to create value for our stakeholders. That concludes my opening remarks. We would now be glad to take any questions that you may have. Thank you.

[Operator Instructions] The first question is from Shravan Shah.

Sir, first, coming on the volume front. So in the last con-call, we were confident that we can do a 6.2 million ton for this year. And now we have reduced the guidance for the volume for this year to 5.6 million ton. So just wanted to understand, despite we are doing -- we were in the middle of the quarter -- last quarter when we did the call and we were confident and what has happened. And similarly, now how confident are we for this even 5.6 million ton? And also for the next year, FY '25, previously, we said 7.5 million ton volume. So if you can help me with the revised number? And also, if possible, how much will be from the Andhra Cements?

Yes. Thank you, Mr. Shravan. Yes, as indicated from -- there is a downward revision from 6.2 million ton to 5.6 million ton. The reason is obvious that the post-election scenario, both at Madhya Pradesh and Telangana, we expected some amount of ramp-up to happen, which looks to be challenging at this point of time. I think the national elections and 3 months post that scenario, in such time, we believe that the demand is more going to be on a flattish kind of a trend rather than on an aggressive kind of a thing. So that's one of the reason why we had to do the downward revision. Now looking at the confidence of doing those numbers, yes, we believe that with the downward revision, we actually removed some of the government demand that was coming by. So we have reduced it from 6.2 million ton to 5.6 million ton. This looks to be lot more realistic from our end to be reasonably close to the number what we are committing at this point of time, Mr. Shravan. Now going to the next year, we believe 7 million ton is a possibility for the full year next year. This having factored that Q1 probably would also be -- the demand probably would be more on a sidelines owing to the general election and more specifically elections in Andhra. So our past experience is that 3 months before and 3 months after election, the demand tends to be a lot more slower than what it normally is. Given that context, we made the downward revision. Andhra specifically, the target for the next year is to grow anywhere between 900,000 to 1 million ton for the coming year. Hope I addressed all the questions, Mr. Shravan.

Yes. Andhra, you said 0.9 million ton?

Yes, 0.9 to 1 million ton, Mr. Shravan for the coming year.

Okay. Okay. Got it. Second, in terms of -- on the profitability front. So there also, we were looking at INR 400-odd crore kind of EBITDA.

Now I think we should since there is a downward revision in the volume, yes, I think the indicative potential EBITDA that we feel that we should be able to generate is around INR 310 crores, Mr. Shravan.

Okay. INR 310-odd crore. So for the fourth quarter, we can look at INR 130 crore, INR 135 crore kind of EBITDA?

Yes.

Okay. Okay. Got it. But there to achieve that, what kind of a price increase? So I believe still the prices would be lower than...

What we have factored is a flattish trend in our case for the realization. We are expecting INR 150 kind of a saving both on account of fuel as well as increased volumes would give a better spread in terms of the overall contribution. So INR 150 per ton is incremental cost savings that we hope to achieve. So from the current INR 610-odd EBITDA per ton from the current quarter, we are expecting it to stabilize somewhere around INR 750 per ton for the coming quarter, Mr. Shravan.

Okay. And then the similar run rate can be maintained for the next year?

Yes, let us handle one at a time. So we are reasonably sure of the volume. I think on the pricing, the outlook, we would be happy to come back to you as we cross the Q4 and enter into the next year scenario, Mr. Shravan.

Okay. And on the CapEx front, how much we have done and what's the number for this year and the next year considering the new expansion that now we have...

Yes, I think we -- yes, we have done all the CapEx that is required for the current year, which was more on the operations side, which is the maintenance CapEx. For the coming year as far as Andhra is concerned, I think for the next full year, our target is to do around INR 151 crores, Mr. Shravan. Bulk of it is back ended, as you know. The announcement is for constructing a new 6-stage pre-heater. So bulk of the time that gets consumed is in the civil activity. So for the next coming year, it's mostly to do with the construction of the civil and partly to do with some advances to the equipment. So we don't expect it to cross more than INR 100 crores to INR 125 crores for the coming year as far as Andhra's new CapEx announcement is concerned. The rest is more to do with the operational maintenance CapEx, which we have indicated, it is close to around INR 30-odd crores for the next year -- full year for -- at all the other plants. We are yet to start the other small brownfield additions that we have announced. We have time. As indicated by FY '25 end, yes, we should do a 0.5 million ton expansion at Jeerabad and a 0.25 million expansion in Gudipadu. Those are not large CapEx kind of a thing. Those are with very limited kind of a CapEx. But they are time consuming because we are going to the clearance at Jeerabad for enhancing it from current 1 million ton, we need to enhance the EC clearance to 1.5 million ton. So until that happens, I don't think we would be doing any CapEx. We expect that to come anywhere between 9 to 12 months. Post that only, our CapEx will start, and we will be happy to come back to you as and when the time lines get crystallized on the Jeerabad brownfield expansion.

And then broadly on the debt front, so currently INR 1,557-odd crores. So in terms of the -- will this further increase...

No. I see -- I think at INR 1,400 crores to INR 1,450 crores net debt position, I think our position is going to remain same because we are committed to raise equity at Andhra that -- and whatever is the payout at a group level, that is the balance that we are going to do. So we would not exceed the net debt level of around INR 1,400 crores to INR 1,450 crores.

And lastly, the Vizag land sale. So anything is happening so now...

I think we did announce. I think we have made a good progress. I think we have another 12 to 15 months. I think the time line still remains the same. So first phase is more or less completed. So the mutation and the associated things are all done. So we are entering to the next phase. So we are hopeful that over next 12 to 15 months, we should be in a situation to liquidate the -- monetize the land at Vizag.

So by end of FY '25, we should be able to monetize and get the cash and that should support us to...

Yes, sir. I think those are the time lines which we are hoping. It looks like there is a good possibility that we should stick to those time lines.

The next question is from Rajat Setiya.

Just wanted to check about the pledge shareholding. It's -- on the BSE, it shows that 75% of our holding is pledged like promoters holding.

No, Mr. Rajat, I think it is more to do with the nomenclature. Yes, if you had looked at it, there is SHA for us that is the shareholders' agreement with PI and all. So it's -- non-disposal agreement also reflects as a pledge, but it's not a pledge. It's actually non-disposal of promoter shares, sir. It's not pledged.

And how much is really pledged or there is nil pledge?

No, there is a very, very marginal -- the extended family of the promoter, but that's very, very negligible, Mr. Rajat. Majorly, it is only the non-disposal undertaking, which is reflecting as pledge. There is -- effectively on the core promoters, there is no pledge at all.

Okay, understood. The second question is about the cost of debt. On INR 1,600 crores or so gross-debt level, we are incurring INR 50 crores in interest payment on a quarterly basis. So what's our cost of debt? And what is the...

So it is around 10%, sir. I think it is at 10%. So there is some amount of realignment. The average cost of debt is at around 10%, slightly lower than 10%, but I would assume it is close to 10%, not more.

So what are the other components of the financials that we are reporting in quarterly statements, which came at INR 49 crores this quarter?

Yes. This time, the debt itself is well set. So your numbers looked higher, but cost of debt is at 10%.

Okay. Because if you go by 10%, it should be INR 40 crores on a quarterly basis?

Yes, sir. It will get aligned to that number, sir. There is a working capital renewal and all. So the [ charge ] and all would have actually added up, sir. But it is effectively interest cost would not exceed the number what we discussed.

Okay. So are you saying there will be reported finance cost of INR 40 crores, INR 42 crores starting next quarter? Or...

Yes, sir. I think it should be close to around INR 45 crores on the higher end.

Okay. Understood, understood. And sir, on the realization side, I think we reported one of the highest realization in the last many, many quarters. So what really led to that? I mean, is this seasonal or...

No, I think, the October pricing in the market, there was a steep increase, sir. And we have always been extremely cautious that we don't chase low cost orders, be it trade or non-trade. We don't mind compromising on the realization -- utilization, but we would never do it on the realization front. So vis-a-vis some of the market players, our realization trended at a lower pace downward rather than -- in October, there was a steep increase. November, there was a little drop for us. And December, of course, we more or less aligned with the market. So that probably pitched our realization slightly higher than most of the other market, yes.

Right. Because correction has already happened basically?

No, correction was a constant effort -- it's a marketplace, so from October to November to December, the trending was downward. But in our case, the drop is not very significant. So is the case even in the current month, sir. So though the market -- see, it's a mix of various things. It again depends on once the -- some of the subsidiaries start operating, they are very close to the market, sir. So the realizations for us would also become higher. So these are all the mix. But in all, our realizations have been reasonably healthy, purely because we did not chase low cost -- some of the low-cost orders that were in the market. Realizing that those things would not any way increase your volume substantially. So idea was not to lose on whatever little margin that is available.

The next question is from Keshav Lahoti.

So just wanted to understand one thing on Andhra land monetization side as it's a big land parcel, so what are the initial trends you are getting? Will it be sold to a single buyer or you have to possibly divide the land? And secondly, when you will sell the land, do you need to do any ground leveling or some other sort of work to make it ready for sale? And lastly, there are the old grinding plant installed at Andhra, so whether have you sold it off? Or how is the progress going on that side?

Yes. Mr. Keshav, so the land -- our intention is to sell the land as is varies. So the question of leveling and all doesn't arise. We are good 6 months away because we are waiting for one more clearance. We put the overall process in 3 parts. The first part was to get the entire land parcel mutated because there is digitalization of land records in Andhra. So that part is more or less 95% done. So we are entering into the next phase where we've already returned to Andhra government on 2 counts. One, there was a permission that was a requirement for us seeking for sale of land because this land was assumed alienated and transferred from Andhra government to Andhra Cements in mid to late '70s. So there was an obligation that we have to get a government permission if we have to put it to use for any other purpose other than the industry there. So we have already initiated that process. We hope over the next 5 to 6 months, we should have got the permission for the sale. At the same time, it also needs conversion -- the usage conversion, sir. Currently, it is for industrial use. So we did apply for a mixed usage. So we believe if we do these two issues, there is a reasonably better value that we could attribute to the company. We are not into the real estate development. So obviously, we are looking at all the options that are available to maximize the realization. Do we have to sell in bits and pieces or do we have to sell a large parcel? Yes, we did assign the consultancy advice to JLL. It's work in progress. So we will be happy to come back to you as and when we would have got the advisory from JLL as to what would be the best route for us to maximize the value from the sale. That part, I think, we have good another 5 months away -- 5 to 6 months away, so we'll be happy to revert back as soon as we reach to that milestone. Now coming back to the existing grinding -- the clinker grinding station there, yes, we did sell. So the mills, there are 2 mills, and there is a dryer. All these things have been sold. In fact, 50% of the equipment have also been lifted by the purchasers. We are leveling it out the civil structures. That is the part which we have undertaken. I think over the next 5 months, the land should have been without any industrial asset sitting on top.

Understood. What sort of realization we can expect from the sale of all those landing units and dryer?

See, I think the attributed value is close to around INR 18.5 crores to INR 20 crores, Mr. Keshav.

Understood. Got it. And right now, how are the cement prices versus -- do you feel like if the current cement prices stays as it is, so what sort of drop in realization we should expect in Q4 Q-on-Q?

See, the current trend though the market was talking of price increase, sir, we are yet to realize. So in some pockets, it's more or less flat all the way from November to now. In some places, we have seen a INR 5 per bag kind of a dilution. But this is very, very specific to Southern pockets because middle of month, there is a Pongal and Sankranti festival. During those times, the demand is literally close to nil. So that typically tends to put some pressure on the pricing because people try to squeeze whatever little that is available. But we hope that the prices are more or less very similar at starting of the month to end of the month. From the exit of December, we believe that it should more or less be flat.

Okay. Got it. What I've understood, like FY '25 would be a very more like a maintenance CapEx kind of thing and the major Andhra CapEx and Satguru and other things will flow in FY '26, what sort of CapEx you're looking in FY '26?

See, I think we did announce a INR 470 crores CapEx at Andhra. Only 30% of that, we expect it to happen in the coming year, sir. Rest everything will be spread. Around another 50% should happen in the coming year. The small residual portion probably would flow into the next year later. But whereas the small brownfield CapEx that is required both at Jeerabad as well as Gudipadu should come in FY '26, that should not be more than INR 50-odd crores. And another -- probably another INR 25 crores should flow through into the year later.

Okay. Okay. Understood. Sir, last question from my side, the trade share for this quarter.

We are at 55.5% kind of a number, sir. For the quarter that went by, right?

Yes, perfect.

Yes. We are at around 55%.

The next question is from Parth Bhavsar.

Sir, earlier, you mentioned that demand usually slows down near our national elections and even it slowed down during your state elections, even we've discovered like we've -- according to our research, 3 out of 5 elections, demand has usually slowed down post elections. So considering that demand is expected to slow down a little in FY '25 and at least 30 MT is being added by -- in terms of capacity is being added, so what sort of EBITDA per ton you're building in? And how much -- like are you building price growth? So is there any EBITDA per ton improvement that you're building, like, which would be on the back of price growth because I feel there would be a lot of...

Coming year, we are reasonably sure of the volume. Mr. Parth, but we are yet to pencil-in potential kind of margin analysis, I think we should be doing it close to first week or second week of March. I think with the current year -- financial year results, we will be in a much better shape to really talk on the margins for the coming year. Our belief is that, see, national elections is one part, but the state elections because state government typically tends to influence more cement demand in the regions that we operate. Historically, it is 3 before -- 3 months before and 3 months post election tends to be slower. So that has been factored in. So we believe that the next year, our own numbers are primarily coming from the ramp-up that we expect from Jajpur as well as Andhra rather than existing assets. So there, we are not trying to factor any incremental volumes for the assets that have been operational purely because there are some new capacities that are likely to get installed in the same region, namely Guntur and My Home Mellacheruvu, and probably, to a certain extent, some additional ramp-ups from Ramco, Kolimigundla. So whatever little demand that is likely to grow, we are adjusting it to these ramp-ups. Internally, our only tick is that we are likely to do 7 million for the coming year from around 5.6 million that majorly would come both from Andhra as well as Jajpur. That's what we have penciled in. Margin, we would revert back to you probably during the full year results somewhere around middle of Q1.

Fair enough. Sir, on the industry, do you think that -- just on the industry, do you think that the incremental capacity addition would be -- demand would able to like equal it -- that would incrementally...

It could, sir. I mean, what we have seen, we are penciling somewhere around 5% to 8% growth rate for the coming year. So market should be able to absorb whatever ramp-up that is going to happen with an assumption that the players would be rational in their flow of material into the market. I'm not expecting the material to rushing into the market. So that rushing sometimes would disturb 1 or 2 quarters. But at the end of the year, I think market should comfortably absorb 30%, 40% capacity utilizations from any of those new commissionings that are likely to happen over the next few quarters.

Okay. Okay. And sir, on the cost front, just wanted to understand what sort of inflation have we seen on slag and fly ash year-on-year or quarter-on-quarter, like whatever you can...

Sir, I think -- I think slag as well as fly ash, we have not seen, sir. Availability has always been a challenge, especially on fly ash. But from a price perspective -- see, fly ash is not very sensitive to the product price. It's very sensitive to the transportation cost. So again, our take is that since it's gearing into the election, we believe that fuel prices may not significantly jump up. So that should more or less be very flattish trend as far as fly ash is concerned. Sometimes fly ash, we may have to go very far to source if the neighborhood power plant is under shutdown because there is a lot of back up -- lack of power that we have seen, we did struggle for some fly ash availability in some of the units that we operate. So we had to source fly ash from a slightly far-off locations, but that's not inflationary going far to get the material, sir. But we have not genuinely seen inflationary kind of a price increase on any of these cost of material. It's more aligned with the transportation cost because the landed cost, the majority of it is only transportation cost, not the material cost.

Okay. Sir -- and we've been listening a lot about busy season surcharge being like higher year-on-year, so is that the reason why your fly ash and slag cost would be higher?

No, we don't use railways for any of these incoming material as far as fly ash and slag is concerned, sir. So I don't think that can be attributed for that in our case. I don't know it could be specific to some units or some of the peers. But in our case, we don't use rail at all for either of these material.

The next question is from Nitin Boricha.

Sir, you mentioned something about $150 kind of savings from Q4...

Not dollar, sir. It is rupee. Yes, it is INR 150 per ton. From the current quarter to the next quarter is what we have indicated from a potential saving that is likely to happen for us.

Sir, I just wanted a breakup of the savings from where this saving is going to come?

INR 100 would come from power and fuel, sir, because it's not just the fuel. Because the last quarter, our power and fuel cost impact was primarily on account of Andhra Cements because there are frequent starts and stops, and we did consume very high-cost imported coal that itself is exhausted. So that potentially would save going forward for us. And another INR 50 from an operational kind of a leverage, sir, because from our 1.4 million once we touch to 1.7 million, yes, we believe that, that should also help us add INR 50 saving. We went through last 3 quarters on a maintenance -- aggressive maintenance at most of our units that is behind. So that should also help us save this INR 50 incremental saving on the repairs and maintenance and consumables part. So that is what we have indicated that it should help us save incrementally INR 150 per ton going forward for the coming Q4.

Understood. Understood. Sir, what's the cost in kcal basis this quarter and last quarter?

On a per kcal -- at a group level, you're looking at it, sir? I think we did include in our presentation. Let me -- this is -- you asked our sourcing cost or as-fired cost?

I got the slide. I got the slide, sir.

Yes, yes, please.

And sir, my next question is on the CapEx. I just missed the CapEx number you have given for '25 and '26. If you can, please repeat it, sir.

Yes. We just announced INR 470 crore CapEx at Andhra Cements, sir, is to build a new 6-stage pre-heater with a pre-grinder for cement. But for the first year, that is the coming year -- coming financial year, the only CapEx that we are going to spend is on the civil side. That's going to take almost 12 to 15 months for us to come up with the civil structure. Around INR 125 crores is what -- is the CapEx for the current year and the balance will be spread over the year and -- majorly into the next year and to a certain portion, would be spread into a year later. So INR 125 crores would be for the coming year. And maintenance CapEx of another INR 30 crores would be spent for the coming year for all the other units other than Andhra.

The next question is from Rajesh Kumar Ravi.

Am I audible?

Mr. Rajesh, yes.

Sir, this year, you are purchasing clinker also from outside?

No, we -- this quarter, we did not. So -- yes, we -- there is an inter group company transfers, Mr. Rajesh. Even that also is more or less completed because when we were under maintenance in Mattampally, so we had to source some amount of clinker from Andhra. That part is done. So I don't think we will be buying any external clinker, Mr. Rajesh.

No. Because in the presentation, the plant-wise numbers that you shared, there is a shortfall in the clinker and cement production numbers, so -- from versus total. So I thought, is there some external purchase?

No, no. I don't think we have done except for some group level transfers, that too minor vis-a-vis to the previous -- I mean, the quarter before in Q2, of course, we -- there was a lot of clinker purchase from Andhra, but coming quarter [indiscernible] and going forward, I don't think there is a requirement.

Okay. I'll get this sorted separately. And you mentioned that this quarter, you're looking INR 100 savings on the fuel cost primarily because of the frequent starts and stop which happened at Andhra. So on a fuel cost...

And also we consumed expensive imported coal during that quarter because it was in inventory so that got booked, Mr. Rajesh. So that is behind.

Sir, in per kilo cal, what sort of savings you're looking, sir, versus Q3...

I think on a kcal basis...

From a group level?

On a kcal basis, we are not significantly expecting any savings for Q4, Mr. Rajesh. It's mostly to do with the optimization and high cost inventory is consumed.

Okay. Okay. So you're on a fuel mix optimization, the change is what will drive and with the...

Yes, sir. Yes, sir. And starts/stops typically consume quite a bit. The coal starts typically consume more, so that also is behind us.

Okay. And total CapEx, you said for FY '25 would be INR 150-odd crores.

Yes, sir. Around INR 150 crores, INR 155 crores. INR 125 crores from Andhra and the balance, INR 30-odd crores for the operational CapEx across the other companies.

And this year, total would be how much, sir? I missed that point. FY '24, including maintenance, what is the CapEx outgo you're looking at?

Yes, we did close to around INR 30-odd crores for the current year, Mr. Rajesh. Plus Andhra...

No, inclusive of -- everything inclusive.

Yes, in the current quarter, we are expecting INR 50 crores.

The next question is from Keshav Lahoti.

Just a follow-up on trade share. What we have seen earlier, trade share was more like 60% or upwards of that. That is now down to something like 55%. So how you see the trend going forward? Will it be back to 60% kind of a number?

Yes. I think it's more to do with the seasonality and also the government demand related, Mr. Keshav. Our usual listing is somewhere around trending around 60%. I think we would realign ourselves close to 60% kind of number.

Like my understanding was Q4, the government demand might have been weak, so ideally the trade should be higher like...

Sir you asked for Q3, right? Not for Q4.

Sorry, Q3. So I mean, Q3, the demand from government might have been weak. Is it a fair understanding?

Q3 was relatively okay, sir -- relatively okay because Andhra still consume some portion of cement, but it will -- we believe that in Q4 and going into Q1, most of it would go missing so. Then naturally, then trade will start looking more. And the other issue also was during the election in Telangana, not that government demand was very substantial, but the private activity was continuing. So we did take some additional exposure into the non-trade segment, especially the RMC business. So that also made these numbers slightly go more towards the non-trade. But I think on an average, we should trend close to 60%, Mr. Keshav.

Okay. Got it. On the 7 million volume guidance what you have given for FY '25, is it possible to give a breakup of Jajpur, Andhra and Satguru what you're building in?

Yes, we'll revert. We will revert. We would keep this in mind, and we will be happy to share those numbers in the coming quarter because it has to be cleared by the Board for us, the annual plan. So we have the general guidance. We'll be happy to share that in the coming quarter, Mr. Keshav.

Understood. One last question from my side. Like Andhra unitary EBITDA was INR 270 for this quarter. So what sort of gain you can get leaving operating leverage and other things aside just by the normalization of plant?

See, I think the normalization itself should kick in extra INR 600, so it should get aligned with Sagar, sir. Though cost is slightly higher, but the footprint area for Andhra sale is in the neighborhood. So that should more or less taper off, the freight should be lower, costs are higher -- the other costs are higher. So net-net, I think it should get aligned with the Mattampally kind of a number, Mr. Keshav.

Got it. Got it. And it should start from FY '25 start, right?

Yes, sir. I think it should start from Q4. But I think it's fair to assume that from F 1 onwards -- Q1 onwards for FY '25, more or less, we see the gap narrowing down or more or less having a parity with Mattampally.

[Operator Instructions] So in the meanwhile, I have a couple of questions on Dhar. So how is the ramp-up which is happening at Satguru, both in terms of profitability and utilization levels?

Yes. At Jeerabad, the capacity utilization for the last quarter was around 69%. The ramp-up is reasonably there. But for the elections and the season -- difficult rainy season that we have had or else we should be trending close to around 85% to 90%. The profit margin for the quarter was close to around INR 969. We believe that we should be slightly higher because we had a lot of inventory on clinker also. So that did not help the margin. But I think the utilization levels at Jeerabad and the margin at Jeerabad is very, very healthy, sir. And coupled with that, the incentives of around INR 30 crores is due from Madhya Pradesh government. We expect to receive them in the coming quarter itself. So the first installment of INR 30 crores is likely to be received in the coming quarter or in the current quarter.

The next question is from Rajat Setiya.

Sir, one historical numbers related question. So in FY '23, our depreciation went up a lot. And compared to FY '22, our current rate of depreciation is almost doubled. What is the reason for that?

Assets have gone up, sir. I mean, commissioning of new assets. And Andhra also -- Andhra acquisition also added up to the depreciation, Mr. Rajat.

Sir FY '23 was largely known Andhra, but more assets you are saying?

Yes, sir, because the full commissioning of both Jajpur and Jeerabad happened during that time, right?

Sir, if we want to understand the kind of EBITDA that we can generate on a per-ton basis with regard -- without any regard -- without considering any realization increase, so what are the levers? And what kind of EBITDA per ton?

See I think it's operational leverage, sir. I think it's only operational leverage because we are operating at close to 55%. I think another 20% increase in realization will automatically add up INR 100 because if you look at salary spread or more or less the repairs and maintenance and everything, if you have to spread it, that itself should add up INR 100 to INR 150 incrementally, Mr. Rajat.

So that INR 740, INR 750 number that you mentioned, is that...

It is without any increase in realization. We did not pencil any incremental realization. Yes, we are only assuming the stable operations to come in, that should add up INR 150 for us.

Okay. So post INR 750, it's the realization that will...

See post INR 750, Andhra ramp-up should add up another INR 100 on a straight forward because if you look at year-to-date utilization at Dachepalli is 22%. Last quarter, it's 37%. I think even if it aligns itself and touches 60%, that should significantly contribute to the margin, Mr. Rajat.

The next question is from Nitin Raheja.

So I just want to know what is the current CK ratio? And how do you see it going forward?

Yes, I think, we are close to around 1.3, sir. On a higher side, I mean, we have a long-term plan. We did commit that it will go up to 1.55. But I think it should take over a phased manner. For short term, I think it should touch around 1.35 for -- within the next 2 years. For eventually to reach close to around 1.55 by FY '30. It's again to do with the ramp-up in the other regions because most of the other regions, the blended cement ratio is much higher related to the current regions that we operate, sir.

Okay. And for gypsum and slag -- for slag and fly ash, do you all have any supply arrangements for the same?

Yes, sir. We have arrangement -- for Bayyavaram, we have an arrangement with RINL, Vizag. For Jajpur, we have it with Tata Steel and Jindal. So we do have arrangement for that for the slag. Yes, fly ash also, we have arrangement for most of the thermal power plants in the neighborhood of each of the unit, Mr. Nitin.

All right. And one last question is, how do you see the energy mix going ahead like for the next 2 years? So what kind of energy mix have you factored in?

See when you look at energy, you're asking for petcoke and coal kind of a combination, right, Mr. Nitin?

Yes.

Yes, we are very sensitive to the price. Our all units can consume petcoke, sir. So it's a very -- we can use 100% petcoke to 100% domestic coal to 100% imported coal. We typically make the mix based on the cost of each of those particular thing. So we try to trend more on as-fired coal to be very, very optimally kind of a [ costing. ] So I cannot give that number unless I know what kind of fuel is available at what price. But all our assets are capable of firing 100% petcoke to 100% imported to 100% domestic coal. So we make the mix based on the most optimal and most financially viable kind of an option, sir. So that subject has been very, very volatile. So it's not that we have fixed the fuel mix forever. We are blessed reasonably with a very good mix of limestone. So we have low-grade, high-grade, all type of limestones available. And dynamically, we can make the adjustments. We historically have also made similar kind of an adjustment. When petcoke was very, very low cost, we ended up using it. When petcoke prices moved up, we switched to domestic coal. So we have always been making dynamically those adjustments to ensure that what we fire is the best from a cost point of view and also technical point of view.

All right. Sorry, one last question from my end is, are you picking any additions in solar and WHRS currently?

Yes, we do have close to around 1.5-megawatt of solar. Yes, we have waste heat recovery system to almost tune of around 14.5 megawatt. We do have plans, but they are phased out. By 2030, we hope to have green power almost a mix of 50% in our electrical energy mix. From current 25% to 30%, we intend to scale it up to 50% by FY '30 sir.

The next question is from Sanjay Nandi.

Sir, just a clarification thing. Like there have been some significant flood in the deep South India, like in Tamil Nadu, in Chennai in this last quarter. So what kind of volume loss did happen for us in that time frame?

Sir, I think that is one of the reason why we did mention that the demand overall tapered off quite significantly because we do know that there is a monsoon in Tamil Nadu, but we have never seen such a heavy flooding in some of deep south pockets. I mean, I think these are historically -- in probably more than a century, people have never seen such kind of flood impact. So that actually took off close to around 0.25 million of volumes out of the current quarter. That's the reason why we scaled down, one, because of election as well as recovery of those markets probably is likely to take more than 3 to 6 months' time.

The next question is from Shravan Shah.

Sir, first, just wanted to understand in terms of the -- when we say INR 30 crores incentive that we are going to receive. So if I just look at and divide by the volume that -- so correct me if I'm wrong. So this when we will be receiving in the fourth quarter, we will be booking in the revenue. So just if I divide by the volume that we will be having close to 1.7-odd million, it results to a kind of a significant 175-odd kind of increase in the realization at the consol level. So is it a fair understanding?

Yes, Mr. Shravan, see, we did not pencil for EBITDA per ton calculation. It's again a state government issue, right? So that would be an incremental kind of add up, sir. We have not factored that inflow in any of the statements that I've made so far. That is excluding that we expect INR 150 per ton kind of a margin increase purely on account of ramp-up at Andhra and the other units, that is something which is like a bonus for us, Mr. Shravan.

Okay, okay. And then this INR 30 crores that we will be getting in this fourth quarter and so going forward in FY '25, how much we are looking at in terms of the incentive?

Sir, I think it is INR 30 crores installments spread over the next 6 to 7 years, Mr. Shravan. It's an equal installment. We did indicate about this even in the earlier quarters. Yes, it's a state incentive. It has nothing to do with the volumes. But of course, it is subject to you utilizing a minimum of 70%. You should be getting close to INR 200-odd crores -- sorry, INR 150-odd crores spread over 7 years -- 6.5 years, sir.

Okay. Okay. Got it. Understood. Second, I just wanted to understand what's the green share for this quarter, sir, Q3?

Green energy -- electrical energy share, sir?

Yes, yes. Yes, sir.

Yes, it is roughly around 27%.

Okay. Similar to last quarter, also 27%.

Yes, sir, because there's not significant change. We have not added anything new, so it's very stable. So even for the next quarter, we do expect things to be very similar, Mr. Shravan.

Okay. And if you can help us in terms of the price increase, what has already happened in the third quarter? So in terms of the state level, if you can help us where...

Nothing, sir. Nothing. I mean, it is flat. As I mentioned, Mr. Shravan, there is a small downward revision, but it's more or less flat with a negative bias.

No, no, sorry, sir. So for us, the realization increased 6.4% Q-o-Q. So how -- in terms of the state level, how much it has come in the third quarter, what has that...

See October month, it has been across South, Mr. Shravan, so it is not one state. Across the states, we actually got a huge increase. That's more or less we sustained barring small dilutions that we have seen in November and sequentially followed in December. But we'll be happy to share that. If you could articulate the exact question, if you could send across message, we will be more than happy to share that, Mr. Shravan.

Okay, okay. And you mentioned that for the fourth quarter, we will be doing a INR 50 crore CapEx or INR 15 crore CapEx?

INR 15 crores, sir, 1-5.

1-5. Okay. And till 9 months, we have done close to INR 145-odd crores?

Yes. Because that includes Andhra's ramp-up, Mr. Shravan, so we'll be happy to share the breakup of that.

No, no, I'm asking for the 9-month FY '24, how much...

Yes, it is close to that number, but that majorly includes the ramp up that happened at Andhra also, Mr. Shravan.

The next question is from Rajesh Kumar Ravi.

Sir, two questions. First, on the clinker CC ratio. If I look at 9 months, your cement to clinker number which you shared, the CC ratio works out to be 1.24, 1.25, which is lower...

No, no -- see -- yes, you should be very careful with the numbers because we have GGBS and all, Mr. Rajesh. I think, we'll be very happy to share those numbers at a unit level. We'll be happy to share those numbers. But with numbers, you should be...

Okay. So I was just plainly looking at your clinker production group level and cement production group level.

But you will have inventory, you will have various things, so we'll happy to share the numbers.

Correct, correct. So that is why I was looking at for the 9-month numbers to even out some of those impact.

We still sit on a huge inventory of clinker, Mr. Shravan (sic) [ Mr. Rajesh ].

Okay, okay.

It is 1.32.

And in Andhra, when you're doing your major expansion, sir, there also this CC ratio can be comfortably...

Sir, it's all the same market, sir. The alignment is across at a group level, Mr. Shravan (sic) [ Mr. Rajesh ].

Right, right.

Brand is same. So alignment is at a group level.

Okay. And second question pertains to when you mentioned this incentive, which you will be receiving INR 30 crores. I think you also mentioned that you need to achieve 70% utilization. Is that right?

Yes, we already are above that. So we are already eligible, sir. We already have it sanctioned. We are just awaiting for the receipt of it.

No. Because if I look at your production number for Andhra Cements, which you shared...

No, no you are mixing up. It is not for Andhra. It is for Jeerabad, sir.

Okay, Okay. For Jeerabad, where you are already. Okay. This Jeerabad, this is INR 30 crores annual per annum, which will be accruing. And the thing is...

Yes, we don't have anything in Andhra, sir. We don't have anything in Andhra.

Understood, understood. Okay, okay. And this, you will be retaining [Foreign Language] quite a different type of -- see, you're looking at -- if this number comes through INR 150-odd incremental realization, so would you not be looking this as using this to push more volumes?

Sir, we have never used incentive as...

At a group level.

For us to put more numbers, sir. We've always been margin-conscious. We are also market wise. So we don't -- yes, we don't compromise on the margin for incremental volume. That's a stated policy, Mr. Rajesh.

As there are no further questions, we will now hand over the call to Mr. Reddy for his closing comments. Please -- over to you, sir.

Thank you, Manish. We would like to thank -- once again thank you for joining on the call. I hope you've got all the answers you are looking for. Please feel free to connect with our team at Sagar or CDR, should you need any further information. We will be more than happy to discuss them with you. Thank you again. Have a good day. Thank you.

Thank you. We will now close the call. Thank you, everyone.