Star Cement Limited (540575) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Star Cement Limited Q2 FY '22 Earnings Conference Call hosted by HDFC Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rajesh Kumar Ravi from HDFC Securities. Thank you, and over to you, sir.

Thanks, Nirav. Good afternoon, everyone. On behalf of HDFC Securities, we welcome you all in the Q2 FY '22 conference call of Star Cement. From the management side, we are hosting Mr. Sanjay Gupta, CEO; and Mr. Manoj Agarwal, CFO. We now hand over the call to the management for their opening remarks, which will be followed by the Q&A session. Over to you, Sanjay, sir.

Good afternoon, everyone. This is Sanjay Gupta, CEO of Star Cement. I would like to welcome you all to this earnings call of quarter 2 FY '22. I have with me Mr. Manoj Agarwal, CFO of the company. He will take you through the Q2 numbers and the half yearly numbers. After that, we'll open the floor for an interactive session where you will be able to ask questions and we'll be happy to reply. I will request Mr. Manoj Agarwal to brief you on Q2 numbers and the earnings. Over to Manoj.

Hello. Hi, friends, very good afternoon. I, on behalf of Star Cement, welcome you all on the con call for discussing our Q2 FY '22 numbers. I would like to clarify that we are discussing on the historical numbers, and there is no invitation to invest. Having said that now, I will just take you through the Q2 number followed by half year number. Starting from clinker production, during the quarter ended September 2021, we have produced 5.49 lakh ton of clinker as against 3.61 lakh ton same quarter last year. So far as cement production is concerned, we have produced 6.18 lakh ton this quarter as against 5.76 lakhs ton same quarter last year. This quarter, we have also taken shutdown in our integrated cement plant at Lumshnong, Meghalaya. Now I will take you through sales volume. During the quarter, we have sold 6.17 lakh ton of cement and negligible quantity of clinker as against 6.34 lakh ton of cement and 0.18 lakh metric ton of clinker same quarter last year. This is as far as cement and clinker sale is concerned. As far as geographical distribution of cement is concerned, in Northeast, we have sold around 4.93 lakh ton as against 4.84 lakh ton during same quarter last year. And as far as outside Northeast is concerned, we have sold 1.25 lakh ton of cement this quarter as against 1.68 lakh ton same quarter last year. In terms of blend mix, it is almost 9% OPC and rest is PPC. These are the quantitative numbers of the quarter. Now I will take you through to the financials. The total revenue figure this quarter is around INR 406 crores as against INR 402 crores same period last year. As far as EBITDA figure is concerned, this quarter, we have done an EBITDA of around INR 80.38 crores as against INR 85.51 crores last year. Profit after tax is INR 46.53 crores as against INR 60.27 crore in the same period last year. This is mainly on account of increased depreciation on account of our Siliguri grinding unit. On the per ton EBITDA front, it is INR 1,302 during this quarter as against INR 1,313 per ton same quarter last year. This is what's our quarterly numbers of second quarter. Now the total revenue figure for the half year ended September 2021, it is around INR 917 crores as against INR 694 crores same period last year. As far as EBITDA is concerned, during half year ended September 21, we have done an EBITDA of around INR 182 crore as against INR 157 crore last year. PAT is INR 116 crore as against INR 104 crore in the same period last year. On per ton EBITDA front, it is INR 1,317 during half year ended September '21 as against INR 1,424 per ton period last year. These are the quarterly and half yearly numbers. Now I request all of you that you -- if you have any query, you can ask the same, and I will request Rajesh to moderate the query wherever it requires. Thank you. Over to Rajesh.

Yes. Thank you, sir. Moderator, you can now open the floor for Q&A.

[Operator Instructions] The first question is from the line of Mangesh from Nirmal Bang.

So my question is -- so we have set up our new unit at Siliguri, 2 million ton in January of this year. And we did face some problems for volumes in the earlier quarters because of the logistic or COVID-related issues. But still, our volumes are extremely low. So what is the reason for that? What has been the reason that we are not able to push the volumes in the Eastern market? In fact, even on a year-on-year basis, the volumes are low despite the addition of new capacity, which means that the earlier volumes that we were selling through the lead units, we have not been able to duplicate that. So when do you expect this to change? And when do we start looking at least some good volume growth given the fact that your utilization is very close to almost 40% to 43%?

No, definitely, I think you are right when you say that we started this unit in the month of January, right? So 3, 4 months were initial months, because of the teething issues, we could not ramp up the volume. And as you understand, that is a 2 million ton plant. It needs a large territory in terms of selling the product. So continuing with the building the network, having the dealer network in place and all that. And in April, May, COVID had actually impacted in terms of market visits and physical visits to the market, and all that has really got impacted. So we have taken up this exercise of building the network very aggressively from June onward. And we have added significantly almost, from June onward, we've almost added more than 200 dealers in our network. So hopefully, in the coming 6 months' time, we hope that the overall utilization of this unit will be able to ramp up to around 65% to 70% by the end of this year.

So any volume guidance you want to give for this year based on what you have done in the first half?

Yes, I think I have already said that we are looking at it a 20% kind of a volume growth in FY '22 over FY '21.

And sir, so by the end of this year, you mentioned that almost 55% to 70% utilization can be achieved for Siliguri, right?

Yes, yes.

Okay. And sir, can you just highlight also there are demand trends in the Northeast and the Eastern region based on what is happening now?

No, in the month -- but until September that the demand was really weak because of the large-scale rainfall, which was taking place in Eastern India, right? That has also largely impacted a lot of coal mining also, and that is one of the reasons of coal scarcity in India because most of the coal mines are actually based out -- located out of Eastern India. So -- but that rains have subsided actually in the month of October. October, we have seen a healthy demand trend. And I think both [ Puja ] and all of the demand has picked up. We hope that the same thing will continue in the month of November and coming months. And we expect that ultimately, the entire Northeast will grow at around 8% on a full year basis. And the rest of East should actually grow at around 4%, 5% on a full year basis.

Okay. I do have some questions. I'll come back in the queue.

[Operator Instructions] The next question is from the line of Vaibhav Agarwal from PhillipCapital.

Sir, just I had a question that recently from many of our, whatever, dealers, et cetera, which we are doing, we are well in that -- the players from the mainland are coming in a big way to Northeast and because of which they are selling their [indiscernible] for a discounted price versus retail price in Northeast. So any -- then the accounting in Northeast is basically going up substantially because of that is what we get in a round figure. So is it true, sir? And can you offer any comment on this particular aspect about the entry of players from the outside of Northeast?

Yes. Vaibhav, see, largely what -- this is -- has always been the trend during the monsoon season, during the offseason. But actually, the price takes a beating in the rest of India. And the prices are more or less stable to, I will say, only with a small negative batch in Northeast. So there is -- and during the rainy season, the price gap actually increases, right? That mix for the players who are there in Eastern India, it has actually become very lucrative for them to sell in Northeast. So that is the trend we have always been seeing it. Yes, there is some amount of additional volume pushed by -- we have seen that UltraTech has pushed some amount to volumes. But those are largely -- if you have seen it in last year also, they have done. But I think those matters are related -- largely related to one-off items. Like last year's Meghalaya and most of the cement plant in Meghalaya has actually suffered on account of 2 bridges which were there in Meghalaya have got damaged. There was a load restriction on those bridges, hence, the branding units which are set up in Guwahati and these places could not get the required clinker from their mother plants. And that is how that supply was restricted and that gap was filled by imports or, I'll say, materials from the Mainland India, right? So that is -- was the reason for last year. But this year, I think they are more or less in the similar line with what they had in last year, hopefully. And I think the prices have also has started moving up. As the gap reduces, the overall impact also reduces. I can only say these are largely a consignment sale kind of businesses. There's no active dealer network which is being created by any of large players in Northeast.

No, actually, sir, the feedback was that players -- some of the players which you mentioned and some other players are now setting up their own permanent network in Northeast with their own CMS and depots, et cetera. So that's the reason I was asking because the evolution will be permanent for that region, so that is a concern. Because this time, the commentary was a little aggressive on that on -- from the -- about the entry of these players versus what has happened in the past. So that is the reason I'm asking you these.

No, I don't deny that there will be renewed interest on Northeast because of the kind of prices which are maintained there. And -- but you can always understand that the nearest plant any of these players have closer to -- they are at in -- [indiscernible] are in Murshidabad, right, and Ambuja in Farakka. So still, there is a lot of freight component which is going to get impacted. And we -- if somebody starts making the dealer network, definitely, we will be a player to watch for.

Right, sir. And sir, also, any of these players are -- do you think that they are looking at setting up their own capacities? And we are also hearing of some potential transactions of M&A, which can happen. Any comments on those fronts that you can offer would be helpful.

Honestly, I mean I don't have any information as such of any potential transaction undergoing at the background. But if those kind of situations do appear, we'll have a look at that at that point of time.

And sir, lastly, I also wanted to ask you that we also had the plants in the longer term to become an East India player as well. So any development on that front or any further market you can share, it will be helpful.

So at this point of time, we are looking at setting up 3 million tons. So we need clinker to expand any further because Siliguri also needs extra amount of clinker. So we are putting up this clinker plant. We will also be having another standing plant in Guwahati. The East India plant will definitely actively start taking shape as soon as we get hold of some clinkerization facility either in Chhattisgarh or in MP.

So there is no progress on Chhattisgarh on clinkerization as of now? Or is it the times which are...

As of now, they're in progress.

[Operator Instructions] The next question is from the line of Uttam Kumar Srimal from Axis Securities.

Sir, my question is related to the CapEx plan of the company during this year and the next year. So what kind of CapEx you are looking for this year and next year? And then what is the current status of clinkerization or plant that you just spoke about?

See, the CapEx expenditure for this year, we had planned around INR 300 crores, and that was largely driven by a WHR plant of 12 megawatts, which we are setting up in Meghalaya. That plant is on track, I'll say, of implementation. We hope to commence that operation in the month of July FY '23 and -- for FY '22, sorry. So we will definitely -- so that CapEx is continuing, and we have already spent out of -- until September, we have spent on INR 125 crores, largely on account -- largely on WHR, and some amount we have spent on the clinkerization plant, right? So -- and we are on track to spend this INR 300 crores on CapEx. And this clinkerization plant of 3 -- so it's a 3 million ton capacity, which we are setting up in Meghalaya. The overall CapEx cost for this particular plant is going to be around INR 1,100 crores to INR 1,200 crores there. And that is the amount we're going to spend in the next 3 years.

Okay. That's going to the clinkerization itself?

That is going to be in clinkerization itself.

Okay. Okay. And sir, regarding price hike. Sir, have you taken any price hike in the month of October, either on East or Northeast region?

There is a small price hike of INR 5, INR 7 in Northeast, and there is a small hike of around INR 10 in Eastern India. That's the hike which was there in the month of October. But we do hope that coming -- going forward in months to come, as the demand picks up, there will be a pressure on the price largely on account of full price -- the full price increases and the full price increase which has happened in past 3 years. So definitely, there will be a pass-through which will happen.

Okay. And sir, what has been about trade and non-trade mix this quarter?

The trade and non-trade mix still remains -- I think we were operating at around 80-20 kind of mix. At this quarter, we have been somewhat -- I'll ask Manoj to give the number.

Yes, it is 88-12, same thing. Right now 88% trade and 12% for non-trade.

Okay. And sir, what has been our lead distance during this quarter?

It will be around 300 kilometers.

Okay, it has reduced. The last time, it was around 325 kilometers.

Yes, it will come down because as you understand, that's now -- there's one -- another plant of Siliguri which has come up, right? So it will definitely reduce. And that's cement's lead distance, right?

Okay. And sir, lastly, one on power and fuel. So how is the current cost of inventory with you right now?

See, as of now, we had a good amount of inventory with us. So we were managing until now. We do have -- we have almost around 200,000 tons of coal, which we have already purchased at auctions from Coal India. That material is going to come to us. Hopefully, the Coal India will start loading rates from maybe post Diwali. That's the feedback we have. And most of our coal sourcing has always been the coal auctions which we have been taking. We have also participated in certain coal supply agreements, which has happened in tranche 4 and tranche 5. I think we have taken now 125,000 tons per year kind of a participation there, and that has been allotted to us for the next 5 years. And so we are hoping that Coal India actually resumes the coal supplies to cement plants.

[Operator Instructions] The next question is from the line of Ritesh Shah from Investec India.

I just continue with the prior question. Sir, can you broadly indicate what is the fuel mix right now? Basically, local coal, if you can segregate it between local-local, Coal India, imported pet coke for broad understanding?

I think as of now, there's no local coal which has been used. It is largely the imported -- sorry, the Coal India for coal. I'll say to that -- it is to the extent of 95% will be Coal India and only some small quantity of imported coal. We are not using any pet coke there.

All right. And sir, you indicated 125,000 tons per annum. Sir, how does the pricing work over here? Like is it fixed price for the full year? Or how should one understand it versus the normal procurement that we do on auction basis? If you can give some number in rupees per kcal basis, I think that would be very useful, sir, the prior quarter and, basically, how should one understand this 200,000 on the coal that we have purchased so far and 125 kt, what you indicated, sir?

But only problem, see, at this point of time, I don't have that number of per kilocalorie cost. But I'm saying that, yes, definitely, these long-term fuel supply FSAs, right? So the cost is actually competitive than what was there in the auction which is available. And this is -- has been recently been done. So there is no past FSA which we had. We have just participated in FSAs, and we have been allotted this quantity. And yes, as far as FSA pricing is concerned, mostly the price is stable until and unless Coal India actually revises its base price, right? And for FSAs actually being longer term, it has really been seen that only on the very rare occasion that Coal India has actually revised the base prices. And that is there. Auction coal cost depends on whenever these auctions are available whenever the auctions are done and what is the prevailing price at that point of time. Definitely, Coal India do benchmark their prices with entrants, the coal availability and the price.

Sir, would it be possible for you to help us understand what is the calorific value and the coal cost? Because I think this is an inherent advantage that the company has, and our cost will be actually lower than the competition, which is a good thing. So just trying to understand the numbers over here, sir.

No, see, the calci value is somewhere around 5,000 to 5,500, depending on which grade of coal you are actually bidding for or which upgrade you are taking into auction. And as far as the FSAs are concerned, the calci value is somewhere around 5,000 to 4,500, which have been offered on the tranches. Actually, we don't decide on what calci values. It is actually based on Coal India's gradation of coal, which goes by -- either you go into -- higher grades are somewhere around G4, G5, G6, and lower grades will be somewhere around G10, G11, G12, right? So it all depends on which grade is under offer and then -- and you have to bid for it depending on what cost -- landed cost you are going to incur on it.

Sir, if I have to put it the other way around, how should one understand the power and fuel cost on a per ton basis from Q2 to Q3 and into Q4? Most of the companies, they have indicated a stiff cost increase. So sir, can you put some number over here?

See, at this point of time, it is very difficult to give you a number, but I can only share with you there that the coal prices has actually been more than doubled, right? So you can understand that from the whatever fuel -- current fuel cost of companies are reporting. Yes, because each company will have its own different take because we have also been -- now have also started -- we have also started and looking at the various options taking place even in Central coalfield and Southeastern coalfield, Northern coalfield, right? So just to understand and keep ourselves deleveraged from the Eastern coalfield, right? So all these costs are really variable, and it will also depend on how the international coal prices actually behave. So putting a number to it, yes, there is a cost increase. I think we have been -- every cement player has been talking about at least an increase of 10% kind of -- by 8% to 10% or 10% to 12% depending on who is looking at the price increase and just to pass through the fuel and the diesel price hikes, which have happened.

Sure. Sir, just to put this question the other way around, you indicated that the price increases so far, I think in Northeast, you indicated INR 5 to INR 7 in the month of October. Is that correct? And for East, it is INR 10. Did I hear it right, sir?

Yes, yes, yes.

And sir, how much has been the increase in the month of November or any anticipated increases? Because the cited price increase number is significantly lower than the broad cost inflation that we are looking at it on the imported thermal coal or be it even on pet coke prices or into land also just increased prices, I think, yesterday or today.

So that is correct, but I think what happens is, actually, the price increase has to happen along with the demand which picks up, right? There is always a volume pressure on each other cement player, which operates in this region. So looking at that, I think the prices were -- there is a 2%, 3% increase already. And we hope that post Diwali, there is no increase as far as the normal is concerned. But post Diwali, as the demand starts picking up, you will see a sharpened increase in prices.

Sure, sir. Sir, if I may just squeeze in one more question. Sir, on the clinker debottlenecking side, I think there was some gram panchayat or some hearings which were due. Is it something which is done with? Or is there any particular other reason why there is a delay over there?

No, I don't think that there's anything which is related to any clearances from gram panchayat or anything like that. The only point was that, see, we -- from the CapEx point of view, we have already completed everything. And there is small changes which is required, the process chain which is we are hoping to do. When that happens, we'll be able to achieve that number also. And until now, we have never tested that kind of -- we never -- because Siliguri plant has just now come up. It is -- this is the first season for the Siliguri plant. And our capacity will get tested now, right? So hopefully, we'll be able to achieve the capacities which we have built in.

[Operator Instructions] The next question is from the line of Shravan Shah from Dolat Capital.

Sir, a couple of, first, clarifications or data points. Sir, Siliguri plant this quarter, how much came early produced? And what was the capacity utilization for this quarter? And how it is -- how it was in October?

Siliguri plant, we don't produce any clinkers. We only produce cement, right? So cement capacity is around 30%.

So 30% for the Q2 utilization was there.

Half year, half year.

This is all for the half year. Q2 number, I'll ask Manoj to share with you.

Okay. I will share it later on, Shravan.

Okay. So in October, has the utilization increased?

See, I think -- say, October, definitely that we have -- company has seen a volume growth of around 8%. So yes, definitely, there will be some increase in the overall utilization.

Okay. Okay. Just continuing with the previous question. So you mentioned that in terms of the power and fuel cost on a per ton basis, considering all the factors, you are mentioning 8% to 12% of all the companies are saying. So we can also expect the same similar Q-o-Q per ton increase in power and fuel in the third quarter, 8% to 12%.

No. See, I think the -- I've not said about 8% to 12% fuel price increasing. I have said that the cement prices has to move up at least 8% to 10% -- 8% to 12%, anything between 8% to 12%, depending on which company would take to help pass through of coal and the fuel price increase, which has happened. As far as the coal cost is concerned and the impact on the company is concerned, it will all depend on -- I think some of the impact has already been reflected in the quarter 2 numbers. And I think the most -- the last part of that impact on the balance sheet of the company will definitely come in quarter 3 because that is where -- because in quarter 2, the people were carrying some amount of inventory. So that has helped them to keep at least the impact of that on the costs were lower. But going forward, definitely, that impact will be seen more visibly. And that's how -- I think that is where the cement price increase to pass through this cost impact is going to come from.

So you mentioned that we already have 2,000 tons of inventory, and we have already participated in 125,000 FSA on a yearly basis. So this 2,000 tons, in terms of -- will it last for the third quarter? How many months these 2,000 tons coal will last? So based on that, broadly, how much we expect the per ton basis, power and fuel cost can go up?

See, basically, this 200,000 tons of coal, which we have purchased from Coal India, the problem is the deliveries, right? Even if the cost of that particular coal -- and we have bought that coal a little earlier, but the deliveries is a problem. At this point of time, delivery -- we are not getting deliveries from Coal India. If we get the delivery, this coal is sufficient for almost more than 3 to 4 months of company requirement, right? But the only question is getting the deliveries on time. And until such time the delivery position stabilizes, you have to get into the spot coal purchases, which are much, much higher than the prices which we have purchased this 200,000 tons of coal.

Secondly, sir, we said that our lead distance has decreased from 325 kilometers to 300 kilometers Q-o-Q. But in terms of the freight cost per ton basis, it has increased 4%, 5%. So definitely, it will be because of the diesel increase price increase. So how much more increase you can see in the freight cost also?

No, I think the freight cost increase is a continuous process. You have seen -- you've been seeing it every day, the prices are going up, right? And it will definitely have an impact on freight cost of the companies going forward, coming next 2, 3 -- 2 quarters also. How much it will be there? It will be very hard to predict at this point of time. But definitely, we are looking at it that the price of freight -- or the coal -- or the freight cost will definitely go up.

Okay. Lastly, sir, on the finance cost, it has increased significantly, though it is a small number. So this quarter, we have close to INR 68 million versus the last quarter, it was INR 18 million. Will you please help me what's the reason?

I'll request Manoj to reply to it.

Yes. Because whatever is there, I have already told that because we have some export obligation under the EPCG, okay? But now the exporting of clinker to Nepal is not economically viable. So that is why we have paid that custom duty, what is the obligation against the proportionate custom duty on those obligations. So on that custom duty, we need to pay the interest of around INR 3.5 crores. So that has been included in the interest cost. That is why this is a one-off item for this quarter.

Okay. And the same in terms of the raw material cost, so even if I exclude the change in inventories, which is close to INR 324, so raw material cost has declined significantly. Will you please help me how one should look at even for the third quarter also?

No, because you did see that because the cement production has come down drastically this quarter, production of cement is lower as compared to -- you can see the 7 lakh last quarter -- you are comparing with the last quarter or that Y-o-Y?

No, no, Q-o-Q on a per ton basis I'm looking at.

Oh, Q-o-Q, yes. Last year, we have -- last quarter, we have produced 7 lakh, 72,000 as against this quarter only, we have produced 6.17 lakh. So cement production was lower. That is like the raw material cost is, in absolute number, it has been degraded.

No, no, I'm talking on a per ton basis. I understand on an absolute basis because of the lower production, but on a per ton basis, it has significantly declined. So just -- even if I remove the change in inventory, so last quarter, it was INR 1,639 per ton. And this quarter, it is INR 1,400, so close to INR 230 kind of a decline on Q-o-Q. So how do we look at -- so is this number sustainable or something one-off is there?

No, I think I will request you to that -- I said I think we don't have ready numbers available with me in terms of that Q-o-Q with us. I will come back to you on that.

The next question is from the line of Simran from SKP Securities.

Sir, can you please repeat the cement sales volume number for this quarter?

It's 6.17 lakh, Simran.

Sorry, sir, 6 point...

6.17.

That is the cement production or cement...

Both are same, 6.17 production.

And sir, how much is for the Northeastern region?

In Northeast region, it is -- and it is 4.93 lakhs.

[Operator Instructions] The next question is from the line of Rajesh Kumar Ravi.

I have a few questions. First of all, on the costing side, if I look at the employee cost, sequentially, it has gone up significantly versus the previous quarter ended. So could you explain what is that leading to?

Rajesh, largely, last year, if you look at it because due to pandemic, the increments were not done, right? So -- and they have been done -- only a small increment was done at the end of calendar year, right, in the month of, I think, January or February or March, right? This year, in this quarter, there has -- the increment impact has already come in. And also, there are certain bonuses which have been handed out, right, which was skipped last year. So that's an impact.

Okay. So the Q2 number would be the new run rate? Or the 1H would be a new run rate, sir?

No, Q2 will be normal. That's a normal thing. And if you look at it, '19, '20 also, if you skip '19, that's how it used to be. So this will be a new run rate, right?

Okay. So subsequent quarters, INR 42 crore would continue? Or will it come back to INR 35-odd crore quarterly run rate? That was the point.

No, no, no, that will not come because Q2, the incremental impact of the last 2 quarters impact was okay. So that is there. And bonus last time, we have given it in Q3. Now it will come to Q2. So Q3, it will not come. Bonus figures will not come, the expiration amount. And also, that is the 1-month -- 1-quarter salary increment. That impact is also there. So that will not be there. So you got to really calculate the thing.

Okay. And secondly, if I look at the input cost on a percent basis, what sort of benefit -- there is one thing which you have been talking about, the fuel cost inflation impact. So -- but if I look at the input cost number sequentially, adding raw material and power costs together, and if I look at the number, then I see this number has come off versus INR 2,900 per ton in the last 2 quarters. It's close to INR 2,600 now. So where is this savings coming in from?

The saving you say, last quarter, we have also purchased clinker aggressively because I haven't had the number right now, but there is a purchased clinker in the last quarter that has impacted the raw material cost in the last quarter as well as the Q4.

If you look at it corresponding quarter last year, right, we know that in the -- from the October onward and we were already looking at a problem of this -- the bridges which were there in Meghalaya, right? So as we have resorted to certain -- bought some clinker at that point of time, right? So that has got -- must be got and built into. And when you are looking at sequentially, you are finding it that actually, the raw material costs have actually come up. It's not like that. It is one-off for that clinker purchases in those quarters.

Okay. Great. From Siliguri, sir, which are market -- Siliguri plant, which are the markets you are servicing currently?

So we will be largely doing North Bengal market and up to Central Bihar. That's the market that we are looking at.

Okay. No, why I ask this because for the first half, as you said, the plant operated at 30% utilization, so 2 million ton, 1 million ton capacity. But if I -- from -- on 1 million ton, 30% utilization. But if you look at the volumes for the outside Northeast numbers, they are close to around 0.28 million tons. So is this totally being serviced now from Siliguri?

Yes, yes, it is 100% serviced from Siliguri.

Okay. And that is why you are getting some benefit on the freight cost also?

Yes, there will be some because the lead distance actually reduces, so there is some advantage there.

Okay. Great. And lastly, on the fuel cost, which you said that versus your landed per ton cost, how has that moved between June and September?

Landed cost of?

Fuel. Your coal purchases across different grades, on an average basis, how has that moved between the 2 quarters, June and September?

See, I'll say June and September has largely remained unmoved. I'll say, there is only an impact of 5%, 7% only. But that was because of the fact that we already had a lot of coal stocks with us. Because any company -- and we are sitting in Meghalaya, right? And we had to get coal from Eastern coalfield. So there's always a lead distance which is there. So the stocks are built depending on the lead distance which we have. So when the coal prices started moving up, we did have a good amount of stock, as you also -- as I've also mentioned that at present also, we have around 200,000 tons of coal, which has already been bought from the Coal India and it is -- that Coal India is yet to deliver that. And that is also the part of the planning which we do because during the offseason, normally, the coals' costs are actually lower and then we build up the stock to service during the season, right? But the whole problem started with Coal India because they are just not giving any rates to non-power players. So we are in discussions with the government for talking to them about and to starting fuel supplies to actually the infra sector, which is largely the cement and the steel and these sectors. So hopefully, we have been given to understand that the fuel inventories at the power plants has actually gone up from 1 or 2 days' up to 5, 7 days' time. And I think they will become comfortable in some time. And we'll get -- getting coal players there.

Okay. And lastly, sir, amid all this crisis, Meghalaya is seated with the pool, which is coal piles which got cleared from Supreme Court. But is there no movement happening over there to sell off that stock of coal which is lying?

I think they had given a trite at one particular coal auction, but that auction could not succeed because of certain technical issues which were raised by Coal India. We are also putting our efforts in terms of making the government understand to carry on with coal auctions. Hopefully, once that happens, it will also ease out a lot of cost pressures on us. And -- but we are still awaiting that. Still, the government is still working on it and has not been able to come out with a clear guideline of auctioning that coal.

[Operator Instructions] The next question is from the line of Shravan Shah from Dolat Capital.

Sir, this Meghalaya clinker unit, 3 [ MTPLs ], so environment clearance, when is it expected?

We have made applications for environment clearance. We expect to get the environment clearance within 5 to 6 months there.

Okay. So by March, it will be there. And from there, it will be 3 years to start the plant.

Correct.

So in FY '25, the clinker unit will come.

Correct.

Okay. Okay. And second, sir, you said that you are expecting a kind of a 20% kind of a volume growth for this year. So during the first half, we have already done 25%. So are we expecting the second half Y-o-Y decline in volume despite the Siliguri plant will be there?

I don't think so, but I think that's the number we are comfortable achieving it. Definitely, we will be happy to surpassing our own targets.

And secondly, sir, maybe previously, the same request would have come. Just once again requesting, is it possible to now add the power and fuel and freight line in the P&L when we release the results? And is it also possible to release the volume along with the results so we don't have to keep on following up with you? So it's a request if you can now do.

We'll have a look at it, definitely.

[Operator Instructions] As there are no further questions, I will now hand the conference over to Mr. Rajesh Kumar Ravi for closing comments.

Yes. Thanks, everyone, for joining in the call. Wishing you all happy Dhanteras and Happy Diwali in advance. Manoj sir, Sanjay sir, would you have any closing remarks? After that, we'll conclude.

Thank you all for joining this conference call. And from the side of the management, we wish all the participants and everybody in your family a very happy Dhanteras and happy Diwali. Thank you.

Thank you. Thank you all.

Yes, Nirav, you can conclude the call.

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