Star Cement Limited (540575) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Star Cement Q3 FY '22 Conference Call hosted by PhillipCapital (India) Pvt. Ltd. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vaibhav Agarwal from PhillipCapital (India) Pvt. Ltd. Thank you, and over to you, sir.

Yes. Thank you, Aman. Good evening, everyone. On behalf of PhillipCapital (India) Pvt. Ltd., we welcome you to the Q3 FY '22 call of Star Cement Limited. On the call, we have with us Mr. Sanjay Kumar Gupta, CEO; and Mr. Manoj Agarwal, CFO of the company. I will hand over the call to the management of Star Cement Limited for their opening remarks, which will be followed by Q&A. Thank you, and over to you, sir.

Good evening, everyone. I'm Sanjay Gupta, CEO of Star Cement. I would like to welcome you all in this earnings call for quarter 3. I have with me Mr. Manoj Agarwal, CFO of the company. He will take you through quarter 3 numbers and 9 months' number for the current financial year. And after that, you will be able to ask questions, and we will be happy to reply. Over to Manoj for updating you on quarter 3 numbers. Manoj?

Yes. Hi, friends, very good evening. I, on behalf of Star Cement Limited, welcome you all to our con call for discussing our number for Q3 FY '22. I would like to clarify that we are discussing on the historical numbers. And there is no indication to invest. Having said that now, I will just take you through the Q3 number followed by a 9-month year-to-date number. Starting from clinker production. During the quarter ended December '21, we have produced 5.25 lakh ton of clinker as against 5.89 lakh ton. We have produced 8.57 lakh ton this quarter as against 6.59 lakh ton same quarter last year. Now I will take you through the sales volume. During the quarter, we have sold 8.62 lakh ton of cement and 0.12 lakh ton of clinker as against 6.62 lakh ton of cement and 0.29 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... [Technical Difficulty]

Ladies and gentlemen, we request you to stay connected while we check the line for the management. Ladies and gentlemen, thank you for patiently waiting. We have the management line reconnected. Over you, sir. You may please go ahead.

Yes. Yes. As far as geographical distribution of cement is concerned, in Northeast, we have sold around 6.35 lakh ton as against 5.37 lakh ton during same quarter last year. And as far as outside Northeast is concerned, we have sold 2.27 lakh ton of cement this quarter as against 1.25 lakh ton same quarter last year. In terms of blend mix, it is almost 2% of OPC and rest is PPC. These are the quantitative numbers of the quarter. Now I will take you through the financials. Total revenue figure for this quarter is around INR 554 crores as against INR 423 crores same period last year. As far as EBITDA figure is concerned, this quarter, we have done an EBITDA of around INR 74.55 crores as against INR 91.41 crores last year. PAT is INR 43.82 crores as against loss of approximately INR 2 crores in the same period last year due to the exceptional item of INR 64.57 crores in Q3 '21. On per ton EBITDA basis front, it is INR 853 during this quarter as against INR 1,322 per ton same quarter last year. This is what our quarterly numbers for third quarter. The total revenue figure for the 9 months ended December '21 is around INR 1,470.88 crores as against INR 1,116.69 crores same period last year. As far as EBITDA figure is concerned, during 9 months ended December '21, we have done an EBITDA of around INR 256 crores as against INR 248 crores last year. PAT is INR 158 crores as against INR 102 crores in the same period last year. On the per ton EBITDA front, it is worth INR 1,137 during the 9 months ended December '21 as against INR 1,385 per ton same period last year. These are the quarterly and 9 months' year-to-date figure. Now I request all of you that if you have any queries, you can ask the same, and I will request Vaibhav to moderate the query wherever it requires. Thank you.

[Operator Instructions] First question is from the line of Keshav Lahoti from HDFC Securities.

I can see that your transportation cost per ton has sort of increased by 8% Q-on-Q. Our assessment is that diesel prices were sort of flat. Is it that lead distance has increased? What we have gathered also from last commentary was that lead distance will decrease as deliveries will ramp up. Can you please throw some...

No, I don't think -- see, what has happened is over -- if you look at it in the total, in this quarter, there is an increase -- there has been a fluctuation in the petrol and diesel prices. So it will -- there is some impact, it's definitely there for the cost of the fuel, which we consume. And the lead distance is more or less is remaining the same. There's hardly any difference in -- there's no increase in lead distance. I think this quarter, our lead distance for the YTD December will be around 220 kilometers. So that remains more or less same in H1 with 222 kilometers, right? So there's not much increase in lead distance. So it is largely on account of fuel increase only.

Okay. And secondly, is there any change in guidance of 20% volume growth for FY '22?

No, I don't think we are going to change any guidance -- we are on track to achieve 20% volume growth, I think, on a 9-month period. If I look at it, overall volume growth has been -- it is already at 25%. So I think it will be better than 20%. In terms of volume, we are going to achieve our guidance.

Okay. And last question, was there an update on delivery? How is the utilization moving?

So the capacity utilization for delivery has improved in this quarter as compared to -- I think as of now, the -- if I'm talking to you on 27th of January, if I look at it, the capacity utilization is somewhere around 60%. So it is improving. We are ramping up the capacity. I think in quarter -- overall quarter 4, we hope to do some something around 65% -- by the end of quarter 4, we'll achieve around 65% capacity utilization.

[Operator Instructions] The next question is from Uttam Srimal from Axis Securities.

Sir, in terms of pricing and demand currently, how are you seeing the pricing in Northeast and East? And how is that demand as you see in the January 13 date? And how do you see, moving ahead, demand will pan out and as far as the pricing is concerned? Because we have seen there has been a lot of correction in pricing in the Eastern market, so your take on this.

Yes. So Uttam, see, I'll take this question in two parts. One is definitely Northeast and another is East. So in Northeast, what we have in quarter 3, definitely the prices has corrected. I'll say there is a correction in the price by at least INR 10 to INR 12 per bag. And that's the correction which we have witnessed as compared to, if you look at it, the correction which has happened in the East. East prices have -- must have corrected by at least 10% to 12%, right? That's -- so we are looking for approximately INR 40 kind of a drop in East, right? So that was not the scenario as far as the Northeast is concerned. Yes, demand was definitely muted in quarter 3 in Northeast, but it has already started picking up. And hopefully, by the time we end the year, I think the full year basis, the Northeast will still achieve an overall cement demand growth of around 7%. Coming back to East, the prices in East, which were really muted in the month of November and December, and that was largely on account of certain year-end closing pressures, which the bigger players have actually been facing, like Ambuja and ACC had a year-end problem in the month of December. So yes, definitely, there was a pressure on the volume. And suddenly, I think in the month of December, the demand has really actually taken a beating. So if you look at it, overall demand was back in the November and also in the month of December. And that has impacted the prices. But I think come January, the price has already started moving up. We have already seen a 3%, 4% jump in the prices in East. And as far as the demand is concerned, I will not say that it is very good. But yes, definitely, it is picking up. By the time we end the year, my personal opinion is that overall, East will end up somewhere around 3% to 4% overall demand growth. So still, I am looking at a growth because January has really picked up very well in the East now. So that's what my take is. And going forward, we definitely look forward that there will be the normal demand growth trend of 6%, 7% in entire Eastern region, we definitely will be able to see in FY '23.

Okay. And sir, during this quarter, our volume growth has been more than 30%. So this volume growth was driven by basically Eastern market or the Northeast market?

Well, if you look at the breakup of this, both the selling patterns we have done, even Northeast volume for us have actually grown by around 19%, right, 19%, 20%. And the East has grown around 50%, right? So definitely, East will grow bigger because as of now, we are a very small player in the Eastern market. The Siliguri unit has just started. So we are picking up the volume. We are ramping up our volume in Bihar and Bengal, parts where we are actually in our own catchment area. And so it will continue to -- I think in terms of volume, it will outperform Northeast. But Northeast volume has also been -- has grown in this quarter. As I said, there is a 20% growth in Northeast volume also, so it's a combination of both.

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

Uttam, around 86% and 14% is the non-trade.

Okay. And sir, my last question with regards to CapEx, what kind of CapEx we have incurred this year and for the next 2 years that we are envisaging our CapEx plan?

See, I think I have been always saying on the calls that we are going ahead with and putting up a 3 million ton clinkerization plant at Meghalaya. That is there. And we are looking at setting up a 2 million ton grinding plant in Guwahati. And we are setting up -- as of now, we're setting up a 12-megawatt WHR plant also. Along with the 3 million ton clinker plant, there'll be another 12-megawatt of WHR plant will also be there. So if I look at all these investments, these investment will be somewhere around anything between INR 1,700 crores to INR 1,800 crores. But it is going to pan between next 3 years, within next 36 months. As far as the stage of implementation is concerned, we are -- in terms of clinker unit, we have started ordering for our equipment. Yes, we still await the environment clearance, which is to be -- which is there. But we have received the ToR from the environment -- Ministry of Environment and Forest. So the ToR is already here. We are fulfilling the requirement. I think we hope that in next 3 to 4 months, we'll receive the clearance and we'll start the construction. That is one. As far as Guwahati grinding unit is concerned, we also have received the ToR for Guwahati griding unit. And we expect again in the next 3 months, we'll also get the environment clearance for that. WHR project for 12 megawatt is already under implementation. We hope to start the project by September 2022. So these are the timelines and the cost for the projects, which we have understood.

And sir, my last question, in regard to our fuel mix this quarter, how has been our fuel mix this quarter, looking at imported coal, coal and...

See, I'll say we are not using any pet coke, and we've not even bought in this quarter any imported coal. It's completely 100% dependent on Coal India.

[Operator Instructions] Next question is from Kunal Kothari from Centrum.

Sir, for the -- just you mentioned that you're completely procuring coal from Coal India. So was there any like usage of the existing inventory also? Can you share some details on that?

Okay. I don't [indiscernible] with that. We had -- I can only share with you that we had around 200,000 tons of coal delivery pending from Coal India, which we have started receiving this quarter. And those coal inventories, you can say that, that was an inventorized coal with Coal India because we bought that coal in the -- which took place in the month of April and May and June, right? So that was at a much cheaper price than what today's -- the auction prices are. So that is definitely, but that coal has already started coming in and we are utilizing that coal.

There will be no need to have import -- to import any coal. Coal India will sufficiently can supply coal to us?

So that's why we have been participating in all the Coal India auctions, which are there taking place in Eastern Coalfield and in the Central Coalfields. So we are getting the supplies there. Yes, the supplies are used regular. I will not say there's a smooth supply. But Coal India has given us assurance that they will be able to fulfill all our demand. We have also entered into a -- for supply of around 150,000 tons of coal for a -- on a full supply agreement with Coal India that also we have done in this, I think, last quarter only. And we hope to start receiving those supplies also from quarter 1 in the next financial year. So we are on track of doing that. And we are absolutely hopeful that Coal India will be able to fulfill its commitment.

And secondly, sir, you mentioned that the demand in the Northeast and Eastern market was down. So first of all, what were the reasons for that? And how our company has performed well when the market was down?

See, [indiscernible] Northeast, the demand is -- normally, the demand is always down in quarter 2. And it actually -- check it, if you look at it, September, October numbers are largely months which are -- demand starts picking up but not to that extent. So there is a carryover of quarter 2 that happened. So demand was generally down. And I will say that demand was largely down from the infra segment. Retail demand has started picking up from the month of November and onwards. As far as we are concerned, what we have been able to do is that we -- I think if you look at it, our way of working, what we have done is we have launched a new campaign in this particular -- I think when we had started in the month of April, last February, when we started this new plan, we launched a new campaign, where we have taken Akshay Kumar as our brand ambassador. That campaign was carrying on. So we could find a good traction for our brand, not only into the new market in Bengal, India but also in Northeastern market. And slowly, I can say that as a brand, we may -- that people will start looking at us as a national brand -- more of a regional brand. Because now we are also presenting a good part of Eastern market. So that will definitely add value to the overall brand recall for the company. And it will definitely help achieving more volume for the company. So I think you have seen that traction in quarter 1. We have to continue the same in coming quarters.

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

I have a few questions. First is on the coal follow-up around the costing side. You are saying that you're continuously getting coal from Coal India. And so in this quarter, there is a spike in cost. Okay. So could you explain how did -- what is the per kilo calc costing that you incurred in this quarter? And now that your coal inventory, which you have done, is coming through, how will that change the cost metric? And in subsequent quarter basis, the current price, how will that cost then be on the fuel side?

You see, Rajesh, see, the cost of coal -- let's say, I will say that today, if you look at it in the month of January, when coal auctions are taking place, auctions like that are averaging around -- number around -- I think the last auction was pulling their [ date ]. The last price that went up towards INR 2.2 or INR 2.3, right?

Per kilo calc, okay.

Per kilo calc. And in our case, I think we have been able to set -- since we had a lot of coal, which we had taken earlier, that cost will be coming to somewhere around INR 1.8 or INR 1.9, right, honestly. So that has helped. But ultimately, if you compare this corresponding quarter last year, if you can see, the price will look elevated, correct?

No, I'm looking from a quarter-on-quarter perspective, there is a sharp reduction in margins. So September quarter, what was the landed costing which you consumed? Because what you're implying is that INR 2.2, INR 2.3 is what you bought into. And the contracted volume, if that would have come in, it would have been at INR 1.82. So there is hardly 10%, 15% difference, not more than that. Is that understanding correct? What was the costing in September quarter for you?

No. See, if you look at it by September costing and in the cost of December, there will be hardly any difference because whatever coal we have purchased now, that coal delivery has not started taking place as of now, right?

No, on consumption basis, sir, on consumption basis, not on inventory basis.

No. I think the quarter 3 coal cost will be somewhere around INR 1.6, INR 1.7. And I think the quarter is INR 1.65. So it is almost the same, Rajesh.

So this quarter, December, your consumption cost was INR 1.65 versus September, INR 1.6?

Yes.

So in that case, why should the cost be so high sequentially? Because you did good on volume. Your input cost numbers are significantly higher quarter-on-quarter. So what explains that differential? Because there is no other cost which would have gone up significantly.

No. Rajesh, you can see, the fixed costs have gone substantially higher as compared to the last...

I mean, I'm seeing on the input side quarter-on-quarter, if I look at -- if I sum up raw material, change in stock in power and fuel, that number was thought to be INR 2,600 in September quarter, which is now at INR 3,000 in December quarter. So there is a INR 400 jump. And you're saying that per kilo calc costing has not changed.

No, because power and fuel costs have not gone up per ton basis, which [indiscernible]

I think, Rajesh, there's some [indiscernible]. So if you look at it, the overall quarter, if you're looking at it quarter-on-quarter cost...

Quarter-on-quarter is what I'm trying to understand, sir.

I don't see -- the overall power and fuel cost largely looks the same, right? It is not having much change in power and fuel. That is one. I don't know what number you are looking at, I need to look at those also.

So how do we look at your -- if per kilo calc costing has not changed in electricity and fuel cost not have also marginally changed, barring 5%, 10% impact [indiscernible]

One thing you have to -- Rajesh, one thing you have to look into because from Siliguri, because last year, last quarter, there is a [ 40,000, 45,000 ] of the cement we have purchased from the...

No, September quarter, sir. In September quarter versus December quarter I'm you looking at.

September to December, you are talking about the per ton. We don't find any such increase over there in power and fuel cost. I will reply...

Sure. I'll talk to you separately. And second is -- yes, this trade/non-trade mix, you're now at very high trade mix, 36%. So how is your East markets? Are there also similar trade mix? Or they are different from your Northeast sales?

So we are only focusing on trade segment that we clearly indicated by the fact that the kind of work we are doing. We are largely focusing on trade because you have to understand that we are only focusing on North Bengal part of it and East Bihar, right, cover the entire Bihar market and the entire Bengal market. And we'll be only focusing on non-trade segment in these markets, right? And partly into the NB one, which is normally is Cooch Behar, Jalpaiguri, Darjeeling and Sikkim market for the non-trade business. So I don't see that non-trade business is going to spike as whatever it is. I think at the -- on the best -- on the worse of time, I think there can be 20%.

20%. Okay. And third, on the CapEx front, this clinker debottlenecking, is that exercise complete, sir? Or is some part of that still pending?

No. I think the last shutdown, we have already -- there's nothing pending on that. That exercise is already complete.

Okay. So what is the total clinker capacity now, sir?

I think we have been saying that from 2.8 million, it will become 3 million tons. [indiscernible] 3 million ton.

So it is now done. And this happened in September quarter, last September quarter?

[indiscernible] in the month of August or something.

Okay. So in this financial year, August, you have already completed the debottlenecking exercise, right? And now what is pending is that the one first phase of WHR, which you're expecting to come by September next year and then the grinding and then the clinker unit. And concurrently with the clinker unit, a 12-megawatt WHR would get commissioned.

Absolutely.

And how would the CapEx number look like, sir, for this year basis because you are already in January. So for full year, what is the target you're looking at CapEx spend?

Yes, I don't think we're largely spending on the CapEx of WHR at this point of time because the orders have just started. So hopefully, by end of it, I think we have around INR 150 crores budget for this 12-megawatt CapEx plan. And by end of this year, my estimate is somewhere around INR 75 crores to INR 80 crores we'll be spending on this and maybe another INR 10 crores to INR 20 crores of advances we may have to give for some. Because ultimately, all the advances and everything will start going from April only [indiscernible] the environment clearance on that. So hopefully, it doesn't look like that in this quarter for the new projects, in this year, for new projects, we'll spend more than INR 100 crores.

Okay. So INR 100 crores for [indiscernible] for the new projects and 150 -- out of this INR 150 crores, what you will spend this year on the WHR and routine maintenance CapEx.

[Operator Instructions] Next question is from the line of Indrajit from CLSA.

A few questions. One, while you mentioned that January volumes or demand has been better than November, December, but on a Y-o-Y basis, does it still remain meaningfully lower? Or even on a Y-o-Y basis, we are seeing improvement in demand in January?

So we are definitely seeing a demand. I think I'll say this that even in Y-o-Y basis, we are seeing a demand jump in the month of January. And I think we are still clocking at -- at our current run rate also, the volume growth is more than 20%.

I'm talking about your industry perspective, not just for us. Overall, on the industry perspective, do you think that East and Northeast is growing ahead of the volumes that are ahead of last year? Or on industry, it is largely flattish or slightly up?

I will also tell you this, on the industry perspective also, I still feel that people must be adding their volume in terms of year-on-year basis. Definitely, the volume must be 15% to 20% higher than what they were. That's the kind of traction, I think, that the people are seeing in the month of January.

That's good to know. Second, you mentioned that in the December quarter, you saw a 10% to 12% price decline. And January, you are seeing more like 4%, 5% price increase so far. So is it fair to assume that from, say, December quarter average, current prices are still 4%, 5% lower East, Northeast -- particularly East, not so much Northeast?

See, I won't say that -- see, when I'm talking of 10%, 12% price drop, this is largely on the peak of it. So if you compare the peak of what peak it had and then still where it went down, that difference is around 12%. So if I average it out, it will be -- I don't think it will be more than 7%, 8%, right? And I think half of that -- more than half of that must have already been recovered. I think this -- and that goes back to also -- I think the prices have started going up only in the -- I'll say, from 10th of January to this, right. So you can assume -- fairly assume that 50% of that price drop has already been recovered in the month of January and the balance is yet to be recovered. So you can assume a 50% recovery on that.

Sure. And one last question, did you mention that your Q3 average coal cost was INR 1.65 per k calc? So -- and given the visibility that you have now, what could be the likely cost in Q4? Will it be like closer to INR 1.8? Or would remain at these levels?

I think that the coal cost will be closer to INR 1.8 only, INR 1.75 to INR 1.8. That's what we are looking at it. Because what will happen is, over a period of time, although I have coal, which we have bought it at INR 1.6 or INR 1.55, INR 1.6 from Coal India, but the problem is that the supplies are so erratic that, at times, you need to go to the spot market and buy this coal. So that has increased -- and that spot prices are hovering around at INR 2.2, INR 2.3, INR 2.4 also, right? So that is impacting the price. It will all depend on next quarter, how -- what's the supply levels for Coal India and how much we have to resort to go to the open market and buy the coal, right? So -- but we still hope that we'll be able to continue even INR 1.8.

[Operator Instructions] We have a follow-up question from the line of Rajesh Ravi from HDFC Securities.

You said that Q4 costing will again be higher on a quarter-on-quarter basis, so -- and if realization does not materially improve, in that case, we would be again looking at below INR 1,000 EBITDA margin. Is that understanding correct?

No, Rajesh, that's not my reading actually. That's not my reading. My reading is very clear that -- see, the prices, I think -- we still sell -- if I look at 65% of our volume in Northeast, Northeast prices have not corrected the way that East prices have corrected. And I think the Northeast prices have already gone back the level where they were, right? And they are still hoping to add -- because there will be some cost pressures, which we'll definitely like to pass on. So my understanding is that Northeast prices will behave much better from there and the volume growth will be definitely there. That will definitely -- and that's the highest EBITDA contribution place for me, number one. Number two, when I say that there will be a coal price hike, you need to understand, in this quarter's EBITDA margin, there are a few one-offs, right, I think, which people swearing into it, and I must highlight that. So lastly, if you look at it, the one-off is that we have spent a good amount of money in promoting this new campaign called Hain Tayyar Hum, and Akshay Kumar is the brand ambassador. So that is primarily for Siliguri plant, which has come up. And it has -- so there is a good impact of, I'll say, on a full year basis, if I look at it, [indiscernible] will be about INR 15 crores, INR 20 crores is only on this advertisement, right? So that itself is adding on the cost. So that is one aspect we are keeping in mind. When you look at FY '23, coal price -- when you say that I'm still expecting the coal prices to be a little higher because of the fact that whatever inventory we have with Coal India, it is very unpredictable to say that how much coal, Coal India will be able to supply in spite of their -- all the promises they've been doing. So we may have to resort to spot private market or a normal market buying, right, where the Coal India is not available. And that prices are around INR 2.38, INR 2.40. So it will all depend on what mix we are able to achieve at the end of the quarter.

And this advertisement cost, INR 15 crore additional, so could you quantify what sort of actual cost -- expenditure has happened in this quarter versus a normal quarter?

So, see, I think, December...

What we want to materially understand is if this company at this quarter number, your margin is almost one of the lowest ever, okay.

So try to understand, so this quarter, advertisement, publicity cost is around INR 13 crores as compared to corresponding quarter last year, it was INR 4 crores. Okay. So it's almost 3x what we had, right? It was INR 4 crores and now it is INR 13 crores, okay?

So that would -- and then versus a normal scenario, it would be 50%, 60% down?

[indiscernible] the advertisement cost is around INR 31 crores, INR 32 crores as compared to INR 7 crores.

Last year was also [indiscernible] in terms of expenditure, right? So no, we are not looking from a last year perspective. See, where I'm coming in from, your coal inflation has not really include third quarter performance, as you are suggesting on a sequential basis. There is a normalization of your advertisement cost, which would largely remain at similar levels, given that you are still not ramped up the Siliguri, at least 70%, 80% of the time you ned to pump in advertisement expense. And the Siliguri, there was a thought that when Siliguri starts delivering, you would have substantial cost savings on your fuel lead distance -- your [ flying ] lead distance and overall other synergies, which you're looking at. Now none of these seem to be coming through in the numbers and the margins, which is on a downward trajectory. You were once the leader in terms of margins on the cement industry. So we are trying to understand where these things are not under your -- how do you look at these numbers? When would we be able to see Star Cement delivering those INR 1,200, INR 1,500 type of a number? And what would take the company towards those numbers?

Let me -- so you asked a broader question. Let me reply it in a sense which we are looking at. What I'm looking at, how does Star Cement go back to INR 1,400, INR 1,500 per ton EBITDA, right? Now look at this like this, don't look at quarter numbers. I understand the numbers are the lowest in the history of Star Cement, that is there. As I say -- so look at -- so you asked about advertisement. So in this year, our advertisement cost will be somewhere around INR 45 crores, right? Normal year, I'm not talking FY '22, FY '21, which is a [indiscernible] year. Normally, we used to spend around INR 15 crores or -- INR 15 crores, INR 18 crores depending on what we do, right? So you can say that there will be around INR 25 crores, INR 30 crores overall cost spend, which I'm going to do it in this year. That is one, okay? Second, when you say that, yes, that this year's numbers are really largely impacted because we are at a landlocked place. The freight costs have also gone up and the cost of fuel are also going up. Coal has actually impacted us considerably. Yes, there is a saving in flyers, all those savings are -- but they're overshadowed -- they're all are overshadowed by increasing the fuel cost. That is the second. Now if you ask me, where do I go and even if what I end up in this year itself? I think this year 9-month EBITDA margin still remain at INR 1,137, right? I will still say that I will still end the year -- and FY '21, I have ended at INR 1,350 and, of course, '20 was at INR 1,400. Now I'll tell you what will bring it back to INR 1,400, right? And I'm still hopeful, this year, we'll still report, at least if it is not that, it will have been INR 1,350 kind of a number, okay, on a full year basis. That is one. Now let me also tell you what we are doing to bring it back to INR 1,450, INR 1,500. Now as soon as I complete this WHR plant, right, it will add 13, 14 megawatt to my existing -- my total requirement of power is around 28 megawatts at this point of time, okay? It will add 50%. Yes. It will give me a saving of around INR 150 a ton, right? We have also done certain -- we have taken a fleet of around INR 100 crores. We have spent INR 100 crores on our own fleet management. That is going to add around INR 50, INR 60 per ton on an overall basis, what I'm saying. That will give me -- so that will make the savings at around INR 200, right? We have -- we are still -- and we're also doing some process improvement in terms of -- are doing certain additions in the raw material level and trying to change the raw mix as we hope to get at least INR 100 on there. So I'm looking for INR 300 contribution, which is in my hand, right, which I can do. I am not banking on anything which is market-driven. So if I add around INR 300 in that and still haven't been able to report INR 1,300 EBITDA at this year-end, and at INR 300, I'm already there at INR 1,600, right? And take or give 2%, 3% here and there, I'll be able to give you a INR 1,500 EBITDA. So that's what our plan in terms of moving back to INR 1,500. So it's definitely a quarter, which is in terms of margin, it's the worse quarter, I agree with you.

But for this year target of INR 1,300, would you imply the last quarter number should be north of INR 1,600 per ton?

See, if you look at our -- and like our quarter 4 numbers for all -- last, I'll say, 2, 3 years, you will come to know about it what is the quarter 4 number coming here.

Agree. You have been delivering earlier also those numbers. I'm saying on a sequentially, what would take you there. So this is what I just wanted to understand, given that your fuel prices, you expect to be higher sequentially. And that is one of the newer cost savings. That is what we want Star to deliver, those INR 1,400, INR 1,500 EBITDA numbers, which in Q4, you have been always been delivering those sort of numbers.

So we are really hopeful, Rajesh, we will be able to deliver that number.

Great, sir. We look forward to it.

Next question is from Shravan Shah from Dolat Capital Markets.

Yes. Sir, you have explained in detail, the previous participant. Just to add on that, in terms of the raw material per ton cost, so that -- even if -- on a per ton basis, are we expecting that to decline significantly? You explained other things in terms of the power and fuel trade, other expenses, advertisement. But on all the raw material, including the change in inventories, so there, do we expect a significant decline at least in the fourth quarter?

So we are not looking at to achieve everything in raw material in the next quarter itself. We are in the process of redesigning the raw mix. We will definitely be doing -- making some value addition in that. But just to quantify that in quarterly basis will be hard on my part. It will not be possible. We will keep on -- and it will all depend on what is the availability of the raw material, what is the mix we have been able to achieve. And these are largely dependent on the chemistry, which happens between the raw material. So I have to ultimately deliver the best quality shipment to the consumer with the lowest possible cost. So we will be definitely doing it, but all those benefits are going to come back to you in quarters to come. I cannot quantify which quarter it is going to come.

So broadly previously, just now what you said in terms of the INR 300 savings, which has been not in your control, now that cement price is higher. So out of that INR 300, just entirely, are we expecting in the fourth quarter a cost reduction or the savings, INR 300 per ton?

Understand, I talked about [indiscernible] which is going to start in the month of September 2022. So I cannot bring [indiscernible] and make it in quarter 4, number one. When I talked about that they're going to have fleet advantage, that is also going to come in quarters because we -- now construction started coming into the system, they will start contributing it. And in some quarters, we'll see partial benefit. In the next quarter, we will see a better benefit, right? In terms of raw material and other mix, what we are doing, some we are going to see in quarter 4, some even in quarter 1. But definitely in 2, 3 quarters, you will find these numbers coming up. And this INR 300 kind of a number, which we are looking at it, we'll be able to realize it. And we'll come back to our original number of EBITDA.

Sir, have we shared the lead distance for this quarter?

Around 221 kilometers.

221. So last quarter, you mentioned it was around 300-odd kilometers. So this quarter, it is 221. Am I right? Sequentially, it has reduced significantly.

No, no, no, it is a similar number. It was 225, I think, last quarter. It was somewhere around 225 only. It's in the same trajectory, around 220 trajectory.

Okay. And sir, last request, so even previously also many parties in the last quarter also, I have requested in terms of sharing the power and fuel, freight and other expense line item with the results. So what happens is we have to keep on following and we got the answer that it will be discussed during the call. But you also need to understand that we need to also have to update to our lines. So why not we make a point that at least even if you don't give it as a part of the P&L line item, at least as [indiscernible] also. So why can't we share that thing, which all of the companies are doing?

Well, I think I don't see any problem in sharing those numbers. I think we would start sharing it. Let me just figure it out [indiscernible] this quarter we will be able to sell it, okay?

We will take the last question, which is from the line of Harshil from IMAP India.

I have just one question. You talked about CapEx plans. So there may be many smaller players [indiscernible] in the region. So are you planning to consolidate through acquisitions?

Can you repeat your question again?

Sure. You talked about CapEx plans across -- for the next 3 years. I just want to check -- I mean, ask you, there may be many smaller players in the region [indiscernible]. So are you planning to consolidate maybe two acquisitions?

See, definitely, if there are opportunities, we'll definitely have a look at it. Only question is there are smaller players. But [indiscernible], then if there is a willing buyer and a willing seller, then only a transition will take place. And we have to also look at what value the asset is available to us. If there is any asset, which is available within our ambit of value and it is actually an accretive addition to our balance sheet, we will definitely look at that asset. And I think we are actively looking at some things. But the only question is we haven't found [indiscernible] which will add value to us. So that will happen. And we continue to look for any acquisition opportunity in the country.

Sure. So sir, so the CapEx plan that you gave, you just mentioned earlier in the call, that is pure from, I mean, organic aspect, right? I mean, you'll set up your own capacity in [indiscernible]?

Yes, absolutely. That is pure from an organic perspective.

Ladies and gentlemen, that was the last question. I would now like to hand the floor over to Mr. Vaibhav Agarwal for closing comments. Thank you, and over to you, sir.

Sir, I had a few questions actually. Sir, you mentioned about one-offs in the current quarter. So sir, you have mentioned about the advertisement cost as a one-off. And beyond the advertisement cost, are there any also consulting fees which you have paid, which is also included in the number [indiscernible]?

Yes, there is a consulting fee we are taking through suggestions from BCG, there's a consulting fee of around INR 5 crores. I think that's going to come in next quarter also. So that's why I didn't say that, that's a one-off thing. But yes, this is one-off -- probably this may be a one-off thing for -- this consulting fee will be one-off for this year probably. Maybe next year, it will be there. But that's why -- because if you're going to continue for next 1 or 2 quarters, I did not mention it in one-offs, right? So probably that is -- but yes, in this quarter, there is a consulting fee of INR 5 crores to Boston Consulting Group.

[indiscernible] charge to this quarter and INR 5 crores. Next quarter also -- INR 5 crores, you are expecting on that number, too?

Yes. Probably we'll be expecting that kind of number.

So your total one-offs would be like INR 13 crores plus INR 5 crores, so INR 18 crores is the one-off. Is that right?

Yes, that's the right reading, yes.

Okay. And sir, on the advertisement part, which you called INR 13 crores as an expenditure for the current quarter, how many quarters do you -- is it an advertisement to seed the market initially and you don't own the advertisement [indiscernible]? Is this the number?

So this is -- that definitely, this is because that, obviously, since we started the [indiscernible] we have to seed the market. And a large part of this expenditure is towards seeding this market. But overall, we have to ultimately -- you have to understand that we are a largely a regional brand, right? We are a regional brand. Once we are moving out of Northeast, we have to also take -- at least make a top-of-mind recall of the consumers that we are also a national brand as compared to Ambuja or an UltraTech, right? So we have to take that fight to them. And that top-of-mind recall will only ensure that our products are also accepted in the same way they are accepted. And we are -- we have that pricing power, and we are priced equivalent to these brands, right? So that's a journey which we have embarked. But yes, in this quarter, it is definitely -- in this year, it will be definitely higher. And we hope to achieve the objectives, which we have in coming 1 or 2 quarters.

Right, sir. Sir, I also wanted to ask you about the trucks, which [indiscernible] 150 trucks in your own fleet, if my understanding is right from the ground. So what was the objective [indiscernible] behind purchasing these trucks. So was it to like -- and what -- do you have any sense on the ground in terms of any strikes or anything like that? And what are the benefits of [indiscernible] on your own fleet?

So we have taken a fleet of around 200 trucks for us. We have already had [indiscernible] fleet. What we wanted to do is you have to understand that the [indiscernible] plant is largely dependent on road. And we have plants which have a dedicated supply for clinker. And there are fluctuations in the market in terms of fleet availability, price, rate and all that, right? So we wanted that as far as the supplies of raw material is concerned, we are actually assured in terms of getting our raw material to the plant and then being able to supply the market. And also in -- by doing that, we will be able to have some control over the ability of the truck and the prices, right? And that will also give us economies of scale because now we are operating 300 clinkers and that will definitely give us some economics. And that's not the worst part of buying these trucks.

And is this an industry [indiscernible] your market? Because I believe most of the clinker plants [indiscernible] and other peers also they have purchased similarly?

Probably not. We aren't doing in the market. It has to be completely -- all the complete fleet has been -- we have been doing our own...

No. Is there an industry [indiscernible] that people are buying fleets for their own...

Yes, yes, yes. There are industry -- in the industry, there are people who are actually trying to deleverage in terms of logistics. So that -- and you have been seeing this -- the electric delivery of transporter in biggest part of the country. I think a very large players are also thinking of getting into having some kind of control over their transport, right? So probably that's what we are also doing.

So sorry, sir, at any point of time, will we consider having our own fleet for distribution also for a final destination or it will be that [indiscernible]

I don't know. We have not taken any addition on that if that is -- if there will be any decision that, we'll definitely come and tell you on that.

Right, sir. And sir, one more thing I wanted to understand about is the -- basically, you had mentioned in the call about your EBITDA guidance for the full year, about INR 1,300. So if I look at the 9 months' figure, even including the other income and everything, that's about INR 1,140 for the current quarter -- or for the 9-month period. So if we are looking at that number of INR 1,300 for the full year, so you are guiding on the -- I believe the guidance you have given us a direction is that it's not a fourth quarter guidance. That INR 1,300 directional guidance for the next FY '23, on what kind of a number? Or is it the guidance for [indiscernible]? I just want to clarify that. Because if I look at the 9-month number of INR 1,140 EBITDA per ton on a 9-month basis. And to have achieve a INR 1,300 for a full year blended basis, the number actually quite high for Q4. I just wanted to clarify that for the...

So I tell you what, I have, what, INR 1,300 number, which I'm talking is for the FY '22 full year number, right? That's what the number I am trying to achieve, okay? And we will be able to achieve it. The other guidance, which I gave around INR 1,400 and INR 1,450 kind of a guidance, which is there with the savings [indiscernible] taking and getting into it. That's the futuristic [indiscernible] definitely for this year, okay?

Understood, sir. Understood. And just one last thing, so on the CapEx front, I just wanted to understand that point. So we are yet expecting the EC to come in, right? But we have started [indiscernible] for the clinkerization. Is that what you mentioned on the call?

Yes. We have started. So we have been given to understand that. Since we have received the ToR, we hope to get the environment clearance shortly. So we can always go ahead and start negotiating with vendors and suppliers and all that. So all that discussion has already started. And we'll start placing orders. Because in anticipation of that, we'll definitely place the orders. Because the time delivery of machinery is definitely very high. So we have to be a little ahead of schedule on that.

And sir, before you conclude the call, I want to give a last take on your -- the increased intensity of new players coming to Northeast. So what is your take, sir, when you hear one of the South players is coming to Northeast all the way from South? So what do you -- how do you read? And do you see that they will go away when -- trying to [indiscernible] or long term? And are there any opportunities [indiscernible] players are looking in terms of acquisition also which is there to a knowledge [indiscernible]?

See, I will say I'm not expecting this player to go away. They've always been there. They used to hold 20% of the market of the Northeast. Now they have around 11%, 12% of the market in Northeast. And we are not here to say that they will definitely go away. I'm saying, yes, there are few serious players, there are a few serious players to remain in Northeast. Market is not a small market now, it's a 10 million ton, 12 million ton market. And people will definitely have a look at it. But I think, as a reasonable advantage, what we have and the kind of distribution setup which we have and the penetration levels which we have, the [indiscernible] which we have with distribution, these are things which are very hard to replicate in Northeast. That is one. Second point is that is why to consolidate our holding and consolidate our position in Northeast, we are again embarking on a new CapEx plan in Northeast. That will further consolidate our position in Northeast and -- but I'm not seriously worried about people who are coming from -- all the way from South and all the way from -- so those are not my [indiscernible]. There will be a few players, will be a player like an UltraTech and Ambuja, maybe -- they have always been there. There may be little -- in case of the intensity of their package during the rainy season. But I think that's quite natural. And that is going to be there. And we have to live with it. And the further volume addition for us definitely will help us control our market share and increase the market share in Northeast.

Thank you very much, sir, on the elaborate answers, and thank you. On behalf of PhillipCapital, I would like to thank the management of Star Cement for the call opportunity. Also, many thanks to the followers joining the call. I'm going now conclude the call. Thank you very much, sir.

Thank you very much. Ladies and gentlemen, on behalf of PhillipCapital (India) Pvt. Ltd., that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.