JKLAKSHMINSEQ3 FY22January 03, 2022

JK Lakshmi Cement Limited

5,330words

169turns

17analyst exchanges

3executives

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Management on call

Shailendra Chouksey

WHOLE-TIME DIRECTOR, JK LAKSHMI CEMENT LIMITED

Sudhir Bidkar

CFO, JK LAKSHMI CEMENT

Vaibhav Agarwal

PHILLIPCAPITAL (INDIA)

Key numbers — 40 extracted

rs,

uld have all seen the results. Nothing much to add. I will throw the floor open for question-answers, so that we have more questions and we are able to clear whatever clarification or doubts you have

17.38 lakh

onsol. Management: You can note down, clinker production in this quarter was for JK Lakshmi was 17.38 lakh tons, Lakshmi Cement and as far as UCWL is concerned it was 3.08 lakh tons. Rajesh

3.08 lakh

ter was for JK Lakshmi was 17.38 lakh tons, Lakshmi Cement and as far as UCWL is concerned it was 3.08 lakh tons. Rajesh Ravi: With RMC and non-cement revenues? Management: Approximately

100 crore

tons. Rajesh Ravi: With RMC and non-cement revenues? Management: Approximately 100 crores this quarter. Rajesh Ravi: This is what RMC or total non-cement revenues? Management: Tota

42 crore

Total non-cement. Rajesh Ravi: And RMC will be how much in this? Management: RMC would be 42 crores. Rajesh Ravi: Coming to Udaipur Cement, the CAPEX, could you explain what is the progress on t

1.5 million

gement: As far as the UCWL is concerned, this project is you know as we mentioned last time is of 1.5 million clinker and 2.5 million tons of cement. While the clinkerization entire will happen at Udaipur, o

2.5 million

WL is concerned, this project is you know as we mentioned last time is of 1.5 million clinker and 2.5 million tons of cement. While the clinkerization entire will happen at Udaipur, one grinding of 1 million

1 million

5 million tons of cement. While the clinkerization entire will happen at Udaipur, one grinding of 1 million will also happen at Udaipur. That we will take that as the first phase the second phase will invo

1.5 million

will take that as the first phase the second phase will involve a split location grinding unit of 1.5 million tons in Rajasthan. The first phase we have taken up for implementation and out of that 1650 this

1250 crore

irst phase we have taken up for implementation and out of that 1650 this will cost about close to 1250 crores and the 400 we have kept for the split location grinding unit. So, most these long delivery item

1650 crore

e fund investment. Management: As far as funding is concerned, as we mentioned last time out of 1650 crores of projects, this will be funded to a debt to equity of 2:1 means 550 will be promoters’ contrib

1100 crore

cts, this will be funded to a debt to equity of 2:1 means 550 will be promoters’ contribution and 1100 crores will be the loan, for that phase the loan amount is 850 crores. So, the financial closure has ha

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Guidance — 20 items

Vaibhav Agarwal

opening

“I will now handover the floor to the management of JK Lakshmi Cement for their opening remarks which will be followed by interactive Q&A.”

Management

“As far as the UCWL is concerned, this project is you know as we mentioned last time is of 1.5 million clinker and 2.5 million tons of cement.”

Management

“As far as funding is concerned, as we mentioned last time out of 1650 crores of projects, this will be funded to a debt to equity of 2:1 means 550 will be promoters’ contribution and 1100 crores will be the loan, for that phase the loan amount is 850 crores.”

Management

“Though it could be shorter and there will be 1 year moratorium after the COD and 11 years will depend upon the ballooning basis.”

Nitin Arora

“Coming quarter, if you can throw some light why the demand is not improving in the last 4-5 months and what's your outlook on the demand, how one should assume going forward?”

Nitin Arora

“Going forward if you can help us guide that for FY23 what's the sustainable EBITDA per ton one should assume?”

Management

“Now as far as the second part of the question is concerned with just regarding the EBITDA per ton going forward.”

Management

“So, we expect it to be in excess of over Rs.”

Management

“850 per ton depending on that will be subject to two major things.”

Management

“One how much fuel prices further pickup or settle down or soften and two our ability to pass on the cost increase onto the consumer which will be a function of the demand in various markets where we serve.”

Risks & concerns — 5 flagged

As far as the fuel cost is concerned, we saw the impact of the escalation in fuel prices also impacted us because we have been also, though that impact is not that, not because of the old inventory but still impact is there.

— Management

One how much fuel prices further pickup or settle down or soften and two our ability to pass on the cost increase onto the consumer which will be a function of the demand in various markets where we serve.

— Management

2Q also there was an impact of lower prices, 3Q also be had lower prices in the east region.

— Sanjeev Kumar Singh

Rail-road we see as far as East is concerned, we don’t have a railway siding so 100% is as far as added concern is on the road and here in North, we mostly do by road but at times we always have rail.

— Management

5 to 10 in Feb and March; don't you think we need a bigger price hike as there is a fuel cost pressure and also there is a pressure in freight cost because of Chhattisgarh strike the transporters rate has increased.

— Keshav Lahoti

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Q&A — 17 exchanges

First of all, could you share the clinker production number for the quarter, both standalone consol?

Management

What you want clinker? Clinker production number for this quarter standalone and consol. You can note down, clinker production in this quarter was for JK Lakshmi was 17.38 lakh tons, Lakshmi Cement and as far as UCWL is concerned it was 3.08 lakh tons. With RMC and non-cement revenues? Approximately 100 crores this quarter. This is what RMC or total non-cement revenues? Total non-cement. And RMC will be how much in this? RMC would be 42 crores. Coming to Udaipur Cement, the CAPEX, could you explain what is the progress on the funding of the same? As far as the UCWL is concerned, this project i

The first question is, if you can throw some light on the demand because that's something looks like not improving even (Inaudible) (8.34). If you can for some light?

Management

You want some lights on the coming quarter, right? Coming quarter, if you can throw some light why the demand is not improving in the last 4-5 months and what's your outlook on the demand, how one should assume going forward? That's my first question? The second question is if I look at your profitability and especially the EBITDA per ton, then talking by mostly you are touching….. Can you speak a bit louder? What I'm trying to understand from you on the profitability, the EBITDA per ton for us at the peak when the industry was doing 1400, we were doing 900 and when the industry is down 1200-1

Just on the cost side, the WHRS I believe was about to be commissioned in December. Could you just confirm when did it get commission and also guide us to the cost savings that you expect to get in FY23 from this year?

Management

This trial runs have already commenced there in. Some last-minute hooking is required but otherwise that has already been completed as far as the waste heat recovery is concerned. There we expect to generate as we mentioned last time also, savings in excess of in the vicinity of about 20 to 25 crores. Could you also just share the debt number? Debt number, as far as a stand-alone JK Lakshmi is concerned as of 31st December, we have total debt of 1078 crores and net of cash, it is 414 crores only. If one were to talk of the consolidated debt, it is a 1634 and net debt of 922 after taking into a

During the month of October the 70 days there was no production, so how much volume we would have lost because of that?

Management

Because of this transporters’ strike it was there for 30 days. It started around end of September and continued up to 18th of October. So, the impact was about 18 days for the current quarter as far as October-December is concerned, that too at our Durg plant only. So, the impact was about 1,10,000, about 1 lakh you can say broadly. Any price increase that you have taken in the month of January, in our respective markets? We have taken a minor increase of about Rs. 5 a bag. This is in all markets where you operate, east-west and north also? Yes. How has been about premium cement sale during th

So firstly, on the fuel prices, last time around I think you have mentioned that we have fuel till Jan and Feb. So, the impact would be limited. So, was that basically the volume perspective or even the price was locked? That is the first question.

Management

That was the volume, price was obviously we were procuring as and when based on the current market price only. But yes, in the current quarter our price was what we hit in the P&L was Rs. 9500. If you can give that the fuel mix that you gave is it possible if you can give it for north and east it would be really helpful. Sorry, come again. The fuel mix for north and eastern operations. We generally don't give plant wise but just for the information of you and everyone, coal consumption is more in east because of their proximity one and two the linkage which they have. But generally, we don't s

I want to understand about cement prices and your realization. So, in lasts two quarters I believe that realization for the company has gone up by around Rs. 200 per ton. 2Q also there was an impact of lower prices, 3Q also be had lower prices in the east region. What has contributed to this realization growth?

Management

In the last quarter also, there was some price increases in terms of markets. So, it was not that there was no price increase that took place. But we could not take a uniform price increase, number one number. Number two, we could do some improvement in our logistic in terms of direct sale, some higher percentage of trade and so on and there it would garner higher prices. So, it’s a mix of efficiency improvement and some price increase which took place. It’s also because there has been improvement in trade sales you are saying? Yes. The improvement in trade sale as well as improvement in the d

This question is on the CAPEX. The CAPEX which we are doing of UCWL. To share the timeline for that as well as how the CAPEX is going to shape in FY23 and ‘24?

Management

FY22 is concerned we may be doing close to about 200 crores in the current and forwards may be 1000 crores will get spent in FY23, balance in the FY24. When our grinding unit as well as clinker unit is going to be commissioned? Yes, you are right. We expect the first phase to get commissioned sometime by before ‘23 and immediately thereafter 6 months later depending on when we form up the, in the second Phase- 2 of that, that will happen maybe 6 to 9 months thereafter. Second question is about the price increase. Is it possible to share as compared to Q3 where our price tends now after what we

Just a follow-up question from the previous participant. As you have mentioned that you have commercialized the 10 MW WHRS Sirohi plant. Is there any further plan of WHR plant, going ahead?

Management

No, as of now whatever maximum based on the gases which get emitted from the kiln, is concerned, we will not have any additional WHR at Sirohi but certainly when we do additional clinker line at Udaipur, it will have a commensurate 6-7 MW of the waste heat recovery at Udaipur. It is linked to the kiln, if only when we were expanding the kiln or increasing its capacity, then based on the gases emitted we try to capture them and create the capacity for waste heat recovery. In our case, out of the three kilns which we had at Sirohi, we were having waste heat recovery on two of the kilns, third we

The first just wanted to reconfirm the numbers in terms of CAPEX for the UCWL. You said the 200 crores will be spent in FY22 and 1000 crores in FY23?

Management

Yes, balance in the FY24. And till now in nine-months how much CAPEX, overall CAPEX we have done and how much to be done in the fourth quarter? You are talking about the UCWL or JK Lakshmi? JK Lakshmi, both even for UCWL how much we have done and for JK Lakshmi, how much till now we have done and how much to be done in the fourth quarter? Out of 200 crores, which we are planning for UCWL, as I have explained first, 100 crores has happened already up to December and 100 crores is happening in the current quarter. That is as far as UCWL is concerned. As regards JK Lakshmi, the only project which

One more follow-up question. What has been our rail-road mix doing this quarter?

Management

My question is with regards to your cost of production, how much cost increase do we expect in the fourth quarter as you have already said that you have already utilized the full low-cost fuel inventory till the month of January and Feb? So, just wanted your perspective on the cost?

Management

This quarter we had hit at 9500. It may go up by about Rs. 800 to 1000 per ton on as far as fuel cost is concerned and that will have the impact on the cost of production.

Even in this quarter, as you said now the demand is looking improving. So, for full quarter because previously we said that in the second half, we are looking at 8% volume growth versus the last second half. But now do we think that we can do a growth Y-o-Y in the fourth quarter also?

Management

Yes, we will certainly do a Y-o-Y growth in the fourth quarter. I mean until this something like a pandemic resurge or something otherwise in normal circumstances we expect that we reached out a growth in this fourth quarter also. Because last year, the fourth quarter was exceptionally good so that's what I was trying to understand? We are still hopeful. When we said 850 to 900 EBITDA per ton, so that to start from the first quarter of next year because I just said the cost will be inching up in this quarter also. This quarter also we can see a lower number on EBITDA per ton? Our endeavor woul

Could you just repeat the standalone sales for the production numbers for clinker and cement?

Management

Standalone numbers for this cement and clinker in this quarter for JK Lakshmi was 22.26 was the cement sale and 2.33 clinker sale, total 24.59.

I just have a question, as you mentioned that prices have increased by Rs. 5 in Jan and you expect the prices to further go up by Rs. 5 to 10 in Feb and March; don't you think we need a bigger price hike as there is a fuel cost pressure and also there is a pressure in freight cost because of Chhattisgarh strike the transporters rate has increased. What is your take on this?

Management

Of course there's a need for a higher increase, there is no demand. But one is looking at how things shape up because even now the once the demand really picks up in the first week, after 1st of February then I think we will have better visibility as to what is the likelihood of a higher price increase in that. Rs. 5 to 10 more on the conservative side.

Just one clarification. When you say that EBITDA per ton expectation of 850 to 900, is that standalone you are talking about or consol number?

Management

Come again. When you say EBITDA per ton expectation of Rs. 850-900, are we talking about standalone numbers or consol numbers? Standalone. When you talked about Rs. 1000 inflation in realized cost price, realized cost of fuel. So, on a per ton basis that would be in around Rs. 100-120 optimum? Rs. 80 to 85. May be Rs. 100, yes. Rs. 80. Any other cost inflation which we can expect in another line item? Because of this fuel cost increase, the cascading impact on one the power cost, two the diesel price and the freight is always there plus the blended cost of the raw materials. Some impact could

Talking on the price increases in fourth quarter; what was the quantum of price increase so far in the Eastern markets?

Management

As I mentioned earlier, in Orissa we have been able to take a higher price increase while in case of Chhattisgarh we have taken a price increase of Rs. 5 and another increase of about Rs. 10 is on the annual. Rs. 10 on an average you are saying? No, it’s just about to take place, we have taken that increase of Rs. 10 in Chhattisgarh only recently, a couple of days back so let's hope that it stabilizes. On over and above the first Rs. 5, another Rs. 10 hike in this month? Yes. That’s what we are expecting. If you would have the numbers for the non-cement revenue for the September quarter? Sorry

Thank you Janice. On behalf of PhillipCapital (India) Private Limited, I would like to thank the management of JK Lakshmi Cement for the call and many thanks our participants joining the call. Janice you may now conclude the call. Thank you very much sir.

Management

Thank you all the participants and thank you Vaibhav.

Speaking time

Management

Moderator

Rajesh Ravi

Mangesh Bhadang

Shravan Shah

Uttam Kumar

Sanjeev Kumar Singh

Ashish Kejriwal

Nitin Arora

Prateek Kumar

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Opening remarks

Vaibhav Agarwal

Thank you, Janice. Good evening, everyone. On behalf of PhillipCapital (India) Private Limited we welcome you to the Q3 FY22 call of JK Lakshmi Cement. I need to highlight that JK Lakshmi Cement is also the holding company of Udaipur Cement Works Limited and therefore the call is also open for discussion about the performance of Udaipur Cement Works Limited. On the call we have with us Dr. Shailendra Chouksey – Whole-Time Director and Mr. Sudhir Bidkar – CFO of JK Lakshmi Cement. I would like to mention on behalf of the JK Lakshmi Cement and its management that certain statements that we made or discussed on the conference call maybe forward-looking statements related to future developments and current performance. These statements are subject to a number of risks, uncertainties and other important factors which may cause the actual development and results to differ materially from the statements made. JK Lakshmi Cement Limited and the management of the company assumes no obligation to

Sudhir Bidkar

Thank you. Good afternoon, ladies and gentlemen. This is Sudhir Bidkar – CFO, JK Lakshmi along with my colleague Dr. Shailendra Chouksey – Whole-Time Director welcoming you for Q3 FY22 con-call. We had the board meeting yesterday; you would have all seen the results. Nothing much to add. I will throw the floor open for question-answers, so that we have more questions and we are able to clear whatever clarification or doubts you have with regard to the results or our business. The floor is now open for question-answer please.

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