JKLAKSHMINSEQ1 FY23July 28, 2022

JK Lakshmi Cement Limited

6,011words
132turns
10analyst exchanges
4executives
Management on call
Shailendra Chouksey
WHOLE-TIME DIRECTOR, JK LAKSHMI CEMENT LIMITED
Arun Kumar Shukla
PRESIDENT, JK LAKSHMI CEMENT LIMITED
Sudhir Bidkar
CFO, JK LAKSHMI CEMENT LIMITED
Vaibhav Agarwal
PHILLIPCAPITAL (INDIA) PRIVATE LIMITED
Key numbers — 40 extracted
rs,
loor open for question answers. Management: Mr. Bidkar before you open it for question and answers, let me first and foremost thank every participant and let me also thank them for all the cooperati
12.2%
uestions. So, starting with the realization growth. On QOQ front as we calculate the number it is 12.2%. Just wanted to understand if you can split in terms of the region wise where the actual increase
Rs. 5
there was minor pressure there as well. Shravan Shah: Do you want to quantify broadly how much Rs. 5-10 decline which would have happened in last one month? Management: I would not h
Rs. 10
Management: I would not hesitate to say that the price fall would have been in the range of Rs. 10 a bag. Even now I don't think the prices have one can be very sure that they have stabilized but t
102 crore
g with the employee costs it has increased significantly quarter-on-quarter from 81 odd crores to 102 crores. So, is there any one-off and this is run rate is sustainable? Management: Employee cost in th
92 crore
onsol basis, whatever my question will be on consol basis. Management: I would have figured out 92 crores, that is on a standalone basis. That is the run rate which will be there in the coming quarters.
7%
w coming on the main power and fuel costs. So, last time we were expecting that it can inch up by 7% to 8% quarter-on-quarter. Even if we take the current prices then the increase would be Rs. 200 t
8%
ng on the main power and fuel costs. So, last time we were expecting that it can inch up by 7% to 8% quarter-on-quarter. Even if we take the current prices then the increase would be Rs. 200 to 250
Rs. 200
up by 7% to 8% quarter-on-quarter. Even if we take the current prices then the increase would be Rs. 200 to 250 but the actual increase on power and fuel front is much-much higher. So, close to Rs. 400 k
Rs. 400
Rs. 200 to 250 but the actual increase on power and fuel front is much-much higher. So, close to Rs. 400 kind of an increase is there. So, any specific reason and is this the peak or can we see a further
326 crore
regarding the employee cost, on a standalone basis overall last year for the full year was about 326 crores which was which on a standalone basis. That translates into about 82 odd crores for each quarter
10%
translates into about 82 odd crores for each quarter, considering the normative increase of about 10%-12% the current cost of 92 crores in the standalone is reasonable. Last quarter if you were to co
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Guidance — 20 items
Vaibhav Agarwal
opening
“I'll now handover the floor to the management team of the JK Lakshmi Cement for their opening remarks, which will be followed by interactive Q&A.”
Management
opening
“He will be the CEO of the company and will be taking forward the journey of JK Lakshmi from where Dr.”
Management
opening
“So, it resulted in unnecessary duplication, so from this quarter that is from financial year ‘23, what we have started doing, whatever clinker they supplied that will be on conversion basis and they will only pay the conversion charges.”
Management
opening
“No sale of clinker will be shown in Udaipur nor any sale of the corresponding cement will be shown in JK Lakshmi.”
Management
opening
“Only the cement which has been purchased either by Udaipur or by JK Lakshmi from Udaipur or buying Udaipur from JK Lakshmi against which no clinker has been given then only that only will be shown as actual sale because that is real but on a consolidated basis that will also get wiped off.”
Shravan Shah
qa
“Yes, consol basis, whatever my question will be on consol basis.”
Management
qa
“That is the run rate which will be there in the coming quarters.”
Shravan Shah
qa
“So, any specific reason and is this the peak or can we see a further increase in the next quarter also?”
Management
qa
“There may be some increase again going forward because the prices are still continuously going up.”
Management
qa
“It will be basically combination of the brownfield and greenfield.”
Risks & concerns — 8 flagged
Just wanted to understand if you can split in terms of the region wise where the actual increase in terms of the realization has happened and now post June how much till now in last one month, we have seen the price decline?
— Shravan Shah
This year we saw a decline in fact in the demand in the month of June.
— Management
Chhattisgarh was comparatively was not that deeply influenced but yes there was minor pressure there as well.
— Management
5-10 decline which would have happened in last one month?
— Shravan Shah
Even now I don't think the prices have one can be very sure that they have stabilized but that's about the type of pressure that we have seen.
— Management
To start with if you can just briefly share your vision for the company what are 2-3 focus areas for us to take notice of or monitor and what would be the biggest challenge you foresee?
— Girish Chaudhary
Should be weak but some prices softening has started happening.
— Management
We hope that decline or softening continues unless the trend is reversed, we see that second quarter should be picking out as far as the power and fuel cost is concerned.
— Management
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Q&A — 10 exchanges
Q
I have a couple of questions. So, starting with the realization growth. On QOQ front as we calculate the number it is 12.2%. Just wanted to understand if you can split in terms of the region wise where the actual increase in terms of the realization has happened and now post June how much till now in last one month, we have seen the price decline?
Management
Normally we are not sharing the numbers of region wise but what we can share in a very broad level is, that most of the markets had witnessed a price increase. As you all know that the Quarter 1, Q1 April to June is a quarter when we register normally a good growth, though not as good as generally March. This year we saw a decline in fact in the demand in the month of June. There was some price correction in the month of June but in April and May most of the markets that we are operating in saw a good improvement in the price. Of course, another driver of the price rise was the track that ever
Q
My question is to Mr. Arun Kumar Shuklaji, so firstly good to be interacting with you. To start with if you can just briefly share your vision for the company what are 2-3 focus areas for us to take notice of or monitor and what would be the biggest challenge you foresee?
Management
I'm really happy to be part of this conversation today. Probably I think I would really want to listen this time all of you and I'll come back to you with all these queries next time. That is what I would suggest all of you to kind of bear with me. Next time on I'll take all your queries and I'll reply each and every one of them. Right. Sure. Appreciate it. My second question is that if I read your FY22 annual report, you shared your 2030 vision where intent to increase the capacity to 30 million tons which is like doubling from the current levels after UCWL expansion. So, if you can throw som
Q
So, the first question is on power and fuel, so what was the fuel mix in this quarter for you?
Management
We have in this quarter fuel mix of about, we did about 46% of coal, 41% of pet coke and 13% was the alternate fuel. 46, 41 and 13? 46 coal, 41 pet coke, that is 87 and 13 is other fuel. What was the power and fuel cost this quarter that you mentioned in rupees per ton? 11,700. Did you have some older inventory or something because this 7700 is still actually quite low compared to….. 11,000, not 7,000. 11,700. Yes still 11,700 also. One more thing on coal could you please also tell us what was the domestic coal within that 46%? Domestic was very less. Whatever we have that we are not getting F
Q
I have just one question, its regarding the supply to the eastern and central UP to Amethi grinding unit, as we have started supply the eastern and central unit through the Amethi grinding unit. I just want to understand what kind of agreements we have with this grinding unit and what kind of volume we can expect from that new grinding unit? I think that should be a grinding unit on higher or on a tolling charges basis we have, just wanted to know your views about it.
Management
That unit has a certain state incentive and therefore the best option that we have is that we sell them clinker and buy cement from them. So, currently that is what the system that we have adopted. So, it’s unclear, so if you can throw some more highlights about is it higher unit from an existing player or anything different is that? We have certain grinding unit available? Yes, this is available exclusively to us. Nobody else is grinding from this. This is a new unit which has come and they have got a state incentive. If we take that unit on hire then obviously there would have to be a transf
Q
My first question is on UCWL CAPEX, out of 1650 crores CAPEX how much is spent till now?
Management
We have spent about 350 crores. And as indicated earlier, the timeline for this is in phases in 2Q and 4Q of ‘24, is that right? Yes. So, clinker is expected by 2Q which is like sort of 12 months from now. Have we started the construction work there? It has started. Secondly for your long-term expansion plan which you mentioned earlier in the call, do you foresee any limestone renewal or mine renewal issues post 2030 for some of your mines? There is only (Inaudible) (27.17) mines which is coming up for renewal in that period. Other than that, there's no issues on that. There are more than 20-2
Q
With regards to these other expenses, 180-200 crores that we have reported with this quarter, is this sustainable going forward also?
Management
Yes, as I mentioned a part of that is linked to the volume. So, it will move in tandem with the volume growth. How has been our sale of value-added product during this quarter? Sorry? Value-added product like RMC and all other…. 118 crores in this quarter. How much? 118 crores. Couple of data points like trade mix for this quarter and blended cement mix in this quarter? Blended we did about 67% in this quarter and trade was about 56%. What was the percentage of premium cement during this quarter? Premium cement we are selling only in the North. It is about 14%. The last quarter it was around 2
Q
I just wanted to understand is there anything different on the marketing side that we have done over last three to four quarters and is it reaping us any benefits on back of that?
Management
Can you please repeat the question? My question was are there any specific marketing efforts or new initiatives that the company has taken in last three to four quarters? And if yes, are we getting any benefits out of it so far or how should we look at this particular variable? I think one of the areas that we are focused is on the geo mix. Trying to curtail the distances that we are going so we are definitely increasing our sale in the nearby markets and all these and the second effort that we have been working is on enhancing our network, the additions, the dealer so that we are able to buil
Q
My one question was on the part of your realizations. If I net out the non-cement revenues then your realizations are up 16% quarter-over-quarter with Rs. 700 per ton and gross of taxes, it will be Rs. 49. In none of the market we have seen such a sharp increase in the prices and that also on the average basis not on the exit or in between. What's the reason for that? Is it because of the taxes we have changed from ex-factory to FOR or what has been the reason for that and such an improvement has not fallen into the margins? Margins have been like flattish or down quarter- over-quarter though
Management
Kamlesh you were there since the beginning of the call. I had made this opening remark that this change has happened in the way we are accounting for the cement being procured by UCWL for conversion from their clinker. Earlier what was happening is that the entire clinker which UCWL used to sell to JK Lakshmi was being shown as sales and the converted cement was being shown as sales by JK Lakshmi. So, it was resulting in double accounting for clinker as well as cement. Now in this current quarter what we have done is that they will not show that as clinker sale, only convert clinker will get c
Q
A couple of things. You mentioned the non-cement revenue is 118 crores. So, out of that the RMC revenue was how much?
Management
RMC was about 55 crores. The other clarification needed is you said the blending ratio in this quarter was 67%. Last time I think you mentioned 55%. If so, despite significant increase in blending ratio from 55% to 67% Q-o-Q, our trade mix has remained the same 56% which was the last quarter? In the fourth quarter our blending was 65% not 55%, 65% it has gone up to 67%. Here, last time also we mentioned that we want to increase our trade share and the blending ratio 4% to 5% in FY23 but in this quarter nothing has happened. Do we think that we can still able to increase this trade say by 4% to
Q
Thank you. On behalf of PhillipCapital (India) Private Limited I would like to thank the management of JK Cement for the call and many thanks to the participants joining the call. Thank you very much sir. Mellissa you may now conclude the call. Thank you
Management
Thank you Mr. Vaibhav. Thank you, all the participants.
Speaking time
Management
61
Shravan Shah
19
Moderator
12
Amit Murarka
8
Prateek Kumar
7
Uttam Kumar Srimal
7
Ritesh Shah
5
Girish Chaudhary
4
Mudit Agarwal
3
Vaibhav Agarwal
2
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Opening remarks
Vaibhav Agarwal
Thank you, Mellissa. Good evening, everyone. On behalf of PhillipCapital (India) Private Limited, we welcome you to the Q1 FY23 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; Mr. Arun Kumar Shukla – President and Mr. Sudhir Bidkar – CFO of JK Lakshmi Cement. I would like to mention on behalf of JK Lakshmi Cement and its management that certain statements that may be made or discussed on this conference call may be forward-looking statements related to future developments and current performance. These statements are subject to number of risks, uncertainties and other important factors which may cause the actual developments and results to differ materially from the statements made. JK Lakshmi Cement Limited and the management
Management
Thank you Mr. Vaibhav and good afternoon, ladies, and gentlemen on this Q1con-call for JK Lakshmi Cement. We have with us Dr. Chouksey – Whole-Time Director who has been with us on the calls in the past and it’s my pleasure to introduce Mr. Arun Kumar Shukla, our President who has joined us in February 2021 and now is being formally inducted on the board with effect from 1st August 2022, that is from Monday and Dr. Chouksey, the Whole-time Director along with Mr. Wali would be laying down their office on the conclusion of their term as a whole-time director on 31st of July 2022. Mr. Shukla would be looking after the entire operations be it of manufacturing, operations or in the marketing etc. He will be the CEO of the company and will be taking forward the journey of JK Lakshmi from where Dr. Chouksey and Mr. Wali had left it on 31st of July 2022. Now results you would have seen already, one important change which we have done in this quarter which I’d like to highlight in the beginnin
Management
Mr. Bidkar before you open it for question and answers, let me first and foremost thank every participant and let me also thank them for all the cooperation that we have received and I have received in particular. I would also like to take this opportunity to welcome Mr. Arun Shukla, who has been in with us now for last year and a half and I can assure the entire investor community that the company is in very safe and in very good hands. I'm very sure that all your queries that you may have today will also be answered very appropriately by Mr. Arun Shukla, who is already hands on the job for now last more than a year. Thank you. Thank you very much and thank you PhillipCapital.
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