JKLAKSHMINSEQ2 FY23November 04, 2022

JK Lakshmi Cement Limited

7,763words
150turns
12analyst exchanges
4executives
Management on call
Sudhir Bidkar
CFO, JK LAKSHMI CEMENT
Arun Kumar Shukla
PRESIDENT AND DIRECTOR, JK LAKSHMI CEMENT
Rajesh Sharma
JK LAKSHMI CEMENT
Vaibhav Agarwal
PHILLIPCAPITAL (INDIA) PRIVATE LIMITED
Key numbers — 40 extracted
67%
do we look at 12 months to 18 months from now? Management: Blended cement production is about 67% and 33% OPC and trade also we are at about 54%, 55% now. There has been good improvement in the p
33%
ok at 12 months to 18 months from now? Management: Blended cement production is about 67% and 33% OPC and trade also we are at about 54%, 55% now. There has been good improvement in the past few
54%
? Management: Blended cement production is about 67% and 33% OPC and trade also we are at about 54%, 55% now. There has been good improvement in the past few quarters on account of segment mix wh
55%
agement: Blended cement production is about 67% and 33% OPC and trade also we are at about 54%, 55% now. There has been good improvement in the past few quarters on account of segment mix which is
50%
king about the outlook. Prateek Kumar: So, trade mix has been now 54-55 I guess it was close to 50% earlier. Management: Our plan is to take it to beyond 60% in the next maybe two, three quarters
60%
een now 54-55 I guess it was close to 50% earlier. Management: Our plan is to take it to beyond 60% in the next maybe two, three quarters and blended proportion to about 72% to 75%. So, that is wha
72%
is to take it to beyond 60% in the next maybe two, three quarters and blended proportion to about 72% to 75%. So, that is what our plan is. Prateek Kumar: And sir any specific focus on overall prof
75%
ake it to beyond 60% in the next maybe two, three quarters and blended proportion to about 72% to 75%. So, that is what our plan is. Prateek Kumar: And sir any specific focus on overall profit per
116 crore
is non cement revenue and the RMC revenue for the quarter? Management: Non cement revenue is 116 crores and RMC is 52 crore. Shravan Shah: Premium sir last time you said 14% of total sales is premiu
52 crore
and the RMC revenue for the quarter? Management: Non cement revenue is 116 crores and RMC is 52 crore. Shravan Shah: Premium sir last time you said 14% of total sales is premium product, so what wa
14%
cement revenue is 116 crores and RMC is 52 crore. Shravan Shah: Premium sir last time you said 14% of total sales is premium product, so what was in this quarter? Management: It is more than 2
21%
% of total sales is premium product, so what was in this quarter? Management: It is more than 21%. Shravan Shah: 21% of trade sales or the total volume? Management: Total sales. Shravan S
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Guidance — 20 items
Vaibhav Agarwal
opening
“I will now hand over the floor to the management of JK Lakshmi Cement for their opening remarks which will be followed by interactive Q&A.”
Prateek Kumar
qa
“Last question on your CAPEX project the UCW project the timeline for commissioning of the same and the status of environmental clearance etcetera for that project?”
Management
qa
“Our target is to accomplish our Clinkerization unit wise we hope to complete that project by March 24.”
Management
qa
“Going forward we will see that overall fuel cost going up from 12,000 to 13,000 in the coming quarter.”
Management
qa
“So, it may depending on our strategy going forward of sourcing petcoke and coal it is expected to come down that is what we believe.”
Management
qa
“It will be erroneous for us to give because last time we had accounted for a clinker sales and all that so that will not be proper, but for the sake of giving the figures I am telling you in the corresponding quarter last year you want on a consolidated basis.”
Kamlesh Bagmar
qa
“100 now, so going forward like I believe in this quarter we had some benefit of low cost coal which peers may not have.”
Kamlesh Bagmar
qa
“So, going forward do we see this particular trend going on like Rs.”
Management
qa
“So, that should help us to bridge that gap going forward.”
Management
qa
“For doing the entire CAPEX in our books we will try to get some implement the project for us and we take a stake in that because as of now the state of Chhattisgarh allows the various benefit under the captive roof by taking only 26% stake.”
Risks & concerns — 7 flagged
On pricing Shravan July, September typically is lower demand wise and hence prices also were also under pressure.
— Management
Overall industry wise we see a decline of about 5% in the prices.
— Management
So, July, August price wise I think there was lot of pressure, but September prices realized little bit during JK Lakshmi Cement November 04,2022 fag end of the month maybe after 15 or so.
— Management
Second question pertains to an earlier participant have also wanted to know this in terms of realization see we understand sequentially all markets witnessed pressure on the realization while on blended basis your numbers do not reflect that, but for your own market, can you give us a sense what was the like-to-like realization for across north, west and east market for you in Q2 quarter-on-quarter?
— Rajesh Kumar Ravi
It is difficult to pinpoint the figure of EBITDA target is to ultimately up to Rs.
— Management
Secondly our lead distance are broadly flat on quarter-on-quarter basis, but what does it explain the decline in the freight cost per ton?
— Dharmesh Shah
That varies because you know that situation is quite volatile.
— Management
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Q&A — 12 exchanges
Q
My first question is can you highlight like versus peers or volume growth have been a bit tepid, but our realizations seems to have significant difference versus what most companies have report in the sector, so is there any material difference in our strategy for past 6 months which have helped our realization better versus the peers?
Management
I think our focus when it comes to prices and realization has been on couple of things. One of course how we are going to optimize the geo mix so that is one area which we have been focusing JK Lakshmi Cement November 04,2022 on for the last so many months. Second, has been the premium product proportion which we are driving because we do have some good products in our portfolio and we are trying to take leverage of that and third of course I think other elements like product mix and segment mix also which has been in the focus of our team and JK Lakshmi Cement as a whole to drive realization
Q
Before asking the questions couple of data points first is non cement revenue and the RMC revenue for the quarter?
Management
Non cement revenue is 116 crores and RMC is 52 crore. Premium sir last time you said 14% of total sales is premium product, so what was in this quarter? It is more than 21%. 21% of trade sales or the total volume? Total sales. 21% of total volume is a premium sir? 21% of trade sales volume. What was the sale number in Q1 FY23 last quarter? I think it was a percentage and half lower than this. What was the lead distance in Q2? Q2 lead distance about 395 kilometer. Still once again I want to reiterate the first question again still not able to understand clearly in terms of the realization the g
Q
Since we had changed that volume accounting or volume presentation for standalone operations right from Q1 FY23, so can you give the numbers for the Q1 and Q2 of last year to have the like-to-like comparison?
Management
It will be erroneous for us to give because last time we had accounted for a clinker sales and all that so that will not be proper, but for the sake of giving the figures I am telling you in the corresponding quarter last year you want on a consolidated basis. Because what happened that there are some doubt in the market that our volumes in the standalone has gone down because we do not have the like-to-like volumes for the last year on the standalone front? JK Lakshmi Cement November 04,2022 On a standalone basis this year you have the volume 22.36 is cement sales and 0.69 is clinker sales to
Q
I have a few questions some of them have already been answered, could you share the clinker production number for this quarter?
Management
Sorry. Clinker production in Q2? Clinker production in this quarter was 19.47, 14.9%. Sorry can you repeat please? 14.69 lakh ton. 14.69 this is standalone console? 14.69. Standalone or console? This is standalone and UCWL was 3.8 so on a consolidated basis the clinker production is 18.49. Sir, if I look at the purchase of traded goods that number is heard of considerably I assume this is with regard to the arrangement with Kanodia Cement, so how is this being accounted sir you are booking sale of clinker to them and purchase of cement from there and subsequently sale of that cement is booked
Q
Sir two questions one is are we also looking at or in a way already able to narrow the price gap versus peers because since Shukla ji in his initial comment said the prime focus is on the top line and revenue, so I am saying is there already an implementation or a thought to narrow the price gap how do you see this?
Management
Yes I think you are right this is one of the major value driver when we talk of top line and we do have identified few actions which we have started implementing market by market and perhaps this implementation part would be over by end of this quarter or maybe it will extend till about January and hopefully I think February, March onward we see that in our prices price gap will dwindle and we have clarity in our thought as to what we need to do in order to reduce this gap. So, all those actions have been taken. Second question then I had was on the cost front so of course I think on the power
Q
Sir, I just want to understand what is the JK Lakshmi focus on the debt to bring down the debt of the Udaipur Cement how the company is focusing on that in the future means because we are still having close to 1,000 crore of that mix of long and short in the Udaipur Cement so that is the only point which I want to understand how the JK Lakshmi Cement is focusing on bringing down the debt of Udaipur?
Management
Basically, we are in the process of implementing this project of expanding its capacity in clinker of 1.5 which will take their capacity from 1.5 to 3 million and cement capacity from 2.2 to 4.7 then that project will cost 1,650 and we are planning to contract and the fund to debt equity of 2 is to 1 contracting 1,100 crores of debt. So, basically we do not have any immediate plans to suddenly bring down the debt they already have about 500 crores of debtors based on the existing CAPEX which they have done in the recent past and gradually it will get paid off from their cash flow only, no imme
Q
Sir, I just had one question that you said that geo mix is improving and the focus is going ahead could be on the geo mix, so can you help me with this like in this quarter what was the geo mix in percentage terms if you can share?
Management
So, we have divided different geographies into GY and R we call it green, yellow and red. So, green proportion is going up month after month and our green proportion as of 30th of September was more than 55%. So, green is basically blended cement? No, green is based on the margins. You talked about geo mix right. In terms of west, north and east? So, what we have done is all markets are divided into GY and R green, yellow and red categories based on the margins which we get. So, we tried to sell maximum quantity in G areas where margins are more. So, green is right now at 55 and what was the n
Q
My question relates to gross debt and net debt position on standalone basis?
Management
Standalone our total debt on standalone basis is about close to 900 crore and net is about 225 crore. And sir we have included EBITDA turnover of around 600 for this quarter, so what kind of EBITDA turn we are looking in Quarter 3 and 4 since commodity prices were also softened? It is difficult to pinpoint the figure of EBITDA target is to ultimately up to Rs. 1,000 EBITDA but considering the increase in the fuel cost it may take some time for that to actually materialize, but endeavor would be to ultimately have a four digit EBITDA. And sir what has been our railroad mix this quarter? I think
Q
Sir, my first question is on the company strategy side from the next two to three years perspective and if you can just prioritize what are the numbers on priority number two priority?
Management
So, I will tell you some up level strategy I will give you and this is what in fact we are working on. One of course I think we are working with lot of focus and lot of intent on the top line and when I talk of top line then it includes improving volumes, it includes quality of volume which I told you geo mix how we can sell in the right area at the right price. Our focus is leveraging our brand because we do have some good products in our portfolio, how we can leverage and really kind of go to the customer with the right value and the right kind of product and services which we have. So, leve
Q
More clarity if you can just provide on the band which you mentioned green, yellow and red, so what kind of I mean the sales qualify for a green any particular EBITDA margin or threshold that is there or it will vary every quarter?
Management
That varies because you know that situation is quite volatile. So, these GYR is dynamic so typically you cannot really put EBITDA because maybe during Quarter 1 EBITDA green would have been different than what green is today. So, this is based on the band of margins which we have from different markets and based on that this is dynamically decided that this is about GY and R is and typically those see we have a matrix of just to give you a little bit more on this. We have a matrix of one total delivered cost in that particular market and the margin. In a way most of the time I think this is in
Q
On the intent of kind of improving the price realization so I just wanted to understand like how are you going about it in terms of your distribution network are you also trying to revamp your distribution network to do the same or is it going to happen through the same network?
Management
Margin and prices not only the function of the right sales or the right (Inaudible) 56:31, but also the couple of channel which you have and somehow I think Vaibhav also has mentioned in lot of write us that this also really affect the margin to an extent. Yes I think we do have a strategy which we call channel strategy, what kind of channel we are going to set up like is it going to be balanced kind of architecture some big dealers, maybe more number exercise dealers and not too long tail right. Based on the competitive environment and competitive landscape we do have a strategy to setup a de
Q
Thank you. On behalf of PhillipCapital (India) Private Limited we will like to thank the management JK Lakshmi Cement for the call and also many thanks to the participant joining the call. Thank you very much sir. Mellissa, now you can conclude the call.
Management
Speaking time
Management
68
Rajesh Kumar Ravi
16
Moderator
14
Shravan Shah
13
Prateek Kumar
7
Kamlesh Bagmar
7
Parth Bhavsar
6
Vishal Periwal
4
Navin Sahadeo
3
Uttam Kumar Srimal
3
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Opening remarks
Vaibhav Agarwal
Thank you Melissa. Good evening everyone. On behalf of PhillipCapital (India) Private Limited, we welcome you to the Q2 FY23 and H1 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 Mr. Arun Kumar Shukla – President and Director 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 maybe forward-looking statements related to future developments and current performance. The 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 of the company assumes no ob
Management
Thank you Mr. Vaibhav and good afternoon ladies and gentlemen for this and welcome to Q2 call for FY23. We have with us as Vaibhav mentioned Mr. Arun Kumar Shukla – our President and Director and also my colleague, Mr. Rajesh Sharma. The results you would have seen I do not have to harp on or repeat the results to save on time let us keep the floor now open for questions and answers please.
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