JKLAKSHMINSEQ3 FY23February 13, 2023

JK Lakshmi Cement Limited

8,038words
204turns
12analyst exchanges
3executives
Management on call
Arun Kumar Shukla
PRESIDENT AND DIRECTOR, JK LAKSHMI CEMENT
Sudhir Bidkar
CFO, JK LAKSHMI CEMENT
Vaibhav Agarwal
PHILLIPCAPITAL (INDIA) PRIVATE LIMITED
Key numbers — 40 extracted
rs,
he cost side of the equation, can we expect margin improvement going forward because of this factors, the second question is sir that our current capacity and capacity utilization just wanted a questi
77%
question. Second was on capacity utilization so last quarter I think our capacity utilization was 77% and this quarter we believe that our utilization would be at about 85% plus so that is what we se
85%
r capacity utilization was 77% and this quarter we believe that our utilization would be at about 85% plus so that is what we see. So, definitely I think that is also we will have bearing on our marg
14 million
dilution of the fixed cost and other cost. Abhimanyu Kasliwal: Sir the current capacity around 14 million tons what are we looking at? Management: I think we do have one outsource unit with us in Ameth
15 million
utsource unit with us in Amethi UP based. If you take that into consideration and we are at about 15 million ton roughly. Abhimanyu Kasliwal: Sir what about the additional capacity of high margin products
1.35 lakh
e are expanding our capacity and last quarter our skills have improved and total volume was about 1.35 lakh cubic meter and AAC block also we are doing quite well, AAC our volume last quarter was on 1.36.
116 crore
evenue that we are seeing? Management: Revenue last quarter we have achieved a revenue of about 116 crore. JK Lakshmi Cement February 13,2023 Abhimanyu Kasliwal: VAP and RMC and AAC? M
15%
little bit of mortar as well. Abhimanyu Kasliwal: And what margins do they usually operate on 15%, 20%? Management: So, I will just let you know I think in our case the high margin business is
20%
e bit of mortar as well. Abhimanyu Kasliwal: And what margins do they usually operate on 15%, 20%? Management: So, I will just let you know I think in our case the high margin business is AAC b
12%
So, I will just let you know I think in our case the high margin business is AAC block is about 12% margin and overall if you take up fully of RMC, AAC and putty POP greater than 7% margin. Abhim
7%
block is about 12% margin and overall if you take up fully of RMC, AAC and putty POP greater than 7% margin. Abhimanyu Kasliwal: 7% operating margin, 7% net margin sir? Management: We are ta
Rs.1,000
e should be following the thing is that just wanted to clarify on that aspect, have we talk about Rs.1,000 EBITDA without increase in the realization? Management: So, Shravan I think yes we believe that
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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.”
Abhimanyu Kasliwal
qa
“Sir what about the additional capacity of high margin products which we were planning to work on VAP, RMC, AAC, wall putty would you like to provide any guidance on that or any outlook on that?”
Management
qa
“Just to let you know AAC block is I think as I told you margin is about 12% we have plan to grow it further.”
Management
qa
“So, Aligarh plant recently we have acquired one plant and we have started production of AAC block that Aligarh unit in UP and we do have some future plans also for AAC block and going forward our focus is going to be AAC and RMC.”
Management
qa
“So, that is also going to give a good boost to our VAP portfolio going forward.”
Management
qa
“Blended also I think we do have a target of getting it to similar to 65% we are there at 66%, 67% and I think we are working the way we are progressing I think I am quite okay the first level is geo mix optimization and second comes trade, nontrade and blended, but I think that is what our target is achieving close to 75% of blended and 60% beyond trade.”
Shravan Shah
qa
“How do we expect the same in this quarter?”
Management
qa
“Deadline remains the same which is March 24, but it may spill over to the first quarter of FY25 that is number one and number two regarding our long-term debt on a standalone basis we have at about 53% and net debt is about 200 crores on a consol basis the total debt is 1,875 and net JK Lakshmi Cement February 13,2023 debt is 125.”
Management
qa
“No I said on that project of the 60-50 we have incurred up to December 700 crore.”
Management
qa
“That would have been only for the current project, 700 crores is the figures we have talked off on that project of 60-50 a portion of which would have also incurred before March 22 you cannot lend the two things.”
Risks & concerns — 2 flagged
And FY25 also has this impact of CAPEX of UCW?
— Prateek
Is there any risk mitigation strategy if at all the Sirohi is come to us in 2030 or if the premiums are very high, what is the plan B that is what I want to understand?
— Ritesh Shah
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Q&A — 12 exchanges
Q
So, to the management I would like to ask that now South African coal it is trading at slightly JK Lakshmi Cement February 13,2023 better prices around 250, 300 as opposed to 350, 400, are we seeing impact on the cost side of the equation, can we expect margin improvement going forward because of this factors, the second question is sir that our current capacity and capacity utilization just wanted a question that what is the current capacity that the Company is operating at and what is this quarter tonnage and related to that if that are we expecting to see some kind of operating leverages go
Management
Just correct me I think the first question was regarding that margin improvement outlook. So, as you know I think we are going through demand month, demand is good in the market. The last quarter and the quarter before I think we have not seen good price increases despite demand being good, but this quarter we do see some kind of improvement not big improvement in prices of margin, but definitely I think we see some kind of prices moving upward and hence margin also will improve and margin will improve little bit better than the price improvement because of the internal drive which we are taki
Q
Sir, before asking the question just wanted to clarify now sir when did we met the investors in Mumbai I suppose we met in end of November or the first week of December, is it right?
Management
Yes, you are right. Sir then how come we have not informed to the exchanges? Sorry. We did not inform the exchanges normally that is the process that when corporate meets the investors they inform to the exchanges that we are meeting investors on this day, but we have not informed to the exchanges? Whatever presentation we had done we have uploaded on the website of the Company so that meeting investor is an ongoing process just did happen that we merged it together instead of whatever we discussed that is all presented in a presentation which has been already uploaded well before meeting the
Q
So first of all on the house keeping you said that there is a non cement revenues for this quarter is 116 crore did I get it right?
Management
Yes you have heard it right. And how much is the RMC revenues for the quarter? RMC is about 56, 40 crores is AAC block, POP is 20. 56 crores is the RMC sorry I could not hear after that AAC. AAC is 40 and 20 is POP. JK Lakshmi Cement February 13,2023 And on a non cement revenues you are making around 7% EBITDA margin? Yes. Sir on the CAPEX front you mentioned as a consol basis you have incurred around 700 crore in the 9 months? No I said on that project of the 60-50 we have incurred up to December 700 crore. 700 crore because why I am asking this the September quarter half yearly balance sheet
Q
So my question is in the press release you have talked about 80% power mix in Eastern operation as a renewable power, we also have this captive power on the Eastern operation, so what happens to that once we have this 80% renewable power mix?
Management
Obviously we will not be using that because of the full cost and 80% will be drawn from renewable will not be required. So, we will be selling off that plant or that will be like? We will take a call at an appropriate time too early let the project. We also have plants to expand that we will see it is not that immediately sale off debt equity. And just for clarification on the consolidated CAPEX this year and next year we are looking at around 1,000 crores this year and 700 crore next year on consolidated basis? JK Lakshmi Cement February 13,2023 Current year we are talked of about 750 crores
Q
Couple of questions first is you indicated a sale of 115, 117 crores for the quarter pertaining to AAC blocks, RMC everything else, did I hear the number right?
Management
Yes correct. Sir, can you give the same number for Q2 and Q3 of last year please and the corresponding margins? So, we can give you Q2 as well. So, incidentally almost same overall 160 crore only, RMC was 52 crore in this quarter the quarter which has ended 116 crore margin 5% last quarter was 10% as against current quarter. Sir I could not hear you sir sorry. 116 is the current value-added products, which was the same as in the preceding quarter. Margin has improved from 5% in the second quarter to 7% third quarter in the value-added products. And sir last year numbers? 99 crores in the prece
Q
One question on the part of like say last concall we had told that by the month of like say January we would be more clear about how much price gap we have narrowed down with a peer, so any update on that part?
Management
I think we did ease our price gap with others, for instance, I think Western and Eastern part of India we have reduced this quite significantly I would say I think where we wanted to actually position ourselves that I think progress is there. I would not say that we have accomplish it, but I think there we have done quite a bit. In the North I think we need to opt on that further. The progress in case of North has not been that great. In the West and East yes, we have picked. Like is it more of an issue with regard to the leakage of volume from nontrade to trade I think that even if we see tod
Q
Sir my question relates to your grinding unit so how that is shaping up and what kind of volume we are expecting in FY23 and FY24?
Management
So, we are averaging close to between 25,000 to 30,000 because we commission this project during July and August during this monsoon time. How volume have started picking up probably this month onward or maybe this quarter I think we will see average volume of about more than 50,000 tons. In the previous quarter we have about close to 30,000 tons that improvement we see this. So, 50,000 per month? Yes per month. And sir this other expenses in this quarter has been very high, so what has been the reason for that and will this run rate will continue in the fourth quarter also? Second quarter we
Q
What are the repeat Quarter 3 FY22 numbers last year same quarter if you can please repeat JK Lakshmi Cement February 13,2023 volume number?
Management
Last year. Yes last year. Last year we had JK Lakshmi total volume of 20.96 cement and clinker (Inaudible) 53:33 UCWL was 4.47, cement and (Inaudible) 53:40 and clinker total was 2.84 and on a consol basis that on the net off unit consolidated 23.44 that was cement, clinker 2.7 total is 26.14. And you said JKL standalone was 20.96 and 0.33 clinker? 2.33 clinker total was 23.21. And second thing was that the capacity expansion which you spoke about so you had said 15 million ton and thereafter you would be adding around 0.5 or 1.5 till March so that part I could not get 30 million ton was by 20
Q
Sir you mentioned in the call that premium sales is 11% overall is 25% of trade have I recorded correct?
Management
Right. Because math is not working you said that trade is around 54% and premium is total 11% and out of trade it should be 20% only which is your consistent trend of 20%, 21%? I think I just mentioned approximately and that does not include our operating volume. Any volume which I does not include trading volume as the outsource volume where from where we are seeing premium product. I put everything together and I mentioned it to you. And sir how will the non-cement revenue margin will look like next year? I think it is going to be about 7%, 8% kind of thing. This 300 per ton internal lever w
Q
Sir just wanted to clarify as your voice was breaking in between couple of times Rs. 300 internal levers you said if you can break it up 200 50-50 again if you repeat what you mentioned?
Management
Yes 200 50-50 approximately you can take 200 top line and 50 manufacturing and supply chain. Sorry 200 from top line. Yes. 50 from manufacturing and 50 from? Supply chain logistic out bound logistics.
Q
My question is could you give the clinker production consolidated for Q3 and 9 months and second is 30 million ton by 30 which is incremental 12 million ton capacity, what is the CAPEX number you are factoring in for those 12 million ton?
Management
Consolidated clinker production in this quarter was 21.86 which includes 18.51 of JK Lakshmi and 3.35.
Q
Thank you. On behalf of PhillipCapital (India) Private Limited, we thank the management of JK Lakshmi Cement for the call and many thanks for participating and joining the call. Thank you very much sir and you may now conclude the call.
Management
Thank you Mr. Vaibhav and thank you everyone.
Speaking time
Management
95
Rajesh Kumar Ravi
23
Shravan Shah
21
Moderator
14
Ritesh Shah
14
Prateek
9
Abhimanyu Kasliwal
7
Keshav Lahoti
6
Uttam K Srimal
5
Kamlesh Bagmar
4
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Opening remarks
Vaibhav Agarwal
Thank you Aman. Good evening everyone. Firstly, we apologize for this delay which was on account of connectivity issues. On behalf of PhillipCapital (India) Private Limited, we welcome you to the Q3 FY23 and 9 Months 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 this 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 Sudhir Bidkar – CFO of JK Lakshmi Cement. I would like to mention on behalf of JK Lakshmi Cement and its management that further statement that is made or discussed on this conference call maybe forward-looking statement related to further developments and current performance. These statements are subject to a number of risks, uncertainties and other important factors which may cause the actual developments and results to differ materially from the statement
Management
Thank you Mr. Vaibhav and good afternoon ladies and gentlemen and sorry for this delay which was due to some technical problem in connectivity and welcome to this Q3 Concall for JK Lakshmi. You must have seen the results which were approved by the board and published and intimated to the stock exchange on Friday. So, without any waste of time since we have already run out of time I am throwing the floor open for question-and-answer session.
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