JKLAKSHMINSEQ4 & FY23May 22, 2023

JK Lakshmi Cement Limited

7,935words
190turns
15analyst exchanges
3executives
Management on call
Arun Kumar Shukla
PRESIDENT AND DIRECTOR, JK LAKSHMI CEMENT
Sudhir Anna Bidkar
CFO, JK LAKSHMI CEMENT
Vaibhav Agarwal
PHILLIPCAPITAL (INDIA) PRIVATE LIMITED
Key numbers — 40 extracted
55%
atio, lead distance, railroad mix? Management: For this financial year as a whole our trade was 55%, blended was also incidentally 55% and premium product overall it was about 11% and lead distance
11%
ole our trade was 55%, blended was also incidentally 55% and premium product overall it was about 11% and lead distance was 398. Shravan Shah: And for this quarter? Management: Broadly the same
Rs. 128 crore
: And what was the non-cement revenue so RMC, AAC and POP? Management: In this quarter it was Rs. 128 crores and for the full year Rs. 478 crore. Shravan Shah: And RMC revenue was? Management: Total
Rs. 478 crore
ue so RMC, AAC and POP? Management: In this quarter it was Rs. 128 crores and for the full year Rs. 478 crore. Shravan Shah: And RMC revenue was? Management: Total product all taken together. Shravan
Rs. 62 crore
ore combined, but for RMC revenue for the 4th Quarter was? Management: RMC on separately it was Rs. 62 crores for the quarter and Rs. 225 crores out of Rs. 478 crores for the year. Shravan Shah: And in
Rs. 225 crore
for the 4th Quarter was? Management: RMC on separately it was Rs. 62 crores for the quarter and Rs. 225 crores out of Rs. 478 crores for the year. Shravan Shah: And in terms of the margins for the non-ce
7%
for the year. Shravan Shah: And in terms of the margins for the non-cement it was around same 7%, 8% kind of EBITDA margin for non-cement revenue? Management: 5%. Shravan Shah: So, now c
8%
r the year. Shravan Shah: And in terms of the margins for the non-cement it was around same 7%, 8% kind of EBITDA margin for non-cement revenue? Management: 5%. Shravan Shah: So, now comin
5%
on-cement it was around same 7%, 8% kind of EBITDA margin for non-cement revenue? Management: 5%. Shravan Shah: So, now coming to the base main questions in terms of the we were looking at to
60%
e base main questions in terms of the we were looking at to increase our trade share to more than 60% this we are seeing for last two quarters still the number remains at the same 55%, so how do we s
Rs. 1000
d I think in terms of the overall EBITDA margin also last time we said we are looking at close to Rs. 1000 kind of EBITDA per ton over 18 to 24 months so that is from Rs. 300 improvement that we have menti
Rs. 300
d we are looking at close to Rs. 1000 kind of EBITDA per ton over 18 to 24 months so that is from Rs. 300 improvement that we have mentioned 200 from realization, 50 from manufacturing and 50 from supply
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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.”
Management
qa
“700 a ton and that journey is going to continue going forward.”
Management
qa
“So, the forecast is 2.31 2.3 around this quarter and what we have achieved so far is 2.42 which is lower than previous quarter.”
Management
qa
“So, typically October to March is about 6 months’ time and if you take 25% of clinker volume of rated capacity of 1.5 million tons that we plan to take it to our grinding station where we have that headroom of further improving our capacity utilization.”
Management
qa
“So, we do have plan to consume this clinker which you are going to get during these 6 months before our grinding capacity.”
Management
qa
“So, any acquisition or for that matter expansion would have initial period under implementation or stabilization you will have some ratio which may go off maybe even 4 to 5 times of net debt-to-EBITDA, but once the underlying EBITDA flows in it will be back to normatively it should not more than 3 to 3.5 net debt-to-EBITDA that is the prudential now which we generally follow.”
Management
qa
“They are planning to come up with the rights issue somewhere in June, July and we are being the 72% holders there off in UCWL stock so will be subscribing to that.”
Management
qa
“The size of the issue is expected to be around 450 crores and what we have also submitting or giving the confirmation that in the event unlikely event of the public remaining 26%, 27% not fully subscribing to that then also we will be making up for good for the unsubscribed portion or shortfall in the public subscription of 27%.”
Management
qa
“So, that is how that money will flow in and pending the launch of the rights issue about 85 crores has already been deployed in UCWL by way of unsecured loan which will be adjusted against our rights entitlement in the rights issue.”
Management
qa
“Shukla mentioned in response to earlier question once that clinker flows in so it will be grounded at our grinding units in Gujarat and other places.”
Risks & concerns — 2 flagged
So, now in terms of the fuel cost so for how much it was on the KKL basis and also the fuel mix and how now one can look at in terms for Q1, Q2 how we can see in terms of the decline in the fuel cost?
— Shravan Shah
So, I think the impact of this softening of fuel cost is going to come about.
— Management
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Q&A — 15 exchanges
Q
Sir, before asking any questions just couple of data points so what was the trade sir for this quarter premium share, blending ratio, lead distance, railroad mix?
Management
For this financial year as a whole our trade was 55%, blended was also incidentally 55% and premium product overall it was about 11% and lead distance was 398. And for this quarter? Broadly the same marginally lead distance was around 400. And what was the non-cement revenue so RMC, AAC and POP? In this quarter it was Rs. 128 crores and for the full year Rs. 478 crore. And RMC revenue was? Total product all taken together. Rs. 128 crore combined, but for RMC revenue for the 4th Quarter was? RMC on separately it was Rs. 62 crores for the quarter and Rs. 225 crores out of Rs. 478 crores for the
Q
So, one question on the part of this M&A activities let us say based on some media reports one of the companies for sale and it is in your core market that is Gujarat, so any thought process like would you be interested in that or how does it patch with you does it synchronize with your thought process or the vision to expand the capacity to let say 20 million, 25 million tons which you have been highlighting that our vision or the or the plan in the coming years?
Management
You are talking of which opportunity please? Sanghi cement. There is some news item which is there in the news. So, we would not like to comment on that. But if say like just hypothetically if it is available at 190, 200 odd dollars and which we are trading at let us 70 odd dollars, would we be assessing that given the long-term opportunity which we have while the market is factoring the short-term issues over your stock price. So, would we be looking at that facility or the operations? We are already operating at around $100, barring these last two-three days drop in the price and certainly i
Q
I wanted to ask few questions can you elaborate on how the cash will flow to Udaipur subsidiary because we are right now net cash company and so how will it flow like, will you raise the money Udaipur size was announced that is one question and secondly in the cost reduction in the operating cost can you share how much come from it is actually like Udaipur which is increasing our scale or from other locations where you are trying to put more trade activities and grinding units?
Management
Cash flow wise whatever money we have to induct into UCWL will ultimately be by way of our contribution in the rights issue of UCWL. They are planning to come up with the rights issue somewhere in June, July and we are being the 72% holders there off in UCWL stock so will be subscribing to that. The size of the issue is expected to be around 450 crores and what we have also submitting or giving the confirmation that in the event unlikely event of the public remaining 26%, 27% not fully subscribing to that then also we will be making up for good for the unsubscribed portion or shortfall in the
Q
Just wanted to check like when you will take clinker from UCW to JK Lakshmi plants what will be the formula for that transfer like will it be cost or how will it work?
Management
It will be at arm’s length pricing. But just to understand like how does it really I mean will it work in a cost plus margins or cost plus ROC or how what will the framework for that? JK Lakshmi Cement May 22,2023 Cost plus whatever is their total cost they will retain some, add on their some margin and that that will be the cost to us. Also on the CAPEX front like how much CAPEX is spent already on this plant and how much is pending and what is the planned outlay for FY24? We have spent about 850 crores on this project up to now which includes about 630 which incurred during the FY23 and we t
Q
Couple of questions for FY23 year as a whole our consolidated volume grew more like 5.5%, so what kind of growth because clinker as we are all well aware that clinker is coming in Q3 and grinding unit for that is coming a little later couple of quarters down the line, so what kind of volume growth are we looking at for FY24?
Management
I think our cement sales grew by about 12% last year. Clinker I think I told you during last call also that clinker is something which we are not encouraging to sell until unless we have some good position. The cement sales grew by 12% last year and what we plan we have taken a growth JK Lakshmi Cement May 22,2023 of 19% this year FY23-24 cement sales growth we have taken as 19% and we are pretty confident because that Udaipur also is going to contribute in terms of clinker access which you are going to get during last 6 months’ time. Can you please share the breakup of the clinker and cement
Q
First of all, could you give the clinker production for Q4 and FY23? JK Lakshmi Cement May 22,2023
Management
Clinker production you want. Consol? Full year. Full year and for Q4 also? Clinker production in this quarter was 17.28 lakh tons and for the year as a whole it was 67.16 tons. I would believe your clinker utilization would be close to peak now? Yes almost full 100%. The volume growth that you are looking at 19% cement volume growth this year for this if could understand that 5 lakh ton clinker which is sold in FY23 that may get converted into cement that will be a major price and is it fair to understand that because your new clinker line will be available by end of Q3 will have some surplus
Q
Sir any RMC plan that you are helping to set up?
Management
Yes, I think we do have plan and as per our strategy sector power RMC plant in the areas where we operate we are in cement, for instance, I think we have put up two plants in Gujarat, Bhavnagar and another plant in Baroda. We are setting up another plant in Sonipat is in the NCR region and Lucknow, Raipur also we have planned to put up our RMC plants. We do have plans to set up RMC plants in the market where our cement availability is there and we find a good synergy between our different product lines. One more question sir this year we have done EBITDA turnover of around 55, so what kind of
Q
So, my first question is with respect to one of the previous questions on Sanghi cement just want to understand where has the divestment process reached and given our interest I mean how does it fit into our strategic priorities and our plan to reach 30 million tons over the next 5 years, 7 years?
Management
Our plan is to go up to 30 million through our organic growth only. We will be close to 18 million once this Udaipur expansion comes in and then 18 to 30 will be a journey of 12 million ton which will be partly done by Brownfield 3 million tons that Udaipur and then the two mines which we have recently been allotted in Nagor and Kutch. So, 3 million each year those two sides Greenfield expansion. So, that is where we are, but yes we are always looking for opportunities in organic way also if it comes as I mentioned to Mr. Kamlesh question if comes at the right price. Sir where are we in terms
Q
Sir I have three questions number one is about the green bond we are about to issue of 2 billion for the green project, can you please highlight which green project we will be taking on these funding and second question is you have mentioned about the Palanpur grinding unit, so what is the capacity of this Palanpur grinding unit and from when this plant we are using as all the arrangement?
Management
To answer your first question regarding the green projects as we mentioned last time also we JK Lakshmi Cement May 22,2023 have taken up several green projects for implementation. One is waste heat recovery project of debottlenecking it and adding about 3.5 to 4 megawatt. Second is the increase in the TSR and the usage of the AFR. So, there it is being gradually increased the TSR from 4% to 16% in phases then we also tied up through under the captive mode 40 megawatt of solar power for our door Durg facility and we are also planning another 7 megawatt of solar power at Sirohi. All these projec
Q
Sir, this TSR you mentioned that by December we are looking at increasing to 10% and 16% we will reach by March, June?
Management
No 16% I think Phase-2. So, Phase-1 we are through with the Phase-1 part of it to 10% and somewhere I think end of this calendar year we will reach their October, November kind of thing and Phase-2 I think that next year that will come 16%. Phase-2 we have not yet started we are just working on Phase-1. Second sir Bidkar sir has mentioned that for all the solar and everything we are looking at this 200, 250 CAPEX, so just to come back to the main question in terms of the CAPEX at the consol level for FY24 and 25 how much one can look at? It will be about 200 crores in the company main company
Q
Most of my questions have been answered just one clarification so you mentioned we are looking for about 18%, 19% volume growth from consol level or the standalone level?
Management
Consol level JKLC also is at the same level. Both at JK Lakshmi as well as Udaipur broadly the same plus minus 1%, 2% at each place
Q
I think in the call you did mention like the nontrade EBITDA margin that you get in some of the regions like including West it is better than the margins that you get in trade side in the center that you get now is this has any role to play where you are targeting EBITDA margin improvement Rs. 700 to Rs. 1,000 a ton?
Management
Yes, this has got a major role to play. So, I told you the hierarchy of optimization of levers. So, first goes with Geo mix. Second on then trade optimization and then you have got premium product then segment mix and then so on. The first lever is of course I think optimizing Geo mix irrespective of trade and nontrade where from we get the better margin. So, basically the NSR that you mentioned is a part of all? JK Lakshmi Cement May 22,2023 Correct part of them.
Q
So, as you have mentioned our plan is to go to around 30 million tons by let us say next 6 to 7 years, so when are we likely to decide on this incremental capital allocation decisions, so any timeline or by FY25, FY26?
Management
As far as Durg is concerned we will do in this current financial year for sure and maybe one year later we will take a call on usable of that. As regards to the Greenfield projects at Nagor and Kutch we have already started the land acquisition activities at those two places and as you would know we have to first acquire the land minimum some portion of percentage of land and then go for the environmental clearances and all that. So, that process will take its own time. Right now we are focusing initially on Brownfield and to start with Durg in this year and maybe take a call on UCWL next year
Q
Sir, previously you just shared the volume breakup for the standalone entity can you also please share the cement and clinker number for the consolidated entity?
Management
Yes sure. In this quarter I am talking of total sale we did about 30 lakh tons UCWL did about 5.92, but on a consol level netting of the inter unit sale total sales cement was in this quarter 31.56 and clinker 2.32 so that makes it on a consol basis 33.88 and similar figure for the year were 112 lakh tons JK Lakshmi is 107 on a standalone, UCWL is 20 so that makes it 127, but net of the inter unit sale it is 118, 12.36 of the cement and 5.79 of clinker on a consol basis netting of the inter unit. So, on a consol basis the cement growth is how much sir just one question here? On a consol basis
Q
Thank you. On behalf of PhillipCapital (India) Private Limited we like to thank the management of JK Lakshmi Cement for the call and many thanks to the participants joining the call. Thank you very much, Sir. You may now conclude with the call.
Management
Speaking time
Management
91
Navin Sahadeo
18
Moderator
17
Shravan Shah
17
Rajesh Ravi
16
Amit Murarka
6
Uttam Kumar Srimal
6
Kamlesh Bagmar
5
Niraj Mansingka
3
Mudit Agrawal
3
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Opening remarks
Vaibhav Agarwal
Thank you, Aman. Good evening everyone. On behalf of PhillipCapital (India) Private Limited, we welcome you to the Q4 FY23 and 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 Mr. Sudhir Anna 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 performance based on current expectations. These statements are subject to a number of risks, uncertainties and other important factors which may cause the actual developments and results to different materially from statements made. JK Lakshmi Cement Limited and the management of the company ass
Management
Thank you Mr. Vaibhav and good afternoon ladies and gentlemen for this Q4 FY23 Call for JK Lakshmi Cement. You would have already seen the results and also our press release where we have also given the volume numbers both for the quarter as well as for the full year along with the standalone and the consolidated one. So, without wasting any time I will leave the floor open for question and answer so that we are able to take maximum question and answer from you. So, over to you for the question and answers.
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