JKLAKSHMINSEQ1 FY24July 28, 2023

JK Lakshmi Cement Limited

7,882words
146turns
11analyst exchanges
3executives
Management on call
Arun Kumar Shukla
PRESIDENT & DIRECTOR, JK LAKSHMI CEMENT LIMITED
Sudhir Bidkar
CHIEF FINANCIAL OFFICER, JK LAKSHMI CEMENT LIMITED
Vaibhav Agarwal
PHILLIPCAPITAL (INDIA) PRIVATE LIMITED
Key numbers — 40 extracted
97%
undar Sriram: We had highlighted in our press release, clinker capacity utilization almost touching 97% and the cement utilization at 85%, with such strong utilization and our Geo Mix strategy, it appe
85%
our press release, clinker capacity utilization almost touching 97% and the cement utilization at 85%, with such strong utilization and our Geo Mix strategy, it appears our operating performance coul
90%
ned that would be helpful to understand, sir? Management: I think our peak utilization is about 90% and the North, West part of it I think it is lower than 90%, overall is 85%. I really give you se
25%
d quite heavily. There also I think our volume went down and if you know hands on volume is about 25% in North and Western part of India. So, I think that is what has impacted our volume growth. Just
16%
n I am having, we have done better than industry. As per my estimation, I think growth is about 16% in Eastern part of India and we have grown more than 16%, but in case of North and Western part,
18 million
e on those aspects? Management: After UCWL expansion, which our capacity will be close to about 18 million tons and we have the vision of going up to 30 million tons as we mentioned in our earlier calls a
30 million
, which our capacity will be close to about 18 million tons and we have the vision of going up to 30 million tons as we mentioned in our earlier calls also and that gap between (Inaudible) 10.05 to Brownfie
19%
Prateek Kumar: My first question is on your guidance. Last quarter we discussed targeting around 19% volume growth and Rs. 1,000 EBITDA per ton by the exit of this year, where are we in terms of tha
Rs. 1,000
st question is on your guidance. Last quarter we discussed targeting around 19% volume growth and Rs. 1,000 EBITDA per ton by the exit of this year, where are we in terms of that? And after a week first qua
10%
so that one I think we are going to use clinker, some of the grinding, still we have that another 10% capacity, I think headroom. So, that is one. Second, we do have some tie-ups with external partie
Rs. 610
pur Cement Works. Prateek Kumar: And what is the runway of our unit EBITDA from current quarter Rs. 610 to Rs. 1,000 by the end of this year? Management: So, yes, I think Rs. 1,000, this is what I t
Rs. 1,000,
om current quarter Rs. 610 to Rs. 1,000 by the end of this year? Management: So, yes, I think Rs. 1,000, this is what I think our plan is and all actions which we have kind of put in place is internal, a
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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.”
Shyam Sundar Sriram
qa
“So, as we look forward, while I understand this since we are getting into a seasonally weak quarter with the monsoons setting in, but post that, do we anticipate this situation to get remedied as we get into Q3-Q4?”
Management
qa
“One area actually I think is which we need to really work on going forward.”
Management
qa
“Apart from that, I think power and fuel we have done alright in line with industry, in fact, better than some of the peers who have declared their results so we are better than them, but the power and fuel I think is going to give further maybe levy going forward.”
Management
qa
“After UCWL expansion, which our capacity will be close to about 18 million tons and we have the vision of going up to 30 million tons as we mentioned in our earlier calls also and that gap between (Inaudible) 10.05 to Brownfield and the Greenfield expansion.”
Prateek Kumar
qa
“And after a week first quarter results, would we want to revisit the guidance?”
Management
qa
“Yes, so I think this is what the target we have taken 19%.”
Prateek Kumar
qa
“I was asking that with high utilization both of cement and clinker specially clinker, how do you plan to achieve the guided volume growth?”
Management
qa
“So, UCWL will be taking out the clinker from October this year.”
Management
qa
“Probably, I think I am sure that by October we will be commissioning our AFR capability at Sirohi and our plan is to take our TSR from currently 4% to about 10% very quickly once I think that facility is there.”
Risks & concerns — 2 flagged
So, as we look forward, while I understand this since we are getting into a seasonally weak quarter with the monsoons setting in, but post that, do we anticipate this situation to get remedied as we get into Q3-Q4?
— Shyam Sundar Sriram
For a couple of years, one or two years, it may haywire, but so long as we have the clear plan that it will be narrowed down to the range of about, not the debt to EBITDA not more than 3, 3.5, 4 max that should not be of concern being a temporary phenomenon so long as the clear visibility is there.
— Management
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Q&A — 11 exchanges
Arun Shukla· JK Lakshmi Cement
Q
Good evening to all of you. I am Arun Shukla from JK Lakshmi Cement. Yes, I think couple of points, I think you could have done better because if you look at volume which is alright, our AFR realization also looks alright, which is in line with what others are doing. But 2-3 points where I feel we would have done better of course, first better volume and I think we have some headroom right, so 85% capacity utilization of cement, so we could have done better on volume, one. Second is we could have done better on operating cost, which is a little bit higher, right, and third, I think if I am loo
Shyam Sundar Sriram
Sir, as you talk about volumes, which regions, if you can share some regional perspective between North, East and West, which were some regions from our utilization, how were the utilizations in these regions for us, any perspective that you can share and how that has improved either sequentially or year-on-year or declined that would be helpful to understand, sir? I think our peak utilization is about 90% and the North, West part of it I think it is lower than 90%, overall is 85%. I really give you sense as to where we could have done a better volume, I think in West because as I told you dur
Q
My first question is on your guidance. Last quarter we discussed targeting around 19% volume growth and Rs. 1,000 EBITDA per ton by the exit of this year, where are we in terms of that? And after a week first quarter results, would we want to revisit the guidance?
Management
Yes, so I think this is what the target we have taken 19%. Typically, I think the one used to be always good, but I told you in our geographies, I think we had some unprecedented situation. I would say, the cyclone and little bit longer layout forcefully. So, that impacted this thing, but still I think we hold on to our volume growth what we planned at the beginning of the year. There is no revision as such. I was asking that with high utilization both of cement and clinker specially clinker, how do you plan to achieve the guided volume growth? So, UCWL will be taking out the clinker from Octo
Q
Sir, with regard to this enabling resolution Rs. 2,500 odd crores, so like I know we are in active discussion for Sanghi Cement’s acquisitions, so like so based on that enabling acquisition, it suggests that we are looking for around Rs. 4,500 to Rs. 5,000 odd crores acquisition or consideration assuming like say Rs. 2,000 crores debt at Sanghi, so like say, what is the thought process there? If we are positive or if we succeed to get that particular asset, then what about the organic expansion because if you see North East market, we are the smallest player there like say, all the players who
Management
You are right, Kamlesh that we have not grown that much as others have grown in the Eastern and the reason which we have been saying for quite some time has been that due to the non clarity on the railway siding, we have not been able to expand our capacity. Now, the good news which we would like to share with all of you is that finally we have got the approval for setting up the railway lines. Whatever were the impediments, those have all been cleared and the approval is in place, so that gives us an opportunity to expand at a fast pace with the railway siding in place in the eastern region a
Q
Sir, just to reconfirming when we are saying the 19% volume growth, so this is on the console volume that we have done in FY23 on that we are seeing the 19% growth still we can achieve?
Management
Yes, over FY23 only. So, that means for next 9 months, the ask would be a 23% plus kind of a growth that we have to do, so just to reconfirm at least in June-July, have we seen that kind of run rate, that kind of growth? That is what we are trying. I think arithmetically, we cannot put on a pro rata basis because July, August, September are typically lean months and I told you that October, we are going to have clinker also in place right and from October, I think we will have a good impetus on volume growth because we will add clinker, that 97% clinker utilization we have already done and gri
Q
Sir, I had a few questions. So, the first one is on that, you mentioned earlier that we won few leases in Gujarat and Rajasthan, so wanted to understand like what is the reserve size like? What is the premium paid over there and by what time do we plan to exercise this growth optionality?
Management
The premium etc. is a little slow. You can see I don't have the figure readily available, but it has not been exorbitant premium which we have paid. It has been almost a year that we have acquired those mines. That is number one. Number two, we are focusing initially on the Nagaur mines in Rajasthan. We have started the land acquisition process and Kutch will be after some time. And so what are the reserves? Reserves also will let you know separately, but that is all in public domain. We don't have the figure right now with us in the call, but I think the both the data on the premium at which
Q
Just wanted to clarify the target of Rs. 1,000 per ton is including the fuel cost benefit that you are seeing or it is excluding that?
Management
As I told, I think this is excluding right, all internal efficiency because we wanted to bridge that gap of about Rs. 300 - Rs. 350. So, industry I understand is having or estimating like a Rs. 300 cost benefit from foreign fuel costs, so then basically we should expect 1300, right? Is that understanding correct? So, I think our estimation is a little lower on fuel cost for this thing because we are already there at about 2.3 now around, right, so maybe if you have recent cost, it started going up. I don't think 300 headroom is there for fuel cost, this is what my estimation is. But whatever i
Q
My question pertains to first, could you share the clinker production at Udaipur and standalone entity?
Management
Production of clinker in the standalone entity in this quarter, our clinker production was 16.65 lakh tons and for Udaipur it was 3.88 lakh tons. What was the fuel cost on console per kilocal? Our fuel cost in this quarter on kcal basis was Rs. 2.23 paisa. And this was what number in Q4? And Q4, it was 242. And how are these even trending in month of July? In the coming quarter, we expect it to further go down from 223 to 215 or so. But why is the softening you are looking at a very smaller number because petcoke prices and all have come down significantly, so the current spot prices by when d
Q
Can you please guide us on the coal inventory on the petcoke inventory which you were holding, like what kind of three months inventory or what is the shipment have been done for this quarter, if you can throw some lights on that?
Management
We are holding an inventory of about 100 odd days.
Q
Sir, my question is pertained to again on the inorganic growth opportunity. Sir, what valuation we are comfortable for the acquisition, what is your thoughts on this?
Management
We have not assigned any number for any acquisition value, depends on what benefit that asset drives to us and whether it makes synergical sense. So, it could be different figure for assets located at different place, ultimately has to be seen in a case to case basis. There is no fixed number there too. And just last question on net debt, what is the current consolidated net debt, I missed the number, sir earlier? No issues. I will read out that. Net debt is Rs. 1,000 crores as on date, 1950 is the gross debt and 950 is the cash.
Q
Sir, what is our CAPEX guidance for FY24 and FY25 on standalone level?
Management
We have CAPEX on 2-3 counts, which is presently underway. We are working on a waste heat recovery as we mentioned of about 3.5 MW. Then there is an AFR project going on. We are doing some AC blocks at Alwar plus the solar power also. All in all, about Rs. 400 crores of CAPEX is lined up and now that the approval as we mentioned in response to our earlier call, the approval for the railway siding and the conveyor belt having been there, there could be some CAPEX of about Rs. 100 odd crores, 100-250, maybe around in that range on that, so maybe 300 plus 100 around 400 in this year. 400 in FY24,
Q
Thank you. On behalf of PhillipCapital (India) Private Limited, we would 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. Melissa, you may conclude the call. Thank you.
Management
Speaking time
Management
69
Parth
14
Moderator
13
Rajesh Ravi
11
Shravan Shah
10
Shyam Sundar Sriram
6
Amit Murarka
6
Prateek Kumar
4
Uttam Kumar Srimal
4
Kamlesh Bagmar
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 Q1 FY24 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 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 based on current expectations. These statements are subject to number of risks, uncertainties and other important factors which may cause actual developments and results to differ material from the statements made. JK Lakshmi Cement Limited and the management of the company assumes no obliga
Management
This is Sudhir Bidkar from JK Lakshmi along with my colleague Mr. Arun Kumar Shukla, welcoming you for this Q1 FY24 call. You would have seen the results and we don't have any comments to it other than that we will throw the floor open for question and answer, so that we can take maximum questions.
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