JKCEMENTNSEQ2 FY24November 07, 2023

JK Cement Limited

6,729words
167turns
12analyst exchanges
4executives
Management on call
Ajay Kumar Saraogi
DEPUTY MANAGING
Sumnesh Khandelwal
DEPUTY CHIEF
Prashant Seth
PRESIDENT BUSINESS
Vaibhav Agarwal
PHILLIPCAPITAL INDIA PRIVATE LIMITED
Key numbers — 40 extracted
rs,
ns. And 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 statements made.
INR2,476 crore
during the quarter. But I will read out the key highlights. The net sales during this quarter was INR2,476 crores as against INR2,541 crores. This was lower by about 3%. The revenue from operations was INR2,571
INR2,541 crore
ill read out the key highlights. The net sales during this quarter was INR2,476 crores as against INR2,541 crores. This was lower by about 3%. The revenue from operations was INR2,571 crores as compared to INR2
3%
sales during this quarter was INR2,476 crores as against INR2,541 crores. This was lower by about 3%. The revenue from operations was INR2,571 crores as compared to INR2,624 crores, a decrease of 2%
INR2,571 crore
76 crores as against INR2,541 crores. This was lower by about 3%. The revenue from operations was INR2,571 crores as compared to INR2,624 crores, a decrease of 2%. The operating expenses were also lower by 4% a
INR2,624 crore
rores. This was lower by about 3%. The revenue from operations was INR2,571 crores as compared to INR2,624 crores, a decrease of 2%. The operating expenses were also lower by 4% at INR2,124 crores as against IN
2%
3%. The revenue from operations was INR2,571 crores as compared to INR2,624 crores, a decrease of 2%. The operating expenses were also lower by 4% at INR2,124 crores as against INR2,222 crores. The
4%
rores as compared to INR2,624 crores, a decrease of 2%. The operating expenses were also lower by 4% at INR2,124 crores as against INR2,222 crores. The -- however, the EBITDA during this quarter was
INR2,124 crore
as compared to INR2,624 crores, a decrease of 2%. The operating expenses were also lower by 4% at INR2,124 crores as against INR2,222 crores. The -- however, the EBITDA during this quarter was higher at INR447
INR2,222 crore
res, a decrease of 2%. The operating expenses were also lower by 4% at INR2,124 crores as against INR2,222 crores. The -- however, the EBITDA during this quarter was higher at INR447 crores as against INR402 cr
INR447 crore
4 crores as against INR2,222 crores. The -- however, the EBITDA during this quarter was higher at INR447 crores as against INR402 crores, an increase of 11%. The EBITDA margins during this quarter was 18% as
INR402 crore
222 crores. The -- however, the EBITDA during this quarter was higher at INR447 crores as against INR402 crores, an increase of 11%. The EBITDA margins during this quarter was 18% as compared to 15.8% in the
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Guidance — 20 items
A K Saraogi
opening
“The Prayagraj 2 million ton greenfield plant is on stream and will be commissioned by quarter 2 FY '25.”
A K Saraogi
qa
“And we feel that within -- from next quarter onwards, we should get a regular production from the Panna debottleneck.”
Amit Murarka
qa
“And what is the target of capex this year and next year?”
A K Saraogi
qa
“This year's capex target was INR1,400 crores, and we have already spent around INR500 crores till now.”
A K Saraogi
qa
“And the next year capex target is INR700 crores.”
Amit Murarka
qa
“And what's the target that you have for FY '24, '25 in turnover?”
A K Saraogi
qa
“So now we started the new project range in this -- early this -- early April.”
A K Saraogi
qa
“So, we should close minimum, I think, INR150 crores, and it may also -- our internal target is between INR175 crores to INR200 crores.”
A K Saraogi
qa
“So going forward, we shall start using AFR at Panna.”
A K Saraogi
qa
“So, there will be further cost reduction at Panna.”
Risks & concerns — 5 flagged
And how much of that decline is sustainable?
— Amit Murarka
See, some of the decline is one-off as a seasonal thing.
— A K Saraogi
Sir, is there any risk of potential import duties of both gray as well as white cement large clinker coming from UAE to India.
— Ritesh Shah
There is an impact of around INR20, INR25 a ton on that count, on our freight cost.
— A K Saraogi
So, it becomes difficult for -- to do a 2 billing to the same customer.
— A K Saraogi
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Q&A — 12 exchanges
Q
So just a couple of questions. First on capacity. So, Panna, I think the clinker line debottlenecking was expected to happen with these maintenance seizes. I just wanted to confirm if that has been done.
A K Saraogi
So, the Panna clinker line debottleneck has already been more or less completed. It is under trial run. And we feel that within -- from next quarter onwards, we should get a regular production from the Panna debottleneck. Sure. Also on capex, could you just highlight how much is done? And what is the target of capex this year and next year? This year's capex target was INR1,400 crores, and we have already spent around INR500 crores till now. And the next year capex target is INR700 crores. On the quarterly, like, I see that the logistics cost and the freight cost has fallen quite a bit Q-o- Q.
Q
Congratulations on a strong set of numbers. Sir, my first question was regarding the Panna plus Hamirpur unit. I would like to know the utilization levels for that unit? And if you can just guide us how the profitability for that is differing from the overall profitability?
Sumnesh Khandelwal
No, utilization level for that unit was 75%. And profitability, say, with the ramp-up of the Panna means profitability is in line, mean whatever is the difference, the region-wise in the pricing that will remain. Otherwise, it is in line with the other existing operations. And there is a continuous -- when you start a plant, there are some additional costs, but that is ramp-up is still going on at the plant level like we are ramping up the clinker production from 8,000 to 10,000. So once all this gets normalized, there would be further savings that we see a potential and we are able to use --
Q
Congratulations on a good set of numbers. Sir, a couple of questions. First, I would request a capex update. So, what is the status of the Waste Heat recovery we were planning at Karnataka?
A K Saraogi
So, the Waste Heat recovery at Karnataka is also at advanced stage of completion. And within this quarter, this will get commissioned. That is 18 megawatt, right? Yes. Okay. Okay. And sir, after -- once we complete the clinker debottlenecking at Panna, which you said is more or less done, what is our total clinker capacity? Total gray cement clinker capacity will be how much? It is around 15 million tons. Around 15 million tons. Yes. Okay. So then in that case, is it safe to say that we can easily, without expansion, we can easily go up to 20 million, 21 million tons? No, around 22 million ton
Q
Sir, joined the call late. So, I just want to get the pricing trends, what we've seen in the last couple of weeks, both October, early November and end of 2Q versus average in our key regions?
A K Saraogi
So yes, we have seen some increase in pricing in the latter part of Q2 or so in the North, and then we have seen some price increase also in the southern regions in the month of October. And -- so these 2 regions have definitely seen and the marginal increase is there in the central but not very significant. So, there is an increase in price across all of our major markets. Okay. And sir, based on what we are picking up, I mean, any -- 4%, 5% price increase in North and South is that ballpark right? Or lower than that is what we're seeing? Yes, around that. Versus 2Q average? 3% to 4% should b
Q
Congratulations on good set of numbers. So, sir, as you mentioned, 13% to 15% rail mix. So, for this quarter Q2 would be the same, what was the last quarter of 14% rail, sir?
A K Saraogi
So Q2, the rail mix was around 11%. Q1, it was 14%. And see, again, it depends on the season, monsoon and other things. So -- and one thing more, even the road freight also gets varied between monsoon and non-monsoon. It's a peak business time. I mean there is a lot of -- I mean see business and movement of various materials from different items. So, it affects the... Secondly, sir, in terms of the profitable -- last time we have talked about gray cement, we are looking at close to INR900 kind of EBITDA per ton. But considering this quarter, is it fair to assume that this quarter should be our
Q
Sir, my question is on demand trends. So, with regards to safety actions in some of your operating states. So, is there any particular demand impact which has now started to be visible because of some levered average towards election purpose or otherwise?
A K Saraogi
So, see, as of now, there is no major dip in the demand. But having said so, the November month maybe a bit low because one of the festival and because in 2 states, we have election. So, election itself may have some disruption in supplies and some demand. So, we may see some dip in the month of November, but again, we -- it should bounce back in the month of December. And one related question on -- regarding the sharp price increase, which we saw in South India. So, is there an impact on demand post the price hike, which was taken? No, no, not really. I mean in the areas where we have upgrade
Q
Congrats on good set of numbers. My first question pertains to incentives. How much was booked in Q2 sir, in P&L?
A K Saraogi
Yes. So, our total incentive -- annual incentive is in the range of about INR250 crores. So INR65 crores was the -- INR69 crores was the total incentive in this quarter. Okay. And sir fuel costs, you mentioned 1.94 for this year in Q2, a similar number for last year, Q2 was how much? Prashant Seth It was 2.4. 2.4, okay significant savings. And sir, just on the paint revenue. I see the wall putty realization is down 4% Q-on-Q. So consolidated basis, what could have driven that? And also, the UAE business numbers, volume number seems to have significantly improved. Any specific changes in the bu
Q
A couple of questions. Sir, first is, can you help us with the UAE volumes? And what percentage of volumes come to India, if it is for Q2 or first half either the number [inaudible 0:36:35]?
Prashant Seth
Yes, UAE volume in this quarter was 193,000 tons. And the last quarter, it was 121,000. So overall, we have done like 314,000 tons in the 6 months. And in India, you see we are bringing material in 2 forms. One is the direct billing from the UAE. And second is what is -- what material is coming to India and build in the -- build from the Indian company. So, the overall material in the first 6 months which has come up is around 60,000 tons in both the forms. Okay. That's roughly one third. Sir, is there any risk of potential import duties of both gray as well as white cement large clinker comin
Q
Yes. You mentioned that during Q2, we have received some like off-season discount from railway. So, what is the percent of that discount? And what is in absolute volume -- like how much amount did we receive -- this will be discount in the freight?
A K Saraogi
So, railways normally do a 15% discount -- off season discount, which is in the July-September quarter. That is a lean period for the railways, the main monsoon period. So that is on all railway dispatches, but -- which is withdrawn from 1st October. Yes. So how amount like did we receive as a discount? No, it is not received. It is -- the freight is reduced. No, no. I understand, but how much lesser freight you have paid for the Q2 due to this discount separately. There is an impact of around INR20, INR25 a ton on that count, on our freight cost. INR20 to INR25 ton, so how much did we ship or
Q
Sir, in paints, I just wanted to check, what are the revenues that get booked in the stand-alone entity?
Prashant Seth
INR21 crores. Understood. But that is on account of what? Because it's paint -- I mean Acro is a step-down subsidiary and J.K. Max is a wholly owned subsidiary, so how can -- just trying to understand the incidence of revenue... What happens there is a direct billing, which is done by Acro to -- Acro has its own client customer base. So that billing is done directly in Acro books as in the step-down subsidiary, because the counters for paint and putty assets as we said, the reason for our entering the paint business was the synergy, and we have the common counters. So, it becomes difficult for
Q
Sir, just one question, sir. Did you also highlight any one-offs in your maintenance costs in the Q2 quarter. I just want to reach upon that.
Sumnesh Khandelwal
Yes, it is actually normal for this quarter because the scheduled maintenance is planned looking to the lower clinker requirement. There was around, say, INR30 crores, INR35 crores of additional expenditure on that account in this quarter. So, these recurring maintenance expense or is the one-off in the maintenance is what I was asking. We can say additional increment maybe about INR15 crores, INR20 crores. There are some maintenance because now we are -- a number of kilns are so many, so there is maintenance comes up actually in -- but most of the maintenance has been done in the first half.
Q
And happy Diwali to all.
Management
Speaking time
A K Saraogi
67
Moderator
14
Marson Luis
14
Navin Sahadeo
11
Rajesh Ravi
10
Amit Murarka
8
Sumnesh Khandelwal
8
Sumangal Nevatia
7
Shravan Shah
6
Vaibhav Agarwal
5
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Opening remarks
Vaibhav Agarwal
Yes. Thank you, Nirav. Good evening, everyone. On behalf of PhillipCapital India Private Limited, we welcome you to the Q2 and H1 FY '24 call of JK Cement Limited. On the call, we have with us Mr. Ajay Kumar Saraogi, Deputy Managing Director and CFO; Mr. Sumnesh Khandelwal, Deputy CFO; and Mr. Prashant Seth, President of Business Information and Investor Relations. I would like to mention on behalf of JK Cement Limited, and its Sumnesh Khandelwal that certain statements that may be made or discussed on this conference call may be forward-looking statements related to future developments and based on current expectations. And 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 statements made. The JK Cement Limited and the Sumnesh Khandelwal of the company assumes no obligation to publicly alter or update these forward-looking statements whether as a result of new
A K Saraogi
Yes, good evening. I'm Saraogi from JK Cement. And the Board of Directors met on 4th November to review the performance of the company for the quarter ended 30th September and for the half year of the current fiscal. We have already circulated the investor presentation, giving the salient features of the performance during the quarter. But I will read out the key highlights. The net sales during this quarter was INR2,476 crores as against INR2,541 crores. This was lower by about 3%. The revenue from operations was INR2,571 crores as compared to INR2,624 crores, a decrease of 2%. The operating expenses were also lower by 4% at INR2,124 crores as against INR2,222 crores. The -- however, the EBITDA during this quarter was higher at INR447 crores as against INR402 crores, an increase of 11%. The EBITDA margins during this quarter was 18% as compared to 15.8% in the previous quarter. The profit after tax during this quarter was INR179 crores as against INR126 crores and the EPS was INR23.10
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