JK Lakshmi Cement Ltd (NSE: JKLAKSHMI) Q3 2025 Earnings Call dated Feb. 07, 2025
Corporate Participants:
Arun Shukla — President and Director
Analysts:
Vaibhav Agarwal — Analyst
Unidentified Participant
Mangesh Bhadang — Analyst
Rajesh Ravi — Analyst
Shravan Shah — Analyst
Uttam Kumar Srimal — Analyst
Nihar Dave — Analyst
Shouvik Chakraborty — Analyst
Amit Murarka — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to JK Lakshmi Cement Quarter and Nine Months Year-Ended 31st December 2024 Earnings Conference Call hosted by PhillipCapital India Private Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone.
I now hand the conference over to Mr Agarwal from PhillipCapital India Private Limited. Thank you, and over to you, Mr Agarwal.
Vaibhav Agarwal — Analyst
Yeah. Thank you, Michelle. Good evening, everyone. On behalf of PhillipCapital India Private Limited, we welcome you to the Q3 and Nine-Month FY ’25 call of JK Cement Limited. I need to highlight that JK Cement is also the holding company of its listed entity, Cement Works Limited and therefore, this call is also open for a discussion about the performance of Udaypur Cement Works Limited.
On the call we have with us Mr Arun Kumar Sukla, President and Director; and Mr Suji, CFO at JK Laxmi Cement. I would like to mention on behalf of. 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 and which are based on current expectations. These statements are subject to a number of risks, uncertainties and other important factors, which may cause actual developments and results to differ materially from the statements made. The JK Limited and the manager of the company has no obligation to publicly realter or update these forward-looking statements, whether as a result of new information or future events or otherwise.
I will now hand over the floor to the manager of JK for their opening remarks, which will follow-up going to Q&A. Thank you and over to you, sir.
Arun Shukla — President and Director
Yeah, however, thank you and good evening to all of you. Thanks for attending this call. Although you have already seen the result, but I’ll just give you a very brief update on the industry as such and our view on that.
So last quarter from December, demand has started improving. So the demand is good in our operating markets. And so is the prices also are improving. But going-forward, what I see, what we at have that this year the growth is going to be around 4% to 5% somewhere around that. And next year FY ’26 may be around 6% to 7%. That is what we see. All those may be because of the delayed capex release of all those pent-up demand is likely to come in next financial year. But we definitely see that next year is going to be good in terms of overall demand. And also I think prices also will be a better than what we have witnessed in this year during — particularly during quarter two, right?
Let me, we are still focused on how we are going to improve our efficiencies in the part of our operations and since that we keep on working on that. Our focus is also there on renewable energy. So we are improving our renewable energy in our overall energy requirements. So last quarter, it was at 48%. Distribution also, we are very focused as to where we operate and where we are going to and that reflects in our lead-in different quarters, which we have achieved. Last quarter also, it was similar to the quarter two, right. And on-top line, supply-chain and operational efficiency, that continuous endeavor is there to be amongst the best companies in terms of everything, right?
So this is what I think a very brief update. I think result you must-have seen. We are open for questions and maybe during that answering those questions, we’ll have further conversation on some of the aspects which you want to know. Thank you so much.
Questions and Answers:
Operator
Thank you very much, sir. We will now begin with a question-and-answer session. Anyone who wishes to ask questions may press star and one on their touchstone form. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use only answers while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. You may please press star and want to ask questions. The first question is from the line of Praveen from Anandham Enterprises. Please go-ahead.
Unidentified Participant
Hi, ma’am. Thank you for the opportunity. My question is regarding Conveyor. What is the current status of atur plant and what is the expected timeline to complete this project?
Arun Shukla
Okay. Yeah, so the status — this is on the final stages of approval, right? So you know that taking leads from the PSUs or the government is a little bit tedious. So we are trying for that. And hopefully during this current quarter we will be able to accomplish this approval.
Unidentified Participant
But could you give me any approximately timeline?
Arun Shukla
It’s very difficult because this is no, these are the things which is not perfectly in our control, right? But as I said that this is on the final stages of approval. So anytime we may get it, but it’s very difficult to give a timeline.
Unidentified Participant
Okay, sir, that’s all from my side. Thank you.
Operator
Thank you. You may press star and want to ask questions. Yeah. The next question is from the line of Mangesh Bharang from Centrum Broking. Please go-ahead.
Mangesh Bhadang
Hi, good afternoon, sir. Sir, my question is on the volume growth. You mentioned that December onwards volumes have picked-up and we have commissioned the units a while back, but we have not seen too much of a volume uptick from there. So just wanted to understand from you, what kind of volume growth can we envisage in FY ’26? And when can we see optimum utilization.
Arun Shukla
At the cement works, I think we are going as per the plan only in terms of volume ramp-up. So last quarter, if you look at the capacity utilization was 57% along with a new unit, right, which is as per the plan which we had laid out. Going-forward, definitely, we see, as I said that next year is going to be good in terms of demand. So we’ll achieve around somewhere around 65% of capacity utilization in FY ’26.
Mangesh Bhadang
Sir, so that means have we slowed down the production from other units just because therefore has come up and because of which it is not getting reflected in the volume growth?
Arun Shukla
I’m not so clear. Can you repeat this one?
Mangesh Bhadang
Sir, I’m saying, you know we are operating at almost you said 45% from right now which was not there last year, but still we are showing growth of, say, 2%, 3% on volume. So is it that the production from the other units that we have has slowed down?
Arun Shukla
No, no, no. I think more or less, if you look at only JK cement utilization is about 78% right and overall is 68%, okay. So October, as I said that December onwards demand has started improving. November was also quite sluggish, right? So if you look at overall capacity utilization of the industry also, I think we are little better than others, okay. So overall at about 68%, 69%, Udaypur alone at 57% and Jeki at 78% is to my mind, is really okay in-line with what others are doing.
Mangesh Bhadang
Okay. Thanks. Sir, one more question was on the capex for the next year. What could be that number?
Arun Shukla
Yeah. Capex, we expect the next year to be about, as I mentioned in my last call also, this year in nine-month period, we have already done about INR250 crores, another INR100 may come in the current quarter. And then thereafter about 1,000 and in the next FY ’26 and about 1,500 FY ’27.
Mangesh Bhadang
Okay, sir, I’ll come back-in the queue. Thank you.
Operator
Thank you. You may press star in one to ask questions. The next question is from the line of Rajesh Ravi from HDFC Securities. Please go-ahead.
Rajesh Ravi
Good evening. First, could you share the numbers like what was the blended cement and trade share and premium sales in this quarter?
Arun Shukla
Blended cement was at 65%, trade proportion was 58%.
Rajesh Ravi
Okay. And premium share and fuel cost.
Arun Shukla
The premium sale on an overall volume basis, total trade put together was at 11% and fuel was at 1.57 per 1,000 kilo.
Rajesh Ravi
157, okay. And lead distance?
Arun Shukla
Sorry.
Rajesh Ravi
Lead distance, AFR and CC ratio?
Arun Shukla
381 was the lead, right?
Rajesh Ravi
How much?
Arun Shukla
380, 81 kilometer.
Rajesh Ravi
Okay. And AFR?
Arun Shukla
AFR, I think different unit, we have different AFR. So at zeroe, we are at 14% at zeroe 14%. Overall, it is 11%. Overall it is 11%, zeroe is at the highest at 14%.
Rajesh Ravi
Okay. And sir, the CC ratio would be how much for?
Arun Shukla
Sorry, cement to clinker ratio, it’s 1.45%.
Rajesh Ravi
And sir, these numbers you share is on a consol basis. Is this understanding right?
Arun Shukla
So this is also the same figure. The figure which we are telling you is from, okay. See, none you is ask very specific about different companies. I think otherwise we mention only consol.
Rajesh Ravi
Wait, that is okay, sir. That is why I’m saying, it is all control only because that is how one should look at this company.
Arun Shukla
Yeah.
Rajesh Ravi
Therefore, how much was the volume sold-in, sir for the corresponding volumes for Upur?
Arun Shukla
So Udaypur volume was at 8.3, 8.3.
Rajesh Ravi
This is total sales for Mudhaipur opinion.
Arun Shukla
Yeah.
Rajesh Ravi
Okay. So is it fair like has driven most of the volume growth in this quarter?
Arun Shukla
Yes. You are right.
Rajesh Ravi
And sir, what is — you mentioned in the nine months we have done just INR250 crore capex and another INR100 crore capex. So are we running very short in terms of the — this is the total capex size which we have spent, including maintenance and all, INR250 crores?
Arun Shukla
Yeah, yeah. Yeah, you’re right.
Rajesh Ravi
Okay. So is this as per the plan or are there any slowdown — deferment which is — which you are witnessing sir?
Arun Shukla
Or there is no slowdown or deferment which we are witnessing.
Rajesh Ravi
Okay. And the Phase-1 railway siding is already operational east.
Arun Shukla
Yeah, yeah.
Rajesh Ravi
Okay. And lastly, in terms of the cost-reduction programs, how much we have achieved and how much more we are looking at tangible over next one year, say, by FY ’26 end?
Arun Shukla
So I think this improvement or cost-efficiency is ongoing process plan we had, I think more or less, you know, we have achieved, I would say to the extent of about 75%, 80%. One of the major initiatives which was pending from our end had explained this to you before that we were — we are working on-brand rejuvenism so as to improve our price positioning. Exercise we have initiated from 15th of January, right? So and the idea is to improve price positioning and perhaps I think that is going to give some a good benefit in terms of at least improving our price positioning by INR80 to INR100 a ton, right? So that is one major, I would say, item which we have worked upon and perhaps I think that is going to give us benefit going-forward. So this is.
Second, renewable energy front, as I said in my opening remarks also, this is one area which we are very focused on based on our corporate responsibility also as to how we are going to be carbon net zero by 2047. So we are aggressively working on this. So this is another area which is going to give us benefit. Quantification, I think maybe in next call, I’ll give you because some of the things still we are working on as, which we are working. And a third, of course, is further working on supply-chain efficiency. See that after merger of Udaypur and Jakal, right. So further synergy will come and that will benefit to an extent in logistics cost-reduction also. Okay. So just to other items which we keep on working on energy, on heat value, on TSR, of course, I think we have further room of further improving by a percentage or two with the capability which we have, right? So that is one we keep on working.
Rajesh Ravi
Okay, sir, two small questions. One is, how much was the RMCA and non-on cement revenue for this quarter? And second, the capex number for FY ’25 in last call, you had — you were targeting INR900 crore, INR500 crore at standalone INR200 crore at Daipur and INR200 crore for the Northeast project. And now which we are talking about is somewhere sharply lower, yeah, INR350 crore.
Arun Shukla
So RMC revenue was INR64 crore last quarter and non-cement revenue total INR135 crore.
Rajesh Ravi
On capex number, which was pecked at INR700 crore in Q2 for FY ’25, why this is reducing to almost half, sir.
Arun Shukla
It is not reducing to us. It is — I’m saying INR1,000 crores for the next year.
Rajesh Ravi
No, no, that is — I agree for FY ’25, in last call, you had that you would be spending INR700 crore. In fact, INR900 crore you had guided INR500 crore at the standalone level and 200 each atura and Northeast projects. Yeah. So what is missing? Where are we going short on the expansion.
Arun Shukla
Is the standalone and about INR300 odd would be — that question was for the standalone, though INR500 is kind of and 300 is for.
Rajesh Ravi
So total, how much we are spending for this year?
Arun Shukla
INR800, INR800 crores.
Rajesh Ravi
INR800 crore, okay. Okay. This explains. Okay. Great, sir. I’ll come back-in queue. Thank you.
Arun Shukla
Thank you.
Operator
Thank you. You have asked one to ask questions. The next question is from the line of Shravan Shah from Dolat Capital. Please go-ahead.
Shravan Shah
Hi, thank you, sir. Sir, EBITDA margin on non-cement revenue is 5% for this quarter?
Arun Shukla
No. It is lower than at 1%.
Shravan Shah
Okay, 1% only. Okay. Got it. So just to sir, again reclarifying, consol capex for FY ’25 is INR800 crore for FY ’26 is INR1,000 odd crore and for FY ’27 is how much.
Arun Shukla
About could be close to about INR1,500 crores.
Shravan Shah
Okay. Okay, INR1,500 crore odd crore. Okay, got it. And in terms of the ongoing expansion, so Surat will be starting 1.35 million ton by this margin.
Arun Shukla
As I — as we said before, we are commissioning it in two phases. First phase is going to get commissioned in the month of March itself or February end, which is about half of the capacity, about 0.8 million ton. And another 0.7 or rest of 0.6 million ton during around June 2025.
Shravan Shah
Okay. So this is getting delayed. So initial was probably will be maybe three to six months earlier, the timeline was. So is there any specific reason why we are — because this is just a — already we have a unit and we have to — we will be adding there. So why there is a delay in this?
Arun Shukla
So I think first phase was about to be commissioned during this time only. Yes, there is a delay, some delay, right, because of some of the equipments which got delayed in terms of getting supplies at the site. So yes, little bit of delays, but not much because anyway, I think we are hopeful that by this month-end or maybe mid of March, I think 0.8 million ton will be up.
Shravan Shah
Okay, got it. Second, just on the timeline for the Kinker and the two phases. So the Kinker 2.3 and 1.2 and 1.2 million grinding at Durg and Paragraj that will be starting by 1H of FY ’27 year.
Arun Shukla
You are right.
Shravan Shah
And the second phase of 2.2 million ton grinding units in FY ’28.
Arun Shukla
Right.
Shravan Shah
Okay. And the Northeast one, last-time we said INR1,800 crore capex expansion. So that will be starting in FY ’28?
Arun Shukla
Yeah. As of today.
Shravan Shah
Yeah. And sir, if you can give us a gross standalone debt and consolidate and cash also and net-debt standalone.
Arun Shukla
And standalone gross debt is INR650 crores, INR300 crores of cash, so net is INR50 crores on a standalone basis. Net-debt. On a consol basis, the gross debt is INR2,150, INR400 crore is the cash, so INR1,750 is the net-debt on consol basis.
Shravan Shah
Okay. Okay. Got it. So second, so sir, in terms of the currently the prices for our core markets, if we compare with the 3rd-quarter average right now would be higher by how much?
Arun Shukla
So I would say definitely about INR100, INR75 to 100%.
Shravan Shah
Okay. And for this quarter, 4th-quarter at a consol level broadly in terms of industry, I think would be a 6% to 8% kind of a growth likely to see. So for us in terms of the volume growth in the 4th-quarter would be the similar at consol levels?
Arun Shukla
So 4th-quarter is — our estimation is likely to grow at about 8%, you are right, 7% to 8%. And we are going to be management with 8%.
Shravan Shah
Okay. Okay. And next year at a consol level, for industry, how you mentioned 6% to 7%. So will we be growing a much better 8% to 10% or mostly in-line with the industry?
Arun Shukla
So I think we are going to do better because I think we have now and Sulat also in-place. So our growth is going to be better than industry.
Shravan Shah
Okay. So sir, just a main in terms of the profitability because we have done a good thing on the cost front for this quarter decent the INR350 odd per ton Q-o-Q reduction and now we are saying that probably are looking at a kind of INR7,500, I think INR100 improvement on the pricing front, what we are trying to achieve and on the costing front. So is it fair to say that easily we can see INR800, INR900 plus kind of EBITDA per ton on a sustainable basis.
Arun Shukla
I think you are very quick in calculation. So perhaps I think all-in all, see, we are in the market and the market is always dynamic, right? So maybe I think why we should limit ourselves to only 75 to 100, we can grow even up to 200 or maybe 50 also. So I think some amount of volatility is — has to be there. So I think I would give a range, right? So I think you were right in that sense.
Shravan Shah
Okay. Got it. But we are not worried given the kind of the incremental supply that will be coming at industry level. So broader calculation is would be 100 million ton plus capacity will be added in ’26 and ’27. So in terms of the in terms of the market-share, so either — is it fair to say that if we can achieve the kind of a market-share or maintain, then maybe one has to look at the lower prices and maybe a lower profitability or it could be a.
Arun Shukla
If you look at capacity addition for the last maybe post COVID you look at. The addition has been about 40 million to 45 million 50 million ton every year. The capacity addition to AGR is about 6% to 7%. This year is about 7%. If demand is also going to be about 7%, 8%. So perhaps whatever capacity utilization we have at the pan-India industry level, that is going to be there. So on an overall basis, I think I do not see that is going to be much demand and supply mismatch. It’s going to be the same way as it was before. Yes, regional imbalances, you may see wherever I think capacity is going to get added more, right? And maybe you know some of the area where I think some ramp-up is happening. So maybe regional level, you may see some kind of demand-supply mismatch. On an overall basis, I see, I think is going to be the same as it was before. And in our market, we are sure that I think we are going to retain our market-share and is not going to mismatch in-demand and supply too much in our market where we operate?
Shravan Shah
Okay. Thank you and all the best, sir. Thank you.
Arun Shukla
Thank you, John. Thank you so much.
Operator
Thank you. Participants, you may please press star and want to ask questions you. The next question is from the line of Uttam Kumar Srimal from Axis Securities Limited. Please go-ahead.
Uttam Kumar Srimal
Yes, sir, good afternoon and thanks for the opportunity. Sir, what would be our closing capacity on a standalone basis in FY ’26 and FY ’27.
Arun Shukla
FY — so see, FY ’26, I think on a standalone basis, I think we’ll be adding 1.35 million tonne only. Right? So this is what that isn’t as far as in FY ’26 goes, okay. And so FY ’27, maybe during quarter two or quarter three, we’ll be adding this Duruga and.
Uttam Kumar Srimal
Durgan, right?
Arun Shukla
So that city you can see about 2.5 million tonness 1.2 into 2.5 million tonne.
Uttam Kumar Srimal
2.5 million. Okay.
Arun Shukla
2.5 million refund is about — close to-4 million ton we’ll be adding as per the plant we have today, maybe you know if we can really take-up some other projects also, this may go further up.
Uttam Kumar Srimal
Okay, sir. Okay, understood. That’s all from my side.
Operator
You may press star and one to ask questions. Anyone who wishes to ask questions may please press star and one now the next question is from the line of Nihar Dave from IIFL Securities. Please go-ahead.
Nihar Dave
Hi, sir, good evening. I hope you can hear me properly.
Arun Shukla
Yeah, good evening. Very good.
Nihar Dave
Okay, great. Sir, congratulations, sir. You had a very good set of numbers. I just had one question, sir, what can you tell me in terms of the regional revenue split and regional volume split, what is it now and once you know our capacity comes online, what do you — what do you expect that to be by, let’s say, 26 ’27?
Arun Shukla
So you’re talking about regional play, right?
Nihar Dave
Yes, yes, yes.
Arun Shukla
So whatever information we have, I think you know, capacities are going to be added in East. So I think there I think capacity is going to be added in East. And if you look at demand also is the fastest-growing market. Even last quarter also the demand was highest in case of yeast, right? So capacity is going to get added. I think dynamics is going to be more or less same, not different than what it was before. In sizing, I do not see that till FY ’27 is going to be a major change or whatever we can see today, right? It’s going to be like that only.
Maybe I think demand will go up and then maybe I think capacity utilization will go further up. So that will happen in tandem with the demand. But not much of a change which we see in West, the market where we operate, I’m talking, right? Yeah. Or see yes, capacities are on the annual for some of the players. But as you know that North is a place where from I think supplies are going to some other market, right? So there has always been of excess capacity in North because no supplies to other markets like you know, Central India to far North India to UP West and so on, right? So it’s not going to be a major change in terms of original play and in terms of competitive intensity. Definitely, I think people have assets, so they’ll try to utilize their assets to the extent possible. And to that extent, I think that might have some impact on temporary impact on pricing during low demand months. Otherwise, I think it’s not going to have much change on the dynamics of demand.
Nihar Dave
Okay. Got it. Not sir. So West, you expect to be more or less as-is. East is a growing market…
Arun Shukla
Specifically go up and so is the demand. So I think more or less I think it’s going to be a.
Nihar Dave
Okay. Okay. Got it. Thank you so much, sir.
Arun Shukla
Thank you so much.
Operator
Thank you. Please press star in one to ask questions. The next question is from the line of Shouvik Chakraborty from Dolat Capital. Please go-ahead.
Shouvik Chakraborty
Hello, sir. Thank you for the opportunity. Just wanted to understand the pricing scenario for the industry right now, maybe from the exit of January. I mean considering the recent hikes that we had seen from the end of December, maybe you can — can you just help me to understand the dynamics of the pricing front?
Arun Shukla
So pricing definitely goes along with the demand. And if demand is good, then prices are going to get reinforced. So that is for sure. And that is what we have seen in case of December and January, whatever pricing movement has happened because of the support of the demand, right? And at least in the next two quarters definitely I see that demand is going to be good and hence prices are also going to be reasonably all right, okay. Yes, during monsoon, there is, as I said before, just before this your question that during lean demand, yes, there could be some pressure on pricing. But I think if demand is good, then prices are going to be in alignment with that. And that applies to all markets wherever we operate.
Shouvik Chakraborty
Right, right. Got it. Got it. Thank you, sir. That’s all.
Arun Shukla
So in sense is you are not going to get something which is unusual is what I mean, kind of supply equation and hence the pricing is one of the outcomes of that.
Shouvik Chakraborty
Right. Okay. Thank you so much, sir. All the best.
Arun Shukla
Yeah. Thank you.
Operator
You may press Star and one to ask questions. The next question is from the line of Rajesh Ravi from HDFC Securities. Please go-ahead. MR. Ravi, I’m unmuted.
Rajesh Ravi
Yeah, yeah. Hello. Am I audible?
Arun Shukla
Yeah, yeah, very much.
Rajesh Ravi
Sir, you mentioned during when premium cement volume overall 11% of the volume — total sale, which I adjust for trade volume, this would work-out to be 19%. In the preceding quarters, this number was maintained at between 25% to 30%. So is there any sharp change in sales strategy or you know, how come this premium cement as percentage of trade come down so sharply?
Arun Shukla
I think our premiums here in case of East is not very good. And as I said that we are also working on streamlining our brand and changing the positioning also, right? So that adds some impact on this. Yes, your observation is right. But for us, I think in coming quarter, we are going to go back to the same level because we have done — what we have done is in East also, we have done some kind of brand restructuring because we have as a premium product here in this part of India like this part, there we have the base product. So some kind of realignment we have done so that in India, we have one brand architecture and similar kind of value proposition for different brands. So this is a temporary thing, I would say.
Rajesh Ravi
Yeah. Okay. Great, sir. That’s all from my end. All the best. Thank you.
Operator
Thank you. You were just star and one to ask questions. The next question is from the line of Amit Murarka from Axis Capital. Please go-ahead.
Amit Murarka
Yeah, hi, good evening. Thanks for the opportunity. So my question is on. I believe the limestone there is going to expire in 2030. So what’s the plan there like how do you — how do you plan to manage the transition when it happens?
Arun Shukla
Yes. So I think is due in the year 2030 and this is the case for CLOVE and this is a case for some other locations for other companies as well, right? So definitely, I think we definitely want to retain this during reaution also for sure that may entail to kind of increasing cost of it because in the auction what will happen, I think that we need to see. So this is what the case is. And parallelly, we are also trying if we can — because we do have that in our limestone reserve at other places, I think, you know, Hudaipur and Navar also we have taken that I think we are in the process of kind of executing all those initial stages of land acquisition, environment clearance and so on and so forth. So that is the backup, but that may not work on a long-term basis. But we are — I think reasonably all right that mines when it goes for reauction, we’ll definitely try to retain it.
Amit Murarka
Sure. But just trying to understand in case, let’s say, the mine premium goes very-high or whatever is that if you don’t get the mine, then like what is the backup plan for the plant then?
Arun Shukla
Backup, as I said, it’s not all about cost-benefit. So premium which we are likely to pay for reauction versus maybe bringing limestone from some other place. So that cost analysis has to be done, right? Right? Because we do have source, limestone source from other locations, which is not quite far.
Amit Murarka
Okay. But — and which mine would that be like…
Arun Shukla
Is the nearest?
Amit Murarka
Okay, okay from there. Okay. Okay. Okay. Sure. And also on generally the outlook on pricing, I believe it’s bottomed-out after the monsoon, but still like it’s been a bit up-and-down in the last couple of months as well. So what is generally your expectation on the industry competitive intensity and the pricing outlook?
Arun Shukla
Terms of competitive intensity, yes, of course, riding is going to be there and it was there before also. If demand supports, then I think prices are not going to see that level of a bottoming up, which we saw in the quarter two, right? If demand supports then definitely, I think it’s going to be reasonably all right and roundabout, I would say. So I’m quite optimistic that since demand is likely to be good in the coming year FY ’26, which is about 7% to 8%, prices also are going to be reasonably alright because see, you know, quarter one, quarter two was exceptional this year because of general election followed by monsoon, which is prolonged little longer and heavy monsoon in some of the areas where we operate, right? So that impacted.
But in the coming year, I think there is no such kind of major events which are going to happen, which we can foresee today, right? Demand is likely to be good. If you look at the budget, budget also is a capex of about INR11 lakh crore, INR11.21 lakh crore. And out of that, half of that is going to be in areas where cement is directly related, indirectly, I think everywhere, but directly related. Suppose about INR170,000 crore in National highway, metro about INR35,000 crores and urban housing, rural housing, 120 additional airport destinations. So I think all these projects, which did not take-off or some of the ongoing projects which did not take that steam is going to really be on the fast-track in coming months and coming years. So demand is going to be good and that will support pricing. So I am reasonably confident that pricing is going to be better than what we have witnessed in-quarter one, quarter two particularly.
Amit Murarka
Sure, understood. And lastly on cost-savings, are there any projects going on for you as will commission maybe in some time?
Arun Shukla
Sorry, I missed something. Sorry, I missed you.
Amit Murarka
No, I was asking on cost-savings side. Are there any projects which we are doing either AFR or the HR or anything like that, which will commission and give you some savings on the next year or so.
Arun Shukla
So as I said, some gentlemen ask these questions. One is of course, renewable energy, which we are working on, further improving our renewable energy proportion, part of our portfolio. This is one. So that will give some savings. Second, we are — will be ramping-up our TASR at Pudaipur because we have already commissioned that AFR capability and we’ll try to take this TSR up at that place. In also, we definitely see a percentage or two further we can improve with the given capability which we have. So that is another headroom which we have. And these are the major item, I would say other than all those ongoing things.
We are working on fixed-cost also, a fixed-cost reduction wherever we see opportunity to reduce that thing. So we — we have taken some action in the past. We’ll take some action in coming months and years also. So that is another thing which we are working on. And supply-chain efficiency further and maybe because now we have railway at door, then the railway wagon loading at. So that is going to benefit us in further improving our supply-chain efficiency, you know, being able to serve our customer better and also reduce our distribution cost. So these are the major items, I would say.
Amit Murarka
Got it. And if I may, just the last question. On, what is the expected timeline for the completion of the merger process?
Arun Shukla
So I think our jobs are almost over. This wagonal loading, the cement, wagonal loading is now getting commissioned. We have already started commissioning that. Apart from that, all minor jobs like you know APA said and some raw-material sale and things like that, we are working on that. Otherwise, all the major jobs are over.
Amit Murarka
No, I was asking about the merger if it was already discussed, I missed it, but what is the timeline of completion of the merger of Cement?
Arun Shukla
Yeah, merger, we already have the stock exchange approval. We have approved the LCLD and that may take about eight, nine months.
Amit Murarka
Okay. So maybe end of this calendar maybe is roughly.
Arun Shukla
Yeah, yeah.
Amit Murarka
Got it. Got it. That’s all from my side. Thank you very much.
Arun Shukla
Thank you.
Operator
Thank you. Participants, you may please press star and want to ask questions. You may press star and one to ask questions ladies and gentlemen, this will be the final reminder and no further reminders will be given that you may please press star and want to ask questions thank you. Ladies and gentlemen, I now hand the conference over to Mr Vaibhav Agarwal for closing comments. Over to you, sir.
Vaibhav Agarwal
Thank you. Yeah, thank you. Sir, sir, I had a question for Arun, sir. Last-time on the call, Arun sir did mention that in the next call, he will be coming back with some newer strategy regarding branding and some sort of something on that front. So anything, Arun sir, which you would like to throw some light on this call?
Arun Shukla
I told one of the gentlemen because brand rejuvenation, which I had promised before that we are working. So that has come to that execution level now. So we have launched a new brand called JK Green Plus. So we have launched on 14th of January this year and the initial feedback from the market is very encouraging.
So one, I think our commitment towards greener product and greener environment. So that was one of the motives. Second was also to improve the positioning of our brand, which we have done. And we definitely see that now this brand resumeration exercise and brand repositioning is going to benefit us in many ways. One, of course, our very strong commitment towards greener product, greener environment with this green plus. And second, also in terms of improving pricing positioning, that will kind of further give benefit in terms of our bottom-line. So that we have done and some of the brand restructuring because there were different brands in different geographies with different kind of positioning and a value proposition that also we have aligned in all our markets.
So pan-India, we have now across one brand architecture and each and every brand has similar kind of value proposition for different markets all across India. So it’s a quite a mammoth exercise and the — we are almost into about 1.5 months into this and the encouraging feedback we are getting from the market and our customers. So hopefully, I think things are going to be turning out well for us as far as our objective goes.
Vaibhav Agarwal
Right, sir. Sir, also one more question I wanted to ask you specifically that over the last couple of quarters, especially our numbers have been a little volatile versus relative to what our peers have reported. So since you are taking now so much of initiatives regarding branding and several other stuff which you mentioned recall. So relative to that, from here on, where do you see your numbers getting better? I’m ignoring the pricing aspect, but on a relative basis to versus to peers, so do you think so that in next couple of quarters, you can come at a par to industry leaders in terms of profitability or we will still be aware like INR100, INR200 and if that number will sustain as per your assessment that gap only or it will fluctuate like the way it has been in the recent past.
Arun Shukla
So we have definitely bridged that gap wherever you know that and all of because you track each and every company very closely. So we have done a substantial job over the last couple of years. There is no doubt about it and that is also reflecting in the gap which we have with our peer group. Now one thing I would definitely want to request all of you that when you compare our result with others, I think let’s compare like-to-like, gray cement versus gray cement.
Based on your input only, we have also done gray versus gray comparison because see, if you are going to compare apple with banana, then I think it’s not going to be good. So we do not have any incentive with us. We do not have other than gray cement with us, right? I think based on those parameters, all of you should be known and all of you are learning people and are kind of doing a detailed analysis. I think I would really love to really see that gray versus gray and like-to-like comparison, where are we? We have done our own calculation. But when I see, I think I’m not far behind, I’m absolutely not far behind. I’m as good as what you call that best-in the industry. And if you meet one-to-one to me, I’ll explain you why I’m saying so and what kind of analysis I have done. And similar kind of things if it is coming from you also, that will really help us and give some insights as to where we need to further work on, right? Otherwise, if you keep on comparing banana to apple, I think this is not fair.
Vaibhav Agarwal
Right, sir. We’ll discuss our, sir. I will look-forward to that. Thank you very much, sir. And on behalf of PhillipCapital India Private Limited, we’d like to thank the manage Jake for this call and also many thanks for the –joining the call. Thank you very much, sir. We are now concluding the call. Thank you. Thank you.
Operator
Thank you, members of the management. On behalf of Philip Capital India Private Limited, that concludes this conference. We thank you for joining us and you may now disconnect your lines.