Orient Cement Limited (ORIENTCEM) Q2 FY23 Earnings Concall Transcript

Orient Cement Limited (NSE:ORIENTCEM) Q2 FY23 Earnings Concall Nov. 10, 2022

Corporate Participants:

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

Analysts:

Harsh Mita — ICSA Securities — Analyst

Abhishek Maheshwari — Sky Ridge Wealth Management proprietorship — Analyst

Rajesh Kumar Ravi — HDFC Securities — Analyst

Kumar Shima — Axis Securities Limited — Analyst

Dhiral — Phillip Capital — Analyst

Johan Deran — — Analyst

Bajrang Kumar Bafna — Sunidhi Securities — Analyst

Surya Nik — Investor — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Orient Cement Limited Q2 FY ’23 and H1 FY ’23 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions]

I now hand the conference over to Mr. Harsh Mita from ICSA Securities. Thank you, and over to you, sir.

Harsh Mita — ICSA Securities — Analyst

Thank you, Malika. Good afternoon, and a warm welcome to everyone. On behalf of ICI Securities, we welcome you to the Second Quarter and First Half of FY ’21 Earnings Call of OrioneLimited. On the call, we have with us Mr. De MD and CEO of the company. At this point of time, I will hand over the floor to Mr. Deeper Kakrapar for his opening remarks, which will be followed by an interactive Q&A.

Thank you, and over to you, sir.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

Very good afternoon to everyone, and I joined Hertel in extending a very warm on to all of you. Thank you for sparing the time. Thank you for investing your time with us. And for those of you who are listed with us in financially, thank you for investing in us and believing in us. Thank you so much. Where do I start this call in the sense that we all know the kind of quarter we’ve had. But even then, let me at least start with the — some of the positive things that have happened during the two. And I’ll obviously come to the hard numbers in a minute I won’t take too long way. But a few good things that I certainly want to point out to people who are interested in ourselves. One, for those of you who’ve seen that in social media a Deloitte does run global program called best managed companies all over the world.

And in India, this was the second edition. And they have a very robust process through which the best managed companies are actually selected and they take us through a four-stage evaluation screening process in which we need to make detailed presentation of our strategy and the communication and implementation capabilities and innovation in another pillar culture and commitment is one pillar and obviously, governance and financials. So based on that, after the call, we finally were selected amongst a handful of companies who have the title of best man companies — that’s something that we are very proud of because it was a fairly tough competition and a very robust evaluation process. Otherwise, all of us are aware of these days, how it awards are actually being given out on how they’re being received.

So this one is special because it actually comes from a very, very professional evaluation process. So that’s something which I thought some of you would be interested in doing — the other thing very important thing is that we — in this quarter, which actually was a lean quarter, we managed to actually migrate from SAP ECC volume to SAP S/4 HANA on cloud. So we are using Google Cloud as a platform to host our data. And the — I mean, we are told that we are part of the first cement company to have done this migration. And also we take pride in the fact that migration, which typically consider a six- to nine-month project we did on an insanely short time of just about just 3.5 million, not about 3.5 months in what we took us from starting the work to going live. So again, a very important step not in terms of just how quickly we derided that we are the first cement company who’ve done it.

We also have done it to keep our progress on the digitalization and to become more and more a company, which is driven by data and data analytics and decision making, which will be largely based on the data that we have with us. So it’s not just a technical migration as a complete migration and the reason to choose Google Cloud is a partner along with SAPSo because Google Cloud has the reputation of offering the best analytics capabilities. in the way we can create our data lakes and data motions and things like that. We are all set. And so that’s under, I would say, positive in terms of building the backbone of the company, so that we managed to complete — and the third important thing I would like to just mention, again, it’s been there in social media for people like some of the people who might be in the market they will launch is a very small launch as of now.

But we actually launched a new brand, our — as most of you would remember, our strong fleet as a brand has really been doing well and we are very delighted about this performance. We’ve actually launched another premium cement where we actually have launched the brand of Orion Green — and why we are calling the Korean Green is simply because this cement has about 15% less corn footprint than the industry norm. And obviously, we are positioning it as a green cement as an environmentally responsible cement and the by line also is a responsible cement for the responsible you that is you could be a housebuilder. You could be the contractor, you could be, let’s say, a consultant or architect responsible cement for the responsible and the branded on green. It’s priced at — like if you remember, our orient — sorry, strong treat is today priced at INR45 higher than Orient Green is priced at INR23 higher because some of the customers have been telling us they’re finding 45 is premium to the little to see.

That’s why we are right now at where we are, I’ll give you the numbers. And in green is another option from our stable, where we are offering something which is in the middle of our PPC cement and a son and leaving the choice to the customer, how much more they want to pay. But — we are sort of strictly speaking, OrienGreen is being focused on that segment of the market where people are actually becoming environmentally conscious not just environmentally conscious in a simple way of how we produce this man it also, for example, in the amount of water they need to do while curing the slabs that the cost and things like that. So there are obviously benefits for the consumers there. And the price, as I mentioned, is two higher than — so that’s the other launch and initial response has been rather good very happy, I think almost every day. We currently launched it only in a few districts of North Canada largely, you’re sorting out the availability of bag when you start launching a part lots of things need to come connected.

So we started with North Kamataka, which is as it is a little more difficult market, but it’s closer to a Chita plant where we are producing the cement for now. And we plan to roll it out. But within that North Kanataka market, our average per day, we are actually costing three to four slabs every single day from the time you launch — so for a small market for a product which is completely positioned differently, we are happy with the initial response. And we will obviously keep supporting our customers who buy this product with our technical services to actually train them how to use it well to have the full benefits of the product. So these are, I would say, the good things from the recent past and I wanted to sort of place before you — now coming to Q2. As I’m sure all of you have seen that actually has been a mailing it a brutal year for the industry.

It’s really been brutal on us. We too have had our own share of grief. And the beef has come more from the fact that we had absolutely unprecedented rains in our catchment areas. To give you an example, and as you know, we will be selling 300, 400 kilometers around our plants. So our mother plant, which is developed in Telangana. At that point, advertise a very high rental area, about 900 millimeters rainfall that we see every year. this year, you already crossed 1,550 millimeter. And Rain,obviously is not happening only on our plant, which happened in the entire region there. Just to give one data point on how hails — and when Winconhappens, not only as the construction slows down, it also — the mining of course, slows down, the — get some availability goes for it off, you get fuel which is we the alternate fuel that we are using more and more during monsoons, very difficult to use them when they come bet. As it is the content value is low and when they come — and the wet form to you, it becomes very difficult to use them. the liquid hairspray that we’ve been consuming became very short supply in the month of — in the three months of Hanson.

There’s been — people are talking only about sales being hit, but I think equally important is the impact on the availability of various materials and costs. So that’s been a negative for us for sure. overall on this, for example, for our developer plant, we always buy our coal from single animal gold mines, the domestic coal. And when you’re buying that goal, this particular quarter, we’ve seen a very strange phenomenon of the rates being not available. So we are having to transport coal from singer mines in mines over plant using trucks by role. And obviously, that adds to the freight cost, the input cost of domestic oil itself goes up, not because the coal itself is that much more expensive, but also because the freight costs have gone up. So these are the impacts of, I would say, the heavier than normal monsoon that we said.

So first, you were looking for, as I say, covered from the way that we were getting and I, I think when we declared the results I’m taking for cover from our investors because, obviously, they are unhappy with the results and I can assure all of you and out of the investors that we are every frustrated because no matter what we’ve tried, we still are, let’s say, significantly lower more than 70% drop in EBITDA, whether in absolute terms or quarters, — at the PBT level, we actually have one minus, although it’s a small loss, but frankly, having a resin the PBT level is a matter of great embarrassment to all of us. But since I don’t have the luxury of hiding being a listed company here, I am talking to all of you and trying to explain as to what all it does. So disappointing, as there are the hard numbers. Most of you have seen it, but I’ll perhaps have a little more detail on the numbers that you’ve seen so far. Our net sales, as you’ve seen, are down 1% Y-o-Y. — and they are sequentially they’re down 14%.

I’m talking rupee scores. The volumes in this particular quarter have been at 12.3 lakh tonnes, 12.4 1.2 million as many of would be quoting is nearly 3% down over last year. But if you remember that last year in Q2, we have sold about 24,000, 25,000 tonnes of clinker — if we — this year, tanker sale was out of question because the coal supplies are so uncertain would never use our coal and make another cement manufacturer have ever tempers didn’t sell any clinker at all. So if you exclude that purely in cement, the drop is 1.4% over last year. And sequentially, the drop in our cement sales in volume, — on H1 basis, on the face value, it seems that we are flat 26.37 a tonnes we 26.3% last year. But again, last year had 24,000 tonnes. So from that perspective, Pause will have nearly 1% growth in H1 over last year. Realization in Q2 has been somewhat better, we have a realization which is 4% higher year-on-year. But on a sequential basis, it’s down 4% which is, like I said, not something that we have liked, but between Q1 and Q2, which is a heavy monsoon season, the drop in price perhaps was Barocas, accepting that the the costs behave very differently.

So that’s where the pain is not so much in the volumes. So like I said, volume being lower by 1.4% and let’s say, the prices being higher than 4% over year-on-year if it wouldn’t look so bad, but the results are bad purely because of the costs that we’ve had to incur to produce the fat. So heavy rains and the slow markets all across — in our markets at least. — the markets are not supportive with all the increases in costs that I’m going to make to you, the ability to pass on these costs, the markets have not been fruitful at all, and that’s where the pricing has really, really hurt us. or rather the costs have hurt us because we couldn’t pass it on to the market. The — in the market that we are operating, especially when we talk about Telangana, especially when you talk about Karnataka, there are no major projects in any cement cycle — we do need the support of some large government-sponsored projects in our area of operation to maintain their volumes. Now they have not happened.

Despite that, the volumes that are going are there, which I believe are not so disappointing, although we wish they could be better. In the absence of demand from South, we actually have done somewhat better actually Maharashtra has ordered us rather well. So as a result, our sales in — if I look at Marash and the best as a whole, they are close to 55% against the normal 15%, 51% that we have. So Maharashtra, we’ve been able to sell more because demand was there. The other impact of heavy rains is that the larger projects who have the infrastructure to continue construction despite rains because they have more mechanized equipment — they have better labor can they everything. They consume a lot more of cement. And this particular quarter, our B2B sales or the nontrade sales as the industry calls it, have actually risen to 55% from what I said, we normally used to be doing about 40-odd percent versus 55% in this particular quarter. What that basically means is when you actually move more towards — sorry, sorry, sorry, my apologies. Nontrade is 45% or 55%, 45 from 40. I apologist make the correction. — which was 39% in the same quarter last year, which has gone up to 45%.

What that does is that basically because B2B market is a lot more I would say, favored towards the customer because they’re all large customers who negotiate very, very hard and almost being the volumes being attractive, Almost every cement manufacturer tries to book that order — so we get prices which are challenged. And also, they consume more of OPC, which as you know, being unblended,ost us more to make. So the impact — on cost if you see higher, it also takes into account the higher proportion of nontrade sales and higher proportion of OPC sales. Another dynamic, which is important to remember is, as I mentioned, the markets in South have been a little soft. So the impact has been that the capacity utilization in this quarter at our ista plant has been a lot higher than the capacity utilization at our older plants at Telenor. Now what that does is now as I think most of you would again — our Telangana plant uses domestic coal, which we buy from Singen coal mines.

They may become a little more expensive because of the freight cost by road. But Petco costs have been at a completely different level. And for Chita even at the costs that we incur hepatis the lowest cost fuel even today is pet because from Single elsewhere, if you transport coal all the way the landed cost of coal at Cepal become unaffordable. So we’ll be using more of that book. and Petco as it has suffered the highest inflation. So if in overall fuel mix, one is overall clinker production mix, citable contribution for the company a lot more than bigot. There we use more expensive cost of the entire fuel mix has — for the company as a whole has got driven in a way where the cost — heavy cost or high inflation in the cost of esport has hurt the overall power and fuel costs. And if you actually look at now the — all these dynamics more OTC, more production at Chicap, then when I’m sort of — we’re looking at my power and fuel costs.

I’m sure you will agree, although they look 61% higher than last year at INR1,647 per tonne of cement to my view from whatever results I have seen they’re still amongst the lowest fare and fuel cost in the industry. maybe just one or two other companies would have a slightly lower parent cost. Otherwise, and this is all the negative factors have already counted on a the and this is despite the fact that it is actually the more efficient plant, but it’s disciplined in pet coke purely because of the ended cost there. The other element in partial cost also, which has hurt is that at Bigar we did not get enough of the higher-quality domestic coal. And for running the production to the extent that we run, we had to use some of our very expensive imported coal, which normally use only a sweetener to the domestic coal to make sure that we keep producing and keep delving to the market.

We also had to use some of an entry of sweetener poll, which is a lot more expensive to emoted holding so much more expensive. — you had to use more of that at Gavaralso — and — but the aberration I’m calling aberrations, and hopefully, they are just angulate the capacity utilization at our Beatport getting better in terms of how it used to be in the past and Chicago sort of keep producing well. So all these aberrations in terms of higher OCC than our norm, higher utilization of capacity as a gold compared to gear hopefully, they should blow over, and we should sort of get back to normal fuel mix for the company as a whole. These — just to give you — I mean, I know last year — not sorry, not last year. In the previous quarter, when I was doing the investor call, something called asked me for the coal — I mean, the fuel cost on a million calorie basis.

I can give you some idea of how the costs have been. So in Q2, petcoke for us, our consumed cost has been INR2,568 billion. Just to set the perspective, it’s 1,500 last year is 26%. That’s the pet cost of too. You can see these in — the domestic coal also for various reasons, including the fact that the Indian miners also have been getting at the price. Those of you who could see the profitability of Coal India Limited, if you saw given the increase in their volume as sales increase the profitability, obviously, means they have kept up their prices. Obviously, taking advantage of the fact that international prices of coal are very, very high. So even domestic coal in this quarter has been around INR1,900 million from about 130 year-on-year.

In this at Motel and the other fuels are expensive, even the alternate fuels they’ve nearly doubled in cost over last year because everybody saw the opportunity and irony is that even when you go for a renewable power because coal is expensive and par is expensive, even the renewal power generators, they have increased their prices of renewal card, although there have had no cost escalation accounts, but taking advantage of the higher price of other power sources there the price it’s been beaten from all possible quarters, the — I would say, — overall fuel cost, actually, if you want to know, so I’ve given you how each of the fuels was there. But overall for us in the last quarter, we had the the fuel cost at 200 — INR2,379 as the awaited average cost per million kilocalorie of fuel that we’ve had which is up from 13 36%. I’m giving you another blended cost after having given you the pet coke and domestic coal at those costs. And for the H1, the blended fuel cost for us is INR2,358 million call versus INR296 million of last year.

So that gives you some idea of inflation in the fuel cost. The savings rates, quite honestly, for us, has been the renewable part that we’ve used, which actually has reached in the overall of renewable power, both at Jalan and at Casaforte we are buying renewal Pargesa. Telangana, even today makes the power a lot more difficult to use because of the state out as you know, — so outsourcing part from tar driven by still the way they want their grid and their power generation companies to perform. — is the waste feet recovery project at Chittapur, which is under construction, which as I said earlier, we will be commissioning towards the end of this financial year. When that company, obviously, our basic recovery, again, is more or less a renewable part because we are not burning and true to generate that.

So obviously, this percentage will go up even further. We continue to be extremely efficient as we’ve always been. There’s no gap there. And as a result of that, if you see, despite the fact I’m telling you how much is the increase in fuel costs, and this fuel cost, I’m talking about it has increased both for pills and also for — but the power and fuel cost per tonne is not looking as high simply because we managed to increase renewable power. We managed to increase to the extent possible. I mean, we’ve been handicapped a little bit by availability challenge on the alternate — but even then we have used alternate fruits. And therefore, the overall cost is not looking as high as far as the landed cost of fuel is. So that’s, again, I would consider an achievement.

So next I can give you all the reasons, but the end of the fact is that I’m feeling extremely frustrated and disappointed as all of you would be with what we’ve had. As a result of which is, as I said, from INR157 crores in the quarter last year, we are down to INR37 crores. And per ton basis, we’ve come to about 300, which is again more than 77% of the last year. I can’t see anything which is more frustrating, but we have to live through these times and hope that some of the transitory challenges will get over. the derealization I’ve already told you what they been total cost per tonne are obviously because largely because of it. The one thing which I certainly want to highlight to you. One is the variable cost of RPost — some of you would obviously be seeing our total costs,

I’m not talking about fixed costs. Looking a little bit higher than what product they should have been given our track record — and on that, again, I would like to just share a little more information with you, which is that when we compare our fixed costs in Q2 this year, we were Q2 of last year. There are a few things which are I would say, the starting the equation. To begin with, for example, last year, in Q2, we had reversed some of the provisions, which had been made earlier for variable pay to our employees. And last year, then after seeing how the year was progressing within the second quarter itself in the time we had some part of the variable pay, we have actually reversed the Q2, which obviously depressed our people costs last year. which was not really a reduction in just the provisioning. In the previous quarter, we do put it higher than last year this quarter we got here.

That is nearly INR4 crores of impact of reversal of provisions of variables — we had some very old cases, when I’m talking about old case, this go back to year 205 before. sales tax cases on the freight costs, which were in dispute with the state government because that time back used to be paid something. With that many years gone, I think our government was a little bit keen. And so they have telemanagement I’m talking about on a government that actually floated a onetime settlement scheme saying you pay, I think we were saying 40% of the total claim and no penalties, no interest, nothing. I just pulled all the pie rather having to go through the assessment all over again. And we took advantage of that. So these costs patented all time. So we have taken a hit of about INR1.8 crores were on account of settlement cases.

But to that extent, the balance sheet becomes more clean. When I mentioned to you that we also migrated to the next version of SSE and incurred all the cost that cost iceboutINR2 crores of, which obviously had to be incurred when you inthe project. And also this quarter, — we quite didn’t expect the range to be as heavy as they are. So we have already planned out some campaigns on our brand building, which again, over — compared to last year, we spent about INR2 crores more. So nearly INR10 crores in fixed costs are which are looking, let’s say, higher than last year same quarter. There are more a distortion rather than an apple-to-apple comparison. So I just thought I replace that for you in case that provides you little bit better insight into why the results are where they are because perhaps the INR10 crores is not there on the go.

We obviously could have been INR70, INR80 per ton difference in cost. Coming to the balance sheet now. We — obviously, we have paid another INR37 crores to our project debt in this quarter, total H1 becoming INR74 crores. So — and we — today, our, let’s say, the project debt is now down to INR236 crores. And our working capital borrowings at the end of the quarter are INR12 crores which makes it a total debt of INR408 crores. The INR408 crores is debt, which I would call interest-bearing debt. But this also has been helped by the fact that in the quarter, we managed to receive INR38 crores from Karnataka government under their industrial policy where we were supposed to get the interest to loan against the earlier VAT and then after — so we’ve got INR38 crores interest loan. If you add that also then the total debt will look like INR44.

But that is, like I said, interest fee for 10 years. And after that also is payable over four equal yearly installment. So it’s nearly a 14-year debt which is coming to the interest piece of that including that will be 46%, but the debt gearing, as I said, is INR18 crores. For those of you who’d like to estimate our anticosts. Other things we continue to do, accepting one more negative in this particular quarter has been that rate shortages has been a big problem. And not just a short is also we really authority to manage their shortage of rigs, they have actually been very, very, I would say, answer to the industry by increasing their demerged to 400%, 500% if it crosses number of hours. And then we started seeing that, that was winning to hurt us, we obviously rearingistics. So as a result of that, from a 20% share of our volume that we moved using rigs last year has actually followed 15% in this quarter this year.

So there’s been a drop. Even in the preceding quarter, it was 19%, but this quarter, it’s just 15%. The capex obviously has been slow. We haven’t started — beyond the West recovery plant and the flashing system, we’ve not started on a major expansion in brownfield or anything. And we did see the news because the demand is so of capacity utilization is so low. There’s no urgency for a company to start construction and get capacity because you still are filling to capacity utilization compared to that’s what we need to have. So those are, I would say, other things that I keep reporting to keep redefining our customer-based channel as brand presence, as I said, evening a year, poor quarter, we still investing more to certain of our brand on our ground services and delivery, I think we’ll keep improving them almost every day that we work. So that’s in a nutshell is a complete summary of Q2 as I see it.

But I’m quite conscious of the fact that no matter how much detail I share there will still be more questions so here. Thank you.

Questions and Answers:

Operator

[Operator Instructions]We have the first question from the line of Abhishek Maheshwari from Sky Ridge Wealth Management proprietorship.

Abhishek Maheshwari — Sky Ridge Wealth Management proprietorship — Analyst

Sir, you are very beautifully explained what the previous quarter and financing lent. So could you give some feeling about H2 also and how the Q3 is progressing? Because we are hearing that coal and everything is coming down, the price rise. Please

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

Yes. So in terms of cost prospects, it does seem that the costs are beginning to see some softening for sure. The good news that we have is that we already have bought on the ship. Actually, we’re just offloading our petcoke imported one ship loan of about 55,000 tonnes of petcoke. — we are beginning to now reach our plant. And obviously, if I told you that in set our cost of petcoke was about INR2,500 is permanent to recovery — this ship that we bought the cost is coming to us under which is still much higher than what we have rational use. So, but the INR2,300 crore is a lot lower than what you’ve recently been incurring more importantly, from the time we confirm the order until now the prices have moved up again. So we were — we had a, I would say, a sweet spot which is available towards the middle of September.

We took a call to book at that time rather than waiting for further fall to happen. And — now in hindsight, I can tell you seem to be a brilliant call because we booked a preset lowest price of pet that is available. And after that, the prices have again moved up by $20, $25, $30 a tonne. So certainly, that’s one softening. And I’m also hoping that as this happens, and I’m also hearing in the last one week or so, the South African coal, again, due to lack of interest from European Union, lack of interest even from China and all — this is beginning to soften in that often, but obviously, domestic miners like single in core will also happen because they all work in line with what the global tire is. So on price in, certainly, it will be it will be softening. Our alternate fuel availability will also improve, which will again help our fuel mix towards super fuel — the big question that I think all of us is still waiting for an answer to is, how will the volumes be in Q3 and Q4. Now unfortunately, the month of October gives no indication because October had a — we can’t make an apple-to-apple again comparison because last year, we had one major festival which as Bisera in the month of October and Diwali was in November.

So the fit on the business, which happens around Basaraba, was split over two months. So today, my view is that October of last year perhaps has been subpart for most of the industry because the two festivals kind of will actually cover all of India. Otherwise, Ashar, in some parts, you celebrated more devaluing some of the parts these are put in some other parts. But this October with all the customers being in one month has slightly distorted the picture that October has been subpar in terms of volumes. Although in terms of pricing, we have seen some small improvement, but some small — some improvement over the Q2 prices. Certainly, we’ve seen in October. In the month of November, we were hoping that the volumes will start picking up post Diwali post-allo got over towards the end of October. But as of now, quite frankly, we’re still waiting for the tick in the demand that is over to come in. And the only reason it seems to be, for some reason, the Availability of labor still seems to be — I mean, earlier you on Diwali we can share put this time,

I don’t know how piping, even in a city like Davis when I’m trying to get some small repair work and some labor to available labor is just not there. which is for us holding back the growth in demand, which should happen around this time, especially with such extensive rains in our case are or nothing there is the need for cement to do complete the repair works itself, which has become significant demand after very high in — so are you still waiting for the sign to appear? And again, do we have some improvement in price over October, November again? Yes, there is some improvement right now. but it’s still too small for us to start talking about and we don’t even know whether this will build up further, which needs to given the cost that we have. double all on the cost side, I’m sure there will be some savings — but unless we get the opportunity to sell number one board volumes and also sell at a better price. The relief that we’re all seeking in terms of significant improvement, I think, is dependent on those two things.

Abhishek Maheshwari — Sky Ridge Wealth Management proprietorship — Analyst

And my second question is regarding the future expansion. So balance sheet is in a very good state right now. Then regarding your future expansion, sir, do you have the land and environmental variances already in place? Or is that an aim that you’ll have to go through before you get into financial closures?

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

I have the land and environment approval for my course like a developer that’s completely hand, okay? There you only rating for the demand to look better before I start putting up more capacity, the utilization has been low. — would have all the land and environment approval process is on, but that’s a simpler environment accrual process Subin take too long because it’s in the middle of so many of the plants that will come through very quickly. But Devapuwe already have. In Rajasthan, we don’t even have the.

Abhishek Maheshwari — Sky Ridge Wealth Management proprietorship — Analyst

Okay. Because land acquisition has become a very difficult process for a new greenfield expansion

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

So it is difficult. But still, I’m sure you are getting volume in greenfield capacity coming up. And we have to find a way we’ll have be smart about how we go about it, but build up there. The other one is to create an opportunity for us to pass up the vet difficult. We’ll have to find a way.

Abhishek Maheshwari — Sky Ridge Wealth Management proprietorship — Analyst

And sir, third question, sir, what kind of savings can be brought about by WHRS in value terms?

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

As I’ve been saying earlier also, if you take the ballpark cost of INR100 crores to put 10 megawatt is tidily planned, the payback is just about three years. Okay. Okay. So now you can calculate to say if you are actually talking about INR30-odd crores of savings on par coming per year from the time we start commissioning. And a part of this is contacted it is, but at least a applanthat’s the saving that we’re going to get because this power comes practically without an operating losses.

Abhishek Maheshwari — Sky Ridge Wealth Management proprietorship — Analyst

Yes, it’s very good savings. Thank you.

Operator

[Operator Instructions] We have the next question from the line of Rajesh Kumar Ravi from HDFC Securities.

Rajesh Kumar Ravi — HDFC Securities — Analyst

I may have missed in my opening remarks, but could you share what is the capex time line for the — this timing for the Bivins WHR and this setup for Flash unit are expected to be commissioned

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

I told you, by the end of this financial year, both will be commissioned.

Rajesh Kumar Ravi — HDFC Securities — Analyst

Most will be commissioned, okay. And sir, on the Serosawhat is the progress.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

Sirona, unfortunately, we still have not been able to make progress there because the — while the environment clearance application is in the process is one document that we need finalization is still not come through. But the good part, at least what I can share with you that all of us have been answered, and I’ve been sharing with you my own invites that an army now owning both Rambuja and ACC, whether there was still on us to put up a grinding unit and compete with their own plants. But fortunately for us, they have once again been confirmed their intent to have all the nonlinear plant. So it’s a question of now, I mean, how quickly can we move the environmental application. So it’s a bit delayed more than what we would have liked. But it will happen. Exact time line at the moment I have the as the availability of the document based on which we move the environment application. I’ll let you know. But right now, I have no line of sight even if I say one more quarter, two more quarters.

Rajesh Kumar Ravi — HDFC Securities — Analyst

And coming to demand and the competitive intensity, sir, with the three companies ramping up volumes, Middle Corp, Dalmia and Switzerland in your market, — how is that impacting the volume for the incumbent players.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

Well, again, as it’s a function of — well, is the impact there? — certainly the — because obviously, on more capacity to come every new incumbent who put up a large capex in an area, we will want to do something. So Dallas invested money, as we said, biocontent, so they are beginning to push volumes. The challenge that we are having is do I start matching the low pricing that they’re offering in the market to defend the volumes — or do I defend my brand for the longer term saying, “I am not going to match their prices. I’m going to stick to my brand positioning a little bit. It’s a pass up currently our Board to agree every quarter.

Currently, our Groboard is saying, keep staying on with your branding because in terms of — if you see as I mentioned earlier, narrowing the price gap between us and the market leader because I’m not benchmarking myself with other brands, accepting the market leader. — if I start chasing every new competition accounts and start matching the prices, my brand strategy position will go for a cost — so currently, we are suffering. That’s why I mentioned that our capable capacity license has been a lot higher than our Gears largely because the new capacities that you’re talking about are coming around the older plant, right?

Rajesh Kumar Ravi — HDFC Securities — Analyst

Meaning.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

We are still sort of believing that the way we have introduced branding and the power of branding to a small manufacturer like our company. is the right way for us to survive because it remain the commodity forever with this kind of capacity, we’ll never, never, never be able to sort of get good — it’s the possible. So we are sticking to our prices right now, not reducing them at all. When your competition starts selling product at INR20, INR25 per bag lower than yours, I’d rather not sell.

Rajesh Kumar Ravi — HDFC Securities — Analyst

Okay. It’s a good set ever.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

Yes, In the short term, it is cost payments.

Rajesh Kumar Ravi — HDFC Securities — Analyst

Correct care.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

And that iterations we need to have, and let’s see how it all pans out. But currently, you’re right, the — and mind you, the new brands which are coming up, the kinds that we name a name, a largely hitting the B2B market with very low prices.

Rajesh Kumar Ravi — HDFC Securities — Analyst

Correct right?

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

Which is not a game that we at are Cement will want to play anymore. We’ve done that in the past, we don’t want to do it anymore.

Rajesh Kumar Ravi — HDFC Securities — Analyst

Sir, would you share what was the incroduction in 1H

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

I don’t have the number in front of you. Can I share that separately. But like I told you more or ever are in terms of volumes of cement, — and clinker because of the adverse product mix towards OPC, obviously, into production for us would be in the plan a little more than when the sales reflect, right, because the center is more in but not to be the difference between that number.

Rajesh Kumar Ravi — HDFC Securities — Analyst

And sir, coming to the cost metrics, if I look at quarter-on-quarter on a per kilo cal could you share how much was the cost in June quarter per kilo? — blended total would be lower.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

I’m just trying to look for a cap and maybe not that sharper I’m an old man. — the previous quarter. No, that lending is not in front of me right now.

Rajesh Kumar Ravi — HDFC Securities — Analyst

Under two.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

H1 is 235 that I have.

Rajesh Kumar Ravi — HDFC Securities — Analyst

And Q3, you said was how much?

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

I have told you the blend overall fuel cost to 379.

Rajesh Kumar Ravi — HDFC Securities — Analyst

Sorry,

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

You’re going to 136.

Rajesh Kumar Ravi — HDFC Securities — Analyst

So Q2, sorry, I couldn’t get your numbers.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

To 379 Q3 to 23.79.

Rajesh Kumar Ravi — HDFC Securities — Analyst

So and H1 is also 235, right?

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

Yes.

Rajesh Kumar Ravi — HDFC Securities — Analyst

So your fuel cost is broadly stable quarter-on-quarter. Is that understanding right?

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

Yes, yes, yes.

Rajesh Kumar Ravi — HDFC Securities — Analyst

Okay. And in this quarter, you’re looking at.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

It’s about 1% more.

Rajesh Kumar Ravi — HDFC Securities — Analyst

Yes, this is okay. And given that players are reporting 10%, 20% surge in fuel cost quarter-on-quarter.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

But this is the cost. Don’t forget that a mix has changed for me, right? Because I’ve used more tube capacity using more petro gaming and more OTC has been sold than normal. — impact will be, but this are very small variation. But broadly, you’re right. I have 279 for the Q2 and five for H1.

Rajesh Kumar Ravi — HDFC Securities — Analyst

And there would be slight moderation which you are expecting for Q3. numbers.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

As I told you, the new Petco, which has just about started arriving will be INR2,300 crore Against the pet coke only pet coke was 256 in Q2 at least a 10% plus in.

Rajesh Kumar Ravi — HDFC Securities — Analyst

And sir, with 1.5 months almost complete, how has been the pricing in your markets quarter-on-quarter again, we come back to the same questions. I said in October, we gained something over last quarter.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

November also we gained some small — I mean I’m talking to just a few repins for that. in November also so October had a slight gain over last quarter. November this further slight gain as of now in the first few days in the month of November also.

Rajesh Kumar Ravi — HDFC Securities — Analyst

So from a quarter-to-quarter, do you expect that realization should improve.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

Issue. They must the what kind of.

Rajesh Kumar Ravi — HDFC Securities — Analyst

No, I agree. They must obviously. But so far, have you seen an improvement quarter-on-quarter.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

If prices were to stay where they are I’ll just answer that as, I don’t know how much detail can we share on one call where lots of people are waiting for the questions. I have already said there is some improvement in October over last quarter and normal there’s further improvement.

Rajesh Kumar Ravi — HDFC Securities — Analyst

Okay. Versus quarter if you mentioned that is okay.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

That is worth to know.

Rajesh Kumar Ravi — HDFC Securities — Analyst

That’s all from my end. We’ll come back in queue. Thank you.

Operator

Thank you. Partou have a question, you may enter San — we have the next question from the line of than Kumar Shima from Axis Securities Limited.

Kumar Shima — Axis Securities Limited — Analyst

Sir, can you please tell me what has been our blended ratio this quarter and premium cement sale out of case.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

In this quarter, yes, I forgot to give you the number, 15%. That’s the highest ever. That is of a premium seat.

Kumar Shima — Axis Securities Limited — Analyst

The strong et on the strong. Only stronger. And what has been total if you call total premium cements and out of trade sell?

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

The brand — other brands we launched very, very early in this month. It was not there last month.

Kumar Shima — Axis Securities Limited — Analyst

Okay. And sir, what has been.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

3% premium sales.

Kumar Shima — Axis Securities Limited — Analyst

Okay. And sir, what has been the blended ratio this quarter.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

Lending.

Kumar Shima — Axis Securities Limited — Analyst

Blended ratio.

Harsh Mita — ICSA Securities — Analyst

I mean no matter how many details.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

Every time somebody will ask me a question for which I don’t have a ready answer. I’ll get back to you.

Kumar Shima — Axis Securities Limited — Analyst

Okay, sir. Okay. And sir, what is the

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

And ratio is blending ratios are a function of your OCPC, right? — if I sold more OPC, obviously, my lending laser is person is water. It’s a very simple math. Is that number, I’m not giving you, but I gave you the number that my actually my OPC from about 39% year-on-year. It’s gone up to 45%, that number I’ve given you. So open is unblended, right? PC, which was 61% last year and down to 55%, which has the blending. So obviously, that ratio has worsened although I don’t have the number.

Kumar Shima — Axis Securities Limited — Analyst

Okay, okay. And sir, what kind of capex we are looking for in FY ’20, ’23 and FY ’24 because earlier, you had guided for INR500 crores to INR550 crores in FY ’23 and some INR900 crores to INR2,000 crores in FY ’20. So is there any change in that capex amount?

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

The fact that in this particular year, we’re not being able to start any work at all. So obviously, in this year, we would perhaps be spending a lot less than what we are expecting — but given the fact that we also want to be getting on with our expansion plan at a — so my own guess is at least FY ’23, perhaps you would like to spend about INR850 crores to stay on track with our growth ambition.

Kumar Shima — Axis Securities Limited — Analyst

In FY ’24?

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

FY ’23 sorry,

Kumar Shima — Axis Securities Limited — Analyst

Okay. Okay. And sir, can you give a figure for rail and road mix?

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

I’ve just given 15% pay I said, because of all the reasons of rate availability and all railway dispatch is 15% in this quarter, down from 20% in the same quarter last year.

Operator

Thank you. Ladies and gentlemen, to ask a question, you may end — we have the next question from the line of Dhiral [Phonetic] from Phillip Capital.

Dhiral — Phillip Capital — Analyst

So for the Q2, what was the fuel midlevel.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

I don’t know what will you do with okay but I thought because that the costs have we gone into a few mix.

Dhiral — Phillip Capital — Analyst

Okay.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

Let me again look at the numbers that are in front of.

Dhiral — Phillip Capital — Analyst

You and the question, Right? Even the one much fourth quarter.

Operator

Your line — please view the line from Johan Deran,while the management is responding to the question.

Johan Deran — — Analyst

So for Q2, the pet coke has become as high as 58% because more capacity is a domestic coal has actually fallen to 28%, which we used to have between 35%, 40% as 28% in Q2. And as I mentioned, imported call also usage has been a lot higher because the good quality domestic all we just fund our hands on. So I think 5%, 6% of imported coal would be — that’s the next balance will be for all put together. Right?

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

Okay. And sir, how many days of inventory we are holding right now? I’ve just said we bought a shipload of coal which for us at citable plant is nearly mount — and we are holding in the sense that we received a reported let our plant — at Data pool, we have — we are seeing right now in entities the mines are close by, we pick up from there and a plan. We don’t start more than that.

Johan Deran — — Analyst

Okay. And sir, any volume growth guidance for FY ’23?

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

As your guess is as well by enlist the market starts showing some indication. I can throw any number, but there’s no basis that I have. I would — I mean I can only tell you my ambition, but — we have, as I mentioned, despite the — all the festivals getting you’re still not seeing the demand traction, which we in December. Early November, we thought October has not been fully should start seeing some traction because too, but we haven’t seen that growth as of now. So until we actually start seeing some trends, it’s very difficult to have it, I guess. Okay.

Operator

[Operator Instructions] You may — we have the next question from the line of Bajrang Kumar Bafna from Sunidhi Securities.

Bajrang Kumar Bafna — Sunidhi Securities — Analyst

Sir, can you give us some sense on the Devapur expansion plan? When do we expect this to get completed. You indicated something about Kirra, but can you guide something on the Java also.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

The for no, no. I think — let me clarify because you obviously don’t have the information that earlier have been sharing. Devapur expansion is linked to perduring unit. — unless I have the branding unit, I already have enough linker at Bilbao to keep feeding those markets, right? So till Roda construction actually starts starting Devapur try would only be locking up the capital with any — without any prospect or utilizing the capacity, right? So the interim Prada and Devapur Intelig. Perola has to start first and then immediately because they would have, as I said, I have land to have it on lensarything. I can start putting it up in one year’s time, I’ll have the clinker ready, but if I don’t have a branding unit ready, what do I do with the ticker. So I’m just being seem just being practical saying unless I’m able to dispose of the clinker on a new lending unit, it may not help us by putting a into.

Bajrang Kumar Bafna — Sunidhi Securities — Analyst

Got it. And some sense on the Rajasthan side in terms of regulatory latencies and how do we see that expansion plan goes in the future?

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

It is — I think even to start the construction, there will take about three years, quite honestly.

Bajrang Kumar Bafna — Sunidhi Securities — Analyst

Okay. And sir, is there a possibility that until we start the construction in the Rajasthan site the limestone that is there with us, can we expect some sales from there, some sort of outright sale? Is it possible.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

I wouldn’t. I would never do that.

Bajrang Kumar Bafna — Sunidhi Securities — Analyst

Thank you.

Operator

Thank you — we have the next question from the line of Surya Nik, an investor. Mr. Nayak your line has been unmuted.

Surya Nik — Investor — Analyst

Yes. Is it clear now?

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

Yes.

Surya Nik — Investor — Analyst

Okay. Okay. Sir, just regarding the demand scenario of what you have printed during your opening remarks. — that in your catchment area, so you see lower demand. And you are, in fact, trading for more the government project to come in to fill up the demand decreases that we are currently going on. So want to understand why we are so much perspective of the car sales and not happening into cleat least to utilize more capacities to instate markets where the newcomers are coming into our area. So at least to have a presence because the nationally, we see improvement in the utilization happening in the — we will not think of setting up the branding unit at the pro maybe quite linking projects. So just to understand, what is — why we are so much perspective of the segments a trade segment, why we are not opening this the noncredit. Thank you.

Unidentified Speaker —

I am tending to are. My proportion already is 45% from 39%, as I mentioned. Only thing I’m not wanting to sell my product as cheap as some of the manfacturer.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

I never said I’m not doing big 5% of our total volume this quarter has been to be.

Unidentified Speaker —

I’m selling, but I’m choosing my customer carefully where my prices are good, it does not hurt my brand. There are multiple things that we have to consider. Only volumes, if I want to do, I will never have a long-term strategy to improve from where we are.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

Mode that I’m not selling to B2B, I

Unidentified Speaker —

Provided the price is the price that on.

Surya Nik — Investor — Analyst

So going forward, if we say, when we will be looking for more one then obviously, to sell more of the OPC rather than PPC. So any other specialized events. So in this case, then our compression would be to sell more of the nontrade area, rather than the three areas. So you should say the realty sector goes for some kind of slowdown because of the interested scenario because already this is quite apparent. So my sense is that unless we attain at least 75% to 80% at Devas, we will not think of expanding infield Kirora that is a linking project. So what is the — why we cannot think of.

Unidentified Speaker —

I think there’s some confusion in your mind. I never said Baroda will hold that. I said the Rodal.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

For that in that.

Unidentified Speaker —

That’s a different strategy. strategy about not trying to sell too cheap around Devapur where some new competition are trying to gain market share in B2B signal selling which that’s where I’m saying, given my costs that we had,

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

Even as it is our EBITDA is nearly INR300, would you be happy if I sold 20% more volume and incurred loss? Would you be happy with that as a shareholder? Do you want to answer that question? Because if I said — and in the previous few quarters, you’ve seen the more the previous quarter that is not visible.

Unidentified Speaker —

The previous quarter, we sold a lot more volume and they declared a lot more, let’s say, decline in EBITDA and decline in profitability. We want to sell volumes but we don’t want to buy a profitability. It’s a slightly different approach. I think there is some confusion in your mind that we can be able to clarify.

Surya Nik — Investor — Analyst

So what what utilization level we are targeting at least for FY FY ’23 could be nearly similar to last year, what I feel — so is there any chance to be utilizing overall utilization of the core and Chicas pool there?

Unidentified Speaker —

Yes, we are very much trying to do that. Without sacrificing please understand the strategy that we are talking about. I want to sell as much volume as possible. I would want to sell 80%, 90% of my capacity and not at the cost of profitability. That’s the differentiation I’m making.

Surya Nik — Investor — Analyst

But more or less we might be or utilize it, we will be able to get lesser in the as recovery for the power that is already there.

Unidentified Speaker —

Or is linked to a different investment. I need payback on that investment also. I can’t invest INR100 crores and reduce the cost and passion to my B2B customers, then who will recover INR100 crores cost.

Surya Nik — Investor — Analyst

I mean.

Unidentified Speaker —

Please understand core investment. And all the reduction I’ll pass on to the customers, then what does the shareholders do to me?

Surya Nik — Investor — Analyst

So in the interim one to two year, we may sacrifice for the sake of attaining utilizing little 80% or so. so that we can think of improving the situation or economically.

Unidentified Speaker —

So then your loss is not a question arises to I take note of.

Surya Nik — Investor — Analyst

So another because we are actually going so much digital into — we have gone into stand. So as to be reset detailed presentation after each quarterly visual highlighting all the KPIs that would be answer.

Unidentified Speaker —

How many hours you want to spend on doing this call then, please? — if you said detailed presentation HANA, it takes three hours when I go to the patient.

Surya Nik — Investor — Analyst

No, I’m not thinking I’m not linking to a taking off or detailed presentation, we’re not highlighting the of the company. So that would be.

Unidentified Speaker —

To give you a detailed presentation. All I can tell you is after that you would ask for it. in the company today, if I just give you some indicated KPIs so that your curiosity is satisfied. I can make a retail presentation here. But all I can tell you is that my to power consumption and tell me another company in the industry does that my power consumption percent about 63%. My heat consumption is about 680. What better can we do than this?

Surya Nik — Investor — Analyst

So I’m just taking what are the in the industry the peers are doing. So that is a.

Unidentified Speaker —

In the investors call, I’m not going to lay out all that I do for my competitor to meat.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

I will.

Unidentified Speaker —

I can give you the number in the outcome, but how I do it on the enough competitors in the I’ve given you the outcome. As a shareholder, you entitled to know the outcome, I’m telling you a power consumption and heat conversion amongst the absolute best in the industry. I’ve given you the number, 63, 680, try to find this too many companies who do that. how I do it as I’m not going to make an explanation or representation on that, I’m very clear. I do it with a huge amount of hard work and innovation and all kinds of things, certainly to lay out an investor call for even to come and listen and go and do it. Why would I do it?

Surya Nik — Investor — Analyst

No.

Operator

Thank you for your response, sir. Ladies and gentlemen, that was the last question and we will now close the question queue. I would like to hand it back to the management for closing comments. Thank you.

Unidentified Speaker —

Thank you, everyone. I hope I’ve provided enough information. I can never provide say that very all the information with all of your curiosity might have as to — if I’m doing S/4 HANA, how does it benefit, where did it — those details obviously are not fair for me to share publicly, especially on these calls. But anything which is which enables you to the quality of our operations, the quality or, let’s say, diligence through the outcomes that we presented, we are more than happy. I hope I provided you all the information. in case there is something missing to reach out to my colleague, Manish or Manager, who is also on this call, you write to us and if the information can be made public. We will share that with you put it up on our website.

Desh Deepak Khetrapal — Managing Director and Chief Executive Officer

Is that fair? Thank you very much once again for your time. Thank you.