SHRI KESHAV CEMENTS AND INFRA LIMITED (BSE: 530977) Q1 2026 Earnings Call dated Aug. 13, 2025
Corporate Participants:
Unidentified Speaker
Tejas Vaity — Investor Relations Executive at Kirin Advisors Private Limited
Venkatesh H. Katwa — Chairman
Analysts:
Unidentified Participant
Presentation:
Tejas Vaity — Investor Relations Executive at Kirin Advisors Private Limited
So Villasar has joined. Good. Good morning everyone. Myself Tejas, on behalf of Kirvisors, welcome you all for the webinar of Shriekshire Cements and Infra Projects Ltd. On the management side, we are pleased to have Mr. Venkatesh Katwa Chairman, Mr. Vilas Katwa, Managing Director of the company. To begin with I would like to give a short introduction after which I’ll hand over the call to Mr. Venkatesh to give a detailed overview of the company. Incorporated in 1993, Shrikesham Cements and Infra Limited is engaged in cement manufacturing and solar power generation and distribution in the state of Karnataka, India.
With that, now I hand over the call to Mr. Wade. Over to you, sir.
Venkatesh H. Katwa — Chairman
Yeah. Good morning everyone and welcome to Sri Keshav Cement and Infra Limited Q1 FY26 earnings call today. I sincerely appreciate your time and interest in joining us today. Shri KF Cement and Infra Ltd. What we usually call SKCL, is engaged in the manufacture of cement and power generation from solar solar industry primarily in the state of North Karnataka. Our cement plant is situated in Bagel Coat and solar plants in Copal, both in the North Karnataka region of the state. And our distribution network for cement spans in North Karnataka, Coastal Karnataka, Goa and parts of Maharashtra.
Supported by over 350 cement distributors and 600 retail touch points and over 14 solar power consumers. So let me take you through our performance in Q1FY26. We are very pleased to start the year on a positive note. For Q1 FY26, total income grew by 32.53% year on year to 41.4 crores supported by robust cement demand, steady solar power contributions and improved capacity utilization for new kill commission. In March 2025, EBITDA rose to 10.4 crores delivering a margin of 25.5% while profit after tax surged by nearly 74% to 3.09 crores. This strong performance reflects the benefits of our capacity expansion, a better product mix and disciplined cost control.
The cement segment saw healthy traction from infrastructure and real estate projects in our core markets while our solar operations continue to provide a stable low cost energy backbone for our plants. With increase in our cement capacity almost completed and power entirely by renewable energy, we will we are well positioned to capture opportunities in the growing urban centers. Rising public infrastructure spending and continued momentum in housing and commercial construction provide a favorable demand backdrop for the rest of FY26. Our strategic focus remains on optimizing capacity, deepening green energy integration, enhancing our product mix and expanding into high growth urban areas such as Bangalore and trying to reach out to Kerala.
Before moving into a QA session. I extend my sincere thanks to our shareholders who are partners, cons, consumers and employees for their unwavering trust and support which we continue, which continue to be the cornerstone of our growth. With this I’m pleased to open the floor for questions for regarding our earnings call and thank you once again for being part of us today. Thank you.
Questions and Answers:
Tejas Vaity
So with that, now we open the floor for Q and A investors. You can raise your hand and I’ll allow you to unmute or you can also drop your questions in the chat box. So. Yes Priyank, please go ahead with your questions.
Unidentified Participant
Yes. Am I audible?
Venkatesh H. Katwa
Yes Priyank, you’re audible.
Unidentified Participant
Good morning and congratulations on commissioning of the new capacity and it’s, it’s good to know the rational for expanding the capacity as you. The south market has been little volatile this capacity expansion.
Venkatesh H. Katwa
Priyank, I lost some part of your question. So I, I heard till the point where it says has it been. Can you just repeat a question real quick again?
Unidentified Participant
So I just want to know the rational for increasing the cement capacity since the bigger players have also Greenfield and Brownfield plans to increase the capacities. Do you think this capacity expansion can really be. You can have sustained realizations?
Venkatesh H. Katwa
Absolutely. So let me come back. The whole rational for going for this capex was basically to you know, increase our EBITDA margins or EBITDA per ton which is what was lacking because of very high fuel and power consumption. So as expected since the kiln has just started and you know, as we kind of stabilize the EBITDA per ton has, you know has grown now from around hardly 100 or less than 100 rupees last year to over 365 rupees this year this quarter. And of course with the increased capacity we qualify for a lot of other government related projects and we are beginning to get some traction.
And also some sales have been generated for infrastructure projects by the government of state government and it will continue to increase as we move on. And I also heard regarding, you know, over capacity in the south. Yes, south is adding significant capacity as well as the realization in the south is not very significant compared to the rest of India and we are almost huggy backing on the south performance. So for example, you know the Cuban cement prices year on year for south reduced by 3% whereas for SKCL it reduced by about 1.2%. Almost the same.
The EBITDA per ton for south beach industries was around 560 rupees. This data and for for our SK sales about 360. This data have received from various sources where only dominant south players we have taken. And based on that these are some of the results we have observed. So pretty much.
Unidentified Participant
Sorry. Can we. Can we expect our company to also reach this figure of 560 or near abouts?
Venkatesh H. Katwa
Yes, as we move along, you know, as we stabilize our plant, of course it has just been 1/4 and we have not got fully the desired results what we were expecting. But then again, you know, as we continue to operationalize the plant as we complete to enhance our efficiency eventually by the you know, another couple of quarters we we should be able to be close to what we see in the southern region.
Unidentified Participant
And this average realization and stabilization of ebitda do you think it will be complete within one year?
Venkatesh H. Katwa
I believe so because this year the whole the the plan has been to stabilize the plant in such a manner that we reach all the efficiency parameters and as was designed to to set up this plant itself.
Unidentified Participant
My next question is regarding the solar business. Can you throw some light on whether you you are able to sell some power to third parties merchant power and what are the rates which the company is able to command on what capacities.
Venkatesh H. Katwa
So approximately now solar generation compared to year on year almost remains same. Instead of adding in spite of adding 3 megawatt to make it a totally 40 megawatt. Because we experienced early rains this quarter compared to, you know, a general rainy season. The realization part compared to Q4, you know, marginal increase in pricing we received from 5.82 in Q4 FY25 we have reached to 5.98 in Q1 FY26. So solar pricing will remain stabilized between 5.9 to 6 throughout the year. And unless there is a change in discount prices, these prices are going to remain stabilized.
And solar power generation as usual is giving the, you know, a lot of EBITDA contribution to the results as of now. Thank you.
Unidentified Participant
The final question I have is regarding the debt servicing and debt repayments. Is any substantial repayments coming up in next one one and a half years?
Venkatesh H. Katwa
This year, this financial year will see three term loans being closed out of which two one has already been closed out of, you know, out of the. When there is a maturity, one term loan was closed ahead of time. In fact, another terminal was supposed to be closed in January due to cash info. We closed it ahead of time and another term loan will get closed by March. So this year three terminals are getting closed whose initial value is around around 42 plus about almost 62 crores worth which was sanctioned. We get closed this year and only this year we will have repayment liability highest.
From next year onwards the repayment liabilities will start going down. Because you know the term loans are getting closed one by one.
Unidentified Participant
See, you will be. You are confident that you will be able to close this loans through internal accruals or you’ll have to raise some more capital. Because this is being first year of operations for the cement plant.
Venkatesh H. Katwa
I believe so, yes. This year also with the increase, if you look at the Q1 results and EBITDA margins and cash profits, we are cusp of the point where our realizations start going up, sales will start going up, profit will start going up and you know, the borrowings will start going down. So I’m pretty confident that for this year we should be able to repay the loan through Internet rows. And if there’s any shortage, the management is always pouring funds when there is a need.
Unidentified Participant
So that means in effect you are saying that the company’s EBITDA will surely more than be doubled this year.
Venkatesh H. Katwa
Yes. This year, definitely. Yes. Because our first quarter EBITDA itself is around 10.5 to 11 crores. So. And typically this first quarter we had early monsoon. So second quarter is also going steady. And the most we will expect to accrue is in Q3 and Q4 where we should be expecting EBITA levels. Where we should be able to service debt and repayment smoothly.
Unidentified Participant
My best wishes to your whole team. You have done an incredible job of trying to fund this expansion more through internal accruals and little bit from shareholders help. My best wishes to all of you. Thank you so much.
Venkatesh H. Katwa
Thank you Priyank.
Tejas Vaity
Thank. Please go ahead.
Unidentified Participant
Am I audible now?
Venkatesh H. Katwa
You’re audible. Yes.
Unidentified Participant
So my question is around the cement. Rates, let’s say with the last year or last quarter, how much cement race has increased now?
Venkatesh H. Katwa
So compared to year on year, the cement price, let’s say year for the cement rates. So across the year you’re seeing. So someone. I mean hello. Across. Hello, can you hear me? Hello. Am I audible?
Tejas Vaity
Yes, you were audible.
Unidentified Participant
Yes.
Tejas Vaity
There’s some network issue.
Venkatesh H. Katwa
So typically Mr. Sound the realization has slightly increased in Q1 of FY26 compared to last year. Last year only except Q1, Q2, Q3, Q4 were pretty bad. But the increase has been around. See all over. I mean quarter on quarter the price have increased by 7%. But year on year the price have reduced by around 1.2%. Pretty much what we have Seen in South India. So as of now being the monsoon for Q2 price have not been so encouraging. But typically what we expect in Q1, you know, we have seen some increase in prices. So to give an example, our naked cement price were around 3433 for Q1FY26 compared to 3477 for Q1FY25.
In spite of that, our EBITDA level were higher because of the new kill and the new efficiency that has flown in.
Unidentified Participant
Okay, and how much is the current utilization of new plant? So since the new plant. Yeah, this year and next year in terms of utilization.
Venkatesh H. Katwa
Sure. So as of for first quarter, 36% is what is utilized because this being the first quarter itself. So we are targeting around 45% this year and then slowly recoup it up to about 6055 to 60% next year and around 70% the following year.
Unidentified Participant
And when this new plant has been. Operated, which month or which, let’s say which week in this.
Venkatesh H. Katwa
So the only the kill is operational as of now, which was by end of March 2025. The rest of the, you know, supporting equipment are added one by one as we speak. So technically we have a kill which can help us produce 1 million ton of cement. Some in balancing equipment. It will be added online maybe this month and few next month itself.
Unidentified Participant
Okay, thank you.
Venkatesh H. Katwa
Thanks a lot.
Tejas Vaity
Mr. Mr. Kush, please go ahead.
Venkatesh H. Katwa
Yes, good morning Mr. Kush. Hi.
Unidentified Participant
Good morning sir. Thanks for the opportunity and congratulations for the good set of numbers. So actually sir, I wanted to understand that the. The new plant is in South India, right?
Venkatesh H. Katwa
Correct.
Unidentified Participant
So is it going to impact our growth as the price realization is better and the even the demand of cement is better in north and middle India. So what? So do we have any CAPEX plans going forward?
Venkatesh H. Katwa
As of now for cement we want to stabilize the existing the recent capex that we completed. So once we stabilize this plant then we would consider thinking of in adding another level of capacity. But right now south is over capacity. But in spite of that, you know we are able to for example, our year on year volume growth is around 42% compared to average south year on year volume growth is only 9%. So we are pushing our and we are capturing more market than what our south other peers are doing. So as of now there’s no plan of capacitation till we stabilize this existing plant.
Unidentified Participant
So from it I can understand that for the next two years like F until FY27, we don’t have any capex plants, right.
Venkatesh H. Katwa
Not in cement. Yes. Yeah.
Unidentified Participant
So again if we look at the south south market as well, so they. The EBITDA growth in EBITDA is mostly due to volume growth and not because, because of the value growth, right?
Venkatesh H. Katwa
Yeah, pretty much. I would think so.
Unidentified Participant
Okay sir, and what’s the growth in our other segments of business other than cement?
Venkatesh H. Katwa
Our other segment is solar. Yeah, so solar last financial year we added another 3 megawatt. So the total plant is of around 40 megawatt. Around 200 crores has been capital expenditures on, you know, establishing this plant since 2018. And right now…
Unidentified Participant
how much we have invested, sorry,
Venkatesh H. Katwa
Almost around 200 crores. I think about 195, 196 crores is what we invested in solar projects to you know, set up around 40 megawatt of a plant.
Unidentified Participant
Okay, and how much do we earn per megawatt?
Venkatesh H. Katwa
So the realization for this quarter has been about 5.98 the last year. Entire relation was around 5.95 the entire year. So that is the net relation what we are getting because the solar plants are incentivized by the government for 10 years, another three years is to go after that. There are certain, you know, statutory charges will be applicable, but they’re not going to be significant once you know, we have our plant stabilized.
Unidentified Participant
Okay, so actually I missed your number. So 5.98 crore is for Q1 or the whole FY25.
Venkatesh H. Katwa
So average price is 5 rupees 98% per unit. But out of total a bit of around 11 crores. Around 7.8 crores is contributed by solar and only 3.2 is contributed by cement. Solar has always been a highest EBITDA contributor currently.
Unidentified Participant
Okay sir, so what would be the payback period for us in from our solar project?
Venkatesh H. Katwa
So solar project typically about eight to nine years. What is applicable to other solar plants in the country?
Unidentified Participant
Okay sir. And do, do we see any major opex in solar? Because no, in, in maybe five years down the line we might need to change some solar panels.
Venkatesh H. Katwa
So there are a couple of things on solar. One is once the cement plant stabilizes, management would like to consider addition of more solar capacity. Plus somehow current evacuation capacity of the solar plants will support a very high, almost three times higher generation. For example, if we have 40 megawatts right now, the evacuation capacities offer nearly 200 megawatt. So in future, you know, what a lot of other old plants are doing is they’re simply changing the panels from the old capacity, new capacity and adding few transfer transformers by which they can drastically increase the capacity.
And we would be looking at that kind of a transformation not right now, maybe about five, six down the line. So currently for example we are using 320 watt peak modules for the existing plant. There will be a point in time where we could expect to reach around 1kW peak modules. At that time it will make sense to replace the panels and made some internal infrastructure adjustments to immediately instantly achieve higher generation.
Unidentified Participant
So our payback period would be around 10 years in this.
Venkatesh H. Katwa
For the existing plant, about 89 years. But in future when we assuming that the solar panel price do not change, the payback period is going to be lesser because then our existing land, our existing what we call as model mounting structures and lot of other infrastructure will remain constant. The only change will be in the panels and transformers. So the investment is not going to be significant. And thus we would expect lower payback period.
Unidentified Participant
Okay, and do we expect the price per unit to remain same throughout the year?
Venkatesh H. Katwa
This year? Yes. Because typically the regulatory charges are, you know, are done for for a year long. So for this year whatever regulatory charges have been applied in the state of Karnataka will remain same. So I would expect, you know, currently in Q1 I have received 5.98. So typically between 5.9 to 6 is the range what you would reasonably expect for this year. The price average price for solar ceiling.
Unidentified Participant
Okay. And in the whole year how much we are expecting from solar in FY26.
Venkatesh H. Katwa
So solar will continue to go down. Now as we keep ramping up on the capacity, the solar, you know, sale units are going to go down. So once we reach around, you know, 60 to 70%, I think almost all the solar capacity will be utilized.
Unidentified Participant
Okay, so what would be the numbers?
Venkatesh H. Katwa
What number?
Unidentified Participant
I mean for solar from solar the top line from the solar or the bottom line from the solar for the whole year? FY26.
Venkatesh H. Katwa
So when I generally give out the solar EBITDA figures, these are all notional EBITDA figures Because internal consumption is considered at the price what we are selling outside.
Unidentified Participant
Sure.
Venkatesh H. Katwa
But as we move on, the EBITDA figures will get embedded within the cement sales itself. Only for the sake of notional emida separation. Because when we compare cement plant to other cement plants, we will have to compare on cement EBITA per meton considering apple to apple comparison. But as we move along, once we start consuming entire solar power, there won’t be any solar sales. However, cement EBITDA would show, you know, a significantly higher per turn basis.
Unidentified Participant
Okay sir, got it. I will join the queue again.
Venkatesh H. Katwa
Sure. Thank you.
Unidentified Participant
Thank you.
Tejas Vaity
Mr. Bharat, please go ahead with your questions.
Unidentified Participant
Thanks for the opportunity and congratulations for a good set of result. A couple of questions sir. First can you just talk a bit with respect to the institutions orders. I think you were mentioning in your opening remarks about the government interest. So can you just share some highlight about the progress on the same.
Venkatesh H. Katwa
Yes. So last quarter on a mid or you know I think in the last month we began to start striking, you know, having orders from what we call as Pridel who does a lot of development work in Karnataka. Cradle itself is the. It’s a infrastructure development corporation of Karnataka who builds roads, bridges and the stuff like that. So you know we were able to dispatch around 3 to 4,000 tons last quarter since it was just the beginning. So this quarter we’re expecting to to more than double that quantity. And once we establish here we’ll keep adding more such institutions only because you know right now we have increased capacity and all other parameters we qualify for the for such kind of orders.
You know, it will start showing up, you know, fully, you know, another cup a couple of quarters down the line. But already we have put our food in the door and we are beginning to get full fledged orders from them.
Unidentified Participant
Is that how the realizations will be like with respect to the B2C sales versus the government orders? The next cement price remains the same for us?
Venkatesh H. Katwa
No, they are little better because one advantage of institutional buyers is they price the same for certain grade of cement across all the cement plants. So there’s no differentiation on the basis of branding. So that works out to be a little advantage for us. So compared to a lot of tier one brands, you know, tier one brands tend to give them a discount and those even discounted levels tend to be higher than our realization. So yes, it is going to be at least 10% higher than our existing net relations.
Unidentified Participant
Right. And sir, like you mentioned that you are targeting 45% kind of a utilization even on the enhanced capacity. I think we were mentioning somewhere close to doing out 50% and above. So has there been any downward revision in the guidance like earlier we were guiding for 70 crore EBITDA. So is there any negative revision on the guidance for this fiscal year?
Venkatesh H. Katwa
So typically what happened was the we expected the kiln to perform efficiently right from day one which you know, of course we had little ramping up issues with the kiln and some of the balancing equipment which will add to the kill capacity have been a little slow in implementation. So they’re almost in the final Stages right now because of which we don’t want to be over the board. So 45% as of now with the current cement scenario appears to be reasonable. But our, our the way we are trying to market and sell is we are trying to push it as much as possible.
Even targeting around 60% just to be on the safer side. You know the revision has been done to looking at the current scenario. Yes, with a little dip in capacity utilization. There is going to be a little dip in the EBITDA expectations too. So reasonably we’re expecting a bit of around 55 to 60 crores this year compared to what we had predicted around 70, 75 earlier.
Unidentified Participant
And on the part print sir it would be somewhere close to 30 odd crores. Like you mentioned on the last concept.
Venkatesh H. Katwa
This is something which is important to discuss. What happens in PAT is we have something called as deferred tax liability which is showing it before the PAT figures. So as a management, as the industrialist we can typically target on EBITA and pbt. So PAT is a derivative of some of the deferred tax liability which are most of an in race adjustments. So based on what I understand on how defer tax liability will is applicable. So about 25 to 30 crores is what I should expect. Typically we are expecting very high pats in Q3 and Q4 which we technically see in cement industry.
Unidentified Participant
Right Sir. Also we were doing some pilot phase with respect to rmc. So any progress where we have made in this particular respect?
Venkatesh H. Katwa
So RMC as of now we are still studying on the project. I mean in fact study has been completed. We have already the land required for the project. But the project will be initiated once we see some stabilization in the cement plant which we were expecting earlier but now with the, you know, with the teething issues that we had in the first quarter. So it might be delayed by another quarter, another quarter or so.
Unidentified Participant
And so when do we see the stability built in like with the balancing act coming in place. So can we see the stabilization of the plant by Q2?
Venkatesh H. Katwa
Q2 are maxed by Q3. I would say Q2 would be the point where all the sublation process will be taking place. So you will see some better results in Q3. That is what is the realistic expectation that we have right now.
Unidentified Participant
Right answer. Any colors on the capex for this year like any plant of addition in the solar side?
Venkatesh H. Katwa
No, no plan, no plans in the solar side. There could be a. There could be a possibility of solar and RMC but decision has not been taken since we Want to stabilize the cement plant first. So if I see complete stabilization by end of Q2 which is really expected then Q3 we would be thinking of a capex in solar as well as in rmc.
Unidentified Participant
And sir, like you mentioned there has been an improvement in the realization on a quarter on quarter basis. So do you think think the trend will continue over the rest of the year? Like particularly with respect to Q3 and Q4 do you see there will be uptick in the pricing realization.
Venkatesh H. Katwa
So. So EBITDA per metric ton has definitely been uptake. It is this. This quarter we achieved the highest EBITDA per metric ton since inception. For example in FY25 the EBITDA per ton is less than 100 rupees. Year before that it was hardly 75 rupees EBITDA Mediterm per. This quarter we reached about 365 rupees. And this is just the beginning. So once as the capacity starts adding up and once we start increasing the capacity utilization the E per also is expected to grow and start hugging with the south based plants.
Unidentified Participant
I was asking with respect to naked cement prices.
Venkatesh H. Katwa
The naked cement prices.
Unidentified Participant
Right.
Venkatesh H. Katwa
So naked cement price year on year it has reduced by around 1.2% but quarter on quarter around 7% which is almost similar to what we have seen in South. So even though Q1 has shown some increase in prices the Q2 has been very slow and because of early monsoons, very particularly because of early monsoons and heavy monsoons all over the region where we sell the cement. But we always, we have noticed in the past that a good monsoon is always followed by a robust demand and cement and then the pricing itself. And if you look at some of the news articles from some top cement plant executives they are predicting a significant increase in the prices of cement in by the end of FY26.
Unidentified Participant
Right sir, and just a last question from my side sir. Like with respect to the enhanced capacity which we have and with respect to increasing on the distributor connect, what sort of a progress we have been able to look like you mentioned that you are targeting newer territories or newer trophies. So any progress which you have been able for penetrating into those market.
Venkatesh H. Katwa
So yes, I mean we are doing a lot of digital marketing, we are using a lot of new loyalty programs and all other stuff. So simple fact that what we are doing we started doing this from Q4FY25 because of which if you, you know for example average south volumes growth year on year is only 9%. Whereas we reached 42% growth solely because you know, we are becoming very aggressive to make sure the entire capacity is sold. So this is helping us to build on our volumes. But yeah, apart from digital marketing and apart from loyalty programs, we are increasing the areas and we are beginning to see new customers added to the list.
So the list goes on and you know, as expected, it is that ramp up is going on. In fact, the ramp up is going on as you speak in Q2 also.
Unidentified Participant
X of 300km radius. We are also looking at newer territories. Whether it is market of Kerala or some other state.
Venkatesh H. Katwa
Right now we’re not reaching out over there. What we’re trying to do is dig in deep in the existing market. We’re increasing our market share in the existing market itself, which is giving us positive results. We would eventually go to longer places once we know that this areas will kind of, you know, reach some kind of a stabilization point. You know, any cement plant would avoid to go as far as possible because of logistic cost. Typically if a cement is selling out to a very long area, it means that they reach the saturation point in their home areas.
So in our case we are increasing our volumes in our local area itself which gives the highest realization. And we will continue to do so till we reach some saturation point. And only then we’ll start reaching out to, you know, markets like Kerala, Pune or Bangalore.
Unidentified Participant
Right. And say for the overall capacity which we have of 1 million tons, what kind of a contribution do you expect? I’m not saying currently, but with respect to the next few years coming out from the government projects like from the institutions, how much contribution to the volumes can come in from the institution side.
Venkatesh H. Katwa
So for, I mean we this quarter Q1 was around 3 to 4%. Q2 we are expecting around 10 to 12%. So it, I mean like with the kind of orders, what, what the kind of capacities, what they want, you know. I think so. Eventually somewhere we should stabilize between 20 to 22% or 25%. So right now, this quarter we would be expecting about 8 to 9, 10% contribution coming from institutional buyers.
Unidentified Participant
Sure, sir. That’s really useful, sir. Thank you. And all the best for the subsequent quarters. Thank you, sir.
Venkatesh H. Katwa
Thanks a lot. Mr. Bharati. Yes.
Tejas Vaity
Please go ahead with.
Unidentified Participant
Hi, are you able to hear me?
Venkatesh H. Katwa
Yes, exactly. Please go ahead.
Unidentified Participant
I wanted to know like we are already in a fuel system business as well as the small contribution or we are planning to.
Venkatesh H. Katwa
No, I could not hear the question. Probably I don’t know. You got disconnected. Come again?
Unidentified Participant
Okay. Are we already in a fuel station? Business or we are planning to.
Venkatesh H. Katwa
In what business did you say special? I couldn’t hear that.
Unidentified Participant
Yes.
Venkatesh H. Katwa
Yeah. Yeah. Come again.
Unidentified Participant
Fuel stations or petrol pumps. Are we having those businesses or we are planning to.
Venkatesh H. Katwa
No, you’re talking about the petrol pump.
Unidentified Participant
Is it correct?
Venkatesh H. Katwa
No, no. Yes. Yes. We have one in house petrol pump. Since our plant is on the main highway, you know, we had used it earlier for logistics. And currently we are using it for any transporters who, you know, bring in raw materials or take our cement outside. But we are not planning to expand or whatever with that. Since that we are right on the main highway. We are just utilizing it to our advantage.
Unidentified Participant
Okay, that is a nice thing to know. And we are how much the volume growth has been instrument for Q4 to Q1.
Venkatesh H. Katwa
So the volume growth. Yeah. From Q4 to Q1 is around 7%. But year on year is around 42%.
Unidentified Participant
Okay. So subsequent quarters also, I think Q2, Q3, we should see the improvement, right?
Venkatesh H. Katwa
Absolutely. As such, we are already seeing some improvement in July and we will continue to do so. So we are being very aggressive in sales and marketing. Which is why I mentioned to you. Even though on average south prices, you know increased our prices decreased by around 3%. It only decreased by 1.2% for us. However, volumes year on year south increased by only 9%. But we increased by around 42%. And you know, it will continue to do so.
Unidentified Participant
Okay, great. Thank you. That’s it from myself.
Venkatesh H. Katwa
Yeah, Thanks a lot. Mr. K.
Tejas Vaity
Sir, we have few questions in the chat box so we’ll take them. We have A question from Mr. Karthik Kartik Raja. Why are material cost is 55% of overall expenses. Whereas competitor of similar size is around 12 to 15%. Please provide some insights.
Venkatesh H. Katwa
So you’re talking about cost of goods sold. Is it.
Tejas Vaity
Material cost? Yes.
Venkatesh H. Katwa
No, I mean to look, we will have to look at a very specific organization, other things. Because what our cost of materials is going to be little high. Not so much high like what it has been projected. Little high because we are purchasing limestone. And by cost there is only 3 to maybe 5 to 6% cost difference between when someone has their captive mind compared to when we purchase from outside. Apart from that, our fuel consumption also is little higher. Right now even though we have started a new kill, it has not reached the efficient stage compared to others.
But the difference should not be like almost 50% what has been projected. It would be good to look at any particular company and what they are showing to make a correct judgment. But as of now with the kind of fuel and power consumption that we have done, we should not be more than 25 to 30% away from what others are doing.
Tejas Vaity
Thank you. Next question is whether a ramp up is as per plan. So do we see any hitches to reach full capacity?
Venkatesh H. Katwa
So as such you know like whatever he we in fact we had a significant roadblocks last year and whatever remaining roadblocks that we had in the beginning of the quarter to a large extent have been resolved. And as of now I can very safely say that the hookup of balance equipment is going on in this month. So we should be able to have a full capacity by the end of Q2 without any challenges because most of the challenges it looks like we have already overcome on it now.
Tejas Vaity
What would be a renewable energy capacity by 2030.
Venkatesh H. Katwa
So renewable capacity right now is around 40 megawatt peak and unless we add another capacity it will continue to remain same. And if we have to add a new capacity we would be looking at it after the cement plant stabilizes. So we are looking to add another 30 megawatt once eventually we see some strong ramp up in cement and stabilization in the side.
Tejas Vaity
Thank you sir. Mr. Vinod, please go ahead with your questions.
Venkatesh H. Katwa
Good afternoon. Go ahead.
Unidentified Participant
Good afternoon sir. Sir, my question is regarding Solar. So with 60 to 65% solar output sold in the market are there any long term PPAs in place or is it sold in the spot market?
Venkatesh H. Katwa
So what happened was our solar plant was established when there was a lot of incentives from the state government. We in fact as a strategy did not sign the PPA because PPA would have locked us on the pricing. Imagine if I had signed, if we had signed a PPA in 2018 when the solar planners commission then the price we would have realized around 5 rupees 50 paisa or 5 rupees at that time. However FY24 we realized average price of around 6.8 rupees and now the average price around 5.98. The only reason we’re not signing PPA is because we knew at some point in time in future we would do do this capex.
So once we start reaching 60, 70% of the capacity we will not have enough power to be sold. So we are selling the power not in spot market but to the industrial customers out of, you know, you know we have around 14 to 15 customers who are authorized to buy from us and whoever is giving the best price we are selling it. In fact all our customers are so huge that last two, three months we just Sold all the remaining power to just one customer.
Unidentified Participant
Okay, sir. Sir. And what is our current market share in operating regions like? And how much can it be expanded with the improved capacity, Extended capacity. So how much can we improve on that?
Venkatesh H. Katwa
So I can give an understanding the. In the areas that we are selling like typically north Karnataka, south Maharashtra and Entire Goa, around 25 to 30 million ton cement has been sold. And our capacity is just 1 million ton. So our capacity or in the some of the strongest areas we would have reached around 10% of the market share on average. About 3 to 4% is what we are seeing. But yes, that also gives us a lot of scope of improvement now which we have done successfully in Q1. So we did dig in deeper. We increased the sales within the existing market itself and that we will continue to do so.
And we already have one locational advantage. Which means that some of the regions where we are selling like Goa and south Maharashtra and north Karnataka, we are closest cement plant compared to most of the largest cement plants baring the few. So yes, the cap, I mean the market share maybe 3 to 4%. And if we keep digging deer, we might reach 6 to 5 to 6%. And that should be almost reaching out to our million ton capacity.
Unidentified Participant
Okay. Another question on solar. So solar contributes significantly to our profitability. Like and you mentioned, I think that. Yes, yeah, yeah. And you have mentioned that we are planning to expand the solar capacity, right?
Venkatesh H. Katwa
Eventually, yes. I mean the management is of the opinion that we should consider adding more solar capacity. But as such right now it is in the on the board table just for the discussion and when we want to take up the project yet.
Unidentified Participant
Okay, so that’s all from my side. Thank you so much.
Venkatesh H. Katwa
Thanks a lot Mr. G.
Tejas Vaity
Thank you. So we have few. We have few questions with. With 65% capacity utilization in FY27 can we expect to reach over 100cr in.
Venkatesh H. Katwa
FY27 with 65 to 70% production levels? 100 is a very safe bet. Yes, we should be able to do that.
Tejas Vaity
Next is can you quantify the total repayment of debt? What FY26 and FY27.
Venkatesh H. Katwa
So FY26 we have around 25.8 crores as. As a repayment liability in FY26. So FY26, FY27 it will go down to around 20 to 21 crores. And FY28 onwards it will be less than 15 crores for the existing debt. This year is the largest. This year is the only year we have the. Where we have highest liability for term loan repayment next year onwards it is reducing because out of all the loans three terminals will be closing this year itself which will save us. Plus with the new loan that we have secured for this capex.
In spite of that the net repayment, liability and obligation will start going down from Q1 of FY26.
Tejas Vaity
Thank you sir, your hand is still raised. Do you have any more questions?
Venkatesh H. Katwa
Achilles, you’re on a mute. I think so.
Tejas Vaity
I think there are no questions from his end. Okay Mr. Kush, please go ahead.
Unidentified Participant
Actually sir, I just wanted one wanted one more information. So what is our guidance for FY26 and the EBITDA margins as well?
Venkatesh H. Katwa
So assuming the prices remain stable like what we are seeing so this year, you know, if. If we see the same cycle of pricing that like what we have seen typically Q1, Q2 prices go down, Q3 prices increase, Q4 prices generally the best. Assuming the cycle continues and we reach for 45% of our capacity relation. So I could safely assume that our EBITDA will be in the range of 50 to 60 or 55 approximately.
Unidentified Participant
Okay. And margins would be around 25%.
Venkatesh H. Katwa
25 to 30%. Yes, we could safely assume.
Unidentified Participant
And what was the absolute number for EBITDA? 50 to 55 crores, right?
Venkatesh H. Katwa
Yeah. On average 55 plus or minus 5. You could consider.
Unidentified Participant
Okay sir, and can you please repeat one more time what was the realization per this turn for cement?
Venkatesh H. Katwa
So EBITDA per ton for this quarter we realized around 365 rupees per metric ton which is the highest since inception so far.
Unidentified Participant
And what is for industry it was around 500.
Venkatesh H. Katwa
So for south base industries I have only. This is the study how I have achieved on how India and South based. So There are about 17 companies which I had looked at out of 17 companies three of them predominantly operate only in South. So if you look at the average of EBITDA per Metatin for south it looks to be around 560 rupees. Whereas we reached around like 360 rupees again because it’s just the beginning for us. Our fuel consumption and power consumption efficiency has not been achieved like what we had projected. And you know eventually what we’re expecting is to hug the south based south based parameters.
Unidentified Participant
Okay. And we are confident that we’ll be able to pace up with our peers, right?
Venkatesh H. Katwa
Pace up with what with our peers.
Unidentified Participant
Like around we are going to Matlab C the upward.
Venkatesh H. Katwa
Absolutely, yes. Because capacity is increased by three times. So there is an aggressive push on sales so simple 42 increase in sales from year on year itself is a indication that what kind of, you know, sales strategy we are putting in place.
Unidentified Participant
Correct, Correct. And just for, for my knowledge, can you also share the what is the new capacity addition we have done and what is the total as of now after the new capacity?
Venkatesh H. Katwa
So we our capacity was only 363 million tons earlier. Now it is 1 million tons.
Unidentified Participant
Okay, so before it was 360 million.
Venkatesh H. Katwa
Yes, yes, got it sir.
Unidentified Participant
Thank you very much.
Tejas Vaity
Thank you. Kush. We have few questions in the chat box. When can we expect to start RMC plan? And.
Venkatesh H. Katwa
Yeah, like discussed earlier, the earlier plan was to start off in Q2 or a beginning of Q3. But we just want to make sure the cement plant is stabilized first because RMC plant is an easy entry plant since we already company has already purchased the land for rmc. You know, once we see a strong stabilization in cement, we will immediately go ahead and establish our first Adams plant. So if we are expecting some stabilization in Q2 by end of Q2, maybe by end of Q3 we should, you know, plan to work on first RMC plant.
Tejas Vaity
Question is, what are the synergy for venturing in rmc? A lot of peers have issues in connection in RMC making single digit margin.
Venkatesh H. Katwa
Yes, RMC are known to have a very strong small margins. But this is where it will make a difference. First, most of the variable cost, the highest cost for RMC cement. And because of irregular cement prices, what we see typically cement prices sometimes very weak over a week. In our case, we will have a strong, you know, possibility of having our own cement and converting it into rmc. Some of the mixtures that RMC plants do in the RMC plant, we can do it in our plant itself and bring it to RMC unit to add water and little other materials.
So there are some strategic advantages what our company or any cement plant company will have to, you know, to go with an RMC plant. See one more good example I could give you is typically on a cement bank you can see the brand which will give the brand equity and brand premium. But in RMC what typically happens is most of the rmc, you know, products go to the, you know, either institutional buyers or it’s Most of a B2B kind of a transaction. Which means that for the similar grade we could get a better pricing compared to if we were selling cement in the bag itself.
So those kind of synergies will help us to bring in a little better than better margins compared to other RMC plants who do not have their own cement plants.
Tejas Vaity
Can we expand current cement capac capacity to 2m tons?
Venkatesh H. Katwa
Can we expect current cement capacity to what?
Tejas Vaity
Expand current cement capacity to 2mn tons.
Venkatesh H. Katwa
To increase the capacity of current cement capacity.
Tejas Vaity
Yes. Current cement capacity to 2mn tons.
Venkatesh H. Katwa
2 million tons. Okay. So our current kill is designed in such a manner that eventually we can increase the kiln output by which we could technically reach around 1.6 to 1.8 million tons. But that will happen once again couple of years down the line. Once we start reaching around 70% capacity. All that we have to add is more crushing capacity and grinding capacity. Because the existing kiln is sufficient to give us enough clinker to produce around 1.6 to 1.8 million tons of capacity. But that will be in the future maybe once we establish around 70% of capacity utilization.
Tejas Vaity
Thank you sir. Next question is any net debt EBITDA levels companies targeting what’s the vision for next three years?
Venkatesh H. Katwa
So the debt will continue to go down as we move forward. And as it can be seen, in fact the debt has been serviced regularly couple of years down the line. You know, since I mentioned to you that the three terminals are getting closed this year out of which two have already closed as of quarter one and another to be closed by quarter four. So that will continue to go down unless we want to add a new cement or a RMC plant in future.
Tejas Vaity
What’s the vision for next three years?
Venkatesh H. Katwa
Based on the current strategy for the existing debt, that debt will reduce to almost about 30 to 40% of debt will be repaid in the next three years or approximately you can say around 70 crores of debt will be repaid in next three years.
Tejas Vaity
Thank you sir. Yes, Mr. Karthikaraja, please go ahead with your questions.
Unidentified Participant
Oh Mr. Vintage, I congratulate for the very solid numbers and a wonderful on time execution of the expansion. I truly appreciate all the efforts. And Yeah, I have three questions. Our material cost expense is almost 50% whereas of our similar size competitor material cost is around 12 to 15%. Why? Our material expenses are very high. This is my first question.
Venkatesh H. Katwa
Okay. I mean so to do a little apple to apple comparison, most of the cement plants do have what you call WHRS and WHR and other sales. So currently as I can say when we look at EBITDA per ton would be the correct way to look at it. Because for example like you know, even though we are not reached the optimum level of you know, fuel and power utilization, but even now we are not more than 25 to 30% away from what they have achieved. Once we start achieving the results with the high, very low correct fuel and power consumption, our EBITDA would be almost equivalent to what other southwest industries will be doing.
So when we say the cost of materials, it could be little. I mean these figures have to be checked on where they’re arriving from. But EBITDA per turn would be the most correct statistics to go with.
Unidentified Participant
Okay, so do we have a limestone mine like on lease or we are buying from ad hoc price, something like this. So that is because most of the other competitors are having the secured limestone their own mind. So they mine and they use it as a raw material. So how about us? Are we buying limestone from outside through third party or some related party from our promoters company, something like that.
Venkatesh H. Katwa
So the company has around 300 acres of mining lease given by the government of Karnataka. However, there is a dispute on the ownership of the land which the matter has gone to the supreme court. Till that is resolved, we are purchasing limestone from locally. And one very good thing to tell you is we are the only buyers of limestone in that area. So all the limestone mine owners there is, there are a couple of other plants who have their own captive mining. Since we are the only buyers, we tend to have a better pricing. And of course the, compared to captive, the pricing is a little higher.
But then the limestone itself does not contribute significant cost. Typically limestone by quantity, it consumes almost 95% of the volume. But by cost is about 15 to 16%. So compared to other cement plants, you know, they have almost 20 to 30% price advantage compared to us. So which means that if 15% is what we are dealing with, they will, their cost will come down to around 10 to 11%.
Unidentified Participant
Okay, my, my second question is. So we need to ramp up to 100% to see how our new plant able to do it. So I understood that next four quarters we would be taking for a slow ramp up. Are we seeing any technical glitches to ramp up or we. So far we are good and we have a full support from our suppliers. Do you give some insight on our ramp up plan?
Venkatesh H. Katwa
So no, we definitely have an excellent support from our suppliers. But again, like you know, cement plant, hardcore machinery, hardcore metals everywhere. For example, kiln, even though we expected kiln did not give any mechanical problems. But then, you know, since the balance equipment was not ready yet, the fuel consumption was little higher. So since the balance equipment is getting ready by the end of, by you know, by this month or maximum, by Next month. So then we would be able to see kiln performing at the levels what the suppliers have promised us and given the guarantees at this point in time.
So as such we don’t see any hiccup right now. Whatever issues we had, 99% of it, we are already through it. In fact our project got delayed for a certain period of time due to a lot of other issues. But we have overcome all of them right now. And we are at the cusp of, you know, completely closing and putting the plant in operations on 100% main part of the plant. Lekin has already been ready and commissioned. The little smaller things here and there will be hooked up as we move along.
Unidentified Participant
Okay, my last question. So I understand our management have a. A good gesture against the future generations. So we are running on renewable energy. I I totally appreciate on this for our future considering future generation wellness. So what would be our estimated capacity by a financial year 20, 30. So five years from now can we see solar capacity as a main business of ours? Some any vision or any brainstorming happened on this with management? Can you give some insight? I don’t hold based on the numbers what you give now but I just want to see management vision and the renewable capacity.
Venkatesh H. Katwa
Absolutely. So this is what a management overall thinks. You know it is like it is still in the close boardroom discussion. But yes, I think our schedule should be privy to such information which is help them. So typically what a management thinks is management is capable in two things. Very good. One is cement. Another is establishing solar renewable power. And you know we have necessary experience. So what we believe in is even though we are building new solar capacities for captive consumptions. But solar industry itself, the renewable power itself has a very high. You know, it has got a good future mainly because of a couple of things.
One, eventually solar would be the only way you could produce the cheaper hydrogen. And it appears that hydrogen could be one of the fuel in futuristic India. If we have to go for non fossil based or oil based fuel for our vehicles and other things. So that is one direction what management feels is a good direction. And RMC because having setting up, you know multiple RMCs across North Karnataka, South Maharashtra or multiple RMCs would mean that we would stop eventually selling cement but selling only rmcs. What it gives is, you know, it typically eliminates most of the middlemen and we reach out to the customer directly where net realization available for the plant will be higher.
And with the rmcs what happens is your technically top line will go extremely high. Even if there’s a small EBITDA generated from as a percentage from RMC. But because of very high turnover, those EBITDA, absolute EBITDAs also are going to be very significant. So overall that’s the direction what management things should go. But again this is like you really rightly mentioned, it is still in the closed doors. We are still not very sure that this is the right strategy or this is the final strategy to go with. But that’s the direction what management is thinking right now for next five years.
Unidentified Participant
Thank you Mr. Vantes. Thank you Korean advisor for giving me opportunity. I wish you all the success. Thank you.
Venkatesh H. Katwa
Thanks a lot. K. Thank you.
Tejas Vaity
Next question please Investors. If you have any further questions kindly raise your hand or you can also drop your questions in the chat box. Venkatesh, I think we have covered all the questions. If there are no further questions, can we conclude the meeting?
Venkatesh H. Katwa
Yes, I would like to just take a formal formally. I would like to thank you all the investors and all those who have question, asked the questions and have participated. It was a great opportunity and thank you for everything.
Tejas Vaity
Thank you. Thank you everyone for your time and participation. If there are any further questions, kindly reach out to us at Research Advisors. Thank you Venkatesh. Thank you Vikasa. Thank you Arshil. Thank you everyone.
Venkatesh H. Katwa
Thank you.
Tejas Vaity
Have a great day ahead.