The Ramco Cements Limited (RAMCOCEM) Q2 FY23 Earnings Concall Transcript

The Ramco Cements Limited (NSE:RAMCOCEM)Q2 FY23 Earnings Concall dated Nov. 09, 2022

Corporate Participants:

Shri P.A.C. Ramasamy Raja — Founder

Analysts:

Amit Wassa — Batlivala & Karani Securities India Private Limited. — Analyst

Lantana — Dolat Capital — Analyst

Nitin Marra — Axis Mutual Fund — Analyst

Ben — Individual Investor — Analyst

Ritesh Shah — Investec — Analyst

Amit Murarka — Max Capital. — Analyst

Pratik Kumar — Pratik Kumar — Analyst

Sumangal Narita — Sumangal Narita — Analyst

Rajesh Kumar Ravi — HDFC Securities. — Analyst

Sudeep Jain — Ambit Capital — Analyst

Sanjay Nandi — Ratnabali Investment Private Limited — Analyst

Hiten Boricha — Joint Aptar. — Analyst

Kamlesh Bagmar — Lotus Asset Managers — Analyst

Pawan Shah — Dolat Capital — Analyst

Game Shah — MK Global — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Ramco mans Q2 FY 21 Earnings Conference Call hosted by Batlivala & Karani Securities India Private Limited.

I now hand the conference over to Mr. Amit Wassa from Balgowan Karani Securities India Private Limited. Thank you, and over to you, sir.

Amit Wassa — Batlivala & Karani Securities India Private Limited. — Analyst

CThank you. Good afternoon, everyone. On behalf of B&K Securities, we welcome you all to the 2Q FY 21 Earnings Conference Call with the management of the entities. We have with us from the management, Mr. Raja, can you Mr. Avi Damasio, CEO; and Mr. Visentin, CFO.

We would like to start the call with the opening remarks from the name, which will be followed by Q&A. Over to you, sir.

Shri P.A.C. Ramasamy Raja — Founder

Good evening, everybody, and I warmly welcome you all to the earnings call of Ramco Simon to discuss unaudited results of our Q2 FY 23. Thank you for taking the time to join us for this call. And Im sure all of you have already seen our results, and Id like to highlight a few of our performance. Well start with the highlights of our performance. the second quarter. Our revenue increased year-on-year from INR1,500 crores to INR1,700 crores for the quarter ended financial year has dropped year-on-year from INR402 crores to INR193 crores. And EBITDA per tone stood at 582 tones, which is one of the lowest in the last eight years. Profit after tax stood at INR11 crores during the quarter. The main reason for the drop in profitability in the quarter is due to the margin pressure you drop in clin prices amid higher fuel prices. The business environment continues to be uncertain due to rapidly changing economic environment in view of prevailing stress in geopolitical situation across the globe. This has put a strain on the fuel cost due to its high volatility.

Usually, the short-term visibility of the business appear are much more clear. But this time, it is the other way around. The situation may continue for a few quarters, considering the prevailing uncertainties. However, we are optimistic about long-term prospects and opportunities in this business. In spite of all such challenges, we continue to keep our focus, form on critical business parameters, such as improvement of EBITDA per ton premiumization of our products, productivity increase, pricing and a lot of emphasis on R&D. — and completion of all our capacity expansions, which we had initiated before for the challenging times started. We are more committed to continue our good efforts to do a much better job going forward. Now let me give you a market finer and outlook. The current demand for cement is good. in the individual house builder markets as well as the Infrastructure segment, thanks to improving economic activities after the pandemic amid easing of supply chain bottlenecks. The resilience of cement demand in the medium term is also encouraging in view of promising factors like good monsoon, good water levels in the retail focus on intra-stent by the government and upcoming elections.

Having said that, with the continuing consolidation of the semi industry, coupled with increased addition of fresh capacity could lead to increased appetite for market share among players which may put pressure on margins in the near future, especially due to the uncertainty in fuel prices. Though there was some spike in the spot CIF prices of pet core in August and September, the spot prices, again, sharply increased in October 22. Any further surge at coal prices could affect margins adversely in coming quarters. The continuing volit in fuel prices, faster rope depreciation, odin interest rates are worrisome factors. We remain watchful on these parameters. Now let me also give you the status update of our expansion plan. The greenfield Sun plant in Kolimigundla, Kabul district with a capacity of 1.5 million tonnes per cement grinding commenced commercial production on September 22. The Honorable Chief Minister of AP CYS TegnMorganbety inaugurated the operations of the unit. The modernization of our Rader plant will be commissioned before March 23.

With regard to expansion of dry motor capacity two units of Tamandare ready for commissioning and market prices for products are in progress. The remaining units in AP and will be commissioned during the financial year 2022, 24. The companys proposal to increase the grinding capacity of high Garant in Orissa by 0.9 million tonnes per annum at a cost of only INR130 to INR130 crores in other infrastructure — since other infrastructures are already in place, thereby doubling its capacity to 1.8 million tonnes per annum. During the current quarter, the company has incurred INR500 crores towards CapEx. The companys net debt as on 392 is INR4,700 crores. The average cost of interest borrowing for the current quarter has increased to 6.42% from 5.47% corresponding previous quarter. This is a brief update on the performance this quarter and the situation of the company.

We are now open to take your questions. Thank you very much.

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, we will now begin with the question-and-answer session. [Operator Instructions] Ladies and gentlemen, we will wait for a moment. The first question from the Lantana from Dolat Capital. Please go ahead.

Lantana — Dolat Capital — Analyst

Yes. Thank you. Sir, before asking questions on operational aspect, I want to first understand on the date and the CapEx front. So the date in the last six months has increased by close to INR900 or INR2,000-odd crores — and now this year also we are planning to do a CapEx of INR1,717 crores, and next year also — the CapEx will be INR82-odd crores. So how do we, first of all, why are such a significant increase in CapEx in this year because last quarter, we guided a

Amit Wassa — Batlivala & Karani Securities India Private Limited. — Analyst

The capacity has gone up because. In the Kabul plant, even for second line, we made a thin prepare work we have done that. so that the when we put up the second plant, the cost of particularly the time will be very, very cheap. Taforexample, Orissa, although first line cost at around INR700 crores, the second 1 million ton crores. So were putting up the second line, we thought that many of the silos, many of the common facilities created Navitself. — so that we can second for the second line, since Sunday GCs in place, well take the second line, we want to have the commissioning time very less, and we can go for the production DNase main reason. And the increase in this one, okay. The last two quarters, the cash still affected on account of cost increase, which we are not unexpected. And the period in fourth quarter, the third quarter, definitely, we expect a good cash flow fourth quarter rate. So there may not be a significant increase in — increase in borrowing in the third and fourth quarter.

Lantana — Dolat Capital — Analyst

Okay. So broadly, we can see the same level of-

Shri P.A.C. Ramasamy Raja — Founder

Looking also has gone up because for the same volume of pet coke, price here to — the working capital also gone up because of the increase in barren volume.

Lantana — Dolat Capital — Analyst

So we broadly expect the current INR4,700 crores net debt to remain by end of March?

Amit Wassa — Batlivala & Karani Securities India Private Limited. — Analyst

Yes, yes.

Lantana — Dolat Capital — Analyst

Okay. Second, on the Odisha 0.9, the new one that we have said today, — when the commissioning will be there, COD will be expected by?

Shri P.A.C. Ramasamy Raja — Founder

The next 12 months from now? Yes, we want to commission before nine months because already people were keeping commenced and also we are placed orders for the time and the nine to 12 months it will be commissioned.

Lantana — Dolat Capital — Analyst

Okay. So

Shri P.A.C. Ramasamy Raja — Founder

Now on the coming of the equipment, all other infrastructure available. That is why we are confident were telling we can come in in nine to 12 months.

Lantana — Dolat Capital — Analyst

Okay. Okay. Now on the operational aspects, first, in terms of the pricing. So post September where and how much, if you can specify in terms of the state-wise how much price increase we have taken?

Shri P.A.C. Ramasamy Raja — Founder

See, cobot price has gone up by almost INR15 to INR20 in the month of October. November also we we announced some price increase, but we are ready to see the market. On the base, theres no price increase in the month of October. — is a price increase of INR25 to INR30. Now another INR15 increase in Mananda. Samantha increased the price by INR20, INR25, and they increase the price by INR5 10 now. risa the prices are already very bad, and we increased the price by 10, 5. The prices were in the month of October was 170 to 275. So in the month of October, the increase price by 40, 50, but only INR10 crores to INR50 are able to hold. Again, Im telling the price. You have to — when you see the related reduced the GST portion. We banglalso the price is around 30 — in the month of September, the month of October 10 to 15 is we are able to increase the price. Now we are attempting other patients except INR10.

Lantana — Dolat Capital — Analyst

Okay. Good to hear that — so now on the costing front, how do notes India — no issues. Thank you.

Operator

Ladies and gentlemen, in order to ensure the management to be able to address questions from all participants in this conference. [Operator Instructions] The next question is from the line of Nitin Marra from Axis Mutual Fund. Please go ahead.

Nitin Marra — Axis Mutual Fund — Analyst

Hi, Sir. So just coming — going back to the CapEx increase, if I remember or

Operator

Wrap Mr. or, we are not able to hear you clearly.

Nitin Marra — Axis Mutual Fund — Analyst

We can hear. Are you got to hear me now?

Amit Wassa — Batlivala & Karani Securities India Private Limited. — Analyst

Yes, we can hear you.

Nitin Marra — Axis Mutual Fund — Analyst

Thank you.

Shri P.A.C. Ramasamy Raja — Founder

Yes. So sir, just on the CapEx part, you gave your reasoning of property work at Kurnool, — but Q4 — we guided for some INR700 crores. Last Q1 call, you said that, okay, let me take the CapEx higher to EUR900 million 500. And then you double that CapEx because of the prepared work youve done at the Kuruplant. But Im assuming these forecast what you do would not be a function of 15, 20 days decision, right? I mean, that prepared to work or whether the Kanul has to expand, you would have taken that call six months back.Can you explain

Operator

Because increase — you should also be very sarcastic when the questions should also ask efiles not picking it because has not gone up. so in what keeps going on. immediately the toil go ahead with some other work because, okay, we have to see, okay, when the competition is picking up when others are consolidating has also consulted in a little faster rather than we operate to slow. So those do that we dont know how to plan it. We also have good plans on all these things. sometimes, okay, when the big players are coming, we should also prefer to face the challenges.

Nitin Marra — Axis Mutual Fund — Analyst

Sir, my question is not on the planning. What Im trying to ask you is that competition will further increase, right? In our industry, competition never goes down, right? As you always told us and we have learned from you that competition is something will always be there in the system. I need to work on the viability of the project. Now even you talked about Maharashtra expansion. So would that come in next quarter announcement? Or how we should look at it that this is the Sandrosan number?

Shri P.A.C. Ramasamy Raja — Founder

Mahara expansion, whenever you find that will come for example, risan told you before because it would be financed with board before that I can for you. I can also understand that, okay, I can inform you people unless it is approval board also based on the Boards approval on a particular date, I can use the CapEx plan. Okay. When today I bored a sofa, please go ahead because they were putting on hold for Kalestmarket. Now the demand is growth seen first quarter, weve grown by 40% to 21%. Second quarter also, we have shown on the highest growth — and rate achieved 100% capacity in there is a good demand for our product. So today, more sales, if we dont wait, please go ahead with the project. then I have included that means, okay, the trialed given as the contractors and are we think that will come only now. Only after that only had I can report before that, I cant report — so you would also appreciate certain things. I cant say certain things without a proud on my board also. And remember my Board approves my Makara project or my anatase

Nitin Marra — Axis Mutual Fund — Analyst

I got your answer, sir. Can I go for the second question?

Shri P.A.C. Ramasamy Raja — Founder

Yes.

Nitin Marra — Axis Mutual Fund — Analyst

Sir, what is the primary reason for the working capital increase — because I remember whether in the last two quarters, you were saying that you had inventory of low fuel cost, cost would not hit us so much as compared to the industry the coroner quarter?

Shri P.A.C. Ramasamy Raja — Founder

Yes. No, yes, it to, we were having very low inventory this one. Now the late uncertainties are coming up, so I have built up by inventory. See, for example, when the prices were a little it downward trends, we thought we can wait some more time. See, for example, see the prices were $190 then suddenly drops to $160. Then last week, again gone up to $85. So we dont know what is going to be priced. — means depending upon their dynamics, then I have to see whether you build up the stack and how to build up the stock also. Got it. And other thing normally we source not a bit sorry. I will just say complete, Normally, we source or a Petoro BPCL. PPC was going for major stator one month. So I have to build up the inventory in an up to the month of September because they are going for one month on

Operator

Mr. Arora, you done with the question.

Nitin Marra — Axis Mutual Fund — Analyst

Yes, question

Operator

The next question is from the line of Ben an Individual Investor.Please go ahead.

Ben — Individual Investor — Analyst

Hi, sir. Thank you. Can you hear me?

Amit Wassa — Batlivala & Karani Securities India Private Limited. — Analyst

Yes.

Ben — Individual Investor — Analyst

Thank you sir for the opportunity. My question is for the Chairman. Sir, first, I would like to highlight that Im a very old investor in Ramco Cement, and I have immense respect for sir, what you and Mr. Ed have done in creating shareholder wealth in this company for the last decade. Sir, having said that, however, if I look into the last couple of years, I have noticed that sir, we, as a group, have taken a huge debt, be it Rajapalal, which has nearly INR1,000-odd crores net debt, Ramore — and now even Ramco Cements, I think is at its all-time high debt of INR4,700 crores. So sir, given the situation of our group, and we all know that Ramco Cement is really the cash cow in this entire group. So having given this background, I wanted to know that as a group, how are we going to manage this challenge of high tech — and as a shareholder of Ramco Sigma, I wanted, sir, complete assurance from your end that the cash cow, which is Ramco Simen, we dont we used the funds only to deleverage Aramco Cement and to take care of the CapEx and not if possible, not use it in other way. That is my first question, sir.

Amit Wassa — Batlivala & Karani Securities India Private Limited. — Analyst

Yes, we wont use this any others. We dont do that.

Ben — Individual Investor — Analyst

Okay. Okay. Sir, my next question is regarding two of our associates. So I was just going through today, this related party transaction has come out. So there is this Madura and carrier — now I see we have spent almost INR36 crores, which is huge in first half of 23. So I want you to understand why is this such a large number? And what is the spend for a service are we take you

Shri P.A.C. Ramasamy Raja — Founder

My team schedules. We are wanting two air crops, and they were owning on helicopter also we used to hire them. Okay, and reduce higher them.The now on helicopter on the aircraft resident sold, that the aircraft we are owning along with some other entity also, not only in Acocement, we are sharing that facility with summer entity also.

Ben — Individual Investor — Analyst

So sir, this INR36 crores that we have spent this year, like for the full year, we have any figure, because like our quarterly, this quarter, PAT is INR12 crores, and youve spent almost INR36 crores here. So is this part of core operating business? Or what is it? And if you can control this time?

Shri P.A.C. Ramasamy Raja — Founder

Or to that the expense will be controlled.

Ben — Individual Investor — Analyst

Okay. Sure.

Amit Wassa — Batlivala & Karani Securities India Private Limited. — Analyst

Expense

Ben — Individual Investor — Analyst

Lastly, sir, there is Ramco Shipmans associate linked logistics, I — there is not much information about what this company does. But just if I go through the annual report last year, it made a INR20 crores loss. And this year, almost INR36 crores loss. So what is the strategy here? And like what exactly is the business that we are trying to do? And how will FY 23 turn out to be for this associate? Thank you.

Shri P.A.C. Ramasamy Raja — Founder

See, the company was originally started by Mr. in for last mile delivery. Then okay, while doing that business, where were doing the business, we are able to understand that, okay, the model should be a little bit different, and theres no big scope for that last month, but we have a lot of learnings from that business. Now we are doing e-commerce this one tech-based distribution system for the Cranston brands. that we are connecting the brands to the Grana stores. So most normally the brands all FMCG brands, normally they deal with small distributor to have some localized for example, take can I maybe tenor maybe on area, Milara small area, they were distributors and their two exclusive distributors. Now what link has then they have taken distribution almost for 25 competing brands, and they have almond facility, and they also take this for the distribution of Tarana stores. So they buy goods, store goods, also deliver goods and and correct payments from them. That is the business they are doing now. So now they are doing around INR600 crores turnover per annum.

Ben — Individual Investor — Analyst

Okay. Sir, just last, my statement, not a question, sir, I am an investor in Ramco Cement, and I understand Cements business. Now this new logistics is in completely some unrelated business and its making losses and the losses are just growing. So if we can take some decision of in keeping in mind the shareholder would be really appreciated. That

Shri P.A.C. Ramasamy Raja — Founder

Last 1 year, theres no investment for Oncocement. Sure. whatever investment was made a year before last year, theres no investment from Rampacement.

Ben — Individual Investor — Analyst

Thats comforting. — sir, thats really comforting. Thank you, and all the best, sir.

Shri P.A.C. Ramasamy Raja — Founder

Thank you.

Operator

Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead.

Ritesh Shah — Investec — Analyst

Question

Operator

A, theres a lot of static from your line. No, sir. Your audio is not clear.

Ritesh Shah — Investec — Analyst

That?

Operator

No, sir. Can you request that you return to the question queue? Thank you. The next question is from the line of Amit Murarka of Max Capital. Please go ahead.

Amit Murarka — Max Capital. — Analyst

Good evening. Thanks for the opportunity. Regarding the Orissa geo expansion, while like while is appreciated, there is a low-cost expansion. I was just wondering about the rationale for the same because a couple of quarters back, actually, you were saying that East is not making much money. And even now, I dont think the situation is too different, particularly with new capacities coming in. So what are the thoughts around further expansion into East India?

Shri P.A.C. Ramasamy Raja — Founder

I told you its not making much money comfort to south. I never told you thats not making money at all. See, definitely for the expansion for being the bigger block limestone in depth to use that, definitely, we have to be in the Houston market. And the nearest market is worse, we have to be there for us to grow. So we are seeing how to reduce the cost and increase the profitable there, we are making all the efforts — so now almost we achieved 100% capacity in Oita plant and also a lot of inquiries for our new products there, mainly from the infrastructure projects. So that is why we are embarking upon this expansion.

Amit Murarka — Max Capital. — Analyst

Understood. And

Shri P.A.C. Ramasamy Raja — Founder

To be a profitable out market, but still it is portable. Were not incurring loss.

Amit Murarka — Max Capital. — Analyst

Got it. And also in your presentation, there is a comment that you moved some clinker from Andra to the Cabana plant. So this is only a short-term arrangement, right?

Shri P.A.C. Ramasamy Raja — Founder

Yes, I really on time. And just on maintenance of two plants at x because if you see last two quarters, almost we achieved 100% capacity is in the existing plants. So we have taken the maintenance at the same time, we had to take the meters of two plants. So we dont want Rosemarket share in Tamnar in Kerala. So we had to transfer in from Matador.

Amit Murarka — Max Capital. — Analyst

Got it. Got it. And also for you, could you provide any update on the auction, the limestone auctions in Taber?

Shri P.A.C. Ramasamy Raja — Founder

There is put on hold.

Amit Murarka — Max Capital. — Analyst

Okay. Any idea by when will it be revised on a

Shri P.A.C. Ramasamy Raja — Founder

Again, no idea, I dont know idea. We had to wait theyll publish in the MCare waiting for the government announcements.

Amit Murarka — Max Capital. — Analyst

Okay, sir. Thank you.

Operator

Thank you. The next question is from the line of Pratik Kumar from Jefferies. Please go ahead.

Pratik Kumar — Pratik Kumar — Analyst

My question is on your fuel cost. So based on data on your presentation in second quarter this quarter, basically, we have realized $199 last quarter, we said $178. And in fourth quarter 22, we also said $199. So actually, versus fourth quarter 22, our fuel cost has sort of not increased. — but our like-for-like foreign fuel cost looks INR500 higher at least.

Amit Wassa — Batlivala & Karani Securities India Private Limited. — Analyst

So theres a disconnect here

Shri P.A.C. Ramasamy Raja — Founder

Sorry, sir, can you repeat? Can you repeat?

Pratik Kumar — Pratik Kumar — Analyst

So based on data on your presentation, where you talk about magnet fuel consumption per tonne of material during the quarter, during last quarter and every quarter we give this data. So in current quarter, we have given that as $199 last quarter, we gave that number at 175-odd

Shri P.A.C. Ramasamy Raja — Founder

164

Pratik Kumar — Pratik Kumar — Analyst

Sorry.

Shri P.A.C. Ramasamy Raja — Founder

Only does 164 million. Q2 is EUR199 million

Pratik Kumar — Pratik Kumar — Analyst

Okay. Your presentation suggest still something else. So Q1, Q2, it said INR199 in Q1 it said INR174 178 in

Shri P.A.C. Ramasamy Raja — Founder

No,

Pratik Kumar — Pratik Kumar — Analyst

You said INR199.

Shri P.A.C. Ramasamy Raja — Founder

On to that. Q1 is 164 — and Q2 is okay. 81, we have told 181. 164, Q2 is 1.99.

Pratik Kumar — Pratik Kumar — Analyst

How about Q4 last year in number Q4 last year and Okay.

Amit Wassa — Batlivala & Karani Securities India Private Limited. — Analyst

Just let you know. We dont have it readily with us, yes. Yes, on

Shri P.A.C. Ramasamy Raja — Founder

Okay. Right now, I dont have

Amit Wassa — Batlivala & Karani Securities India Private Limited. — Analyst

But last year, half early, as we cedulas year, Q2 was $97 million

Pratik Kumar — Pratik Kumar — Analyst

Sure. Im also asking this because last quarter, we said that in next

Shri P.A.C. Ramasamy Raja — Founder

Before end up the call.

Pratik Kumar — Pratik Kumar — Analyst

Yes. So in first quarter call, we said that power and fuel cost is like sort of a contained versus peer thing what was mentioned earlier in this call also. And you are expecting around 5% to 6% kind of inflation in 2Q, while our 2 inflation themes

Shri P.A.C. Ramasamy Raja — Founder

Expectation. But unfortunately, lets say so much as there is a problem. That is why even my this one, my last pucca was $150,000. Now were again down up to only 88 in the matter of 25 days.

Pratik Kumar — Pratik Kumar — Analyst

No for 2Q expectations, you talked about fuel inflation halfway through

Shri P.A.C. Ramasamy Raja — Founder

Yes, yes, because we dont — I dont know more than a thing I was saying to Yes, I have only to todays talk. — also, we changed the feel mix depending upon availability and also went on to consult certain Petco and in between by the coal agent trade.

Pratik Kumar — Pratik Kumar — Analyst

Okay. And so moving forward, is this $199, which we have realized in this current quarter, how should we expect it based on current set of inventory

Shri P.A.C. Ramasamy Raja — Founder

Come on by $10, $15, but Q4, again, will go up by $99

Pratik Kumar — Pratik Kumar — Analyst

Okay.

Shri P.A.C. Ramasamy Raja — Founder

Come down. Q4 again will go up. There is the current trend come today. Tomorrow it can change

Pratik Kumar — Pratik Kumar — Analyst

My second question is on CapEx. So we have — while we completed this CapEx of a new unit, we have closed this CapEx probably a INR3,000 crores which first of all, is this INR3,000 crores gain — or is this still like sort of ongoing the INR3,000 crores of CapEx, which we are like

Shri P.A.C. Ramasamy Raja — Founder

There is a maximum anticom because there is a nice moment to go still is ongoing, but they do not exceed that amount. — because were projecting first projected that were going for it, then we have gone for Temetrant also. See a lot of ongoing — this one we are going on increasing our scope of work also — and the license to the INR2,000 crores Unfortunately, what is happening. The steel price has also gone up too steeply.

Pratik Kumar — Pratik Kumar — Analyst

All right.

Shri P.A.C. Ramasamy Raja — Founder

Now it is coming down. So to the extent, there will be some savings also

Pratik Kumar — Pratik Kumar — Analyst

Okay. So this expansion is

Operator

Mr. Kumar for me, we recall that you return to the question queue.

Pratik Kumar — Pratik Kumar — Analyst

Sure. Thank you.

Operator

Thank you. The next question is from the line of Sumangal Narita from Kotak Securities.

Sumangal Narita — Sumangal Narita — Analyst

Good evening and thanks for the opportunity. The first question is more on the medium-term outlook on our capacity. three years to five years down the line? I mean what is the ambition in terms of increasing the strategy from 20 22 million tonnes — and the second question is on the debt side. I mean what is the comfort level of debt at absolute and in terms of leverage, I mean do we expect next one or two years to focus on deleveraging and reduce to some compatible level? Or we continue to go expansion plan or growth plan

Shri P.A.C. Ramasamy Raja — Founder

See, first of all, these six months, definitely, our gas log has been affected by INR400 crores to INR500 crores. So that really made you to be uncomfortable because they get an otherwise or whatever I committed are made to me that our commitment to number one. Number two, for example, Orange project also, we have taken one ahead of the deal because we thought since our sensor can project a little delayed, the money we can make up by saving in R&R projects that even we have taken it late up the cities always, we wanted to take up only 6 months or only a net. So they also be taken ahead of the schedule. Yes, as far as 22, 23 is concerned, definitely, we are expecting 25% to 30% growth definitely. Sasan today, our growth is around 3% and the year-end definitely maintain 8% growth.

And the further expansion the first year, then next year also, Im expecting 33% growth. The next year, we will review, and we have many expansion programs on the drawing board. — depending upon the cash flow, depending upon dedicate ratio, dividend patient will define. And whenever Board approves them, we will form this. Okay. otherwise, we have not expensive program, just to be here on the drying board. But we dont want to announce you can again we have a concern on leverage. Then there will be the argument to go on for selling that, okay, how youre going to fund it these things. So whenever cash present improves — but definitely, we take the approach on the port, and we will inform you.

Sumangal Narita — Sumangal Narita — Analyst

So sir, any level which we are looking where we can again resume and expansion plan

Shri P.A.C. Ramasamy Raja — Founder

This is – Level. This is the maximum we are looking at the comfortable level. So in 2010, we had almost INR3,000 crores, INR302 crores borrowing, but the capacity is 1 million tons. — and successfully were able to make Grodetcompany in 2014, 15. So that is not — is not very alarming. At the same time, okay, now because of uncertainties, we have to be to careful

Sumangal Narita — Sumangal Narita — Analyst

Okay. And sir, again, in terms of the medium-term expansion plans, I mean, what are the new regions we could enter? Or is it more will be consolidation and expansion in our existing regions

Shri P.A.C. Ramasamy Raja — Founder

We have seen a lot of opportunities because now the infrastructure is a lot of spending is there, we are able to feed that market previously, we used to concentrate only on trade now a little bit aggressive in nontrade also infrastructure project. Also Kannada also did a lot of scope. The infrastructure is so because it is to take care of our expansion. — whatever growth we wanted that the infrastructure will be free, they are definitely we can market that.

Sumangal Narita — Sumangal Narita — Analyst

Got it, sir. Thank you and all the best.

Shri P.A.C. Ramasamy Raja — Founder

Thank you.

Operator

Thank you. The next question is from the line of Rajesh Kumar Ravi from HDFC Securities.

Rajesh Kumar Ravi — HDFC Securities. — Analyst

Hi, sir. Good evening.

Shri P.A.C. Ramasamy Raja — Founder

Somebody asked about the eco prices, as I tell you, consumption, Q1 was $85, Q2 was $97. Q3 was 149 million 199. Again, this year, Q1 was INR164 Q2 99 — this the consumption rate. Okay. Sorry, you can proceed to questions.

Rajesh Kumar Ravi — HDFC Securities. — Analyst

Hi, sir. While you mentioned the blended fuel cost on a parter basis, I believe you want to first look at this number may vary significantly because of the different calorific mix — so would it be prudent if you could share what was the fuel cost on a per kilo cal footprint.

Shri P.A.C. Ramasamy Raja — Founder

It will be around INR2 — now on today is around INR220 basis

Rajesh Kumar Ravi — HDFC Securities. — Analyst

So in second quarter, what was the costing you incurred on a per kilo car?

Shri P.A.C. Ramasamy Raja — Founder

So the thing aniline was around INR20

Rajesh Kumar Ravi — HDFC Securities. — Analyst

So Q2 and how like

Shri P.A.C. Ramasamy Raja — Founder

Second half — it will be around 2.7% would be on

Rajesh Kumar Ravi — HDFC Securities. — Analyst

And Q1 and what was the number

Shri P.A.C. Ramasamy Raja — Founder

To INR265

Rajesh Kumar Ravi — HDFC Securities. — Analyst

60s?

Shri P.A.C. Ramasamy Raja — Founder

Yes.

Rajesh Kumar Ravi — HDFC Securities. — Analyst

So why this is confusing to most of us, sir? Because from 26%

Shri P.A.C. Ramasamy Raja — Founder

This all depends upon petcoke and the coal also. We use payroll also alternate, we are also deepening upon today percentage.

Rajesh Kumar Ravi — HDFC Securities. — Analyst

Believe what Im saying is from INR260 per kilocal on consumption basis. So from INR260 to 270, there is hardly any jump while if I see — if you see the input cost or the it is almost gone up by INR400 crores to INR500 quarter-on-quarter, which has dented the numbers. So how do we explain this? Because if it was from 2.2% to 2.7% — how do we reconcile this on a because

Amit Wassa — Batlivala & Karani Securities India Private Limited. — Analyst

Give you the accurate figures a little later. Sure.

Shri P.A.C. Ramasamy Raja — Founder

Because things were a consumption Im giving. Of course, all depends upon the order fuel youre using that also makes a difference.

Rajesh Kumar Ravi — HDFC Securities. — Analyst

But Im asking on the blended total consumption on a circular calm.

Shri P.A.C. Ramasamy Raja — Founder

What I give to you is whatever the cost of merit Ive given to you. What is the 19 or the cost of check a given to you

Rajesh Kumar Ravi — HDFC Securities. — Analyst

But that is not the blended fuel cost, right? Thats only your petrol costs.

Shri P.A.C. Ramasamy Raja — Founder

Yes. Yes.

Rajesh Kumar Ravi — HDFC Securities. — Analyst

Which makes this changing every quarter because the market is volatile when youre optimizing your less

Shri P.A.C. Ramasamy Raja — Founder

Okay. I give you the details,

Rajesh Kumar Ravi — HDFC Securities. — Analyst

For next question pertains to the CapEx number, probably, if I missed it in your earlier remarks, — just if you look in Q1, your estimate for FY 23 CapEx between now this business

Shri P.A.C. Ramasamy Raja — Founder

But

Rajesh Kumar Ravi — HDFC Securities. — Analyst

There are no period in the CapEx plan, barring the refi expansion will come up next year and cost will be incurred in for that next year. So what has led to this INR800 crores, INR900 crores increase in the CapEx number versus Q1 ST?

Shri P.A.C. Ramasamy Raja — Founder

See, based on whatever Board approved, what is — whatever the Board approved in you — what CapEx car youre asking?

Rajesh Kumar Ravi — HDFC Securities. — Analyst

No, no. CapEx amount for FY 23 during Q1, the guidance was between INR600 crores to INR900 crores for FY 23. Now if we look at the detailed presentation where you have mentioned

Shri P.A.C. Ramasamy Raja — Founder

Was not imported. Limestone purification pipeline and a starting on 29. Yes, the then Board is not approved back end after that board has approved certain CapEx for the year. water I can give you the guidance.

Rajesh Kumar Ravi — HDFC Securities. — Analyst

Sorry, if I missed it, Re is already an ongoing project, which was announced early, right?

Shri P.A.C. Ramasamy Raja — Founder

No, but, no, no, not ran money spent was not there apart from the limestone dedification plant was not included at that time. Now my limestone belifcation plant is also now we are going ahead.

Rajesh Kumar Ravi — HDFC Securities. — Analyst

Okay. And on — you mentioned that on the live side, youre comfortable. So if I look at net debt to EBITDA is already at 4.7x

Shri P.A.C. Ramasamy Raja — Founder

Dont take this quarter, I cant take just on one quarter, I cant decide what is going to be my EBITDA. What was my EBITDA before I dont quarter dont be

Rajesh Kumar Ravi — HDFC Securities. — Analyst

Exactly at — so where Im coming from is that next two quarters, you are mentioning that the fuel inflation will remain sharp and elevated only you see youre looking at sharp colon and next quarter, it will again. So the earnings may remain impacted, and we will have a ramp-up costs also for the Four — so is that a

Shri P.A.C. Ramasamy Raja — Founder

Included already, we started producing ramp-up pace at input

Rajesh Kumar Ravi — HDFC Securities. — Analyst

But ramp-up in Q3, Q2 8, 10 days because Kulula commercialized on the back end of the quarter. So

Shri P.A.C. Ramasamy Raja — Founder

Rice started producing from June.

Rajesh Kumar Ravi — HDFC Securities. — Analyst

Okay. Okay. So the clinics-run citation cost inflationary impact is built into the numbers

Shri P.A.C. Ramasamy Raja — Founder

Yes.

Rajesh Kumar Ravi — HDFC Securities. — Analyst

Okay. Last question, if I may.

Operator

Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead.

Ritesh Shah — Investec — Analyst

Hi, sir. Am I audible now?

Shri P.A.C. Ramasamy Raja — Founder

Yes, youre radio.

Ritesh Shah — Investec — Analyst

Sir, two questions. First is power and fuel cost is definitely something which is beyond our control. But sir, if I had to ask you what are the variables that the company is focusing on when we can actually optimize on the cost. This can be any of the variables on the logistic costs or any other costs — and also on discount structure, like the large terminals have indicated that there are certain is on the discount structure to retain the GST benefit as part of the discounts where the companies cannot — is that a variable also that as a company, which is under our control, we can work on. So thats the first pet.

Shri P.A.C. Ramasamy Raja — Founder

See, whatever discounts we are giving that we are giving GST adjusted Okay. To that extent, we dont lose GST on discounts. We dont give any discounts outside GST.

Ritesh Shah — Investec — Analyst

Number one

Shri P.A.C. Ramasamy Raja — Founder

But if you see the other elements that turn since our capacity is rollup almost by 33% on the first six months, the very other element, a ton has come down.

Ritesh Shah — Investec — Analyst

Okay. So nothing on the large

Shri P.A.C. Ramasamy Raja — Founder

We are focusing on erelementbecase element on the element we are focusing — and even though we PitcoandRDtns are beyond our control, still we are able to source new stores what you have seen in peruse you are going to real people to source from new source, we are able to bring down the pet care cost in the entire not only for the entire country by $30, $40. — like that, we are also counting around, okay, what can be new sources so that we can bring them the cost.

Ritesh Shah — Investec — Analyst

Okay. Sure.

Shri P.A.C. Ramasamy Raja — Founder

Basically these people, you can see that who brought the new source of petcoke to the country.

Ritesh Shah — Investec — Analyst

Yes, yes. Sir, my second question is on capital allocation. During the call, you indicated a couple of reasons for going for incremental expansion. One was you indicated energy balance and hence, basically, we are announcing incremental Secondly, you indicated lower CapEx in term and third, you indicated that the change in market order where in a new guy here who is more aggressive Sir, basic question is basically when we are looking at growth, and you also indicated Maharashtra expansion potential scope over there. So the question is, what is the minimum hurdle rate minimum ROC that we look at then we are announcing any incremental CapEx

Shri P.A.C. Ramasamy Raja — Founder

Rare expecting many of 15% to 15%, sir?

Ritesh Shah — Investec — Analyst

This is post tax, sir?

Shri P.A.C. Ramasamy Raja — Founder

Yes.

Ritesh Shah — Investec — Analyst

Sir, then if I have to just remind a couple of years back and look at the situation one is there in Eastern India right now, do you think we are able to cover that? And if at all, we had to go into Mars Will we be able to cover up for 15%, 16% ROCE.

Shri P.A.C. Ramasamy Raja — Founder

When they started operations in Wisting, my profitability was much more than what we are used to get in a almost 7 years, we operated in a situation where my EBITDA per ton was much higher than what Im sitting in Antapite. So the situation can change at any time.

Ritesh Shah — Investec — Analyst

Okay.

Shri P.A.C. Ramasamy Raja — Founder

Dynamic Production bidding. We are still the lowest price, the car price is even lower than Karnataka or not a — now the prices are better than Canada. These are very dynamic based on 1 quarter or only we cant take the per be able to take the long term

Ritesh Shah — Investec — Analyst

I just wanted to squeeze one particular available. Sir, what Ive seen in all the expansion that we have, we do not have any fiscal incentives from the state government However, the competition also has that. So theyre always better equipped on ROC given pricing is there, cost is there, those variables are there, but they have a structural advantage over us when it comes to fiscal incentives. — any particular reason that why we have not been able to extend this out of state governments

Shri P.A.C. Ramasamy Raja — Founder

We are operating steps where we have developed states. For example, and industry wise, they are much deepen other states, they dont want to be intent. The same thing with on the publish also, they have some incentives we cant avail it at all. And Orissa Bengal, we are getting only grinding units. So for grinding binge may is on their benefits, but they about. — us, the cement banner in rate category, so they are not entitle for it. whereas Maire, Rajasthan, Sudan even Karnataka give some sell-side benefit. When we put the plant in Canada the entity for it. But in today, Im not getting the sense that we or anybody okay, based on only sell-side benefit, we cant put up the plant because sensible it is already the early part, it in particular read is not a liter.

Ritesh Shah — Investec — Analyst

Sure, sir. Thank you so much for the wish you good luck. Thank you.

Shri P.A.C. Ramasamy Raja — Founder

Thank you.

Operator

Thank you. The next question is from the line of Sudeep Jain from Ambit Capital.

Sudeep Jain — Ambit Capital — Analyst

Thank you for the opportunity. So a few couple of questions. On the detail — thank you for all the details on the CapEx. On that, there is a mention of CapEx for the limestone mine at GTP — can you please explain whats going on there? Is it the higher it

Shri P.A.C. Ramasamy Raja — Founder

In an some 8 square meters away from our plant, we got big mining as almost 100 million tonnes of limestone we got it. So now I entered into an agreement with prices that they be 50% concession for transport of limestone from mines to my factory. And there will be dedicated. I have already saying. So we have to create some biofacility some loading, unloading petites as mines also so that they are willing to 10 years of doing so at agreement. — so that it will be only 50%. — that will definitely reduce my largest ship cost in the long term. So what is the Again, this is a new CapEx, we are — we have gone ahead because the rays currently told that we are willing to consider and we are consistent.

Sudeep Jain — Ambit Capital — Analyst

Okay.

Shri P.A.C. Ramasamy Raja — Founder

So my cost of transportation milestone from the Bodowata mine, which is around 10 to 15 core meters away from this plant will be reduced.

Sudeep Jain — Ambit Capital — Analyst

Okay. Understood, sir. on the Karnataka on the, I guess the limestone book is so close to Bangalore, which is why it seems the land acquisition cost is so high, which is also reflected in the land acquisition that youre budgeting for the next 1.5 years. Is there a risk that the — given the location, the capital cost may end up being higher and is are good environmental approvals also being slightly more difficult given the location, it close to so close to a main city, which is somewhat rare for a cement plant in

Shri P.A.C. Ramasamy Raja — Founder

Its not near Bangalore, it is near an lines not yet an era — the it is the last area is over makers. Its not a grain unit, you say an integrated plant. So we would buy land for the mine safer for the factory, it will be over 2,000 to 3,000 acres we have to buy — and the capital cost, okay, well — there will — just we will plan very carefully, and well announce you.

Sudeep Jain — Ambit Capital — Analyst

Okay. Lastly, if I can squeeze one question on the the Go expansion that youre outlining for Prisa, I would imagine the clinker is between the integrated unit at Gentera, risa, Visa I would imagine there is no spare clinker in Gentera. Are you — would I be right in imagining that some of the spare clinker from Canon would be sent to Gentera for this? Or is there

Shri P.A.C. Ramasamy Raja — Founder

No, no, no, no. Canal will supply to some of the AP markets. Today, Jairam also suffering to some of the for example, is area. The rice to some plants. So those are definitely will be sending to a range will be sufficient.

Sudeep Jain — Ambit Capital — Analyst

So youre saying the star clinker at the NP program for the GU and risa, right?

Shri P.A.C. Ramasamy Raja — Founder

Yes.

Sudeep Jain — Ambit Capital — Analyst

Okay. Thank you.

Operator

Thank you. The next question is from the line of Sanjay Nandi from Ratnabali Investment Private Limited. Please go ahead.

Sanjay Nandi — Ratnabali Investment Private Limited — Analyst

Thank you for the opportunity, sir. Most questions answered. Thank you so much, sir.

Operator

The next question is from the line of Hiten Boricha from Joint Aptar. Please go ahead.

Hiten Boricha — Joint Aptar. — Analyst

Thank you for the opportunity, sir. Sir, my question is on the premium products specifically. So currently, in this quarter, we have about 25% of our sales from premium products. So just wanted to understand what is the total CapEx we have spent on this premium product? And what would be our revenue potential from this?

Shri P.A.C. Ramasamy Raja — Founder

Thank you for the opportunity, sir. Sir, my question is on the premium products specifically. So currently, in this quarter, we have about 25% of our sales from premium products. So just wanted to understand what is the total CapEx we have spent on this premium product? And what would be our revenue potential from this?

Hiten Boricha — Joint Aptar. — Analyst

30%, 35% of top line — it will be done in over next 2 to 3 years period, sir?

Shri P.A.C. Ramasamy Raja — Founder

Yes, is possible.

Hiten Boricha — Joint Aptar. — Analyst

Okay. Okay. I just wanted to understand on the asset of this CapEx

Shri P.A.C. Ramasamy Raja — Founder

See, more than the asset turnover, give us see the brand image. — nobody is having a security of cement for different applications. That gives us data for mileage in the brand — and so that is why our growth is much faster than other companies also.

Hiten Boricha — Joint Aptar. — Analyst

The reason Im this question is because these products have higher margins around 25% to 30%. So I suppose if the…

Shri P.A.C. Ramasamy Raja — Founder

No, no, not let 80%, and I never told you that you give margin 35% to 50%. So dont tire per bag I totally deliberate 30% of my top line.

Hiten Boricha — Joint Aptar. — Analyst

No, no. Sir, what would be the EBITDA margin for this product

Shri P.A.C. Ramasamy Raja — Founder

EBITDA margin will be maybe 2% to 3% higher than the normal product. But one thing I want to tell you, this is a lot of brand image. And also growth can be faster than other companies because I have to see products for specific applications. So that will pick up nicely.

Hiten Boricha — Joint Aptar. — Analyst

Okay. Okay. And what would be the price difference between the normal products and the

Shri P.A.C. Ramasamy Raja — Founder

It depends upon INR15 to INR25 depending upon the products.

Hiten Boricha — Joint Aptar. — Analyst

To INR25

Shri P.A.C. Ramasamy Raja — Founder

Again, the two will not be fully realized because I have gave special packing that will be cost me for five more more of, okay, definitely, you can give higher price than this one. Also, it improves our brand image and also to accelerate our growth.

Hiten Boricha — Joint Aptar. — Analyst

Okay. Okay. Actually, I read somewhere, the revenue potential from this is around INR200 crores to INR250 crores

Shri P.A.C. Ramasamy Raja — Founder

So here is our time plan.

Hiten Boricha — Joint Aptar. — Analyst

Dry mix branch

Shri P.A.C. Ramasamy Raja — Founder

Okay.

Hiten Boricha — Joint Aptar. — Analyst

So 25%, 35% of this margin, right?

Shri P.A.C. Ramasamy Raja — Founder

Yes, yes. That is distant.

Hiten Boricha — Joint Aptar. — Analyst

And that contributes around 10% to our revenue

Shri P.A.C. Ramasamy Raja — Founder

What would be drama.

Hiten Boricha — Joint Aptar. — Analyst

No, no, no, no. It can be

Shri P.A.C. Ramasamy Raja — Founder

Huge plant will be around — to the fourth plant is around INR250 crores when you can it in what is going to be Well, the beginning, we can go. We can also — we can put up in many places, which is only dining each plant will contribute around INR80 crores.

Hiten Boricha — Joint Aptar. — Analyst

Okay. Okay. So how many times to have this

Shri P.A.C. Ramasamy Raja — Founder

Now we have commissioned two plants — two more plants already be placed to others and the reconstruction is going on. That will be commissioned next year. Then we plan depending upon the where the other products were able to develop because we have a lot of R&D is also going on to develop products in the line — so the channel will also be different. So we have to carefully market it. We cant market this in my channel.

Hiten Boricha — Joint Aptar. — Analyst

Okay. So just a clarification, INR80 crores, you mentioned revenue potential from one plant, right?

Shri P.A.C. Ramasamy Raja — Founder

INR480 crores.

Hiten Boricha — Joint Aptar. — Analyst

Yes.Thank you, sir.

Operator

The next question is from the line of Kamlesh Bagmar from Lotus Asset Managers. Please go ahead.

Kamlesh Bagmar — Lotus Asset Managers — Analyst

On the part of the CapEx, like as we have mentioned that we are going to have the inbanfacilities where we have already spent for Kanan these locations — so when can we expect the second line at Kanu because we are already spending a part of that?

Shri P.A.C. Ramasamy Raja — Founder

I wait for the Board approval once my Board approach, Ill definitely keep informed.

Kamlesh Bagmar — Lotus Asset Managers — Analyst

But can we expect in over the next couple of years?

Shri P.A.C. Ramasamy Raja — Founder

Yes, this is a less my board approves with my car question improve, definitely, we keep you informed.

Kamlesh Bagmar — Lotus Asset Managers — Analyst

Okay. And sir, secondly, for the Karnataka branding unit, like say, a quarter back, we had mentioned that we would tend around INR350-odd crores on that in it and also was expected to start in 6 months

Shri P.A.C. Ramasamy Raja — Founder

So in the mine what we have done, we had enrolled a market plant that was put down. Now we ending unit now already, we are dispersing 1,000 tonnes from that. We have plans to increase the capacity to content minimum CapEx for us INR10 crores to INR15 crores. Then we will decide

Kamlesh Bagmar — Lotus Asset Managers — Analyst

Okay. So there, the CapEx

Shri P.A.C. Ramasamy Raja — Founder

Because the mining lease also, then we hope to decide, okay, whether I have to go there or we can do something in Motor to increase the capacity that we are internally if

Kamlesh Bagmar — Lotus Asset Managers — Analyst

But the clarity on that expansion of the CapEx would be there in the next six months time or it

Shri P.A.C. Ramasamy Raja — Founder

I mean six months

Kamlesh Bagmar — Lotus Asset Managers — Analyst

Okay. But that would be within that range of INR30 crores, INR50 crores.

Shri P.A.C. Ramasamy Raja — Founder

It can be lower than that also. So

Kamlesh Bagmar — Lotus Asset Managers — Analyst

And

Shri P.A.C. Ramasamy Raja — Founder

I think it all depends upon what are the cities like to have and what we were expansion program in the future. Since very far, we wanted to have the expansion program in the future and maybe even almost million tonnes, that is why we spend initially so much money. So now we are spending INR150 crores. Maybe the next to maintain even can be cheaper than this.

Kamlesh Bagmar — Lotus Asset Managers — Analyst

But then the propose is spending on that Karnataka drain, — would that be on the board? Or as of now, it has been put out old what is listed as

Shri P.A.C. Ramasamy Raja — Founder

We are keeping the option open. We never were shipping option open. Now that See, now that today Motor is doing and with the Macoplant as well with the grading facilities a little in catal definitely, we can market reasonably care from the covered plant.

Kamlesh Bagmar — Lotus Asset Managers — Analyst

Okay.

Shri P.A.C. Ramasamy Raja — Founder

Okay. But its not going to enhance my market share in different parts of Canada. So that really used to be useful.

Kamlesh Bagmar — Lotus Asset Managers — Analyst

Okay.

Shri P.A.C. Ramasamy Raja — Founder

Now that the last \two quarters, our Casas not that good, just we are thinking at what a point of time, it should go back. Otherwise, already, we identify the area

Kamlesh Bagmar — Lotus Asset Managers — Analyst

Okay. And so for this Bomanahali project, land acquisition, which we have mentioned in our presentation. So eventually, like what will be the time line for that greenfield plant or like say, the the commitment with the state government for coming out with the plant or the expansion on that particular location?

Shri P.A.C. Ramasamy Raja — Founder

Now just last week, a we made application to the state government because the Canada of process is a bit different as we were before buying the land will take the approach from the state government, a very made applications in government. — it of you know the progress. But anyhow, we are completely probably looking four years.

Kamlesh Bagmar — Lotus Asset Managers — Analyst

Thanks a lot. Okay. at — thats helpful.

Operator

Thank you — the next question is from the line of Pawan Shah from Dolat Capital. Please go ahead.

Pawan Shah — Dolat Capital — Analyst

Yeah. Just two things. First, what was the radar in Q2?

Shri P.A.C. Ramasamy Raja — Founder

Its about 75%.

Pawan Shah — Dolat Capital — Analyst

75%.

Shri P.A.C. Ramasamy Raja — Founder

Yeah. Sorry for 68%, sorry, 68%.

Pawan Shah — Dolat Capital — Analyst

69%, Yes. And sir, Manson, correct me if Im wrong, sir mentioned that for the full year in terms of the volume, we can see the same 30% kind of growth in the next three

Shri P.A.C. Ramasamy Raja — Founder

Is it

Pawan Shah — Dolat Capital — Analyst

Okay. Thank you, sir.

Operator

Thank you. The next question is from the line of Rajesh Kumar Ravi from HDFC Securities. Please go ahead.

Rajesh Kumar Ravi — HDFC Securities. — Analyst

Hi, sir. On this volume growth, while youre delivering phenomenal growth, would it be — because the market will not be going in use to places that even half the rate — so what is your thought in terms of the implications on the pricing and margins?

Shri P.A.C. Ramasamy Raja — Founder

No, pricing, I told in our site pricing is very dynamic because Im hoping on a lot of infrastructure spending. That is why Im projecting this increase because the last 6 months, we are able to get larger inquiries from in and other infrastructure projects to whatever inquiry we are getting is much more than what we expected. That is why we are a content will grow by 30% in the next six months also.

Rajesh Kumar Ravi — HDFC Securities. — Analyst

Okay. So most of the growth youre looking is from

Shri P.A.C. Ramasamy Raja — Founder

We not put any pressure. So whatever this one will be or maybe prospects

Rajesh Kumar Ravi — HDFC Securities. — Analyst

So okay. So margins generally

Shri P.A.C. Ramasamy Raja — Founder

How much any pressure on prices — on account of that, our volume will not put any pressure on prices.

Rajesh Kumar Ravi — HDFC Securities. — Analyst

No, sir, if trade versus nonserhow does the margin profile differ sir?

Shri P.A.C. Ramasamy Raja — Founder

No, its almost same. Theres no big difference. Now on the advantage is there is the saving largest is card. Theres no need for any starting and all these things to go directly from the factory but theres no post discourse, theres no gold stream. Theres no — nothing is whatever the price is fully realizable. Okay. To that extent that we say a lot of money on discourse and all these things also logistics also we say a lot of money because RBC grow most in bulker directly from the factory to be — theres no need for any stocking.

Rajesh Kumar Ravi — HDFC Securities. — Analyst

Okay. And two more questions. First is this year CapEx would be around INR700 crores. So fair to assume that subsequently, your even Sanaka project will also come into progress, the work on Tanaka project may start. So INR1,500 crore to INR2,000 crore annual CapEx run rate is what you would be looking at a

Shri P.A.C. Ramasamy Raja — Founder

May not be INR1,500 to INR2,000 there.

Rajesh Kumar Ravi — HDFC Securities. — Analyst

Because currently, only for next year, your target is around 700, 800

Shri P.A.C. Ramasamy Raja — Founder

And in as with the current cash flow and what are the CapEx either approved board there is the production.

Rajesh Kumar Ravi — HDFC Securities. — Analyst

Okay. Okay, sir. Yes, thats all from my end. Thank you all this

Operator

Thank you. Thank you. The next from the line of Game Shah from MK Global. Pleaase go ahead.

Game Shah — MK Global — Analyst

Thank you for this opportunity. So sir, we see FY 23, 24 guidance earlier capital guidance, we have almost increased by INR1 billion Im just trying to understand the figure because we dont include the INR500 crores for Rancors for INR160 crore Brand INR350 crores or it. So if you see this INR1,200 crores is mainly because of increase in this. So have you factored in any material figure for the preparatory work for the second line of color

Shri P.A.C. Ramasamy Raja — Founder

Yes. I told you no.Yes, it includes yes. My second line in cap can be put up not more than INR500 crores to INR600 crores.

Game Shah — MK Global — Analyst

Sorry, I didnt get your second part, please?

Shri P.A.C. Ramasamy Raja — Founder

Secondly, internal single capacity, we can do it only with INR500 crores, INR600 crores.

Game Shah — MK Global — Analyst

Im just trying to understand this incremental INR1,200 crores, mainly because you are spending in this project. And it seems that we are not materially pattering any CapEx for the second line of

Shri P.A.C. Ramasamy Raja — Founder

In most — many silos have been built that will take out the second line. And the railway siding has been built that will take care of the second line. Many focals the end that will take care of the second line. And also the conditions for the second in is also already.

Game Shah — MK Global — Analyst

Got it. Got it. So can we get this again like how much CapEx we are already factoring for the second line

Operator

INR200 crores, INR650 crores. Crores already, we have mentioned in our annual report.

Game Shah — MK Global — Analyst

Okay. Okay. Sure, sir. And sir, second on is just trying to understand from a capital allocation perspective, like in such an interest value environment, why we are already spending for the second line given that we already have a high debt in the books. So Im just trying to understand the reason for spending are porch pending for the second line?

Shri P.A.C. Ramasamy Raja — Founder

Arm we please go through our reports every day and 100% of go through the report, what all the expansion announced by other competitors, please go through that. What is announced by us so can go to that, whether we are conservative were really aggressive. You also can put it in your report.

Game Shah — MK Global — Analyst

Thank you.

Operator

The next question is from the line of Prateek Kumar from Jefferies. Please go ahead.

Pratik Kumar — Pratik Kumar — Analyst

Thanks. This follow-up question to earlier question. So you talked about the fuel consumption cost in fourth quarter last year and current quarter which is actually the same at $199. So why our reported power and fuel cost per tonne is higher by like INR500 per tonne over same period exchange crores

Shri P.A.C. Ramasamy Raja — Founder

Yes. See, there are two things, only exchange rates. 18 rate is going to depicted by — that is why we had told in dollar terms — so rupee depicted by more than 12%. We please take into consider that also. And some OPC/PPC car, there is a change in mix also.

Pratik Kumar — Pratik Kumar — Analyst

Sure, sir. This was the only question. Thank you.

Shri P.A.C. Ramasamy Raja — Founder

Thank you. Ladies and gentlemen, that is the last question. I now hand the conference over to Mr. Amit Basta for his closing comments.

Pratik Kumar — Pratik Kumar — Analyst

Yes. Thank you very much, sir.

Amit Wassa — Batlivala & Karani Securities India Private Limited. — Analyst

For your valuable food action around seconds. That concludes this conference call for today. Thank you, everyone, for joining us.

Shri P.A.C. Ramasamy Raja — Founder

Thank you, Sirota. Carles, nice earnings. Thanks for all the participants. The questions are very trust for us also that latticing, and well improve our presentation in the coming quarters.

Amit Murarka — Max Capital. — Analyst

Yes. Thank you.

Operator

[Operator Closing Remarks]