The Ramco Cements Limited (RAMCOCEM) Q4 FY23 Earnings Concall Transcript

The Ramco Cements Limited (NSE:RAMCOCEM) Q4 FY23 Earnings Concall dated May. 19, 2023.

Corporate Participants:

P.R. Venketrama Raja — Managing Director

A. V. Dharmakrishnan — Chief Executive Officer

Analysts:

Amit Srivastava — Batlivala & Karani Securities India Pvt. Ltd — Analyst

Shravan Shah — Dolat Capital — Analyst

Noel Vaz — Union Asset Management — Analyst

Sathyadeep Jain — Ambit Capital — Analyst

Prateek Kumar — Jefferies — Analyst

Amit Murarka — Axis Capital — Analyst

Rajesh Kumar Ravi — HDFC Securities — Analyst

Pankaj Tibrewal — Kotak Mutual Funds — Analyst

Parth Bhavsar — Investec India — Analyst

Analyst — — Analyst

Keshav Lahoti — HDFC Securities — Analyst

Kamlesh Bagmar — Lotus Asset Managers — Analyst

Sumangal Nevatia — Kotak Securities — Analyst

Parthiv Shah — — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Ramco Cement Limited Q4 FY23 Earnings Conference Call hosted by Batlivala and Karani Securities India Private Limited. [Operator Instructions] Please note that this conference is being recorded.

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

Amit Srivastava — Batlivala & Karani Securities India Pvt. Ltd — Analyst

Thank you, Seema. Good afternoon, everyone. On behalf of B&K Securities, welcome you all to the 4Q FY23 Earning Conference Call of The Ramco Cements.

We have with us from the management Mr. P.R. Venketrama Raja, Managing Director; Mr. A. V. Dharmakrishnan, CEO; Mr. S. Vaithiyanathan, CFO. We will start the call with opening remarks from the management, which will be followed by Q&A. Over to you, sir.

P.R. Venketrama Raja — Managing Director

Yeah. Good evening, everybody. I warmly welcome you all to the earnings call of Ramco Cements to discuss the audited results of quarter-four financial year 2023. Thank you for taking the time to join us for the call. We hope all of you have seen our results and updates. I would like to summarize the key highlights of performance for the quarter for financial year 2023.

The sales volume for the quarter ended 31st March 2023 stands at 4.7 million tons as against 3.23 million tons during the corresponding previous period, a growth of 45%. Revenue for the quarter ended 31st March 2023 increased year-on year from INR1,719 crores to INR2,581 crores. Revenue for the quarter ended 31st March 2023 surpassed our INR2,500 crores for first time for the quarter. EBITDA for the quarter has increased year-on-year from INR305 crores to INR424 crores in the quarter-four financial year ’23, amid strong volume growth of 46% — or 45.51% to be precise.

During the quarter financial year ’23, blended EBITA per ton is INR917 compared to INR956 in quarter four financial year 2022. Profits for tax for quarter-four financial year 2023 is INR207 crores as against INR264 crores during the quarter four financial year 2022, the growth of 26%. We have commissioned the line three kiln 1 million tons per annum and a drive motor unit of 1 lakh ton per annum in our RR Nagar unit in March ’23.

The infrastructure facilities for — like 4 MW WHRS, 18 MW TPP railway siding at our Kolimigundla plant. The limestone verification in RR Nagar are to be completed during the year — financial year ’24. Additional grinding capacity of 0.9 million tons per annum in Odisha and Jayanthipuram will also be commissioned in the financial year ’24.

Current demand for cement was good in the individual own homebuilder segment as well as the infra segment. Cement demand in the medium-term is expected to be resilient in view of the governments focus on the infra spend and the upcoming elections and the forecast of normal monsoon for 2023. The proficiency of cement business was challenging the last few quarters in view of high fuel prices. The CAI spot rate for pet coke. was at $178 in February ’23. That has been softening from then on. Now the current price stands at around $125 per ton. The margins are expected to improve because of that from the quarter two financial year ’24.

Thank you very much for your patience and I’d like to now. Let’s start the question-and-answer session. And Mr. Dharmakrishnan, our CEO will handle the question-and-answers, along with our CFO.

Questions and Answers:

Operator

Thank you very much, sir. We will now begin with the question-and-answer session. [Operator Instructions] We’ll take our first question from the line of Shravan Shah from Dolat Capital. Please go-ahead, sir.

Shravan Shah — Dolat Capital — Analyst

Thank you. And first of all congratulations on superb numbers, particularly on the volume growth. Just wanted a first clarification, RR Nagar clinker line, so the clinker capacity that we are mentioning 14.99, I think previous our stand was it will be a replacement of old kiln ad only 3, 5 million ton will be on the new capacity will be added net-net. So are we also maintaining the old kiln and the new line added both together? So that is the first. And also we did not previously mention 1 million ton grinding unit at RR Nagar and this quarter, suddenly we see a r addition of 1 million ton. So just need a clarification on that.

A. V. Dharmakrishnan — Chief Executive Officer

Thank you. Always you are a opening batsman, so thank you for your question. See as far as RR Nagar is concerned, we keep our options open to continue the second line also. So that is why this time we have mentioned that additional 1 million ton which has been commissioned. So we keep we keep our options open. So, either we can operate or we can discontinue. But as of now, we want to operate.

Shravan Shah — Dolat Capital — Analyst

Okay. Sir also just wanted to understand in terms of the — if you can said clinker production for FY23 and Q4 and the cement production. In the sense I want to understand the CC ratio, so how much more growth we can see in FY24 and ’25 on the volume front?

A. V. Dharmakrishnan — Chief Executive Officer

You want for the whole year or only for the quarter?

Shravan Shah — Dolat Capital — Analyst

Both I need for both clinker and cement production,

A. V. Dharmakrishnan — Chief Executive Officer

For the quarter isn’t it. The clinker production is 11.87million tons.

Shravan Shah — Dolat Capital — Analyst

11.82?

A. V. Dharmakrishnan — Chief Executive Officer

11.87 million tons.

Shravan Shah — Dolat Capital — Analyst

11.87, Okay.

A. V. Dharmakrishnan — Chief Executive Officer

Yeah, this is for the year.

Shravan Shah — Dolat Capital — Analyst

And cement production.

A. V. Dharmakrishnan — Chief Executive Officer

And our cement production is 14.86 Lakh tons.

Shravan Shah — Dolat Capital — Analyst

Okay, so then broadly it works out around the same 1.25 CC ratio, which normally we have for last three-four years. so, just trying to understand how much more volume growth we can see. So even for this quarter also to achieve this at a blended level we have mentioned that for Kurnool clinker it is 85% utilization. To achieve this 4.7 million volume, the other kiln should be working more than 100% utilization, is the case of net-net quarter FY24 how long can look at the volume growth considering the 1.25, 1.3 CC ratio?

A. V. Dharmakrishnan — Chief Executive Officer

Our cement capacity of or our RR Nagar whatever the conversion will be around 22 million tons. To backup that we have clinker capacity for the same whatever conversion ratio we are talking about.

Shravan Shah — Dolat Capital — Analyst

Sorry sir, I didn’t get, so we can still see a…

A. V. Dharmakrishnan — Chief Executive Officer

Capacity is 22 million tons. The conversion ratio whatever you mentioned we have backup clinker capacity.

Shravan Shah — Dolat Capital — Analyst

Okay, okay. Now the other question on the CapEx front. So FY24 and ’25, so, considering that previously we were looking at expansion at Karnataka also. So when can we start the new expansion CapEx and without that also previously we mentioned INR892 crore CapEx for FY24. So what’s the stand and accordingly how do we see the net-debt for FY24?

A. V. Dharmakrishnan — Chief Executive Officer

Whatever guidance we given earlier that will continue. So unless you people advice me, okay, because the good growth we want to expand at the earliest we will do that.

Shravan Shah — Dolat Capital — Analyst

Okay, okay. That’s it from my side. Thank you.

A. V. Dharmakrishnan — Chief Executive Officer

Thank you.

Operator

Thank you, sir. We’ll take the next question from the line of Mr. Noel Vaz fm Union Asset Management. Please go-ahead, sir

Noel Vaz — Union Asset Management — Analyst

Just to confirm. I think so just regarding the volume guidance for FY24 and ’25, so currently we have seen a very strong numbers for the end of FY23. So, what kind of a growth should we expect? I think the last you had guided for roughly about a doble digit kind of a number.

A. V. Dharmakrishnan — Chief Executive Officer

Internally, we have talked 30% for’23-2’4.We have growth target of 80%, for the year ’23-’24.

Noel Vaz — Union Asset Management — Analyst

Okay fine. Thank you that. Just one more thing. So the company has been able to deliver a much stronger growth in the industry level, both at the end of 4th-quarter as well as in your guidance as well. So, what exactly is going to enable Ramco to drive the industry to such a large extent? I just wanted to know the factor again. Thank you.

A. V. Dharmakrishnan — Chief Executive Officer

See four things happened this one. Number-one, we had the capacity0. Number two, the demand was very strong. Number three, we created necessary infrastructure to service thing. In the last three-four quarters I was repeatedly I was telling, we invested so much money to create the infrastructure to service this demand, so that whenever, you know very well also we are also promoting what is called right cement for right application, nearly 14 types of cement we manufacturing.

They are catching up very well. So wherever we need our cement, that is accepted very well. So because we are able to tailor made and we meet the requirements of different customers, we are able to get repeat orders, so the growth is really good. So whatever we had told the last three quarters that everything that falls in line this quarter.

Noel Vaz — Union Asset Management — Analyst

Okay, thank you. Yeah, that is all for me.

Operator

Thank you, sir. [Operator Instructions] The next question from the line of Mr. Sathyadeep Jain from Ambit Capital. Please go-ahead, sir.

Sathyadeep Jain — Ambit Capital — Analyst

Thank you. Thank you, sir. A couple of questions regarding to 20% volume growth which implies almost 18 million tons in FY24. You also mentioned right cement for right application. Given that there are so many varieties of cements being produced, does it limit your capacity of 22 million tons to something below 22 million tons? And tied to that would be, would it basically mean that you need to look at some capacity expansion in FY25-’26 to build some volume growth there?

A. V. Dharmakrishnan — Chief Executive Officer

No, you might have seen our conversion ratio, with right cement for right application we are doing last almost all one and half years. You might have seen our consistent in conversion ratio. Okay, to the extent it will not limit our capacity utilization. Whatever capacities we are doing, that 22 million tons definitely is achievable, Number one. Number two, yeah definitely given the demand, also the capacity utilization, we have to definitely go for expansion. So, we will time it and we will let you know.

Sathyadeep Jain — Ambit Capital — Analyst

Just want to clarify the next leg of growth would be Karnataka greenfield or could there be a brownfield. I know your expansion at Kurnool.

A. V. Dharmakrishnan — Chief Executive Officer

First we’ll take-up the Kurnool second-line, then we will go to Karnataka because Karnataka we have to buy the land. Whereas in Kurnool we have everything ready. All the infrastructure is ready. What is needed is, you have to put for equipment, that raw mill, cold mill, kiln. Otherwise all other infrastructures are ready. So, first definitely we will go for Kurnool second line, then we’ll go for Karnataka. In the meantime [Speech Overlap] Karnataka because necessary approval for the purchase of land, because the committee has to approve that we got necessary approval, now we started buying the land.

Sathyadeep Jain — Ambit Capital — Analyst

The second-line can possibly before it comes, railway setting would be up and running, I’m guessing before that?

A. V. Dharmakrishnan — Chief Executive Officer

Kurnool?

Sathyadeep Jain — Ambit Capital — Analyst

Yes, yes

A. V. Dharmakrishnan — Chief Executive Officer

It is possible. Also, see now we are also creating capability even without railway setting how to service the second line also, we are creating necessary facilities for that. we are confident. Definitely railway setting is going to be helpful, but our expansion is not depend upon only railway setting. It’s not really constrained because of that, but railway setting is also also progressing fast. Since it is long, almost 25 kilometers it is taking it little time, but railway setting will help us in assisting transfer of coal and all these things, but our marketing of cement is not going to depend upon only railway setting.

Sathyadeep Jain — Ambit Capital — Analyst

Okay. The second question was on cash flow. So, given, if let’s say, if you do decide to go head with Kurnool second phase, will there be an upside to the CapEx target with the cash for FY24 and there was very strong performance in working capital cycle with a few more days and inventory days, is that sustainable going into FY 24 this working capital cycle?

A. V. Dharmakrishnan — Chief Executive Officer

We will come back to you. Once we finalize that we will come back to you.

Sathyadeep Jain — Ambit Capital — Analyst

Okay. Thank you.

A. V. Dharmakrishnan — Chief Executive Officer

Thank you.

Operator

Thank you. We’ll take the next question from the line of Mr. Prateek Kumar from Jefferies. Please go-ahead, sir.

Prateek Kumar — Jefferies — Analyst

Yeah, good evening, sir, and congrats for great results. My first question is with our data question. So we have reported our volume numbers including dry motors. So what is the contribution of dry mortar and the volume for 3Q and 4Q this quarter, I mean 2Q and 4Q.

A. V. Dharmakrishnan — Chief Executive Officer

The dry mortar volume for the whole year is 0.2 million. And the fourth-quarter is 0.07 million. For the whole year is 0.2 million, 2 lakh tones. For the quarter is 70,000 tones.,

Prateek Kumar — Jefferies — Analyst

Okay. My next question is on your North east foray. So we have [Technical Issues] understand. So how much of the non-South 25% would be North East volumes for us.

A. V. Dharmakrishnan — Chief Executive Officer

Same thing, yes. Around the 20%, 25% Maximum is 25%, minimum 20% whatever in the first three quarters we are maintaining that, nothing change in that. The mix is same. I’m asking specifically on the North east, which is other than east. So of the total, non-South volumes [Speech Overlap] The North east includes east. This is totally. It all depends upon price realization cost, all these things we are taking share. So mostly North east we are only suggesting non-trade orders not trade orders. North east. So okay to that extent it does not matter North east or east because okay whenever we get good rainy season then definitely we can go up to Arunachal Pradesh, Sikkim and all these places. We are doing that also.

Prateek Kumar — Jefferies — Analyst

Okay. We [Indecipherable] date of around INR47,000 crores we are off line on the INR400 crores is something which we also talked about during the result in one of the quarters. So what would be our target before the next year what we are looking at.

A. V. Dharmakrishnan — Chief Executive Officer

So that is why we will work out the growth. I told you any number of times I also told we have to see the growth as well ass debt direction. See we work our, every quarter we will give you the guidance.

Prateek Kumar — Jefferies — Analyst

Sure. These were my questions. Thank you.

Operator

Thank you, sir. [Operator Instructions]We take the next question from the line of Amit Murarka from Axis Capital. Please go-ahead, sir.

Amit Murarka — Axis Capital — Analyst

Hi, good afternoon. Congratulations on a great number. Just couple of questions. Firstly on volume target of 20% growth, like I understand your clinker utilization was about 75% in FY23, so this would take utilization to almost 90% in FY24. So what are the growth plans then, because for FY25 then probably we will need more capacity to kind of participate in the growth after ’24. That’s the first question.

A. V. Dharmakrishnan — Chief Executive Officer

In our growth plans I told you that we have to grow. We have plans to expand our Kurnool second-line, then we’ll put up the plant in Karnataka also. So the exact timing, definitely we let you know as soon as the orders are placed and the Board has take the decision, definitely we will let you know.

Amit Murarka — Axis Capital — Analyst

And the Capex, like as of now what is the Capex for’24? Like you had earlier guided for INR850 crores, so I think in the prior third quarter call earnings.

A. V. Dharmakrishnan — Chief Executive Officer

Around INR850 crores.

Amit Murarka — Axis Capital — Analyst

Okay. And just the the third question is on RR Nagar upgradation. Like post upgradation, what is the capacity there, like the size of contribution on the capacity number?

A. V. Dharmakrishnan — Chief Executive Officer

3 million tons.

Amit Murarka — Axis Capital — Analyst

3 million tons of cement and clinker?

A. V. Dharmakrishnan — Chief Executive Officer

Yeah, yeah.

Amit Murarka — Axis Capital — Analyst

And clinker would be how much? Sorry.

A. V. Dharmakrishnan — Chief Executive Officer

The clinker will be around 2.2 million tons because they are 100 percent PPC make.

Prateek Kumar — Jefferies — Analyst

Okay. So if I’m not mistaken, earlier I think the plan was to kind of scrap one of the older units and then bring this unit in its place. So now you are still running older units now is it?.

A. V. Dharmakrishnan — Chief Executive Officer

Yeah. See, second plan we thought of cutting down. So we are keeping our options open now. As of we have plans to run it.

Amit Murarka — Axis Capital — Analyst

Okay, fine. Got it. I’ll come back later in the queue.

Operator

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

Rajesh Kumar Ravi — HDFC Securities — Analyst

Yeah. Hir, sir. Good evening. Am I audible?

A. V. Dharmakrishnan — Chief Executive Officer

Yeah, you are audible.

Rajesh Kumar Ravi — HDFC Securities — Analyst

Sir, on the the volume guidance is 20% I see in FY23 you have delivered strong growth both in [Indecipherable] blending ratio [Indecipherable] do you see this number going up in FY24 or you would be mostly targeting aggressively the non-trade market?

A. V. Dharmakrishnan — Chief Executive Officer

No, we tried to maintain, even though we aggressively done in Q4, even though it’s been fantastic growth the blended rate is same. Blending ratio both are same. We have not deviated. Maybe 1% or 2% here and there can be there, that are the major deviation.

Rajesh Kumar Ravi — HDFC Securities — Analyst

So the 70% is what you are comfortable or your looking this to towards 75%, 80% in next one, two years.

A. V. Dharmakrishnan — Chief Executive Officer

Depending upon market. I can’t give you a particular number. It all depends upon which market grows. If the trade grows, definitely I will go for more trade growth. Then is non-trad growth, there also we are there.

Rajesh Kumar Ravi — HDFC Securities — Analyst

And, sir, currently at March end your CWIP stands at INR2000 crores. Most of your ongoing projects are already done and only few projects are up for execution. So what is this INR2000 crores CWIP pertaining to?

A. V. Dharmakrishnan — Chief Executive Officer

Mainly purchase for the Karnataka plant, then balance in RR Nagar mines also we have to complete limestone verification plant. Then TPP in Kurnool plant.

Rajesh Kumar Ravi — HDFC Securities — Analyst

Karnataka, you have already invested in land and how much is that?

A. V. Dharmakrishnan — Chief Executive Officer

We are starting, buying the land.

Rajesh Kumar Ravi — HDFC Securities — Analyst

No, I’m saying the CWIP capital working progress is INR2000 crores. What would that pertain to?

A. V. Dharmakrishnan — Chief Executive Officer

It will be again [Indecipherable] then in Jayanthipuram we are putting up our limestone. One of our mines is around 10, 15 kilometers away from the track. So now we are putting railway setting for transport our limestone for mines to Jayanthipuram, that is around INR250 crores. So that is yet to be commissioned. That will be commissioned in another month or so. And Kurnool is around [Indecipherable] these are the main things.

Rajesh Kumar Ravi — HDFC Securities — Analyst

Okay. And sir, one thing — on questions. We have seen that you have done phenomenally good on ramping-up your green power usage. Last year you had targeted 70% of your clinkerization electricity requirement will be met through green power. I think we have still to go or you have achieved closer to that number?

A. V. Dharmakrishnan — Chief Executive Officer

Sorry, again tell me, 70% of the…

Rajesh Kumar Ravi — HDFC Securities — Analyst

Electricity requirement to clinkerization.

A. V. Dharmakrishnan — Chief Executive Officer

No not for entire company, I told you for the Andhra Pradesh. Already what I told, Andhra Pradesh already 70% to 80% of the clicker is green power, that is [Speech Overlap] What I told, Tamil Nadu we have wind power, that are all almost 175 MW we have. With our Tanjore facility around 40 MW. So far they have already said to the Board they are converting into captive consumption.

Rajesh Kumar Ravi — HDFC Securities — Analyst

Understood, understood.

A. V. Dharmakrishnan — Chief Executive Officer

At the year end by ’24 beginning power would be around 34%. [Speech Overlap]

Rajesh Kumar Ravi — HDFC Securities — Analyst

Alternate fuel usage last year you did very good, but in FY23 that share came down from 20% to 13%. Any specific reason…

A. V. Dharmakrishnan — Chief Executive Officer

Once we started using alternate fuel, everybody started using and that is where the cost has gone up more than the coal.

Rajesh Kumar Ravi — HDFC Securities — Analyst

So it’s more than the coal that you’re purchasing.

A. V. Dharmakrishnan — Chief Executive Officer

Yeah, everybody goes to that place, then cost goes up.

Rajesh Kumar Ravi — HDFC Securities — Analyst

Got it. Sir, lastly on the leverage, I understand you have — what is the comfort level, your comfort level at which you would want to operate at that EBITDA number.

A. V. Dharmakrishnan — Chief Executive Officer

I’ll have open conference with you. Whatever you suggest we will follow that. No, if I say something you people are getting sometimes — sometimes people are getting upset, whatever is comfortable is not comfortable to you. So I will come there. There is a open house, whatever you people suggest we will carry out.

Rajesh Kumar Ravi — HDFC Securities — Analyst

Great, sir. Thank you.

Operator

Thank you. We will the next question from Pankaj Tibrewal from Kotak Mutual Funds. Please go ahead sir.

Pankaj Tibrewal — Kotak Mutual Funds — Analyst

Good evening sir. First of all, congratulations on good set of results. I have two question. The first one is on the cash flows. We have seen a very

Strong generation of OCF this year and a part of that was also because we released some money of of working capital. Can you help us understand from a overall cash flow perspective how should we look at from FY24 perspective in terms of capex and in terms of debt deal everything. I heard you that between capex and growth and deleveraging, still you have not made up you mind, but thoughts on that will be appreciated.

A. V. Dharmakrishnan — Chief Executive Officer

The market is very dynamic Pankaj. So I have to blend both. Suppose if I look at only this deleveraging and If don’t take part in the growth, then you will tell me everybody else can but you are not in the growth path. At the same time If I don’t deleverage in Sulphur, okay people can say okay for this capacity others are getting so much debt but you are getting higher. So we are taking very very conscious steps how to balance that. So definitely you might have seen what our efforts I explained to you in that whatever efforts we are making in promoting our new products and all these things will be good results. Definitely last two quarters what we have done, excellent job in that and coming quarters also we are expecting that good growth and good realization is bound to come [Indecipherable] that I can’t reduce that. See the balance amount as of now I have plans to deleverage it.

The demand is so good, okay I have no option but to expand, definitely I will come there, discuss with you people, explain to you and then we will take decision.

Pankaj Tibrewal — Kotak Mutual Funds — Analyst

Okay. Wil there be release from working capital because the pet coke prices have started…

A. V. Dharmakrishnan — Chief Executive Officer

Possible, possible. Definitely INR100 crores, INR200 crores is possible. Also I told you we are planning to fill some surplus land. I don’t see great progress is made, some progress is made. Here and there we are able to find some buyers for small portions of lands. So big portion of land If I buy, then [Indecipherable]

Pankaj Tibrewal — Kotak Mutual Funds — Analyst

Is there a scope for none core assets to be disposed?

A. V. Dharmakrishnan — Chief Executive Officer

The noncore assets is only land.

Pankaj Tibrewal — Kotak Mutual Funds — Analyst

And that can be disposed to fund a part of a land acquisition.

A. V. Dharmakrishnan — Chief Executive Officer

Yes, you are right.

Pankaj Tibrewal — Kotak Mutual Funds — Analyst

So if you look at your return on capital post tax, obviously this was not a very good year except the fourth quarter, any thoughts on how you want to grow because at a faster pace without return on capital the growth could be a little toxic because the returns wont support that growth. Any thought that to reach that threshold level on the return on capital and then start the next capex side. Any thoughts on that will be appreciated.

A. V. Dharmakrishnan — Chief Executive Officer

See Pankaj, many times I explained to you in meetings also. So many of our capex expenditure is, number one to reduce the cost compared to others because the time like this definitely whatever investment we have made is going to help us. Number two also, we create a lot of facilities so that any big jump like this okay, of course you are not interested in many silos, many packing plants and also railway settings and all the plants and we not invested, definitely we cannot take advantage of growth like this. So return on investment will be my incremental — I told you, I explained to you also in my earlier meetings my incremental capex is going to be much less. So at that time when I do that, when I expand further definitely my return on investment will jump. There will be quantum jump in our return on investment when I have sufficient capex because my incremental capex expenditure what is needed to create maybe another 5 million, 10 million in capacity is going to be much less compared to my annal capacity compared to anybody else in the industry.

Pankaj Tibrewal — Kotak Mutual Funds — Analyst

As shareholders we would like to see the double digit return on capital back.

A. V. Dharmakrishnan — Chief Executive Officer

See only last two years, Pankaj. Before that we have given best return on investment.

Pankaj Tibrewal — Kotak Mutual Funds — Analyst

Absolutely.

A. V. Dharmakrishnan — Chief Executive Officer

Last two years because of there is some delay in Kurnool project. Otherwise we have given the best return to market. We will look forward for that and wish you all the best.

Operator

The next question is from the line of Mr. Parth Bhavsar from Investec India. Please go ahead.

Parth Bhavsar — Investec India — Analyst

Thank you for the opportunity. I had two questions. The first one is on the volume. So you reported very good set of volumes. So just wanted to understand in the area of your operation which region play better than the other one. If you could help us…

A. V. Dharmakrishnan — Chief Executive Officer

All regions have performed equally.

Parth Bhavsar — Investec India — Analyst

Each performed better than south.

A. V. Dharmakrishnan — Chief Executive Officer

My market mix is same. There is no shift in market mix.

Parth Bhavsar — Investec India — Analyst

You are saying growth in both the regions was the same?

A. V. Dharmakrishnan — Chief Executive Officer

Yeah, yeah. In whatever states we are everywhere we have grown.

Parth Bhavsar — Investec India — Analyst

And the other question was the RR Nagar modernization, the RR Nagar plant that you are saying that you operated 1 million ton. So what are cost over there?

A. V. Dharmakrishnan — Chief Executive Officer

Around INR120 crores. So the cost is mainly because of the steel prices.

Parth Bhavsar — Investec India — Analyst

Why do we draw a line where we stop using that plant, like the 1 million ton, where do we draw the line?

A. V. Dharmakrishnan — Chief Executive Officer

It depends upon demand growth and the cost.

Parth Bhavsar — Investec India — Analyst

And there is no scope of improvement as you said that all the capex is spent towards making plants better. So is there any scope to improve?

A. V. Dharmakrishnan — Chief Executive Officer

No it is only in second line in entire company only the second line of RR Nagar is little inefficient, we can upgrade that also. Either we can operate, it is inefficient compared to our standard, not for industry standard. Compared to our standard the fuel consumption it is more to our standard, not to industry standard. So industry standard usually it is efficient. So either we try to use if the demand is good or if there is slack in demand, definitely we will take shutdown for three, four months and we will operate that.

Parth Bhavsar — Investec India — Analyst

And if I could squeeze one more, what is the limestone reserves in Tamil Nadu? And can we increase clinker capacity here on.

A. V. Dharmakrishnan — Chief Executive Officer

We have lot of land. The bidding has to take place. If the bidding takes place, then I will let you know what is the exact. We have a lot of lands with limestone. Tamil Nadu from 2014 no bidding took place. So, we’ll tell you what are limestone is left after whatever mining which we do. So we have enough lands.

Parth Bhavsar — Investec India — Analyst

Okay,

A. V. Dharmakrishnan — Chief Executive Officer

Which you can ensure very well. The bidding takes place because these lands are owned by us, so definitely we will get it. So there’s no problem as far as the e limestone resource is concerned in Tamil Nadu.

Analyst — — Analyst

Sir, what would be the reserve line?

A. V. Dharmakrishnan — Chief Executive Officer

Without that we can’t venture to expand in Tamil Nadu. That shows that we have enough limestone.

Parth Bhavsar — Investec India — Analyst

Okay. What would be the current reserve line though?

A. V. Dharmakrishnan — Chief Executive Officer

That’s why I told you, we have enough land. If everything comes for bidding, then definitely we have enough limestone reserve even for next 30, 40 years.

Analyst — — Analyst

Any mines coming coming, like is it coming near the expiry. Any leases that are near expiry?

A. V. Dharmakrishnan — Chief Executive Officer

No, it will be beyond 2030, not now. All this is beyond 2030.

Parth Bhavsar — Investec India — Analyst

Okay sir, thank you so much.

Operator

Thank you sir. The next question is from the line of Mr. Keshav Lahoti from HDFC Securities. Please go-ahead, sir.

Keshav Lahoti — HDFC Securities — Analyst

Thank you sir for the opportunity. Can you please share the revenue and EBITDA numbers for FY23?

A. V. Dharmakrishnan — Chief Executive Officer

It is too small quantity, 2 lakh tons what is the EBITDA you wanted to see. When we have done 15 million tons versus 2 lakh tons, do you want to get the number, don’t be too minority, let us give us some room. For 145 lakh tons I told you our sale-in value should only 2 lakh tons. Is it going to change the…

Keshav Lahoti — HDFC Securities — Analyst

No I was trying to get the cement, the actual EBITDA.

A. V. Dharmakrishnan — Chief Executive Officer

It is going to change the number, 15 million to 2 lakh tons put the ratio.

Keshav Lahoti — HDFC Securities — Analyst

Okay, got it. Yes, sharp fall in your CO2 emission of 20% probably FY23, so what is the main reason for that and will the trend continue?

A. V. Dharmakrishnan — Chief Executive Officer

Our focus on limestone is for right application. So we are all-in many projects we are participating. Definitely, we are able to get repeat orders and ours is most preferred products in all the major projects. So that gives us confidence to growth.

Keshav Lahoti — HDFC Securities — Analyst

And do you see broad bifurcation of of your FY23 capex now going there and how you are done the strength?

A. V. Dharmakrishnan — Chief Executive Officer

’23, Kurnool is around INR600 crores. The RR Nagar is around INR500 crores.

Keshav Lahoti — HDFC Securities — Analyst

Okay, thank you. That’s it.

Operator

Thank you sir. The next question is from the line of Mr. Kamlesh Bagmar from Lotus Asset Managers. Please go-ahead, sir.

Kamlesh Bagmar — Lotus Asset Managers — Analyst

Yeah, thanks for the opportunity and lot of congratulations on exemplary performance, sir. Sir, just one question on the part of, let’s say, the volume growth which we are targeting around 20 odd percent next year. So how do you see the margins? What is the trade-off between the margins, like say, would be the, like say, interested in pushing volumes even if comes at next the INR900, INR950 EBITDA per ton. How do you see the trajectory of the margins?

A. V. Dharmakrishnan — Chief Executive Officer

Whatever industry are seeing, I am not pushing margins. So you might have seen the margin is not my margin. I’m operating only in South and the East. The other regions the margins are not that great compared to others. So you can’t tell me my position with cement or whatever strategy we are following this is going to push on the price, because it is the case in other places people might have EBITDA INR1500, INR1600. So the EBITDA is the same for all the company if you see, the entire India EBITDA is same, where I’m not there. Okay, to that extent these all mainly demand and supply, different players, strategy to expand the market. So I have no particular this one. We will not spoil the price, definitely we want the price because when we make much efforts in expanding, in modernizing, in introducing new products, if there is no big margin and what the point in our hard work. So definitely we want the price, but it all depends upon market dynamics.

Kamlesh Bagmar — Lotus Asset Managers — Analyst

And sir, secondly on the Kurnool side, like will how much capex we would be spending on that second-line and when can we expect the commissioning and the orders to flow in the markets sir?

A. V. Dharmakrishnan — Chief Executive Officer

The amount that will be recurred for the second line is anywhere between INR800 crores to INR900 crores.

Kamlesh Bagmar — Lotus Asset Managers — Analyst

And what are the…

A. V. Dharmakrishnan — Chief Executive Officer

We see the same capacity. The timeline as I told you earlier, we will let you know.

Kamlesh Bagmar — Lotus Asset Managers — Analyst

Okay. And lastly, sir, the is conversion of great wind capacity to captive 19 odd percent you have converted it. So what is the target for that in FY24, would it be entirely converted or how much that would be? I know you have given a 10% incremental or 10% incremental share of renewables coming from in next year. So with that, entire will be contributed back of it.

A. V. Dharmakrishnan — Chief Executive Officer

Almost 60% of the wind mills are converted into captive, another 40% will be converted in another month or so.

Kamlesh Bagmar — Lotus Asset Managers — Analyst

Okay, okay.

A. V. Dharmakrishnan — Chief Executive Officer

Because this season — before wind season reverting it will be converted.

Kamlesh Bagmar — Lotus Asset Managers — Analyst

And entire would be converted. Okay. And sir, the way the fuel prices are there in the market, do you see your margins getting improved from the exit of Q4 or the average of the Q4 levels?

A. V. Dharmakrishnan — Chief Executive Officer

See, the margin depends upon not only on cost, it all depends upon prices also [Speech Overlap] in the first quarter will be small reduction, but second-quarter onwards I’m expecting big reduction in the cost.

Kamlesh Bagmar — Lotus Asset Managers — Analyst

Got it. Thanks a lot.

A. V. Dharmakrishnan — Chief Executive Officer

Prices, you have to watch the market.

Kamlesh Bagmar — Lotus Asset Managers — Analyst

Great performance and thanks a lot.

A. V. Dharmakrishnan — Chief Executive Officer

Thank you.

Operator

Thank you very much. We’ll take the next question from the line of Mr. Sumangal Nevatia from Kotak Securities, please go-ahead.

Sumangal Nevatia — Kotak Securities — Analyst

Yeah, good evening sir, and congratulation on good set of numbers. First question — the first one is a bookkeeping one. If you can share what is the non-trade in 4Q last year what was it?

A. V. Dharmakrishnan — Chief Executive Officer

Same thing. There is no change here. Our percentage is around 35%. See 1% or 2% here and there will be there, that is all. Otherwise, the percentage is same.

Sumangal Nevatia — Kotak Securities — Analyst

Okay, so 35% similar. Okay, got it. Sir, second question. I mean, when you are evaluating and the focus currently is on deleveraging and you are evaluating when to kind of start the next phase. I mean, what sort of metrics are we kind of focusing on any particular net-debt to EBITDA kind of metrics we are tracking at what level we are comfortable before?

A. V. Dharmakrishnan — Chief Executive Officer

The EBITDA should be around 2 to 3.5. It could be ideal, yeah.

Sumangal Nevatia — Kotak Securities — Analyst

So once it approaches this range, we will be kind of starting the next phase. That’s the way to think?

A. V. Dharmakrishnan — Chief Executive Officer

Yeah, that is right way to go. Again, it all depends upon market growth also. If there is the case, there maybe little bit here, deviate here and there. See, otherwise net-debt to EBITDA, I you want to mention 2 to 2.5.

Sumangal Nevatia — Kotak Securities — Analyst

Understood, understood. But in our priority and strategy is there any inorganic growth which fits in or we are evaluating or it’s largely the focus is on organic opportunities?

A. V. Dharmakrishnan — Chief Executive Officer

As of now there is enough scope for organic growth and also at a very-very reasonable cost. That is why I told you, my incremental capital cost will be much higher. As I told you earlier to our counterpart, Mr. Pankaj, I have to give him good return on investment also. So that is possible with organic growth. It may be be possible to give in inorganic growth.

Sumangal Nevatia — Kotak Securities — Analyst

Got it, got it. And sir just one last clarification on the volume growth. And then you said its quite even. I mean, think this kind of growth is something which is sustainable and any particular project or any peculiar thing which has contributed to this level of growth in the last few quarters.

A. V. Dharmakrishnan — Chief Executive Officer

So I told you, even before also we had demand, but we didn’t have capacity to support it. Now I created capacity. So since we are able to take advantage of whatever good efforts we made in the last one year, that I’m able to take some advantage whatever efforts we made because the capacity has come up.

Sumangal Nevatia — Kotak Securities — Analyst

Got it. All right sir. Thank you and all the best.

Operator

Thank you sir. The next question is from the line of Mr. Amit Murarka from Axis Capital. Please go-ahead.

Amit Murarka — Axis Capital — Analyst

Hi, thanks for the opportunity again. So I wanted to know like what was your clinker production in FY23 or if you could tell me what was the cement clinker ratio for ’23.

A. V. Dharmakrishnan — Chief Executive Officer

My clinker production was around 11.872 million tons.

Amit Murarka — Axis Capital — Analyst

Okay, and cement?

A. V. Dharmakrishnan — Chief Executive Officer

14.866.

Amit Murarka — Axis Capital — Analyst

Okay, okay thanks. And also on AFR, you ramped up AFR mix a lot in FY23, do you see that going out further in FY 24?

A. V. Dharmakrishnan — Chief Executive Officer

It depends upon cost.

Amit Murarka — Axis Capital — Analyst

Okay, what’s the cost for AFR these days.

A. V. Dharmakrishnan — Chief Executive Officer

Pardon?

Amit Murarka — Axis Capital — Analyst

In rupees, like what would be the AFR cost versus, let’s say, pet coke?

A. V. Dharmakrishnan — Chief Executive Officer

It used to be less than INR1, now it is almost equal to coal cost.

Amit Murarka — Axis Capital — Analyst

Okay. And also the fuel cost that you mentioned in you presentation, like INR2.21 this quarter, that doesn’t include the RFR cost, right? I mean, that’s not averaged out for AFR.

A. V. Dharmakrishnan — Chief Executive Officer

Average of everything.

Amit Murarka — Axis Capital — Analyst

Sorry.

A. V. Dharmakrishnan — Chief Executive Officer

Average of everything.

Amit Murarka — Axis Capital — Analyst

It includes AFR.

A. V. Dharmakrishnan — Chief Executive Officer

Includes AFR also.

Amit Murarka — Axis Capital — Analyst

Okay, okay. Thank you.

Operator

The next question is from the line of Mr. Parthiv Shah from [Indecipherable] Please go-ahead, sir.

Parthiv Shah — — Analyst

Thank you sir for taking my question and congratulation for very good set of numbers. Sir, just on long-term sense, basically I do understand as and when time comes you’re not going to be shy to expand. Just for my understanding, you’ve done a lot of up spending of your capex and there is of course lower ROCE, but I do understand you have done a smart thing by building up a lot of infrastructure which you would not have to repeat again. So if I have to assume that over the next three years you want to add another 5 million ton or for that matter, say another 10 million ton in your existing plant capacities, can it come at around $60 EV by ton, which is around INR5,000 crores. Is my assessment correct?

A. V. Dharmakrishnan — Chief Executive Officer

Lower than hat we can do that.

Parthiv Shah — — Analyst

You can do more than that. So another 10 million tons you can add…

A. V. Dharmakrishnan — Chief Executive Officer

My cost will be lower than INR5,000 crores even for 10 million tons.

Parthiv Shah — — Analyst

Even for 10 million tons, okay. Okay sir. Thank you very much. Sir, my second question is regarding our pet coke. So pet coke prices have come down. I do understand you had previously policy of hedging pet coke prices at the price that you are feeling it’s comfortable. How much more inventory of high-cost pet coke we still have? Have we replenished that and from quarter one…

A. V. Dharmakrishnan — Chief Executive Officer

At any point of time we have only two month stock. Less than $100 we will build. More that $100 our policy is to have only 2 to 2.5 months stock maximum.

Parthiv Shah — — Analyst

Okay, so current average cost for the two months would be, what are around?

A. V. Dharmakrishnan — Chief Executive Officer

See, last three months, January 176, February 178, and March was 161.

Parthiv Shah — — Analyst

Okay. So only from the third month onwards you can expect $1.25 benefit, right?

A. V. Dharmakrishnan — Chief Executive Officer

Second quarter.

Parthiv Shah — — Analyst

Second quarter. Okay, thank you so much sir. That answers all my questions. All the best.

Operator

Thank you. The next follow-up question is from the line of Mr. Shravan Shah from Dolat Capital. Please go-ahead, sir.

Shravan Shah — Dolat Capital — Analyst

Hi. Thank you sir. Sir, in terms of prices it seems the March exit till now, 1.5 months, so in terms of their trial where we operate — the current prices of the average prices for one-and-half months is a similar or slightly lower than the fourth-quarter average.

A. V. Dharmakrishnan — Chief Executive Officer

Even as the 11th man you are playing very well here. I thought this question was not asked before. Not only you are opening batsman, at 11th place also you are playing exceedingly well. So as you know very well, you can make market check and find out what are the prices.

Shravan Shah — Dolat Capital — Analyst

Sir, that we are doing, but just wanted your confirmation.

A. V. Dharmakrishnan — Chief Executive Officer

My confirmation is whatever you say I will confirm it.

Shravan Shah — Dolat Capital — Analyst

Thank you, sir

A. V. Dharmakrishnan — Chief Executive Officer

The prices vary every day.

Shravan Shah — Dolat Capital — Analyst

Okay, okay.

A. V. Dharmakrishnan — Chief Executive Officer

I’m not saying it is coming down only.

Shravan Shah — Dolat Capital — Analyst

One thing in terms of Odisha 0.9 MTPA grinding, we mentioned that it will come by our second-half. So will it be in the Q3 FY23 on Q4 it will start?

A. V. Dharmakrishnan — Chief Executive Officer

Q3,

Shravan Shah — Dolat Capital — Analyst

Okay, okay. And this Kurnool when we say INR800 crores, INR900 crore capex that we can look at when they start for the second-line. So this will have around 2.25 clinker and 2 to 3 million ton grinding.

A. V. Dharmakrishnan — Chief Executive Officer

Yes, you are right, you are right.

Shravan Shah — Dolat Capital — Analyst

Okay, okay. Thank you sir. All the best.

A. V. Dharmakrishnan — Chief Executive Officer

Thank you..

Operator

The next question is from the line of Mr Rajesh Kumar Ravi from HDFC Securities. Please go-ahead, sir.

Rajesh Kumar Ravi — HDFC Securities — Analyst

My questions have been answered. Thank you.

Operator

Thank you, Mr. Rajesh. Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to the management for closing comments.

P.R. Venketrama Raja — Managing Director

I like to thank everybody for the very interesting questions all of you have asked and I hope we have answered all of them to your satisfaction. I’d like to say that we are working towards a sustained growth and we will be able let you know all our plan as we crystalize them. So hope to meet you all again and say the our growth plans, etc., as we make our decisions. Thank you very much.

A. V. Dharmakrishnan — Chief Executive Officer

Thank you. Thank you for all the participants. Thank you, Amit, for the nice arrangement.

Operator

[Operator Closing Remarks]