Release Date: July 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Grey Cement volumes grew by about 6% year on year.
- Central India expansion achieved 93% capacity utilization.
- Commissioned a 2 million tons greenfield grinding unit at Prayagraj in record time of 10 months.
- Profit after tax increased by 60% year on year.
- Net debt to EBITDA ratio is at a manageable 1.36 as of June 30, 2024.
Negative Points
- Net sales for the quarter dropped by 11% compared to the previous quarter.
- EBITDA decreased by 13% quarter on quarter.
- Profit before tax fell by 19% quarter on quarter.
- Profit after tax declined by 14% quarter on quarter.
- Pricing pressures are expected to continue into the second quarter, with a potential 1.5% drop in prices.
Q & A Highlights
Q: Your other expenses as well as your raw material cost have dropped significantly this quarter. Could you help understand the reasons for this drop?
A: The other expenses are lower due to timing differences, such as annual adjustments and branding expenses that will be incurred in the upcoming quarters. Additionally, raw material costs were impacted by lower volumes and an extraordinary item in the previous quarter.
Q: Could you explain the priorities for your expansion plans as laid out in the annual report?
A: We have not finalized the exact order of expansions, but likely Jaisalmer will be first, followed by Karnataka, Panna, and Orissa. Land is already in place for most of these locations.
Q: How far are we from placing the order for the Jaisalmer expansion?
A: We expect to place the order by the end of next year, ensuring that the necessary infrastructure is in place to coincide with our plant commissioning.
Q: The white cement segment has seen a decline in volumes. Are we growing slower than the market?
A: The decline is mainly due to lower putty realizations and aggressive pricing by competitors like Asian Paints. We are working on strategies to grow in line with the market.
Q: Could you provide an update on the cost savings target of INR150 to INR200 per ton by FY25-26?
A: We are on track to achieve these savings, primarily through logistics, power, and fuel cost reductions. We expect to see about INR70 to INR75 per ton in savings by the end of FY25.
Q: What is the reason for the gap between the cash tax rate and the effective tax rate?
A: We are still in the old tax regime, and our cash tax rate is about 17%. The gap is due to tax-exempt income and incentives.
Q: Can you provide an update on the Toshali mining lease?
A: We are in dialogue with the new government and expect to finalize a long-term arrangement for limestone by September 2025.
Q: What is the current pricing trend in the North market, and how do you see it going forward?
A: Prices are under pressure and are expected to be lower in the second quarter compared to the first. However, we anticipate a demand increase and price correction by October.
Q: Could you explain the impact of the recent price decline on your margins?
A: The price decline is partially offset by reduced fuel costs, which helps maintain our margins.
Q: What are your plans for green power, and what cost savings do you expect?
A: We aim to achieve 75% green power by FY28, with a cost saving of approximately INR3 per unit.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
