Release Date: May 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- JK Lakshmi Cement Ltd (BOM:500380, Financial) has made significant progress in bridging the EBITDA per ton gap with competitors.
- The company has achieved a renewable energy usage of 47% at the Group level, with JKLC at 39% and Udaipur Cement Works Limited at 46%.
- The TSR (Thermal Substitution Rate) improved to 11.27% in Q4 from 4% last year, indicating better manufacturing cost management.
- Premium product sales have increased, with over 25% of sales in the west and north markets being premium products.
- The company has successfully reduced supply chain lead distances by more than 25 kilometers, improving efficiency.
Negative Points
- Volume growth was flat in Q4 due to reduced sales from outsourced units and a focus on efficiency improvements.
- Prices dropped by about 5% in Q4 compared to the preceding quarter, and by 1.5% for the whole year compared to FY23.
- The company faces challenges in the Gujarat market due to increased competition from Ambuja and ACC brands.
- The cost of renewable energy projects and other expansions may strain financial resources, with significant CapEx planned for the coming years.
- The geopolitical situation and supply chain issues may prevent further reductions in fuel costs, which are currently around INR1.68 per kilo cal.
Q & A Highlights
Q: Could you discuss the expansion plans, particularly for the Gujarat, Surat expansion, and the plans for the east and northeast expansions? What sort of CapEx and expenditure are you looking at for FY25 and the next two years?
A: We are doubling the capacity of the Surat grinding unit from 1.5 million to 2.7 million. The Durg expansion involves a 2.3 million clinker and 4.6 million cement capacity, costing around INR2,500 crore. The northeast project is still in the land acquisition phase, and we are not able to provide a specific timeline yet.
Q: What are the cost levers you are looking at in FY25 in terms of fuel and other efficiencies versus FY24?
A: Major cost drivers include improving TSR (Targeted Supply Ratio) and enhancing renewable energy capacity. We plan to increase our solar capacity and commission the AFR facility at Udaipur by September. Additionally, we are working on digital solutions to improve plant operations efficiency.
Q: How do you see the Gujarat market, especially with Ambuja ramping up its plant?
A: We believe the market will behave rationally and not see drastic changes in price dynamics. The west market is expected to behave similarly to other regions like the north and east.
Q: Could you provide the non-cement revenue and EBITDA contribution for Q4?
A: Non-cement revenue was INR154 crore, with RMC contributing INR86 crore. The EBITDA margin for non-cement revenue was around 5%.
Q: What is the current status of the conveyor belt at Durg, and when will it be completed?
A: The conveyor belt project is in the final stages of approval from Steel Authority of India Limited. We expect to start working on it within a month or two after approval, with completion expected in about six months thereafter.
Q: What are the expected CapEx numbers for FY25 and FY26, including project and maintenance CapEx?
A: For FY25, we expect a CapEx of around INR1,200 crore, including INR600 crore for the Durg expansion. For FY26, the CapEx is projected to be around INR1,000 crore.
Q: What is the current capacity utilization of the Udaipur Cement's new greenfield plant of 2.5 million tons?
A: The current capacity utilization is around 40%.
Q: How has the trade and blended share been in Q4?
A: The trade share was 56%, and the blended share was 66%.
Q: What is the outlook for volume growth in FY25?
A: We are targeting a 70% utilization rate, translating to a volume growth of over 10% on a consolidated basis.
Q: Could you share the clinker production and sales figures for FY24 on a consolidated basis?
A: Clinker production was 69.96 lakh tons for JK Lakshmi Cement and 19.75 lakh tons for Udaipur. Clinker sales were 8.7 lakh tons for the whole year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
