JKCEMENT — earnings call

The transcript as filed. Every paragraph is addressable: its link names the page and the position it sits at in the call.

Prepared remarks

Ajay Kumar Saraogi

JK Cement Ltd. Ltd. November 14,2022 Ladies and gentlemen, good day and wolcome to the Q2 FY23 ard Hl FY23 Call of JK Cement hostedbyPhillipCapital(India)PrivateLimite,d.Asareminder,allparticipantlineswillbein the listen only nrode.

And there will be an opporhrnity for you to ask questions aftor the presentation concludes.

Should you need assistance during the conference call, please signal an operator by pressing "t ' then.0'onyourtouchtorrephone.Pleasenotethattlrisconferenceisbeingrecorded, InowhandtheconferenceovertoMr.VaibhavAgarwalfromPhillipCapital(India)Private Limited.

Thank you and over to you Sir' Thank you Steve.

Good evening, everyone. on behalf of phillipcapital (India) Private Limited, IwelcomeyoutotheQ2FY23andHlFY23CallofJKCementLtd..onthecall'welravewith us Mr. Ajay Kumar Saraogi -Deputy Managing Director and CFO' Mr' Sumnesh Khandelwal -DeputyCFoandMr.PrashantSeth-President@usinesslnformatiorrandlnvestorRelations).

IwouldliketomentiononbehalfofJKCementLtd.andanditsmanagementthatcertain statementsthatmaybemadeordiscussedorrtheconferencecallmayboforwardlooking statern€nts related to future developments on the current economy.

These statements are subject to number of risks, uncertainties and other important factors which may cause the actual developments and the results to difier materially from the statements made' JK cement Ltd' and the management of the company assnmes no obligation to publicly alter thsse forward-looking statenentswhetherasaresultofnewinfornationorfutureeventsorotherwise.

I will now hard over the floor to the management of JK cement Ltd' for their opening remarlis which will be followed by interactive Q&A' Thank you and over to Saraogi Sir' ThankyouVaibhav.GoodeveningandwelcometoQ2results.Theboardofdirectorsmeton l2th of November to review the working of the results for the Qurter entled 30th Se'ptember 23 and for halfyearly and then Septernber 22'

The majorhighlights

TherevonuefromoperationsduringthisquarterwasZ,ll}croresasagainstl'836croresan increaseoflT%,otherincomewaslowerat23croresasagainst43crores.Theoperating expenses were higher by 22o/o atl,846 crores as against 1'507 crores' Theprofitbeforeta)(was16Tcroresasagainst24gcrores.Theprofrtafterta:(wasl35crores asagainst16gcrorosadropof'26Vo.TheEPSwasRs.16,16paisaasagainstRs.2l.85paisa.

TheEBITDAduringthisquartgrwas303croresasagainst35gcroresinthepreviousyear' EBITDA margins was 14.49% as against 19 95% last year' Ifyoulookattheperfonmanceforihe6montlrsApriltoSepxembertherevenuefromoperations hadinoreasedby24Yoat4,3[scroresasagainst3'46gorores.Theotherinoomewaslowerat45 fr J Kctr rn # nt iP Phiuipcapitat JKCement Ltd. Ltd. November 14,2022 crores as against 75 crores.

The operating expenses lvas higher at32o/oat 3,61 I as agutstzJ4l crores.

The EBITDA was 707 crores as against 761 crores.

The profit after tax was 306 crores asagainst3TTcrores.TheEPSforthe6monthswasRs.3g.60paisaasagairrst4S.4S.The EBITDA margins for the 6 montls was 16'8% as agunst22'38o/o' Thegrossdebtasat30thSeptemberstoodat2,6S6croresasagainst2,s50croresason3lst March 22 and the net debt was 1,70g crores as against 1,606 crores.

The not debt-to-equity was 0.3g rvhich was same as last year.

The consoliilated gross debt was 3B53 crores as against 3'434 crores and the consolidated net debt was 2B39 crores as against 2,150 crores' The board also approvedincreaseinthecemerrtcapacitiesby5.5milliontonsovernexttwoyears.Thiswasby adding grinding capacitres of 5'5 million tons by revamping the ginding capacrty of oristing units as Mangalwar, Muddapur, Jharli and Aligarh which would result in increase of 2 million tons by setting up a Greenfield cement grinding capacity in Ujjain at Madhya Pradesh with a capacityofl.5milliontonsandalsotosetupaC'reenfieldgrindingcapacityinUPatPrayagraj of 2 million tons besides increasing the clinker capaoity at Panna for presont 8,000 TPD per day to10,000TPDperday.Thiswouldbeatatotalcapitaloutlayofl,16lcroresatabout$26per ton.

Tlresearethemajorhighlightsifyouhavoanyquestionspleaseletusknow'Thankyou' · Thankyouverymuch.Wewillnowbegirrthequestion.and.answersession.Thefirstquestion

Thankyouverymuch.Wewillnowbegirrthequestion.and.answersession.Thefirstquestion is from the lino of Shravan Shah from Dolat Capital' Please go ahead' Sir the first question is on the pricing front on the gray realizations we are seeing close to 6'87o QoQdeclineinthisquarter,myspecificreasonwhythedeclines@mstobesliglrtlyonthe lrighersideversusthepeersandpostSeptemberhowdowoseetheinoreasehowmuchincrease we have seen in our regions where we operate?

So,ifyoulookattheprioingseomoretheprioingintheNorthhasbeenunderpressureas compared to other regions' Since major of our exposure is in the North wo are seeing a nrargirrallyhigherdipintherealizations.AsregardspostSeptembertherehasbeensomeprice increase in the Southern region and the western region.

However, there was no increase in the pricing in rhe Nordrern tegion up tilt october, some prico increase has taken place in the North now only two, three days back and we have to see whether the prices are sustained or not' Broadly if we want to quanti$ in terms of how much hike rvould have been?

SouthisaboutRs.15toRs.2QabagandWesternregionisforRs.l0andsoistheNorthern · regiorr,butforNorlhwehavetowaitandseewhetherweareabletosustainthepricoinNorth.

regiorr,butforNorlhwehavetowaitandseewhetherweareabletosustainthepricoinNorth.

Now,ourPannawouldbestartingso2MTPAwestartedandrostolinkerand2MTPAwillbe · startingbythisquarter,sohowdoweseeintermsofthevolumefronrthis4MTPApartioularly

startingbythisquarter,sohowdoweseeintermsofthevolumefronrthis4MTPApartioularly in third and fourth quarter and the nextyear in terms of the rarnp up?

Shravan Shah: · Management

f,JKCur t-t..'i P rn,tttpGaprtar JK Cement Ltd. Ltd. November 14,2022 we have already planned the ramp up and as a part of the existing we had opened up the various markets which are to be served from Panna and started supplying those markets from North.

So, partoftlrevolumesNorthalsoincludedsomesalesintlreNortlrofParrrramarketsandweare hopefulthatwewouldbeabletormrpuptlriscapacityovernext6togmonthstimeandinitially yeswewillstartmaybearountlimmediatelyafterthemonthorsoaround15,000'16,000totts monthlyandgraduallyrampupadditionalvolumesaswegoouteaohmonthincludingsome sale in the nongacle segment. so, gradually the volumes would pick up' we are oonfident about that we have alroady done our all-initial working with respect to the market, appointnrent of dealers etcetera that has been done' And this new 5.5 MTpA we have mentioned everything in terms of the where capacities will come, but in terms of the broad deadline in terms of the strting though we are mentioning two years,butifyouwanttoquantirybyFY24,soalldebottleueckinglikelytobestartingbynext yearFY24?

Yes within that.

LastlyonthedatapointsonthefirelmixKcalcostofthepowerandfuelforthisquarter,load distance, rail road mix?

Forthefuelmixourpetcokeconsumptionwas50%intermsofthevolumeandontheKcalbasis our fuel cost has gone up by around 20% from the previous quarter So, this quarier it would be?

So,the2milliondebottleneckwhichisattheexistingplantsthatwillgetcompletedbyMarch · 23itselfandthenelvgrindingunitofUjjainthatslrouldcomesomewherebyMarch24andthe

23itselfandthenelvgrindingunitofUjjainthatslrouldcomesomewherebyMarch24andthe

grindiryatPrayagrajsometimebytheardoffirstquarterortlresecondquarterofFY25, · In terms of the CAPEX then last time we mentioned tlris yoar around 1,700 odd crore and next

In terms of the CAPEX then last time we mentioned tlris yoar around 1,700 odd crore and next year 1,100 crore' so now in the second half how much in the next year and maybe in FY25 you canbroadlyguideintermsoftheCAPEXanddebtlevelpreviouslylvernentionedthatinterms of the dobt 3,300, 3,400 crore that we look at' so how do we see that?

So,CAPEXthisyearwillbenowincreasedtol,g00croresinnextyearalsowillbel,400crores looking to the investrnent in these grintling units and we have already done this year like around l,000ororesinthePannaexpansionplusthenormalCAPEXsol,200croreshavealreadybeen

spentandasregardstheborrowingwehaveachievedthepeakborrowinglwelbyMrchorsay · Jurrenextyearandthatwillremainbecausewewilltakesomefreshbonowingsforthese

Jurrenextyearandthatwillremainbecausewewilltakesomefreshbonowingsforthese grinding units, but repayments will be there' So' peak level will remain at that level' So, that number would be how much 3'500 odd crores?

Shravan Shah: · Management

frJ Kcff f'Tl * rl t i F phnripcapitar JK Cement Ltd. Ltd. November 14,2022

Road rail mix?

so post this Panna once it will become fully operational so sffucturally can we se'e in terms of the lead distance can signifioantly c.m come down by let us say FY25?

Moderator · Conference Operator

Thankyou.ThenoxtquestionisfromthelineofAmitMurarkafromAxisCapital.Pleasego ahead.

Shravan Shah

Shravan Shah: · Management

f, JKCffrn*r"lt,P

Moderator · Conference Operator

JK Cement Ltd. Ltd. November 14,2A22 We will cheok and revertto you the numbers' Thank you.

The next question is from the line ofTejas from Citigroup' Please go ahead' No major CAPEX has been done till now and we are analyzing everything and the major CAPEX and the total plan would be in the last quarter only' Thank you.

The next question is from the line of uttam Kumar srimal from Axis Securities' Please go ahead.

Uttam Kumar Srimal

My question has already been answered'

Moderator · Conference Operator

Thankyou.ThenextquestionisfromthelineofParllrBhavsarfromlnvesteclndia.Pleasego ahead.

Parth Bhavsar

Sir, I had just one question that you have earlier mentioned ftat this 3'5 Greenfield expansion thatyouhavearrnouncerlatUjjainandPrayagraj,soyousardthatitwouldhaveasufficient clirrker that you will be able to supply in the cfinker rmit would operate at 80%, 85% utilization' but still wanted to have some ideathat at Panna we have like 2'5 million tons of clinker capacity currently which would like go and increase to 3.2 and we aro announcing 3'5, so how are we going to manage the 3'5 incremental? ffiJKc#rn#nf, P pCapita Ph JK Cement Ltd. Ltd. November 14,2022

Moderator · Conference Operator

Thank you.

As there are no furdrer questions I nolv hand the conforence back to Mr' Vaibhav Agarwal for closing comments.

Over to you, Sir'

Vaibhav Agarwal

Thank you very much.

On behalf of PhillipCapital I would like to thank the management JK cement for the call and many thanks to the participants joining the call.

Thank you very much sir.

Steve you may now conclude the call.

Thank you.

Moderator · Conference Operator

Ladies and gentlemen on behalf of Phillipcapital (India) Private Limited that concludes this conference. we thank you all for joining us and you may now disconneot your lines.