JKCEMENT — earnings call

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Prepared remarks

LIMITED · MODERATOR:

MR. PRASHANT SETH – PRESIDENT (BUSINESS INFORMATION & INVESTOR RELATIONS), JK CEMENT

Moderator · Conference Operator

MR. VAIBHAV AGARWAL – PHILLIPCAPITAL (INDIA) PRIVATE LIMITED JK Cement Limited May 14, 2024

Ladies and Gentlemen, Good Day and Welcome to Earnings Call for Quarter and Year-ended 31st March 2024 of JK Cement hosted by PhillipCapital (India) Private Limited.

As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes.

Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone.

Please note that this conference is being recorded.

I now hand the conference over to Mr. Vaibhav Agarwal from PhillipCapital (India) Private Limited.

Thank you and over to you, sir.

Vaibhav Agarwal

Thank you, Michelle.

Good evening, everyone.

On behalf of PhillipCapital (India) Private Limited, we welcome you to the Q4 & FY'24 Call of JK Cement Limited.

On the call we have with us Mr. Ajay Kumar Saraogi, Deputy Managing Director and CFO, and Mr. Prashanth Seth, President, Business Information and Investor Relations.

I would like to mention on behalf of JK Cement Limited and its management that certain statements that be made or discussed on today's conference call maybe forward-looking statements related to future developments and based on current expectations.

These statements are subject to a number of risks, uncertainties and other important factors which may cause actual developments and results to differ materially from the statements made.

JK Cement Limited and the management of the company assumes no obligation to publicly alter or update this forward-looking statements whether as a result of new information or future events or otherwise.

I will now hand over the floor to the management of JK Cement for their opening remarks before open it up to Q&A.

Thank you, Saraogi, sir.

the eastern markets. · Management

JK Cement Limited May 14, 2024 Looking to this, the Board of Directors also recommended a dividend of Rs.15 and a special dividend of Rs.5 as this year we are going to celebrate 50 years of gray cement and 40 years of white cement.

We started the gray cement journey way back in 1974 and the white cement in 1984.

As far as the projects are concerned, our expansion is well within the track.

The Prayagraj unit of 2 million tons is in advanced stage and this is likely to be commissioned in the second quarter of this fiscal.

The 6 million tons expansion plan, we have already placed orders for the main plant and equipment, the civil and mechanical contractors’ work has already been released.

At the main integrated plant site, the Bhoomi Pujan has been done and the construction work has started, then about either end of second quarter of FY'26 or third quarter of FY'26.

As regards, we continue our journey of growth.

And yes, presently because of elections, the demand is subdued.

However, we feel that we will end up the year with at least about 10% growth.

And we continue with our journey for cost optimization and going forward, we see that we should be able to achieve Rs.150-200 of reduction in costs.

These are the major highlights.

I would be pleased to address any of your queries.

Thank you.

Navin Sahadeo: · My second question then was around the timeline for Panna-2 CAPEX. So, in the presentation

So, if I may please request some more like elaboration on this as to what will be the broader areas under which you plan to achieve this, and if there are any specific year wise timelines to this that will really help?

My second question then was around the timeline for Panna-2 CAPEX.

So, in the presentation you said that the clinker plant would be possibly up and running by July to September '25.

But JK Cement Limited May 14, 2024 if you could help us understand the grinding units related to this, what are the specific timelines if you can share that?

Moderator · Conference Operator

The next question is from the line of Mangesh Bhadang from Centrum Broking.

Please go ahead.

Mangesh Bhadang: · The second question is on the market. Just wanted to have your views on what the current pricing

So, a couple of questions.

First is on Toshali Cement.

So, now that the acquisition is complete, what kind of contribution is expected in terms of volumes from that plant, or do you think that we need to make certain investments for that plant to basically start contributing the new fleet

So, this year we can expect 4-5 lakh you said, right?

The second question is on the market.

Just wanted to have your views on what the current pricing is compared to the 4Q average, and you mentioned that demand is low at least initially because of election.

So, what kind of number you're looking for in '25 and that 10% growth you have mentioned is largely will come from the central region?

On the current pricing trend?

And sir, finally, the Prayagraj and Ujjain grinding units cumulatively will have 3.5 million tons of grinding capacity.

So, we do have the commensurate clinker for the same, right, at the existing unit?

Moderator · Conference Operator

The next question is from the line of Amit Murarka from Axis Capital.

Please go ahead.

Amit Murarka

So, my first question is on the CAPEX build up for '25 and '26.

So, if you could just provide some guidance there?

Moderator · Conference Operator

The next question is from the line of Keshav Vijay Ratan Lahoti from HDFC Securities.

Please go ahead.

Keshav V R Lahoti

Just want to confirm on the central and east expansion what I can recall the entire expansion was 2,850 crores and the central piece was 2,200 crores, but we can see now Panna alone cost is 2,300 crores.

Is there some bump up in expansion, how much this total expansion will cost?

Moderator · Conference Operator

The next question is from the line of Shravan Shah from Dolat Capital.

Please go ahead.

Shravan Shah

Just continuing for FY'25 on paint front, how much loss that will be delivered?

Moderator · Conference Operator

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

Please go ahead.

Rajesh K. Ravi

My first question pertains to your CAPEX.

So, this 1,900 crores which you have mentioned will be spending in this financial year.

This is only the expansion CAPEX or all that is inclusive of your maintenance CAPEX.

JK Cement Limited May 14, 2024

Moderator · Conference Operator

The next question is from the line of Amit Murarka from Axis Capital.

Please go ahead.

Amit Murarka

Sorry, I missed the comment on fuel cost.

So, can we now expect that that the downward sloping curve that we're seeing on fuel cost for last year, it will now be more like a flat curve from here for the next couple of quarters at least for which we have the visibility or is there some further reduction that can be expected?

JK Cement Limited May 14, 2024

Moderator · Conference Operator

The next question is from the line of Girija Rai from Asit C.

Mehta.

Please go ahead.

Girija Rai

So, if I go through the presentation, our lead distance has reduced by 6-7 kilometers on quarter- on-quarter basis and also, we see the global energy cost also has declined.

But we do not see much impact in our freight cost per ton, and in your opening remark you mentioned we will be having a saving of around Rs.40-50 per ton of savings from the freight cost.

So, how we are going to do that?

Moderator · Conference Operator

The next question is from the line of Ritesh Shah from Investec Capital.

Please go ahead.

JK Cement Limited May 14, 2024

Ritesh Shah

First is, can you please provide some color on the UAE business, the shipments, the volumes that we had for the full year, if at all there were shipments from UAE to India and how are we looking at this asset going forward?

Moderator · Conference Operator

The next question is from the line of Siddharth Mehrotra from Kotak Institutional Equities.

Please go ahead.

Siddharth Mehrotra

Just a small query.

I see that your other expenses have been elevated and the reason for that is attributable to increased branding spends.

So, could you just break down what sort of branding spends are there in this quarter out of the total other expenses of around Rs.468 crores?

Moderator · Conference Operator

The next question is from the line of Navin Sahadeo from ICICI Securities.

Please go ahead.

Navin Sahadeo: · My second question then was around the timeline for Panna-2 CAPEX. So, in the presentation

Sir, just two follow-ups.

So, in the previous quarter, I think we commissioned the Karnataka Waste Recovery.

Is that correct?

I'm just comparing Q3 presentation with this.

JK Cement Limited May 14, 2024

It's a 15 MW?

Sir, my second and last question was about the CC ratio.

So, with now addition of more 6 million tons of grinding capacity against the 3.3 million ton clinker that we are like adding, Panna line- 2 I am referring to, so what could be then improvement in CC ratio we can see, I understand I think last year we were more like 1.45, I'm talking about FY'23, will really help if you give CC ratio for FY'24 and how much we can improve on that?

I was only asking if this 1.45 could increase too maybe –

And since you mentioned trade, non-trade, what was it in Q4 and for the year?

Moderator · Conference Operator

The next question is from the line of Keshav Vijay Ratan Lahoti from HDFC Securities.

Please go ahead.

JK Cement Limited May 14, 2024

Keshav V R Lahoti

I just want to get a sense on the paint business.

We can see sequentially the business is down, revenue is down by 35% though we understand some seasonal factor is there but still there is a sharp dip in the business and when the business is ramping up, so possibly 300 crores revenue in FY'25 could be a tall task to achieve?

Moderator · Conference Operator

The next question is from the line of Amit Murarka from Axis Capital.

Please go ahead.

Amit Murarka

I just wanted to clarify the paint revenue.

You mentioned 30 crores or 53 crores?

Moderator · Conference Operator

Ladies and gentlemen, this will be the last question for today, which is from the line of Shravan Shah from Dolat Capital.

Please go.

Shravan Shah

Just again a clarification needed on the paint.

So, 2-3 things.

First is 707 crores white consol revenue for this quarter, does that include the 51 crores paint revenue?

Moderator · Conference Operator

We will take one more question, which is from the line of Ritesh Shah from Investec Capital.

Please go ahead.

Ritesh Shah

A simple question.

You indicated cost-saving numbers over two years.

Sir, do you think this is something which is replicable industry wide?

The reason to ask this is two largest companies have also chief given cost-saving targets.

So, is it like industry cost curve will actually go down or is it something which is more company-specific?

Moderator · Conference Operator

Ladies and gentlemen, due to time constraint, that was the last question for today.

I will now hand the conference over to Mr. Vaibhav Agarwal for closing comments.

Over to you, sir.

Vaibhav Agarwal

Thank you.

On behalf of PhillipCapital (India) Private Limited, we would like to thank the management of JK Cement for the call and thanks to the participants for joining the call.

Thank you very much, sir.

And Michelle, you may now conclude.

Moderator · Conference Operator

Thank you, members of the management.

Ladies and gentlemen, on behalf of PhillipCapital (India) Private Limited, that concludes this conference.

We thank you for joining us and you may now disconnect your lines.

Questions and answers

Moderator · Conference Operator

We will now begin the question-and-answer session.

The first question is from the line of Navin Sahadeo from ICICI Securities.

Please go ahead.

Navin Sahadeo: · My second question then was around the timeline for Panna-2 CAPEX. So, in the presentation

Just to confirm, did you mention Rs.150-200 per ton cost reduction potential in your initial comments?