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

“JK Cement Limited Q1 & FY25 Earnings Conference Call” July 22, 2024

CEMENT LIMITED · MODERATOR:

MR. PRASHANT SETH – PRESIDENT – BUSINESS INFORMATION AND INVESTOR RELATIONS, JK

Moderator · Conference Operator

MR. VAIBHAV AGARWAL – PHILLIPCAPITAL (INDIA) PRIVATE LIMITED JK Cement Limited July 22, 2024

have any in mind? · Management:

The grey cement volumes grew by about 6% year-on-year.

Central India expansion achieved 93% capacity utilization.

We commissioned 2 million tons Greenfield grinding unit at Prayagraj of 2 million tons and this was completed in record time of 10 months from start of work.

As far as the expansion is concerned of 6 million tons and which is our journey for 30 million tons by FY '26, so we are already now at 24 million tons and the work on the 6 million tons, which is at Prayagraj to set up the Clinkerization unit Line-2 at Prayagraj and Brownfield expansion at Prayagraj, Hamirpur and Panna, whereas the Greenfield expansion in Bihar.

So, at Panna the work has already started.

We are on stream.

The orders for main plant and equipment have already been placed and we expect that in 3rd Quarter FY '26, this should get commissioned.

Similarly, in case of the grinding unit at Bihar, the Greenfield grinding unit, we have just finalized the land acquisition, now moving in for the various approvals.

In the meantime, we have already placed orders for main plant and equipment, and we are hopeful here also, that we should be able to start work post monsoon and then complete within the time schedule along with the main plant.

So, that was the major highlights of the working.

And if you look at the balance sheet, then our gross debt was 4,515 crores and the net debt was 2,830 crores and net debt to EBITDA was as on 30th June is 1.36.

That is the major thing on the balance sheet.

Now, if you have any questions, we will be happy to address the same.

Thank you.

Amit Murarka: · Also, lastly, on the Orissa unit, I believe the limestone is not owned by you or lease is not with

Also in the annual report, I think this time you have laid out a plan to do capacity heading for FY '29, FY '30 and you have laid out some units also, Muddapur and Orissa and all.

So, could you just set up, I mean, explain the priorities as to what will be the order of expansions if you

And land is in place at every location, right?

Also, lastly, on the Orissa unit, I believe the limestone is not owned by you or lease is not with you.

You have an arrangement of purchase.

So, you were saying that you would be working to get the lease in your name.

So, is there at least a progress on that?

Moderator · Conference Operator

Thank you.

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

Please

have any in mind? · Management:

Sir, couple of questions.

First was, how far are we from ordering or considering like, you know, placing the order for Jaisalmer?

Because the last couple of times, my understanding was that we needed more support from state infrastructure to be developed in that belt because it's not just us.

I think several other cement players have bad limestone mines in that belt.

So, just wanted to get a sense as to how far are we?

Because if we can do it, then obviously other companies may also consider putting up a plant or if the infrastructure is ready for material evacuation.

JK Cement Limited July 22, 2024

Yes, certainly.

I am saying certainly a Brownfield expansion is far easy and faster to convert.

Yes, exactly.

So, that's what my question was, sir, that is it fair to say that Jaisalmer is now soon to be developed as the next.

Sir, my second question was on the white segment per se.

So, I was just observing that the volumes for the quarter have been I think down.

Since the past two quarters, there is a de-growth of sort seen in the overall white segment so to say.

So, question was, are we growing slower than the market or how should one look at it?

And in the same breath RAK White is now a subsidiary of the largest cement company in India.

So, does that have any impact or positive rub-off so to say, positive, negative rub-off so to say on the prices of white cement imports into India?

Moderator · Conference Operator

Thank you.

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

Please go ahead.

Ritesh Shah

Couple of questions.

Sir, first is on cost savings.

Earlier you had given a target of Rs.

150 to Rs.

200 per ton over FY '25-'26.

Sir, is it possible, so is the target the same?

Are we looking to afford to revise the numbers over here?

Secondly, if you can bifurcate it between freight, power and fuel, others, and if you can also help us understand what part of it would be achieved in '25 and then in '26?

That's the first question, sir.

Moderator · Conference Operator

Thank you.

The next question is from the line of Prateek Kumar from Jefferies.

Please go ahead.

Prateek Kumar

My first question is on pricing in the North market has been usually weak versus historical strength what we have seen in the market.

Can you discuss on the pricing how it is, I mean, how do we see it going forward?

Also, how it is looking for second quarter versus average of 1st Quarter?

Moderator · Conference Operator

Thank you.

The next question is from the line of Pathanjali Srinivasan from Sundaram Mutual Fund.

Please go ahead.

have any in mind? · Management:

Sir, I just noticed one thing, like our RM plus fuel cost has kind of been flat for the last three quarters.

So, did we get some kind of an inventory benefit or something?

Or could you explain why it has been flat?

Because the fall is pretty steep in the last six months, but I don't see much of it getting translated into our numbers or did we kind of get it front ended in the 1st Quarter itself, which is like December?

Any guidance for the next few quarters, sir, for this?

So, we will get some benefit in the subsequent quarters in terms of fuel cost.

And one more thing on realization.

Can you give us some color on region wise intensity on weakness in pricing or demand?

So, like large part of a fall should come in from North.

Would that be a correct statement?

And just one last question, sir.

Like employee costs, will it stay at this level for us or is there any one-offs or anything of that sort?

Moderator · Conference Operator

Thank you.

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

Please go ahead.

Mangesh Bhadang

Sir, couple of questions.

So, firstly, on the paint business.

Given the competition that we are seeing with new players and things, would we revise our CAPEX guidance for this business anytime soon or you think that once we move out of UP and the rest of the state, we would need more CAPEX on the scene?

Moderator · Conference Operator

Thank you.

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

Please go ahead.

Rajesh Kumar Ravi

My first question is if you can explain the sequential price decline appears to be almost 5%, but the margin decline seems to be nominal.

So, is it that a grey cements, a higher amount of clinker sales relative to the Q4?

Moderator · Conference Operator

Thank you.

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

Please go ahead.

Shravan Shah

Many questions answered or a couple of data points and maybe a clarification.

So, first is in terms of the volume growth guidance, last time you said 10%.

So, that remains the same.

Moderator · Conference Operator

Thank you.

The next question is from the line of Tejas Pradhan from Citigroup.

Please go ahead.

JK Cement Limited July 22, 2024

Tejas Pradhan

I just have a book being question actually.

So, the 30 crores revenue that you mentioned, which was one-off in the last quarter, is this recorded in the grey cement revenue that you disclose in the presentation or?

Moderator · Conference Operator

Thank you.

The next question is from the line of Jyoti Gupta from Nirmal Bang.

Please go ahead.

Jyoti Gupta

Just a few clarifications.

I saw that the volume decline was on a Q-on-Q basis was around 6%, and a price decline on a Q-on-Q basis was 3%, and the total expenses per ton basis was 2% and therefore there was a decline in the EBITDA per ton was only to the extent of 7%.

Now, in the next quarter, since the cost that you just mentioned, your total expenses on a per ton basis is likely to increase by 6%, which will again be, and we will see some sort of a decline in price as well, by 3%.

So, can I comfortably consider that EBITDA however not bad, based on the assumptions, we will see, if not a marginal decline of maybe 972?

Would that be a fair assumption?

Moderator · Conference Operator

Thank you.

We have our next question from the line of Sanjay Nandi from VT Capital.

Please

Sanjay Nandi

Sir, what would be your incremental clinker capacity for a 30 MTPA grinding unit?

Sir, what would be your clinker capacity on 30 million ton overall grinding capacity?

Moderator · Conference Operator

Thank you.

Ladies and gentlemen, we will take the last two questions.

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

Please go ahead.

Siddharth Mehrotra

Sir, just a couple of small questions.

I see there is a subsidiary contributing to volumes in the grey business.

Could you just tell me which subsidiary is this?

Moderator · Conference Operator

Thank you.

The next question is from the line of Ajay Kumar from CoV Capital Markets.

Please go ahead.

As there is no response from the line of current participant, we will move on to our next question.

Our next question is from the line of Amit Murarka.

Sorry, our next question is from the line of Navin Sahadeo from ICICI Securities.

Please go ahead.

have any in mind? · Management:

Sir, two quick questions.

Your green power, I think, we have done a very commendable job in a short span of time.

From 19%, we have already had 57%, target being 75% by FY '30.

So, my question is, is there a possibility that we meet this green power target much sooner?

And if so, and also, I mean, what is the cost saving that we get per unit in green power?

And last question, sir.

Toshali volumes you said in the quarter were about 0.3 million tons.

Okay, 30,000 tons, my bad.

So, what is the full-year volumes that we can expect there?

Moderator · Conference Operator

Thank you.

Ladies and gentlemen, due to time constraints, we would take that as a last question.

I would now like to hand the conference over to Mr. Vaibhav Agrawal for closing comments.

Vaibhav Agarwal

Yes, thank you.

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

Thank you very much, sir.

Sagar, you may now conclude the call.

Thank you.

Moderator · Conference Operator

Thank you.

On behalf of PhillipCapital (India) Private Limited, that concludes the conference call.

Thank you for joining us.

You may now disconnect your lines.

Questions and answers

Moderator · Conference Operator

Thank you very much.

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

Our first question is from the line of Amit Murarka from Axis Capital.

Please go ahead.

Amit Murarka: · Also, lastly, on the Orissa unit, I believe the limestone is not owned by you or lease is not with

So, the first question is on cost.

Your other expenses as well as your raw material cost has dropped a lot in these quarters.

Could you help understand what the reasons for this drop?