Central India 6mtpa commissioned.

Employee expenses grew 25% Y-o-Y. Majority could be attributed to commissioning of grinding units, but was there any other one-off in employee expenses given the approximately INR32 crores sequential rise?

The commissioning of the new plant in Central India meant salaries that were capitalized have now gone into revenue. There were additional manpower requirements due to increased business, normal increments, and also provisions under the Labor Code for the year were made in this quarter. There is also a onetime liability pertaining to leave travel assistance provided in this quarter.

Can we safely assume a sustainable run rate of INR260 crores going ahead, or is there some dilution in employee expenses?

Around INR250 crores or so would be the base, but the annual increment effective 1st April adds about 10%. Nathdwara will also need manpower when commissioned in September. Overall, from the full year number of INR937 crores, we expect about 12% to 14% increase year-on-year.

On other expenses, the PPT mentions an increase in advertising and packing cost. What is the component of packing cost in the INR80 crores rise in other expenses?

Packing cost has increased on two accounts - volumes and price. The combined impact is around INR30 crores.

The incentive income seems lower than the earlier guidance of around INR75 crores. What is the reason, and can we assume the same run rate going ahead or expect any pickup?

One unit at Aligarh has fully availed its 10-year incentive. In Rajasthan, we are not able to claim the incentive because we are getting GST input credit on the investment. Full year incentive was about INR230 crores, and this year should be around INR250 crores to INR260 crores. Bihar incentive will come once we receive the sanction letter, and other grinding units at Prayagraj, Hamirpur etc. will also contribute. We expect around INR250 crores for FY27.

White Cement was also sourced from UAE plants which is impacted by geopolitical issues. What is the outlook on White Cement volumes for FY27 and near term?

For domestic White Cement, we can meet entire demand from domestic production. We were feeding certain regions in the South from UAE as it was more economical, but now we are feeding that from Gotan plant. We do not see losing any market of White Cement on account of the present geopolitical situation.

Has pricing increased because the flow from Middle East has reduced?

We have been able to increase the prices of both White Cement and Wall Putty on account of increase in the input costs. The chemical costs have increased substantially, and we have tried to pass on the cost increase to the customer.

What is the capex guidance for FY27 and FY28?

For FY27, the capex should be in the range of INR3,500 crores to INR4,000 crores. For FY28, it would be INR1,500 crores to INR2,000 crores.

What was the incentive accrued in Q4 and what is the outstanding on books as of March?

The outstanding as on 31st March is close to about INR300 crores and in this quarter, it is about INR29 crores.

Would INR29 crores to INR30 crores be the assumed run rate going forward?

It would not be the assumed run rate. We are not accruing Nimbahera incentive due to GST input credit. Full year we got about INR230 crores and this year should be INR250 crores to INR260 crores. Bihar incentive will come once we get the sanction letter. We feel full year FY27 will be around INR250 crores.

Is the sanction letter just a formality, or will you start accruing only after receipt of the letter even though you are already eligible?

As our accounting policy, unless you have the document - the scheme says you are eligible, but the sanction letter makes it officially eligible. After receipt of the sanction letter, we submit our application to the state government for the amount. It is a prudent accounting policy to start accruing only after receipt of the sanction letter, though it will be from the back date.

With Jaypee's 5 million tons becoming operational this year, do you see competitive intensity increasing in the central market which is already under margin pressure due to multiple companies ramping up capacities?

We don't see this as a surprise - it was expected for the past 3-4 years. Dalmia earlier had already started sending material and seeding the market and could not. We will address it as it comes. We don't see large volumes coming immediately - only from beginning of Q3 should you start seeing some material from the Jaypee plants.

A similar trajectory for Rajasthan market where a lot of capacities are coming up during FY28 - how would that market shape up in terms of volume and pricing FY28 onwards?

We are well prepared. When we took the expansion, we had factored in that competition would definitely intensify. We have strengthened our team processes, planned how to consolidate our position in the market, and how to send material from Jaisalmer and the 2 grinding units. This is an opportunity for us - we will now have 3 more locations and an advantage in serving the market from shorter distance, which will improve our market share. Even after commissioning of all those capacities, utilization could be reduced by around 4% to 5% but would remain higher than the overall country average.

Any update on the Saifco expansion in Andhra and the Odisha expansion plans?

No plans for expansion at this point. For Orissa, we have not got any mining lease as yet, and we will think about expansion only when the mining lease comes. For Saifco, though we have the mining lease, we will first stabilize our position in the market, stabilize the plant and start earning profit, and then look at expansion.

What is our expectation for FY27 in terms of volume growth in the gray cement business?

In FY27, we should also be growing in double-digit growth. We expect the market to grow around 6% to 8%, and as far as our volumes are concerned, we should get incremental definitely 2.5 million tons incremental volume, maybe more.

Any commentary on progress on the cost reduction front?

We have already achieved the major cost savings, but it is ongoing. We see another INR50 per ton which we should get in this fiscal, mainly driven by green power and AFR in the South and North plants.

What was the fuel mix in Q4?

Based on heat value, around 50% petcoke, 12% alternate fuels, and balance is Indian coal.

The INR50 per ton cost savings guidance for this year - does this include the benefit from the Central India ramp-up (waste heat recovery, etc.) or is it from existing operations?

These are for the existing operations. If we optimize more on existing waste heat, that is part of cost saving. Installation of new waste heat is not part of the saving. Central India ramp-up cost benefit will definitely be there and will be reflected as it comes, as Central India has a major cost advantage in that region.

Could you share the consolidated cash balance as of FY26?

Our standalone and consolidated cash balance is the same because the subsidiaries are mainly Saifco and Fujairah, where there is hardly no cash balance as such.

One of our peers mentioned regulatory clearance issues in Punjab, which is also the location for one of our plants. Are we anticipating similar issues, especially given possible election-related slowdown?

As of now, it is very difficult to say, but we don't foresee any issues where we have identified our site. If there are issues, we will inform everyone. But as of now, there are no issues.

In the recent 10-odd days, there has been a substantial increase in diesel prices of about INR8 to INR10 per liter. What is the impact on freight cost, ballpark?

As of now, whatever increase has taken place, the impact has not been significant, maybe about INR10. There has been an increase announced only yesterday. We have to see what is coming in the pipeline and how much to pass on. We have to wait and watch.

What was your paints revenue and EBITDA for this year?

Paint top line was INR380 crores and there was a loss of around INR40 crores in the paint business. This year we expect a top line of INR500 crores to INR550 crores, and with improvement in gross margins and other things, we expect a breakeven on EBITDA basis.

Is there any onetime or promotional expense in other expenses that is elevated because on a year-on-year basis the increase seems steep?

Other expenses include packing costs, stores, and selling expenses which are variable and increase with volumes. We are also investing in branding for both gray and white business. The additional incremental branding investment is about INR50 crores to INR60 crores.

What is the impact sensitivity with respect to increase in diesel prices?

Diesel prices impact both internal material movement and external freight. If it goes up by INR10 to INR11 - a fair number given the government's direction and the INR7 increase already announced - it may have an impact of about INR50 a ton to INR60 a ton.

Do you see any pre-monsoon price hike? And is the 6%-7% industry growth guidance conservative given post-COVID and FY25 demand trends?

6% to 8% is fair for the cement industry historically, which grew at 1.2x GDP. There is good infrastructure demand, but we factor in the geopolitical situation which impacts housing demand. People may defer housing investment if businesses are down. On price, with cost increases we would definitely like to pass on all cost increases prior to the monsoon period and we will wait and watch.

For FY28, given Jaisalmer, Bikaner, and Punjab supporting incremental volume in the second half, can one look at similar 2.5 million to 3 million ton extra volume in FY28?

Sure. We are making investments, and we definitely want that volume growth. Going forward with our 2030 plans, we should get minimum additional 2 million tons annually, and I have already revised that to 2.5 million, and hopefully will revise further to minimum 3 million every year.

On consolidated basis, is the 12% to 14% employee cost growth also applicable? Q4 consolidated employee cost was INR291 crores and will we see further increase from Q1?

Yes, from Q1 you will see an increase. The increase is on account of increments and reclassification of salaries to meet Labor Code requirements, which also has some impact on wages.

FY27 capex is INR3,500-INR4,000 crores but Jaisalmer balance capex is INR3,900 crores. Does FY28 capex of INR1,500-INR2,000 crores represent spillover from Jaisalmer or include Muddapur expansion?

The INR3,500 crores is not entirely towards Jaisalmer expansion - it includes normal capex, putty plant capex, solar tie-ups investments, Saifco and paint investments. About INR800 crores to INR1,000 crores would be normal and other capex, and the balance on greenfield expansion. We have not considered the next expansion yet. In Panna, there is also a spillover capex on railway siding, but there will be a saving of about INR200 crores to INR300 crores in the Panna project versus the announced INR2,850 crores.

On paints, the INR500-INR550 crores revenue and EBITDA breakeven - is that for the full year or exit rate of FY27?

That is the full year number, not exit. INR500 crores to INR550 crores is the full year FY27 number. The EBITDA positive is also a full year number.

With the 6 lakh ton wall putty plant being ready by Q2, how should one look at the full year consol white cement volume?

Consol white cement should see 8% to 10% growth.

Thermal power plant capacity of 27.5 megawatt was reduced this quarter - from which plant and why?

We have discarded the thermal power plant at white cement and one at gray cement. It is not economical to operate, so we are going for more green power. We should mostly sell it as scrap.

With WHRS at 51%-52%, how should one look at the green power mix going up to the 75% target in FY27 and beyond?

FY27 should increase by 2% to 3% due to pending state government and group power approvals - should be closer to 55% by FY27. The main increase to reach 75% will come from FY28 onwards as we already have about 80 megawatts of green power in process. Once commissioned, it will substantially improve the green power mix.

North operations are now running at close to 100% utilization. Central region capacity has increased to almost similar or slightly higher than North. How does the regional split look?

North still remains the highest capacity out of 32 million. If you say 15.5 million is North and South is 4.5 million after debottlenecking in Muddapur. Central is 12 million. The debottlenecking was mainly at the South plant, increasing capacity from 3.5 million to 4.5 million. Central region utilization on expanded capacity is around 65% to 75% combined.

What was the Kcal cost this quarter, the rail share, and the CC ratio?

The Kcal cost was INR1.48. Rail share was 8%. CC ratio was 67%.

Peers have been giving feedback that JK Cement is pushing a lot of volumes especially in non-trade segment in Central India, bringing pricing to a subdued level. What is your response and strategy in Central India in terms of ramping up utilization and its correlation to pricing?

That was about 2 quarters back. We focus on KAM - key account management - as a major driver for volumes. We are not dumping any material anywhere. There is no reason for worry from JK Cement perspective in Central India.

Given that some players are holding back expansions while UltraTech talks about 300 million ton capacity, will JK Cement continue to move forward to the 50 million road map by FY30 or could there be a delay?

As on date, we are confident in whatever we have planned for 2030 and do not foresee any change in that plan. If there is a major challenge on cash flows due to geopolitical external factors, we may shelve for another 6 months or so, but nothing wrong - we are quite confident that we will go ahead with our plan for FY28.

The FY28 capex guidance of INR1,500 crores - does that factor in the road map to 50 million or would there be additional capex for the next expansion?

The guidance given is only with respect to commitments as on date. The next expansion is definitely on the cards and we are planning for it, but we will give capex commitment only once it is approved by the Board.