Well, the numbers are quiet satisfying, but I just wanted to know, have we lost market share by any chance because there is a sharp decline of almost 7% in the East market or anywhere or has been some change in the strategy in terms of volume sales?
So, as I said that we were quite aware that in Q2, the demand for cement was very subdued, if not negative, and hence we were very clear that we should try to retain and give more importance to price over volumes. And this is why you saw that while we have lost on the volume, but we were able to deliver relatively better result in terms of price. I do not have the market share figures, so I will not really quote there. I will not go in that direction, but what we are aware that by all the reported figures that even the country demand has been negative in the last quarter.
Sir, my next question is how do you perceive the Company with second-half for your Company and what would be your guidance in terms of volumes? And is there any increase in prices which you have seen in your key markets and do you see substantial improvement in EBITDA per ton or are we going to be in the same range in the third and the fourth quarter as well?
So, ma'am, as we are speaking now, just about Diwali and Chhath festivals are over. On the macro side, we believe there is every reason for demand to be better in the next 6 months versus the last 6 months, largely because most of the budgetary allocations will now get converted into purchase orders across states. That is the hope and optimism with which we are working. So, demand growth should be positive in the next 2-3 months and 6 months. If that were to happen, then as you know in cement, our industry demand growth has a close linkage, with- the price -. If this were to happen, then we believe if demand is good, then we should see a better pricing environment.
And sir, my second question, if I look at last 2 years or say last 5 years, the discounts that we offer on a per ton basis, it has increased significantly. So, if I look at the CAGR of last 2 years, the number is nearly Rs. 600 per ton, which in FY19 used to be Rs. 330 per ton. Again, is this a conscious measure to increase the discounts as we widen the spread or as we try to push more volumes, how should we understand this variable?
Please understand that if we are saying that our rebate and discount are better than how our EBITDA is increasing, there is some disconnect in the understanding itself. You will appreciate that this quarter amongst the peer group, we have the highest EBITDA per ton. We have a realization which has a minimal drop. We have taken a large volume drop, but that doesn't mean that we have to do a rebate and discount increase also. And if that would have been there, then our EBITDA would not have been Rs. 780 a ton. It is highest in the industry. My friend, please appreciate that 19-21 is not comparable at all because of COVID years. 21-24, if I have an increasing EBITDA trend, then irrespective of rebate and discount, my NCR is keeping on increasing or my cost is going down at a much higher pace than the NCR. What I suggest is that you exactly word your query and send it to either Mr. Subhash Jajoo or me and we will give you exact calculation.
And my last question on depreciation, this quarter, also like very high depreciation, So, what is the expected depreciation number for this financial year and next financial year? And we will be commissioning lot of more capacity like in next year also, so that number of Rs. 2,700 crore will remain at the same number as like even next year?
If you look at the half-year number, it is at about 1311. So, if you just double it because we expect to commission new plants only in April-June, this year, the depreciation number should be 2,700 kind of. However, you have given me the opportunity to explain that I had always been maintaining vis-a-vis Shree that please look at cash profit numbers and not net profit numbers. And I am very happy to say that in spite of whatever we have done, the cash profit still stands at about Rs. 200 a share vis-a-vis 259-260 in last quarter, so Rs. 200 is the cash EPS, net EPS is 25 and it is nothing but because of an aggressive depreciation policy which we have been following. We are cash centric, we are not net profit centric. Look, I will really get back to you on the predicted depreciation numbers. Will it all depends on when, whether we commission it on 1st April or 1st June or 30 June. So, as far as next year depreciation number is concerned, please give us some time.
Just one book keeping question, what will be the power revenue for the September end quarter?
We have stopped giving power revenue separately and we don't intend to. I made it very clear in last quarter that we will be giving you blended revenue from operations and blended EBITDA.
Sir, just one question on your standalone and consolidated operations, so couple of your plants are now in subsidiaries, so is this meaningful volumes and revenue and EBITDA output on those plants and would you be reporting like consolidated volume sometime in future?
Look, Prateek, what I suggest is that you send your exact query and we will reply. These figures, since we are sitting with standalones and consolidated, we don't have these numbers together at the moment. You send us a query and we will get back to you.
Sir, my question is on blended cement. You indicated 70%, is it possible if you could break it up between PPC, PSC, Composite cement and if at all we have any plans for calcine treatment? And the related question over here is any trends on fly ash and flag sourcing costs and if you have any contracts in place which would be longer duration and it helps us on the cost curve?
Let me put it like this that our fly ash cost quarter-on-quarter has come down. And PSC, PSCC or Calcine or whatever you are asking, we may like to keep it within ourselves.
So, my first question is like what was the cement realization in the quarter? And on Q-o-Q basis comparison with Q1, plus clinker sales in Q2, plus capacity expansion timing — both clinker and cement units?
Cement realization was Rs. 4,447 per ton. Q1 figure was Rs. 4,464. That is what I was saying, that our focus has been to maintain the realization knowing fully well that in Q2 demand was subdued. Clinker sales were also as about 3.63 lakh tons. This is also low compared to 5.26 in Quarter 1. Our estimate as we speak in November is that the commissioning should be happening in April to June. Of course, as management, we will try if we can prepone few things, but I am reasonably sure that commissioning should happen between April to June next year. Both for clinker and cement units.
Sir, may I know what is the regional sales mix for this quarter and the realization region wise? And growth region-wise YoY, premium sales trajectory, lead distance?
I can give you a regional sales mix. We have done about 58% in the North, about 31% in East and 11% in South. Remember that our North constitutes both Gujarat as well as parts of UP. So, 58-31-11. I don't have the realization breakup. North growth has been about negative — It is -6% for North, -8% for East and about -10% for South. So, as we speak now, we will like to stabilize it [premium] going forward also at around the same numbers. Once we stabilize, then we will take the next jump to a higher level. Lead distance 433, again, it is down from 475 kilometer last year. Our intent would be to manage the lead distance around the same numbers, but in case, there are some markets where we find that attractiveness of prices is high, we might try to go back to those markets.
My question is on credit days, it has increased for first half as well as last couple of years. So, March '21, it was 20 days. If you look at March '24 and even for the quarter ended, it is like 36 days. So, the number has increased continuously. So, is there some change in strategy?
We will get back to you on this, yes, our numbers are little different than what you were putting. But having said that, there is no change in strategy in terms of market approach. We still operate on the same terms which we operated in the last few years and it could be possible that last quarter the demand being low, the outstanding has gone up slightly otherwise, but there is no change of strategy.
Sir, I just want to understand one thing, this quarter you prioritized premium products versus volume. If I remember right, in the first quarter, you shifted some volumes from North to East where prices are relatively low, right? And you gained market shares on volume. So, just trying to understand what is your strategy on volumes going forward? Can you just help us guide how you will fare versus the industry over the next couple of years?
What we have done, if I compare the last 2 quarters, it is true that last to last quarter, Quarter 1 of this year, we had taken certain strategy. For now, what we have done, let us say in North that we have considerably reduced our non-trade sales. So, our trade sale as an example in the North has gone up to plus 65% odd which was up from 59% in Quarter 1 and in non-trade, we were at 41% in Quarter 1, we have come down to a level of 35%. So, that is the kind of approach that we had taken, which I told you in the very beginning, that price was more important for us than volume in the last quarter and the number of actions were taken of the right geography, right segment, right product to make sure that we are able to deliver a better result on the realizations. Volumes performance, I am convinced, we should be in line with the industry demand growth. Sometimes little higher, sometimes a little lower, but we should be broadly in line with the industry demand growth.
There was a strategy of taking market share, improving utilization and improving pricing. And quarterly, we are not able to figure out what exactly is the strategy because it seems like the goal posts are changing every quarter. When you say market, you expect volumes to grow in line with the industry, you have dropped the utilization, market share, guidance and focusing on maybe improving pricing and how do you plan to improve pricing from here on?
Please understand that there is a classic disconnect between increasing volume and increasing pricing. If you want to increase volume, you have to give up some pricing because everybody else will drop the prices to chase the same value. We were seized of the fact that the volumes will be lower, A, because of delayed union budget, B, because of monsoon season. The budget ultimately got presidential assent on 16th of August. So, we were anticipating practically no demand from the Government who is the major buyer for infra. If you think that 60% is housing, 30% is infra and 10% is industry and if we have operated at about 60%, then we have catered to the housing, but 30% demand was just not there. This is all a dynamic situation. Tomorrow, if the government demand comes up, if the pricing moves in a different manner, we will not be hesitating in increasing our non-trade share. So, what is the strategy? The strategy is to maximize profits, come what so may.
Second question, just wanted to ask on a follow up to that, the volume guidance of growing in line with the industry for the next 2 years, just want to understand why the urgency to add so much capacity if you want to grow in line with the industry — The rational for adding capacity, if you are going to grow in line with the industry?
No, by next 6 months, we are talking about projects that are already in the pipeline under construction. In fact, now in the last part of the construction, which will be now commissioned in next 5-6 months, 7 months. What we are saying if the demand were to grow at the CAGR what we have observed in the past, it makes sense for us in order to conserve and maintain our market share to go up to 80 million tons by 2028 is what the guidance we have given to all of you.
Just on the premium product, you mentioned that you wanted to stabilize at these levels. Are we talking about like a 15% for a stable level for premium product? And what was the overall trade sale proportion and the cost decline drivers?
For next few quarters, 15% is what I have said, yes. And the last quarter [Q1] was 9%. We are at about 74% plus, ma'am, totally 74% at all India level [trade share]. Total cost is 4,122 per ton. Ashok Bhandari added: Yes, the realization has dropped, the power is we don't give any separate figures, so we are talking of blended EBITDA and obviously if there is a dilution in margin it is because of a relatively lower reduction in cost. Other income is more or less the same. My other income which is treasury income is about Rs. 130-Rs. 135 crores. Quarter-on-quarter, the capacity utilization went down to 56%, so obviously the recovery of fixed cost has gone lower. Our total sale (including clinker sale) is 76 lac ton versus 96 Q-on-Q. so you can understand that all these reductions have led to lower recovery of fixed costs and lower contribution.
Sir, on the fuel pricing 1.71 that is the consumption cost, where are we at now? And on the green energy you indicated you are adding 90 megawatts by March 25 and beyond that, what is the plan beyond of March 26? And the 3 million ton Bangalore expansion timing?
This quarter, we will be at about 1.65-1.64 because of the pipeline inventory which we are carrying, but today we are purchasing 1.51. So, the effect will come only in Q4 FY25 or maybe partly in Q1 FY26. See let me make it clear to you. We have seen and we feel that 60% of the total energy max can be attained from green energy sources. We are trying to optimize this by having a combined hybrid kind of thing where wind and solar can also be done at the same site to have better PLF, but then these are all in working. We will get back to you. We are at 54.8. We will certainly reach 60 by June 25 or something. Neeraj Akhoury on Bangalore: We are still working on it. We are trying to getting some of the clearances done. Once that is done, then we will be able to be more accurate about when will the Bangalore facility come.
My first question is on this other operating income or like the numbers you mentioned, so does your reported realization of like 44 and 47, does it improve the impact of subsidies and has subsidies number changed on quarter-to-quarter basis?
Prateek, first of all, the realization number that we have given of 4,447 does not include the other operating income. It is roughly Rs. 66 crores as against Rs. 45 crores last quarter.
We got from channel feedback like versus January, we had a big event in January regarding consolidation of brands into one brand and then focusing on premium brand etc., that was a big event and push there. And then there was some, in 2Q, particularly feedbacks, there was some discontinuation of certain premium products, but you mentioned that premium mix has actually gone significantly higher. So, just wanted to cross check, there was no change versus what was launched in earlier part of this calendar year? And what specific products have we got back?
So, the January initiative, I don't know how much about the event, but for the initiative it was initiative of the Mother brand of the Umbrella brand, which is Bangur. That strategy could be the Bangur master brand continues. We have of course introduced some new products in the market. Having said that, once we have stabilized the volumes of the new premium brands, then we have also bought back some of our most tested brands back to the market. So, that is the strategy that we are following and I think it is working quite well given that in premium, we have been able to deliver a better result than last quarters. So, Roofon was, for example, one product Roofon was one of our very time tested premium products in the market for Shree and that is what we have now reinstated. Similarly, Jung Rodhak was one of the iconic products in India and iconic brands in India. Now, it is coming back as Bangur Shree Jung Rodhak. So, we have made some tweaks, some changes, some alterations, more to suit the market, but overall, the results have been to our estimates quite favorable.
Sir, first is on the CAPEX, so 1H we have done close to Rs. 1,860 odd crores. So, for full year and maybe next 1 or 2 years or previously we said Rs. 4,000 crores CAPEX, so that number remains intact? And in October-November, our region South and North in terms of the prices, how are they versus the Q2 average? And blended cement sales in Q2, road share in Q2 and the fuel mix pet coke in Q2? And 2028 80 MTPA — FY28 or calendar 2028?
Yes it does. We will be roughly Rs. 4,000 crore every year for next 4 years. Very marginally better [prices vs Q2]. Mr. Jajoo will give you these data. Subhash Jajoo: The blended sales ratio is 70% for this quarter. Road-rail is around 88% by road and 12% by rail. Pet coke, 88% was the pet coke and balance was alternative fuel. This is stretching too far my friend. Let us commission Q1 FY25-26 and we will get back to you. The Bangalore unit, Mr. Akhoury has said, we are awaiting regulatory approvals. Now, how does it matter if the commissioning is delayed by a quarter? You say in March it will happen or in December it will happen. At this stage it is extremely difficult to answer.
I just want to understand what is your average utilization, your target for the year across your Central, East and South markets? And for the first half, what has been our utilization across these three regions? And in the next 6 months, among the 3 markets which market, you perceive that there will be relatively better growth? And is the Middle East unit making cash profits?
Well, the overall utilization, as Mr. Akhoury said, it is 56%, in North it was 58%, East 63% and South 40%. This is for the September 24 last quarter. Neeraj Akhoury: I think the way we see therefore will be to grow, as I said, in order to maintain our market share that will require us to grow across geographies depending on each geographies market demand growth. But my expectation would be that we should see in a relatively better growth in North and South and somewhat more muted in East. Ashok Bhandari: Let me repeat the numbers for you. Q2, my cash EPS is 196-197. Q1, my cash EPS was 260. Half year FY 25 is 456. Half year FY 24 was 478. Irrespective of such bad market conditions, we are almost maintaining our cash EPS as per last year. Yes, [Middle East unit] it is [making cash profits].
Just one more question on the other expenses. So, I see that Y-o-Y there is a 70% drop in other expenses when volume is dropped 7% and two new clinker units are also in the base this year. So, I just wanted to understand why there is a big drop in other expenses. Also, like you mentioned that every year there will be a Rs. 4,000 crores CAPEX that you plan to do, so given that most of the expansion plans at least announced ones are getting over in Q1, so could you just explain?
You have to please appreciate, other expenses as a group include what? Number one, in last quarter, we had Royalties included in the other expenses, this quarter we have reclassified, and other expenses have been reduced by an amount of Royalty and added to the raw material cost as is being done by most of the cement Company. That is major reason. Rs. 100 Cr is because of that. Secondly, the logistic costs have also slightly improved because of the drop in lead distance. Number three, as the units are getting stabilized, the stabilization expenses which were high in Quarter 1 has also got sobered down and is likely to remain around this level. You are making slight mistake. It will reach 70 in June 25, whereas it has to reach 80. Even in this 70, if you see the brownfield and green field mix, maximum is brownfield. In 80, maximum comprises of greenfield.
Sir, what is the current status of our RMC plant? How many plants currently we have got and how many plants we have commissioned in this fiscal?
So, this is the first year of our RMC foray into this industry. We started in West and South in Hyderabad as well as in Mumbai where we have taken 5 plants in Bombay and 2 in Hyderabad. That makes 7 plants to date. We are also constructing plants in other regions now and what we had assured to the investors was 5 plants in year 1. We have already crossed that to 7 as I said and I hope we will be in double digit by this financial year end.
Can you just help me understand what was the lead distance in first quarter? I understand it would have come more of, but can you please help me with the number?
433. Right [453 was last quarter].