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00:00 We're now joined by the director and CEO of Orian Cement, Mr. Deepak Khetrawal.
00:05 And we're going to talk about a little bit on the quarter 4 earnings of the company and the
00:10 outlook going forward. Good afternoon, Mr. Khetrawal. Khetrapal is my name. Khetrapal. Thank you.
00:16 Yeah. First, I want to go ahead and ask you on how the quarter has gone by
00:20 for Orian Cement and what is your view on the same?
00:24 Well, on Q4, when we talk about the performance of Orian Cement, we also have to talk about the
00:30 industry, cement industry, the very large industry. And we are a very modest size player in the
00:36 industry. Well, the quarter 4 has not been easy for the industry and also not for us largely because
00:41 the prices in the highest quarter for the year, this year, have been much softer,
00:48 and especially if we talk about the month of March, the prices came down very sharply,
00:52 which has hurt the entire industry. Within that context, if you look at our company,
00:56 I think we have reasons to feel satisfied, if not happy, because we have been able to report
01:04 better profitability. And despite the fact that the volume growth didn't come by as much as we
01:09 would have wanted, but certainly with our strategies of premium products, of managing our
01:14 costs a lot better, we are one of the few companies who've been able to increase their bid up a ton
01:19 in Q4 compared to the same quarter last year. So yes, we wish it was a better quarter than what we
01:25 have, but compared to the rest of the players in the industry, I think we can be considered that
01:30 we've done a few things better than the industry. And you spoke about volumes, fairly muted. What
01:37 was the volume number for the quarter and what are your expectations for FY25?
01:41 So for the quarter, we did a little over 1.7 million tons of sales in this particular quarter.
01:49 And in terms of pricing, I would say we were significantly better than what happened in
01:56 the previous quarter, but Q3 is never comparable to Q4. Compared to Q4 last year, the prices are,
02:03 I mean, just under a percent higher than that. And as a result, the bid up for the quarter
02:10 in absolute rupees, we are at 155 crores, which are the 144 crores of last year.
02:15 And the bid up per ton, we are close to 900 rupees a ton, which is a gain of over 100 rupees,
02:23 I would say, over the previous year, which is something we can draw the satisfaction from.
02:28 But like I said, the plans, the aspirations that we had in the company were higher. So to that
02:33 extent, we need to try harder going forward. What is the guidance that the company has or
02:38 like a target that the company has for the bid up a ton in the next one or two years?
02:45 Next one year, let's speak about because two years tends to be a little too iffy.
02:48 But if we talk about the AIR FI25 that we've already entered, we are gunning for 8% gross,
02:56 that means from about 6.13 million tons, we certainly would want to go to about 6.6 million
03:01 tons or more. And a bid up per ton that we are targeting this particular year is between 850
03:06 and 900 rupees a ton. And I would really want to talk about the pricing. There's been weakness,
03:13 especially in the last quarter, all India average prices were down 6% on a sequential basis. But
03:19 is there some kind of, do you see some kind of sparks in terms of pricing improvement,
03:24 especially in the southern and the western corridors that the company operates in?
03:27 Not yet, because I guess you people are picking up from the market also that the April demand has
03:35 been very disappointing in the industry, largely due to the fact that there's elections going on
03:42 and construction activity largely engages migrant labor, who go back to their native places to cast
03:48 their votes. So there's a shortage of manpower who can do the construction, the extreme heat
03:53 conditions in many parts of India, water shortages coming up. So all kinds of negative influences are
04:00 keeping the demand and construction down right now. So April has not been good for us. May again
04:07 is likely to be soft, we're expecting some strength to come back in the market in terms of
04:12 demand only from June onwards when the elections are over and the government starts taking the
04:17 usual decisions that they need to take. And also, I think when the demand starts improving,
04:24 that's the only time we expect the prices to improve. As of now, the prices are marginally
04:29 better than what we had in the quarter that's gone by in Q4 of last year, but not enough.
04:36 We would perhaps expect better pricing as the demand picks up from June onwards.
04:40 And when you talk about fuel costs, I wanted to know what the percentage that fuel costs have in
04:48 terms of your total expenses and how the company is managing to optimize these costs and do you
04:54 all have a target to get these costs down with respect to green power or any other methods?
04:59 Absolutely. You see, the fuel power remains one of the most important,
05:05 the largest part of our total cost. So fuel and power put together is the metrics that the
05:12 company and the industry monitors and all the analysts also talk about the same thing.
05:16 So there are two aspects to it, fuel and power. One, fuel power largely is a function of how the
05:24 fuel prices in the market are. Because in terms of efficiencies, I think we are already counted
05:28 as one of the most efficient companies when it comes to fuel consumption to produce clean
05:32 current cement. The other part is the power cost. In that, there are significant gains that we
05:37 have started having from Q4 of FY24 when we commissioned our waste heat recovery plant.
05:43 And in Q4 itself, the total gain from in that one quarter, the gain in terms of the
05:49 conventional power that we were using and we replaced it is about 11 crores of rupees.
05:54 The second phase of that waste heat recovery plant has already been commissioned
05:59 late in the month of April. Now, just a few days back. And put together, we expect that the
06:06 total savings from the waste heat recovery plant and the additional solar power that we are
06:12 bringing in, put together, we should have a gain of about 55-60 crores on a per annum basis,
06:17 divided by the volume of 107, but almost 75-80 rupees a ton of benefit coming
06:22 from purely the power side of it. And that is the larger saving that we think of when I say
06:28 that we will target between 850-900. A large part of that gain is actually going to come from these
06:32 two initiatives. Got it, Mr. Khetrapal. And I wanted to know where the company's current
06:37 capacities and capacity utilization stands and also maybe a little update on the Rajasthan and
06:43 Chidarpur expansion plans. Yeah. So, in terms of capacity utilization, in Q4 last year, we finished
06:51 with 81% capacity utilization. If you talk about current, current obviously April has been so low
06:56 that it's obviously worryingly low. And that in any case is not the norm, it should improve soon.
07:02 But on a quarterly basis, we had 81% utilization and made up largely of one plant, which happens
07:09 to be in a more, I would say, more active market doing more than 100% utilization. The plant,
07:15 the oldest plant in Telangana has suffered just about 60% utilization. That mix is a little
07:21 tricky for us. But going forward as the volumes pick up, the capacity utilization definitely is
07:27 going to look better. Okay. And where do the Chidarpur and Rajasthan expansion plans,
07:32 expansions currently stand at? Like what stage are they in? Yeah. So, the first plant that's
07:40 likely to take up the expansion activity is going to be the Chidarpur plant in Gurbargarh
07:44 district in Karnataka. We have gone through all the requirements that we needed to do from the
07:50 company side. Now the application or our request for environment clearance has to be approved by
07:57 the MOE of Delhi, which I somehow have... I'm afraid that it may not happen till the government
08:03 gets formed in June, because obviously the ministers get appointed and they start taking
08:07 decisions all over again. But once the application is being processed, typically a process of just
08:12 three to four weeks. So hopefully, if not by June and early July, we should have the environment
08:17 clearance. And that is the time we'll immediately place the orders for equipments and all.
08:22 The Chidarpur plant capacity expansion should be completed. The target would be to start sometime
08:27 within this year, very early in the second half of the year to be completed by end of FY26.
08:36 Rajasthan, you're asking about perhaps will come a little later. But before that, there's a plan
08:40 to put up a split grand unit in Madhya Pradesh, which will support our other plant in Telangana
08:45 in terms of utilizing the clinker there and improving capacity utilization. That also we
08:49 intend completing by FY26. Rajasthan is a completely greenfield project where the land
08:55 acquisition is the first challenge that we have to get over. The process of land acquisition has
09:00 just been started. We are beginning to negotiate with some of the owners of the large chunks of
09:05 land there. And I think Rajasthan, we can't start construction activity to mine one for at least
09:12 another two and a half, three years. We'll take that long. Okay. And one last question, Mr. Khetrapal,
09:17 there were recent media reports that suggested a potential big player acquiring the company.
09:22 Do you have any comments on the same? I have heard the same media that you have heard, but I internally
09:27 from the company, I can tell you there's nothing going on. Media has its own, let's say, ways of
09:32 finding out things. I wish they had checked the facts with us. Okay. Thank you so much, Mr. Khetrapal
09:37 for joining us. We wish you all the best for your net adventures. And that's what we had on
09:42 Orian cement. And the management suggested the recent media reports do not be actually correct.