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00:00Now joined by the management of Birla Corporation and with us today to talk about the company
00:05is Mr. Aditya Saraogi who is the Group Chief Financial Officer. Good afternoon Mr. Saraogi.
00:13Good afternoon.
00:14Yes, so first I want to talk about, first of all congratulations for a strong set of numbers.
00:19I want you to give a kind of like a color and how the quarter went by for you
00:23and your perspective on it.
00:24The quarter was quite decent for us in terms of volumes. We grew 16% on a sequential basis
00:36and 9% on an annual basis. Our realization drop was lower than the industry average
00:46and because we had quite decent cost savings, our EBITDA per ton was Rs. 967
00:57which we earned on an annual basis it was Rs. 808.
01:02Okay, and in terms of the volume outlook for the current fiscal 5 by 25,
01:09what's the kind of volume growth the company is eyeing at?
01:11We are estimating a volume growth of 8 to 10% for the next financial year.
01:17And in terms of EBITDA per ton, could there be more increase?
01:23Yeah, in terms of EBITDA per ton, we are expecting an increase of 8 to 10% again.
01:29Okay, and I also wanted to know your outlook in terms of fuel cost. Obviously,
01:34the prices do remain volatile depending on global scenarios, but what kind of
01:40fuel cost savings is the company expecting for FY25? Do you all expect it to be lower?
01:47Yes, we are expecting it to be lower compared to last financial year's prices by 6 to 8%.
01:556 to 8% lower from last financial year. Okay, got it.
01:57That's right.
01:58And I also wanted to know, kind of get some perspective of the pricing environment. Now,
02:04regionally prices have been lower all around India, but in terms of the central and the west
02:10regions where your company has a higher market share in terms of capacity,
02:15has there been any signs of improvement? What's your outlook in terms of pricing for FY25?
02:22No, currently, because the demand is quite subdued, we are not seeing any improvement.
02:32We expect that post-elections, from the month of June, we should start to see uptick and demand,
02:40and that should be accompanied by some price rise across the market.
02:46Is there any kind of range that you all are eyeing in terms of price upticks post-elections?
02:52No, we don't have a definite range in mind as of now.
02:57And in terms, now the company has reduced over 600 crores in debt. Now, this is ahead of the
03:03guidance. What's the guidance for FY25? Could we see further reduction in terms of net debt?
03:11Not much, because we will be embarking upon a CapEx plan. Later this year, we are going to
03:20start working on the next phase of major expansion from 20 million tons to 25 million tons.
03:28So, that's required CapEx, and therefore, there will not be a major meaningful reduction in debt
03:34because we'll be deploying the surplus funds on the CapEx.
03:39Okay, got it. And will the company be taking on more debt if needed, or will it all be
03:45internally financed? No, no, it will be a mix of internal accrual and debt. So,
03:52there will be repayment of existing debt and there will be taking of new debt for the expansion.
03:59Okay, so the repayment will cancel out the new debt that the company will undertake?
04:05No, in the short term, the debt might go up from existing levels, not in the current year,
04:12maybe in the next year. But in terms of debt to EBITDA, we expect it to be
04:17reinforced. Okay, and you spoke about capacity expansion. Could you maybe give us more color on
04:24how the capacity expansion will be taking place? What's the current capacity? What's your target
04:29for the near term, 2-3 years? Yeah, so current capacity is 20 million tons. By FY26-27,
04:39we plan to take it up to 25 million tons. We plan to double our capacity as an integrated
04:47unit at Madhya Pradesh. And coupled with that, we plan to set up a few of grinding units across
04:57Bihar, Uttar Pradesh, and in the West. Okay, and is all the capacity expansions will be organic,
05:05or can the company consider any inorganic routes too?
05:09As of now, it is organic, but we are not averse to any inorganic proposals.
05:18Got it. And in terms of the coal mines that are currently under construction,
05:23when will this be commissioned? And in terms of cost savings, in percentage form,
05:29what's the expectation of the cost savings to come by once the capacity is commissioned?
05:36So, we have got two major coal blocks under development, Bikram and Malti Verka.
05:42Bikram is expected to come in the fourth quarter of this financial year, 24-25.
05:49And Malti Verka is expected to get commissioned in the financial year, 26-27.
05:56In terms of saving, these are quite competitive in terms of cost, but saving really is a factor
06:03of the market price of fuel at that point of time. So, it's difficult to quantify,
06:09but what I can say is that both these mines are quite competitive in terms of landed cost.
06:17Got it. And in terms of total cost of the company,
06:22is there a certain target in terms of reduction?
06:26Yeah, that is a continuous process. So, in this financial year, we are estimating
06:34saving of 30-40 rupees on account of the efficiency improvement for it.
06:39Okay, got it. Now, I want to get to the Makatban plant. This gradual ramp-up has been very
06:46advantageous for the company. I want to know what volumes in Q4 were, as well as the full
06:51financial year, and what's the target for the next quarter and this fiscal year?
06:58Okay. In last quarter, it was 6.6 lakh tons. For the whole year, it was 1.8 million tons.
07:06And in this financial year, we are expecting a volume of 2.7 million tons.
07:13And in terms of percentage of total volumes, where did Makatban plant stand and what is the
07:21target to grow? What's the full capacity in the next three to five years? What will be this plant
07:27share in terms of total volumes? Our capacity is 20 million tons,
07:33and the capacity of this plant is 4 million tons. Last year, the market in the West contributed
07:41about 90% of that total volumes. And in this year, we are expecting about 19 million tons
07:48and 2.7 from this plant. So, maybe about 15 odd percent will come from this plant.
07:54Okay. Got it. From a 9% to a 15% growth. And in terms of incentives, now, since the plant is in
08:01Maharashtra, has the company booked any incentives? Or if not, when will these incentives for this
08:07plant come in? No, we have not yet booked any
08:12incentive because we are yet to get the final registration appearances from the state government.
08:20And we are expecting it shortly, maybe hopefully within this quarter. So, we'll start booking
08:25the incentives from this year. And do you all have an estimate in terms of
08:31incentives for the, maybe for the full fiscal, if not plant specific?
08:36For full fiscal, out of booked plants, we are expecting incentives of about 100 crores. And in
08:41total, we are expecting incentives of about 110 crores.
08:46Okay. So, in terms of other plants, there's only additional 10 crores.
08:51We had a major incentive in Kundang plant, which got fully utilized in March 2024.
09:00Okay. And are there any other plants that are yet to book any more incentives?
09:07No, not in the current year. We are setting up a grinding unit at Kundang plant,
09:13which will get commissioned in H1 of next financial year. So, once that gets commissioned,
09:19then again, in that plant, in that additional capacity, we will be entitled to incentives.
09:25Okay. And in terms of lead distance,
09:29what is the company-wide lead distance and specific for the Mukatbal plant?
09:38Company-wide lead distance is around 340-445 kilometers.
09:43And for Mukatbal, it is slightly higher than 400 kilometers.
09:47So, does that have an overall impact on your logistic cost? Could there be higher since the
09:52volume ramp up in the Mukatbal plant given the higher lead distance?
09:57No, you can't see logistics cost in isolation. You have to see the realization, which is the
10:04market which gives higher realization. You have to see the realization on a net versus
10:09net of logistics cost. Okay. Got it. And lastly, my questions are
10:15surrounding the premium cement volumes. You've seen a good amount of uptake in terms of total
10:22percentage. What's the mix? And what is the aim? Because I do see the focus on the premium segment.
10:31So, what is the target that the company has in terms of growth?
10:35Our current share of premium segment in total trade volumes is around 64%.
10:42We plan to keep it around 65% because we want to be present in both the
10:50flanking as well as premium branch. We don't want to vacate any of the two spaces.
10:56Okay. And in terms of pricing advantage or the kind of margins that you have with the premium
11:03segment versus the other segments, what are the margins between the segments?
11:09It varies from market to market, but on an average, maybe about 20 rupees.
11:15Okay. Got it. Yeah.
11:17Thank you so much, Mr. Saraogi, for joining us and for giving us the outlook,
11:22going ahead and the kind of things that the company has planned. We wish you all the best.
11:29Thank you. Thank you for having me on this one. Thank you.
11:32Well, viewers, that was Birla Corporation and their outlook in terms of demand,
11:37their volumes and their targets in terms of capacities for the next few years. Do stay tuned.