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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, good day, and welcome to the HeidelbergCement India Limited Q1 FY '23 Earnings Conference Call hosted by PhillipCapital (India) Pvt. Ltd. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Vaibhav Agarwal from PhillipCapital (India) Pvt. Ltd. Thank you, and over to you, sir.
Yes. Thank you, Lizan. Good afternoon, everyone. On behalf of PhillipCapital (India) Pvt. Ltd., we welcome you to the Q1 FY '23 call of HeidelbergCement India Limited. On the call, we have with us Mr. Jamshed Naval Cooper, Managing Director; and Mr. Anil Sharma, Chief Financial Officer of HeidelbergCement India Limited.
I would like to mention on behalf of HeidelbergCement India Limited and its management that certain statements that may be made or discussed on this conference call may be forward-looking statements related to future developments and the current performance. These statements may be subject to a number of risks, uncertainties and other important factors, which may cause the actual developments and results to differ materially from the statements made. HeidelbergCement India Limited and the management of the company assumes no obligation to update or alter these forward-looking statements, whether as a result of new information or future events or otherwise.
Also, HeidelbergCement India Limited has uploaded a copy of the Q1 FY '23 presentation on stock exchanges and its website. Participants are requested to download a copy of the presentation from these websites.
I will now hand over the floor to the management of HeidelbergCement India Limited for the opening remarks, which will be followed by investor Q&A. Thank you, and over to you, Mr. Jamshed.
Thank you, Vaibhav, and thank you, everyone, who has joined this conference for today. While you have downloaded our presentation, I will start saying -- start this by saying that even it was one of the tough quarters for the industry, I'm sure for others also, it would be for us, it has been because -- mainly because I would say that trend was played here by cost.
So it has been a very costly quarter I would say. However, nevertheless, let me run through the presentation, some of the key points in the presentation, which are there with you. So capacity utilization, as usual, we try to keep it at a very high level. So we operate at close to about 72% capacity utilization, which is, I would say, it is a -- under a such a difficult quarter operating at this level is -- was a good task done by the team.
We, as a company, which -- as a company, we operate 100% blended. So on a carbon footprint, on a sustainability, we are on a very high note. We are close to about 511 kgs per tonne of cement.
And we started our -- last time also, we said that we are sourcing renewable power. So in our journey to have hired more and more power under renewable in the green power, we got this 15 megawatts clicking in, taking in from March. And now in Jhansi plant, we are having this amended power availability.
Very happy to inform you that for the first time, highest-ever share of green power in this company has been 30%, which is, I would say, a very, very welcome move of the company in the direction, which leads this company -- puts it ahead on the curve.
We have, again, migrated -- last time also, we mentioned that we are migrating towards lower corporate tax, and now it is a lower [indiscernible] tax for this year, and this has been accounted for while we are making our planning and while we are doing our results.
Net cash in bank is posted close to about INR 2.2 billion. So we have a good reserve here.
And we continue to operate on negative working capital, which has always been one of [indiscernible] in the market. And despite a very strong push back on the liquidity side, the team has been able to try to collect the money on time, although there is a little bit of debt [ has ] increased, but that is -- sometimes, it happens in certain weak months.
But yes, overall, I would say it's good progress on the management side of the team has done a relatively good job.
Moving to Slide #4, which is on the Page 4. We -- as I mentioned, blended, we are 100%. CO2, we have 511 kgs per tonne, and another bright spot, the silver layer, is that we have water positivity of 4.4. We are working to improve it further. And possibly, if this year, the monsoons are good, we will be able to harvest far more water and improve this trajectory from 4.4 and upwards.
On the CSR side, we have made -- we have been responsible, or we have been good stewards. We have been able to be a change agent for the lives of about 32,000 people. And the journey goes on, and we keep contributing because we believe that the industries cannot survive or exist in societies that fail.
On the green power side, I mentioned to you, which is the highest ever we did, 30% share of green power.
Moving to Slide 5. This is a snapshot of how our -- this 30% contribution is distributed. So it is in solar, 15. Services, Jhansi to 15 megawatts. In Narsingarh, with the help of 12 megawatt WHR and 5.5 megawatts solar plant, we are able to take a good respite in terms of power from the grid. Our grid content has reduced. Same thing in Ammasandra, it has been now a story for more than 2 years, 2.5, 3 years, where we have been operating close to 90% of our power is in green power.
On the right-hand side, you can see how our growth trajectory has been. And one good point is that in this quarter, we have achieved 30%.
Coming to the results, which are on Page 6. Whatever we did, okay, we tried to improve our pricing power. We did every possible thing to improve our revenue on the revenue side.
But on the cost side, the fuel and power, there were -- this has impacted us inversely. And our total cost has gone up by 24%. And on the side of realization, we have been able to take out about 13% out of it. So still there is a lot of work to catch up. It is unfortunate that the markets have remained soft for reasons best known to the market.
There has been -- there was a good demand, some period. Within the month of May, it has been a very bad month. In the month of June, it has improved. July, it seems to be a little better, but let's see how the monsoons pan out.
Giving you waterfall of how our EBITDA has got impacted or how this waterfall has happened. So you can see here our EBITDA per tonne was about INR 1,100 last quarter -- in last June. We got -- added on price, and you can see on the right-hand side, in the middle of it, which is a center of drawing attention, which is about INR 620 [indiscernible] economically, that's power and fuel.
The other items, you can see a little bit here, but then this is -- these are some of them, I would say, they are not critical ones. They are one-off funds. But that is not a major concern for us because there is some shutdown, and some small, small things happened. So that's not too much of a concern for us. That will come back to normal. But this power and fuel will remain our question of concern for the -- for us, and I'm sure it is for the other industry members also.
On Page 8, you can see that we are on a net cash of INR 2.2 billion as of now after the debt has been paid, which will be taking its own time, which will be paid up on the right-hand side. The breakup has been given how the cash flow is going to go out from '23 to '26 and how it is going to be repaid. But today, as of now, the bank balance is about INR 4.58 billion, so which is a good balance that we are sitting on.
Coming on Slide #9, you can see that our road volumes are about 45%. And this time, you will see a little change in the coal because since February, the coal prices were lower than petcoke. And now petcoke prices are lower than coal. So we had to rechange, which is the whole fuel mix. And now we have come back to on coal. Coal is 38%, and petcoke is more.
Coming to blended, our premium cement, happy to say that there is a 6% growth on year-on-year, which is very much in line with the trajectory we have planned. And we want to continue growing until we reach a reasonable amount. As of now, it is about 23% of our trade premium brands. And about 83% of our trade sales has been -- in trade, 83% of our volumes are being in trade, and balance is in nontrade. Nontrade and trade, we -- I will be very happy to inform you that earlier the difference between trade and nontrade was more. We have been able to narrow the gap. So to that extent, there is some merit in selling a little bit of nontrade, getting more.
So another thing which I want to inform you, which you might have heard or you might have not heard, which is on Page 10. This is a very unique initiative, which we have launched that's probably the first time in the cement industry anywhere in the globe.
I'm sure there is -- this has been -- this project, we took up because to address the dilemmas of the cement consumers. Let me, for those people who are not aware of it, elaborate a little. Normally, in Indian cement industry or [ later ] consumer, where cement users would buy a cement, first of all, when a consumer goes to buy cement, he is not aware of which are the authorized dealers because you find dealers are in small shacks, whether they are authorized, not authorized, where they are bringing cement from and what -- how much of serious cement flows into the market is known to people that are often raised by the government. And they find some look-alike brands coming to the market, and it takes away a very big toll on the brand.
And so many times, brands lose their reputation because also of this. And the more the premium segment you are, the more is the chances of your duplication. So you have to be very careful. So the customer does not really know today -- in today's time where to buy cement.
Another thing -- so what we try to do is that this app is on WhatsApp. Now what is the chatbot? This is basically a chatbot. Now what happens is when you log on to this number and you just say hi, the system registers you as a customer, and then they give you a menu from what you are to choose. The menu is very vast. You can download company catalogs. You can download product catalogs. You can download the dealers' names in the vicinity where you are. So you have to just type your PIN code in the area where you are. So if we have dealers, the system will tell you that these are the top 10 dealers and retailers in your market vicinity, so you can go and buy from them. Their phone numbers are given to them. So that is all there.
Another thing after that -- another biggest dilemma of the customer is that what should the price -- actual price be in the market. Today, you can go to a cement market, and you will find that dealer to dealer, shop to shop, the prices may vary from as low as INR 2 per bag to as high as INR 15 to INR 20 a bag. In the same vicinity of 300 meters, you will find this type of different cases.
So to address this and to bring all the customers onto one line and to give them the confidence, today, there is no cement -- in the cement industry, nobody gives printed price list. So there is no price list displayed like other products. So what we have tried to do, we tried in the earlier past, we did our [indiscernible], which we put it in the dealer shop where the prices were -- suggested retail prices were promoted. But then we said it was limited to -- not every outlet was having it. So we extended it by using this technology digitization, and we went into this WhatsApp. So you put up PIN code in your area, and you will get a suggested price.
The prices, in our view, should not vary more than INR 5 to INR 7 a bag between what is actually on the ground, and the dealer make you some discount here and there. This is a price which we will get on the [ x shop ] price. And then if they have to sell it or supply to a distant place, then we will charge you probably cartage extra for that. And sometimes, the volumes are more, so we may charge you the same price in the same cost we may deliver it to you at the site. But for a customer who is buying 5, 10 bags, 20 bags of cement, the chances are that the person will get this as a very, very realistic price.
The deal that customer can even book for customer service ramps, service ramps, and then we will provide him the customer site services. He can register a complain if anybody is charging him wrongly, or if he finds that our address of the dealer is not there, or the dealer is not responsive, or he has not met his demand or he has taken the money or something or the other. Then he can log a complain, and we will call him back and understand the customer's details.
Another area that we have also put up for our business associates, there are many people who don't know where to apply for dealerships. By this method, we are telling that here, you can make a call and let us know, and we will reach out to you and supply you or just try to see that whether we can make you our dealer or not. We cannot make everybody a dealer because we do not want unhealthy competition to come into the business. So we are selective about it, but definitely, there is an opportunity for people to apply. And now the company knows that who is interested and who is not interested in the business. We will expand this WhatsApp for business, which is there, which we'll expand it in the future. And this will become the order of the day, which we want to establish that the customer should not feel grief or, in any way, feel less that he does not know anything about cement, from whom to buy, at what price to buy. By this, we are building -- trying to build a customer confidence in our brands and our company. I'm very happy to inform you also that our Patharia mines was honored by the Chief Minister of Madhya Pradesh, the Honorable Shivraj Singh, who will give away a first price to our Patharia mines for environment -- under the environment category. Outlook, just to run through quickly. We expect that the GDP rate to grow at 7.3% as per the forecast, what has been coming now in the media. So we expect that it is close to 7.3% when the cement demand should be aligned close to it or at least a little better than this.
Government spending has been a little low of late. But we expect that with the coming Lok Sabha elections in '24, the spending will go up because the government tax collection revenues have been growing continuously at, at least 20% [indiscernible] on month-on-month basis. So we are expecting that this growth will continue when the government resets.
Russia-Ukraine war, we know that it is -- nobody knows when it will end. But the fuel -- it has taken a hit on the fuel, but I am hopeful that now the Russian coal has started coming to the Indian market, which is cheaper, that the coal production from Indian coal mines has gone up. The last 3 months, we have been seeing a little bit of easing on coal availability. And I'm sure in the months to come, we will also see a little bit of easing on the coal prices also.
Rupee continues to struggle against the dollar, and it's one of its peak. And people talk about INR 80 to a dollar, which is probably the future also are forecasting that.
On the inflation side, we know that -- how the global economies are positioned and how they are moving in what direction. So there is an imminent risk if we see that if a recession was to trigger in, what will be the state or how will we face the industry, how the industry will go. But we are making our plan B, how we will work if that recession was to come and how we will manage our businesses. So we are working on that.
Liquidity crunch, I mentioned to you that it is a -- despite such a heavy, severe liquidity crunch in the market, our teams have been able to manage and do the businesses and still recover our money. We are still great in the history of our company, and we have not had a single bad debt in these so many years. And I'm hoping that we will really continue this good work and continue to remain healthy as our organization.
And this is all from my side. And thank you for your patience listening and happy to answer any of your questions. Anil is with me, and we will be able to answer all your questions to the best of our abilities. Thank you very much. Over to you, Vaibhav.
[Operator Instructions] The first question is from the line of Shravan Shah from Dolat Capital.
Sir, the first question is on the pricing. So how do we see the prices of -- so have you seen any further decline from the start of July compared to the exit of June or the average for the first quarter?
So Mr. Shah, there was little pressure developing because of monsoon is not coming in. But now when the monsoon is coming in with setting in, I think there will be some uptick in price. I think for this month, the prices should remain flattish.
Okay. Now coming to the main question of power and fuel. So 2 things. First, in terms of the average fuel cost for the first quarter, how much was blended? And how much more increase we can see in the second quarter?
You are -- for the power and fuel, both combined?
Yes.
Power and fuel combined. I can give a separate, separate.
Yes. [indiscernible]
Okay. Power for this quarter is about INR 450, and fuel is about INR 1,410.
Sir, I'm asking in terms of the coal, petcoke consumption cost, what was for the first quarter...
Rupees per tonne. Okay. Fuel cost per tonne of cement has been about INR 1,410. And for power consumption, it is on per tonne of cement is INR 450.
Yes, sir, that I got. But in terms of the purchasing cost for us in terms of the coal and petcoke, what was the average consumption cost for the first quarter?
On this particular -- in this quarter, the power cost has been almost INR 6.5 per unit, INR 6.50 per tonne.
Okay. Sir, how do we see the further increase in the power and fuel cost in the second quarter?
However, I don't expect power to go up any further, but fuel, we cannot say. It depends on the market condition. But going forward, I'm expecting power and fuel to come down a little.
Okay. Okay. And sir, what is the lead distance for the Q1 FY '23? And also in terms of the CapEx, last time, we guided INR 50 crores, INR 60 crores CapEx. And also, we are doing the debottlenecking. So any change in the number in that?
On the lead distance, it is the same. There is -- as far as the CapEx part is concerned, that is also constant.
Okay. And any update in terms of the Gujarat expansion? Because previously, we were saying that maybe after September, once we have environment clearance, we will take 1, 1.5 year to get the enrollment clearance for September. So any change in the deadline in that?
No change. We have just received -- in the last month, we received our SEZ clearance approval. Now we are applying for a TOR.
We'll move on to the next question. That is from the line of Kamlesh Bagmar from Prabhudas Lilladher.
Yes, sir. One question on the part of volumes. Our volumes are down 6% and, I think, the lowest volume levels since the Q1 FY '18. Like we had added some capacity through debottlenecking, but we continue to lag on that part because volumes like it's -- if we see the other peers as well, like say, ACC reported 10-odd percent volume growth, and there are also no capacity addition. And even we believe that rest of all peers would be having the growth in the vicinity of 8% to 9%. Against that, we are growing at 6%. And the fact that in Q1 -- in Q4, we had the election. So some weakness could have been there. But in Q1, likely, it was a significant decline.
So Kamlesh, you would not notice it directly, but if you look at it, if you compare it to the Q1 on a year-on-year basis. Okay, last year, we -- in the same quarter, we grew by 38%.
But in the base, there was a COVID impact. Sir, I am comparing right from Q1 FY '18, not from year-over-year or...
Allow me to complete it. That what I'm saying. That time in Central India, other players did not grow by the same extent. So our base was higher. So the growth did not come to that extent, okay? So that is one part.
In terms of absolute number, I agree with you. There was a little bit of pressure on price between -- judgment between price and volume. And because of the liquidity crunch in the market, we did not want to push in too much of material just only to get the money locked in because there have been incidences where some money got delayed, but we recovered it. There are some stresses in the market, so we were balancing this out. But now this is not going to happen in this quarter. We have overcome that situation, which was there in the month of May. There was a little bit of tough time. And that's why there is some hit back on volumes also. We have taken a little hit, but at this volume, we will recover.
Okay. And sir, secondly, on this revenue. So we used to give the breakup of other operating income. And even in the last quarter, we had, like, say, reclassified our revenue breakup. So other operating income was there in the other quarter. So can you provide other operating income number for this quarter?
Please, I'll ask Anil to provide you that. Yes.
The other operating income from last quarter, we started grouping under the revenue, investing probably -- other companies have been publishing results. And this other operating income comprises of mainly 2 parts: 1 is with our tax incentive, which is every quarter around INR 50 million. And second thing will be some kind of miscellaneous income on account of sales. So that amount, so we can consider around INR 30 million. So it is around INR 80 million other operating income during this quarter has been grouped under the revenue part.
INR 80 million, 8-0.
And these are the recurring things. Even the earlier quarter 2, we announced the range to be 70 to 80 or maybe net maximum INR 90 million on this account.
Okay. And because in press release, you were giving the revenue net of other operating income. So in the last quarter as well, the same thing was done. In this quarter, only your revenue numbers include your other operating income in the press release.
You're right. But what we have done in compliance with the annual account for the final audited accounts, we reclassify or regroup in the published results to keep the uniformity in the published results as well as the annual accounts.
The next question is from the line of Rajesh Kumar Ravi from HDFC Securities.
Am I audible?
Yes, yes, please go ahead.
Yes. Sir, a few questions. First, addressing the volume decline. Would you suggest what is the outlook? Because this is 3 consecutive quarters we have seen volume decline. So what sort of number you're looking at for FY '23?
So this year, we are -- for the whole year you are talking about?
Yes.
That is around 4.7 million if I'm not mistaken.
It is for the last year. Last year, '22.
'21, '22 fiscal, it was 4.75 million, the cement volume. This year, it is similar.
No, I think [indiscernible] some growth in the market. So at least 6% to 7% growth must be -- this is what we are targeting. It is because now the GDP numbers are coming at 7% growth. I think we should try to achieve more than that, 1% better than that.
So despite volume decline in Q1, you're still hopeful of full year growth of 7% to 8%?
In every quarter, we will make it up.
We'll make it up. You discussed about the fuel mix. Could you share what was the fuel mix in Q1? And what is it in Q2? And on a per kiloton, what was the costing in Q1? And where do you...
So I mentioned it in earlier on. The fuel mix is about -- in my presentation, it is -- 38% is coal in this Q, quarter past, gone by. And this will keep changing depending on how the fuel prices pan out. Tomorrow, if the coal becomes cheaper, then we will shift to coal. So it is -- we cannot -- I cannot tell you for sure, but ultimately, what is the target is to keep our overall fuel mix in a lowest possible current level.
And what was the per kilocal costing in Q1?
Per kilocal, this one was -- it is -- coal is around INR 3.25, and the petcoke is around INR 3.10.
So INR 3.25 and INR 3.10, right?
Yes.
And how were these numbers in Q4, sir? Because I was just trying to understand what is the impact in Q1 numbers.
Actually, in March quarter, that is in Q4, the petcoke was INR 2.50, and the coal was INR 2.30. So there is significant hike in the coal cost.
Coal price, INR 1 jump in coal and around 50%, 60% jump in -- on this petcoke price.
Petcoke price also increased significantly, but the impact on the coal was much, much higher than [indiscernible]. That's why during this quarter, we increased our petcoke consumption that gives the benefit on account of optimization of fuel mix during Q1 2023.
And sir, this INR 3.20 and INR 3.10, how these numbers are currently stacking up in Q2?
It should be a little better. It's should a little softer.
So the same case is coal prices have come down from, say, INR 3.20 levels or lower because international coal prices, we understand is north of INR 4.
Depends on and what -- how the coal prices come into the game. We cannot say today because we are buying coal on a spot basis. To get coal also it's really -- although there is a struggle there, but at least when we get our FSA coal, then it is better. But today, getting the FSA coal -- earlier today, now the government is clearing amounts which we had paid last year in February, March. The coal is coming now this year to us.
Okay. So my -- I'm asking is sequentially, you're not assuming the prices stay where they are for months of August and September. Is it fair to say that your fuel inflation has peaked out in Q1?
Yes, you can say so.
Okay. And sir, lastly, in the solar power, which you're purchasing annually, how will they improve your power cost? What would be the landed power cost for this new arrangement?
This INR 6.50 is including the solar power cost, which is much cheaper than the grid price. And gradually, when we'll start getting more solar power, I think our landed cost of the average power will almost remain flat. As earlier said, whatever the coal power prices, if the grid increases, we will be able to verify that impact by increasing this newer power from our long-term agreement as well as our own power plant.
[Operator Instructions] The next question is from the line of Pinakin Parekh from JPMorgan.
Sir, my first question is, can you give us some more granular color on cement prices in your key markets, where they were in April and how they've trended over May, June and July?
I would say it is very much -- constant prices have been very flattish. In Central India, the prices have not really moved in a very narrow range, I would say. But you can take comfortably around INR 380 somewhere. Prices in Lucknow, about INR 360, INR 370 in [indiscernible]. So if you take these 2 major markets, it will be somewhere close to -- in this range bound on this.
So sure. So just to understand more clearly, the price hike that you took in April, how much were they per bag broadly? And how have the entire price hikes stuck through the last 3 months?
I won't be able to tell you some micro fines because I don't have the figures of April because I will give you a big picture of the whole thing because as I mentioned, too, it has been hovering around INR 380 -- INR 370, INR 380.
Understood, sir. Sir, second, in terms of demand, right, you said that May was impacted. But broadly, if you were to look at demand across trade and nontrade, where is the weakness higher in terms of the end demand?
See, the demand is getting deep a little bit on the government side. About 30% under nontrade. We -- although we don't supply there. But when the whosoever is filling up that demand, if they don't have then the price, then there will be pressure on prices of certain areas.
Understood. And sir, in terms of the expectations, you said that prices now that the rains have come, but would it be fair to say that the price hikes is possible now only after the monsoon months in October? Or do you think that the company or the industry will try to push through prices over the next few weeks?
See, for us, it is very clear that we look at our day-to-day demand, okay, how the orders are coming pouring in into our system. And then we take a call based on that. If our daily targets are getting over, then we try to take [ INR 1, INR 2 ] increases also, which we, at least -- we are not fussy about it that we have to take a big large increase or anything. But even if I can take INR 1 increase any day, particular day, it makes a difference to us. So we do that. So we play it by the market, how the market is serving us on that basis.
So I cannot tell you whether we can be able to -- how much we will be able to increase. But yes, we don't leave as a company. We don't leave a single day opportunity to take that money. We may have some benefits now after this our new project, which has started, this -- on WhatsApp, where if we are getting more inquiries and if we are getting more inputs, probably, there might be some positive side. But I'm not very sure. It is just launched very recently. So I can't say today.
Understood. And sir, my last question is you mentioned that probably energy costs have peaked for you as a company. Now going forward, sir, is that more driven by a normalization of domestic supplies from coal India or expectation that the global coal prices will fall sharply from here?
It's like this -- Russian coal is available at about 20% to 25% cheaper. So that will bring -- that will put pressure on some other coals available. So they will also try to because everybody then will move towards Russian coal. So then there could be -- people may think, okay, let us negotiate other types of coal, which are coming from South Africa and in other places. We might start reducing the pricing.
Even -- just to add up to this, Mr. Parekh, we are seeing that there is China weakening also happening for Indonesian coal. So the full movement, which was sticking to China, is also -- the Indonesian coal will also find it shore -- Indian shore soon. And then there will be a little -- Indonesian coal is a little cheaper than South African coal.
The next question is from the line of Jayant Gautam from Axis Capital.
This is Amit Murarka. So just a quick question on the market. Like in Central India, we had seen some flow of cement coming from south and east. So has that moderated? Or like are we still seeing that happening?
No, in Central India, we are not having any inflow from south.
Okay. No, I remember after the [indiscernible] some materials were starting to come in from [indiscernible].
Right now, it is not there.
Okay. And I believe even some rigs were coming in from Conarc Cement and all. So...
I do not [indiscernible] where it comes. But that is coming from the eastern side.
Yes. Yes. Okay. So -- but it's not as bad as it was, let's say, 1, 1.5 years, right?
[indiscernible] that earlier, there used to be a freight subsidy, which used to be [indiscernible] have reduced. Now the cost has gone up for everybody. I don't think people will be aggressive on pricing because Central India has seen a very stable prices for last too many months together or, I would say, quarters today.
Okay. Right. And also on the status of the Gujarat plant, if you could just refresh -- update over there.
As I said, that we have the mining lease with us. We applied for TOR. There was some small -- they wanted clearance from -- the SEZ clearance. They wanted as a postal zone area. Clearances were required. Now we have got it. The government has given it. Now we are proceeding with our application to apply for TOR. Once that -- this TOR will take about 1 year, 1.5 years to do the study, and then we are, in parallel, working on that.
Okay. But should we like expect ordering and all should start in the next 6 to 12 months?
6 to 12 months is [indiscernible]. TOR will take another 1.5 years to do. Until that time, we cannot do anything there.
Okay. Okay. Got it. So then it's at least 2 years away at least the projects start then?
Yes, yes.
[Operator Instructions] The next question is from the line of Prateek Kumar from Jefferies.
Sir, my first question is on your coal mix. You said it is 38%. Can you split it further between domestic FSA coal, e-auction coal and international coal?
For us, it is 100% domestic coal. There is no imported coal we buy in Central India.
And how much of that would be linkage and e-auction coal?
There is no linkage coal. Nowadays, linkage is [ gone ]. [indiscernible] there is no coal received during this quarter under the fuel supply agreement. So that's why we also expect that coming quarters, the cost may reduce once we will get -- start getting the coal under our fuel supply agreement. But during this quarter, it was 100% open market domestic coal.
And we may start getting the linkage coal from which quarter?
We expect because now when the pressure will reduce from the power plant, maybe the whole India will divert some of the coals through this cement industry. So it depends on how the rig allocation comes in. We cannot predict anything on that because if the backlog is very huge, depending on how the backlog is going to come out, we don't know. But ultimately, our right remains there that we will get our share of coal.
Okay. And sir, just on your CapEx. For modeling purpose, your FY '23 CapEx would be around INR 100 crores and -- in net range, and '24 will be much higher related to Gujarat. Or it will be like pretty much similar in FY '24 as well at INR 100 crores.
For '23, you are right that it is around INR 100 crores including some investment on account of debottlenecking projects. And on the similar line, we expect that same amount will be in the fiscal year 2024, and we'll see, in case of Gujarat, how much CapEx will be required for the purpose of land acquisition, depending upon the development of our licenses and permits.
The next question is from the line of [ Deep Nayan Shah ] from BNS Investments.
Sir, I just wanted to understand the -- there is some lower given in this quarter below that we have received INR 20 crores during the quarter. So just -- because in the quarter, we already [ solicited ] during the quarter. So I just wanted to clarify that.
But if you see in the note, it is mentioned during the quarter March 2022 and year-end March 2022, respectively. So this is the incentive we received. Or you can say we received the approval from the Madhya Pradesh government. And in March quarter, it was accounted for.
Okay. And what was the -- have you got any incentive in the current quarter? The GST part.
Incentive is really until February 2023. So every quarter, our average amount is around INR 50 million. In June quarter, also on this line, INR 50 million were accrued.
The next question is from the line of Ritesh from Investec.
The first question is you indicated around INR 30 million of other operating income in the quarter. How much was the number corresponding period last year? Was it equivalent number?
Versus June 2021 quarter, this amount was slightly lower. The amount, it is INR 55 million.
Okay. Sir, the question is basically if one looks at the price growth on a year-on-year basis, it looks pretty good as compared to one other [indiscernible] that has actually reported. So is it more of a region-specific thing that we are looking at? Or is it something specific to the company, reduction in discounts, higher trade volumes or direct dispatches? Was there any other measure which was actually just contributed to better price growth?
Ritesh, there are a few things here. One is a good contribution from our premium products, number one. Number two is we have narrowed the price difference gap between trade and nontrade. So that also has added to it. And since we do about close to 82% of our business in trade, there, we try to see that we can inch up our premium over a period of time, which now we are working seriously on that, more seriously than before. And we hope that we will be able to deliver you better results in the months to come.
Right. Sir, this -- all the 3 variables that you indicated, I think we have been doing that since quite some time. The price growth, what we have seen for Heidelberg, it is actually a pretty good number. So I was just trying to probe, was there any one-off or anything specific that we have done besides things that you're already doing? Or is the difference between trade and all -- has it reduced for us?
So in premium also, we have increased in step of premium earlier between that also. We are -- what we are trying to do within that bracket also if you have a premium product. Earlier, the difference used to be some x amount. Now we have increased it to x plus something. So this is a part of our strategy, how to keep inching up our premium. So the product will remain the same, but the price difference between a normal PP bag and a normal premium product, the price gap will keep increasing over a period of 5 to 10 years.
Sure, sir. Sir, my second question is on cost. You did indicate that we do expect cost to actually inch down. So just was trying to understand, what is the sort of inventory that we maintain for over different [ goods ] that we have? Would it be same as 30, 35 days? And how should one look at -- basically, how are you looking at it basically inventory position given the extra costs?
Fuel inventory?
Yes, sir. [indiscernible]
Inventory nowadays, it is a little lower than 25 days. But yes, the target would be that at least keep 30, 35 days.
Okay. Okay. And sir, you indicated Russian coal was 20% to 25% cheaper. Probably, we might not be using that. But sir, can you give the landed cost numbers basically on dollar terms and the kcal of what it yields? I'm just trying to understand the rupees-kcal comparison, what you give for us in Russia.
I think, if I'm not mistaken, that coal is somewhere around [ $170 ] to Russian coal as of now.
Sir, this is on landed Indian ports?
Via Indian ports.
Okay. This is helpful. And sir, lastly, I just wanted to check, how does the parent look at India growth plan? So are they very much comfortable for us to work with the Gujarat expansion or at a later date, so as a [indiscernible] merger to simplify the structure? Sir, I just wanted to get some sense on how does the parent think of India as operations and the growth opportunity, which is very available on the table?
Ritesh, as I -- again, at the cost of repetition, I always say that the group is very focused on India. The group wants to stay invested and grow. So they know that it was the emerging economy. It is developing the state, and cement is one product where you have to stay there in such type of countries because this is -- it is not only that tomorrow because this also lays a foundation for other building materials for us because as a group, we are into many of the building materials, as you know that we are #1 in aggregate throughout the world over. We are #2 now in cement also and #2 in ready mix also.
So these are the building blocks which we have to remain in that. And if we have to -- since it is the forte of the group, so I don't think the India group will ever think of divesting any asset here. In fact, every time, they ask us if there are any opportunities where we can invest more. So of course, we are not able to provide them those opportunities. We have only these 2 greenfield projects here and there. And of course, simplification of our structure is there always on the cards. The working has already begun. The group is already -- we are discussing with the group. Our finance team, Mr. Sharma and his team are working on that. It might take us maybe some time. And by the time, we will come back to them with the news whenever we decide that this merger has to take place. But ultimately, it will be one company.
Sir, have we taken any regulatory steps towards the group simplification? Have you already [ filed ] -- is there any regulatory steps that we have taken?
No as of now. But in future, whenever we decide to do it, then we make our full drawing board is ready. Then we will go step by step as the regulation asks us to go.
Ladies and gentlemen, we'll be taking the last question. That is from the line of Rajesh Kumar Ravi from HDFC Securities.
I have 2 questions. First on this Gujarat CapEx. I understand this is still 3 years or 3-plus years ahead. But what would be the CapEx size? And what would be the funding mechanism? Will the parent company will be infusing equity for the same?
I would say you have to just wait, Rajesh, on this and wait and watch because today, we are doing some -- currently, we have some cash sitting in our account here. The idea is that if this project is going to take about INR 2,500 crores, okay, INR 1,000 crores, we can put from here and the INR 1,500 crores, we can look at how to raise this money. So if the debt pushdown has to be there from the group, if it is cheaper than it is, we look at that, or we'll find out other sources of financing it.
But that won't be [indiscernible]. The net worth of the company is so good that you can -- we can borrow sufficient money to take the closure for this project.
So any number if you suppose you have to borrow, any net debt-to-EBITDA or any net debt-to-equity number, which you are looking at that you won't try and reach those numbers?
By the time we will go for the funding, I think that time, our network will be -- or the free reserve will be around INR 1,500 crores. So if the same amount of the debt will be required, then also, it is not more than 1:1.
Okay. And second, you talked about Russian coal available at [ $170 ]. So 2 things. On a per kilocal, how is that costing? And second, is that sufficiently available to make a meaningful pressure on the market for other sources to reduce prices in domestic markets?
I think kilocalorie, which is [indiscernible], have increased INR 3.25 for the domestic coal. So for our Central India plant, there may not be possible to use the Russian coal because it is landlock situation. We understand from the other people, they have been importing at this level. And for them, CIF in South India, it will be below INR 3 kilocal.
Okay. Okay. So my point was this Russian coal coming in, if the quantity is sufficient enough so that the other sources not directly in your market. But if there is logistics, is it of southwest or the port west player buying more and more of Russian coal will release the other sources of coal for Central India players at a competitive price. Is this understanding right?
Yes, of course, because somebody -- some coal demand is getting replaced by Russian coal. So there is some surplus which will get created. Some surplus that will get created in the domestic world, then that will be available at a cheaper price or much easily. Let me put it -- let us not make -- build our hopes on cheaper, which is to say, easy availability. We are really struggling for coal sometimes. You wonder after 5 days, whether the coal material will come or not or we are going to run into a dry situation.
Despite high prices.
Yes.
Ladies and gentlemen, that is the last question. I now hand the conference over to Mr. Vaibhav Agarwal for his closing comments.
Yes. Thank you. On behalf of PhillipCapital (India) Pvt. Ltd., we would like to thank the management of HeidelbergCement India Limited for their report [indiscernible] call. Lizan, you may now conclude the call. Thank you very much all.
Thank you.
Thank you.
Ladies and gentlemen, on behalf of PhillipCapital (India) Pvt. Ltd., that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.