J K Cement Ltd
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J K Cement Ltd
NSE:JKCEMENT
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Ladies and gentlemen, good day, and welcome to the Q3 and 9 Months FY '25 Earnings Conference Call for J.K. Cement hosted by PhillipCapital India Private Limited. [Operator Instructions] Please note that this call is being recorded.
I now hand the conference over to Mr. Vaibhav Agarwal from PhillipCapital. Thank you, and over to you, sir.
Thank you, Rio. Good evening, everyone. On behalf of PhillipCapital India Private Limited, we welcome you to the Q3 and 9-month FY '25 call of J.K. Cement Limited. On the call, we have with us Mr. Ajay Kumar Saraogi, Deputy Managing Director and CFO; and Mr. Prashant Seth, business -- Head of Business Information and Investor Relations.
I would like to mention on behalf of J.K. Cement Limited and its management that certain statements that may be made or discussed on today's conference call may be forward-looking statements related to future developments and statements which are based on current expectations. These statements are subject to a number of risks, uncertainties and other important factors, which may cause actual developments and results to differ materially from the statements made. J.K. Cement Limited and the management of the company assumes no obligation to publicly alter or update these forward-looking statements whether as a result of new information or future events or otherwise.
I will now hand this over the floor to the management of J.K. Cement for their opening remarks, which will be followed by interactive Q&A. Thank you, and over to, Saraogi sir.
Thank you, Vaibhav. Good evening and welcome to Q3 call. The Board of Directors met on 25th of January to review the working for the quarter ended 31st December 2024, and 9-month period April to December '24. The major highlights are that this quarter, our net sales was INR 2,606 crores as against INR 2,322 crores of previous quarter, an increase of 12% though year-on-year, it was lower by 3%. And the revenue from operations was higher by 14% at INR 2,716 crores as against INR 2,392 crores and INR 2,784 crores last year, which was at -- as compared to year-on-year, it was lower by 2% and previous quarter, it was higher by 14%.
The profit -- the EBITDA during the quarter was INR 489 crores as against INR 273 crores, an increase of 79% vis-a-vis previous quarter, though it was lower by 20% as compared to year-on-year position. The EBITDA margins during this quarter was 18.7% as compared to 11.7% in the previous quarter and 22.6% previous year. The profit before tax for the quarter was INR 295 crores as against INR 65 crores in the previous quarter and INR 415 crores in the previous year. The profit after tax was INR 205 crores as against INR 45 crores and INR 289 in the previous year. The EBITDA per tonne for the quarter was INR 1,040 as against INR 649 per tonne in the previous quarter and INR 1,335 in the previous year.
If you see the position for the 9-month period for the stand-alone, the net sales was INR 7,493 (sic) [ 7,483 ] crores for the 9-month period as compared to INR 7,707 crores in the previous year. The EBITDA was INR 1,241 crores as against INR 1,458 crores, a drop of 15%. The EBITDA margin for the 9-month period was 16.5% as compared to 18.7% in the previous year, a drop of 13%. The profit before tax was INR 650 crores as against INR 850 crores previous year. The EBITDA per tonne was INR 910 for the 9-month period as against INR 1,091.
These are the major highlights. The balance sheet position. The gross debt as on 31st December was INR 4,863 crores as against INR 4,593 crores as of March. The cash position was INR 1,755 crores as against INR 2,011 crores as of last year. The net debt was INR 3,108 crores as against INR 2,582 crores. The net debt to EBITDA was 1.74 as against 1.29.
These are the major highlights. Besides, the Board also reviewed an opportunity in the region of J&K and decided to invest in Saifco Cements, which has a capacity of 0.42 lakh tons -- 0.42 million tons. And it is proposed to acquire 60% of the equity of the company. And the company proposes to enter into the shareholders' agreement and the share subscription agreement.
And the deal would be -- this would, however, be subject to the completion of the due diligence process and some of the conditions precedent, which are likely to get completed within next 3 to 6 months' time. So this has been the major position for this quarter.
I'll be pleased to address your queries. Thank you.
[Operator Instructions] The first question is from Jyoti Gupta from Nirmal Bang.
Good set of numbers. Two questions sir. One is, I understand that North has been extremely doing very well and fourth quarter also seems to be -- seems remain robust. Two things. One, just that since the volume growth has been there, yet the raw material cost has come down on a Y-o-Y basis -- has grown -- increased on a Y-o-Y basis, while your power and fuel has declined substantially by 19%. Could you please explain why is it not commensurating with the raw material cost increase?
The second thing is has the plant that we acquired in Orissa stabilized completely and has it become breakeven now? So this means any losses from the East plant in Orissa is not -- has no implications on the overall EBITDA and plus, what is the implication apart from the market share of Saifco? What other -- how do you intend to increase the capacity? And what -- in what phases would you actually increase the capacity for Saifco?
Thank you. So I'll answer. In the power and fuel expenses if we see, they have increased during the quarter as compared to previous quarters. Though the volumes overall, if you see they have been more or less flat and the clinker production was lower because in the previous quarter also and in this quarter, there has been some shutdown in the previous quarter. So the power fuel consumption was lower. And in this quarter, we also see a lower fuel pricing as compared to previous quarter.
Okay. And the plant in the East, is that the one we actually acquired?
So the one we acquired, we have done some modification in the plant, and that has now been completed. It's at completion stage. And I think from the -- from next fiscal onwards, we propose that whatever we will be operating the plant at full capacity and would be generating profits. Though in this year, up till now, there has been some losses at Toshali plant. And in the 9-month period, there has been a cumulative loss of about INR 9 crores.
Sir, we see it's a profitable despite buying clinker from the open market? Or have we acquired some reserves over there and we'd be able to...
No, no. We are not buying linkers from the open market. We are getting the limestone. We don't have a long-term limestone arrangement for a higher capacity. Whatever the existing capacity, we are getting the limestone. That agreement is already there. So the clinker is already operating there. So there are certain production inefficiencies and some modernization had to be done. This work is at advanced stage and it's about at the completion stage and will be operative within this quarter, the plant will be normalized. And we are going to launch our brand also in this quarter. So with that, from next year, from post FY '25/'26, we see an EBITDA -- positive EBITDA from the Toshali plant.
Sir, so correct me if I'm wrong, we are not really present in the East market. So there will be some selling and running expenses, which should build up in the fourth quarter and the subsequent 1 quarter so...
No, no. Sorry, we are not -- we don't have any big plans because it is very small region, and we have a small quantity also. So there is no big spend, which is of significant nature, which needs to be specified and told that we don't have any such plans.
And sir, what about Saifco? I would like to understand apart from...
Yes.
So apart from...
So Saifco, this is a plant in Srinagar. And this is of capacity of 0.42 million tons, and presently, the clinker capacity is about 0.26 million tons. And the plant is operating at a lower efficiency, though it will not be on the numbers, we can say it is 40%. But in the region, in the valley, you operate the plant only for -- practically for about 9 months only. So one, it's already a profitable company. We -- there is an EBITDA margins of about INR 1,500 a ton. But we see that there are immediate opportunities in improving the performance of the plant and to get an increased profitability by another INR 400 a ton.
Besides, we can -- we have a plant, but we have studied the plant. There is an opportunity to increase the clinker capacity to about 1,000 tons per day with a capital outlay of about INR 50 crores to INR 60 crores. With that, we would be able to increase the present -- the present profitability in that plant is around INR 24 crores, which is inclusive of the SGST benefit, which is we get benefit both on central and state. So it's a full exemption. So that -- including that and which is available up to 2031. So we are hopeful to, one, increase the profitability, take it up to INR 2,000 a ton and at end time, increased the production capacity from present levels to more than 100% over a period of 1, 1.5 years.
Immediately, after taking over within 6 months, we'll be able to step up to about additional 60%, 70% and then another 60%, 70% -- 50% after we do the CapEx. The -- this plant also has a mining reserve spread over 144 hectares and reserves of about 123 million, which gives an opportunity for further expansion, which a view would be taken not immediately. Once this is a new region, we will evaluate the region. We will see how the things are politically and otherwise, this is a new region for us. We need to understand the things. And maybe after 3 to 5 years, a call may be taken depending upon the situation to further expand there or not.
Agree, sir. The other thing is, sir, INR 174 crores is 60%. So any time the plan...
Pardon?
I said 60% at INR 174 crores. So your plans to acquire the full stake of by -- to 100% by when...
So the value is INR 290 crores and 60% is INR 174 crores.
Okay. So -- and the refurbishment cost apart from that or does it include?
Hello?
Refurbishment cost. Sorry, am I breaking?
Refurbishment cost is about INR 60 crores in all, which will be met from the operations of Saifco itself.
Okay. And the 60% will become 100% by when? Or is it going to be 60% for the next 2, 3 years?
No. There is -- we do not know about that because there has been -- there were no -- there is no such immediate agreement. We will see going forward if it is possible or not. But as of now, it is a joint venture, which is going to continue at 60-40.
Okay. And the profit sharing will also be at 60-40?
Yes, of course. That's the equity. So it would naturally be that.
[Operator Instructions] The next question is from Amit Murarka from Axis Capital.
So great numbers, congrats on that. But last quarter, you had a lot of one-off costs. Just wanted to confirm that this quarter, was there any one-off in the result? Or it's just absolutely normal quarter now?
Yes, this has been a more or less normal quarter.
Sure. And on the CapEx front, like what is the number that you're looking at now for '25 and tentative number for '26 as well?
So CapEx, like we have planned around INR 1,900 crores of CapEx in this year. And next year CapEx would be in the range of [Technical Difficulty]
Sorry, I didn't get the next year number?
I said earlier, we remain as it is, except whether you take it as a part of CapEx sort of thing. This INR 175 crores on this Saifco acquisition would be additional.
Yes. So INR 1,900 crores plus this Saifco number?
Saifco number will come actually in the next fiscal. This is not going to come. The payout will be sometime next fiscal only, beginning next fiscal.
Okay. And what is the number for next year you mentioned?
Next year, INR 1,700 crores plus the Saifco acquisition, like INR 174 crores. Even if you see the INR 1,700 crores will include major is for the Line 2, which is about INR 1,400 crores and INR 300 crores is the normal CapEx, broadly the broad numbers if you look at. So that would be the numbers, [ 14 plus 3 ] plus Saifco. These are the numbers.
Understood. Understood. And also in terms of the future expansion potential at Jaisalmer and Muddapur and others, like is there any progress either in terms of approvals or anything that you see?
So we are just working on all the approvals for Jaisalmer. And we would have a clear picture sometime by June this year.
Okay. Okay. And any like -- can we think of when can this tentatively start in terms of CapEx? I mean, can the CapEx start in '26 itself, FY '26 itself or will...
Amit, see, much would also depend on the scenario. So once we are -- yes, as far as this calendar year is concerned, we would first concentrate on completing Line 2, which is present and the expansion work is on track, and we are well set to commission the whole thing within this -- within FY '26. So there is no -- so we are confident on that. There has been some delay in the approvals for the grinding unit, where also we have done the Bhumi Pooja and now we expect that to be within 11 to 12 months, so by December this year or January next year, the grinding at Bihar would also be operative.
So yes, by that time, once we have all the approvals, then we will take a stock of the market situation and then take a call on the various opportunities which we have and plan accordingly.
Understood. Understood. And lastly, like what is the expectation on the [indiscernible] fuel cost now?
See, fuel cost is already down and there's no...
It is down. It has come down. It was, I think, some the...
[indiscernible] EBITDA in this quarter.
I think there has been some as we speak, there has been some hardening of the some prices increases there. We have to wait and watch. But the quarter December was quite good in terms of when we place orders for petcoke at very good rates ranging from between $95 to $105. So that has been the -- but we do not know going forward, what will be the situation as we're already seeing some hardening of the pricing.
And what was the number this quarter?
INR 1.50.
[Operator Instructions] Next question is from Pathanjali Srinivasan from Sundaram Mutual Fund.
Congrats on good quarter.
Sorry, you have to be a bit loud, come closer to the mic, please?
Is it better now?
Yes, yes, it's much better now.
Yes. So congrats on a good set of numbers, sir. I have a couple of questions. One is what would be the incentive that would be included in our other operating income, sir?
So incentive going forward and even now, you could say broadly around -- I mean it would be INR 25 crores a month, INR 75 crores per quarter. And the net growth here and there, depending upon the volume and others things, some incentives that would be the whole thing. It's around INR 75 crores quarter.
Okay. Okay. So the additional difference here, like in the current quarter number, some INR 110 crores. So what would this be? What would the differential be like what is the nature of...
INR 110 crores include the other operating income also, it is not totally the incentive.
Yes. I'm just trying to understand what the difference...
There was some additional incentives on account of the start of the incentive for the Ujjain plant. And now also, we have got the additional approval for the CapEx, so there is some incentive of INR 10 crores to INR 15 crores relating to the previous period, which is accounted for in this quarter.
Got it, sir, And just one more question. The white cement realization in the overseas has gone up quite meaningfully. If you will tell me like what was the reason for this?
Pardon, I didn't follow?
The white cement realization in the overseas business has gone up pretty meaningfully. So could you tell me like what is the background for this?
No, it is actually the -- because it is regarding the Fujairah plant. So Dubai economy is picking up, there is good real estate growth. And that is why we are able to get good results in the UAE operations.
[Operator Instructions] Next question is from Sumangal Nevatia from Kotak.
Sir, just want some more color on the white cement and putty market. If you could just share how are the margins and overall demand supply situation in the domestic market. Is it deteriorating further? Is that stable? Are there any green shoots visible?
So the putty market continues to be very, very competitive. So both, I mean, Asian Paints and Birla, they are very, very aggressive. So as a result, I mean, putty, the price under pressure. And Asian Paints with what all has already become the largest seller of putty, though they don't have any manufacturing facility. They are mostly outsourcing, but still they are -- they have the largest market share of putty. But -- having said so though the demand is increasing, I mean there has been a growth in putty demand about 8%, 9% overall.
Yes, the growth of Asian Paints is more than us. We have grown by about 4% and Asian Paints has grown in double digits. So this platform still remains very competitive. There is an absolute growth in volume of the white business, but otherwise, it is very competitive, and it is having an impact on the margins. But still we are able to operate that and get EBITDA margins of ranging between 15% to 20% in the white business.
Understood. Understood. That's helpful. Sir, from your commentary on the cost side, as far as variable cost is concerned, is it fair to -- I mean, kind of infer that we've kind of -- all the cost savings largely because of the commodity price deflation is behind us. And from year on, it will basically depend on how coal prices trend?
So yes, but there are certainly some more opportunities there in terms of we are increasing the share of our green power, and we are -- we continue to work on increasing the AFR share. And besides that, we are working on the logistic costs. So these are the areas where still we have got certain benefits which have accrued, but there are -- we see some more, as we said, on a journey of about INR 150 to INR 200 a ton. We may be closing the year by INR 40, INR 50 realization of that, but some other about INR 75 a ton, we will get over a period of time.
Understood. And sir, is it possible to share how is the prices now, say, in January versus the average of 3Q in our key markets, North and Central?
So except I think marginally higher in the month of January on the average of Q3. But this is just the beginning. We have to see how it goes. And though we are hopeful, yes, it could be better than Q3.
Is it similar both in North and Central, the trend?
Yes, both. But it will depend, see because when the year-end comes and there is a pressure on volumes by everyone, does it have impact on the pricing -- so all this has to be seen. But as of now, yes.
And sir, if I may just squeeze in one last question. Overall, in our growth, I mean, mid-single digit, how has been the market growth in both Central and North in the third quarter?
So see, our growth in -- naturally, most of our growth is coming from the central markets because our expansion is in the central market. Our growth in the North is we may be marginally at par or maybe marginally lower than the overall because we did -- when we had some maintenance. So at that point of time, we did cut down some of the nontrade volumes, but we have been able to maintain our trade share across, but the major growth factors is in the Central India, where the major investment is being done. There, definitely, we are growing much more than the market.
[Operator Instructions] Next question is from Prateek Kumar from Jefferies.
My first question is on incentives. You said INR 75 crores per quarter. So this run rate based on future expansions and ongoing -- future expansions and ongoing run rate. This number could stay stable for like maybe a number of years like 3 to 5 years? Or like how is this incentive going to pan out?
it should remain stable because what would happen like for not -- going forward, the North incentives at which we are getting for at Nimbahera, we will get tapered off. But however, the central incentives would increase. So we see in terms of the value, it may remain same, but it could have a lower impact if larger volume numbers here, North is also excluded, South gets excluded. So that may have some mix variance. Otherwise, we see that about INR 75 crores each quarter, we should get as an incentive.
And is there any difference in timing of receipt from various state governments for whatever reason, I mean, those states fiscal at this moment?
So timing difference, it takes about a year or so in realization. So what we see vis-a-vis whatever will get accrued in this year, the actual realization is more or less of the amount which accrued last year. So it's a 1-year gap. So whatever amount gets accrued this year, we should get the payment in the subsequent year.
Sure. And one more question on your profitability, we have recorded like industry leading EBITDA per ton this quarter. And as you said there's no specific one-off either and -- I mean there is like a small one-off in incentives like [indiscernible] but still like INR 1,000 is the unit EBITDA for this quarter. There's some price increase in Q4 and operating leverage, like both of this still lead to like probably grow to like INR 1,100 or so like in next quarter. How do you see profitability in Q4?
So Q4, it will all depend upon what is the price increase over Q4 -- Q3. So whatever is the price increase over Q3, I think that much we could -- we are confident of getting that incremental EBITDA.
[Operator Instructions] Next question is from Navin Sahadeo from ICICI Securities.
Sir, a couple of questions. So first of all, paints, if you can just throw some light how was the performance in this quarter in terms of revenue and EBITDA. I think in past quarters, there have been some losses in the paint business. So does that continue if you can give some information there, please?
So if we talk about the revenues for the paint, in this quarter, we did about INR 83 crores as net revenue vis-a-vis which was INR 53 crores in the previous quarter. And year-on-year, it was INR 47 crores. And in the 9-month period, we have done INR 200 crores as against INR 101 crores in the previous years. So we have been able to tap up this business quite well. Yes, as even on -- yes, on the profit, it is nothing surprising, but this was there that we -- to establish the brand and there is -- the fixed costs are also -- will be on the higher side. In this quarter, there is a loss of INR 17 crores, which is more than what it was in Q2 of INR 11 crores.
And in the 9-month period, we have had a loss of INR 38 crores. And we should be ending the year with a loss of approximately INR 50 crores plus marginally over INR 50 crores. This is how we see. And that is as per the plan, and we expect the top line to be around INR 275 crores plus. This was an indication what we had given, INR 275 crores to INR 300 crores despite the fact that this year, there has been a big disruption by launch of Birla Opus. So we have been able to do that.
Right. And just to understand this better, this loss of INR 17 crores is bulk of it in the stand-alone entity or it could be in the consol entity?
It's in the consol.
Okay. So the entire loss is in the consol entity?
Yes, yes because paint loss is not in the stand-alone entity.
And despite that -- I'm saying despite that, the difference between consol and stand-alone remains positive at about INR 2.5 crores EBITDA?
Yes, this is because of good profit from the Fujairah plant.
Okay. So Fujairah is really doing good then, right?
Yes. Fujairah, we had about INR 24 crores as an EBITDA during this quarter. It was same as previous quarter. And in the 9-month period, we have got about INR 68 crores as EBITDA as compared to INR 55 crores in the previous year.
Wonderful. Wonderful. This is good. Great to know that. So from a volume perspective, sorry, I have not done the math, but what is the utilization at UAE now? And what is the scope there? Because if the profitability is good, can we expect further improvement or recovery there?
No, see, again, UAE though -- I mean it is -- but it's always -- it's a very typical market with now -- I mean going -- as you foresee going forward next year would become a bit challenging because Asian Paints is planning to set up a white cement plant in the UAE, which should come sometime middle of this year. So not a big capacity, but definitely, that is going to have some disruption.
In the UAE Grey market, you're saying?
Not exactly UAE market, but again, they would -- this is primarily for self-consumption. They would bring in clinker from there to India and maybe use for the putty -- for the putty production. So that's their plan. We do not know what is the -- if they have some other plans though, but the capacity is not big. So -- but having said so, it will have -- since we being a major supplier to Asian Paints for the putty, it will have some disruption on the volume numbers for white cement, both in the UAE and India because we will be losing a big customer.
Is it possible to share how much is the volume quantity?
Close to -- combined close to about lakh tons.
Okay. A lakh ton volume, 100,000 tons is what we sell to Asian Paints on annual basis, which can be impacted next year?
Yes, which can be.
Understood. And...
[indiscernible] lakh tons, that is -- but not full year may not be impacted, but partially, yes.
Fair point, the market is also growing. So that is also...
Yes, so we have been working on other revenues. As we said, even for Fujairah, we have a backup plant. We introduced [ IMX Motors ]. We had Africa as a growth area. So all that we working which we had done now means it is giving some positive results. So that -- so Africa is not turning into black and even the [ IMX Motor ] is giving us profits. So -- and we are trying to look at other revenues for white cement in the region [indiscernible] so when I'm saying further though capacity utilization is for as overall capacity utilization, it's about 85%. So the plant would definitely be operating around 75% plus including clinker and cement.
Understood. Understood. And on the Grey Cement bit, are we likely to face any volume disruptions in the UP region because of the ongoing Kumbh Mela? And maybe one of our plants right being there, so do we see any logistic issues or some hit on volumes because of this? Just wanted to get that one.
Not much. But it's not affecting.
Not affecting as such.
Yes, I mean there's no significant as such.
Understood.
That way, then Delhi will have some elections, some -- I mean, there's not any major disruption.
Understood. Understood. That's helpful. And last question, was there any change in the mix in the quarter sequentially as in trade versus nontrade for the March quarter or broadly the same?
No. It is trade was 66% in this quarter. Last quarter, it was 65%.
It improved. Okay. Okay. That's all I wanted to...
And one more thing, we have been able to improve upon our premium products. So this quarter had the highest percentage of premium products.
[Operator Instructions] Next question is from Ritesh Shah from Investec Capital.
Sir, I just wanted some clarity on the J&K venture. Sir, I was just looking at the number of limestone leases in the state. There are several of them, including several in the names of Mr. [indiscernible]. I think he is a key owner from there. We are looking at the asset -- looking to buy the asset from. So sir, the question is what is the sort of competitive intensity you look in the region? And how is it that we were able to pick this asset and nobody else in the industry?
That I will not know how -- I mean, see, we have been trying to -- we have been looking at J&K for some time, 2, 3 years. So we've been seeing what sort of opportunity is there. There was some time divestment of J&K Cement also was on the cards. And then we had some friends in the region, and so they connected us maybe, then we had a dialogue and because nobody is ready to divest when they have been there all -- I think cement -- all the players are there since late '90s, mid-'90s.
Everybody came in to set up the plant during that period. And they have a good incentive package and so everybody is not -- they're are too -- I mean test or anything with new diversification. So we had some meetings and we could convince them that it would be a win-win position. But definitely, when we started our dialogue for 100% acquisition, which was not there acceptable at all. So then we came that it could be a good partnership in the interest of both the parties. And this is how we got into this arrangement.
Sure. And sir, there are multiple limestone leases across different districts over there. Do you think after your move, the competition in the region will actually increase?
I don't think so. See, again, there are 5, 6, 7, 8 plants over there in the region with supplier. I mean the limestone leases, I mean, in our case also, the limestone's lease earlier, the land or the mining lease had to be -- a company could not own those mining lease. So they were allotted to -- in the name of individuals, and they used to lease it out to the company. And now the government has relapsed that. So as a part in our case, in particular, the mining lease will get transferred in name of the company. So though the extension is already there, that's sort of process. So it will be extended up to 2046. And at the same time, as a next step, we propose to get the lease transferred in the name of the company.
Sure, sir. And sir, can you detail on the sort of incentives that you are expecting and we have indicated some incremental CapEx over there? Is it contingent to the state's industrial policy or the fiscal incentives? And what sort of numbers you are looking at over there?
So they already have -- this Saifco has an incentive, which is available up until 2031. So it's 100% exemption of SGST and GST. So which is around INR 800 a ton if you convert that into the per ton analysis. It has an impact of about INR 800 to INR 900 a ton. And this will be continued to -- this will continue until 2031. And it has got -- there are no other stipulations in the exemption, which is available to Saifco.
I'm not aware of any other plant. But for Saifco, it is there. And this investment, which has been done, INR 60 crores, is only being done with a view to increase -- see because that market is 100% OPC market. The grinding capacity is 0.4. What we lack is clinker. So once -- and there is a scope in modifying the kiln production from present about INR 780 -- INR 750, INR 780 per ton [ 2,000 ] tons per day. And with more our technical experience and other things, we would be in a position to increase the productivity of the kilns.
Sure. And sir, anything on the tax rates?
Pardon?
Anything on the tax rates?
Tax rate, it is normal. There is no special -- I mean, there's no incentive on the tax rate.
Accumulated losses, anything?
Yes, there are some accumulated losses. So that we are evaluating as a part of -- I don't have them because that is a part of the process of the old due diligence. So I would not be able to -- until the whole due diligence is done regarding the tax, which is a part of process, we'll not know what other tax incentives, which are -- accumulated losses are there as per the assessment, what opportunities are there over there. That is a work in progress.
Correct. And sir, my second question was on Toshali. Sir, given we don't -- I'm not sure whether we still have clarity on the limestone over there if at all -- if we get into an MOU, how much is the rupees per ton, including royalty that we will have to pay to the government? Sir, is there any clarity on that yet? And if not, then why are we even considering Toshali?
No, no, because again, there is definitely an opportunity available. We are still in dialogue with the government, and we have not got a regret. They are still considering our proposition. So we are hopeful. Two, even going forward, we could see in the vicinity and some of the mining may come for auction. So if that comes into place and we take a mine and auction, so that will become again a business case for us.
Right sir, historically, the way in which we have operated, we have been very, very conscious on the OpEx side. If it is through auction, it will become expensive. I'm not sure if we do an MOU whether it will be below INR 300 per ton of limestone. So is it like optimal from an ROCE standpoint? Or is it more like regional diversification, it's more of a strategic move that we are looking at?
See, going forward, auction mines or limestone mines are becoming for renewal. So post 2030, most of the cement which will be produced would be from the mines, which have been already reauctioned, I mean there is from auction mines. So going forward, there would be nothing available. Very few mine areas would be available where you have limestone, where there is no premium has been paid. We have to see everything in the long term -- medium and long term, not in the short term. In any case, even if everything goes well with the mining lease and we get the mine lease allotted at Toshali, the plant would not come into operation before '28.
Sure. Sir, if I may squeeze one industry-level question. You did indicate that post 2030, most of the leases will be -- which will be used will be under auction leases. Sir, possible, based on your assessment, if you could highlight which region will see the maximum cost of our raw material inflation? Is it Central, North, South, how should -- how are you looking at it, sir?
The older plants will have more -- I mean, see, the older the plant, their leases will get expired. The newer plants will have some more years to come to stay. The plants we started all capacity, all the mining leases, which were allotted in the 80s will come for renewal.
Right So sir, from that -- so from that perspective, we will be very well placed in Central India, but not so much in Northern India?
Yes, yes. Some of our mines are coming for renewal and currently, 32, 35. So that is there. It is -- so we have taken some -- that is definitely there. It is there for all established players.
[Operator Instructions] The next question is from Shravan Shah from Dolat Capital.
Most of questions has been answered. A couple of just a clarification of data points. Sir, first, this clinker line, the second line and the 6 MTPA. So you mentioned out of that just Bihar likely to be either -- next max by January it will start and rest all will start by this December end.
Yes, yes. We see the clinker addition and the other to the modification in the existing grinding units at Panna, Hamirpur and Prayagraj to get done in this year.
Okay. Okay. Got it. Second, sir, in terms of the cost reduction, you mentioned, correct me if I'm wrong, that in the fourth quarter, you are looking further INR 40, INR 50 kind of a cost reduction and another INR 75-odd in the next year?
No, no, sorry, sorry. I said cumulatively, what we have been doing, we would see some savings have already accrued by March. So some savings are already there. So this could be INR 40, INR 50 by the close of the quarter, the cumulative savings.
Okay. Okay. And the next year?
It is not an incremental saving in this quarter.
Okay. Got it. And then for incrementally next year, how one can look at in terms of cost savings?
Yes, maybe over a period of time, we could definitely see another INR 50 coming in next year.
Okay. Got it. Second sir, just to get a number for 9 months, how much consolidate CapEx we have already done?
Nine months, we have already done CapEx of about INR 800 crores -- sorry, around INR 1,400 crores.
Okay. INR 1,400 crores. And the incentives though you have mentioned that this quarter was a INR 10 crores, INR 15 crores extra, so is it fair that for this quarter, we have booked around INR 85 crores, INR 90-odd crores incentive?
Right. Yes, yes.
Okay. Got. it. And sir, fuel mix for this quarter, how much petcoke would be?
Petcoke is normally by heat around 75%. See, petcoke is higher in case of the North and the Southern plants. While in case of the Central plant, it is lower where domestic fuel is a major fuel and petcoke is around 30% -- 25%, 30%.
Okay. Okay. And sir, in the fourth quarter at Grey Cement, I'm just trying to understand how much growth one can look at for industry where we operate or maybe for us of 9%, 10% kind of growth [ one ] then can assume?
Yes. See, we are targeting, but I think we are confident that we could get about 7%, 8%.
Okay. Got it. And for paint, sir, whatever the -- for FY '26 and '27 revenue, last time whatever you have spoken INR 400 crores, INR 450 crores and INR 600 crores. So that remains intact?
Yes. So we should -- yes, I think that INR 450 crores and INR 600 crores still remains intact, and we are working towards that.
And in terms of EBITDA breakeven by FY '27 only, we will be able to do it?
FY '27 should be EBITDA breakeven.
Okay. Got it. And lastly, sir, road mix for this quarter would be how much, same 91%?
Yes, road was 91%.
Next question is from Uttam Kumar Srimal from Axis Securities.
Congratulations on a good set of numbers. Sir, my question pertains to premium cement. You mentioned by about 16%. Sir, where do you see premium cement sales moving ahead in the next 2 years?
So we are working -- next 2 years, definitely, we should be able to have 20% plus.
And sir, in this premium cement sale is coming more from the Central India?
So see, today, maximum, it is in the South plant. But as we are Central region, it's a new market which we are entering, as we are expanding the Central region. That is why it's taking some time. So yes, we would be expanding in the Northern as well as Central regions.
Okay. Okay. And sir, lastly, what would be our volume growth guidance for FY '26?
So FY '26 should be around 10% definitely from exit of FY '25.
We take the last question from Vignesh Sbk from Ksema Wealth.
Sir, just want to understand how is the market dynamics, sir, in our region? Any competition from the large players?
So the competition from the large players remained as it was over the previous quarter. There has been no new large players, anything, which is having any significant impact.
Any pricing impact because of these players aggressive or how is the...
No, not -- I will not say as of now, we -- anything -- if there is anything, we will let you know. But as of now, it is...
That was the last question. I would now like to hand the conference back to Mr. Vaibhav Agarwal for closing comments.
Yes. Thank you. On behalf of PhillipCapital India Private Limited, I would like to thank the management for the call, and many thanks for participants joining the call. Thank you very much, sir, you may now conclude the call. Thank you.
Thank you, Vaibhav. Thank you, everyone, for joining.
Thank you.
Thank you very much. With that, we conclude the conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.