Orient Cement Ltd
NSE:ORIENTCEM
Earnings Call Analysis
Q3-2024 Analysis
Orient Cement Ltd
In a testing economic environment, the company reported a year-on-year revenue increase of 3% and 4% over the previous quarter. This improvement was bolstered by higher blended realizations from premium cement offerings, which lifted per tonne prices by 5% year-on-year and 7% quarter-on-quarter. Notably, year-to-date net sales grew by 11%, outpacing volume growth due to a rise in price premiums.
The company achieved a remarkable EBITDA surge of 28% over the previous year, with a year-to-date increase of 33%, hitting INR 309 crores. This substantial gain underscores the effectiveness of the company's premiumization strategy and its position among 'A category' brands.
The cost of pet coke, primarily used at the Chittapur plant, saw a decrease of roughly 10% compared to the previous year and 6% sequentially from the last quarter, contributing to improved margins. The company's fuel mix consists of approximately 42% indigenous coal, 41% pet coke, and a significant 17% alternative fuels and raw materials (AFR) aimed at optimizing cost efficiencies.
Freight costs emerged as a notable pressure point, rising by 4.5% year-on-year and 8% quarter-on-quarter. The increase in transportation expenses is partly due to the need to service markets farther than the Telangana market, higher costs associated with bulk cement transportation, and the suspension of lean season discounts from railways, which has led to a slight decrease in rail dispatches from 15% to 14%.
The company has acknowledged delays in fulfilling its announced expansion plans, largely due to regulatory hurdles. However, significant progress has been made across four key projects, with upcoming public hearings and the prospect of expedited environmental clearances. There's an emphasis on timing and sequencing the expansions, striking a balance between beginning new projects and phasing out older ones.
The industry faced unexpected sluggishness, with the last quarter lacking the typical momentum seen in January which influences the entire quarter's performance. Despite slower months and stagnant price levels since December, the company has managed to reduce debt, boasting a near debt-free balance sheet and preparing for robust capital expenditure plans.
For FY '24, the company projects to produce approximately 6.2 million tonnes, aiming to exceed 1.8 million tonnes in the final quarter despite a slow January. The outlook beyond the election period appears promising, reliant on a stable government to foster industry growth exceeding national averages, especially with potential tailwinds from a rebounding Telangana market.
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Ladies and gentlemen, good day, and welcome to Orient Cement Limited Q3 FY '24 Results Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Harsh Mittal from ICICI Securities. Thank you, and over to you, sir.
Thank you, Ria. Good afternoon, everyone. On behalf of ICICI Securities, I welcome you all to the Q3 FY '24 Earnings Call of Orient Cement Limited. From the management, we have with us MD and CEO, Shri Desh Deepak Khetrapal. So without any further ado, I hand over the call to Mr. Khetrapal for his opening comments. Over to you, sir.
Thank you, Harsh. And a very warm welcome to all the participants in this call. And as usual, I'm grateful to all of you that you show interest in our company and spare time for coming on this call. I know we are a few minutes behind, but we were waiting for more people to join the call. So, here we are. I know the participants on this call are all interested people and who do their homework pretty well. But still, I'll give you a little bit of a summary as you would have seen. We're happy with the, I would say, the profitability results that we've been able to put together, INR 117 crores EBITDA, touching about -- sorry, INR 840 per tonne, and this is where we said we would want to be at the end of the year as well.
I think some of the concern that people may have had, and I'm saying we have had because internally we at Orient Cement also are a little bit disappointed with the degrowth in volumes that we have recorded in Q3. But I'll just give you a perspective on the -- what we think has happened in Q3.
Our disappointment aside, but the fact of the matter is that, in Q3, there were several things that have happened in the industry. More importantly, in our home states, which -- home state means which is very important states, which is Telangana and Madhya Pradesh. We had elections that obviously created too much of a slowdown when the labor and people have disappeared -- what happens when the state elections happens. So that was one of the main reasons.
Besides that, obviously, the festivals in this quarter and also the Maratha agitation in some parts of Maharashtra. For the first time, we saw construction activity being, and multiple bans being placed on the cement and concrete activity in both Mumbai and Pune. So multiple reasons are there.
One of the most important I should point out is also that despite our degrowth, when I look at the YTD growth numbers that have come out from DPIIT, they came just a few days ago. When we see, YTD, we have a growth of about 9%. It seems to be completely in line with the growth of the rest of the industry, pan-India. Okay? That's the only reliable data available. So while we do believe we should have done better, but it doesn't seem that we've actually lost in terms of the growth that the industry is recording and we have already growth.
So in fact, if you look at the data, where data also shows that up to November, the growth of the industry, I'm talking of, YTD was about 10%. And up to November, we also had a growth, and we make sure next year we are at 11%. In the month of December, if you see the numbers, the growth rate has come down very significantly and that's where I think we also have a little bit -- at the end of November, we're looking at 11% growth YTD -- Y-o-Y. So I just thought I'll bring that up to you.
The other matter of concern basically has been in our state of Telangana, which, as you people know, is very, very important. It's not the largest state for our sales, but it's still a very, very important state for us. That is a smaller market, but our home market. And in that, the B2C sales have been extremely slow in this quarter. The trade sales as the [ Jalgaon ] goes in the industry. And obviously, first it was the election and then the change of government. So a lot of uncertainty there where lots of changes are being made in the administration, the officials. And things are not sort of getting to go as there would be the stable government.
With lower demand and too many players actually getting aggressive in Telangana, we are surprised as to how many players in Telangana are beginning to offer prices which, quite frankly, surprised us. I don't want to name them. But if you people do your research, you'll find that some of the top most brands who have enjoyed premium for a long, long time in the markets because of the brand equity, in Telangana market, we have seen them selling, not just quoting, selling at about INR 20 less per bag than our price of Birla A1 cement.
Now that is something which obviously puts pressure on us also. But given our strategy of staying with the right pricing and also pushing more and more of a premium cement in the market, you would have seen that our realization part are very close to INR 5,400, is in some way in contrast to what we are seeing as realization being reported by many other players, which I think is carrying on and sustaining the strategy that we've had.
But I just thought I'd point out to you that despite lower prices from very big brands, we are not succumbing to the pressure. As a result of that, the pain has come our way. And just to give you one data point, the B2C volume in Telangana in Q3 for us are actually lower by 29%. That's a huge, huge hit.
Are we happy degrowing by 29% in our home states? Certainly not. But the options are to compromise in price and start selling cheap, which as a strategy, as of now, at least we will not thought that it's prudent for us to do that. That's why, I thought I'll just stable that.
Even in our largest market by volume, we said 60% or thereabouts in Maharashtra market, and as we know that's our most important market. There, again, I think the major growth in demand continues to come from the -- what we call the B2B, the non-trade segment. And they largely buy OPC cement. And in that market again, because the growth is coming from, we have actually been growing well. The only problem that is there is that in that state also, in B2C, there has been degrowth. So B2C sales degrowing is very fine for us, because it means not just the segment change, it also means the product mix change and that keeps getting adverse.
And when you sell so much more OPC, you know the pressure that creates on companies. So in terms of -- so that was a little bit qualitative feedback or inputs on the volumes that we have. But, overall volumes as you people would have seen, we ended up at 13.92 lakh tonnes, a degrowth of 3% over last year and 2% over the previous quarter.
YTD as I mentioned, the sales have been 44 lakh tonnes and up about 9% over last year YTD, again, as I mentioned in line with the industry. The pressure of, let's say, demand growth that we've seen coming from the B2B sales has resulted in our total B2B sales in this quarter actually to going up to as high as 56%, which is something that we would like to correct as Telangana consumer demand picks up and as Maharashtra consumer demand picks up, we hope -- even if it doesn't happen in this current quarter, but sooner than later, I think this trend needs to reverse, but this is not a trend that we would like to pursue.
But as of now, Q3, we had 56% of our volumes coming from B2B. As a product mix, our OPC, that is unblended cement versus blended cement, has reached a high of 50% in the quarter. So I thought it went -- because all of you remain a little bit curious about how that breakup is. So non-trade 56%; OPC, 50%; balance, obviously, is our trade sales.
In all this, I think the good news is the consistently growing share of our premium brands. And we now comfortably are crossing 20%, 21%, 22%, I think we are selling premium cements. Including initially, we used to talk about only StrongCrete, now Orient Green is beginning to chip in. And Dolphin is still to, like I said, find volumes worth mentioning, but any consumer who have actually used our Dolphin brand, they are actually -- the people who start with only the basement or only with [ soothing ] slowly gradually start coming back to other users also. So in that product, again, is being received exceedingly well by the user customers. And as happened with StrongCrete and as happened with Orient Green, basically, we rely on word-of-mouth from our existing users to build our market share. Exactly the same strategy that we've had from the day we introduced the first premium brand with StrongCrete. So we will go slow, but will go steady, and keep charging the price that we believe our product actually deserves.
As a result of that, despite, as I mentioned, the degrowth in volumes, if we say our revenues there actually improved. We are 3% higher year-on-year and 4% higher Q-o-Q, which is, as I said, the higher blended realizations coming in because of premium cements helping us a lot.
As I mentioned earlier, realization, it will be of INR 5,400 per tonne this quarter is 5% up year-on-year and 7% quarter-on-quarter, which is I think a very strong evidence that we're starting -- that we're following is of premiumization. And actually being in the league of the A category brands, it's working, and we're happy to be there. It's taken us many years of effort and commitment and some sacrifices. But we are glad it's working out for us.
And I don't need to call it but still the YTD net sales at INR 2,292 crores are 11% up year-on-year against, as I mentioned, volume of 9%. Balance is coming from price premium. To a certain extent, I must acknowledge, while our premium products have helped, they're also in the Q3, for about 5-odd weeks, getting close to 6 weeks, there was a little bit of pickup in prices initially in this quarter, which in the second half of the quarter just disappeared, and we ended the quarter with prices, they were going back to what they were at the end of September. But for a part of the quarter, there were somewhat higher prices. They definitely help us look at better realization in the quarter.
EBITDA, as I mentioned, is 28% higher than previous year. And on YTD basis, that grows [ INR 309 crores, is 33% ] up, which is good news given the scenario that we have in the industry. EBITDA per tonne at about INR 840, is up about INR 200 over last year and about INR 220 over the preceding quarter, which is again a gain, helping our bottom line. Besides the slightly improved prices in part of the quarter, also, as I mentioned, the contribution coming -- increasing contribution from our premium brands, the other elements which have worked in our favor are the way we have benefited from the waste heat recovery plant that we had set up. It is still not 100% operational. But with the 80%, which we had called Phase 1, with that itself, which got commissioned during the quarter, it didn't work for the full quarter. We're actually beginning to see the benefit of over INR 4 crores per month.
And I think when we have the balance 20% bar also coming in, which is from pre-heater section, the work is in advanced stages and we should be commissioning that soon. But I believe that, from at least next quarter, the benefit that we see from waste heat recovery itself should be around INR 5 crores per month.
And a total volume that we typically end up doing about 5 lakhs or between 5 lakh and 5.5 lakh tonnes, it would be close to INR 100 a tonne. But in this quarter itself, the waste heat recovery impact for the whole quarter has given us a benefit of INR 56 a tonne, when the plant was neither in use for a full quarter, nor like I said, worked at 100% capacity.
And here again, if I look at -- so the good news is that with 80% completion, what the assumed generation was we actually are having generation from our waste heat recovery, which is higher than what we guaranteed in generation from the vendors was. So that has been completed and is doing well. We are quite sure that even the pre-heater section when it's completed and commissioned soon, we will keep getting this significant benefit that we have told the shareholders, but the benefit is proving to be a little higher than what we had perhaps conveyed to all the analysts and shareholders.
Power and fuel costs, they are down by INR 157 per tonne year-on-year and about INR 87 from Q2, because prices have been softening in the return side, the costs here. The important thing to remember here is at INR 1,420 per tonne that we are quoting here, it certainly has the impact of a much higher proportion of OPC than we are used to. Typically, we used to have 40% OPC, now we come to 50%. So every percentage point higher in OPC consumption does mean that we are using less of additives, which means there is more clinker going per tonne of cement, which means more fuel going into that. And that obviously impacts our total cost.
Even grinding your clinker is more, because when you're adding between 30%, 35% of fly ash, obviously, the grinding power on that part is so much lower. But when you are using only about 4%, which is as per the standard, so then obviously, your grinding costs along with the clinker-making cost goes up. So that's pushing the per tonne fuel cost slightly on the higher side despite the fact that our fuel has actually benefited us. Our waste heat recovery plant is benefiting us. But still, we would like to see it more competitive with the revenue.
Anybody who has -- and thankfully, when you see the results of competition, people who have the luxury of about 80% of PPC cement, obviously, the power and fuel costs tend to be lower. Even as, let's say, if we actually did apple-to-apple comparison and looked at our what is my cost of producing 1 tonne of OPC or 1 tonne of PPC, I think we are still very competitive. But the product mix right now doesn't make us look the lowest power and fuel cost, which we have had in many quarters. So this -- like I mentioned, currently is our compulsion. We are taking it. But as we move forward, we're hoping that this trend will change and we will come back to the PPC also having its fair share in our product mix as we move forward.
The other initiative, which we've been talking about and which has helped our power and fuel cost is the -- our thrust on the alternative fuels. And the AFRs, as all of you are aware, they are nothing but the waste of other industries. So with the effort that's certainly going on and I think quarter-after-quarter, we'll be increasing the percentage of AFR in our fuel mix. As a result of this -- and I'm happy to announce that in Q3, actually on volumetric basis, we consumed as well as 25% of our total fuel coming from the AFR.
On TSR basis itself, a little bit more modest that, that because AFR obviously doesn't have as many calories as the traditional fuel has. So if you go by TSR basis, it's just 17%. We've never been in this trend before. And we will like to continue this trend and keep increasing the usage of AFR as you go forward. Not just AFR, the -- even the -- besides the waste heat recovery plant that I've already mentioned, we -- currently about 50% of our power requirement at our Jalgaon grinding unit is actually coming from solar, which is the renewable power.
And the further investments that we have, which should be available to us in the next maybe a quarter, 1.5 quarters, both at Jalgaon and also at our Chittapur, Karnataka plant, that will further give us more renewal power giving us more savings. But currently, we have reached in Q3, 25% our total power consumption coming from renewables, including waste heat recovery and solar at Jalgaon, which should go up significantly once we commission the solar capacity, which is under construction at the key location, as I mentioned.
In terms of state mix, I mean all of you do know that West is about 64% for us now. South is at 27%. It used to be closer to 30% -- 29%, it has dropped a little. And the balance is being made up by the Central India, Madhya Pradesh, and some markets around that. Always, I think it's interesting to share when we talk about -- on a blended basis, it's so much high OPC in our system. Despite that, in Q3, our power consumption per unit is, I think, at a low of 63 units, which most of the industry perhaps will confirm is a very, very good place to have specially when you are selling 50% OPC.
Heat consumption, similarly and part of our clinker is 687. Again, it continues to be one of the best -- I'm giving you blended for the whole company. Obviously, the near Karnataka plant works at significantly better than that. So it's a blended number I'm sharing with you. The fuel costs, if we -- power cost is one element in the whole thing which is coming down because of waste heat recovery, although the CPP coal continues to be expensive. And when we -- CPP is our captive power coal, despite that, we've been able to sort of lower our power costs.
But on the fuel cost, again, it's down from last year on a complete per tonne cement basis, which I've already talked about with you. In terms of coal or our fuel prices, the domestic coal that we source from Singareni Collieries, as you know, it's a public sector body, I think, there the coal prices thankfully in this quarter have been flattish year-on-year. There's no further increase. And also sequentially, they've been a little stable now for a change. And I think that's a pressure coming with the pet coke prices have come down significantly. And therefore, I think coal in India has to somewhere remain competitive.
The pet coke cost, which we largely use at Chittapur, actually the cost is down by about 10% over last year and about 6% sequentially over the previous quarter. I know, these questions have been coming from, including that in my briefing right at the start, blended cost of fuel, I'm talking about INR 1 million with kilo calories, blended includes my coal, pet coke, AFRs, whatever we are running in our kilns.
At our Telangana-Devapur plant, it's been a flat over last year. Sorry, it's flat at about 1,800 sequentially, but it's down, including the AFR when I'm saying that, it including AFR, our blended cost is down about 12% over last year for our Devapur plant.
And at our Chittapur plant, the main fuel is pet coke. There also, sequentially, it's down about 7% and about 12% lower year-on-year. So there is obviously the benefit of AFR and a somewhat benign pricing on pet coke is being translated into better margins for us. In terms of total fuel mix, the indigenous coal is about 42%, petcoke at 41% and balance, as again mentioned to you, about 17%. All these are on thermal substitution basis, TSR basis, 17% AFR.
One pressure point for us definitely has been our freight costs, which I think on a per tonne basis when they look higher by 4.5% and also 8% Q-o-Q. Two factors. One, as I already mentioned, because of the loss of momentum in Telangana, which is our closest market basically, then we are still sort of, in a way, making up for the volumes elsewhere, which are lost in Telangana over the previous periods. It means we are having to reach out to slightly -- market just slightly farther away. More volumes in markets which are somewhat farther than where the Telangana markets are. So that is one factor.
Secondly is that, when I'm saying B2B projects, whether in Mumbai or in Pune area, most of that is going in bulkers. And as we know, the per tonne per kilometer cost of transportation of bulker is higher. And bulk cement in quarter 3 for us has been as high as 40%. So that's the second pressure point in terms of freight costs being higher.
And the third, obviously, is the typical lean season discount that's available from railways that has not been available in Q3. So that is the third factor, which has impacted our freight costs.
Given the, I would say, withdrawal of lean season discount and also the bulker demand, the rail dispatches in this particular quarter have actually fallen from about 15% to 14%. So those are, I would say, some highlights of what the numbers for the quarter are. Like I said, we keep drawing satisfaction from the fact that our strategies of premiumization is working well. Consumers love our products and they're willing to pay the price that we are charging for it.
And also in terms of, I would say, the ability to sell OPC so much higher, have higher costs, but still being able to improve our bottom line is something which, again, is a part of our operating model, which is working well for us. So that's on the operations.
A quick word I will also have on where our expansion plans are. I know I'm very conscious of the fact and a number of times we talked about when the capacities will put up, how they'll come down. And every time, we've not been able to keep up with the date that we have announced. And largely, I have been reporting that it's been due to delays in our being able to get the necessary regulatory approvals. In this quarter, there have been significant progress on almost all the 4 projects, I would say, that we've been telling you about.
So as we speak, one of the things that we have is our Chittapur plant expansion, which I have been mentioning that, will be our first project to take up on, for expansion. The public hearing, which is a precursor to the environment clearance, is now being -- has been scheduled. The public notice has been issued for 17th of February. So in 17th February, we'll have both the public hearings for the production capacity and also for mining. So that happens on 17th February. Post that, obviously, the environment clearance process really picks up speed. Because the process before the public hearing is a lot more cumbersome, that we've been through.
On the Telangana-Devapur plant expansion Line-IV, I had been making, again, a very clear, let's say, communication that we would want our grinding unit to be parallelly available before we add more capacity at Devapur. The good news there is that you might have seen part of our release to the stock exchanges yesterday. Earlier, we were not disclosing the name of the location. So today, it's official. It's the Madhya Pradesh state electricity generating company. They have a power plant in Satpura range. And the name of the village, if you want to call it, Sarni. So at that place, they have approved our, let's say, proposal to put up a grinding unit on their premises, which will have -- they will provide us land, they are giving us use of railway siding, and they will also be providing a fly ash at a fairly competitive cost. So all those things, they have approved.
Only 1 or 2, I would say, there are minor additions or modifications they have made in the -- other conditions in terms of blended cost of fly ash. They've stipulated an amount which are higher than what we had stated and something to do with space for people to live, a colony, and things like that. While they have made those changes, we are in touch with them. We're trying to -- we have not accepted what they've stipulated as a conditional approval. We are in touch with them to basically negotiate to the extent that is not available for us, which we should be able to tie up very, very soon.
So for the first time, I'm letting you know that the new grinding unit, which will support Line-IV at Chittapur and Devapur, is now very close to being signed up. Because from -- if I accept their conditions, it's ready now. But yesterday at the Board level, we discussed the whole thing and we believe there is some room for negotiation. We will -- we are going to try our best. And post that negotiation, we'll close it and get on with the activities there. So that gives me the encouragement to now come back to track for Line-IV at Devapur also.
Again, for which the public hearing for mines has been scheduled for -- actually, that's before, on 15th of February. But the Sarni site means that very quickly will go through certain formalities, close the deal with the Madhya Pradesh electricity generating company. And thereafter, start the process for environment clearance for Sarni also. So that sort of ties up multiple loose ends which have been hanging for quite a while.
And as luck would have it, even the last fourth, I said, expansion of capacity, Rajasthan mines for which the government orders have been passed, but the required deal was not being executed for some technical reasons, that finally that deal also has. So we have now valid signed lease date for our Rajasthan mine also, which will now allow us to start making the acquisitions of the land that we do. So that also -- so all 4 expansion plans have gained momentum in 1 quarter, which is good for us because so many times we've said we'll do it and we've not been able to deliver on the dates. Exact schedule now, based on how the public hearing goes in the next 2 weeks as I mentioned,and how the files move from there, hopefully, we'll be able to -- I'm not announcing the exact start of the activity once again and once again going wrong. In a few weeks, maybe the moment we have clarity, we'll come back to all of you through whatever forum really when exactly we will complete the expansion plans. But all 4 of them are on, it's just sequencing of them, so when to start one, when to taper-off one, and start the second one. Those kind of things will perhaps take a few weeks internally, and our long-term plan for that perspective is under process. So let me form it up a little bit and only then communicate back to you. So that's good news on the expansion plans.
I personally don't think there's much left for me to add more to the initial briefing. So I'll stop here and open the floor for the questions. Thank you very much for your patience.
[Operator Instructions] First question is from the line of Keshav Lahoti from HDFC Securities.
So I want to get a sense about how big is Telangana market for your B2C market overall?
See, Telangana market, overall, typically, we've been given numbers -- giving number for South India as a whole. State-wise normally we refrain from giving. But South India as a whole for us, that's 30%, bulk of which comes from Telangana.
Okay. Understood. And as you highlighted, the September to December prices are similar, how are the pricing trend in January?
Generally, I'm sure you're talking to many other companies also, it's a difficult time for the industry because, typically, in the last quarter, the momentum we should have seen in January which sets up the entire quarter very, very well, that momentum, frankly, has been missing not just in January and December itself. And that's why I told you the YTD figures of DPIIT also tell you that till November end the growth was around 10%, and by the time the quarter ended, it can now be 9%.
So obviously, November was slower -- sorry, December was slow. January again has been a little slow. And prices, as we speak, have actually stayed at the exit levels of December, I would say.
Okay. Understood. Is it possible to give fuel cost in the terms of INR per kcal?
I think I did give it. Okay, I'm just giving you the movement. At the Devapur, on blended basis, it's -- let me just see what it was. I don't have the state number.
Company level will also do.
Sorry?
Company level will also do, blended.
No, I'm giving you -- because I am on it -- because blended -- I'd rather give you plant at Devapur, we have about 1,800. And at Chittapur, it's around -- it's a little under 2,000. So blended products will come to more around -- a little under 1,900. I don't have the state number with me, but I'm just doing a mental calculation basis average. So the ballpark about 1,900, a little less maybe.
Okay. Yes, I got it. And so last call you have highlighted that you will reach a premium share by -- to 25% by FY '24 end. So you think is it achievable? Or it might be with a lag of a 1 quarter or 2 quarters?
Look, 25% -- FY '25 was always going to be difficult. But yes, we are working on that. We're already around 22% or thereabouts. So for all you know, I mean, if the -- one of the things that needs to happen is that, see, the premium cement is all at the B2C market. And the momentum in B2C market -- and if Telangana consumer market picks up and goes, I think we'll be able to hit 25%. But without Telangana B2C market supporting us, it remain a bit of a challenge.
Okay. Okay. Got it. Lean distance for the quarter?
Maybe they've gone up by about 10, 11 kilometers more than what we had on an average. It will be -- but it's a little over 300 kilometers that we keep saying. So that 305 kilometers may have become 315 kilometers thereabouts.
Next question is from the line of Sumangal Nevatia from Kotak Securities.
My question is, if you could share what is the net cash level, I believe it would be net cash at this point as on 31st March?
31st March? March is not even given.
31st December. 31st December, sorry.
Okay. No, honestly, we are not keeping much in cash form. I think, I need to give you the debt numbers which have actually come down. Just to sort of -- sorry, that somewhere got left out in my briefing. The total loan that we've had against the Chittapur construction when we started, that entire loan by now, as we speak, is almost liquidated completely. We had the [ written stay ] for 2030. As we speak today, there were about INR 37 crores left at the end of 31st December, that's been repaid in January itself, okay. By now, it's already repaid.
I think we had some -- total borrowings as of now would be perhaps more around INR 150 crores, and that's about it, which includes my working capital. So rather than keeping cash in hand, we've actually reduced our borrowing so that when you are going to banks with the new expansion plans, we have a debt-free balance sheet.
Understand. Understand. Got it. Sir, any sort of volume guidance you would like to give for overall FY '24, which now is just left with fourth quarter and '25 as well?
No. Look, as far as quarter 4 and the FY '24 is concerned, as you know, we've done just about 4.4 million till end of December. We do -- comfortably do about 1.8 million tonnes in Q4. Although January has not supported that, but we're still not giving up our expectations, our hope, and our efforts. We'll try to do more than 1.8 million tonnes, in which case, we'll end up with about 6.2 or thereabouts for FY '24, right? Given the current, I think, the lack of momentum, it's difficult. But my own guess is, as the elections get over, in Q1, you may see a little bit of election -- when the election is happening at that time, demand does slow down. And from all indications that we are seeing, that there will not be any kind of the stability in the political level, national level. We believe, if not earlier, post election the momentum should pick up. And typically, what we've talked about, I think everybody in the industry would assume that a strong government is at the center without any dislocation, a growth of 10%, 11% is a given.
And we'd rather -- with sort of -- rather promising anything more than the rest of the industry, we should -- actually, if you ask me -- so honestly, we should get something more because Telengana should pick up at some point in time. In which case we might do somewhat better than the national average, but largely we'd like to stay with the -- not be behind the national average.
Understood. Understood. Sir, one just last set of questions on the expansion. So we should start the land acquisition at Rajasthan in the couple of months once this...
Yes. We will start because as I told you, until you get the mining lease, you're never sure. With the government, we never take anything for granted. So that activity of land acquisition will start soon. And obviously, we'll go in phases trying to acquire first the land, which is needed for putting up the plant, because that's a 18 to 21 months kind of activity to put up the plant itself. So we need to have that.
I mean, last one I was briefing, I was saying that from the time we start acquiring land, till we get into some kind of a position to start the activity, the investment there would be ballpark about INR 100 crores for acquisition from land -- acquisition of land there and then we will keep coming back. But yes, you're right. For Rajasthan, we will start acquiring land. That's a time-consuming process and we are conscious of that.
Okay. And just one last question. Are we looking to currently expand Chittapur and Devapur? Or is it one will kind of happen first and then the second?
Honestly, I personally think that the -- picking up 2 clinker line at the same time may test our bandwidth. That's a very honest acknowledgment of, I think, our size of the company. What is more correct likely that we will think -- and don't take this as the final guidance. But as I think about it, I think Chittapur should happen now. As I mentioned to you, there the demand is a lot more than what we can meet. My own guess is, I think, we should be able to start early somewhere in parallel the grinding unit, for which we have clinker available at Devapur, right? And as we sort of, in a way, complete the putting up the expansion project in Chittapur and Sarni, in the meantime, Devapur some time in the middle can start. So that's how -- it will be a little bit of overlap, but not that big.
[Operator Instructions] Next question is from the line of Krisha Kansara from Molecule Ventures.
Sir, I just have 2 questions. You said that volumes were down in this quarter. So can you please guide us on the percentage now that you saw on the volume side, sequentially as well as on Y-o-Y basis?
The overall volume for the company?
Sorry?
The overall volumes for the company, you're asking?
Correct. Correct. By how much percentage were they down in this quarter?
We were down 3% over last year and 2% sequentially.
Okay. Okay. And sir, second is not a question, I just want to confirm the EBITDA per tonne figure that you mentioned in your opening remarks, it was 840, correct?
Yes, That's right.
[Operator Instructions] Next question is from the line of Uttam Kumar Srimal from Axis Securities Limited.
Sir, my question pertains to CapEx guidance for FY '24 and FY '25. Since mostly in FY '25, we will be doing the expansion plan, as mentioned by you. So what would be our CapEx guidance? And how much debt we are going to take for this ongoing coming expansion?
As I did mention in my briefing, I have sought some time from all of you, maybe just a few weeks in which we are actually preparing our own plan. Now that the clarity is emerging about the public hearing, that clarity, just give us a short while. Let me not, again, throw some number at you. I want to have a little better clarity. The public hearing getting completed, the files moving. And then when -- it's all a function of when can I start the activity. Total, as you know, at Chittapur, our expansion costs are going to in the ballpark in the region of INR 1,500 crores. That's known to us, right? What I mentioned just now was also maybe Sarni can start coming somewhere in parallel, if you can get government release it quickly inside the power plant. So hopefully, it should be easier. That cost would be ballpark, again, about INR 500 crores, and grinding will cost for that much. So out of the INR 1,500 crores at Chittapur, how much will get spent in FY '24 and FY '25, the split is not there.
But I -- my guess -- sorry, FY '24, nothing is going to happen there. I'm talking more about FY '25 and '26, right, in which we would like to complete Chittapur for sure and also bulk of the Sarni split grinding unit. Total cost of INR 2,000 crores between FY '25 and '26, the split is something I would know only when I start the actual processing, I am ready to start construction now. But ballpark is, for these 2 projects, I think my current estimate is we'll spend about INR 2,000 crores between the 2 years of FY '25, '26.
Okay. And sir, this one, this grinding capacity will be around 3 million tonnes or4 million tonnes?
No, grinding at Chittapur is going to be 3 million tonnes, which is integrated clinker and grinding. And Sarni will be a split grinding unit, where we will be putting up a 2 million tonne grinding unit.
Okay. And sir -- no, sir, I'm asking for Rajasthan, where you were trying for land acquisition.
No. At Rajasthan, our current calculation tells us, based on the reserves and based on the life that you want at the plant of around 40 years plus, which we are currently working on the assumption of about 3.2 million tonnes at Rajasthan.
Next question is from the line of Parth Bhavsar from Investec.
Sir, just -- so I have like 2 questions. So right now, we can see that your share of B2B sales is quite high. So can we say that this is because of the election time in Telangana? And do we see this improving going ahead?
See, the B2C demand in Telangana or any of the places, it's -- basically, how is the consumer demand across industries. We've had -- I think because I do handle another consumer company, and anybody I'm talking to any business today, consumer demand, especially in the rural [ Sanjeevan ] sector, has been very soft. The moment the rest of the economy picks up, in Telengana or elsewhere, we'll start seeing more B2C demand coming, and that's always been the norm. Right? Currently because the B2C demand is not there, it's likely B2G spending -- or B2B spending, which is current the demand forward. As a result, the percentage we are looking a little distorted from normal. But as the consumer demand starts picking up, our B2C business also will pick up.
Okay. So this is not an election phenomena, right?
Election, partly. 1 quarter can be election, right? But overall, if you look at it across India, if you've been noticing consumables, whether durables or otherwise, everybody is telling you that the consumer demand is soft. I think that's a known fact to everyone. So that is on top of Telangana going through elections.
So what would we target like we would bring this B2B sales back to like the target would be 45%?
Our B2B -- I'd say our ideal mix that we worked in the past is about 60% B2C and 40% are under B2B.
Okay.
Yes, we are not able to go to 20%, 25% like some other players whose markets are different. In the markets that we operate, with Maharashtra and Mumbai and Pune will remain large markets, I think our sweet spot will be B2B sales being less than 40%.
Okay. Okay. So sir, like once this improves, like we do expect -- we can see like some good improvement on power and fuel cost and freight costs, right, on the back of this?
Yes. And obviously, the more blended cement that you can sell, the less the power and fuel cost, which is a very simple way of -- a simple process of manufacturing.
[Operator Instructions] Next question is come from the line of Raghav Maheshwari from AMSEC.
My question is for particularly on the demand side. Last quarter, we have reported almost 3% demand degrowth. So how is the industry grown and degrown in particularly area of our operation, particularly Karnataka, Telangana, and the part of Maharashtra, where we are the operating?
Look, there are no -- unfortunately, no official confirmed data available with anyone on the state-wise basis. Because nobody collects data like that. So it's very difficult for me to have a guess and tell you. Overall, we know that has been low. And I've also mentioned besides the demand being low, people have come under volume pressure and they have been pushing more volume at lower prices. So maybe some of them at much lower prices have sold a little more than what the market would have needed for sure. But there is no reliable data available with anyone on demand on month-to-month or quarter-to-quarter basis in every state, unfortunately.
Got it, sir. And second, for the proposed MP grinding unit, is our current limestone availability -- facility available at the Telangana, particularly, is that sufficient to serve this grinding unit or we need particularly new line to serve that grinding -- the clinker line for this grinding unit?
For the time being, we'll have some spare clinker at Devapur. But Line-IV at Telangana-Devapur plant have always maintained, which would actually need a split grinding unit. That's why I did not start Line-IV earlier. So the -- Sarni grinding unit in Madhya Pradesh would need finally to add capacity at Devapur, also in Telangana. But if it's a question of a few quarters, can Devapur spare some clinker? Yes, it can.
That's why I said that maybe I'll start doing Sarni before I put up Line-IV in Telangana. It's just to manage our bandwidth and manage our resources, because, ultimately, we have a certain size of balance sheet. We have a certain size of the cash flows that come in. So taking up are 2 clinker units simultaneously, I think we are just going to overstretch ourselves and I don't think we would like to do it.
Got it. And sir, what is the status of the EC and FC for the Telangana and EC for Chittapur? It is in our hand or we had applied?
If you heard me earlier what I was saying, the public hearing being scheduled are both places in February, without public -- I mean, we do not get the EC. It's simple. If you can't, I mean, handy, [indiscernible] to do public hearing.
And same case with the FC also?
No, forest clearances is happening in parallel, which is a separate process, which again, is going at a good pace. My only writing right now, is that earlier it got delayed by a couple of months because there were state government election in Telangana, because the file has to move from Telengana. Now in Telengana state after the election, the file has started moving. My fear is by the time we reach the center, center may announce election, that they'll go under model code of conduct, which can be hazard, when you have to move from state government and central government.
So by now, if Telangana elections will not be there, a filing should have been through in Telangana government. But unfortunately, not only the elections happened, the government changed. So obviously, things are slower right now. They are resetting the administration. The officials are being centered and all ministers have not been appointed. But despite that, the file has moved well in the forest departments in Telangana. And my own guess is that, fairly soon, it should be ready to move to central. Because it has to move from state government to central government.
If it happens on -- let's say all of us today mentally we need to be prepared that in about a month's time, the central government elections may be announced, right? And now that is my anxiety. The biggest anxiety were forest clearances, will it cost me another 2, 3 months? Because our file has not reached center before the election announcement. So that's a bit of a worry right now, yes. But like I said, there is no immediate crisis in terms of either availability of limestone or carrying on our manufacturing in Telangana. A 2, 3-month delay, I would have wanted not to have it, but not that it's going to impact our operations.
We take the last question from the line of Vaibhav Jain, an individual investor.
Am I audible?
Yes, you are.
Just wanted to know for this Rajasthan 3.2 million tonnes, what would be our CapEx estimate?
Quite honestly, I personally don't see that the construction activity happening for at least 3 years in Rajasthan. We just acquired land and get ready with it. But when it's ready for us, it's a greenfield site. 3 million capacity, to my mind, will cost us about INR 2,500 crores, INR 2,600 crores based on today's information. In 3 years' time, things might change a little bit. But if you ask me today, today we know what the equivalent prices are and everything, ballpark INR 2,500 crores or INR 2,600 crores about that much.
Okay. Got it, sir. One more question, sir, regarding the realization per tonne and EBITDA per tonne, can you give us the split between what is the realization in EBITDA per tonne for OPC and PPC for?
No, no, we don't share that. No. I will not share that. It's the blended data that we're sharing with you. Nobody shares separately for OPC and PPC. Because then I have to give every minute detail that is not in public domain.
The last question is from the line of Surya Narayan from Sunidhi Securities.
So sir, what is the CapEx for FY '25 with the Chittapur and forest clearance, everything put together, and for FY '26?
As I mentioned just a while ago, 5 minutes ago to another question, currently I'm indicating to you our CapEx, between now and FY '26, which will be close to INR 2,000 crores. If that slip-off between FY '25 and '26 will depend on when I get my environment clearance in hand, because only then I can start contemplating with erection, right? So in the absence of that, it will move based on when the environment clearance will become variable. Total CapEx in these 2 -- for expansion in those, FY '25 and '26 total, I can make at INR 2,000 crores.
Okay. So how much debt could be planned to come in?
How -- debt?
Debt, yes.
Debt? Sorry, I misheard you. Look, largely what we would want to keep using is all the cash flows that we generate, we don't keep -- I mean, historically, we will never kept cash in hand. We'll keep using our cash flows to fund these projects. To my mind, I think debt, in the next 2 years if we are doing a INR 2,000 crore CapEx, perhaps about INR 1,200 crores, thereabouts.
INR 1,200 crores? Okay.
Yes. And it will keep getting fine-tuned as we go. But ballpark, you can assume about INR 1,200 crores.
As there are no further questions, I would now like to hand the conference over to management for closing comments.
Thank you. Closing comments are nothing more than my usual -- just my appreciation and thanks to all of you who come and attend our conference and ask some very good, interesting questions and make us think harder about the way we run our business.
Thank you for your patience. Thank you for all the support that you keep giving us. Grateful to you. Thank you very much.
Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
Thank you. Bye-bye. Bye, everyone.