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Ladies and gentlemen, good day, and welcome to Shree Cement Q4 FY '23 and FY '23 Earnings Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Navin Sahadeo from ICIC Securities. Thank you, and over to you, sir.
Thank you. Good morning, everyone. On behalf of ICICI Securities, I welcome you all to the Q4 FY '23 earnings call of Shree Cement Limited. From the management, we have with us Managing Director, Shri Neeraj Akhoury ji and CFO, Shri Subhash Jajoo ji. Without any further ado, I hand over the call to Akhoury ji for his opening comments. Over to you, sir.
Thank you. Thank you, Navin. Good afternoon, ladies and gentlemen. I welcome you to the earnings call of Shree Cement Limited for the quarter ending March '23. Navin, I hope I am very clear and is audible right?
Absolutely clear, sir. Go ahead.
So 2022/2023 was an exciting year for Bangur and Shree Cement. On 1 hand, we were able to record about 15%, which is rather healthy volume growth, but we also started a new journey remaining the greenish cement company in India. We are currently very happy to say that we are currently at about 55% of green power share in our process, which, to my mind, is highest not only in India but also in the globe.
And we're also making significant investments in the plant with advanced technologies to improve our fuel flexibility including ability to reach higher numbers on alternate fuel. And at the same time, we're also testing new logistics models now, including the testing of EV vehicles. At the same time, at Shree, we are executing systematic interventions to explore full potential of our company, covering a range of subjects like commissioning of advanced digital solutions or upgrading our IT platforms, enhancing our manufacturing excellence, building our logistics capabilities as well as working on root to market with enhanced product offerings.
As you know, now we have redesigned our organization and we have a very strong marketing team, which is separate from sales as well as commissioned technical services team, which will allow us to bring products with sharper value propositions in the market and possibly impact not only the volume but also the price performance.
We have recently launched an internal campaign which we call, WeLead. And this campaign is to make sure that Shree remains the leader in manufacturing and logistics performance. And this program is performing well, and we expect that it should start giving results in the coming quarters. We have started recovering our performance in Q4 '23, the softening of fuel prices, but also due to start of execution phase of several planned initiatives to mitigate the headwind of costs.
To focus on the quarterly performance, the company was able to achieve realization improvement of 2%, while driving the sales volume growth by almost about 9%, up to 9 million tonnes in the quarter as against 8 million tonnes in the same quarter last year, which is equal to about 10% growth. The capacity utilization has also increased strongly from 71% last year to 78% this year. And this is largely because of very healthy demand shoots that we are observing across the country, led by infrastructure, housing segment both rural and urban as well as the commercial real estate.
The realization increased by 2% has resulted also in the EBITDA, which is down by about 2% at INR 892 crores against INR 911 crores in March 2022. EBITDA per tonne has stood at INR 1,011 against INR 1,134 last year. On a sequential basis, volumes were up by -- as I said, by about 10% and realization has remained flat during the quarter. However, absolute EBITDA increased from INR 708 crores in December '22, to INR 822 crores led by operational efficiencies and volume gains.
EBITDA per tonne sequentially has increased from INR 881 per tonne to INR 1,011 per tonne. For full year, our sales volumes increased from 27.7 million tonnes in '21, '22 to a level of 31.8 million tonne in 2023. The capacity utilization for the year was at 70% as compared to 64% in the preceding year. The utilization was up by about 3% despite increase in sales and realization. EBITDA, excluding other income decreased from INR 3,648 crores to INR 2,942 crores, which is about roughly about 19% largely because of significant and unprecedented increase in fuel cost, but also in most of the other costs like fly ash as well as slag.
The impact was mitigated to some extent due to higher consumption of alternate fuel and import of fuel from newer markets, prices of fly ash, as I said, and slag also increased recently in India. With fuel prices declining since Q3 of 2023, combined with the execution of our performance of programs, profitability has started moving up thereafter. The company continues its focus on subsidiary initiatives. As I said, the share of green power consumption in total power during the quarter stood at 55% against 50% in the corresponding quarter of the previous year.
We have completed commissioning of 122 megawatts of solar and wind power plants in different states during the year. As a result, our total green power generation capacity has increased to 386 megawatts at the close of 2023. Another 93 megawatts of green power capacity would be added this year and next year. The company remains committed to continuously increase its share of green power.
We are also stepping up our efforts to increase the use of agricultural, industrial, municipal waste to improve our thermal substitution rate. The company has invested in state-of-the-art facilities for handling and feeding materials, which will help in significantly enhancing our AFR performance.
We are very happy to state that we have fully stopped using coal or fossil fuel in any 1 of our branding units. We are able to achieve TSR of 4.35% last quarter. We expect it to increase to close about 15% by the end of this year. I'm also very happy to share with all of you that under the national mission for enhanced energy efficiency, Shree Cement has been recognized as top performer, designated consumer and cement sector for achieving maximum energy savings under PAT cycle 2.
As a result of multiple initiatives taken to bring down its carbon footprint, the company has been able to reduce its carbon emission by 3% to 513 kg of CO2 per tonne of cement equivalent in '22, '23. On the marketing side, and I know there are many things in the marketing side, the company is continuing with its efforts towards fulfilling various needs of its customers through premium offerings and better customer servicing, a new vertical of technical, which has been created to support our sales team.
The team has well-defined KPIs of [indiscernible] transaction sizes and educating customers, getting our products and its applications. We've initiated the process of sending our brand equity by engaging with experts, who have advised us for our future strategy. Due to these efforts, we'll be able to increase the shares of premium product sale against total cement sales -- trade sales from 6.6% in March quarter to about 7.5% in quarter -- in the last quarter '23.
We're also working on various initiatives on the digitalization front. Very shortly, we will go live with our customer relationship management, CRM software, which helps in real-time integration of dealers, retailers, institutional influencers and the company. This would support sales force with live relevant public feedback. Logistics control tower system and transport app is also in the process to set up on to enable management of logistics cycle from order to pay. End-to-end shipment visibility is now a reality for Shree Cement through our GPS activity in almost all trucks.
We're also migrating from Oracle to SAP 4HANA based ERP to adopt more advanced and simplified workflow processes. In manufacturing operations, we have implemented a plant data management system, which we call PDMS software to capture data from IoT sensors and generate automated KPI reports and alerts to bring overall efficiency in the operation. We are also digitizing our HR operations by implementing state-of-the-art tool called Darwinbox.
On the expansion front, I'm very happy to say that we are achieving -- we are working now very strongly to achieve our goal to reach beyond 80 million tonnes capacity in the coming years. The 3 million tonne East India, Purulia grinding unit will be commissioned very shortly, in fact, by first of June '23. Work on 3.5 million tonne project at Nawalgarh, Rajasthan unit is also on, should be commissioned by quarter 3, quarter 4 of this year. And then our Andhra project, Guntur project is also progressing well, and should be commissioned early next year.
On the demand front, at Shree, we expect demand to maintain its healthy momentum in FY '23, '24. The demand growth is expected to be mainly led by government from infra spending before the Lok Sabha elections in 2024. Infrastructure segment as a result of 24% enhanced outlaid budget spending with central government [indiscernible] main demand driver.
New projects and capacity expansion plans announced by the players in capital business sector, such as steel and [indiscernible] data centers are likely to also contribute to increasing demand in both industrial and commercial segments.
Demand from housing segment should also remain strong, volumes expectation of normal monsoons with continuation of healthy prices for farm produce and government schemes like Pradanmantri Avasyojana. Industry margins are expected to improve in this year because of softening of the fuel prices as well as declining of the crude oil prices.
All in all, in my view, FY '24 is expected to be a favorable year for this industry. With this, I will now open the floor for the Q&A. Thank you very much, everybody.
[Operator Instructions] The first question is from the line of Sumangal Nevatia from Kotak Securities.
The first question is on the fuel cost. If you could just share some detail as to what was the cost in 4Q? And how do we see coal, pet coke procurement and consumption happening over the next 2 quarters.
Good morning, Sumangal. This is Subhash Jajoo here. Yes. The fuel cost those -- current fuel cost has come down. The coal prices have come down significantly. But because of the large inventory which we were carrying, the impact of the same is not right now visible in our last quarter results. In fact, in March '23, the per CV cost of fuel was same as compared to what it was in December, around 2.53. Our -- the current prices of pet coke has come down to almost 1.80. The benefit of the same will be visible in the coming 1 or 2 quarters, most probably -- for the June quarter, you will see the fuel cost declining to around INR 2.35 to INR 2.40. And then over next quarter, again, it will going to come down.
On a full year basis, our cost was INR 2.62 in '22/'23 as compared to 1.69 in '21/'22.
Understood. And Jajoo, in the mix, if you could just share, I mean, is it fully pet coke or also you're using thermal costs.
In March quarter, we have used almost 76% pet coke and remaining was the other coal and alternative fuel as compared to 50% used in the last year. Pet coke price is -- last year, pet coke fuel -- at 1 point of time, fuel prices, coal imported -- thermal coal prices were cheaper as compared to pet coke. But now gradually in the last 3, 4 months, pet coke has come down cheaper. So we are continuously increasing the use of pet coke. On a PV basis, pet coke is around 1.80, whereas thermal coal is around INR 2.
Sir, my second question is more with respect to strategy. On our inorganic growth ambitions, so in the past decade, we've seen that we've hardly participated in any of this and we've clearly preferred to build over buy given our superior project execution capabilities. We now read us evaluating various opportunities in the market. Is there any change in thought process, approach, strategy over the next 5 to 10 years? I mean the way we want to grow our business towards 80 million and 100 million tonnes over the next 5, 10 years?
So we are growing, of course, on organic growth. We have enough plans to reach beyond 80 million tonnes. As far as inorganic is concerned, it depends on the strategic fit, but also on the value creation potential of the target, based on that, we take some decisions. I don't think Shree has ever been, but even today. I would like to reemphasize that Shree is very open to such opportunities, but the opportunity should add value to us. At the same time, should be part of the strategic fit in terms of the growth model in terms of market, in terms of several other things.
So we are not against acquisition, as has been said by some people even today morning -- same information. We are very open to wait, but it should be positive for our business as well.
Mr. Nevatia, may request you to join back in the queue for any follow-up as we have several participants waiting for their turn. [Operator Instructions] The next question is from the line of Prateek Kumar from Jefferies.
Yes. First question is on your premium -- premiumization of the product mix so where are we -- I mean, you highlighted in your opening remarks, but where are we in our efforts for taking of this premium product mix? Where should we end up maybe by FY '24 end? And how much it can contribute to your incremental realization on a short term basis?
So last year same quarter, I think, were roughly about 6%, 6.5% of premium products. Last quarter, this year, we have been able to increase it to something like 7%, 7.5% -- 7.5% to be precise. The journey has started where we are bringing up some new products. Just about 2 days back or 3 days back, we launched a new product in our coastal markets of Odisha by the brand name of Rockstrong. We are also working with our R&D as well as manufacturing to come up with some enhanced products, which have sharper value proposition.
With the current brand that we have in the market, we expect to grow up to about 15% of sales -- the 15% of share premium segment by end of this year. As I said, the journey has started. We are building the brand equity. We are making strong corrections in our brand architecture. And this will all help us to communicate the value that we bring to the customers in a stronger way. So my first year ambition is to reach about 15%. And thereafter, we will start the ways of how to grow it further. As far as what does it bring, I think, on my view would be, and I make this comment at the current level of pricing that each tonne of -- this 15% will give us about INR 50 per tonne advantage in our EBITDA.
And this is the strategy or the product mix of sizing of premium pricing? Is it different across regions? Or we have like similarly -- similar mix of premium product costs before regions we operate in?
So in my view, cement is a very local product, yes. And so each market, each district needs to have its own unique strategy of products and product position. And this is exactly what we are doing. Each market has its own needs, for example, when I just now mentioned about Coastal Odisha, Coastal Odisha is known for its weather. And it's known for somewhat very harsh weather. It requires a specific type of concrete to have durable structures, and that's what our focus has been. Similarly, if you go for a coastal market, because of [indiscernible] as I said, each district will have its own approach. We will be able to -- we are defining it district by district. But overall, I see a space for 2 to 4 premium brands in the market as we move forward.
One other question is on -- what was the loss of volumes due to the IT incident that happened over the last week of the quarter? And was that volume recovered in first quarter '24?
No, there was no volume impact because of the IT incident. We have a very strong business consulting process in the company. And the moment it was reported that there is an IT incident, very quickly, the BCP process took over. And therefore, there has not been any impact because of this on business performance.
Thank you, Mr. Kumar, request you to join the queue for any follow-ups. The next question is from the line of Shyam Sundar Sriram from Franklin Templeton.
Yes. Thanks for the opportunity. So we are seeing utilizations improving over the last few quarters from a 2-year perspective, can you please highlight the pecking order of our strategic priorities such as, say, market share gains, product mix improvement, EBITDA improvement, what would be your pecking order of strategic priorities would be great to hear that.
Just adding to that, we are also seeing the cost curve shifting down, led by fossil fuel prices, just like Jajoo ji just highlighted in the prior question, will we look to share some of that surplus to deepen our market presence? Or will we retain that within the company to improve the profitability?
Sure, let me try to understand the question first. So first is the strategic priorities. We have very...
The pecking order sir -- more importantly the pecking -- your pecking order, how you think of it?
I am supposed to think of all the ones in the same pecking orders. It's not that 1 is better than others. But let me let me see if I can answer a part of it. First thing is first that, as we said, that we, Shree Cement, are very clear on our objective to become the biggest cement company in the country. And this is the top priority for us. It's good for environment, good for business, and therefore, it is something that we would like to pursue [indiscernible] last 2 years.
The second priority is to make sure that from the current operations, we are able to extract more value for our shareholders. This will come in 2 fronts, one is by having a better look at the offerings that we are making in the market, our product offerings, and how can we price them better in some cases, what can we do in terms of meeting the exact and precise customer expectations. This is something that we are doing. And we believe this is a journey by itself. It takes some while before we reach there.
As we have mentioned to you that we have recently partnered with [indiscernible] 1 of the very known branding agency to make sure that our brand stories are told well in the market. So this is the second -- this is the other priority that we have as second, but other priority. Third is to make sure that we Shree is able to maintain its momentum of capacity growth. We have known for this in the last several years. And this is something that we are firmly on ground.
We have a very strong team that is pursuing this, and we believe that by in coming years, we should be reaching 80 million tonnes through our organic efforts in different parts of the country, which, by the way, will truly make us pan-India companies. These are the 3 big topics for us, but the fourth topic that is going to be the platform on which we will construct all this initiatives is, what I call, a very modern organization, an organization with advanced IT, IT tools like SAP 4HANA and organization with advanced digital tools what we are doing in CRM or logistics or manufacturing.
And that is the way we are setting up our objectives for -- strategic objectives for the coming year. What I'm saying is also applicable to other support functions, and they are all working around this to make sure that as a company, we succeed in the coming years.
Understood, sir. That was clear. The other point I was trying to understand is given the cost curve shifting down, will we look to share some of the surplus to deepen our market presence? Or will we try to retain that within the company, as we also have growth ambitions going forward?
No, I don't think we are going to play a role by which we destroy our price lines in order to reach a volume target. Our objective strategy is very clear. We have to reach our business and volume -- reach a volume level by which our utilization level is at least that of average industry. That is number one.
But by doing so, we are extremely conscious that our role is to make sure that the price line does not get affected of it. We are able to in fact strengthen it by pushing more premium products. And that's the strategy we are going to play.
Understood, sir. Understood. One last question, if I may ask. Is there an aspirational EBITDA per tonne that we would like to reach in the medium term for Shree Cement, sir?
So we have been kind of leaders in EBITDA per tonne in the industry to look at the Shree cement. I think I used to believe that even today, we should not be, in any way, a company which is giving an inferior set of numbers on our core business. With the new capacity additions, with increase in premium products, with making sure that we are able to work on manufacturing and excellence, we believe we should be able to create some additional room for adding to the EBITDA per tonne performance in the company, and that is the way for us going forward.
The next question is from Kunal Khudania from DSP Asset Managers.
My question is on the debt front, like although you have explained in terms of the capacity expansion. So how do you see your debt levels panning out in the near to medium term? Or is it that your internal accruals would be sufficient to take care of the CapEx requirement?
Yes. Kunal, currently, we have net cash of around INR 5,700 crores as of March ending. And we believe -- despite our aggressive capital expenditure program, everything will be through internal accruals. We don't foresee to take any further debt in the books. In fact, the cash in the books is sufficient to take care of our needs in the coming few years.
Okay. Okay. Understood. So that was my question.
The next question is from the line of Amit Murarka from Axis Capital.
So I have 2 questions. First, on the inorganic optionality that you're exploring. Earlier, I believe the thought that used to be that you would not look beyond $80 per tonne kind of valuation for an asset. So given that most transactions in the market for integrated plants are happening about $100, so has that thought changed? Or are you still looking at that $80 number? That's the first question.
So the value of any acquisition target is based on the quality of the asset, quality of the business that we are acquiring. It is not right to give 1 number for any business. It depends on which market that asset is, what are the operational numbers, what are the length of reserve, for example and so on and so forth, yes. So it is not right to give 1 number for it. Each asset is evaluated based on the specific set of financials that we get. And clearly, the idea would be how to make sure that by acquiring that asset, we are making our business stronger, and that is how we could be done, yes.
Okay. But you're not benchmarking yourself to that $80 number or from something, I think, which used to be the thought value.
Each asset, each opportunity has to be evaluated based on the specifics that has been on the table. And so $80 per tonne is one number, but asset quality will largely determine what kind of valuations we give.
Sure. Sure. And the next question then is on UAE, so like you see from your cash flow that you invest another INR 525 crores in UAE. So what was this amount for? And then like how much more is planned to be spent with that asset in the coming years?
No, we have not done any further investments in UAE. In fact, the other investments, which we are seeing, is in our other subsidiary companies, like Shree Cement East, where we are setting up our grinding unit. For UAE, we are not doing any expenditure right now.
Okay. Okay. Okay. Yes. So my mistake then. I thought that -- in the consol, it was showing up as an investment in a subsidiary. So the UAE -- so it is for other investment, not the UAE investment.
That figure is for our -- all our subsidiaries. And in that, expenditures, the main expenditure is for the grinding unit, which we are starting up in Shree Cement East.
Got it. Got it. So there's no further investment plan in UAE as of now, right?
No, as of now, certain efficiency improvements, these things go on forever, like -- but no major investments as such.
Okay. Could you detail out your CapEx plan for FY '24.
In the current year, we'll be spending something close to INR 3,300 crores to INR 3,500 crores.
The next question is from the line of Satyadeep Jain from AMBIT Capital.
A couple of questions. First 1 is on volume and capacity. So tied up follow-up to Shyam's question in a way. You're indicating that you want to bridge the gap on utilization between Shree Cement and the industry utilization. And given Shree Cement is also adding capacity in the next year, how much growth can we look at for next year?
I think earlier in the media interviews and all, if I'm not mistaken, we've heard of 36 million tonnes in FY '24. Does it still hold? And in the release, you mentioned beyond 80 million tonnes versus target of 80 million tonnes by FY '30. So beyond 80 million tonnes would be by FY '30 or you looking at even beyond 80 million tonnes before FY '30? And after these expansions, which 1 will be -- once Nawalgarh and all these project commissions, what could be the pecking order for projects for you -- beyond this project? That's on volume and capacity.
And then second 1 would be on the branding strategy, I'll come to that.
What was the last line, I'm sorry. Could you repeat last line, please?
Second question would be on branding strategy that maybe I'll ask after this question, volume and capacity.
Okay. So as we said, 80 million tonnes is a very well-stated objective, which our Chairman has already communicated to all of you in the last year as well. For this detailed plan, site-by-site is there. We are progressing on each of these sites as a separate stages of development. Somewhere the land acquisition is over. We are going for EC. In some cases EC has been done. And in some cases, we are progressing with the land acquisition.
So after Nawalgarh, we expect to have 4 or 5 projects. It's -- it depends on the date by which we get the clearance from the government as well as other regulatory authorities. And as and when we get the clearance, we will be starting those projects, and you will hear it from us, every time when we start the project.
But we have sufficient locations and sufficient arguments to go from current, where we are, 80 million tonnes for this mix of brownfield and greenfield expansion projects.
Okay. And on the volume growth sir, for this year for FY '24.
As we said, we should be reaching about 36-odd million tonnes is what we have kept, which means the growth of about 13% for us, which is slightly ahead of the market estimate -- the market growth that we are expecting in the range of 7% to 8%, so we're slightly ahead of that growth largely because we are adding new capacities this year.
Okay. Second question is on the branding strategy, you touched upon premium products in Rockstrong, premium product in Odisha. When you look at the northern region and the normal category A products also in addition to the premium category, is there some thought on the strategy, specifically on the Northern region, how would you look at improving the utilization there?
Is it largely going to be introduction of new premium products or maybe brand repositioning or introduction of new products in category? Specifically in that category, premium products has also been -- a lot of players are chasing that market. How has the initial reception been in that premium category? Are you seeing a lot of competition in that particular market? So that's some branding in North and overall, the premium depth and positioning.
In my view and in our view, there is segment of customers who are looking for products with value proposition, be it in soaps, be it in cars or be it in cement. And that's the customer group that we have identified. We are -- we have studied the expected requirements, their needs both stated and non-stated. And therefore, the products that are being designed to induce in North India are in 2 stages. One, we have 2 existing premium category brands in the market Roofon and Bangur Power. Both of them today are in North position in line with the A group pricing.
But beyond this, we are looking at what else we can do to certainly communicate this big message [Foreign Language] with the product that has more sharper value proposition and when I say value proposition, you might think we can talk in terms of cement that have -- that are designed especially for high-performance areas, in 30 and 40 and 50 grades of concrete. These are the kind of products that we are now launching. And hopefully, we should see that 1 brand at least in North India will be launched in this year in addition to Bangur Power and Roofon.
The next question is from the line of Raashi Chopra from Citigroup.
Just on your -- to understand better, on a sequential basis, your realization was flattish, power costs were flattish. Was the change that you are seeing? I mean, how do you kind of allocate that between the remaining cost as well as the sale of power.
Yes. Raashi, you are correct, the realizations were more or less flat. There was a very marginal increase, if you look -- compare it from the December number. And yes, fuel cost also did not move up. In fact, December quarter, the fuel cost was around INR 2.53 and it's on a per CV basis, and it remains the same, more or less, in this quarter. That is particularly because of some high-cost inventory, which we are carrying.
We believe the sales benefit will come -- some part of it is going to come in this quarter. You should see some moderation in fuel cost, to around INR 2.35 in the current quarter.
Okay. And then on the cement realization, post the quarter, have there any significant changes or realization of the kind of flattish?
No. In fact, in the -- you were talking about December and March?
Current. Post the quarter...
No, the realizations have slightly come down, I would say, as compared to last quarter.
And just last housekeeping questions. What was the lead distance and trade sales in the quarter.
Trade sale was around 80%. Lead distance was 463 kilometers as compared to 473 last year and 450 kilometers in December quarter.
The next question is from the line of Rajesh Ravi from HDFC Securities.
Yes. My questions pertain to -- first pertains to the Union Cement performance. Could you share what was the volume numbers and profitability for that unit in FY '23? And what is the outlook?
Can you just repeat the question once again?
Sir, the Union Cement, how is that unit performed in FY '23? And what is the outlook, volume and margin?
No. Unfortunately, we'll not be able to share details of any of our subsidiary individually. Well, we can only give an outlook, the performance -- last year, the performance was not very good. And the primary reason was because the main export market, Sri Lanka and Bangladesh have just collapsed over there -- collapsed. Even the domestic prices were not that good last year, and that is why the performance was not so much, but we expect some recovery in the current year.
Okay. Great. And given that now Purulia will be set up under the subsidiary structure, so the stand-alone number would appear slightly distorted. So can we have the consolidated numbers of cement volumes for FY '23 and '22?
No, that maybe from next year onwards, we will think about. But right now, I will not be able to share the details individually of the subsidiary. Purulia will only start functioning from second quarter.
Correct. Correct. And clinker, how much was the production number, sir, for FY '23? Full year?
What?
Clinker production in FY '23 full year stand-alone?
Yes, that I will just share, just 1 second, please. Clinker was 20.2 -- it's around 20.2 million.
And sir, just -- because of the external power sales, the sequential numbers because you're not reporting it separately, the realization numbers are volatile. Is there a way to mention that in the press release so that this -- because it distorts both the top line realization as well as the energy cost numbers.
I got your point, but right now, our policy says that we will not be able to share the power details maybe from -- we'll think about it. And maybe from next quarter, we will find out a way how to give you.
Sure. At least -- cement number when you mentioned at least, which is an area of analysis, so that will help us.
Yes.
And last question on the total CapEx, what is the -- on the ongoing projects, how much is pending in terms of which we will be spending? You mentioned that INR 3,300 crores to INR 3,400 crores on ongoing projects in FY '24. So what would be balance amount that would be left for FY '25, primarily toward Guntur?
Yes. As we told you, like we have already spent around INR 3,300 crores last year. Current year, we should also expect similar sort of spending. This includes the amount for Guntur, Nawalgarh. Purulia is now more or less complete so there is no major amount left, but this INR 3,300 crores also includes some of the new projects, which we'll be announcing in the coming quarters.
Mr. Ravi, may I request to join the queue for any follow-ups as we have several participants waiting for their turn. The next question is from the line of Nitin Arora from Axis Mutual Fund.
So my question was similar to the previous participant, Jajoo ji, the thing is if you can help us quantify the profitability per tonne of cement because then this 1,000 is not a representable number. Is it possible to state that in the cement, what was the EBITDA per tonne? Because it looks like a power a decent number in this quarter.
No. As per the -- currently, we will not be able to share because we are not allowed to share our power numbers separately. But yes, I appreciate your point. Maybe from next time onwards we'll find a way how to clarify it, but -- yes.
Okay. And second thing, with respect to improvement in the -- and sorry for asking your short-term question. The improvement in the fuel cost, what you talked about, we'll see it from the next quarter. And I'm assuming this number is not correct in terms of cement EBITDA per tonne, which you reported in this quarter.
Can you help us at least in the direction, what the benefit you are looking? Is it like INR 30, INR 40 per tonne? Is it like INR 100, INR 150 per tonne from the fuel cost angle because I don't have a base number to see the improvement, if you can answer that? That's my only question.
It will be too early to guess that number, how much that power cost will be. In terms of [indiscernible] -- it will come down to around INR 2.35 from the existing INR 2.50.
The next question is from the line of Pulkit Patni from Goldman Sachs.
First is in continuation with Nitin's question. I mean, historically, we've always seen that we've carried low inventory, so changes in fuel price typically has come to us the fastest, whether it is on the way up or way down. This time around, we see that you've built a bigger inventory. Any reason for why this change in strategy?
Yes, the reason for currency, always, whenever you are thinking about stocking some of the you have to take a view on the future prices. Now looking at the volatility in coal prices, which was -- around a year back, which was quoting at around $300, now come down to almost as it was coming down, $200, $175, we thought probably this was a good level and it should not go down below. But now currently, the prices are almost, at the last shipment which we bought was, at around $115, $120 per tonne.
So -- the way the prices are coming down, so we thought that probably it has come down a lot and that is why we have built in a higher inventory. But it's a matter of time before that higher cost inventory goes down. And again, you will see the average rate of fuel coming down to these levels.
No, fair point. I completely understand. Second question is for Neeraj. Neeraj, Shree is already 1 of the most efficient in terms of the cost structure. You spoke about premiumization as 1 of the ways to take profitability up. Any other way, any sort of cost angle where you think there is more scope to improve efficiency or improve profitability that you can talk about? Or our focus would primarily be on premiumization or brand upgrade whichever way you look at it?
Remember the way I would see it as any other companies, there are -- we will operate on various levers. I'm very confident about it that any organization has several arguments to improve our performance, whichever level you are at, so be it manufacturing, be it logistics, be it sales and marketing. There are areas where we do believe that there is further scope of improving our performance.
As I said, while we have reached a very high number of 55% of solar power, still we are evaluating where else we can put these capacities of solar power that will help us reduce our power cost, yes. And similarly, there are many other areas within manufacturing, within logistics where we find that there is a scope to improve performance, and that's what we are working on. So it's not only premiumization. Premiumization is just 1 part of the journey.
There are other levers on which we are working simultaneously. And I hope given the fact that there is -- there are global opportunities, no low-hanging fruits, but in global opportunities. We should see some events happening in the coming quarters.
The next question is from the line of Kamlesh Bagmar from Lotus Asset Managers.
Sir, just 1 on the volume guidance, which we are targeting around 36-odd million tonnes. It's around utilization of 78-odd percent. And given the fact that barring like, say, 3 million tonnes grinding unit at Pune, we have not commissioned much of the capacity so that our capacities are underutilized and it has been there for the last 2-odd years. So why -- lot of that great utilization numbers on the capacity, while our peers like UltraTech, the way they are pushing volumes and at -- not at the cost of the margin, lower margin. They are doing phenomenal work. Why we are lagging on that part despite the fact that Shree has been the pioneer in terms of pushing volumes.
I'm sure -- and this is exactly what I was saying that some of the things that Shree has been known for which the reputation was built and 1 of them was building capacities more than the industry growth. So that is something that Shree has done very well and there has -- and therefore, has been able to multifold, improve our capacities in the last several years, yes.
Having said that, 12% to 13% growth of volumes in a year is by no means low. It's a very high number, given the fact that industry growth in the same period is around 8% -- 7% to 8%. So it's not a less ambitious target. It's a very ambitious target, I would say, yes. But we will -- and as I said, our challenge would be to push these volumes by about 13%, but also make sure that we reach our 15% of premier products. So it's going to be a lot of hard work now from -- for us from now until year-end to make sure that we are able to reach such ambitions.
And secondly, like I know you have given the clarification on the part of not telling about the individual numbers or separate numbers for the power business? But like at least we can give some trend like how we have performed that compared with the peers. Like internally, we would be doing some analysis on that part, because there has been so much of volatility in the power in the quarter. We went down to like, say, INR 50 crore EBITDA loss on that and then we moved to INR 100 crore profit on that. So at least like, say, how much we have seen on the actual or the pure EBITDA business in the cement.
We appreciate your point, but please -- and we obviously -- we have all the numbers, but then you also please try to understand that power constitutes -- if you look at it from an overall perspective, power constitutes hardly 3% or 4% of our total revenue.
So it is not that material. And that is why the Board decided that -- earlier we used to give power data separately, but then looking at the overall things and materiality, which is hardly 3%, 4%. So the Board decided that henceforth we should discontinue giving power separately to be treated as a segment. So that is why it is not possible to share the numbers. But we really appreciate your concern and maybe we'll try some -- try to -- from next quarter, we will internally discuss and then try to see how we can sort this out.
Mr. Bagmar, request you to join the queue for follow-up. The next question is from the line of Navin Sahadeo from ICIC Securities.
Just 1 question from my side because from the -- as you said, in Odisha, we launched a premium product. Also, we get from the market feedback is that in North per se, we are looking at launching or recently launched an OPC 53-grade kind of a high strength -- high-quality kind of product. So with various -- with focus on premiumization, wherein the product itself is not a push product, it's a full product, which also has a higher cost to it. At the same time, the influencers or the channel partners have to be slightly rewarded more to recommend that product.
So in general, the cost is a little high. Against that, we also have a volume target which is much superior than the industry. So how does this tradeoff works? How does -- how do you think this trade-off will be in favor of the driving cost and also the volumes that we are looking at from a margin perspective?
The way I look at it, the market is -- in India is clearly not one market. We have at least 3 types of market. One market is what we call the, in automobile terms, the Mercedes S-Class market. We also have E-Class market and a C-Class market. And we also have something in India, which is a very important segment now growing very fast and a very big segment, which is the B2B business, the non-trade segment of the business, right?
So for each of these segments, we have a specific market size. And what our attempt is that we should be present. It's just not 1 market segment, but multiple market segments. So we can take -- we can participate in each of those market sizes, right?
So it is not like -- pushing premium means that you will not be able to achieve overall volume growth because premium -- the products are going into a totally, entirely in different segment. And that segment, if I go up, somebody else will serve that segment, right? So it is not true to believe that if you are having a premium segment, that overall volumes will be constrained.
In fact, in my view, a multi-segmented approach to market will only add to our capacity of further achieving volume numbers, build out how I see it, Navin.
Next question is from Shouvik Chakraborty from Dolat Capital.
Sir, I just wanted to know, can you share the cement realization for this quarter and also for the Y-o-Y and the last quarter also.
Yes. The realization for the current quarter is around INR 4,850. It is similar to what it was in December. And in March last year, it was around INR 4,743 and for full year, the realization will be -- for the current year, it is around INR 4,872 as compared to INR 4,730 to last year.
Okay. Okay. Got it. That was my question.
Next question is a follow-up question from the line of Sumangal Nevatia from Kotak Securities.
My questions are answered.
The next question is from Amit Murarka from Axis Capital, follow-up question.
So I just wanted to check what is the region wise capacity utilization in Q4 and FY '23?
The capacity utilization in Q4 was around 78% as compared to 71% in March '22. It was 72% in the December quarter. And for full year, last year, it was 64% and for full year -- fiscal year '23, it is around 70%, increasing the capacity utilization.
Okay. Okay. I was just checking like if you could give it region-wise, let's say, for North and East and South. Like I think you used to share it earlier.
Separately, North is -- we are operating at around 82%, East, we are operating at around 82% and South as the new unit -- the Kodla unit has come up, so the utilization is slightly down at around 65%.
Okay. Okay. Understood. And on the TSR expansion to 15% target, like does it also involve some CapEx and setting up some units at the plants?
Yes. Actually, this is exactly -- what I said that we are setting up quite state-of-art facilities in our plant for feeding AFR, which is the major challenge in our industry of how do you feed in the AFR, which has different chemistry. In cultural AFR or be it in -- within industrial AFR right? So that's why we are setting up this feeding system so that we are able to feed to the extent that we -- our process must -- can take in these plants. So there will be a CapEx involved, which was started last year itself to create those facilities. Again, we'll let you give the CapEx numbers.
Ladies and gentlemen, that would be our last question for today. I would now like to hand the conference over to Mr. Navin Sahadeo for closing comments. Thank you, and over to you.
Thank you. So on behalf of ICICI Securities, I once again thank the management and all the participants on the call. Akhoury, sir, if you have any closing comments, please, we'll take that, and we'll conclude the call thereafter. Thank you so much.
Navin, again, on behalf of the management of Shree and everybody present today in the call, we would like to really thank all our investors, all our shareholder groups who have come here today. It is encouraging when you all ask questions, when you ask some deep probing questions. It is frustrating when we are not able to answer any of those questions, but we will come back next time more prepared -- better prepared. Overall Shree is on the right path, right direction.
Our assurance to all of you that the performance actually, is known for, will be continued. The team at Shree, is known to, will continue. Deliverable position Shree, is known for, will continue. We will become -- we will reach those targets that we spoke about. Thank you very much everybody for participating today.
Thank you.
Thank you very much. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines. Thank you.