Q3FY24 – Transcripts summary
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Recognition – from The Bureau of Industrial Standards for meeting the highest quality of cement without any product failures over the past three years of observation
About the Business
350 – Distributors
500-600 – Retail Sales points
They are reducing around 75% – 80% of power cost by green plants
Permission has been granted for the expansion of the solar plant from the current capacity of 37 to 40-megawatt peak
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Q1 final year will be similar
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Q2 of next year is going to be a monsoon quarter
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Q3 is a good quarter
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Q4 will have little correction
Guidance
In the areas they are in almost 10 to 15 million tons of cement is being sold per month whereas they are only putting in a capacity of 1 million ton per annum which is very minuscule
They are aiming to reduce the dispatches on the delivered basis and relying mainly on an ex-plant basis
Guidance on pet coke – reduction of prices in the petroleum coke and Q4 they are expecting to go down
By FY ’26, they are targeting INR900 to INR1000 rupees EBITDA per Ton, and by 27 they are expecting 300 cr of revenues
By FY26 they are aiming for about 75% to 80% of capacity
At 80% efficiency of 1 million ton capacity Considering inflation and a projected revenue of 5,000 per ton, the revenue range is anticipated to be between 370 to 430 (presumably in crores INR) for the top line.
Management has got a very good experience in setting up the power plant
Why sales are flat
- The cost of the dispatches done in this quarter are typically ex-plant basis and the company is trying to reduce the dispatches on the delivered basis and relying mainly on an explant basis to dealers with discounted prices despite the increase in capacity utilization which has reached 76%
- The reason for doing so is not to be able to pass on the cost of logistics to the consumer.
Volumes
- FY23, there are 2,26,000 tons over the dispatch quantity
- As of 9months, it has reached 1,98,000
- Expecting the range of 240 to 245,000 tons for FY24
Reason for improvement in EBITDA & PAT
Changes in terms as mentioned above and reduction of prices in the petroleum coke
EBITDA – In this quarter 11.7 cr of EBITDA 8cr is contributed by solar
Reason for solar plant expunction
- For transmission from existing lines, 20% to 30% of the capital cost has already been incurred
- So now they are just enhancing the DC capacity to accommodate the existing electrical equipment capacity
- To accommodate this internal consumption of electricity without incurring additional costs such as cross-subsidy charges this plant will be added
- With this capacity of 3 Megawatt, they can increase EBITDA and are expected to be commissioned by April 2024
- After the expansion and commissioning of a new one-million-ton capacity in July, the power currently generated and potentially sellable to external parties dew to efficiencies will instead be consumed internally due to increased operations
- This setup allows for capitalizing on incentives for the existing power generation facilities, which can then continue to sell power externally with government incentives, while the new solar power project, supports the internal power needs
Inefficiencies
Until the capex is deployed their EBITDA per ton will be lower than the Industry
Now they are consuming 110 units per ton compared to 60 units per ton of electricity as per the industry
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