JK Lakshmi Cement Limited (500380) Earnings Call Transcript
May 21, 2020
Earnings Call Speaker Segments
Ladies and gentlemen, good day, and welcome to the JK Lakshmi Cement Q4 FY '20 and FY '20 Conference Call hosted by PhillipCapital (India) Pvt. Ltd. [Operator Instructions] I now hand the conference over to Mr. Vaibhav Agarwal from PhillipCapital (India) Private Limited. Thank you, and over to you, sir.
Thank you, Sampath. Good evening, everyone. On behalf of PhillipCapital (India) Pvt. Ltd., we welcome you to the Q4 FY '20 and FY '20 call of JK Lakshmi Cement. On the call, we have with us Dr. Shailendra Chouksey, Whole-Time Director; and Mr. Sudhir Bidkar, CFO of the company. At this point of time, I'll hand over the floor to the management of JK Lakshmi Cement for their opening remarks, which will be followed by interactive Q&A. Thank you, and over to you, sir.
Thank you. Thank you, Vaibhav, and good afternoon, ladies and gentlemen. This is Sudhir Bidkar, along with Dr. Chouksey, welcoming you for Q4 con-call. You would have all seen the results. I don't want to repeat any numbers therein. Only thing that, yes, the financial year '19-'20 ended on a sore note because of this lockdown, which lasted initially in the month of March for about 12 days and then continued much longer than what we had initially envisaged. Though we have started operations in a smaller way, starting with the -- in the month of April with commissioning starting of the restarting of the grinding units. And slowly, gradually, we are picking up. And without wasting any time, I'll throw the floor open for question and answers, please.
[Operator Instructions] The first question is from the line of Shravan Shah from Dolat Capital.
Sir, before asking any question, just a clarification needed. Raw material number for FY '19 and '20 seems to be different if I total the 4 quarter numbers, and this has been adjusted in the employee cost and other expenses. So just wanted to understand, is it a printing mistake or have we restated the numbers? And if yes, then in which quarter of the FY '19 and... [Audio Gap]
We will explain the reason for that. But broadly, this is the only reason because of the shifting of the packing cost from the raw material cost to the other expenses.
The next question is from the line of Sanjay Gandhi (sic) [ Sanjay Nandi ] from Ratnabali Investments.
Can you share the production number for this quarter as well as last year of this same quarter?
Sorry, come again?
Can you just share the production number for this quarter as well as last year of this quarter?
Production, you want production, not the sales? Our cement production was, for this quarter, 20.15 lakh tonne and the corresponding quarter of this year was 26.15 lakh tonne.
26.15 lakh tonne. This quarter, sir, I missed out the number?
20.15 lakh tonne.
20.15 lakh tonne. And what is the sales number, sir?
Sorry?
What is the sales number, if you can kindly guide?
Sales number for this quarter is 24.55 -- 24.65 lakh tonne, which includes clinker sales of 3.3 lakh tonne and the corresponding quarter was 29.39 lakh tonne, including clinker sale of 2.09 lakh tonne.
Okay. Sir, this is standalone basis, right, sir?
Yes, yes. We is -- we are talking on a stand-alone. All figures are stand-alone.
On stand-alone. And sir, current utilization for the Udaipur Cement, sir?
Sorry?
What is the current utilization for Udaipur Cement?
Udaipur Cement is now operating in the current month around -- over 65%.
Over 65%. And sir, what is the current pricing scenario post this COVID crisis? If you can guide what has been the changes or traction that happened from the mid-quarter of March '20 and yield as on date?
See, we have retained more or less the same price everywhere barring that there has been some price increases, which we have been able to take in the East and some price in the North. We've not been able to take any price increase in Gujarat or Maharashtra because of the very, very low demand there.
Okay. So which pockets you are planning to increase the price or you have already increased the price, sir?
No. Hereafter, we are not intending for any immediate increase -- price increase till the demand does not support the further price increase.
So you mean to say the post-COVID thing, the prices are similar to that of March exit quarter, right?
No. We have taken some increase as I was mentioning. About INR 10, we have been able to take the price increase in North and East and about INR 15 in the Central division.
INR 15 in the central division?
Yes.
Okay. Okay. And what is the current petcoke price scenario, sir? The prices have already dipped a lot. So do we have booked any kind of inventory we have already or the benefits which we can reap in the coming quarters, if you can guide something on that issue?
Sorry, repeat your question, please?
I want to know like the petcoke prices have dipped a bit. So can you just guide us as what kind of inventory we have as of now or what kind of we have booked as of now so that we can reap the benefit in the coming quarters?
We are in the process because we are carrying certain goods inventories, although the prices have softened, but we have still not booked in a major way for future because we are still carrying our booking inventory.
Okay. So average carrying cost would be roughly 75%, sir? Or it's higher?
Sorry?
The average carrying cost would be 75%? At what level you're carrying, sir?
Last quarter, it was INR 7,000 -- INR 7,100 -- close to INR 7,000 in the last quarter as compared to INR 8,100 in the corresponding quarter last year. Overall, for the year as a whole, it was INR 7,300 as against INR 8,300.
The next question is from the line of Ashish Kumar from Infinity Alternatives.
Congratulations for a great set of results. Couple of questions, sir. Wanted to understand what is the -- because last year, when you had mentioned, we were talking about looking at evaluating an expansion plan. Now post-COVID situation, what is the CapEx plan for FY '21 that we are looking at? And when you will plan for next expansion?
We have temporarily kept that on hold with the new expansion, which we were talking of that was to come in North. So we were to announce -- had there nothing had happened means without COVID, we would have announced this, but now we have kept that on hold. At the appropriate time, we'll come back with the announcement.
And if there is a CapEx plan for FY '21, how much would that be, sir?
CapEx is nothing major. Only 2 things are happening. One, small waste heat recovery project is getting implemented at Sirohi. And -- so the CapEx for that would be about INR 120-odd crores in the current year, FY '21. And some balancing -- small balancing is happening in Udaipur, which may cost about INR 50 crores there, for Udaipur. Other than that, there could be some normal CapEx of INR 15 crores, INR 20 crores. So overall, the I see CapEx in JK Lakshmi of not more than INR 150 crores max, and not more than INR 50 crores for UCWL.
Okay. So total INR 200 crores as a total limit?
Yes.
The second question, sir, was that we had given INR 40 crore loan to a group company. By when do you think we will be getting that repayment, sir?
Yes. We have given that to a group company, INR 40 crores loan. Actually, what had happened is, though it has not impacted us, we were having the treasury corpus of about INR 350 crores at the start of last year, which has ballooned to about INR 450 crores. Fortunately, for us, the investment in various debt instruments was safe. But going -- but looking at what has been happening in the market, 2, 3 players in the recent past had deferred their, in fact, the maturity of the FMPs, and something has happened to one of the mutual -- major mutual fund where fixed [indiscernible]. So in between, at that time, there was opportunity of giving an NCD to a group company, which we thought would be a safer bet than investing in a market, which was in turmoil. So it's a loan for a year and could get rolled over for another.
So you think it will get repaid on in FY '22?
Yes, yes. Initially, it was for a period of 1-year. They may pay and they may ask for another one, so this is a deployment of surplus money. It's not a group investment elsewhere other than -- not a major long-term investment. It's only a deployment of our treasury corpus, which is minimum, than to get in a turmoil market.
Right. One suggestion and one request would be that given where your stock price is, if that money could have been deployed to do buybacks, like another group company of yours is doing it, it would help in terms of the -- it would help from a shareholder perspective to some of the shareholders...
Yes. We had already -- also done that one buyback in 2012, and we thought we have given good return as far as the dividend was concerned. But yes, certainly, this is a treasury corpus, which we are keeping for our future growth. Now we -- as I mentioned in our response to your question or some previous question that we have deferred that -- our expansion plan. Had the expansion been on time, we would have required this money, whatever is in the corpus -- treasury corpus as part of the internal accrual that we require for the promoters contribution for the new project. It's only because that project has got deferred, that's why. So I don't have money. We can't borrow to do a buyback. And this money, as the treasury corpus, which is there is for funding my long-term growth. At that time when we had that surplus, we did the buyback. So that INR 40 crores here and there will not make much dent in that.
Yes. Now my -- this is just a request. Given the fact that you have deferred it, you might want to think about it over the next couple of months, and so your Board will come to the right decision.
Yes.
[Operator Instructions] The next question is from the line of Ritesh Shah from Investec Capital.
Sir, congratulations for a great job on the debt side. Sir, to understand how is debt maturity profile, what sort of repayments do we have lined up? This is the first question, sir.
We have, today, an outstanding long-term loan -- total loan portfolio on a stand-alone basis of about INR 1,450 crores and about INR 250 crores over the next 2 years each will get repaid, INR 250 crores to INR 270 crores. So we'll be down by about over INR 500 crores over the next 2 years.
Okay. And sir, at UCW?
UCWL, we are today having a total loan of about INR 550 crores total, right? And there the repayment is gradually. It is not happening in a big way because they had done some temporary funding through NCDs issued to a group company. That has now been replaced with a fresh loan, which is now coming in their own balance sheet from the bank. So that carries 8 to 10 years repayment tenure with moratorium of about a year or so. So effectively, there will not be any major reduction in the debt as far as UCW is concerned.
That's useful. Sir, in the earlier question, you did indicate that we are postponing -- we have -- we could have actually gone ahead with the North expansion, which I believe is we are referring to 1.8 million tonne to 2 million tonne at Sirohi -- 1.5 million tonne to 2 million tonne, which is not difficult to get.
Not Sirohi, we said in north, it could have happened in either Udaipur or in Sirohi. We had not selected or pinned down either for Sirohi or for Udaipur.
Correct. I just wanted to understand what would have been the quantum of CapEx had we gone ahead for this expansion if not for COVID?
It would have been anywhere between INR 1,200 crores to INR 1,400 crores.
Okay. So, sir, incrementally, if one had to deploy this, what is that -- what are the variables that we are looking at before we actually kickstart the process of the next phase of expansion?
It's basically demand/supply and that's how the demand tapers.
Basically, the demand/supply and our own existing capacity utilization. So we had reached about 70% to 80% capacity utilization. Had this COVID not been there, we would have been -- we would have continued with about 82%, 83% capacity utilization, and that would have given us enough reason to go in for expansion because by the time we could come in about 21 to 24 months, we'd be actually losing our -- start losing our market share. So that is how we had planned our next capacity expansion.
Correct. Chouksey sir, I have a couple of questions for you. Sir, we have seen a very nice price drop on a year-on-year basis. Can you give some color on the pricing differentials between the Northern markets and the Eastern markets for the quarter? And what are the trends right now, if possible? And secondly, any major differential on the cost curve between North and East?
See, in terms of price differential, yes, there's a substantial price difference between the prices here and in the East. The only advantage that -- in East is that nearly 80% of our sale is in the waste segment there, right, while in the north it's about 55%. So if I take the weighted average price difference, while the market price difference would be about INR 40, INR 45, but because of our good trade price and also because of the low freight, there we are operating at a very low radius, the total market is well within 300 kilometers, that makes it -- the actual price differential net to us at about INR 20 to INR 25 a bag. Otherwise the market price difference is -- differential is about INR 40 to INR 45 a bag.
Interesting. Sir, last question. Specifically, there are labor issues and truck availability issues. So sir, how are we catering basically looking at some of our distributor networks there, do we have our own dedicated fleet from a transport side, basically in Northern India and Eastern India? Or is it we completely rely on external guys? What is the degree of comfort that we have over here?
So we have actually a mix, we don't have the entire fleet as our own. We have mix, we have some dedicated transporters, who have put their entire fleet at our disposal, but that takes care only of about 50% of our requirement. For the balance, we use railway for about 18% to 20% and the balance is all the market share. So there, of course, is the challenge. When we started the operation in April, I think we got a bit of a lead because of our high percentage of dedicated circles attached to us, so we could ramp up comparatively faster. It's only relatively, and we could reach 60%, 65% in very short time. But going forward, if the migration goes unabated, then this could be, again, a fresh challenge can be made to us, both in terms of operations, the contract labor which is engaged in the plant, especially in the packing and loading, et cetera, and also in the supply chain, it could be a challenge.
[Operator Instructions] The next question is from the line of Pritesh Sheth from CRISIL.
Firstly, I'm trying to understand on the realization front. So, sir, for this quarter and Q3, your realization declined by around approximately 2% quarter-on-quarter, but what we are seeing and what someone, I think, suggested was that there was a realization growth of around 2% -- 2%, 2.5%. So why was that your realization declined? Was it because of the mix in trade, non-trade or because of mix in premium, just trying to understand.
Decline over what, which quarter are we talking?
Third quarter and fourth quarter. Third quarter and fourth quarter.
Yes, you see this is marginal. I think, this is about -- I think it's almost very similar what we -- almost INR 7 or INR 8 difference. But then we have been able to make up in the freight, which where we could reduce the rate considerably and that gave us a better net realization, so to say. So I'm not too sure as to where will that put us to a disadvantage.
Right, right. So you're right on that, sir, it's INR 7, INR 8 of decline in realization quarter-on-quarter from third quarter to fourth quarter. But what the market generally experienced was there was a marginal increase in prices rather than the decline in what we have reported. So I was just trying to understand where the decline came from.
See, it depends on the -- it actually depends on your market mix. We have seen a price decline in Gujarat, and we have almost 37%, 38% supply there. So it depends on we are comparing with what.
Agree right, sir. Okay, got it. Got your point. I think maybe your East -- supply to East market would have increased where we have a lower price, so got it, sir.
You're right. You're right. That also makes a difference there.
The next question is from the line of Amit Murarka from Motilal Oswal.
So a couple of questions. One, I missed your comment on capacity utilization. So currently, what will be the utilization at which you are operating?
Yes. I think we mentioned in one of the question earlier that we are operating at -- the plants are operating at about 70% capacity utilization. East is doing slightly better where it might be over 75% capacity utilization.
So that would roughly imply, I mean, near normal level, right? I mean, if we have to look at a full year average basis?
Not exactly. Not exactly because our full year capacity utilization -- if I leave out the fourth quarter, then we are operating at about 80% capacity utilization.
Yes. So it's 10% lower broadly then. I mean...
Yes, yes. Perfect.
So volumes have recovered quite well in that case.
Sorry?
So the volumes have actually recovered very well in that case.
Yes. But as I was mentioning, whether that would really continue is a challenge. And I had put that caveat in the beginning that the initial supplement came from the dry supply chain. So the whole pipeline was dry, the retailers, the dealers, the material in transit and so on. So initially, the push came from there. And then, of course, the rural construction which was left half in between, when this lockdown came, the rural was immediate to pick it up, and there we have a -- comparatively, we are better placed in the rural market in the construction.
Okay. So then is there a fear or concern that maybe June volume could actually dip given that the pent-up demand will get over and plus the migrant labor issue is also, I mean, looking at sort of a concern.
The situation is actually very dynamic and it's very, very difficult to really put a finger as to what will the numbers be in June. But right now, we are working on the premise that June would be at very similar level as May, because from July onwards, in any case, the monsoon will start impacting. So the volume will go down there. And a lot of people would like to finish their construction despite all these odds before the monsoons sets in.
Right. And in terms of the operating costs, like, has there been any perceptible change in cost post the COVID or in this situation like road logistics freight has apparently gone up, so can you like put more light on that?
Well, there has been some increase in the logistic cost, but then we are trying to make it up by more number of -- more amount of -- or higher volume of direct dispatches to the site rather than routing it through the ground and so on. So net, we are -- we may not see really any major change in the cost.
Okay. Fine. And petcoke...
Other than, of course, the fixed cost, which will per tonne -- on per tonne basis will certainly go up.
Yes, yes, yes, of course. And also like on the other variable line items, like petcoke currently would be lower than, let's say, the 4Q averages, right? Would you be able to quantify that?
Yes, yes, you're right. We have some inventory. So the real impact of that new reduced price will come later on.
Okay, sir. So how much was your reduction? I mean if you could quantify?
Reduction as of now is about 10%.
[Operator Instructions] The next question is from the line of Pratik Desai from NMV Securities.
Congratulations, sir, on a good set of number. So my question is towards the exceptional item, which you had in the FY '20, INR 30 crores, what was it towards?
It is towards the -- this was done not in this quarter, it was coming since the first quarter. This was towards the impairment of the carrying cost of one capital work in progress of the conveyer belt, which is to be commissioned at our Durg cement plant. So the carrying cost was lower than -- the actual carrying cost was higher, that's why the impairment was to be provided.
Okay, okay. Sir, can you give the fuel mix for the quarter? I mean, I missed the numbers actually.
Which -- what mix?
Fuel mix, fuel mix.
Fuel mix...
Almost 20% is coal and 80% is petcoke.
Okay. So it is largely towards petcoke only. And you actually gave out the tonne -- per tonne numbers, right, for the petcoke or...
Yes. Mr. Bidkar, earlier gave you the...
This per tonne total in this quarter was about INR 7,000 as against INR 8,100 in the corresponding quarter. And for the year as a whole was at INR 7,300 per tonne as against INR 8,300 in the last financial year.
Okay. Okay. Sir, last question is towards -- sir, how do you see the demand recovery, specifically in rural? Like you mentioned earlier that you are like a good established player in rural regions. So how do you see the demand recovery going forward for FY '21?
No, I think I mentioned also that whatever demand we are witnessing now is mainly coming in the rural. So the demand recovery in the rural has been good, and there are a couple of sectors, which are supporting it and there are a couple of sectors which will negate it. So how they will play out in future is, of course, anybody's guess. The positive factors are that the migrant labor, which has gone back to their villages, they are likely to fuel the demand of the rural because when they are free, they can take up the construction of their own houses -- construction or repair, I mean, of their own houses, and they don't need to engage outside labor, they can do it themselves. That's a very common phenomenon. So that can actually add to the demand. The negative side is that with lot of people going back to the villages, the spread of the disease in the rural is likely to happen more. And it has been witnessed in many places in Rajasthan that villagers have started getting infected. So it's both, positive and negative.
The next question is from the line of Swagato Ghosh from Franklin Templeton.
Sir, the clinker sales that you generally do every quarter, is it to external companies or is it to our Udaipur unit that gets accounted in the stand-alone numbers?
This is broadly external only except for some conversion job work which we are doing from other outsourced grinding unit. We are not selling any clinker to Udaipur.
Okay. But sir, why are we selling to external like units? So maybe you can help me with the profitability number on this volume. And also from a competitive perspective -- competitive strategy perspective, does it make sense?
Yes. It makes sense because it saves us the transportation cost, then I am only transferring the clinker, I'm not transferring the fly ash or the spun along with it. So I'm not selling the cement. So if I have a grinding unit which is near to a market where I don't have a grinding unit, it helps. So like I have one outsourced grinding unit in U.P. and one I have in J&K, there I don't have a nearby -- captive grinding unit nearby. So that helps me in terms of logistics and it also helps me to retain my market share there.
Okay. So the end cement product gets sold as JK Lakshmi brand only, but it does not come in your P&L, the revenue, the cement revenue. Is that understanding right?
Sorry, come again, can you repeat that?
So when you sell clinker to these outsourced grinding units and they in turn sell the cement, the revenue -- the clinker revenue comes in my P&L, but the cement revenue is in some other entity's P&L, is that right?
No, no. We buy the cement from them. That is a trading -- we buy the cement. We sell -- we buy the -- first, we sell the clinker, then we buy the cement from them and then sell in our own name. So that trading -- that extra is trading of cement.
The next question is from the line of Prateek Kumar from Antique Stockbroking.
Sir, my first question is, can you give volumes for consolidated operations for FY '20?
Volumes, sorry, come again?
UCW volume for FY '20?
UCWL volume for FY, just a minute. UCWL has done a total of about 19 lakh tonne, total sales, which included 14.69 lakh tonne of cement and 4.42 lakth tonne of clinker.
So this -- when we -- if we have to calculate the total consolidated volumes for the company, that will have like this 92 lakh tonne of stand-alone plus 19 lakh tonne of UCW, that's right? Or we have to subtract them intersegment?
Correct. Because for us also we are selling at arm's length. Even if we are selling some products to Udaipur or to outsider, we are also doing it at arm's length pricing. And even if they are selling to us, then the -- all is at arm's length pricing. So it's as good as a sale only.
No, but your individual company's sales could have that. So there is no intersegment or intercompany, we have to subtract for that?
No, no. It is completely valid.
Okay. Okay. And sir, you highlighted our trade mix in East is 80%, North and Gujarat is 55%. How is the premium product mix in these 2 regions of the trade sale?
It's roughly -- I don't have the exact figure right now, but then it's roughly 20% of our trade sale is in the North.
And in East, how would that be?
East would be about 12% to 14% for the trade sales.
Okay. And regarding the price hike, you mentioned, you took like INR 10, INR 15 price hike. So this improvement in utilization in the month of May to INR 65, INR 70, have all these volumes happened at higher prices?
I think, most of them, yes. Barring what we are selling in Gujarat, there is no price increase.
Even in May -- month of May?
Yes. In May also, there's no price increase. The demand there is very, very subdued because of the very high incidence of corona there.
Right. And how would be the profitability like -- for a year basis, how would be the profitability per tonne in North and East operations?
It is too uncertain and it is too far off really to discuss that in today's time.
No, no, no. In FY '20, how would the profitability...
We don't share the region-wise profitability, please.
Okay. Just one thing, on your gross debt position for consolidated operations, is it INR 2,000 crores?
Sorry?
Gross debt position for consolidated operations, is it INR 2,000 crores, INR 1,450 crores plus INR 550 crores, that's what you said, right?
Yes. Yes. It is about INR 1,980 crores, close to INR 2,000 crores. You are right.
Okay. So there is a very large component of current maturities of long-term debt in that case for FY '20 for...
Yes, about INR 283 crores -- INR 280-odd crores. Yes, that is what I mentioned about INR 250 crores to INR 270 crores will get paid off.
No, sir, for consolidated -- in consolidated operations?
In a consolidated basis, about 200 -- say almost INR 250 crores of debt is replacement debt. So what is going to be paid out of the company's cash flow profitability is about INR 270 crores only.
The next question is from the line of [ Saurabh Dubey ] from HDFC Securities.
I want to know the RMC revenue for Q4?
Sorry?
The RMC revenue for Q4?
It's about INR 43 crores.
INR 43 crores. Okay. And what would be the clinker utilization?
Sorry?
What would be the clinker utilization for Q4?
Clinker utilization, you mean capacity utilization?
The production in Q4, sir?
Just a minute, clinker capacity utilization you're asking no? It's about -- in the fourth quarter, it was about 95%, 96%.
What was the number for clinker production?
Clinker production for the fourth quarter was 16 lakh tonne.
Okay. So flat Q-on-Q?
Sorry?
So on a Q-on-Q basis, the clinker production number was flattish, right?
Yes, flattish.
Okay. And sir, on the consol volume numbers that you said, like the stand-alone volume for the full year was 92 lakhs tonnes odd. And for the consol, including UCW, should we directly add 19 lakhs tonnes or there were intercompany sale, which needs to be knocked off?
Sorry, can you repeat your question, please?
Yes. For cement and clinker sales, JK Lakshmi stand-alone for the quarter is close to 92 lakh tonne, is that understanding right?
That is for the year, not for the quarter.
For the year, yes, yes, for the year. And for the UCW, you mentioned 19 lakh tonne, cement plus clinker?
Right, right.
But if we want to see the consol revenue and divide to get net realization, what would be the volume we should take? A plus B or sum...
Summation only.
No intersegment? You may be selling to Udaipur and Udaipur would be selling some cement or clinker to you?
Because we are doing the both at both the entities at arm's length pricing.
Okay. But that doesn't create any double-counting of numbers when we add up?
No. In consolidated basis, when you do for this value part, there are 2 things. One is on the volume. Volume is total 110 lakh tonne. But when you consolidate for value purposes, sales value, then whatever is sold for consolidation basis, that has to be knocked off.
Yes. So that is what I'm asking. You may have knocked off on the revenue front.
Yes.
So accordingly, on the volume front, what knock off would be required?
I will just come back to you on that, what is the corresponding knocking off required from the volume.
Okay. And sir, meanwhile, on full year basis, what is our clinker utilization in stand-alone entity?
95%, I told you.
Full year?
I'll just get you, Saurabh, that the inter sales which needs to be knocked off. I'll separately address to you that question.
No issues, sir. One more question was on the clinker utilization on stand-alone entity. We have around 6.9 million tonne installed capacity clinker.
Sorry?
Stand-alone JK Lakshmi clinker capacity is 6.9 million tonne?
Clinker capacity?
Yes.
The total clinker capacity for JK Lakshmi is 6.7 million tonne.
6.7 million tonne. And out of that, we have already achieved in this financial year 6.5 million tonne of production.
That is what I said. We are -- capacity utilization for the year is almost 95%.
Correct. So in terms of for growth purpose, we do need to have another clinker line going forward.
Yes, that was what the expansion we were planning, but that in -- in terms of UCWL, we do have the surplus clinker capacity therein. And we are also doing bottlenecking that will help us to further improve the production there.
How much does that will lead to from 1.3 million tonne currently, Udaipur?
1.2 million tonne is their existing capacity. That will go up to 1.5 million tonne.
And what time line do you ascribe to that, sir?
By the end of this financial year it should be...
Okay. And just 1 more question. Initially, you had mentioned that we were talking about around INR 15 crores CapEx for expansion in the North -- brownfield expansion in the North. So what capacity was that related to the INR 1500 crores?
That was about 2.5 million tonne capacity.
And at the same location in Sirohi, or one 2.5 million tonne at Sirohi?
We had not pinned down it was in North. Either in Sirohi or in Udaipur.
Okay. But 1 unit of 2.5 million tonne, which will not be ....
One line of 1.5 million tonne clinkerization and commensurate to 2.5 million tonne grinding capacity.
So -- and for that you're earmarking around INR 1,500 crores?
Yes, yes. INR 1,400 crores to -- INR 1,200 crores to INR 1,400 crores.
Because earlier you had guided that for a brownfield expansion your CapEx density may be around INR 500 crores to INR 600 crores per tonne. So from that perspective?
Yes, yes, that is what I'm saying. About 2.5 million tonne would be about INR 1,200 crores...
Yes, INR 1,500 crores. Right, right. Okay. Great. Sir, you have already mentioned on the debt profile and debt reduction plans for the next 2 years.
The next question is from the line of Swagato Ghosh from Franklin Templeton.
Yes . So sir, just a clarification on a question I asked earlier. This clinker volume that you said, it was 3.3 lakh tonne for the quarter. So we sold this entire quantity to the outsource grinding unit. Then we bought the corresponding cement back and sold it, right?
Right.
Okay. So...
Not -- just sold out. The entire sale is not for trading. Some has actually gone to -- as sales without there being any conversion. Only a portion of that got converted at our outsourced grinding unit. What I'm saying is not the entire 3.5 lakh tonne has gone to get converted at our outsourced grinding unit, maybe only 20%, 30% thereof would have got converted only. Other remaining clinker is an actual clinker sale to outsider where there is no conversion happening.
Okay. Okay. So then my question, sir, is then is that 70%, 80% of this number is still like about 10% of your sales number, so it's generally very uncommon for a player your size doing such quantity of clinker sales to external parties continuously.
If I may clarify, this would be roughly 40% to 45% of our own conversion and about 55% will be, as Mr. Bidkar said, would be the sale. So your question, whether your -- this is common or not. Every company will have its own strategy of where to sell. Say, if I have a choice that I have to convert cement and there's long distance or if I sell a clinker at a lower distance, then I get a price, it depends. So one is constantly taking a view based on the relative return that one gets either on clinker or cement.
Okay. Okay. And so the profitability is comparable because you are taking this decision based on economics, so can I assume that the profitability of the clinker -- external clinker sale...
It won't be comparable in that sense that if I'm comparing -- had it been in share market if I had an option, obviously, I would convert and sell. But if I had to travel a long distance and bring down my overall realization, then I might sell it as a clinker. So I think [Technical Difficulty] which is not exactly the profitability that you are seeing here, it would rather be lower profitability.
Okay. Okay. And so because we are like -- thanks for the explanation. But because we are doing this, so that means we have additional clinker capacity actually. So going back to the earlier question asked, we are at 95% of clinker utilization, but most -- some of it is at least getting sold externally. So we do not need to expand immediately, right?
You can say that -- no, it won't be very substantial. If you see in a year, we sold about 7 lakh tonne of clinker. So if had to -- if I were selling, say, 50% in the market, 50% I am getting converted, then it's only 3.5 lakh tonne of clinker that I could have converted to sale. So now overall, then you are talking about 11 million tonne or 12 million tonne of cement that you have, you're adding only about 0.5 million tonne there.
Yes. But sir, your 6.5 million tonne is your clinker capacity -- so 6.7 million tonne and you are selling...
Sorry?
Yes. So on a base of 6.7 million tonne, if you are selling -- 6.7 million tonne, if you are selling 7 lakh tonne and out of that 50%, 55%, so that is a good 5%, 6% number in itself, 1 year of growth. So that is why I was asking from.
That's what I said that when we took that decision of starting the work prior to COVID, this was what the idea was. Presently, we are at about 95% and if new capacity will take 2 years to come, 1 year we'll manage with going to -- with 100% and then also utilize the clinker that we are today selling convert into cement. So this is how we would have managed in next 2 years' time.
Fair enough, fair enough. And sir, from next quarter onwards, like the suggestion, which was given earlier, a similar suggestion, if you can just have some of the key numbers in the press release itself, including the consolidated volume numbers, because probably it's better to look at the company on a consol basis, including UCW. So that will be very helpful from next quarter onwards.
Yes. In response to the earlier question for consolidation, we are netting off, then you need to net off on the interunit sale of about 10.51 lakh tonne. So that is what is going -- getting canceled off when you consolidate the accounts.
Ladies and gentlemen, due to time constraint, we take the last question from the line of Sanjay Gandhi (sic) [ Sanjay Nandi ] from Ratnabali Investments.
Sir, can you just share the margins like what we make by selling the clinker?
Sorry?
Sir, what kind of margins do we make in selling the clinker, sir?
At the contribution level, we get about something like INR 800 a tonne.
Pardon, sir? I couldn't hear you, sir.
At the contribution level, you get about INR 800 to INR 900 a tonne.
Okay, okay. INR 900 a tonne. And sir, can you just guide also what is the like maintenance CapEx for 1 million tonne plant on annual basis?
Actually, your voice is not clear. Can you repeat your question?
Hello?
Can you repeat your question? Your voice was breaking.
No, I just wanted to know like what would be the maintenance CapEx for a 1 million tonne plant, sir?
We have a maintenance CapEx for us scheduled for -- in the FY '21 of about INR 20 crores, INR 25 crores.
INR 20 crores to INR 25 crores for 1 million tonne, sir, right?
Not for 1 million tonne, for our total capacity.
Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Vaibhav Agarwal for closing comments.
Yes, thank you. On behalf of PhillipCapital, I would like to thank the management of JK Lakshmi Cement for the call and also many thanks to the participants for joining the call. Thank you very much, sir. Sampath, you may now conclude the call.
Thank you. Thank you, Vaibhav. All the best.
Thank you, Vaibhav. sir.
Most welcome, sir. Thank you.
Thank you.
Thank you. Ladies and gentlemen, on behalf of PhillipCapital (India) Pvt. Ltd., that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
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