JK Lakshmi Cement Limited (500380) Earnings Call Transcript
August 7, 2020
Earnings Call Speaker Segments
Ladies and gentlemen, good day and welcome to the Q1 FY '21 Conference Call of JK Lakshmi Cement Limited, a call hosted by PhillipCapital (India) Pvt. Ltd. [Operator Instructions] I now hand the conference over to Mr. Vaibhav Agarwal from PhillipCapital (India) Pvt. Ltd. Thank you, and over to you, sir.
Thank you, Sanford. Good evening, everyone. On behalf of PhillipCapital (India) Pvt. Ltd., we welcome you to the Q1 FY '21 call of JK Lakshmi Cement. On the call, we have with us Mr. 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 the company for their opening remarks, which will be followed by interactive Q&A. Thank you, and over to you, sir.
Good afternoon, everyone, and thanks for joining today's con-call. You would have seen the results. And I think we now will -- I think it would be better that we go straight for the Q&A. So the floor is open for your questions.
[Operator Instructions] The first question is from the line of Rajesh Ravi from HDFC Securities.
I have a few questions. Yes. Sir, first, on the revenue, could you throw some light on what are the noncement revenues that we booked? Because I see from the annual number -- annual numbers, noncement revenues other than cement would constitute more than 10% of the total revenue. So if you could throw at all what are these -- one is the RMC. What else gets included into that and how that goes to the noncement revenues performed in this quarter?
Our total turnover for this quarter is about INR 825 crores. And out of that, this noncement is about INR 29 crores. So it is less than 5%. It's not 10% as I think total.
No, sir. If I have seen FY '19 revenue, it is other...
FY '19 -- we are talking of the -- I thought first quarter here.
Yes. On an annual breakup basis, I'm asking that if I see there are other revenues, other numbers, INR 520 crores, which was reported in FY '19, and so then we could adjust. Sir, I'm just asking is only the RMC, which is there, or we have the Blocks, also AAC Blocks and all.
I think one is this RMC, then there is AAC Blocks. There's POP and also some solar power.
Okay. So this AAC and this of POP, how much would they be in terms of annual basis, sir? And also, in this quarter, what would have been their performance?
What we have done in this quarter, this was a quarter in which it was impacted by the shutdown due to COVID. And if one were to talk of in the preceding quarter, out of the turnover of about INR 1,061 crores in the preceding quarter, about INR 77 crores were pertaining to these noncement items, which is again less than the 10%. So the other businesses are very badly impacted due to COVID, so while I've talked about procurement, these products did not have any pent-up demand. And -- but their operations also started later than that of the cement.
Yes, sir. Okay. So not only in RMC, even in this AAC and POP, you witnessed a very low demand that would have impacted your performance this quarter.
Yes.
Okay. And on the cost item, do you know what portion of your cost you expect to be more recurring in terms of the cost control that we have seen in this quarter? Particularly, other expenses were coming down by 26%, along -- while volumes declined 18%.
Yes, the other expenses that have come down is basically some saving in the fixed costs because in the corresponding quarter last year, we added INR 20 crores hit on the account of the BCG fees and certainly fees which we have paid to one of the consultants who has been advising us earlier. So that has not come. Other than that, there is some marginal saving in the other fixed overhead because of the lockdown.
Right. Right. And there was INR 5 crores political donations also, which we knocked them off. We have seen slight collections. So this is more of a stable number which you expect to continue.
I don't think there was any INR 5 crores donation, I believe, last year. In the last -- overall, there was some donation, which we had done in this -- last year primarily on account of our hospital and the university. The political donation last time, maybe a one-off one during election, we may have done about INR 1 crore, but nothing more than. This year, we have done about INR 75 lakhs to the PM CARES and about another 50-odd lakhs to the -- by way of contribution to the state and various states where we are operating.
Okay. And lastly, on the fuel cost, where -- how was the Q1 quarter for you while the landed fuel costs are changing? And what is the outlook as we stand?
Yes, it was about INR 6,700, INR 6,800 in this quarter as against about INR 7,800 in the corresponding quarter and INR 7,000 in the immediate preceding quarter.
The next question is from the line of Subrat Dwibedy from SBI Life.
I just wanted to know the gross debt and net debt positions. And how much are the total debt repayments in this year and next financial year?
As of March, we had the total debt of about close to INR 1,500 crores. That remains there because there's some repayment in the long term and plus some increase in the short term. But on a net debt basis, because of the increase in the cash surplus, we are down to about INR 800 crores of net debt as against about INR 1,000 crores as of March. So there's a reduction of INR 200 crores net debt as of in the 3-month period. Going forward, we expect another INR 200 crores will get repaid in this year and another INR 200 crores next year.
Okay. Okay. And so almost INR 500 crores sort of odd crores of cash would be there now?
Sorry, come again?
In terms of cash position, it will be around INR 500 crores now?
Today, it will be around close to about INR 700 crores.
Okay. And these will be passed to mark overnight funds or what kind of investments?
These are not in overnight funds. It's simply liquid or liquid-plus basically. And some instruments, which are already there, you can see -- look -- have a look at the balance sheet, which classify it. As of March, we had a figure of about INR 450 crores. It has gone up to INR 700 crores as of June.
Okay, sir. And just one last thing. So this is at the stand-alone level. At a console level, what will be the debt position?
We have to wait another INR 550 crores there, both in the gross and the net debt position.
[Operator Instructions] The next question is from the line of Sanjeev Singh from Emkay Global.
I have 2 questions. First, can you give some sense on the profitability of other segments? So it looks like there has been -- there would have been some impact in RMC and other segments, which have -- which look like that it has impacted the profitability of the overall company. So can you give some sense on the cement segment profitability on an Q-o-Q business?
They were hardly any -- as far as the OPM is concerned, there was hardly any OPM from this in this quarter. But otherwise, 5% to 6% normal we are earning in this noncement segment, OPM.
Okay. And secondly, in interest costs, so it has come down because of reduction in debt, or are there some other components to that because if I see that interest has come down on a Q-o-Q basis, so what do you add to this?
It is not -- it basically is due to reduction in the debt, prepayment of it.
Again, we would not have than in moratorium, we don't think. We don't think it's right to be in that phase.
Frankly speaking, when we started, it was -- our first moratorium was offered on 31st of March. We did avail something. And then others, we did not avail anything. So we have, out of the total INR 120 crores, which was to be paid, we had to avail of a moratorium of about INR 65 crores.
Okay. Okay. And third question, if I may squeeze in. Can you give some sense on how demand is panning out in your core markets because last year, I believe that Gujarat was impacted because of monsoon. This year, monsoon does not really look to be so severe. So how is it panning out for you? And how do you expect it to be over the next few months?
The demand has been quite good in the month of June and July and July, mainly because you are very right. Nowhere we have experienced very severe monsoon so far in our marketing area, except for some days in, the Chhattisgarh and Orissa. So we started off in the Central slightly impacted. But in the northern, we have, so far, we have not hit any demand concern on this account. However, Gujarat was hit so hard this time not because of the monsoon, but because of the severity of the corona there. Most of the cities of the Surat, Ahmedabad, Vadodara, Rajkot and some parts of Saurashtra were very badly impacted on account of corona, where the -- even the dumps could not be opened or opened late, to close in front. So therefore, Gujarat has suffered on account of -- especially in May and June, it's somewhat on account of the severity of the corona. But once that gets normalized, then I would expect an improved demand situation just where Gujarat is concerned.
As any capacity expansion plans, sir -- this is the last question. We were talking about the expansion plan in the North region. So any consideration for that?
We'll still announce it in the coming quarter also.
Okay. Okay. So that is on the line, right?
Yes. That is -- actually, we should have done that in the March quarter, but because of COVID, we have put it temporarily on hold. But we may announce it maybe next quarter.
It all depends on how the corona scene actually turns out in the coming quarters.
But this will be clinker plus the grinding rise?
Yes. Yes.
[Operator Instructions] The next question is from the line of Sumedha Srinivasan from ICICI Prudential Asset Management.
My question is on the waste heat recovery, 10 megawatts, which was announced. I just wanted to understand where it's coming up and what is the time line for that.
It's going to come up in Sirohi plant at our JK cement factory there, the original factory. And we expect it somewhere around second quarter of FY '22. It will be on this team, hopefully. There have been some delay in this quarter because of the nonavailability of migrant labor and all that. So there could be a delay of 2, 3 months. But other than that, it should be there in the second quarter FY '22.
[Operator Instructions] The next question is from the line of Keshav Lahoti from Angel Broking.
Congrats on a great set of numbers. Sir, can you please throw some light on how has been your volume in June and July months compared to last year? What sort of degrowth has happened?
I think both June and July have been as good as last year. In fact, July would have been slightly better only compared to the last year.
Okay, sir. As we have seen the cement demand is picking up, June and July has been doing good, so I wondered if you would give a sense, is that due to pent-up demand or going forward, also, we should expect the same kind of number provided no local lockdown happened?
Yes. See the -- you'll have to look at it actually segment-wise. You may not have a very concrete answer in what I need to tell you. Simply, if I were to divide into 2 or 3 major segments, so in the urban, we have a lot of the organized real estate, which clearly has suffered, and even the individual housing in urban has suffered because of the COVID in the last 2 months. But now it is gradually coming back in the month of July, except for the real estate. The other is in rural, which continues to very robust because of the various stimulus package, the whatever the funding hedging release, all the management expenditure, the various development schemes they have also got, all that has, in fact, gotten much more funds to them than was going to result in cash. So I think as the migrant labor has gone, we have to solicit those, particularly a lot of construction jobs in their respective houses or in their villages. So as a result, there has been a good demand. So some pent-up demand, some new demand contributed to rural, and that is expected to be there. But my old reasoning is that it will be there for the entire year, which is a major driving force. The other third segment, which is very important, is infra. Infra has suffered on account of the immigrant labor. So once the immigrant labor comes back totally, then it should pick up. But when will that happen is exactly a question mark. It can happen by September or it will happen after Diwali. So there's a question mark, which is there. Doors are just gradually opening now, and deliveries are coming back, clinics have started. But none of them have started in the full swing, which they could have done otherwise. So this is the broad scenario. Overall, if I were to sum up. I think now from Q3, definitely, we should -- one should expect a normal demand until that the corona takes -- something very drastic happens on that front. Otherwise, I think it will be a normal demand from Q3, Q4, with some collection for these -- improvement collection for these as in the past inadequate demand, inadequate consumption. That is what my belief is.
Okay. That is quite helpful. One last question from my side. Sir, how has been the pricing month-on-month in July and August? And how do you see the pricing to play out in the near future?
Pricing, the first quarter was actually fairly close to what was the January-March quarter. It was very good otherwise. I'm talking about those markets that we operate in. South has seen some very good price increase, which did not happen in the North or West or East. Here, we have seen some decline in the pricing, which is the normal seasonal phenomenon that invariably happens in the monsoon because of the decline in demand. So we are experiencing that particular phenomena. Prices have slightly slipped from July onwards, and I won't be surprised that they slip further in the event of August, September. But then the collections would again come in the month of September. That has been the usual phenomenon. But there has been no major changes in the pricing unlike South.
Okay. So possibly something like a INR 10 decrease might have happened in June, July, right?
To some degree, yes. Whether it's INR 10, it will depend on the segment that is talking. Where there has been more decline in the nonintersegment, clearly, we have not seen that. Then every market has one -- kind of a one-off decline that varies on a state-to-state. It all depends on where you are distributing this segment you are choosing and so on.
Okay. Okay, okay. What would be the difference between trade and nontrade?
So that has gone up considerably. Some states have gone up as high as INR 70 to INR 80 a bag. And in some states in the east, it is about INR 30 a bag. So there's a whole spectrum. Every state has its own current trade line. But average, it would be about INR 40 to INR 50 a bag.
The next question is from the line of Sanjay Nandi from Ratnabali Investments.
Sir, can you just clarify why we took like a hit the realization front? Like most of the companies in the north that are operating, they just posted some numbers with a good boost from the realization front on a Y-o-Y basis. But we saw some dip in the realizations. Is it because of the restarts in the product mix? Or if you can clarify that thing, sir?
Actually, this quarter, we saw a higher-than-normal percentage of our clinker sales.
I didn't get you, sir. Can you please come again, once again, sir?
Sorry?
I didn't get you, sir. Can you please come again, once again?
Yes, we have sold a higher quantity of clinker in this quarter than the normal sales that we do.
Okay. Got your point, sir. And sir, what is the pricing? Even the North and East India, if you can specifically mention, sir, like for the month of July?
Sorry?
What is the pricing scenario in the month for July, August in North and East, if you can separate a little bit, sir?
I think as I look at then all pricing right now, and except that the pricing difference between trade and nontrade is already high in the East, otherwise, the pricing scenario is what exactly I have told you, that the demand has been good in the rural. There, the prices have been more stable than the urban, where the demand has been less, so the prices have been more fluctuating. And there has been a decline in the pricing in the month of July compared to June in most of the markets, which is the usual seasonal phenomenon, which we experience every year once the monsoon starts.
Okay. And what's the current utilization, sir, in this like first 1.5 months of the next Q2 versus last year?
We will just tell you. In the meanwhile, if you have any other questions, the second quarter was very good.
So you would say same compared to last year, right, sir?
Yes, it would have been about the same, July didn't change last year...
Compared to last year...
It's same as with last year. So we can conclude like this, sir. We can -- we'll be exiting inflation versus last year, right, in Q2 '21?
That is very difficult to predict even 1 month hence from now for the several reasons now that we are experiencing COVID, it's spreading in the rural areas. That demand, the point here is that will drop because of the rural may get impacted. So it's very difficult to predict in very confident measures. But if the one way to look at it is as normal, then yes, we would be slightly better off than the last year Q2.
The next question is from the line of Swagato Ghosh from Franklin Templeton.
Yes. Sir, can you give us some specific volume numbers? Firstly, what was the cement production this quarter stand-alone?
Cement production in this quarter was 14 lakh tonnes, 14.31 lakh tonnes to be precise.
Okay. And sir, what was the clinker sale this quarter?
Clinker sale in this quarter was 3 lakh tonnes, 3.01 lakh tonnes.
Okay. And sir, what was the same clinker sales number last quarter?
Corresponding quarter, clinker sale was only 1.12.
Okay. And sir, for the combined, as in consol volumes adjusted for the intercompany material transfer, what is the total sale?
Our combined, if one were to see, then you have to -- total sales were 20.7 after knocking off 2.09 for the interunit sales.
Okay. So 20.7 was after knocking off.
20.7 is after knocking off. Yes, you're right there.
Okay. And sir, this clinker sale, I just want to understand, was 2 -- like was it exports or was it to other players, the higher percentage that we did this year, this quarter?
Yes. It is not -- or this will be a little export because it applied to demand, which is not really treated as export. But it is to outside customers...
Sorry. That is to what?
To outside. Some -- we are giving to our -- the outsourced users where we grind cement, and there is a substantial quantity we have done in this quarter to outside our demand base...
30% in July last year.
What was it in August?
68%.
68%.
Sir, by outside party, do you mean like other cement players?
Yes, many cement players of -- other cement players, yes.
Okay. Got it. Got it. And sir, this quarter, what was our trade, nontrade mix?
We were 61% trade.
61%. Okay. And sir, what was this number last quarter?
59% was in last quarter.
Okay. Okay. So sir, I just wanted to clarify one thing. Other companies have shown a significant increase in the trade mix, whereas ours has remained the same. Can you just help me understand? Because generally, in the market, overall, the trade mix has improved?
I think in East, there was some nontrade which was still working. Then what also happens is that, in our case, though there is the sale in the rural market to the nontrade sales, many of them sell through their dealers, though at the same rate as being on trade. But I assume that they would be not classifying it as their sale is going to the dealers. While we are trying to sell to all these parties within franchise, directly buy from us, and we only pay -- we do not book the sale through the dealers, we only pay them their commission as like our agents. So that could possibly be within this because I know for sure that some people sell it through their dealers. They first sell to the dealers and then even sell to those direct. And as since the sale to the rural has been a big quantity in most of the markets, that could possibly within reason.
The next question is from the line of Madhav Marda from Fidelity Investments.
Sir, my question was basically on the demand side, if you could help us out with -- on the government spending, like how do you see that in North and East India? Do you think that projects are -- new projects are still being announced, or once the current project ends, we could have a slowdown in demand?
So it is -- the projects have been -- the government funding has been mainly on the spending on the labor-oriented projects. And they have been following development activities in the franchise or the mid-level, where there has been a major demand. So I think this has been all a part of the stimulus package also. So if the corona impact is there, I think the stimulus package gets exhausted. This is expected to continue at least for this year.
Okay. Okay. More. And what about the rural side? I think a couple of companies have been highlighting some slowdown because of spread of COVID in the rural parts of the country. Is this strictly to the Eastern part of the -- of India, and even Northern part, are we learning of...
No -- you see, in these, these include cities and most of the states in the Northern part, a comparatively bigger size where we operate, be it Rajasthan or Gujarat. So there, you are focused where the rural markets have been affected. But in the East, we have seen, in the recent time, a lot of impact can be rural. And what has also happened is that in the -- immediate after the lockdown, that is in the month of April and May, the lockdowns are comparatively less in the rural areas. Now most of the rural markets in the East have clamped down the lockdown very seriously even in the rural markets. So the stocks are not opening. Like today, only the -- our 2 states where we operate, mainly in the East, that is in Orissa, the stocks still run smoothly, from could be third onwards. And this time, they incur very strictly, so it impacted our demand in these 2 states to last now, practically 11 to 12 days very seriously. And then the North, it was seen in certain pockets, wherever there is more impact on the COVID in the villages.
Okay. And the last question, on the fixed cost side, are there going to be any like structural or sustainable cost cuts that will be making post-COVID on the fixed cost overhead, or largely by, let's say, FY '22, it will all come back to the similar levels of earlier?
There may be some marginal reduction as compared to last year because last year, we had this -- some consultancy fees and some donation, et cetera. But otherwise, broadly, that would be in line with the last year. No major change or in these 2 items.
[Operator Instructions] The next question is from the line of Kishan Gupta from CD Equisearch.
So I want to know what is the volume growth you're targeting for the year.
It's very difficult to answer this question. Without COVID, we have a good target. But COVID has obviously changed all that and probably quarter 1 itself in a meaningful manner. And quarter 2 is vague, is very difficult to bear out a number. I think we'll be carrying with cement then. Yes.
To maintain last year?
Yes.
And how much was last year's full year volumes?
9.3 million for the entire year.
9.3 million you did last year, full year?
Yes.
Okay. And going by your rhetoric, it appears that you people are a bit hesitant to enhance capacity. So what's the primary reason for that?
Well, I wouldn't say the word "hesitate," but we have not been overtly aggressive. We did for our debt to come to a reasonable level first. Having done that, and we know that we have a potential to grow in the existing site itself, which will take much lesser time than what would we have taken in a greenfield project. We did not hurry up, but as Mr. Bidkar had mentioned earlier in one of the questions, that we expect to come out with an announcement sooner than later and which will be in the existing site only. It will take much less time. So that's why I wouldn't call it very, what you call, a pre-answer about hedging the capacity.
How much of the capacity can be increased through debottlenecking at the current stage?
You see, whatever we will get now is not from debottlenecking. That has all been done. If you have been attending our calls, you would have heard that we had increased by debottlenecking in total last year. Now whatever we'll add will come through a new line.
Okay. So -- and then you think existing, it would be more brownfield, right?
Yes, it is.
The next question is from the line of Swagato Ghosh from Franklin Templeton.
So what was the RMC revenue this quarter?
RMC, generally, we have been doing about INR 40 crores, INR 45 crores. This quarter, it was only INR 12 crores.
INR 12 crores. Okay. And sir, our sales mix, did it increase? I know we do not give a breakup of East and North, but I just wanted to understand directionally, did it increase materially the mix of East sales?
No. There's no -- there's not been a very material change. In this quarter, it may appear slightly because of the lower volume in the North. But otherwise, directionally, that remains the same. The ratio remains the same.
Okay. So the ratio in June quarter was similar to, say, March quarter?
No, there will be some distortion in the June quarter because the operation in the East started earlier, while the North started a bit late.
Okay. And would it be fair to assume that East profitability is lower than North?
Yes, of course.
Okay. Okay. And one slightly longer-term question. I understand we have brownfield capacity at all our locations. But what is the plan after that? Although it might not be needed for some time, but we might have to prepare from an earlier time point. So have you given a thought that beyond the 3 brownfield locations, what options we have for longer-term growth?
Currently, we do not have any mining leases on hand to talk about outside that, but then our -- we have participated in all the auctions, and we are still trying to install them. Nowadays, I think we are more guided to where the land all can be made available, rather than having account to choose one amongst the various options. Secondly, when we realized that we have an option to add additional lines at all the 3 locations, we have not been overtly aggressive in our bidding. And that's why we may not have been -- has been not getting any mining lease so far in the auctions.
Okay. Okay. And sir, for the brownfield expansions, do we have all the necessary environmental clearances for the mining, et cetera?
In most of the places, we don't foresee that to be a problem, somewhere -- we have our clearances there, somewhere some prediction has to be done.
Okay. Okay. And sir, one last question. Is our engagement with BCG, is that done, is it completed?
Yes, it is nearly completed.
Okay. So will we like reengage them for some other projects, or like maybe continuation of the same projects? What are we thinking?
So we'll give a call in Q4. Right now, we are about finishing our current engagement. Once that is done, we'll give a call.
The next question is from the line of Milind Suresh Raginwar from Centrum.
Sir, firstly, can you please share the clinker production number.
Sorry? Clinker production?
Clinker production this quarter was about 9.25 lakhs, sir.
Okay. Sir, you just mentioned that there was one BCG expense of about 20 million -- INR 20 crores in the base quarter of June. Now so if we adjust to that, then our other expenditure is the savings there. Do you think that we could have done more in this quarter given the volume adjusted to clinker is about 28% down, or even on a clinker basis, we are 20% down? Is there any more headroom for savings in the other expenditure?
Actually, the -- we don't do it based on the actual costs incurred, the pro rata allocation we estimate for the year as a whole, and instead of loading in the actual month, the quarter in which it is incurred, we pro rata a portion over the 4 quarters as far as the fixed cost is concerned, barring those abnormal expenditures like the donation or the BCG fees, et cetera. So it may not look in line with the actual -- whatever the actual cash output, that one, or the shutdown, which has happened during this quarter. But broadly, it will be around to the next pay...
So what will be that proportion of fixed cost in the other expenditure?
Sorry, come again?
I mean I would like to know what would be the variable cost proportion in the other expenditure.
We have in the published results, we have already shown the 2 major heads separately, which is the power and fuel, which is about 21% of our total cost, and then freight and logistic costs separately. Other than that, there is only the stores' payers and repairs, et cetera, which is the only other than that. This is part of the...
If I can squeeze in one more question. On the trade, nontrade mix, you indicated that it is 61% and 39%. Can you just indicate how was that in North and East?
North, in that, we don't give separately, but generally, our -- in East, we are much higher in the trade.
Okay. And in the North, we were higher in the nontrade mix.
And compared to the East, in the other time in North, the East is slightly higher as far as trade number percentage goes.
Okay. And sir, last question is on this -- the ICD that we issued to the -- our holding company. Yes, that's, I think, coming to an end. It wasn't a 1 year kind of a lending, so by August, is it being -- is the money coming back, or is it likely to be renewed?
Actually, this is -- basically, this is a part of our treasury operations, which we are doing. I would like to clarify for the benefit of other participants on the call, that this is a spend -- now this is an ICD, which we have placed INR 40 crores to our group company out of our treasury corpus. The primary reason therefore was last year, when we originally did it, there were some concerns expressed about the defaults which had started happening in the mutual funds. And especially, in some of the funds, I don't want to name it, 6 schemes have closed down. And even in FMPs, there were delays. So we decided that at least a small portion, not more than INR 40 crores, INR 50 crores, can be put in some ICD within the group, which is far more safer, one, and two, it is going to yield a return higher than what we are otherwise getting from the market. So that ICD was placed out of our treasury corpus of about INR 450 crores last year to one of the group company for a period of 1 year. That is going to come back. That company -- I'm not going to name the company, but to be precise, have already confirmed to us that they will do pay that and thus will come back. But now that the treasury corpus has gone to about almost, as of June, to about INR 700 crores, we may consider possibly putting the same amount, redeploying it somewhere within the group, again, for a period of a maximum of 1 year. So that we get the money, it is rotated and not more than INR 40 crores, INR 50 crores. That is the cap which we have put for ourselves, which we can do, for it's being one, a high-yielding instrument, and two, being much more safer than what we otherwise are doing in the market. So that money, whatever we had done last year, is definitely going to come back. They have already conformed to us. We have informed our Board. But simultaneously, if the opportunity comes and there's some requirements, we may do that placement again with this company or some other company, maximum for a period of 12 months and at a rate which is higher than what we are otherwise getting in our treasury operations from other instruments. That answers your questions.
[Operator Instructions] The next question is from the line of Shravan Shah from Dolat Capital.
Sir, you highlighted in terms of the expansion that we will be announcing next quarter. Just trying to understand in terms of the overall CapEx required for that and the size of -- I think last time, or maybe the fourth quarter, we have spoken about 1.5 million clinker and 2.5 million tonne grinding, with the INR 1,200 crores to INR 1,400 crores CapEx. So will it, more or less, will be in the same range? Or there would be a drastic difference?
And then this will broadly be the same range. You are absolutely correct, preferably, as far as the numbers are concerned, both in terms of capacity as well as CapEx. So broadly on the same lines, where there will not be any dramatic change in that.
But in terms of the place, whether Sirohi or Udaipur will be announcing in the next quarter and not are sure as right now?
Yes, we'll do it in the coming quarter. And that is for sure that it will be not in East. But we'll announce that going forward.
Okay. And it will be -- or the time period will be about close to 20 to 24 months?
Absolutely. You're right.
The next question is from the line of Kamlesh Bagmar from Prabhudas Lilladher.
And congratulations on -- for management of the balance sheet. Sir, just one question on the operations side. So if you see last 3-odd years, our EBITDA margins have been broadly in the INR 800 range. And if you see our region, like the Gujarat or even in North, the way the transition has happened on the margin across the players, so they have moved to the range of, like, say, INR 1,100, INR 1,200 per tonne. And even if we take into consideration that we have put out the Gujarat -- CPP in our Gujarat plant, and even in the growth, let's say, cost has come down because of the debottlenecking and higher scale available, but are we hopeful that this trajectory of margin is going to improve to like INR 1,000 per tonne, or is it going to be similar levels given the logistics disadvantage we have?
See, basically, you're right, in Northern, the EBITDA margin, people have been able to cross INR 1,000. In fact, if one were to see and closely do an analysis of what we have done at our Udaipur plant, which is exclusively a North player as opposed to JK Lakshmi, where 33% -- 25% to 30% of our output is in the East, where the realization per se are lower, much lower, and we talk of the consolidated EBITDA per tonne, Udaipur has done INR 1,000-plus for your information. So it's only basically because of our operations in the East, where because of the subdued realizations, we, on a consolidated basis, we are seeing a better margin of about INR 800 per tonne. So we are operating in the same market where others are operating. And there's no reason for us or for anybody to believe that our EBITDA is not in tandem with what other players in this North market are achieving.
And sir, so lastly, in the case of Udaipur, when are our incentives going to expire, sir?
Sorry?
When is our contract for incentives in the Udaipur plant?
That will be in '21, '22, that whatever benefit which we are availing, that would go.
The next question is from the line of Pulkit Patni from Goldman Sachs.
Sir, this is in continuation with the previous question where you said that one of the reasons why our nontrade, the trade mix has not changed compared to what competition has seen, is that there is some material that goes and gets sold in the nontrade segment, but eventually, actually, ends up in the trade side. I thought that this was a general practice for most companies, where companies try to protect, that the both segments do not get mixed. And if that was the case, is there a chance that this benefit, which many other companies are seeing and probably could even continue for a couple of more quarters because trade is the one which is selling, that for -- as this benefit might actually not come through?
No. Since here, it will be following. What I only said, that when you see the numbers of trade and nontrade, there is a different, different way of normal, giving it a normal future. The realization mix remains the same. That doesn't get altered. It is not that it is being sold as scaled and coming to market as nontrade, also why is that? No. Whether we are billing it directly or whether we are billing through the dealers, that's all I can say.
No, sir. It's actually not very clear because, in which case, then the trade mix should have gone up, right?
Sorry?
It's not clear. What I mean is most of your competition has seen at least 15% to 20% higher trade mix in this particular quarter. So why is the same not visible for us? That's what I'm trying to understand.
Well, there is an improvement maybe because we had improved earlier, so the network that we have qualified were about just what sales is what -- all I can see.
Sure, sir. So maybe I'll take this separately with you.
The next question is from the line of Madhav Marda from Fidelity Investments.
Yes, sir, I have a question. Earlier, there was a question around the treasury operations. My question was, sir, considering we have debt on the balance sheet, why don't we just take the cash to repay the debt instead of doing an intercorporate deposit? Wouldn't that be better from the company's perspective?
No, I don't think because if we have got INR 600 crores, INR 700 crores of the treasury corpus, first, my return from treasury corpus is higher than the cost of the debt. That is number one. So I have an arbitrage about per 1% to 1.5%, number one. Number two, tomorrow, when we go for expansion, the figures which we are talking of, anything between INR 1,200 to INR 1,400, I need to invest about INR 300 crores to INR 400 crores as per part of the promoter's contribution. So if I use my treasury corpus now to pay off the debt, then tomorrow for the entire funding of INR 1,400 crores, I need to borrow. So and that one doesn't make sense. You have to plan for your future growth also, so to keep cash in the balance sheet and then plan for the expansion rather than using the entire corpus for paying off the debt.
The next question is from the line of Ashish Jain from Macquarie.
I just had 2 questions. One is, sir, for all the expansion that you are planning, either Udaipur or Sirohi, is there any land acquisition that needs to be done or we are good from a land point of view?
Land, no additional land would be required. So our mines as well as the land for the plant is adequate at the existing location, both at Udaipur as well as Sirohi and even for that matter, at Durg also.
Okay. Okay. And sir, any update on the -- somewhere back in the East that we have been planning for some time now?
Yes. There has not been any major progress therein. But we are working on it. This is unduly taking a lot of time. But because of the -- but apart from corona, which has impacted and further delayed that project, but the fact remains that there are some issues which are held up at various government states as well as the central level. So that is taking time, beyond what we had originally thought of. We have been updating you time and again on the conference call quarter. But unfortunately, it has taken much longer than what we had set out for us in the time line.
So now shall we think that, as of now, there is no visibility in terms of time frame? Or you would want to put a time frame to that?
We would be happy if I get the consent to go ahead in this next 2, 3 quarters. After that, it is about 9 to 10 months to put it in place.
Understood. Understood. And sir, just lastly, I just want to confirm the volume numbers. I actually joined the call late. So can you just tell me what is the stand-alone external sales volume, including clinker and definitely only...
Total sales for the quarter is 19.05, including 3.01 lakh tonnes of clinker. And on a consolidated basis, I have given the figure of 20.70 after knocking off 2.09 for the interunit sales.
The next question is from the line of Swagato Ghosh from Franklin Templeton.
Sir, can you just help me understand how are we making a positive spread over our cost of debt? How much is the cost of debt currently? And what is the lead on the treasury cash we have?
We are getting -- we are -- because of 2, 3 things. One, we have put -- this is not in one instrument, as I mentioned earlier. This is some, as in the FMPs and some, as in the funds, which are locked in for almost more than 1 year. We threw some indexation benefit. So on a pretax basis, we -- our rupee cost of borrowing is about 8.3%, and we are able to, on a pretax basis, able to garner a return of over 9.5%, taking into account the indexation benefit, et cetera. So that gives an arbitrage above 1, 1.5. Plus this intercorporate deposit is yielding us 9.75%, that's INR 40 crores, which we had given, which would come back by August 10. So overall, my return on the investment, both pretax-to-pretax basis for the cost of the funds is 8.3%, and about 9.5% is for the returns on the -- this treasury corpus.
Okay. So this 8.3% is for the entire debt? Or is it the current rate?
This is for this current debt, whatever -- entire debt which is today outstanding INR 1,500 crores in the balance sheet. And it doesn't include any rupee or any foreign currency borrowing. So it's all rupee loan, and that is the cost.
Ladies and gentlemen, due to time constraints, we will be taking the last 2 questions. We take the question from the line of [ Uttam Srinath ] from Axis Securities.
My question is in regard to the blended cement sale that we have done this quarter.
Sorry?
Cement sale blended in the quarter...
Our OPC is 22%, and blended is 78%.
We take the last question from the line of Sanjeev Singh from Emkay Global.
I just wanted to understand how is the ramp-up happening for the grinding unit?
The plant is fully -- this was only a matter of demand. And the ramping has been very adversely impacted by the COVID. We had, by March, we had come to a fairly good level of operation that was 15 days. Thereafter, the quarter was impacted, and now, the presale lockdown that we are experiencing in Orissa and Chhattisgarh is affecting it. So once this -- as long as we get back, the product, we fully expect to get back into operation fully very soon. But with normal people that [indiscernible]
But -- so had we reached a utilization rate of 60%, 55% at some point of time, or we did not see that type of utilization?
So we have seen about 50% immeasurably.
Okay. Okay. And the profitability of selling cement will be higher than selling clinker, if I'm correct?
Sorry?
Profitability of selling cement than selling clinker will be higher?
Yes. Always.
And then normally because we were the one only selling clinker. More, we say.
So sir, earlier, you said you're selling clinker into East, is that right, that some portion of clinker, which we will convert into cement now.
Yes. Yes.
Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Vaibhav Agarwal for closing comments.
Well, thank you. On behalf of PhillipCapital, I would like to thank the management of JK Lakshmi Cement for the call and then thanks for all for joining the call. Thank you very, sirs. And everyone, I'm ending the call. Thank you.
Thanks. Thank you, Mr. Vaibhav Agarwal.
Vaibhav, [indiscernible]
Thanks. Thank you. [indiscernible]
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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