Sagar cements - Q1 FY18 concall
- Volumes for quarter remains steady. Demand in Maharashtra remained strong. Volumes in south remain soft .
- Expect good demand to be seen in future due to affordable housing and various govt policies.
Yearly expectation of regional growth :
Ap and Telangana - 15% due to small base and most demand drivers active from govt standpoint. Lots of spend is on concrete roads at the Panchayat levels.
Karnataka - 5 %
Maharashtra and Orissa - 10 %
Tamil Nadu and Kerala - (-5%) - don't cover full Tamil Nadu, cover which is in north and till now not seeing any improvement.
Sales grew by 31% due to improved volumes and realization.
- EBITDA grew by 65%
- Op margins 14% against 11% increase due to cost control measures.
- Gross debt at consolidated level at 773 crores .
- Freight cost reduced due to increase in FOR (free on rail - freight cost borne by customer) sales (about 90% this time ). But this sales is on choice of customer and not sustainable
- BMM - Doing brownfield expansion there, so cost is high (due to frequent shut down of plant ) but from Q4 it will reduce and plant will be aligned.
- If coal prices remain same , we expect reduction in cost of production .
- Generally q2 and q3 are not good quarters as per price realisation, so there is some reduction in price in first month.
- Co has seen 7.5 to 10 Rs decline in realizations across our markets in this July month which is seasonal. For consumer it can be somewhat more due to post GST and monsoon season .
* Capex is 275 crores total for this year and next year (incl growth capex and maintenance capex).
* WHR has become operational last month and it is ramping up and will result 2-3 crores saving in this quarter, and 4-5 crores in Q3 or 100-125 per tonne cost saving .
* Grinding station will take a year to be operational
* Will commission recently 1MW solar plant .
Cost reduction strategies
- For Matapally plant , co is using 95% pet coke
- Also heating capacity will help to reduce cost
- In BMM, co will start using pet coke from Q3 due to change in burner which is to be done. BMM will have savings of around 60-65 per tonne
- Debt repayment will not be much in current financial year , 40 crores would be repayment on consol basis
- Supply addition in next 24 months - Around 6-7 MTPA
NCL to commission in Q3 (1 mtpa ), KCP will come and Shree cement will also start in q3 or q4. This will spread over wider canvas and will cover wider geography and will have 2.5 MTPA around in South alone .