Shri Keshav Cements and Infra Ltd — Q3 FY26

Shri Keshav Cements and Infra Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=7X4FovpCC4s Published: 2 months ago

0:00 Ladies and gentlemen, good day and welcome to Shri Kesh of Semens and Infra Limited Q3 and 9 months FI26 earnings 0:09 9 seconds call hosted by Kirin Advisers Private Limited. As a reminder, all participant lines will be in the listenonly mode and 0:17 17 seconds there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please 0:26 26 seconds signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being 0:33 33 seconds recorded. I now hand the conference over to Mr. Hershel Gansshani. Thank you and over to you sir. 0:40 40 seconds Thank you. Good morning everyone. On behalf of advisor, I welcome you all to the conference of Shri Kesha Fement and Intra Limited for three and 9 months. 0:52 52 seconds From the management team, we have Mr. 0:54 54 seconds Wenesh Katwa, chairman, Mr. Vilas Katwa, management director. I head over the call now to Mr. Wenadesh for the opening. Over to you, sir. 1:06 1 minute, 6 seconds Yeah, good morning everyone and welcome to Sri Kesha cement and infra limited quarter 3 and 9 month FI26 earnings 1:13 1 minute, 13 seconds call. I sincerely appreciate your time and interest in joining us today. Sri Kesha cement and infra limited is 1:21 1 minute, 21 seconds engaged in the manufacturing of cement and the generating and distribution of solar power in Karnataka. 1:29 1 minute, 29 seconds Our cement plants operate from Bagel code district supported by 40 megawatt solar power facility at Copel. 1:37 1 minute, 37 seconds Out of this approximately 25 megawatt is utilized for captive consumption to meet the entire power requirement of our 1:44 1 minute, 44 seconds cement plants while the balance 15 megawatt is sold in the market. 1:51 1 minute, 51 seconds We serve north, coastal karnataka, go and parts of Maharashtra through our established distributor and retail network. 1:59 1 minute, 59 seconds Before I move to present the company's financial performance, let me briefly share our operational progress with the 2:07 2 minutes, 7 seconds new can now stabilize and operating consistently. Our focus has been on improving the capacity utilization, strengthening supply chain efficiencies 2:15 2 minutes, 15 seconds and deepening our market penetration across key regions. We continue to work towards expanding volumes, enhancing 2:23 2 minutes, 23 seconds engagement and ensuring better availability of our products. Our integrated solar operations provide a 2:30 2 minutes, 30 seconds structural cost advantage enabling us to remain competitive while maintaining healthy operating margins. These 2:37 2 minutes, 37 seconds initiative uh position as well to capitalize on steady demand from infrastructure, housing and commercial construction across our core markets. 2:47 2 minutes, 47 seconds So let me walk you through our financial performance for Q3 and 9 months FI26. 2:54 2 minutes, 54 seconds For the 9 months ended FI26, the total incre income increased by 35.81% 3:01 3 minutes, 1 second yearonear to about 116.31 crores. Aida stood at rupees 29.28 cr reflecting a growth of 66.85%. 3:11 3 minutes, 11 seconds With AIDA margin expanding to 25.68% and improvement of 454 basis points. 3:19 3 minutes, 19 seconds Pack for the 9month period was 3.23 23 crores compared to loss in the previous year reflecting a clear turnaround in overall profitability. 3:30 3 minutes, 30 seconds Earning per share improved to rupees 1.85 supported by strong utilation levels, disciplined cost management and enhanced operation stability. 3:40 3 minutes, 40 seconds In Q3 FI26, the company reported total income of 38.69 crores registering a growth of 33.22% 3:47 3 minutes, 47 seconds 22% yearonear supported by improved realization and sustained cement dispatches. 3:54 3 minutes, 54 seconds Aida for the quarter stood at 10.5 cr reflecting a growth of 63.1% while aida margin improved to 27.68% 4:04 4 minutes, 4 seconds compared to 22.98% in Q3 FY25 marking an expansion of 477 basis points. 4:12 4 minutes, 12 seconds Cash profit stood at 4.03 03 crores uh which is an 8 by9% jump year on year. 4:20 4 minutes, 20 seconds The term debt reduced from 188 crores to 159 crores reducing by around 15% which continue which will continue to do so. 4:29 4 minutes, 29 seconds In fact the repayment obligation next financial year will reduce by around 16.4% 4% owing to closure of three terminal 4:37 4 minutes, 37 seconds for in FI26 cement continued to remain the strongest contributor to our performance both in terms of revenue and operating 4:45 4 minutes, 45 seconds profitability. I dispatches better relation and stable kill operations have strengthened segment momentum through the quarter with construction activity 4:53 4 minutes, 53 seconds remaining steady across Karnataka Go and Maharashtra. Our focus remains on leveraging this demand through deeper markets engagement, stronger channel 5:01 5 minutes, 1 second relationships and enhanced brand positioning. Cement will continue to anchor our growth trajectory in the coming quarters. 5:10 5 minutes, 10 seconds Looking ahead to the remainder of FI26, we will continue to prioritize discipline execution, optimal utilization of assets, and further 5:17 5 minutes, 17 seconds strengthening of our dealer and retail network. Our objective is to sustain operating momentum, improve margins 5:24 5 minutes, 24 seconds through better leverage and enhance our market presence across existing and adjoining geographies with steady cement 5:32 5 minutes, 32 seconds demand and cost stability offered by our Capricola power model. We believe we are well positioned to deliver consistent and sustainable performance. 5:41 5 minutes, 41 seconds So before moving to the Q&A session, I would like to extend my sincere thanks to all our stakeholders, partners, customers and employees for their 5:49 5 minutes, 49 seconds continued support and confidence in the company. Their contribution remains central to our progress. With this, I am pleased to open the floor for questions. 5:58 5 minutes, 58 seconds Thank you once again for being with us today. Thank you. 6:03 6 minutes, 3 seconds Thank you very much. We will now begin with the question and answer session. 6:07 6 minutes, 7 seconds Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove 6:14 6 minutes, 14 seconds yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a 6:22 6 minutes, 22 seconds question. Ladies and gentlemen will wait for a moment while the question Q assembles. 6:39 6 minutes, 39 seconds Participants may press star and one to ask a question. 7:01 7 minutes, 1 second The first question is from the line of Anurak Chan from Oakland Capital. Please go ahead. 7:09 7 minutes, 9 seconds Yeah, thank you for the opportunity. 7:12 7 minutes, 12 seconds Uh so sir uh I wanted to ask uh what is the clinker to cement ratio currently 7:18 7 minutes, 18 seconds and uh how will it improve post modernization? 7:25 7 minutes, 25 seconds So currently clinker to uh you know for one ton of clinker we are able to produce around uh 1.6 tons of cement 7:34 7 minutes, 34 seconds uh 1.6 to 1.8 tons. So we are expecting to reach around 1.9 to two uh not in 7:41 7 minutes, 41 seconds this quarter maybe in uh a quarter down the line from this point on. Okay. 7:50 7 minutes, 50 seconds Uh and sir uh how much uh power cost savings uh annually come from a 100% solar usage model? 8:01 8 minutes, 1 second So directly uh solar presence almost 35 cr aa uh if completely 8:10 8 minutes, 10 seconds taken as an independent vertical. So my production cost is around u let's say around if for 100% utilization of solar 8:18 8 minutes, 18 seconds power is a question you had. So for around six cr units uh saving of around uh 8:26 8 minutes, 26 seconds roughly about 4 and a2 rupees would translate to around uh 25 to 26 cr actual savings coming from uh solar uh 8:35 8 minutes, 35 seconds usage in the cost itself in the operating cost. 8:41 8 minutes, 41 seconds Okay. Answer uh will there be any risk to this uh solar generation efficiency due to any regulatory changes? 8:50 8 minutes, 50 seconds As such like you know uh we have a regulatory benefits given to the solar plants which was commissioned in 2018 8:57 8 minutes, 57 seconds and those regulatory benefits will continue for uh 3 years for one plant and around 7 years for uh another plant. 9:06 9 minutes, 6 seconds As of now there are no regulatory challenges happening and I don't foresee any kind of regulatory changes you know 9:14 9 minutes, 14 seconds coming in future which could hamper our uh the cost structure after few years there are some charges which will be 9:22 9 minutes, 22 seconds applicable but which is common for everyone all over India so it won't it would be a common cost share by everyone 9:29 9 minutes, 29 seconds and not specific to uh persons using practic only cap solar that. 9:37 9 minutes, 37 seconds Okay. Okay. That's it from my side. Uh as of now, I I'll join back with you if I have any more questions. 9:44 9 minutes, 44 seconds Thank you. 9:48 9 minutes, 48 seconds Thank you. A reminder to all participants to press star and one to ask a question. The next question is 9:54 9 minutes, 54 seconds from the line of Sakshi Shandai from SHA Consultancy. Please go ahead. 10:06 10 minutes, 6 seconds You may unmute your line Sakshi ma'am. 10:08 10 minutes, 8 seconds Yeah. So my question is uh is the company exposed to the price volatility 10:15 10 minutes, 15 seconds from a large players discounting strategy? 10:21 10 minutes, 21 seconds Yes to a large extent every cement player in the industry will be exposed to the challenges faced currently by lot 10:28 10 minutes, 28 seconds of consolidation. So you know I would try to address this question more by going into the uh southern market. See 10:37 10 minutes, 37 seconds the south and east India regions experienced sharpest price corrections with the average cement price declining by 2 to 3% quarteron quarter in Q3 F26. 10:48 10 minutes, 48 seconds Cement demand was pretty much weak in the first half of Q3 due to extended monsoons and festive disruptions but 10:56 10 minutes, 56 seconds they improved meaningfully towards the latter part of the quarter. 10:59 10 minutes, 59 seconds In summary, Q3 FI26 Southbased manufacturing expressed experienced compressed margins with specialized uh 11:09 11 minutes, 9 seconds uh you know some top level players uh getting generating around 250 to 600 rupees AITA per ton heavily impacted by 11:18 11 minutes, 18 seconds over capacity and weak pricing in the southern market. So yes, so because uh the larger players are uh are competing 11:27 11 minutes, 27 seconds and there is a you know aggressive pricing strategy used by some top players, it it has to some extent 11:34 11 minutes, 34 seconds impacted uh all the other players including us. 11:39 11 minutes, 39 seconds Okay. Uh and my last question is what competitive mode exist uh beyond the green energy usage? 11:49 11 minutes, 49 seconds So the biggest uh strategic benefits uh our company has is uh which is in fact 11:57 11 minutes, 57 seconds helping us to grow. In fact we grew at around year on year uh in um quantity by 12:04 12 minutes, 4 seconds around 32% whereas south struggled with minus 3% or -4% growth year on year. Now 12:12 12 minutes, 12 seconds the biggest advantages what we have is we are in close proximity to the consumption market which reduces the logistic cost which has been a biggest 12:20 12 minutes, 20 seconds competitive advantage to us and also being located at the Karnataka Maharashtra border. So we are devating 12:29 12 minutes, 29 seconds purely being addressing only the southern market and now in the Q3 we have entered the western market through 12:38 12 minutes, 38 seconds coastal and southern Maharashtra and we have got a new access to these kind of markets uh which previously we were not 12:45 12 minutes, 45 seconds addressing to. Also we have added uh GGBS which is granulated ground uh based lag as a product uh which is used by 12:53 12 minutes, 53 seconds large national highway uh projects which is helping us to cross market into uh 13:00 13 minutes cement. So uh one biggest uh benefit as I would say right now which I do not see 13:07 13 minutes, 7 seconds anyone having any other industry having in our region is uh the addition of GGBS as a product. So once the customer uses 13:16 13 minutes, 16 seconds a product it is natural inclination to buy our other products which is uh cement. So these are the strategic advantages we have right now which is 13:25 13 minutes, 25 seconds helping us to compete and uh growing at a faster pace compared to the southern market averages. Thank you Sashi. 13:32 13 minutes, 32 seconds Oh thank you sir. 13:37 13 minutes, 37 seconds Thank you. The next question is from the line of Puja Mashra from JK Capital. Please go ahead. 13:51 13 minutes, 51 seconds Ma'am, you may unmute your lines. Hello. Yes, you're audible. 13:57 13 minutes, 57 seconds Yeah. Okay. Yeah. So, I have few questions with me. Our why on why total income growth is around like 35%. When 14:05 14 minutes, 5 seconds it is grow, what is the reason behind this know like part? 14:13 14 minutes, 13 seconds uh so I did not understand the last last yes there is a growth of around 33% in topline year on year a bit also there's 14:21 14 minutes, 21 seconds a growth of around 53% in absolute terms so the growth is mainly driven by the factors like our new kill is being 14:29 14 minutes, 29 seconds stabilized and u you know uh being a solar means that we have a high dose of fixed cost compared to variable cost so 14:38 14 minutes, 38 seconds every increase in the uh every increase in the dispatches is uh is giving us a higher contribution margin and which is 14:47 14 minutes, 47 seconds what I mentioned in uh addressing the previous question even though the southern markets are uh barely having 14:53 14 minutes, 53 seconds minus2 or uh minus 3% growth uh year on year we delivered 32% growth only because of our aggressive marketing and 15:02 15 minutes, 2 seconds addition of few products which is helping us to you know boost our cement sales too. 15:11 15 minutes, 11 seconds Yes. Uh correct and in quarter we reported a loss even though the uh talking 15:21 15 minutes, 21 seconds are you talking about pat yes yes yes I'm asking about pat so uh puja the reason why we uh it shows 15:30 15 minutes, 30 seconds negative is because uh there is something called as deferred tax liability which appears because of a huge difference in the depreciation on 15:39 15 minutes, 39 seconds the books and on as per income tax which is basically an index adjustment but not 15:45 15 minutes, 45 seconds a cash expense as what it portrays. In fact, it is an advantage to the company 15:52 15 minutes, 52 seconds because of that there is a huge uh you know cash tax liability reduced because 16:00 16 minutes of uh that is a kind of a promotion given by the uh you know by the government you would say otherwise 16:07 16 minutes, 7 seconds actually it is not a negative part it is only because of certain uh uh non-cash adjustment figures what we put due to 16:14 16 minutes, 14 seconds India's requirements it appears to be uh negative Fair enough answers. Uh also I have a 16:22 16 minutes, 22 seconds few more questions like what was cement volume growth in uh 9 month 26% industry growth specifically in Karnataka. 16:32 16 minutes, 32 seconds So uh the data that I have is only for the pure southern region like Karnataka and Telangana. 16:37 16 minutes, 37 seconds So the the data that I have right now with me is on volumes. There is a even though there is a negative growth in AIA 16:46 16 minutes, 46 seconds the volume there is about 4% growth for southern markets but uh KF cement has performed at 32% uh growth in volumes. 16:57 16 minutes, 57 seconds Okay. And can you share blended realization per ton trains over the last three or four quarters? 17:04 17 minutes, 4 seconds So blended realization has remained almost stable like if I compare from Q3 FI25 to Q3 FI26 it has uh hovered 17:14 17 minutes, 14 seconds between 3300 to 3400 60 it had peaked out in Q2 and again it has come back to 17:20 17 minutes, 20 seconds around 3350 3400 uh right now. So absolute CAGR growth in uh uh naked cement rates is hardly 1%. 17:31 17 minutes, 31 seconds That is again mainly because of uh um you know uh southern market showing over 17:38 17 minutes, 38 seconds capacity and compression in the uh margins. In fact this quarter three uh 17:45 17 minutes, 45 seconds with the increased sales we would we would have expected a higher uh profit margins but then petco prices increased 17:53 17 minutes, 53 seconds almost 20% uh year on year which was not very much expected. 18:00 18 minutes Yeah. Okay. And what is the trade versus non-trade sense mix and how does margin uh differ between the two? 18:09 18 minutes, 9 seconds So trade versus non-trade. Trade uh in our case is um for non-trade when we talk about direct to the consumers uh 18:18 18 minutes, 18 seconds the prices may be a two or 3% difference otherwise there's not significant change because if the non-trade uh if they can 18:26 18 minutes, 26 seconds find the better prices they would go for outside market itself being a small plant with a small capacity no we have 18:32 18 minutes, 32 seconds not uh kept a very substantial difference a non typically will be one or two% lesser 18:41 18 minutes, 41 seconds Yes. So um like that was my last question also. Uh uh I'm joining your concourse for the first time but I keep 18:48 18 minutes, 48 seconds hearing that you regularly uh you know host Concourse even if there's no uh like positive part which 18:57 18 minutes, 57 seconds is good. This shows your sincerity to us investor. Good luck sir. Looking forward to thank you puja appreciable. 19:08 19 minutes, 8 seconds Thank you. Participants may press star and one to ask a question. The next question is from the line of Raj Sha from Sha Ventures. Please go ahead. 19:20 19 minutes, 20 seconds Uh yeah. Hi, good morning. Uh so uh basically what happens to market if prices decline by 5 to 7%. 19:32 19 minutes, 32 seconds Uh yeah good good morning Raj. I I couldn't get the question market what shift uh yeah uh so I repeat my question what 19:41 19 minutes, 41 seconds happens to uh margins if prices decline by 5 to 7%. 19:48 19 minutes, 48 seconds So uh it's you know typically what we would see in these industries with five to 7% decline it would be a hard hit for 19:57 19 minutes, 57 seconds any cement industry but in generally in my case because of high usage of green power almost 100% of green power uh you 20:07 20 minutes, 7 seconds know with the current structure even if you look at it uh in the past performance with less than 30% capacity 20:14 20 minutes, 14 seconds or 31% 32% capacity regulation we are delivering a healthy AIDA per turn. Of course, it would impact 7% reduction in 20:22 20 minutes, 22 seconds uh prices would mean it will chop off the AIDA to that extent. Uh but in my case, the impact is little lesser only 20:31 20 minutes, 31 seconds because we have a uh you know renewable backup which is generally not the case in all the other competing cement plants in our region or outside. 20:44 20 minutes, 44 seconds Okay. And uh sir uh can you also uh tell us about that uh how vulnerable is the 20:51 20 minutes, 51 seconds company to coal uh pet coke prices spikes before alternative fuel stabilize. 20:59 20 minutes, 59 seconds Very good question. So right now we 100% depend on fossil fuels like petroleum coke and petco. Although the management 21:06 21 minutes, 6 seconds is considering to look at AFR once a plant stabilizes to a certain uh capacity which might take another two or 21:13 21 minutes, 13 seconds three quarters. So yes uh pretty much most of the plants in the country are 21:20 21 minutes, 20 seconds subject to the uh variances of this um uh the fuel prices and is going to 21:27 21 minutes, 27 seconds impact everyone in the similar manner except for those who have uh you know put up EFR but also EFR does not replace 21:35 21 minutes, 35 seconds the fossil fuel completely. I mean uh the most successful plant would have uh reached around 20 20% of their fuel 21:44 21 minutes, 44 seconds requirement through EFR. Uh but yes pretty much as at this point in time if uh you know coal prices very very high 21:54 21 minutes, 54 seconds this that way it would impact us more severely than the one who has got an EFR at this point in time. 22:05 22 minutes, 5 seconds Okay. And uh I want to know about uh ROC as well the ratios part uh if the 22:11 22 minutes, 11 seconds capacity utilization remains stuck at uh 65%. Then what will be the impact on ROC? 22:20 22 minutes, 20 seconds No. Uh right now we are hovering around 31% capacity utilization because we just started our plan this uh you know this 22:28 22 minutes, 28 seconds year itself. So at 65% uh our return on capital should be significantly higher. 22:34 22 minutes, 34 seconds I I mean assuming that uh you know uh the prices remain the way we are looking at it right now nothing exchanges if we 22:41 22 minutes, 41 seconds increase this thing our ROC is expected to increases by 25 to 30% and I think we should be in the range of 20% plus 22:50 22 minutes, 50 seconds mainly because again we have a good uh you know solar plant in fact my term debt is reducing as I mentioned in my uh 23:00 23 minutes you know opening remarks our term is reduced from 188 cr to 159 course a reduction in 15%. And very importantly 23:08 23 minutes, 8 seconds three terminals are getting closed this year and next year my repayment obligations registering by around 17%. 23:15 23 minutes, 15 seconds So you know as we keep moving as this uh debt which is uh which is significantly higher on solar assets keep coming down 23:23 23 minutes, 23 seconds my average cost of power generation will keep coming down and we will see a very high percentage of ROC you know going forward. 23:33 23 minutes, 33 seconds Okay, that's great. And uh s uh can you also uh explain about that uh what contingency uh plans does uh management 23:42 23 minutes, 42 seconds have in place if the like uh plant capacity expansure expansion or ramp up takes uh longer than expected then what would be the approach of management? 23:54 23 minutes, 54 seconds So as such the uh you know even at 31 32% if we are able to deliver this kind of an abida in all probability uh even 24:04 24 minutes, 4 seconds if nothing happens we will maintain the status quo the loan our cash generation will will be sufficient to cover all the 24:12 24 minutes, 12 seconds debt repayment obligations and everything. Having said that uh contingency would mean like uh 24:19 24 minutes, 19 seconds sale of power is not going to stop irrespective of whether cement goes up and down because power is a continuous requirement across all the industries 24:28 24 minutes, 28 seconds and our production cost last month in January's 1 rupee 30 peso or so and it'll keep going down by the by you know 24:37 24 minutes, 37 seconds by end of uh uh by end of FI27 we expect our price of power to go down less than 24:44 24 minutes, 44 seconds one rupee whereas we're selling at six rupees. So we have something uh a solar plant which is generating cash uh which will take care of any kind of 24:53 24 minutes, 53 seconds contingency or academic even if it is uh I think we're pretty held up on having that asset which is going to take us 25:01 25 minutes, 1 second through the rough patches which it has already shown during last couple of years. If you look at last couple of years, even though cement by itself 25:10 25 minutes, 10 seconds performed very badly, company continued to deliver a certain AITA as well as cash profits and covered all the recruitment obligations on time. 25:21 25 minutes, 21 seconds Okay. Uh so yes uh thank you so much sir uh for giving us the insight about uh much more about the business. Uh so yeah that's all from my side. Thank you. 25:30 25 minutes, 30 seconds Thank you. 25:34 25 minutes, 34 seconds Thank you. A reminder to all participants to press star and one to ask a question. The next question is from the line of Vidhi Jan from AEX Capital. Please go ahead. 25:49 25 minutes, 49 seconds Hello. Yes ma'am, you're audible. 25:52 25 minutes, 52 seconds Okay. Uh hi sir. So uh can you break down your receivables between institutional customers and dealer channels? 26:02 26 minutes, 2 seconds So right now uh as we speak you know we are increasing the institutional buyers 26:09 26 minutes, 9 seconds a little higher compared to Q3. So I think we must have reached about 8 to 10% on uh institutional buying 26:18 26 minutes, 18 seconds particularly institutional buying means uh uh national highway authority projects or RMC projects or anything 26:25 26 minutes, 25 seconds which is directly B2B as opposed to retail maybe about 8 to 9% is what would have reached by Q3 and it seems to be continually increasing too. 26:36 26 minutes, 36 seconds Okay. And uh how do uh like how do credit days differ between the between these segments? And has there been any uh recent change in collection cycles? 26:48 26 minutes, 48 seconds Not significant because of aggressive marketing. You know our receiver cycle has gone from 13 days to say about 17 to 26:54 26 minutes, 54 seconds 18 days. uh that is mainly because of uh you know uh aggressive entering into the existing market kind of offering uh more 27:04 27 minutes, 4 seconds uh u little discounts as well as payment terms and stuff like that but overall it has not impacted significantly uh even with this strategy. 27:17 27 minutes, 17 seconds Uh so are you seeing any stress in dealer financing or uh the need to extend credit terms in uh in the current 27:25 27 minutes, 25 seconds environment or have collection days increased in the last two quarters and particular in specific region? 27:32 27 minutes, 32 seconds No, southern region itself is showing a little higher uh collection days but uh 27:38 27 minutes, 38 seconds we are cutting down that in the you know particularly the new areas of market like coastal Maharashtra and uh southern 27:47 27 minutes, 47 seconds Maharashtra where lot of development work is happening you know the collection days are far lesser so it is averaging out uh with the average is 27:54 27 minutes, 54 seconds moving from 13 to about 17 to 18 days that's all so what is the minimum cash buffer or 28:03 28 minutes, 3 seconds liquidity level management is comfortable maintaining on balance sheet and uh do you have any internal policy 28:10 28 minutes, 10 seconds in terms of month of operating expenses or depth servicing coverage? 28:17 28 minutes, 17 seconds So cash flow as such is comfortable which is why you could see all the repayments are being done on time. uh for the debt servicing when there is we 28:26 28 minutes, 26 seconds once we start reaching 50 plus utilation levels we're expecting a lot of additional cash flows or residual cash 28:33 28 minutes, 33 seconds flows which will go towards impairing the debt ahead of the schedule that is a plan the management has uh we're 28:41 28 minutes, 41 seconds expecting to improve our itation level next year so maybe end of next year or beginning of next year we will start 28:48 28 minutes, 48 seconds impairing the oring the debt off ahead of the schedule but management is consistently thought that to reduce the 28:55 28 minutes, 55 seconds debt whenever there's a opportunity to uh uh to take care of it. 29:02 29 minutes, 2 seconds Uh thank you sir. That's all from my side. 29:09 29 minutes, 9 seconds Thank you. The next question is from the line of Mahes from RIV Capital. Please go ahead. 29:20 29 minutes, 20 seconds Sir, you may unmute your uh can you hear me? Yes sir. Yes, we can hear you. 29:25 29 minutes, 25 seconds Uh yeah. Uh sir, uh wanted to know like our AITA margin uh expanded by around 450 bps uh in 9 month FY26. 29:36 29 minutes, 36 seconds So uh I wanted to know like how much of this improvement is uh structural versus cyclical. 29:44 29 minutes, 44 seconds uh I would say the significant portion has come by structure only and not cyclical. 29:51 29 minutes, 51 seconds If you look at year on year Q3 FI25 my AIDA per turn was minus 47 rupees per turn as opposed to around for uh for Q3 30:00 30 minutes 397 rupees uh per ton. This is excluding the benefits of solar altogether. 30:07 30 minutes, 7 seconds But if I add solar benefit to the extent of uh uh to the extent of what it has been utilized, my AITA per has increased 30:16 30 minutes, 16 seconds from 246 in Q3 of FI25 to 835 in uh Q3 30:22 30 minutes, 22 seconds of FI26 registering a 240% growth in spite of the uh uh prices remaining 30:31 30 minutes, 31 seconds almost flat and also uh increase in the fuel prices. In spite of the increase in 30:38 30 minutes, 38 seconds the fuel prices, in spite of my sales price remaining flat, Aida per ton increased significantly 30:46 30 minutes, 46 seconds which pretty much indicates that structurally there has been a lot of improvement after we put up a new kill. 30:55 30 minutes, 55 seconds Okay. Okay. Okay. Got it. and uh like uh what will be uh uh annual onm cost for a 40 megawatt plant. 31:07 31 minutes, 7 seconds So typically we have taken in the range of around 6 lakh rupees per uh megawatt. 31:12 31 minutes, 12 seconds So 40 into 6 will be around 2 and uh 2.4 crores per year is is reasonable and we 31:19 31 minutes, 19 seconds are seeing the same thing in vicinity of that year and year. 31:25 31 minutes, 25 seconds Okay. So 2.4 4% of 82.4 crit and uh how much of uh solar revenue is locked under a long-term agreement. 31:38 31 minutes, 38 seconds So as such the company has not signed a specific PPA with anyone because the solar plants have an incentivized by by 31:48 31 minutes, 48 seconds the government of Karnataka by which we could sell it in the open access without any uh you know regulatory charges or 31:57 31 minutes, 57 seconds losses. So that strategy has worked out for the management uh and we are getting the best price possible in the market. 32:06 32 minutes, 6 seconds We are allowed to sell almost to every you know power consumer in the state which is why we're getting a net 32:13 32 minutes, 13 seconds realization price around 5 rupe 98 pesa currently. Of course it will change after 2 or 3 years but for next two or 32:21 32 minutes, 21 seconds three years typically we will be in this range of net realization. 32:27 32 minutes, 27 seconds Okay. Okay. Okay. And uh can I also know like uh what is degradation rate of solar output per year? 32:36 32 minutes, 36 seconds So as per the engineers uh design around 7% but we are seeing around 7 to8% degradation happening. 32:49 32 minutes, 49 seconds Okay. Okay. Got it. Thank you. Sure. 32:55 32 minutes, 55 seconds Thank you. The next question is on the line of Venode Sha from BS Ventures. 33:03 33 minutes, 3 seconds Hello, I'm audible. Yes, Lun. 33:07 33 minutes, 7 seconds Yeah. Hi sir. So, so what is the like break even capacity utilization for the current capacity? 33:16 33 minutes, 16 seconds So with the current capacity with the kind of solar backup that I have my break even point is probably the lowest in the industry maybe less than 20%. 33:26 33 minutes, 26 seconds Because even at 30% we are able to make a substantial AITA and uh uh you know uh the cash profits. So maybe 20 to 22% is 33:36 33 minutes, 36 seconds where our uh break even point lies at these kind of prices of uh cement as well as the fuel. 33:44 33 minutes, 44 seconds Okay. 33:45 33 minutes, 45 seconds And I can tell you easily that we will be the lowest in the industry. 33:49 33 minutes, 49 seconds Okay. Okay. That's great. That's correct. And sir like what is the current capacity utilization? 33:55 33 minutes, 55 seconds 31% in Q3 FI26. 33:58 33 minutes, 58 seconds Okay. And going forward uh how how do you see that like evolving? 34:04 34 minutes, 4 seconds So we're expecting to sign off this year by around 40% uh uh utilization. Uh 34:13 34 minutes, 13 seconds maybe next year we are targeting around uh 45 to 55% capacity utilization in case the market still remains compressed 34:21 34 minutes, 21 seconds or uh you know having challenges of over capacity. If there is a slight pull in the market like you know there is a uh 34:29 34 minutes, 29 seconds in every department if there is an improvement in this thing we should be able to be 60% effortlessly. So currently our challenge is not uh 34:37 34 minutes, 37 seconds improving the capacity. Our challenge is because the market is very very competitive. Uh our footprint is not 34:44 34 minutes, 44 seconds growing as fast as what uh you know we deserve to get. In spite of all these challenges, the negative growth, 34:52 34 minutes, 52 seconds negative growth by major major uh suppliers for South Bay here, we're still able to achieve 32% growth, which 34:59 34 minutes, 59 seconds indicates that had there been a even a normal market, we should be we should have been able to reach uh 50 60% pretty 35:07 35 minutes, 7 seconds efficiently. Our cement capacity is not very significant 1 million ton and our consumption around the area where uh we supply is more than 30 million tons. 35:19 35 minutes, 19 seconds So a slight pull in the market, a slight pull in the pricing would immediately you know increase our capacity utilization substantially. 35:27 35 minutes, 27 seconds Okay. And like uh let's just say that we uh achieve those higher utilization like 60 70. 35:39 35 minutes, 39 seconds Yeah. So how much like margin improvement we can see and uh how will overall our profitability look? 35:48 35 minutes, 48 seconds So with these kind of AIDA margins like assuming the same price around 800 or so uh you know with 60 70% uh you know our 35:58 35 minutes, 58 seconds EIDA margin should grow almost by two times or maybe a little higher than that because most of the fixed costs will 36:06 36 minutes, 6 seconds remain intact like uh employee benefits and you know everything else uh you know let's say for example by 9 month our 36:15 36 minutes, 15 seconds AITA has uh come to around uh 31.5 crores. uh so maybe this year we'll sign off with 40 to 45 crores AIA which is 36:24 36 minutes, 24 seconds which is assuming around 30 31% 32% capitulation at 60% capitulation we should be comfortable reaching around 90 36:31 36 minutes, 31 seconds to 100 crores every time okay and sir like uh how much volume we sold in like Q3 36:39 36 minutes, 39 seconds so in Q3 around 78,000 tons we have sold compared to 58,96 36:46 36 minutes, 46 seconds tons in Q3 of FI25 registering around 32% growth. 36:51 36 minutes, 51 seconds Okay, good. That's great. And uh you mentioned the employee cost. So is there like uh do we see any impact of uh the 36:59 36 minutes, 59 seconds new wage code? Uh so will there be like any uh like uh any rise in uh employee cost? 37:08 37 minutes, 8 seconds No, generally not for cement plants because cement plants are generally considered to be an assets with a very high capital investment. Uh it's not 37:16 37 minutes, 16 seconds very labor intensive plant. uh the impact is not going to be significant. Okay. Uh that's all. Thank you. 37:24 37 minutes, 24 seconds Sure. 37:28 37 minutes, 28 seconds Thank you. The next question is on the line of mantoi from Alpha Belt Avenues. Please go ahead. 37:36 37 minutes, 36 seconds Yeah. Thank you sir for the opportunity. Am I audible? Yes. Yes. 37:42 37 minutes, 42 seconds In the last uh calls we have also mentioned about RMC's right. So are we moving ahead with that or uh we will 37:51 37 minutes, 51 seconds take a look at it at a later part in 2020? 37:56 37 minutes, 56 seconds No probability I don't think so. We will uh you know look we thought we could consider it in Q4 but uh it might take 38:03 38 minutes, 3 seconds another couple of quarters before we work on that. No, we were expecting cement uh dispatches to improve in Q3 38:09 38 minutes, 9 seconds and Q4 because uh you know looking at the cyclical performance of a cement plant uh there should have been an 38:16 38 minutes, 16 seconds uptick in the demand as well as our utilization but that didn't happen like expected. Uh in fact most of the plants 38:24 38 minutes, 24 seconds registered uh negative growth in aa in the south and very minor positive growth through to focusing in volumes. Um so 38:33 38 minutes, 33 seconds what the management is of the opinion is we will wait for uh some more time till we reach say at least 50% plus uh 38:40 38 minutes, 40 seconds capacity utilization then look into RMC's but for the sake of RMC the company's already purchased the land uh 38:48 38 minutes, 48 seconds we are pretty sure once some uh positive figures start flowing in from cement vertical RMC is going to be immediate next step. 38:58 38 minutes, 58 seconds Okay. And uh you mentioned you have purchased the land rate. So what's the amount that we have spent on that and if any what is our collections? 39:09 39 minutes, 9 seconds Uh spent on what? Come again with the question. I I lost it somewhere. 39:12 39 minutes, 12 seconds You mentioned you have already purchased land in RMC. 39:16 39 minutes, 16 seconds Yes, we have purchased land uh to set up an RMC project near in uh in a city called Belgam. It's in south India uh 39:26 39 minutes, 26 seconds north of Kandaka is you know so pretty much it's a population is around 10 lakh and uh our corporate office being in 39:33 39 minutes, 33 seconds this town uh we thought we would model the first project uh in Belgium so that 39:39 39 minutes, 39 seconds uh once the uh once the project takes off and the nuance of the business is understood then we could expand across 39:48 39 minutes, 48 seconds southern Maharashtra go and uh other parts of north Karnataka Right. 39:53 39 minutes, 53 seconds But RMP has got a huge currently we are supplying similar to many RMC's. It would add to our existing uh sales and 40:02 40 minutes, 2 seconds in fact in future uh it would be more beneficial for the company to sell through RMC because RMC does not have or 40:10 40 minutes, 10 seconds has got a very minimal price arbitrage difference between the top players or any RMC player. Unlike in cement where 40:17 40 minutes, 17 seconds uh cement brand is visible on the back the price arbitrage is uh pretty significant. 40:25 40 minutes, 25 seconds Yes. So uh one more question from my end uh we have seen lot of consolidation in the southern market right for cement 40:33 40 minutes, 33 seconds plants. So are we not seeing any price improvements in that region or you think like that could be the situation once the demand recovers? 40:43 40 minutes, 43 seconds uh the management was expecting the consolidation period is over in Q2 of FI 20 uh uh you know six Q1 or Q2 F6 40:54 40 minutes, 54 seconds consolidation is pretty much over and we were expecting better pricing discipline but what we have seen is technically in Q3 the prices should have improved which 41:03 41 minutes, 3 seconds has not if you look at the past history of 3 to four years which has not so there is an intense uh competition 41:10 41 minutes, 10 seconds between the top players to capture the cement having a cement market which is why it 41:17 41 minutes, 17 seconds is causing a price war particularly in the south region where uh which houses the largest capacity in India uh so 41:27 41 minutes, 27 seconds south typically you know uh holds around 30% of the Indian cement market uh by for production 41:35 41 minutes, 35 seconds and uh which is why yeah so which is why we would expect some kind of a demand growth in the southern regions which 41:43 41 minutes, 43 seconds will immediately turn into uh you know price discipline which is what is needed is in this industry right 41:52 41 minutes, 52 seconds now right and so like uh you mentioned in the earlier call also that our location is uh it's kind of a beneficial for us 42:01 42 minutes, 1 second so can we sell our cement in Pune region also because I think there's a lot of construction that is going in the city and the demand seems to be good 42:11 42 minutes, 11 seconds in Pune Pune what happens even though we are supplying to some peripheral areas of Pune town uh the logistic cost is 42:18 42 minutes, 18 seconds almost around 1,600 rupees per metric ton but Pune is still a good market we are opening up over there Pune Rnagiri 42:26 42 minutes, 26 seconds uh Samani regions of Maharashtra are showing lot of improvement because uh we would be one of the closest cement 42:33 42 minutes, 33 seconds plants to these regions and uh which is why uh you know we are able to easily penetrate our nearest competitors are 42:41 42 minutes, 41 seconds also reaching out over there with a much higher logistic cost. So as we keep moving uh we are seeing higher penetration in Marasa regions uh because 42:50 42 minutes, 50 seconds of being proximity to the area and that is helping us drive the growth at this point in time otherwise depending purely 42:57 42 minutes, 57 seconds on southern based market would not have allowed us to reach this kind of a growth right and as they've increased the 43:05 43 minutes, 5 seconds capacity um are we seeing any issues in procuring limestone as we do not own any mines 43:12 43 minutes, 12 seconds uh not at all because uh we are the only purchasers of limestone in that area with around 20 to 30 suppliers. So at 43:20 43 minutes, 20 seconds this point in time we are well poised with the uh limestone requirement and the uh availability of the basic raw material 43:29 43 minutes, 29 seconds and even if we move to maybe 70% utilization you do not see any issues with limestone 43:36 43 minutes, 36 seconds not at this capacity not at all okay okay and are we are uh so are we also looking at a mixture cement like 43:44 43 minutes, 44 seconds PSC where we mix lag or flyish etc. Huh we are uh in fact most of our cement 43:52 43 minutes, 52 seconds goes in PSC sector only. So PAC is the order of the day all almost all the cement plants supply most of the product 44:00 44 minutes in PSC format only. OPC format is used only by specific requirement say for RMC or cement articles. Otherwise uh pretty 44:09 44 minutes, 9 seconds much for all the projects like national heavyway or the grand scale projects can uh uh can go with PSC which is what we are supplying with right now. 44:19 44 minutes, 19 seconds Okay. So from where we are buying flag or flyish. 44:25 44 minutes, 25 seconds So fly we are purchasing from one thermal power plant near our cement plant which is known as Raichu thermal power plant. But flyest requirement is 44:34 44 minutes, 34 seconds not very significant. Slack we are buying from uh you know uh Kalyani GSW there are there are two or three plus we 44:42 44 minutes, 42 seconds have supplies from Goa also there are four to five people or even from Vanta from Goa so we have four to five sources 44:49 44 minutes, 49 seconds we are purchasing slack from thank you so much no more question 45:00 45 minutes thank you the next question is from the line of Dash Talwar an individual ual investor, please go ahead. 45:11 45 minutes, 11 seconds Hi. Uh, can you give me a break? 45:14 45 minutes, 14 seconds So, uh, sorry. Hi. Can you give me a break up of the debt repayment schedule and what are the quantities and when it's happening? 45:21 45 minutes, 21 seconds The debt repayment schedule is what you're asking for. Yes. So, uh, FI26 our 45:28 45 minutes, 28 seconds obligation is around 29 crores. Uh, out of which almost 24 25 course is already done taken care of. this uh or not 26 27 45:38 45 minutes, 38 seconds crores already repaid another 23 crores by next uh month in March. In FI27 our 45:44 45 minutes, 44 seconds debt uh obligation is about 23 crores in FI29 uh sorry in the next year the debt 45:52 45 minutes, 52 seconds depreciation about 19 crores typically mainly because uh three terminals have closed down this year or will close down this year another one will close down 46:00 46 minutes next year and it keeps going from that point onwards. 46:05 46 minutes, 5 seconds All right. So, thank you so much. That's all from my side. Thank you. 46:12 46 minutes, 12 seconds Ladies and gentlemen, you may press star and one to ask a question. 46:22 46 minutes, 22 seconds Ladies and gentlemen, we take that as the last question of the day. And now I would like to hand the conference over 46:30 46 minutes, 30 seconds to Mr. Hershel Ghani for the closing comments. 46:36 46 minutes, 36 seconds Oh yes, thank you everyone for joining the conference for obstacle and intra limited. If you have any queries you can write us at research at thekarin.com. 46:46 46 minutes, 46 seconds Once again thank you everyone for joining the conference call. 46:50 46 minutes, 50 seconds Thank you everyone on behalf of Kiran Advis Private Limited 46:57 46 minutes, 57 seconds that concludes this conference. Thank you for joining us. And you may now disconnect your lines.