The company hosted a conference call on 22 Jul, 2021. In the conference call the company was represented by Mr Atul Daga-CFO.

Key takeaways of the call

The company has vaccinated around 73% of its employees.

Revenues grew by 54.21% YoY to Rs 11829.84 crore.Domestic sales volumes stood at 20.5 MT (down 22.8% QoQ) while blended realisations were higher by 6.4% QoQ to Rs 5,590/tonne, up 5.7% YoY. All of the growth has been driven without new capacity both organically or inorganically.

Capacity utilisation stood at 73% vs. 94% in Q4FY21. In terms of regions, south reported over 50% utilisation. North & central reported utilisation of over 73% while east region operated at over 90% capacity utilisation.

Cost of production was up 2.9% QoQ to Rs 4045/ per ton led by a sharp rise in diesel, petcoke, coal prices. Logistic cost increased by 6% YoY due to increase in diesel prices, Power and fuel cost increased by 12% due to increase in pet coke and coal prices, raw material cost increased by 7% due to increase in diesel price hike impacting on input costs.

Coal prices increased from USD 60 to USD 100. Pet coke prices stood at around USD 150. The consumption cost of pet coke stood at USD 123 in Q1FY2022 as against USD 109 in Q4FY2021.

Higher pet coke and coal prices are expected to continue to keep costs higher. No major spike is expected in fixed overheads post resumption of normalcy.

The company is targeting at green power contribution of 34% of the current capacity by FY2024. This includes WHRS and solar power.

Lead distance stood higher at 430 kms in Q1FY2022.

EBITDA/ ton increased by 17% QoQ due to improved realization. Cement prices witnessed price hikes of over 10% in East and south, 7-10% in North and 3-6% in West. The company expects the prices to remain stable. However, the prices may soften during the monsoon period.

The company has received Rs 70 crore incentive during the quarter.

EBITDA per ton has increased to more than Rs 1000 per ton for the Century plant.

The company expects the DFC to be the game changer going forward. Out of the programme of 2800 kms, 425 KMS has been completed. Rake speed has also doubled which has resulted in shift of movement of materials from road to rail.

Trade mix stood at 70% during the quarter due to good demand from rural side. Also, absolute quantity in trade sales is also picking up. Blended cement stood at 72%.

Net Debt/EBITDA stood at 0.44x. Covid had an impact of Rs 733 crore on net debt due to working capital requirements. The company would have done better, however resurgence of Covid had an impact on working capital requirements.Long term debt stood at Rs 19,000 crore with treasury surplus of Rs 13,000 crore. The company repaid Rs 5,000 crore long term debt in Jul 2021.

The company is on track to reach 130.9 MillionTon (MT) by FY2023. The company is undertaking 19.5 MT capacity expansion of which 3.2 MT East and Central will be added in Q2FY2022, 4.1 MT will be commissioned in Q2FY2023 and the balance 12.2 MT will be commissioned by Q4FY2023. Also, work on putty expansion in Rajasthan has commenced.

The company incurred a CAPEX of Rs 1000 crore in Q1FY022.

Divestment: The company is working on divestment of overseas operations and plans to complete all the pending issues by end of FY2023.

Demand: Demand is picking up on all fronts, strong in central & east region. Large infra projects are expected to continue to generate demand especially the roads segment as awarding and execution. Both picked up with constructions speed of 37 km/day now vs. 4-5 km/day long time back. Health infrastructure including 21000 public health centres, 15 all India medical science. Also demand from airports to develop regional airports, 100 smart cities all the above to drive demand going forward.Further, rural housing is seeing a gradual recovery supported by higher MSP for Kharif crop, increased procurement by government agencies.