Nuvoco Vistas Corporation hosted a conference call on Nov 11, 2021. In the conference call the company was represented by Jayakumar Krishnaswamy, Managing Director.

Key takeaways of the call

Commenting on the results, Mr. Jayakumar Krishnaswamy, Managing Director, Nuvoco Vistas Corp. Ltd. said, “In spite of the challenging market conditions in our major operating market of East,

Sales volume for Q2FY22 stood at 3.8 million tonnes. Volumes in Q2FY22 are at par despite weak demand in East. While the demand in WB market was impacted by rains and cyclone, the Bihar market was hit by lack of availability sand. The transporters strike in Chhatisgarh market has hit the sales volume in Q2Fy22.

Expect improved demand offtake in balance period of current fiscal. The situation has improved in WB post Pooja and the demand in Bihar is also expected to pick up as the sand availability to improve in Q3FY22 onwards with SC judgment allowing sand mining.  The transporters strikefor about 48 days in Chhatisgarh has come to an end with acceptance of price increase ( by about 12%).

Increase in freight cost will have an impact of Rs 70-100/tonne in Chattisgarh market.

The company to offset P&F cost has increased the prices in Oct 2021 across all markets it has presence starting at varying dates.  The net impact in average cement price in Oct 2021 is about Rs 10-15 /bag in East and Rs 10-12/bag in North.

Premium products share improved by 3% on year-on-year (y-o-y) basis and will continue to be thrust area going forward.  Preimium product share in Q2FY22 stood at 32%.

Company's flagship Project SPRINT which is to drive synergies between Nuvoco and NU Vista has been yielding results as expected and is able to partially offset the input price hike.

Double Bull launch in North and composite cement scale up have been faster than target plans.  

The company has commissioned the Arasmeta Captive Power Plant during Q2FY22. 

Nuvoco reduced its net debt/EBITDA to 3.1x in Sep-21 (vs 4.7x in Mar-21) and aims to lower it further to 2.2x by Mar-22E.

The company has built up inventory. The clinker inventory was about 7.5 lakh tonnes and it has also have ramped up cement inventory to about 3-4 lakh tonnes. The company have also build adequate slag inventory. So the company is better placed to cater to rebound in demand especially in East. The company expect the inventory will vanish in next 5 months.  Overall the company is confident of 2 million tonnes of sales every month in balance period of current fiscal and the focus of the company is to maximise the volume in Dec 2021-March 2022 period.

Planned capex for FY22 is Rs 550 crore of which the company has spent Rs 233 crore in H1FY22 including RS 120 crore in Q2FY22.  The planned capex for FY23 is Rs 1750 crore (include Rs 1000 crore towards Gulbarga plant).

The capex for 5 years is Rs 4750 crore of which Rs 3500 crore is towards Gulbarga plant, Rs 150 crore/year is towards sustenance capex.