Capitaline

Analyst Meet / AGM 14-Aug-15

Analyst Meet

JK Lakshmi Cement

Expects demand revival post monsoon

New capacities enhance volume growth

The company held its Analyst meet on 13 August 2015 to discuss the results for the quarter ended 30 June 2015 and way forward. Dr. Shailendra Chouksey, Whole-time Director and Mr Sudhir Bidkar, CFO of the Company, addressed the conference call.

Key highlights

The Company has registered a production and sales growth of 20% and 15% respectively in quarter ended June 2015 over Q1FY15, aided by the commissioning of Durg plant in March 2015. Sales volume of 1.66 mt during the quarter which includes 0.2 mt from the newly commissioned Durg, Chattisgarh plant

The Company Gross Sales declined to Rs 663.03 crore in Q1FY16 as compared Rs 668.94 crore in Q1FY15, despite a healthy increase in volume, due to slow-down in real estate activities, dip in buying power in the rural region. The costs were higher due to impact of higher volumes. The lower cement prices and higher cost has brought down the PBIDT to Rs 55.04 crore Q1FY16 from Rs 115.98 crore in Q1FY15. The Company bore the additional burden of interest and depreciation to the tune of Rs 37.58 crore on account of commissioning of 1st phase of Company's Greenfield cement plant of 1.7 million tonne at Durg in March 2015. Resulting company incurred a loss of Rs 34.91 crore at PBBT level in Q1FY16 as against profit of Rs 49.65 crore in Q1FY15. After providing tax, the losses at PAT level stood at Rs 23.48 crore in Q1FY16 as against profit of Rs 40.46 crore in Q1FY15.

The Company has shown Rs 5.45 crore as exceptional items which represent additional expenditure incurred on stabilisation of its Green Field plant at Durg.

The Company plans to continue its focus on reduction of the cost. It has further brought down the coal consumption to 685 K.Cal/kg of clinker in Q1FY16 from 714 K.Cal/kg of clinker in Q1FY15 at its Sirohi plant. The Company operating efficiencies are amongst the best with coal consumption as the lowest in the industry.

The Company has hiked cement price around Rs10/bag in the first week of August in North. The pricing scenario in Bengal remained subdued, however Gujarat and Maharashtra witnessing some uptick in the price trend and it is stable in Chhattisgarh and Orissa.Price scenario in Bihar is uptick due to finish of pending work before election. Rice The Company expects that there should be some revival in demand post monsoon majorly from expected infra activities and some revival in rural demand as the monsoon this year has been good.

The work on the Company two split location plants is progressing satisfactorily. Gujarat's second grinding unit is expected to come into stream by end of the current financial year (FY 2016). The work at Udaipur unit, the subsidiary company, is also progressing well.

The company Durg plant operated at almost 45% capacity utilization in Q1FY16. Currently 60% petcoke is being used for the Durg plant. Petcoke price for the quarter stood at around Rs 6400 in Rajasthan and around Rs 7,400 in Durg.

The company has received all clearances for the grinding unit at Cuttack, Orissa, and the plant is expected to get commissioned by Q2FY17e. Surat grinding unit of 1mt is expected to get commissioned by end-FY16. Post completion of these expansions, company's capacity will stand at 10.3 mt against 8.3 mt.

The Company plans a Capex to be Rs250 crore for FY16 and Rs100 crore for FY17, excluding the capex planned for the Udaipur plant. Capex of Rs250 crore has been spent in Udaipur Plant out of planned Rs 700 crore, Rs 200 crore is expected to be utilized in FY16 and rest in FY17.

TheCompany has reduced the lead distance by 20 km in the existing market. The average lead distance stood at 450km.

The Company Gross debt as on 30th June 2015 stands at Rs2050 crore and cash of Rs 250 crore.

The company expects based on existing limestone availability along with land, the capacities can be doubled at Sirohi, Cuttak and Udaipur plants as a part of brownfield expansion, when the demand revives. The Company has sufficient availability of limestone for existing as well as new plants. The limestone mining license is valid till 2030 for existing plants and 2034 for new unit.

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