Ajay Kumar Saraogi, JK Cement, ET RealEstate

June 23, 2023

“As of now, there is no price increase. We have to see, the demand is good. Since there has been a cost pressure, there is a need for a price increase but it will really depend how the market takes it,” says Ajay Kumar Saraogi, Dy MD & CFO, JK Cement.

What is the outlook in terms of your on-ground demand at present as we are stepping into the monsoon season? How are you expecting it to shape up?
The demand is good at this point of time. And yes, there have been some hiccups because of unprecedented rains and weather conditions. So otherwise we foresee that the demand in this fiscal should go around double digits for 9 to 10% and as far as our company is concerned, we expect our growth to be around 15%.Could you also talk to us about how the pricing is really panning out? We understand that the industry managed to take a price hike in the month of May. April also saw a bit of an uptick and there is further price hikes expected in June. Could you clarify and confirm that for us?
As of now, there is no price increase. We have to see, the demand is good. Since there has been a cost pressure, there is a need for a price increase but it will really depend how the market takes it.

Any sense in terms of how the pricing has really panned out in the last three to six months and overall the number of cost increases that you have done or price increases that you have done, is it enough to pass on the pricing pressure of the raw materials that you talked about?
If you see in the last fiscal the cost increase has been far more than the price and that has affected the margins. But now though there is an effort we have to see, because a lot of capacities have also come in and effort is there to pass on the cost increase.

But at the same time, we are seeing some silver landing as there is some reduction in the fuel pricing. So we expect that at least some relief is there. But the industry definitely needs some price increase.

Your EBITDA per tonne in Q4 was about Rs 750 per tonne. What is the outlook on a QOQ basis?
Now we expect the EBITDA to definitely improve going forward. And there should be some improvement in EBITDA in this quarter and even going forward we should be able to achieve an EBITDA growth of closer to Rs 1000.

You are expecting in, let us say Q1, Q2 itself or towards the fag end of the year?
Towards the fag end of the year not in Q1, Q2.

We understand that, of course, the company is looking at foraying into the paint segment as well. So could you talk to us about what is the update? When will we see the rollouts in a big way? When are you expecting the commissioning of the plants etc.?
We have acquired a paint company. So now we are now just increasing the reach of the paint. And the last year, this paint company does an annual turnover of about Rs 90 crores and this year, we expect that we could be doing at least about close to 100% increase in the top line.

Separately, there is a lot of consolidation which really continues in the sector. Are you looking out and scouting for any acquisition opportunities? And if yes, which areas, which other companies?
At this point of time, no, we are not looking out for any opportunities.

Okay. Not looking out for any opportunities, but the debt continues to be a bit elevated around that 2900 crore levels on a net basis. What is the trend expected to be when it comes to net debt going forward? Any debt reduction plans that you can highlight?

See the net debt is there because we just completed an expansion. But I think this has peaked out and going forward, it should, it will reduce.

Let us talk about the capacity expansion as well because you did point out that there is a lot of supply which is going to come on board. For JK Cement itself, what is the capex plan? What are the capacity addition whether it is happening in the grey cement? Is it happening in white cement?
We have added about 6 million tonnes in FY23, 4 million tonnes of Greenfield capacity and 2 million tonnes of Brownfield capacity. So now at the end of fiscal FY23, we are at 20 million plus capacity. We have 3.5 million tonnes Greenfield grinding, out of which this 1.5 million should get commission in this fiscal and 2 million should get commissioned in the second half of FY25.

  • Published On Jun 2, 2023 at 08:27 AM IST

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