Heidelberg Cement India hosted a conference call on May 23,2022. In the call, the company was represented by Mr Jamshed Naval Cooper-MD and Mr Anil Kumar Sharma-CFO.

Key highlights of the call

EBITDA per ton stood at Rs 961 per ton for Q4FY2022 and Rs 910 per ton for FY2022. Margins were impacted due to higher fuel and power.

Clinker factor stood at 61.4% in FY2022. The company is a 100% blended cement company.

Carbon foot print stood at 511 Kg/ ton of cement in FY2022 and plans to reduce it to 500 kg per ton by FY2025.

Utilization for the year increased and stood at 76% on expanded capacity through de-bottle necking. The company plans to expect the same to increase it to above 90%.

Premium products: Premium products contribution stood at 22% in Q4FY2022 and 21% in FY2022.

Trade Sales: Trade sales contribution stood at 75% for the quarter and 85% of trade sales in FY2022.

Rail road mix stood at 46% and 54% in FY2022.

Price Trends:Prices post march 2022 has increased by 25-30 /per bag.

Power: Sourcing of power from grid stood at 55%, 40% from WHR and balance was from 5.5 MW solar power at Damoh.

Green power contribution stood at 23% in FY2022 and the company plans to increase to 35-40%.

AFR constituted around 3-3.5% of the total power in Q4FY2022. The company plans to raise AFR to 5% in the short term and to around 20-23% by FY2025.

Coal: The coal prices have increased drastically. All of the coal and pet coke procured is domestic.

Coal and pet coke ratio stood at 62:38. The inventory level is around 25 days due to high prices of coal and pet coke.

Petcoke prices: Pet coke prices were around Rs 8000 / ton in March 2020, Rs 13500/ ton in Mar 2021, Rs 20000/ ton in Mar 2022 and the current prevailing prices is around Rs 27000-27500/- ton.

Diesel:Reduction in excise duty by central government will reduce cost of transportation by around Rs 2/ bag.

Fly ash: The company sources fly ash through standard supply contract and is fully secured.

Lead Distance: Lead distance stood at 360-375 kms for Q4FY2022. There is no much change in lead distance.

Expansion:

Through de-bottle necking the company plans to add around 0.5 MT of capacity by FY2024.

The company plans to add cement capacity by 3-3.5 MT in Gujarat. The company has obtained environment clearance for the same. The company expects another 1.5 years to get all the government clearances and another 1.5 years to set up the plant.

The company commissioned 5.5 mega watt solar power plant in Damoh, Madhya Pradesh.

CAPEX: The company plans to incur maintenance capex of around Rs 50 cr each in FY2023 and FY2024 and capex of around Rs 40-50 cr and Rs 40 cr towards de-bottle necking in FY2023 and FY2024 respectively.

Incentive: The Company has received approval from the State Government of Madhya Pradesh for its SGST claims pertaining to earlier years. Accordingly, the SGST incentives amounting to Rs. 30.5cr, Rs. 3.7 cr and Rs. 42.5 cr have been accrued during the quarter ended 31 Mar 2022, preceding quarter ended 31 December 2021 and the financial year ended 31 March 2022 respectively.

The company's incentives will expire in Feb 2023 and does not expect it to extend further.

Debt:The company paid its 3rd tranche of NCD amounting to Rs 1.2 billion. The company has interest free loan from government to the tune of Rs 235 crore. Net cash balance as on 31 Mar 2022 was around Rs 1.35 billion. The company continues to operate net negative working capital.

Outlook:

The company does not expect impact on demand due to Covid. However, the company expects impact due to ongoing war between Ukraine and Russia.

The company expects cost pressure to continue and increase in prices to pass on the cost pressure.Prices of some of the inputs have increased by 2 times and 3 times.

There was slackness in government demand by 15-20% post Mar 2022 at industry level. However, the company expects it to be good from the month of June.

The company does not see any change or loss in market share in central region due to other players expanding the capacity.

Dividend: The Board of Directors have recommended dividend of Rs 9/- per equity share.