Good afternoon, ladies and gentlemen. We welcome you all to the Q1 FY 2022 results conference call of Sagar Cements Limited. We have with us from the management, S. Sreekanth Reddy, Joint Managing Director, Mr. K. Prasad, CFO, Mr. Rajesh Singh, Chief Marketing Officer, and R. Soundararajan, the Company Secretary. We will start today's session with the opening remarks from the management, and this will be followed by a Q&A session. I request all the participants to be on mute only mode during the course of the call. I would now like to hand over the call to Gavin Desa of CDR India for his opening remarks. Over to you, Gavin. Thank you, Manish, and welcome all to the Sagar Cements Q1 FY 2022 earnings call. As Manish mentioned, we have with us S. Sreekanth Reddy, the Joint Managing Director, Mr. Prasad, the CFO, and Mr. Rajesh Singh, the Chief Marketing Officer, besides Mr. R. Soundararajan, the Company Secretary. Before we begin, I would like to point out that some statements made in today's discussions may be forward-looking in nature, and a note to this effect was stated in the con call invite sent to you earlier. We trust you've seen the communication and the presentation on the results. I would now like to hand over to Mr. Reddy to make his opening remarks. Over to you, Sreekanth. Thank you, Gavin. Good afternoon, everyone, and welcome to Sagar Cements earnings call for the quarter ending June 30th, 2021. Let me begin the discussion with a brief overview of the market in terms of the demand and pricing trends, post which I will move on to the Sagar-specific developments. Volumes during the quarter were understandably low, given the impact of the second wave of the pandemic. The utilizations levels, along with the restrictions on the material movement, resulted in lower sales during the quarter. However, the demand and volume started improving by the end of the quarter, following the relaxation of the restrictions in light of the ebbing of the second wave. Despite lower volumes, realizations though remained largely steady, in turn helping to offset the impact of the lower volumes. In terms of demand, starting with South, while the retail demand was largely benign, the demand from real estate players and the government projects, especially in Hyderabad, remained steady. In terms of West as well, pickup in demand from non-trade segment negated the impact of the lower retail sales. Demand in the Eastern market as well improved following the easing of the restrictions. In terms of pricing, as I said, the overall trend in realizations was positive. While Southern and Eastern markets witnessed a steady pickup in realization, the pricing environment in the Western market was largely steady during the quarter. One of the key reasons behind the improved realization trend was the persistent increase in the input material prices, which in effect warranted a price hike. Going ahead, we remain positive on the business and believe the steady demand from housing, industrial, and infrastructure provides a strong visibility both in terms of the demand and also the pricing trajectory. Moving on to Sagar-specific developments, we are pleased with our performance during the quarter, especially when one considers the challenge one had to operate given the second wave. While a large part of the quarter was disrupted owing to the second wave, we did see things improving by the end of the quarter following the relaxation of restrictions, which in turn helped us deliver steady growth in our revenues and profitability. Volumes were understandably lower during the quarter. However, a supportive pricing environment helped us to offset the impact of the lower volumes. EBITDA for the quarter stood at INR 107 crore, higher by 23%. However, margins declined by 600 basis points owing to the higher input prices. As indicated in the previous call, the prices of most of the input material, namely the thermal fuels, coal, petcoke, diesel, have been trending upwards over the past few months, in turn impacting the margins. Lower capacity utilizations during the quarter as well contributed to the margin compression. Irrespective of the price movements of the key input material, we remain focused towards improving the efficiencies and rationalizing our expenditure. Average fuel cost stood at INR 1,138 per ton, as against INR 802 per ton reported during Q1 FY 2021. Increase in fuel prices have resulted in higher cost of fuel. Freight cost for the quarter stood at INR 762 per ton as against INR 704 per ton during the quarter Q1 FY 2021. Profit after tax for the quarter's stood at INR 50 crore as against a profit of INR 36 crore reported during Q1 FY 2021. From an operational point of view, Mattampally plant operated at 56% utilization level, while Gudipadu and Bayyavaram plants operated at 78% and 59%, respectively, during the quarter. As far as the key balance sheet items are concerned, the gross debt as on 30th of June stood at INR 844 crore, out of which INR 731 crore is long-term debt, and the remaining constitutes the working capital. The net worth of the company on a consolidated basis as on 30th of June 2021, stood at INR 1,308 crore. Debt equity ratio stands at INR 561 crore. Cash and bank balances were at INR 172 crore as on 30th of June 2021. That concludes my opening remarks. We would now be glad to take any questions that you may have. Thank you again. Thank you, sir. We will now begin the question and answer session. Anyone who wants to ask a question may raise their hands on the Zoom platform. We'll wait for a moment. The first question is from the line of Shravan Shah. Please go ahead. Sir, first of all, congratulations on good set of numbers. A couple of things. First is, if you can elaborate more in terms of the pricing first, if possible in the state-wise, be it Tamil Nadu, Karnataka, how it was, and now in July, are the prices versus the average for the quarter, is it steady or have you started seeing a decline? That is first, and then I will have a second question. Thank you, Shravan. Let me address the first question. From Q4 exit, Hyderabad was at INR 350. It steadily increased to almost INR 360 in April, and by May it reached to INR 370. June, of course, there is a small compression, primarily owing to the monsoon and seasonality. It is at INR 365. I'm talking of the retail price. Bangalore, the exit price for the Q4 was around INR 350. It slowly increased to INR 370 and INR 385. Same is the case we see for our brand at INR 380 in Bangalore. Chennai again, we look at Tamil Nadu in two parts, that is the North Tamil Nadu and South Tamil Nadu. Yeah, Chennai, which is in the North Tamil Nadu, the exit price during Q4 was INR 375. Yeah, it increased to INR 385, INR 395. Yeah, right now our reading by end of June to middle of July is around INR 390 prices. Okay. Secondly, in terms of the two things, the volume, what we last time guided in terms of the 3.6 million tons and Satguru in the presentation, we mentioned it is commissioned. First, clarification, when the actual commercial production will be starting, and is there any upgrade in terms, even if the marginal upgrade in the volume guidance that we are looking at. Secondly, on the gross debt, we were looking at peak debt of INR 800 crore, but now it marginally is a higher rate, INR 44 crore. The QOQ INR 38 crore has increased. How do we see the gross debt now? Yeah. Thank you, Mr. Shravan Shah. See, our guidance for the current year stays at 3.6 million, with 3.2 million coming from the existing plants, and a 0.4 million ton is what we have factored from both Satguru as well as Jajpur. Yeah, both the plants are in advanced stage of commissioning. We would be commissioning before end of this September. Most of the work, especially the packing side of Satguru is already commissioned close to a month back, so we are in the trial stage. By August 15th, we are hoping to start the first dispatch, the first commercial invoice to start from 15th of August. The full commercial production, as mentioned, would be for the end of September for both Jajpur as well as Satguru. Going specifically back to the gross debt scenario, as mentioned, there has been an overrun for the Satguru project for various reasons. We see the gross debt close to around INR 850 crores-INR 875 crores, but that includes the working capital also. The net debt should be close to around INR 700 crores, at least for the short period of time. We see that getting lower in the coming Q1 of next year. I think it should start coming down rapidly because there would be quite a few payouts for the existing debts, Mr. Shravan Shah. Sir, lastly, on the power and fuel, I understand it, what we last time told, I think slightly higher than what we were expecting per ton on power and fuel. How do we now see when we will continue to maintain two quarters of inventory and what the change in terms of the fuel mix of, we were looking at once again starting the U.S. coal and the petcoke also? Now what's the fuel mix and how do we see from 1,138, will it remain at this level or can we see further INR 50 increase per ton for at least next two quarters? Now, Shravan, as told before, our hedging is for the two quarters. We know for sure from exit of Q1 to the entire Q2, we are expecting an increase of almost INR 100 on the account of power and fuel, purely because the high-cost fuel is being consumed. For Mattampally, of course, it's the petcoke plus domestic coal combination. We would be using it for the current quarter. For the current quarter, we see a increase of close to INR 100 incremental cost increase on the account of power and fuel. That needs to be looked from a context that there is some amount of product mix changes. As you would have seen from Q4- Q1, the blended cement ratio has gone up. That should also help us offset some amount of it. Our bigger worry is on the diesel price, though it looks like it has stabilized. As long as it remains here, we don't see major kind of a cost changes from Q1 to the Q2. Internally, we think that diesel price might move slightly higher, which should in turn start putting pressure on some amount of input material costs also. Inward freight also, there are some corrections that are being made to the freight. All said and done, internally, we have factored INR 150 both on account of fuel, freight, and the other input material costs to move up from Q1- Q2, Shravan. Sir, last, just a clarification in the presentation, second last page, key enablers. There is a significant decline in terms of the limestone reserves for Mattampally from 800 million ton- 404 million ton. Is it a printing mistake or anything to be clarified? Yeah. Mr. Shravan, this is purely on account of the MMDR Act, as you would know. We were sitting on what we call as the mining memo. Though it is sub judice now, but in our case, cautiously, we have put that kind of a reserve outside the thing because, as you would know, the MMDR Act annulled most of the mining leases which are not executed. The mining lease is not executed. Most of that was canceled. But in our case, we actually crossed beyond that. The local government did not end up executing the mining memo for more than 10 years. It's a legal issue, so we would not like to comment. As a cautious kind of a thing, we have reduced that much of limestone resources from the earlier statement, Mr. Shravan. Okay. Thank you, sir, and all the best. Thank you. Thank you. The next question is from the line of Mangesh Pandey. Please go ahead. Good afternoon, sir. Good afternoon. Congrats on good set of numbers and the amazing annual report that you published. Sir, I have two questions. First one is on the demand side. If you can touch base on how much has been the FY 2021 demand in the states that you operate in, and what is the outlook for FY 2022 in terms of growth, provided that no further setbacks are there? That's the first question. Second one is, sir, you mentioned that because of the cost push you have increased the prices, and which is what we're hearing from most of the management. It has actually resulted in increased margins. Is it that you expect that the cost will actually catch up, and that's the reason in the ongoing quarters, and that's why the price hike has been taken already to cover that? Do you see margin contraction here on because of the cost that we have seen? Yeah. Good afternoon, Mr. Mangesh. Now let me first address, our annual report is an integrated report, sir. It is the second integrated report that we have published. Thank you, and appreciate that you have liked it. The second part of the question was regarding the demand. The states that we have operated did contract by 15% from previous year to last year. Q1, as you know, is a mixed bag, with most of the Q1 was under strict lockdown in most of the markets that we operate. We are not giving any guidance at this point of time, because COVID third wave is impending. At least we wish and hope that the impact of it is very negligible. Given that scenario, our internal assessment is that it could still grow by 2% last year. Because last year itself de-grew by 15% a year before. Internally, for our own estimations, as indicated earlier, we get close to 3.15 million from the current operations that we have. We are only going up to 3.2 million. We did not factor much internally. Not that we are anticipating COVID three to be very severe. Some amount of supply also is there in the market, and there is a ramp-up. If demand remains the way it is, we cautiously try to estimate the similar kind of a demand for ourself, like last year for the markets that we serve, Mangesh Pandey. The other part of the question was regarding the increased price adding to the margin. I do not think the increased price added to the margin, sir. If you look at year-on-year kind of a margin, there was a compression. It is true that quarter on quarter, optically it looks like there is a margin increase, but it is only optics, sir. The reality is that input cost is going up phenomenally high. Fortunately, the market supported us to pass on the incremental kind of a cost. We wish and hope similar kind of a trends continue. Issue is not that it added up to the margin, sir. That is not true that it did not add up to the margin, sir. It only optics make you think that it is added. It's only from Q4- Q1, you think that margin got increased, but if you look from a year-on-year number, it actually contracted by almost 600 basis points, Mr. Mangesh. Right. Sir, just one more, if I can squeeze in. Do you think that with the load of capacity coming in the eastern region and large part of it also clinker-backed, it's heading like the south way in terms of the utilization in east? Do you foresee that, or you think that demand is going to take care of the increased supply that is coming in? Mangesh, as mentioned even earlier, our outlook for East is that East consistently has been growing for more than two decades or one and a half decade consistently on 10% year-over-year. We strongly think that East growth would continue. It's true that a lot of supply is due, most of it is not backed by clinker, sir. Again, only some portion of it is backed by the clinker. All said and done, the supply is likely to get increased. Our own internal assessment is it should match up with the demand increase. For ourselves, since for certain parts of East we are going for the new, internally we did factor some amount of lower capacity utilization for the asset that we are coming up with. I think it's only going to be a short-term kind of a phenomenon. Over next couple of quarters or maybe a year, next year same time or few quarters thereon, we think that the demand supply equation still would be skewed more towards demand rather than supply, especially in the eastern side, Mr. Mangesh. Thanks a lot, sir. Thanks a lot, and congrats once again. Thank you. Thank you. The next question is from the line of Gaurav Birmiwal. Please go ahead. Hello, sir. Thank you for the opportunity, and congratulations on good cost control. Sir, I have two questions. One, you mentioned that we expect INR 100 impact from higher fuel cost going forward. Does this INR 100 factors in the price that you locked in earlier, or is that from spot? It is from our cost, Mr. Gaurav. Spot looks scary because if you look at the imported coal or petcoke, the sea freight is actually moving extremely fast. This is purely on the account of the price that is locked in by us. Any assessment on what the number will be versus spots? I know the number will be quite scary, but any assessment on what the gap will be versus our Q1 average consumption? You're talking of the current spot price. Yeah. Versus the current spot price. That is up by almost 15%-20%, Mr. Gaurav. Fair enough, sir. Second question, can you throw some light on what this inventory adjustment is, sir? Like in your consolidated number, you have INR 16 crores of stock adjustment. What does that stem from? That's the stock that you produced but were not able to sell at the end of the month or is that mark to market of some commodity that you have? No, sir. It is very simple, straightforward. The closing stocks to the incremental stocks that get added up is actually adjusted there. Okay, fair enough. Thank you. Thank you. The next question is from the line of Pritesh Sheth. Please go ahead. Yes, sir. Thanks for the opportunity and congrats on the great set of results. Firstly, can you repeat the utilization for each of your plant you highlighted in the initial part of the commentary? We were close to around 56% at Mattampally, 78% at Gudipadu, and 59% for our Vizag grinding station. Thanks. My question on demand, what were the varied trend you noticed in Q1 across the states that you cater to? For sure this does indicate that for you, Andhra market did quite well because from the competitors' results, what we have seen till now, Tamil Nadu and Kerala were not as good. Can you highlight the trend across the states you saw in Q1? Mr. Pritesh Sheth, I think irrespective of the other cement companies, I think it's a fact that some states in South went for a very deep restrictive kind of a thing. It again depends on what kind of exposure each of us have to those states actually is reflecting on the current supply that we have done to those markets during Q1. If you look at today's press, Kerala is going for very strict weekend lockdown because they are seeing some spike of COVID. Our exposure to Telangana and Andhra is close to around 55%-60% of our volumes. Both the states were relatively under less pressure because they were less restrictive compared to Tamil Nadu, Kerala or Karnataka. That probably is making you think that we did more or our volumes are higher. It's purely because of each state's restrictions that were imposed during the Q1, sir. Fair enough. Just in terms of what would the underperformance be for the states like Tamil Nadu, Kerala versus? Sir, our exposure is limited, so it did get impacted. If you look at Q4 of our volumes was more than one million, sir. That itself shrank by 15%. My assumption is that the other states probably had that kind of an impact. Please be mindful of the fact that our exposure to Kerala is very minimal. That should not be translated in any which way, the current statement that I'm making. For somebody who has a bigger exposure into Kerala, I think the restrictions were a lot more severe there. Probably that kind of a supply probably would have not happened for people. In our case, we don't have, so in our case it was 15% lower. For some it was more than 30%. That how it is, Mr. Pritesh. One last one on the pricing. We have already seen prices reach at a multi-year high, obviously, given the cost pressures. For now we are seeing INR 150 per ton of further increment in the cost, and then looking at the spot prices, there's another INR 100, INR 150 per ton pressure if they hold on to this level. Is the market ready to accept further hike in prices? Yeah, Mr. Pritesh Sheth. See, I think what we should understand is, when we talk of multi-year high, sir, it is not true. Yeah, if you make an inflationary adjustment, I don't think we are anywhere close to the prices where they need to be. Some of us, our margins might make you think that the prices have reached very high, but it's primarily on account of cost management and the effort that has gone in terms of the CapEx and all, to manage that, sir. Prices per se, if you make the inflationary adjustments, they are not anywhere close to where they need to be or they should be. The reality is here. So far we were fortunate that market did absorb, though there was some amount of compression on the margin. We wish and hope that the margin compression would go away, and whatever is the additional cost that is likely to go up, we wish and hope to pass it on to the market, sir. Will it take is something which we would want to wait and watch. We are more than hopeful that at least a portion of it market should absorb. I don't think cement is a single commodity which is into the similar kind of a thing, sir. It is across the commodities. In fact, the cement is still at the lower end in terms of the inflationary price pass-through into the market, sir. If you look at steel, if you look at any product, copper, aluminum, I mean, most of the commodities have gone up much, much ahead of curve. Cement is still in the early part of that curve is what we think. This product is a bulk product, it's such a low-cost product, and the inflationary impact on cement is much higher compared to any other bulk commodity, or rather heavy commodities like steel and all. For us, transportation is a very key cost item. You know the inflation impact on that. The diesel price is just moving up one way. We are not even tracking how much percentage it has gone up year-on-year. It remained steady for a couple of years back, but that's not the case, sir. I think it's an everyday it is going up. We still see some gap where the market should absorb the incremental cost that is happening, Mr. Pritesh Sheth. That's what we think. From what we think, to what we want, to what market would behave is something which is staged. Last quarter was comfortable from a pass-through, so we hope and wish similar thing should happen and likely to happen in the coming few quarters also. Sure. Lastly, when would your next set of fuel ordering will happen? It's a continuous process, sir. We are doing quite a bit of hedge. We just paused because the price is moving up quite sharply. Alternate fuel arrangement is being made. We are increasing the higher domestic coal consumption now. It's a continuous process. We have paused for some time on the imported coal and the petcoke, but we need to make the decision quickly so that the hedging formula or the principle that we follow comes back to normal. We just paused for 15 days to 20 days, but I think we should be comfortably making it over. The hope was that some amount of sanity would come in terms of the price, but unfortunately the sea freight is just moving one way up. Fortunately, the domestic coal in our case still is holding up. We are looking at a possibility of increasing the domestic coal consumption going forward. Okay. You have stopped reporting this petcoke and coal mix. Used to you report two quarters back. Yeah. I don't think it was a deliberate attempt. It was minuscule petcoke, sir. It is 100% imported coal. Since it was just a fraction or close to zero, yeah, we would be happy sharing it, Mr. Pritesh. Yeah, I'll take it offline. It was all imported coal for the last quarter. Sure. Thank you. Thanks for answering my questions, Mr. Sreekanth Reddy. Thank you. All the best. Thank you. The next question is from Ritesh Shah. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity. Sir, first of all, congratulations on integrated report. Honestly, it's setting a new benchmark on disclosures. A big positive overall for the industry as well. Sir, I have two questions. We have indicated our expansion plans to 10 million tons by 2025. Any sense on how should one look at the geographical footprint that you are looking at going forward? Do we have any aspiration to have, say,% of our capacity or sales which will be ex south and east if one has to look at, say, three years, five years out? Yeah. Good afternoon, Mr. Ritesh. Thank you. Sincerely appreciate your appreciation for the integrated report. Yeah, I think our journey into the ESG reporting has been quite long. Thanks to the IFC participation in us for more than a decade. Yeah, that's an in-house work. The team did work hard for the disclosure side. We would be very happy to improve for any feedback that you might have for the further improvement. Now, going back, we did state our ambition to be a 10 million company by 2025, and every 10 years to double thereon. Now, we are colorblind from a perspective of green, brown, organic, inorganic or region, it should not matter. At this point of time, we are not looking at Northeast, but any other region which offers us for the growth and the cardinal rules that we follow. Yeah, we would end up doing in those regions. Yeah, we do not have any policy to have a regional kind of a presence, sir. I think it is very asset-driven. For each of the asset, we are very conscious of the movement of the material not going beyond certain distance. It's asset-specific and region-specific. We are not averse to be in any region at any given point of time. The only thing is that Northeast is something which we are not looking at this point of time. We are regional and color-agnostic is what I would like to point, Mr. Ritesh. Sure, sir. Sir, any color on the incentives of the expansion plants, the plants which will get commissioned and the incremental expansion plants that we have? Any color on the incentive trajectory? Have you already negotiated with the state governments? How should one look at this variable? Sir, I think for our size, the issue of negotiation doesn't arise. The stated incentive plan is what we have followed. Madhya Pradesh, we are very clear. Madhya Pradesh state, we did sign the agreement, which would kick in as soon as the COD is done. As indicated, it's INR 150 crore incentive, which is capped to the total investments that we have done for that particular asset to be paid over seven years. Seven years would be compensated. There are some small incentives in form of the electricity duty exemption. These are the assets. In Odisha, the incentive is in transit. The day we commission, that is when we need to go and apply, and whatever is applicable incentives at that point of time would be given out to us. The incentive, as given by the state, is still under preparation. By, I think, first week of October, that is when we would be reaching out. We will have a lot more clarity for the incentives in Odisha, sir. Perfect. Sir, just last one question. Any scope or plans to increase stake in Satguru Cement? Do we have the optionality to, or when will we consider this? At this point of time, sir, from a clinkerization perspective, I don't think we see a big scope because the limestone more or less in the neighborhood is between us and UltraTech, so we don't see anything new happening. Of course, there are few mines which are still open. Given that scenario, in the short to medium term, we don't see a big opportunity for us to grow in Madhya Pradesh on the clinker side, though we do see some opportunity for us to go for incremental cement kind of a thing. It is purely based on the blending, sir. That gives a 0.25 incremental supply possibility. Right now, we have given it as a 0.99 million ton cement capacity. There is a possibility that we might increase the cement capacity going forward. It's purely based on the product mix. We see that happening. That we don't see it happening over the next one year. Probably beyond that, once we stabilize the operations, we see a possibility on incremental capacity on the cement side at Madhya Pradesh. Odisha, the layout permits us to add up, double up. That, I think we will take a call once we reach to certain distance in this particular asset, sir. The other assets that we have at Mattampally and Gudipadu offer huge opportunity for us to double. We have always been more than double. We have always looked at market wise kind of a scenario. We don't see that happening for next two years for sure. We do look at options that are available in the neighborhood. If any of them come at a reasonable price, we don't mind looking at them very closely, Mr. Ritesh. Sure, sir. From an inorganic perspective. Okay. Sure, sir. Thank you so much for the answers. Thank you. Thank you. The next question is from Rajesh Ravi. Please go ahead. Yeah. Hi, sir. Good afternoon. Congratulations on those set of numbers. My question pertaining on the two CapEx. How much has been spent in this Q1 toward those two expansions? INR 75 crores would be the right number, Mr. Rajesh, but what you have to be mindful is there has been a slowdown, as you know, because of the COVID second wave. Another INR 150 crores needs to be spent, which will happen in the current quarter itself, sir. Because both the projects are due for commissioning before end of September. Okay. INR 75 crores spent in Q1 and the pending INR 150 crore will all get completed in September quarter, right? Yes, sir. Okay. Secondly, what sort of impact the new commissioning will have on your employee cost? Most of it is already in the P&L. Yeah. Mr. Rajesh, can you repeat the question, sir? Sorry. Sir, on the employee cost number because of these three expenses, what sort of impact it will have? Yeah, I think, sir, it's a usual practice for us is to take 8%- 10% incremental hike every year. I think Q1 is not yet factored that kind of a thing. I think going forward, that is additionality. What you have to be mindful is that Q1, the capacity utilization was way below, so the spread was not very high. Going forward, I think that spread should give us the similar kind of a number, though there could be absolute number increase, but per ton number probably could be something very similar, Mr. Rajesh. Okay. I was asking for the new two plants. Are the employee expenses already part of the? Yes, sir. I think the recruitment is already done for all the plants. Yes. Before commissioning. It will be capitalized pre-commissioning, and post-commissioning it'll start getting reported in P&Ls. Yeah. Broadly, how much of that number will get capitalized, sir, in P&L? Sir, I think it is too soon for us to comment. I think a couple of quarters later, we should be in a much better situation to report. Okay. The reason is, absolute numbers we do have, but specific per ton, I think it'll take some time. No. Yeah. Sure. Okay. On the demand front, Q1 is also a steep quarter in terms of extended lockdown and all. If we had to look at from a perspective of a normal quarter, what sort of volume loss would have been there? I'm just trying to understand how is September quarter. Mr. Rajesh, I think given the pandemic impact and likely still it is not out, sir. I would not like to keep my neck out for any soothing when it comes to demand. There is nothing called normal, sir. We have seen when in abnormal times volumes did move, and in normal times volumes shrank, so it would be a challenge for us. As stated earlier, we are not adding any specific guidelines for market in general. Our internal assessment, as I told you, we are trying to factor in similar kind of a number what we did last year for the assets that are in operation already. Okay. Last year, September quarter numbers is what you're looking at, that at least that much can be achieved in September. Yeah. The caveat there is, again, we need to be watchful of how the impact is going to be, sir. Sure. That is like if there is impact, it may go lower, but at least that much is achievable if things remain where they are currently. We are giving only annual outlook, Mr. Rajesh. Okay. Not quarterly outlook. Okay. Yeah. Please be mindful of that. Sure. Okay. Possibly what we talked about, I'll come back to you. Thank you, sir. Thank you. Thank you. The next question is from Amit Murarka. Please go ahead. Hi. Good afternoon, Sreekanth and everyone. A few questions. Firstly, on the debt. I understand that the debt has gone up in this quarter versus March. One, I wanted to understand the reasons. I believe one would be inventory, but is there any other reason for the debt expansion? Debt expansion? See, I think we're talking of inventory cost or the debt expansion is primarily on account of the money that we are spending for the projects. No. We have generated good cash flows of INR 100 crores of EBITDA this quarter. From that point of view, the debt has. I think you're talking of the cash flows. As mentioned earlier, sir, the inventory pileup itself is to tune of around additional INR 37 crores. It's all in the inventory, sir. The cash that got generated, most of it is also. Inventory. Okay. Yeah. Inventory and as well as receivables. Just for the clarity, yeah, Q4 is usually the time when most of the dealers would want to give away the entire thing because of the annual incentives that they would have. Q1 onwards, slightly the receivable days go up. It's a usual practice. It's a combination of inventory plus the total quantum of receivables would have pushed some amount of overall cash flows being slightly lower, Amit. Okay. What will be the peak debt number now? Earlier, I remember you guided for INR 800 crores. I think it is INR 850 is what we are looking at, sir. This includes the working capital position for both the new assets, and we should be anywhere between INR 850-INR 875. That number probably would be for a very short period of time, because we do have payouts for the existing debts, so we should peak out at INR 850-INR 875 on a gross side. Sure. Of late, we have seen couple of announcements being made even in South, like Dalmia made an announcement. What is your view on the way or capacity expansion? As we see cash flows actually improving for the industry, better margins we are seeing, are you seeing a next wave of capacity additions happening in the space? Yeah. Mr. Murarka, they never stop, sir, they pause. Let us keep that in mind. Are they going to come? Yeah, I think at this point of time, it will be too soon for me to comment much. Yeah, because the announcements are just announced, we would want to review before taking any comments on that. Okay. Also on the M&A side, do you see too many M&A opportunities now left in the space, because I believe all the larger assets have been taken out? What is your outlook or view on the M&A potential in the sector now? Sir, I think M&A potential always exists, sir. We have seen Ambuja and ACC merge. Merge in a sense, they became part of the same parent. Nothing can be ruled out. There are a lot of assets in this space, so we don't know when who would want to make a sale or who would want to buy. Opportunities do exist. Fortunately, even the new IBC regime also prompted some of those assets, which actually were closed either for want of working capital or because of any of that. Yeah, we see some of the revivals keep happening in those market space. It's a work in progress, sir. Opportunities do keep coming. Will they happen is something which we have to be mindful of. Usually, when the market is euphoric about the margins and the cash flows, we see a lot of discussions about them. And when market is under some stress, and especially the market prices are under stress, people don't talk. It's always work in progress, Mr. Amit. Okay, sure. Understood. Just on the power and fuel side, if I understood you correct, you said that the spot prices are basically 10%-15% above the Q1 numbers. I'm not keeping my neck out. I think even 20% is not a bad number, Mr. Amit. It's what you are looking at. It's exactly what fuel you are looking at. For sure, the overall 15% is the overall increase in the thermal fuels, sir. Both imported. Yeah, no. Domestic. I remember in the earlier calls you mentioned that you have switched to U.S. coal now. From that point of view, I think the. We are back to petcoke, because U.S. coal is exhausted, and the price of it also has moved. Yeah. We moved back to petcoke, and we are also looking at a possible blend of domestic coal with the petcoke. Okay. Isn't petcoke, on a calorific value basis, still higher compared to, let's say, some of the coal grades? Mr. Amit, if you look at our presentation, we did indicate on a per kcal. Yeah. I saw that. Yes. Yeah. Petcoke is higher. What it offers is if you can blend with domestic coal, because when we talk of domestic coal, in our case, it is Singareni. The quality of our domestic coal is reasonably lower. A blend with petcoke could overall reduce the per kcal kind of a cost for us. That's what we are planning to do now, Mr. Amit Murarka. Okay. Understood. Thank you. Best of luck. Thanks. Thank you. Thank you. The next question is from Sanjay Nandi. Please go ahead. Sanjay Nandi, you may please go ahead. Yeah. Thank you for the opportunity, sir. Sir, what would be the debts repayment for this current fiscal? Debt plus principal plus interest put together would be INR 185 crores. INR 185 crores. Okay. Sir, just you mentioned, we have a potentiality of doubling our capacity for the Jajpur plant, which is currently 1.5 million tons. What would be the clinker supply for that thing if we go for the planning for the expansion thing, sir? Yeah. We are only talking of the layout potential, sir. We are not looking at that for some more time. At this point of time, we have enough clinker to support 70% capacity utilization at Jajpur, 70% capacity utilization at Vizag, and 65% capacity utilization at Mattampally. Any configuration changes, we would be short of clinker. Till there is a clarity on our clinker, this thing, I don't think we would be in any way situation to increase the capacity of Jajpur. Sir, currently we are feeding the clinker. From Mattampally, sir. From Mattampally plant, right? Both for Vizag and the Jajpur plant. Yes, sir. We are going by the sea route, sir, right? No, sir. We are going by land route itself, sir. By rail and by road. By rail. Vizag we are feeding by rail, right? Or road? No, by road and rail, sir. Jajpur we'll be feeding by rail. Jajpur will be feeding by rail. Okay. sir, what is the outlook for your Jajpur and that Satguru plant going forward in FY 2023? What kind of utilization levels we are eyeing into? Yeah. We are looking at 75% capacity utilization at Satguru. That would be the first full year, so we still are trying to look at the market. We are not in a hurry to push too much of material till the brand is positioned well. Jajpur, we are looking at 60%-65% for the coming years. A year later, we are looking at 85% for Satguru and close to 70%-75% for Jajpur, sir. This, I mean to say, for FY 2023, right? Yes. Okay. Got it. What is the current scenario, sir, if we consider from the exit of Q1 FY 2022? Has the demand improved in the southern parts? Already you mentioned. Mr. Sanjay, I think it is too soon. Okay. We are still assessing. This is a season where you have monsoon impact. It would be too short for us to take any call in any which way, sir. Let us look at the annual kind of an outlook. Okay. As stated earlier, we are looking at something which is very similar as last year. In our own case, though the market could grow a bit, but we are just trying to be cautious because we are trying to make provision for the incremental supply that is expected from some of the people, either by ramp-up or some new commissionings that are likely to happen. Okay, sir. Thank you so much, sir. Wish you all the best. Thank you. Thank you. The next question is from the line of Mudit Agarwal. Please go ahead. Hello. Hi. Good afternoon, sir. My question is related to this Panyam Cements, which was recently the resolution plan submitted by RV Consulting and Sagar Power Limited, which was approved by the NCLT. Just want to know your comment. Is there anything related to the Sagar Cements? Because RV Consulting and Sagar Power is the promoter group of Sagar Cements. Any comment you would like to do? Yeah. Mr. Mudit, I think as stated, I think if you have seen the press release pertaining to that also, it's a consulting assignment, sir. It has nothing to do with Sagar Cements. RV does build lot of capacities for others, so it is part of that. Sagar Cements has nothing to do with Panyam Cements. Okay. by any chance they are looking for that, trying to get this company, the Panyam Cement? As stated, we have nothing to do with it, sir. If we had to get it, probably Sagar would have bid and got the asset, right? We are not looking that asset at all. Okay. Thank you, sir. Thank you. Thank you. The next question is from Indrajit Agarwal. Please go ahead. Hi, sir. Thank you for the opportunity. One question I had is the inventory buildup that you have, is it more finished goods inventory or fuel inventory in terms of petcoke. It's a combination of all, sir. Where do I place clinker is a question. It's a clinker plus finished goods along with the fuel and the other raw material also, sir. The finished good inventory that has been built up, is it higher than what we see in the first quarter in normal course of action? Sir, if you remember, March quarter, we did close to one million, most of the stocks were close to zero. The buildup typically happens for this time. Even the clinker levels and everything was very negligible for the closing of Q4. From then on, it is only built up, sir. That is the difference I am saying there. This entire thing will be drawn down in the rest three quarters, right? Effectively, there will not be any stress on working capital on a full year basis. Sir, I think it's a function of how the cement industry behaves. We typically run for 330 days. The blocks of two 15 days or 18 days blocks are for the maintenance. Those schedules are appropriately planned, where we need to build the inventory for the shutdown, which would happen for 15-18 days for each of the kiln. It is in anticipation. Sir, at the end of the year, everything will come back to similar kind of a situation straightaway. Sure. Thank you so much for the answers. Thank you. Thank you. Ladies and gentlemen, if you have a question, you may indicate by a raise of hands. I repeat, anyone who has a question may indicate by raise of hands. Sir, as there are no further question, we would like to hand over the call to Mr. S. Sreekanth Reddy for his closing comments. Thank you, Manish. As always, we would like to thank each one of you for participating here and joining in our call. I hope you got all the answers that you are looking for. Please feel free to connect with our team at Sagar or CDR should you need any further information or you have any further queries, and we'll be more than happy to discuss them with you. Thank you. Have a good day and stay safe. Thank you again. Appreciate your time and interest in us. Thank you. Thank you. We may now disconnect. Thank you.