Ladies and gentlemen, good day and welcome to HeidelbergCement India Limited earnings call for quarter and year ended 31st March 2025, hosted by PhillipCapital India Private Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vaibhav Agarwal from PhillipCapital India Private Limited. Thank you, and over to you, Mr. Agarwal.
Yeah, thank you, Michelle. Good afternoon, everyone. On behalf of PhillipCapital India Private Limited, we welcome you to the earnings call for the quarter and year ended 31st March 2025 of HeidelbergCement India Limited. On the call, we have with us Mr. Joydeep Mukherjee, Managing Director, Mr. Anil Sharma, Chief Financial Officer, and Mr. Amit Angra, Head of Investor Relations and Vice President, Finance of HeidelbergCement India Limited. I would like to mention, on behalf of HeidelbergCement India Limited and its management, that certain statements that we made or discussed on today's conference call may be forward-looking statements related to future developments and are based on current management expectations. These statements are subject to a number of risks, uncertainties, and other important factors which may cause the actual developments and results to differ materially from the statements made.
HeidelbergCement India Limited and the management of the company assumes no obligation to publicly alter or update this forward-looking statement, whether as a result of new information or future events or otherwise. Also, HeidelbergCement India Limited has uploaded a copy of the FY25 investor presentation on their website and stock exchanges. Participants may download a copy of the presentation from these websites. I will now hand over the floor to the management of HeidelbergCement India Limited for their opening remarks, which will be followed by an interactive Q&A. Thank you, and over to you, sir. All right, good afternoon. I'm Joydeep Mukherjee, and I welcome everyone to this annual investor call of Heidelberg. I'll start off with the FY25 key messages. HeidelbergCement India Limited continues to produce mainly blended cement in its operations as a testament to our commitment to the environment and producing low-carbon cement. Our alternate fuel usage has increased to about 8%. It would have been higher if not for the main kiln, which was down for a month as it was being upgraded, and that's the kiln which takes all the alternative fuel that we use in our plant. We have signed a long-term wind-solar hybrid PPA for 5.5 MW in this period. Our share of non-grid power has increased to 45%. The EBITDA was INR 530 a ton, which was down 20% year on year. We have been able to repay an interest-free loan of INR 694 million.
Our bank balance and cash exceeds our borrowings as of now, and we continue to operate on a negative net operating working capital, and the Heidelberg Board has recommended a dividend of INR 7 per share after the board meeting. On the ESG overview, 98%, as I said, our cement continues to be blended cement. On our CO2 footprint, our score is 507 kilos per ton of cement that we produce. We are 4.4 times water positive in our plants. As part of our CSR activities, we have improved 22,000-plus lives in this period, and green power constitutes more than one-third of our total power consumed. Next slide, Amit. So we have the green power PPA supporting increase in our green power share. On Jhansi, we have a long-term solar PPA for 15 MW. Narsingarh operation, we are operating on 12 MW waste heat recovery and a 5.5 MW solar project.
At Narsingarh and Imlai, we have a long-term hybrid PPA for 13.5 MW wind and 13.5 MW solar. Our factory in South India, Ammasandra, we are consistently operating there at more than 90% green power. Our income statement, the notable thing to see here is that our quarter-ended PAT is up hugely over the last quarter. Last quarter was bad, but quarter-ending March, profit after tax stood at INR 304 million Indian rupees, which has been a fairly good performance. Sales volume has been down this year, and it's directly ascribable to we have had an exceptional year in terms of the elections. Also, a little bit because of our expansion, a little volume was impacted, but mainly the elections followed by a severe monsoon in the area that we operate led to a decline in volumes. Next.
If we look at our quarter, March 2025 quarter, EBITDA bridge, March 2024, the number was 721 per ton, and March 2025, it is flat at 722, and while our gross sales revenue increased, we had a little bit of a negative impact because in raw material, we have had an increase in cost of INR 41 a ton, but this is a one-time impact because it was during this time for almost a month in this quarter that our main kiln, which contributes to more than 60% of our total volume, was down. And this was because there is an expansion project which was going on, and we are still executing the project, and it's going to be fully over by the month of June, and that will give us around 200,000 tons of cement extra in a year.
It was because of this shutdown that we had to buy, as a one-time exception, some clinker from the market, which has contributed to this increase in raw material. Otherwise, we would have had definitely a higher EBITDA in this quarter per ton as compared to the last quarter. On April 2024 to March 2025, EBITDA decreased from INR 659 to INR 530 a ton. This was mainly due to a decrease in prices on the pressure period which started from April, May, and continued well till November. There was a INR 163 per ton dilution in prices. Though we had an upside of INR 79 in raw material and INR 58 in power and fuel, overall, we did end up with a lower EBITDA of around 20%.
The balance sheet continues to be healthy, and we continue to work on negative working capital, which is a very good sign for us. On cash and bank balances, our net cash far exceeds our debt. So this also is a very healthy situation. We have INR 687 million of debt and INR 3,849 million as net cash. So it's a very comfortable position. Nothing to comment there. The dividend payout has been consistent, and it has been driven by operation and cash flow. And as we have already mentioned, the proposed dividend is 70% of a face value of INR 10 per share. In April 2024 to March 2025, share of volume, if we look at, if we split the sales pattern, we'll have 44% of our total sales has happened by road. This was flat year on year. 43% of our trade volume has come from premium products.
This is almost 9% up from last year. On alternative fuels, we are at 8%. This was flat, but then again, during this entire period, almost two and a half months, April 2024 to March 2025, the kiln which actually uses AFR, our main kiln, was being upgraded and was not operational. So the AFR number looks flat, but we could have done much better because the supply side is completely tied up, and we hope to have a significantly higher number next year. 80% of our trade sales, percentage of trade is 80%, is down 1.8% year on year. But we are continuously increasing our premiumization and optimizing appropriate product mix in the market. On the Indian cement demand, here are my comments. We have significant tailwinds.
GDP forecast, growth forecast indicates 6.3%-6.8%, and this means that India still will continue to be one of the fastest-growing economies. Domestic demand shall remain the primary engine of growth, and with a rebound in private consumption and capital expenditure, we are pretty confident that the demand shall be good. At the same time, in the housing and infra, the major consumers of cement are anticipated to continue driving demand. The monetary easing and capital-focused fiscal policy, we expect, that it will sustain momentum, and inflation is expected to stay within a manageable range supporting macroeconomic stability. On headwinds, we do have geopolitical uncertainty, ongoing global conflicts. We have recently come out of a near conflict which got resolved pretty quickly, but all this could create tensions and create volatility. There is also some indication of a global economic slowdown.
Softer global growth could impact India's exports and investment inflows. And of course, the cement capacity expansion where we operate could further intensify competition because we've just seen Shree Cement starting off their project at Etah and UltraTech, also five million tons in Kutti, very near where we operate. So near term, we've seen intensification of competition, but thankfully, the markets in which we operate are good consumers of cement, and there is a consistent growth over the last 10, 12 years, 15 years. This area has seen very steady growth and demand driven by rural consumption. So over the mid and the long term, I would say that this remains healthy and is a good news for us. So that's all from my side in terms of my opening comments, and I will now open the floor to questions that we have from the audience.
Thank you very much.
Thank you.
Thank you.
Thank you.
We will now begin the question and answer session. Anyone who wishes to ask questions may press star and one on the touch-tone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. You may please press star and one to ask questions at this time. The first question is from the line of Rajesh Ravi from HDFC Securities. Please go ahead.
Hi sir, good afternoon. Am I audible?
Yes, sir. Please proceed.
Sir, could you throw some light on what is the progress on expansions and also the status of the clinker and cement debottlenecking, which we are scheduled to happen in FY25?
I just commented, this is why our main kiln was shut down. This project is underway and expected to be completely over by June.
Okay. And what will be the expanded clinker capacity or what is the debottlenecking which is happening?
This will lead to 200,000 tons of extra cement in a year in 12 months.
Okay. It's cement or clinker debottlenecking?
It's a clinker debottlenecking which shall result in additional 200,000 tons of PPC cement in 12 months.
Right. So clinker capacity would go up by how much, sir? It was 3.1.
130,000 tons of Clinker will increase.
And sir, what are the plans on future expansions? We haven't seen any progress for the last two to three years on the same or the west market, which you were earlier on.
We definitely have plans. We have acquired new mines in Sukha Saktara, and work is now going on identifying proper project site. So yes, that is very much on the anvil.
Okay. So in.
Also, Gujarat, this environmental clearance is also going on. I think there is good progress, and maybe we will have some positive news from the government of Gujarat.
So on both of these.
In Central India, we have acquired new mines, and we are right now undertaking a study on the correct location for the new line, and on Gujarat, we are following up with the government on quick resolution on the environmental clearance issue.
So by when and what size capacity additions you're looking at in Gujarat? This is the current development.
I can't make a comment on that right now. It will all depend after we get the EC only, we'll make an announcement.
Okay. So three years after the EC is okay. But Post-EC, how much time it would take? You understand the EC is not in your hand by when it can come through, but whatever is within the company's control, at least you can guide on that.
I've not understood your question. Post-EC normally takes anywhere between 26 to 30 months to build a project.
Right. Okay. And you have not finalized on the CapEx size?
No, not as yet.
Okay. And secondly, you mentioned there's a central market you're expecting more competition to intensify. So could you first elaborate what is the price improvement that we have seen in Q1 versus Q4, and what is the impact you're looking at at company level, or what are the cost levers you're looking to mitigate the impact?
No, we are currently running at a net sales realization which is about INR 100 up from the average of Q1.
Okay.
Okay. But what will be the impact of these expansions? That's crystal ball gazing. I would not like to make a comment on that. It will all depend on how quickly the competition decides to ramp up and how is the demand, how is the demand-supply situation, fundamentally how is the demand driven by government policies and the rural demand, etc. So hazarding a guess on what will be the impact on pricing in the market is not something that we are in a position to do.
Okay, and any thoughts on the volume growth for FY26?
When you say cement volume growth?
Your company's sales volume growth for FY26, what sort of number you are looking at?
We are certainly looking at because we are almost sold out in the sense that our capacity utilization is running around 85%-86% already. Till the time we have additional, what do you call, clinker capacity, I would say around 6%-7% is definitely what we are targeting as a growth in line with the cement, with the GDP growth and overall cement growth in India.
Because Rajesh, you know we confirmed that our additional cement of around ₹2 lakh tons, that is going to come in the correct fiscal year.
That will get absorbed.
That will get absorbed around 4%-5% of our existing volume. So we expect that we will be able to sell out that cement in the market.
But the guidance would be anywhere between 6%-7%.
Great. Okay. Sir, I'll come back and see. Thank you. All the best.
Thank you.
Thank you. The next question, before we take the next question, a reminder to all the participants that you may please press star and one to ask questions. The next question is from the line of Shravan Shah from Dolat Capital. Please go ahead.
Yes, sir. So just continuing the previous question, sir, you mentioned that you have acquired a mine in Central India. So is it in MP or UP?
It's in MP.
Okay. So in terms of giving a preference in terms of the expansion, will it be a Gujarat first or the Central first?
Both will happen concurrently. Gujarat is dependent on the EC that we are still awaiting from the government.
Okay. But do we see that the EC can come in next six months? That's the likely scenario?
It's completely speculation. We will not be able to comment on this because it's on the government. We are doing our best. We are following up hard, but unfortunately, things in the government department in India take their own sweet time.
Okay, and for Central India also, if we want to go ahead with the expansion, any rough idea? Will it be a kind of a one million ton, two million, or it can be how much size one can look at in terms of the expansion?
Again, we have not finalized the project. Right now, we are looking at an ideal project site. That site has to be ideally placed for good access to railways, etc., evacuation. But any modern clinker plant could be anywhere between 2-3.5 million tons. But right now, I would not be able to hazard an exact number. It will all depend on the location and the kind of land that we can get. But we have a plan. There is no problem.
Yeah. But this is the Central. If, let's say, we have to actually start and broadly, if somebody wants to look at in terms of when it can start, at least one can say that minimum three years it will take to start the actual production in terms of the cement.
Yes. Yes. That's right.
Okay. Okay. Got it. And sir, you mentioned that the INR 100 realization is increased versus March exit or a fourth quarter average?
Right now, we are running at a price which is up by INR 100 over the average of first quarter.
Okay. Okay. Got it. And lead distance for fourth quarter and for FY25 and maybe possible for FY24 is how much?
I'll have to have a look at that number. Just hold on. You have the number? How much is it? Tell me.
367 for quarter four.
Okay.
For the full year, INR 362. INR 362.
For quarter four, it was INR 367, and for the full year, it was INR 362.
Okay.
There is no major change in our lead distance. Overall, we are working in the same geography of the Central India.
Okay. Okay. And in terms of the kcal cost for fourth quarter, what was the kcal cost? And possibly for FY24 and FY25, what was the average kcal cost?
It is actually kcal cost, it is around INR 1.75 per kcal in this year. And this is also more or less similar to the full year because petcoke price is starting with the higher than it reduces. Now it is again further hardening. So our fuel cost, if you see the entire year, slightly better than the financial year 24, but it is more or less steady.
Okay. So for full year, FY25, it is 1.75, and even for fourth quarter, FY25 also, it is the similar 1.75.
Yeah.
Okay. In terms of the green share, if you can, I understand we have given the individual plant level, but in terms of the overall share perspective, if you look at fourth quarter and FY25, what was the green share and how much now one can look at this green share can go up?
We have given here is the non-grid power, which is full year, it is 45%, and for the fourth quarter, it was slightly higher. It was 46%, but when we talk about the green power, fourth quarter, it was 38%, so we purchase a little bit power from the open market. So that's why in the presentation, you find that there is the one data for the green power and the data for the non-grid power.
But when we say it is a non-grid, does that mean the entire 55 non-grid 45, so this entire is a green or something? We also have some TPP plant, thermal power plant.
45% out of that, it includes the green power and the power purchased from the third party open market. But the pure green power is 38% out of 45%.
Okay. And lastly, two things. CapEx for FY26, how much are we looking at? And also on the employee cost, which has significantly increased, 32 odd crore was there in third quarter, and the fourth quarter was 48 odd crore. So how one can look at from this quarterly run rate? Is this the sustainable run rate that one can look at?
No, no. That's okay.
On the CapEx side, actually, annual CapEx for the financial year 2026, we estimated around INR 60 crore, which includes a little bit on account of debottlenecking because most of the debottlenecking CapEx already we did by March 2025. Part amount will come in the financial year 2026. The rest is the replacement CapEx. And this amount is more or less sustained if you compare our CapEx total amount incurred during the last two to three years. Your specific question on the staff cost? Year on year, it is more or less the same line. The amount increase in the financial year 2025 last quarter is on account of increment when we compare with the March 2024 quarter. But there is the increase as compared to December because two reasons are there. One is the actual valuation.
When we do the annual actual valuation end of the fiscal year, depending on the discount rate, the gratuity, and the leave encashment, the accounting amount, accrued amount increases. So earlier, the discount rate was higher. Now it is reduced because of the G-Sec returns reduce. And second thing is that in the March quarter, then when we calculate the variable pay amount, then the amount is slightly higher than the December quarter.
So to summarize, the full year number for employee cost is INR 157 crore. So is it fair to assume that on a yearly basis for FY26, one can see a INR 170 crore kind of a number?
It is slightly lower than that.
Okay. Okay. Got it, sir. Thank you and all the best.
Thank you. You may press star and one to ask question. The next question is from the line of Alok Shah from SRE PMS. Please go ahead.
Hello, Sir. I'm available?
Yes, sir. Please proceed.
Yeah. So my first question is that can you quantify that each and every MW of green power will increase? That will result in increasing the EBITDA % going forward. And second question is that any plans for FY26 for increasing the green power energies? Thank you.
So, green power, you know that, okay, it is the we have the cost arbitrage when we compare with our grid power because whatever the green power we are purchasing, that we are replacing with our grid power. And generally, it is 25% cheaper than the grid power. And you are right that with the every increase in the green power, our EBITDA directly will benefit and EBITDA will increase. You have also asked about the second question, how much green power you are going to make in the financial year 2026. So, we expect that maybe around 2%-3% increase in 2026 because we have recently entered into this 5 and a half MW for the green power, and that benefit will come in the financial year 2026.
Yes, sir. Yes, sir. Sir, can you quantify the EBITDA % that can increase per MW?
We'll see that, okay, once we restart receiving the additional power, but we can confirm that it will improve the EBITDA %.
Okay, sir. Okay. Thank you. Thank you a lot, sir.
Thank you. You may please press star and one to ask questions. The next question is from the line of Rajesh Ravi from HDFC Securities. Please go ahead.
Hi, sir. Follow-up question. Could you share what was the clinker production for full year FY25 and FY24?
Do you want to know the total quantity?
24, 25?
Yes, yes.
So our total clinker in the 2025 fiscal year is 2.7 million tons.
Okay. And last year?
Last year, 2024, it was three million tons.
Sorry, 2 point?
2.7 in the current financial year ending financial year 2025, and last year, it was 3.0 million tons.
3.0 million. And sir, when you mentioned your per kcal cost was INR 1.75, and this was flat throughout the year, Q4 as well as FY25, I'm just wondering because for all players, we have seen this cost to be trending lower versus given to Q4. Most players are now reporting close to INR 1.5. So do we have a different type of fuel mix whereby the cost was flattened throughout the year and also on the higher side?
No, that is not the reason. Actually, we use three types of the fuel, petcoke, coal, and the alternative fuel. So petcoke prices started with the higher prices in the fiscal year, then start reducing, and thereafter, end of the year, it starts again hardening in the market. So that's why our last quarter, the fuel was slightly higher. And the coal depends upon whether we receive from the collieries or whether we buy from the open market. Start of the year, we purchase the coal from the open market as well. And thereafter, last quarter, we receive some amount of the coal. And that is applicable for most of the Central India players that they receive the coal under the fuel supply agreement from the collieries. So the March quarter was more or less similar to the full year.
But yes, in the December quarter and in the September quarter, fuel prices, our fuel prices also were lower.
This is the last sentence. In December and September quarter year, fuel cost where?
That will check and let you know.
Okay, and also, if you could share, what was the fuel mix for the quarter and year? petcoke, domestic, linkage coal, or?
Our alternative fuel mix is around 8%. The rest is petcoke and coal, and generally, we consume petcoke around 60%-70%, and the remaining is our coal.
When you say collieries, everything is linkage or it's an auction coal, sir, for you? The 20%-30% mix?
It is auction coal.
Auction, auction.
But under the fuel supply agreement, long-term fuel supply agreement.
Okay. Okay. Understood, sir. Yeah. That's all from my end. Thank you.
Thank you. Please press star and one to ask questions. The next question is from the line of Alok Shah from SRE PMS. Please go ahead.
Hello, sir. Sir, just a follow-up question on green power. So I just want to understand that generally, cement companies do CapEx in the green power, and we are doing power purchase agreements. So any reason behind that?
We are talking the same thing. The power purchase agreement is the green power.
What is the question? I didn't understand. Power purchase agreement is Green Power. So you have two choices. You can either set up your own plant or you can participate in equity and purchase. So my question is that we are purchasing rather than investing in Green Power. So any reason behind that? Because.
I think, Alok, just to maybe clarify, we are investing under the long-term power purchase agreement, and we get the green power. It is not like that we are purchasing power from the open market, which is not the green. So we are talking about this power purchase agreement. It is the green power only.
Alok, okay.
You're trying to say full CapEx. So you can say on a little bit of asset-like model, which gives us a better capital allocation, number one, and a lot of flexibilities when you are in a larger, let's say, special purpose vehicle to kind of increase your offtakes and mitigate your risks as well, and a lot of banking possibilities which comes through when you are doing a PPA route versus your own CapEx, on-site CapEx, if you're referring to that. Okay. Okay. Understood. Understood, sir. Thanks. Thanks, Alok.
Participants, you may please press star and one to ask questions. The next question is from the line of Shravan Shah from Dolat Capital. Please go ahead.
Yeah. Sir, for us, entire FY25, in terms of the thermal energy, that is a kcal per kg of clinker, is it how much? 740 kcal?
Hello. What is the number?
It will be less than that.
Any idea where it could be? 720, 730?
726.
Okay. And in terms of the power requirement per ton of cement, would be how much? 66, 68?
Total power consumption per ton of cement?
Yeah. Yeah. So per ton, roughly, the range is from 62 - 72. So just wanted for us.
72.6.
Only for PPC.
It will be 19%. 72.6 is the power consumption per ton of cement.
Okay. And for us, in terms of the grid power cost, would be of INR 6 currently?
Slightly high. Grid power now, it is around INR 7.
Okay. And then the PPA that we are doing would be closer to INR 4 only?
Yeah. We can say total landed cost is around INR 4.5.
INR 4.5. Sir, we used to be 100% blended cement, but this year, we are at 98%. So, have we started OPC cement now again?
Yes, we have. Not again. We have started for the first time. But yes, we have.
Yeah. So any specific reason to start the OPC?
Yes, because there are a lot of road projects which are happening around our plants, and we wanted to participate in that.
Will this 2% can inject to 5%-10%?
I would not like to have to guess on that right now. OPC is not our core strategy. That's all I can comment.
Okay. Okay.
It's a purely situational play.
Okay. Okay. Got it, sir. Thank you, sir.
Thank you.
Thank you. You may press star and one to ask questions. The next question is from the line of Harsh Mittal from Emkay Global. Please go ahead.
Yeah. Thank you. Thank you for taking my question. Good evening, Mr. Management. Sir, my first question is, how has been the demand faring in the first two months of quarter one compared to the quarter four, given that there has been a lot of the monsoon has been unfair in many parts of India? Can you give some color?
Your voice was not clear. Can you repeat your question once again, please?
Is it clear now?
Yes, sir. Please use your handset, please.
Yeah, it's a little clearer. Yeah, you can tell me now.
Is it clear now?
Yes.
Sir, my question being that, how has been the demand faring in quarter one FY26 in the first two months of the quarter one, given that many of the regions in India have been facing a lot of heavy rainfall? So can you give some color on that demand scenario?
The demand is still muted.
Okay.
The demand as compared to March is muted because there was a season for marriages, etc., and labor was not available, and there were unseasonal rains. So I wouldn't say the demand is extremely bad, but it's muted.
Yeah. So you see, so is it lower than what it was previous quarter, same quarter previous year, or higher than that?
I would say at the same level. April was lower. May would be at the same level than last year.
Okay. And second question, sir, what is the current difference between the trade and non-trade prices in Central India, if you can throw some light on that?
No, I can't give you a number because that varies from place to place. Somewhere, it could be as low as INR 15 a bag, and other places, it could be as high as INR 60-INR 70 a bag. It depends on which location, and since I do not know what is the footprint of my competitors, non-trade sales, it would be very, very unfair for me to hazard a number as a guess, but as a guideline, I can tell you it differs. It varies from 15 to 60, 70 bucks per bag.
Okay. And the last question, can you give me the current clinker and cement capacity for Heidelberg?
Our Clinker capacity at this moment is 3.1 million tons, and cement capacity is 6.25.
And the clinker I could not hear, sir.
3.1 million tons, which is now going to be expanded, and the project will be over in June.
Thank you, sir. These were my questions. Thank you.
Thank you. Ladies and gentlemen, this will be the final reminder, and no further reminders will be given. That you may please press star and one to ask questions. The next question is from the line of Dheeraj Davey from Samvad Financial Services LLP. Please go ahead.
Yeah. Thanks a lot. Can you hear me?
Yes, I can.
Yeah. So my question is, in the past, there was a discussion that the Heidelberg group wanted to add up a Zuari and also trying to kind of restructure the companies, various companies which they have in India. Any update you would like to give to us about what is your thought process now and where we stand?
No, we are still evaluating. Though it's not part of this particular call and it's not related to our listed entity in India, I am happy to announce that the group has invested in a two-million-ton clinker expansion at Gulbarga, and that project is well underway right now. We are considering various options of how to do the structuring. I mean, that will involve a potential merger of that company with either Zuari or with Heidelberg, or it could be a three-way merger. We are still working it out. It's only we'll have to see how that we haven't decided. It's a timing issue. Eventually, we will have to do it. With this expansion, the entire process will get accelerated.
Okay. So any timing kind of a year or so, or it can take longer than that?
I think by the time it is over, it should be at least 24 months from now. But the process is already on, so.
Thanks a lot. Appreciate it. And the second part is, this time, our dividend payout has already been higher than kind of full-year EPS. So shall we assume I mean, any idea on what is going to be your dividend payout policy when we are looking at expansion? We have sufficient liquidity, but any thought on it?
I didn't understand your question. Can you repeat your question once again?
The dividend payout of Rs 7 basically is higher than our EPS. So its payout is almost more than 100%. So any thought should we expect same kind of dividend distribution, or we should see decline given that we are going for expansion end of it?
No, no. The dividend payout is a decision which is taken before the board meeting at the relevant time. It also depends on what is the kind of earning, what is the cash that you need to retain for expansion projects, and what you can pay out. We can't comment on what is going to be the dividend payout in the future. But if you look at it, roughly, we have been navigating between 70%-90% levels over the last three to four years. So you can expect that it will remain in the same range until there is a very, very significant requirement of cash for expansions.
Thanks a lot for answering both the questions. Thanks a lot. Wish you all the best.
Thank you.
Thank you. Ladies and gentlemen, we'll be taking last two questions, which is from the line of Shravan Shah from Dolat Capital. Please go ahead.
Yeah. Sir, the current AFR, you do mention that it could have been higher because of the clinker expansion. How one can look at where we can increase this AFR in, let's say, FY26, 27?
I can't give you a number right now, but the strategy of the company is very definitely centered around AFR. A very large portion of our CapEx allocation goes behind increasing alternative fuels and specifically increasing usage of biomass because that directly impacts the carbon per ton of cement. But if I were to hazard a guess, maybe this year, we are going to finish with around 1.5%-2% higher numbers than what we have done, that 8%. So we should be ending this year at about 10%.
Got it. And in terms of the premiums, sir, that currently we have 43% where we want to increase, and also in terms of the price gap between the premium cement and the rest of the products, for us, is how much?
INR 40-INR 50 a bag.
Okay, and this 43% premium, sir, can go how much?
Can go up to 47% this year.
Okay. Just a rough idea, I understand you mentioned that we do not want to specify in terms of how much expansion we want to do in terms of the size. But any broad idea in terms of the obviously, this would need a decent CapEx, whatever we will be doing, two to five million tons, whatever expansion. So in terms of the currently that we have the net cash, obviously, most likely to become a net debt company. So any idea where we can have an upper limit in terms of the net debt to EBITDA or any other parameter?
No, no. We don't look at it like that. It will depend on the size of the project that we announce, and I think I already answered the question. You could expect anywhere between a 2.5-3 million ton kind of a project, and then you can calculate what is the cash required, but we don't have a problem with cash at all. We are virtually a debt-free company, so we have no issues with funding the project.
You also recall that in the past, when we did the expansion, that time also, we were at the net cash balance, and we borrowed money for the expansion, and then we paid it. Same situation, same thing we can follow. Money should not be any issue. We are carrying at this moment INR 400-500 crore bank balance. Once we announce the expansion, then accordingly, that money will be utilized, and further equivalent also will go to the project. The remaining amount, we can borrow from the market. We can borrow from the group.
Yeah. No. So why I was wondering is because, as we mentioned, that we can simultaneously do the central and the Gujarat one. So put together, it could be a 4-5 million ton kind of expansion. So roughly, if I put a number close to INR 600-700 crore, so kind of a INR 2,500-odd crore kind of a number would be their CapEx. So that's why I was trying to understand.
No, both projects are very different. It will be obviously phased out in terms of timing because in Gujarat, you also have the evacuation is very different. It's not road. It's primarily by sea. So we will have to see how we schedule both the projects. But as Anil said, source of funds is not a problem. We can have investments from the group. We can raise debt. We have a very good balance sheet, so don't foresee any problems with that at all.
Sir, this CapEx required during next three to four years.
Yeah. So it will be phased out also. It's not at the same time.
Okay. Got it, sir. Thank you, sir.
Thank you.
Thank you. This will be the last question for today, which is from the line of Rajesh Ravi from HDFC Securities. Please go ahead.
Hi, sir. Just one strategic question. We were among the pioneers in terms of margins or other one of the leaders in terms of our margin profile. When we go into FY 2021, more than INR 1,000. Now, we have gradually this is almost half to INR 500 odd in FY 2025, a decade low. So what has actually gone wrong? You are already very decent on your green power, on your cost metrics. You have 40% plus of your sales coming in from premium cement. So where is this margin getting a significant beating? I understand this year there has been a like-to-like pressure on the because of the realization. But even on a small base, lower base, the margin has come off. So any larger picture thought and how we are looking to correct this?
It is structural. If you look at it, there are two big impacts that have happened in the market. One is when you look at the two biggest cement players in the market, the premiums over us have come down from INR 30 to INR 5, INR 10 at places. And in certain places, they are actually equal to or even lower than us. Okay? So there is a huge pricing pressure in the market, and the pricing has got diluted. Secondly, when you compare, it is very difficult to compare us with other players because every player, virtually when you speak of, it has the advantage of a geographical arbitrage across India. We do not have that. So it is not a like-for-like comparison.
And the third reason that I can speak of is when you again compare, most of the new plants, when they set up the plants, they have a huge amount of government SOPs. We have not announced any new projects as of now. So when you look at anywhere between INR 500 to INR 600 SOP coming in from the government on per ton on new investments, which is capital-linked, that definitely helps to bolster the EBITDA at a company level, which is not the case in our case. So I would just leave your question with these three answers.
Maybe, Rajesh, I can add one thing. When you see the results of the old cement companies during the fiscal year 2005, let's come back to 2024. The reduction in the EBITDA per ton is more or less in the same range.
Same range.
All cement companies. Obviously, everybody knows that, okay. Prices have reduced because of the intensified competition.
Yes. If you take the four quarters of 2024 calendar year and you take our EBITDA per ton and compare it with the biggest companies of India, and I'm not talking about UltraTech, you will be pleasantly surprised. You shall be very pleasantly surprised.
Okay. Sure. So I will do that evaluation also.
Yeah. Right.
Yeah. Great, sir. Thanks for taking my question.
Thank you. Thank you very much. I think with that, we conclude the call and all the best.
Yes. Ladies and gentlemen, I would now request Vaibhav Agarwal to give his closing comments. Thank you, and over to you, sir.
Yeah. Sir, before I conclude, I also had one question, if I may. Sir, it's an extension of what Rajesh actually just asked you. So, sir, if I look at our realization picture.
I'm sorry to interrupt you. The management has already disconnected.
Okay. They've dropped it. Okay. No problem. Thank you. I'll connect them separately. No problem. Thank you. I think they're out of time. Okay. No problem. Thanks to you on behalf of Phillip Capital. You may conclude the call. Thanks very much, everyone, for joining the call. Thank you. Thank you.
Thank you very much. Ladies and gentlemen, on behalf of PhillipCapital India Private Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.