Ladies and gentlemen, good day and welcome to the Q2 FY 2026 earnings conference call of Birla Corporation, hosted by HDFC Securities 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 call, please signal an operator by pressing star then zero on your touch-tone phone. I now hand the conference over to Mr. Rajesh Kumar Ravi from HDFC Securities. Thank you, and over to you, sir.
Hi. Good afternoon, everyone. On behalf of HDFC Securities, we welcome all of you to the Q2 and H1 FY 2026 earnings call of Birla Corporation Limited. From the management side, we have Mr. Sandip Ghose, MD and CEO, Mr. Aditya Saraogi, Group CFO, and other senior members of the team. I now hand over the call to the management for the opening remarks, after which the moderator will open the floor for Q&A. Over to you, Sandip, sir.
Very good afternoon, everybody, and thank you for joining our Q2 call. This happens to be, I think, our three running year, or shall we say, 12 consecutive quarters of calls since we started doing it in January 2023. We have been encouraged by the level of response and interest which we have found from the analyst and investor community. That gives us, as management, a lot of confidence in the strategy which we are following and the appreciation of the communication which is happening. It is a two-way situation, gives us a lot of feedback. I think it probably reinforces our conviction as well as the confidence which we receive from talking to all of you. So thank you once more.
This quarter, as we know, we have been, I think, fairly consistent with the industry per se, though our scale is much smaller than some of the very large players. Despite that, I think we have stayed in line with the broad industry performance. This is despite a few headwinds. We, as you know, operate primarily in the central region. As some other companies have also stated in their communication, the prices in central region has remained the most subdued compared to other regions throughout this period and even subsequently as we move into the third quarter. That has been one headwind. Obviously, the heavy unseasonal rains in our key markets have been also a dampener. On our side, we had a setback at the end of last quarter itself in terms of a breakdown in our biggest units, that is Maihar.
We had an overhang of that into this quarter, for which we had to continue using the purchased clinker from what we had bought from outside. That carried on, and that gave us a dent in our profitability. Had it not been for that, we probably would have reported much better results than what we have. Though, it seems from all the comments we have seen so far, the market and analysts have been generally positive about what we have reported. We could have done slightly better than that too, had we not had this particular setback. Mukutban also, that area was affected by heavy rains during the period, which caused dislocations and dispatches. Our Mukutban, the volumes were probably lower than what we had been budgeting for.
That is a temporary aberration as markets open up, and we feel we should get back on track as per our original projections. So that's broadly an observation. You know all the trends. September, as we all know, the GST was a major disruptor, the GST changes. How it affected us, especially in the central region, apart from generally, and it's probably useful to point out, the biggest hit came in the non-trade sector, industrial sector. Mercifully or thankfully or really speaking as per our plan, our exposure in the non-trade is very limited. We don't even sell more than 15% of our volumes in the non-trade sector, so our exposure is very limited. Overall, that is where the biggest slide in prices happened. Obviously that also has its fallout and spillover into the trade segment as well, affecting both demand as well as prices.
The biggest, as I said, the slide happened in the non-trade sector for two reasons. A lot of companies there in our region, some of our peers, have the benefit of GST incentives they have because of their new facilities. Many of them took advantage of dispatching, making higher dispatches before the changeover of rates. Because even taking into account subsequent drop in prices, what they stood to gain in terms of incentives was pretty significant. As a result, A, there was a huge buildup of stocks in the non-trade pipeline as well as, therefore, post the changes, there was a very sharp drop in prices. Sharper. Therefore, actually, it became a double whammy. There were price slide in anticipation of the GST changes. There was a slide in the market.
Because of the factors I mentioned, there was an even bigger slide post the 22nd of September. Which actually has carried on to October. That's a different story. I'm underscoring that we were able to insulate ourselves to a large extent from this impact because of our consistent stated strategy to focus on the trade segment, that is the B2C segment, and also focus on blended cement. Third point is on premium product. Some of you have expressed surprise at the realization and profitability, but that's been the key driver of our profitability despite some of these headwinds as I mentioned, or negative trends in the market.
Here, our strategy has been vindicated, and this has been vindicated at large because, as I have been repeating, though we had moved out of the incentive period in U.P. last year itself, the new entrants who came in with newer plants and incentive, they have focused primarily on non-trade and OPC. Having been unable to penetrate much into the trade segment, the value-added segment, and the value-added trade segment, the premium segment. Therefore, their impact has remained a great deal in this OPC and non-trade segment over there. We have managed to keep our head above the water, despite any sort of ups and downs and turmoil in the market. That has been the story overall. Last quarter, though we have a very small presence in Eastern India, our Durgapur plant has done despite that well.
Rajasthan, we have managed to regain our volumes in the trade segment. That has been a very positive development over there. We had in the previous year, again, led largely by the low prices, which made our products unviable in certain markets. We had lost market share in the previous year. In the overall context in volumes, we have been able to recover much of that. Maharashtra, we remain as per strategy, barring these few aberrations we talked of, but we are led, really speaking, by what is happening in the market and the overall prices or demand situation. That is what affects. Otherwise, we are not operating with any lag or handicap vis-à-vis either the old established player or any other newer entrants. That is my overall summary.
I will hand over to Mr. Saraogi, our CFO, and my colleague, Rajat Prusty, who is the CMO&P, and Mr. Kalidas Pramanik , who is our Sales and Marketing Head, to answer any other questions. Aditya, would you like to go in or we will open the-
No, I think you can go.
In the interest of time, we would open this out for now the questions, and we can take it, the question, answer, and any additional comments simultaneously.
Sure. Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask questions may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Also, before we begin, a request to participants to please limit your questions to two per participant. Should you have follow-up questions, we request you to rejoin the queue. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from Shravan Shah, from Dolat Capital. Please go ahead.
Hi. Thank you, sir. Continuing to your opening remarks, two, three points just wanted to put together. The clinker purchase in the second quarter and your opening commentary, you are saying the prices are under pressure till now. If you can help us in terms of quantify. Currently, the prices till now versus the Q2 average for us would be how much lower? And also possible region-wise, if you can break it up, would be better. And given that the prices are under pressure, how do we see now the profitability, which is around INR 700+ crores in the first half? And what kind of a cost saving we have? In the second half, how one can look at the profitability inching up?
You have combined many questions into one, Shravan. We will have to sort of unbundle them and talk to you. First of all, we said about what you asked about the clinker purchase. It has-
Can we have the specific number?
We can't share the specific numbers there, but I think you can make a rough guess. It's not very large, but it would have-
INR 20 crores-INR 25 crores.
Ha.
INR 20 crores-INR 25 crores.
Yeah, kind of number is what we have had for that setback. That is all water under the bridge now, behind us. We are now very comfortable on clinker stocks, and our plants are operating full steam. We have no such contingency to worry about throughout. The rest of it, I think all of you have been tracking prices. We have been in line with the price scenario. As we said in our net realization or in terms of the bottom line, we have tried to improve by having a higher component of our value-added product, the premium product, et cetera, which the numbers we have already shared in our press release.
As regard H2, normally H2 is better than H1 because in H1 we have got this lean season of monsoon period. Definitely in this year also, we do not expect any exception. We expect the second half to be better than the first half of the year.
The demand scenario is, again, we are not saying anything more than what the market has said. Prices, as we see, it depends. We are already getting close to the second half of November. But we think there should be some price improvement beginning to happen from the second half. But really, if the demand picks up, we will see the major correction coming in the last quarter.
Okay. Got it. Just wanted more clarity in terms of the number. Till now, if the prices do not improve, will it on average basis, though the premium set is helping us in a decent way, but on a ballpark basis, one can assume kind of INR 100- odd kind of impact if the prices do not improve from here on for the third quarter. That is the way one can broadly look at?
We won't commit on numbers, Shravan. You've been with us for a long time. Prices, really speaking, as we said, I think it will have to be led by the non-trade segment. Without that recovery, we are not really major players. We are looking up to what the market does, and then accordingly, we think sympathetically one will change. Nobody is going to take prices aggressively up now than what the market naturally can take in.
Got it. Lastly, sir, couple of data points, lead distance for this quarter, CapEx cost, and the CapEx for full- year would be how much?
Lead distance for this quarter is 340 k. The kcal cost is INR 1.48 and the current CapEx for the entire year, we expect to be around INR 800 crores.
Okay, so it is lower versus what we were looking at, INR 1,000 crore-INR 1,100- odd crore.
Margin will be right.
Yeah. Got it, sir. I have a question. We will come back in queue. Thank you and all the best.
Thank you. The next question is from Manish Choudhary from PhillipCapital India. Please go ahead. Mr. Manish Choudhary, you may go ahead with the question. Mr. Manish Choudhary from PhillipCapital.
Hello. Can you hear me?
Yes, please go ahead.
Actually, I have not pressed anything to come into the queue. I think there is a mistake.
Okay, sure. We will move to the next question.
Manish hearing your voice, at least.
We move to the next question. The next question is from Saket Kapoor from Kapoor & Co. Please go ahead.
[Non-English content], sir, and thank you for this opportunity. Sir, firstly, my question is to Saraogi ji. In the cash flow, we have mentioned about direct taxes paid to the tune of INR 91 crore. So this is the net cash outflow on account of this advance tax payment as on September, or any other component is also embedded here?
There is no other component. This is the routine payment of taxes.
Okay. That translates into 45% of what the total tax liability for the year. That is how it is worked out?
I can comment on that after the call.
Okay, sir. Sir, for the EBITDA pattern for this quarter, I think so we were in the range of INR 712 per tonne, and for the first half, it was at INR 714 per tonne. Taking into account the current environment and the opening commentary by Sandip sir, what should we be factoring in terms of the EBITDA trajectory going ahead?
We also commented on that, Saket, that we don't predict especially numbers.
We expect second half to be better than the first half, but beyond that, we can't just assess it now. No other cement company also does, so we also cannot venture to guess.
There are variables in the market just now, which all of us are aware of. We don't want to give you any indication or commitment which doesn't have a strong basis.
Right, sir. Sir, on the efficiency front, if you could just outline to us the backward integration in terms of the captive coal output that we are anticipating from the two mines for this year. How is the ramp-up going ahead?
Rajat here. Yes, already the Sial Ghoghri is going on, and for the Vikram, already the activities are on. We expect that during the end of this financial year, we'll start some activity and maybe you can touch the coal production also.
Meaning from next financial year, obviously, we'll start getting the production from Vikram coal mine.
Okay. Sir, in your commentary, just to conclude, you had mentioned about the management expects, I quote, "Cement demand to revive in the three months ending the December, led by government CapEx, translating into a YoY volume growth of 4%-5%." This is what we can work out our number in terms of what you are anticipating. We are on track even after taking into account how October has been. We have factored in the month of October with this comment?
Yes. Saket, we made a declaration on Friday, so obviously we have taken that into account. There should not be any change. It is as recent as that.
Right, sir. And sir, just a very small comment. As in your opening remarks, Sandip sir, you have very well articulated to us that what the communication means for investing community in creating the awareness for the company as a whole. Through this channel, I would also request you to address our Chairman also about the group companies and the valuation that currently are there for the market to understand, to open up the same medium for other companies also, so that the insights and awareness can be created through this platform, so that the benefits flow to the other group companies also. My humble submission, if that could be possible.
They are, that way, independent companies and independent Board of Directors, and I am aware you go and attend the AGMs of all other companies as well. I am sure you have a forum and opportunity to voice your expectations.
Correct, sir. I will join the queue for a jute question. If time permits, may I ask that, or shall I reverse?
Go ahead.
Yes, sir. Thank you.
Permitting, not permitting, you will ask. I thought you also had pressed the button by mistake, but I will go through.
Sir, you are always ready with your one-liner, sir. Congratulations on that. Sir, for the jute part of the story, sir, if you could just allude to us what is the thought process of the management currently with the type of scaling up of this segment, since it is a legacy and we were earlier known as Birla Jute. Taking into account the CapEx done by other people, I can show an announcement came from the Kanoria Group also today in the Business Daily of upping their capacity by a meaningful 30%- 40%. So what have we outlined for jute as a sector in terms of volume, capacity growth, and profitability also? Because the margins are very meager when we look at what we have posted.
Saket, first of all, we still remain Birla Jute, and we are very proud of our heritage, because as I keep repeating, we are the oldest Indian jute manufacturers, and we remain probably the only major company which the ownership has not changed hands right from the inception. Whereas many of the foreign companies which were there, the foreign owners have left the place, and thereafter also it has changed several hands. Many of them, there are very few who have remained consistent. So we have an abiding commitment to this business. It is close to our heart, and just like in our other business, also, we have done things which is right for the business. That is what we will try to do. But the change which has happened is now jute has been mainstreamed in the company. It is no longer like a satellite unit.
It is fully engaged in the jute operation. We took a step, this since you know this, which is very unconventional in the industry. For the first time, we have a head of the business who has moved from the main business to jute. People usually take career jute people from either here or there. We have taken our person. The intent behind it is to bring the same synergies and the efficiencies, and discipline which we have in our main business. Focus not only on improving technical efficiencies, but also start focusing on R&D. So our first intention is to grow through value addition. By value addition, I do not mean just value-added product, but creating more value and profitability. There is a lot we believe can be done in jute.
So we are not really concerned about just adding a few machines and hands and opportunistically increasing the looms which are there and thereby get additional quota and do that. We want to do what is right long-term for the business. We are already, as you have seen, we are beginning to see results. Just like in cement, we are stuck consistent with the strategy. We hope that we will be able to move forward in the same way in jute as well. But it is a bit early in the day. Just like in cement, we have taken two, three years to build your confidence. We hope that in a few quarters down the line, you will see the difference.
Right, sir. Thank you. I am joining the queue, sir. Thank you.
Again?
Yes, sir. Thank you.
Thank you. Next question is from Anup Lal from Eureka Stock & Share Broking Services. Please go ahead.
Thanks for giving me the opportunity. Is it likely to know that currently your premium brand contribution is around 60% of grid sales. So what is the target mix for FY 2026 or Hello?
Hi. Sorry.
Yeah.
We will remain in the same region, Anup. We do not want to vacate the territory. We have a strong presence on both segments. Our brands are equally strong. Our Samrat and Chetak is very strong in the value segment, whereas Perfect Plus has been making rapid strides in consolidating on the premium segment. You know we do not have right now too much of headroom and capacity. This is how we are going to operate. We are committed to both the segments, and that fits us strategically. We consider it to be a strategic advantage because compared to whether our bigger peers or larger peers or people who are at the same level or smaller, the only company who almost straddles between the two segments almost equally.
Unlike, as I said, some of the bigger peers are present primarily only on the top segment of the A and premium category, whereas people who are on the other side, they are trying to inch up some of their thing to get a level of premium mix in their volume, but their premium is actually far lower than at the level where we are operating in the A category. They are doing that, whereas we have presence on both sides, and we also have a presence now in what I would call the upper value segment, because when we are looking at Samrat, we have a product called Samrat Advanced, which is actually at a level compared to what others are calling premium from the B category.
When we are Samrat Advanced is at par with them, whereas Perfect Plus is clearly, as some of you have commented in your assessment, we are clearly in line with the top A category players. We would like to operate that way. We consider it to be, as I said, a competitive advantage, and this is how we wish to stay there. We are not going to abdicate or abandon one segment for the sake of others. We see merit long-term in being present in both, and that is how we are going to. Because we see not only merit in both, we feel there is a market on both ends. Whether you look at segmented geographically or segmented market-wise. That is part of our strategy. So far we have done well, we believe, and we will continue on that.
Sir, my next question is regarding the increase of share of renewable energy to 32% in the second half. Could you quantify the cost savings?
We cannot quantify the cost savings as such, but as I said, this is in line with the industry.
Okay. Thank you.
When we talk, only thing is what I would say, our renewable energy is essentially a mix of solar. We are getting into hybrid and all of that, and that is our higher level. We are not so high on alternate fuel, et cetera. You will find it in these two categories. There, the benefit, as Mr. Saraogi said, is in line with what other industries are getting, and also varying from state to state. It is fairly easy to, I think, extrapolate.
Okay, thank you.
Thank you. The next question is from Uttam Kumar Srimal from Axis Securities. Please go ahead.
For the opportunity, and congratulations on good set of numbers. Sir, my question pertains to your capacity expansion plan. Can you set a timeline for Kundanganj unit? Hello.
Sorry.
We are expecting Kundanganj to commence by the end of third quarter, beginning of fourth quarter.
Okay. And sir, on RMC business, you can give some timeline, how RMC business is going on currently and how much plant you are planning to open in RMC business?
RMC business, as we said, we are progressing steadily and slowly. We are in no rush to expand and then burn our hands and feet and all that, which many people have done. The profitability component there is lower, so we are taking wherever there is a clear synergy with our brands. We are trying to see, and we would like to progress in a very not only steady but sure-footed way. We are in no great anxiety to expand the volume and again share. A lot of people are doing that because they have a lot of spare cement and they are doing it as a captive source. We do not have that as any compulsion. Our own cement, we are selling well. This we are trying to do only to expand our footprint for up.
We see a lot of synergy in our brand because we are operating RMC under the Perfect Plus umbrella. So, so far the markets where we have entered have got clear presence of that. We are present in Lucknow, which is a strong market for us in Perfect Plus. We have moved up to Ayodhya area, which is again, a strong market because we want to get benefit of our branding. With RMC, as you know, is at the base level. If you are looking at the vanilla RMC, it is a very low cost, low margin kind of an operation. People do not make much money. And you start making money only if you are providing value-added RMC, which is the high tech. Or if there is a brand value people are willing to pay for your product.
You really cannot compete with the small players and everybody just giving them vanilla product. So that is the route we are taking, and therefore, we want to move forward systematically, making a combination of the market opportunity plus our brand synergy there. So if there is an area where our brand is not present, just for the sake of opening a unit, we will not go. We know some players who have got plants all over the country where they do not have any brand presence or even manufacturing presence. We are not going that route. We are going clearly expanding where we are strong.
Okay. And sir, last one. What is current net debt?
About INR 2,450 crores.
Okay, sir. That is all from my side and all the best to you.
Thank you.
Thank you. The next question is from Rajesh Kumar Ravi from HDFC Securities. Please go ahead.
Hi, sir. Good afternoon. My first question pertains to if you could share what was the incentive accrued in Q2, and also how was the ramp-up happening in Mukutban? You shared the Q1 volumes, what was that in Q2?
The incentive in Q2 was about INR 18 crores.
Okay.
And second-
Mukutban volumes.
Mukutban volume was 6 lakh tonnes in this quarter. There is a YoY growth of 20%.
20%, great. Sir, this GST, how will this change post the GST rate cut from 28% to 18% quarterly accumulation?
For us incentive?
Yeah. Incentive approval which you will be making.
Largely, we are not expecting any major change. In some states like Rajasthan and all, it might come down, but that is just about maybe 10,000 tonnes.
Rajesh, there are two components to this, as you know.
That's right.
Some places there is a GST Cap.
Yeah
in terms of the absolute.
Okay.
If in the earlier scenario, we were exceeding the cap, okay, what we could draw during the year. Now the rates have fallen, so the cap remains. So if in absolute terms, we can claim the GST, we claim that. Therefore,
there is no actual loss on that. Secondly, you might say it is a blessing in disguise or otherwise, since we did not have incentive in Uttar Pradesh since last year. Now our
clocks will start ticking with the new rates from day one. We will plan it accordingly. Whatever we invest now from Kundanganj Line 3, it will be incremental from what we have at the moment. As Mr. Saraogi has said, we are not anticipating any major, I think. Only place we are getting affected is Rajasthan because it is all linked to our sales in Rajasthan and within that
Incremental sale.
Huh?
Incremental sale.
Incremental sales
Incremental
and therefore, Rajasthan, but there our stakes are not very high.
Understood. Sir, on the expenses plan, you have lowered the CapEx outlook guidance from INR 1,200 crore to INR 800 crore. Could you just share what is your plan or what is your-
This is a sustainable CapEx, sustaining CapEx.
Okay.
This is not really our expansion plan.
If you look at the historical trend also, at the beginning of the year, the guidance we give, usually we end up spending lower than that.
I just wanted to understand this Maihar expansion. What is the progress on that and by when, how much capacity? What stage of the expansion we are in the central region beyond the Kundanganj?
Regarding that, we are maintaining our earlier guidance. You can take our earlier guidance. We are maintaining that guidance in terms of capacity expansion.
Next year, how much CapEx you are looking at, FY 2027?
We can't, at this stage, give you a year-wide CapEx. Maybe down the line we can share that one.
Sure, sir. Okay, sir. I'll check beyond that separately. Thank you.
Thank you. The next question is from Vipul Kumar Anupchand Shah from Sumangal Investments. Please go ahead.
Thanks for the opportunity. Most of my questions have been answered. I just have a question on some of our plants are efficiency-wise operating quite moderately. Is there any plan to upgrade them, and what will be the CapEx required? What will be the timeline? Which plants you are considering? Your broad comments will be welcome, sir.
I will let Mr. Prusty answer that, but I do not know where you are talking about are we operating lower than efficiency, because if you see our capacity utilization, I think we are operating in all our older plants at peak capacity or higher. Only it is in Mukutban, which is still in the process of reaching the peak capacity. We are below our nameplate capacity, but everywhere else, we pride ourselves in the efficiency what we are doing. Okay?
Yeah. Already rightly said by Ghose, we are operating in the efficiency point of thermal, electrical. Everywhere we are working and already they are very good numbers, and they are benchmark numbers in many of our plants, both in terms of grinding and thermal electrical power for the clinkering also. And capacity point of view, you have seen the results also. Already we are more than 90% we are operating. And the availability, reliability is really good. So we are continuously focusing there. Yes, one plant, we have a little bit of higher thermal because of the old technology. But there also we are operating to ensure, establish that what are the best possible there. If there is any future requirement will be there, CapEx, we will review that.
Because now at this point of time, we are operating all the kilns and all the mills at a peak rate capacity with efficiency.
Thank you.
Thank you. I think we should close here, Rajesh. Shravan and Saket get disproportionate time, and people will almost suspect that we planned them to ask more questions. We should close it here.
Unless there is something very pressing to ask.
Okay. We will take that as the last question. I would now like to hand the conference back to the management team for any closing comments.
No, we are looking cautiously at this quarter. I think this third quarter will show the light for the fourth quarter. Like everybody else, we are looking at it circumspectly, still keeping our confidence the kind of growth which we have indicated and a reasonable improvement in realization, especially coming in the fourth quarter. Thank you very much.
Thank you very much. With that, we conclude today's conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.