Ladies and gentlemen, good day and welcome to the Birla Corporation Q3 FY 2025 earnings conference call. 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 your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rajesh Kumar Ravi. Thank you, and over to you, sir.
Thank you, Sagar. Good afternoon, everyone. On behalf of HDFC Securities, I welcome you all on the earnings phone call of Birla Corporation to discuss Q3 and nine-month FY 2025 financials ending December 2024. The management team is being represented by Mr. Sandip Ghose, MD and CEO, and Mr. Aditya Saraogi, Group CFO. I would now hand over the call to Sandip, sir for his opening remarks, which will be followed by Q&A. I would also request participants to restrict their questions to two per participant initially, so that management is able to address queries from most of the participants. Thank you. Over to you, Sandip, sir.
Very good afternoon and welcome to this phone call. I have with me Mr. Aditya Saraogi, as mentioned, our CFO, but I also have our Chief Manufacturing and Projects Officer, Mr. Rajat Prusty, our Chief Marketing Officer, Mr. Kalidas Pramanik, and our CFO, Arun Agarwal. That is the full team really, to answer your questions. The results are before you. I do not think there are too many surprises or to really answer or talk about.
So I will start, first of all, by giving a little setting the context on a couple of points which may not be apparent from the published results. This is actually probably my eighth con call or even for us, because we never used to have con calls earlier. Eighth con call in the last two years. I did my first con call here in January 2023. At that point in time, the burning question used to be Mukutban. Everybody was concerned and really worried about Mukutban. We used to be grilled and quizzed about Mukutban.
Two years down the line, having made steady progress quarter from quarter, I do not hear as many questions, but I am happy to report on my own that Mukutban today has become really a growth engine for the company. A lot of the performance which you are seeing today are contributions from Mukutban. Not only has the unit become profitable, but the swings in profits, which was poor over the years, and that is what is making the difference. From a situation when it was cash negative, it used to pull down our overall profitability. Mukutban has today become, as I mentioned, an incremental and both in terms of our volume as well as our bottom line.
We are happy that we have, I think, much ahead of expectations of a lot of people. We are today doing capacity utilization of high 60s in Mukutban, and we hope that this will improve further in the times to come. As management, we are extremely pleased with the way Mukutban has been ramped up and as I said, proving the naysayers wrong or the apprehensions which people had expressed. This shows our ability to enter a new market, and this is something as far as Birla Corporation, I would like to underscore, if I may, taking a minute more. When we acquired Reliance Cement in 2016, there was a lot of apprehension expressed whether we will be able to upgrade our volumes from being. Essentially, we were then a discount segment player in B or B minus.
From there, whether we will be able to retain the premium positioning of Reliance Cement. There were a lot of doubts expressed by people. They thought that we will probably get even the Reliance Cement portfolio pulled out. The company had proven at that point in time our ability, our marketing ability to not only maintain the Reliance Cement premium, actually to upgrade it, so that today we have a portfolio where we are a significant player in our core market. Not only a significant player, I would say a core market leaders in our core markets, our addressable markets in the premium segment. Perfect Plus has got accepted and has got a brand equity across all the markets where we operate over there. At the same time, we have consolidated our position in the popular segment.
Most interestingly, we have also entered a mid-price segment between the two with another premium brand, Samrat Advance in those markets. We are operating over there in three levels. So the Reliance Cement integration and the way we were able to seamlessly move into a co-branding operation, et c, which many have not succeeded even after a longer period, I think is something this company has proven and demonstrated then.
Equally, when we entered a totally new area, which was totally a new area where the company was unknown, our brands were unknown in an area which was dominated by very strong players. I think there were similar apprehensions expressed about Mukutban two years ago. I think we have once again not only proved our ability to enter into the virgin territory, or what is virgin territory for us, but also position ourselves at a very respectable situation.
Even in Mukutban, from day one, we are selling upwards of 40%. In terms of premium products, we are selling a very high percentage of blended products, although large parts of Maharashtra is OPC dominated. In institutional dominated, we have been able to make our positions fairly in a strong footing on the trade segment as well as the blended segment. These are the two things I think I would like to highlight, and thereby, what is underscored, what is of immediate importance is the contribution Mukutban is making to the overall performance of the company. Why is that significant? Why is that significant in the context of this quarter's results? It is because, as all of you know, our core market in central India has faced severe competition intensity over there, for reasons which are well-known to you.
That is one area where there has been, to some extent, oversupply or overcapacity. The prices have been under pressure for a variety of reasons, and in normal circumstances, in earlier circumstances, that would have affected us very adversely because that is where our core strengths lie. But because of Mukutban today, where our portfolio has become so much more balanced, we have been able to offset that in a big way, both in volume terms as well as in terms of the profitability. This is a point I would like to underscore. But there is a flip side to this, which is not understood. Some people have raised the questions about our realization growth, why our realization growth is probably lower compared to some other people in terms of the top-line realization.
The explanation for that also lies here, because the Mukutban volumes which have come in, as I said, which is a very significant volume today, that comes in at a much lower net realization because that's how those markets are operating. If you were to compare to people who are very strong in the north or even for people who are strong in the central region, if we were to just have a weighted average of our earlier portfolio or our geographic mix of north and center, our net realization would have been much higher.
But net realization today looks lower because of the impact of Vidarbha and Maharashtra in the pricing. This is another explanation I would like to elaborate, I'd like to provide to you all, those who are trying to decipher some of the figures. Now coming to region-wise thing. As we all know, in the last quarter, things have looked up since in November and December over the industry, both in terms of volumes as well as in prices, but the biggest uptick or upswing was in the northern area.
So people who have got a very strong presence in the north have done extremely well because they have got the full benefit of the volume uptick, upsurge, as well as the price improvements which have happened there, especially in the non-trade segment where the prices were very depressed earlier in the northern region, and that in turn has pulled down the trade volumes. In our case, although our presence is not as large or as strong as other people, but in terms of our portfolio, our Chanderia unit as a single location unit is today one of our biggest unit.
In fact, it is the biggest unit for the company. Because of this situation, our Chanderia unit has performed exceedingly well. Exceedingly well both in terms of volumes, the way we have been able to make capacity utilization, keep up our dispatches, as well as because we are in the trade segment and the beneficial impact of the non-trade to the trade prices, we have also benefited from the improvement in trade prices. So Chanderia has been a very happy story for us after a long gap. Today, Chanderia has really performed, I think, to its potential, and we hope that going forward it will further augment the company's results and be the jewel that it was in the company's entire portfolio. Coming back now to center, which is our region.
As I mentioned earlier, it is well-known that center has faced a lot of competitive intensity due to some amount of capacity overhang over there. There are bigger players with lower capacity utilization and therefore are being very aggressive on the pricing front. There again, what we saw in the central zone, the pricing pressures were much more in the non-trade segment, because when trade demand was muted, people focused a lot more on the non-trade sector.
Even that, there was a little bit of, I think, slowing down on traction over there. As a result, the big players were extremely aggressive on the non-trade thing, and certain new players also who had additional capacity and incentivized capacity in those areas, they could be very, very aggressive on the pricing in non-trade. Non-trade is never our suit. That is not the area we operate.
Neither do we want to operate in OPC segment. Obviously, there is a spillover effect which happens on the trade front if the non-trade market levels go down. There are two things which happened as far as we are concerned. In terms of positive, what was our strategy? Our strategy was to focus much more because we have our capacity utilization, even in a slightly soft market conditions, are very high in that region.
So we focused primarily not only on trade, but we focused entirely on maintaining our price premium. We believe, and this is for those of you who conduct channel checks, we have been able to maintain a premium over many of our peers, including large competitors. In the A segment, we were able not only to maintain our premium, but we have been able to increase the proportion of our premium in that A category segment. So if you compare our presence in the premium segment is today probably the highest among our peer group. We have done about 59%?
58%.
58% premium volumes in this quarter, and that was very much not because we want to neglect the popular segment where we have a strong presence with our heritage brands of Samrat, Chetak, but here it was a conscious decision. In that market, we wanted to maximize our premium sales, and I think we have largely succeeded, and that has really protected and insulated our margins over there. Simultaneously, though it's a very small area, our Durgapur unit has performed well towards the end of the quarter, because that's when the eastern market prices also went up. There was an uptick in demand. We saw better demand in Bihar, also improved. So all that helped us also in the east.
East was also a supportive story, though, not as I said, we are not very large players there, but it was certainly not in any way a drag on the performance. Our focus on costs remain a relentless focus on costs, and subsequently, I will request Mr. Prusty, our CMOP, to talk, comment a little bit more on the cost side. The cost elements we have continued to do. We have done quite a few initiatives and certain initiatives undertaken.
You will start seeing the impact of that in the last quarter. Many of the cost initiatives, the results you will start seeing now. And now given the outlook of the market, which is before all of you, and luckily or unluckily, our results are coming towards the fag end of the sector. Only two or three, I think, other companies are left before announcing their results. As we are coming, I am happy to say that we are not changing any of our guidance which we have given earlier. On that score, we have been, I think, fairly consistent.
We have never taken an over bullish position. Even in the previous quarters, we have tried to give a realistic assessment. Even now, therefore, we maintain our guidance, which we have given previously. We are looking for the entire year a volume growth of 7% to 8% in H2. We are looking at it over there, and we are also keeping our projection of what we said about H2 EBITDA increase, which we had indicated between first half to second half of H2 average would be about INR 150 increase in EBITDA, and we are maintaining that, and no change in that. We will stay there. That kind of concludes my part of the presentation.
No major changes in the debt situation. All those are remaining constant. I will end over there. I will request Mr. Saraogi, if he has to add anything, Mr. Prusty. We will take on the questions now, and we will respond. Thank you very much.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Again, to register for a question, please press star and one. Our first question comes from the line of Shravan Shah from Dolat Capital. Please go ahead.
Yeah. Thank you, and congratulations on a good set of volume growth for this quarter. First is the couple of data points, if you can share, lead distance, kcal, CapEx in nine months, net debt, and incentive in the third quarter.
So lead distance is 360 km.
Okay.
Fuel cost is 1.50 million kcal. We received an incentive of about INR 40 crores in Q3. Our net debt as of the third quarter end is around INR 6,000 crores. That's all?
Yeah. The CapEx in nine months, sir.
CapEx for the whole year, we are looking at a number of INR 500 crores.
For nine months, how much we have done?
Nine months, it is around INR 300 crores.
Okay, got it. Sir, now the question is on the volume growth and which is also related in terms of the expansion. Broadly, in nine months, we have done a flattish volume growth. If you are maintaining the guidance of 3% to 4% or 7% to 8% growth in the second half, we will be needing a kind of a 10% volume growth in the fourth quarter. Are we confident to do that? Second is for FY 2026 and 2027, given the 1.4 million ton, the Kundanganj which will be coming in, if you can also clarify in terms of the timeline. Previously, you said by Q1.
For FY 2026 and 2027, unless we add more capacities, our growth, my calculation suggests would be a 5% or 6% average for 2026 to 2027, which would be lower than the industry if it grows at 7%. If you can help us there.
First of all, your question in terms of we maintain that when we are saying the overall growth percentage of 7% to 8%, we maintain.
It is true. We are maintaining that.
We are maintaining that. That is not what we are changing, and we are quite confident of doing so. As we said, we are not changing any of our guidance.
Yeah.
Your question about the new line coming up in Q1 end, that we are also not changing at this point in time. We are there. In terms of the volume growth next year, we are not commenting on the numbers, but what you are saying, we are alive to the situation. We know where we have got elbow room or headroom available and what are the other debottlenecking, which we would do. We will address that question when it comes at the time of the next con call.
Why I was saying because our except the Mukutban, our entire rest of the plants are running at a full capacity utilization 96%, 97% odd. So there is as such no headroom in terms of the growing. So that is what I was trying to understand the next capacity. So our original plan was to reach a 25 million capacity by FY 2027. So are we sticking to it or is there a possibility that any capacity can come earlier so that we can have at least at par with the industry volume growth?
We are not changing any of our projections. Including the timelines with regard to the.
Future expansion.
The future expansion.
We will say whatever is required in an appropriate time, but as of now, and this is for the benefit of all questioners, I wouldn't repeat this again. There is no change in our guidance, short-term, long-term, anything as of now.
Okay. Thank you and all the best, sir.
Thank you very much.
Thank you. The next question comes from Mangesh Bhadang from Centrum Broking. Please go ahead.
Hi. Good afternoon, sir. Thanks for those opening remarks, which have been very informative. First question is on the demand growth. You mentioned central region demand growth has been pretty slow. Just wanted to understand how much this region would have grown in Q3, and what are your expectations for the next quarter? Any impact, either positive or negative of Kumbh that you expect in this region?
Kumbh, we think it is a temporary phenomenon. There will be pent-up demand which will be made up. There is obviously some amount of dislocation in a limited geography as well as movement of things, but that is not going to overall change the entire situation very much for the quarter as a whole.
Any expectations that you have from this region in terms of whether it will come back to the normalcy in terms of demand growth because it has been weak in this year?
That is true for the entire this thing. As far as this is concerned, between the north and the center, what are different is north you may have there is no capacity expansion, no capacity overhang. So things may be more, what you should say, firm in north in terms of whatever progress. In center, we expect center to come back to normal essentially because of two things. One is good monsoons and good harvest. So agricultural demand is coming back. We also see a beginning in terms of government expenses at the state government level, which there was some amount of slowdown which had happened earlier. I think the budget, which has just been announced, would also instill confidence in things. So we expect there to be a healthy return to healthy growth in the center.
So it may not be, as I said, as firm as what you are seeing in the north.
Understood. Sir, second question on pricing. You mentioned in the press release that prices have firmed up and that should drive profitability higher going forward. So just wanted to understand, say from your 3Q average, what is the current realization from the exit of 3Q? Like how much it is higher or from the average, how much it is higher right now?
We have indicated the overall per bag prices. I would not like to get onto a per ton realization, et c. I think there is by and large consensus among all of you is the kind of way market has moved up. A mix will change from one company to another because of the regional balance, et c. What you have seen or heard so far, overall, I think we do not have any special insights to offer on that.
Okay. Sir, last question from me. Earlier we had this vision of reaching 25 million tons by 2027 and then next up to 30 million tons. Now we have reached a target of say, INR 3,000 crores of net debt. When can we expect the next set of CapEx announcement from your side?
What we mentioned just now, Mangesh, we are repeating that we are not changing anything. As and when the things will come, we will announce. We are pretty consistent in whatever we are saying.
Nothing beyond Kundanganj as of now, right?
As of now, nothing.
Okay.
Go around the question. I will point to similar. Whatever we have stated, we are sticking to it.
We are sticking to it.
Okay, sir. Sure, sir. Thanks for the info. Thank you.
Thank you. The next question is from the line of Saket Kapoor from Kapoor & Company. Please go ahead.
Namaskar, sir, and thank you for this opportunity. Firstly, Saraogi, you mentioned about the CapEx to be at INR 500 crore and INR 300 is what we have spent for the nine months. Sir, our closing capital work in progress was closer to INR 580 crore. So how much have we capitalized for this quarter? The depreciation amount has been lower sequentially and also year-on-year. Sir, how will you explain this, sir?
I do not have the number on the capitalization part. Saket, you can connect offline with us. Depreciation, I do not think there is any material change, and I see no reason for any change also because there has not been any change in accounting policy as such. So I see no reason why there could be any variance with regard to the depreciation aspect.
Okay. Ghose sir, you mentioned about pressure on the non-trade segment size going smaller. When we look at our mix, I think so the trade channel has been at sub-lower level of 70%. So if you could just explain what were you trying to allude by the lower size for the non-trade segment?
I didn't say lower size. I said the price pressures were much more on non-trade, which had a spillover effect on the trade segment because the two segments don't exist in isolation. In the last quarters, et c, because the trade segment was slower, all the players focused much more on the non-trade and that too on the OPC, and therefore the prices in the non-trade sector in most regions, including north and center, was very highly affected.
That had a spillover effect on the trade. We are essentially trade players. We are trade and we are a blended cement player, so we don't operate in that segment. Because of the spillover, obviously trade prices were there, but our strategy is to remain primarily a trade player and a blended cement player, and that's what we will do as the market grows. We are not changing our strategy there.
Sir, second question is, in your press release you mentioned about healthy rural demand coupled with higher government spending generated momentum in the cement demand. Sir, so when you are mentioning about the non-trade segment pressure, I think the non-trade is towards this institutional part that is governed by the government spending only. If you could just explain how the Yeah.
Saket, what you are talking about is a big infra spend. We are not talking of big infra spends. We are talking about rural infrastructure, money being released to contractors, etc , for the rural. We are talking about Pradhan Mantri Awas Yojana spends and things like that, which boosts rural demand. So I'm not talking about infra spend.
Okay. We are seeing this traction now from the government spending part. That is what we should take in factoring for the quarter ahead.
I do not get you. Come again.
As per our release, we should now factor the government spending part. That was a cause of concern earlier that the type of spending which was envisaged from the government, and even when we look at the budget numbers and the more concentration for fiscal deficit, we have seen there is a lowering the government spending intention also. That is getting corrected.
I am not talking about macro trends at all, Saket, to clarify. Our talk is largely in terms of state and local government spends. Post various elections and everything else, government budgets, certain funds got diverted into other developmental schemes. Due to which monies in many of these markets which get released to contractors, etc , there was a slowdown. We expect those monies to get released, and we are seeing that happening, and which is going to boost our overall traction in the rural.
Rural demand comes from, one, individuals, home builders, which is the function of, as we said, the crops, the harvest, monsoons, et c, the overall income. And then the other part comes through rural infrastructure, and I think for which the state government spending and lot of the central government spending in many of the schemes are linked to the state government expenditure. State government doesn't release the fund, the central government also don't release the fund in some of those development efforts. It's a combination of that. I'm not making a comment about what was talked about in the union budget. Those relate to mega infrastructure, and we have a very small presence in that segment.
Okay, sir. Thank you, sir. That will be only the receivable part from the government incentives.
Mr. Kapoor, may we request-
Yeah, I joined the queue. Yeah. No issue.
A reminder to all the participants, please restrict your questions to two each per participant. If you have any follow-up questions, please rejoin the queue. Our next question comes from Sanchita Sood from RoboCapital. Please go ahead.
Good afternoon, sir. I just wanted to ask if we can get any guidance on what our EBITDA per ton could be in FY 2026 and FY 2027. If we can see EBITDA per ton hitting, say, INR 1,000 per ton anytime soon, maybe in the next two, three years.
2026, 2027, we are not going to comment, Sanchita. That is too far into the future. We do not want to speculate on that. We have told about this year, and for the moment, we will stick to that. We are a conservative company, Sanchita. We do not do too much of future reading.
All right. Okay. That is all from my end. Thank you.
Thank you. The next question comes from Pathanjali Srinivasan from Sundaram Mutual Fund. Please go ahead.
Hi, sir. Am I audible?
Yes. Very audible. Thank you.
I wanted to check on the utilization. I think in our press release, you mentioned that our utilization is 91%, but I think it also mentioned in your opening remarks that the utilization at Mukutban was close to 70%. Can you help me understand this?
Look at the weighted average first. Our existing plants operate at a certain level, and Mukutban, Desh. Mukutban is not even one-fourth of our capacity.
99%.
I know in other places, we are operating close to 100%, so that's how the average works out.
Okay. One more question related to these incentives. Could you tell me if you started receiving incentives from Mukutban plant?
Yeah, we have.
We have started accruing. We have not received that. We have started accruing incentives.
What would be the accruals here for the quarter?
For this year, as guided earlier, we are expecting total incentive accrual to be around INR 100 crores.
Is this from Mukutban or at a company level, sir?
At company level.
Okay.
Mostly it is from Mukutban .
Mukutban right now
Okay, sir. Just one last question. This trade and non-trade volume. If I look at trade volume, nine months year-on-year, it has declined. Is this any specific reason that you could attribute towards this?
No, this is a function of how the market moved in the last two quarters. As we are saying, there has been a shift in the last two quarters when the trade demand, especially in the rural sector, was muted. So by definition, some of it shifted towards non-trade. Besides, in our Mukutban area, Maharashtra, in some places, there is a higher component of OPC and non-trade, and that is where it has shifted because that's the construct of the Maharashtra market. So that has shifted, but we expect it to the reverse correction to start happening now that IHB segment and rural segment is picking up.
Sure. Thank you.
But you would see, compared to everybody else, our trade volumes are much higher than many of our peers, as well as some of the larger players.
Yes, sir. That would be correct.
Thank you.
Thank you.
Question comes from Prateek Kumar from Jefferies. Please go ahead.
Yeah. Hi, good afternoon, sir. I have three questions. Firstly, on your incentives, you said INR 40 crore incentive in first quarter. What is the nine-month incentive for the company and expectations for full year?
Year we already mentioned was
Okay
INR 100 crores is what we said.
For nine months, that accruals around INR 60 crores.
Basically, this quarter was slightly higher than run rate we got incentive for last
Function of the volume as well as the price.
Right. Okay. Secondly, on, we have historically talked about few new businesses like construction chemicals, also sometime around RMC business. Have these businesses scaled to any meaningful level, and how do you look at these businesses?
Both these businesses are, I would say, on a fairly nascent stage. Construction chemicals, it's focused in the areas where we are strong. We are not scaling it up to areas where we don't have a strong presence. It is linked to our Perfect Plus brand. It's a brand extension. On RMC also, we have been on a kind of a test marketing, you might say, or initially we are trying to learn.
That's an area where we want to learn the ropes of the business. There are a lot of people who have gone into RMC in a very fast track, and then we believe that has not been profitable or that has been a cash drain. We don't want to do that. We are moving slowly, and we'll step by step. We'll let you know as soon as the next phase of expansion, whenever we do that.
Last question is on profitability. Q3 versus first half seems higher by around 30 INR-40 INR. We are looking at 150 INR improvement for second half. We are looking at 200 INR-250 INR improvement in full Q, right, on a quarter-to-quarter basis?
Yeah, if that is the arithmetic, that is what we stick by, as we said.
Right. Thank you, sir. These are my questions. All the best.
Thank you. The next question comes from the line of Sanjay Nandi from VT Capital. Please go ahead.
Hello? Hello.
Yes, please go ahead, please.
Yeah. Can you hear me, sir?
Yeah, we can hear you very well.
Sir, can you please share with the clinker utilization levels for this quarter?
Clinker utilization.
What do you mean by that?
Like, what has been the utilization level for clinker capacity as we have? 100%.
100%.
100%. Okay, sir. That's all my side, sir. Wish you all the best.
Thank you. The next question comes from the line of Girija Ray from Yes Securities. Please go ahead.
Am I audible?
Yes, please go ahead.
Thanks for taking my questions. I have a couple of questions. First with related to freight costs. I can see there is a spike in freight costs on part-time basis. Is this because of we are transporting volume from Mukutban plant to Gujarat or is it becoming so far for Maharashtra?
Mukutban obviously has contributed a little bit because the Mukutban, our footprint, since our plant is in Vidarbha, the further we go, it increases a little bit. We don't have a grinding unit there. Overall, we've had to reconfigure some of the geomics distribution given the market condition. It has not increased in other places, so roughly, we don't see any significant increase in our thing. It's only very marginal change.
Okay. Is this also possible that we sell the volume to Telangana market as well from Mukutban plant?
Telangana is very close. Telangana is right next door. Telangana is an opportunistic sale depending on the pricing there.
Basically, our primary market would be Telangana for Mukutban plant, right?
No, it is not primary. It is, as I said, a very marginal market. It is a spillover. Telangana is an opportunity sale when the prices, et c, is good. Our primary market for Mukutban is Vidarbha, Khandesh, and then going further, if you want to go towards Nashik and Mumbai.
Okay.
Telangana is not something we focus on.
Okay. And one more thing, if I see year-on-year basis, from various data, there is a spike of pet coke and imported coal price. So how do you see this pet coke price and imported coal price going to shape out going forward?
Pet coke price has come down to mid 90 levels, and currently they have again gone back to around 110 levels. And we expect these to range between $100 - $110, pet coke prices. As far as domestic coal prices are concerned, they are quite range-bound.
Okay. Fine. Thank you, sir. Thank you very much.
Thank you very much.
Thank you. The next question comes from the line of Uttam Kumar Srimal from Axis Securities Limited. Please go ahead.
Yeah. Thanks for the opportunity, sir, and congratulations on good volume growth. Sir, my question pertains to your CapEx. You mentioned about FY 2025 CapEx. So what would be our FY 2026 CapEx?
We cannot comment on that. We can take that question in the next quarter.
Okay. Sir, now coming to your jute business, though it is only 4% of our entire revenue, this quarter, we have seen some substantial growth year-over-year and quarter-on-quarter basis in revenue. How do you see this jute business panning out in fourth quarter and in next year?
Right now, it will go along, but we are not seeing any significant changes. It will be in relation to what is happening in the market. There is a greater demand for agri bags, etc . We are not seeing too much of a change there, but when we have something more to say on jute, we may have some things to talk about in future. We will talk about it in greater depth. At the moment, there are no material changes we are reporting.
Okay, sir. That is all from my side. Thanks a lot.
Thank you. The next follow-up question comes from the line of Shravan Shah from Dolat Capital. Please go ahead.
Hi. Thank you, sir. The question is pertaining to our captive coal mine. If you can help us. Currently, in terms of the fuel mix, how much we are using our captive coal and the Bikram coal, which is likely to be operational by Q1 FY 2026. In terms of the fuel mix, how it will increase, because the cost previously you mentioned is 30%-40% lower versus current kcal cost.
Yeah. Our own coal was to the tune of 15% in this quarter. In terms of volume.
Okay
Once Bikram coal comes on stream, once that achieves optimum levels of production, it should go up to around 30%, between 30% and 32% of our total sales.
Will that be by end of FY 2026, we will be able to reach that level, or it will take even one more year?
I think next year it will not reach optimum level. Optimum level will be reached in the next financial year. That is 2026, 2027.
Okay, got it. And this green cell, which we currently have 26% odd level. How we see it structurally for next one or two year, where we want to reach this level?
Which one? What is that?
Green power.
Green power.
Green power, sir.
Yeah. We are working on the project. Some projects we have already started working on, both in terms of hybrid solar. So our aim is to reach to the level of 35%. But as you rightly said, it will take another one to one and a half years.
Okay. Got it, sir. Thank you and all the best.
Thank you very much.
Thank you. The next follow-up question comes from the line of Saket Kapoor from Kapoor & Company. Please go ahead.
Saket, your questions are disproportionate to the distance from our office. Okay, you are the closest to us and maximum question. I think you should come and have a cup of tea with Mr. Saraogi rather than asking on a con call.
Okay, sir. As you say.
No, no, you can ask him. Go ahead and ask.
That is all right. I can know. Please go ahead.
Yes, sir. Saraogi sir, the question is for you only. Sir, you have mentioned about we have accrued INR 100 crore incentive on account of the Delhi government incentive. What is the closing balance as on December 30? And in actual, how much we have received out of the pending balances?
No, we have not accrued INR 100 crores. We have accrued around INR 60 crores.
INR 60 crores.
We expect to accrue INR 100 crores by the end of this year.
By the end of this year. Our closing balance is about INR 435 crores as of December 2022. This is excluding the West Bengal incentive, which is under litigation.
What is that amount, sir?
That is about INR 118 crore.
Okay, so 435 minus . Sir, in a nutshell, how much have we received cash in terms of these subsidy balances?
This financial year.
This financial year?
INR 187 crore in this financial year.
INR 187 crore of cash we have received?
Yeah.
Okay. Thank you, sir. Thank you.
Thank you. The next question comes from Rajesh Kumar Ravi. Please go ahead.
Hi, sir. Good afternoon. My question pertains to, first on the CapEx, which number which we are really looking to INR 800 crores, which was further slowed down to INR 700. Now we are looking at INR 500 crores. So why this slowdown on the CapEx number? What is exactly leading to this deferment?
We try to optimize our cash flows. While we plan, we plan on a conservative basis, but then we try to optimize the life of it on account of maintenance CapEx, sustenance CapEx.
Right.
We are trying to optimize whatever is possible to defer, we defer that. That is an ongoing exercise.
Okay. This Bihar expansion was also announced long back, and last update was that the company is in the process of acquiring land. Is there anything which is materially progressed over there? Next one, two year, we will see this project coming to light?
Actually, part of the 5 million ton expansion that we are targeting to complete by 2027. We have acquired most of the land on the location.
Okay. Lastly, on the coal blocks, you mentioned it will be 30% + when these Bikram mines become fully optimized. Total of your requirement, 30% will come from your captive mines. There is a Marki Barka which will come up in FY 2027. How will that change the captive requirements, sir?
Marki-Barka , once that comes, it will be between 55% and 60% of our total requirements.
Total at company level.
Yeah.
Okay, great. That's all from my end, sir. I'll come back if needed. Thank you.
Thank you.
Thank you. The next question comes from the line of Harshal from AMSEC. Please go ahead.
Thanks, sir, for the opportunity. Sir, what would be the gap in terms of profitability between Mukutban and company average?
I am sorry, we do not share unit-wise or region-wise profitability.
Okay, sir. Thanks.
Thank you. Ladies and gentlemen, we would take that as our last question for today. I now hand the conference over to the management for closing comments.
Thank you very much for participating. This has been very heartening, the level of participation, the number of people who participated. Above all, for the confidence you have in the management and the performance and the support we have been receiving from all of you. Thank you once again and see you soon. Bye.
Thank you. On behalf of HDFC Securities Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.