Yeah, I'm starting. Good morning ladies and gentlemen. Welcome you all to the 1QFY 2026 results conference call of Sagar Cements Ltd. We have with us today Mr. S. Sreekanth Reddy, Joint Managing Director, Mr. K. Prasad, Chief Financial Officer, Mr. Rajesh Singh, Chief Marketing Officer, and Mr. J. Raja Reddy, the Company Secretary. I would like to hand over the call to Gavin Desa for his opening comments and then over to management. Over to you, Gavin.
Thank you, Manish. Welcome everybody to this call. We will begin this call with optic remarks from the management, following which you will have an interactive Q and A session. Before we begin, I would like to point out that some statements made in today's discussions may be forward looking in nature. A note to that effect was stated in the Concall invite sent to you earlier. We trust you have had a chance to go through the result communications and documents. I would now like to hand over to Mr. S. Sreekanth Reddy for his opening remarks. Over to you, Sreekanth.
Thank you, Gavin. Good morning, everyone, and welcome to Sagar Cements Ltd's earnings call for the quarter ended June 30, 2025. Let me begin the discussions with a brief overview of the market in terms of the demand and pricing, post which I will move on to Sagar specific developments. Overall, the industry witnessed healthy volume growth supported by a pickup in infrastructure activities driven by the government spending and improving demand from the individual house builders. Additionally, the low base in the corresponding quarter last year due to the Lok Sabha elections and some of the state elections also contributed to year-on-year volume uptick. On the cost front, key input prices, particularly power and fuel, remained largely stable. Given the robust volume growth, the steady pricing environment, and benign input costs, the industry experienced an improvement in profitability and margins during the quarter.
Let me now move on to our quarterly performance. As indicated in our previous call, Q1 registered a good volume growth of around 11% for the previous year. As demand momentum remained firm during the quarter, for FY 2026 we expect our overall volumes to be in the range of around 6 million tons. Moving to the headline numbers, our revenue for the quarter stood at INR 671 crore as against INR 561 crore during Q1 FY 2025, higher by almost 20%. EBITDA for the quarter stood at INR 121 crore as against INR 47 crore generated during Q1 FY 2025. Margins for the quarter stood at around 18% as against 8% in the corresponding quarter last year. EBITDA per ton stood at INR 851 during the quarter. Going forward, as the capacity utilization improves across our units, the business is expected to benefit from operating leverage.
We remain optimistic that our ongoing initiatives such as optimizing the freight through reduced lead distances, lowering the clinker factor, upgrading Andhra Cements Ltd plant, and increasing the share of renewable energy in our power mix will further enhance our cost efficiencies and support our overall profitability. Profit after tax for the quarter stood at INR 7 crore. In terms of the key operational activities, modernization at Andhra Cements Ltd Dachipalli unit is progressing as per schedule. Power and fuel cost stood at INR 1,450 per ton as against INR 1,470 per ton reported during Q1 FY 2025. Freight cost for the quarter stood at INR 860 per ton as against INR 844 per ton during Q1 FY 2025. From an operational point of view, Mattampalli plant operated at 54% utilization while Gudipadu, Bayyavaram, Jeerabad, Jajpur, and Dachipalli plants operated at 77%, 66%, 94%, 48%, and 32% respectively during the quarter.
As far as the key balance sheet items are concerned, the gross debt as on June 30, 2025 stood at INR 1,556 crore, out of which INR 1,179 crore is long-term debt and the remaining constitutes the working capital. The net worth of the company on a consolidated basis as on June 30, 2025 stood at INR 1,802 crore. Debt Equity Ratio stands at 0.651. Cash and bank balances were at INR 182 crore as on June 30, 2025. The Board of one of the subsidiaries, Sagar Cements (M) Private Limited, has given approval to take up the expansion of the cement grinding capacity from 1 million - 1.5 million and as part of green energy initiatives to establish a 6 MW solar power plant involving a CAPEX of around INR 140 crore.
To summarize, our expanded capacities strategically position us to capitalize on the anticipated growth in infrastructure and real estate development in the years ahead. Moreover, our ongoing initiatives to broaden revenue streams and strengthen our regional presence are expected to enhance the company's overall profitability. That concludes my opening remarks. You'll now be glad to take any questions that you may have. Thank you.
Thank you, sir. We will now begin the question and answer session. Anybody who has a question may indicate by raise of hands. We will take the first question from Mr. Shravan Shah. Shravan, please go ahead with your question.
Hi sir, can you hear me?
Yeah, good morning, Mr. Shepherd. Yes, sir.
Hi sir. First of all, congratulations on decent setup numbers supported by the pricing. Just on the clarifying on the volume front, on the presentation, we are maintaining kind of a 6 million ton for this year. Does this also. Does this also. Hello, s ir.
Yeah. Mr. Sreekanth Reddy. Go ahead sir, please.
Does this also include the clinker cell that we are looking at? Also, trying to understand how much more clinker that we are looking at. Once this Dachipalli plant starts, are we still going to keep on selling the clinker?
Yeah. Mr. Shavan, I think we do not sell clinker in any of the South units. The only location where we sell clinker is at Indore for the external. Andhra's sale of clinker is primarily to Bayyavaram. It's primarily to do the stock management because Mattampalli plant line 2 was under 198. During this time there was some amount of clinker flow that has happened from Andhra to Bayyavaram. Now, going to the Jeerabad units, clinker sale, as you know, we are able to produce more clinker and the peak grinding capacity we have reached. The residual quantity of clinker is what we sell. We believe that by end of this financial year, end of Q1 of coming year, we should not have any clinker even at Jeerabad because everything we would be converting into cement. Mr. Stan.
Yeah.
Outlook for the current year. We are taking two views. One, for a better price regime. We are very clear that we would want to regulate our volumes just in case. If the market prices tend to be lower, then probably there could be a higher volume. Given the price position, our view is that the demand, given the demand and the new supply that is likely into the market, our volume outlook remains close to 6 million. We would like to revise it, not before middle of Q3. Till such time, we believe that 6 million is doable and that's what we would like to stick to.
For FY 2027, is it fair? Once we will be starting by this September or December, 7 million ton is fair to assume that we can do in FY 2027.
I think for the coming year we believe that this is only the start of a good cycle. Next year we expect demand to be much better than what it has been, what is anticipated for the current year. Given that scenario, I think 7 million is definitely a doable number for the coming year. Mr. Shawan.
Okay. Now sir, on the pricing front, if you can, state-wise, help us in terms of what was the price increase which has happened in Q1 and currently, are the prices the same or till now have you seen maybe an INR 500 further hike or a decline, and do we believe that this pricing is going to sustain or, given the kind of supply that will be coming in the third and the fourth quarter, do we see that these prices may, whatever the discipline the industry has shown, maybe some correction can happen.
Yeah. Mr. Shivan, I think as you are aware sir from March exit to June end in AP Telangana we did get around INR 50 to 55 increase per bag. Tamil Nadu is around INR 35 - 40. Maharashtra is around INR 20. Odisha we received, though there was slightly higher number, but from an exit perspective we are close to around INR 30, 10 to 15 rupees. Madhya Pradesh market more or less remained flat for us. Now from June exit to July, of course we are only 20 days into the current season, more or less it is flat to slightly negative bias. That drop is expected because of the seasonal correction. Fortunately, it is not very significant. What I would like to put forward now, the next part of your question is are these prices sustainable?
Yeah, we wish they are, but our internal view is that we have taken an overall kind of a price to be flat to slightly negative by INR 5 from its peak in June. We wish we are wrong, but given the demand in some pockets of the markets that we service, especially in AP, and fortunately even Telangana government have been engaging with most of the industry players. Given that scenario, we believe that we could be better off in terms of the prices. It's too soon. I think I would like to take this call probably middle of Q3. Till such time, even with this kind of a price regime, we should not complain because as you know monsoon is very very active, Mr. Shah.
Our internal concerning is that we did take a INR 5 drop on an overall kind of from the current scenario just to factor in kind of market fluctuations that are likely to happen.
Got it. Lastly, sir, on the profitability, this quarter was much better. Now, how are we seeing, given the, as you are saying, even if let's assume the prices remain flat where it is, how do we see in terms of profitability? Is it fair to say INR 350 crore, INR 400 crore kind of EBITDA for this year? Is this possible, or maybe EBITDA per ton going forward in Q2 onwards, more than INR 600 is possible?
Because this time what we have penciled in is around INR 600 per ton as a minimum. If the prices remain where they are, and obviously there is some amount of operating leverage that is likely to kick in, we believe around INR 600 is a possibility.
That will be from Q2 onwards, can be maintained. 600 plus.
I think so. Year-end average also, we believe the minimum of INR 600. That includes some amount of small dip during Q2, and probably a catch-up will happen somewhere around the middle of Q3 to a very good Q4 is what we are expecting. Mr. Shaman, this is an average price is what we are talking.
There is no more incentive till the end of this year, whatever we were supposed to receive.
Yeah. There is an additional INR 12 crore that is likely to happen. That is the only pending incentive available for the current year. Mr. Shah.
Will this be in Q2 or Q3 that is likely to come?
We wish it is as soon as it is possible. Anytime, sir.
Okay. Going forward, next year onwards, INR 23 crore odd. That's the number that one can look at.
Yeah, that remains. Of course, the CAPEX that is happening, incremental CAPEX that is happening at Jeerabad also is likely post commissioning. That thing also would be eligible for additional.
Okay. I have more questions will come in queue.
Thank you. Thank you.
Thank you. We will take the next question from Mr. Nitin. Sir, please go ahead.
Thank you for the opportunity. Am I audible?
You are audible.
Yeah.
Okay. Yeah. My question is last time when we had a call we mentioned that about Vizag land deal. We can expect in Q1 results. What is the status right now?
At this point of time? The likely date which our Lysand team has indicated is around October. In fact, the critical process has already been kicked in. The government again is seeking some internal clarity whether it entails cabinet approval or not. That probably is going to add up a few months. Our team did indicate that by October we should get clearance for the sale of land at Vizag.
By end of this quarter or early next quarter, I think somewhere around.
October is what they have indicated, Mr. Nitin.
Okay, my next question is about what is our focus, margin or volume for f inancial year 2026.
Sir, I think our focus has always been margin, sir. Our operating rates are always fluctuating to match up with the margin. We definitely don't chase the market shares. We have been very, very focused on the margin, and last few years when the pricing was very, very difficult, as you would have seen, we did not chase the volume. We tried to conserve the money by not losing out the money because some of the places had extremely difficult pricing where we were losing money for every sale. That remains focused for us forever, and that is the case even for this year and years to come.
Perfect. My next question is about the CAPEX that we are doing. What is the incremental CAPEX we'll have? We indicated around INR 120-130 crore for clinker capacity. Is that correct?
Year Mr. Nitin, it is INR 360 crores, sir. Out of that, INR 260 crores is for Andhra, around INR 80 crores is for Jeerabad, and around INR 20 crores is the maintenance CapEx across all the other units. That's our current year's CapEx. Out of this, what we have already incurred is around close to INR 80 odd crores during the current quarter. The rest is spread over the next three quarters. As you are aware, Andhra's new preheater project most likely we should commission before Dussehra. As we speak, we are running ahead of time, but for the rains, we are very confident that by end of September to middle of October, we should have commissioned the new preheater.
Of course, the grinding capacity at Andhra, which is again an ongoing project, is likely to take until the end of the current financial year to Q1 of next year, but the whole idea here is to upgrade more, so given that our priority has always been to reduce the cost, that more or less is happening at slightly ahead of time, Mr. Nitin. We did place order for the grinding mill, so we are just awaiting for the EC clearance for the Jeerabad unit for upgrading the plant from million to million and half. We are expecting what we call as the CT consent to establish. That is likely to happen in a month's time, and immediately after the monsoon, we would start the civil works and start the work on that, sir.
Even that expansion, we should complete either end of Q4 to middle of Q1 is what is our estimation.
I got it. Will this CapEx be through internal accruals or will we be going for any additional?
It's a mix and match of internal accruals plus some equity and also the debt as indicated earlier, sir, whatever is the principal that we have been paying off. That would be again borrowed back. The gross debt, the net debt position may not be significantly different from how it has been for the last year still.
I understand. Equity or dilution will also happen. That is what you are.
No, sorry, it's equity because of the rights issue at Andhra Cements Ltd.
Got it? Yeah, got it. Okay. Thank you so much and wishing you best, sir.
Thank you, sir.
Thank you. We will take the next question from Mr. Vishal Udwana. Vishal, you can go ahead.
Okay. Good morning, sir. Am I audible to you?
Yes sir, you are very much audible, sir.
I have a couple of questions. First, on a macro level, with the rollout of the new rail corridor under PM Gati Shakti and Coal India shifting dispatch mix, how are you hedging against both rising rate tariff and input supply volatility? Are you in talks for dedicated racks or supply line to lock lower logistic cost versus peers?
Yeah. Mr. Vishal, I think you should be aware that we have one of the lowest logistic costs in the sector. Secondly, we do not have any coal linkage with Coal India. The only linkage that we have is with Singareni and that definitely comes by rake even now. We also get a lot of imported coal. It is with both by rail and as well as by road. We believe we are reasonably optimized on our inward freight logistics, Mr. Vishal. Gati Shakti so far from a relevance perspective to us is very, very limited. We are very much dependent on the current options that we have, Mr. Vishal.
Okay, got your point. The second one was like your gross debt rose 9% YoY and planned principal remit of around INR 200 crore by quarter one FY 2027. How are you going to fund your upcoming CAPEX and ramp up in your Sagar and Jeerabad plans? Will it be via internal accrual or some other sources?
I think as I mentioned, Mr. Vishal, most of the tenures are fairly long term for the debt. It's a mix of both debt and equity. That is because of the rights issue as well as internal. Mr. Vishal.
Okay, any guidance for the rights issue w hich you asked about?
We do have clearance from SEBI and the approval is all the way up to December. The team is working towards somewhere around Dussehra time for us to hit the rights issue, but these are all subject to market conditions. Mr. Vishal.
Okay, got your one last portion. Like your Jeerabad and Jajpur grinding units use the latest vertical roller mill technique. What per ton energy and maintenance saving you have actually achieved versus your legacy.
Mr. Vishal, I would encourage you to look at our integrated report. I think it's very exhaustive, so it's self-explanatory. Present each unit, each product, its product-wise, very, very different. Sir, I would definitely encourage you to look at our latest integrated report, which gives all the details, Mr. Vishal. You could reach out to any of our team for any specific queries you might have.
Okay. Okay. What about. Thank you.
Thank you.
Thank you. We will take the next question from Mr. Badri Vishal Bajaj. You can go ahead with your question.
Morning. Thank you for the opportunity. Sir, I have worked your future projections in detail with the annual report. Also, my earlier shareholders or analysts have asked. You have given in detail my. A simple question is Q4 FY 2025. Q4 FY 2025 we made a loss of almost INR 73 crore. Suddenly, this quarter, even FY 2026, we made a profit of INR 7.5 crore. Now the question is your revenue generation for both the quarters Q4 FY 2025 and Q1 FY 2026 remains almost the same, marginal difference. What made the company give the fantastic margins, though I see in the last year, loss of INR 23 crore, there was about INR 27 crore on the power front which was earlier to be debited. Please throw some light on this.
I think it's all to do with the relation. Yeah. I think it's a very straight equation that when the realization moves up, profitability moves up. Sir, it's no rocket science. From Q4 to now, for 50% of our markets, per bag price moved up by almost close to INR 45 - INR 50 per bag.
No, no. The revenue should go up.
Sir, volumes did not go up. Volumes actually dropped by 15%. Mr. Vishali, yeah.
Thank you. Thank you, sir. Good luck, sir.
Thank you, sir.
Thank you. Thank you. We will take the next question from Mr. Sanjay Nandi. Sanjay, you can unmute your line and go ahead with your question.
Yeah, good morning sir. Thank you for the oppotunity.
Hello. Good morning, Mr. Sanjay. Please.
Yeah. We have seen that a certain spike has happened in the power and fuel cost in the current quarter compared to the exit of last quarter, like March 24. What has been the reason for that?
Sir, I think it is more to do with the production itself. I think there is a lot more clinker that was produced during the current quarter compared to the previous one because we are stocking up for a potential shutdown of Andhra, which we are in shutdown. We produced more clinker, so obviously it gets factored in that particular thing. In terms of the specific cost, it has not been significant. I would put it, Mr. Sanjay, it's more to do with the inventory management. We ended up producing more clinker because usually for the monsoon time we do the maintenance. During that time the clinker gets shed.
For that, there is a huge kind of clinker build-up that has happened. If you look at this slide, what we have presented on 8 of our investor presentation, more or less it remains very flat. Got it. What has been our procurement price of petcoke like in this quarter? We are almost close to $110. Excuse me, sir, around $110 is an average procurement cost for us, but this includes the blended. One is the imported as well as the local.
Yes, sir. Got it. Got it. Got it. That's some from my side. Sir, thank you so much. Wish you all the very best. Thank you, sir.
Thank you. We will take the next question from Mr. Rajesh Singh. Rajesh, you can go ahead with the question.
Good afternoon. Good morning. Am I audible?
Good morning, Mr. Rajesh. Yes, definitely, you are on.
Yeah. Sir, I have a few questions. First, on the minority interest for this quarter, there is a significant rise, around INR 6.3 crore out of INR 7.6 crore. What explains this large minority interest?
Yeah, I think it is more.
By the way.
Yeah. It's Sagar. The Jeerabad plant operations. Mr. Rajesh, as you are aware, Sagar only owns 65% of that company, 35% by the local partners.
So.
That's the entry.
No. Why? I'm saying because if I look at Sagar Cements this Jeerabad profit which is reported is INR 26 crore, which is a profit of INR 26 crore. Even if I take 35% out of that, it should be much lower. Andhra Cements Ltd is obviously 95% owned. There also it was a loss.
Mr. Rajesh is 90%. Yeah.
No, that's a loss only. You know the minority should rather be lower over there. Out of this INR 26 crore, how.
I think specific calculation should be shared, Mr. Rajesh. It is okay.
Okay, this is one, and second is about this lead distance. Sorry, this freight cost sequentially going up. What is the view?
Sir, it's all to do with the volume movement from Andhra. There has been a slightly higher volume movement, so that did contribute to a certain extent higher freight on a relative scale, sir.
What should be the normalized freight?
Cost one should we are there sir. I think the current quarter numbers should be there. The only thing that we have to be mindful is the fuel cost that is likely either up or down should get adjusted automatically or as we are there at the optimal kind of a.
Because all of last year you were incurring close to INR 800. Now this is close to INR 870.
We are talking of an increased volume.
Yeah, understood. CapEx for this year you mentioned is around INR 360 crore total, right?
Yes sir.
For next year, what is the number one should work with?
The overall number for the next year is close to around INR 150 crore. The residual portion of Andhra, again the residual portion of Jeerabad, then the maintenance CAPEX that kicks in. Our indication is around INR 60 - 65 crore will be left for the coming year for Andhra, around another INR 60- 65 crore would be left at Jeerabad. The rest is the maintenance CAPEX of around INR 20 - 30 crore across all the other units.
Okay. In terms of the land monetization, what should one factor in in terms of, you know, what are the potential monetization which can happen this year and next year?
Yeah, we did indicate around INR 350 crore as the net receipts. We expect around INR 100 - 150 crore for the current financial year. That is subject to us getting the approval by October, and the rest to happen over a significant portion in the next year. A small portion probably should overlap into a year later. We are only trying to be cautious on that count. We are yet to engage with the buyers, and at the same time, we believe that it's a large land parcel for a place like Vizag. We are not expecting a wholesale kind of a sale to happen on the land, which probably needs to be made into small fractions, not like a development fraction but something which is handleable. Given that scenario, we did spread out the sale plan into close to two, two and a half years.
Understood. Understood. Most of the critical approval which you are awaiting, when do you expect that should come through?
Yes sir, we did cross major kind of approvals since there are some regulatory changes that have happened since the land has been given, which is close to 50 years now. Given that scenario, even government is contemplating on how to, what are all the applicable kind of things we need to take into consideration. The general debate is do we need the cabinet approval or not, is what I, primarily they are trying to debate and basis that we expect the approval process to come on. Critical aspects are all covered.
Understood. That's all from my answer. I'll come back in queue. Thank you.
Thank you. Thank you.
Thank you. We will take the follow-up question from Mr. Shravan Shah. Shravan, you can go ahead with the question.
Hi sir, just to get a clarity. You said that Jeerabad will start in the 4th Q FY 2026 to a mid of 1 Q FY 2027.
Yes, sir, you are right.
Gudipadu 0.25 million ton will start by.
No, we are yet to take a call on that. Sir, at this point of time, given the cash flow issues, that's one area which we are yet to take a call. We would be happy to come back to you as and when the decision is made.
Okay. We will be starting by this Q4.
We should complete four to middle of Q1. We should have completed the grinding plant even at.
Okay, okay. It will be in the Q4 or 1Q. It will start the grinding. The clinker will start by September, October.
Yes sir. Yes sir.
Okay, we can see a clinker cell there also for maybe one or two.
We don't sell clinker in South India at all. Sir, I don't think there is a big market. I just want to clarify, I don't think we would be selling anything outside the group requirement. We don't see a big opportunity even in that space in this region. Mr. Sreekanth Reddy, it should be very opportunistic.
No, I have to.
Yeah, but we have not penciled any clinical sale at Andhra. The primary reason is mostly to do with the cost management. Mr. Sreekanth Reddy.
Okay. Okay. Okay. Even if the clinker expansion will.
We will be close to 25% - 30% at clinker level even now. We can produce more clinker at Andhra but the market doesn't give you that opportunity at this point of time. We don't pursue selling clinker in this region unless it is really opportunistic and really a good price is offered. Unless good price is offered, I don't think we are pursuing that option.
Okay, regarding.
Sorry to interrupt you, sir. Can you please rejoin the queue so that we can have you again?
Yeah.
Questions from all the participants. Thank you. We have next question from Mr. Please can you unmute your line and go ahead with the question?
Hello, am I audible?
Yes, sir. Good morning, sir.
Good morning. Sir, my question is on the EBITDA per ton. I think you gave a conservative guidance of INR 600 per ton, right, for the full year. Yes, sir. Yeah. My question is on that. We did around INR 850 per ton in Q1, which is like one of the weakest quarters in the cement industry. Considering the prices are also going to sustain in the second half, why conservative guidance?
Q1 is one of the good quarters, sir. Q1 and Q4 typically contribute 60% of the margins and the top line, bottom line. Q1 obviously also was like, you know, the best of the pricing only started midway through April.
Okay.
Secondly, there is an incentive receipt of almost close to INR 34 crore that we have received during Q1.
Okay.
We wish that the price remains the way it is and the demand also goes much higher. We have penciled in what we believe is likely to happen. We wish it is much more. Some people may call it very conservative. We are trying to be far more realistic in our estimation numbers. Mr. Ethan, I would like to leave that thought with you. Beyond that, I cannot comment much on whether that number is optimistic or pessimistic.
Understood. Understood, sir. My question is on the incentives. We mentioned INR 24 crore in Q1. What is the total incentives a re you expecting this year?
I think INR 46 crores. Out of INR 46 crores, we did receive INR 34, sir. Another INR 12 crores is new, which we are expecting in the current or maybe by the middle of next quarter.
More INR 12 crore in remaining three quarters, right.
INR 12 crore are. Another INR 12 crore is likely to hit in the other three quarters.
Understood. Yeah. hat's all. Thank you.
Thank you.
Thank you. We will take the next question from Mr. Bhavin. Mr. Bhavin, can you please unmute your line and go ahead with your question?
Yeah. Hi Sreekanth. Congrats on overall good set of numbers. A couple of questions. One is what was your statewise mix of the volumes during the quarter? You used to give that earlier, I think. I don't see this in the press release.
Usually we disclose it at an annual basis, Mr. Bhavin, but the mix has not been significantly different from what you would see in our integrated report. We do disclose statewise numbers on an annualized basis because from a quarter to quarter perspective, it varies purely because the seasonalities are not same. If you look at Tamil Nadu, monsoon is slightly different from some of the southern states. Madhya Pradesh and Orissa also some amount of shift. From a percentage perspective for the current quarter, sir, it's not very, it's not very, very different. It's very, very similar, sir. Around 50% odd for AP. Telangana, Karnataka is close to around 7%. Tamil Nadu is also close to 7%. Madhya Pradesh is close. Maharashtra is close to 7%. Orissa is close to 15%. Madhya Pradesh is close to 10%. Gujarat is close to around 3.5% and the others is around 2.5%.
Mr. Bhavin, which is very similar to how we would have done it on an annualized kind of a thing, which we did like how we did last year.
Second question, Sreekanth, more on the industry perspective and basically the wave of consolidation which we have seen and more towards South India, what has happened? The Birlas acquiring India Cement and Keshav Ram and Ambuja acquiring Penna and Orient. What, according to you, or in the last three to six months, what marketing strategy have you seen a change in terms of statewise volumes getting impacted from these new acquisition targets because they have been ramped up and how do you see it forward? It looks like pricing has become, it looks from this quarter result that there has been good, good pricing. I think the competitive intensity has gone down, it looks like. What are your views on that?
No, Mr. Bhavin, I think from a consolidation side, sir, I think for South, it's still more an acquisition story rather than a consolidation story. So far the market share shift is not as significant as most of the equity believe or think because South is still very, very fragmented. Most of the acquisitions that happen, if you have to look notably between Adanis and UltraTechs, some of the states that get influenced are limited to an extent that it is to Karnataka, Maharashtra, and Telangana, the bulk of the Andhra market. There has not been any shift, sir, because Orient is primarily a very large player in Telangana and more so in Hyderabad and some northern parts of Telangana. Same is the case with Kesoram. India Cements obviously has a lot of assets in Andhra Pradesh and Telangana, but primarily they are a big player in Tamil Nadu.
Given that scenario, the overall market shift in terms of shares and all, what is to be expected out of so far the acquisitions that have happened is not very, very influential or significant. The ramp up obviously is primarily on account of some of the assets that these people have acquired were underused. They got to what we believe a normalized kind of a scenario that obviously would not put too much of volume pressure onto the significant portion of the markets that we service, Mr. Bhavin, and primarily into South also. The general tendency is that once the ramp up has to happen, price should suffer. That's not the case in this part of the world. I think most part of last 18 months to two years, somehow the existing players to the new players panicked at the market and tried to focus mostly on the market share.
Historically, market shares never held any of the people leave it on the margins. I think even the current perceived good pricing, you know this is a relative term because our operating margins are still in the range of around 15 to 20%. I think these are the normal EBITDA margins but with acquisitions happening at a price, again it's a relative term whether it happened at a good price or a bad price. These prices don't justify even the current prices. Given that scenario again, our belief is that people would not be in a hurry to ramp up. People would be a lot more cautious to pull whatever is the volume that is coming up.
It is also true that some of the players are new, especially on the brand side, so it makes sense for them not to be in a hurry to take at a lower price because if you position your product at a lower price, it would take a lot of effort and energies to take it to a level which is viable margins. All these things have happened over the last three months. Going forward, we believe for most of the time, I think a similar situation should prevail, is what we think, Mr. Paril.
Sure. Sreekanth, in the last question, what is your South demand outlook for the remaining nine months of this fiscal? Will it grow between 9% - 11% the way the.
You will be very surprised Mr. Bhavin. In spite of early monsoon, the entire South grew close to around 8% - 9% in Q1. Obviously, this growth is purely because last year was very, very bad because last year the market more or less was flat across South, but if you see the net gain, we are actually close to 5% above 2024 number, sir. We believe that this year we would definitely cross FY 2024 number in terms of percentage. In FY 2023, the overall South market grew healthily at 20%. We expect next year to be even more healthy than the current year. The average outlook for the current year demand is to grow close to around 8% - 9%.
Thank you, Sheena. Thank you.
Thank you. We will request all participants to limit the questions to two per person so that management can attract the questions from all participants. We have next question from Mr. You can unmute your line and go ahead with your question.
My question is already answered.
Thank you. We have next question from Mr. Girija Ray. Girija, you can unmute your line and go ahead.
Hi, thanks for taking my question. I just wanted to check my previous p articipate in what the questions he was asking. Sir, do you see any kind of price discipline after these larger players are coming into the southern regions? The second question that you have mentioned, we are not chasing the volume. I'm having bit concern. The moment the larger players come into ramping up their capacity, this is again going to disturb somehow the southern market. We are expecting 8% - 9% o f growth in southern market. Please help me out understanding about t he price discipline and the larger players. How they are going to act for next one year.
Yeah. Mr. Girija Ray, I think you will appreciate from last year 5.4 million. We are talking of ramping up to 6 million. Whatever is the market growth, we have penciled exactly the same number for our own growth from pricing discipline perspective. I cannot comment for the entire industry nor for other players. Internally, we always believe that there is no point in chasing volumes where there are no margins because most part of last two years, I would predict the price is terrible. It was not contributing. Obviously, there is no point in going and chasing something which is not going to remain permanently with you, and losing whatever little money that we were making was not a wise thing. That's what we have done. We've always been very similar, Mr.
Guru Raj, for over last one and a half to two decades that if you follow us, I think similar is the trend. Yeah. Our operating rates are in proportion to the market. The South, as you know, the supply is almost 2x of demand. Given that scenario, you cannot expect any higher demand. There are some times when there are players who are new to the market. There are some players who, for some strange reason, all of a sudden would want higher volumes to put in the market. For reasons best known to them, they keep trying to test the market. That's when we believe the prices did suffer. Will they behave same? Will they not?
I cannot comment much on that, sir, but I think given some of the acquisitions that have happened in the market, the recent ones, they happened at a price which we believe cannot be justified unless pricing is healthy. The current price regime that you are seeing is only contributing to an extent of 15% - 18% EBITDA margin, sir. That still would not help some of the players to justify. These people are large players and, you know, some of the brand movers and even the existing players, whether they have expanded, not expanded. Most of us did expand, sir, either organically or inorganically. Everybody has certain kind of EBITDA margin requirement to ensure that balance sheet remains healthy. If you have to look at overall kind of a consideration, I think pricing discipline is the way forward.
Having said that, there are always few quarters, a few months where, you know, somebody new to the market wants to establish himself. Sometimes, you know, your seasons and sometimes some events would put demand under stress. With all these things, the major loser would be the price. Of course, it would be us. The first thing that would follow is the price would collapse. That's exactly what has happened for the last 18 months. That is not new, sir. It fortunately or unfortunately has been very, very cyclical. If you trace back every five years or 10 years, you reach the same point in our industry, especially in South India. That's what has happened. If we have to follow the past trend lines, we believe that the cycle has turned and we are up for a good couple more years from here on.
Okay. Okay. Thank you very much, sir.
Thank you very much. Thank you.
Thank you. We will take the next question from Mr. Tom A. Cardinal. Tom, you can go ahead with the question.
Yeah, am I audible?
Good morning, Mr. Tom. Yes, sir. Good morning.
Good morning.
See, I have one question. I would like to know the power c ost per unit with the bifurcation like t hermal grid, solar, WHRS.
Mr. Tom, what I would appreciate is if you could reach out to any of our team, you would be more than happy to give up because there are six units spread over three states, four states, I would put it so at each unit, it's very, very different. We would be more than happy to share those numbers, Mr. Tom.
Okay. That's all. Thank you.
Thank you.
Thank you. We will take the next question from Guru Darshan Guru. Please go ahead.
I'm audible?
Yeah. Good morning. Yes sir. You are very much audible.
Thank you sir. Congratulations on good set of numbers. Regarding incentive, we have received around INR 34 crore. Is this number included in the EBITDA figure reported?
I think this definitely includes sir, because this is part of the income. Out of INR 121 crore, INR 34 crore has come in form of incenti ve.
Got it. In terms of pricing, we have. T aken around INR 5 - INR 10 of price cut this quarter. Right. Q2 or exit of June.
I think the price across various markets is very, very different. It's not that we have taken a price cut, sir. The price dilution has been in the range of around INR 5 is what we have indicated. It's an average number, sir.
Okay. The CAPEX we are doing for Andhra Cements Ltd around INR 260 to 50 crores. It's mainly related to
That is for the current year the overall CapEx for Andhra. Just for the benefit of most of our friends who have participated here, it's a INR 470 crore CapEx spend over three years' time. Out of INR 470 crores, last year we did spend INR 85. For the current year we would be spending around INR 260 odd crores. The balance amount would be spent a year later. This is primarily for upgrading the preheater because the preheater there is more than one and a half decade old. We are updating this. The primary intent is to reduce the cost structure there. Incidentally, we are also getting an incremental kind of a volume.
We are also optimizing this event mill, sir, wherein from a current 2.25 million grinding capacity we will be reaching to 3 million ton. Andhra from 1.85 million clinker we would be reaching to around 2.3 million ton clinker capacity. Okay sir. Got it. One last question. With respect to rights issue, you're looking to raise around INR 130- 140 crores of rights because of the minimum public shareholding norms compliance. Yeah. We need to reduce from current 90% of Sagar Cements Ltd holding to 75%, sir. I think the price of the market will decide how much we will raise. Our idea is to reduce from 90% to 75% holding. Mr. Bluegrass.
All right. Thank you so much, sir, and congratulations.
Thank you.
Thank you. We will take the next question from Vidisha. Vidhi, you can unmute your line and go ahead with your question.
Yeah hi, this is Sudeep and many congratulations sir for a very good set of numbers. Just one on royalty side as Tamil Nadu had imposed royalty on mining. Are we hearing similar kind of thing or any chat from other, like other South states? Anything so far so good for us sir? So far so good, right.
In the states that we operate nothing has been indicated so far and we wish it remains same, that's the comment I can make. I think some of the states which did, industries of course are representing food from. From that perspective, we have not heard anything so far. Even consultations have not started in any of the states that we operate.
That's good. Thank you so much sir and all the best.
Thank you.
Thank you. We will take the next question from Lakshmi Narayan. G.K. Lakshmi, you can go ahead with the question.
Hi sir, congratulations. Good side of number. Sir, you previously said that like government was engaging with various different players in Andhra. Could you just throw me some light on the infrastructure projects which are going to come which is going to push demand, sir?
Yeah, I mentioned it is in Telangana. Selection government did indicate that one of the five guarantees that Congress government, when they were elected here, is a low cost housing set, so and Panchayatraj, some of the projects and irrigation. These are the three departments together invited the industry and they wanted to supply cement, so they were negotiating for the price and at the same time industry again was obviously negotiating for price and the payment terms. We hope to hear from the government soon.
There were quite a few meetings that are happening and that have happened probably because government usually uses this time because this time government cannot do much work because of the season. Before the end of this season they would want to negotiate and commit. I think we will be in a much better situation to know the quantum, though government typically when they are trying to negotiate, sir, they indicate a huge number. In reality, you know, it's more a part of a negotiation, but for us to arrive at what is likely to happen in terms of the demand, probably it would take some more time when the final negotiations would have arrived. We would be in a much better situation to indicate the numbers, sir.
Understood, sir,
Good news that they are discussing, sir, and this is happening after quite some time. That's the good news.
Okay sir, one more question. Could you just throw a light on the limestone availability and the demand for your products? Okay.
Raw material availability. Raw material availability, sir. Limestone availability. I would encourage you to look at our integrated report unit wise. We did disclose the availability of resources. That includes the validity of the limestone mine. If you're looking at the limestone because that's a significant portion. Obviously, we do source fly ash, we do source some amount of other details. But e e do have those resources in the neighborhood, so we don't see any problem. I would also encourage you to look at slide 29 of our investor presentation, where we did indicate unit wise the total reserves that are available at each of the unit wise selection.
Thank you so much, sir.
Thank you so much.
Thank you. Thank you. We will take the follow-up question from Mr. Rajesh Singh. Rajesh, you can unmute your hand. Go ahead, please.
Yeah. It's a two question, just one on depreciation. I see across two of your units in Andhra there is a Q-on-Q fall in depreciation.
I think those specific data you would be more than happy to share because those are numbers which are driven more from a regulatory perspective. I would be more than happy to share any of those details unit wise. I think that if that helps we would be more than happy to share depreciation numbers unit wise.
This would be the more recurring numbers which one should look at Q numbers.
I think we are very on the existing capacities, but you should be mindful that we are going for an expansion.
Yeah, yeah.
Proposed implementation. Those are. For that, I think the numbers more or less are aligned. We have not adopted policy. We have not adopted any new policy. It's more or less very, very similar. Though auditor has changed because from Deloitte we are new to BSR which is KPMG because of the 10 years completion, depreciation method and everything more or less remains same. There is no change in our depreciation method, sir. Our team would be more than happy to furnish unit wise depreciation numbers and relevant calculations for sure.
Sure sir. One last question on slide 11 where you share the fuel cost trend. There you have shown that the current imported coal and domestic coal prices are almost higher by INR 0.30 per kg versus Q1. Are there both imported and domestic coal?
Most of the transactions that have happened are on a similar trend, sir. In between, because of the geopolitical issues, there was a surge. It is likely that everything is at least slowly coming back to normalcy, that is at least the indication. If you have to look at it, we are talking of a quarter when there was a huge fight that was happening in the Middle East. During that time, some of the traders definitely would have put some pressure on the selling prices of the bullet. We did indicate those mostly on the offers that we have received. Sir, it's not at what price we bought.
Understood. Understood. Understood, sir. Great. That's all from my end. Thank you.
Thank you.
Thank you. We will take the last question from Mr. Shravan Shah. Shravan, you can unmute your line and go ahead.
Hi sir. Sir, just to clarify, you said that the INR 5 prices have corrected from June exit to till now. That's what you wanted to say?
Yes, Sven, you heard it correct. In our case it's not even close to five. Sir, that has been the general industry news so far. In our case the dilution is less than INR 3. The overall industry from whatever market sources, it is very market specific also. Mr. Shah.
Got it. Got it. Second sir, in terms of the green share, which is at 15.45% for 1Q, by end of this FY 2026 or for average how one can look at it? For FY 2027, where one can look at this going up?
Sir, I think for the current year we should be very similar. Q1 by Q1 we should have implemented a wastage recovery at Jeerabad because that's an ongoing project that is happening there. With that, the green share is likely to move quite significantly only during the post this year. Sorry, it will be for the next year. We expect that to move close to around 20% - 23%.
Okay, got it. Sir, in terms of the debt level, we have mentioned that we are looking at the net debt of close to INR 450 crore, INR 460 crore, INR 1,450 crore, INR 1,460 crore for FY 2026-2027 number.
Close to around 1,357. I think that number we should maintain.
Okay. Okay. In terms of just to clarify for FY 2027, you said that INR 23 crore incentive and plus some for Jeerabad once it will start. What would be the number, will it be.
I would assume it is 23 for FY 2027. Sir, the other probably should have some time lag, but for sure this 23 crore is expected to be expected for FY 2027.
Okay, great, sir. Thank you and all the best, sir.
Thank you, Mr. Shah.
Thank you. As there are no further questions, we will request management to give the closing commentary.
Yeah, we would like to once again thank all of you for joining us on the call. I hope you have got all the answers you're looking for. Please feel free to connect with our team both at Sagar or CDR. Should you need any further information or queries that you have, we will be more than happy to discuss them with you. Thank you. Have a good day, sir. Thank you. Thank you.
Thank you. Yes, sir, thank you. We will now conclude the call. Thank you everyone. Have a good day.