...Ladies and gentlemen, good day, and welcome to Ambuja Cements Limited Q3 FY 2026 Earnings Conference Call, hosted by Antique Stock Broking. As a reminder, all participants' lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this 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. Krupal Maniar from Antique Stock Broking. Thank you, and over to you.
Thank you, Ikra. Good evening, and a warm welcome to everyone. On behalf of Antique Stock Broking, we welcome you all to the Third Quarter FY 2026 Earning Call of Ambuja Cements Limited. I will now hand over the call to Mr. Deepak Balwani, Head of Investor Relations. Thanks, and over to you, sir.
Thank you. On behalf of Ambuja Cement, I am pleased to welcome all the participants to our quarter three FY 2026 earnings call. Ambuja Cement Limited is part of the diversified Adani portfolio and the world's ninth largest building material solution company. Before we start, please note that this call may include forward-looking statements based on our current beliefs and expectations. These are not guarantees of future performance and may involve unforeseen risk and uncertainty. We are pleased to have with us on the call Mr. Vinod Bahety, Chief Executive Officer, and Mr. Rohit Soni, Chief Financial Officer. Now, I invite Mr. Vinod Bahety to provide his valuable insights on the quarterly performance.
Thank you, Deepak. Good evening, and a warm welcome to everyone joining us for the Third Quarter Results of FY 2026. This has been a decisive and strategically important quarter for Ambuja Cements. We delivered industry-leading performance, growing our volumes at two times the industry average. This was supported by stronger market execution, improved availability across both trade and non-trade channels, and higher base capacity utilization. Our actions on premiumization and mix improvement helped us capture significantly higher market share, better realization than the peers, and thereby reinforcing our leadership position. The operating environment remained favorable throughout the quarter. Cement demand growth was driven by infrastructure activity, sustained housing demand, and a recovery in the rural construction after a favorable monsoon. A defining development this quarter has been the proposed amalgamation of ACC and Orient Cement with Ambuja Cements.
This marks the beginning of a unified one cement platform that will accelerate our growth trajectory, support EBITDA expansion, strengthen operational excellence leverage, improve logistics density, and enhance capital efficiency. We see this driving long-term value creation over the next 24-36 months. Regulatory approvals are progressing quite well. We are seeing an early operational success across the acquired assets. The capacity utilization for the quarter improved meaningfully for the acquired assets at 58%, improvement of 21% compared to the previous, to the last year year-on-year, which was at 37%. Utilization had further improved. The exit of December, by the way, is 65%, although my quarter average is 58 for the acquired assets, but the exit is at 65%, and we are confident and, looking forward to achieve almost 80% on these acquired assets.
These outcomes reflect disciplined execution of our integration and optimization playbook. Pricing has entered January on firmer ground, as we are seeing a similar uptick in price in January, along with double-digit volume growth. Southern markets are leading increases in the range of INR 15-INR 20 for non-trade, while the northern market has witnessed price increase in the range of INR 5-INR 10 in non-trade range. Importantly, these hikes have helped making a departure from the rollback-prone patterns of the previous years. With a comprehensive focus on value and market share, realizations improved INR 5 per bag as compared to last year. Trade pricing continues to outperform non-trade, with gaps widening up to INR 31 per bag, as non-trade remains more sensitive to the infra-led offtake and seasonal disruptions. On capacity, we commissioned 2.4 million tons of Marwar grinding unit ahead of the schedule.
With this addition, our total capacity now stands at 109 million tons per annum. We were looking earlier at 120 million tons in FY 2026. 2 million tons of Sindri and Jamul has also been included here, in addition to our 118 million tons of target, but the Warisaliganj commissioning is now scheduled for first quarter of 2027, so there is a delay of three months in Warisaliganj, such that now we will be exiting March at 115 million tons, as compared to earlier, 118. Alongside this, we are unlocking an additional 15 million tons of debottlenecking capacity at lower CapEx cost. These initiatives will provide a clear and capital-efficient pathway to reach our aim of hitting 155 million tons by March of 2028, which will position us strongly for sustained growth.
Premiumization continues to be a powerful value driver for us. Premium cement volumes accounted for 35% of the trade sales, and in absolute terms, it increased 31% compared to last year, among the highest in the industry. Ambuja Kavach and ACC Gold, they remain our blockbuster premium cement products under the super premium segment. GST reduction only has helped in terms of shifting of the consumer preference towards the higher quality performance-driven products. Cost leadership remains a key strategic advantage, although I'm sure you, you have seen that in this quarter, my costs have gone up and, you, you would be keen to know about the reasons, but I can only give you more details when I come to the cost part. We have delivered visible year-over-year reductions across the value chain.
Kiln fuel cost declined by 6%, power cost reduced 15%, green power share increased by 15% to now 37%, and logistics costs reduced by 1%. Our narrative on reaching INR 3,650 per ton of cost by March 2028 continues. A little bit more on the cost, so that while our December quarter comes at INR 4,500 a ton, as compared to our September quarter, it is almost INR 250 hike. Right in the beginning, I can highlight that these are, like, specific one-time expenses, because the mix of December is below INR 4,000, December month. So that this INR 4,500, I would say, is an aberration of one of these initiatives. For example, the brand transition, the B2B and the B2C segment.
As you know, that we have introduced and more, larger amplification of Adani Cement brand. We have also done a substantial, overhauling of the assets of Sanghi, Penna, which has seen a significant capacity improvement. I must also tell you that Sanghi is now operating the December month exit, is almost at, for clinker, 80% and for cement, 65%. Penna is also showing a very healthy improvement in the capacity utilization. There were one or two plants which had, some unfortunate, equipment failures, and one of them was Tandur in, for the Penna and Jamul for ACC. But these are, like, under now, going to be operational very soon. So these are, like, expenditures which have come, in terms of the, quarter, but, this will not be there for the March quarter.
Therefore, end of December, already, as I said, we are below INR 4,000 a ton. Coming back to my commentary, our renewable energy footprint now stands at almost 900 MW, strengthening both sustainability and cost resilience. The real benefits of this 900 MW trend will come in coming quarters, because many of this power, as of now, I'm selling in the market, because it will require certain approvals in terms of consumption at my sites, but that will happen very soon, and therefore, the benefit will significantly come in the coming quarters. But the good thing is, these assets are operational and I'm able to sell this power in the market. We expect to reach 1,122 MW by FY 2027, providing this long-term insulation in terms of the energy price volatility.
This green power, when I consume captively, as I said, it will significantly improve my overall power cost per unit. As of now, I can tell you it is almost closer to INR 6.1 per unit. When I look at the competition, they have an advantage over there, but that advantage will sooner come to Adani Cement once this is fully operational and we are able to consume it. Digital intelligence continues to be central to our operating model. We have launched CINOC, Cement Intelligence Network Operating Center, which is AI-enabled central control system. Lots of applications, user interfaces, simplified apps and smart tabs have been given to our people. And I strongly believe that this will be a game changer and will bring substantial efficiency and productivity with power of analytics to the cement business.
Both IT and OT will have a significant improvement. Our ecosystem continues to deepen our aggregation advantage. We expanded engagement across the priority industry platforms. You are all aware of our engagement with CREDAI, BAI, NAREDCO, Institute of Town Planning, amongst many. These are, like, first of its kind institutional partnerships which we have initiated in the last nine months, and they are giving us significant results. On-the-ground programs and brand activations continue to build trust in our product quality and services. FutureX, which now engages almost 750+ institutions. Some of you would know that we launched this program on fifteenth of September, which is turned out to be the largest industry academy initiative.
Almost now it encompasses 1.3 million students, which, will give us a significant advantage to, to bring the synergies of academia with the industry, apart from getting the mind share and market share. In terms of the consolidated financial performance, we delivered a strong performance this quarter, supported by higher volumes, improved realizations, and discipline. On the cost, although, as I said, the December month has been a significant improvement, and which will percolate down to March quarter as well.... We reported our highest ever quarterly sales volume at almost 18.9 million tons, up 17%, and the market share improved to 16.6%. By the way, we have been giving a consistent double-digit, volume growth for the last nine months. So even if you look at my nine months, volume growth, it is in the range of almost 19%.
On a normalized basis, we achieved the highest quarterly revenue at INR 10,277 crores in the third quarter of the year, Q3, up 20%, supported by INR 5 per bag improvement in realizations. I think you will find some of the industry players have seen a decline in the prices Y-on-Y, but, our focus on market, our focus on, premium cement, our focus on blended cement, and you will see it more accelerated focus. It is now giving us a delta improvement in the realization, which in this case has improved by INR 5 per bag, Y-on-Y. PAT for the quarter was INR 378 crores, a jump of 258%. Again, for the sake of clarification, we have put an entire table on the one-off, exceptional items, so that PAT is apple-to-apple comparable.
Unlike if you go with the reported numbers, you will find a steep fall, but that is incorrect because there are exceptional items sitting in terms of the income tax refunds and one time off the items or the excise duty drawback for Himachal, which I have clarified in my IR deck, also in my reported numbers, also in press release. So that is for apple-to-apple comparison, PAT is up 258%. Operating EBITDA was INR 1,353 crore, up 53%. And again, I've given a clarification that the Himachal excise drawback is a one-off item. Last time also, you all had suggested the same thing, INR 635 odd crore.
So when you remove that, my EBITDA is up 53% Y-on-Y, and the per metric ton EBITDA is closer to INR 718 per ton, up 31%. I have given you some explanation earlier when in second quarter, September, when my EBITDA was almost 1,020 rupees per ton. The delta of INR 250 per ton, ballpark, for example, is what I told you in the element of cost, which is slightly higher as compared to last quarter, but as I said, December exit is phenomenally below 4,000. The EBITDA performance was supported by Y-on-Y, which is 2% cost improvement. Kiln cost declined 6%.
Of course, I can tell you that the kiln rate is better for me, but the kiln efficiency, I'm still, when I look at some benchmarks, I'm still at 25-30 kilocalorie heat consumption higher, which is an area which is clearly earmarked for us to run down. Power cost reduced by 15% on back of the green power share, which is increased by almost 15%, and my logistics cost. There's a good scope for me to further reduce my logistics cost, but as of now, it is reduced by, say, 1%. The diluted earnings per share for the quarter is INR 0.82.
Net worth is almost at INR 70,000 crore, to be precise, INR 69,854 crore, and it increased by 361 crore, which is equal to closer to the PAT, which we have made for the quarter. Company remains debt-free, CRISIL and CARE AAA stable and A1+ ratings, which are the highest in the country. From the operational excellence, friends, our operations have strengthened on back of disciplined execution, capacity expansion and network optimization. In terms of the low CapEx logistic initiatives, which, for example, are on track. Some of them, for example, so we have already ordered the vessels, almost seven of them, which will be delivered to us by somewhere like mid-2027.
We also are working right now in terms of the EV, for which we already have given some orders. So you will see more of this. We also are putting the blenders at the plants. We are also debottlenecking on the logistics. We are also putting a sharp increase in terms of the production of the premium cement. So all of this, for example, will bring a substantial improvement in the, in the overall state, plant efficiency. By the way, we have substantially run down the SKUs, and which used to be multiple SKUs in from a plant. Almost 30%-40% of that, efficiency has also been brought in. On the digitalization, I have covered it, so I won't repeat more, but on the ESG and sustainability, this quarter marked another step forward in strengthening our climate and sustainability leadership.
Efficiency improvement from the modern assets, and by the way, more and more modern assets, because this March quarter itself, we will have almost around 8 million tons of cement, which will be up and running and commissioned. So this efficient new assets will help to average out the overall efficiency factors. It will help me to bring down the lead distances. As of now, I see that my lead is relatively higher compared to some of the peers, but that is obviously in terms of the location advantage what others have, since they have number of GUs. But in my case, as we move with new assets, it will come down.
We accelerated our breakthrough on decarbonization pathways, while we have been the first in the universe in terms of the commercial scale installation of Coolbrook's RDH, which is rotodynamic heater technology for the kiln electrification. This will help me substantially to improve my AFR. As you know that we are doing it in Boyareddypalli plant in Andhra. Additionally, the Indo-Swedish carbon capture unit pilot project in partnership with IIT Bombay and the Government of Sweden is already in the process. And we have become the first Indian cement company to adopt the TNFD framework, bringing our nature-related disclosures in line with the global benchmark.
On the ESG front, friends, I can assure you that we are front runners, and we will not leave any stone unturned to achieve the ESG desired parameters. On people, community, and capability building, our organization is becoming younger. As I told you last time also, my plants are becoming younger. We are becoming more digital savvy, and we are more focusing on smart execution. Across the communities, we are expanding access to future-ready skills through robotics, drone labs, rural KPOs, so and so forth. I think so in terms of our community engagement, it is on a very strong footing, and therefore you will see more and like approvals coming on the at the various public hearings and all. Brand, customer, and stakeholder engagement has been very strong.
Our presence across the 29 high impact industry platforms enable us directly engage with more than 38,000 key stakeholders, including builders, developers, engineers, architects, and policymakers, which I mentioned to you, some of the great institutions like CREDAI, BAI, NAREDCO, and so forth. It is giving us a direct interface. Brand visibility remained widespread, with outreach and activations touching over 300 million individuals across the cinema, OTT, digital, so and so forth. I think so our team is very forward in terms of using the digital media. In terms of the technical services, which is the one of the key strengths of Adani Cement, and I have a very sizable team on technical services. We have strengthened considerably.
We what we call it as ACT, Adani Certified Technology site, which are like the houses which are built by our premium cement. This is growing every quarter, and this quarter we had almost 36,000 ACT sites. We have a network of 70,000+ contractors, influencers. We have almost, like, taken 400 workshops, and so and so forth. So on the technical engagement also, we are on a very strong footing. Now, friends, I'm on the last concluding for my opening speech. In terms of industry, I'm very positive. I've been positive for last four quarters. At the beginning of this financial year, in the first quarter itself, I told I see a demand growth of almost 8%.
In between, there were headwinds of the war and monsoon and seasonal dynamics and so and so forth. But you are seeing a strong revival coming back, and therefore, FY 2026, I strongly believe, the industry will close at almost 8% growth of demand, which resembles also like 1.1 times of the GDP of almost 7.5. So demand comes to around 8%. Exit of trend of December was robust, and with demand strengthening from early December and carrying into January also. I mentioned to you that even in January, you have seen a good level of, say, price improvements, and we are also seeing a similar trend expected in February. So the overall revenue are going to improve.
It is expected, almost, as I said, 8% demand growth and, almost, two to three percent improvement, another improvement in the quarter, coming quarter, which will be healthy finish for the year. Against this backdrop, our R&D-backed customized cement solutions, you will hear it very soon, that we are also doing some specific R&D-backed, customized cements, and, that is going to strengthen my value-added products of, cement and thereby the weighted average realizations. Institutional demand is very healthy, but, growing focus is on the blended cement and, which will consume lots of, say, fly ash or slag. So that is what, for example, will be a key driver for me. Currently, my, share of, trade and non-trade is almost, 65% is trade and non-trade is 35%.
Down the line, it, it will be moving towards 70/30. By the way, end of December, exit of December, we are seeing this trend of 67/33, and January already we are at 66, 70/30. So that is, for example, what we are focusing more on the, on the trade channels, which is going to give healthy kind of, say, realizations. Overall, strategies are working very well on the market-led leadership, and the cost leadership is going to unfold in quarters to come, as already started with December at almost below 4,000. And I'm seeing the same trend, which will follow through in the March quarter.
Needless to mention that all the benefits of AFR, WHRS, green power, new cement capacities gives me lots of confidence that our journey to achieve 3,800 rupees per ton of cost by March 2027, 3,650 by March 2028, that conviction and confidence continues. Thank you. Although it was a little longer, but I thought I will go into more details. Now back to the moderator.
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 touchtone 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 a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Navin Sahadeo from ICICI Securities. Please go ahead.
Yeah. Good evening, sir. Hello.
Yeah, Navin, good evening.
Yeah, good evening, sir. So, two questions. One is, on your volumes. So in the quarter, you have reported about 17% growth. But if I were to just exclude Orient from it, which you have reported... I mean, first of all, congratulations for the transparent, like, you know, kind of, entity-wise, reporting, which helps us, really understand and even pose this question in the first place. So congratulations on that. My question was-
... If I exclude Orient from the total volumes, then the volume growth comes to more like 6%, and even I'm assuming Penna would have ramped up. My question was that if the realization decline, as I see, is much less than peers, so is it that in Q3 you are focusing more on premiumization or on pricing or value versus volume, and which is why we saw a slightly lesser growth in other regions, if I may, if I may, think it that way? And how should one look at then incrementally going ahead about volumes in the South from a market share and growth point of view?
Okay, so you had two questions. So, Navin, yeah, you are through with your both the questions?
Sorry. My second question then was on the renewable energy. So, 898 out of 1,122 is already commissioned, which is nearly 80%. But in your opening comments, you also said that you're not able to utilize it fully, pending approval, so you're selling it in the market. So is it that this, whatever you are selling in the market, is—how is that reported in the, in the first place? And then what kind of savings, by when can we expect, and how much, savings in the renewable space?
Okay, Naveen, so let's come to the most important question is in terms of the volume growth. I think 17%, which includes all the entities, Ambuja as consolidated, right, Y on Y. So you're right, that in the previous year quarter, Orient was not there. I can do the math, and Orient, if I exclude, that would come somewhere like 8%. And if I completely remove all the acquired assets, and then if I go with the base capacities, Naveen, that comes to... In fact, that is a tad better than the industry. It comes to closer to around, around, 6%. Yeah. Now, which would mean the base capacities of Ambuja and ACC, right? Now, if you, if you do a similar thing for other companies, you will find that those companies are at somewhere like 3%-4%.
I'm not naming anyone, but generally, like, that is the trend, but we are actually better than that. Second question. So second point, you're right, that in terms of the gear shift, of course, now the strong brand of Ambuja and ACC, and now with the loaded power of Adani, and therefore now it's like Adani Ambuja, Adani ACC, our whole larger drive is to regain the market share on the trade side. So many companies will end up doing a larger share of volume because they will end up doing on the non-trade sides and all. Our focus will be to regain the leadership position of Adani Cement on the trade side, on back of the strong brand equity what we have. So therefore, forward-looking, I can say 70/30.
I mentioned in my opening remarks, 65-35 to now the end of December to 67-33, and then in March already although in the month of January, I'm seeing 70-30, and gradually down the line, 75-25, for example. So that is like our wish list and our working to achieve. So that will definitely help me to improve my realization. It will help me to penetrate more premiumization, and therefore, the NSP will be better than the industry peers. This is a clear earmark strategy, and which is played in the month of in the quarter of December. And more so you will see it actually being played in the month of January as well as the coming quarters.
Which also brings another point, that the digital strength will help me more in direct engagement with the... and simplified working with the dealers, and therefore the retailers, and therefore the end customers. Therefore, I'm very confident, the whole logistics and the technology optimizers and the algorithms will help me on a speed of orders and all. So therefore, the blended cement and the trade will be a higher growth percentage. Coming back to your question on the renewable energy. As of now, renewable energy, there are two factors: one is certain government approval, second is also that my capacities, when they come up and running. For example, I told you, like 8 million of the grinding units, then also the clinker in Bhatapara, line three, the clinker in Maratha, which is expected in first quarter of the next year.
Clinkering facilities obviously consume more power. So as things move forward and when my new capacities come fully operational, they will be able to draw more power. Pending that, therefore, you can say that I am ahead in terms of power, and therefore I am also able to sell those power in the market. And I have a combination of both, green wind power and solar power. As of now, this income of power, it resides under the other operating income in the P&L. Yeah? So, that is how it is. If I net it off in my power cost, then it will be much lower, but from an accounting perspective, right now, this third-party sale is residing under the other operating income. Yeah?
Thank you. Thank you, sir.
Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead.
Yeah, hi, sir. A couple of questions. Sir, first is, how are we looking at the JP assets, which are now sitting at AEL? Would it make logical sense for Ambuja to digest it, based on what AEL decides upon? That's the first question, sir.
... Yeah, you complete, Ritesh, and then I can in one time I can-
Yep. Yes, sir. And sir, second question is more on accounting. In ACC press release, we have written that plant maintenance from next fiscal will be amortized over 12 months. I just wanted to understand the rationale for it. And, the other accounting-related question was in the notes to accounts, again, we have indicated that, with respect to coal sales as other operating income, now basically we net it off under power and fuel. In the earlier quarters, we have seen something similar for sales promotion expense. So we just wanted to understand the thought process, for the all three line items. One was maintenance, second is coal sales, and third is promotion expense. Thank you.
Yeah, Ritesh, thank you. Good observations. First, Ritesh, on the JP assets, last time also, I think a similar question would have had come, rather, and I said that AEL is a separately listed company, and it would be better that this question is asked to them. As of now, I will keep it on an arm's length basis, and therefore, I would say no comment right now from Adani Cement, from Ambuja on this. Second is, in terms of the accounting of the plant maintenance. This is, like, very important, Ritesh, because, otherwise, what happens is, so far as of now, the accounting has been done.
For example, say, December quarter, the accounting results into distorted sometimes picture of a quarter because the cost gets booked on an actual basis when the maintenance happens. What now we want to bring it, which is more logically to all of you also, that this amortization will happen over 12 months, so that the quarters don't get distorted with the scheduled plant maintenances. Right now, the accounting policy has been to book it in the quarter when the maintenance activity actually happens. Yeah, so that is like a very proactive step, so that all of you are able to then properly look at the quarter in a real sense. So far as your third question is, in terms of the coal sales-
Yeah.
and the which is like whether it is netting off my other OpEx. I will just, like, want some details from my CFO.
Yeah.
Yeah, the-
So in ACC, because of the MSA, what we have between the one cement platform, so the coal sale, which happens, earlier we were netting it off on the expenditure. Given the discussions which we had with our auditors, we have to show net and gross at both ends. So that is going under the revenue from operations instead of it netting off from the power and fuel, and the value was INR 315 crore for the period.
Yeah.
Sure. Sir, can I just squeeze in one more question?
But again, Ritesh, I think the moot point here is, I just want to again, check that there is no impact.
First, it's only grossing up.
It is only the grossing up.
Yeah.
No impact on the PNL item.
Absolutely.
Right? No impact on the EBITDA, right? So, yeah, so, Ritesh, over to you again.
Yep. And sir, last question was basically, how should we understand the change in inventory on a sequential basis at Ambuja consolidated level?
Change in inventory, like, what is your question specific?
It's more from -30 to -84. The swing is quite substantial.
Yeah. So, okay, Rohit, you want to address that one?
It's... So, Ritesh, if I can answer here. I mean, if you take in quarter two, that's where we have a big swing, and that's predominantly on account of the stock buildup, which happens in the quarter. That's the seasonality of the business, which is a low quarter sale from that perspective. So you will have buildup on the cement stocks. You also have a buildup on the clinker stocks, which gets pushed out in quarter three, quarter four, and quarter one, where it gets smoother now. So we see in this current quarter, we don't have much of it reflecting it. It's predominantly on buildup of the quarter two, which we have. Otherwise, it's a seasonality which impacts, so there's nothing more to add on to.
Sure. Thank you so much for the answers. Thank you.
Thank you. The next question is from the line of Rahul Gupta from Morgan Stanley. Please go ahead.
Hi, and thank you for taking my question. My first question is, in the September quarter, you had mentioned that a majority of consolidation of Orient and Sanghi-related costs were largely behind. In fact, there was around INR 42 per ton for maintenance-related cost in September, which should have subsided in this quarter. Can you help us understand what exactly is driving OpEx higher Q on Q? Any quantification over here would be helpful. And my another question is, by when can we expect clarity on the expansion? You gave us the 15 million ton debottlenecking breakdown, but what about the rest on your roadmap to 155 million ton? Thank you.
So, what's his name?
Rahul Gupta.
Rahul, hi. I think if you go back to Slide 38, so while it captures broadly the overall phasing of the expansion plan, so FY 2026 exit is 115. Actually, it is 117, but then I am also going to do mothballing of two uneconomic unviable and economically unviable units, basically. So therefore, I'm seeing 115 on a net basis. And then on top of it, the overall phasing of FY 2027 and 2028, that will cover balance almost. So it will have a combination of both the new units and the debottlenecking also. Ballpark around 130-132 will come by exit of FY 2027, and the balance will then come online at exit of March 2028.
Thank you for that. What I was looking for was breakdown asset-wise. When can we expect details around that?
Breakdown of the capacity or breakdown-
Yeah.
What breakdown?
Capacity.
Capacity.
Yes.
Okay, that we can. So as things, first, let's achieve the end of March, so that we are happy at, say, 118 million tons, 117, sorry, and minus two of the modelling. So 115, for example. Let's achieve that. Then as things progress, we will keep giving you further details, because the blueprint is ready. But as things progress, we also want to go progressively with the quarters.
Got it. Thank you. And my, the earlier question on, OpEx. Thank you.
Thank you.
Sorry, what? The earlier question was on cost of what? Of Penna and Sanghi?
Debottlenecking.
Debottlenecking. I think in the last previous analyst call, also I told the debottlenecking comes below 50. So I was at say $48 per ton.
No, no, that's not what I was looking for. The last quarter you had mentioned that Sanghi and Orient were largely fully transitioned, and
Okay, the operating cost. The operating cost, you're saying.
Yeah.
The O&M cost. No, no, I think the O&M cost, for example, Rahul, of course, like, that point of time, Sanghi and Penna are through. But now, for you to have a substantially more capacity utilization, there were some items which are left. And then as I said that for Penna, there were a couple of these plants, like, more so like Tandur was down. And in case of ACC, couple of old assets were down on certain equipment. So that is where, for example, the some of the scheduled maintenance, which was supposed to happen in, say, January, February, got preponed in December itself, and that results into... And which is precisely my point when Ritesh asked that how you want to schedule this in terms of the overall maintenance cost.
I told that from coming financial year, we will have a proper amortization of the O&M cost over the quarters in terms of spread over the month in as part of the say budget, so that there is no per se distortion of the cost on the actual basis, yeah? Unless there is any other breakdown, otherwise it will be like scheduled over the four quarters.
So let me, let me ask this question differently: So how much of your OpEx was one-off during the quarter?
No, so like, a good level of, for example, almost like, in terms of my branding and my repairs, for example, almost INR 125, is, sort of like one-off. In terms of my higher freight, because, sometimes you then go with a larger lead, and it is almost like INR 25-INR 35 higher per ton. In terms of, my some of the, legal costs, one time in terms of, some of the legal cases, which we have won, by the way, but then this, this, this adds to the cost. So ballpark around, say, 150 odd rupees is, say, one time.
Therefore, like when I look at now my December exit, my December exit is clearly below INR 4,000, while compared to which was almost like 4,500 rupees a ton for the quarter. Yeah? So, with every passing month, with every better utilization of green power, with every better utilization of the WHRS capacities and the alternate fuels, these costs are going to come down. So therefore, in terms of giving you an estimate, I can only give you an estimate ballpark, but the actuals will be positively surprising to all of us.
Got it. Thank you so much, and wish you all the...
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your question to one per participant. The next question is from the line of Siddharth Mehrotra from Kotak Securities. Please go ahead.
Thank you for the opportunity, sir. So just to sort of elaborate on the previous participant's questions, could you perhaps give us some breakdown in terms of direction for each of the cost line items? Say, for example, in terms of power and fuel costs, how much do you expect them to trend downwards, upwards, same for other costs, so on and so forth? Yeah.
Yeah, yeah. Siddharth, good, good point. I can give you ballpark. I think in the initial commentary also I mentioned. Let us say, for example, my overall, say, power consumption, per ton of cement, which I find there's a scope for me to reduce by almost 10-12 units per ton. And in terms of rupees per unit, almost, one and a half to two rupees, which is like although end objective, but one rupee immediately. So ballpark, hundred to one twenty-five rupees a ton, I see improvement possible quickly on the power. While my end target is by FY 2028, 4.5 rupees per unit as compared to 6.1 rupees in terms of my power cost. And my consumption, almost which is, from here, I can improve by almost minimum 15 units.
But as of now, I'm thinking 10 units is quite possible in the coming quarters and this INR 1 reduction. So like let us say around INR 150, INR 100-INR 125 reduction on the power cost. On the fuel, almost like power and the fuel is almost INR 150 reduction is what, for example, we would like to peg ourselves. And back on the strength of the new asset, which will come to us, which will reduce my overall the heat consumption, and with every passing quarter, my fuel cost is coming down, and that you will see further trend.
Look at the raw material, like now, fly ash and all with the group synergies, we will be benefiting on the fly ash. We are putting up the BCFC rakes, all across, the major, centers of consumption, which will bring me, benefits of logistics. So on logistics part, for example, when I look at it, almost INR 150 reduction is what we are targeting to, and, on the, on the raw material, almost INR 100. So plus minus around, say, INR 300-INR 350 is what, for example, will come, and that should come, to bring it down my cost to almost INR 3,800, again, as I'm saying, exit of twenty-seven of March and INR 3,650.
But this is like, for example, as I said, positively we'll surprise with every passing quarter. But the blueprint is very clearly laid down.
Good, sir. So these are basically longer term goals, not exactly visible, say, over 1 or 2 quarters, right?
No, they will, they will come down, because as I said, like, the moment my line is ready for commissioning, Bhatapara, for example, line three is commissioned, and it is ramping up. Maratha will come in Q1. This, this quarter, 8 million tons of cement will come. They will all be geared up to consume green power, which is right now, for example, which we are selling in the market. So, like, it's not like long-mid to long term, it will be possible to consume as they start the ramp up, on an immediate basis also, number one. The moment they commission and get giving commercial production, this 8 million and all, the efficiency immediately improves because these are all efficient new kilns, as compared to my almost the existing old assets.
So, like, this combination will give you quick returns on a quarterly basis. So every passing quarter will give you the improvements. Needless to say that, as I mentioned, the revenue pattern also will keep improving because all these new assets and all will be focused on premium and trade sales, focus, blended cement focus. Many of my rakes, BCFC rakes, are getting delivered, so, like, typically once in almost three to four rakes gets delivered a quarter. The moment they get delivered a quarter, it straightaway helps me to deploy for movement of fly ash on railway logistics, and therefore, the blended cement portion will go up. So I think don't look it as a long term. Look it as a every passing quarter kind of action.
Got it, sir. Just one quick question, sir. What would be your guidance for CapEx, say, the next couple of years?
So CapEx, Siddharth, as I have also highlighted in the investor deck, around ballpark, for the growth part, say, ballpark, INR 8,000 odd crore, and for the efficiencies and all, another, say, INR 2,000 odd crore. So I would peg it, but this is like, this is like a modular kind of, say, CapEx, because, this is the various opportunities. My foremost focus remains and continues on capacity utilization of my existing assets. So, that is, like, straightaway helps me to bring substantial KPIs improvement, and therefore, this CapEx, when I indicate to you, it also will be a factor of, how, the existing assets also spans out in terms of utilization of the capacity and all. But ballpark, yeah, INR 10,000 odd crore you can consider.
Over two years, three years?
No, no, this is like I'm saying, yearly CapEx-
Annual CapEx.
Yeah.
Okay, okay.
Annual CapEx.
Got it, got it. Got it. Thank you.
Thank you. The next question is from the line of Amit Murarka from Axis Capital. Please go ahead.
Yeah, hi, good evening, and thanks for the opportunity. So, just on your expansions, while you have put out the, the numbers, but specifically on the clinker unit, which is Maratha and the Rajasthan clinker unit and Penna. By when is that expected to commission now?
Oh, good. So, like, Penna, Amit, thank you. Penna is expected in this quarter itself.
Okay.
It's been targeted somewhere like second, third week of February, but hopefully like mid of February. Yeah, so this quarter itself, the commissioning will happen. And, so far as Maratha is concerned, I mentioned earlier, it is expected somewhere like in Q1 to Q2. I would just keep a buffer of one quarter, so Q1 to Q2. But, so Bhatapara and Penna Marwar, Bhatapara is commissioned, Penna Marwar in February, then Maratha somewhere like in Q2 kind of scenario.
Sure, understood. And beyond these then, which are the other clinker units that you plan to take up in order to reach that 155 million ton of grinding?
Again, good question, Amit. Thank you. See, primarily for me, the engines of growth in terms of clinkering, Bhatapara remains my engine of growth so far as east is concerned. Sanghi is my engine of growth so far as west is concerned. And, in terms of south, we have Wadi and Chittapur, basically. But, primarily, Sanghi is where we will grow. Mundra, we are already expanding, in terms of the calcium sludge based cement, basically. You're aware of that, and Bhatapara, which I mentioned. So... And another important thing is for north, Marwar. Marwar remains my major, for example, mother unit in terms of the expansion. So the clinkering lines will be more-...
primarily as a brownfield expansion, and therefore the benefits of, brownfield CapEx, and therefore the economies of scale and all will come. That's how, for example, our whole, blueprint will emerge and all the GU are therefore, and BCTs and all. A good thing is railways have also come out with the, with the, bulk movement discount policies, our tie with CONCOR. In fact, my CapEx actually will, be a tad lower, because now instead of GU, you can also very well plan BCT and, the advantage of fly ash the group has. So this will get. The model is getting now reemerging because of these various, dynamics which are positive for the, for the, for the industry. Yeah, but, as I said, Bhatapara, then, Marwar, then Sanghi, are our, are our mother units for these three locations.
In South, I have Chittapur and Wadi, which are like primarily our group engines in South.
Thanks a lot. That's very helpful. And, also on grinding, when will you be coming out with more details on the 24 million ton, which you have mentioned for 2027 and 2028?
I will go back to what I think Rahul had asked this question, or Siddharth would have asked this question, Amit. I think, give me time that, with every passing quarter, I'm going to keep you posted, because, as I said, the industry is in a very interesting, very, supportive of policies by government, and therefore, instead of saying you that grinding units, I will rather, put a blend of BCTs and grindings and container movement and so on and so forth. Therefore, like, the models are emerging and, and therefore, like, I will keep updating you all in terms of the footprints with every passing quarter.
Thank you. Just a last question, if I may. So, you were earlier also contemplating giving out the operations on a contracting basis. So has there been any progress on that attempt that you're making?
I must appreciate, Amit, you have been keeping so close track. Of course, yes. Whatever we are discussing with you on every investor call, we are moving our our journey on that. So in terms of the outsourcing also, I must compliment my team and the efforts which has been coming out, that we are in a good momentum on that, and you will hear positive things on that part as well.
Okay. That's all from me. Thank you very much, and best wishes.
Thank you.
Thank you. The next question is from the line of Raashi from Citibank. Please go ahead.
Thank you. My first question is on cost. Sorry to ask several questions on cost. But just to understand this, you mentioned that in the second quarter, the costs were INR 4,000-5,000, and that's gone to about INR 4,500. And as of the close of the quarter, you are at INR 4,000. Is... Are these numbers correct?
That is true, Raashi.
Okay. So then, and you also mentioned that the one-off expenses in the quarter were about INR 150 or so. So from 4,500, if I remove 150, I come to 4,350. But that 350 is such a fast decline, like, how did that quick decline come from, like, the quarter to current?
No. So, Raashi, like, I gave you some quick headlines when it was asked, like, what are the items which are, like, one-off, and I explained. But, I explained in terms of broadly, the branding, the O&M, the logistics cost, for example, which came in, and some of these legal costs which, additionally came in and also. In terms of, this delta of INR 250, which was there as compared to September quarter, ballpark, 250, resides in some of these items. But primarily, primarily the first two months have seen it's more on the maintenance and all. December was lean and clean, and therefore, December is almost, like, below 4,000. And, as I progress in March... In January also, it is actually below 4,000.
Therefore, my confidence to circle back to you, on March exit at, below 4,000 is very high. I can share further to you, one, details more, if you require, but, that is, this is like ballpark, what I have been, explaining, right from my initial commentary to now. And, as I said, with every passing month, the benefits of, green power, the benefits and all of that, for example, I won't repeat, are actually coming in. So therefore, like, some, some of these items get paid off also. Yeah. So, these are like, ballpark, my answers to that.
Okay. On pricing, you mentioned that in the south, non-trade prices were up INR 15-INR 20 a bag, in the north, INR 5-INR 10 a bag. Are there any increments on trade as well, or it's just only in the non-trade segment?
So, there is an improvement on trade also, but the level of speed of growth is more on non-trade, and as compared to trade, because the downfall also was much accelerated for non-trade, and therefore, the corrective action happened. But of course, yeah, even in the trade segment, it has improved. Yeah. And good thing is now, again, for South also, for example, our focus on the blended cement, and I'm happy to share that the... Some of the first kind of initiatives in terms of Penna assets, where the blended cements are now moving out from the factories. Just like two days back, that started. I'm also happy to share with you that in Bombay, the blended cement in form of premium cement, otherwise Bombay is more of a OPC market....
Bombay also, for example, we have launched our premium cement, and it has got a huge response positive. So, yeah, so I think coming back to, south has seen trade also improvement, and south will see more of our blended share of cement improvement in an accelerated manner.
Would you be able to quantify on average where your realizations today are versus the last quarter?
Raashi, that would be too, too much of tech- details, but basically, but I can ballpark tell you that, yes, things are improving, I think, all, all clusters, all zones. And good thing is like the, the brand equity is now pulling a good level of demand from the, from the customers. And the Adani added advantage of brand actually is bringing lots of positive euphoria in the supply chain partners. So you will find the benefits coming in every passing quarter in terms of market realizations.
Got it. And just one last question from me. Your balance sheet is suggesting there's a slight decline in the cash, quarter-on-quarter. Could you explain that, please?
Oh, like, Raashi, when you are looking at commissioning 8 million tons of cement, obviously, it will have a CapEx outgo. All your clinkering of 8 million tons, which will be coming right now from Penna to Bhatapara, for example, to the commissioning of Maratha. All of this is a planned scheduled CapEx, and therefore, primarily. But if you look at, like obviously you know that from March to June, and from June to September, there has been this acquisition of Orient and all. So Orient, if you keep it aside, which was almost like outgo of INR 6,000-odd crore, but if you keep that aside, huge CapEx, which is there in terms of the capacities which are getting added, and the volumes growth will come in incoming quarters.
I understood. CapEx in nine months is how much? Total growth and efficiency.
So in terms of CapEx for the nine months, it is ballpark around INR 6,000 crore. And I would put the run rate, and therefore I'd given initially that almost INR 10,000 crore is what we are expecting between growth and efficiency. And for the next three months also, for example, another INR 3,000 crore. So this will be ballpark INR 9,000 crore for this year, and the same plus or minus, say, 10% run rate we will follow, passing quarter, in passing years also.
Got it. Thank you. There's no question.
Thank you. The next question is from the line of Jyoti Gupta from Nirmal Bang. Please go ahead.
Good evening, sir. Thank you for the opportunity. My question is, on your Slide 10, where you said that the cost reduction will be INR 4,000 per metric ton, March 2026 exit. Nine months, we are averaging around INR 4,000, roughly INR 4,300. So do you... Can I assume that last year's fourth quarter added the INR 900-odd EBITDA per ton, and with the improved conditions in the first two months of this quarter, can I see that improvement reflecting in the EBITDA per ton? So maybe INR 900 + INR 300, or maybe anywhere close to it, could be the EBITDA per ton for fourth, for full, fourth quarter? And can we end the full year with something like INR 1,000+ EBITDA per ton?
So, Jyoti, I think I can give you commentary on cost. So far as EBITDA has two elements, therefore like, of course, I've hinted that, and, informed basically that January price momentum is very positive, and therefore, you will see, that upside, in terms of price also. And of course, on the cost, which I mentioned, that exit of March, it will be, below INR 4,000. So you will... Definitely, you can expect, improvement, overall, but what would be four digits or three digits? I would, not give a forward-looking EBITDA.
But are we sure we'll be around 4,000? Will we average 4,000 full year?
I'm giving exit of March, Jyoti.
Yeah, so that's a full, a full year. So quarter four, 4,000, so there's significant improvement.
For the month of-
No, sir, this is the number, March twenty-sixth. So March twenty-sixth, 4,000, and you're already nine months average of roughly around 4,300. So that INR 300 per ton improvement should reflect in the fourth quarter alone, which means overall,
No, no, Jyoti, it will be definitely, but just, like, put the numbers properly. When I say March exit, in this case, I'm meaning of March month exit. Yeah? So therefore, like, like, you do your math on that basis. And, like in terms of price and EBITDA, definitely the cost, definitely the performance improvement will come on EBITDA.
Thank you so much.
Yeah.
Thank you. Next question is from the line of Jashandeep Singh Chadha from Nomura. Please go ahead.
Hello. Am I audible?
Yeah, Jashandeep.
Yeah. Hi, hi, sir. Thank you for the opportunity. Sir, my first question is regarding the acquired assets. It seems like, you know, for a year or so, these acquired assets have been a drag on the performance of Ambuja Consolidated. In your presentation, also, you mentioned that from the organic assets, you delivered INR 1,045 per ton EBITDA. I just wanted to understand from the management point of view, from the strategy point of view, by FY 2027 end, what are the utilizations that you're targeting from these assets? What is the internal EBITDA per ton targets, and what will be the key levers, you know, in generating those numbers? I just wanted to get a sense of, you know, how you're planning to ramp up the acquired assets.
Jashandeep, now that we have acquired and we have integrated, so therefore I would say that it's now under Adani Cement. All these assets, including my existing assets, the target is to hit 80% utilization, and the target is to hit EBITDA, which is almost closer to INR 1,250-1,300 a ton, and then gradually move towards INR 1,500 per ton. So the acquired assets are doing very well. I told you, Sanghi, which is now a good turnaround, and we are hitting almost 80% on clinker for December month, and I told you 65% on cement, and which will move up further.
Some debottlenecking, which I have to do it in Sanghi, so that I get, almost, as of now, say, 25% of the clinker, which is like 20,000 tons per day. I have to do a small CapEx part, which is already in the process. So by June or July, I should have 25 tons utilization. As of now, I'm handicapped to 17,500 tons per day kind of utilization. So that will happen. Yeah. So when you acquire asset like this, and most of the assets which are, which are financially challenged, when they were acquired, and when the erstwhile company, promoters, could not do overhauling and all, it takes time. Because these are, like, strategically important assets.
You get 1,000 million tons, you have a huge play, you have a mother plant now, which will set up more clinker units over there. Therefore, I would give enough opportunity for the asset. And by the way, I'm planning for a site visit also for all of you in the month of February. Team will come back to you shortly on this, so that seeing is believing, and therefore, like, you will get a larger comfort of the turnaround of Sanghi. That was, say, on the, on the acquired assets. So, like, for me now, acquired and existing, it gets all as a Adani Cement platform, one cement platform.
Now, I would be confidently discussing with you in terms of the capacity in line with the Adani norms and Adani standards for all, all of these assets.
Understood, sir, and thank you for this. So my next question is, you know, more from a strategy point of view, from an industry point of view. Now, Adani Cement is one of the largest player we have. Just wanted to understand your view on, you know, consolidation. Do you think... I mean, you have already told us that organic capacity expansion you will be discussing in a later call, but do you think that if the consolidation phase over or, you know, there is more scope? And, I mean, just a structural view, if you can give us how are you looking at the industry right now?
So consolidation phase, of course, like, till one to one and hal years back, has seen a good run-up on that, and now taken a pause because the companies which have deeper pockets when they have acquired, and therefore they are just taking a pause to basically ramp up the existing assets, and that trend will continue, and therefore the focus on ramping up the acquired assets and then capacity utilization of the assets remains the focus area. But as things turn around, obviously then companies become more bullish, and this is like a cycle which will continue. So it takes a pause, it again comes back to the cycle, and there are companies which will be available for consolidation, right from small size to mid-size companies.
But the pace will be not that what we have seen one and a half years back. The pace will be little lesser. The size and scales will be relatively lesser. But I would say that, yes, there will still be opportunities, and I'm sure those are opportunities. I would always saying that we are always open to at the right price and right value. So therefore, no one, for example, because I have a very strong balance sheet, INR 70,000 crore of net worth and zero debt as of now. So therefore, like, opportunities will come at the right price, we'll be very open to that.
The current deeper focus is right now on the ramp up of the existing facilities and the organic growth, which is already we have put a blueprint to work on.
Understood, sir. Thank you so much for this.
Thank you.
Thank you.
Participants, you are requested to limit your questions to one per participant. The next question is from the line of Prateek Kumar from Jefferies. Please go ahead.
Yeah, good evening, sir. Please allow a couple of questions. Can you tell how the EBITDA per ton would look in different regions in 3Q? Or particularly, maybe which region underperformed versus your 7 and 15 per ton, blended average due to specific plant performances?
No, generally, it's like you all know the answer. It's like South will generally be modest compared to the other markets.
Uh.
West, for example, is generally better, and in this case, markets like Bombay are always far, far better. In terms of East was also subdued, although it picked up in the last month of the December. Center has been completely subdued. So, the pricing was very—the aggression of competition was very high in center. North, you will generally find... The North and West clusters are generally mitigated from this kind of, say, immense pressure on competition. But center and East and South remains vulnerable, and South generally is vulnerable, and East and center can surprise on either side. That's how it spans out.
... Sure. One other question, and this was like something related was asked earlier. So you had like 4,500 rupees per ton average for this quarter, and you checked at 4,000 rupees. Simplistically, for modeling purpose, next quarter you will have like a swing of, oh, 500 rupees per ton on cost, and likely will flow completely to EBITDA per ton. So you can, like, report 1,200 rupees plus pricing increase, is that the expectation for next quarter?
I would be very happy to give you some forward-looking statements on this, Prateek, but I would resist on that because I can give you with comfort that what I can target on cost. But on the EBITDA, I think this question came with Raashi or Raashi also. Raashi or with Jyoti, I think. So I would resist on any commentary on the EBITDA. But you can do your math.
But you have-
I think you are smart enough.
Thank you. Sure, leave it on the question. Thank you.
Thank you.
Thank you. The next question is from the line of Ashish Jain from Macquarie Capital India. Please go ahead.
Sir, my first question is on power consumption. Like, you know, the point you made earlier that power consumption can come down by 10 units, and one of the drivers you listed was commissioning of the new clinker plants. But, you know, like, our understanding under the current management was that one of the reasons power consumption here was the limestone and the aging of the plant. So, are you saying that the 11 million tons will really help you to bring down portfolio-level consumption by 10 units, or are we also working on efficiencies of the existing clinker plants as well?
Both, both, Ashish. I mentioned to you in terms of the stability, reliability, and therefore the utilization factor of the existing plant, and that will be a key for every kind of KPIs. And on top of it, the blend of the new assets. So it will be benefit of both coming together on a overall basis, the reduction of 10 units.
This is high visibility, do you think, based upon whatever technical assessment you have?
Yeah, I think, I'm already seeing that visibility. As I said, with, capacity utilization improving for the acquired assets, with the, efficiency CapEx is done for the existing assets. And you're right, some of the assets which are old from ACC and all, and therefore, when you debottleneck, you will actually be able to get a higher volume of, cement from the same, assets, and straightaway your efficiency improves. So, there's a high degree of visibility on that. And that's how I think we have done our maths on that and then come up with this weighted average reduction of, a minimum 10 units.
Right. Right. So secondly, you know, again, I understand that, you know, JP assets are, are with AEL, and you don't want to comment on it. But, in case, let's say those assets, come to, us, then will it be like incremental above 155, or you will have flexibility in the existing, potential pipeline, and you will still stick to 155 by FY 2028?
No, I think my larger point is 155 has element of both organic and inorganic, so that continues. Although I'm not commenting anything on AEL AEL transaction, but-
Right.
Whether it is JP or whether it is XYZ, 155 will subsume as an overall both organic and inorganic.
Got it. Got it. Okay, sir. Thank you so much. That was very helpful.
Thank you.
Thank you. The next question is from the line of Pinakin from HSBC. Please go ahead.
Yeah, thank you very much, sir. I have two questions. My first question is, again, going back to the costs, which were very disappointing this quarter. So over the last two years, the costs have been volatile. And going forward, while you maintain the guidance of costs coming down, there will also be a lot many new capacities which will ramp up, which will have lower utilizations to start with. So shouldn't that cost also be a drag? So, you know, I'm just trying to understand the cost picture. Will the overall cost for the company come down, or will the new plants' cost be higher, in the ramp-up phase, and the existing plants' cost will come down?
No, good. I think good, Pinakin. First, your question is in terms of volatility. I think, I wanted to address that part when I said that, the accounting of this O&M cost, which should actually ideally get amortized logically over, say, 12 months, so that volatility comes down. Point number one. Point number two, the new capacity, right, ramp up. So in terms of GU, the ramp up happens very fast. Unlike in clinkering, the ramp up happens in a phased manner. The ramp up doesn't really increase the cost because they already are sitting at efficiencies. So ramp up will not increase, but it incrementally will improve the costs. And any cost which is required at the time of commissioning, anyways, that gets capitalized.
So these three answers, for example, will help you to... so volatility answer is right. In cement, if you do it on an actual basis, it becomes volatile, and therefore, like, I will take those corrective steps in terms of equalizing in terms of the quarter, so that it is not on an actual basis, but it is properly amortized. Number two, in terms of capacity, I mentioned to you, and therefore, the new capacities don't tend to increase the costs.
... Sure. My second question is on the capacity, number 155 million tons. So the pipeline of 24 million tons, which includes both organic and inorganic. While there is an inorganic element which you cannot detail right now, but given that you have given a target for capacity as of 2 years down the line, when can we expect the organic capacity roadmap to be detailed out? Because it's just trying to wonder that if the capacities are not detailed, then how confident we are of that March 2028 number?
No, I told, I think in terms of the end target for FY 2027, we are at, around 135 million tons, and then it moves to, 155, right? So I think end target for the year is there. Now, in terms of the question was specific GUs and all, that I've said that, we will come back with every quarter, so that whether it is GU, whether it is, bulk cement terminal, whether it is, container terminal, I think lots of options have now come out. And, we have these synergies and advantage of, the power plants and, of course, on our arms and then all, but we have the advantages wherever, for example, we can very easily now put up some of the BCTs and all.
So this whole model requires a detailed review to bring more efficiency on the CapEx and still get the benefit of the capacity. I think that is what we are going to come back and circle back to you. But the larger numbers very much remain intact. Second, as I said, that focus will be to spread the existing assets much better, smarter, and efficient, and therefore, at any stage, when we are able to meet the same demand and market share with spreading of the existing assets, I think 5%-10% here and there cannot be basically ruled out, because that is where, for example, the whole opportunity will be to bring more efficiency in the existing assets.
155, 135, 115, 115, these are like three ladders to the next, say, three fiscal years, and ±5%-10% when you are able to achieve your capacity utilization. That's whole, like, part of the whole strategy.
Got it. Got it. Thank you very much, sir.
Thank you. The next question is from the line of Ashish Jain from Macquarie Capital India. Please go ahead.
Hi, sir. Thanks for the follow-up.
We are at, say, 6:20, so I would say, like, maybe last one or two questions. Yeah. Yeah, Ashish,
Sure, sir.
Yeah. Sir, thanks for the follow-up opportunity. Sir, I just had one bookkeeping question. Sir, earlier in the call, did we comment that INR 315 crore of coal sales is booked differently this time, which is both in revenues and costs, which was earlier being netted off in the power costs? And is that the reason why our realizations are flat sequentially and the cost is also significantly higher? Is that one of the reasons, or, or-
No, no.
Can you please clarify?
That's not the... So, Rohit, Rohit will answer you on this.
Sir, so that's not the reason. It's just a gross up and gross down from accounting perspective. So all the numbers, what we report, they don't consider that. We report it from the management, this thing. That is just a gross up, gross down. Nothing to do with any of the numbers, what we report.
But affirmation that prices-
No.
So affirmation that NSP is not influenced on that?
No.
Affirmation number two, that EBITDA is not influenced on that. These are two points. Now, Rohit, if you want to still clarify.
True.
Yeah.
Sorry, sir. Sir, if I can. Sir, sorry, if I can, but is that accounting change effective this quarter on coal booking? If you can just clarify that.
Yes, it is there in last quarter also, the value was less. Might be in this quarter, it's a value bit larger. That's the only thing. It has been there in the past also.
Sir, can you give the value for the previous quarter, please, if possible?
I have for the current quarter. For the past quarter, I'll pull it up and I'll ask Deepak to share it with you.
Sure, sir. Sure, sure. Thanks.
315.
315.
315.
Yeah, yeah.
So for the current quarter, it's 315, and previous quarter, while the next question comes, if you are able to dig out, then we will tell you. Otherwise, Deepak can separately inform you.
Yeah, and I'll again clarify, Ashish, this is only at ACC level. Otherwise, at consolidated level, everything is eliminated because all these things are within the one cement platform, what Mr. Bahety was trying to explain. At consolidated level, zero, zero, zero.
So again, I think this is like-
Okay.
Coming as a question again. My point is, Rohit, and we can just confirm.
Confirm it.
Again, 2, 3 things. EBITDA is not influenced.
No.
Price is not influenced.
No.
Right? And it's purely, purely, accounting-
Absolutely.
It nullifies.
Absolutely.
Absolutely nullifies at the console level.
Console level, yes.
So friends, this is like very, very clear, so that and then any specific further details, circle back with Deepak.
Great, sir. Thank you so much. Thanks a ton. Yeah.
Thank you.
Thank you. The next question is from the line of Rajesh Ravi from HDFC Securities. Please go ahead.
Hi, sir, good evening, and congrats on very detailed presentation and, the discussion. So my few questions, you have talked about the 3 clinker units, which will get commissioned over, you know, next three to foir months. For FY 2027, are there specific targets beyond these 3 clinker which would get commissioned? And also, could you share demand outlook for Q4? Overall, how is the industry growing? And my third question, what we have seen, and I remember a few calls or quarters back, you had alluded to this, that there's a lot of value unlocking you're doing in ACC Ambuja, which is below the EBITDA, the tax, you know, refunds which you are securing or getting it cleared for prior periods. So some discussions around that, please.
...So your first question is in terms of the new kilns beyond—so there are four of them right now in the discussions. One is, so of course your three one, which you said, and the fourth one, which I mentioned, was the Mundra, right? So this together, for example, right now, 16 million tons, because each one of them is, say, 4 million. So 4 into 4, 16 million into ballpark 1.5. So you have 24 million tons GU. Right now I'm sitting at, say, 109. So 109 plus 24, we are at, say, 133, 135, which I mentioned. Yeah. So this is how, for example, this... No, the 8 is included in that, the GU.
So basically, these four kilns are very much there in terms of process. And then, I mentioned that Bhatapara, Sanghi and Marwar Mundra are our centers of growth from clinkering perspective. And sooner that you will find our additional announcements and narratives coming on the CapEx program for the... By the way, Assam also, we have signed up, we have entered into agreement with the government, in terms of setting up another one line of 4 million in Assam, which is the fifth one, by the way. So which is like, brings, brings, brings to you 20 million tons of clinker. Yeah? So, Assam, Mundra are, let us say Mundra is still a brownfield, because we have a great ecosystem there.
Assam is greenfield, and Maratha is brownfield, and Penna anyways is in a fairly advanced stage, which will be up and running in February.
Great, great. And on the demand outlook and value, value unlocking through tax refunds for prior period?
Tax refunds of the prior period, I think we have done a major effort on that and unlocked the working capital. I think we have also... I mean, if I give you a ballpark, we have resolved a substantial of the legal cases also, so we are extending our balance sheet from that perspective. I hope you are not asking me about the past year refunds and all. I'm more like forward-looking, which you are. I think your question is more about the forward-looking.
No, no, no. The tax refunds which you have secured for both ACC and Ambuja in the past few quarters are quite sizable relating to prior periods. So are there more which is available to be realized on that, those?
So in the future, not to that magnitude, I think there will be, but this magnitude may not come, I think, but few points on the GST and few points on some of the specific taxes and all from couple of states, and then some incentives which has to come in form of long pending. So I think those are the ones which will be adding up to the overall cash flows. But on the income tax, I think we have sizably resolved majority of the cases.
Okay. On the demands on Q4, what is the industry outlook you're looking at Q4? How is January, and, you know, what is the outlook for next two months in your assessment?
I remain bullish on demand for the cement industry. And industry as a whole, I would say that Q4 should also see around 8 kind of percentage, and therefore the leading players will find double-digit growth again in the quarter of March.
Great. Great. So just last question on the capacity which you mentioned. Assam, when do you target this line to be operational?
Which line?
Assam capacity, which you are planning. You mentioned that-
Ah.
There will be something of a greenfield in Assam.
Yeah. I would say that since Assam is Assam, and therefore, like, it, it, it could take around, I would say ballpark, say 24-odd months. 18-24 months is what, for example, we should be looking at.
Okay. So somewhere closer to FY 28 exit, we would be looking at this?
Yeah, I think, the work on the ground has already started.
Uh-huh.
Land has been secured, and the incentive program and all, for example, is well in moving very well. So Assam will see a good level of work at the site.
Sir, you talked about two capacities getting mothballed, 2 million tons odd. Could you elaborate if it is already done, and at which locations?
These are, like, very old assets. One of them is in, say, Sindri, and second is basically at Jamul. So on Slide 38 of the IR deck... See, again, I'm sure, like, you would appreciate our IR decks are very transparent, and-
Right
... very full of information. So on Page 38, you will see the mothballing of these two capacities, Jamul and Sindri, very old mills.
So these are already done, right? In the current capacities.
They have already been there non-operational practically, and therefore, like, I'm not, therefore, I'm removing them from my operative capacity.
Okay. Okay. Great, sir. That's all from my end.
I can still use it on an opportunistic basis, but as of now, the economics are economically unviable. Therefore, I've kept them non-operative.
Understood. Great, sir. That's all from my end. Thank you. All the best.
Thank you. We'll take the last question from Kunal Shah from DAM Capital. Please go ahead.
Yeah, hi, sir. Firstly, on Sanghi, now, it continues to operate around 50% odd, sub-50%, on an average level in terms of grinding. Now, this is despite this asset being acquired for more than two years, the ramp-up remains much lower versus our initial guidance. And the geography is Gujarat, where we already have a very strong presence. So what is going wrong here structurally, or what was the negative surprise here, that we realized post the acquisition, if any?
Good, good, good observation again. Nothing per se wrong. I think we have to understand the topography of Sanghi. It's like a classic island plant. And you've seen some of the harsh seasons. So last year, for example, you have seen flooding and all, and huge storms. Some of the plants were affected, and Sanghi was also, some equipments were damaged. Second is, in terms of some improvements, for example, the transmission line was a little low voltage transmission line, and which is, if you would just track it, therefore, already now the transmission line from government is getting revamped and strengthened to take a higher load factor, which will straightaway help me to bring at least 20-25 MW of green power in Sanghi.
Therefore, it will benefit me in a sustained power and at a reduced cost. Sometimes otherwise, when this kind of, say, storms and winds and, bad seasons, so power tripping happens very often. So nothing wrong with the asset, per se, except some of the, debottlenecking and investment which you had to do, including some dredging activity which had to be done, which has been done now. So like now, I think, with 80%, in December exit. When I say December exit, it's December month. 80% of clinker being, being, capacity being used, and almost 65 for cement. I think from here, things are now only improving.
Earlier, you would see that the colony was also the plant life was very badly managed, but it takes time for us to also revamp the whole quality of life over there, the infrastructure, the facilities, and therefore, I'm very eager to take you all now to Sanghi. And therefore, like, the right contractors, the right talent will also now move in. Earlier, becomes a very merciless area. So those were the issues. But we know that when you acquire a asset of this scale, and which gives you sizable potential, and which has 1,000 million tons opportunity so that you can set up multiple lines, I think it's a game of doing it, setting it right and gradually, so that it performs overall in due course.
Understood. This is helpful. And one last one. You know, if you look at the current status, we have underutilized acquired assets, a capacity expansion target of maybe 15%-20% over the next two years. This in the backdrop of industry demand at roughly 8% odd, right? So how are we thinking on volume growth targets over the next two to three years? Or is there, like, any guidance that you can give on volume growth or capacity utilization or market share? That would be helpful.
See, volume will be growing double-digit. I mean, like, while my base will keep increasing, but double-digit is what we are expecting. But it is very important for me to highlight that we are balancing it between volume and value, and therefore, we will see more accelerated improvement on my realization, on my blended cement, on my premium cement. And therefore, even at the risk of losing some low EBITDA volume, which we will do, but we will play a balanced game of volume and value.
Understood. And one last bookkeeping. Can you just give Penna's utilization levels, both on clinker and grinding, if possible?
Penna ballpark is, for the month of December, is ballpark 52%-55%. And, as I mentioned, like, this asset of Tandur of Penna was down, but now, it is going to be up and running in the next week or 10 days. And therefore, like, you will see a good level of utilization, sharp improvement in Penna assets. So, some of the assets we have done a substantial overhauling. That also, for example, results into where whenever I do an overhauling, it sharply improves my O&M costs, and which gets booked when the actual cost is incurred. Penna is a classic case on that. So, lots of this work has gone to bring these assets back to their desired asset reliability factor.
Therefore, like, I mentioned to you that Penna assets now will start sending blended cement also, and therefore it will help me to improve substantially the capacity utilization. The Krishnapatnam grinding unit of Penna, for example, which now, say, 2 million becoming 4 million. And once I start substantially using this 4 million, because right now, the ramp-up of the additional 2 million has not happened. But the moment that happens, this 55% will see a sharp jump in terms of capacity utilization.
Understood. Understood, sir. This is very helpful. Thanks, and all the best, and thank you for extending the call as well. Thank you.
Thank you very much. We are almost at 1 hour, 45 minutes, so I'm sure now Iqra will take a judicious call.
Yes, sir. Ladies and gentlemen, due to time constraint, that was the last question. I now hand the conference over to Mr. Deepak Balwani, Head Investor Relations at Ambuja Cements Limited, for closing comments.
Thank you. I trust most questions have been addressed. You have my contact number. Please feel free to call me. Thank you. Thank you.
On behalf of Antique Stock Broking, that concludes this conference. Thank you for joining us, and you may now disconnect your line.