Ladies and gentlemen, good day and welcome to the Earnings Conference Call of Dalmia Bharat Limited for the quarter and year ended 31st March 2025. Please note that this conference call will be for 60 minutes, and for the duration of this conference, all participants' lines will be in listen-only mode. This conference call is being recorded, and the transcription may be put on the website of the company. After the management's discussion, there will be an opportunity for you to ask questions. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchstone phone. Before I hand over the conference to the management, I would like to remind you all that certain statements made during the course of this call may not be based on historical information or facts and may be forward-looking statements.
These statements are based on the expectation and projection and may involve a number of risks and uncertainties such that the actual outcome may differ materially from suggested by such statements. On the call that we have with us today: Mr. Puneet Dalmia, Managing Director and Chief Executive Officer, Dalmia Bharat Limited; Mr. Dharmendra Vartak, Chief Financial Officer, Dalmia Bharat Limited, and other management of the company. I would now like to hand the conference over to Ms. Aditi Mittal, Head Investor Relations. Thank you, and over to you, ma'am.
Good morning. Welcome to Dalmia Bharat's earnings call for Q4 and full year FY2025. Our results have been uploaded on the website along with the press release and the earnings presentation. Hope you've been able to download and go through the same. With this, I will hand over the call to Mr. Dalmia for his opening remarks. Thank you.
Thank you, Aditi. Before I start, I want to say that we strongly condemn the terrorist attack in Pahalgam. Our hearts go out to the victims and their families during this very difficult time. May God give them strength and courage to face this very difficult moment, the entire country standing with them. Now, I want to get to our earnings call and results for this year and this quarter. Based on the key indicators, the economic activity seems to have picked up in Q4 of FY2025, following a relatively muted first half. This momentum has supported the overall economic performance for FY2025, and it is believed that the full year GDP growth should be around 6.5%.
While the global macro situation is facing some uncertainty, India seems to be relatively better placed, considering that it has its own large captive consumption base and a reasonably strong manufacturing base within the country. The likely bilateral trade agreement will also be an added cushion. As per the RBI's recent estimate, India could still achieve its projected growth of 6.5% for FY2026. In this context, the cement demand is unlikely to be affected majorly by these global disruptions. I continue to believe that India is a multi-decade story, and short-term disruptions should not deviate the focus. Looking ahead, a sustained rise in investments, both government and private, robust job creation, and improved consumption will be the key growth drivers for our country.
During Q4 of financial year 2025, I believe that the cement demand grew at 7%-8% on the back of increased government spending and pent-up demand following the festive season in November. As you're aware, the first nine months of the year were relatively slow, with the growth in demand being around 3%-3.5%, and the full year cement demand will be around 4%-5% YoY growth. The GDP growth is projected at around 6.5% for financial year 2026, and the cement demand is anticipated to grow by around 7%-8% during the next year. Now, coming to the industry supply side, over the past three years, the capacity share of the top four companies has grown from approximately 47.5% in financial year 2022 to nearly 57% in financial year 2025. In financial year 2025 alone, we witnessed 52 million tons of capacity changing hands.
Looking ahead, I expect consolidation to continue, driven not only by acquisitions but also by organic expansion, as larger players scale up capacity more rapidly than the other smaller companies. Over the next two years, the top four companies are likely to account for approximately 60% of the industry's total capacity. In this backdrop, we have commissioned a phase one of expansion, milestone of 49.5 million tons per annum, with the commissioning of 2.4 million tons per annum grinding unit at Lanka, Assam, and 0.5 million tons per annum grinding unit in Bihar during Q4. We have recently announced capacity expansion of 3 million tons per annum at our existing plant in Belgaum, Karnataka, along with a new greenfield 3 million tons per annum grinding unit in Pune, Maharashtra, which is expected to be commissioned by the end of financial year 2027.
This 6 million tons per annum expansion will cater primarily to newer markets in Maharashtra, in line with our vision to build a pan-India cement company. Coming to business performance, in the last few quarters, we have been actively strengthening our dealer network and distribution channels while investing in brand-building initiatives. Some of our key initiatives included the rebranding of Dalmia Cement as RCF Expert, rolling out new cement packaging across all locations, and enhancement of multiple reward and incentive schemes for our dealer network. These strategic investments are being done for the future and will help us in delivering strong growth in the years to come with a healthy balance between volume and profitability.
Speaking for the year gone by, while our overall sales volume for financial year 2025 improved by 2% on a YoY basis, if you look at the volume growth from Dalmia plants, the volume growth came in at 6%, as against the industry growth of around 4%-5%. In financial year 2026, we will be working towards delivering a more consistent and sustainable profitable growth. A quick comment on pricing: we have seen an improvement in prices this quarter. We remain reasonably optimistic about the stickiness of the recent price hikes and believe that the absolute level of consolidation should eventually aid in better pricing. On the cost side, Dalmia is one of the lowest-cost cement producers, and we are working to deepen this position further.
In order to reduce our cost by INR 150-INR 200 per ton over the next two years' period, we are working on different strategies, including consuming more renewable energy, improving our heat and power consumption rates, and optimizing our logistics. During the current year, we should be able to realize around half of the above efficiency gains. Before I hand over the call to Dharmendra, I want to mention that as a part of our commitment to continuously strengthen workplace safety and foster a safer working environment, we are undertaking a safety excellence program across our operations. This initiative is aimed to further enhance the effectiveness of our current safety SOPs, reduce unsafe practices, and embed a stronger safety culture across all sites.
Ensuring the safety and well-being of our employees remains a top priority, and we are fully committed to continuously improving the quality of life at our plants. Thank you, and over to you, Dharmendra.
Thank you, Puneet Ji. Let me give an overview of our performance. During the quarter, our sales volumes degrew YoY to 8.6 million tons, while if you look at the sales from Dalmia plants, that is excluding the calling volumes from JP last year, our volumes YoY in Q4 FY2025. On a full year basis, our volumes grew YoY overall, YoY if we consider sales from Dalmia plants only. We have YoY to INR 4,091 crore in Q4 due to softening of cement prices YoY basis and lower volumes. However, on a quarter two basis, our revenues improved by 28.6%, supported by both volume and price increases. For the full year, softness in prices during FY2025 led to our revenues declining YoY to INR 13,980 crore.
As Puneet Ji mentioned, we have taken a lot of initiatives for improving the quality of sales for our company. During the quarter, our premium product mix improved to 24% from 21% in Q4 2024, and the trade mix improved to 67% from 65% last year. Moving on to the cost line items, our raw material cost per ton of cement production declined YoY to INR 743, primarily due to reduction in fly ash and limestone raising costs. Going forward, raw material cost will see an additional impact of tax on minerals, as has been imposed by the state in Tamil Nadu. This is the notification. The impact is INR 160 per ton on the limestone that is mined in the state of Tamil Nadu, and which translates to about INR 130 crore annually for the company.
Power and fuel cost per ton of cement production also declined by 7% YoY during the quarter to INR 945 per ton, primarily due to a decline in fuel consumption cost from $114 per ton in Q4 FY2024 to about $95 per ton in this quarter, and also improvement in RE from 34% to 39% during the quarter. The blended fuel cost during the quarter declined to INR 1.30 on kcal basis. Our CC ratio also improved from 1.67x in Q4 FY2024 to 1.69x in Q4 FY2025. Fuel prices have started inching up in the last couple of months, while the Q4 consumption rate stood at $95 per ton. The spot prices are very volatile amidst the ongoing global macroeconomic uncertainties. We continue to add renewable power capacity through both captive and group captive methods.
During the quarter, we have commissioned 2.2 MW of solar power capacity at Lanka, Assam. Besides this, 13 MW of RE capacity is also commissioned under group captive arrangement during the quarter. This takes our total operational RE capacity to 267 MW. We expect to reach 595 MW of operational RE capacity by the end of FY2026. Coming to the logistic cost during the quarter, our logistic cost declined by YoY to INR 1,135 per ton. This is due to an increase in direct dispatch from 56% in Q4 FY2024 to 61% in Q4 FY2025, and reduction in lead distance from 289 km in Q4 FY2024 to 277 km in the preceding quarter. However, some benefit was offset by a higher amount of clinker movement to the Northeast Region due to an unplanned shutdown.
During the quarter, our EBITDA improved YoY to INR 793 crores, as the impact of lower prices and volumes was offset by better cost management. The EBITDA works out to INR 926 on a per ton basis. This translated to an EBITDA margin expansion of 420 basis points YoY basis to 19.4% in Q4 FY2025. On a full year basis, EBITDA declined YoY to INR 2,407 crores, which is INR 820 per ton. Our profit after tax stands at INR 699 crores during the quarter against INR 853 crores in FY24. During the quarter, we accrued INR 99 crores in incentives, with collections totaling INR 119 crores. Total accrual during FY2025 was INR 336 crores, and collections against the same were about INR 307 crores. During FY2026, we expect total incentive accruals will be about INR 300 crores.
Incentive outstanding at the end of the year was INR 743 crores. Depreciation for the quarter declined YoY and 14% QoQ to INR 314 crores, primarily due to the full amortization of goodwill last quarter, which was previously recorded at INR 51 crores per quarter. The full year depreciation for FY 2026 is expected to be around INR 390 crores. Coming to the ongoing projects, we have commissioned our 2.4 million tons grinding unit in the Northeast. This makes us the largest cement producer in the fast-growing Northeast Region. The clinker unit at Tumarangshu is also near completion and expected to commission in quarter two of FY 2026. We have also commissioned 0.5 million tons of grinding capacity at Bihar, which is a lucrative market in terms of profitability. With this, our closing capacity now stands at 49.5 million tons.
During the year, we have incurred CapEx of approximately INR 2,654 crore, with the majority being spent on the before-mentioned projects. Besides this, INR 98 crore investment has been done in equity SPVs of group captive RE projects. As Puneet Ji mentioned, we have embarked on the next phase of expansion with the announcement of Belgaum and Pune expansion of 3 million ton each. We expect FY2026 CapEx to be about INR 3,500 crore, which will largely be spent on expansion at Belgaum, Pune, clinker line at Tumarangshu, and some land for the future projects, besides some cost efficiency investments and maintenance CapEx. We closed the year FY2025 with gross debt at INR 5,279 crore. That is an increase of INR 629 crore as compared to March 2024. Net debt, as of 31st March, was INR 716 crore, and the resultant net debt to EBITDA is at 0.3x .
I also wanted to share an update on one of our legal matters. In April 2025, ED has issued a provisional attachment order amounting to INR 793 crore. This emanates from a case originally registered by the CBI in 2011, which involved certain allegations relating to the company's investments in Bharathi Cement. We would like to clarify that this order does not impact the company's running operations. We will take appropriate legal steps to defend our position. In our opinion and basis legal advice, no offense is made out against DCBL , and we do not expect adverse outcomes for the case. Lastly, in line with the capital allocation framework, the board has proposed a final dividend of INR 5 per share, which is subject to the approval of the shareholders in the ensuing AGM. This is in addition to the interim dividend of INR 4 per share.
Our total dividend declared for the year, including interim, is INR 9 per share. With this, now I open the floor for questions. Thank you very much.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone 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 Rajesh Ravi from HDFC Securities. Please go ahead.
Hi, sir. Good morning. Am I audible?
Yes.
Yes, sir.
Great. Sir, first question pertains to, first of all, the housekeeping. Could you share what was the per kilocal costing in Q4 and the blended cement mix in this quarter?
Yeah. Per kilocal cost last quarter was 1.30, and the blended percentage is 84.3%. 84%.
84%. Sir, these petcoke prices which have gone up recently, what sort of impact are you looking at? What is the petcoke share in the fuel mix?
See, the world economic scenario is in front of everybody. Nobody is aware of how the economy impact will be there because the tariff today is up, today tomorrow is down. With these changes, nobody can predict what the scenario will be there. There could be some upward price increase, but it's difficult to gauge as of now.
That's true. Based on the current price increase in December, January, February, March, we have seen petcoke prices going up by 20%. What sort of impact? Because first, what is the petcoke share in the fuel mix?
See, the prices have gone up, and we expect some marginal increase in the per kilocal cost, blended cost, which I had mentioned. I think it's difficult to quantify the impact as of now because the situation remains volatile. Every week, prices are going up or down.
Sir, does that answer your question?
Hello. Am I audible? Sorry.
Yes, sir.
I'm seeing the group captive power which you have announced. What would be the landed cost from the group captive power cost?
Yes, it varies from about INR 3-INR 4 depending on the areas of operations and depending on the levies of these respective states.
Okay. Lastly, in terms of your volume growth outlook, any guidance for FY2026? What sort of number are you looking at given that you're looking at industry to grow to 7%-8%+ ?
We will be putting our house in order, and I think we expect to give a good performance. I think it does not make sense to give a hard number, which in the past we have seen that the situation remains volatile. The focus will remain on how to ensure the balance of profitability and the volume growth, which we covered in his opening remarks.
Okay. Last question on the expansion plans. You have announced, see, the Northeast you will be completing in Q2, and you have recently announced INR 3,500 crores for the South expansion. For FY2026, 27 together, what is the total CapEx outgo one should look at?
The total range I have given is INR 3,500 crore, which should take care of all majority growth.
Okay. Full year basis, FY2026, INR 3,500 crores?
Yes, please.
Okay. This tax notice which you have received for the Northeast plants, how do you look at them?
Yeah, it is not good in law, so I think it should get questioned in due course.
Great. That's all from my end. I'll come back in queue.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants, please limit your question to two per participant. If you have a follow-up question, I would request you to rejoin the queue. The next question is from the line of Devesh Agarwal from IIFL Capital. Please go ahead.
Good morning, everyone, and thank you for the opportunity. Sir, my first question is basically on pricing. On a QoQ basis, my calculation, I think we had seen a lower increase in the prices versus what we were seeing for the regions. Could you share how much was your pure cement realization growth on a QoQ basis, and how did this stack up versus the regional hikes that you have seen in your core regions?
See, the prices have marginally improved in the Eastern region, while in the South, they remain low. On an average, I think they remain flattish and maybe very, very minor uptick. We are hopeful that in the current quarter, prices should improve. Of course, we remain cautiously optimistic, and the situation remains volatile on the prices.
What has been the current price increase versus QoQ average?
It varies from region to region, but it's too early to say. It has increased by about INR 10-INR 15 on average. Whether they'll stick or not, we need to see. I think the trade channel checks every month, I think that will give a better picture because we'll discover it month to month.
All right. Again, you mentioned adjusting for JP tooling volumes. Your volume growth was 4% on a YOY basis. This again seems to be lower than the industry volume growth. Is it because of the regional mix that your volume growth is lower, or is it that you have lost market share in your core markets?
I think quarter to quarter, things change a little bit. If I look at the whole year, our growth has been 6%, as against the industry growth rate of 4%-5%.
Right, sir. Sir, finally, on this, what would be your total clinker capacity at the end of FY2025? How much are you targeting to add in FY2026? How do you see the ramp-up in your Northeast recently commissioned capacity?
Right now, we are at 23.5, and we have closed the year at 23.5. Now, 3.6 will get commissioned in Northeast during quarter two of FY 2026. Next year, we will close at 23.5 + 3.6, which is 27.1.
The ramp-up in the Northeast plant?
The grinding unit just got commissioned this quarter, the quarter that has just gone by. I think Northeast is a great market for us. We're one of the leading producers of cement and the largest cement company now. I think we'll be able to ramp it up pretty comfortably.
Okay. Thank you.
Thank you. The next question is from the line of Rahul Gupta from Morgan Stanley. Please go ahead.
Hi. Thank you for taking my question. Two questions. I know you don't want to discuss what ailed volumes growth during the quarter, but can you please help us understand from the context of how to look over the next couple of quarters? Number one. Number two, now that you are moving away from guiding on volumes for full year, how should we look at earnings trajectory on back of, let's say, INR 75-INR 100 cost improvement that you have guided for next year? Thank you.
See, the reason for not giving a firm guidance on the volume for the next year was that we'll try to balance the objectives of the growth as well as the profitability. Of course, considering the backdrop of the industry volume growth and the leading players' growth, maybe you can have your own estimate about our volume growth. In terms of margins, of course, INR 75 guidance we have given in terms of the cost reduction. Whatever price improvement comes, that can be added on top.
Thank you. What about any specific reasons of relatively weaker volumes during the quarter? I'm asking this question more from the context of if consolidation is the theme for the near future, then how should we think about your volumes? Thank you.
As Puneet Ji said, that quarter to quarter situation may change, but overall, we should be able to show a respectable growth in line with or better than the industry growth, which remains volatile.
Great. Thanks. This answers my questions. Thank you.
Thank you. The next question is from the line of Amit Murarka from Axis Capital. Please go ahead.
Yeah. Hi. Thanks for the opportunity. My first question was on volume again. Actually, I had a different take on volume because I see that your volume has grown 28% QoQ, which is the same thing last year Q4 as well. Is it that there was some volume push in the quarter, and I also see that your realization was flat QoQ, whereas the Nast saw a 3% price hike? I just wanted to understand why was realization flat, and was there some volume push that was done in the quarter?
See, realization has been flat because the market which we operate in, South, practically did not see any price increase. Rather, some erosion also happened. Whether any volume push was there, I do not think it was at the cost of profitability because the margins have improved. Unlike the previous year, same quarter, we had increased the volume significantly, but it was at the cost of the margins. This time, you can see that the quality of sales has also been kept in review.
No, even this time, the realization is flat, but East saw a decent price hike, actually, in March, I believe, end of February, early March. That is not reflecting in the realization, and the margin has improved largely, I think, because of the overheads and operating leverage gains. I just wanted to understand why was realization flat, basically, QoQ?
Yeah. The prices have improved in North Region where we are not present, and East.
Even in East.
Yeah, but it was negated by the price drops in the South also. South had a very, very competitive environment during the quarter. Overall, practically, it was flattish in terms of price hike.
Got it. The CapEx of INR 3,500 that you mentioned, would you be able to give some breakup as to how much of it will go to Northeast and how much to Belgaum and other projects?
I think the associate number I've given, so it's majority towards the growth CapEx, which is Belgaum as well as Northeast. In real breakup, I would not like to give.
Okay. Sure. Would you stick with your guidance of coming back with the bigger capacity expansion plans in June, July, whatever you had been mentioning?
Yes. Definitely. Next quarter, we'll fully detail out our plan of capacity creation till FY2028, along with the balance sheet impact of that.
Sure. Thank you very much. I'll come back in the queue.
Thank you.
Thank you.
The next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Yeah. Good morning, everyone. Thanks for the time. The first question is on the P&L. The other expense on a burden basis has dropped quite significantly. Anything to note here or any one-off right back or anything?
No, Sumangal. Basically, it is on account of the operating leverage as the volume jumped up by about 28%. This has reflected in the burden drop. Of course, Q2 and Q3 are normally the quarters where some shutdowns take place and the cost goes up. Q4 is normally you do not have a shutdown, so naturally, the cost comes down.
Understood. Understood. Second question is overall on the next two years' cost saving, which we are spelling out at around INR 150-INR 200. Is it possible to share what is the breakup? I mean, how much is led by RE and a few other heads?
Sorry, Sumangal, can you repeat that question? I missed it initially.
Yeah. My question is on the cost efficiency and cost saving, which we are guiding at around INR 200 for a turnover the next two years. Is it possible to share some breakup in terms of how much is RE and other heads?
I think in my earlier call, I had mentioned that roughly 50%, 50% you can assume from VC and the logistic cost. There are multiple variables working at play. Of course, Ari will be one of them, but I think specific numbers are not important right now.
Okay. Okay. And half of it is what we are expecting to realize in FY2026 itself, right?
Yeah, please.
Okay. Understood. Just one last question on our utilizations. If you see in the last few years, our utilizations have dropped from 70% to currently around 60 to odd percent. Do we, I mean, just strategically, do we have an eye on this matrix as well? I mean, going forward, our expansions, I mean, are we looking to tie it up with, I mean, utilization and eventually getting into some sweet spot of 70%-75% levels, or should we expect this level of utilization and maybe growth and expansions to kind of tie up?
Sumangal, I've said this earlier also. I think we will focus on capacity creation where we think our utilizations are higher, and we will balance profitability and volume growth as we go forward. Market by market, the situation is very different. We will take a balanced view in every market depending upon what our immediate objectives are and what our long-term objectives are. I think there is no sense in creating capacity where you already have unsold capacity. I think we are very clear about that. We will create capacity where we think we have a cost-competitive position and where we have a better cost structure to serve the market, and we have a more reliable service that we can provide to our customers.
I think given all of this, you will see a very balanced approach in terms of capacity creation and a very balanced approach in terms of profitability and volume growth.
Got it. Got it. That's very helpful. Thank you, and all the best to the team.
Thank you. The next question is from the line of Satyad eep Jain from Ambit Capital. Please go ahead.
Hi. Thank you. First question on the investigation. Just wanted to understand, I think from the commentary also, it's clear what Dalmia stand is. We've also heard the investigation is going on for a long time. When you look at the investment, Dalmia, I just want to understand, get more clarity on the stand, there was an investment in Raghuram Cement. What was the rationale that you are pitching for that investment? Overall rationale and where we are in the process, because the CBI hearing is going on for a long time. Where do you think we are and how long will it take? Just from a risk standpoint, just want to understand more granular details on this.
I think we have a very simple position on this. We had invested INR 95 crores in Raghuram Cement, which is now Bharathi Cement, and we sold our shares at INR 145 crore to a French company called Vicat, and we made an INR 50 crore profit. I think we are very clear based on the legal opinions and based on our own understanding of the law that there is no criminal offense made against the company. These things take time in India. This is a 14-year-old case, and I'm unable to say how long this is going to take, but even today, the process in the CBI court has taken a very long time, and it continues to go on at a slow pace.
It is hard for me to give a timeline, but I think we are very clear that these are all bona fide transactions, and there is just no case and offense against the company.
Based on this provisional attachment, was this Kadapa mine? Is this Kadapa mine also a part of your 75 million expansion that you're looking at? Does this provisional attachment of land limit your borrowing, obviously, against that land and also any future limestone expansion until this is settled?
Based on the overall size of the balance sheet, this number is very minuscule, so I don't think it's going to affect the operations of the company in any manner.
The Kadapa expansion could still happen if you're looking at 75 million expansion that you announced. Thanks for the clarification. Secondly, just in the context of all these expansions you're looking at, there have been too many management changes in the recent one year. Do you think now, given all these changes, which for us also becomes difficult to track, I'm not sure compared to the history, this is more attrition than you've personally seen. Now you think you have the entire team in place as you embark on this entire expansion plan that you're looking at, and what would you look to do to have the team in place through this entire journey?
I think I have said this earlier also, and I will repeat it on this call. We want to build a young team. We want to build a team which is grown from within in the long term. Our leadership has to come from within. With these two objectives, I think we are trying to prepare a succession plan for all critical roles in the company. The second thing is we are also looking at where we can improve efficiency and reduce layers in the company so that we can become more agile and more efficient in terms of our speed of decision-making and quality of decision-making. I think based on this, some changes have been made, partly due to reducing the number of layers and partly also because of succession planning. We will continue to go on this path as a normal company.
I don't think these changes are anything major, and I think they are not going to impact the company in any way whatsoever. If at all, we are stronger, leaner, and more efficient.
Okay. Thank you so much, Satyadeep .
Thank you. The next question is from the line of Indrajit Agarwal from CLSA. Please go ahead.
Hi. Most of my questions are answered. I have two questions. First, on the Belgaum or Pune expansion, what is the limestone availability and visibility over there, the kind of quality and life of limestone mine that we have?
I think I have already said that we have sufficient limestone, and I think we are serving a market which we think is very attractive. We are serving the Western part of the country where a lot of investments and growth is there. It's a place where we are underrepresented. It's a place where we have a very cost-competitive position, and we think this is a project which will deliver very good returns in the years to come. I cannot comment on the limestone reserves individually, plant by plant. All I can say is we have sufficient limestone to support this expansion and more.
Sure. Thank you. Secondly, even if you can't give absolute numbers, can you broadly split the growth trajectory in each of the three geographies that you are in for fourth quarter and also for FY2025?
No, I will not be able to do that. I'm sorry. We've said that we don't give breakup by geography, and we mentioned.
I'm asking more like a trend. Would you say that one region has grown much faster or it was broad-based across regions?
I think we will not be able to share that.
Okay. Lastly, on tax rate, how should we look at both P&L tax and cash tax for FY2026?
The cash tax next year also, you can expect a, I think, high single-digit tax rate. After that, it should be normal tax rates.
Sure. Thank you. That's all from my side.
Thank you. The next question is from the line of Navin Sahadeo from ICICI Securities. Please go ahead.
Yeah. Thank you for the opportunity. I had two questions for Puneet Ji. So Puneet Ji, until the fifth quarter, every single time in your opening comments, you always gave a little bit of a cautious outlook on the pricing, even if there is some improvement, but you said that major upside is capped because of increased competitive intensity, and that was a pretty consistent commentary in the past couple of quarters. In your comments now, you did mention about optimism and also on the stickiness of this price. I just wanted to understand, is it that are you seeing the consolidation actually play out, or is it so that the price has gone so low and then the mineral tax just comes in, which helps the overall pricing momentum just to improve a little bit? How should one look at it?
I think it's a great question. I think both the points that you mentioned are impacting this in some way or form. I think in the Southern region, prices had gone to a level which was unsustainable for many players, and it had remained there for a fairly long period of time of almost 12-15 months. Yeah, 12 months, actually. I think the second thing is that during this period of pain, some consolidation also happened. I think it's a combination of both factors. Prices were at an unsustainably low level, and also consolidation happened during this time. A combination of both these factors has caused a price increase in South in April.
Whether it will sustain or not, I am reasonably optimistic right now that it may be the same low level which we have experienced in the last 12 months may not remain, but it will be at a slightly higher level. Now, how high and for how long is hard for me to comment. That is why I am a little bit more optimistic, but I am also cautious in terms of where it can go because there is still oversupply in the region. There is still fragmentation in at least Andhra Pradesh, it is still quite fragmented. It is definitely more consolidated, but still the level of fragmentation is quite high. Tamil Nadu and Kerala consolidation level has become very high now, but Andhra Pradesh and Telangana are still quite fragmented.
That's really helpful. Thank you. My second question then was on your capacity expansion plan. Of course, in February, you announced a 6 million ton expansion. The first line itself of that press release says towards meeting the 75 MTPA objective for 2028, which also means another 20 million ton of capacity. Even if it's a mix of greenfield, brownfield at $85, it comes to almost INR 14,000 crore of additional CapEx. My only request in this question is, how much should investors be prepared for debt to come on, or is it also a function of overall profitability being at higher level to meet this objective? Can it be a little fluid subject to profitability? How should one look at this overall CapEx that is planned from a three-year perspective? Thanks.
I request if you can just hold on for one more quarter for this. I can only say one thing that we will be, while we want to grow, we also want to be prudent. We will look at the competitive landscape of the industry. We will look at our own ability and cost competitiveness in markets that we are present in. We will also look at diversification to new geographies. We have to keep some multiple factors in mind before we can give you a very clear answer on this. I know you asked a very specific question, and I'm giving a slightly more generic answer, but please wait for one more quarter. I can only say that we will be prudent, and we will grow with prudence.
Yeah. Just related to this, this IEX-related monetization, I understand NetDebt is fairly comfortable now, but that is mark-to-market, the IEX value. I hope that clarity over monetization of this IEX tax also will come in by next quarter.
I think we have already said that it's a short-term investment that we are holding, and we are going to monetize it soon, but it's a listed company, so I cannot give an exact time frame. This is something which I've committed to the markets, and we will stand by our commitment.
Thank you. Appreciate it. Thank you.
Thank you. Ladies and gentlemen, please limit your question to one per participant. If you have a follow-up question, I would request you to rejoin the queue. The next question is from the line of Shravan Shah from Dolat Capital. Please go ahead.
Hi, sir. Sir, a couple of questions. Just first, for clarity, when we say that we are looking at a INR 75-INR 100 reduction this year and next year, so combined put together kind of a INR 200, INR 50-INR 200 cost reduction. This is from FY2025 average or from Q4 FY2025 because Q4 FY2025 itself is close to INR 80-INR 90 lower versus the FY2025. From FY2025, if you are looking at the reduction, then actually there is no reduction from current fourth quarter number.
Yeah. This we had called in the July call. You can consider Q1 of FY2025 as the base.
Q1 FY2025. Okay. Q1 FY2025 would be the base. Okay. Got it. Okay. There also, the number is the current quarter number itself is a kind of INR 125 lower versus that. That means even if we reduce by 75, it would be still higher than the current quarter Q4 cost. That is the way one should look at it. Okay. Got it. Second. Hello.
Yes, sir.
Yeah. Please go ahead.
Yeah. Yeah. Sir, is it possible also to share just a data point on the road rail mix and the blending ratio, which is at 84%? In the April presentation, we said that we will be looking at 100% blended cement by 2026. Does that mean FY 2026 or calendar year 2026? If that is the case, how do one look at in terms of whatever the OPC we have currently, 15%-16%? Obviously, it should be on the higher price. If it goes away, how one can look at in terms of the kind of pricing impact for us?
See, directionally, we would like to move towards 100% blended, but of course, these things may not be possible to achieve in a one-year time frame. Directionally, our commitment remains. We'll try to see market by market, balancing the growth and the profitability point of view, and try to move towards that direction. It can't be a hard-coded number which has to be achieved quarter by quarter or year by year. Another aspect you asked about the road mix, it is 84%.
84%. Sir, is it possible to share the current whatever? I understand the next expansion we will tell in the next quarter, but whatever the given is, INR 3,500 crore CapEx for FY2026, for FY27 would be how much? Based on the current things, obviously, it will increase once we announce the next expansion.
Yeah. Better to wait for one more quarter. We will get complete clarity on that.
Our stand still will remain that NetDebt EBITDA will not cross 2x to reach a 75 million ton.
Yes, please.
Sorry to interrupt, sir. I would.
Yeah. Got it. Thank you.
That's why I'm with you. Thank you. The next question is from the line of Prateek Kumar from Jefferies Group. Please go ahead.
Yeah. Hi, good morning, sir. My first question is on Tamil Nadu mining tax. What is the status there? Has it got implemented or we heard that there is some lobbying for reduction of that tax? Can you update us on the same?
Yeah. This has become operative from the first week of April. Of course, industry would like the rates to be much, much lower. This rate is quite high. For the time being, I think best for us and you to assume that this stays.
Okay. On clarification on the pricing, you said INR 10- INR 15 price hike. We understand the price hike in South are much higher at like INR 40-INR 50 . Are you talking about other regions of price hike or?
What I've given is on average. Other regions have not seen that kind of price hikes.
Okay. Lastly, on JP, you're bidding for JP assets under the new consortium. That includes a whole host of other businesses. What is the idea about bidding such for bidding such businesses?
We have given our expression of interest. After thorough review of the position, we'll take a prudent call on that.
Sorry.
That includes like.
I would request you to rejoin the queue for your follow-up question. Thank you. The next question is from the line of Pathanjali Srinivasan from Sundaram Mutual Fund. Please go ahead.
Thank you for the opportunity. I just wanted to get some clarity on the.
Thank you. I will request you to please use your handset .
Yes. Yeah. I wanted to know what the incentives for the quarter was and also what about the receivables for incentives? How has it been moving the current year?
Current year accrual, as I mentioned, was about INR 99 crore. Next year, we are expecting about INR 300 crore. Receivables, INR 43 crore is the current year. They should remain around the same level or maybe slightly go up because the current year receivables may take slightly longer to realize. On average, we'll realize.
This accrual you're saying for the current quarter is INR 99 crore, is it?
99 crore is for the Q4, which just went by.
Understood. Understood. Okay.
Next full year is about INR 300 crore.
Okay. Generally, the share of profits, if you look at subsidies or grants, it seems to be fairly high. Will this be recurring for the long term or will a large part of this go away in a few years down the line? Could you give some color on this?
Yeah. We are operating in the Northeast Region where this is likely to continue for a very long period because it's for 15-20 years time frame. Bihar is the one which will expire in the current year. For the small unit which you added, 0.5 million, that will continue for another five years. We believe also will go for about 15 years. Jharkhand also will continue for a couple of years. I think the next couple of years, we don't foresee any reduction on this.
Okay. Just one last question, sir. This capacity expansion that we announced for the grinding unit in Pune and expansion in Dhildon, how are we planning to service the grinding unit in Pune because the lead distance is almost 400 km?
It'll be by rail.
Okay. Okay. Got it. Thank you.
Thank you. The next question is from the line of Jyoti Gupta from Nirmal Bang Securities Private Limited. Please go ahead.
Thank you so much for the opportunity. I'll start with, as I understand, the industry should grow YoY this year, this quarter. However, we have seen a decline YoY basis. Realizations would be flat. However, the players in the regions in the East have actually benefited from the increase in realizations while we have not. Third is we have moved clinker, as you have already mentioned in the commentary. However, your overall cost seems to have declined. Now, how should we see? Of course, the benefit of increase in price in the East will be reflective with a couple of companies. In the first quarter itself, we've seen almost like INR 60 gross level increase in price in the South Region with a net impact of at least INR 30 absorbed already. How should we see Dalmia's performance in the first quarter of FY2026?
Second is on the limestone reserves, I believe Rajgangpur has been almost like a 70-year-old reserve mine. Is it not expected to exhaust by 2032 or something? Any comments on that, please?
I think let me take the comment on limestone reserves first. I have already said in many statements during the earlier calls that we have sufficient reserves in Rajgangpur. In our own mining lease area, there was some land that we had to buy, which is in process and which is going to get concluded. A large part of it will get concluded within this year. We see no challenge in reserves over there. The second part is that while we have, I mean, they already mentioned that there was some price increase in East, but there was erosion of prices in South, which kept our realizations flat for the quarter. I think in the coming quarter, currently in the first fortnight, we have seen a significant increase in South, which could be in the range of INR 30-INR 40.
On a blended basis, it is about INR 10-INR 15, as I mean, they have said. If these prices sustain, profitability should be better. I have already said that we are going to balance our volume and profitability targets and estimates market by market. In terms of quarterly guidance, I apologize. We will not give any quarterly guidance. Thank you.
Can I just get in terms of price and regional breakup between North and South? That should have actually offset decline in price in the South. At the same time, I would also like to understand, I mean, the kind of volume decline, realization, reliance, the cost structure has actually declined quite significantly, and we paid only 6% tax in this quarter compared to 20% in the last quarter. Any specific reason for that?
See, if you see, there are prior period adjustments for the tax write-backs. You can consider that as a one-off item. If you remove that, our effective tax rate is still 24%. Our cash tax rate remains low because we have the brought forward losses from the past acquisitions.
Thank you for now, but I have many questions on Dalmia. I hope to get all of them answered in the future. Thank you. Thank you for your time.
Thank you. The next question is from the line of Jashand eep Singh from Nomura. Please go ahead.
Hello. Hi. Thank you for the opportunity. Most of the questions have been asked by my fellow analysts. I just wanted to.
Yes, sir. I would please use your.
Is my, am I audible now?
Yes, sir.
Is it better?
Yes, sir.
Just wanted to continue on the Northeast Region. A lot of investment has gone from Dalmia to Northeast, and I understand this is a very lucrative region for Dalmia. I just wanted to understand, if you can give me a rough market size of that Northeast and what is the growth trajectory you believe the market will see? If I am not wrong, the top two players hold more than 50% of the market share. I just wanted to understand, is Northeast going on the same trajectory as East, where capacity growth might outpace demand, and hence, there will be pressure on margins? If I can just get the management view on that, that would be great.
See, not getting the regional data, but all I can say is that Northeast is growing faster than the Indian average. That is likely to continue.
Sir, I understand. I'm just asking about the market and not Dalmia specifically. Even if you say Northeast is growing at a faster rate, again, demand is growing at a faster rate in India, its capacity growth is also growing at a faster rate in India. I just want to understand, do you think the margins will sustain for the next couple of years despite all the capacity that's coming here?
Look, when we make CapEx decisions, we take a very long-term view to take CapEx decisions, to make investments. Because it takes around two to two and a half years to create new capacity. I think the way we look at the Northeast Region is as follows. I think, one, from a demand perspective, Indian government is very focused on investing in the Northeast Region. In this last decade, the number of visits by the Prime Minister and also the union ministers has been pretty phenomenal over there. There is huge commitment to creating infrastructure. Even in Assam, there is a very, very aggressive plan to increase industrialization and make huge investments in the economy. This was highlighted in the Advantage Assam Summit recently, where a lot of investors have committed significant capital. There are semiconductor facilities being built. We are building the largest cement plant over there.
We've already almost completed. I think huge investments are happening there in infrastructure as well as industrialization. We think demand growth here is going to be very strong, point number one. Point number two, from a supply-side perspective, it's a fairly consolidated market. It's a market where people who have local presence have the ability to serve the market in a more reliable manner. I think from a market structure point of view also, we find this market quite attractive. Now, having said this, whenever new capacity comes, there could be turbulence in terms of prices. Capacity comes in steps, and demand grows over time. There could be a little bit of turbulence whenever new capacity gets commissioned in any market. I personally think that we make investments from a long-term perspective.
Long-term, we find this market quite an attractive market to be. That's all I can.
Now, I completely understand. Thank you so much for such a collaborative answer. Just if I can squeeze in one more, what will be the average utilization for that region, if you can, on a market basis, if not particularly for Dalmia?
I don't share region by region.
Not for Dalmia, but for the market itself. If you can give us a sense, that would be great.
Jashan Deep, the utilization for the Region should be in the ballpark range of about 65% because the market is a 14 million-15 million ton of volume that it sees.
Thank you so much, Aditi, for this. Thank you so much. I am going to join back with you. Thank you.
Thank you. Yeah, sure. The last question is from the line of Pulkit Patni from Goldman Sachs. Please go ahead.
My questions are already answered. Thank you.
Thank you.
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Puneet Dalmia for closing comments.
I once again want to express my deepest condolences for the victims of Pahalgam and pray for peace and strength in their families. I once again thank you all for your interest in Dalmia. We will see you again next quarter. Thank you very much.
Thank you. On behalf of Dalmia Bharat, that concludes this conference. Thank you for joining us, and you may now disconnect.