Ladies and gentlemen, good day and welcome to Q4 FY 2025 Earnings Conference call of Nuvoco Vistas Corporation Limited. We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore viewed in conjunction with the risk that the company faces. The company assumes no responsibility to publicly amend, modify, or revise any forward-looking statement on the basis of any subsequent development, information, or events, or otherwise. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Madhumita Basu, Chief Investor Relations. Thank you, and over to you.
Thank you, Yashashri. Good afternoon, everyone, and thank you for joining our fourth quarter and fiscal 2025 conference call. Let me start by briefly discussing the broader macroeconomic landscape linked to cement demand, followed by a review of our performance and key events for the quarter. As we all know, the global economic landscape is shifting rapidly, with recent trade tariffs amplifying uncertainties. Nevertheless, India has demonstrated notable resilience underpinned by robust economic growth, a solid macroeconomic framework, moderating inflation, and strong domestic demand drivers. After a muted first half, economic activity picked up in the second half, driven by a rise in government capital expenditure. Real GDP growth accelerated to 6.2% YoY by Q3 FY 2025, up from 5.6% in the previous quarter, reflecting a robust economic recovery supported by stronger rural demand from good crop yields.
The forecast of above-normal monsoons further strengthens crop prospects for the upcoming Kharif season. These developments collectively point to a favorable outlook for the cement sector. Now, I would like to provide you with key updates on Nuvoco's business. This year, we have taken a fresh look at our mission statement as we embark on a growth phase. Our new mission of trusted building materials company creating value for our stakeholders embodies our commitment to operational excellence and enhancing value for our stakeholders. Coming to a status update on our acquisition of Vadraj Cement Limited, we have received approval from the NCLT for our resolution plan, marking a key milestone in our growth strategy. This acquisition will enable us to reach a total cement capacity of 31 million tons per annum by the third quarter of FY 2027, further strengthening our position in the industry.
Additionally, we are planning to set up a GU at Kutch as we remain very optimistic on the Kutch corporations, considering the Gujarat government is actively focusing on developing this region. Furthermore, the state government has favorable incentive programs in place to encourage the establishment of cement operations in Kutch, making it an attractive destination for investment. To reiterate overall, the Vadraj cement transaction is a strategic value buy and will be funded without a significant increase in our consolidated debt levels. By adding Vadr
aj cement assets, we are well positioned to expand and consolidate our presence in the western region. This acquisition will also allow us to further consolidate our presence in the Northern region as the release of additional capacity from Chittorgarh plant enables us to better serve that market.
With this acquisition, we will become the third largest cement producer by capacity in the combined Gujarat and Maharashtra markets, while also diversifying our operations and further strengthening our competitive position in these key regions. Let's now review our quarterly performance, evaluate the progress we have made, and discuss the outlook for the coming period. In Q4 FY 2025, the company recorded its highest-ever quarterly consolidated cement sales volumes, increasing by 8% year-on-year to 5.7 million metric tons, with full-year sales reaching 19.4 million metric tons. While demand was subdued in the first half of FY 2025, the second half witnessed a strong recovery. The company acted swiftly to capitalize on emerging opportunities, strengthening its market presence and driving robust volume growth. Consolidated revenue from corporations grew 4% YoY to INR 3,042 crores in Q4 FY 2025, bringing full-year revenue to INR 10,357 crores.
Supported by back-to-back quarters of improving demand in H2 FY 2025, the price environment remained supportive. The price hikes introduced towards the end of 2024 were maintained through Q4 FY 2025. The company continued to work on premiumization agenda, with premiumization reaching 40% during the year. Additionally, the company maintained a sharp focus on operational excellence. This is reflected in achieving the lowest blended fuel cost in the last 14 quarters at INR 1.43 per cal, reinforcing Nuvoco's position among the industry's lowest in power and fuel costs. On cost efficiency program, Project Bridge 2 delivered a saving of INR 56 per metric ton in FY 2025. Turning to our balance sheet, we have continued to make progress on our deleveraging agenda during the year, reducing net debt by INR 390 crores year-on-year to INR 3,640 crores despite a challenging operating environment.
Over the past few years, we have consistently focused on lowering debt, bringing net debt down from INR 6,730 crores in FY 2021 to INR 3,640 crores in FY 2025. We are committed that once Nuvoco's debt level reaches the range of INR 3,500 to INR 4,000 crores, we would initiate growth CapEx. With our debt now within the targeted range, the strengthened financial position places us well to initiate the next phase of growth and commence operations at Vadraj cement plant by Q3 FY 2027. To quote Mark Twain here, "The secret of getting ahead is getting started." We are now ready to embark on a significant journey to diversify our geographical footprint. Turning now to the cement demand scenario. As you are aware, FY 2025 was a mixed period for the industry.
The first half of the year experienced a subdued macroeconomic environment, primarily due to prolonged elections slowing down government capital expenditure and later challenging weather conditions. However, demand rebounded strongly in the second half of FY 2025. During H2, cement demand showed sustained growth over two consecutive quarters, driven by increased CapEx from both the central and state governments, which supported infrastructure and housing projects. Correspondingly, pan-India cement prices began to improve from Q3 FY 2025 onwards. Most of the price increases implemented towards the end of Q3 FY 2025 largely sustained through Q4 FY 2025. Capital expenditure by both state and central governments has started gaining momentum. For FY 2026, the central government has increased its capex by 10% YoY to INR 11,000 crores, while state governments have planned an average 17% rise to roughly INR 10 net crores, providing a significant boost to infrastructure and housing initiatives.
Specifically, the central government's allocation for the Pradhan Mantri Awas Yojana is set to increase by 64%, and major states such as West Bengal, Bihar, Chhattisgarh, Gujarat, Rajasthan, and Jharkhand have collectively earmarked approximately INR 35,000 crores for various housing projects. Given this planned Capex from both central and state governments, cement demand is expected to remain robust in FY 2026. Looking ahead, sustained demand growth is also likely to support healthy price levels.
On marketing initiatives, our premium products continue to be the preferred choice for customers. Concreto Uno and Duraguard Microfiber are flagship premium products that have shown encouraging growth. We are pleased to share that our Haryana cement plant [inaudible] which is helping expanding its availability and reach across the Northern markets. With improving market conditions, our trade share has gone up to 75% in our mix in Q4 FY 2025, 71% in the previous quarter.
Alongside this, we remain active with on-ground engagement programs that resonate strongly with our channel partners and end consumers. The Sabse Khaas Pehelwaan initiative in Haryana strengthened the product's positioning around durability and strength, while the Kumbh Mela gave us an important platform to create an enhanced experience for our channel partners and influencers. Turning now to the Ready Mix and MBM businesses.
With respect to Ready Mix , we added two plants in Ranchi and Nagpur in Q4 and remain committed to driving growth and enhancing market presence across India. The MBM segment provides an opportunity to strengthen our cement channels and garner a wallet share of our end users. The company is committed to delivering high-quality, differentiated products that drive growth and create long-term value. Strategic outlook for FY 2026. As we look ahead, our strategic focus remains on driving growth and operational excellence across all three business verticals.
Firstly, in the cement business, our priorities will be refreshing our go-to-market strategy to align with our expanding footprint, with a clear ambition to drive market share, achieve market leadership in our home markets while expanding our presence in the western region, continue to drive premiumization agenda for value growth, and deploy efficiency programs to optimize manufacturing, procurement, and logistics costs. In the Ready Mix business, we plan to expand our manufacturing footprint to support volume growth. Alongside this, we will continue to deploy operational efficiency programs to enhance cost competitiveness. For MBM business, our focus is on accelerating business growth by leveraging the strength of our existing cement distribution network. This will allow us to tap into additional market opportunities. Here too, efficiency improvement programs will be deployed to deliver cost savings. Together, these strategic priorities are designed to enhance our market positioning.
We will continue to build competitive advantage through customer-centric culture to delight stakeholders. On sustainability, we remain committed to our sustainability focus. With this, I conclude my opening remarks. I'm joined here by Mr. Jayakumar Krishnaswamy, Managing Director of Nuvoco Vistas, and Mr. Maneesh Agarwal, our Chief Financial Officer. We will be happy to answer any questions that you may have. Thank you.
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 the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take our first question from the line of Navin Sahadeo from ICICI Securities. Please go ahead.
Yeah. Good evening and thank you for the opportunity. Am I audible?
Yes, Navin.
Go ahead.
Right. So congratulations on a good set of numbers. A couple of queries, but let me start by congratulating your sales team first for the wonderful realization increase and also increasing the trade share from 71% to 75%. So indeed, a great job. My first question was, in your opening comments, madam, you mentioned that the acquisition of Vadraj will be pursued without any further increase in net debt. So if you could just help us understand or just take us through how do we really plan to do that. Of course, net debt has come down to INR 3,640, but I think there is an upfront payment to be made of INR 1,800 crore to the NCLT or to the bankers itself.
And then I think it was guided that INR 1,100-1,200 crore is what would wire over two years. So I'm assuming that INR 1,200 crore, that partly, at least INR 500 crore will come this year and the balance next year. So upfront payment is almost INR 2,300 crore, some maintenance CapEx. So just want to understand how do you see this without increasing the net debt.
Yeah. Thank you for this question. In the last three years, ever since our listing and then in our investor call started way back in 2021, one of the things which we have clearly mentioned is for the size of the company and the size of the business we have, we are comfortable operating with a net debt around INR 3,500-4,000 crores. Our pursuit in the last few years has been to pay down the debt from where we were three years ago till now. And this quarter, we reached 3,640. And you would have seen every quarter-to-quarter comparison and year-to-year comparison, every quarter, we have debt levels of the company has been lower than the previous quarter.
So we reached the stage, and in the last call, I had mentioned that we had successfully bid for Vadraj, and then we were waiting for the NCLT process to happen. And this quarter, obviously, the NCLT process happened, and now the ruling is in our favor, and then we should proceed on getting investment going. We certainly earned the right to invest, meeting the commitments which we have made consistently by reducing the debt of the organization.
Now comes to how do we kind of find a way to fund this acquisition as well as the rebuild of the facility. In the last call, we had mentioned that the cost of acquisition is around INR 1,800 crores, and our current estimate at that time was to rebuild the Surat and the Kutch facility will be to the tune of about INR 1,200 crores. That was the messaging which I had done in the last quarter. So when we come to the continuation of the transaction, here is what we plan to do. We would find a way to fund this transaction to keep the debt levels of Nuvoco at a reasonable level.
What do you mean by -
Reasonable level. Out of this INR 1,800 crores of financing which we need to do upfront, we will take a long-term debt of INR 600 crores in Nuvoco's books, and then the balance INR 1,200 crores will be through instruments like CCDs and CCPS, which will be at a long-term maturity. Interest cost of this will be at the flag end at the end of the period so that the balance sheet of Nuvoco doesn't get loaded. So Nuvoco will pick up a debt of close to INR 600 crores in short term, and till the financing happens, we will also take a bridge loan of about INR 1,200 crores for a max period of six months, but it should be much before six months before we complete the payment for the transaction.
So in short, INR 600 crores will be on the books of Nuvoco in the form of long-term debt, and the balance INR 1,200 crores will be through CCPS and CCDs, which will be long-term and not figure in the debt level of Nuvoco. That's the first bit in terms of paying that INR 1,800 crores. The second thing is about the investment of about INR 1,200 crores. I just want to inform all of you in this meeting that subsequent to the last investor call and now, some important positive welcome development happened, which Vita mentioned in her speech. We have also identified there are fiscal opportunities available in the state of Gujarat for expanding in Kutch, and we have decided to set up a grinding unit in Kutch facility for 2 million tons.
Hence, the overall CapEx needed to rebuild Kutch facility, Surat facility, and also put up a GU in Kutch will now be turned up from the original number of INR 1,200 crores to about INR 1,500 crores. But the timeline to do all these things will be in three calendar years of FY of 2025, 2026, and 2027, and the phasing of the investments would be in the tune of about INR 600 crores, INR 600 crores, and INR 300 crores in the next three years, which will be 24-30 months. And along with that, to fund this CapEx from internal accruals, we will pare down our capital expenditure to run the current operations to a max of INR 100-150 crores so that we have adequate cash flow in the organization to fund the CapEx of Vadraj.
So that's the sum and substance of how the INR 1,800 crore funding will happen and also the INR 1,500 crores, which was INR 1,200, plus the current change into 300 of setting up the grinding unit in Kutch, plus also refurbishing Kutch and Surat facility. Hope that's clear to you. If you have any further queries,
you can ask.
Yeah, sure. So just on this bit, when you say CCPS, and I'm assuming you're talking about compulsory convertible preference shares, is it the promoters who will be looking to subscribe this? Are they putting in more money, or are we looking at an external investor or a combination of both? How should one look at it?
We will have investors who will invest into Vadraj in the form of CCPS and CCD, and at an opportune time with a long-term maturity. And when the maturity happens, then we kind of repay the CCPS and CCDs at the maturity time.
Understood. And just one last question from me. Are we building in the acquisition or the I think there's a power plant which is in control of JSW. It's not part of the deal, but it's in the vicinity, and we'll need it for operations. Are we accounting for that acquisition cost as well?
Currently, we are in discussions for the CPP. The deal is not concluded, but as soon as it is done, we will find a way to incorporate in the refurbishment cost.
That's helpful. Thank you so much. I'll come back and queue for more queries.
Thank s Navin.
We'll take our next question from the line of Prateek Kumar from Jefferies. Please go ahead.
Yeah. Hi, I'm Prateek here and congratulations. My first question is on your cost savings. So you have been sort of rolling out a few cost-saving programs. If you can quantify how much of, on a pertinent basis, was achieved in FY 2025 at the company, and how are you looking at in terms of FY 2026, 2027, in terms of any more incremental initiatives there?
Okay. Madhumita mentioned in her speech that Project Bridge delivered close to about INR 56 per tonne. That has come through three routes. One is raw material cost reduced by close to about INR 5-INR 8 at a full-year basis. The power and fuel cost from FY 2024 to 2025 reduced by INR 30-INR 33. And then the distribution cost, which is including of SFG okay. I'm sorry. It reduced by INR 130. I'm sorry. I guess there's a number there. It's about raw material cost about INR 5-INR 7. Power and fuel cost close to about INR 130.
Distribution cost reduced, including the semi-finished clinker movement, reduced by close to about odd INR 100 . So all this came through cost savings, which were planned through the railway siding in Sonadih, railway siding Jaj pur, which is more or less complete but will be completed in the quarter. Setting up of alternate fuel systems in Nimbol and Chittor, which brought us the fuel cost down, and also ramp-up of the AFR facility in Risda. Namely, three buckets: raw material cost reduction, second one is power cost savings, and third one is paring down of distribution cost. Overall, when compared to FY 2024 to 2025, we had these savings. And Project Bridge is one part of overall cost savings, and the Project Bridge delivered close to about INR 56 per tonne.
The second part of your question was, what is the future targets for us? I think we are targeting at this with the implementation of full ramp-up of Sonadih railway siding, full ramp-up of Jajpur siding, and also other productivity improvement programs in terms of getting the full benefit of AFR in these sites. We are targeting close to about INR 100-INR 150 per tonne in the next two to three years.
Just for clarification for 25 over 24, you said INR 8 from RM130 from PNF and 100 from so total like INR 240 kind of savings, did I get it right? INR 240 per tonne savings from these three.
Yeah, more than INR 200. But overall, if you remember rightly, a year ago, we defined what all items which came in the form of Bridge agenda . In the speech, Madhumita clearly mentioned the Bridge agenda which we announced delivered close to INR 56. But on top of that, programs which are not part of the Bridge, which is namely ramping up of AFR and also getting the allied flag and other projects in raw materials delivered the balance savings.
The bridge agenda typically had new batch sourcing model. It had a grid integration program out of Chhattisgarh. It had efficiency improvement in variable cost, and also it had a component of SO percentage increase in sales. All this was part of the bridge agenda. We delivered INR 56 out of the bridge agenda in this year. Over and above the bridge agenda, there was a fuel cost saving which came through rate variance as well as through AFR improvement and also enhanced semi-finished goods movement through the railway siding.
Sure, sir. Very clear. My other question is on pricing. So, exit of March quarter, so some price hikes, and then April, some more price hikes. So, how is Q1 trending over average of last quarter's pricing?
Okay. So, just to jog the memory that when we did the earnings call in January, I had mentioned that we ended the quarter with a 6% increase in realization. Happy to report that the kind of realization we ended Q3 almost continued throughout the quarter with some changes. But I had mentioned at that time itself that we will see the benefit of price corrections which we made in Q4, which did happen, and that's one of the main reasons for our improvement in results.
Also, quite confident that the price increases and the changes which we did in Q4, large part of it is sustaining in as we entered April, completed April, entered in May. But as we stand on the 1st of May, a large component of what happened in Q4 continues to be present in April and as of now in May.
Sure. Thank you, sir. I'll get back to the queue.
Thank you.
Thank you, Prateek.
We'll take our next question from the line of Satyadeep Jain from Ambit Capital. Please go ahead.
Hi. Thank you. Just a couple of questions around Vadraj indeed. Just a clarification question. When you say you're looking at CCPS from external investors, Mr. Jayakumar, have you already have an agreement in place with these investors? Would largely be I'm guessing private equity investors who put in the CCPS. When you say 600, you already have an agreement in place?
Yeah. We are on term sheet exchange levels right now. As you would know, we signed. The court order came on April 3, and sometime earliest could be 3rd week of May. We are still working on the various procedural issues with the CCP, but with the RP. Over the next two to three weeks, we should be able to firm up the term sheets. So we are pretty confident that these two instruments, CCDs and CCPs, will be concluded before we kind of conclude the deal. In any case, what we have done, as I mentioned in this earlier remark, while the shake hand has to happen, it may take a week or two here and there. We will do a Bridge financing to ensure that if the due date of paying the money happens, so we would do a Bridge financing in the interim.
That's why I mentioned in the speech that we're doing a Bridge financing of INR 1,200 crores for a max period of six months. But we are fairly confident in completing the CCPS and the CCD route before the timeline which I mentioned.
Okay. Fair enough. Just secondly on the Vadraj, now that you have completed the formalities for acquisition, you have better idea. When you look at the refurbishment, the entire commissioning of plant, can you maybe walk us through the timelines, the milestones that we can also track from here, let's say, for the next 24 months?
Sure. As I mentioned, the original plan when we did the due diligence as well as the closer to the date when we did a technical discussion with our technical partners, the original scope was to refurbish Kutch and also get the Surat grinding unit going. Along the way, we also realized that the incentives are available in the state of Gujarat, and so we have changed the scope, increased the scope in Kutch to refurbishment, plus also the grinding unit setting up a grinding unit in Kutch. So the broad timelines for this, obviously, we cannot expenditure till the deal is consummated.
So I'm assuming in the next few weeks, we consummate the deal. But to get a head start of the place, we have done a couple of recce trips to the place. We have already appointed a technical consultant who is going to design the plant for us. Internally, we have a very clear-cut understanding of what are all the changes which we need to make in Kutch as well as Surat, namely, just give a little bit of a broad highlights of what we are planning to do in Kutch, and then I'll talk about Surat.
The broad highlights of Kutch being basically many things are in very good shape there in Kutch in terms of the kiln per se, in terms of the CCR, in terms of overall crushing equipment, mines equipment, all those aspects are just needing overhauling. The VRM there, the coal mill as well as the raw mill, all of them, I think we have had all the OEMs have invested and made a technical estimate as well as the cost estimates already in terms of how long it will take, how much it will cost to kind of refurbish these assets.
The housing is also kind of half complete residential complex for the employees. The mining area is almost. Equipment is in fairly decent shape. So a lot of things are in good shape in terms of our original assessment as well as what we saw later. I guess we are very happy that our due diligence was fairly accurate, and we have not gone quite away from our original estimate in terms of what we needed to do. The broad timelines being as soon as we complete the deal, our target is in the next six to eight weeks, all the purchase orders will be rolled out, and the longest lead time item for Kutch could be the desalination plant and some of the other infrastructure should take typically 12- 13, 14 months and outside limit of delivery into the site.
Pre-commissioning should start sometime end of Q2 next year. By Q3, we should have commissioning completed in Kutch in terms of the clinker manufacturing. The GU per se, again, will start in parallel, but that again should take close to 15months-18 months. We should be having a matching timeline, give or take one month here and there for the GU to be operational in Kutch. Coming to Surat, while we knew what was available there in Surat, so we now have a clear-cut idea of what all needs to be done in terms of the mill, in terms of the packing line, the truck loaders, the CCR, and the rest of all the stuff.
Again, here again, our current estimate is it should take, after the purchase order which we released in close to six to eight weeks, anywhere between 12- 15 months for the mills to be operational. So technically, as we speak, we are timing in such a way that six to eight weeks purchase orders go before the technical design is completed, contractor mobilization as well as the rest of all the stuff will happen in parallel. And by the time we hit Q3 next year, we should be ready for pre-commissioning trials in both the sites, and GU should be operational in Kutch end of Q3. That's broadly the timeline. When we meet up for the next earnings call, I'll be able to give a little bit more color to the plan which we are building right now.
Thank you for all the details, Mr. Jayakumar. Just on the decision to have the GU in Kutch, if you look at coastal transport, would it not have been more prudent to transport clinker rather than transporting clinker? What's the thought? I know you also have a rail line you're looking at from Mundra. Just want to understand the thought behind putting up a GU in Kutch rather than Surat.
No, no. Surat GU is very much ours. Surat has got three VRMs, so we are going to operationalize two of the VRMs from day one. That's the plan. And certainly, one will be commissioned at that timeline. So we are targeting all the five regions of Gujarat, Mid-Gujarat, South Gujarat, you have the Saurashtra and Kutch, then you have the Banaskantha as well as the Ahmedabad area. All the markets we are targeting. Currently, we sell in Vadodara, Surat, and Banaskantha.
But then with the Kutch facility coming, we are targeting the markets of Saurashtra, Rajkot, Porbandar, and that part of Gujarat through the grinding unit in Kutch. And the clinker movement via jetty will continue to happen in the original plan which we spoke about in the last call, all the way from Kutch into the jetty in Surat. And we would be grinding cement in Surat as well for the markets in South Gujarat as well as West Maharashtra and North Maharashtra.
Okay. Thank you. I have a couple more questions, I will join the queue. Thank you so much.
Thank you, Satyadeep.
Ladies and gentlemen, in order to ensure that management is able to answer queries from all participants, kindly restrict your questions to three at a time. You may join back the queue for follow-up questions. We'll take our next question from the line of Tejas Pradhan from Citi. Please go ahead.
Yeah. Hi . On the breakup of the refurbishment cost that you have mentioned, INR 600 crores, INR 600 crores, and INR 300 crores in three years, FY 2026, 2027, 2028. So just wanted to understand, is this just related to the plant startup or considering that, I mean, there is some CapEx to be done in FY 2028 as well, whereas the commissioning is expected for third quarter of 2027? Is this INR 1,500 crore split into some part of CapEx which is not required to start the plant, or is that difference just timing delays of, I mean, the delay in making payments to your contractors?
Okay. So it's very clear. Actually, when we are going to start the plant, when I mentioned Q3 kickstarting the facility, we will certainly start the clinker facility in Kutch. End of Q3 will be the GU. Q3 means December FY 2027, and also then comes the Surat. Out of the three mills, at the first stage, we are going to commission one mill because at day one, we are not going to sell the 6 million capacity, so we need to ramp up the market, so we are not in a hurry to kind of set up all this on the first one and a half years.
That's why we're kind of phasing the expenditure in such a way, investment in such a way that get the clinker line going, get the Surat grinding unit going, one unit, one VRM, and also get the GU going, which means this year, FY 2026, there will be a set of expenditure. FY 2027, there will be a set of expenditure.
But part of the investment will get into maybe Q1 of FY 2028. And hence, the phasing is what I mentioned. All that is needed to get into the market and be in the market will happen by end of Q3 next year, which is FY 2027. However, the overall project will be completed not by end of December next year. It will get into another three, four months, which will technically get into FY 2028.
Okay. Okay. And just in addition to that, I mean, what would be the pace of ramp-up that you would be expecting over here once you start the commissioning? How long would it take for you to fully utilize the capacities over there?
Again, I'll go back three months ago during our earnings call in January. We did speak about it. I'll just kind of refresh the stats. Currently, in Gujarat, we already sell close to a million tons of cement in trade and non-trade, and as we speak, we have the facilities in Chittor and Nimbol, which service the entire North market as well as Gujarat, and one of the rationales for our Vadraj is to kind of, it's a value buy and gives us the opening in the west market of Gujarat and Maharashtra, plus also frees up capacity for North when the plant is more or less sold out next year same time.
The thought process being, once the Vadraj starts at Q3 next year, the 1 million ton which we have been selling in Gujarat during the course of this year, certainly as per market growth as well as our trade channel expansion, this number itself is going to increase.
So I'm really giving a, it's not a kind of a number which I am kind of targeting, but I'm just giving a regular course of things. This number certainly would have gone from a million ton to a million and a quarter. So the thought process is the million and a quarter tons will move from Gujarat. The cement which is spared out of Gujarat will be used in Rajasthan, Haryana, Western MP, and up North. So FY 2027, Q3 onwards, the capacity which is freed up from Gujarat will get into North. And when Vadraj starts, we will already have a million and a half market which is already developed from our product in North open for Vadraj production.
Along with that, during the course of this year, Q3 and Q4 and Q1 next year, we plan to start appointing dealerships in Gujarat, expanding the market, spend beyond our brand, spend the network, employ people, establish the channel, create key accounts. We call it the project wide. This is the project which is set up to kind of expand Gujarat. When the market, when the plant is ready, we already have a market which is 1.5 million tons, and then a channel which will be ready by Q3 next year. In FY 2027, half a month, probably 0.3-0.4 million tons from Vadraj will be sold in Gujarat. In FY 2028, we are targeting a full year 2 million tons sale in Gujarat. In FY 2029, this will go to higher number, and then on the build-up racks. That's the kind of target which we have in mind.
Sure. Sure. Thanks. Thanks. That's all from me.
Thanks, Tejas.
We'll take our next question from the line of Parag Thakkar from Fort Capital. Please go ahead.
Yeah. Hi. Thanks a lot, and congratulations for excellent set of numbers. So just wanted to understand that in this quarter itself, after paying interest, I think your cash profit was close to INR 400 crores. So what I'm trying to say is that how much of the entire INR 3,000 crores you feel that actually on a cash flow basis, net debt addition due to the INR 3,000 crores in Nuvoco's book, as you said, you are just taking INR 600 crores right now. But since Vadraj is your company, ultimately, the investors are going to look at consolidated net debt, right?
So I would like to say that you can generate around INR 1,200- INR 1,300 crores cash profit every year based on if the demand and pricing remains favorable, which is looking to be favorable right now. So at the end of the CapEx cycle, again, what your net debt to EBITDA can be? Is there any number in your mind?
At this point of time, end of CapEx cycle three years from now, I won't be able to tell you what is the kind of number which we will have. But suffice to say, the target which we have is three-year cycle from now, we certainly will be back at anywhere between 3,500-4,000 crores because that's the number which we have always maintained that we are comfortable carrying a debt of close to 3,500-4,000 crores in our books because eventually we have to grow as well.
And when we have to grow, we need to fund the CapEx. And as we have mentioned in the past, we would be targeting a number anywhere between INR 3,500-4,000 crores around the end of CapEx cycle for us to be ready for the next wave of expansion once the Vadraj is done.
Got it . So basically, you are saying that at the end of this CapEx also, your net debt on a consolidated level will remain at around INR 4,000 crores only because of the internal accruals which you are generating and funding your CapEx through internal accruals?
If we have to kind of, okay, I have to do a mathematical modeling for you. If I were to look at the current market condition and the volume growth and the EBITDA per ton and the overall cash that the business will generate, if I simply want to value, it doesn't count as quantifying Q4 into full year and the next three years, I won't do that, but still, I would be kind of very balanced in terms of projecting the numbers for the organization because the market conditions may not be the same all the time, but suffice to say that at any given time, during the tail end of this CapEx period and also at the end of this CapEx period, our target will be to kind of keep a debt level anywhere between INR 3,500- INR 4,000 crores.
Yeah. Thanks. Thanks. That is very helpful, and just to ask one last question. When you said that large part of the price increases done in Q4 are sustaining and it will flow into up till now in April and May, how is the demand behaving after March in terms of volumes?
I won't be able to give a forward-looking statement in terms of volumes as well as how the price will pan out going forward because I mentioned as we stand complete April as well as the threshold of May, we are looking at this kind of numbers, but as the market estimate as well as our read of market as well as what's being projected for the cement industry, the industry is looking at close to about 7%-8% volume growth in the coming year, and then that's the kind of number which I am foreseeing going forward.
Thanks, sir. Thanks, sir. All the best.
Thank you.
We'll take our next question from the line of Rajesh Ravi from HDFC Securities. Please go ahead. Rajesh, can you please unmute your line and go ahead with your question, please?
Hello. Am I heard?
There's disturbance on your line, Rajesh.
Hello.
We can hear you, Rajesh, but there's a lot of background noise.
Okay. I'll come back in the queue.
Thank you.
We'll take our next question from the line of Shravan Shah from Dolat Capital. Please go ahead.
Yeah. Thank you. Ma'am, just to get us some data point, first is the lead distance for fourth quarter, ready mix, pet coke share in the fourth quarter, and AFR share in the fourth quarter.
Yeah. Shravan, I think I've got some of the data points here. So let me take it. Q4 and 525 lead distance, we did get some incremental improvement, stood at 324. The road share was 63%. And what was your third question?
AFR and pet coke share.
Okay. So the fuel mix, I just call 38% of which 26% was linkage. Pet coke, 52%, North plants depend on pet coke, and volumes were high, operational volumes were high. And AFR was 11%.
Got it. And Ma'am, sorry when mentioned 7%-8% industry demand growth, we also said [inaudible] can get similar volume growth in FY 2026.
Yeah. Shravan, the context was how we are looking at the FY 2026 growth. As you know, that the year gone by, the growth has been more in the region of 4%. But they said since improved, and our outlook shared earlier too that we see a demand growth of 7%-8% over two or three quarters should also create a favorable environment for prices to sustain. That's the outlook as of now.
Okay. Got it. And then just to clarify in terms of whatever way we will be funding the Vadraj, just to put you a simple number in terms of the CapEx at a consolidated level in FY 2026, 2027. So obviously, this INR 1,800 crore, whatever way we will be funding, so that we will be spending immediately by maybe June this, and then another maybe INR 150 odd crores. So is it fair to say for this year, FY 2026, it would be close to INR 2,200 crore plus kind of a CapEx will be there, and next year would be kind of INR 1,500-INR 1,700 crore CapEx will be there in FY 2027 at consolidated level?
Shravan, if I might make a request, Mr. Krishnaswamy has been taking this question in many forms, almost three times in this call. May I request you to reach out to the investor relations department? We'll give you a specific perspective.
Got it. And also when sir was mentioning that even by end of third year, we are also looking at INR 3,500-INR 4,000 crore kind of a net debt, I was just wondering how that will be. Even if I, let's say, look at the way that we were saying one and a half million ton volume for Vadraj in FY 2027, then 2 million, 3 million. So 5 and 6 and a half million, even if I take INR 1,000 EBITDA, would be close to a INR 650 odd crore kind of EBITDA that we will be generating. So is it still, are we confident that at the end of FY - even FY 2028, we will be having a INR 3,500-INR 4,000 crore kind of a net debt?
Right. That is our operating framework, Shravan, as I said, because we can't be doing a full financial modeling on the call. So do please reach out to us, and we will walk you through the process.
We can add one more thing to Shravan. You are looking at Vadraj. Vadraj is going to be a wholly owned subsidiary of Nuvoco. So it's Nuvoco which is going to invest on CapEx in the group companies of Nuvoco Vistas, NU Vista Limited, and Vadraj Cement Limited. So we have to look at the overall results of the P&L delivery of the company to find out where the cash will come out, how cash deployment will happen. Suffice to say, I mentioned one statement. At a Nuvoco group level, in the coming year, we are looking at a CapEx not more than INR 100-150 crores. Hence, all the money which will be generated, Nuvoco group will be used to fund the Vadraj CaPex. Hope that meets your question.
Yeah. Got it. And the pay and deliver card, but we have three and a half -
Please join back in the queue, please, as we have other participants.
Okay. Thank you. Thank you.
We'll take our next question from the line of Jyoti Gupta from Nirmal Bang. Please go ahead.
Good evening, ma'am. Good evening, sir. I hope the performance that we have done in Quarter 4 is similar in Quarter 1, FY 26 as well. And to that, to this, I want to add, we are adding almost 150 million ton capacity in the next two years, 26 and 27.
Can you speak a bit louder, please? Your volume is very low. Can you use your handset?
Can you hear me?
Yes.
So we are adding literally 95 million tons, and at 7% growth, we will have an incremental demand of only 67.9, that will be around 68 million tons. How do you think, is this not going to depress prices going forward, and how do you think we are going to manage or be able to maintain our market share going forward?
Thanks, Jyoti. Actually, when we look at the numbers, firstly, you know the kind of operating mix we have. For us, the dominant space in which we need to take a look at these numbers is still in the Eastern region market, particularly in the perspective of FY 2026. So here again, this is a discussion we heard it at an earlier call too. There are two things we should look at. What is the additional cement capacity that is coming in, and what is the clinker-based cement capacity that we are expecting?
So if we take a look at the clinker-based, effective clinker capacity during this period, I'm looking at FY 2025 to FY 2027, clinker in East will go up from 56 million tons to 62 to 67. So clinker-based cement capacity will go up from an estimated 96 million tons to 105 million tons to 140 million tons. And if you take a look at the percentage growth in the cement demand, even at 8%-ish two years in a row, because that is the outlook we are taking now, the capacity utilization backed by clinker in East continues to increase. So there is not a radical change in the supply situation to dampen the prices.
Again, as we said, we have gone through a period in East of severe dips in demand cycle. This is now improving, and outlook of anywhere between 6%-8% sustained quarter on quarter on a year-to-year basis, we feel is a good environment for prices to stabilize. What about North, ma'am? Because if I understand your regional mix is 60% East and 40% North, we have a lot of capacities coming in the North as well.
Jyoti, that is right. But in North, the scope to grow, we are a 6 million ton player there. It is not that our leadership position in the top three is being challenged. So we do believe that there is growth given our strategic intent and our product portfolio to grow in the North.
Thank you, ma'am.
Thank you.
Thank you. We'll take our next question from the line of Sanjay Nandi from VT Capital. Please go ahead.
Thank you, ma'am. Thank you so much for the opportunity. Congrats on a good set of numbers. Sir, can you please throw some light on the pricing front? What has been the price movement from the exit of Q4 to, as we talk ed to.
Yeah. I think from Q4 average to March exit, overall, the realization has increased close to about INR 8-INR 10 per bag. So from exit of Q4, it's up by INR 8-INR 10 per bag, right? Yeah. End of December to Q4, the realization has increased anywhere between INR 8-INR 10 per bag.
And sir, I was asking from the exit of Q4 for the March quarter, and as we stand in the second week, yeah.
Yeah. We can again look at close to about anywhere between INR 8-INR 10 per bag increase in the prices from Q4 all the way to Q1 next year.
Okay. From Q4 to as we talk, INR 8-INR 10, right? Great. Great. Great. Sir that's from my side. I'll come back in the queue, sir. Wish you all the best.
Thank you Sanjay.
We'll take our next question from the line of Satyadeep Jain from Ambit Capital. Please go ahead.
Hi. Just a couple of follow-up questions. One was you mentioned you would be running lean on maintenance CapEx for the next three years, somewhere about INR 100 odd crores. Just want to understand this long duration going lean on maintenance CapEx, how does it impact the maintenance and operations of the assets? It's just a relatively low number sustaining for such a long period of time. I just want to understand the implications.
Okay. When I mentioned, Satyadeep, the maintenance CapEx is not maintaining the plant. So these are all routine CapEx which are there to kind of do de-bottlenecking, increasing small capacity increases, or basically all of them is technically mandatory safety CapEx or improving product quality or increasing productivity. That's the kind of CapEx historically our company spends in the tune of INR 100-150 crores. We used to be less than INR 100 crores before the Emami acquisition. Now with the Emami plant coming in, that number is anywhere ranging between INR 100-150 crores.
When I mentioned that the maintenance CapEx is not bearing on the maintenance of equipment, maintenance of equipment comes to repairs and maintenance, and that gets into the operational expenditure of the company. There is no kind of compromise on keeping the equipment on ship shape. All I mentioned was at 19 million tons in east and 6 million tons in North, right now in this year and the coming year. We don't intend to expand the capacity big time in any place in terms of clinker increase or grinding increase or the AFR which we did or the siding in Sonadih or the siding in Jajpur.
Such kind of CapEx we don't intend to invest in the coming year and the year next. However, maintaining equipment is part of the routine expenditure that anyway will incur to ensure that the lines are in good shape. So suffice to say, the philosophy of the company is to maintain the reliability of greater than 98%, and we run total productive maintenance in all our plants. Maintaining equipment health and equipment well-being and ensuring equipment productivity continues to be of the highest level, and it is our competitive advantage.
Okay. Just one more follow-up on the marketing strategy. There is now a new marketing team looking at this quarter also. Has there been any change in branding strategy? Is it more status quo so far? Just want to understand. You mentioned price correction. I didn't understand. Is it generally industry price increase, or has there been any brand positioning or something, especially with the new team in place?
I mean, people are there occupying positions, so I guess I'm not going to talk about who occupies the chair or not. Eventually, the Nuvoco leadership team runs the company where all of us are part of the leadership team of the company. So there might be odd changes always at the top, so I don't think people changing is going to change the strategy of the organization. So we have been consistent with the top leadership of the company. So I want to assure all of you that Nuvoco's strategy in terms of being a premium player, being a blended cement player, priority in slag cement, and having a higher trade share, and getting a C/K ratio, one of the top in the industry, all those have been consistent for many years.
We don't intend changing any of those core principles to the organization. Our brands being Concreto, Duraguard, or the two flagship brands. That's how we run our organization. On the Concreto side, very happy to report that in fiscal 2025, we launched Concreto Uno at a price point of close to INR 35 more than the regular Concreto. And we are very, very pleased. In the month of March, we sold 80,000 tons of Concreto in the states of Bihar, Bengal, Jharkhand, and expanding the same to Orissa going forward. Our target is to get a million tons of Concreto Uno in the coming year.
Along with that, Duraguard Microfiber, as Mita mentioned, we now make in Haryana cement plant to make it available in Haryana, Rajasthan, Western MP, Chhattisgarh, and rest of North India. And this product currently, it used to sell about close to 16,000 tons-20,000 tons per month. We have ramped it to about 35,000 tons per month. And going forward, our target is to take it to 500,000 tons in the coming fiscal and beyond. So Nuvoco's strategy of premiumization and super premiumization continues to hold good.
So if you were to ask me a question, did we do anything different in FY 2025? Yes, we did something very, very different in FY 2025. Launched Concreto Uno at a price point which is right at the top in the market, which is called - and we've demonstrated that it sells at excess of 56,000 tons per month, and rolling Duraguard Microfiber through the Duraguard franchisee in the rest of India. So these are the two salient points. Other than that, Q4 trade share increase versus Q3, our C/K ratio is at 1.72 and above. So all those things continue to hold good. Marketing strategy is strong. Brand strategy continues to be stable and consistent with the past, and we have things in order and in place.
Thank you for the detailed answer. Thank you so much, and wish you all the best.
Thank you.
Ladies and gentlemen, we'll take that as the last question for today. I now hand the conference over to Ms. Madhumita Basu for closing comments. Over to you.
Thank you, Yashashri. Ladies and gentlemen, thank you for your questions, which we trust have been well addressed. Our investor relations team will remain available for any clarifications required. To conclude, we remain optimistic about the cement demand. As we look ahead, our focus will be on scaling growth and expanding our market footprint. The company will continue to drive key initiatives pertaining to premiumization, geo-optimization, and cost optimization. This aligns with our renewed mission of being a trusted building materials company, creating value for our stakeholders. Thank you once again for being with us today. Good day to all of you.
Thank you. On behalf of Nuvoco Vistas Corporation Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.