Ladies and gentlemen, good day and welcome to the Nuvoco Vistas Corporation Limited Q4 FY 2026 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mOde, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. I now hand the conference over to Mr. Bishnu Sharma, Head of Investor Relations from Nuvoco. Thank you, and over to you.
Good evening, everyone, and a warm welcome to Nuvoco's FY 2026 Earnings Call. We appreciate you taking the time to listen to us. Let me begin by sharing a few key highlights as we reflect on our performance in fiscal year 2026. We ended the year on a high note and delivered the strongest annual performance for Nuvoco, which is the highest volume of 20.4 million tons and EBITDA of INR 1,881 crores in the history of the company. We expanded our industry-leading premiumization base by 300 basis points year-over-year to 43% in FY 2026, and thus establishing a stronger base going forward. The fourth quarter was also a landmark quarter as we, for the first time, reached 6 million tons volumes with a historic high quarter EBITDA of INR 580 crores.
We witnessed improvement in overall demand during the fourth quarter as the CapEx by both state and central government gained momentum, which was up by approximately 12% in Q4 till February, supporting infrastructure activities and cement demand. Overall, in our view, we performed well in FY 2026 despite the challenging market conditions and headwinds witnessed during Q2 and Q3. On the growth agenda, we are pleased to share that the Vadraj cement project is progressing well and remains on schedule. The clinker unit and grinding unit are planned to be commissioned in phases between Q3 FY 2027 and Q1 FY 2028. Let me give you a quick on-the-ground update on project execution at both our Kutch and Surat facilities. In Surat grinding unit, key equipment and spare deliveries are completed. The 66 KV grid connection has been established. Equipment upgradation and electrical installations are nearing completion, and trials commenced.
In Kutch clinker unit, equipment upgradation and electrical panel testing are underway. Cyclone inspection for refractory assessment is in progress and deliveries are on track. In Kutch grinding unit, civil works are on track with works on silos, VRM foundation, packing plant and hopper building progressing as scheduled. Installation work of VRM has also started. For Kutch railway siding, engineering scale plan and detailed project report approvals from Indian Railways is at an advanced stage and site execution has also commenced. We are also establishing a bulk cement terminal at Viramgam, Sachana, Gujarat with a dedicated railway siding and a handling capacity for approximately 1.5 million tons per annum. The terminal will enable efficient unloading and storage as well as dispatch of loose bagged cement. It will serve as a strategic distribution hub to expand our reach across the Gujarat market, with commissioning targeted for FY 2028.
Alongside this project, our East expansion program of adding four million tons per annum of grinding capacity in phases through FY28 is also progressing well. Looking ahead, we remain confident that the structural demand story for cement is intact. On infra, central government CapEx for FY27 is planned to grow by 20% and state government CapEx to grow by 15%, implying a meaningful step up in construction activity. On housing, the PMAY drawing allocation is up seventy-three percent, and in the east specifically, state governments have planned housing schemes worth approximately twenty-nine thousand crores for FY27, which is directly positive for Nuvoco given our leadership in the geography. Moreover, the Asian Development Bank recently revised India's FY27 GDP growth estimate upward by forty basis points to six point nine percent with a further acceleration to seven point three percent projected for FY28.
This is a constructive signal for cement demand going forward. While the structural demand outlook remains positive, we are mindful of near-term headwinds stemming from current geopolitical uncertainty, rising fuel prices, currency volatility, escalation in raw material costs, particularly for packing materials, could exert pressure on margins in at least 1-2 quarters going forward. We are closely monitoring the situation on the ground. We have already initiated proactive measures of right-size, prudent procurement practices, accelerated cost optimization initiatives, and strengthening supply chain efficiencies to mitigate the impact and protect our margin profile to the extent possible. With that, I conclude my opening remarks. I'm here with Mr. Jayakumar Krishnaswamy, Managing Director of Nuvoco Vistas, and Mr. Maneesh Agrawal, CFO, Chief Financial Officer. We are happy to answer any questions you may have. Thank you very much.
Over to you, Tiffany.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone 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 Siddharth Mehrotra from Kotak Securities. Please go ahead.
Thank you, Sir, for the opportunity. Sir, one quick question on our CapEx. Now it seems that when we first announced the expansion.
You have to speak a little bit louder on the mic or if it's on the handset. We can't hear.
Is it better now, sir?
Can you use your handset mode, please, Siddharth?
Yeah, I'm using my handset mode. Is it better?
Yeah, go ahead.
Yeah. I just wanted to check, sir, at the time when we stated our East debottlenecking plans, I think it was mentioned that we planned to have them possibly by the end of FY 2027, with certain capacities coming online even by the end of FY 2026. Now it seems that we've slightly delayed those plans. If you could help me sort of understand what sort of timelines we are looking at with respect to the expansions in the East, that would be really helpful.
Okay. Thank you. As mentioned in a couple of calls ago, we had clearly mentioned that we are doing a debottlenecking of close to about 4 million ton capacity expansion in East, with 1 million ton coming from all the four plants of Jojobera, Odisha cement plant, Panagarh cement plant, and Arasmeta cement plant. The timelines we had mentioned was in end of FY 2026 or Q1 FY 2027, we'll commission Jojobera, Panagarh, and then subsequently Jajpur, and last will be Arasmeta. We have more or less done the debottlenecking in Jojobera as well as Panagarh. We're just waiting for the CTO. NIPL has been completed, which is no increase in pollution load. There's a clause which says that much amount of expansion we can do, that is already done. We're just waiting for the final approval to happen.
In terms of hardware modification, it's all done in these two plants. Jajpur should happen in the next two to three months, and Arasmeta will happen by the end of this year. Certainly by the next few weeks or a month or so, once the CTO comes, we should be able to make an announcement on completion of this expansion.
Understood. Everything should be online by the end of FY 2027. Is that the correct way to look at it?
Yeah, definitely. It should solve more or less. We're just waiting for the CTO to happen.
Understood. Secondly, sir, quickly on the fuel mix, given the sort of volatility in the energy markets due to the ongoing conflict, could you just tell me what is our current Kcal cost and what sort of change do we expect once we transition to the newer pet coke procurement or coal procurement as the case may be? What sort of price increases we are looking at on the power and fuel cost side?
I guess a number of things which you asked, basically the impact has happened on three levels. One is obviously pet coke. Second is impact of international coal prices in the domestic coal prices. The third one is the impact of rupee depreciation because all the pet coke is imported. In Q4, our blended fuel cost for the company was INR 1.44 per million kcal, and that was more or less same as the previous quarter. We were already down at 1.43 types. We are more or less a little bit more than that. At INR 1.44, not too much of a difference. As we enter Q1, pet coke, which was at INR 1.84 per million kcal, is becoming INR 2.01 per million kcal. We also have adequate stocks for 6-8 weeks.
Some of the orders which we have booked on pet coke are on high seas at the rates which were prevailing during middle of March or end of March. We are foreseeing a number of, in Q1, anywhere between INR 1.51-INR 1.55. We will also keep on altering the mix to ensure that we get Charcha Coal or Eastern Coalfields coal or increase or decrease of AFR. That's why we should have a range of close to about INR 1.51-INR 1.55 should be the number I foresee for Q1. All the shipments which are currently booking, which should come around July, August, which will have the impact for Q2, there again, there will be a further increase in blended cost for the company.
There, I think it's too early for me to give an outlook, what will be the cost as we see, because we are already booking now. Suffice to say that this INR 1.51-INR 1.55, which we are forecasting for Q1, will further increase in Q2. That's the outlook I can give. Obviously, all this will have an impact on the energy cost for the company. A few things which we have taken during the month of March and certainly in the month of April, from the exit prices of March into the prices in April, we have taken price increases in both the trade and non-trade channel in all our markets. In eastern markets, we have taken a price increase of INR 10 in the trade channel and across the states of Bihar, Jharkhand, Bengal, Chhattisgarh, and Odisha.
On the non-trade side, we have taken close to about INR 20 per bag price increase in all our states. East has been INR 10 per bag in trade and INR 20 per bag in non-trade is the price increase we have taken. This has not happened on 1st of April. It has happened around sixth, seventh, and then non-trade, typically, price increase we take that on the 10th, once we finish the orders for the previous month. Hence, I think we would get a number which will be anywhere between INR 7-INR 10 for the full month, and also non-trade could be INR 12-INR 18 for the full month. That's on the East side. On the North side, similar price increases we have taken in all our key markets of Rajasthan, Haryana, Gujarat, Western M.P., and Punjab and Western U.P.
There we have taken a INR 10 price increase in trade, and non-trade has been different in different places, close to INR 15 price hike in Gujarat and about INR 10 price hike in Rajasthan, Haryana, and Western U.P. Here again, if you see, the blended price increase in trade should be anywhere between INR 8-INR 10, and non-trade will be INR 10-INR 12. Technically, across the markets where we operate, we can say that we want to inform that price increase we have taken is anywhere between INR 8-INR 12 in trade and INR 10-INR 15 on non-trade.
Thank you, sir, for the detailed answers. Good luck. Thank you.
Thank you. Ladies and gentlemen, in order to ensure Management is able to answer queries from all participants, kindly restrict your questions to two at a time. You may join back the queue for follow-up questions. We'll take our next question from the line of Pinakin from HSBC. Please go ahead. Pinakin, your line is unmuted. Please go ahead with your question. Since there is no response, we'll move on to the next question. Next question is from the line of Navin Sahadeo from ICICI Securities. Please go ahead.
Yeah. Good evening. Thank you for the opportunity. Two questions. One was if you could talk more about the cost impact probably which we faced in March month in particular because ever since this Middle East crisis broke out, we were hearing a lot about issues related to the packaging cost, especially the bag not being available. Did we face any impact in the month of March or we had inventory, so now the impact of that front would come in Q1? Related to the same cost angle, my second question was what was the pet coke mix in this particular quarter and how flexible is it? I'm assuming you would be looking to lower it. How flexible, how much could it go down further and offset by domestic coal so as to mitigate the impact? That is my first question.
Okay. Fine. The previous question which was asked, I responded only for the pet coke and energy cost movement from Q4 to Q1 in terms of rupees per million cal. Of course, in the month of March, we had a relatively sizable impact, which came from the packaging bags and granules. The granule prices in the market, which was at INR 99 per kilo, which was in February, over multiple phases have shot up to INR 155 per kilo, which resulted in increase in cost of packing bag. That did impact the March costing of bags. We had an overall impact of close to about INR 20 per ton at a consolidated level for the company.
Since we also carried sufficient bags inventory as well as we are on a granule conversion model, so we also had granules of different values with us, and hence the impact which happened in the month of March was close to about INR 20 per ton. The number is going to further increase in the month of April, certainly. Already, we are looking at a close to about INR 100 per ton increase due to packing bag cost increase and granule cost increase and conversion cost increase which has happened. That's something which currently loaded on the cost line. Certainly, I have no view on whether this 100 will remain 100 or it will go up.
That's all subject to the granule cost, which has kind of gone up from ninety-nine to one hundred and twenty, one hundred and forty to one hundred and fifty to one hundred and fifty-five in multiple steps. Currently, it's holding on at this kind of number, but if the conflict were to continue for longer and then we are going to have issues with incoming crude, I think this number will also have a negative side. Because the government of India has already asked the granule manufacturers to divert crude for making LPG and other stuff, and hence there is a general shortage of granules in the market. So April, we are looking at a Rs.100 per ton increase in packing bag cost, and May and June could be-- I can't make a guess.
It could be at this level or a little bit go higher also in the coming months. Other than this, the cost inflation did not happen in March, but will happen going forward is the cost of mineral gypsum. Mineral gypsum is also used in manufacture of cement along with FGD as well as chemical gypsum. There we can see close to about INR 20 per ton increase because of mineral gypsum import cost. Most of the mineral gypsum comes from Oman, and there again, the supply lines are cut. The second question that you asked, what is the company doing to mitigate this cost inflations? As far as bag is concerned, it's going to be difficult because it's not possible to mitigate because that's the only sources, the granule manufacturer in the country like IOCL or Reliance.
That's where the granules come, and there I think there is a challenge. It can't be mitigated. It can be only offset by price increase. As far as pet coke increase, obviously, we have a formula. Fuel mix in East and North is different. Nuvoco is also close to about 70%+ sales which happens through East market. There, our key factories are Arasmeta, Sonadih, and Risda. One of the things which we have done in our three plants is reducing continuously the use of pet coke. We are changing the fuel mix in the calciner, and we are changing the fuel mix in the main kiln.
As we speak, people are all working on this effort to reduce the pet coke consumption in Arasmeta and Sonadih to less than 20% from the current 23-odd %, and also from Risda from the current 35% to less than 30%. That's going to have a good impact. With this reduction, we're also looking at other coal sourcing from Eastern Coalfields and Charcha Coal and various other coal initiatives. The blended cost is being controlled by reducing the pet coke consumption, as well as try and get local coal, which will offset the overall coal. Local coal price has also gone up, but overall, I guess, the initiatives are being taken to reduce the consumption of pet coke by at least 300 basis points-500 basis points from Q4 actual consumption. That's on the eastern side.
On the northern side, again, we have entered into some unique coal contracts with Central India as well as from Varanasi depot to get also some domestic coal, which we have not used in the past to be used in the kiln in our Chittor factory. There, again, our target of pet coke consumption, which was in the 55% and 60%, has been brought to 50%, and we are further reducing to 45% by use of domestic coal. In Neemuch, we are still trying to work out some new alternative to see whether lignite can be blended on the kiln and reduce further the pet coke consumption. Technically speaking, in northern plant, our pet coke consumption from 50%, we are trying to come to 45%, which, with the efforts of our manufacturing team, will be able to certainly reduce by 200-300 basis points.
Number two, increase of AFR in these two plants. We have full-fledged investment done in Chittor and Neemuch for AFR processing, which will have the refused material or carbon black or etc., all the stuff. So north is going to be unique domestic coal into these plants, number one agenda. Number two agenda is to try and see whether we can process lignite. Number three agenda is to increase our AFR quantity so that our cost in north is brought down to less than 50% of pet coke consumption. East is going to be overall reduction in pet coke by about 300- 400 basis points, supplemented by increase in use of Charcha coal waste, or get it from Eastern Coalfields. So that's the broad work the teams are doing.
On gypsum usage, a big initiative we are doing is to find out how can we replace mineral gypsum with FGD gypsum. I think our procurement teams are working with nearby power plants and all the plants to try and increase the use of FGD gypsum in all the plants, which will reduce the cost of gypsum usage. Gypsum will be controlled. Fuel costs, we are working on. Bags, I don't think at this point of time, there's a clear-cut way forward, so we'll have to live with the price increase. That's broadly the agenda for the company to mitigate the cost challenges.
Yeah. Thank you for the detailed reply. My second question then was on the pricing and the competitive intensity. You did mention in your, I think, previous questions that the range of price hikes that have happened both in North and as well as the East region. I think similar sort of a commentary we had, I think, witnessed or heard in the previous con call also, at the time of January, that there is some price hikes. Despite peak season demand, I think the price hikes that have happened in March, a quarter as a whole, have been a little underwhelming, just about 2% or so.
I just wanted to get your views about the confidence of this price hike now sustaining, because I think April, May onwards, you also start seeing the seasonally weak monsoons coming through and then the impact of overall volumes and the regular weak season thing. Do you think these price hikes in April are more sustainable, or you think it could still face challenges with the onset of monsoons? Thank you.
Demand, supply, and pricing typically will go through the classic demand-supply model. Right now, we are not on certainly demand-supply framework at all. These are all unique times, and if you see, almost every industry and every sector in India has taken price increase, paint industry, additive industry, automobile industry, FMCG industry. Almost every industry whose raw material is crude-linked have taken price increase. There is no escaping the fact that we will not absorb this. We will absorb this inflation and reduce the profitability of the company. In a normal scenario where demand peaks and or demand drops and then supply is there'll always be pressure on pricing. These are all abnormal times, and I guess every player in the industry, in our sector or outside the sector, is facing the impact of crude.
I am fairly confident that the price hikes which we have taken will stay put in the near term and hopefully further cost inflation doesn't happen. I am confident we can stabilize with the current prices. I certainly feel that if further cost inflation happens, I guess we'll have to find a way to pass on the cost inflation down. That's the view I have and that's how our thought process is.
Yeah. Just to conclude, we will see more price hikes if there is a further cost inflation. Otherwise, so far, the price hikes are good enough. Is that the way to look at it?
If you really put the mathematics of it, I cannot get into details of the total cost increase and the total price increase. Obviously, 100% one cannot defray on step one. By and large, the efforts which we have taken to take the prices up in trade still doesn't meet all the cost inflation. There again, I think efficiency programs are being run in the factory to offset the impact of the cost inflation, but certainly supported by price increase, geo mix, product portfolio and trade, non-trade ratios, all the other agenda which we are working. It's not like 1/1 ratio, cost increase by 100, price increase by 100. That's not the way one works. I guess there is certainly acknowledgment there's a cost increase.
We have done the price increase to kind of mitigate the issues coming out of the cost inflation. In parallel, as a company, as a manufacturing organization, we are embarked into number of initiatives on energy side, raw material side, efficiency side, product mix side, rest of all the stuff to ensure that we are able to compensate for the cost increase with some internal efficiencies as well.
Thank you, sir.
Thank you. We request participants to restrict themselves to two questions at a time, please. You may join back the queue for follow-up questions. Next question is from the line of Satyadeep Jain from Ambit Capital. Please go ahead.
Hi. Thank you. Sir, just Ambit here. Just to follow up on the packaging part. You mentioned that there is some conversion where you source granules on your own and then give to packing companies for conversion. Just a couple of questions around packaging specifically. A, what is the inventory that you have for packaging? Just trying to understand, were there too many moving forces right now in terms of seasonality for packaging that we're hearing? What is the inventory level you're carrying? Just trying to assess the risk of availability of packaging bags. When you source granules on your own, is it something higher versus the industry and are you facing any challenges like everybody else in sourcing the granules?
Third, on this packaging specifically, that historically when we saw fuel cost inflation in 2022, there was a pivot to blending because you reduced the share of clinker in the overall mix for the industry. Now you have higher fuel cost inflation, but you also have higher packing costs, which would naturally mean companies try more non-trade cement. Where are you pivoting to in terms of trade, non-trade mix this year? All these are tied to packaging. I have another question I'll come back for balance sheet, cash flows, and on.
Okay. In terms of the bags, typically we carry about 15- 20 days of bag inventory. That's the stuff. And I guess it is so volatile that the bags currently, which I have are at a price which was already at RS155 per kg granules. And I guess any further increase in price, again, the bag cost is going to increase. So when I mentioned the impact of granule price increase, which will come for full month, April will be close to about RS100 per ton. So that's like kind of a done deal for the month of April. Any further increase in granules will anyway go to month of May. There can be next cost impact will further go up in the month of May. As regards the granules and conversion models, I don't know about other companies.
We had adopted this approach for more than a year now where we source granules from granule manufacturers and then put it on a conversion contract with our bag manufacturers and run. Currently, since the overall granule availability itself is kind of reduced, so we still get granules from our granule manufacturers, but also use the granules which the suppliers already have. Right now it's a blend of granule supply model as well as outright bag purchase model. That's how we are navigating. We'll continue to navigate the same way till such time the entire situation gets back to normal. That's the scene on packaging. In terms of impacts of packaging into trade segment and non-trade segment or moving from bag cement to loose cement, typically we are a company which operates at a pretty high trade to non-trade ratio.
And also our CK ratio in east is already over 2.1 is the CK ratio which we operate in east and then north and the CK ratio is a little bit lower because we have the More OPC content in north. So overall, the company's CK ratio is 1.72. It's pretty high as per industry standards. I don't see the CK ratio going much higher than this kind of number in the short run. So we don't have any programs to move from CK ratio at current level to any other number to compensate for the various cost increases. As regards the movement of non-trade cement from bag cement to loose cement, certain markets do operate at a loose cement model, which is typically the Gujarat market, and also some parts of Chhattisgarh, we still would send through loose cement.
If you ask the question, is there a huge thrust to move from bag into loose? Not really. One thing which we are really focused on right now is to move away from OPC to blended cement more in each, in the short run, so that our CK ratio can further increase and our energy cost per ton of cement can come down. That's the specific agenda I need. North, again, OPC markets, we are trying to go a little bit slow, but in Gujarat, we won't be able to do because the market constructed itself in that way. As to the markets like Rajasthan or Haryana, our focus is to move away from OPC to get blended cement. That's independent of this energy agenda because in the past calls, I had mentioned that our North capacity is more or less reaching capacity utilization.
If we have to unlock cement in North in the short term till Vadraj comes into being, we will continuously move away from OPC to a blended cement to increase that much more cement available for sale in the market. That's a separate agenda, not linked to the energy crisis.
Thank you so much for this elaborate answer. Just a follow-up on this, cost increase on the packing side is well understood. Just on the availability of bag, also either granule or bag, are you foreseeing any challenges where there is shortage and that restricts the ability for cement manufacturers to manufacture? In that context, we heard from some channel checks that there were specific pockets where Nuvoco actually faced some challenges for a very short period in the quarter, and that was overcome through various means. Maybe if you can talk about, were there any challenges in the quarter in terms of availability and did that disturb production at all? How are you foreseeing the availability and what actions can you take in this? Because generally there is a fear that there may be some disruption if you have lower availability of bags.
I think it's an industry phenomenon, so everybody in the industry got impacted due to bag non-availability in the month of March. It continues in April as well. If you look at the East market or any market for that matter, a lot of bag capacity, bag manufacturing capacity, came into force three years ago. Hence, there has been a general reduction in capacity utilization. Around COVID time and beyond that, I think lots of capacities came into being. Typically, April, May is the time when fertilizer movement also happens, and also with this Bangladesh issue of jute bags not coming to India, there was a general scarcity of bags which started happening from February onwards. One was of the view that this entire fertilizer movement, as well as Bangladesh, nothing can happen because right now there is no jute availability there.
However, starting February itself, the issue of overall bag availability and heating up of bag conversion costs happened January and February, March. This war is a new phenomenon, additional phenomenon, which happened in the month of March. We were of the view that come May, once this fertilizer movement happens, the capacity utilization of bag manufacturers will come back to normal and this should not be a problem. With this issue of granule itself not available, then I think that added a new layer of serious challenge, not even new layer, it's a serious challenge. Availability issue, price is a problem. I certainly can talk for Nuvoco, but I think, because bag manufacturers are all common for all the cement manufacturers.
I guess there is a widespread challenge for timely bag availability in certain markets all over India, more so in East, where capacity utilization of bag manufacturers are running to extent of 90%+. We did face in the month of March bags and the number of six million, we could have done a little bit more in the month of March. We had two major disruptions which happened in the March. One was rake availability was a serious problem in the month of March because the government decided to divert all rakes for movement of coal to power plants. Typically we would get four and a half rakes per day, and that came down to four rakes per day. There was overall clinker movement challenge as well as bag availability challenge.
In spite of that, we hit a historical high of 6 million tons in the quarter. We could have done more because we could have served the market. Demand was pretty good for us. I guess that's what we have to live with. We have to sail through the coming few months with this bag shortage. If somebody had asked the next question, I had to share the issue of rake availability in the month of March. As we sit right now, we are having serious problems of rake availability as well, and we have resorted to moving material by road to some of our grinding units because rake is not available sufficiently because all rakes are diverted to power plants. I think this should reduce once the monsoon sets, but that's still a month and a half, two months away.
We face problems in bags. We will continue to face problems. I guess it's a tightrope walking. It's an everyday journey where we kind of find a way to source bags, incentivize for short-term incentives for the bag manufacturers to make. All net-net with all the incentives, granular cost increase, it came to about INR 100 in the month of March. It is continuing at similar levels in April.
Mr. Krishnaswamy, I'll just ask one quick follow-up.
Thank you. Satyadeep, I request you to join back the queue, please, as we have other participants.
Thank you.
Thank you. We'll take our next question from the line of Shravan Shah from Dolat Capital. Please go ahead. Shravan?
Hi, sir. Yeah. Hi, sir.
Yes, please go ahead.
Can you hear me? Yeah.
Yes, please go ahead.
Yeah. Sir, you mentioned about in terms of reducing the pet coke share both in east and north, so roughly around 3%-5% odd. Currently in Q4, what was the pet coke % and the AFR % in the fuel mix at the company level?
Company level, our Q4 number, all blended fuel was INR 1.44 per million kcal, out of which coal was 1.
No, sir.
Yeah, go ahead. I'm answering your question.
Yeah. Sir, go ahead.
Fuel cost for the company was INR 1.44, coal came at INR 1.27, pet coke came at INR 1.84, and AFR was at INR 0.9. That was the number which we had for last year.
In terms of the fuel mix percentage share, pet coke share and AFR share in Q4 was how much? Because we were looking at even AFR also to increase to 13%-15%.
Okay. Our coal percentage as a company was 53% with linkage 31% and non-linkage 21%, which is domestic open market coal. Pet coke in Q4 was close to 37%, and AFR was about 10%. That's the number we had in Q4.
This AFR, in Q1, can we see will further go up to 13%-15%? That's what we were looking at.
FY 2021, our target is to get this AFR percentage as a company from 10% to 12%-13%, is what we will look at. That's the number we are targeting to offset the coal price increase.
Sir, in terms of cost, furthermore, let's assume by the end of this month and election is over, state elections, and if we further can see diesel price going up by INR 10-odd, which the central government has to excise it. How one can look at this INR 10, let's assume, or 10-odd % kind of a increase? Will it be an entire 10% will be the direct increase in the freight cost, or will it be a 60%-70% and 30%-40% is kind of a fixed, that way one can look at?
No, I don't think in this investors call I would be able to give a pricing strategy of the company and what are the minute steps, how are we going to manage it. I basically gave an overview because this is a strategy which we will work, other companies will work. I would refrain from giving what are all the details that the company will take in the coming six to eight weeks to manage. I gave overarching picture of reducing pet coke quantity, increasing geo mix, improving our premium share, and moving away from mineral gypsum to FGD. These are the big initiatives we will work on. To kind of give a mathematical model, if this goes up, this will be the price rise. I don't think I would like to share such kind of information in this call.
Yeah, I got it, sir. Just on a broader prospect, whatever we have said till now, INR 8-INR 12 kind of a trade hike and INR 10-INR 15. Roughly INR 10-INR 11 kind of at a blended level price hike. Given, obviously, the pet coke cost, if it stays as it is today, maybe July, August onwards, we will have a hit. Let's assume that. The INR 100 packing cost increase is there. Roughly still we are behind in terms of INR 10 odd on the price hike. INR 8-INR 10 still for the.
I don't think I will be answering this question because I cannot do a mathematical reconciliation and say that this much price increase, this much cost increase. Suddenly, I will not be able to tell. That's not going to be my approach of giving both the details. All I can share with you is, certainly costs have gone up, which I shared with you in a transparent manner, what has been the impact of bags and what has been the impact of fuel in March, and March is all done now. I guess April, what will be the impact of bags on fuel? I guess certainly, the blended cost of fuel, bags, gypsum, rest of all the stuff, I am really looking at a cost inflation of close to INR 200 per ton.
Hence at INR 200 per ton, with the kind of price increase, net of GST, there is still going to be some gap. Our effort will be to work on the internal levers. Plus, I guess an appropriate time when the year have started, I guess, quarter-ending schemes have ended in the market, and I think demand will pick up. Summer is coming with elections finishing and also labor getting back to major markets from the post-election scenario in key states. I think I foresee a demand opening up to 7%-8%. Going forward, that's when I plan to catch the pricing trajectory.
Thank you. We'll take our next question from the line of Tejas Pradhan from Citigroup. Please go ahead.
Yeah. Hi, sir. Just on the balance sheet, if I look at historical trends, Q4 has been typically a quarter when we have unwind in terms of the debt reduction. This quarter, if I look at net debt, it has gone up from INR 42 billion-INR 44 billion, and in addition to that, we also had the CCD issue at the Vadraj level. If I adjust for that, then maybe that INR 3 billion also in addition, the debt would have gone up. Any reason why we had an increase in net debt in the quarter?
Yeah. Let me ask Maneesh, our CFO, to address this query. Maneesh?
Yeah. Basically, if you look at during the quarter, so first of all, we had this CCD which has come in and we use the proceeds to pay off the commercial paper or in terms of the bridge loan that we had taken earlier for the purpose of this Vadraj acquisition. That is there. Besides that, if you look at the overall net debt for the entire year, I'll just give you the whole waterfall for that. If you look at that, we started the year with INR 3,640 crores and overall net debt we've ended with INR 4,445 crores. There's a INR 900 crores increase that has happened, and this is primarily because of the Vadraj acquisition that has happened.
Overall investment value for the Vadraj, if you recall in the previous calls what we have talked about is INR 1,800 crores and on top of it there is this INR 200 crores that we had funded or made the investment for the V-Gen acquisition. Altogether INR 2,000 crores of investment has been done and as against that we have INR 900 crores of CCD that has come in. There's INR 1,100 crores of internal accruals or the borrowing that has gone into funding the entire acquisition. From the operating cash flow if you look at around INR 1,880 crores of EBITDA that has been generated, there is this interest of around INR 450 crore that has gone in. Besides that, the working capital to fund the scale of operations from 19.4 million tons-20.4 million tons, there's increase in the working capital.
Besides the CapEx that has gone in across the plants, the sustaining CapEx, the normal CapEx that has gone in for the land mining as well as the CapEx that has gone for the Vadraj stuff, that is how the overall INR 1,880 crores of operating cash flow has been utilized, and then there is income tax payment that has gone in this financial year. Altogether, if you look at from the operating cash flows, there is actually a INR 300 crores of net debt that has reduced. Because of this Vadraj acquisition that has happened, so there is increase that is coming on the balance sheet side to the extent of INR 900 crores.
Maneesh, finish it. Maneesh, thank you for explaining this. We started the year with INR 3,640 crores of net debt. We ended the year with INR 4,445 crores of net debt. This INR 3,640 you have to add close to INR 200 crores of investment which you have made. It should have gone to INR 5,640. INR 5,640 had INR 900 crores of CCD. Knock off INR 900 from INR 5,640. It will come to INR 4,740. Technically speaking, we had debt, we bought something, we did CCD, we should have ended the year with INR 4,740 but we ended the year with INR 4,445, good INR 300 crores reduction in debt on a like-to-like comparison coming out of operational efficiency, prudent CapEx and cash flow generation.
I guess whatever things which I've been talking on every call to kind of find a way to restrict CapEx, reduce working capital, manage cash flows to do a debt reduction. All the time we have been talking about when our debt reaches INR 3,500-INR 4,000, we will make the next investment. That is how we made the next investment. The next investment took the debt up. Now the debt ranges at INR 4,445. Technically, on mathematical terms on a like-to-like comparison, it should have been INR 4,745, but wonderful work done by the teams brought the number to INR 4,445.
Okay. Just to sort of clarify the question also. Just on a quarter-on-quarter basis if I look at least the last four or five years, generally 3Q end versus March, there has been like a INR 4 billion-INR 5 billion quarter-on-quarter reduction in net debt versus that this quarter there is a INR 2 billion increase. Anything specific in this quarter? I understand the full year. That explanation I understood. Just on a quarter-on-quarter anything particular to flag off because of which the debt increased?
Our net debt December stood at INR 4,817 and against that INR 4,817 we are at INR 4,445.
Sir, the point that you're making is the net debt has gone down slightly higher this time as compared to the previous years?
Okay. My number was INR 4,217 crore. Correct me if I'm wrong.
That's not the right number. The number is 4,817.
Okay, understood. I'll take it offline. Not an issue.
Yes.
Just on the other data question that I had, was the clinker production in full year FY 2026 and the lead distance for the fourth quarter, just these two?
We don't clock clinker production, only company. We report cement production. As regards to the lead distance reduction, Q4- Q3, no substantial reduction in lead distance. We are at 325, just about a kilometer less, 325 km, largely coming due to, as I explained a little while ago to Satyadeep Jain's question, we had challenges in clinker movement, so we had to kind of do a little bit of trade-off of how can I move clinker to the right places because rake availability was not there everywhere. Second also is the fact that packing bag was also a challenge in certain places and like North factories, which was different, need was different. We couldn't do too much of impact on the lead distance reduction. It remained at 325.
Sure. Thanks. That's all.
Thank you. Next question is from the line of Gaurav Goel from UTI AMC. Please go ahead.
Hi. Thank you for the opportunity. Just one quick question, if you could give the debt?
Can you speak on the handset, please? You're very feeble.
Yeah. Am I audible?
Yeah. At this level, you're audible.
Yeah. Thank you. Just one quick question. If you could give a guidance on the debt and CapEx for FY 2027?
On the CapEx, I would give a guidance. Every quarter we've been talking about CapEx. In FY 2026, the year gone by, I had given a outlook of INR 700 crore for CapEx. We ended with INR 712 crore, a small INR 10 crore increase. More or less exactly the same way which we planned for the year. 2027 and 2028 will be INR 900 crore for 2027 and INR 960 crore for 2028. That's all largely coming out of Vadraj's refurbishment, INR 600 in 2027 and INR 700 in 2028. Overall, next two years, INR 900 crore in FY 2027, INR 960 crore in FY 2028. As regards the debt level number, I guess there is going to be a period of few quarters where the debt is going to be around this number, because we have borrowed and invested in Vadraj.
However, our goal has been to maintain that debt level to two to two and a half times EBITDA, and there we will meet our numbers during the fiscal FY 2027.
All right. Thank you so much.
Thank you. Next question is from the line of Girija Ray from Nirmal Bang. Please go ahead.
Hi. Thanks for taking my question. One confusion, if I go back to 2022, September, post-COVID again, there is a spike in pet coke, even though after COVID, the market opens and everything, the infra also started moving. The industry was struggling to pass on this input cost pressure to the consumers. Even this normal course of situation when enterprise are doing well and the things are getting in a good phase, seeing this cost increase, like pet coke prices and packaging costs, how do you see the kind of price hike will take, which can be passed on to the consumers post GST rate cut? Even, if I remember post the GST rate cut had given a headroom of INR 35-INR 37 per bag of increase. So far we have increased around INR 10-INR 12 on a blended basis.
Even in September 2022, most of the pockets they have taken a price hike of INR 50-INR 70. Still, it was not adequate enough to pass on to the consumer. The profitability was impacting that time. How do you see this can be, what kind of price hike we can take and how is it feasible to pass on to the consumers?
If you look at a four-year window. I guess I'll little bit jog from my memory and talk about September 2022. It's pretty far away, but all I can say is at that time, pet coke was trending nearly close to about $250 per ton. The rupees per million Kcal was also pretty high at that time. It took a good six to eight months for their prices to taper down. This time around, if you see, pet coke is currently trending at INR 2.04 per million Kcal. At this kind of levels, the price hike which we have taken just about meets the cost inflation. Whatever currently we have taken, it just about meets the current kind of cost inflation which has happened. It's kind of a neutral ground as we speak.
Any further increase in cost, I guess we will go for additional price increase. I will not be able to comment right now whether it will be INR 10 per bag or INR 15 per bag. God forbid, the cost doesn't go so much, so we'll be mindful as a responsible company. Certainly I think, eventually when the overall cost lines go up, I think it'll have an impact on the overall economy of the country. We will go by as the situation unfolds. What is in our control is to tweak the fuel mixture, tweak the model mix, tweak the geo mix, bring about efficiencies, and that's where our immediate focus, the entire team is working on to squeeze out some of the money so that the cost increase can be obviated by the efficiency improvement within the company. Beyond that, we will have to take a price increase.
I hope this situation doesn't happen where we have to take big-time increases. I don't rule out any situation where we will not take price increase. I won't say we will take, but certainly I will give a different way I will answer your question. I'm not ruling out any price increase going forward.
Okay. My last question will be, there is some kind of decline from past three quarters. I can see the employee cost per ton has declined. That is one. Second one is related to our capacity utilization. It is very good to see that we have reached a very significant capacity utilization in fourth quarter. Is there anything like, we are trying to capture the market or gain the market share, breaking the pricing power? These two questions. This will be my last questions.
Certainly, I think we will not drop price to increase market share. I think our focus is profitability. Nuvoco will have to find, as a company, we do a good balancing act between ensuring profitability and also get growth. We will not kind of buy growth by throwing money. That's not in the DNA of the organization. We will work very hard to get the profitability right, but certainly, I think we'll run behind growth, but certainly not throw money to create growth. That's the DNA of the organization. That is how we have been running our company for last many years, and that's the way we look at things going forward. As regards to the overall employee benefits per ton, I guess scale also comes to picture. If you see our overall absolute volume growth in FY 2024 and 2025 was 18.8 and 19.4.
Two years we were stuck at 18.8 and other year we went only to 19.4. This was a year where I think the market also improved. We also kind of improved to 20.4. That's where I guess the volume scale benefit also comes to use, comes to our cost per ton impact.
Thank you, sir. All the best. Thank you, sir.
Thank you. We'll take our next question from the line of Pinakin from HSBC. Please go ahead.
Thank you very much. My first question is related to demand. In your view, what was the industry growth in FY 2026? Given in April, there has been so much disruption that we are hearing about, how is demand trending in April? Is it flat or is it starting declining on a year-over-year?
If you're looking at what's the demand has been, I guess if you really recall our Q2, I think we did not have aggressive volume growth. Whereas Q3 and Q4, I guess we did grow. Industry, we are looking at a volume growth in FY 2026 or 2025, anywhere between 6%-9%. That's the outlook for the last year. I think that's my read of how the overall market, but again, India is north, south, east, west, central. Various markets have got various growth rates. At an all-India level, industry has grown by 6%-9%. Certain markets like East or even Gujarat for many months during the year, or Maharashtra for many months during the year, growth was tepid, less than the national average.
However, as in our opening speech, we mentioned about the infrastructure improvement and the investment government is going to make. I'm still looking positive for this industry to grow anywhere between 7%-9% in the coming year as well.
Sure, sir. Related to that, how has demand shaped up in April so far, given whatever disruptions we have seen?
Okay. First week, anyway, April, typically, first week is always a challenging week with the March annual targets for all the dealers across the staff. As we speak, overall, I can basically say there are few markets where we don't operate all over India, but certainly in the markets where we operate North, East, and West, and some parts of Central, I think there are pockets in India currently where there are demand is slightly weak. I'm not going to kind of list on which states there are demand is weak. In our core states of Bihar, Bengal, Jharkhand, Chhattisgarh, there is good demand. In terms of the first 13, 14 days of the month, our pro rata is as per our plan.
Sure, sir. Lastly, very quickly.
Pinakin, your voice is muffled. Can you repeat your question, please?
Yeah. For FY 2027, you mentioned demand growth at industry level of 7%-9%. At a Nuvoco level, I mean, it's very early days, but what is the target that you are working with? Because FY 2026 was 5%. Should we see a pickup in volume sales in FY 2027?
You want what I tell my employees or you want what is likely to happen? Certainly I think, we will certainly want to grow in line with the industry of 7%-9% for sure in the market. Practically if you see, markets in North, we are kind of operating at 95% capacity utilization. There, I think once our Vadraj comes in, there is going to be few months in the coming year where we'll be short of cement in North. That's a staffing phenomenon, that's part of their stuff. I have adequate capacity in East. I still have more cement available in East, so we are targeting to grow anywhere between 7%-9% in line with industry in the coming year as well.
Got it. Thank you very much.
Thank you. Ladies and gentlemen, we'll take that as the last question for today. I now hand the conference over to Mr. Bishnu Sharma for closing comments. Over to you, sir.
Thank you, Ashley. Thank you everyone for the question and engagement today. We trust the discussions have been both informative and useful. The IR team remains available for any follow-up clarification you may need after the call. As we close, let me leave you with a few thoughts on where Nuvoco stands and where we are headed. Our growth agenda is firmly on track. The Vadraj cement project is progressing as planned with phased commissioning beginning Q3 FY 2027, further strengthening our presence across the western and northern markets. Beyond capacity, our strategic priorities remain clear and consistent, premiumization, geographic optimization, and cost discipline. These are not just aspirations, as they are disciplines we have demonstrated quarter after quarter, and they will continue to drive long-term shareholder value creation. Thank you for your continued support and trust. We look forward to speaking to you again next quarter.
Thank you very much.
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.