Ladies and gentlemen, good day, and welcome to the Ambuja Cements Limited Q1 FY 2027 Earnings Conference Call hosted by Nomura. As a reminder, all participant lines will remain 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 the operator by pressing star then zero on your touch-tone telephone. Please note that this conference is being recorded. I will now hand the conference over to Mr. Jashandeep Chadha from Nomura for opening remarks. Thank you, and over to you.
Yeah. Thank you, everyone. Without much delay, I will transfer the call to Mr. Deepak Balwani, Head of Investor Relations. Mr. Deepak, over to you.
Yeah. Thank you, Jashandeep. On behalf of Ambuja Cements, it is my pleasure to welcome all participants to our earnings call for quarter one FY 2027. Ambuja Cement is the ninth largest cement company globally, a key part of diversified Adani portfolio, the country's fastest growing portfolio of sustainable businesses. Before we begin, I would like to remind everyone that today's discussion may contain certain forward-looking statements based on our current expectations and assumptions. These statements are subject to various risks and uncertainties and actual results may vary materially. At Ambuja, we remain committed to enhancing transparency, strengthening disclosures, and continuously elevating our capital market communication standards in line with the global best practices. We are pleased to have with us today Mr. Karan Adani, Director, Mr. Vinod Bahety, Chief Executive Officer, and Mr. Rohit Soni, Chief Financial Officer.
With that, I would now like to invite Mr. Vinod Bahety to share his perspective on the quarterly performance and the company's [audio distortion].
Thank you. Thanks, Jashandeep. Good afternoon, everyone, and thank you for joining us. Started FY 2027 with a difficult and sustainable performance [audio distortion] for strategy, despite the current operating environment. The quarter was characterized by stable cement demand, supported by infrastructure, housing, and construction activities, while profitability across the industry remained under pressure from the higher imported fuel prices, elevated freight costs. Against this backdrop, Ambuja Cements delivered stronger profitability, improved operating efficiency, and continued strategic execution. Our strategy remains clear and consistent, creating sustainable value ahead of volume. We used this as an opportunity to perform scheduled maintenance for almost 12% of our kilns, absorbing additional cost of INR 50 per metric ton this quarter. While we built up clinker inventory of one month and coal inventory of around three months, giving us a competitive edge in second quarter.
We continue to execute against the four strategic priorities that will define the next phase of our growth. First, profitable growth. Our focus remains firmly on value creation. We continue to improve the quality of our revenue through a higher share of trade sales, including premiumization, discipline in pricing, market- specific commercial strategies. Trade sales share has actually improved from 74% to now 78% of our overall sales. Our premium strategy continued to gain traction, with premium products comprising 34% of our trade sales. Cluster- wise, if I was to highlight, North continued with its leadership in terms of giving highest EBITDA [audio distortion]. We grew 2% of our trade volumes YoY in North, while we had a much sharper reduction in [audio distortion].
Central cluster, it remained a stronger market for us with higher proportion of premium cement enabling higher EBITDA margins, and we improved our share of blended cement in this cluster. So far as West is concerned, it's well balanced between trade and non-trade, since the key markets of Mumbai, Gujarat are stronger on higher margins of non-trade volumes. We have grown positively both in terms of trade as well as non-trade in West. East is concerned, we have sustained on the trade volumes, and we maintain healthy EBITDA margins. So far as South is concerned, we have consciously reduced our lower margin volumes while we continue to increase our channel network and focus on trade volumes as we move on the coming quarters. In all, we have a 2% negative YoY growth on the trade and a 21% negative growth on non-trade.
The second on the track in terms of our four strategic priorities I would highlight is the structural cost leadership. Operational excellence continues to strengthen our competitive advantage. During the quarter, our clinker factor improved by 3% from 67% to now 64%, while share of blended cement increased 85%. Improving both profitability and sustainability. Net operating cost reduced to INR 4,241 per metric ton, a reduction of INR 206 per metric ton from the previous quarter. Thus, it puts us firmly in terms of our guidance to achieve INR 4,250 per ton for this financial year. Importantly, these gains were achieved despite the inflationary pressures. Productivity initiatives enabled us to maintain manpower costs at INR 222 per metric ton, while optimization of our manufacturing footprint reduced the primary lead distance by 20 km, lowering our logistics cost by another INR 10 per metric ton.
Across the value chain, we continue to build structural advantages through raw material optimization, higher renewable energy utilization, greater use of domestic fuel, enhanced capacity, enhanced captive coal integration, improved kiln efficiency, logistics optimization, and expanded rail infra. Our RE power capacity is now at 973 MW, up almost 500 MW over the past one year. WHRS capacity stands at 228 MW, and this has helped us reduce our unit of power cost from INR 5.9 per kilowatt-hour to almost INR 4.9. By INR 1 actually, it has come down with this improvement. This is in line with our other patterns. Our cost transformation journey for this year remains firmly on track, as I mentioned earlier, supported by a series of structural efficiency initiatives. One of them, for example, reduction in the lead distance.
We are expecting another 15 km, which will deliver additional INR 30 - INR 35 per ton of savings. Raw material logistics optimized through greater use of the BCFC rates and the fly ash sourcing initiatives is expected to contribute additional INR 30 per ton. On the energy front, increased RE power consumption backed by commissioning of additional 75 MW of the new green power capacity along with the targeted reduction, the heat consumption, which on a conservative estimate, I [audio distortion] 5 kcal from the existing levels per kilogram of clinker and on the power consumption which will come down by almost 2 - 3 units per ton of cement. This is all expected to generate additional savings of, say, INR 50 on these initiatives and the other expenses, for example, there's a headroom of improving by INR 10- INR 15.
In all, these initiatives are expected to deliver savings of almost INR 130 - INR 150 per ton providing a strong visibility towards our cost leadership target and enhancing long-term competitiveness. It also mitigates any pressures on cost from the geopolitical tensions. I again re-emphasize all these initiatives are fundamentally reshaping our cost curve and reinforce our confidence in achieving total cost of INR 4, 2 50 per metric ton by end of 2027. The third factor in our strategic approach is the disciplined capital allocation. Today, Ambuja has evolved into a 109 million tons of capacity integrated cement platform. Our priority is no longer simply adding the capacity but it is [audio distortion] scale to higher productivity, superior profitability and stronger returns on capital. Our expansion program remains firmly on [schedule]. To highlight, trial runs have already commenced at Behesra, which is the expansion of 1.2 million tons of cement capacity.
Salai Banwa in U.P. has already started with 2.4 million tons of capacity. Bathinda in Punjab, 1.2 million tons and Jodhpur which was, if you remember we had acquired from Penna as an overall company. So this Jodhpur was under construction at that point. It has already also commissioned at 2 million tons of capacity. Kalamboli in Mumbai basically 1 million tons of expansion that is expected in Q2 and so is Warisaliganj in Bihar, 2.4 million tons expected in Q2. Maratha is a clinker line which we're expecting it to commission next year. These projects will increase our installed capacity to 119 million tons by end of this financial year and it will also help us to improve on our efficiency and overall costs. At the same time, our focus extends well beyond capacity creation.
The debottlenecking, the asset reliability, the operational stabilization and the productivity enhancement remains equally important to maximize the returns from every amount of capital invested. Fourth in the pillar of the strategy which we are focusing is to build a future- ready enterprise. Technology and sustainability are increasingly becoming enduring competitive differentiators. Importantly, at Ambuja, sustainability is not merely an ESG commitment, it is a driver of innovation, efficiency and long-term shareholder value creation. Let me now briefly summarize our performance. Revenue of INR [9,500] crores [EBITDA] [INR 1,589 cores]. EBITDA margin has improved 331 basis points to now [16.7%] with [audio distortion] per ton of INR [audio distortion]. Net cost reduced by INR [206] per metric ton sequentially, PAT of INR 660 crores, and net worth of almost INR 72,000 crores. Looking ahead, friends, India's long-term demand fundamentals remain compelling. Infrastructure development, urbanization, industrialization, logistics investments and housing demand continues to support sustained growth in cement consumption.
While near-term demand may remain influenced by monsoon input cost volatility, our priorities remain unchanged. We remain well-positioned to outperform industry growth, expanding installed capacity to 119 million tons with the addition of 10.2 million tons, which I mentioned before. We also target approximately INR 250 per ton of additional cost, which I mentioned, to INR 4,250 now for the full year of FY 2027, and continuing to improve returns through disciplined execution, premiumization, operational excellence and digital transformation. With industry scale leading structural cost leadership, disciplined capital allocation and technology-enabled execution and a stronger balance sheet, Ambuja Cements is uniquely positioned to create superior long-term value for all the stakeholders. I thank you again. I will now hand over the call to the moderator.
Thank you. Ladies and gentlemen, 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. [audio distortion] headset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Navin Sahadeo from ICICI Securities. Please go ahead.
Yeah. Good evening, sir. Am I audible? Hello?
Yes, Navin, you are.
Good evening. Thank you for the opportunity. Also, congratulations on the [audio distortion] that we have seen in the profitability. I have two questions. One is on volume. Now, volume, I know you will appreciate that yours is the only company to have seen a, at least so far, on the listed entity space, Ambuja is the only company to have lost volumes and you explained trade, there is a decline and a much higher decline in the non-trade. This is in the quest to chase value over volume, which is now very apparent and also mentioned in the PPT.
I wanted to just understand then, is it fair then that for full year FY 2027, if this strategy maintained, we will have a very muted kind of a volume growth because we will be focusing more on maximizing the value in the backdrop of the previous quarter's guidance that we were chasing around 80 million tons or so.
Thank you, Navin. Thank you very much. I think this question may be also from some of the other analyst fraternity. Let me explain this in more detail. First, I want to assure you all, I think, the whole focus on the trade volume, and therefore this improvement in the percentage of volume [audio distortion] [74%] to 78% sequentially, as you rightly said, has actually given us a good bump in the EBITDA by almost INR 206 per metric ton. From here onwards, on back of our brand equity, Ambuja, ACC with the parent brand, Adani Cement, we are riding quite well in terms of the volume growth. As we speak in the month of July, and I would not shy highlighting that we are already seeing an 8% improvement on the trade volumes.
And therefore it gives me a good level of confidence to continue with our estimation and guidance of 8% growth, which we are targeting for this financial year. Therefore more the way we focus on value terms, I think in terms of overall revenue, it will commensurate and keep us giving that elbow advantage compared to the competition. Doesn't mean that we are not focusing on the non-trade. We are. In my comment, I highlighted that some of the markets of West and few of North, which provide a great opportunity on the non-trade, which remains our key focus area. What we are also doing is many of the markets in Central and East, for example, they are also moving blended cement in the non-trade, which actually becomes an advantage and therefore has helped us to improve our overall share of blended cement to 85%.
The track is two. One is improve the blended share of sales to the non-trade institutional segment and keep focusing on trade with the brand equity and the excitement which we see now with the channel partners, the dealers, the contractors, the retailers, and the whole positive momentum which is now coming in. I think this definitely bodes very well for the coming quarters and which is reflected in July also. I think we are quite positive towards the volume growth for the year.
We'll gain the lost-- Just to, part of this question is, so whatever market share loss we have had in Q1, we'll be able to recoup that in the balance nine months. Is that a safe understanding?
Navin, I would say that market share has to be looked upon not in overall basis. Again, for example, I would say that we have sustained and rather only improved in terms of the market share on the trade segment. So far, you may say that we have reduced our market share on the non-trade, which is a very well-calculated, thought- upon discussion, basically action plan.
Understood.
But on the trade side, we have sustained and improved only.
Understood. My second question then was on the green power. As you reported that out of the 1,122 MW, 973 MW has already commissioned, which is 87%. My question was that by FY 2028, the target is to take it to 1,122 MW, which is just 13% incremental, but the share of green power is then going from 34% to 60%. So two parts of the question is, what major difference will the incremental 13% do to take the overall share to 60%? If company is selling some green power also, it means that the benefits of green power are largely captured? The only difference being they are in revenues, right, come to cost. Thank you.
Very good question again, Navin, I must appreciate. I think this is a very interesting point. What we have done is, we have set up the capacity and just to put some more specific numbers, [45] crore units has been sold in first quarter [out of our op erating] assets. First, are we basically towards sale or actually the inclination is towards the consumption? But there are always [audio distortion] facing issues, the transmission infrastructure, some of the policy initiatives. So it takes time. This quarter, which is Q2, we are expecting to consume almost 50% of this, so almost 20 crore units out of these sold units, number one. Your question is very interesting, that 34%. Actually, if I consider the sold units, this 34% is actually reported on a consumption basis.
I would have actually shared on an overall revenue plus consumption, then my green power share is almost 48%. The journey is then from 48% to 60%, and that is quite basically enabled through the capacity which you highlighted of from 1,122 MW, for example, and also the WHRS capacity, which are getting set up from some 230-odd MW as of now. So we are absolutely well on our plan in terms of green power to achieve 60% by FY 2028.
Thank you, sir. I'll come back in queue.
Thank you.
Thank you. We take the next question from the line of Manish Somaiya from Cantor Fitzgerald & Co. Please go ahead.
Good evening, everyone. I have a couple of questions. First, Sanghi, Penna, Orient. When do we expect normalized utilization and EBITDA return levels? And how much CapEx do you think you need to spend to achieve that?
So far as the acquired assets of your question is, Manish, about Orient, Penna, and Sanghi, right? If I understood correctly. Orient, for example—
Yes.
—is quite well in terms of its capacity utilization as well as margin. Therefore, for example, from prospectively here onwards, I only see an improvement in Orient with minimum of investment. So far as because we have 87% utilization of capacity in Orient. So far as Penna is concerned, that remains an area in terms of improving the capacity utilization. One is the investment part. Investment is lesser, but I think what we have to do, investment is more on the channel network and increasing the whole focus in terms of the trade sales, which will be the key driving factor for improving our overall, say, penetration of utilization of capacity of Penna. Sanghi is quite moving well. Sanghi, for example, we have seen an improvement in the capacity utilization, both [audio distortion] as well as [audio distortion].
Sanghi, for example, what we are doing is an investment of closer to, say, INR 600- odd crores, which is planned in terms of the jetty expansion. But that's more for the clinker, basically utilization, which will support the plant grinding units on the port. Otherwise, Sanghi has taken up the investment. We have, for example, we are already investing into WHRS line in Sanghi. What we have done is also a plant shutdown of one of the kilns, which is in a normal course of the investment. Nothing special. I think Penna is what, for example, requires some of the AFR investments and WHRS investments. I would say the investment is less than, let us say, INR 100 crores-INR 150 crores altogether.
But the more important is the whole improvement in terms of the channel development first out, to enable and facilitate a margin expansion of the Penna assets. As I said, Sanghi now doing well, and we'll see every prospective quarter [audio distortion].
Okay, that's super helpful. You mentioned in the press release that you expect sequential cost pressure in [audio distortion] quarter. When should we expect those costs to normalize?
Basically, I would say that this cost about the geopolitical escalations, if at all it happens. For example, normalized [audio distortion] deescalate. But what [audio distortion] beyond your control. What is in your control is how you can further optimize cost. I gave a net of INR 150 per ton, [audio distortion] [green] power is basically the efficiency of the heat consumption or the power [audio distortion]. Also the clinker, very important, because in the industry, for example, amongst the peers, I probably say that [audio distortion] is the one which has actually reduced the clinker factor by [audio distortion] percent. So every 1% [audio distortion] has a good savings also. I think we are expecting almost [audio distortion] to INR 150 per ton.
Basically, cushion available, which we are focusing to have any kind of. We are expecting, if at all this kind of geopolitical situation continues, ballpark about INR [200], for example, potential rise in the cost. But I mentioned to you, I'm holding an inventory of clinker of almost a month, and I'm holding a coal inventory of almost three months. So I'm very well mitigated from that perspective. On top of it, the initiatives to bring down the cost by INR 100- INR 150, which will be a good mitigation to absorb any kind of surprises from any external factors.
Okay. That's also helpful. Just lastly, if I were to look at industry demand and pricing, can you just give us a flavor for what you're seeing across some of your key regions?
Yes, Manish. In terms of our key regions, I think we are seeing a good momentum coming to the in terms of, say, East. East is doing well. So is West, we are seeing now where we have grown positively also both on the trade and on the B2B side. For me, the key market remains, Manish, North, West, Central, and East. All of them, for example, we are seeing a good traction, and that's our confidence I mentioned to Navin also in terms of our estimates of guidance on the volume growth. I think there is now a stronger [audio distortion] our premium [audio distortion] and our overall [audio distortion] . We are seeing a good momentum. Across this on South, I have to wait on these channels [audio distortion] focus, and you will see a good [audio distortion] on that part as well.
Meanwhile, we are also focused in terms of doing some further [audio distortion] on the product with some R&D and all on certain product segment, which, for example, down the line, we will know how things are shaping on that. Essentially, the idea is to improve the share of blended cement, which we are. As of now, we are at 85%, and we want to further improve down the line.
Okay, super helpful, and best of luck.
Thank you, Manish.
Thank you. We take the next question from the line of Indrajit Agarwal from CLSA. Please go ahead.
Hi. Thank you for the opportunity. A couple of questions. Despite improvement in trade sales, our ASP increased on a sequential basis in one of the lowest [audio distortion]. Is it more geographical?
Yes, Indrajit. Thank you. In terms of the growth, I think we have achieved, say, 2% sequential growth [audio distortion]. If I have to put some factors which get, there are different ways how you calculate the NSP, so I will not go into treatment, but one should consider that also because there are Incoterms. For example, some companies actually net off from certain [audio distortion]. We actually put certain expenditures which are netting off [audio distortion] compared to some of the other industry players who may not do it. One, in terms of sometimes the Ex-Works, which is in the Incoterm, commercial term. When it increases, it impacts your NSP also. One would look at those factors, and therefore, for example, the NSP gets impacted. From here onwards, I think what we are [audio distortion] the whole brand pool and the trade segment and the premium actually is going to differentiate [audio distortion] also.
I think price is all market-[audio distortion], which is well appreciated, but I would still bring the focus back to cost, which is something which is absolutely in our control, and we want to deliver most efficiently there. Which will be a determining factor in our delta improvement vis-à-vis [audio distortion] . You will see the journey of NSP also will improve in line with the industry.
Sure. Actually, on that note, if you already have substantial coal and clinker inventory versus the comments of some of the other players of, let's say, [INR 80, INR 100] kind of cost increase sequentially in 2Q. Can we assume at least a variable cost basis, you are unlikely to have any cost increase in 2Q?
No, I would say that we will still have some impact, but I have given you the mitigation of that. Therefore, for example, on a net basis, we will be well in line with the June quarter estimate and slightly better only. On a full year, we are anyways giving guidance of INR 4,2 50 a ton. When I mentioned that there will be some element of surprise coming from these geopolitical tensions and all, and we are well mitigated with the overall, say, raw material and the other factors which I have highlighted.
Sure. What is the CapEx numbers for FY 2027 and 2028?
CapEx is overall closer to INR 6,500 crores, and which is well spread between the growth and the efficiency CapEx, but that slide we are working on.
Sure. I have more questions. I will come back in the queue.
Thank you. We take the next question from the line of Rajesh Ravi from HDFC Securities. Please go ahead.
Yeah. Hi, sir. Good evening. Am I audible?
Yes, Rajesh, you are.
Hi, sir. First question, I think you partly covered that on the volume growth for full year, when you are maintaining 8% and first quarter we have seen a sharp decline. What gives the confidence that on a total basis, we would be able to deliver 8%, which would mean more than 10% growth in the remaining nine months?
Rajesh, I think the confidence is on the [audio distortion] . We are now seeing in terms of the focus on the [trade] [audio distortion] brand, the support coming now from the whole network, and that is what we wanted. Therefore, even for the B2B, we are focusing on the key markets which are high- margin B2B business, and it is therefore important that we are there in terms of the new capacity also. For example, which I mentioned to you, almost 10 million tons is coming, which will come in, say, different staggered manner, but those are also going to improve the volumes. The improvement also comes when I have a source of [fly ash] which I have a long-term agreement, and it comes at a very competitive costing.
The infrastructure availability we have created, the BCFC rate which we have invested, all of this basically helps us to bring and move the material in most efficient manner and get the volume share more so on the trade side.
Sir, so this trade non-trade mix 8 5% of what we have achieved, 78%. Can we expect that in subsequent quarters it would be north of 75% trade sales?—
Yes.
—that will be the focus?
Absolutely, Rajesh. You hit the point. It is going to be upwards of 75%.
Sir, we hear in the channel that there is a lot of talks of merging ACC Ambuja brand into an Adani Cement brand. Could you throw some light on that and what is the thought process behind that effort?
Rajesh, no such plan for the brand merger. Whatever the plan is for the company merger, which we have announced.
Okay, understood. On the RMC, could you share what is the EBITDA numbers for the RMC segment in Q1?
So, okay, in terms of the RMC EBITDA for the quarter, we are at about INR 35 crore. Yeah.
Okay.
Yeah.
Okay. Now, why I am asking, because on the last four quarters of last year, this segment reported margins of close to 14%-15%, and this quarter this has fallen down sharply to 7%. Any change in strategy?
No specific reasons, but this is still a smaller segment, so I would say that I can spend time on that, but maybe we will discuss more. There are specifics in terms of the overall sales, the raw material pricing, and certain financial accounting, for example, in terms of the lease accounting and all. But I think specifically here and all, here and there. For example, we can spend more time on this separately.
No issu e, sir. Lastly, of the total INR 6,500 crore earmarked for this year CapEx, how much we would have spent in Q1?
I would say that we are well in terms of almost closer to 25%, which is balancing out for me for the year, actually. 25% is there, around closer to INR 1,500 -INR 1,600 crore, which we have invested.
Great. That's all from my end. I'll come back in queue. Thank you.
Thank you, Rajesh.
Thank you. We take the next question from the line of Raashi from Citigroup. Please go ahead.
Thank you. I may have missed some of the initial points. Could you mention that the trade volume decline was 2% and non-trade was 21%?
Yeah, Raashi, you're right. This is YoY.
Given that there is so much focus on trade, why is it still witnessing decline? Could you give us a regional, like regionally, what was the dynamic across? Why is it?
Yeah, sorry. Raashi, basically, YoY, for example, this quarter had the biggest impact of all the geopolitical tensions in terms of the diesel availability, in terms of the interim issues on the packing back availability and so and so forth. This was one part. When you change your gears, there are certain disruptions, which I think now, I mentioned to you in July, we are already seeing [8%] year-on-year growth. I would repeat from here that how things are moving, so that is the recalibration which we have done.
Okay. The 8% that you mentioned was only trade. Non-trade was still being [audio distortion].
Yeah. Again, the whole focus of our [audio distortion] trade. Yes, absolutely, you are right. Even going to see YoY of the previous of the quarter [audio distortion] the earlier year on some of the clusters I mentioned to you, like North, we have grown 2% on West, and these are like the high EBITDA markets. West also we have grown 2%. So selectively we have grown, selectively we have de-grown. Some of them is well-calculated because of the low EBITDA margins and all, which I mentioned now, and we are focusing absolutely on value terms. 8% for trade, and trade remains a high degree of my overall sales. It will be, I told, upwards of 75%, and then you can calculate and calibrate the overall volume growth.
Understood. On a regional basis, like your overall volumes, either overall or on the trade basis. Regionally, did you basically witness a decline across in all regions on a year-on-year basis?
You are saying on the B2B, Raashi?
I am talking on either total or the trade. I mean total actually, on the total volume which was down 7% year-on-year.
No, in fact, we have seen a good growth. As I mentioned, for example, even in B2B in the West side, we have grown both in trade and the non-trade. On the North, we have grown basically in North and East we have sustained. So it is like selective. I mentioned that South is where, for example, we have consciously the low margin we have. We have de-grown basically, which is the highest de-grown in that cluster. Center, for example, more we have de-grown because we have moved into the blended cement as an offering, and it has actually helped us to actually improve our margins. So we have been selective cluster by cluster.
Got it. And what was capacity utilization for you overall in FY 2024?
Overall, I'd say 65%. I think so, yeah, ballpark 65% on a totality basis.
Got it. Second question on costs. I'm just trying to understand, in this quarter, you've witnessed an INR 206 decline sequentially on your costs. But where exactly is this decline showing up? Because when I read the various heads as per your presentation, then like power and fuel costs have actually moved up sequentially. I know that there's like a whole stock change impact. But if I have to look specifically, where all have you got this INR 206 saving?
If you look at in terms of, say, raw material, so we have got the savings in fly ash, in terms of efficient sourcing of the fly ash. In terms of the power, we have seen the RE power which has benefited.
Okay.
The overall price per unit of the power rate has come down. These are like two primary factors. Apart from that, my clinker factor, which has come down by 3%, that has been also a good improvement of my overall cost reduction. So this INR 206 improvement has come from combination of efficiency, the clinker factor. Logistics marginally, I mentioned INR 10 per ton. RE power and fly ash has also given me a good advantage. Prospectively also, they will keep giving me advantage.
Understood.
Also what we are doing, Raashi, is the optimization of the fixed cost. For example, and you will say that it is commendable that despite the capacity utilization being lower, still we are able to optimize my fixed cost as well. A good speed of acceleration you will see on this front as well. Various factors I can actually give a bridge on that, but I think suffice to say, this INR 206 has many good factors to sustain further and further improve from there.
Understood. You had given at the beginning—
This INR 206 by the way is after absorbing the INR 110 ballpark which we believe also has hit us from the West Asia escalation. So this INR 206 + INR 110 if I have to gross it up, actually my saving is INR 316 actually. On the cost side. I have digested that INR 110, and after that our cost has come down by INR 206 per ton.
Understood. Okay. You were giving some numbers on waste heat recovery, renewable energy. What was the total capacity now? What will it go to? I missed that earlier on.
It is 228 MW and this will go further to almost 376 MW. Almost like another 100 MW. About, say, 70 MW, 140 MW which will improve from here basically. All my new kilns whichever it comes to, it will have WHRS and will further add up to, as I mentioned, Sanghi and Penna and all.
Okay. RE?
RE, Navin mentioned. We are, say, 1,122 MW in terms of 1,122 MW basically for the RE and from the current 975- odd MW. Almost closer to 150 MW there.
Okay. Thank you.
Thank you. We take the next question from the line of Ashish Jain from Macquarie India. Please go ahead.
Hi, sir. Good evening. Sir, my first question is on capacity. While you have [audio distortion] a map for fiscal 2027, there are two parts. One is, how do we see growth or capacity in let's say 2028, 2029? That is one. Secondly, out of this 119 million tons, which is some of the old capacity, [audio distortion] , is there something that we plan to permanently mothball? How should we think about that?
Ashish, hi. Thanks. I will answer your second question first. In terms of the one which you mentioned about the mothball, answer is no. In fact, we are evaluating, and we are working to see how they are optimized. Therefore, that's like a temporary suspension. So far as the capacity for 2028, 2029 is concerned, I would say that now I want to just give you this confidence that by end of this year, we should be hitting 119 million tons and for 2028, 2029, work in progress. Then we expect every year, 8 million tons- 10 million tons of capacity additions, and that's how we will plan it out.
Right. No, sir, I am not looking for numbers as of now, but we will be adding something or the other, organic I mean, in 2028, 2029 also or given our shift to profitability.
True. That is true.
Yeah.
Organic only. Whatever we are discussing now is purely organic. Yeah. Anything more, Ashish?
Yeah. Sir, second, I wanted to understand the cost impact a bit better. The incremental number that we are talking about f rom the breakup, which you kind of alluded to. Looks like the large part of the incremental savings is coming from RE. Is that the right interpretation?
Well, I think you have all the engines on fire on the cost. One is the efficiency, second is the raw material, third is the overall. Of course, RE power also and the fixed cost optimization. I think all of them, for example, we have a good focus on them and there is a good visibility also because we have invested, right? When I say raw material, we are investing into the BCFC infrastructure and the fly ash, for example, when it comes to recently, like 10 days back, there was policy from railways which actually further improvises the logistics cost when you move by BCFC. We have made those investments.
Right.
Therefore, the incremental savings are coming from those investments, whether it is RE power, whether it is in railway, so on and so forth. But more importantly is the efficiencies also which are now coming on our plants.
Thank you so much.
Other too, if you want some, I can put those. In terms of, let us say, the efficiency factor, it is almost like [audio distortion] INR 50. When it comes to the input material and logistics, it becomes almost a INR 50 a ton. The clinker factor itself brings another INR 50 a ton, and the fixed cost, for example, optimization will help you another INR 80 a ton. This journey, for example, from the INR 4,447 which we had reported in Q4 of FY 2026 to coming to INR 4,250 for the or INR 4,241 for the first quarter of 2027, I think these are broad heads in terms of specific numbers also. As I said, this is after digesting the INR 110 West Asia War escalations.
Right. Yeah. Thank you so much.
Thank you.
Thank you. We take the next question from the line of Ritesh Shah from Investec. Please go ahead.
Hi, sir. Thanks for the opportunity. A couple of questions. First one, sir, how should we look at the ICD which has actually come through via ACC and Orient? How should one read into that? That's the first question.
Ritesh, we are in the advantages of merger. I think ICDs are well within the approved limits of the shareholder and carries a coupon of 8%. But now, practically, [audio distortion] platform, and I think that's what the whole idea was to merge together all of this. I would say that these are all within the compliances.
Sir, I appreciate it's under compliance. It's all legit, but any specific reason of not raising debt at Ambuja level? Or if I have to put it the other way around, if I look at the debt maturity profile for Ambuja, we have almost INR 22,000 crore, INR 23,000 crore, which matures in FY 2027. Should one link both the variables, or how should we read into it?
The operating company, Ambuja, has no debt, and so far, if you are alluding to the parent company debt, I would not be the right person to answer on that. Coming to the Ambuja level, as I mentioned, zero debt, and I think we are managing our cash flow from the operating cash flows, and we have a good plan to sustain on that.
Okay. Sir, would it be possible for you to reflect upon the SLA that we have done for a few plants, how the experience has been? And I understand we are also looking to expand it to logistics as well. Is this for a particular market, or is it on a pan-India basis? If you can give some numbers around CapEx, OpEx, cost benefits that we already derived or what we expect out of SLA.
Ritesh, we have begun on this. It is still early to come to you on it, but I think let us mature on this, but things are quite positive, and I must say that the overall vision of our Chairman and [audio distortion] , I think things are moving well [audio distortion] on this.
Sure, sir. I will just squeeze in one more. With respect to power and fuel, sir, the stated goal for 2030 with respect to TSR is 23%. We are somewhere at 5.7%. How do we plan to achieve this roadmap? That is one. And the second question, I think we have four coal blocks right now. One of it is operational. How should we look at the potential cost savings from both TSR as well as the coal blocks?
TSR, basically it is the overall utilization of the AFR, for example. That is what you are highlighting, right?
Yes. Yes, sir.
AFR, for example, I agree with you that we are on a lower side at 7%, and that is one of our key focus areas, to improve this component of KPI. You will see good progress in coming quarters. We have highlighted to you before that our target is to achieve 25% of the AFR down the line, and right now we are little behind on that schedule. But every passing quarter you will see an improvement.
Right. But sir, is there a roadmap to go till the stated number? Because the number is quite steep and the incremental cost savings can be huge over here.
Immediately right now, for example, in this fiscal year, we are targeting to hit almost 12%- 15%. Because see, when it comes to AFR, it's all a combination of how much is basically cost of the fuel, how much you want to basically save on the AFR, what is the overall sequel and blah, blah. Now, as a rule, basically we want to maximize this and this improves to 10% - 15% in this fiscal year.
And sir, on coal blocks?
The coal cost. What it is? The coal cost?
Sir, coal blocks. I think one of the coal blocks are operational.
There are three coal blocks which we are focusing. The first one will be operationalized in two , two and a half years' time. Just to circle back on the AFR, I think needful investments have already been made, therefore the confidence to hit 15% is high. So coal block, the first one gets operationalized in about 30 months from now.
Okay. Sir, would you like to give some numbers on tonnage savings?
No. I think it's too early. But the investments all have a good payback before you can basically understand. These are five to six years payback.
Sure. Thank you. I'll join back. Thanks.
Thank you. We take the next question from the line of Amit Murarka from Axis Capital. Please go ahead%
Hi. Good evening, and thanks for the opportunity. Would you be able to share the regional volume mix in the quarter?
In terms of the overall volume mix, that is for overall, I am saying this for the trade and non-trade. Ballpark I am going to highlight to you. Let us say the North is almost closer to 25% for me. West is a tad higher to 30%-odd . East is also 25%-odd . This becomes almost 80%. Then 10% is the Center and 10% is the South. Ballpark this is the breakup.
Sure. Would the share of South be lower in Q1, given what you just mentioned earlier in opening remark?
Yes. You mean to say Q1 or Q2?
Q1. You mentioned that in South basically you have de-grown in both trade and non-trade.
Yes. Absolutely. So therefore, compared to, say, last quarter and also last year, South my percentage is lower this time.
Got it. So that is one of the reason as well for better cost performance, right? Because we know that South is a higher clinker factor market as well as a higher cost market in that sense to service, particularly in a quarter where fuel costs are high.
That is true. That is the whole focus. Absolutely right.
Got it. Secondly, on green power, sorry, the sales you mentioned, right? INR 44 crore, INR 45 crore unit sales of power. What is the EBITDA number of that?
The sales revenue, I can say. For example, ballpark around INR 140 crore is the sales number for the quarter.
Right. [audio distortion] because these are all [audio distortion].
Yes. These are all because these are all based on my investments made. Absolutely right. So very much part and parcel of the business.
What I mean to say, the OpEx will not be too high for this INR 140 crore.
Hardly 5%. Otherwise, these are all adding to the bottom line.
Got it. Lastly, when I look at the mix of trade, non-trade, last year Q2, it was actually pretty high. It seemed that 32%, 33% was non-trade actually, and trade was a bit low at 67%. So when you say that the trade is growing 7% or so in July, the non-trade is continuing to be a big decline because that would imply that the overall volume would still be low in Q2.
No, I think we are specifically handling non-trade also. It's not going to be that big decline, for example. So overall, we will be able to manage our volumes in line with the guidance which we have given.
Sure, sir. Just lastly, can I ask. While you mentioned the cement cost number, which is obviously different from the overall cost, but can be calculated. Similarly, for cement [audio distortion], could you provide a number just to get a like-to-like [audio distortion] EBITDA is [audio distortion], right? When you report EBITDA per ton in the PPT. Similarly, if you want to just calculate what is the [audio distortion] EBITDA per ton, could you give a clean realization for cement as well?
EBITDA per ton for the gray cement is INR 911 per ton. That is the number I have.
Sure.
I haven't actually RMX and gray cement. So gray cement is 911.
That is the overall EBITDA, right? Which includes EBITDA for your RMX.
Basically.
Okay, sure. Maybe we connect on this a bit later.
Okay.
Thank you.
Sure.
Thank you. We take the next question from the line of Pinakin from HSBC. Please go ahead.
Yeah. I have two questions. My first question is that the filing mentions that some manufacturing operations have been shut down. Can you just highlight what are the manufacturing operations, what capacity has been shut down? My second question is that there seems to be some ICDs from ACC Orient to the parent. Any particular reason for the ICDs, given that the company already has access at a group level, at that cash entity, at the Ambuja Group level? Thank you.
Basically, in terms of the temporary closure of the plants, basically this is temporary because we are anyways working on optimizing it. The capacities are closer to around say 3.5- odd million tons of annual capacity. Number one. What was your second question?
The ICDs from the subsidiaries to the parent.
The ICDs? Sorry.
Yeah. See, the ICDs from I think ACC and Orient Cement to the parent.
Right.
What is the particular requirement for it at this point of time at the Ambuja level?
No, so as part of the whole MSA commitments, because Ambuja has the higher share of the capacity and, therefore, Ambuja is supplying the materials. This time you have seen that almost 1.6 million tons - 2 million tons of cement has been supplied. How much? 3 million tons? 3 million tons has been supplied to ACC by Ambuja. I think this is part of the whole MSA arrangement, Pinakin, wherein the investments which have been made by Ambuja, the benefits are also being received in terms of volume by ACC, Orient, and everyone within the cement pack. That is how the MSAs are ensuring the proper payouts also to the respective companies.
Got it. Thank you.
Thank you. We take the next question from the line of Prateek Kumar from Jefferies. Please go ahead.
Yeah. Good evening, sir. I have three questions. Firstly, can you discuss the timelines of, like quarter timeline of this 3 million ton Jodhpur clinker and 4 million ton Maratha clinker?
Maratha , we are expecting to commission next year. That is what, for example, we have planned. So far as Jodhpur is concerned, we already have seen trials started, and in Q2, which is in this current quarter, it will start stabilizing and supplying to my grinding units.
Next year? You mean Maratha is next financial year, FY 2028?
Yeah, absolutely. First quarter of next year.
The question is on your cost again. You have done this quarter INR 4,240 kind of cost full year, INR 4,250 expectation. Basically, incremental cost impact of inflation will be absorbed by incremental savings. So your full year cost remains same what you reported in Q1. Is that correct?
Absolutely. Well summarized by you, Prateek.
Okay. Last question. Can you just, because your PPT first time mention of fly ash sale and power sale, can we get the cumulative revenue and cost of fly ash and power sales in 1 Q and 4 Q to get an exact calculation of cost per ton?
Prateek, I mentioned to you that these two components basically, which are basically closer to INR 45 crores of unit which we have sold in RE power. And fly ash I do not have right now with me, but I can circle back to you in terms of what tons of fly ash been sold.
No, I am looking for revenue and cost for these two line items cumulatively. I do not require separately.
On this point, let me just circle back once I have the details on this call or maybe separately.
Sure. Thank you.
Thank you.
Thank you. Participants, in the interest of time and fairness to others, we request you to restrict to two questions per participant. We take the next question from the line of Pulkit Patni from Goldman Sachs. Please go ahead.
Sir, thank you for taking my question. I do not know if this has already been asked, but my first question is, the plants that have been suspended, any time duration for which they have been put under suspension?
Around, say six months, basically.
Okay. We should not expect any volume throughput coming from those plants for the next six months, or it is in total six months?
Total six months.
Total six months. My second question is about bookkeeping. The depreciation number is much lower in the quarter. Any specific reason, and what is the run rate that we should keep for the next few quarters?
I will request our CFO to answer on this.
Sir, if I can add to hear the depreciation [audio distortion] rate would stay at the similar level. In the last quarter, due to the true-up entries which were taken on account of the merger of Sanghi and Penna, the depreciation was higher [audio distortion]. Otherwise, it is only [audio distortion].
Okay. Thank you.
Thank you. We take the next question from the line of Rahul Gupta from Morgan Stanley. Please go ahead.
Yeah. Hi. Thank you for taking my question. So two questions. First, with data keeping mentioned, revenues were around INR 140 crores in the first quarter. Can you give us the comparable [audio distortion] for fourth quarter?
For the fourth quarter, the question was about the power revenue. In terms of the [audio distortion], that in the fourth quarter, which is March 26, and over here, almost INR 70- odd crore is the number for power.
It is 45 crore [audio distortion], right?
No. For fourth quarter, the units would be lesser. So, in terms of the overall sales, this was around INR 28.4 crore for fourth quarter.
Versus 45 crores in this quarter?
Versus 45 crores in this quarter.
My second is towards understanding your strategy in South. You said that, cut off some of the volumes in the region. Can you please help us understand what [audio distortion] cut off, and how much of that would be from Penna and Orient? Thank you.
We actually curtailed the low and negative EBITDA volumes, and this is almost closer to 1 million tons, for example, which we actually reduced.
Is it fair to say that some of these volumes may not come back?
Sorry.
Is it fair to say that some volume, 1 million ton could [audio distortion] or is there any strategy to improve?
No, I think the strategy is to improve the costs so that they become viable and sustainable and the margins expand on them. That is the way which we are working right now.
Can you please help us understand what you are doing to help improve [audio distortion] the current level?
So [audio distortion], like right from the green power to alternate fuel to WHRS to basically bringing the fly ash [audio distortion], the raw material mix, the fuel mix. These are precisely the treatment and the efficiency factors for those. So the overall say, blend of cement [audio distortion].
The reason I am asking this question is I am trying to understand the 1 million ton volume that has been lost, how soon can we expect this to come back?
No, rather see, I am not so concerned about the 1 million tons which has been lost. I am more concerned on how I move that 1 million tons into trade segment, number one. Anyways, the work in progress is there, and out of 1 million tons, we will be able to capture a good volume. But more importantly is how can I move into the trade segment.
Yeah. How soon—?
Because we have an opportunity because our market share, for example, will give us the opportunity to move into the trade segment. That happens. Therefore, I said that I have to invest on the channel. I will have to build a brand, especially in markets like South, which is, for example, it will take one or two quarters more, but the ramp-up, otherwise on the other clusters, the other four clusters which I mentioned is moving very well. The brand pull, the brand equity, the channel is excited. I think that is helping us, and South is also now started to pick up in terms of my trade sales.
Got it. Thank you so much.
Thank you. We take the next question from the line of Rajesh Ravi from HDFC Securities. Please go ahead.
Yeah, hi sir. I was just comparing your NSP with UltraTech's reported NSP for like-to-like comparison. I see barring Q1, the preceding eight quarters Ambuja delivered better NSP compared to UltraTech. But this quarter, almost INR 50 higher on an average versus this quarter we are down INR 100 versus UltraTech's reported NSP. Given that we have almost similar market mix, why should there be such a sharp fall in our number, versus UltraTech when the focus was more on trade sales and premiumization versus UltraTech, which is aggressive both in trade as well as in non-trade?
I think I mentioned to you, Rajesh, that we have seen a disruption in the June quarter, coming from multiple factors which are beyond control. Therefore, for example, this was one quarter which has seen this aberration. But I think so far, I raised also basically how to get this whole channel growth and all, and you spend investment on that. I am not sure accounting-wise which companies does what. We actually, in our NSP, we treat that accounting-wise also, and reduce the NSP from all those costs. For example, this time we are investing into channels.
Understood. And sir, just to clarify on that, power revenues, which you have told, that green power. So you sold around INR 140-odd crore realized in Q1 and around INR 70 crore in Q4, which you netted off in your power cost. But incrementally, your plan is that you will be consuming those captive green power within your cement companies, and hence, if I have to look at that for a certain, that should be on a sustainable basis. That is a benefit which will directly accrue, right?
Absolutely, Rajesh. In fact, that's what I mentioned that from INR 45 crore—
Correct.
—I'm expecting 50% of that will be consumed this quarter. Every quarter with our capacities moving up, this will be consuming it.
Thank you. All this—
Basically because my savings on cost is better than my realization by selling in the market.
Correct. Agreed, sir. Incrementally, are your solar power plants, how much more they can ramp up? I want to understand this opportunity of selling INR 140 crore in Q1. Even when you ramp it up for your captive consumption, would you still be left with surplus over the next three to four quarters, whereby you can sell it, realize some incremental gain resulting in lower cost for the cement business?
I think first priority will be for the own consumption, and there will be some left out capacity, which will be sold efficiently. So we will keep balancing on it. So let us say that, at any stage, not more than 10% will be used for selling, and rest we will be actually consuming for our own requirement.
Understood. And lastly, the fly ash sale was an opportunistic sale where you had surplus and you sold it off in the market. What should we understand of that?
Sorry, Rajesh, if you can circle back again.
The fly ash sale, which you said that you have realized some fly ash sales in Q1. So was it some surplus inventory liquidation which you did?
No.
Or was it-?
No, Rajesh. We have now entered into a long-term agreement, basically for the fly ash. And wherever, for example, we are consuming it, and we are actually consuming almost 30%, and wherever we have an opportunity to sell, we are also selling in the market. Instead of—
Understood.
—selling, dumping into the dikes and all, we are actually selling it.
Understood. You're gaining some. Fair to understand that you will be making some profit out of that sale versus your own long-term purchase price.
Absolutely. It actually brings down my overall effective cost of fly ash.
Great. That's nice to hear. Thank you. That's all from my end.
Thank you. Participants, a reminder. We request you to restrict to two questions per participant and rejoin the question queue. We take the next question from the line of Siddharth Mehrotra from Kotak Securities. Please go ahead.
Thanks for the opportunity. Sir, just wanted to check, given that you've temporarily suspended manufacturing at these facilities, sir, can we gain some color as to which facilities are they? Are they the acquired facilities? Are those old ACC facilities? Which facilities are we exactly talking about?
Siddharth, your voice was very feeble, but what I hear is that the mothballing facilities, your question is about that, basically?
Yes. Which facilities are they?
These are like the very old facilities of ACC, some of them, and one facility also of an acquired company.
Okay.
But Siddharth, as I mentioned to you that these are actually a temporary closing because we are looking to see improvement in terms of the overall treatment what we do on cost and efficiency. Before that, I mentioned that about say, six months time horizon, I am expecting. But yeah, this will actually help us to optimize it. But it doesn't mean that we are losing on the market because we have alternate supplying plants which we are catching to.
Okay. So sir, we have highlighted that we have around INR 24 crores of termination- related exceptional items and no impairment for this quarter. Can you give us some color as to what sort of further impairments are we looking at, maybe two quarters down the line?
No, this is not to do with impairment. This is like a normal VRS scheme which has been implemented in one of our plants in South India. This is more about bringing more efficiency in the operations, nothing to do with the impairment.
So right now we do not really expect any impairments to happen on this account, right?
No.
Got it. Thank you.
Thank you. We take the next question from the line of Jyoti Gupta from Ashika Group. Please go ahead.
Good evening, sir. Thank you for the opportunity. Sir [audio distortion] market share by 2%. A [audio distortion] decline in your volumes. What kind of market share gain do we expect given if you are growing at 8% in FY 2027 and in FY 2028? Second is, we have seen cost measures. Adani has acquired ACC Ambuja in 2022. I would like to see when are we going to really see the actual cost measures feeding into the EBITDA per ton to, let's say, INR 1,200 and then INR 1,500 of that big number we've always heard of. When do we see the trajectory, Ambuja actually on that trajectory of gaining that numbers?
Okay. Look, thank you. I think both are important questions. First is on the cost journey. I still remember when we acquired [audio distortion] way back in September 2022. The journey from there, for example, cost was almost INR 4,700- INR 4,800 a ton. For example. Rather, actually, my team tells me INR 5,000. We have now come to INR 4,241 a ton and with the point of confidence, we are giving guidance for INR 4,250 a ton for the FY 2027, number one. The way we have worked upon it, the next phase also, we want to bring another INR 250 reduction in the cost, so that by end of FY 2028, we reach up to INR 4,000 or below in terms of cost per metric ton. That's INR 1,000 , for example, reduction from INR 5,000 to the journey which we are right now navigating.
Your second question is about the EBITDA. I think EBITDA is. I would rather restrict myself to cost. EBITDA is a multiple factor of [audio distortion] the cost, and that is something which is beyond your control. The cost journey is what, for example, my request to all of you, and therefore we are giving our guidance on that. So far as the market share is concerned, Jyoti, I think I can only highlight what is my growth. Market share is again [audio distortion] dependent how others are doing. I can highlight that we will be growing. When I'm adding almost 10 million tons to capacity, say, here. From a capacity additions perspective, we are growing almost say 8%-10%. That is what, for example, we would be targeting to grow in terms of our growth plan on that [audio distortion] especially.
Okay. Thank you, sir.
Thank you. We take the next question from the line of Bharat C. Shah from BCS Capital Ideas Private Limited. Please go ahead.
Just a question in retrospect. If we think about all the acquisitions that we made, whether Penna, Sanghi, et cetera. Now that we have a better chance of assessing what we have done and what we have got, do we think we have acquired more of an asset or more of a liability in that?
Bharat, thank you for this alerting question. We have actually bought assets only, and these assets will actually start giving the results. I think, rest be assured, these are assets.
Okay. I had a second and last question. It is not about numbers or any micro data, but about people and the talent pool. What exactly is being done to tone up the organizational talent pool in general and senior management in particular? Cement is a traditional business. It is not a business of some grand strategy, but of terrific detailed execution. Therefore, people with eye for detail, fire in the belly, taking every element of the cost, every element which will optimize advantage in the marketplace, which is gaining that incremental volumes, and implement the strategy at the ground level in a very efficient, deterministic way and using technology in an apt way. What exactly we have done so far to tone up the talent pool and more sets which are on the way to make that happen?
Bharat, so nice. I think you are the first one to actually put this perspective, and I really appreciate this because these are the two Ts which you mentioned, talent and technology. In the group also and in cement business, these are highly focused upon as of now. You will see benefits of this. We are building up a young team, a very enthusiastic and energetic team who are roaring to and willing to take up the larger responsibilities, who have been groomed with substantial L&D programs, and group has a very methodical structure. As you rightly said, I mean, in cement, we always say [audio distortion] for themselves. I think that is the beauty of cement in terms of the operating leverage, and we have our eyes on that.
Are we on the testing phase to what we have [audio distortion]? Are there any major initiatives in place going ahead?
Bharat , there is always a scope of improvement. More so like in the last investor call also we highlighted there are few delays which have happened in terms of our certain [audio distortion] and all, in terms of giving the outcomes. I think better late than never. A good thing is now in June we have only given the savings of INR 206 a ton. I will take, for example, the passing quarter, I will keep improving and there is going to be still a scope of improvement. I think that is a learning curve and opportunity for us in my business.
Awesome. Very tricky one that.
Thank you, Bharat .
Thank you. We will take the next question from the line of Kunal Shah from DAM Capital Advisors. Please go ahead.
Yeah, hi, sir. In terms we mentioned in terms of the realization and the ex [audio distortion] reflected in lower freight as well. Sir, our lead distance has gone down [269] km to 249 km on a YoY basis, but yet the freight per ton is stable. If you could just help here with some insights.
Kunal , basically, there was this disruption of the diesel shortages and more so like in some of the plants in western side and all, basically which hampered the distribution and therefore escalated the costs. We have also seen some disruptions which have happened in East. Therefore, that is one factor which has resulted into and then there was this [audio distortion] which was from the AGP, for example, in Himachal. So there are some of these factors which are beyond control, which has kept the cost higher. I think I mentioned that is one area for us to and with the tech platform on logistics, there is a good opportunity for us which we are working on, and we will come with more details on this. So point very well taken. This is an area which we want to improve.
Understood. Secondly, sir, just to understand our strategy. From here on, what would be the desired utilization levels or a range on the expanded base of 119 million tons for us to start the next leg of CapEx? Like when do we actually think about the next leg now? Just a follow-up to that, are there any regions in our current footprint wherein the utilizations would be tight and we might need to initiate CapEx there despite relatively lower utilization at comparable?
Kunal, absolutely good, thank you. I think our targeted utilization now that our focus on value and all, so in that background, I am seeing around 70%-75%. This is all value-focused capacity utilization. Point number one. Point number two, in terms of the expansion requirement, so we have done that in North. So I have expanded Bhatinda. I have also expanded the Marwar Mundwa. We also have now, say, Penna, Jodhpur. So I have almost 1 million tons + 2.4 million tons = 3.4 million tons, plus another 2 million tons. So almost 5.5 million tons of additional cement capacity which is coming north. That was, as I mentioned, one of the most profitable markets what we have. Likewise, in West also, we are in fairly advanced stages to expand our Kalamboli. BCCI Kalamboli which is an important asset what we have.
We are putting up additional, say, this will give me additional 1 million tons of capacity, for example. We are also expanding few other locations like Bihar, for example. I mentioned East and Central also are going very well. So Salai Banwa and Warisaliganj. Salai Banwa is already the trials are through, and Warisaliganj will come in second quarter, most likely in September. So wherever these needs are there, we already have proactively worked on that, and the capacities are therefore going to help me to sustain the volume which I mentioned. There was this previous question that how are we confident, and this is where the confidence comes. Because now I already have almost 10 million tons of capacity which will be coming in the market on the commercial production fence.
Understood. Just one last if I could squeeze in. There is this clinker line at Maratha and the earlier timelines were 2Q, 3Q of this year which moved to FY 2027 and now we are talking of FY 2028. Any reasons there why the delay? Are there any structural issues if you could just tell me?
No structural issues. In fact, no structural per se issue because I have a good level of overall balancing of my utilization of the facilities because Maratha would have served the Maharashtra market and I have clinker coming from Sanghi also which is, for example, now going very well. In fact, in Sanghi I am utilizing almost 60%-65% clinker capacity utilization which will actually go up to a larger capacity utilization. Therefore, I think we are trying to now balance it well. We do not want to rush and then unnecessarily have a capacity while we already have capacity which can be augmented well with the marine infrastructure which we have in Sanghi. So per se, things are absolutely under control. Last call we have highlighted one teething issue which we had faced with one of this contractor partner. That is also now under control.
You will see now closing of many of these projects which are in the hands.
Understood. This is very helpful, sir. All the very best.
Thank you, Kunal.
Thank you. We take the next question from the line of Bhavin Chheda from ENAM Holdings. Please go ahead.
Good evening, sir. Congratulations on overall improving on the cost and the efficiency on the quarter-on-quarter basis, and we are on the right path towards that. A couple of questions, sir. Basically, on this fly ash and power sales which are shown in the presentation. This fly ash sales which has happened, has this been reduced from the raw material cost itself? Has the raw material cost per ton looks to be lower both on quarter-on-quarter and YoY basis? I am saying on the absolute numbers of raw material cost. Hello?
Sorry, can you please put your question again? Some voice has been feeble. Sorry, please. Can you repeat?
My question was, you have fly ash sales in the quarter since you have long-term contract and you sold, as is shown in the presentation. The absolute number of sales of fly ash which has happened, has that been reduced from the raw material cost itself in the absolute numbers of [INR 15 crore-INR 26 crore] in the consolidated basis?
There are two factors, Bhavin. One is the actual consumption basis. Basically, fly ash costing has come down, and further on top of it, the overall, say, sale also gives me advantage further. This is like, on both the sides we have seen the improvement, and the same is the case so far as the power is concerned.
Both the sales which has happened has been accounted in the top line. My question was that basically.
That is part of the other operating income.
Other operating income. And sir, you guided that the plants which are mothballed will be restarted in, say, three to four months time. So this assumption is dependent on, because obviously for your 7%-8% volume growth, you are obviously looking at 12%-13% volume growth for the remaining part of the year. So when the second half demand would be much stronger, is that when you want to restart those plants? Because you still have enough capacity in the remaining plants to service the market. So how the restart of the plants would be dependent upon?
Bhavin, thank you. I think, let me first again, request and put you all, mothballing may not be the right word. What we are doing or we have done is a temporary basically closing of this so that we do a thorough plan of optimization and then look forward to restart. Your question is, what are those initiatives to optimize the cost, correct?
Correct.
I think right from the overall, say, efficiency factors to the investments required in terms of the overall, say, costs, whether it is WHRS or AFR, whether it requires any kind of debottlenecking, what is the railway infrastructure requirement, what is the availability of fly ash, what kind of, say, coal can we consume, can we actually put some technical efficiency in terms of heat factors? These are like, I think cement is that way well understood by all of you. So these are very important factors which we will be going through it. Of course, we have the alternate plants, but we do not want to lose any asset if we are able to turn it around, and that is the whole endeavor and efforts to see how best we can turn them around.
Great, sir. Best of luck. Thank you.
Thank you.
Thank you. We take the next question from the line of Navin Sahadeo from ICICI Securities. Please go ahead.
Yeah. Thank you. Thank you for the follow-up opportunity. Sir, my question was about the other expenses. I was just looking at your Annual Report, and last two years I see some of these expenses have seen like a sharp jump year-on-year, particularly your stores and spares cost or even the advertising and sales promotion cost or repairs and maintenance cost also for that matter. How should one look at these major cost items, which largely form part of other expenses in FY 2027?
Navin, when you have acquired assets, like in which we have actually acquired the four companies, obviously there has been this other expenses would, depending on the intensity of requirement of the investments on these four stores and spares to the likes of Penna, Sanghi and other assets, for example. Therefore apple to apple, we'll look at it. But now we are stabilizing well and, therefore, for example, prospectively and therefore this one cement platform which is anyways like this financial year, we are hoping that we will be able to close it. It now, for example, with all the organic growth, it brings a level of, say, stability and no per se, say, any surprises which otherwise would get when you acquire the assets and all.
Understood. Sir, my just a clarification again. On the green power cost, you said we sold about 45 crore units in this particular quarter, and if I do a simple arithmetic as per your power and fuel cost per ton reported, I broadly understand that the cost of these units sold was roughly INR 3.3 a unit, correct me if I am wrong. Yeah. Broadly then, I just want to understand at what price they are currently sold, because in next quarter, I just wanted to understand that when they actually start getting consumed, then it will displace or offset what cost of power. So as to broadly understand the delta gains that will accrue incrementally at the EBITDA level. That will be my question. Thank you.
Very good point, Navin. See my blend of power, if I look at the overall grid power, that comes almost at INR 7 - INR 8 a unit, and that is the first opportunity for us to basically replace with this green power, and hence the math, for example. I think I mentioned in my previous question also, I mentioned that it is always beneficial for me to consume the power first, and only for any reason surplus, we will want to sell it. Otherwise, the opportunity is far better to consume on account of cost element.
Very helpful. Thank you so much.
Thank you.
Thank you. We take the next question from the line of Girija Ray from Nirmal Bang Securities. Please go ahead.
Thank you. All of my questions have been answered, and all the best.
Thank you, Girija.
Thank you. We take the next question from the line of Kamlesh from Lotus Asset Managers. Please go ahead.
Yeah. Thanks for the opportunity, sir. If I just calibrate or look at your write-downs, which we took for the impairment. If I see in particularly in ACC, Chaibasa, [Marwar], then Wadi, and even say Lakheri, roughly around 6.5 million tons of capacity, which I presume has been on the suspension for the temporary purpose. Even if you take one plant in acquired entity, that also has been suspended. What is your learning going forward, if we take a look at any inorganic opportunity which comes into play? Because this is a mammoth capacity which has been suspended. Just wanted to have a thought on that.
No, I think, Kamlesh, when you acquired ACC and Ambuja, obviously the whole world knew that ACC has these old assets, and at some stage there will be a situation of improving and upgrading them, and we have been highlighting about this during the investor call also. I think learnings are enormous whenever you operate business, and the learnings in terms of the organic and inorganic, both expansions are immense. As I said, every prospective quarter, despite level of improvement, we will keep further upgrading and improving. That is one part. Second is about what you said about the asset, any impact on the asset per se? No, because I mentioned to you that these are all temporary suspension. We are working on that. Unless and until we decide to permanently close, which we have not yet, for example, we are still evaluating.
At that point of time, for example, any treatment on the books, we will do that.
But sir, that way, even if in the past we have seen some companies having preference over value over volume, and that has played in their margins getting improved or the realization getting improved. But our case, if we see the [NSR], it has improved hardly 1% quarter-on-quarter, and despite the fact that we have cut down so much of volumes. Honestly, that has not realized in form of high realizations. On the cost front, no doubt we have sold the renewable power. So that also doesn't give a proper picture on how the cost has come down.
No, I think, Kamlesh, in absolute terms also the cost has come down, and on top of it the sale has further complemented. If you look at, and you can do a very quick math also whatever the numbers you have highlighted. So in both absolute terms and on top of it, the sale which is complementing. But second, your first question is about the NSP precisely, for example, when the NSP of those particular clusters were not supporting and the costs were not supporting that, we decided to suspend those plants temporarily. Then basically put the whole focus on the cost because NSP is beyond your control and my control. That is what we are doing as a treatment to see the revival of those plants in a most optimized manner.
Lastly, sir, on post Q3, we had done the call and on the maintenance cost we had highlighted that now the maintenance cost would be portioned over the four quarters. But in your opening remarks you have said that your maintenance cost is higher by INR 50 in this particular quarter. So how come our maintenance cost is higher by INR 50 in this particular quarter?
Another point, Kamlesh. I think we are still engaging with our auditors on this point because from the accounting standard perspective, they are deliberating on this point that how we basically equalize over the four quarters. Until that time happens, we have continued with the reporting on the actual basis on the O&M cost. That's also my follow-up with the auditors also. Otherwise in the industry people have been following on the actual basis. We only thought we'll actually amortize over four quarters subject to the accounting standards which they will let us know.
Great, sir. Thanks a lot and best regards.
Thank you. All the best.
Thank you.
Thank you.
We take the next question from the line of Shravan Shah from Dolat Capital. Please go ahead.
Yeah. Thank you, sir. I thought I will not be getting an opportunity to ask our questions. Just a couple of things. First, sir, in WHRS, when we are saying 228 MW will increase to 376 MW in FY 2028 from now, which is 148 MW. Would you help in terms of how much clinker capacity are we adding, so where this significant WHRS will come up?
It's a combination of both the existing kiln lines and the new kiln lines, basically. In terms of the clinker new capacities coming up, say Assam you have announced, and then Mundra, for example, then Maratha is expanding and so is the Penna, Jodhpur, which has come up now. Then Bhatapara we have already expanded, for example. On top of it, some of the acquired assets of Sanghi and Penna, for example, they will also be having these investments on the WHRS. Overall, basically, this will complement and improve the capacity of WHRS.
Okay. And sir, correct me if I'm wrong. We say that from FY 2028 onwards, we will be adding 8 million tons-10 million tons capacity every year. So this, sir, definitely will reach to 119 million tons and then one can look at 8 million tons-10 million tons every year capacity addition.
That is true, Shravan Shah. On the cement capacity, absolutely you're right. That's the plan which we are working on.
Okay. And so similarly for FY 2028, the similar INR 6,000 crore-INR 7,000 crore kind of a CapEx one can factor in?
Yes. On a run rate, yes.
Sir, still many people have asked on the costing front because everybody wants to understand the cost reduction, the INR 4,241 number cement cost. Still, I am not able to figure it out, particularly because of maybe the fly ash, even for RE if we take. So if you can break it up, this entire cost of, let us say, the reported INR 7,911 crore consolidated cost for this quarter. If I go by this number, INR 4,241 multiplying to the units or the volume that we sold, 17 million tons, which comes INR 7,238. And the RMC cost is obviously INR 33 crore is the spread, so the cost is there. But still a gap is there, and similarly for the Q4. So if you can help us in terms of reconcile how the cost per ton comes.
Shravan, maybe I will repeat basically. Our cost which was reported at almost INR 4,500, say in March and where we have now come down to say almost INR 4,2 41. And some of the components of this cost I have highlighted. The overall, say, clinker factor which has improved by 3%, which gives me savings of almost INR [50] a ton. The fixed cost optimization almost-
Sir. That we got. What I was trying to understand in terms of if I have to break it down, this entire reported cost of INR 7,911 crore into cement, into RMC, into RE power and into flyers. If that is available, would be helpful to understand how the for Q4 and for Q1. Then it would be more easy or convenient to understand how the cost reduction has happened.
I think the detail which you require, maybe then offline we can connect. I do not have it right now in terms of breaking between cement, RMC and all in totality. So, we will circle back offline.
Okay. Thank you. Thank you and all the best, sir.
Thank you.
Thank you. We take the next question from the line of Satyadeep Jain from Ambit Capital. Please go ahead.
Hi. Thank you. Karan, just first want to understand on the trade, non-trade. Historically, when we saw Ambuja before the acquisition, it was mainly trade-focused organization. It seemed like in the last two, three years, there was a thought of moving more volumes to non-trade. What has the learning journey been in terms of non-trade and now going back to trade? Looking at 65% utilization on the outside, logically it would seem like an 85%, 90% utilization you can still make a decision between trade and non-trade. But why leave extra volumes on the table when you can maximize EBITDA and return? Why at 65% utilization you want to give up the non-trade?
Let me give some flavor. I think originally, yes, Ambuja ACC was heavy on trade and non-trade was a small part of it. I think as we look at last year as well as our performance in, I would say, last year. Especially on the acquired assets, what we have seen is the performance had dipped because we have increased our non-trade volumes over there. Most of the volume was happening at a negative EBITDA or a marginal EBITDA, and that was actually dragging the overall performance of the company down.
Even when we look at today the performance, w e feel that having a sustainable performance matters more than anything, and the variable cost of producing the cement at a lower EBITDA or at a marginal EBITDA generally doesn't make sense because at the end of the day, your fixed cost is smaller compared to your variable cost. That's where we feel that even with a lower capacity utilization, you're not leaving value on the table. Yes, you might be leaving the volume, but you're not leaving value on the table. That's where we are focused on. The idea is, as you become more cost -competitive, automatically those volumes will come back onto the table. Because at the end of the day, we are looking at EBITDA and not looking at permanent loss of volume over here.
Just to clarify, these volumes are largely from the acquired assets, not-- Ambuja and ACC did not shift to a meaningful degree of non-trade and now moving back to trade. This is largely at the acquisition level. Is that [audio distortion] ?
Yes, that's right.
Secondly, on the cost, I'm just trying to understand the rationale, and sorry if I missed it, of selling RE power outside and fly ash assumes there's some CPP, because anyway, you have a long-term agreement with Adani Power. So the rationale for selling it outside through [Power pulse] and not using it internally, can you clarify please?
Yeah. So let me clarify. We are both on the RE as well as on the fly ash. The ultimate goal is to consume everything in-house. It is a transition phase because as a lot of our systems come online, so for example, in RE a few of our plants we need to connect to the central grid. So they don't have the connectivity to the central grid, which programs are under execution. Even on the fly ash, as the BCFC projects come online with the capacity coming in, we do believe that all of this will be consumed internally. There will be a 10% or 15% volume both on the fly ash as well as on the renewable, where there will be a mismatch between in-house consumption and production, which we will look at optimizing from a sales perspective. But the ultimate objective is to consume 100% in-house.
This is a sort of a transition phase where we will move in the next three quarters to 100% consumption.
This is 1 GW in Khavda, where you are saying the ISTS connectivity is not there. How will Khavda connect it?
Yeah. Khavda is connected. Some of our cement plants are not connected. That is where the—
Okay.
—Programs are going on. The plant is not an issue. Connectivity to plant is not an issue. I mean, to the power plant is not an issue.
Just to also add to that, 700 MW is Khavda, 300 MW is Rajasthan. This 1 GW is in this setup.
Okay. Right now you are selling on the exchange. Is that a safe statement, this 700 MW and 300 MW?
Not everything. A large part of it is consumed in-house, and the balance is sold.
Okay. Thank you, sir.
Thank you. We take the next question from the line of Rajesh Toshniwal from Family Office. Please go ahead.
Thank you for the opportunity. Just had a small concern. The asset of Orient Cement has delivered quite impressive results after acquisition by our company. But the valuation at the time of acquisition of this asset and the valuation being offered at the time of merger, do you think, sir, that this is too low in comparison to the acquisition price of around INR 8,000 crores? If at all it has come down to INR 3,000 crores or INR 4,000 crores as per the merger valuation, how do we reflect this loss on acquisition in the books of Ambuja?
No, Rajesh, I think you are looking at the standalone numbers of Orient and then giving this remark. I think always there's an element of MSA between Orient and Ambuja. Therefore, when I look at in totality, Orient assets are delivering us decent margins and justifies the valuation. When you look it on a standalone, therefore you will find that given the MSA treatment. My request is, we'll have to factor those MSA treatment and then look at it.
I see. No, I was just trying to come to some explanation for the wide divergence between the acquisition price and the implied price derived by the merger ratio. I just thought that maybe some color can be thrown by the management just to reconcile that difference. That was all.
Okay. I think on that part, it is all about the valuations by the independent valuers and followed with the guidelines of pricing or SEBI guidelines and all. I think during the approvals also, those were discussed in detail. My request is, if you can refer to those discussions, so that would be sufficient. On this call, maybe on the operations part, I can address.
Fine, sir. Thanks for clarifying whatever could be done. Thank you.
Yes.
Thank you. We take the next question from the line of Rajesh Ravi from HDFC Securities. Please go ahead.
I think most of the questions have already got answered. Just one on the clinker capacity addition. So this financial year, we are not commissioning any clinker unit, and the Maratha would get commissioned next year, and the Mundra project would also be operational mostly in FY 2028. Is this understanding correct?
Rajesh, my Penna assets in Jodhpur that—
Right.
—3 million ton of clinker has already started trial production.
Right.
Yeah, this is one development. I think, just to also highlight, we are well balanced on all my requirements of cement with the clinker availability.
Right. For commercial depreciation and all purpose, the Penna clinker unit in Jodhpur, that was commissioned in March quarter, or that will be considered to be operational or commissioned in FY 2027?
It will be considered in September quarter, because trials have started.
Oh.
Yeah.
Okay. Understood. Okay. This Mundra project is also expected to be on stream for next year?
Mundra is expected about 18-24 months from here.
Oh, okay.
2029, basically.
Okay. Not in FY 2028. Understood. Next year then we only have the Maratha project which would get commissioned.
We have that and already we have commissioned our Bhatapara line, for example. We have—
Right. Correct.
—over here.
Yes.
We have adequate clinker because market to market we will be able to move on our cement.
Understood. Yes. That is all from my end. Thank you, sir.
Thank you. We take the next question from the line of Atishay from Axis Capital. Please go ahead.
Yes. This is Amit here from Axis. Just to clarify, the INR 206 QoQ per ton reduction in cement cost that you highlighted. In that calculation, is this power sale being netted off over the 45 crore units?
Yes, it is netted off. It is very much part and parcel of my overall, say, OpEx only. This is netted off.
Got it. Is the fly ash sale netted off in that calculation?
Absolutely.
Sure. By when are you expecting these cement plants to get connected to the power grid in order to receive the green power?
In about, say, two to three quarters in a phase-wise manner, progressively.
Sure. Got it. Lastly, you say that there are some plants which are shut, and you will be kind of upgrading or making these plants more efficient before you bring them online. Again, just to clarify, these are mostly plants in South India, or these are plants also in other regions of the country?
No, these are like mix and match, basically, Amit. There are few plants which are there in Central, Eastern side basically, and one of them in the North and one of them in South. We are evaluating them.
Sure. Okay. Got it. Thank you. That is it.
Thank you, Amit.
Thank you.
Thank you.
We take the next question from the line of Eshaan from Aakash Emprise. Please go ahead.
Yeah. So hi, sir. So my question is regarding on the gross margin. So, how much gross margins the company expects in the next few quarters this financial year or next financial year?
I think, see, margins. Again, in the prior call, I have highlighted that right now we will give you guidance on the cost, and which is like INR 4, 2 50. Margin is a factor of combination of NSP and cost. That leg of NSP, for example, I would say that it is still market forces- driven. So I think we will sustain on our margins, but we will improve on our cost.
Okay, got it. And in terms of the volume growth guidance of 8%, so this is for trade [audio distortion], not for non-trade, right?
Our focus right now remains very much on trade. We will separately come on non-trade also, but yes, the 75+% bucket will be on the trade side, and which we are seeing a good, healthy growth now.
Okay, got it. Understood. That is it from me, sir.
Thank you. Ladies and gentlemen, we take the last question from the line of Rahul Gupta from Morgan Stanley. Please go ahead.
Hi. Thank you for taking my question again. I just want to understand what would be the fly ash sales during the quarter. My math suggests that it was more like INR 50 crore in the fourth quarter. Can you give us comparable numbers in the first quarter as well?
The first quarter sale is about INR 25 crore - INR 30 crore. Let me just confirm it. Can you just give me a minute? I have the details with me. Just a second. Rahul, it is INR 15 crore for the first quarter, and you are right around INR 50 crore for the second quarter.
Thank you. Is it fair to say that just like power sales, almost entirely it flows through the profitability, right?
Yes. Net of the expenditure around that.
Okay. Thank you so much. Wish you all the best.
Thank you.
Thank you. Ladies and gentlemen, with that, we conclude the question and answer session. I now hand the conference over to Mr. Deepak Balwani, Head of Investor Relations, for closing comments.
Thank you everyone for your time and engagement today. We appreciate your continued interest in Ambuja. If there are any follow-up questions, please do not hesitate to reach out to me directly. We look forward to stay connected. Thank you.
Thank you. On behalf of Ambuja Cements and Nomura, that concludes this conference call. Thank you for joining us, and you may now disconnect your line.