Ladies and gentlemen, good day and welcome to Shree Cement Limited Q2 FY 2027 earnings conference call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Gupta from ICICI Securities Limited. Thank you, and over to you, Mr. Gupta. Mr. Gupta, kindly unmute your line, please.
Yeah. Can you hear me?
Yes, sir. We can hear you.
This is Naveen here. Good evening, everyone. On behalf of ICICI Securities, I welcome you all to the Q2 FY 2027 earnings call of Shree Cement Limited. On the call from the management we have with us Mr. Neeraj Akhoury, Managing Director; Mr. Subhash Jajoo, CFO; Mr. Khandelwal, Company Secretary; and also Mr. Jain, Joint President, Finance. Without any further ado, I hand over the call to the management for their opening comments. Over to you, sir.
Thank you, Naveen. Good afternoon, ladies and gentlemen, and welcome to Shree Cement Limited's earnings call for the quarter ended September 30th, 2026. Before we begin, I want all of us to remember Mr. Ashok Bhandari, our special advisor. He passed away suddenly two days after our Q1 results call. Many of you know him from these calls. He earned the trust of the investor community. During his tenure, the market cap of Shree Cement grew significantly. At work, I will still remember him as a person who was firm and direct. With people, he was warm and cared. His passing is a real loss for Shree Cement and for everyone who worked with him. We will miss him. We miss him every time. Our condolences are with his family. May his soul rest in peace. Going into our quarterly performance.
The second quarter is usually a soft quarter for the cement industry. This year, it was also affected by the conflict in West Asia and by a weak monsoon in most regions. The East was an exception. Against this backdrop, our focus on volumes continued to deliver results. India sales volumes increased by approximately 18% year-on-year from 7.91 million tons- 9.31 million tons. Realizations improved marginally by 1% from INR 4,840 per ton- INR 4,870 per ton. Consol EBITDA rose by about 4% from INR 974 crore- INR 1,016 crore. However, consolidated EBITDA per ton declined to INR 966 from INR 1,055 a year ago, primarily due to a higher fuel cost.
Consol sales volumes also grew by about 14% from 9.23 million tons- 10.52 million tons. This improvement in volumes was also supported by better capacity utilization in our India operations, which increased to 56% compared to 52% in the corresponding quarter last year. On a sequential basis, against the first quarter, the numbers are lower, which is what this season usually brings. India volume fell 11% from 10.49 million tons- 9.31 million tons. Realization was 1% lower at INR 4,870 against INR 4,919. Consol EBITDA declined from INR 1,272 crore- INR 1,016 crore, while EBITDA per ton moved to INR 966 from INR 1,111.
Consol sales volumes were down by 8% from 11.45 million tons- 10.52 million tons. Our capacity expansion program continues to progress. In September 2026, Union Cement Company, our step-down subsidiary in the United Arab Emirates, commissioned a new cement mill with an annual capacity of 3 million tons. This takes its total cement production capacity to 7 million tons per annum. In India, work is progressing on our greenfield integrated plant in Meghalaya, which is expected to be commissioned in the quarter ending March 31st, 2028. We continue to evaluate and pursue strategic expansion opportunities across our markets with a focus on building capacity and delivering our long-term growth objectives. A few words on ready-mix concrete business. Our ready-mix concrete continues to grow, and it continued to grow in last quarter also. The commercial network is now 28 plants with captive units.
The total is 35 plants. The plants which have been running longer, did quite well, and the new ones are ramping up. Volume rose 153% year-on-year to 2.73 lakh cubic meter. Revenue rose 182% to INR 129 crore. The business stayed EBITDA positive. As each plant fills up, its fixed cost is spread over more cubic meters, and that shows in the numbers. We have said for some years that ready-mix is where cement in India is heading. This quarter is a small step in that direction. As you all know, sustainability remains an integral part of our operating strategy. In Q2 FY 2027, green electricity accounted for 65.2% of total electricity consumption, including our wholly owned subsidiaries in India. I believe these are amongst one of the highest levels in the Indian cement industry, if not the global cement industry.
Our green power generation capacity currently stands at 667 MW , including our wholly owned subsidiary in India, and we are progressing additional projects to further increase the share of green power in our energy mix. For us, saving energy and saving cost are the same work. Every unit of green power we add makes Patas cleaner, and not only cleaner, cheaper to produce. All our manufacturing locations operate on a zero liquid discharge basis, treating, recycling and reusing 100% of the wastewater generated by our operations. These initiatives helped us to achieve a water positivity index of more than eight times in FY 2025. We remain committed to sustaining and improving this performance in the current financial year. October month is also the month of our great leader, Mahatma Gandhi, who very aptly said, "To destroy something is easy.
To build requires great skill and care." This thought resonates strongly with our business. Building a sustainable enterprise requires the same discipline and care, not only in the quality of our product, but also in how we serve our customers, invest for the future, and contribute to nation building. In terms of the outlook, India economy remains supportive. Infrastructure, investment, urbanization, and stable macroeconomic conditions are all helping. A weak monsoon may hold back rural demand for some time, but spending on road, railways, housing, and data center continues, and that will keep India cement demand moving in a positive direction. We remain focused on strengthening our market positions, improving operational efficiency, and executing our growth plans while navigating the near-term pressures facing the industry. With these remarks, I now hand over the mic to our colleague, Mr. Subhash Jajoo, Mr. K.K. Jain, and Mr. S.S. Khandelwal for your questions.
I am very confident that you are in good hands, and since we are in a cement business, we'll try to make sure the discussions do not set very quickly, and that your questions are well answered. Thank you, Naveen. We can now open the Q&A.
Thank you very much. We will now begin with the question- and- answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Parth Bhavsar from Investec. Please go ahead.
Yeah. Hi, sir. Sir, I just wanted to get a sense on fuel costs. What was our landed fuel cost on kcal basis, and how do we see this going ahead into Q3 and Q4?
For the current quarter, the landed cost was INR 2.09 as against INR 1.66 last year and INR 1.95 for the June quarter. For the coming quarter, we believe this will be around INR 2.15- INR 2.20.
Okay. Sir, my next question is on raw material cost. There is a swing in, basically, change in inventory, which is of around INR 100 crore, and this number was INR 69 crore even in Q1. What is this related to, and how should we see this in H2?
This quarter, our clinker production is higher by 33% as compared to September 25. We hope that the demand would be good in the next two quarters, so it will be consumed.
Okay. Sir, what would be the sustainable number going ahead?
By year-end, it will be around INR 60 crore-INR 70 crore.
Okay. Sir, those were my questions. Thank you so much.
Thank you. The next question is from the line of Pinakin from HSBC Private Limited. Please go ahead.
Yeah, sir. I have three quick questions. My first is, there was very strong volume growth in first quarter and second quarter of 17%. As we move into the second half, what is the volume growth that you expect the company to see?
As I said, the demand triggers are strong. There is only one topic which is concerning is the weak monsoon. Other than that, we are seeing demand to be supportive in infrastructure, in railways, in data centers, and many other segments. Last quarter, there are different figures we still have to assess, but looks like the demand growth in India for the industry was about 10%. Other estimates are about 7%. Let's say 7%-10% was the demand growth. We'll get more real pictures sometime soon. If this trend continues, then what we have promised you all that our growth will be slightly better than the industry. If demand growth is around 7% in the next two quarters, we should grow little better than that.
At this moment, any forecast beyond that is difficult to give, but we remain confident that we should be able to deliver slightly better numbers than the industry growth.
Got it. My second question, sir, is, there are a lot of moving parts on costs, right? The company gave some color on coal. But overall, between packaging, other variable cost rate, on a consolidated cost outlook, how should we see second half versus Q2? There will also be benefits of operating leverage in terms of higher volumes.
This was a difficult one to say. What we do know that one of the major cost driver, which is the fuel, we should be able to forecast it based on the kind of purchases that we have already done. This is what our CFO, Mr. Subhash Jajoo, too, spoke about. There are other elements of the cost where things are moving rapidly. For example, the bag cost. Today, it is not a matter of worry, but we do not know what will happen in future. I think any cost line which is external to us is difficult to forecast. Having said that, my mind says this, that quarter three for cost should not be very different than what we have seen in quarter two.
Got it, sir. My last question is on cement pricing. Companies which have reported so far have indicated a INR 20- INR 25 bag price increase in markets in North and East. From your vantage point, are you seeing similar price hikes in October or in September versus Q2 average? Do you think that price increases should be able to offset the cost inflation we saw in Q2 and probably see in Q3?
So far, we have seen better prices. October is better than September, for example. But again, price is purely a function of demand and supply. We have to see how it evolves in the coming quarter. But with the internal actions that we have taken, especially on premium percentages, I feel we should be able to deliver a better price than what we saw in Q2.
Got it. Thank you very much, sir.
Thank you. The next question is from the line of Raashi from Citigroup. Please go ahead.
Thanks. Just on the cost of production for cement, roughly what was the increase on a sequential basis?
The blended cost of production is INR 4,636 per ton for this quarter against June INR 4,329, and against September 25, it is INR 4,245. Blended cost of course.
Sorry, can you give us that again? INR 4 636 how much?
INR 4636.
Okay. Can we get it for cement purely? Just the cement cost of production.
Pure cement data is not available. We will give you later.
Got it. Okay. Please, how much was the capital expenditure in the first half?
The capital is INR 895 for the first half. We expect in the second half, it would be around INR 700 crore-INR 800 crore.
What would be your consolidated net cash at the moment?
Consolidated net cash at the group level means the consolidated is INR 8,168 crore.
INR 8,168 crore?
Right.
Just last two questions. In the last quarter, you had said that 40 million tons is doable for the year. I would imagine that is still the case, 40 million or more in the second half despite the concerns on the monsoon.
Raashi, as we said, we should be between 40 million tons- 41 million tons. If you all are wishing us so much, then most probably we will be able to reach up to 41 million tons.
Thank you. Just one question. What tax rate should we take for the year?
Tax rate. The tax is coming around 32% for the quarter, and almost same as half year also, 31%. You should assume that it will be between 31%-32% for the year also.
Thank you.
Raashi, it continues to remain in the old tax regime, and that's why the rate is around 30%.
Understood.
Do you have a follow-up question, Raashi?
I'll join the queue. Thank you.
Thank you. The next question is from the line of V. Nahar from Veles Capital Limited. Please go ahead.
Yeah. Good afternoon. Congratulations. We have just one question about what kind of action you have taken on using the EVs for your mining operation, as well as transportation of your cement or clinker.
Is it renewable means for the mining end?
No.
RE?
No, not RE. Basically, your mining equipment, whether those are still run on diesel or you are converting to the electric operated equipment, that is on the mining side.
We are experimenting with EV in the mining equipments. It is too initial a phase, so not being able to give you a It is a testing period for us, yeah, of how does this equipment perform. Historically, all of us have always used equipments with traditional fuel. EV, we have started, and give us few more quarters before we give you some kind of a stronger response on how the performance is.
And about your transportation of clinker or cement, are you using the EV truck?
We are trying to introduce EVs everywhere, not only in mining but also in our clinker transportation. We are also testing with cement transportation. As I said, this is the first phase of this activity. We are still evaluating how complex it is to manage and what are the real returns on this investment. Give us few more quarters, and we should be able to tell you our longer-term plans around EVs and both in mines as well as road movement.
On the same line, whether in any of your plants to optimize the use of renewable, whether you have installed the BESS, Battery Energy Storage System.
I am not able to understand the question, sorry.
Energy.
So renewable power, as I said, we are
Putting up 80 MW.
We are putting up about how much?
80 MW.
80 MW now. Currently, we are at 667 MW. We are putting up 80 MW more.
No. My question is whether, have you installed?
Sorry to interrupt, Mr. Nahar. Due to time constraints, I would request you to join back the queue for more follow-up questions.
Okay. Thank you.
The next question is from the line of Sanjeev Kumar Singh , Motilal Oswal Financial Services Limited. Please go ahead.
Thank you. Thank you for the opportunity, sir. I have two questions. Firstly, in terms of volume growth, which is at around 18%, can you give us some regional mix? As we understand that there was some volume pressure in the eastern region. It would be helpful if you give some regional mix. Also, how has been the growth in the trade and non-trade segment both?
On regional mix, a large part of Shree volume comes from north. The balance is equally mixed in east and south. Of course, when we say north, part of that material also flows into states like M.P. or Gujarat, which is not really north for the industry. It is more west and central for the industry. Having said that, our growth is kind of very balanced across. We have grown little stronger in South India, followed by North and then by the East. However, it is something that we monitor very closely. It is kind of equally balanced across regions. As I said, South leads, followed by North and then by the East.
Secondly, sir, channel feedback also suggests that we are trying to withdraw from some of the markets which are not remunerative or lesser remunerative compared to other markets. If that is true, can you throw some light on what type of actions are being taken to improve profitability?
This is totally untrue. In fact, we are trying to increase our penetration across markets. For example, now we are a significant player in Jammu Kashmir. We are a player now, a significant player also in Gujarat. We are also making our first presence in parts of South Karnataka. It is not true that we are withdrawing from markets. In fact, we are increasing our penetration.
Okay. Thank you so much.
Thank you. The next question is from the line of Amit Murarka from Axis Capital Limited. Please go ahead.
Yeah. Hi. Good evening, and thanks for the opportunity. Sir, just in the quarter, what was the trade non-trade mix? I just missed that data.
Trade, non-trade. We have done better on non-trade. We are now 61% is trade and balance is non-trade. 61% is trade.
61%?
Yeah.
Okay. Because if I put that number, then essentially, I get a flat year-over-year volume on trade from you and non-trade obviously is a big jump of 50%, 52%. Is that correct?
No, trade has also grown. That is not true. Trade has also grown.
Based on the data which was shared last Q2.
I'll ask Mr. Raju to send you the numbers breakup. Yeah.
Okay. And also generally on the pricing, typically we have seen strong hikes being taken in the last couple of weeks. Does that kind of change your outlook on the way you do volumes in trade, non-trade? Because last few quarters at least, we're getting stronger volumes on the non-trade side, as you yourself have admitted. That is one. Secondly, I think in the previous quarters also said that because of the change in fuel mix also, you've been forced to do more non-trade. Is that continuing to be an issue for you or you have kind of gotten over that problem?
Non-trade and trade, the realization gaps are somewhat coming down. Having said that, at Shree, we are actively looking at participating in some of the nation's core projects, which is why you are seeing increase in non-trade. It in no way means that we are not pushing trade equally hard or even harder. Trade has been our bread and butter, so trade we will be pushing. But non-trade, the nature of market is also changing with large institutional buyers, large infrastructural projects, railway projects, and so on. So we are seeing this kind of a shift.
Got it. Also, could you share your fuel mix as of now?
Amit, the fuel mix for this quarter, pet coke was almost 11%. Imported coal was 75%, 2% Indian coal, and alternatives were 12%. We have gradually reduced the use of pet coke because of the increased prices. Last year, the same was almost 66%, so it has come down to 11%. Coal, we have started using.
Got it. Sure. Thanks a lot. I will come back.
Thank you. The next question is from the line of Siddharth Mehrotra from Kotak Securities Limited. Please go ahead.
Thanks for the opportunity and congratulations on surely strong volume growth. I just wanted to check. Sir, freight costs seem to have come down significantly, and if I sort of try to calculate them on a percent basis, they are significantly lower on a consolidated basis. Sir, can you just tell me why this is so?
Quarter two has two, three odd things happening together. One is our lead distance to market has come down. Second is that this is a period when we get some special discounts from railways as part of the lean season discounts. Third is that we are having some new processes where freight fixation is now a little more data-based, using some modern tools, which is allowing us to correct lot of rates across markets. All these three steps have given us an opportunity to reduce our freight to these levels. But as I said, this is something we have to see how we can stabilize it over a longer period. This one quarter does not say much, as it could be also because demand was good. But as we progress, we will see how much it is this freight cost we are able to retain.
There are no one-offs in this number. Is that understanding correct?
No, there is no one-off.
Understood. Sir, secondly, we have been hearing that- Yes. We will be on the lookout for the number in the coming quarter, sir. Sir, there have been some sort of news that our Meghalaya plant is sort of facing certain protests on the ground. Sir, what is the latest update on that front?
There was a kind of a hearing by the state authorities, in which various people who were supporting the projects also participated, and some who have an issue with this project also participated. I understand that the doubts have been cleared by the state government, and very soon we should be able to start the project construction. Our entire workforce is now at the site. The contractors have been mobilized. The orders have been placed, and very soon we should actually start the construction activity.
Got it, sir. Basically, no delays anticipated there. Understood.
[inaudible], in my opening remarks I said we should be able to commission it in [inaudible].
Got it, sir. Sir, just one small question on our working capital. It seems that we have increased our inventory by around INR 600 crore in the cash flow statement. That is an anomaly versus our earlier numbers. Sir, what exactly is this inventory increase, INR 600 crore?
There is some increase in the trade receivables, as well as some of the investment has been sold, but on September 30th, and the payment received on 1st October. So that has been classified with the other financial assets.
Okay. So you are saying it is essentially delayed receivables. That is it, right?
Yeah. It is trade receivable, INR 300 crore something, and the INR 500 crore something on sale of investment, which will be the fund received on October 1st.
Okay, sir. Understood. Thank you.
Thank you. The next question is from the line of Jashandeep Singh Chadha from Nomura Asset Management Company. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. I hope my voice is clear.
Yeah.
Yeah. Sir, I have three questions. Firstly, I see that your thermal substitution rate has increased significantly, which means you are using more AFRs. Is this 5% sustainable or is there any further potential of improving that? How much cost benefit can we forecast on the basis of this? That will be my first question, sir.
We have started now pushing our performance around TSR or AFR consumption, which is why you are seeing some good results from 2% odd to about 5% now. Some more plants are now getting put to handle AFR consumption. As they are commissioned, this 5% should see improvements in the coming quarters. As far as what is the kind of advantage we get from TSR, I think it is a little too early, because currently we are testing with all kind of alternate fuel, be it agricultural or RDF or liquids or other kind of carbon black and so on and so forth. Give us some more time. At about 6%, 7%, 8%, when we realize that number, then we will really know the cost basis for AF versus the traditional fuel.
Understood, sir. I think maybe in couple of quarters I'll come back to this and we can have further discussion.
Yeah.
Sir, my next two questions are more from the strategy point of view. Firstly, on capacity. So another 3 million ton capacity in U.A.E., and if I remember, U.A.E. used to be, compared to India, a dull market. Are you seeing an incrementally higher bid per ton in that market? I just want to understand what is the logic behind redirecting a lot of cash towards U.A.E. Again, versus that in India, despite delivering strong performance, the utilization rate is between 55%, 60% odd, right? What is the strategy to improve utilization, which I believe will be a very good value unlock for the company. If you can just shed some light on this before I ask my third question.
Yeah. First thing that, as a company, we are very happy with our performance in U.A.E. We are also very confident of the kind of demand potential for cement that exists in U.A.E. There is a slight issue because of the West Asia crisis, the Middle East crisis. But we are seeing that U.A.E. continues to build and continues to push further cement demand growth. The new airport in Dubai is now getting constructed. By itself it will consume very high quantity of cement. That's part number one. Part number two, we were selling clinker in U.A.E., as well as cement. Given the fact that the market demand for cement is robust, it makes ample sense to convert that clinker into cement and then sell. Which is why this investment of 3 million tons, to our mind, is justifiable. We are closely watching the market.
U.A.E. also is one of the place from where we can make specialized products like oil well cement and export into many other countries in Middle East as well as in distant countries like U.S. and parts of Europe. U.A.E., because it's a coastal plant, and once the war topics kind of subside, then we should be able to see a much bigger demand emanating from U.A.E. Having said that, even last few months, we have seen cement volumes very promising and much in line with our forecast. That's part of one. What was the second question?
Sir, utilization improvement in India.
I think our strategy always has been to build as we progress. We do not grow by acquisition. If you acquire, then you also acquire a typical market share. In our case, we build a plant, and it takes some time before it is stabilized and market starts accepting that higher volumes. When we say this, remember that three years back or four years back, our capacity was 46 million tons, and we were doing about 24 million tons, 25 million tons. Around that, the volumes. three years later, now we are doing about 40 million tons, 42 million tons at our capacity. Basically, what it means is a new plant which comes in the market, organically built, takes about three years to be fully utilized. That is the journey that we are in.
Understood, sir. I think we will discuss this better offline. My last question is largely on the, let us say, from here, next five years, what is the key focus of Shree Cement in terms of strategy? Why I ask is that till FY 2017, Shree was the cost leader. Then there was a time till FY 2022 when Shree was expanding outside, then came a time when Shree was focusing on price realization. Given that from now, what will be your key focus for Shree and what will be the value system? Will it be price realization, which you have been doing, or still cost control? I just wanted to understand in what mode the Shree Cement should sit.
Shree has a core DNA. The core DNA is to all these three things that you talked about. So we have been building new plants for ages now. I do not say low-cost producer. What I say is the most efficient producer. That is our core DNA that we will continue to push. In recent times, we have added one more topic, and that topic is to get the right price for our product. This is what we have done since last year. Now, one year later, we are finding that that strategy has paid out, and we have been able to improve our price positioning. Now as you see, at that price position, volumes have also returned. In last two quarters, we have done a higher double-digit growth. I think 16%, 17%, 18% last quarter, for example.
Our core strategy remains how to remain the most efficient, be it by bringing in AI or bringing in some new technologies or making sure that our technical parameters are one of the industry best. We will continue to grow. As I speak, we have a commitment to all of you to reach 80 million tons very soon, and we are working on that to reach that number. At the same time, we have also worked a lot in last few years on improving our price position so that better price can be realized for our products. This is kind of the three-pronged strategy that we are following.
Understood, sir. Thank you for such an elaborate answer. I enjoyed my video. Thank you, sir.
Thank you. The next question is from the line of Harsh Mittal from Emkay Global Financial Services Limited. Please go ahead.
Thank you. Good evening team. Thank you for the opportunity. My first question is on the premium mix. We have seen a sharp jump in the premium share, which is 29% this quarter compared to 21% last quarter last year and 23% in the previous quarter. Is there any threshold in your mind that we want to reach from here onwards. This is my first question.
No, if you are asking me, the ambition would be to do 100% premium. What as an internal target we have kept is in few years, we should be crossing 40% premium share. I think we gave this promise till for about 2028, 2029. I was not so confident of reaching 30% so soon. I am happy that we have reached there and a lot of work has happened. I was explaining to your colleague a while back that we are now really pushing that we should get the right price for our products, as well as we should bring right products in the market.
Recently, we have launched a new brand called Bangur Total, which is a first waterproofing cement which we have got in the market. And this is again, a high premium cement. Idea is to bring in more closer-to-market-needs kind of products and get the right price. 30% is what we have achieved and, as I said, our aim is to cross 40% in the time to come.
Sure, sir. In the same breadth, what is the gap between Shree's mass product and the premium product versus the top-tier brand in each of your market? So has this gap reduced or what is the quantum now?
Typically, premium cements are INR 25- INR 35 more expensive than the base products from our side. At wholesale level also, we will see that Shree's premium products are sold at about INR 25- INR 35 higher than our base product. What is a new thing is that we have now products like Total or Marble, which are priced a little higher, where you can expect to be about INR 35- INR 40 higher than the base product.
Got it. Just a few bookkeeping questions. What has been the change in the railroad mix from previous quarter?
Current quarter rail is 8.5%, and against this September 25, it is 11%, and June 26, it is 9%.
Oh, sorry. Can you repeat? Just the rail mix. Last quarter.
Rail percentage is 8.5% for the quarter.
8.5%. This was 11% last quarter.
Last quarter, last September 25, corresponding quarter it is 11%.
No
June 26, it is 9%.
9%. Okay. What was the lead distance this quarter?
Lead distance for the quarter is 427 km. Against this, in June 2026, it was 445 km, and September 2025, it is 441 km.
Got it. Last question.
Sorry to interrupt, Mr. Mittal. Due to time constraints, I would request you to join back the queue for more follow-up questions.
Sure.
Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, please limit yourself to two per participant. The next question is from the line of Parvez Qazi from Nuvama Group. Please go ahead.
Hi. Good evening. Congratulations for the great set of numbers, and thanks for taking my question. My first question is, what could have been the clinker volume this quarter?
Hello. Parvez, we will not be able to share the clinker volume separately, because henceforth, since last quarter onwards, we have decided to give total volumes. Anyway, clinker is minuscule as compared to the total. So there is no point giving separate volumes or numbers for clinker.
Sure, sir. Just last question. What would have been the share of blended cement this quarter?
Blended cement is around 58%.
Thank you, sir.
Compared to last year, it was around 68%.
Sure. Thanks, sir. All the best.
Thank you. The next question is from the line of Rajesh Ravi from HDFC Securities Limited. Please go ahead.
Hi, sir. Good evening to the team, and congratulations on a great set of numbers. My questions are in two parts. First, if you could explain the rationale for this China subsidiary and that through the UAE step-down subsidiary. Are there any strategic reasons that we are looking into that? Second question is around your cost metrics. You are already very strong on your power cost. Your per ton, per kilometer freight cost is among the lowest, given that 430 km lead, and you are still around INR 1,100 per ton. What further cost levers are we looking at from a one to year perspective? In terms of India growth story, what other capacities? Obviously, we know that your Meghalaya plant is on track by end of next financial year. Beyond that, FY 2029, are we planning any expansions?
So, first part was the China story. China, as you all know, has become a major hub for supply of cement spares as well as cement project items. China's manufacturing capacity for project related items has doubled up, and we see that there is a potential for us to shift our dependence from European suppliers to China suppliers. This is a first-level work. We still have to see what is the kind of savings we will get from China. We still have to see whether, in reality, China equipments will be more efficient and lower in cost compared to our traditional ones.
So what we are doing is to opening an office there to start learning about China, their facilities, their equipment supply facilities, and try to bring some of those equipments into our new projects that we will be doing, as well as try some of the spares that are available in China for our requirement in India, as well as in UAE. So China is the first step. At this moment, it's an experiment which we are doing. Once we start and we see over a period of time, if it starts making sense, then we will further strengthen our China facilities. Second part of your question is
Second part, sir, on the cost-saving potential that you look in India.
Why UAE, why not India, and so on, so forth.
Right.
We find that from UAE, the visa process is far easier as well. There is a good presence of Chinese engineers in UAE. Which is why, which is where it is easier for us to negotiate, easier for us to meet them, and so on. India and China relationships now are quite positive, but we have known historically that there are some kind of fault lines with both us and China. That is why UAE has been given as a preference. As I said, and I would really highlight it, this is the first step that we are taking in China. The intention is more about learning how does China industry operate.
The intention is more about to know the way they build, the way they construct, the way they keep the cost at the level that they talk about, and see if we can bring some of those expertise and skills in our operations in India and UAE as well.
Mm-hmm. And sir, India cost-saving potential for the next two years, given that you are already very strong on-
Cost is something on which any company keeps working continuously. So are we. We have spoken about that we are trying to increase our alternate fuel consumptions from current level to higher levels. So we have already demonstrated from 2.5%, now we are 5%. I think with the kind of facility that we are putting up, we should go up further in the coming years. So that is AFR is why alternate fuel is one of the big topics for us. Logistics is a big topic for us. We are also investing in some of the plans to create railway facilities. The intention is that it will bring down our cost of transportation. That is the second lever we are working on. But beyond that, hundreds of experiments are being done in Shree every day.
Each one of them is giving us some kind of a cost reduction potential, that is what we are known for. To be the most efficient, that is our DNA, that will continue to push.
What capacity is that you are planning to add
Sorry to interrupt, Mr. Ravi.
I am just completing this. What capacity are you planning to add in FY 2028 beyond Meghalaya?
Already 3 million tons is what will reach in the shutdown.
Okay, great. Great, sir. Thank you, and all the very best.
Thank you. The next question is from the line of Shravan Shah from Dolat Capital Market Private Limited. Please go ahead.
Hi, sir. Couple of data points. First, clinker factor or maybe a CC ratio for Q2, how much was that? Second is on the UAE revenue in terms of the INR which is part of the consol revenue, how much was and maybe in the Q1 FY2027 also, if you can share that number would be great.
Your first point was on the conversion factor. The conversion factor is around 1.51 for this quarter. Can you just repeat the second question once again?
I am saying UAE revenue for Q1 FY2027 and Q2 FY2027, which is part of the consol revenue.
No, UAE revenue we will not be able to give separately. Volume we have already shared with you.
Okay. In terms of the UAE, for India, we have said that we are looking at a 41 million volume for this year. UAE, which is in 1H, is already down close to 7%. How one can look at the second half for UAE or maybe the full year, how one can look at the volume given the 3 million tons that we recently have started?
Yes, in UAE for the first six months, we have already done around 2.1 million tons. We expect similar rates going forward for the second half of the year. Yes, from the additional 3 million tons, we believe around 30%, 40%, you can take 30% you can take from there. Total UAE will be around 4 million tons- 5 million tons.
4 million tons- 5 million tons. So this will be on a full annualized basis for even more?
Yes, full annualized. Yes.
Okay. Last, just a clarification.
Whenever we start a new capacity, it takes around, as Mr. Akhoury said, it takes around two to three years for it to attain its maximum sales. The first year, the utilization level will always be around 15%-20%.
Yeah.
It moves forward over a period of two to three years.
And in UAE, EBITDA margin would be 1% or 2% better than the reported consol-
We will not be able to share separately the EBITDA margins of UAE.
And power and fuel, just to clarify, you said for Q2, it was INR 2.59 kcal cost, and that we are expecting-
No, second quarter, this quarter, the fuel cost was INR 2.09. As compared to INR 1.66 last year and INR 1.95 in the June quarter. For the forthcoming quarter, we have given a guidance of INR 2.15-INR 2.20, based on our order pipeline.
Okay. Lastly, any-
Sorry to interrupt, Mr. Shah. I would request you to come back in the question queue for more follow-up questions.
Okay, thanks.
The next question is from the line of Siddharth Mehrotra from Kotak Securities Limited. Please go ahead.
Just one small data point. What were the external power sales for this quarter? Am I audible?
Can you
Yes, sir. Audible.
Your question was on the power sales?
Yes, external power sales this quarter, sir.
Well, Siddharth, let me remind you about one year, three, four quarters back, we decided that since power is not that significant, we are not going to share any numbers pertaining to power separately.
Understood, sir. Thank you.
Mr. Bhavsar, kindly unmute your line, please.
Yeah. Hi. Sir, is it possible to help us with the earmarked capacity of power for external sales? So we have 503 MW of CPP. Out of how much of it is earmarked for external sales?
How much of it is earmarked for external sale?
Yeah.
I think it's better to avoid this question because power division, we are not going to share any separate details. As I told you, and moreover, looking at the overall number, overall revenue and the contribution also, it's hardly any significant.
Okay, sir. That was my question. Thank you.
If you want a breakup of the total power facility, yes, that we can share. Its total capacity of power is around 1,170 MW, out of which 503 MW is thermal and balance 666 MW is green, including the WHR solar and wind.
Got it, sir. That was my question, sir. Thank you.
Thank you. We take that as the last question for today's conference. I now hand the conference over to the management for closing comments.
Thank you. Thanks a lot. Thank you for attending our conference. Just last few words, as I said, last quarter has been encouraging for us in all our performances. We find that many of these steps and initiatives taken some years back are now finally paying off. Be it in price, be it in cost. We will continue to work on those levers in next several quarters as well. What I see in quarter three and quarter four with the demand and with the kind of work that we have done on the cost, we should be able to come up with reasonably better if not similar numbers on performance as we did in quarter two. Again, thank you very much for attending today, and good day, everybody. Thank you.
Thank you. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.