Ladies and gentlemen, good day, and welcome to the UltraTech Cement Limited Q3 FY 2024 earnings conference call. We must remind you that the discussion on today's call may include certain forward-looking statements and must therefore be viewed in conjunction with the risk that the company faces. The company assumes no responsibility to publicly amend, modify, or revise any forward-looking statement on the basis of any subsequent development, information, or events or otherwise. As a reminder, all participant lines will be in the listen-only mode.
There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Atul Daga, Executive Director and CFO of the company. Thank you, and over to you, sir.
Thank you so much. Good evening, everybody, and welcome to the earnings call for quarter three FY 2024 for UltraTech Cement Limited. I will try and keep myself brief today and giving more opportunity for questions. One of the most critical points which has been doing the rounds is about demand, whether there's a slowdown, et cetera. We believe that this quarter, the industry should grow somewhere around 3%-4%, not more than that, and there are several reasons around it. I should clarify it upfront before too many theories start doing the rounds. Q3 is a festival season, which is generally subdued due to absenteeism of workers from project sites, and this has been a routine phenomenon year after year. Besides, a large country like ours will have something or the other going on.
Such issues do hamper the movement of goods. Specifically in this quarter, we had election in four major states, Chhattisgarh, Madhya Pradesh, Telangana, Rajasthan. Fiscal challenges in the states of Bihar, Jharkhand, West Bengal. There were floods in Tamil Nadu, cyclone in Andhra, sand and aggregate shortages in some parts of the country, NGT-related construction ban in NCR since last quarter, which still continues, and severe weather as we speak. We also had rains in Himachal, which impacted the movement of goods. You must already be aware that the first two days of January were also impacted by the truckers' strike, which would impact not just us, but the entire economy, per se. So one should not panic because of such situations. There have been news items like government orders have slowed down.
I believe if so, it is only temporary. India is fundamentally poised for a huge infra growth, which will benefit all the cement players alike. The bigger point is that any project which has been initiated will go on, and we are seeing substantial construction activities across the country. So long story short, fundamentals around growth of cement, growth for cement in the country continue to be the same. We have already started seeing improvement in demand since the middle of December. Slower demand leads to correction in prices, and most of the gains achieved initially have been surrendered. While QoQ and YoY, there has been an improvement in prices for the quarter, but towards the end of December exit, prices had corrected largely. You are all monitoring daily prices, but I wish to reiterate that prices are always guided by demand.
As and when demand improves, prices are bound to improve. It's a pure economic phenomenon. Jumping on to our expansion plans, I think we are happy to tell you that all our expansion plans are on schedule, and in fact, some of them are ahead of schedule. Given the way we are seeing going up in the country, we are quite satisfied with the way our expansion plans are panning out. On the last announcement made for 21.9 million tons of capacity, which we call internally Phase 3, orders have already been placed for critical technology items. So work has commenced on a few sites. We are confident that the plants will be commissioned as per schedule. This year, our CapEx cash flow will exceed our initial plans, which we have outlined, and we will spend around INR 9,000 crore.
Next year also, we could see our cash flows on CapEx being around INR 9,000 crore. Working capital has taken up some opportunistic bets on purchase of coal and pet coke, because of which our working capital is slightly extended. Both of these elements added to a marginal increase in our debt position at the end of December 2023. And given our belief that Q4 will be high, will be a high throughput quarter, we should be seeing a further improvement in our cash flows and shrinking net debt. Everything else remaining the same, we are working towards reaching a 0 net debt position by the end of March 2025. Going forward, we keep seeing an improvement in costs. As per current data, imported coal and pet coke do not seem to be spiking up, albeit the ocean freight flare up due to the war issues.
We achieved a fuel cost of INR 2.048 per kcal this quarter against INR 2.184 per kcal last quarter. Blended cost of fuel consumed net of moisture was, in dollar terms, was $150. We use very limited domestic fuel, which is around 6% of our total fuel consumption, and maximum energy is from imported coal and pet coke. We expect to see a further reduction in our fuel costs in the foreseeable future. With 455 MW of renewable energy and 264 MW of WHRS, we are now at about 24% of non-fossil fuel-based power, and work is in progress to nearly double this percentage by the end of FY 2025. To give you some more numbers, we today in all have 44 kilns in operation, out of which 29 kilns have already been covered by WHRS.
Work is further in progress on 5 more kilns. With the ongoing expansions by the, which is at the end of completion of Phase 3, by fiscal 2027, we will have in all 48 kilns, and 41 kilns will be covered with WHRS. All future expansions, current and further, will always be with WHRS and zero thermal power. That is our commitment to sustainability. I have covered briefly, touched briefly upon costs, demand, and our expansion plans. Last but not the least, I must communicate about the recent acquisition that we are announced of cement assets of Kesoram Industries. We have already filed it with the stock exchanges. CCI application should be filed shortly, perhaps by the end of this month, and after that there will be an NCLT process. Two NCLTs will be involved, which is namely, Mumbai for us and Kolkata for Kesoram.
The effective date of merger has been kept as first April 2024, hence, as and when the merger gets completed, the numbers will be consolidated with retrospective effect once all regulatory approvals are in place. That's all, I had to share, with you today from my side, and look forward to questions from you and anymore , inputs that you may have. Thank you, and over to you.
Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to withdraw 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 Amit Murarka from Axis Capital. Please go ahead.
Yeah, hi. Good evening. Thanks for the opportunity. So the first question is on other expenses. So, like, I generally Q2 has higher other expenses, which we saw, and Q3 generally witnesses a drop, but this time that drop is not visible. Like, first thing I wanted to highlight was, I wanted to check was, was there any one-off on, in, other expenses?
So it's not a one-off, but you know, when we saw the slowdown, I shouldn't say a slowdown, or lukewarm response in the markets during October, November, we did some preemptive or you know, early preponement of some maintenance costs, which would have become part of the overall costs during this quarter.
Okay. So recently this campaign has also been launched with Shah Rukh Khan. Of course, congratulations on that, but that is already in the P&L or Q3 or will that come?
Who is Shah Rukh Khan ? Yeah, it is. Obviously, obviously, we, we will book the expenses. We don't keep anything for a later date.
Okay. Okay. And then lastly, I see the slide on the capacity commissioning schedule. Like, what will be the clinker capacity addition in Phase 3, and where will you go on total clinker capacity at the end of Phase 3?
I think I had already mentioned, last time, 10 million tons-12 million tons. But I'm not getting into details, on clinker capacity, but 10 million tons-12 million tons. So we will always be clinker, but that is most important, aspect.
Yeah.
Just one second. Jhanwarji wants to speak.
Yeah. See, the first of all is, Atul has already just said that our all capacities are always clinker based. Actually, we never put the surplus grinding facility and not having the clinker on the backside.
Okay. Okay. Sure, I'll come back in touch with you. Thank you.
Thank you. The next question is from the line of Navin Sahadeo from ICICI Securities. Please go ahead.
Yeah, good evening, sir, and congrats on good set of numbers. Just two questions. First, I'll take on prices. So you said by the end of December, prices had turned fairly weak. So the exit or the current-
No, I wouldn't say weak, but the gains which were there in the quarters were largely surrendered.
Fair. So can we say that the spot price maximum in January is at least, let's say, 2% or some number to it, lower than Q3?
Lower than Q3? Yeah. Prices will be currently lower than Q3.
Marginally.
Yeah.
Okay. Marginally. Fair. Fair. And sir, my second question was on your recently incorporated company in Northeast, and a very peculiar name to it, you know. So I'm just trying to understand, it seems like something is already formed up, and, you know, very soon we could see either a greenfield expansion or some venture in that state. If you can throw some light, light on this.
So I will throw some light when I have the torch with me. So, sorry, I don't know why I started joking on the call, but we will come back, Navin. Yeah, we are making progress on our expansion in the Northeast. It has been long, long overdue. As per the legal requirements, we need a separate entity with local partnerships, local directors, et cetera, so that has been structured. We will come back with details as and when we are ready.
Fair. I mean, I, my only question was, given the peculiarity of the name, I, I could sense that it could be a greenfield venture, because there you don't have to really go into an auction of a mine as such. If you have land already in place, you can start.
Yes, absolutely. Absolutely.
Great. Great. Thank you so much.
Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead.
Yes. Sir, couple of questions. First, sir, you used the word we have taken opportunistic bets on fuel. Sir, can you please provide some more color over here? You did indicate on the INR per kilo basis for the quarter. If you have taken some nice bets, does it mean it is lower than the prevailing spot prices? How should we look at it?
So, Ritesh, let's keep it for the next quarter. Why do, why should I spill the beans right now? I have also mentioned that you will keep seeing, our cost curve sliding down continuously. We will reveal the numbers, as and when, at the end of the next quarter.
Okay. Sir, if I put the question the other way around, would we have taken-
I can't see the other way around.
Okay. Okay. Right. So perhaps I'll try to move to the next question then. Sir, you did indicate that the incremental clinker capacity you had earlier indicated at 10 million tons-12 million tons. This corresponds to Phase 2 and Phase 3 together?
This was about Phase 3.
This was Phase 3. Specific corresponding to Phase 2?
14 million.
14 million tons.
Okay. And, the incremental announcements which we have detailed, are the incentive backed on most of the states? Because I see a few states where-
I'll tell you which places have incentives. So we have Rajasthan, which Rajasthan has incentives. Andhra doesn't have, Bihar has, yeah. UP also will have it.
UP has. Tamil Nadu doesn't have
Punjab also . Punjab is in the Phase 2. So Punjab also... i n Phase 3, you would have Rajasthan, UP, Bihar. Yeah, these states will have incentives.
Okay, so AP doesn't have. I presume Tamil Nadu also would not have, right?
Yeah. Tamil Nadu is very small.
Okay. And sir, when we give a IRR number of 15%, what is the-
We don't take incentives into account.
We don't take incentives into account. Okay. That's, that's useful. Okay, and sir, lastly, if you want to just touch upon probably, the rationale behind Kesoram, and, given we have already announced Phase 2 and 3, would there be a motivation to look at further, inorganic assets, given we have a very strong pipeline already in place?
So, Ritesh, inorganic is always opportunistic, and each transaction has to be examined on its fitment with UltraTech, given the fact that we are pretty densely present in the country. So each transaction has to be examined on its own merits. So fundamentally, I have maintained that we are looking for profitable growth opportunities, so it has to give us growth as well as has to be remunerative.
So at the end of the day, it has to the value accretive actually, otherwise, there may be number of opportunities. If it doesn't add value, I don't think it makes sense just to add capacity.
Sir, my question was, what will there be anything specific that will make us move or motivate us to look at it? So something in southern India which is rich in limestone, would it be of-
It's not about southern India. Let me comment about whole of the entire country. So if it's a profitable growth opportunity, that's point number one. Since you touched upon limestone, obviously, it has to be limestone-backed.
Okay. Sure. And sir, Kesoram, basically the motivation to go for Kesoram?
Oh, it has good limestone. It, we can certainly add value to ourselves, to our customers. We can service our customers in a much better way. Markets are very attractive.
And also the good brand, the markets where they are present.
Sure, sir. Thank you so much. I'll join back with you. Thank you again.
Thanks. Next. Hello?
Yes, sir, I'm good, thank you.
All right, thank you. Next question, please.
Thank you. The next question is from the line of Raashi Chopra from Citigroup. Please go ahead.
Thank you. So my, just on utilization, your utilization was about 77% in this quarter.
Yeah.
So what are you expecting in the fourth quarter?
Fourth quarter, you know, historically, if you see, I would expect this quarter also to repeat. However, election date depends on election date, as in when the election dates are announced and the code of conduct sets in. It's very, very confusing to put a number, to put a finger to a number. As I already mentioned, mid-December onwards, we started seeing demand pick up, and the signs are very good. Still, if I have to put a number, we will definitely cross 80%-85% for sure.
Okay. In your opinion, like, for the full year, what should the industry demand growth be for like India?
Oh, we were looking at close to double digits, so 8%-9% for is a possibility.
Yeah. Anything between 8%-9%.
Just on bookkeeping, on your trade volumes and blended cement for the quarter, please.
Trade was 64%.
Yeah.
Okay.
Blended around 58%.
Great. And, while you're on the blended coal price, what was the pet coke price for the... Like, last quarter you had mentioned the pet coke was $138. This quarter?
$126.
So this should continue to go down?
Yes, that's what the trend looks like.
Okay. Sorry, $126 you said, right?
$126 .
Okay. Lastly, on the waste heat recovery, your capacity is 254 MW right now.
Yes.
Anything more getting added this year?
Uh-
Yeah, about 26 MW in prior year.
The last two quarter, maybe 16 MW. Some more will come in. One or two more lines will come in.
So what is the, is there like a, what's the total megawatt capacity expected by FY 2024-2025 on waste heat recovery?
About 16 MW-20 MW additional will get commissioned by the end of March 2024.
Okay. And then beyond that, in FY 2026?
202 5 also we'll have. So we have five existing lines under implementation, out of which you will see 16 MW-20 MW getting commissioned by March. So three lines would have commissioning in the next fiscal year also.
Okay. So, just one last thing. I don't really want to discuss the EBITDA for tons for the next quarter, but generally speaking, directionally, prices have basically corrected. I know costs have come down or will come down as well. But, I mean, this probably remains like a steady state number, what is reported this quarter?
I assume so. I think I'm confident that it is a steady state number.
Okay. Okay. Okay, thank you.
Thank you. Next question, please.
Yes, the next question is from the line of Indrajit, an individual investor. Please go ahead.
Hi. Sorry, Indrajit Agarwal from CLSA.
Indrajit, yeah.
Yeah. After the CapEx of INR 18,000 crore in the two years, how much will be remaining for Phase 3, till Phase 3?
We had total cost of INR 13,000, INR 12,000, right? So INR 25,000.
Phase 2 and 3 is around INR 25,000 crore-
INR 25,000 crore, yeah, out of which INR 18,000 crore is getting completed, so balance is there, INR 6,000 crore-INR 7,000 crore.
Okay. And, given that not all the capacity, about 2 million tons of capacity at Kesoram is not clinker-backed-
Yeah.
Could we look to realign some of our, like, organic expansion to support that, or how do we-
Yes, we are looking at it. I think in the next, and we have plenty of time, so once we are, get CCI approval, we'll work more closely with them to understand their plans and how we can realign our capacities.
Sure. Sir, last question on this. Post Kesoram, we will be at around 190 million ton capacity, right?
Very close to that number, yes. Very close to that number.
Yeah, our target is 200-
In India.
By 2028. Yes, in India. And our target is 200 by 2028. So, do we have enough organic opportunities for getting to that additional 10 million ton or we'll have to-
Organic? Most certainly. Most certainly.
Okay. All right, and all those organic, we are still confident it is truly lower than, like, say, $90-$100 per ton, right?
Absolutely. No doubt about that.
Okay. Thank you. That's all from my side.
Thank you.
Thank you.
Next question, please. Yeah.
The next question is from the line of Ashish Jain from Macquarie. Please go ahead.
Hi, Ashish. Yeah.
Ashish, your line has been unmuted. You may proceed with your question.
It's the next person, he has dropped off, I think.
Yeah. Hello. Hello. Am I audible now?
Yeah, yeah, you're audible.
Sir, you know, on, you gave some numbers on, you know, kilns with, with, WHRS, and while that you said that currently we have 44 kilns, and, by 2027 we will have 48 kilns. So are we adding this 25 million ton between Phase 1 and Phase 2, just across four new lines? I was not clear about that.
Yeah, there are four lines, four, greenfield lines getting added.
For 24 million tons of kilns. Okay. Okay, fine. Thank you.
The next question is from the line of Prateek from Jefferies. Please go ahead.
Hello. Yeah, hi, good evening, sir. My first question is on last quarter's demand growth. You said it's around 3%-4%. Would you have, like, region-wise distribution of how this growth was?
Very difficult at the moment. We will wait to see numbers from regional players, then it'll be better to comment on that.
Your utilization of 77%, how would that be region-wise?
More or less evenly spread, you know, the highest being 85%, and the lowest being 73%.
Okay. So South utilizations have like, I believe the South number would be lower number of the, of the range. So South utilization, for yourself and for, for the industry has like sustainably moved up, or is like we are operating at significantly high?
So when we are growing at a pace higher than the industry, our capacity utilizations will also be higher than the industry. That is one. South market has been consolidating and improving continuously. Gone are the days when South, southern markets used to operate sub 50%. So you are seeing South markets also going up above 70% for sure.
Okay. And over next six months as you conquer, like, volume growth may like sort of get impacted, how do you see the pricing during this period?
The pricing is, Prateek, determined by demand, good demand across the country, and I have seen this, you know, in the past also. When all India capacity utilization crosses 85%, prices become very strong. So it's, it's a play of demand. If there's good demand, prices tend to improve.
Right. But like versus last quarter, when we like sort of seen like start of the quarter, we had like 5% higher prices, like all of that rolled back. We are like sort of having a similar view on pricing like we had that time, or?
My sense is if capacity utilizations in January-March, which has precedent, you know, if you go last two, three years, capacity utilizations have been strong, the prices could improve.
And one, lastly-
We are heading into election period, so there might be, you know, how demand pans out. It remains to be seen.
Sure. And lastly, this INR 25,000 crore of CapEx, you said, INR 9,000 crore, INR 9,000 crore and maybe INR 7,000 crore for three years.
Yeah.
Is this maintenance CapEx also included in this?
All in. All in. All in.
Okay, so maintenance included, we have INR 25,000 crore to spend.
One second. Sorry, sorry, sorry. Phase 2, Phase 3. Yeah, yeah. So maybe INR 1,000 or INR 2,000 crore on maintenance CapEx, give or take. And there will be WHRS also, which is under implementation. But all put together, CapEx, which I am seeing this year, we have already crossed about INR 6,500 crores for the nine months. So we will very easily touch INR 9,000 crores on that day, which includes both, which includes both our growth CapEx as well as routine CapEx or maintenance CapEx. This is a trend which we see at least next year for sure.
Sure. So, INR 9,000 crores, INR 9,000 crores, and next year, FY 2026, we'll have, like, INR 6,000 crores, INR 7,000 crores+?
It will be higher only. It will be higher, not INR 7,000 crore, because there will be maintenance CapEx also.
And in between there will be, like, acquisition EV of around INR 7,500 crore of-
Yes. Yes, that is coming in. Yes, that is coming in.
Okay.
In my commentary, when I mention FY 2025 net cash on the balance sheet, I am not taking into account this acquisition, which will bring in a debt of INR 2,000 crore.
Right. Okay, that's it from my side. Thank you, sir.
Thanks, Prateek.
Thank you. The next question is from the line of Devesh Agarwal from IIFL Securities. Please go ahead.
Thank you for the opportunity, sir. So firstly, in terms of cost, you did mention that the cost will continue to decline. But based on our inventories, can you give some sense what could be the decline we can expect in forty?
We are at $150, no? This quarter? So we are at $150 of consumption this quarter. I would expect 7% -8% reduction over the next six months for sure. It could be higher also.
Okay. And secondly, sir, based on our Kesoram acquisition, you do have some capacity addition plans in northern or southern India. Can there be any rethink or those remain intact?
So I think somebody had asked about this. In the next six months, we will come back, in case there is any change in our existing expansion plans.
Okay. So in the RMC business, what will be the margin for the quarter?
In what? RMC business?
Yes, sir.
RMC business generally delivers 3% higher-
4%.
4%, sorry, 4% margin. Over and above cement, yeah.
Understood. Perfect, sir. Got it. Thank you.
Thank you. The next question is from the line of Satyadeep Jain from Ambit Capital. Please go ahead.
Hi, thank you. Just a couple of questions. One follow-up to Naveen's question on the foray in Northeast. Just want a clarification. You already have some limestone assets there in Northeast?
Identified, yes.
Oh, but not existing assets. Secondly, on Nawalgarh, in the Phase 3, we don't see Nawalgarh yet. Is there some land acquisition?
No, no, no, there's that will come in Phase 4.
Yeah.
Land acquisition is happening.
Okay.
Yeah. Because right now we are doing Kotputli expansion in Rajasthan, which is part of our Phase 2-
Phase 2.
- which will get commissioned, and then we will take up further expansion in Rajasthan in Phase 4 , if I can call it that way. Sorry?
Just, so land acquisition is still going on there?
Sorry, and Nathdwara expansion, my colleague corrected me. Nathdwara expansion is also happening right now.
Okay. All right. Thank you so much.
Thank you. The next question is from the line of Rajesh Kumar Ravi from HDFC Securities. Please go ahead.
Hi, sir. Good evening. Am I audible?
Yes, please.
Yeah. So, could you share the breakup of the pending 2.6 million ton debottlenecking, which was due in second half, and also the slag grinding units, which are expected next year?
Slag grinding units, one is in South, one in West Bengal, and t hird one? Two in Bengal and one in South. And as far as debottlenecking, I think I've corrected the numbers in this presentation as compared to earlier. So once we are through, we will come back with the details on debottlenecking.
Okay, okay. The debottlenecking there are changes. And this Burnpur is already amalgamated, end of Q3?
Yes, Burnpur, we had acquired the assets, and not the company.
Ah, so this is already done. Okay.
Already in our balance sheet.
And also, can you share the Phase 3 you mentioned, some 10 million ton of clinker additions?
Yeah.
Across which, what would be the region-wise clinker additions for kilns?
That's happening in East, North, and South.
What will be the breakup? Because South, we see that you are adding one large greenfield, 6 million tons in Andhra, and one brownfield, 2.7 million tons, which is in, again, APCW. So almost 9 million tons addition.
Rajesh, let's focus on cement capacity instead of getting into clinker details.
Okay. Total you said is how much, sir?
Total of what?
Total clinker across these three regions would be how much?
Give or take, 12 million tons.
12 million tons. Okay. And sir, lastly, Q3 volume numbers for various regions have been impacted, but in Q4, is it feasible to see a 10%+ growth? You have the capacity in place. Is that a, you know, is that a reasonable number you're looking at, 10%+ growth in Q4?
You know, right now, given the weather conditions in North, so North is still not doing full steam. Otherwise, all the other regions are performing well. We should see a good improvement in, in our Q4 numbers. I don't want to comment on a number which is unnecessarily giving directional, performance for Q4.
Okay. Because, just, if you work out even if sequentially you're able to deliver 25% volume growth, year-on-year, it would still look at some, you know, some 7%-8% growth. So, you know, is it the base effect will also come in play, is what I was looking at?
No, no. As I mentioned, Rajesh, I don't want to preclude or reach a conclusion on Q4 in this call. We are focusing on Q3 performance.
Yeah. Great, sir. That's all from my end. Thank you.
Thank you.
Thank you. The next question is from the line of Shravan Shah from Dolat Capital. Please go ahead.
Thank you, sir. Sir, one data point, what's the premiums for this quarter?
23%
23%. And second, sir, definitely as you mentioned, that, in terms of the demand for fourth quarter, we are looking at, it to improve. But, overall, if you look at for FY 2025 also, will there be a some slowdown in the first half and mid-May for the full year? Will it be fair to say the max we can see is 6%-6.5% kind of a demand growth at industry level in FY 2025?
Maybe. I think so. It is a possibility.
But our growth will definitely be much better than the industry growth.
Yeah, yeah, we will have higher growth, definitely.
Okay. On the profitability front, sir, if you can repeat what you mentioned, I was not clear. Did you mention that the profitability still have a scope to improve, given the cost is still going to be on the declining side? Or, will it be going forward in FY 2025, will it be more of a pro from the pricing perspective, we can see the profitability to improve?
I didn't comment anything on future profitability. What I said was you could see, improvement or reduction in cost of fuel further. It all depends on how volumes play, how other levers of the PNL play out.
Okay. Okay. Got it, sir. Thank you and onwards.
Thank you.
Thank you. The next question is from the line of Patanjali Srinivasan from Sundaram Mutual Fund. Please go ahead.
Hi, sir. Am I audible?
Yes, please.
Yes, sir. So firstly, congrats on a good set of numbers. I wanted to know what a grey cement EBITDA per ton would be?
Grey cement EBITDA per ton, we are, we are at INR 1,200 per ton. INR 1,208. Of what? Depending upon operating EBITDA, how you calculate, operating EBITDA, it would be around INR 1,208 per ton.
No, sir. So on India business, when we declare numbers, I think it includes our white cement RMC also. So I'm just trying to understand if gray cement EBITDA will be slightly lower, but because of RMC, it will be a blended number of INR 1,208. Is my understanding correct?
Yeah. RMC is obviously part of our gray cement business.
From a kcal perspective, what would be our fuel cost for the quarter, sir?
From what perspective?
kcal.
kcal, I already gave it, I think 2.04.
Okay. And, where do we see it going in the coming quarter?
Yeah, you should have been on the call earlier. I expect-
No, no, I was there, sir. Directionally, I just wanted to know how much will it be?
It will be reducing. Again, I also mentioned 6%-8% reduction is a possibility. It could be more, it could be less. I don't have a control on that.
Okay. Okay. Got it. Okay, sir. Thank you.
Thank you.
Thank you. The next question is from the line of Ashish Jain from Macquarie. Please go ahead.
Hi, sir. Good evening. Sir, my first question was one on expansion. But, you know, like, when we acquired Nathdwara, one of the arguments was that we can easily double the capacity. But even in Phase 3, there's only 1.2 million tons coming in Nathdwara, and we've hardly added after the acquisition. So what... And from, you know, profitability point of view also, I think in the past you've highlighted that Nathdwara is fairly profitable. So why are we going so slow on Nathdwara expansion?
The Nathdwara, actually, the what you are talking, 1.2 million is the cement, actually, but the clinker is, 3.3 million tons. Obviously, the grinding, has to take place not entirely at the Nathdwara site, but in the market.
Right. So, clinker you're adding there between Nathdwara.
Yeah.
Got it. Got it. Sir, secondly, in terms of Kesoram, is it possible to quantify the potential Kesoram offers, given, you know, you said that, one of the-
I missed your question. Repeat, please.
Sir, I'm saying, Kesoram, is it possible to quantify the potential Kesoram has in terms of capacity addition, given that was one of the reasons you said for the acquisition?
Whatever we studied, their existing location in Karnataka definitely has limestone and land available to expand.
Okay. Sir, my last question, you know, like this quarter, if I see, nearly two-thirds of your renewable power is coming from waste recovery. Out of the 24%, 16% is waste recovery. So in 2027, the 60% target that we have, are we seeing the dependence on solar or wind going up or the mix will be maintained?
Yes, no, no, it will go up.
What will be the mix then, ballpark, if you have any? I'm sure we will have a long-term plan.
Solar would be around 34% out of 60%, and 26% would be WHR.
you know... Okay, okay, 34% into-
34% would be renewable energy.
No, no, sorry, sir, I thought it was a 60% target by 2021, is that right?
Total. That is green energy. Right, which is WHRS also.
Okay, got it. Got it.
85%, 85% by 2030.
Right.
Which will be largely delivered by renewable energy.
Okay. Okay. Got it. Thank you so much. Thank you.
Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead.
Hi, sir. Two questions. So, sir, first is, we have given a long-term carbon intensity target of 462. This includes Scope 1 reduction of 27% from the baseline and 69% on Scope 2. So is there a roadmap which is there to reduce carbon intensity? I would presume clinker factor would be one of the variables. So when we are looking at Phase 2 and Phase 3, are we looking at this particular variable to shift significantly? That's the first question.
So, to answer, yes, clinker factor will be the largest driver for reducing the CO2 emissions. We have a concrete plan in place to reduce clinker factor.
Sir, would it be poss-?
New products which are getting added, variants which are getting added, which help improve the clinker conversion factor.
Sir, would it be possible to guide any particular clinker factor numbers, say, by up by 2026, 2027, or say 2028, something in interim before 2032?
No, I would not want to reveal that.
Okay. And sir, as you indicate, we will focus on clinker factor, then, how should we understand the demand/supply dynamics for fly ash and slag? If could provide some color over here and specifically on the cost inflation for both this variables.
My sense is that our country will not have any shortage on account of fly ash and slag availability. The cement industry will not suffer because of that.
Okay, but from a cost inflation standpoint?
On these commodities?
Yes. Fly a sh and slag.
It's a matter of demand and supply. For example, fly ash can vary from zero cost to INR 507 per ton plus freight. So it purely is on demand and supply.
Sure. And sir, you said, new products getting added. Are we referring to, I don't know, LC3 or something else? Also would like to have your thoughts, given BIS has come up with the norms over here. So is it a variable that we will look at going forward?
Yes, the LC3 is still not commercialized, I would say. Some pilot scale production has started in the Western World. At least in India, nothing is different. But yes, it is very much on the radar, and we are working on it.
Okay, so we have the product ready. It is just that we have not commercialized, should we read it that way?
It's not question of product, because the product is not so important to produce. But I think the overall, the technology and the scale actually, because if somebody can produce in, say, a 1,000 TPD plant, but it should be scalable to a higher level, and at the same time, the raw material availability is also to be ensured, actually, at least for 30, 40 years.
Sure. And sir, second, last question, sir. Can you give some color around, it's good to see bulk cement terminals being added. If you could provide some color on why the rationale behind the locations where we are, and after Phase 2, Phase 3 expansion, any broader thoughts on distribution? So, I see a lot of jetties on the western coastline, but we have hardly anything on the eastern coastline. So how should we understand that, and the location of the bulk cement terminals? Anything on the distribution, say, four years out, five years out?
They are clearly determined by the market, and you know, by the market and the kind of demand that exists in those markets. And for East Coast, Rahul, you want to say anything?
The East Coast, because, again, the availability of the right kind of ports, et cetera, is generally hampering, unlike the way the terminals are there in Southern India. And ultimately, it's, it's a very composite subject in terms of where you have your integrated facility of cement and what are the markets which can be conveniently served actually to those markets. So it's a question of taking integrated holistic approach of putting up either bulk terminal or grinding unit.
Right. But again, sir, we don't see much of bulk cement, bulk cement terminals on the eastern coastline. So what we have is pretty few, actually.
So, because in the east it is not there, because everything is to be moved by rail only, and the rail availability of rakes itself is a major challenge in Eastern India as of now. So, there is no like the sea movement, which is happening from Gujarat to the southern side. It's purely the land movement because the most of the cement is coming to Eastern India from Chhattisgarh cluster, actually.
Sure. Sir, I'll just squeeze one bookkeeping question. Will it be possible, will it be possible for you to give a split of OPC, PPC, PSC and composite, probably for the last fiscal or probably for the, probably I can take it afterwards?
What did you ask?
Product mix, OPC, PPC, PSC and composite.
Everything is blended is one, and rest is OPC.
Yeah, so I wanted to break that thing up. Probably I'll connect offline with...
Sure, sure.
Thank you. Thank you so much.
Thank you. The next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Yeah, good evening, sir. Just one question left. So Grasim will be launching its paints venture soon, and, at the time of, the foray, there was some sort of discussion that we, that the wide cement distribution network will be used of UltraTech. Any sort of compensation or benefit we will get, any quantification since it's very close to launch now?
We are working on, you know, business sharing agreement, but as far as dealer network is concerned, it's a free market. There's no really a royalty that we will get and from them for accessing those dealers because they are not our private domain. They are not our proprietary concerns. They are individuals whom anybody can approach to do business.
Okay. So nothing meaningful from this?
They are, they are working independently. We have no role to play in their working model or whatever they are doing.
Understood. Understood. And, and just if I may, second question. I mean, if you see from a industry perspective, last 18 odd months, there's been three or four big M&A announcements by us and by a few peers. Over the next, say, one, two years, do you see there's further consolidation happening in the industry and any sort of broad capacity, you would like to, guide us to? And what sort of consolidation is left in the industry that could happen?
I think consolidation will be a theme for a few more years. Things will keep happening, as we progress along, as the industry progresses along. That is a given. There are lots of names, and I'm sure you would know them yourselves, instead of me for me to repeat them on the call. The names are quite evident who will be there on the radar.
Got it. Got it. All right. Thank you so much, and all the best, sir.
Thank you.
Thank you. The next question is from the line of Vishal Periwal from IDBI Capital. Please go ahead.
Yes, sir. Thanks for the opportunity. I think in the call you briefly mentioned that the cement prices in quarter four is slightly lower. Region-wise, will it be possible to share how they are currently?
I don't have that immediately.
Okay, fair enough. And, second, I think you did touched upon the fuel cost, will be lower in quarter four. So the 6%-7% number, that is for this particular quarter, quarter four, on a quarter-on-quarter basis or, it is like, six to eight months?
Two quarters safely.
Okay. Okay. Sure. So one can say that probably a split between quarter four and quarter one, like-
Yes.
Off.
Yes.
Okay, sure. Thank you so much. Thank you.
Thank you. The next question is from the line of Navin Sahadeo from ICICI Securities. Please go ahead.
Yeah. Thank you for the opportunity. So just one question. You've given the plans of Phase 3 coming in, you know, and capacity by FY 2027, but is there any indication how much we could see in FY 2026 as such, or it will be like a lean year as such?
No, no, no, no. So it will be spread, and keep coming gradually. As we progress, you know, on work, we will give a further granular schedule.
Sure.
Because right now, as I mentioned, technology orders have been placed. A couple of sites have started civil work. Major work will start, I'm assuming, in 2025. Once there's traction, we will give a schedule the way we have given the schedule for Phase 2, we'll give a schedule for Phase 3 as well.
Understood. We look forward to that. And just one more question. You said for the quarter, the blended cost is around $155 , and within that, petcoke was more like $126. So at current spot rates, which are more like $115-$116, the blended cost will be around $130-$131 , which is roughly $20 savings from current savings?
Everything gets converted, everything is at $115, and you have the math.
Yeah, provided you are able to get $150-
Everything.
Shipments, actually. The one shipment gets over $115, but you all know, well, that the availability of petcoke is very limited, and with every parcel, the price gets changed.
Okay. Fair comment. Thank you. Thank you so much.
Thank you. The next question is from the line of Amit Murarka from Axis Capital. Please go ahead.
Yeah, hi. Thanks for the opportunity again. So my question was on the carbon trading, which the Indian government is now looking to implement, the CCTS scheme, that is. So could you help understand, like, I believe the trading will start in FY 2026 and FY 2025 will be the year when the monitoring starts. So where do you think the benchmarks will be, and is there any potential cost that would come in because of that?
No idea whatsoever. I think I will, I'll also learn when you learn. Let me know if you come to know about something.
I think there is a lot of talk, but I think it is too early to get a real sense because there are multiple levers that the government is yet to take it in.
Okay, okay, sure. Got it. Also on this, the blended fuel cost of $ 150 and the petcoke $ 126. So the coal, which means implies about $ 170, $ 175, correct? I mean, if I'm not wrong in assuming a 50/50 split. Spot coal, as I can see, at least RB1 and all, is now at close to $100, $105. So, the difference seems to be quite big in that respect. It's just if, if my calculations are correct.
So, Amit, this is at 7,500 CV.
Okay, got it. Got it. So, but what is the split between petcoke and imported coal right now?
50/50 percent in terms of,
44%
44%
44%
44%, 46%.
Yeah. Yeah, you're right, sir. 44%, 46%.
Lastly, Kesoram rebranding strategy, if you could highlight upon, like earlier, we have seen you shift quite fast into UltraTech brand. So will the strategy be similar here, or will you go slower?
So we are not doing anything on Kesoram as yet. First focus is to get regulatory approval. We'll start working on it after that. There's plenty of time.
Oh, okay, thanks. That's all.
Thank you.
Thank you. The next question is from the line of Aman Agarwal from Equirus Securities. Please go ahead.
Yes, sir. So thanks for the opportunity. One question from my end on the eastern market. So, you know, many peers have been highlighting for quite some time about the slower slowness in demand in the eastern market, especially in states like West Bengal and Bihar. What would be your take on that? What will be key reason why, you know, demand is still not panning out as buoyant as other regions?
I think there have been, as I'd mentioned in my commentary also, there have been fiscal challenges in the states of Bihar and West Bengal, because of which there have been a slowdown.
Okay. And then, second, just lastly on industry growth that you, you would be expecting for 3Q. I'm sure you said that UltraTech has kind of grown better than the industry. Any number you would like to assign for the industry on, on-
I mentioned, I think, we expect the industry to be anywhere between 3%-4%.
Oh, sure. Thank you.
Thank you.
Thank you. Ladies and gentlemen, that was the last question. On behalf of UltraTech Cement, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.
Thank you.