Good morning and welcome ladies and gentlemen to Alta Tech Cement's Earnings Call for Q4 FY 2021. I thank everybody for joining in and I hope and pray that you, your family and friends are all safe from COVID. The second wave is hitting our country badly and we are seeing cases all around us. We as a company and Aditya Birla Group are doing everything possible to help the people in need. I pause here for a moment to pray for all the people who lost a battle to COVID and for those who are fighting it.
Life goes on and so does work. I will be brief today in my commentary and happy to take Any questions in the end for which our Managing Director, Mr. Keshi Jhamal is also present on the call today. This has been a phenomenal quarter and results of Cement companies are speaking for themselves. The Indian economy has shown a strong resilience against the pandemic and the government support has been unparalleled.
Cement consumption has been at its best in FY 2021 barring the quarter 1 of last year. We at Altratek have been focused on what we know best and that is Cement. Ultratech has reached a capacity utilization of 93% for the quarter and March 21 was a record 99% which is very heartwarming and reassuring about things to come. It put all our skills to test to dispatch nearly 9,000,000 tonnes of cement in 1 month that is on an average 300,000 tonnes of cement a day and ULTRATIG did it in style. The complexity of the scale of operation is to be looked at in light of the dispatches being done from 54 locations across the country.
Considering the Indian cement demand of 350,000,000 tonnes a year, which is roughly 1,000,000 tonnes of dispatches a day needed 0.3000000 tonnes of cement. This gives you a perspective about of what Ultratech is all about. This is one of the efforts which has helped us generate a jump in our net profits by 60% in this quarter. We have been leading the markets right and taken advantage of the tailwinds of growth going ahead with our expansion of 90,500,000 tonnes. We believe that India is on the brink of a jump in cement demand.
Per capita consumption of cement has already gone up from the lows of 190 kilograms s to around 250 kilograms s per capita list, which clearly show that Indian Cement Industries is in an upswing. Our expansion program is on track barring a bit of a slowdown due to the current wave of pandemic. As the analysis and reports coming in from all over, this shall also pass. The second wave also should come to an end and we will we don't think that we will lose any time in ramping up and be on course to commission our 19,500,000 tonnes by the end of March 23. The input costs have unfortunately also been on the rise casting a shadow on the profitability of the industry.
Spot prices of pet coke as you know have shot up from the lows of $60 per tonne to around $1.25 to 1.30 dollars per tonne already. Gazelle has also been continuously going up resulting in the 2 biggest cost components that is logistics and power and fuel putting pressure on the profitability for the industry. We believe that pet coke will start stabilizing As we see the restart of Texas refineries, which had suffered recently due to floods. Also as the COVID vaccination program in the U. S.
Keeps making progress, there are increasing number of people returning back to work in the refineries thus helping increase the output in these refineries. This will lead to increase in pet coke production and Consequently, pet coke prices should also stabilize, which we believe should happen by the end of in the second half of this calendar year. This meeting is being recorded. This call has been hit with the level price increase, but we are doing everything possible to manage this cost. Logistics is a big science and we have been investing heavily in digitalization of our logistics network which has been bearing fruits.
And in spite of increase in diesel costs, we have been able to bear the pressure of rising input costs. Demand is very robust and continues to surge from all corridors. While the initial thrust came from the rural market, the infrastructure segment picked up as the government spending gained momentum and now we started seeing gradual improvement in the urban real estate, No thanks to the pandemic. With relaxation in stamp duties in Maharashtra and some other states I think, lowest possible interest rate regime and the increase in the need for space. We believe that this growth in consumption will continue.
Towards the end of the Phase 1 of day 1 of COVID, the government had started expediting the projects, making sure that the payments to the contractors are released on time. We continue to do so, but unfortunately the lockdown pressures are withholding project work. I must talk about cash flow management and Ultratech which continues to yield results. Tight working capital has held good cash flow during the quarter, reducing our leverage by a further nearly INR 27,000,000 crores. In this financial year, we have deleveraged rapidly reaching a net debt EBITDA of 0.55x from a peak of 3.3x at the end of last acquisition which was 2018 December 2018 October December 2018.
Towards the end of March 2021, we prepaid our long term loan to the extent of INR5,000 crores. You will start seeing the benefit of reduction in interest costs on our P and L from quarter 1 on account of these prepayments. As the year progresses, we are confident that there will be some more prepayments that we will do during the year. I've already mentioned about our 19,500,000 tonne of expansion. All critical orders have been placed.
Civil work on all the sites has started off. The 2nd COVID wave has slowed down work a bit temporarily. But as I mentioned, we are hopeful that we will not we will maintain our timelines on execution of these products. For the Dalla Super Tinker Plan, I'm glad to inform you that we have received the Stage 1 clearance from Ministry of Environment and Forests, MOEF. And we hope to complete the formalities by end of September 2021.
Thus this gives us confidence that the plant will go on stream before the end of this fiscal year and provide relief to our Eastern and Central markets requirement of clinker. It's a 2,300,000 tonne of clinker plant. In the last meeting, I had told you about our RMC starting to play a bigger and a far more important role. Well, we are now 132 plant network, up from 109 plants at the end of December 2020. In Alta Tech, RMC is one of the largest internal customers for Gray Cement and generates an incremental margin over the Gray Cement margins.
Nagpurra Cement has been doing very well. We operated Q4 with almost 85% capacity utilization serving the markets of Gujarat and Rajasthan. Century assets have not stayed behind operating at 90% plus capacity utilization. All the operating costs Optimization plans are in place except for the markets of Bihar and Shakisgarh where We are yet to do the brand change, all of the markets brand change has happened, accounting for almost 77% of Century's output. Shaktisgarh as we have already mentioned earlier will continue with the old brand.
And Bihar would count for 7% to 8% of the Century Plan. You are aware of the amendment in the MMDR Act. Ultratech is the only cement company like a good corporate citizen that continued to pay the royalty as per the old MMBR Act on the limestone raised from the acquired cement units. As of March 28, this additional royalty has been withdrawn and we stand to gain by way of reduction of our cost of royalty that was being incurred. The story of this quarter will be incomplete without telling you about our work on sustainability.
We are targeting a reduction in carbon emissions by about 27% at the end of 2,032 over the base of 2017. That is the high level of confidence that we have committed to pay additional interest on our U. S. Dollar bonds that we raised in the last quarter. And there is if we don't meet the emission targets and there is no better recognition for Algortech's commitment.
This being our maiden debt issuance in the offshore markets, the 1st company from India and only the second out of Asia to issue a sustainability linked bond and achieving sovereign pricing. That is Alta Tech for you ladies and gentlemen. Thank you and I hope you decipher my message in the last slide of our presentation. Wish you all a very safe time ahead And I hand it over to hand it over for the questions. Thank you.
Thank you very much. We will now begin the question and answer session. 1. The first question is from the line of Sumangal Newadia from Quota Securities. Please go ahead.
Yes, good morning and congratulations
on a great set of numbers.
First question, Mr. Daga, is on the balance sheet and on the capital allocation. Now we are impressively deleveraging every quarter And in couple of quarters, we would be net cash. And given our expansion plans already announced, it appears that we will be approving a lot of Cash balance on this. So in terms of capital allocation priorities over the next 2 to 3 years, can you share your pecking order Whether you would like to keep some cash on books as gunpowder for any future inorganic opportunities I was expecting good dividend.
Or in case there are any international or global or non core And Vishnish, Ultratech would like to pursue. Thanks, Umangal. And I think I should have Spoken about our capital allocation policy in my commentary, but let me give you guys an overview. You would have seen that we have stepped up the dividends. The money has to go back to the shareholders.
You are absolutely right that the cash flows that we expect in future years will be very good. On 111,000,000 tonnes of capacity with a 71% capacity utilization for the year. The free cash flow was in a close to 5 digit number, EBITDA being close to INR 12,000 crores. This number with a 100 and Satish is going to go up further. As for international acquisitions or international foray, no, there are no plans as yet.
I guess we have enough to do in India. Several markets are wide open for organic There will be opportunities for inorganic growth for which we will keep gunpowder on the balance sheet and excess cash will be returned to the shareholders. I hope that answers your question. Yes, it does. So, taking question on the first line, so getting to FY22, Bhakti, what are the fuel cost areas which you would keep an eye on or a key risk of inflation, Whether it is the flat raw material prices in terms of flat cash or petco?
And So if you could say that what is the flexibility for us to switch between alternate fuels and even thermal coal in case Spectro Keep inflating the way it is. So all our plants are multi fuel and highly flexible on switching on an instantaneous basis from pet coke to coal or different grades of coal. It's a Fuel mix that has to be managed, that is never a constraint. And in fact, this quarter we reduced the dependence on pet coke and increased Coal to manage the fuel mix, which has helped manage our costs as well. As for These costs none of them give us flexibility.
Fly ash, Coal, petco, diesel, if these are the main cost drivers as a buyer, We can only strategize, try and beat the markets, lock in quantities at the optimal prices. But spot prices are not in anybody's control. So we do our Planning, pretty solid. And I think Alteryg as a company with its Size and Scale is very well placed, very well organized, very well connected in the international markets for sourcing, in the domestic markets for fly ash and Whatever best is possible, I think Alticek is able to get the best. Understand.
And if I may just squeeze in one more question on Slide 14 on your demand chart. After many quarters, there is green And now in the Q1 we are hit with COVID. So this time around this rural demand which has been a key Trend area for the industry, is there significant risk? I know it's quite a dynamic situation, but any early thoughts you would like to share, sir? No, it's too volatile or too unpredictable with and lockdowns.
And I mean, life is more important. I think it's now the question of how The country fights this menace of the pandemic. Once that is out, I'm sure History will history is very short like last year history will repeat itself. We are already seeing Everybody's authority on COVID. We are already seeing reduction in numbers in Maharashtra and Gujarat and the focus is now shifting to other states and I'm sure other states will also start seeing recovery.
We are seeing demand sustaining and improving in Gujarat and Maharashtra. Understand. All right. I'll get back in the queue. Thank you and all the best.
Thanks, Umamdev.
Thank you. The next question is from the line of Vivek Maheshwari from Jefferies. Please go ahead.
Good morning, Atul sir.
Good morning, Vivek.
So a few questions. First on this Limestone royalty, the change that you spoke about, so That helps Century, JP West as well as JP all 3 and Binani merger. Yes.
All should also happen based
on the as in Nadwara, merger should also be now should be on the cards given that there is not going to be any limestone implication. Is that understanding correct?
Yes, we will. So we still have to do a lot of cleanup on Nadwara balance sheet. The litigation cases keep popping up everywhere. There are so many cases and luckily we have a Supreme Court blessing. I don't want to do the merger till we have absolute clean balance sheet on Nadwara.
So maybe FY2023 will certainly go ahead with the merger of Nadwara, if not by the end of this financial year. So it's a matter of it's within our control. And yes, the Royalty benefit is there on JP as well as all JP assets as well as Century assets.
Sorry, can you could you remind me, sir, JP West, whether Limestone Royalty It's paid on that one as well because I think the merger happened probably before the regulation change and or maybe I'm a bit confused on that.
No, no, no. So you see we had acquired JP Asset. There is nothing called JP West and actually you were talking about Seavagram That's Chevron acquisition, yes. So Mukesh, is
already applicable on Chevron also?
Yes, because the transfer has been done later on.
Yes, yes. So there is a huge amount of in fact, You will be surprised that there is one plant of Grasim transfers, which the government delayed doing the transfer and put penalty not penalty, put royalty on that also. So the JP West that you talk about also attracted royalty. The rest of JP that we acquired also attracted royalty as well as Sentry assets.
Okay. Can you would it be possible in terms of just quantifying it in terms of capacity which gets Impacted or rupees crores whatever that number
Bit of capacity, I'll give you a number, yes, it's INR 200 crores plus per annum. That's the benefit.
Okay, great. And that starts right from 1st April?
From 28 March 2021.
28th March, okay, got it. That was one. 2nd on the dividend payout, so you have elaborated In the earlier to your earlier response, but just to get it right, so let's say that this year's payout as in F21 payout has been about 19%. Is that what the number so broadly 90%. Sorry?
Yes, 19.99 or 20% is what I would look at. And the Board had adopted a capital allocation dividend policy of ranging from 15% to 25%. So I think we are going to sustain and improve our dividend as a percentage to net profit. So 20% is here.
Got it. Okay. Sure. That is second. 3rd, sir, on In the last call you have had indicated that you have let's say a low cost fuel inventory going up to April or maybe early part of May.
Can you just Give us an update
now? We are managing our inventories and procurement processes, procuring from wherever possible. And I can only share with you that our cost will be better than the industry.
Sure. And lastly, can you just quickly also talk about the so you have covered demand, but The local restrictions impact, let's say, was there a material difference between April 1st fortnight and second fortnight? And in terms of, let's say, Maharashtra being an example, While construction at site is allowed, but what are you seeing on the ground right now?
It's Too unpredictable, Vivek. I don't want to say anything which will be dramatically which will change dramatically in the next 10 days. So let's watch this quarter. Let's not take decisions on 1 month, one day per se.
I see.
And I'm sure you guys have your channel checks, the infamous channel checks that you will and can figure out. I'm surprised you did not ask any question about my last slide.
Anyways. I'll take it offline with you, sir. Thank you very much.
All right. All right. Thank you. Yes.
Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead.
Hi, sir. Thanks for the opportunity.
To interrupt you. May I request that you please increase the volume of your phone? Mr. Shah?
Ritesh, a little louder please. Can't hear you.
Mr. Shah, please increase the volume of your phone. Shambhir, you are not audible, sir.
Yes. Hi. Sir, I'll just repeat the question. So my first question is on conceptual chemical. How do you see the allied category for ultrasonic program?
Obviously, the company has a right to win. If you can provide some color on how much revenues we are trending right now and revenue is serious business going forward? I can't hear anything that you're saying, Ritesh. Sorry, am I audible? You are audible, but It was garbled.
Your voice was garbled. Sorry for that. I'll just repeat it. So my question pertains to Construction Chemicals. How do we see this business going forward specifically wherein the company has a right to win?
If you can provide some numbers on where we are right now And where do we see this going forward that will be useful? I will reserve a commentary on what we call BPD Building Products division as part of our foray. We are going great guns ahead and this will become one of the big drivers in Ultratech. Numbers, it's too difficult to put numbers at the moment. We have discussed this in the past also, Ritale, we are very focused.
I told you about RMC and I have shown you the numbers this quarter and RMC is going to go full steam ahead. So is BPD and when the time is right, I will speak about BPD in much more detail. Sure, sir. Sir, second question was on R and C. You did indicate that we have increased the number of plants from 109 to 132.
But sir, can you allude over here, has the industry gone from shift in cost structure or basically the way in which the industry operates, Specifically on transit mixture, is there a structural change? I think post COVID, the business model did get Reversed a bit. Are we back to normal? How should one look at RMC as a business? RMC is a big growth engine.
And in the lighter vein, if I can say, we did Ultratech decides the future of RMC. But honestly, RMC is going to be a Big element of construction industry, people are realizing the benefits, construction sites are realizing the benefits buying RMC instead of doing mixing RMC on-site and that is what is paying off. And this is It's how we try and educate and give a better product, better service to our customers. Okay. Sir, I have more questions over here.
Sir, just last question, under the amendments, one of the things which came out was That the leases which don't have peers on it, basically they got lapsed or the same leases got lapsed. Just wanted to ensure basically get comfort from you that for all leases which Ultratech has, basically they are We have 0 lapses. No, no, no. We did not have any lease lapsing. All are secured.
That's quite useful, sir.
The next question is from the line of Amit Muradga From Moti Laloswala. Please go ahead.
Yes. Hi, good morning, Mr. Jalal. Just turning on it. Yes.
So just firstly, your question on the capacity update. Amit, there is a lot of background talk in your from your side. I guess it is better now. Yes. Thank you.
Yes. So I was asking could you provide an update on Superdala and Vara2? Yes, I did mention about Dalla Super. MOEF Stage 1 clearance has been received for the planned land. Unfortunately, because of COVID, the next step which is payment of dues etcetera is spending.
We hope things settle down and we will start work on the plant and be ready with the plant By December end hopefully January March quarter should see the production coming out of Dalla Super, that's a 2,300,000 tonnes of clinker. Bara has already got commissioned, Line 2 has already got commissioned, railway sidening has already got commissioned and at last I remember it had reached capacity utilization of upwards of 70%, 75%. Okay, fine. And also on the fixed costs, like last year obviously post COVID we had seen industry cut down on spend. But now again, like we were on a recovery mode, but now the demand is again looking a bit shaky.
So can we now expect like Spence like whatever dealer promotions, ad spend and all and other costs such things getting cut in? It's natural. Jomali, you want to comment? Yes. So I would like to say yes, it's a very dynamic situation.
We have seen that the Overall environment has changed after the first wave, everyone was released. But in last 1 month, all we know that things are again At a different stage actually. So yes, we are quite consistent about that. In case our problems Continues, obviously, we may have to look for some post cutting measures again, the way we did in the past. But yes, it's I would say it's little early to conclude that we are going full blast from The other 4 suspects.
So to supplement what Jainwati just mentioned, Amit, We have shaved off nearly INR 500 crores over FY 2020 because you see there is inflation in every element of cost. Even if I Assume a 5% inflation that inflation has been nipped And we are looking at fixed costs at almost the same level as FY 2020 only. So there is a saving which is kingdom. Okay. Sure.
Thanks. And also like on RMC, just had a simple question. In Presentation you've mentioned the IMC volume is up 31% Q o Q, but revenue is up only 8% Q o Q. So why would we be such a big consolidation, I mean just to understand? No, it's not One second.
Ankit, can you correct the number? Tell me, RMC 32% revenue increase also year on year. Arun, this is Q o Q. Last quarter revenue was mentioned at INR620 crores and in the presentation the volume is mentioned 31% or 32% of Q o Q. Let me give you a clarification in a moment.
We'll go on to the next question. Mukherjee, just look up the numbers and Be ready with the clarification. And also on the fuel mix, could you share your current fuel mix? I guess pet coke would have gone down so Yes. EdCo has gone down to under 30% and imported coal is up to 60% plus.
Okay. That's all.
Yes. RMC and other projects, we give the combined number, Which is 18% higher than the last quarter.
Okay. I'll take it offline because last quarter number Yes, sure. Amit will explain it to you. Mr. Muradka, is there anything else?
Yes, that's all. Thank you.
Thank you. The next question is from the line of Shravan Shah from Dollard Capital. Please go ahead.
Yes. Savi, for clarification,
on Page number 1718, the volume in the presentation, There is some calculation mistake in that. So India operation volume is 26.59%, overseas is 1.41%. If we add together, It is not telling with the console number. Same is the case with the annual number. So first, if you can tell us what's the exact Number console plus India plus overseas for 4th quarter and for the full year and it's good that we Have shared the number in the presentation on the wide RMC everything.
But on the annual number, there is no RMC annual number. So Is it possible to share the same way 4th quarter number we have said, grey RMC white export For the full year of FY 2020? And is there any restatement of the FY 2020 annual numbers because gross number does not also tally? So Nik, some clarification on that part.
I don't know how you are calculating the numbers. If you can connect with Ankit offline, he will the number that we have mentioned in the slides are all audited and accurate numbers. There is no error in the numbers. Sorry, this is for clarification you require. If you can connect with Ankit, he will be helping you on that.
It's between consolidation, a quick clarifications. Between consolidation, there is a elimination of intercompany transaction. To that extent, you cannot do a math. Because you see, Nagdwara supplies cement to Alsatek. So that I can't count double.
No, sir, I understand. But even if you just look at 26 €0.59 for this quarter India operation number and you add €1.41,000,000 overseas, the number tell you that 28,000,000 and we mentioned that 27,780,000,000. So that is a difference of 0.22. And if I look at for the full year, the difference is 1,000,000 tonnes. So that's what I say, it's a Clarification and the request to share the same way the annual number for R and C, White and all these, the way we have shared for the gray.
And the question is my question is most of the things is answered. Couple of two things. One is what's the trade non trade mix for this quarter For the full year FY 2021 and what was it for FY 2020 restated now and what is the late distance same way for this quarter Full year FY 2021 and the same for FY 2020 and Q4 FY 2020.
So trade share is about 67% for this Quarter lead distance is about 4.40 kilometers.
What is for
Full year FY 2021. 69%
69. Yes. What was for FY 2020?
Ankit, what was your FY 2020 full year? The full debt must be lower actually. Yes, we'll just give exact number, sir. Okay. No, Shishan.
No, Shishan, all the best of it.
Keep the good work going on.
Thank you.
Thank you. The next question is from the line of Madhav Mehrda from Fidelity International. Please go ahead.
Madhav, are you there?
Mr. Murda has left the question queue. We'll move on to the next question from the line of Indrajit Agarwal from CLSA. Please go ahead.
Good morning, Mr. Daga. I have a couple of questions. First on the utilization levels, as you mentioned our March utilization 1st close to 99%. So is there any market where we have struggled to cater to demand with high utilization or we have managed to drill through?
If I had more cement to sell, we would have sold more. Sure. So on that note, you mentioned about keeping the powder dry for inorganic expansion. Do we have a priority order in terms of which regions You would be scouting for assets more, what would be our focus easier? Except for West, where we would get restricted by consolidation From CCI's point of view, all other markets are wide open.
I am keen on Northeast, I mean, we are keen on South, we are keen on all the markets. Yes, that's helps. One last question. Current levels, what would be the price differential on landed versus Sorry? The price differential between landed, pet coke and imported coal on a blended basis for us?
One second. If I look at Fuel price Consumption rate about I'll tell you percentage gap You're asking about imported coal and pet pork? Correct. So there is a gap of about 20%, 25%. Imported coal is 3%.
Yes. Okay. Thanks. That answers my question. All the best.
Thank you. Thank
you. Thank you. The next question is from the line of Swagato Ghosh from Franklin Templeton. Please go ahead.
Yes, thanks for taking my question. So, Dara, it's actually a very simple question on realization. Your realization was up about 1% QoQ, But from the jingle channel check, the sense that I got was, over the sector, it was down QoQ as the pricing increases came in later part of the quarter. So can you just help me understand that how did you bump this trend of realization?
So let me I'll ask you the question, your channel checks cover how many people. We deal with 60,000 leaders across the country. So what happens is the price improvements depending upon which market, What date the price improvements take place will have an overall impact. Now let's say if you are dealing with a Regional players and the price improvement has taken place on 25th March. Obviously, they will not have huge impact.
But as a Pan India player, when we are seeing we are Selling all across every price improvement helps every price change has a positive or a negative impact.
Yes. So I just want to understand, so was your pricing improvement in line with the overall Improvement like Liza said, my channel checks. I just want to understand, did
you outperform the market or growth was in line? We have it goes to show we have outperformed the market. Right. So I just want to like understand whether this is like for theatres for the quarter or can
we do it because of Scale and obviously a bit of a size can be like continue to do this every time.
Because of scale and size and the brand, The pricing capability or the respect for the brand is higher than respect for or the willingness to pay for a Brand B and a Brand C. So obviously price improvement for Category A brand is far higher.
Okay, fair enough. And sir, one other
It's a sustainable methodology, if that's what your question is. It's a sustainable methodology.
Okay, got it, got it. And so the other question I have is because you're the market leader, you would have strong market intel. I wanted to get a sense of what has happened to the tail of the market during this last disruptive year. By the tail, I mean the small, small 1,000,000 to 2,000,000 ton capacity players. Have some of them gone out of market or have been severely stressed or like the most
There has been an impact on smaller players because in the initial period of COVID when we discussed, There was a time if there is a 2 plant company and if there is a lockdown in one of their plant locations, 50% of their capacity is gone. As compared to that, if there was one plant of Alta Tech was in a lockdown situation, We or any large company would have the benefit of servicing its customers from other plants, sacrificing any distance but servicing the customer and gaining market share. I made a big statement earlier on in my commentary. We sold 300,000 tonnes a day as compared to 1,000,000 tonne a day of all India that speaks.
Right, right. That's definitely huge. So, sir, I
just want to understand when you
look at the demand supply for
the sector, The supply side, we look at
a €500,000,000 to €570,000,000 kind of a supply number. Do you think that the
tail might Shrink and this overall number might come down if we The deal might Those are the 1,000,000 tonnes and smaller pairs of 2,500,000 tonnes capacity pairs will shrink. But you will have larger players like Ultratech and other larger players Investing in capacity because there is a huge potential. I believe that we will see CAGR growth, large CAGR growth in India for a long period of time. These projects which are under execution are very cement intensive and time consuming. So we will India will have a long sustained period of demand And capital intensive nature of Cement Industry will not let smaller investments sustain.
We have the capability of investing and putting up ground wheel expansions at a cost of $60, $70 a tonne or even lower. It will not be possible for everybody.
Right. Anshul, if I may squeeze in just one small question on your government project orders. Have you seen any great pricing pressure over the last one year because there has been
No, no, no, no. Government is focused on Project execution and fast tracking projects. No pricing pressures and pricing are generally long term contracted prices with the government projects. So I'm really happy or actually this is the most sensible thing that the government is doing to generate employment to bring back labor to project sites. So that the government is now releasing payments to the large contractors on time and pushing the is on time and pushing the pedal on execution.
And let's not talk about yesterday and day before or in the last few days of COVID. But generally, the underlying current is that we want to increase the execution of budget execution at the ground level, so that employment generation is also there and labor is available. Yes. Atul, just to add up on, as we said rightly, unlike last year, this is not the case because all projects Practically running yet number of labor might have reduced because of some sites say now maybe 60% labor Maybe you're working, but major projects like road, metro, all projects are owned and if I talk about Bombay, the postal note project is on. No.
So the government is fully committed before this has linkages with the government also.
Thank you and all the best.
Thank you. If the person from Dholod Capital is still on the line, 26.59 plus 1.41 is year 28 And the number reported is 27,780,000 tonnes because 0.22 is again elimination of domestic sales Our cement supply to Sri Lanka. So it's an elimination only. The numbers are not wrong. Yes, go ahead.
Thank you. The next question is from the line of Ashish Jain from Macquarie. Please go ahead.
Hi, Sarvak. Good morning. Can you give some sense like to give a color of how Inpra is doing on demand side? Can you give some sense of how bad rural is as we speak because the impact on rural this time has been much more than what it was last year? And if you can also give some sense of how our volumes would have dropped in April over March, any sense of that will be very useful.
I don't want to comment on 1 month, one day, 1 hour of sale. So let's watch this quarter go by too unpredictable. I know my April numbers, but I'm restricting myself from commenting on them because Let's say June picks up and whatever work was lost in April or in There is a work loss, there is a construction slowdown, no doubts about that. We'll come back to you with the exact numbers at the end of the quarter. As for infrastructure, Jaimar ji already mentioned and yes, all sites wherever possible work, Work has not stopped.
So this lockdown, slowdown or perfuse are not an economic lockdown. Economic lockdown is where You have to shut down everything. That has not yet happened in the country. So infrastructure is growing. In Bombay, you see our coastal road project is going continues, highways continue, work on metro is continuing, Everywhere work is going on at a slower pace, but work is going on.
My question is more for Google. What kind of impact you have seen on the Google demand this Thanks. I don't have a daily number, but yes, there is a slowdown. Then I said I do want to And it's a slowdown, but Akul, just to tell the slowdown, obviously, because we all know there are no downs across the country in different So there is a slowdown, but it's not slowdown where there is a huge worry for kind of thing. Yes, Obviously, with all these kind of environment, pandemic environment, there is a definitely slowdown.
And March and April, as you know, the although there used to be different Yes. If we will in any case be lower than March, March is a huge mark there, right? If I did 99% capacity utilization in March, in normal circumstances without COVID also April would not have been 99%? Yes. That's a normal trend.
And second, have you kind of give a sense of region wise how the pricing moved in March over So I know overall number is 1%, but can you give some color on region, but how it moves? I'll give it to you offline. Sure. Okay, great. Thanks.
That's the comment. Thank you.
Thank you. The next question is from the line of Gaurav Bhataria from Morgan Stanley. Please go ahead.
Hi, thank you for taking my question. Sir, two questions. Firstly, on the market share gains, you talked about the initial part of the Yes, you benefited from supply side issues, which other plants were facing. But I think every quarter after quarter, Alta Tech has been gaining market share. So In the recent quarter, there has not been any supply side issues.
So what really has been driving the market share gain for Ultratech? And which regions in particular, if you can show some light that be helpful. Gaurav, can we do a complement? Complement the company sometime. So we had a capacity utilization of 100% plus in the Eastern markets, 90% plus in all the markets, all the other regions and a shade under 90% in South, which South is always supposed to be laggard, but just a shade under 90% in South, that is the kind of demand, that is the kind of euphoria and cement consumption in the country.
And Ultratech is the only company. There is no other company which is in that situation which Our diversity of the spread that we have in the country comes to our advantage. So we are able to service customers from anywhere. The best part is the serviceability, I think the serviceability, we can service from central to east, from west to north to east. Maybe it's certain post, but yes, the serviceability is already and so with our size and scale.
Yes. So Gaurav, we have focused on gaining market share, not losing a single theoretically saying not losing a single order. Understood, sir. So second question, a great move on dividend Of increasing the payout, but I'm just trying to contextualize this. In terms of the percentage of free cash flow, it was probably still 10% and that will probably be the case even going forward because of good confidence on the future cash flow.
What is the Kind of a gunpowder you want to have on the balance sheet to have that optionality of any future inorganic opportunities in the balance sheet? So my aim is to go net cash on the balance sheet. And irrespective of any gunpowder, if I have to leverage For a year, my free cash flow for 1 year will be let's say INR10,000 crores. So we will deleverage and come back to net cash in a year's time if you were to leverage. Having said that, We would carry a 10,000 crore plus surplus on the balance sheet for any exciting opportunity.
Understood, sir. Thank you so much and great set of numbers. Thank you.
Thank you. Our next question is from the line of Madhav Mehrda from Fidelity International. Please go ahead.
Yes. Hi, sir. Good morning. Am I audible now? Yes, Madhu.
Yes. So I just had one question was On the fixed cost side, we had a INR 500 crores saving this year over the last year. I didn't fully sort of understand you said that in FY 2022 we'll maintain it at the same level as FY 2020, is it? That's what you said? Yes.
So if you look at my fixed, Ankit, correct me, Mukesh, Why fixed cost for FY 2020 was close to INR 5,500 crores? Yes. Yes. So if I were to do an inflation on that INR 5,500 crores, I should be inching towards INR 6,000 crores for at the end of 2 years, but we will maintain INR 5,500 crores. We maintained 5,500 crores in FY22.
Okay, understood. Yes, yes. That's the way I count my chicken. Okay. That's all for
my question.
Thank you. Thank you. What happened?
The next question is from the line of Sumita Srinivasan from ICICI Prudential AMC. Please go ahead.
Hi, sir. Congratulations on a good set of numbers. So my question was on the WSS capacity that has been announced, I think the result mentioned that we expect to go to almost close to 300 megawatts by the end of FY2023, which is more than the More than double of the current capacity that we have. So is this mainly coming up in the new expansion projects that are happening? And what will be the I mean, will this come up along with the expansions or after completion of it and what will be the CapEx for this?
All the Finishing that we are doing, we are the integrated plants. We are baking in WHRS in parallel. Today we have reached 125 Megawatts of WHRS and by 2023 or middle of 2024 WHRS would be at TNN 4 Megawatts. Now the Incremental investment, Ankit, Mukesh, can you guys give the number? Around INR1800 crores.
That is the part of overall investment on WHRS. And Akhil, if I may add, because wherever new sites are coming, it is part of our CapEx plan announced for more Yes, it's part of the announced CapEx, yes.
Understood, okay. And what would be the cost benefit We would be likely seeing from this and would that be visible from FY24 onwards, if not, is that?
Yes, it will be visible through 2022, 2023, but if you want to annualize the Benefit of CMN 4 megawatts that will be in 2024. And the cost this will become WHRS will become about 25%, 26% of our total power consumption. On the current, I'll give you all the levers, you can do your own math. On the current network, our power consumption is about 1200 megawatts and this will be 300 megawatts, 304 Megawatts of WHRS. Current Cost of power without WHRS would be 5, 5.5 rupees a unit.
So and so let's say INR5 a unit is the grid power or our thermal power. The WHRS part will be 50 paise to 75 paise a unit. Okay. So 25% of my power will cost 75 bus a unit and 75% of my power will cost, let's say, 5 bus a unit.
Understood. Okay. Thank you.
Thank you.
Thank you. The next question is from the line of Bhavan Shera from INAM Holdings. Please go ahead.
Yes. Good morning, Mr. Daga and
the entire Alta Tech team, excellent performance across FY 2021. So two questions. What was the premium cement now as a percentage of overall Within the cement sold About 7% to 8%. And how it has moved over last year? What?
How much was it in FY 2020? Sorry, it's not 7% to 8%, it's about 10% now. And last year, I think it was 8%. Okay. And any internal targets how this will move going forward as you're planning ahead?
We are looking at going up to 15%. By when, sir? This is on the current new products or value added products and the company is working separately on identifying and bringing out newer value added products. Okay.
So just before the 2nd wave hit India, I think majority of the Indian got impacted in April May, Most of the cement industry projections were close to industry projections of 15%, 16% and obviously, Ultra Tech Being market leader expected to grow ahead of that. Your internal projections on industry still stand there or What will be your view going forward?
I would count pandemic as a temporary slowdown. It's an unfortunate one, but I will want to count it as a bad blip. 2 months, we should come back and I'm scared of reading about the 3rd wave and I don't know how long it will go, but we have to take it in stride. So if June by June things become normal, fingers crossed, People are saying by 15th May things will start improving and just start upsiding. Let's say June things improve and then we are back on track.
The industry is back on track. Okay. And We have to see the project. Now let's say a metro let's say you're in Bombay, right? Yes.
So coastal roads project, they have to complete it And they will push the pedal, whatever slowdown has taken place will be wiped out. So you'll be back to normal speed. The project life is not reduced. The quantity of cement required in a project, the work involved in product is not going down. It's only temporary setback in the pace of execution.
Sure,
sure. And what about the individual home units consumption because that forms a
It's going up. It's going up. It's going up.
Okay. So you're saying the pent up real estate demand last 6 months what we saw a big pickup in real estate will eventually lead to? Okay.
Now if you have started a project, you have done the roof or one wall, you will not leave it there. Now the moment Labor is available, things at home are all right, things in the neighborhood are normal. I am confident of stepping out and buying cement. I'll go out and buy cement, Get my contractor back home and do the job. That's the IHB segment.
Let's be honest, today I am scared personally. I don't want to call an electrician inside my house for any repair work or Mason or the pest control guy, when things normalize, we'll start calling. Similarly, when Things normalize, the work which has stopped on my house, which I'm building in Timbuktu, I'll start work there. So that's the general philosophy, right?
Yes. So last question I missed out, you said you want to maintain net Cash of INR10,000 crores, that is net cash in the balance sheet or you spoke about
Liquidity, liquidity, liquidity on the balance sheet.
Liquidity. And technically you want to be a net cash company, but you're not giving any figure on that?
Yes, Yes. Okay. That sounds great. Thank you. Thank you.
Thank you. Ladies and gentlemen, as there are more questioners, we are extending the call by 15 minutes. Thank you. The next question is from the line of Girish Chaudhry from Spark Capital Advisors. Please go ahead.
Good morning, Couple of questions from my side. Firstly, on the RMC business, if you could also share the margins which you're making and on the Capacity utilization for the year and extending the capital employed in this business just to get a sense on the return in Profile of the business. So the last question first, you will follow the chair if I were to tell you the return on capital employed in an RMC. It's a very high number. Second question was on it will go Yes, it will go way above 25%.
2nd question was on margins. Margins, we would have 5% to 7% over gray cement. Okay. On a transfer pricing that I clarified, it's on a transfer pricing. So RMC is one of the biggest Customers for my Gray Cement, R and D marketing team is separate and the Gray Cement marketing team is separate.
So Gray Cement sell, Gray Cement marketing team sell cement to RMC at the best possible price and then they earn a margin of 5% to 7% over Gray Cement margin. 3rd point on capacity utilization, There is no concept of capacity utilization in RMC because the transit mixer is not allowed to move 20 fourseven. It can run 13 to We run maybe 13 to 15 kilometer distance because we don't want the material to set. So we don't go by capacity utilization percentage. RMC plant might be 30 What cubic meter, million cubic meter cabotan?
60
cubic meter plant, but that's the sizing of the plant depending upon the customers that we want to service. Capacity utilization is not a number to track. Got it. So that was very helpful on the RMC. The other question was that I had a follow-up on the premium migration, the earlier Compast.
So what we have seen is that in the recent past, we are seeing increasingly many players focusing on this and also talking about premiumization of products Moving to 10% to 15%, I'm also targeting closer to 20%. Ultratech, if you see, has the highest Price become product which is Ultratech WeatherClip. So do you think this can slowly get Commoditized or let's just can there be some pricing because in this part of the product profile? See in this space is always an early mover advantage. And when our product has established itself, It is very difficult for somebody else to substitute.
So and as more and more players copy us, yes, there will be Some bit of discounting on the current pricing, but we will have a premium positioning in this product also. Jyavaji, would you like to add something? Yes. So, Atul, because fundamentally, because the brand has its the premium thing, Even if somebody new person is coming in these products, our premium on the new products should continue to come on in the market. That's what the And sir, lastly, kindly, just the I know you shared the Can we take on another question?
I've already extended the call. Let me take other questions. No, sure. Yes. Thanks.
Yes.
Thank you. The next question is from the line of Arjit Datta from Axis Capital. Please go ahead.
Congratulations, sir, on strong set of number of balance sheet deliveries and high dividend payout. A question from my side. Considering cement prices moving up in late part of Q2 and the full inventory impacting cost will be realized in Q1, Can you give some guidance on how EBITDA percent increase will be currently versus Q4 level without considering the operating leverage part Because as you said that Yes, you are asking me to talk Arjith, you are asking me to talk about Q1 2021. I don't want to give you any details. Some guidance?
I don't believe in giving any guidance. Once we whenever we need 1 on 1, I'll explain trajectories and show you directions how things are moving, you make your conclusions. That's a real connect off. All right. All right.
Thank you. The next question is from the line of Sanjay Parikh from Nippon and Demetrius Fund. Please go ahead.
Yes, yes. Mr. Kumar,
please go ahead with your question. Your line is in talk mode.
Move to the next question, please leave on another call.
The next question is from the line of Pratik Kumar from Antik Stock Broking. Please go ahead.
Yes. Thanks for the opportunity, sir, and congrats for great results. First question, when you said that utilization of Anartwara was 85, Century was 90, was it for annual numbers or for 4Q And what are the other hand? I told you about quarter numbers, yes.
Quarter numbers. So what would
be the annual Profit per ton, EBITDA per ton for these assets now for FY 2021? Difficult to well, Nadwara, yes. The Nagwara would be about $1500 a tonne. But the Century asset is very difficult because they are We are totally synchronized with our existing network in the same markets. We should target something in the range of 900 to 1000 For 'ninety three, we would have sort of So from there, I think I have already reached above $800 and now $60 will be realized from MMDR royalty.
INR64 will come as a gain. So INR865 will be there. And I'm sure with some pending improvements, brand And this is that are happening, we will cross dynamic for sure. Sure. And just a second question on your gross debt.
We did some Absolute gross debt reduction by INR 5,000 crores as we mentioned, but our reported gross debt took only INR 25100 crores lower for FY 2021. So yes, what happened was I'll tell you we paid off INR 5,000 crores. We had done a raising of U. S. Dollar bonds, which was INR2900 crores, so net number will be less.
We had also raised On NCD during the year, which was about INR 1,000 crores. So, at that level, you will not see a INR 5,000 crores number. Sure. I will get back in queue. Thank you.
Thank you.
Thank you. The next question is from the line of Kamlesh Jain from Prabhudhasliladas. Please go
Yes. Thanks for the opportunity, sir, and congratulations on good set of numbers. Sir, one question on the part of CapEx, like say, I do appreciate that COVID volatility or uncertainty is there. So how much CapEx can we consider in par For FY 2022 and 2023. Sorry, you're asking for what, how much CapEx cash flow?
Yes, CapEx, yes. CapEx spend, this FY 2020 2, we will look at INR 4,000 to INR 5,000 crores that will be bulk of our cash flow. FY2023 might come down to about INR 3,000 crores and this is largely because of the expansions. And sir, secondly on the cost parts, we have done phenomenal work on the particularly on the energy and the freight, which is the bulk of the cost. Sir, like going forward, like if I see the imported coal cost, it is flat quarter on quarter $7 to $6 So going forward, like say 2 quarters On 3 quarters.
So from the current tables, what could be the cost increase we can see for Artech? I don't think we'll see cost increases, cost should come down. Diesel, of course, is not under our control. Luckily, we don't consume petrol, which has gone up to $100 a little. Petco will come down, coal will come this is what our reading of the international supplies is.
But sir, given the current size is sustained, so what could be the, like I said, as we had moved to coal to at around 61%. So taking that into consideration, I do appreciate that on the freight cost, we can't comment. And there impact has been visible. So but on the energy cost side, how much could be the incremental move which we can see? No.
So what I'm saying, The incremental might be $50 here or there per ton, but not more than that. And July onwards, I can't it cannot be cast in stone, but second half of this calendar year fuel prices should come down. Okay. And lastly, sir, on the overseas. So we have done roughly around INR 251 crores EBITDA there.
So that's also Far better as compared to what the headlines had been there that in Middle East market, the market has not been that strong. But do we see the sustainability on the INR250 crores EBITDA there in overseas operations? Yes. I'm glad you asked about our UAE operations. The brand is very well established.
We would have More than 25% of the market share in the UAE and we are the best Performing we are the best performing That's a comment in the UAE. Thanks a lot, sir. Thank you.
Thank you. Ladies and gentlemen, we will take the last question from the line of Vivek Getha from HSBC Securities. Please
Hi, sir. Thanks for the opportunity. So firstly, I just wanted to get a sense of the volume difference in pricing trends I'll start with my region. I think we did not agree with regard to that, but I think I missed that. I didn't get your question.
I just wanted to get a sense on the volume growth and pricing trends for Ultrafit by region. By region, I think somebody else also had asked that question. Let me give it to you offline, Vivek. Got it. So secondly, just wanted to get a sense that with R and C and DTV being a long term growth engine, What kind of ROE would we target for the consolidated business on a medium to long term from the current 50%?
Lovely question To end this session today, we have reached an ROE of about 15% and I am looking at taking it at least 2 or 3 bps higher. And any time frame that I may ask? 25 by 2025. Got it. Got it.
Thank you. Thanks a lot. 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 for joining us and you may now disconnect your lines.