Ladies and gentlemen, good day and welcome to the UltraTech Cement Limited Q3 FY 2025 earnings conference call. We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore 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, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Atul Daga, Chief Financial Officer of the company. Thank you, and over to you, sir.
Good afternoon and welcome all of you to our earnings call for Q3 FY 2025. First and foremost, wishing you all a very successful and a happy 2025. We often talk about a lull before the storm. Most part of the calendar 2024 was a lull for the cement industry for multiple reasons known to all of you, which we have been discussing from time to time. The lull ended somewhere in December on a positive note. The storm is a positive storm, and we have benefited from a continuous increase in demand, which has also boosted the sentiments on cement prices. We have seen a movement in realizations. Q3 averaged 1.4%, vis-à-vis QoQ . North and West saw the best performance in terms of price improvement, which was more than 3%. January, we have further seen improvement in prices in Central and West.
North remains the star performer, as I said, increasing prices and profitability to the highest. Talking about Star, well, this was an offer on the table which we chose to invest into. I'm talking about our investment in Star Cement. As you know, it's only a non-controlling financial investment. We have been trying to identify opportunities to deepen our presence in the Northeastern markets. Hopefully, this investment will help us understand the markets better and what are the opportunities in those markets for us to grow. When we had done the transaction, there were lots of different numbers floating in the market. I want to clarify. We have purchased 8.42% in the company at a total investment of INR 776 crore. Let me now touch upon India Cements. Open offer was subscribed 110% and concluded on 21st of January at a price of INR 390 per share.
We will now hold about 81.49% equity in the company, and there are regulatory processes to be followed to bring it down to 75%, which we will be doing as per timelines allowed. This will result in our average cost of equity at INR 359 per share. Net debt in the company as of 31st December 2024 is INR 877 crore, INR 877 crore. Thus, the EV of the company at our acquisition cost works out to about INR 12,075 crore for a capacity of 14.45 million tons. I leave it to your calculators and your exchange rate interpretations to derive the dollar per ton cost of this acquisition, which is certainly not $120. It's way below. It's below $100 per ton. Further added to that, the debt will get reduced with cash generation from non-core assets, which the company has.
We have started engaging with our team at ICL and studying the opportunities that lie before us. The initial review gives us an opportunity of debottlenecking some of the capacities to our three plants. There is a debottlenecking opportunity, as well as some brownfield expansion opportunities that exist in another set of two or three plants, which will help us in our growth journey in years to come. Our focus is to turn around the performance of ICL in less than 12 months, starting January 25. There will be some return-based CapEx plans, which are being worked upon. As you know, we entered the company only on 25th of December and have not spent even a month studying their operations. Allow us one quarter to revert with our full plans.
Kesoram now, we are awaiting the last of the approvals for transfer of mines in Telangana and Karnataka, and we are tracking every step. There are multiple steps within the transfer formalities. We are tracking all these steps, and we expect to consolidate the assets of Kesoram within this financial year. Organic CapEx. All our project sites are progressing well. We target closing this year at 185 million tons of capacity. This includes the two acquisitions of Kesoram as well as India Cements. Let's talk about demand. Demand seems to be opening up, which is good for the industry. We are seeing it across all sectors: pent-up IHB demand, infra growth, urban housing growth. Urban housing growth is maturing or slightly slow, but still continues to consume cement. Rural markets are, of course, driven by the housing demand and continue to grow strong.
A point worth mentioning here is that rural demand should be positive with the good monsoons that we have seen, good crops, and good harvest, which will generate good cash flows for the rural markets. CapEx programs have been gaining momentum from the end of Q3, but it is still a long way to go. There are stimulus for mass housing programs which are coming back. Cement demand clocked an improvement in December 2024 after being subdued in October and November 2024, and it is likely to further increase as we speak in the current quarter, quarter four FY 2025, with a pickup in government CapEx and demand overall. General government CapEx, which logged 20% plus YoY growth in 2024, was down about 12% in April to November 2024. State government CapExes were also down. CapExes by PSUs were also not growing very strong.
We believe that the government CapEx will start improving, and consequently, cement demand shall start improving from January 2025 onwards. While April to November was a slow period for cement industry in cement demand in India, sorry, I believe that the demand momentum is picking up, and it will remain strong in the years to come, and Indian cement industry is gearing up to meet the surge in demand in the coming years. At UltraTech, work is in full swing for adding additional 10 million tons- 15 million tons of organic capacity in the year 2026. This will take us to 211, 212 million tons of capacity at the end of our expansion program. Talking about our efficiency improvement programs, which are also on course, winter conversion ratio of 1.45 for this quarter as compared to 1.44 in Q4 last year.
Lead distance is at 377 kilometers this quarter as compared to 400 kilometers when we started this journey on efficiency improvement program. WHRS was at 324 MW, up from 278 MW at the end of Q4 2024. As far as WHRS is concerned, we had spelled out our targets to reach 450 MW for UltraTech capacities. This target will go up to 511 MW of capacity, taking into account the additional WHRS expansion, which will be done at India Cements and Kesoram. 511 MW of WHRS, which will be completed by FY 2027, on our 211 million tons of capacity at that point in time, will account for 24% of our power requirement. Similarly, renewable energy is up at 752 MW at the end of this quarter from 612 MW.
As for targets, we had given out a target of 1.8 GW by the end of FY 2027, taking into account the requirements and opportunities thrown up by ICL and Kesoram. This target is now standing at upwards of 2 GW, about 2.1 GW is what we are looking at to complete, and this will support about 30% of our power requirements on the 211 million metric tons of capacity. Lastly, about fuel. At our size of operations, we don't have too much of a choice but to use coal also as a fuel, given the overall global supply situation for pet coke. However, we have been continuously increasing our pet coke consumption, with our fuel mix reaching about 58% of pet coke this quarter. Our fuel costs have come down accordingly to about 1.76 kcal from 1.84 per kcal in last quarter.
Based on current spot price, we expect our fuel costs to be around 1.7 kcal in the near future. And to conclude, we achieved an EBITDA per metric ton of 964 this quarter, which jumped more than 30% over Q2, and we expect further improvements going forward. Thank you. Over to you for questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take a first question from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Yeah, good afternoon. Thank you, and congratulations for a great set of numbers. So first, on the volume growth, is it possible to share what would be the contribution of whatever six, seven days of India Cements in the results, number one? And if you could give some more regional color as to which other regions, I mean, this 10% odd growth, which region we've grown versus the industry, higher or lower? Yeah, I mean, that's my first question, and I'll ask the second one later.
Or I'll forget your question. Sumangal, so we haven't taken into account the volumes of India Cements in those last seven days for reporting our growth numbers. It does not make any sense. So this is only the UltraTech organic growth. I've already forgotten your second part of your question.
I just wondered, some regional color, which regions have done better than the other regions, and where we think we've gained market share?
North and West continue to do well. I would imagine East was at the lowest rung as compared to the other regions.
South will be the lowest or the weakest?
East, I would imagine, would be the lowest, and South, then you climb up to Central, North, and West.
Okay. What is our sense of industry growth in this quarter?
Industry growth, I think we'll have to wait and watch for some more numbers, but my sense is we should be looking at somewhere around 5%.
Okay. Okay. That's quite heartening to see every quarter we managed to beat the industry. So great, great work.
These are the leaders of the pack.
Yeah, clearly. So my second question is more on the South region. Now, we've seen four acquisitions in the last year, two where we've involved. I mean, what would be our strategy? I mean, whatever you can share with respect to South over the coming year with respect to our brand penetration, use of India Cements, Kesoram brands, and then any market share target versus where we are today?
There are no market share targets. That's the easiest one to answer without having a target, but yes, we would definitely want to keep growing. If I look at the capacity utilization of India Cements, they were at about 57% for the quarter. Certainly, there is an opportunity for improving the capacity utilization from that target entity. Out of their 14.45 million tons, how much is 13 million tons in the South? About 1.5 is in North and 13 million tons in South. So there is the opportunity to increase capacity utilization. Second point, Kesoram, yes, they are slightly better off in terms of capacity utilization. They are operating at about 70%. I don't remember last quarter. 70% is what they were operating at.
So there might not be too much of headroom to improve, but maybe 4%-5% we could improve capacity utilization in the Southern markets for the Kesoram set of operations. As for brands, all of our brands, we will wait, and what is too early to say how we will look at the various multiple brands of India Cements. Kesoram brand is also equally powerful. So it's more about there's no rush to change the brand, but at the same time, brand transitions will happen at the right time.
Yeah. And just a follow-up, sir. I mean, last time, I mean, the profitability of these assets are quite low, even in terms of efficiency, etc. So earlier also, when we had merged JPA, there was some dilution on the blended, in which eventually got transitioned to our levels of margins and efficiency. So what should we expect when we start reporting all these consolidated and blended numbers? What is the transition time we are looking at to bring these assets to our level of efficiency and margins?
Look at least 12 months to improve the performance of India Cements to bring it up to a reasonable level. As I mentioned, there are WHRS investments which have to be done for India Cements also, which is a return by itself. WHRS investments would typically take, if I'm counting work start from January 2025, we would start seeing the benefits of that only towards the October-December 2026 quarter. There will be one leg of improvement that you will see towards the end of 2025. Sorry. Then further improvement after efficiency improvement-based CapEx programs get completed. Similarly, on Kesoram, there are opportunities to improve the cost of production as well as realization. There is a lot of opportunity that exists to improve our logistics costs on a consolidated basis. Now, from our 2025, we had how many? We will now reach about 60 million tons of capacity in South from 20 million tons?
20 million.
From 20 million tons of capacity. So obviously, the density of our network increasing will help us reduce the logistics cost significantly. So there are lots of opportunities that lie ahead of us.
Got it. Thank you so much. I'll join back the queue.
Thank you.
Thank you. Next question is from the line of Amit Murarka from Axis Capital. Please go ahead.
Yeah. Hi, good evening. Thanks for the opportunity. So my first question is on India Cements. So is there any thought around any brand transition or tolling arrangement for India Cements as well, or will it be sold in the quarter final?
Yeah. I think give us some time, Amit. We are studying the opportunity. We've just entered the company from 25th of December. So perhaps next quarter results, we'll be in a better position to give more clarity.
Sure, and CapEx, I think you had earlier guided for a number, but including Kesoram and India Cements, is there any? I think you had guided INR 8,000 crore-INR 9,000 crore earlier for 2026 as well. So what would it go to now?
No. So INR 8,000 crore-INR 9,000 crore of CapEx is on our UltraTech balance sheet. India Cements balance sheet needs to be studied, and it has to have its cash flows to meet those CapEx requirements also. As for Kesoram, I think we were looking at INR 400 crore-INR 500 crore of CapEx for Kesoram, which gets baked into my overall numbers of ± INR 9,000 crore for next year. Because Kesoram, these are the units which we are acquiring, which will get absorbed in UltraTech from day one. India Cements is a separate listed entity.
Just lastly, on fuel cost, you had earlier mentioned that by December, all your higher price contracts will get over. So is that done now?
Yes. That's done.
Okay. But I think you said INR 1.7 kcal. That would still be higher than, I think, market price. I think it's INR 1.4-INR 1.5, I think, for pet coke.
Why I'm saying that's why I qualified that statement by saying that we will have a fuel mix of coal as well as pet coke. We will not be able to do only pet coke. Had I been in a situation to do only pet coke, the cost could come down dramatically since we'll be using a mix that remains slightly higher, and if it is 1.7, it could become 1.6 depending upon spot market. My colleagues were telling me between two days, the spot prices of pet coke have gone up by $4, so it's a continuously moving target.
Got it. And lastly, for Kesoram, could you provide nine-month financials as well?
We haven't seen that yet. It would be there on their own website.
No, I think they're not showing cement business.
It's there as part of notes. It's there. Anyways, I'm asking Ankit to share that with you separately.
Okay. So that's all. Thank you very much.
Yeah.
Thank you. Next question is from the line of Rahul Gupta from Morgan Stanley. Please go ahead.
Hi. Thank you for taking my question. Atul, sir, I understand, like you said, utilization rates for Kesoram and India Cements will improve over a period of time. Can you help us understand how to look at the overall volumes for next year? How does Kesoram and India Cements higher utilization rate help you gain further market share on volumes? So that's the first question.
Okay. So we will go into the next financial year with about 185 million tons of capacity. It's in decimals, but I'm just using a rounded number of 185 million tons. We would look at a double-digit growth next year on our expanded availability. And I would assume a capacity utilization of anywhere around 80%-85%.
Okay. That's heartening to hear. Thank you so much. My second and last question is, I remember until last quarter, you used to give a comparison of fuel cost on a consumption basis and fuel price. So I see fuel cost has come off by 6% sequentially. Can you help us understand where the prices are on a blended basis?
$125. $125, right? $125 per ton. It's not mentioned.
Okay. Okay. Thank you so much. That's it.
Thank you.
Thank you. Next in line is Prateek Kumar from Jefferies. Please go ahead.
Yeah. [Foreign language] . My first question is on your leverage. We have not been given consolidated net debt. That was last quoted for 2Q at INR 8,800 crore, including India Cements. Now, open offer, where are we looking at our current net debt? Also, another related question.
Let me just pause here. I think let me just show this to you first. I'll give it to you first. So INR 3,142 crore is the cost of open offer. Now, India Cements net debt was INR 12,141 crore December. I'll request you to do the math. Note down the numbers and can do the math. INR 877 crore is India Cements. That takes us to INR 13,018 crore. Open offer will be about INR 3,142 crore. That would be the consolidated net debt. So INR 16,100 something. INR 16?
INR 16,160.
INR 16,160 crore at the end of open offer.
Sure. Okay. And why do you say India Cements' net debt as INR 877 crore and not like they used to have INR 2,500 crore net debt? Just a clarification there.
INR 877 crore only. That's the magic of UltraTech Cement. That's why I, sorry, there was a lighter wind. As I said, the earlier expectation was that the EV per ton we have paid is $120. It's not $120. It's about $97 or $98 per ton. The debt actually, as of December, is INR 877 crore.
Okay. So they will be still publishing their financials, right? So that will now reflect a lower number versus.
Two days ago, they had their board meeting. They have published their results.
On balance sheet?
They haven't published a balance sheet, but their press release carried. I have seen their press release, which carried the debt numbers.
Sure. Okay. I'll take that. And just one question on this. Again, India Cements, is there also evaluation of potential merger between two companies and you sort of issuing in case of Kesoram share swap? Likewise, can happen in India Cements?
Too premature. Too early to comment on that. We have to evaluate the assets and how do we operate them? What is the profitability that we can bring it up to? There are lots of litigations that need to be resolved from that company. As I mentioned, there are a lot of non-core assets which we will want to sell. There's no point in transferring those non-core assets onto the UltraTech balance sheet. So as of now, I think give us some time before we can spell out clear plans.
And then last question on your realization. We reported 1.5% for the quarter average. How is the exit pricing versus the quarter average for the quarter?
Sorry? Exit? There are too many, exit December.
Exit December pricing?
it December over?
3Q average?
Over Q3 average. So it was marginally up. 1% up. Yeah, not Q3.
Okay.
Yeah. Just once again, Prateek. Yeah. Yeah. 1%.
So, sir, these were my questions on all of this.
All right.
Thank you. Next in line is Jashandeep from Nomura. Please go ahead.
Hi, sir. Thank you for the opportunity and congratulations on a good set of numbers. Sir, my first question is on limestone, especially in Tamil Nadu. Even if we look at India Cements, I think most of their limestone reserves are in Andhra Pradesh, Telangana region. How is both UltraTech and India Cements placed on longevity and brownfield optionality in Tamil Nadu? Is there enough limestone in Tamil Nadu with India Cements?
Yes. As of now, we have a visibility of more than 25 years of life on the India Cements. They are old plants. So Sankar Nagar and what is the other name?
Sankari.
Sankari. So two plants which are old plants, and they have a visibility of more than 25 years of life.
Okay. That's good to know, sir. And my second question is largely on operating cost. I understand that on an organic basis, UltraTech has set a target of reducing it by INR 300 per ton. But on a consolidated level, will the FY 2026 see a significant increase in operating cost, given that India Cements is on the highest end of the cost curve? And since before acquiring this asset, also, you would have studied this asset. So any idea of how much CapEx or a ballpark figure would be required to bring it to the efficiency level of UltraTech? That's my second question.
Yeah. So the second part of the question, we entered the assets only on the 25th of December. We are studying. There will be CapExes. The no-brainers are the WHRS, renewable energy, which are return-based. But there will be some upgradation CapEx also, which the team is studying. And we will revert back on the CapEx that we want to do. As far as operating costs are concerned, I think we have started seeing reduction in their operating costs in the first month itself. And I don't have an exact date or exact period by which the costs will align, but you will have end October-December 2026 is when the WHRS implementation - that's a long lead CapEx project which will get completed. So by that time, you would see an alignment of their costs with our costs.
Okay. Understood, sir. And just last thing on the Sankar Nagar plant. If I'm not wrong, there was some—I think they had applied for an EC extension or something. So they are sorted on that front? Just a clarity on that. For limestone.
I'll have to study that. I'll have to find that out myself. Not aware.
Okay. No worries, sir. Thank you so much. I'll join back. Thank you.
Thanks.
Thank you. We'll take our next question from the line of Pulkit Patni from Goldman Sachs. Please go ahead.
Sir, thank you for taking my question. Sir, in the previous acquisitions that we've made, rebranding has been a very big kicker in terms of the differential realization that UltraTech gets versus other brands. Now, in this case, if rebranding is going to happen over time, at least not immediately, what are the levers where you can see such a significant cost cut that we'll be able to improve profitability? So first of all, what today is the realization differential between UltraTech and India Cements in the same micro market?
Just one second. How much is the difference? Sorry.
INR 20-INR 25.
That's on a selling price basis. Selling price basis is about INR 20-INR 25 a bag is the difference, and as I said, we are evaluating. There are low-hanging fruits in rebranding at the ICL units. We will start seeing rebranding as we progress, so day one, you will not have 100% rebranding, but in due course of time, maybe nine months, 12 months, you will have a rebranding effort, but first quarter, also, we will start seeing some plants doing rebranding.
And also, Sanghi, you used to give a quarterly roadmap of when your bit upper ton would actually merge with the main brand. Any sense on how that will be for Kesoram and India Cements? Eight quarters, 10 quarters?
It's all on UltraTech Cement.
Yes, sir. We are trying to project profitability of UltraTech Cement only.
No, no. But don't ask me questions about Sanghi Cement.
No, no. I'm just saying that in terms of projecting that improvement in EBITDA per ton, is there a roadmap whether we'll be able to do it in six quarters, eight quarters, 10 quarters earlier? I mean, just a sense on that.
Also, I was saying no, I don't know why you mentioned Sanghi Cement in our call, sir. That's why.
Oh, no, no. I'm so sorry. No, no. I meant Binani. Sorry.
All right.
Yeah, yeah.
We are looking at least 12 months to turn around the performance of the India Cements assets.
When you say turn around, you mean the same profitability that our mother brand gets, or?
No, not the same. Maybe INR 200-INR 300 lower.
Okay, sir. Thank you.
Yeah.
Thank you. We'll take our next question from the line of Ritesh Shah from Investec Capital. Please go ahead.
Hi, sir. Thanks for the opportunity. Sir, first one, are we looking at any contingent liabilities, specifically after the Supreme Court judgment which has allowed states to levy taxes on minerals, including limestone?
So first and foremost, we also hear that there is thinking within the central government to do something about this judgment because there are a lot of PSUs getting impacted in a far significant way. Secondly, we are impacted by the levy only in the state of Chhattisgarh and Rajasthan. We are not impacted. However, India Cements had a liability. No? No. Okay. Neither India Cements. Sorry. So we are not looking at any adverse liability. However, now you would have read about Tamil Nadu wanting to levy a new tax, Karnataka wanting to levy a new tax. So these things will surface for the future periods.
Okay. So nothing adverse?
Nothing adverse. Nothing adverse.
Okay. Great. So second is at industry level, what is the sort of supply that we are looking at based on your estimates for, I'll say, FY 2025, FY 2026, FY 2027? Broad numbers would be quite useful.
As I mentioned, we would do about 15 million tons of capacity. Taking other bigger players, we would see about 50 million tons of capacity getting added in FY 2026.
Okay. That's useful. And sir, you have given separately a revenue number for UBS on slide number 26. Is it possible you quantify the number for nine months and also EBITDA and PAT numbers? And if there's an incremental game plan over here?
Don't have it immediately. I'll share it with you, Ritesh, later on.
Sure. And sir, what's the game plan on UBS stores? The count has increased. I think one of the slides mentioned the significant contribution of grey cement sales via UBS.
Yes.
So are we looking to monetize this? How should one understand it?
This is the way we are monetizing it. It is helping us sell big volumes of cement in the retail market.
So second.
We're thinking about listing it as a separate entity. No, there's no plan like that.
Okay. Sure. This is helpful. Thank you so much.
Thank you. We'll take our next question from the line of Rajesh Ravi from HDFC Securities. Please go ahead.
He's not there, I think.
Mr. Ravi, can you check if your line is on mute?
He's not there in the queue.
Since there is no response, we'll move on to the next question from the line of Navin Sahadeo from ICICI Securities. Please go ahead.
Yeah. Thank you for the opportunities and indeed, great set of numbers. My question was first on this Northeast plan. So I think a year back, we had floated this or incorporated this company by the name Letein Valley, if I'm not wrong.
Yes.
So what is the progress there? Is there land? I mean, since you incorporated, I believe could have been with a local partner and land and the location is identified, but we haven't heard anything there. So if you could just.
Yeah. So because mines is required and Northeast is seemingly a complicated market with involvement of tribals in land ownership, mines ownership. So we haven't been able to identify a clean mines land as yet. And as soon as we do that, you will hear from us.
My second question was then on the outlook for pricing in South. One of your peers in South mentioned of expectation of huge intense competition or competition further rising with the ramp-up of Penna and India Cements, even Kesoram to some extent. So would you concur with that, that pricing in South could continue to remain subdued despite demand picking up, or how should one look at it?
If demand picks up, my guess is prices will also improve.
Understood. My last question, sir, can you just mention what is the consolidated debt?
I just gave that number a minute ago. I'll go back to it again.
It was the enterprise value calculation, I'm saying.
INR 16,160 crore. After taking into account the monies required for open offer.
Okay. INR 16,000 is the current net debt. Understood. Thank you. Thank you so much.
Thank you. We'll take our next question from the line of Patanjali Srinivasan from Sundaram Mutual Fund. Please go ahead.
Thank you for the opportunity. Am I audible ?
Yes, please. Go ahead.
Yes, sir. One thing I noticed in our presentation, so our power cost per ton has actually stayed more or less flat over a year. Whereas our share of green energy has gone up from 24% - 33%. Can you tell me why the drop in cost has not really happened here?
So yeah, from 424 to 402, that's the drop that has happened. And if I were to, I think, index it with the coal cost, coal cost might have gone up. So it's relatively lower. So the delta will be small between solar power generation cost versus landed cost. There is about 35%-40% difference between renewable energy and the thermal power cost. So this is what it is. I will, in any case, deep dive and revert to you.
Sure, sir. Thank you. And just one last question. Are CapEx numbers for 2026 and 2027?
2026 will be around INR 9,000 crore, and 2027 will taper down, maybe INR 6,000 crore-INR 7,000 crore to complete our expansion program.
Okay. Sure, sir. Thank you.
Thank you. Next question is from the line of Bhavin Chheda from Enam Holdings. Please go ahead.
Yeah. Good afternoon, sir. Very good set of numbers across. So, a few questions. One on the consolidated debt, which you mentioned, INR 16,160, that includes the number of what you said, India Cements, INR 877 crore?
Yes, please. And the open offer money, which will get paid on the 4th or 5th of February.
Sure. But sir, when I'm seeing the India Cements numbers, which were available for September 24, the debt was roughly above INR 2,000 crore. So what has happened in the last three months, or is there some different calculation what must have happened between these three months? How could India Cements debt come down so sharply in three months?
They have announced the December number. I don't know what was the September number.
December, the balance sheet was not disclosed. That's the reason.
They should be. They have mentioned it in their press release, and we have taken over a debt of INR 877 crore.
That's roughly a net debt number.
Yeah. Net debt number.
And the additional question on that press release itself is what I was going to refer to: with the revalued assets, which you will be consolidating. So there is a revaluation of roughly INR 5,300-odd crore, where the mining land and plant and machinery was revalued before the UltraTech taking over consolidation. So can we assume that the large part of revaluation has happened on the land part?
Mainly on land.
So we should assume that could be the unlocking potential when it comes under our fold?
As I mentioned, there are lots of assets, non-core, which I count. So large part of the land is required because that's a mine's land and a plant land. Besides those, they have lots of land which are not fit for a cement grinding unit or an integrated plant or a bulk terminal. So those we would want to monetize.
Sure. And there's a last question on the lead distance. Very good to see a reduced lead distance in the quarter, which was, I think you mentioned the number of 377 km. And now with the new acquisition coming into fold, so you have much more capacity where you can service the market from nearby plants. So would there be enough space to again reduce this lead distance when you look at your overall portfolio?
Certainly. Certainly. We would look at this number dropping down further, 5%-6%.
That would be great, sir. Thank you and best of luck. Yeah.
Thank you.
Thank you.
Before we take the next question, I wanted to clarify about the question which was asked previously on the power cost. There was a one-time charge which was levied by the Andhra Pradesh government, which amounted to about INR 47 crore-INR 48 crore, which we had to account for in the December quarter. And that is why the December quarter number is looking slightly higher. The impact of INR 15. So 402 would drop down to 37. Yeah. Go ahead, please.
We'll take our next question from the line of Raashi Chopra from Citigroup. Please go ahead.
Thank you. Just continuing on the cost. So from here on, how much more improvement can we see? I think earlier on, you were mentioning about INR 300 by September 26. So how much of that is already done, and how much can come?
I haven't calculated. You have a calculation. Thank you so much. Okay. So let me complete it in the March quarter. Raashi will revert. We'll give it in the presentation.
Okay. That's fine. Then on the realization, you mentioned that the December exit is about 1% higher than the pre-Q average , right?
Yes, please.
January, there were further increases in Central and West India?
It'll be about 1.5%, yes.
In January, 1.5%?
Yes, as of now.
Got it. And what are the expectations? I mean, for the remaining quarter?
Yeah. We definitely want prices to go up further. That's our expectation.
Got it. And then lastly, on the CapEx, so this year, what will be the full year CapEx? So next year, you said it was INR 9,000 for FY 2024.
Next year also, we should cross INR 9,000. That shouldn't go. It should be INR 9,000. We are already at INR 6,300 crore. We have already completed INR 6,300 crore. January, March should be doing INR 3,000 crore more.
This is for Kesoram, right?
I'm sorry.
Sorry. This doesn't include Kesoram, sir.
Just answer it more, please. I'm sorry to interrupt.
Sure. This doesn't include Kesoram, right? This INR 9,000.
Yeah. This does not include Kesoram.
Okay. Thank you. That's it.
Thank you.
Thank you. Next question is from the line of Satyadeep Jain from Ambit Capital. Please go ahead.
Hi. Thank you. I have just one question on coastal transport. You already have Sewagram. Just wanted to understand there was obviously another asset in play in the vicinity. It didn't seem UltraTech was looking, maybe competition CCI since you're already there. I just wanted to understand what's your experience. Would that plant be similar in utilization and profitability to other plants you have? And when you look at the overall mix in transport, for you going forward, do you see a higher share of coastal transport in the mix?
Yes, we will see an increase, but in the overall ratio, today it's about 3%. We'll not go beyond 5% of the overall mix. As far as the Sewagram plant, the Kutch plant is concerned, it's a low draft area, which has made it challenging for berthing bigger vessels. So my belief is rail is becoming available in that market very soon. So rail network will start improving the capacity utilization from that market.
Even for Sewagram, you would see so currently, utilization level you're indicating for that plant would be lower, but with the main railway line coming up, utilization?
It'll pick up. It's a hot market. It'll pick up.
Okay. Thank you so much.
Thank you. We'll take our next question from the line of Shravan Shah from Dolat Capital. Please go ahead.
Hi. Most of the questions have been answered. Just a couple of things, sir. In the fourth quarter, how much demand at India level we are looking at? And if possible, for FY 2026, how much are we looking at cement demand growth?
FY 2026, it will definitely be a double-digit growth. And quarter four, generally, it's a very high quarter. What is the base that you are comparing it with? Over Q3, obviously, it will be a growth over Q3 easily.
No, sorry. Sir, I'm looking from an industry perspective and not from yours. Definitely, you have said you will be growing double digit.
I was talking about industry perspective. Industry will definitely achieve a double-digit growth next year, given the fact sorry, you're asking about industry. Industry would do about 6%-7% growth. We will do about 10% plus growth is what our game plan is for next year also.
For this quarter, fourth quarter at industry level, 6%-7%, that's the number one can look at, or it could be a much higher?
Easily, it should be higher, I think. The way January, March quarter is, it should be higher.
Okay. Got it. And sir, what was our clinker utilization in the third quarter? And if it's possible, how much clinker capacity we would have added in this nine- month? And what more are we planning to add?
Clinker added during this period is 6.7 million tons of clinker was added. Another 3.35 million tons is about to get launched in this quarter, clinker capacity. The next question that you asked was about 76% is the capacity utilization.
Okay. And in FY 2026 also, would be close to 10 million ton kind of clinker capacity will be adding?
Yeah. 10 million tons. 6 and 9. Exactly 10 million tons.
Okay. And sir, you mentioned that the cost reduction plan previously you said INR 300- odd that we were looking at by FY 2027. That now we will be disclosing this number after the fourth quarter results. That's what you mentioned?
Yes, sir.
Okay. Thank you, sir, and all the best.
Thank you.
Thank you. We'll take our next question from the line of Anuj Jain from Globe Capital. Please go ahead.
Good evening, sir, and congratulations on the good set of numbers. Just wanted to understand, I mean, in today's presentation, you have mentioned that for the merger of Kesoram, we'll require additional approvals for those two mines, Telangana and Karnataka. And in opening remarks, you have said that by financial year end, you will integrate all the Kesoram with UltraTech. Just want to understand, generally, these states take much longer time than we anticipated. So how much delay one can expect for the integration?
I have kept sufficient buffer in my hands before telling you the end of the year. As I mentioned, these are at the last stages towards the approvals pending within the authorities, which should get completed very soon, and we are very confident there will be no slippages beyond March 25.
Got it, sir. Thank you so much. That's it from my side.
Thank you. Next question is from the line of Rajveer Tandon from Ventura Securities. Please go ahead.
Hello. Thank you for the opportunity to give me the question.
I'm sorry. Rajveer, can you use your handset mode, please?
Yeah. Hi. So the first question I had was for the INR 8,000 crore-INR 9,000 crore CapEx that you are planning, will you be taking any additional debt for that?
No. This can be funded by internal accruals. We expect our debt to start going down from next financial year in small steps. Next year, because CapEx plan is big, so you will not see too much of that reduction, but it will not go up.
So this INR 8,000 crore-INR 9,000 crore figure is for how many years?
For next year.
Okay, so can you give us an estimate?
No. The CapEx, if you're asking, INR 8,000 crore-INR 9,000 crore is next year, and the year 2027 will be much lesser. There will be the remaining elements of our organic growth plans, which has to be the completion stages. So INR 6,000 crore ± is what we are looking at.
All right. So my second question was, do you see the EBITDA figures for India Cements and Kesoram to reach the levels of UltraTech by FY 2027?
Yes, please.
Yeah. All right. Thank you so much.
Thank you. Next question is from the line of Sanjay Nandi from VT Capital. Please go ahead.
Yeah. Thank you for the opportunity, sir. Congrats on a good set of numbers. Like most of the questions are answered, sir, can you please help us with the regional utilization levels if possible, sir?
I think I had answered that question, and we had East, which was below 70%, and other regions were in the ± 75%.
Got it. Got it, sir. Thank you for the opportunity. I wish you all the best.
Thank you.
Thank you. Next question is from the line of Prateek Kumar from Jefferies. Please go ahead.
Yeah. Thanks for the opportunity again. I have just a couple of clarifications. Firstly, on FY 2027, CapEx of INR 7,000 crore, so that would be excluding India Cements related utilization of.
Yeah. This is only on our expansion program, which was going on. Which is going on, sorry.
Including CapEx on, which you said Kesoram is not so material, but India Cements CapEx included, CapEx may again still be INR 8,000 crore-INR 9,000 crore kind of.
Yeah. If you have to count the CapEx of India Cements, I don't know how much will it be. It will be certainly more than INR 500 crore because INR 500 crore was what is being earmarked for Kesoram.
All right. And one clarification on branding. So India Cements has a host of brands, and then obviously there are associations like IPL, etc. So when we integrate these brands, so these will sort of migrate to UltraTech. You said there's an INR 20-INR 25 gap there. And then all these other associations like IPL also sort of move to you. Are there some royalty fees there? How does that work?
IPL? No, there's no cricket with us. So that company, CSK, has already been hived off long ago, and there's no IPL as in cricket IPL, right?
No, no. So that was the branding partner, right? India Cements is used as a branding partner for CSK. Maybe I'm mistaken, but.
No. We will not be branding partners for cricket. That is one. And you asked something else also. No.
The various brands of India Cements move to UltraTech?
So all the various brands are part of India Cements. The brands are owned by India Cements as a legal entity. They continue to be with that company, so CSK as a cement brand exists, which will be owned by us. CSK.
CSK brand.
Cement brand. Yeah. But there's no association with cricket.
Right. That is the information. Thank you.
Thank you. Next question is from the line of Kamlesh Jain from Lotus Asset Managers. Please go ahead.
That will be on the podcast.
Yeah. Yeah. Thanks for the opportunity, sir. Just one question on the part of, yeah, sir, are there any loans and advances which are being given to India Cements, which has resulted in lower net debt? Just a bookkeeping question on that.
I'm sorry. What?
Have we?
Say that more, please.
Have you given any loans and advances to India Cements?
No, no. UltraTech has not given any loans and advances.
Okay. Great. So can you summarize what was the reason for the debt to go down? Has there any been land sale there? Because I believe in such a short period, such deals can't happen at, let's say.
So much of a monetized asset, which has helped release cash flows to reduce debt.
Okay. Great, sir. Great. Thank you very much, sir.
Yeah.
Thank you. Next question is from the line of Eshwar Arumugam from iThought PMS. Please go ahead.
Sir, thank you for taking my question, sir. So the first question I had was the South India cement prices, sir. It has been very dull this quarter and the price increases have not been able to stick much. Moreover, there used to be a disparity between the TN Kerala prices and the Andhra and Karnataka prices. But TN Kerala used to be better priced than Andhra and Karnataka. But the prices are converging now. Is it because players are fighting to gain market share? Or is it just because of the demand scenario?
We really won't be able to comment on that micro analysis that you are doing. But my belief is Andhra Pradesh is going to improve demand sentiment, and it will benefit the entire South, which will help improve prices in the respective markets.
Sir, you said that you've grown from 20 million tons- 60 million tons in South, sir. So what would be the approximate market share gain for the company in terms of volumes?
In terms of capacity, I believe South is 180 million tons. 196 million tons of capacity. So we are very close to 30% capacity share.
Thank you. And what is the outlook and future plan for UBS, sir? Is there an increasing trend you see of people in the urban areas preferring building material solutions instead of cement? And what is the outlook there, sir?
Outlook is very bright, especially in Tier-2 towns and Tier-3 towns . UBS as a platform is convenient for individual home builders. It becomes a one-stop shop for the home builder to get all his needs. And our interest, obviously, remains why to service the customer as also to increase the throughput of our sales.
Right. Right. And one question I had was on the Indian waterways you used, the national waterway you used for the grinding unit in Patliputra, sir, so is there any plan to ramp up the capacity? And if you do ramp up, how much logistic cost decrease can we look at?
So it's too early. I think we will definitely want to ramp it up. It is eco-friendly, cost-effective, a high-volume opportunity. It will be definitely of big benefit.
Right. So this was more of a test run, sir?
Yes, please.
Okay. Okay. Thank you. That's all the questions. Thank you.
Thank you.
Thank you. And there were a couple of questions asked about how much have we completed on our efficiency improvement program. And the reason I'm not able to comment on that because quarter to quarter, it will vary. The monsoon quarter is a depressed quarter. January, March will throw up another number. And hence, it is better to look at the efficiency improvement program deliveries at the end of the year. Having said that, we have already quantified the lead distance, the implementation of renewable energy, and implementation of WHRS, which are very, very measurable. And from 400 that we started and we reached 377, 23 km, 23 km is almost $ 60. 23 km is almost INR 70 benefit, which is available as part of the efficiency program.
Similarly, WHRS implementation on the increase in the capacity of WHRS, the power cost keeps dropping by almost 90% on the incremental capacity. These are measurable numbers, but I would still want to reserve my comments for the end of the year. Thank you so much.
Thank you. Ladies and gentlemen, we'll take that as the last question for today. On behalf of UltraTech Cement Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.