Ladies and gentlemen, good day, and welcome to the UltraTech Cement Limited Q1 earnings conference call. We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore reviewed in conjunction with the risk that the company faces. The company assumes no responsibility to publicly amend, modify or reverse 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Atul Daga, Executive Director and CFO of the company.
Thank you, and over to you, Mr. Daga.
Thank you. Good evening, ladies and gentlemen, and welcome to this call of UltraTech for our results for April-June quarter. I think I will focus on three issues today, demand, costs, and our growth plans. Demand is good. Costs, as you all know, have not been very good, and I don't know how things will pan out in future. Growth prospects, as we see, are very good. We are happy to see the cement consumption in this current quarter, the reported quarter, April-June quarter, continuing the momentum after a strong performance in Q4. Month after month, we saw improvement in demand, in cement consumption. The good part about this cement cycle is that urban housing has picked up in the last few quarters. The unsold housing inventory is at its record low.
RERA coming into effect, there has been a reduction in number of unorganized real estate players, clearing the path for time-bound completion of residential projects. The number of new project launches has also been on the rise, which will benefit cement, of course. Mind you, these are announcements in real estate projects. After the announcement of real estate project, there is still lead time before cement actually starts consumption. Cement consumption actually starts on each project site. There is a negative impact on the purchasing power to invest in housing, but I believe demand is resilient. Large infrastructure projects like high-speed Mumbai-Ahmedabad train, coastal roads, Jewar Airport, Mumbai Airport, to name some of them, are leading to an overall growth in cement demand in the infrastructure space. With a lot of ancillary projects getting seeded which generate employment, income generation, and of course, housing growth.
The government thrust on infrastructure growth is very much there and most welcome. Prices have been good, but like anyone else, we would also want them to be better, given the inflationary trend in costs. Now let me talk about the not-so-good news, which is input costs. Costs have been rising continuously. Fuel and energy costs have been a matter of concern for all players. Production costs have risen about 7% this quarter. Effect of rising costs have been mitigated by improvement in procurement prices, improvement in efficiency, and better planning. Everyone knows that China has a significant influence on most of the commodity prices. Good news is that China's domestic coal production hit a high of 395 million metric tons in March, before slipping to 362 million metric tons in April. The average monthly production is trending 12% higher year-on-year.
However, I understand that China has cut import tariffs on all types of coal to zero from May 1, 2022 to March 2023, as compared to the tariffs of 3%-6% on imported coal, depending on its quality. This might still lead to a jump in exports to China, thereby leaving prices inflated for some more time. Good news is that coking coal prices have started softening. We have seen maybe about 10% reduction in the prices over the last month or so. Hopefully, coal will also follow suit. On an average, UltraTech would require about 13 million-15 million tons of fuel per annum from FY 2024.
With that kind of requirement, obviously we are planning our procurement strategies, inventory management plans, alternate fuel plans, WHRS efficiency improvement plans as best as we can to soften the impact of rising costs. I would want to clarify on the news flow around Dalla Super, the JP unit which we had acquired in 2016. It's stuck in NGT issues. It is in the last leg of forest clearances. You will recall we have held back INR 1,000 crores from the original consideration paid in June 2016. After settling all the costs pertaining to forest clearances, land acquisitions, the balance money will be released to the sellers at the time of taking over the asset. I realize this has got delayed. It's almost been five years, but trust me, we are clearing all the hurdles step by step.
At this point in time, I don't want to give you any timeline on final clearance because every time I have committed, I have not been able to deliver on those timelines. These things are not in our control. There are lots of government or regulatory clearances that have to be taken, but I am hopeful that we should be able to clear everything and the asset should start production before the end of this calendar. There have been several theories during the rounds on our 22.6 million-ton expansion announced last month. I must tell you that it is a very well-thought-out planned step. It is part of the earlier announced 50 million-ton growth plan. The news announcement of the 22.6 million-ton expansion was perhaps delayed by a month.
We were contemplating the go-ahead as part of our Q4 board meeting, Q4 results board meeting, but we went slow on it since there was news about Holcim assets, the transaction happening, and we were also interested in looking at those assets. Anyway, that is history now and we have got back into our stride. The delay caused in announcing the plans will not be a bottleneck to meeting our overall timelines to commission all the projects by 2025, 2026. Work is in full swing on the ordering process. In fact, lots of orders have already. Main project items have already been ordered. Advance payments are being released. All these expansions are predicated on our fundamental philosophy of profitable growth. Expansions are not done just to add capacity, but to generate profits.
These investments are targeting an IRR of in excess of 15% as and when, from 2026 onwards, when they start delivering production, thus helping the overall balance sheet also improve its return ratios. The internal accruals will be sufficient to meet all the CapEx requirements. At this juncture, my colleagues are reminding me of a unique and credible achievement of the company. The growth since inception have all been funded through internal accruals. Why this expansion? India will remain a strong market, growth market for a long time to come. After completing this expansion, we will chart out our roadmap to rise from 153 million tons to about 200 million ton mark through organic and inorganic routes. Don't ask me questions now.
It's work in progress, and we'll come back to you with details in due course of time and tell you all about it where, when, and how. That's all from my side for this quarter results. 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 touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants, I request that you use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Pinakin Parekh from JP Morgan. Please go ahead.
Sure, sir. Three quick questions. My first is that you mentioned 153 million-200 million tons. Now, obviously that, we don't expect any details, but is this part of the 2030 timeline, or is this something?
Yes.
Which can be preponed even before 2030?
It can be preponed for your whether it is 2028, 2027, 2028, 2029, somewhere around those timelines. Because after completing our 2026, the current expansion of 2026, we will see how the markets are shaping up. We start preparing for that plan for 2028 now, and decide on the next steps somewhere around 2026.
Okay. Because I'm just trying to put the numbers in context. 153-200 is 47 million tons, right? If you are thinking to add by 2028 or 2029, you would have to start, you know, the process of land acquisition, mines, ordering and stuff like that.
Land acquisition is a continuous process, Pinakin, which keeps on happening, and that's why we are able to cut short the project execution time. When we announce our expansion plan, we would have completed our mines, land acquisition, environment clearances already.
Sure. My second question is that on the phase two expansion, slide 20, slide 28, which gives a break-up between integrated units, grinding units, and bulk terminals.
Yeah.
Now it mentions that bulk terminals is not additional capacity, but.
Yeah.
Bulk terminals is around 2 million tons of this 22.7.
Right.
How-
No. If you sum up all these 4.4, 5.7, 5.2 and 7.3, that's 22.6. If you look at, let's say South, sum up all the four line items, it's much more.
Okay. Okay, fair enough. Can you give us lastly a break up of this 22.6 in terms of what is the clinker capacity of this?
It's backed by full clinker. That's all I can say right now.
Okay. Understood. Thank you very much.
All right.
Thank you. The next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Yeah, thanks for the opportunity, and congratulations on a good set of numbers, notwithstanding the cost pressures. First question is on the cost. A bit surprised to see only a 10% decrease in the coal cost this quarter. Doing great job on the cost management. Given the inventory and the sourcing visibility we have, is it possible to give some guidance on the coming quarter? How do you see the energy cost moving?
Um-
The mix of coal?
I find it very difficult. You know, I think last quarter I gave a guidance of 10% increase, and I barely managed to be there. It becomes very difficult to predict cost. Of course, the cost will get locked for the quarter, in the next few days. At this point, I would rather avoid doing forecasting, and let me stick to the results.
Okay. Just for understanding, I mean, what sort of inventory and the lag is there in pet coke and international coal in the port?
We have 50+ days of inventory at the close of the quarter, close of June. Sorry, what was the next part of your question?
Yeah. 50, and it will be same?
Yeah.
Would be same for pet coke and thermal coal or some different?
Fuel mix is what I'm talking about.
Okay. Understood.
Because it's all our plants are multi-fuel, so we can fire anything.
Mm-hmm. Got it. Second question is more broadly on the industry, supply dynamics. I mean, we're hearing the new entrant, and also many other players might be a bit aggressive on the growth given the balance sheet across is in good shape for the sector. Do you see a risk of increasing supply pressures and low utilization?
No, I don't think so, Sumangal, because you'll have to wait and watch for the next few quarters to see how the balance sheets shape up, given the cost pressures that are being faced. Also, even if new capacities are added, I believe that new demand will continue to surpass the new capacity addition.
Understood. One just last thing. I mean, are there any acquisitions will come up, anything on the block for inorganic opportunity?
There must be.
Okay. Nothing more than that. Okay. All right. Thanks. Thanks a lot, Mr. Daga, and all the best.
Thanks, Sumangal.
Thank you. The next question is from the line of Amit Murarka from Axis Capital. Please go ahead.
Yeah, hi all. Great set of numbers. Just a few questions. Firstly, the capacity that went up, it will come up.
I'm losing you, Amit.
I'm sorry to interrupt. Mr. Murarka, we cannot hear you, sir.
Can you hear me now?
Yeah.
Yeah. Sorry. So, like, on the timelines, just wanted to check, like, by what will be phase out of this phase two? Like, will it be all at the end of the period mentioned, or will it come during or, like, spread out during this period?
Which one? The phase two expansion? It will be spread out. It will not be one go. It will be spread out. It cannot be one quarter.
Okay. Is there any break up as of now available, or we'll have to wait for that?
I think the project work starts late. Right now is in the ordering stage because all main equipment have got ordered or will get ordered by the end of this month for all the plant locations. In the next couple of quarters, we should start drawing timelines as well.
Okay, what will be the revised FY 2023 CapEx number now?
I'm sorry?
The FY 2023 CapEx guidance that must be revised now, right?
Yeah, it will go up, I think, ± INR 6,000 crore, I would say.
Right. What would be the trade mix in the quarter?
Trade mix, 67%.
Okay. Thanks. I'll come back to this. Thank you.
Blended ratio is 70%.
Okay. Got it. Thank you.
Thank you. The next question is from the line of Indrajit Agarwal from CLSA. Please go ahead.
Hi. Good evening. Congratulations for a great set of numbers. I have a couple of questions. First, on the expansion.
Great set of numbers.
Sir, amazing set of numbers.
All right. Go ahead.
The numbers, your CapEx is at $75 per ton. We have seen some other players doing at a much higher number. What do you think the replacement cost for industry now is? I understand part of your land acquisition is done, part of it is brownfield. How do you see the replacement cost for
I would, you know, if you are to start from scratch today and on the current prevailing prices, I would peg it anywhere between $100 and ± $110-$120.
Sure, that helps. Secondly, as we are already planning for 2030, we will also have some limestone mines expiring by that period. How are we planning for that? Any thought process, any strategy we are adopting?
I have two mines expiring, and they will be ROFR obviously with the existing players. We will secure those mines. What is required for us is to get more mines in the locations that we are blueprinting now. It's too early, but I thought the importance of you know tabling our growth plans 2030 was so that you are not caught by surprise later on that it's or was not talked about. Anyway, limestone is secured. There are two mines which expire, which we'll have ROFRs. You know, 2030 cost of operations for every player will go up with-
I'm sorry to interrupt. We lost the line of the management. Please stay connected while we reconnect them. Ladies and gentlemen, thank you for patiently holding. The management line is reconnected back. Thank you, and over to you.
Sorry, there was a brief power failure on my handset. You were asking about our preparedness. Sorry. We talked about costs of a greenfield and our preparedness. We will be prepared as and when time comes.
Sure. One last question. We generally see a bump up in demand in the pre-election year. Are you getting some kind of sense of that already or too soon to tell?
I have reasons to believe that there are 20 months left pre-election, and there's a huge amount of tailwinds for demand.
All right. That's all from my side. Thank you so much.
Thank you.
Thank you. The next question is from the line of Prateek Kumar from Jefferies. Please go ahead.
Yeah. Good morning, sir. First question is on you have mentioned about overall utilization of 83%. I believe your quarter-on-quarter grey realizations are up 7%. Can you split this region-wise utilizations and realization of?
If you will, north and central would have gone up in double digits. West and east might be 5%-6%. South was flat.
Our realizations would be like better than industry growth because a couple of peers of yours reported like 4.5% sequential growth this quarter.
My peers? Okay. I don't know who my peers are, but, yeah, I think we should report good numbers.
Sure. Secondly, when we say on these expansions we have a 15% IRR post FY 2026, what kind of unit EBITDA we are like assuming for these expansions corresponding to the volume?
I think you can do your back calculation, INR 12,866 crores delivering a ROCE of 15%+ would generate a 1,500, or thereabout INR 1,400-INR 1,500 EBITDA.
Sure, sir. Last question is on.
We are looking at that number for 2026.
Right. All right. Lastly, on realizations, while you had a very strong Q1, how would the exit realizations of June quarter versus average for the quarter?
June exit was slightly less, I think. Yeah. You know, when monsoon starts kicking in, realizations start dropping. Maybe 3%-5% lower was the exit from the chart. Anything else?
3%-5% versus average, that's what you said?
Yes. Yes.
Sure, sir. These are my questions. Thank you.
Thank you.
Thank you. The next question is from the line of Ashish Jain from Macquarie. Please go ahead.
Hi, sir. Good evening.
Hi.
Sir, firstly on the expansion. You know, I just want to understand, like earlier when in December we had announced the expansion, we had spoken about 160 million tons by 2030. Now we have, you know, in a way raised that that's like a major increase.
See, we don't want to fall short of capacity, and we are seeing. I've also given a demand outlook.
Right.
If that demand outlook is there on a CAGR, we will not have capacity to service.
Okay.
If we don't expand.
Sir, what headroom we have on brownfield, or greenfield based upon, you know, limestone mines that we own?
We will share that offline with you.
Okay. Got it. Sir, lastly on cost, I mean, I understand you don't want to give a forward number, but where would our cost be, let's say, for June month or you know, the first month of, the first three weeks of July, in terms of the energy cost versus what we were consuming in June or?
Daily it is going up.
Okay, sir. Let me put it like this.
You know, I think let's stick to a quarter instead of the month or the day or the week.
Very volatile.
Yeah, it's very volatile.
Okay. Got it. Just one housekeeping question. What is our net debt at the end of this quarter? We haven't shared it at ICICI.
Sorry. I think there were too many slides. Net debt has gone up, slightly. We are at INR 5,561 on a consolidated basis. India is INR 4,670.
Okay. Got it, sir. Thanks a lot. I'll come back then. Thank you.
Thank you. Next question is from the line of Satyadeep Jain from Ambit Capital. Please go ahead.
I thank you for the opportunity. A couple of questions on the slide 28. Some details on the expansion. In south, you're adding GUs, especially some of the GUs, one of the GUs is actually far from Andhra Pradesh. Are you looking to add clinker in Tamil Nadu in this one, or are the new GU going to be served from Andhra Pradesh?
We will serve it from APCW, the IU, which is Andhra.
That's clear.
We are also participating in auctions and mine auction in Tamil Nadu.
Okay. Because the one of the GUs, Karur is actually sort of 600 km from APCW.
I know. I'm fully aware, our plan is that we'll have the bulk terminal at Bangalore. From there, it can service. Directly also it can service.
Okay. You're also banking on possible auction wins also to support some of the GUs?
I'm sorry, banking on?
Possible auction wins in the auction.
Yes. Certainly.
Okay. Next question. Just a couple of questions on the entire CapEx. One is somewhat surprising to see a greenfield IU in Chhattisgarh, given you already have GU clinker plants within 10 km-15 km of that upcoming.
It helps me leverage on economies of scale big time. If you look at the next chart, which is page 29, the focus is now how we'll service the northeast market. The extreme east plant, which is Raisen plant, will start catering to northeast. That capacity is available from here to service the other markets.
Moreover, to this, I may add actually, the limestone is available only in the Chhattisgarh-
Chhattisgarh.
In the east actually. People have no choice other than to put up the clinker.
Clinker addition will be in Chhattisgarh.
Chhattisgarh only. There is no limestone, Bihar, Jharkhand, Bengal. Orissa even a very limited quantity only. Chhattisgarh is a natural choice for clinkerization units.
We have similar concentration in Satna. We have three units there. It also helps economies of scale.
My question was, why not do a brownfield in Hirmi or any other?
We are just completing a brownfield in Hirmi. The clinkerization got commissioned, I think, last month, and cement will get commissioned this month or next month perhaps.
This month itself, yeah. One should not also complicate one particular site. If you have other options, you might want to first use those options rather than making one particular location vulnerable from multiple point of views.
Okay. Lastly on debt in this round of expansion, of course, mostly, but I guess the Nawalgarh land acquisition is also complete. Is that going to be part of the next
Yeah. Nawalgarh will form part of my next phase of growth. There are some issues on mines which we are sorting out.
On the mine you said? Limestone mine?
On mines. Mines and land both.
Okay. Thank you so much.
Thanks, Satyadeep.
Thank you. The next question is from the line of Girish Choudhary from Spark Capital. Please go ahead.
Yeah. Hi, thanks. There was this recent news flow that you bought this Russian coal at $164. Just on this, what would be the landed cost? Incrementally, how much more of this low cost fuel can be replaced with other high cost?
INR 164 is what the cost is, and INR 168, if I remember it right. We keep on scouting for opportunities. There's nothing in sight. It was opportunistic transaction. If something more surfaces, we'll pick it up.
Okay. As of now, you have just bought this month.
557,000 tons.
Yeah. Okay. Secondly, if you can just guide us on the phase two expansion, what would be the CapEx to be spent over 2023, 2024, 2025?
We have the phasing as yet. I think give me next quarter because we are just in the ordering phase right now. Hopefully, we'll give clarity on cash flows next quarter.
Sure. Sure. Thank you.
Thank you. The next question is from the line of Navin Sathe from Edelweiss Securities. Please go ahead.
Hello.
Hi, Navin.
Good evening, sir. Thank you for the opportunity. Couple of questions. First, I would request some more details or color about slide 8, wherein you're talking about electrification of cement kiln heating process. I just wanted to understand, is this like, you know, can this be a big opportunity in the sense, can we really go in for instead of
Yes, it can be. You know, technical discussions have just started. It's not happening in the next couple of years. It's a long-term plan, but the emphasis is that we are making all efforts possible on reducing emissions.
If at all there is a next phase of evolution, this can be one of them.
Yes. This will be a game changer.
Okay. I just wanted to request your views on the overall pricing powers, in the sense that of late what we see is that despite the cost rising, we have not really been able to like, you know, pass on prices commensurate to the way the cost is. Also understand government's focus on inflation. When diesel prices were reduced, there was also an industry reciprocation of passing it on to consumers. Is it safe to say that till such time the inflation stays firm, we should be more looking at cost because prices may not really go up? Your views, please.
Navin, as of now, I think we would want to balance the cost pressures with prices. If you look at the current quarter's performance, the reported quarter's performance also, it's been all right. I've always maintained that the price increases will always be with a lag effect. They don't happen immediately. The efforts will be at the moment to cover cost increases, cost pressures with prices.
Understood. Just one bit on the costing part. Because the prices have been volatile, but of late we have also seen global prices seeing fair amount of drop. Is it be safe to comment that whatever cost of like, you know, fuel that we saw in the quarter, is that very much the peak or no, we can still see some decent increase coming into Q-?
You know, keeping our fingers crossed that we have passed the hump. But as of now, at least in the next two or three quarters, we would still see price increases, cost pressures continue.
For two, three quarters, because as you said, in just a few weeks, we would have, in just a couple of days, maybe our cost for Q1 gets locked because of that inventory aspect.
Yeah.
That would still be on a rising trend for at least 1-2 quarters.
For sure. It will be on a rising trend.
Okay. That's all I wanted to confirm. Thank you so much. A great quarter, by the way.
Thanks, Navin.
Thank you. The next question is from the line of Kamlesh Bagmar from Prabhudas Lilladher Pvt. Ltd. Please go ahead.
Yes. First of all, great quarter numbers, and congratulations on that. One question on the part of, let's say, phase two expansion. How much is the waste heat recovery capacity included in that?
In the expansion?
Yeah.
In about 50-60 MW.
50-60 MW. Would that be sufficient to reach our target of 45% reduction?
Yes. No. Along with that, we'll be doing solar as well.
Okay. Secondly, on part of-
Most important, the important aspect to note is that we are not putting up any thermal power.
Okay. Great. Sir, on the part of your existing expansion, this is phase one.
Yeah.
Some like, say, in Cuttack we have reduced, like we have revised the capacity. That is coming up with some at like the Jajpur and other units. What has been the reason behind that? Because those capacity expansions have been going for long in Cuttack, particularly in Cuttack.
Cuttack, for example, the plan was two lines of 2 million tons, 2.2 million tons each. After looking at the market and opportunities available, I think the team decided that we should restrict ourselves at the moment to 2.2 million tons only at Cuttack.
2.8.
Sorry, 2.8.
Sir, lastly, the way phase two expansion is, like there is going to be a far higher level of blending ratios as compared to what we are at currently. Because like, we are coming up with units in south where blending units would be in Tamil Nadu and even in Chhattisgarh and JP. Would it be like how much blending ratio or blended ratio can we presume or clinker conversion ratio in this phase two expansion?
Currently we are already reaching 70%. On a consolidated basis, we might see a percentage improvement further.
Great, sir. Thanks a lot and best of luck.
Thank you.
Thank you. The next question is from the line of Rajesh Kumar Ravi from HDFC Securities. Please go ahead.
Hello.
Hi.
Yeah, hi sir. My question pertains to first on the phase two expansion for 23 million tons. Is it fair to assume that it would be backed with 15 odd million tons clinker capacity?
Yeah, plus or minus.
Plus or minus. Okay. Second, the blended fuel cost which you mentioned, on a per kcal for Q1, where would that stand?
By kcal. We've given the fuel cost at INR 1,500-
Per million kcal.
Per million kcal.
Okay. How much is it?
INR 2,200.
Sorry?
2,200.
INR 2,200 million.
Rupee per million kcal. Yeah.
Okay, INR 2.2 sort of a number you're talking, right?
Yeah.
Yeah. Yeah.
Why I'm asking this is that given that, imported coal prices are currently hovering at north of INR 4 and even pet coke prices are INR 2.5 after falling off recently. Is it fair to assume that we could see a sustained sharp hardening in Q2 numbers from 2.2 north of INR 3?
Yeah. I, as I mentioned in the previous question also, costs for Q2 will go up. I don't want to give any guidance.
Mm-hmm.
On the number, but it will go up.
No, because you already have 50 days of inventory almost closer to that. For most of your Q2, your cost would be secured.
Yeah, it is secured. It will go up. The reported cost will go up.
Okay. Sir, your net debt number on a Q on Q basis would have gone up by INR 2,000 crore?
No. Okay, we're very close and INR 1,600 crores has gone up.
Okay.
On a consolidated basis, but India has gone up by INR 900 crore.
Okay. Last question, is there overseas operations? If I back calculate the India operations and consolidate it, the numbers look quite depressed. You know, what will that be on account of?
What has happened is we have operations in Sri Lanka where we had to take a rupee depreciation, the currency depreciation impact of about INR 38 crore. Other than that, what? No, no. Sorry. You are asking about an operating cost, right?
At a EBITDA level, the margin would be not more than INR 150 per ton.
Correct.
For the overseas operations.
Overall, because of Sri Lanka is what we have suffered on the P&L.
Okay. INR 38 crore for the quarter itself.
INR 38 crores has been provided for currency.
Okay. In the expenses only? Other expenses.
Yeah.
Okay, that's all from my end, sir. Thank you all to you.
Thank you.
Thank you. The next question is from the line of Ritesh Shah from Investec Capital. Please go ahead.
Please, the next one is on.
There is no.
Hello?
Yes. Ritesh Shah, can you hear me?
Yes. Sorry, I was on mute. First, congratulations on a good set of numbers. Wanted to understand the price growth. I think it's pretty stunning if one compares it with the other listed companies which have reported so far. Anything specific that you'd like to highlight? I think would love to hear your thoughts here. That's the first question.
About what? Numbers speak.
Yes, sir, how basically was it were premium sales, I think that number is something which has been quantified, is it direct disparities to leaders or anything different on discounting or anything at all?
Ritesh, look at the numbers. Let us do the business now.
That is there. That is what?
Yeah. You enjoy the numbers. Why are you counting the goodly?
Okay. Has there been any shift in the sales mix basically region-wise wherein pricing was more conducive to us, which could have helped us?
No. I think there was a question which was asked earlier. North and central we were able to get better price improvement as compared to the other markets.
Okay. That's fine. Second question is, we have announced incremental phase two of growth CapEx, 22 million tons. What sort of growth opportunity do we have after this?
I think you're joining slightly late. I talked about the next phase of growth will take us to 200 million tons. Somebody had asked a question whether we'll do 40 million tons in two years. It's too early to talk about phasing of that, but that is the game plan that we have in place now going to 20-30.
Okay, that's great. Just last question, given we have outlined our plans on the capacity side, we have also indicated CapEx intensity, which is great. Anything which can actually improve us into our positioning on the cost curve, as we continue to expand? Anything from a logistics side, anything that one can look at say DFC, any other variables?
I think as far as DFC is concerned, UltraTech is very well positioned to take advantage. Today, we run more than 260-odd railheads in the country. I think after Coal India, I think we might be having the highest number of in the private sector, you know, railway sidings. We will definitely get the benefit of lower costs in terms of movement through railway corridor. Economies of scale will always be a plus point for a large operation like ours, whether economies of buying, economies of logistics.
Hello.
Mr. Shah, does that answer your question?
Yes. Thank you so much. Thank you, sir.
Thanks, Ritesh.
Thank you. The next question is from the line of Pulkit Patni from Goldman Sachs. Please go ahead.
Sir, thanks for taking my question. Just one question. What I derive looking at your realization is that clearly the gap between trade and non-trade is much lesser in the particular.
Yes, sir. Absolutely right.
Anything structural there for us to?
Structural efforts.
Structural efforts. Okay. Any sense on what that gap would be right now?
$15-$20.
Wow. Okay. Great. Thank you so much for that, sir.
Thank you. The next question is from the line of Bhavin Chheda from ENAM HOLDINGS . Please go ahead.
Yeah. Congrats on excellent set of numbers. It surprised The Street and all the estimates. One question, if you can share the coal mix in the quarter, how much was pet coke, linkage coal, which normally you share in the quarter?
Just one second. 52% is pet coke is what my colleagues are telling me. No. Still mix. Still, 52% is pet coke and
Thirty-seven.
37% is imported coal and 5% is the domestic coal.
Okay.
Balance is,
Comparing to quarter four, the linkage coal was close to 17-18%, so it's gone down further?
Indigenous coal is more or less at the same level.
It's the same level. Sir, are you getting any imported coal under long-term contracts? Because it looks like you're saving a lot on power and fuel as compared to some peers.
You know, I was emphatic about our strategies on fuel management, given the quantum of fuel that we consume. There are lots of efforts which are put in, whether long-term contracts, whether it's sources of supplies, mix, everything goes on.
Sure. What would be the lead distance in the quarter, sir? Average
About INR 430. INR 429.
INR 429.
Okay. Thanks a lot. Thanks a lot.
Thank you.
Thank you. The next question is from the line of Shravan Shah from Dolat Capital. Please go ahead.
Thank you. First of all, congratulations on a great set of numbers. Most of the questions has been answered. Couple of things. Sir, in terms of the CapEx, the already ongoing 19.9 MTPA. So when we announced the CapEx was around INR 6,500 crore, so that, has that number increased or-
No. You know, it might increase by INR 100 crore here or there, but that's all.
Broadly, you mentioned INR 6,000 crore CapEx for this year, FY 2023. 2024, the number should be INR 7,000-INR 8,000 odd crores?
Yes, sir. I think the ability to spend also is capability exists, but ability to spend will also be there, you know, on the ground execution. INR 6,000 plus minus should be an annual spend.
Okay, this entire 22.6, when we say 2025, but I think in your comments you mentioned maybe by FY 2026.
2025, 2026 because you know as we progress we will have more clarity on the exact dates.
Okay. The other is, the already clinker that we announced in 19.9 MTPA expansion. We have given the grinding expansion timeline, but clinker, if you can help me out of that 11.4 MTPA that was we announced previously.
You know, for example, Hirmi, if you look at the clinker has already got commissioned. Now, there is Pali, which is clinker in Q3, Dhar is in Q3, others are all grinding units. It's there in the chart, page 23. Q3 2023 is what the other clinkerization commissioning is.
Just the last you mentioned that the pricing has gone down 3%-5% in June versus the average for this quarter. Has it also further reduced the realization in the first 15 or 20 days of July?
Supply is always, so in the way the monsoons have been progressing in the country, I think, supply generally, the prices soften a bit.
Okay. All the best. Thank you.
Thank you.
Thank you. The next question is from the line of Sanjay Gandhi from Ratnabali. Please go ahead.
Yeah. Good evening, sir. Congrats on a superb set of numbers. Just one, two questions. Like you mentioned, like the trade down trade gap is currently 15-20 INR per bag. What was the thing like previous before this like increase.
It was higher than 20.
Higher than 20. Just a long-term question. Like in China, the per capita consumption is 1,600 kg per person.
Correct.
In India, we are heading to 200 kg.
No, maybe closer to 300 now. It's improved, but way behind China.
Yeah, it's.
If you exclude China, but China is high on everything. If you exclude China, then the average per capita of the globe will be 500-600 kgs per capita.
Right, sir. Sir, do you think like in next 10 years' time we will be able to like touch that?
It's improving. When, five years ago, it was closer to INR 200, now it's reaching about INR 290-300, so it's improving.
Okay. Got it, sir. Thank you so much, sir. Wish you all the very best, sir, for this next superb set of numbers for the coming quarters.
Thank you.
Thank you. The next question is from the line of Akshata Taliserao from SBI General Insurance.
Morning.
Please go ahead.
Yeah, hi. Thanks for the opportunity, and congratulations on great quarter. Over the last decade, we did see a lot of capacities come in in anticipation of demand, but the demand did not materialize enough, and therefore we kind of entered a surplus environment. Even today, a lot of capacities have been announced by you and your peers. My question is, how do you see the large players like you and others interact with the other large players in regions like, say, North and Central? Or how do you see the small players interact with other small players in, say, South? Or how do you see the large and the small talk to each other in regions like East? If you could just elaborate a little on that. Thank you.
First of all, we don't have to interact with other players, so that's the shortest answer I can give you. Unless you have something else to ask and/or I didn't understand your question.
No. I was just wanting to understand how would the pricing play within the players, given that there is a demand-supply mismatch here.
Oh, every market, its prices are clearly driven by demand supply. If you are tracking the cement market for a longer history, the moment any market crosses 85% capacity utilization, there's a very strong uptick in prices. That is how the markets behave.
On an aggregate level, we are around 70%, right?
I'm sorry, what?
On an aggregate level, we are at around 70%?
The capacity utilization at the country level, 70%. Yeah.
Yeah.
You know, this is, again, to caution you, one should never look at all India full year capacity utilization. You will never reach a high number because cement is seasonal. July, September, and the peak summer months do pull down the cement consumption. So you will never have all India number to go by. You have to test waters for January, March. January, March, we operated last year 93% capacity utilization. In fact, for the month of March, we operated at close to 100%. I would want you to imagine 55 physical plant locations operating at 100% capacity utilization, railway sidings operating, you know, 100%, no strikes happening anywhere, railway wagons available, everything moving smoothly.
If that happens, then you have 100% capacity utilization.
Okay.
Thank you. The next question is from the line of Amit Murarka from Axis Capital. Please go ahead.
Thanks for the opportunity again. Actually on slide 30, you have mentioned about improving the blending ratio, which actually is quite an interesting comment given that you have one of the lower blending ratios actually amongst the players. How will that be achieved? Will it also mean like you will focus more on the trade markets and hence maybe sell lower OPC, or how do you think about that?
See, OPC will if infrastructure is going up, OPC consumption will go up. Large infra projects require tend to consume OPC, and that is where UltraTech stands out in supporting the infra growth unlike any other player in the country. What we are also engaging in is advocacy with the infrastructure players to do blending and reduce OPC consumption. That is what will help us improve the overall blending ratio. Besides, there are markets, like, eastern markets are composite cement markets, which the higher the sales mix in those markets or southern markets will improve the overall blending ratio.
Okay. Is there any number you have in mind, like, going up to 1.4, 1.5?
We're already at 1.4 today.
Okay. Yeah, you used to be slightly lower than that.
We were at 1.34 in maybe a year or two years ago. We are already hitting 1.4, and obviously the ambition will be to improve it further.
Got it. Thank you. Yeah.
Thank you.
Thank you. The next question is from the line of Prateek Kumar from Jefferies. Please go ahead.
Thanks for the opportunity again, sir. There's some question, bookkeeping question on slide 13 of your presentation. There is a line item under others, which says INR 291 crore of revenues, and corresponding that there's no volumes. We used to give this export and others volumes in this head. So firstly, why is there no volumes there? Also, this INR 291 crore is corresponding to what exactly?
The other is actually an intercompany sale, which we have removed from this quarter. If you add up all these numbers, which is cement, RMC, white and gray cement, it will add to the consolidated number. It was only an intercompany sale.
Volume has not been shown on that account.
INR 291 crore revenue, which is on other business, UBS, and others.
Yeah.
UBS sales or our building construction chemical sales or other incomes or other miscellaneous sales that might be there.
Last quarter that number was.
We are trying to improve the disclosures, simplify your life. What perhaps you might want is export volumes. Export volumes were dismal. Our exports are largely to Sri Lanka, and Sri Lanka was virtually no exports. Just 1 lakh tons of export to Sri Lanka.
Sure. Okay. That clarifies. Thank you.
All right.
Thank you. The next question is from the line of Indrajit Agarwal from CLSA. Please go ahead.
Hi. Sir, one follow-up bookkeeping, you know, bookkeeping question. Any ballpark number on how much CapEx is remaining in phase one for FY 2024?
We should complete everything this year, and maybe INR 2,000-3,000 crores of spending might be pending. If I'm wrong, then Ankit will revert to you in the future.
Sure. Thank you so much.
Thank you. The next question is from the line of Ritesh Shah from Investec Capital. Please go ahead.
Hi, sir. Two questions. First is, Grasim has made an announcement of INR 2,000 crore on the B2B side, online portal. We have a solid UBS franchise. Any color if both the verticals can actually marry into each other for both the entities to realize the gains?
No, they should be. I think they will evaluate how to synergize because that's B2B eCom. That's what I believe. Our UltraTech Building Solutions is hardcore, it's B2C.
But, uh
Yeah, I don't have too much more insight on what Grasim is doing.
Right. Sir, any growth numbers, target numbers on UBS stores, let's say three years out, any target revenues over there?
We are today reaching about 3,000-odd stores. UltraTech Building Solutions from cement perspective, because it's an important channel partner for us, I would think 10% of revenues, quantity. One second.
Okay.
Today 15%. Let me double-check. Just today, about 15% of our cement volumes. Yeah, 15% of our cement volumes are through UBS outlets, so we will continue to grow the UBS channel.
Sure. Sir, on RMC, there are a few players who are going super aggressive in the market. Any plans over here to up the game?
We are expanding pretty rapidly. Today, you know, maybe a year ago or six quarters ago, we were static around 100 plants. Today, we have reached almost 171 plants. YoY, 35 plant growth has happened.
It's if I look at the revenue numbers on that same chart, 77% growth in revenue.
Mind you, these generate incremental EBITDA over the cement EBITDA. It's not just a channel, but it generates its own P&L.
Right. Sir, last question. I'm not sure whether should I ask or not, but I'll just go ahead with it. Sir, at what point do you think that adding capacity beyond a particular point could actually be detrimental to us? What is the variable that you will look at and say, "I do not want to be
I will, you know, in the lighter vein, if I look right, I see my plant, and if I look left, I see my plant, then that is when we will stop adding capacity. To be honest, you know, it's a brilliant question, Ritesh. The answer to this would be defined by lead distance. How much lead I am generating. Maybe today I have lead at 439 km. Maybe average of 300 km might be a good lead to operate on, to that extent, we'll keep on expanding. Because there will be opportunity to expand, let me put it this way. There will be opportunity to expand. This is off-the-cuff answer. There's no scientific work that I've done in giving this answer.
Right. If I just try to push you a little bit, we have given numbers, say, 2025, probably something by 2030. Any specific numbers on market share that we would be looking at, given you would have
Undefined market share. You know, because we don't get any market data. We don't know how the capacity will be there, how the growth will be there. It's difficult.
Okay, sure.
You asked me a difficult question. I'll give you a difficult answer.
Sure. I'll come out and meet up.
All right. Yeah, done better.
Yes, thanks.
All right.
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.
Thank you.