Ladies and gentlemen, good day, and welcome to the Q2 FY 'twenty one Earnings Conference Call of Ultratech Cement Limited. 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. Please note that this conference is being recorded.
I now hand the conference over to Mr. Atul Dagha, Executive Director and CFO of the company. Thank you, and over to you, Mr. Daga.
Hi. Thank you so much, Raymond. Good evening, everybody. Thanks for joining us today and hope that all of you are staying healthy and safe in these times. Unbelievable but true, office see office space seems so redundant.
I visit office just to keep the memory alive of what it looked like, and, hopefully, it will be a monument about which I will narrate stories someday to my grandchildren. I wish and pray that all of you and your near and dear ones have been safe and are doing well. I'll try and focus today on the key parameters going the industry and Algertec, namely demand, prices, costs, and CapEx. In the early days of the pandemic, there was a marked shift in concentration of demand from the rural markets for reasons which we are already aware of. What was thought to be a pent up demand actually has sustained and strengthened over the past few months.
Migrant labor is coming back and still not coming back. Good monsoons are all helping the rural markets grow. Over 50% of the rural districts have shown a growth over their past peak performance. The impact of COVID nineteen has been lesser in rural markets as compared to Tier one markets. Districts having rural demand of 25% impacted as compared to 50% in rural in urban areas.
Farm or welfare expenditure is up nearly 100%. Other rural industries are also generating a good growth like fertilizers, seeds, etcetera. Both state and central government are increasing the focus, allocation and release of funds on the rural housing. MSPs have been increased, second consecutive good monsoons this year. To sum it up, our expectation is that there will be an overall improvement in rural AKA retail, AKA trade markets over a sustainable longer period of time.
The uncertainty in the crowded urban markets will give a further boost to the trade ratios. Urban demand also is, however, slowly and surprisingly coming back as the company goes through its unlock program. So here we are where initial thoughts were that the economy will come to a grinding halt. We saw Google markets with a pent up demand doing good for cement industry. In came the government spending program, gaining momentum, payments being released on time, and we are seeing infrastructure growth also happening.
Tier one towns are seeing opening up of real estate markets. People are wanting to buy their own space or larger space, and we are seeing good traction in urban real estate also. Albeit it's very slow, it will take time to to show some real growth. All these factors put together are, in any case, very good for the industry. Government trust and spend on infrastructure is one of the key drivers, as I mentioned.
Housing demand is definitely showing green shoots. Keep housing loans and the need for space is falling some demands. Gujarat, which was amongst the bottom two states in terms of demand, has also started showing signs of recovery towards the end of this quarter. Maharashtra is still to pick up, though, you know, the large projects like coastal roads, metro, Mumbai Airport ex extension, expressways continue to keep our manufacturing plants busy, but that is not enough because of the high base which Maharashtra as a state has because of its fairly developed state of economy as compared to the other states. Eastern and central markets have literally brushed aside the COVID impact and running full capacity with solid demand.
North markets have started picking up largely driven by more by inter projects by the government in the road project except the MCR markets where we are starting to see housing market picking up. It is generally the rural retail demand that has shown big traction as compared to the other markets. South looks promising with Andhra getting into good demand from the state capital cities, the irrigation projects, And the remaining South states also, Tamil Nadu, Karnataka, are starting to see positive movement in demand. As I mentioned earlier, Gujarat, which which had been one of the slowest states, has also started growing. So demand seems to be playing very well along for the industry.
Costs. If I were to talk about the costs, pet coke is no longer flavor of the season. With crude production down, aviation demand for aviation fuel down, demand for automobile fuel down, pet coke pet coke production has also come down. And added to that, cement industry went all out to buy pet coke, which has shown increase in prices of pet coke today in today, I think in October, the prices have almost reached $100 if one were to buy for deliveries of. However, as I mentioned, pet coke has is no longer a player of season because cement industry is switching to alternate high calorific value coal, which is today cheaper.
Diesel, have you you've all seen it's up 13% this quarter, which which does impact our logistics cost. At Altertec, our journey on overhead reduction continues. In first half of this financial year, we have seen an overall reduction of 14%, which is roughly 450 crores. And we are very confident of our mission to reach a sustainable reduction of 500 crores for a year year on year basis. You might say that $4.50 has already been achieved in first half, then I am telling you a smaller number for sustainable basis.
But this $4.50 crores is not necessarily sustainable. That's what I had mentioned last quarter also. As things start opening up, as economy starts opening up, spending will definitely increase. Let me now touch upon prices. Cement prices have come off marginally over the last quarter, but that is so normal about seasonality.
Seasonal trends so normal about the monsoon quarter. I also heard about prices hardening in some of the markets as monsoon has started receding. But I strongly suggest not to read too much into these price movements. It will not be prudent to analyze every price increase into profits because price movements are like your stock market prices today up, tomorrow down. To talk about our last acquisition, Century, it has been fully integrated.
The assets have achieved an operating EBITDA per ton of over 700 this quarter, which is a maintenance quarter. Brand transition has been slow because movement of people has been restricted. We are hopeful to complete the brand transition during the before the end of this financial year. We are now investing in 20 megawatts of the VHRS at Mahir and Managar, two of the units of Sensi, which will result into further cost reduction and improvement, thus an improvement in EBITDA per ton. These projects will get are scheduled to get commissioned by March 22.
At Ultratech, we remain focused on deleveraging integration of our acquired assets. We have pared down our debt net debt by about INR 2,500 crores this quarter on the back of INR 2,200 crores that was reduced last quarter. And we have to do net debt because we are carrying a treasury surplus on our balance sheet of over 10,000 crores as of now. Keeping liquidity is always helpful in these times just in case some sweet opportunity knocks the door. Yet, of course, the treasury surplus in our company generates a positive carryover borrowing cost.
Otherwise, it would not make any sense of carrying the treasury. This brings me to the point of ROI and ROCE, which is quite often investors have asked me about our performance. So if you were to exclude the treasury surplus of INR 10,000 crores, noncore assets which have been held for sale, the annualized ROCE that we are generating today is about 12%, and ROE is improving to has reached about 10% and will continue to improve going forward. This will further improve when the assets like the 2,300,000 ton Dalla Supa clinker plant and the line two Bara plant get commissioned and start generating revenues and profits. All these are the both these assets have already been paid for.
We expect to commission Dalla Supa clinker line sometime during the next financial year. The legal clearances and work on phase two is in progress, a bit slow, but on track, on course. On our CapEx plan, there are delays on the 3,500,000 tonne brownfield expansions in Westingall BR and the Greenfield cutback plant, largely due to the COVID impact, but I'm sure we will be able to complete these projects in FY '22. Eastern markets are expected to continue to generate strong demand, and hence, we are very focused on executing these projects at the earliest. All these CapEx plans are being funded with internal accruals, and we are on course to reach a net debt EBITDA between around one x by the end of this financial year.
We're only at 1.22 x at the end of h '1. Let me now talk about what we are doing on environment sustainability. We, at Enerpac, are very conscious of our commitment to build a country's infrastructure as well as reducing CO2 emissions. Somehow, would these goals get conflicted since good infrastructure needs needs good quality of cement and good quality of cement to manufacture, good quality of cement, there is a lot of CO2 emission. And Altertec will not compromise on the strength and durability of the products of its products.
High purity, as I mentioned, high purity OPC cement consumes more limestone and result into more emissions. How is Altotec balancing both hats? The benefit of cement we make ultimately help reduce auto fuel consumption, reduce the number of automobiles at La Alero, the metro network, the expressway, the bridges that are built with our cement are definitely helping reduce c o two and also helping building an economy. We are working for the future in the present. In these COVID times, we were able to complete work on one of the WRTH projects, taking our total capacity to one twenty five megawatts.
We expect to commission additional 60 megawatts by FY twenty two, taking a total tally to one eighty five megawatts of WR TALIS. Then there's the expansion plan of another 60 megawatts to reach our peak capacity of three forty five megawatts, forming 20 of our total power consumption. Added to that, we expect to commission solar power of three fifty megawatts. And along with the alternate fuel that we consume, by the end of FY twenty two, green power will constitute 30% of our current energy consumption. That is what is our contribution to Mother Nature.
I'll take a firm believer of delivering our product to customers in markets with lowest impact to To manufacture and deliver our product, there is involvement of large scale logistics movement. Last time when I had taken stock, we were moving 28,000 trucks on a daily basis. This number I'm referring to somewhere in FY '20. Things are much slower in the current pandemic times. We look at our all options to transport raw material and cement and prefer to adopt low carbon transport options.
Last year, a significant portion of our material and product was moved using railways. As you know, rail is less carbon emitted mode of transport as compared to road. So if we had moved the entire quantum by road instead of by rail, it would have emitted additional 3,000,000 tons of carbon dioxide into the atmosphere. That is what we saved last year by not moving material by road. This year, we have kept predominantly using using rail and already resulted into carbon savings of more than 1,250,000 o two t c o two.
The first half of the year, we have scaled up our act ambitions and action in climate change. I would therefore like to highlight two key actions in in this area. Our company, a founding member of GCCA, Global Cement and Concrete Association, has committed to the 2050 climate ambition announced by GCCA on behalf of all its members. Algertech is also committed to science based target initiative, SBTI. This will enable the company to set climate targets aligned to the Paris Agreement.
Before I conclude, let me share with you how we have been dealing with the pandemic. No doubt, the impact of COVID nineteen is is unprecedented beyond imagination. It is affecting everyone worldwide and every aspect of our daily lives. Ultratech has emerged stronger and well prepared in the wake of the ongoing COVID pandemic, managed the crisis with sharp focus on operational efficiencies. We led the response with timely precautions and creating business continuity plans, focused first and foremost on ensuring the safety of our people.
We adapted to new ways of new ways of working in every sphere. The company has laid down very strong SOPs for the safety of people and efficient running of our operations. As of today, we have just about 108 active cases across the company having a strength of nearly 16,000 people. Sadly, we also lost four members of our team out of the sixteen thousand to this damn virus. We have been increasingly working with digital technologies to help us calibrate our ways of working and collaborate more effectively.
We recognize the need to ensure business as usual and are working with experts to achieve this for our customers, our people and partners in the value chain. Thank you very much, ladies and gentlemen, for sparing time from your busy schedules and joining us today. With this, I end my commentary, and I'm happy to take on any questions.
You very much.
Thank you, Raymond.
We will now begin the question and answer session.
Session.
The first question is from the line of Sumangal Nevacha from Kotak Securities. Please go ahead.
Yes. Good evening, sir. And firstly, congratulations to Mr. Dagar on a great set of numbers. So my first question is on the volumes.
You've done 8% on a like to like basis, which appears much better than industry. So if you could start with just sharing what our thoughts is on our performance versus the industry in 2Q? And then if you look at last few quarters trend, it appeared that we are growing tad lower than the industry, which appears to have changed this quarter. So is there, I mean, a deliberate change, of course, or any change in strategy? Your thoughts, sir, please.
I think pandemic has helped us in a way to increase our growth, better coordination amongst everybody. No. This is a network of 50 plants, and I don't even know the headcount of marketing people who are there out on the field. The coordination is going up, and no order is being left unserviced. If plant one depot one is not able to service, immediately, the order is picked up from the by depot two and service.
So that is the only benefit or I don't don't wanna call it a strategy, but that is how things are moving right now. And, you know, I don't really agree whether we've been degrowing the market in the prior periods. We have been growing because we've added new acquisitions don't often start ramping up at the same pace from day one. It takes time. And we look at the consolidated numbers, obviously, it does not reflect properly.
Why is it that you should look at counting century into my base when I did were not operating that asset? When I put up tomorrow, the $33,400,000.0 ton of east capacity, there is no base effect. Consider this acquisition also as or any organic or inorganic capacity, why should it get counted in the base? There there are several players when they announce their results. It should be showing you a double digit growth.
But if you analyze it properly, in the base, the volume was not there. Similarly, if I were to exclude Century volume, which has been included in our numbers because of MCLT order, UltraTech has grown 20% this quarter. Ultratec brand, that is far more compelling reason to be happy about. Ultratec brand has grown 15%, and that's not a joke. At a size of, you know, 100,000,000 times if they are able to go back to.
Let's see who can achieve it. Got it. And, sir, with respect to industry, I mean, how the industry fare? Any sense on that in 2Q? We will outgrow the industry for sure.
Understood. So second question is with respect to the cost. So we had a target of around 10% reduction in overhead cost. And looks like from the run rate, our cost control is much more tighter, and we are well above that target. So any latest thoughts you would share as to how we are doing on this overhead cost and other fixed cost reduction?
As I said, today, h one, we are at 14% reduction. By the March, we will be at that 10% because this extra 4% reductions that happened in h one is more about not being able to spend But there was no need to advertise in q q one or q two. It's later part of the q two only when ad ad spends has started happening. And ad spends will be regular in h two. So I will do a catch up and we our target was, let's say, 500 crores per annum, 500 to 550 crores.
Annualized number, which we have done $4.50 crores, and I specifically specifically mentioned in my commentary also, we should be doing $5.50 crores per annum on an annualized basis. Understood. I have more questions. I'll join with you back. Thanks and all the rest.
Thank you.
Thank you very much. The next question is from the line of Ritesh Shah from Investec. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. Congratulations on a good set of numbers. Would it be possible for you to provide some color on white cement and property market?
Specific comments on market share and profitability will be quite useful. And some color on the RNC margins, please. So that's the first question. I think we have been getting market share in maximum also after some the fact that we that we had to face in the last few quarters, but without losing in the price position. RMC RMC is doing alright.
You know, total revenues from RMC were about 434 across. White Cement was also around the same number. RMC is very fragmented and very difficult to measure market share in RMC because because the organized the unorganized players are far higher than the organized players. I I don't have any other on on vitamin and RMC. Unless you have any specific question.
Sir, would it be possible for you to quantify the market share or the volume that we have locked this quarter or in first half? So the sense that I have is, basically, we have lost some market share over here. Please correct me if I'm wrong. And if that was the case White cement, we have gained market Hello? White Cement, we have gained we have performed very well.
I'm sorry. When I'm saying vitamin, I'm saying talking about vitamin, fifty combined. Fifty together. Okay. Okay.
Thanks. And, sir, in the initial comment, you did indicate a sweeter opportunity knocks the door, and we are holding a good chunk of treasury. What is our thought process, sir, over here? Like we have done a phenomenal job on the balance sheet side. You did indicate year end leverage ratio that you would end up on net debt to EBITDA.
But from a capital allocation point of view, how should one look at it? Is it like we are chasing growth? Or should one expect a higher dividend payout going forward? Dividend payout is higher dividend payout is still long way away for us to take. Because so when if we expect to grow at a 70% CAGR over a longer period of time, we will have to invest a lot of price.
So all the cash flow that get generated will be deployed back in the business, whether organic or inorganic. And in my earlier commentaries, I have told you that we are geared up for about 50,000,000 tons of expansion till 2050. First of which which is Poly will be rolled out, but we will start work on Poly in the next calendar year depending upon, you know now we we get into order placement and finalizing all the details. We'll start getting into that, and then we are putting up our expansion proposals to the board. Once the board approves, I will come back to you.
Okay. Great. I'll now join back the queue for more questions. Thank you so much.
You. The next question is from Gunjan Priyatni from JPMorgan.
Just two questions from my side. Firstly, just trying to understand this volume outperformance a bit better. Is it that you saw the nontrade market also recovering in this quarter, and that could position us in a better position? You know, is there anything to read in terms of trade, nontrade market share out here? And and if you can just give the mix also, what is it now for?
So, yes, market has started picking up. I was mentioning Lot of infrastructure projects coming back into stream. And I think our trade market share correct me, guys, okay. 71% would be trade? 70%, sir.
75. 70% is trade. Okay. It is down from trade. One trade started picking up momentum.
Sorry, sir. I missed that remark. It is from the versus last quarter. How is it?
It's it's come down to about 70%. Last quarter, it was about 78%. 77, 78%. Okay. So it it could be that we don't see yeah.
But it is better than last year. Yeah. It's still higher than last year. Last year, we would be around 6067% on trade. We are now at about 71%.
Okay. Got it.
But looking at the outperformance, it could also be that non trade has come back, which is, you know, in a way, we were kind of ready for any demand that came to the market.
Yes. Absolutely.
Okay. The the second question I had was on the on the cost side. Now, clearly, there are some pressures building up on this fuel on the on the diesel and the pet coke. I just want to understand, is there any inflation that reflected in quarter two? If not, you know, what kind of increase we should work with for second half, you know, both on a pet coke and the freight side?
So due to, yes, no no inflation has yet impacted. And we we did a consumption of about $71. Current prevailing prices on pet coke are $100, but other coal, you know, the imported coal is still cheaper. So at max, if I if you have to look at not more than 10% inflation and energy cost in the h two. Not more than that.
Oh, okay. So you the the shift would happen towards intern international code?
Yes. It is only happening. So the the way one manages the international code international code at a high calorific value is available, which is cheaper than Petco. Okay. Petco is no longer the for cement industry.
Okay. So 10% on power and fuel and on the freight?
Freight, it's difficult. They all depends on how diesel goes up. But the diesel engine Diesel has already gone up 40% in this first half. I don't know how much it will go up. The 40% has been largely absorbed in our efficiency improvements.
Remains to be seen how Dizel performs because Dizel would contribute 3% to total cost. No. That's not logistics is 20%. Diesel Diesel has a percentage of total cost, not logistics cost, and contributes about two to two half of 3%.
Okay. Got it. Okay. Just last clarification on the pricing adjusted, you know, on the pure cement business, can you give, you know, can you give a sense on a q on q basis how much was your realization down for the cement business?
Realization was down You are talking about to buy one why or quarter on quarter?
Quarter on quarter, sir.
Quarter on quarter, roughly two to 3%. It is
two to 3%
down. Yeah. All India numbers, so it don't compare us with regional players and get misguided.
Okay. Got it. I'll join back with you. Thank you.
Thank you. The next question is from the line of Vivek Maheshwari from Jefferies.
First on the on the industry slide that you have put out, on the South one, you have a comment September 20 saw a sharp increase in demand. So, basically, you are saying exit numbers are far better than what the quarter average was. Absolutely. Absolutely. Because our understanding is that South was a sharp double digit decline through the course of the quarter.
So that is like a big check. Is there a base effect to it, or there was a like, a decisive change, you know, on the ground, which is No. I would say we we make that the volume just started picking up in. Okay. Okay.
And and your comments similar comment is in Maharashtra or Maharashtra also in for a segment recovery in September 20. So you think both these markets will become growth market as we enter into second half, even if in the base? In spite of these intra projects, you know, taking off in Maharashtra, because of a high base, they are still very small numbers. The interesting market is Gujarat where we are seeing improvement in demand. Sure.
Very long time. Okay. Okay. But, you know, to me, South and Maharashtra, your comments, you know, are more like, you know, changing trend because Gujarat, whatever we picked up in our checks, was doing okay for the last three, four months. Right?
But Maharashtra, South, if you are saying there is a big tougher change, particularly in South, that's an interesting one then. Yes. Absolutely. And do you I mean, how do you reconcile IAP number versus industry demand? Because the numbers are looking very different.
Right? And and I mean, do you think there is, you know, some disconnect over there? Big disconnect. The way you do your channels on industry, you should check on how these numbers are computed. We'll have a separate discussion on how the competition are done.
Right. I look forward to that. And the other bit is on the energy cost. You mentioned about moving from export to international coal. I mean, after long, we are hearing about coal from you.
So have you already moved there, or it is something that, you know, you will see in case if Petco prices further move up? Also, has been inflation has been quite a bit. We we are not consuming Petco now. The high high cost pet coke or whatever inventory we had is what consumption is happening. Otherwise, we are more into international coal at the moment till the time pet coke starts softening.
So, basically, you are using in your at your plant international pool already? Yes. Yes. I see. I see.
And then last bit, you know, previous participants are so on a on a sequential basis, you are seeing realizations are down up to around 3% to 3%. Right? Correct. Got it. Got it.
Perfect. Thank you,
and have the best.
Thank you, sir.
Thank you. The next question is from the line of Amit Morarka from Motilal Oswal. Please go ahead.
Hi. Good evening, Mr. Lager. Congratulations for a blockbuster result, if I can say. Just just a few questions.
Firstly, on capacity ramp up. So while you said that East now will happen in FY twenty two, so it'd be, like, early FY '22, like, 01/2001. And secondly, also, like, in the super dollar now, what would be the timeline for that? So dollar super should go definitely to Jan, March twenty two quarter. That is for sure.
And the 1,200,000 ton, which is done West Bengal and Bihar will be q '2 or q three depending on how things progress. Cutback will be again q four twenty two. Okay. And and for the dialogue, has the issue been settled on that environmental front? Yes.
Yes. That has been settled. There's a lot of procedure work, a lot of red tape or I shouldn't say red tape, but a lot of procedures that have to be compliant with. We are complying with that. The biggest thing is that NG NGT matter has been resolved.
And to explain to you in simple terms, since the since they declared the NGT declared that the plant and mines was on forest land, We have to identify alternate forest land and give it to the government or to the forest authorities so that we can use this forest land for mining and plant operations. That has been done. Handing over to the government is in process. Formality formalities have to be completed at MOE of Delhi. I guess by November, the MOE of formalities for the plant will be completed.
And by June, the MOEF formalities for mines will be complete. June 22. June 22, MOEF formalities for mines will be completed. Okay. Okay.
Understood. And just on the
working capital front, like, in
Vanek, we can see that there has been a very strong working capital release, and which has come from both payables increase as well as receivables. But if I think of the September month of this year versus September last year, there must have been a very strong growth for Y o Y for the month of September, but receivables are still down. So, like, has the payment terms or the credit terms still remain tight in the market? We we are not reducing our current period, but we are not allowing anything extra. Okay.
So is the second half, then the working capital will still will still be strong then? Yes. It will remain strong. I'm not guaranteeing that I'll still have this 1,700 crores negative. It could be 1,500 crores, but it will remain a big negative working capital.
Sure. And lastly, the Northeast, you've opened the Zonal office now, I think, for for first time, only used to cater through, I think, C and F agents. So what is the plan there? I think or even for Zonal, there has been application or expansion of capacity there. Have you been to that office?
I have not seen the office yet. No. I just heard from people that you opened some general office in Northeastern. Now because we have a significant capacity available to to the Northeast markets, we can manage it instead of depending upon an agent. We can do things our way better.
Instead of leaving the benefit of price to the agent, we should get that price benefit. That's the whole hypothesis.
Okay. Sure. Sure. Thanks.
Thank you.
Thank you. The next question is from the line of Gaurav Vateria from Morgan Stanley. Please go ahead.
Great execution, sir. Sir, two questions. Firstly, on the non trade side, how to get some visibility about the next three months sequentially? Next quarter should be better than this quarter because labor is coming back. Is that how one should look at, or there are other elements moving parts in it?
No. I think, essentially, labor is coming back, government is opening its first change and pushing for execution. They are cracking the weight on all the contracting companies for increasing the pace of execution. And road now the classic case is road, which I always tell every, you know, people that road projects are the easiest ones for the unskilled labor to get employed. You come in today, and tomorrow you could start working.
That's where the good amount of employment generation and revenue income generation takes place for the laborers. So there are huge amount of focus on road work that is happening. So sequentially, the number should look better, right, for the non trade segment as a whole? Sequentially, as in q two over q one? Q three over q two, the numbers should look better for non trade segment in volume terms.
Yeah. We've already we we've already reached we are down from 78 to 71 on trade, which is I think that is where the numbers will be now. We used to be 66% trade and, you know, 34% non trade. As compared to that, we are now at 71% trade. Okay.
Second question, sir, at what point we may need additional clinker in the East given that East is showing very, very strong growth? We are today bringing material from central plants and coastal under plant. So as of and the Maharashtra plant also, Manikur also sticks material to the Eastern markets. Today, we don't have any shortage. In the peak time yes.
We we bought it up landing capacity also. We don't have landing in peak peak period. That's in January, March 2022. We will be transporting some from south location because the market remains buoyant. There's no harm in transporting long distance provided it is a contribution accurate.
So I at no point in time, Altertec will be falling short of. Great, sir. If I can squeeze one more, then you I I it looks like you increased your target for the green power from 22% to 30% f by f by '22. What what No. It's now investment in further WHRS into the century plants into Nagwara cement, is increasing their percentage share.
Okay. And there's no CapEx implication. That's what I wanted to check. No. For example, when we are doing the new HR, there is CapEx.
No. I I meant from a Outlook perspective. Whatever CapEx you have guided for, that CapEx stays intact. Yes. Yes.
It's within that. Okay. Great. Thanks a lot, sir.
Thank you. The next question is from the line of Indrajit Agarwal from CLSA. Please go ahead.
Hi. Good afternoon. Thanks for the opportunity. Couple of questions. First, sir, can you put some light on the exceptional that you have on the consolidated, mainly on the continued operations for which entity it relates to the loss?
Yeah. So what we've done is so I'll explain the full piece instead of, you know, continued and discontinued.
Sure.
All these are towards the acquired assets from as. China asset when we sold off, we had a gain of 400 odd crores. We have tried to assess the carrying value of The UAE asset and embedded by 78. We have looked at the realizable value of the loan that we we inherited on account of which is a loan offering to this European company. We have impaired it down by $2.50 odd crores.
Fourth, in one of the subsidiaries, there's a major subsidiaries which is attached to Vinani Vinani Cement, which is now not Dwara Cement. There were some advances outstanding to unknown people, not traceable people, which we have had to do an impairment. So these are the Mukish, these are the main items. Unmute. These are the fourth items, and net, we are gaining 24 rupees.
That's helpful. Second is you talked about the utilization and getting stretched. Can you provide on what kind of utilization either you or the industry had as of September in this region? You it's really misleading if you look at the quarter. Mhmm.
Month on month, the capacity utilization has been going up. So if for us, if the capacity utilization for the quarter was, what, 66%, But if I look at my September, was not even close to 75%. Mhmm. And October, I need to close 85% also. Okay.
That's helpful. One last question for me. More broad based, as you spoke at Length
Road ESG, you said a
thermal substitution rate for Indian milk is significantly lower than global averages. So what do you think can be done to bring over the step change in that at at a country level? You globally, there's a huge amount of alternate fuel that get consumed. Thermal power is not so high because they have gas available. Gas is a power available for energy.
India is dependent on coal based energy only. These two and, you know, there are companies, global companies where alternate fuel forms forms as high as 20 or 20% plus. I have only one plant in the entire network, which does about 30% alternate fuel because they are able to source and get alternate fuel. Lots of other plants, they don't have anything nearby to supply alternate fuel. If you go and approach the municipal authority for municipal waste, which has which has energy, they ask us to do the sorting ourselves.
I don't I can't deal with that shit, literally. So there are challenges in the country which do not exist overseas. Overseas, the awareness about disposal of waste is very high as compared to India. All the manufacturing facilities generating combustible waste should be more than happy to reach out to cement companies or any other manufacturing process where they can burn their waste. But the ways of working in India is different than overseas.
Sure. Thanks a lot.
Thank you. Before we take the next question, we'd like to inform participants that in order that the management is able to address questions from all The next question is from the line of Rishi Chopra from Citigroup.
Thank you. Just some bookkeeping questions. One is what is the RMC and white cement volumes for the quarter?
White cement volume would be about 330,000 tons. And white cement, right, it's very difficult to quantify volumes. The value is about.
Okay. Okay. That's fine. Secondly, the how much has been the CapEx spend in the first half?
First half, $4.06 $4.50 crores.
Okay. And you're sticking to the 1,500 target for the year?
My guess is I will not be able to spend 1,500. Might might there might be some reduction. As of today, when I was looking at the forecast, we could look at 1,200 or 1,300. Okay. This is largely due to Rashid.
The ability of user is still a challenge at most project sites.
Okay. And the completion is scheduled for December? The 2,000,000 are correct?
No. No. It won't. Will get pushed to March because cement mill has just been is in the moment of in in the process of being moved. So I guess it will go to March.
Okay. And so so this year, basically, we have Barra coming, and next year, we have the east capacity coming. That's what we are that's what's in the pipeline, right, at the moment?
Yes. At the moment. Okay. And next year, we'll start work on this year, we'll start work on the 3 and a half million time.
That will take how long?
It will have to be commissioned before by October, December 22. And I'm I'm very less less because land and boundary work. A lot of work has already been completed.
So when you say October '22, meaning the October '22 or October '22?
October '22, and calendar and fiscal remain the same.
I don't know. October to this. What I mean is they're coming to fiscal twenty three or fiscal twenty two was my question. March, October, December 22. Got it, sir.
October, December 22. Okay. Okay. And just one I mean, just as you've seen, you know, these price increases that have been announced in the South and prices seem to be generally resilient except for the East. So do you think that I mean, can we expect some sort of changes with you know, given that demand is quite strong and the pricing pattern in the East?
When people don't have capacity left, then, obviously, price hikes are in.
Okay. Okay. So we should expect this after the rally, you think?
Very difficult. My standard question response to that kind of a question is to tell me what will be the stock price for index ten days from now. Okay. I'll be able to predict that. Unfortunately.
Difficult to predict. Opportunity the moment the marketing team gets an opportunity, they will take the prices. If they don't have money yet to sell, what else to do?
Got it. Okay. Okay. That's it. Thank you.
That's it. Thank
you. The next question is from the line of Swagato Ghosh from Franklin Templeton. Please go ahead.
Yeah. Thanks for taking my question. So, Dada, sir, I just wanted some help in reconciling your realization performance. So from what I know, the sequential realization was down about four to 5% for the industry, and you actually outgrew the market and also had an adverse mix impact because your trade mix came down this quarter. So and still you better delivered the better realization performance.
So what were the reasons? Can you please help me with that?
Very difficult question. You see, it's a market mix. What happens is when you do check-in one particular market, it might be behaving differently. And one is the market mix and my share in each market out of my own portfolio. So depending if South is moving up and in total volume that I have done, let's say, 19,000,000 tons, what volume I have sold in South, Delhi, in North, and so on and so forth.
So it's a market mix game, essentially.
Okay. So then, yeah, then you have sold more in South and less in the weaker realization market. But can you continue to do that? Can you continue to optimize your mix in the coming quarters as well? That's the follow-up I have.
Yes. We will optimize our mix. We will not lose any opportunity to you know, capitalize on that opportunity. There are times when there are plants which have gone hand to mouth and clinker. So everything is fresh baked today and sold today.
Okay. Okay. Okay. Second question is because you are the market leader, I am asking you this. Industry profitability has taken a step up in the last, say, three quarters, but the utilization levels are still pretty low on an absolute basis.
Like, if I heard you right, in September, it has improved quite a bit, but still it's at the 75%. There is still some room for, like, additional improvement. So do you think that some some players now might go for maximizing absolute profit at the expense of slightly lower profitability? That can start happening. What's your sense, sir?
No. It doesn't happen that way. The moment somebody starts dumping, material prices will collapse. And today, I can as I also mentioned the commentary of during one of the questions, we are already reaching an 85% capacity utilization without any compromise on realizations. So this is a phenomena I remember where we had last seen in Jan, March nineteen where all India cement capacity utilization was going up.
What happens is that let me try and explain. It's important. If one region is seeing a good demand and good pry and consequently good prices, the neighboring region infiltrates. So it's easy for central to send to north or to east if depending upon where the market is good. Today, North is good.
East is good. Central is very good. So they don't have to travel long distance and, you know, incur additional cost to for market. They are happy selling in their own home market and making more money. This we had seen in January, March 19.
Yes. January, March 19 pre elections. This phenomena is coming back again.
The next question is from the line of Pulkit Patni from Goldman Sachs. Please go ahead.
So my first question was actually the same that previous participant asked because realization despite the fact that your trade mix has gone down, it's tough to fathom how your realizations have actually not fallen meaningfully. And nonetheless, I mean, just one more question. Since you mentioned in the presentation unprecedented growth in rural consumption, Could you highlight what are the end markets where this is going? Is it like rural infrastructure? Or is it housing?
If you could throw a little bit more light on rural consumption?
Hello? Hello? Can you hear me? Hello?
Yeah. I yeah. Now I can.
Sorry. The mute button had got placed. I did not be right. When we talk about rural markets, infrastructure is not captured over there. Infrastructure is part of my interest expense.
Rural market is largely retail market, which is
a
housing and repair modification market. This is what has been growing very well. It has gone back. It's continue is spending time on local work as of because the job opportunities had dried up in the urban market. So the rural housing market has swollen up.
Sure. Sir, my last question would be on incremental capacity that is likely to come through. I mean when COVID hit, we saw multiple players announce delays in their existing expansion plans. Do you see that changing now given that pretty much we are talking about normalcy within five months of COVID hitting us?
Yes. You see, projects where work was deferred will come back on stream because one would be losing interest on the half of the capital employed on that project. So those projects will come back for completion as gangs of labor are available on project sites, delivery of equipment, you know, parts, etcetera, starts normalizing. Those projects will get completed. But going forward, as mines are starting to become expensive and costlier, new capacity and very limited players have got surplus mined, by the way.
There are few announcements that you hear right now. They will start drying up as mines become lesser in the hands of people or mines are expensive. Because unless they can forecast a profitability, which will absorb the additional cost of Limestone under the auction process, my belief has been in the last several years ever since MMDR came into being that new capacity addition will slow down will slow down, and it has been actually slowing down.
Thank you. The next question is from the line of Madam Madam from Fidelity Investment. Please go ahead.
Yeah. Hi, sir. Good evening, and congratulations on a very good set of numbers. I just had one question that was given that, you know, we've seen good volume recovery in in '2 q. If you could have a guess for a full year, like, you know, can the volume decline for the full year despite one q being weak?
Can it just be flattish or maybe down with, you know, low to mid single digits? Or what would be your thought be for the full year? Annual as of now, I I I guess the remaining quarters, the industry should show a growth Y o Y. So barring q one, which was a massive degrowth, thirty thirty, 31% or 32% degrowth, the rest of the three quarters should show positive growth. Right.
So the 30 and yeah. No. The 30% the growth of that one quarter, which is, let's say, what will get reversed to a large extent on an annualized basis. Yeah. Because q four FY twenty was hit by COVID.
So, you know, we already had decline in quarter four. So the week basis is quite easy, which is why I was thinking if, you know, if we could end up with zero to 5% decline for the full year, maybe. Is that broadly, like, okay assumption to make? Yeah. It's a good assumption to make because I'm this year, I think, was already in our pockets.
Now I am looking forward to f five twenty two, which will be a blockbuster year for cement industry because of the low base that has got created.
Got it. Got it. Okay. Alright, sir. Thank you so much all the way.
Thank you.
Thank you.
We take the next question, we'd like to inform participants that this call will be extended by an additional ten minutes. The next question is from the line of Ashish Jain from Macquarie. Please go ahead.
Hi, sir. My first question is on pricing. Can you just share how your regional prices moved on a sequential basis? That's very sensitive information. So, in other words, I am not able to Okay.
And, sir, on the cost front, so, you know, in the last quarter, you had indicated, like, a decline of $505.50 crores. And now, you know, like you indicated, $4.50 crores of that has been achieved. So going ahead, will this start reflecting in other expenses in a material way? You know, the context I'm asking, this is also from a repair and maintenance cost point of view. How much of that have you actually done in first half?
And, you know, could that be a big driver of how cost move in the second half? Yes. So, know, what what happened actually was, like, q one production was down, which helped us extend the life of bricks, which is just maintenance cost. So we've got the benefit of that in financial year. Next financial year, it'll come back to normal.
So as of now, I think 20 odd Mukhesh, you remember how many kills were done for declining this year this quarter? No. He wants to speak on mute, so I can't help it. Sir, actually, that was the context of my question. Yeah, Mukesh?
Some claim will come in quarter third also. Yeah. So we we spread because of the 41 kills that we have, we don't take all the kills in one quarter. Right. Q two, we have had some kills, q three also, we will lose some kills for maintenance shutdown.
But maintenance shutdowns are planned so that the markets don't suffer, you know, after piling up clinker stocks for the twenty odd days of kiln shutdown. But to to answer your point, there will be shutdown costs which will which will come in q three also. And if you were to compare it with last year same quarter, we also had maintenance costs in q three last year. It's more or less if I remember it right, it is as high as 100 rupees a ton is the maintenance cost going towards in q three also. So y o y, you will not see too much of erosion in our numbers.
Okay. Okay. Thank you. The
next question is from the line of Navin Sachdev from Edelweiss Securities. Please go ahead.
Hello, Am I audible? Hello?
Yes, Mr. Navin, you may go ahead.
Yes, yes. Yes. Thank you. Thank you for the opportunity, sir, and congrats on the great set of numbers. Sir, my first question basically was on your volumes.
When you post like a 8% growth on a like to like comparison basis, and with that South, in your initial presentation slide, say South was negative, does it mean we have grown positively in South as well? Or this 8% growth is contributed by a much higher double digit kind of growth in other regions? How should we look at it? And in the same breath, how is that in October? October is much better than September.
Or, you know, firstly, as I mentioned, Navi, while the average capacity utilization for the quarter was 66%, September was 73 or 74%, and October, currently, we might be running anywhere between 85%. And the growth, if I were to look at, West was the lowest growth market, y o y, look at. Otherwise, all markets have been doing very well. So, basically, just to clarify on this, when you say, West was the lowest, which means in South, despite the industry being negative, we have been we have seen a positive growth there also. Is that correct?
Marginal. Yes. Great. So so that's what I just wanted to, confirm. So great achievement, I'll I'll certainly see on that.
And my second question then, if you could just run us through on this waste heat recovery yeah. Sorry. I mean, this is Sorry. I'm losing you. Achievement.
This is UltraTech. This is not data achievement. This is UltraTech's UltraTech performance. Yeah. Congrats on Carry on.
Certainly, congrats on that. I'm sure market will also receive it very positively. My question, second, was on this waste heat recovery thing. You said we are going to take the total capacity to two forty. If you could just help me understand this, where is it currently?
And how much are we adding with time lines to understand how these efficiencies will will kick in both for waste heat and solar. You shared it in my comments. We we are at one twenty five today. By March '22, 60 more gets added. By March '22, we will be at one eighty five, and then we will launch the program for the remaining 60 megawatts.
So '22, maybe 24. Maybe 24, we will reach there. Mid twenty four will be two totally two forty. Right? And One second.
F like, one second. 521 is 1185. 522 yeah. '24. 2324.
Yeah. We'll read this 214 number. 24245 by mid of f y twenty four. And solar, where are we and how much are we adding? Total, we are we are tied up for about 350 megawatts of solar.
Out of which, how much is completed as of today? 115 or 120 megawatts is already up and running.
Next question is from the line of Mangesh Pradang from Nirmal Bang.
Sir, just one thing on this rural side. So how much of our total volumes would be contributed by this segment? Because we keep saying that we have been a good performer, and we have seen unprecedented demand from this. How much percentage of your total volumes you described to this segment? How much?
So I didn't get you. So how much I didn't get your question. Yeah. So rural, how much you're selling, the rural segment out of the 71% of 71% of our volume is retail market. And give or take 35% of that 35 or 40% of that is rural market.
You know, the definition of rural also needs to be understood. What we call rural is not a remote village. It can be a town which is a population of less than 30,000 becomes a rural market for us. And so How you define understand, sir, this demand better. So probably tier three, tier four towns would also be included there.
Is that right? Four for sure. Yeah. Tier four for sure. If I call Mumbai as tier one, Bangalore as tier two, and Araipur as tier three, you know, going in in that analogy, then tier four is part of my.
That's all. The reason I'm asking from 70% of your retail and out of that, say, 40%, when you say it goes to that market, then that has to grow by significantly large. The growth in that segment has to be significantly large, you know, show overall growth. That So means this is a broad based demand recording, not only restricted to rural. Right?
It's a very broad that's why I said practically all all states are generating growth, whether it's an advanced state, except for Maharashtra. All the states are generating demand. India still is supposed to. Last question. Yes, please.
Thank you. We'll be able to take one last question. The last question is from the line of Milan Raghunwar from Centrum Broking. Please go ahead.
Yeah. Thank you, sir, for this opportunity. I have some initially, to start with some bookkeeping questions. One is in the September, in the seventeen point seven seven, we did something like point 3.32 of white. So what would be that number for nineteen point two one this time?
Sorry. I didn't get your question.
So in terms of volume
get your question.
Yes, sir. And Volume of Yeah.
Volume of ice cement is 3.3 lakhs.
Okay. And, sir, in terms of further realization, what would be the incentive part for this quarter?
Incentive in EBITDA per ton? Incentive per ton or not work out too. No. I'm saying Then my then I'll get my team to reach out to you directly. About so sorry.
It's about 30 rupees a ton.
Okay. Yeah. And, sir, if I've heard it correctly, did you mention that the RMC and numbers were $4340000000.00.04 34 crores, $4.35 crores each.
Is that the right understanding? Yeah. Both of them were at four thirty four levels. Each. Right?
Yeah. Each. Each. Yeah. And when we speak about white cement, it can work in this manner.
Correct. Correct. So okay. So right. Sir, I mean, just understanding despite the RMC business coming back strongly on a sequential basis, the logistic cost on a certain basis is still the more or less same.
So
and and the input cost are up. Input costs are going up, That's why.
Okay. Okay. Maybe for a better understanding, I'm a take this offline. Right. Yes.
Actually, these were three, four line items question that I want to understand. Thank you, sir. Thank you for the question.
Thank you very much. We'll take that as the last question. On behalf of Ultratec Cement, that concludes this conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.