Ladies and gentlemen, good day and welcome to the UltraTech Cement Limited Q3 FY20 Earnings Conference Call. We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore viewed in conjunction with the risk that the company faces. The company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent development, information, or events or otherwise. As a reminder, all participant lines will be in the listen- only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during 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, sir.
Thank you so much. Good evening, everyone, and welcome to this call to discuss UltraTech's Results for Q3 FY20. Better late than never. Wishing all of you a very successful and eventful 2020. I think too much is happening in the country and around the globe. In all this confusion, the growth story of India has actually taken a beating. Let me start by sharing some good news. We have started seeing improvement in demand from few geographies in the country, with states like Odisha, West Bengal, Jharkhand, Bihar, Tamil Nadu, Kerala, Telangana, Maharashtra, Rajasthan and MP turning around. This covers a lot of territories. The best thing to happen is the restart of work on the Polavaram Dam, the biggest irrigation project in the country, and several other irrigation projects have been re-awarded by the AP government.
Clearly, the government is concerned on the depressed state of the economy, and I'm sure where there's a will, there is a way. The honorable Prime Minister has identified and chalked out a detailed program of driving growth, and the cement sector is totally going to benefit with a thrust on infrastructure. You all would have read about the task force on National Infrastructure, where pipeline has been identified in different segments for spending about $1.5 trillion till 2025. Of course, the pipeline has this work that has been identified, has to actually get awarded and start execution. In real estate segment also, there is a 25% growth during second half of 2019 for launches of number of housing units in top eight cities in the smaller and lower ticket sizes. Unsold inventories dropped about 13% in calendar 2019 versus the previous year.
We are, as I mentioned, seeing new launches. This should help in the overall pickup in the real estate demand in urban areas. Let's now talk about cement prices. During the quarter, prices dropped on an average about 4% compared to Q2. However, they still remain higher than last year. Prices corrected mainly in East, South, and Western markets. In some markets, prices have started picking up as we speak during the current month with improving demand sentiment. How are the costs doing? Please don't be alarmed seeing a higher amount of other expenses in UltraTech's P&L. Let me first tell you about the exceptional items which have been charged in the P&L during this quarter. INR 133 crores has been provided against the disputed liabilities offered under the amnesty scheme called Sabka Vishwas, introduced by the central government.
This amnesty scheme, as you might be aware, is for service tax and all other indirect taxes up to June 2019. We've examined our various pending cases and the gross liabilities involved against this settlement that we have taken is INR 832 crores. All these liabilities are in the nature of contingent liabilities, show-cause notices and cases which have been going on. We thought it is better to focus the management efforts on productive work instead of spending time and effort on running around courts and legal authorities. To my mind, this will give us a lot of peace of mind and we can do more productive work. As I mentioned, INR 832 crores worth of contingent and disputed liabilities have been settled by way of payment of INR 133 crores. Sorry, the payment will be made by 31st March 2020.
The provision has been made in this quarter. Another one-time expense is an amount of 31 crores, which was incurred for the acquired Century plants as a one-time exceptional cost as part of our process of integration and alignment with our company accounting policies. Both these items have an impact on operating EBITDA to the extent of nearly INR 82 a ton. As for the transition costs or upgradation cost at Century plants, we will further have around 30 crores of spends in the current quarter as part of the integration program. Getting further into details in the energy costs, they have reduced about 6% linked to drop in fuel prices. During the quarter, we have consumed petcoke at about $80 a ton as compared to $91 a ton in the last quarter.
Spot prices of petcoke are hovering around USD 70, and US coal is around USD 80 on a landed price basis. The benefit of these prices will surely reflect in Q1 FY 2021. However, we are all aware of the IMO's ban on bunker oil being used as shipping fuel. Whatever we know of, most of the chartered ships are switching to low sulfur fuel oil, which will lead to an increase in their cost and thus the ocean freight. This means that we might not see significant fall further in the landed cost of fuel going forward. It will be important to talk about green power. In our total power requirement, the share of green power is increasing every quarter. During this quarter, the green power constituted about 12.7% of our total power requirements, up from 10.5% in the last quarter. This excludes Century assets.
At this mix, the company is reducing about 5 lakh metric tons of fossil fuel on an annual basis on a current capacity utilization. Logistics cost, which is the biggest cost for cement industry. Railways extended the benefit of exemption from busy season surcharge till June 2020, which has helped maintain the logistics cost at the current level. The recent hike in passenger fares seems to have been absorbed very well in the system, giving us hope that there will be no increase in rail freight for some time. On the other hand, road freight rates have gone up due to hike in diesel prices. Synergies between existing plants and the acquired assets have helped reduce our lead distance by about 2% as compared to last quarter. As the capacity utilization of Century assets ramps up, this benefit could increase further.
During the last quarter, there were several questions about the Century Cement asset performance. We had just taken it over. I did not have enough details to tell you. Now let me tell you about the progress of integration of Century assets. The assets are fast turning around. For the month of December, not the quarter, for the month of December, we have achieved a capacity utilization of 79%. This has been a month-on-month ramp-up, with average capacity utilization from these plants touching about 55% for the quarter. You'll appreciate that it takes time to convert category B brand into category A brand in the same markets. The dealer community selling a category B brand takes time to change their practices. Our team is on the job.
For the month of December, with a 79% capacity utilization of the 14.6 million ton of capacity of Century assets, we have achieved 55% brand transition. This will reach upwards of 80% by the end of September 2020. We are tapping into various synergies in operations, manufacturing costs, and overheads. Today, the production costs are higher by about INR 425 per metric ton from our neighboring plants. This includes the structural cost increase of INR 70 per ton towards MMDR royalty and about INR 125 per ton being exceptional costs. We expect to have a complete alignment in costs with UltraTech costs by the time we complete the transition. We have been rapidly converting the Century brand into UltraTech and are confident of a complete switch in 12 months since we started managing the operations from 1st October 2019 only.
This acquisition, in my view, will start generating an EBITDA per ton in excess of INR 1,000. Hence, it will not be relevant to look at the current quarter's performance as a steady state performance for the Century acquisition. It will be worth mentioning about UltraTech Nathdwara. I think it has achieved nirvana, generating an EBITDA per ton in excess of INR 1,500 at a capacity utilization of only 60%. The production costs are in line with our existing plants or better than some of the plants. They will improve further with commissioning of a 10.5 MW WHRS plant by March 2021. This will be our 11th WHRS unit. With improvement in demand, my guess is that this unit is poised to power bigger wonders. Talking about WHRS, we now have a total operating capacity of 103 MW and another 39 MW is under implementation.
During the quarter, we completed the sale of a grinding unit of 6 lakh metric ton in Bangladesh at an EV of $30.2 million. Our cash flows on CapEx till December 2019 were INR 1,150 crore. We expect it to go up to INR 1,600 crore by the end of fiscal 2020, as against our earlier guidance of about INR 2,000 crore, thus saving us INR 400 crore of cash flows. Orders have already been placed for the 3.4 metric ton grinding capacity expansion in the eastern markets. Cuttack will be a greenfield capacity. Two brownfield expansions, one at Dankuni in West Bengal and the other Pataliputra in Bihar. All these three plants will be for composite cement. We expect to commission this expansion by March 2021.
I'm happy to tell you, and you would have noticed from the stock exchange release yesterday, that we have finally been able to commission the phase I of Bara grinding unit, which was purchased as part of the deal from Jaiprakash Associates. Talking about the Jaiprakash transaction, Dalla Super unit, which is a 2.3 metric ton clinker plant, is expected to commission by March 2021 after completing all legal formalities. There is a delay. We are fully covered on our existing clinker requirements. Having given you an overview of the cash flows that have taken place and what lies ahead. On the basis of 12 months performance, our net debt to EBITDA is at about 1.87% on a consolidated balance sheet, including the Star Cement UAE. We have reduced our net debt by about INR 3,486 crore during the first nine months of this year.
I'm happy to tell you that our ROACE for the trailing 12 months has increased to about 11.2% as compared to 8.9%. ROE has improved to 10% as compared to 7.3% as of March 2019. These numbers, of course, have to be looked at taking into account the front-loading of the investments that we have made. We have a lot of capacity available, and I'm sure there are interesting times ahead, and UltraTech is in a unique position to tap the opening up of the markets going forward. Thank you so much for listening to me, and I hand it over to you for further discussions and questions.
Thank you very much, sir. Ladies and gentlemen, we will now begin the question- and- answer session. Anyone who wishes to ask a question may please press star, then one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star, then two. Participants are requested to use handsets while asking a question. Anyone who wishes to ask questions, please press star, then one. The first question is from the line of Bhoomika Nair from IDFC Securities. Please go ahead.
Good evening, sir, and thank you for the detailed opening remarks. Just wanted to understand Century a little better. We've clearly seen an improvement in realizations, and we are making the brand transition. Just wanted to understand what has been the average realization improvement on a per ton basis for Century. If you can give some color on the EBITDA for the asset.
Improvement in realizations would be a percentage. Right now, I think we are more focused on brand transition, and it's a marginal improvement only. Prices will start falling in line with UltraTech from January-March quarter. As far as EBITDA per ton is concerned, operating EBITDA excluding one-time costs will be about INR 267 per ton.
Okay. In that sense, as we move ahead, there will be a continuing cost of the INR 70 and INR 125.
No, no. Only INR 70 per ton, which is the MMDR royalty. The one-time cost, which we incurred about INR 31 crores in this quarter, I might have give or take INR 25 crores-INR 30 crores in the January-March quarter. That will be the end. From April onwards, we will have only the INR 70 as an I can't call it an exception business, so.
Okay. By then is when we are saying that will hit the number of INR 1,000 EBITDA per ton from, i t will sometime in one Q, would that be a fair understanding?
Absolutely. With capacity utilization in excess of 80%.
Got it. Perfect. As and when the balance is transferred or the balance brand transition happens through the course of FY 2021, and also the Baikunth plant shifts over at a later stage, the EBITDA per ton would broadly improve in line with the realization.
Yes. When I told you that we will have in excess of 80% brand transition completed, I had excluded the Baikunth plant. Baikunth plant will continue, for strategic reasons, to sell Birla Gold or the Century brand for some time.
Ultimately, the team is firming up the view that we will have to raise down that line and put up a fresh line unless there is some other technology or improvement possible to improve the quality of cement coming from that plant. Out of the 14.6 million tons acquired capacity, Baikunth is 2.4. Baikunth is 2.4. 12.2 million tons would be 100% UltraTech, this 2.4 will continue for some time as the old brand. Sells in Chhattisgarh market only, which is a very low price market.
Understood. Just second question is on the volume. You gave some color.
We gave all the color.
Yeah. Just wanted to get some sense on just real estate. How is that part? You talked about infra being a key driver for demand, and if you can just throw some color on the real estate activity.
Whatever we have heard, and I gave a small glimpse of the knowledge that we've gained. We are seeing an improvement in new launches in metro towns. Now, new launches have to be looked at. They are not a luxury apartment. If I were to give an example of city of Mumbai, new launches in the ticket size of INR 1 crore-INR 1.5 crore are seeing growth as compared to the luxury apartments of anything above INR 3 crore or those kind of apartments are just not selling and not too many new projects are coming up. We've been told that Mumbai has a surplus inventory for about 24 months. And Bangalore, which is an interesting market, has an inventory of eight to nine months.
Once this inventory becomes tighter of unsold houses, you start seeing new projects rapidly surfacing. With RERA in place, there is no way that there will be any delay in project execution. Whichever project gets launched under RERA, we'll see project execution also on time. Good for cement.
Great, sir. Wish you all the best, and I'll come back in the queue. Thank you very much.
Thank you.
Thank you. The next question is from the line of Apoorva Bahadur from Jefferies. Please go ahead.
Hi, sir. Congratulations on a good set of numbers and an understandably difficult quarter. Just couple of questions from my end. Wanted to understand, sir, something on this one-time settlement. Is this one time done now, or should we expect more such settlements in future?
No, the scheme is over. The scheme got over on January 15th. 15th January. The government closed the doors for anybody wanting to go under amnesty. This is nothing new. There have been several amnesty schemes which have come in the past period also.
Mm-hmm. Okay. How much would be the tax benefit? Because I think in your presentation you mentioned it is between 40% to 70%?
INR 133 crores is roughly about 50% of the principal amount of the demand, which was contingent or disputed. Since it was contingent, we did not make any provisions, so it's a direct charge to P&L.
However, the contingent liabilities extinguished amounts to INR 832 crores. The bigger point to note, Apoorva, is that suppose some matter is pending in Supreme Court, and the court prolongs, and the decision is made three years, four years down the road, this INR 832 crores would have become INR 1,100 or INR 1,200 crores with compounding interest.
Right.
We thought it best to settle these cases and move on in life.
Of course. Makes sense, sir. Secondly, overall, your premium cement piece is increasing the volumes over there. I just wanted to understand whether we are still maintaining those EBITDA margins of INR 5 to INR 10 per bag. Going ahead, do you see these margins being maintained, or will they come under pressure as the competitive intensity increases over here as well?
No. The premium products will continue to command a higher EBITDA per ton.
We are maintaining INR 5-INR 10 per bag EBITDA per ton margin. Per bag. Sorry, EBITDA per bag.
Almost higher. Actually, slightly higher than that, but INR 10 is a safe number for your calculation. As volumes go up, the EBITDA per bag will also go up because of operating leverage or cost absorption.
Okay. Fine. Sir, lastly, you have mentioned in your presentation that there was a fly ash price increase. I wanted to understand if this is seasonal or there's any specific reason, and how do you see the trajectory going ahead?
Generally, it's seasonal because suddenly when there's a power plant shutdown, there becomes a scarcity in a particular region. Like slag that you had seen in the past, where steel industry saw an opportunity, power plants have also seen an opportunity of making money in fly ash. Fly ash used to be negative cost maybe a decade ago. Now we have to incur a cost. It's opportunistic and not necessarily seasonal. Some could be seasonal also, but more because of a shutdown in a power plant.
Okay. Going ahead with renewable, possibly there could be some increase over here as well.
Both ways. It could come down also. We are doing with the size and scale of our operation, any big power plant would be more than happy to do a long-term tie-up with UltraTech, and we are doing those kind of strategic initiatives to lock in our costs.
Makes sense, sir. Lastly, if I could just squeeze in one more. I basically missed out on your expansion part. If you could just elaborate on that, the three plants that you're going to be commissioning.
Why don't you miss out now also then? Three plants, total capacity is 3.4 metric tons, out of which Cuttack is our grinding unit at greenfield, which is 2 million tons and 0.7 million tons each brownfield expansion.
Sorry, 0.6, not 0.7, 0.6 each at Dankuni and Pataliputra. This would add up to about 3.4 MTPA. We should be commissioning by March 2021. Total capital commitment, which I did not mention earlier, is about 900 something, INR 900 crores. 9 40 crores.
Great, sir. Thank you so much. I'll get back in the queue.
Thank you.
Thank you. The next question is from the line of Indrajit Agarwal from Goldman Sachs. Please go ahead.
Hello, sir. Thanks for the opportunity and congratulations for a good set of numbers. I just want to understand a little bit more on the transition of brand part. If you look at the others, two acquisitions, for example, the Binani and JP, we did at a much lower time, right? About 40-50 days. For this one, we are taking a little slightly longer. What is this different this time around?
If you start from December, then it is taking about six months. In the quarter April, June 2021, we should be 100% of the convertible possible plants. Baikunth is not possible, we should count it out. It's saying six months. Don't count October, November. First two months takes time to settle the plants, people alignment, process alignment, et cetera. The bigger question, why is it taking so long? You need to understand the location of these plants. The Manikgarh plant, which is acquired, is 20 km away from our existing Awarpur plant. The Baikunth plant near Raipur is 35 km -50 km from two of our existing plants in Chhattisgarh. Maihar plant is less than 70 or 80 km from two of our plants, Bela and Siddhi. Sonar Bangla, which is of course doing very well.
It caters to the Northeast markets. Here we come in the Northeast markets with a big bang. All the other plants, since they are operating in the same market where we were already existing, there is a gradual transition. I cannot just uproot an existing brand and start selling another. It is not a selling of a label. There is a convincing to the customer about quality, the benefits of a product that we are selling now as compared to what they were buying earlier. I don't want to lose that customer either. I want to convince the customer to pay a premium. That's why it takes slightly longer. JP acquisition, if you were talking about, which conversion happened very fast. Bela Siddhi plant in Central market, which was our first entry in the Central market. It was a virgin territory for us.
It was launching of a category A brand straight away and not a conversion. As part of the JP acquisition, Vizag market, we were catering to that market from Tadipatri plant, which is very far away as compared to this plant, giving us access to the industrial development and that market. We could launch our product and increase the volumes there. There is the Dalla plant, again, helps us in the eastern markets. Easy transition. Baga plant, which is up the hills in Jammu itself, Himachal. We were present in a very small scale because we were supplying material from foothill, and it was exorbitantly expensive. Small supplies. Now we had an opportunity to launch big scale. We've been able to do that. Nathdwara, similar story. While we were present in Rajasthan markets, we are present in Gujarat markets.
The location gives us advantage to split Rajasthan into two territories, and we have been able to cater to western Rajasthan in a much more granular manner, which helps us capture the market. I hope I have been able to explain.
Absolutely. Thank you for the elaborate answer. One follow-up. For this second plant, is there any incremental CapEx that we'll have to incur?
There will be. Certainly. We haven't firmed up the plans. Once we do, we will let you know.
All right. One last housekeeping question. Can you help us with the working capital release in third quarter and nine month as a whole?
Yes. In third quarter, basically, we have released about INR 834 crores, which is largely on account of inventory liquidation.
He didn't ask what account. Don't tell him that. About INR 1,000 crore of release of working capital.
Thank you. Thank you so much, sir.
Mentioned that in the capital spend.
Shall we take the next question?
Yes, please.
Sure. The next question is from the line of Amit Murarka from Motilal Oswal. Please go ahead. Amit Murarka from Motilal Oswal, your line is unmuted. Please unmute.
Hi, good evening, Mr. Daga. Just a couple of questions. One, on the presentation, I see that you mentioned that the trade sales improved by about 3% on a year-over-year basis this year. Overall volumes have declined 4%. Does this imply that basically your institutional volumes or the infrastructure volumes were the spoilsport here?
Absolutely. In a depressing market, everybody knows that infrastructure activity has slowed down. It was easy to focus on the trade market.
What was the trade non-trade split then in this quarter?
68% is trade.
Sure. On the infra side, as we see that some coastal projects is getting approved, Mumbai and Nagpur highway is going on. Do you expect a pickup in that segment then going ahead?
Yes, very much. As you mentioned, I think that's the best part. That's the brighter side of life, that things are picking up. Take the case of Mumbai and Maharashtra. Maharashtra, we are firing full throttle in both the plants, the Panipat and Navapur plant now with the Mumbai-Nagpur Expressway and coastal roads will also pick up. No cement consumption has started yet, but it will pick up.
Okay. Also on the petcoke side, basically, the fossil cost has come down this quarter, but the presentation mentions $80 as the consumption cost.
Yes.
Whereas I believe the stock spot prices have been much lower. Again, can you quantify what kind of benefit can flow through on the 4Q also now on the pet coke side?
Well, I think I mentioned it. Our consumption was INR 80, and if you're buying at about INR 70, the INR 10 differential, give or take INR 50 a ton in costs would reflect in the next quarter.
Sure. Lastly, on the Bara grinding unit. This is phase I, there's another 2 million ton phase II as well. One, by when will this be commissioned? Secondly, what do you think or expect the ramp-up schedule to be over here, given that the Dalla Super clinker will come later?
I clarified that we are not short of clinker. We supply clinker from Siddhi, where we have surplus clinker to Bara. Bara will ramp up in the next couple of months of this 2 million ton capacity. The phase II, I expect, will commission by September 2020.
Sure. Will there be enough clinker for phase II as well? phase I understand.
Yes. We will have enough clinker.
Okay. That's all then. Thanks.
Thank you.
Thank you. The next question is from the line of Ritesh Shah from Investec Capital. Please go ahead.
Thank you for the opportunity, sir. Sir, my first question is, when we look at our volume growth for the quarter as compared to the industry growth, I don't know what it is. Sir, how do you look at it? Are you happy with our volume growth on a year-on-year basis? I mean, de-growth.
I think we performed better than the industry.
Sir, can you help? What was the industry growth number? Basically, broad number should be helpful.
Difficult to pinpoint a number because it is a fragmented market, and there are so many unlisted players. My giving a number might send the wrong signal. I would avoid commenting on that.
Okay. Sir, if I have to put it the other way around, have we lost market share in any of the regions, given the decline that we have seen? Is it that the industry de-growth would have been higher than what we have reported?
I don't think so. I think we have gained in terms of market share. There might be a district level number, which I'm not tracking. Generally, overall, we have increased our market share.
This would be across regions, right?
Yes, at an all-India basis.
Okay. That's helpful. Sir, secondly, just to continue with the prior question, you indicated that we have adequate clinker now. This is despite JP Super there being a delay over here, and phase I getting commissioned for Bara. Century also had a million ton deficit, to my memory. Sir, when you say we don't have a deficit, is it you are adjusting for the OPC, PPC, PSC mix?
Absolutely. That is taken care of, plus the surplus clinker that we have at Siddhi. There is an inherent debottlenecking capacity which is available at the acquired plants.
Okay. Sir, how should we look at the OPC, PSC, PPC in composite cement mix for a, say, FY 2020 and FY 2021, just to have a better understanding of the.
On a blended basis, when we are 68% today? We are 68% on a blended cement FY21. We should be around 71%. Blended cement. Blended cement includes PPC, slag, composite.
FY20. That's helpful. Sir, last two questions. Sir, on wall putty, what we understand is we have lost market share. Not giving discounts on smaller kg bags, one kg and five kg. The peer set has benefited. Sir, this has been going for the last six months or so. Sir, any thoughts over here? One is, if you can give us some numbers over here on the top line and EBITDA, that would be useful. Are we fine with this market strategy of losing the market share?
We want to maintain our price position, and there is a core market which we are catering to. I don't think the domestic players are gaining market share. It's more of the imports which are getting an advantage. Imports from UAE or the Middle East markets, which has found its way into India.
Sir, I was referring to wall putty.
Wall putty, I was referring to white cement. Yeah. WallCare Putty, it's the paint companies which are gaining market share. I'm afraid, I think we are not wanting to compromise on our pricing position. We will live with the situation as of now.
Okay. Sir, last question. Incentives on the eastern expansion that you indicated in the three places, one greenfield, two brownfield. Have the incentives been formed up? What we hear is the states are going slow on doling out incentives. Sir, please correct me if I'm wrong.
Yeah, you're absolutely right. Hardly any states have cash flows. Odisha, the policy exists. We will try for our incentives for the Cuttack grinding unit.
Okay. Sir, nothing firmed up.
Nothing firmed up. Bengal, I think it's really a dry state in all terms. Difficult to get incentives in West Bengal. Bihar has also announced a policy. Mukesh? Bihar also policy? Bihar also has an incentive policy where we will apply for incentives.
Okay. Sir, I have more questions. I'll join back with you. Thank you so much.
Thank you.
Thank you. The next question is from the line of Tejas Pradhan from Citigroup. Please go ahead.
Hello.
Hi, this is Raashi here.
Hi, Raashi.
Hi, gentlemen. This is Raashi. Yeah.
You'll have to be a little more louder, Raashi. Little louder, Raashi.
You had mentioned. Is this better?
Yeah, better.
You had mentioned that prices have picked up in some regions. I mean, please correct me if I'm wrong, I believe that west and some part of the south has not improved yet. You also suggested that the dams and some of the irrigation projects have started up. The western market demand looks like it's kind of picking up. Is this just a matter of, like is this a time purchase before which we see price improvement across or the pickup not advanced in world period of demand?
I couldn't catch. What regions are you hearing have price pickup?
I said, has there been a price improvement in all of south and all of west?
No, not all. For example, we are not seeing in Gujarat. We are seeing improvements in Maharashtra. We are seeing improvements in some regions in South. Rajasthan is seeing an improvement in North. East is growing so rapidly, showing double-digit growth again in this quarter. We'll start seeing price improve.
Has this demand improvement that we're seeing in the South, that's not fully translated into price hikes?
Not yet. My sense is as capacity utilization starts going up, you'll start seeing price improvements.
What would be the utilization in the south, like ballpark right now?
Current prices?
Utilization in the south.
Utilization. One second. Somewhere around 70%.
Okay. Just one more question, and not linked to the results. The Emami, what are the timelines that you're looking at? I know you all have bid, what are the timelines for the closure?
Guess what? I hope everybody is listening. I did not bid for Emami. Now you need to discount all the news that you guys read in the newspapers.
Sorry, you said you did not bid.
Did not bid at all. I would always be surprised what newspapers are reporting. The asset is of no interest to us.
Okay.
There were some people who were worried about our cash flows. We are as conscious as you are about our cash flows.
Okay. Got it. Okay. Thank you.
Yeah.
Thank you. The next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Yeah, good evening, sir. Sir, first question, again, a little bit more on demand. Is it in the last two months more of restocking demand or we're seeing actual project and real demand growth?
What do you mean by restocking? Cement is never stocked, Sumangal, depot stocks or warehouse stocks will be two days, three days. They are small warehouses. I don't know what you mean by restocking .
No, generally what we hear is in December, there was expectation of strong price increases in January.
No. I think you are misinformed. There's actual activity on the ground which is taking off.
This is more from January onwards or December?
I would say December. December is when we started seeing, which helped us improve capacity utilization also. As I mentioned in my commentary, we've seen Century assets improve. November was better than October. December was better than November. We did nearly 79%, 80% capacity utilization on Century assets, up from below 50% a quarter ago. This is actual work happening.
Understood. Secondly, on our volume growth, I think last December, Nathdwara was just for 18 odd days. If you look at ex-Nathdwara, it's a 7%-8% volume decline YOY. Is that the right calculation?
Ex-Nathdwara. It is very difficult because we move material crisscross. If suppose I was not moving material from Nathdwara, I would have moved material from Aditya Cement and Kotputli. Beyond a point, it is impossible for us to segregate old versus new.
Okay. You still, I mean, a bit confident that we've not lost market share and overall volume growth in the industry would have declined by more than 4%, 5%?
No, I never said anything about volume decline in the industry. Industry would see a decline of 1%, 2% only or nothing significant.
Understood. Okay. Just one small clarification. Is there any progress on the Nathdwara's non-core assets?
I forgot to update. We have appointed merchant bankers for China and non-binding bids have been received. We will take action in post. I was thinking of post-Chinese New Year, Chinese New Year holidays begin from today, and the country shuts down completely for 15 days. Now I'll have to wait for this new virus issue which has come up. I don't want to travel to China. We will look at the next steps on China in the month of March. As far as Europe is concerned, things are progressing well. We might be able to close the deal by June. Dubai, unfortunately, we haven't been able to find any suitable buyer. We are trying to operate the plant and improve its efficiency.
Understood. All right. Thanks and all the best, sir.
Thank you.
Thank you. The next question is from the line of Navin Sahadeo from Edelweiss Securities. Please go ahead.
Hello.
Hi, Navin.
Good evening, sir. A couple of questions. Nathdwara Cement per se capacity utilizations, you mentioned remained at 60% in this quarter, I think it has remained at that level for a while now.
Yeah, sorry. Go on.
Yeah. My question basically was that in case of Century Textiles, those assets there seem to be like a good ramp-up progress happening there. December, as you said, was 79%, Nathdwara remains at 60%, while I think overall region per se in north, there could be at least upwards of 75% or 80% or so.
No, it's the market mix that determines our plant to market ratios. We have surplus capacity available in the market, and we'll use whichever plant is most L1 in terms of logistics cost to serve the market.
Got it. Understood. Basically, other plants could be operating at a much higher utilization probably.
Yes. Could be.
Okay. In case of Century Textiles, you said average for the quarter was 55%, but exit was about 79%.
Yes.
With March quarter only being better versus a December quarter, we can easily expect an upwards about 85% odd utilization for the full?
Distinctly possible. As things stand, the volumes are picking up. Demand is picking up, so it could reach an 85% level also.
Okay. My last question on the petcoke usage. The presentation mentions overall petcoke at about 77% versus 69%.
I'm assuming that is for the quarter.
Yeah.
In your November corporate dossier or that November company presentation, what I see is for the first half, pet coke consumption is actually at 64% versus 71% last year. In the same time, I think we are ramping up pet coke usage both at Nathdwara as well as at Century. I just wanted to confirm.
No, absolutely. It's bang on. No confusion. Century has come in now, from an insignificant petcoke to a high petcoke. Nathdwara was zero petcoke to now 100% petcoke. This quarter has an advantage in terms of petcoke consumption. In current times, petcoke has lost its shine because it is easily swappable between U.S. coal. U.S. coal also has a high calorific value. Whichever sells cheaper will be used.
Got it. Just one last question, if I may slip in. Sir, in the previous quarter's con call, you seemed to be a lot interested about Emami Cement. I think there was some question about will CCI be an issue or even to the extent that since you're already announcing a 3 million+ ton expansion there, would you still be interested in Emami? Now there's a change of heart. You said you're not interested in their assets. If you could just throw some light to understand what could be.
We evaluated, we did the due diligence, we put in a lot of effort to understand what value it brings to the table. They don't have clinker, and there's surplus mining capacity and some land bank. You can't sell me a dream and value it at EV of a operating plant. There was a lot of disconnect. There were a lot of other issues that we found in the due diligence, which were not comfortable for us.
Got it. Valuation disconnect last year. Got it. That helps. Just one housekeeping question. The white cement volumes and revenues that you normally give. Nilesh shares, I think.
3.46 lakh tons is this quarter as compared to 3.7 lakh last Q3 2019.
Revenues?
Revenues.
This quarter and last quarter?
INR 500 crore last year.
Last year.
RMC revenues?
INR 500 crore for this year and last year, INR 520 crore.
Thank you. That helps. Thank you so much.
Thanks.
Thank you. The next question is from the line of Rajesh Ravi from HDFC. Please go ahead.
Hi, Rajesh.
Yeah. Hi, sir. Good evening. I have a few questions. For the East expansions, which you just going ahead, what sort of clinker backing we have? Or are we looking at some clinker expansion opportunities in East? Second would be on the WHRS, which all places and what capacities which we are adding over next one, two years?
We have clinker available at Hirmi and some surplus which is coming in from Maihar. Century as in totality, you might see from their perspective, they were short in clinker, but when we are merging it with our overall network, we have some surplus clinker available from Maihar. The debottlenecking that we are doing at the Century plants which will help us meet the requirements at Cuttack, Dankuni and Pataliputra. Existing Dalla also is undergoing debottlenecking, which not on a heavy CapEx. It's a routine stuff being done, which is releasing clinker capacity for us.
Daga, bhai, when you expect the clinker to be up and running?
Dalla Super. I would keep time in hand and commit by March 2021. Lot of progress has been made in the UP government. The files have moved to the central government now to the MOEF, and hopefully we'll get clearances in time for March 2021, clinker going on stream.
Nilesh, you asked on WHRS. Nilesh, just tell the locations.
We will be having in Gujarat plant, Andhra at Tadipatri plant, in central market, Baga plant, and then Nashik.
Malanker. Okay. Malanker, the Century plants also will be considered for expansion of WHRS. I think my colleague stopped me because board has not yet approved it. We are still firming up the proposal.
Okay. Just extending on this question. We have around 85 MW WHRS currently?
103 MW.
Today.
Okay. We added something in this quarter, Q3?
Last quarter.
This quarter. Q2 were added, not Q3. Q2 were added.
Okay. Which place, sir?
Basically it has got partly commissioned at Gujarat, Tadipatri, and Rajasthan at Kotputli plant.
Okay. Around five, six MW each.
Yeah.
Final target at 131 MW is what remains for you?
141. Additional 141. Okay.
Up to 141, everything has been sanctioned and work in progress. We will look at the next phase because this would cover about 11 plants, right?
Yes, 11 plants.
This covered about 11 integrated plants out of 22 integrated plants. There is scope for doing WHRS in other plants also.
Great. Sir, just two last questions. One on the Binani. What helped you scale up 1,500% EBITDA margins? We understand pricing is relatively stable, but despite that, this is a very strong number. First on this maybe, please.
Our brand is very strongly respected in that market.
Okay.
We sell more than, I think, 25 million tons annually. As a capacity, ± 25 million. Point is, northern markets, we have a very strong foothold, and the price premium that we enjoy in the market is very strong. Cost advantages, we have been able to drive very hard in the improvement program for Nathdwara plant. Logistics cost, one of the biggest things. It's a very sweet location. Sweet spot that this plant sits in. Bang on the borders of Gujarat and Rajasthan, giving it a optimal advantage on lead distance.
Okay, what would be a sustainable margin? Earlier we were factoring in INR 800-INR 900 would be a sustainable EBITDA margin. In this Q3 it sold INR 1,500. No, I mean, as an analyst, we were not factoring in obviously 1,000 + and 1,500 in Q3 obviously sets a high benchmark for this plant.
Yes. I will not let it go below four digit mark.
Great. That's a great thing, sir. Lastly, because you're not going ahead with the Emami at least for now, and your own expansions are there.
Not at least for now, never.
Okay. Okay. Do you see the competition remaining elevated in that market? That market would remain relatively fragmented, and lot of capacities are piling up across Odisha, West Bengal, grinding units and all.
Yeah.
What is your thought process in terms of pricing stability in the eastern market?
East, I think there is so much of demand today also. Whenever a new capacity stabilizes, there is some correction in prices, and then prices bounce back. However, it has not helped the overall EBITDA for the zone to improve.
Yes.
I don't think if you were to analyze east as a standalone, if you have results of companies for the east zone only, then nobody would be generating a four-digit number in the eastern markets.
Correct.
It's a market for high capacity utilization, good operating leverage.
Yes. Great, sir. Thank you for taking my questions, and all the best. A strong set of numbers for you. Keep repeating it. Thank you, sir.
Thank you.
Thank you. The next question is from the line of Bhavin Sheth from Enam Holdings. Please go ahead.
Yeah, good evening, sir. Two questions. One, what was the average lead distance in the quarter and nine months, if you are sharing the approximate number?
Around 400 km.
Around 400? This would be after including Century, Binani, everything.
Yeah, Century, Binani and clinker, because clinker travels long distances. We transport clinker from south to east also.
All right. Sir, what would have been the white cement, INR 150, and the RMC EBITDA in this quarter? I missed that number if you shared.
No, difficult to compute it separately.
Combined number you have for the quarter?
No, don't look at the EBITDA separately. It's cement for us.
Okay. Thank you, sir. Yeah.
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.