Ladies and gentlemen, good day, and welcome to the Ultratec Cement Limited Q1 FY 'twenty 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 risks 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 a 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 Daghar, Executive Director and CFO of the company. Thank you, and over to you, Mr. Daghar.
Thank you. Good evening, ladies and gentlemen. Welcome to the earnings call of Undertech Cement for Q1 FY twenty twenty. With general elections behind us, we all know and believe that continuity at the center will help stabilize the economy and bring growth to the economy. This is a temporary slowdown, which I believe is being visible across all sectors.
We have seen, I would say, an unpredictable slowdown in the economy as well as cement sector, which is part of the whole game. You must have heard several theories around it, and let me add my 2¢ to the pot boiler. Construction industry, the real estate sector, as well as the infrastructure sector is one of the quickest drivers for employment of unskilled labor. With construction activity slowing down, it has had a cascading effect on employment and rural incomes. Various states are facing the tight fiscal position resulting in a slow release of funds for infrastructure projects.
Our sense is that demand should stabilize after Diwali twenty nineteen. All the ongoing long term projects, that is metros, roads, etcetera, will pull demand. We have seen improving sentiment in the organized housing sector in the Tier one towns with organized real estate players gaining momentum. There is a big vacuum in real estate in the Tier two towns, which we believe will be captured by the organized developers in the longer term. Low cost housing and affordable housing segments continue to grow, providing some support to the housing segment.
It has always been and will be a key demand driver going forward. Let me talk about sand mining, which has become an area of concern time and again. In Rajasthan, since November 2017, the sand mining ban is continuing on major mines, which is impacting the construction activities there. Recently, High Court has given a decision that mines allotment are valid and mines can be operational after all required clearances as per NGT. We expect that in the next couple of months, the sand mines in Rajasthan should be operational.
Again, in the state of Andhra Pradesh, in the month of June 2019, the new government has imposed ban on sand mining, which is creating a barrier for construction activity in the state. The government is expected to introduce new sand mining policy in the month of September, which would restore construction activity to normalcy. Similarly, in West Bengal, the state government has strict norms on movement of sand, which is keeping sand prices high and having an impact on construction activity. Andhra Pradesh also has seen a slowdown in all state level projects with the new government coming in. We believe once their review is over, the projects will kick start work and we should, as I mentioned, it's anybody's guess, one quarter, two quarter, it should start and come back into mainstream.
Let me touch upon costs. Costs have been under control, thankfully. We do not expect any surprises in the near future. Petcoke prices have come down nearly 25% from their peak. Alcatec's average consumption price in the quarter was around $95 marginally lower from the consumption price of Q4 twenty nineteen, which was around $98 The benefit of the continuously falling prices will reflect in future periods.
For example, the current purchase price is prevailing anywhere around $75 to $80 only. Imported pet coke supplies have filled a vacuum created by reduction in domestic pet coke supplies, thus not having any adverse impact on prices. 70% of our pet coke requirements are now being met from imports without any constraints. Besides pet coke, we are also using high calorific value imported coal, which is economical at some of the plant locations. With capacity utilization going up strongly in almost all the regions in Q4, we were able to take price improvements, the impact of which is reflected in the earnings of this quarter.
With monsoons, we have seen prices correcting a bit and along with the slowdown in demand. This is nothing unusual. This is a direct correlation between demand, capacity utilization and prices. Let me look inwards. It's important to share the progress on our growth plans.
First and foremost, on Century Textiles. We have received the NCLT order approving the takeover of cement business of Century. This takes our total operating capacity in India to 109,400,000 tonnes. We are awaiting completion of other regulatory approvals for completing the transaction, which we expect should get completed in this quarter. The mines transfer, which is underway, will attract additional royalty under the MMDR Act.
Alsatec will be fully compliant with the MMDR Act. After inclusion of Nagwara Cement in our network, our numbers were consolidated with no option of having comparative numbers. Well, you'll have to look at this phenomena for some more time. NCLT Mumbai has fixed twentieth May twenty eighteen as the appointed date for the transaction. We will recast financials via after from the date of 05/20/2018 going forward once the transaction is completed.
We will I can only assure you that our presentations will be as simple and as clear as possible so that you don't have any difficulties in interpreting and analyzing the numbers. Speaking about Nagwara segment, I'm pleased to inform you that the integration has been fully completed. The plant has fully synchronized with our existing operations. Nagwara Cement has generated an EBITDA pattern in excess of rupees 1,200, and there is enough capacity available at the plant as and when the demand opens up. We have achieved a PBT breakeven for Najwara operations within two quarters of acquisition.
However, at the current cost of acquisition, our returns are not really worth talking about from the acquisition. We are evaluating opportunities to liquidate noncore assets before the end of this fiscal year, which will improve the returns. And in the next few years, with the improvement in demand, there is always the option to double the capacity at Nagara Cement, which will help us generate a desired level of returns from this investment. The decision on Pali greenfield expansion has been put on hold for the time being. We will revert once the Board takes a call ongoing head on Pali expansion.
We, as a responsible cement player, keep our growth options open. The JP assets which were acquired in July 2037, some of you might require our guidance for these plants to be EPS accretive in the eighth quarter of the operations, I. April, June 19. Well, we are stuck to our guns. The cash flows from the acquired assets have improved significantly.
This quarter, the plants were operating at a capacity utilization of 68% and have become EPS accretive. We have generated positive PBT. We have had a small setback in the in this acquisition, though, though nothing to be bothered about. Barra grinding unit was under trial runs last month, but there was a breakdown during the process. The free of cost replacement parts have been ordered and are underway, and we expect the plants to get commissioned in Q3 FY 'twenty.
Leverage, which is always an important focus area for us. Our focus on improving leverage has helped us to reduce net debt further by about 1,000 crores during the quarter, to be precise, $10.22 crores. Our trailing net debt EBITDA is at 2.24x as compared to 2.71 in March 2019. Our consolidated return of capital on trailing twelve month performance has improved to 11% for June 2019 as compared to 10% in March 2019. Our business and our balance sheet will remain sharply focused and cater to the needs of Cement business only.
There have been lots of questions raised in the past and hence I thought of making it very clear for everybody that we are very focused in our business. A small initiative, which I would definitely want to mention before ending this call ending this commentary, sorry, is on sustainability. In one of our initiatives, we have collaborated with our group company, Hindalco, to develop aluminum dry bulk of vehicles, which can carry 10% material 10% extra quantity. This will support to reduce the number of truck number of trips for the trucks, which eventually reduce carbon emissions. Once the scheme is fully implemented, we will have three lakh trucks moving less on the roads, and that is our contribution to sustainability.
We assure you of a long sustainable future in Alta Tech. And with that, I hand over the session for questions. Thank you, and have a good evening.
Thank you very much, sir. Ladies and gentlemen, we will now begin with the question and answer session. The first question is from the line of Indrajeet Agarwal from Goldman Sachs. Two
questions. First, on the demand. In your slides, you mentioned several factors which has led to a weakness on industry demand. Can you highlight which of these factors are more transient in nature? And which do you think are at least structural in the near term, least through the course of FY 'twenty will be an overhang on demand?
Short term, Nunjeet, is slowdown in construction activities as I mentioned in the commentary also. The housing sector continues to grow, albeit at a very slow pace. And I believe that infrastructure growth will come back with gradual stabilization, you know, that we'll see in the economy. So infrastructure and real estate within real estate also, it's government led, low income housing, and affordable housing. The good part about affordable housing projects is that affordable housing has segment has started taking off now.
Have you seen like, liquidity was one of the concerns in the last couple of quarters. Have you seen some easing on that front at all in the last few weeks?
No. I mean, it is you know, it's difficult to quantify on a weekly basis, but and I don't want to, you know, discuss the current quarter current operating quarter. April saw squeeze on liquidity because of election and because of, you know, all related reasons with elections. Things should come back to normalcy as a layman, if I were to speak, should come back to normalcy. And it's anybody's guess whether it happened in July or this quarter or at the earliest.
Sure. One housekeeping question. Would you be guiding us to how much was the utilization for in this quarter?
Nagwara was about 60%. Of course, we had a major maintenance shutdown taken during this quarter.
Sure. That's all.
Thank you. The next question is from the line of Gunjan Petyani from JPMorgan. Please go ahead.
Yeah. Hi, sir. Thanks for taking my question. Just a follow-up on this industry growth. Going by the trends that you're seeing in the market right now, would you would you say that the 7% growth that we were looking for full year or I think even higher would be addressed.
Is there any revision to the growth expectation for full year that you are looking at now?
As of now, Gunjan, I would still look at, you know, plus minus 6%. Maybe you have to drop it by a percentage if that is what you would look at. Because all these projects which were which have been underway will not stop and will kick off. So the latter part of latter half of the financial year will will see or should see a phenomenal growth.
Even on a high base that we saw in March. I'm just trying to understand because we do have a very demanding base as we get into the second half for the entire industry?
Yeah. Historically, if you look at January, March has always proven to be the best quarter. And, you know, the government spending kicks up because the government spending is also looking at budgets their own budget reallocation for the next financial period. So there is a huge base of activities typically in the January, March quarter.
Okay. So we'll stick with the 6% Yes. Seven percent Six,
7%. Yes. There's no decimal that I can guide to.
Sure. And the second question is on the the deleveraging and capacity expansion plans. If I got understood right, I mean, there's no new project that you've approved as such in terms of expansion. So it's essentially going
to be
the board has have no no approvals from the board yet.
So no party, no bin the Nagdwara additional expansion. So this year, do you see we can have more expansion being announced or the focus is going to stay on just consolidation of Century and deleveraging then?
My guess is it will remain focused on deleveraging and Century consolidation.
Okay. And just on this overall CapEx number, if you can give guidance, what
we Roughly 2,000 roughly 2,000 crores for this fiscal year. There are some big projects which are ongoing, like WHRS, which are for cold block which are for cold block. There's a putty plant put you know, white cement putty plant, which is ongoing. There is a bulk terminal that we are doing besides the Barra project, which is going on. And then there will be maintenance routine maintenance capital.
Give or take 2,000 crores is what we would look at.
Okay. And last question. On the Century, you mentioned that there will be that fee on under the new mining regulation. So that is similar to the JPA thing, right, that there'll be additional I'm I'm not missing around 60 rupees. Right?
As of now, the current rate is 60 rupees plus 64. Sorry. Effective 64.
64 and the century EBITDA per ton. Can you share anything around it? Where are they operating right now? Because the last till date
we January, March was 670 rupees EBITDA. January, March was 670 rupees EBITDA per time.
Okay. Got it. Thank you so much.
Thank
you. The next question is from the line of Vivek Maheshwari from CLSA. Please go ahead.
Hi. Good evening, Atul, sir.
Very good evening.
First on the demand, your comment about 6% demand growth, that's for full year or for rest of the year as in the nine months?
Full year. Full year. I'm commenting of what I'm saying. Yeah. Full year.
Okay. Understood. Second, mean, pet coke prices, as you mentioned, have gone down quite a bit. Is there any inventory that you still carry the high cost inventory? Or second quarter, we should start seeing start to see the benefits of low pet coke prices?
We will see improvement in fuel consumption prices quarter on quarter. So we will have today, we don't have any inventory above 100. It is in the range of, yeah, early nineties. So added to that, the procurement which takes place will help improve the fuel consumption prices for the next quarter as well.
Okay. Okay. And this quarter, obviously, saw very strong realization, and you indicated about some pullback. But can you share how where were the exit cement prices or realization compared to the quarter average?
Exit cement prices were obviously lower, and you could not indicate maybe 3% average across the country reduction.
3% from your quarter average?
Yes. Yes.
Okay. And lastly, you mentioned about this CSR project with Hindalco. I fully could not understand. So you mentioned something like 10% higher, you know, tonnage and all. Can you just repeat what exactly it is, and how do you plan to go ahead?
These are trucks or bulkers. You know, the dry bulkers, the vehicles which carry cement and bulk. So these are developed with aluminum body, and Okay. That obviously helps help them carry. One is the capacity has been increased.
So capacity is being increased because lighter weight on the same chassis, it is able to carry a higher weight. And on that basis, effectively for the same volume to transport, we require lesser number of trucks.
And, I mean, are there any timelines to I mean, is this still an experiment or you would be able
It has been officially launched.
Oh, officially launched. So, I mean, the benefit of this, we should be able to see next
May have you you counted next year. I mean, I would want to see scale to reflect in our numbers. Small number of trucks will roll out, which might not see too much of because what in the end, in the long run, we are looking at three lakh trucks moving less. So that's a bigger number, and I would start counting my chicken only in the next financial year.
Sure. And just last bit on the same point. So let's say f y twenty one. So the plan is basically to get all the trucks which are, you know, which are therefore able to carry 10% more. Is that how would you, you know, you would plan it?
Wait. You will scare the truck operator. Yeah. Let's not.
Alright, sir. Looking forward to it. Thank you, and all the best.
Thank you. The next question is from the line of Navin Sade from Averywise. Please go ahead.
Hello? Hi, Navin. Good evening, sir, and congrats on good set of numbers.
But why are you so depressed?
No. I'm not depressed. I I I sound like that. I'm sorry. I'm excited to see the numbers definitely.
So so my first question basically was, what are the consolidated volumes? Of course, you've shared 17.86 as the total volumes. Yeah. And I believe you said Nadwara, which include definitely Nadwara at 60% utilizations. Correct?
Correct. Correct. So so just wanted to understand what are the total consolidated gray volumes and white cement volumes. So 18.8 is the total volume including white cement of point three one five. And white is point three one five?
Okay. Got it. Fair. Second then, I just wanted to understand. You said your premium sales segment has grown by 24% in your in your presentation.
So I just wanted to understand it contributes how much now of the total volume then? Is there a target we have in mind towards premium products? And also just an extension there that how much more in terms of margins do these products contribute?
Sorry. So first firstly, what is the target? Obviously, we will want to be as high as possible as much as the market can absorb. There will always be a challenge because there will be a market which does is not interested in paying a premium. There there are products which we have launched in the market, which are 50 to 55 rupee per bag higher in realization as compared to our own prices.
Those are very niche products. So the market will also remain niche. And all the products, whether composite or these value added products, we are still launching in in various markets. I know I'm going roundabout because I don't have an exact number to give you. And I but directionally directionally, yes, we will we will be increasing the percentage share of all the value added products.
As as on date,
the I I don't have a number. Naveen, I don't have a number immediately.
Sure. Sure. Okay. And just one bit then. Barra grinding unit is scheduled for q three.
Yeah.
Clinker is likely by when there?
We already have clinker available.
No. Which is fine.
We have surplus clinker, but along with the same project, there was a clinker.
The the Dullah Super Clinker, happy to tell you that the MOEF or the forest advisory committee meeting took place on August 31, has cleared the proposal. So now it should go through. And and if we are speaking in September, maybe April, June, for sure, we'll see the plant commissioning.
Okay. Great. Great. Thank you. Thank you so much.
Thank you. The next question is from the line of Madhav Madhav from Fidelity. Please go ahead.
Hi, sir. Good evening. Sir, just wanted to understand on the demand drivers, companies have been talking about social housing program. And I look at the company, the government allocation for the next four years, you know, they, we get what the numbers are. But if I just go to the budgetary document, it'll be something I'm trying to solve for.
If I look at the allocation that they made for the budget for rural housing, for example, they've allocated about 19,000 crores, which is which was close to 20,000 crores last year. And, urban housing was about 6,800 crores, which is 6,500 crores last year. So net net, it's a 2% decline y o y in the government budget allocation for the next financial year. So all I'm trying to understand is how does this step up in terms of demand for the next year? That's I'm just trying to solve so that it will
Harder, why is there the budget allocation whether the government is able to exhaust that allocation is if they are able to exhaust that allocation, that will be a wonderful achievement because they are growing rapidly. We have seen allocation targets getting missed in spite of achieving huge growth. So over a current base, right, allocation is one aspect or looking at on a current base, they will keep on growing. That is more important.
Sir, that's what I'm trying to understand. So we we they had a lot of growth last year, and if I look at the completion data, which is available on the website, there's been a massive scale up over the last three years. Yes. But in in this year, if the and the budget allocation, of course, got stepped up as we went into elections. But now that number sort of seems to be leveling off or is coming down a little bit on the rural side.
So
I don't know
if there's gonna be growth in terms of execution this year over the last
slowdown which you've seen is because there are there have been delays in contractor payments. I I have understood that beyond March 31, there was a major slowdown in release of funds. At a state level, you know, you look at various states, whether it is whether it is UP, whether it is MP, whether it is Andhra, whether it's West Bengal, the states are state treasuries are running dry, and there has been delay in release of payments to a large contacting company, which has had a cascading effect on the on the project execution. I believe things will come back to normalcy. Payments are you know, will get released, and you have to give it six months for normalcy to come back.
Then you start seeing a way which is where I was looking at post Diwali, which is November October or November. Post November is when you should start seeing action on ground.
Okay. Okay. Okay. Great, Pradeep. Thank you so much.
Thanks, Madhur.
Thank you. The next question is from the line of Kamlesh Jain from Trabutasil, Razaar. Please go ahead.
Yeah. Thanks for the opportunity, sir. Sir, I must congratulate that the industry has
Excuse me. This is the operator. Sir, may be request to
speak closer to the phone. We are unable to hear you.
Yeah. Yeah. Am I audible now?
Yes. Slightly better. Thank you.
Yeah. Thanks, sir. Sir, just one question. Like, in this quarter, we have the industry has shown excellent resilience in terms of prices and discipline. So like the way the demand is, like if it continues to grow at maybe, like, say, 4% to 5%, So how do you see the lifting in the industry going forward?
Well, the any industry, nothing to do with cement, any industry operates on the pillars of demand, supply and capacity utilization. So those pillars will come in, you know, have their forces playing. Okay.
But like in which particular markets you see better pricing going forward, like say, in North, which all markets? Because in the Eastern market, despite the fact that the capacity has not been there in last one, one point five year, demand has been going at a strong pace.
Four and a half million ton of capacity got added this quarter in Eastern market. Are you aware of that?
Yeah. But like I said, it's more not not led by the, like, a clinker based capacity, sir. True. But despite that, we are seeing significant erosion in the Eastern Market in terms of prices. So how do you see the reason why dynamics going forward?
See, I really don't know how other companies are thinking. We are more than 95% utilized. We are a small player in the East. We are more than 95 utilized, and we will continue to follow the market in the Eastern Corridor.
Okay. And lastly, sir, are we still hungry for the m
and a sales?
Like, say, some of the opportunities which are available in the Eastern market, are we looking at those opportunities available despite the focus on deleveraging the balance sheet? Any other question?
Joke apart. I will not be able to comment anything on that.
Thank you, sir. Great.
Thank you.
So yeah.
The next question is from the line of Gaurav Duteria from Morgan Stanley. Please go ahead.
Hey. Good evening, sir. Two questions. Firstly, is there any difference in the growth for trade versus non trade segment during the quarter?
No. In fact, we have marginally improved our trade. We are now at about 66% on trade as compared to 65% previous quarter.
And have you seen any green shoots in the month of June and July post elections are over? And which would be the segment where you have probably seen some, you know, pickup in the demand?
Infrastructure and affordable housing. These are the two segments. There are state level challenges which exist. But overall, if you were to talk about, these are the two areas where we see traction, coming back in the month of July. In spite of monsoons, we have seen good traction in July.
Okay. Thirdly, sir, the Barra facility, will that be contributing additional volume for for you, or will that help you in saving some cost because clinker was already, you know, available for with us?
No. We have surplus clinker, so it will increase overall capacity in the industry.
Okay. Last question from me on the difference between the consolidate consolidated and the stand alone EBITDA, there was a quite a bit of a jump in there. Any color or explanation there that could be helpful? Thank you.
Including UNC. So consolidated, I'll just take Nagdwara, which had in excess of $1.50 crores of EBITDA. Yeah. Yeah. $1.56.
It was in excess of $1.50 crores EBITDA from Nardwara and UAE operations and Sri Lanka oil terminals. So all those get consolidated.
Thank you.
Thank you. The next question is from the line of Panitch Mukherjee from Bank of America. Please go ahead.
Hi, sir. Thank you for taking my question. The first question is on, can you please comment on demand outlook for the next nine months, specifically for North and for Central India?
Let me talk about Central first, an easier question. Central is very strong in demand. Buying the slowdown of April, June, I believe we should see good capacity utilization in Central India. Not that in the in the Northern markets, it will remain good. It will remain buoyant.
Rajasthan has some challenges on sand mining. I would look at Jammu and Kashmir as a segment opening up with the new focus there. Lots of tunnels, roads, you know, those those that kind of infrastructure. Differentiated infrastructure will start picking up in the JNK market. So North markets will remain buoyant, but I will see stronger growth in central markets.
Understood, sir. The follow-up to that question is if I look at your presentation for Rajasthan, it just shows red across all the demand driver segments. So keeping that in perspective, could you comment on your pricing outlook for North India and is there a scope for further price hikes post monsoons?
Prices, as I mentioned, will be clearly governed by capacity utilization, demand, and supply. Supply as in new capacity coming in. So it it's a natural phenomenon. I really can't comment if things suppose the demand just collapses, then obviously, prices will collapse. If demand is buoyant, there's no new capacity coming in, which is quite unlikely, then you could see prices remain firm.
Okay. Understood. And so for Century Cement, do you plan to rebrand Century Cement to Ultra Tech Cement after merging the two businesses?
Yes. As we have done with all our acquisitions, we will be a single brand company. We have to undertake quality operation, process alignment at Sensi plants. As we have mentioned in the earlier calls also, that one of the plant is very old. It's a vintage 1972, '74 of thereabouts.
So that is a plan which will take maximum amount of time for quality accreditation and rebranding, but other plants will be much faster. Know, give it a quarter or so, we should be able to rebrand and launch Altertec from the remaining three locations.
Okay. Understood. And my last question is, can you elaborate what could be your, you know, freight cost savings or cost savings after acquiring Century Cement? I mean, how could how much EBITDA per ton improvement can we see in Century Cement?
We not see we might not see too much of freight benefit because all the plants are collocated. Barring one plant, which is in West Bengal, which might be 120 to 150 kilometers away from our existing location, other plants being collocated, we might not see too much of fixed savings.
And, sir, what's the fuel mix at Century Cement right now,
and how can we use I'm sorry?
What's the fuel mix at Century Cement right now? And how can we make Century.
I don't have that, unfortunately. The transaction has not completed. We have not yet stepped in. I don't have that information. Okay.
And, sir, thanks a lot for asking my questions.
Thank you. The next question is from the line of Rajesh Kuchani from HSBC. Please go ahead.
Yeah. Many thanks for the opportunity. Sir, also my question is basically on demand. So while the industry, as you have pointed out in your presentation, has contracted by three to 4%, can you throw some color on region wise demand breakup?
I what would you mean?
Which so which regions have contacted more and which regions have shown some resilience?
So in that sense, I've I've given a statewide breakup in our presentation. If you were to look at, I think South contracted the most. Andhra was the state which contracted the most. We saw some impact in central market and Gujarat market. Sorry.
Odisha as well Odisha as well. Sorry. I forgot about that. Odisha as well. These are the few states which come to my mind immediately.
Others might be very relative, you know, one against the other. Difficult for me to Okay.
So no quantification. Can you help us with some quantification with regards to region wise demand growth?
I don't have it, unfortunately.
Okay. No problem, sir. And, sir, with regards to the current quarter, are you looking at some growth in the current quarter or even the current quarter looks like to be a muted quarter or degrowth?
Forward looking numbers, I don't want to talk about, if you don't mind.
Understood. That's it from my side.
Thank you.
Thank you. In order to ensure that the management is able to address questions from all the participants in the queue, we request the participants to please limit your questions up to two. We move to the next question from the line of Pulkit Patni from Goldman Sachs.
Thanks a lot for taking my question. My first question is, in your opinion, how are you looking at capacity addition over the next couple of years? And has that estimate changed given the strong pricing we've seen in the last sort of three months in the industry? That's my first question.
No. So, you know, because of three months change or any outperformance during one particular quarter, next year's capacity addition or the year after will not have any impact because as you're aware, Pulkit, there's a long gestation cycle for putting up a capacity, six to seven years. So whatever is in pipeline will come through. And, my sense is we have seen a slowdown, in the new capacity addition. People whoever had existing mines, you know, to to do a brownfield, will come to an end, then you have to wait for auction mines, which slows down the new capacity addition instead of increasing the pace of new capacity addition.
Last year, you if you recall, we had a very small, I think, 12,000,000 tons of capacity which got added last year. We have seen four and a half million ton already getting commissioned, this year in the first quarter. Give or take 15,000,000 tonnes, I would keep my tab on a 15,000,000 tonne capacity getting added this financial year.
Sure. My second question is if I look through those statewide demand colors that you have put in, a lot of those you have attributed to non availability of labor. So if I was to ask you to hazard a guess that out of the 3% to 4% demand decline that you are talking about in the quarter for the industry, how much of that would be related to election? And how much is general demand slowdown that you see, which could reverse in the quarter, this quarter and the subsequent quarters?
Well, Kit, I don't know who is Delhi is listening to my call, so I don't want anything to happen to me. Alright? That was in the light of rain, but I don't have a breakup of what would have you know, how much to attribute to which factor. But everybody knows where does the labor go during election time. There's a lot of earning opportunity that the labor has during that period, which sees the scarcity of, you know, these people on construction site.
And construction sites are sites which offer employment on a day's notice. You land up at a site, you can start working tomorrow. So that is the scene which typically we see around election time when labor is not available.
Sure, sir. Thank you.
Thank
you. The next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Yes, thanks. Just a small clarification. You shared that Nardwara EBITDA is around INR 156 crores. And on the volumes, based on the utilization you shared, appears that EBITDA per ton is more than overall EBITDA per ton, which is around INR 1,600 odd crores, INR 1,600 per ton, sorry. So is this the right way to look at this, Satul?
What can I say? Yeah. Yeah. You have the numbers with you. You can do the analysis.
Okay.
Second question, with respect to working capital, I mean, given the liquidity tightness in the economy and higher prices, what sort of work working capital buildup do we expect this year?
We have peaked out in working capital. Working capital buildup typically happens pre monsoon for almost all cement guys. And now we should not see any further buildup in working capital. There will be one lump lumpy payment, which happens is towards the MMDR advanced royalty for the Century acquisition, which should be less than 100 crores. Somewhere around 100 crores would be that one element of advanced royalty.
Other than that, I should start seeing reduction in working capital.
Understood. Alright. Thanks and all the
best. Thank you.
Thank you. And the next question is from the line of Swabhat Hakush from Tangle Templeton. Please go ahead.
Yeah. Thanks for taking my question. So you mentioned that you have held back on the Pali expansion, but where exactly are we in terms of preparation, in terms of the land acquisition, etcetera? And
land is fully under con you know, available environment clearance, all licenses fully available. It's a matter of the the day the board give us or not, we can start civil work.
Okay. So from that day, what kind of timeline?
Twelve months? We look at? Twelve months.
Okay. Okay. And
second question is on the Benani non core assets, when can we expect the process to start if it has not started already?
It started already. We are in different levels of discussion for their multiple assets. I would want to see some color of money before the March '20.
Okay. Okay. That's encouraging. And as part of this acquisition, we also acquired some loans and advances. I think this is for the GlassFiber business.
Correct. So I
just I just wanted some color on, is it interest bearing? And if it is, are we getting the interest on time?
No. It is yes. It is interest bearing, and, no, we are not getting our interest payment. So we are looking at cashing out on that loan at the earliest. Don't want to hold that loan on our books.
Right. But we have to take a haircut. Is that understanding right?
Yeah. We'll have to look at our haircut. Yes.
Okay. Okay. And so last question is you mentioned about the quality upgradation as part of the Century deal to get it under one brand. What exactly will we be doing there to upgrade the quality?
One easiest one to tell you is to increase the strength of cement coming out of those factories to the same level of strength that we produce. Besides that, the strength is the biggest thing besides that the texture, the fineness of cement has to be identical to what we produce. That would amount to, you know, the quality of production.
Right. But would that mean a lower blending and higher cost of production?
Not necessarily. Because there are lots of common costs. We'll have synergies on in terms of procurement costs. We will have synergies in terms of clinker movement for them because right now, they move clinker from the Chhattisgarh plant or even the Maharashtra plant to their their Sonarbangla, which is the West Bengal plant, we will be able to serve them clinker from a closer plant that, in fact, would would be a small amount of logistic gain also as somebody had asked me earlier on on the call. But overheads, you know, the fixed overhead load will not be there.
So we will not have on an absolute basis, we will not have cost going up.
Okay. Understood. Thanks.
Thank you. The next question is from the line of Dirish Patak from Goldman Sachs. Please go ahead.
Thank you.
Sir, for Century Assets for the June, what has been the EBITDA per term?
The results have not been declared yet. I believe Century's board meeting is scheduled for twelfth of Sure. This month.
Okay. And can you give the RMC and the white and the? RMC.
RMC. Okay. And white cement 400 k.
400 k. Okay. Thank you.
Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. Sir, you won't probably give some color on Imami or CCI nemets. But if I if I had to ask you the other way around, what is the sort of balance sheet parameters that we are looking at factoring?
Benani overseas will be there with us by March. So what is the appetite that we have for inorganic growth? Good question, Ritesh. You're you're driving me, but I'm right awake, so you won't catch me off guard. Our balance sheet, all I can say is and I've given this, what should I say, advanced estimate also, that we would reach our debt EBITDA of below two x for sure by the March '20.
Sir, you said net debt to EBITDA of two x by
March 20. Correct? Yes. Net debt to EBITDA will be two x as of thirty first March twenty twenty. That's what we are working towards.
And, sir, this will factor
in what CapEx? I'm assuming the number is of CapEx is already included. I I I think I had somebody had asked a question on the CapEx. Correct. And, sir, including Century, this number would move up.
So will the ratio of two x still stand? Yeah. I'm absorbing Century debt, which will, yeah, which will come on our books on account of Century. Right. That's helpful.
Sir, secondly, incentives as percentage of sales have increased considerably for us on FY '19 annual numbers. In the annual report, it's nearly 7% now. So how should one look at this trend going forward? And and how is the cash conversion over here? Because the receivables are also moving up sharply.
So, you know just for a second. I'm looking at my numbers. Should I put the number? So FY '19, we had nearly INR $4.50 crores of fiscal incentives, and this quarter, it's about 112 crores. So I don't think too much of, you know, offline.
The numbers are broadly trending the same way. In fact, when Barra grinding unit kicks in, the the absolute amount of incentives will go up because Barra also has incentives attached to it. Second point that you raised on cash coming in on account of these incentives, they have an assessment cycle. So the approval, which is done in q one f y twenty, the assessment will take place after March 20 only. So what the cash just coming in is of, obviously, prior billing.
I have I don't have any, what should I say, delays abnormal delays. I don't have any abnormal delays in collection of our incentives, if that helps your question. That that helps. Sir, you indicated a time line of April to June for Tala Super. Is that correct?
Yes. April, June 20. Sir, this particular project is it has got postponed, like, quite a long on the timelines. To my numbers, I think we are we are we have less quantum of clinker in Eastern India. And with Century coming in, it would only aggravate the situation.
But please correct me if I'm going wrong anywhere. No. Century is already short and clicker. What was your point you made? I I just missed missed you.
Sir, Dala, you indicated that it will come by April to June. Yeah. So I was hopeful of Dala coming in a bit early given we are short of blinker. In a way, it it is a bit subject to subject to the blend in Eastern India. And once the century comes to the port, I think the clinker shortage will only increase for us.
No. One is clinker shortage does not increase. And by the time my Bharat timing unit comes up, we will we will be able to service it with the surplus linker that we have in the central market. And to meet our requirements, Dulla Super will come up in April, June. We will be fully balanced.
We are always fully balanced, and we'll make it sure that we're fully balanced. Right, sir. Just to continue, last question. Sir, we are operating at pretty high utilization in North And Central India. You also did indicate that Barra could be serviced by the other kids.
Yes. Now we are in a scenario wherein we are about high enough to go ahead with the expansion either at Bali or at Denani. Okay? Hello? So it's a good scenario to expand the capacity, then why are we not expanding the capacity?
Oh, it's a good scenario to expand capacity. We will expand at the right time, as I said. Today, if you were to look at you know, we have sufficient capacity available in North. Our just for your reference, our total capacity in North India is close to 24,000,000 tonnes, and we have sufficient room over there. As of now, we are operating somewhere around 70%, 75% for the last quarter.
And if I were to not go by last quarter as in April, June, which is not a benchmark, if I were to go by the quarter ended January, March quarter, we still have sufficient capacity based on the high capacity utilization of January, March as well. I don't want to block capital unless it is required. We do we have our long term planning. We know how the markets are moving and we're building a twelve months flat to erect a plant, and we will be sure that we are not out of place at any point in time. Thank you so much.
I'll join back
at you for more question.
Thank you. Ladies and gentlemen, we take the last question for today from the line of Malind Radhneval from Centrum Joking. Please go ahead.
Hi, sir. Thanks for this opportunity. The incentive number for the quarter was 112 crores, if I'm I just reiterated it. I mean, reconfirming this.
Yeah. Yeah. Yeah. Incentive, yes. I just did the number.
Yeah.
Hello? Yes. Okay. Sir, just on your initial answers to some questions that 6% looks to be still possible. Would that mean that the second half, we will be at about nine percent to 10% of
It will give double digit growth, then only second half. Then only you can achieve a 6% growth.
So in that line, do you see the pricing pressure continuing that we are seeing in June, July?
Pricing, again, I will maintain that. I'll tell you it's a matter of demand, capacity utilization, and new supplies. So it's market force driven, nothing else.
Okay. Okay. Okay. Got it, sir.
Thank you. Ladies and gentlemen, this was the last question for today on behalf of UltraTech Summit Limited. That concludes this conference call. Thank you for joining us, and you may now disconnect your lines.