Ladies and gentlemen, good day, and welcome to Ultra Tech Cement Limited Q4 FY 'nineteen 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. Ultra Tech Cement reserves the right to block access to any media to whom an invitation is not sent. As a reminder, all participant lines will be in 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. Achal Dagha, Executive Director and CFO of the company. Thank you, and over to you, sir.
Thank you, Sankar. Good evening, and a very warm welcome to this call for Alteryx Q4 FY 'nineteen results. Well, actually, the Q4 results are out of the way, and I guess we can now focus on bigger things that the country is experiencing. First and foremost, the elections. All eyes are on the results of general elections, which will set the tone for the country's growth and, of course, for the cement industry for the next five years.
All I can say is I'm keeping my fingers crossed. Next big thing or an event unfolding is the monsoons. And there is confusion around monsoons. I think that's nothing new in India. Initial news was that monsoon will be deficit and subsequent announcements were made that monsoons will be normal.
It clearly shows that the wet department is as unpredictable as cement industry. Last year also parts of the country had a dry spread and there could be a drought situation in some parts of the country this year as well. You may be aware that in some regions, there were construction activities were banned due to acute water shortage last year. We'll have to wait and watch how the met department's forecast pans out this year. Forecast for this GDP for this year is also robust, upwards of 7%.
And our belief is that the cement industry is back on track and will deliver a higher growth this year as well. Several questions have been raised about the scope of cement demand. While the institutional demand is clearly rising in the country, we are still a retail market. Affordable housing projects have started gaining momentum in several towns alongside the low income housing program in markets. Besides, the infrastructure demand continues to grow very strongly.
Talking about demand, I should also touch upon the new supply situation. During last financial year, 12,000,000 tons of capacity, mind you, only 12,000,000 tonnes of capacity was commissioned, of which 4,000,000 tonnes was added in quarter one, three in quarter two and five in quarter three. You all know that the cement plants take time to ramp up. And secondly, with the phasing of new capacity during the year, it has not seemed to be too much of a challenge with the new cement demand growing at a pace much higher than the new capacities. For FY 'nineteen bus, the effective annual new capacity during the year was around 6,000,000 tonnes only.
Our estimate is that the annual demand for cement in the country is around three forty million tonnes and the installed capacity, the nameplate capacity is around four eighty million tonnes. Out of this installed capacity, clearly, are several plants which are not running optimally or shutdown, giving us a lower effective available capacity in the country. We expect 15,000,000 to 20,000,000 tonnes of capacity to get commissioned during FY 'twenty staggered over the year and the incremental demand during this year will be around 20,000,000 to 30,000,000 tons. For FY 'nineteen, our numbers tell us that the industry will show a growth of about 13%. This is on the back of 9% to 10% growth recorded in FY 'eighteen, which had some economic reforms like GST and REDA.
And prior to that, marginal or a degrowth in FY 'seventeen because of demortization. Ladies and gentlemen, don't be surprised in FY 'twenty if it still delivers a reasonable growth. That should bring a smile to our face. Having spoken about demand and supply, let's understand the input cost scene. As was expected, we have had favorable cost conditions during this quarter.
We expect the same trend to continue at least till H1 FY 'twenty for sure. Pet coke, which is nearly 14% of our total cost, has seen a reduction in the consumption price of about 7% sequentially. While imported pet coke prices were lower 15%, there was increase in domestic pet coke cost by about 2%. However, these days, The U. S.
Coal is as attractive as pet coke. So pet coke is not the stand alone parameter for energy cost consumption. Diesel, which roughly contributes 9% of total costs and 35% of our logistics costs has also seen a reduction of 6% to 7% sequentially, helping in our road transport costs. Ultratech has about 70% close to 70% of its logistics being moved by road network. Selling prices have seen an improvement in almost all the regions in the country, driven by strong demand and improving regional capacity utilization.
Having spoken about the macro environment about the cement industry, let me now tell you what we have been doing in the company. For the quarter, we have achieved a four digit EBITDA per tonne, up from around INR770 crores in the previous quarter. This was supported this was achieved with an improvement in selling prices, reduction in costs and strong volumes. Also, to our aid were our efficiency improvement program, which is continuously helping us deliver a sustainable reduced cost curve. Besides this, other factor is the accruing of synergies because of the acquisitions done recently in logistics, procurement and operating leverage.
Talking about the acquisitions, let me tell you what has happened at Dwara Cementing. Have completed the acquisition on twentieth November twenty eighteen. The integration has been completed on a fast track. The operations have been stabilized and helping the company to further strengthen our presence in the North and West markets. Every month has been an improvement and this quarter generated an operating EBITDA per tonne of $8.30.
I have eliminated the onetime ramp up legal cost and foreign currency devaluation gain, all of which have had an impact of about INR160 per tonne. Obviously, the March exit performance is comforting and reassuring on our investor hypothesis. March, we had an exit capacity utilization of 72. We are working on exiting the noncore businesses to reduce the overall cost of our acquisition and are hopeful to reach a conclusion before the end of FY 'twenty. We have increased the use of wet coke and imported coal from mill level at the time of acquisition to more than 50% as we operate as of now.
There is further a program in place to deliver a cost reduction of close to 50 per tonne, which should be delivered in the financial year FY 'twenty. A very important aspect to note is that the DFC, the dedicated freight corridor passes by very close to both these plants, which I hope will improve the dispatches dramatically. An important aspect has been the leverage position. And we are working on several initiatives to reduce our debt. The India business, which is today 94,800,000 tons of capacity had a peak debt of INR19563 crores in December when we completed the acquisition.
With a closing net debt of INR1750094 crores, we have reached a net debt EBITDA in India at 2.5x. Needless to mention, this net debt to EBITDA does not include the benefit of operations of Madhuara Cement for a full year. We always focus on India net debt EBITDA because the overseas operations have a separate debt at a cost of 1.6% and the debt amount is about INR 2,000 crores and it's a self funding debt. Consolidated debt, net debt to EBITDA for someone looking at for academic interest is 2.71x. On our sustainability agenda, I must tell you what has been happening in the company.
We are now 2x water positive. This means that with the persistent efforts, we have developed sources of water through rainwater harvesting, creating reservoirs and fully secured the requirement of water supplies. As far as power supply is concerned, for over 94,800,000 tonnes of capacity in India, 1,100 megawatts of power is acquired and we have fully invested in captive power plants. Not satisfied over there yet, we have now started investing in renewable energies. Today, we have 62 megawatts of effective renewable energy from solar and windmills.
This accounts for around 1% of our total power requirement. However, there are additional programs in progress, which will increase our effective renewable energy from solar and wind sources to about 10%. Added to that, there is WHRS. During FY19, we have commissioned 26 megawatts of WHRS, taking our total WHRS capacity to 85 megawatts. There are four more investments in progress, which are expected to be completed in a phased manner by mid FY 'twenty one, taking our WHRS capacity to 131 megawatts, which will account for about 12% of our current power requirement.
Thus, WHRS and renewable energy through solar and wind will contribute in excess of 20% of green energy that Ultratech will consume. We are very strong on our CSR initiatives as well. Around our network of more than 50 plants, we are touching the lives of 500 of people in five zero two villages. And out of these, there are 58 model villages. What are these model villages?
These villages have 100 children going to school, no girl dropouts from the education system, 100% immunization and employment for all. So this is what is our commitment to society. We should definitely look at our return on capital. Pacific has been busy investing in the last five years. Our capital employed, which stood at INR26000 crores, somewhere around INR25000 crores as at March 14, has more than doubled to nearly INR55000 crores as at March 2019.
Headwinds of our investments have obviously impacted the return on capital, which you all are concerned about. However, having reached up 84, 85% capacity utilization for last quarter, we have enough panpowder in our system to meet the growing demand and improve the return on capital. I think we can sit back and relax and now enjoy the fruits of our investment in this up cycle. I have told you before, the best is yet to come from Altertec. And before I open this session for questions, I think it will all be fair to say that all is well and ends well.
Thank you, and have a good evening.
Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session.
I think there are no questions.
We take our first question from the line of Sumangal Nimidya from Kochi Securities. Please go ahead.
Yes. Good afternoon and congratulations on the strong results. First question, Assum, is with respect to Nardvara volume and margin. If you could just share some more detail what was it during the quarter? And mainly, I just wanted to understand how it is captured in the standalone results versus consolidated?
So first and foremost, if you look at my presentation, Page 22, if I remember it right. Yes. So there, we have shown you the results of stand alone Algertech as well as India operations.
Now India
operations includes the reason of showing India operations separately is to add the Nadawara Cement business along with it. Okay? So that will show you the picture of what domestic Cement is all about. And do you want to eliminate the difference between the two entities as far as the financial performance is concerned? Your question about what was the volume, about 9.85 lakh tonnes?
Nine seven lakh tonnes was the volume from Nardwara Cement. However, again, that number is misleading because month after month, we have been ramping up. Average capacity utilization for Nagwara Cement for the quarter was 62%, whereas the exit month was 72%. Clearly shows things are on the northbound journey.
Understood. And in terms of further cost reduction, your presentation, you said around INR 50. But given that volume has further scope for decent ramp up and pet food usage, etcetera,
Is INR
50 crores looking a bit conservative?
Question. Next question.
Okay. Just another thing on the cost deflation, I mean, what consumer tailwind do you think will 1Q and 1H also have? Or a large part of the lag on cost is already reflected in 4Q results?
I think it's all baked in 4Q. Crude, as you know, thanks to Mr. Trump, is not behaving very well. The for our lay consumer also, petrol prices have gone up marginally in the last few days. That is, I would say, a black hole.
And the other biggest cost driver for cement industry is fuel. I think that is under control.
Got it. Thanks and all the best.
Thanks a lot.
Thank you. The next question is from the line of Jitam John from CLSA. Please go ahead.
Hi, good evening. This is Vivek. A few questions. First I have a question before you start, Vivek, for you. Why is it that different name is used by CLSA and that Mr.
Vaishwari comes to ask questions every time?
Take it offline.
Okay. My first on the on Najwara. So I just want to understand, I saw Slide 22. But if you just look at stand alone, can you just highlight other than purchases, which other line item or any of the line items other than purchases getting impacted because of Madhurra on the cost side? Logistics will be one way.
One way only. Sorry, because the clinker movement which is taking place, if you were to count the logistics cost of that, that will get knocked off. Obviously, interest income interest paid by Nardwara to Ultratec has to get adjusted. Other than that, let's say, SG and A, manpower cost, fuel consumption is obviously direct, manpower is direct, marketing is all by 100, right? So technically, is no marketing overheads or marketing manpower.
So we have actually marketing manpower of Nagwara on its Nagwara roads. So there is no overlap beside Singapore transfer and related logistics. And just to get it right, between Nagwara and Ultratech, the thing that gets transferred is it sold to Ultratech stand alone or it is a cement that gets sold? Two way movement because of multi plant locations. From additive cement, our plant, we can we transfer clinker to that is how logistics synergies will pan out for our network.
But if that is the case, if you're transferring clinker from Najwala to Altertec, then there will be obviously after that, there will be out of freight cost for the cement that you are selling and all that. Basically, my limited point
is it's going to be
the bigger point when you said Najwara is captured by entirely Najwara or a part of this is in Altertec? It's 100% in Altertec. So is there anything over and above that Ulritech mix on this or no? No, no. When I tell you so let's call it our management reporting, $830,000,000 is the benefit which is generating or EBITDA which Nardwara Cement is generating.
Okay. And any part of that Nardwara operations, which is any part of EBITDA being captured at UlcerTec standalone level or no? So ultra tech is selling its cement at almost zero EBITDA? Yes. That's why if you look at stand alone results, it will not be correct because of the Got it.
Which also means Not the benefit, yes. Okay. And which also means that the denominator that we are using in the stand alone, if we reduce it with DINANI number, then whatever your EBITDA per ton is almost INR 1,100 then at the stand alone level. Our math is as good as mine. Okay.
Got it. There was another thing on Binani. Wanted to ask you. Sorry. Slide number 22, if you take.
If I the problem is the EBITDA that you have given over here includes financial other income. Right? So if I subtract INR 2,406 minuteus INR 2,353 crores, which makes it around INR $5.14 crores EBITDA per ton at Ghanani? Yes. You can take this question offline with Nilesh.
They'll explain you the math because there is the other income, internal inter payment reporting, which has to be knocked off. Okay. Okay. I have a few questions, Madhur. I'll repeat it.
One other thing is full axle load impact or benefit you have said is captured in the quarter. So there is not going to be anything else that you will see?
No. No.
Nothing. Unless we are able to break the monopoly of the transport unions in Kerala and Himachal, there is nothing else left to be captured. Okay. And the impact was through the quarter? I mean, was it like back ended or It's difficult to say, but I think it's evenly spread out.
Evenly spread out. And last question, if I may. Again, if I take your revenues, the way in which you have reported stand alone, your revenues of fourth quarter versus third quarter, and I take the unit realization, it shows almost flat trend as against 1% to 2%, which you have highlighted in your PPT. What is the delta? What am I getting wrong?
Vivek, I will separate you till the exact number, but there is an increase of 1% quarter over quarter on like for like basis.
That's basically all right. Thank you and all the best. For your reference of where accounting reports happen, knocking off certain expenses from the sales, etcetera, will never reflect the selling price, the way the selling price prevails in the marketplace. So is Najita impacting this or there is an accounting thing which is impacting? I would say it's purely accounting.
Any balance sheet, not just us, any balance sheet you will look at. Assuming a cement bag is sitting at $300 throughout the period, into the volume, we'll never give you the revenue number on the P and L. Sure. I'll take it offline. Thank you and all the best.
Thank you.
Thank you. The next question is from the line of Madhav Madhav from Fidelity Investments. Please go ahead.
Hi, Raj. Good evening. Hi, Madhav.
You know, one basic question, I was just trying to understand that in the previous quarter, you see, see the commentary, you know, we were highlighting surplus capacity at the industry level, pricing being challenging, and demand was pretty strong that time as well. But just after quarter, you know, we're seeing that industry is an upcycle. I'm not able to understand where the industry is. Is Arvind an upcycle or is it surplus industrial capacity?
Let me explain to you. First, between Q3 and Q4, I already referred to explained in my commentary, we are like that department, right? So meteorological department will put heavy rains and there might be no rains. So that was in the lighter rain model. However, up cycle what we refer to is in terms of demand And that is there was no two doubts about it that the demand is whereas demand has always been bullish and I have been bullish on cement demand right since the time pre demonetization.
It's only demonetization which put brakes. Otherwise, if you go back and see the history of April to September, 'fifteen, April to September, the markets were cement demand had been starting to rise. So you are in the up cycle ever since then. There have been roadblocks like RERA, like GST, which created a disruption, but the inherent growth exists. That is what is the up cycle.
Up cycle, again, I'll repeat from our perspective is volumes growing at well above GDP. That's the upside.
Got it. And is the current level of utilization for the industry in the different regions of the country, is it good enough for the price up cycle? Because my understanding, firstly, is that an industry up cycle corresponds to a price, you know, better better per ton goes up. Am I missing something there? Is No.
Think we have seen regional capacity utilization improvements, which is now leading to the industry's ability to pass on the cost pressure. Last year, we were seeing capacity utilization improvements taking place, but the cost pressure was significantly higher. Now I think that is what is happening. So in fact, Q4, if I look at Y o Y, the costs are still higher than Q4 last year. They are significantly down as compared to Q3.
So there is a bit of a catch up that needs to be done yet.
And are the current utilizations in your view sufficient for price versus cost inflation sort of scenario for the Indian cement?
You know, What is current utilization and the pain that the cement industry has gone through in the last two years? I think so that the there is a strong chance of price improvement in FY 'twenty as well.
Okay. Great. Thank you so much, Thanks, Mahalo.
Thank you. All participants are requested to limit their questions to super participant. If time permits, we will take follow-up questions. The next question is from the line of Rakesh Vyas from HDFC Mutual Fund. Please go ahead.
Congrats on good set of numbers. Can you just explain Slide 24, which is the operating EBITDA bridge?
Because the numbers that I am
seeing is very different from the numbers that are highlighted on the other slides on the individual cost basis?
I don't know what the question is. Anyway, Mirek will answer.
So the Slide 24, this certain numbers are based on the blended volume, while the other cost slide is purely for gray cement. And this is why there is a difference between these two sets of
So when we are looking at energy cost reduction of 151 per Yeah. On a base on a base, which essentially would be on power and fuel cost around 1,100, it is almost 13%. Yeah. I I think most of the cost items, usually, like pet coke, etcetera, has fallen by only 7%. So if it's so
what's happening to So this is
why if you see the power and fuel cost, where we have eliminated impact of increased decrease in stock, and there is a reduction of 4% only from $11.05 per tonne to $10.57 dollars per tonne. While the Slide 24, since it is on blended basis and it is not adjusted for the increased decrease in stock, that's why this number is coming in 141 per tonne.
So on a steady state basis, which should be the number that
No, we should see that 1051%, but pure that energy cost on Grayson and Bessie.
The next question is from the line of Gunjan Pee from JPMorgan. Go ahead.
She is currently on the line.
Gunjanthi from JPMorgan, your line is unmuted. Please unmute the line from your side and go ahead. As there's no response, we'll take the next question from the line of Indrajit Agarwal from Goldman Sachs. Please go ahead. Hello, sir.
Congratulations on a great set of numbers. A couple of questions from my side. How are the current pricing versus the quarter average? Are they significantly higher or largely on similar levels?
I think the exit prices were higher because the price improvements have taken place during the quarter through the quarter.
Sure. That helps. And also secondly, in
terms of demand, what kind of so I understand that your average demand that you're expecting, but in the first half, are you expecting because of elections and other factors, a significant deceleration of demand in the near term?
We are seeing that deceleration right now. April and May is not very encouraging. And this, I would attribute largely to movement getting restricted. Sure.
One last question, if I may. In one of your slides, you mentioned PBT breakeven for Nagwara by fourth Q FY 'twenty. What kind of utilizations are we building in for that?
85%, 86%.
The next question is from the line of Mihir Deviti from Aventus Capital. Please go ahead. Thank you. My questions have been answered.
Thank you.
Thank you. The next question is from the line of Bumi Khanaya from IDFC Securities. Please go ahead.
Yes. Good evening, sir, and congratulations on a great set of numbers. Sir, on Dagmara, you mentioned that the EBITDA for the quarter was $8.30, but there is a onetime cost. So is it is it when I'm looking at the EBITDA number for on for India operations, it's actually including the onetime impact? Okay.
So as we go ahead, it will reflect the $8.30 plus the 50 rupees cost efficiency to flow in, and that will take care of about INR88. So that
will take to INR88, for sure, that's the math. But it's on a 62% capacity utilization. As my capacity utilization goes up, there will be overhead absorption resulting into the benefits of leverage operating leverage.
Understood. And that is also the gap between our existing EBITDA, sir? Correct. Correct. Correct.
Understood, understood. Sir, on while how has JP's assets, how is their EBITDA per tonne move? JP assets are
also almost operating at a regional level, they are operating at par. We had a surprise in one of the plants, which is Bela MP, where we had to take a major shutdown. I think I'd explained that in the last quarter results also. The shutdown carried through in Jan also. Yes, it had carried through in Jan also.
But now that plant is on track and delivering costs like any other plant. So we would start looking at April, June quarter for the JP acquired assets also to operate at a four digit level.
Okay. And that would help in achieving the PBT breakeven?
Absolutely. Okay.
Okay. And lastly, if I may just squeeze in a repeat question on White and RMC revenues for the quarter and for Pure.
White revenues, INR536 crores for this quarter as against INR591 crores,
$5.05 36
crores, and RNC was $5.91 crores. Sorry.
And if I could just get back to the full year as well, sir.
White cement, White cement, 9 just 60,000 rupees?
Thank you so much. I wish you all the best. Thank you.
Thank you. The next question is from the line of Amit Muraga from Deutsche Bank.
Congratulations on the great result. Just a few questions here now. Like firstly, what is now the status between like has the decision been taken whether public expansion is going ahead or will be going ahead?
No, not yet. Okay. Okay. And because we are now actually focusing on ramping up Nagara. Again, as I mentioned, capacity utilization was 72%.
So there is enough material to sell before we commit capital.
Okay. And the Binaani or sorry, Nardwara expansion then is also kind of is still kind of not yet decided yet?
Not yet decided, no.
Okay. And like also just to be sure about the volumes that you have shared in the presentation is given in domestic volumes. All of it was also stand alone volume. Right?
So and Natwara volumes were 9.75 lakh tonnes, which is included in a total domestic volume of 20,460,000 tonnes or 204.65 lakh tonnes.
Yes. And that's also a stand alone volumes, basically?
What do you mean stand alone? No, stand alone would be this one, no, 194.9. Yes. So 194.9 is stand alone. 194.9 lakh tonnes is stand alone.
Add to that, 9.75 lakh tonnes of Namswara. And total domestic becomes two zero four lakh tonnes.
No, what I meant was even the Nardwara volumes have are there in your top line, stand on top line?
Yes. In the stand alone number, yes, you're right, sorry.
Okay. And in the presentation, in the slide, you can mention or share that the pricing premium is being realized. So for. So is it not fully realized yet?
So if the pricing premium is fully realized, the two things which are left out as of now is the cost improvement program, which will deliver improvement in margin and capacity utilization.
Okay. And can you also share the trade on ship, non trade, the kind of
absolute number? Trade, we had improved to about 60% in '66 this quarter. And sorry, what did you ask?
Yes. That's what and also the what is the blended cement percentage now?
55. 55%.
Okay. And will you be able to share the PTC PSC split in that?
Don't have it readily. Can you call Malaysian ticket separately?
Okay. Sure. Sure. Thanks. That's all from my side.
Thanks, Amit. Thank
you. Participants are requested to limit their questions to a group of participants. The next question is from the line of Praveen Sahadriam from Eagleweiss. Please go ahead. Yes.
So firstly, congratulations on good
sales numbers. Two questions. First is on this performance. If you could throw some light on the console front. Stand alone, you did explain, but how have the Nagdhuta's overseas units done and even the other overseas ETSR volumes.
So just wanted to get a color on these volumes and performance. Sure, sure. So first
and foremost, Naveen, you were looking quite zapper on TV, David, for yesterday, I think so.
Thank you.
So the Slide 23, which is consolidated, we have not included the performance of the acquired assets overseas because they have been classified as held for disposal. So the total revenues when you look at for Q4 INR9739 crores includes our existing UAE operations, India and domestic cement, which is Altertec domestic and Najwara Cement sales. Does that help?
Okay. Because I was referring to your recent corporate presentation in that the volumes given for the console entity were more like 18.9. So just the total console volumes for Gray for the company, if
you can help? Over these volumes will it will add up to about 22,200,000 tonnes. This includes the white cement and put k also.
And which is how much, Nilish? INR0.41. Sorry, INR0.41? Yes. Yes.
So just a
request, Atul, sir, here that since you said stand alone looking at stand alone numbers is increasingly not correct because of these interrelated intercompany transactions.
So it will be helpful if
you can also like give these consolidated volumes as well and some more color because I think All
right, Sanjay, if can add the volumes in so these Page twenty two and twenty three will be a standard part of our disclosures. I will add the volume numbers also on top. And I welcome any suggestions anybody has show more color and clarity in case there is. I thought this was a good job planned for March, right, to explain the numbers, but yes, suggestions are most welcome. I'll add the volume numbers as well.
Thanks. And
just my second question then was, what's the
question? What's Okay.
So second question is about this product, you
can update what's the timeline there? Think Parra is delayed. I expect June end to see light of day. So as part of the contract, JP Associates had been had taken a turnkey contract to execute the entire project and hand it over to us. You know the situation with them.
There's a slight delay, but I expect that the grinding unit will get commissioned by June. Clinker, sir, for this? Oh, the clinker is available in 20 from our Siddi plant in MB. Is and the other, which is Dalla Super. So there are it's a complicated legal issue.
Part of it has got resolved, which is awaiting clearance now from MOEF Delhi. I expect the clearances to come only after elections. And there is one leg which needs to be completed about mines, but we are not extremely worried about that because once the plant gets cleared, we will start manufacturing clinker from that plant from the existing mines. So the clinker plant should also see light of day simultaneously along with Dara, grinding mill getting commissioned.
Okay. That's helpful. Thank you very much. Thanks, Hari.
Thank you. The next question is from the line of Pulkit Batim from Goldman Sachs. Please go ahead.
So two questions from my side. One, how much scope is there for further reduction in lead distances without incorporating Century in the fold, so within your existing portfolio of assets? That's question number one.
Yes. So let me respond rather than forget. Today, we are hovering around 400 kilometers of lean distance. And there is always an opportunity. So today, is 400,000,000 It cannot be a static number.
It could go up or down. But however, around band of $395,000,000 to $4.00 $5,000,000 There is always a possibility as we ease the ramp up of Nagdwara, it will come down by 10 kilometers fifteen ten kilometers max.
And sir, Nagdwara is largely catering to West India right now or is it catering to North India equally?
It's catering to North as well. It's catering to the Western Rajasthan, which where we had a void situation from our suppliers.
Sure. Sir, secondly, what is the debt repayment that is scheduled in FY 'twenty?
So the biggest repayment comes up in FY 'twenty two on the first leg of the JP acquisition borrowings. $5.35 crore. INR $5.35 crore is the repayment due in FY 'twenty.
Okay. INR 500 And FY 'twenty two would be how much, sorry?
INR 1,500 crores, close to 1,500 crores. Sorry, sorry. I was roughly wrong. It's INR2300 crores.
Sure. Thank you so much, sir.
Thank you. The next question is from the line of Rajesh Lakhani from HSBC. Please go ahead.
Yes. Thanks for the opportunity. Sir, we have also heard there are some price hikes taken in North, East and Central regions in April. So along with the exit rates in Q3 and this recent hike, can you just guide us to what could be the approximate realization level increase compared to the previous quarter?
Can't give price sensitive information. No, but Joseph, I don't want to give any forward looking statements, I think. That will have a bearing on the next quarter performance.
Ashish, just separately, so if I look at your balance sheet consolidated, have some assets held from disposal with assets with around INR 1,100 crores in it and liabilities are INR 500 crores. So can we assume the assets that are held for sale in INR 600 crores?
Yes, that's the ambition that we out are for.
Understood. And sir, last one. So Century has been, I believe, been delayed by three months. So earlier, we were expecting it to come in 1Q. Now we are saying 2Q.
So any reasons for
the same? And can we see further delay in that? Elections is one reason because we haven't had the LCFT hearing yet. So till the LCFT hearing takes place, I'm not able to put my finger on what date we will be able to complete the transaction. Now the process left is LCFT hearing, maybe one or two hearings and award the MCFT order, That order gets filed with the mining department for mines transfer, that completes the transaction.
Mine department, it's not just filing, but there are several approvals within the mines department that are to be declared, which will take at least month to forty five days after the NCLT order is received. So that's it from my side. Thank you.
Thank you.
The next question is from the line of Ashish Jain from Morgan Stanley. Please go ahead.
He is not there. Let's go to next. We don't have time.
The next question is from the line of Ritesh Shah from Investec. Please go ahead.
Sir, congratulations on a set of numbers. Sir, my first question is, sir, if you can give us some sense on the inventory at the system level and at the mill level. I'm trying to understand pricing, which you won't comment on, so I'm asking you indirectly. So you're asking about what? Inventory.
Inventory. So channel inventory is never high, two to three days of channel inventory. And unless there is news about price increase happening, dealers talking about it, they will pull in inventory pre price hike. Otherwise, it's a routine two to three days inventory anywhere in the country. Okay.
So it hasn't moved up post March. It remains at the very same, two to three days? Yes, I guess so. It cannot move up because dealers will not take delivery. Okay.
Fair enough. Sir, second thing is you indicated on cost tailwinds till first half. You did indicate about pet coke and crude and Trump. Sir, what gives us visibility for next six months? Have you already locked in pet coke contracts for delivery for next six months or thermal coal what you indicated?
That coke and crude are commodities and drums are human beings. So we have locked our prices at least till H1. That's where I was very confident in making my statement. And after that, we'll see what happens. And sir, lastly I think the macro environment indications are that we don't expect fuel coal and coke in any case to go up.
Sir, given the macro is so positive, you indicated on 12,000,000 tonnes and 28,000,000 tonnes incremental supply and demand. So why is the lead distance actually not coming down? One would expect this number to actually come down pretty sharply besides the trade non trade mix, which has been improving gradually? Look, distance, we have seen it reducing from four fifty to 400. That, in certain, is a big reduction.
And it cannot keep on reducing every time. So for us, for a network like ours, need reduction will happen whenever a new plant, new location gets added to the network because the entire country ultimately will go through a reorganization from our distribution perspective. Otherwise, with market utilizations increasing, yes, we start selling closer to the plant, and that could see a lead reduction. However, I cannot ignore our customers sitting long distance. Fair enough.
Sir, last question, you indicated on BFC, it could benefit the Nagwara asset. Sir, how
do you see the implication on
a system wide level for Ultra Tech and at the system level, how will Eastern and Western DFC change things? DFC will be a big benefit because the wagon availability will improve. Today, our rail is about 30% or less? It's about 26%. It's about 26% today.
I have seen in the last four years, rail network availability coming down from 30% to 35% to 26%. And long distance movement, obviously, rail is cheaper more than road. So once the air conditioning takes place, rig availabilities will improve, which will help us significantly. Perfect, sir. I'll join the queue, sir.
I have a few more questions. Thanks.
Thank you. The next question is from the line of Vibham Juchi from JPMorgan. Please go ahead.
Hello. Hi, sir. Sorry about the issue earlier. I have two questions. Firstly, on the CapEx now, there is no clarity on Pali and the the UNCL expansion yet.
So how should we look at CapEx for F 'twenty? So about
anywhere between INR59 crores to INR10000 crores would be the CapEx cash outflow in FY 'twenty.
So this would essentially be maintenance and
Maintenance of the builder project, which is going on is a Picharpur coal block development. There is a bulk terminal that we are developing outside of Mumbai. And there are WHRS plants across four locations, as I mentioned, those are the bigger ones. And of course, another stand alone expansion, which is a Volker to three plant incidentally in Nardwara District itself is taking place. Sorry, one more is Bara grinding unit where CapEx is happening.
These are the bigger projects. So to recap, there is Bara, the Charpur, WHRS, Bolk Terminal and Valke Pukchi plant. If I were to add them together, they would stack up to 1,000 plus. Just one second. The chart would INR $5.70.
So I spent INR $203.70 crores, INR 150 crores, $2.25 crores, INR $2.25 INR $7,700 100 crores would be attributable to these projects, balance would be all maintenance cost.
Okay. Basically, I'm just trying to understand from an F F 'twenty perspective, you're not looking at any aggressive expansions in organic or organic. Is it fair to assume that the lot of focus will be on deleveraging the balance sheet and optimizing the mix because, clearly, we have gone lower on the trade side, and there will definitely be more synergies. So I'm just trying to understand what will be the focus from an f 20 perspective given you kind of now seem, you know, you're gonna take pause on those expansions?
Deleverage. Deleverage. Deleverage.
Okay. Any target you have in mind in terms of net debt to EBITDA or, which is where you want to get to?
Next target, next halt will be definitely below 2x.
Okay, got it. Second question is on this PBT breakeven for UNPLA that you've mentioned. Now this PBT breakeven pertains to the debt that is there on UNCL subsidy?
Yes, on UNCL books. As also, we will have a benefit of liquidating the noncore assets, which are sitting on the UNCL books.
So that is 4,500 crores. Right?
2,700 crore is the debt on twenty seven plus eighteen hundred. So, yeah, 4,500 crore is the debt. Yeah.
So the PBT breakeven is the thing from the perspective of this INR 4,500
crore?
Yes, absolutely. So this INR 4,500 crore would get knocked down. So we should look at Q4 number, not annual number, by Q4 next year, where we should be able to knock by when we should be able to reduce leverage on account of selling all those noncore assets and improving profitability, which will give us a PBT breakeven.
Okay. And last question on this other expenses and ASP. Honestly, I mean, it's very difficult to see the ASP being flat Q on Q. And then I'm continuing to see that your other expenses are coming off, whereas the scale of operations has meaningfully increased. So is there something which is structurally, you know, some efficiencies or it is something to do with accounting because other expenses has come off very meaningfully in the last couple of quarters?
No, it is bound to happen because it's clearly operating leverage advantage that one gets with additional capacities coming on stream, expenses don't go up proportionately. A simple example I'll give you is TV screens, which are very expensive. The cost doesn't go up unless you increase the number of time spent on TV.
Yes, Steven, number is coming down despite you having consolidated such large M and As. So I'm just wondering, is there any accounting adjustment?
Compared to q three, in q four,
the maintenance cost is very less. Yeah. Yeah. Sorry. Yeah.
Okay. Got it. Between q three to q four is the maintenance cost. Yes.
Okay. Okay. All right. Thank you so much.
Thanks, Sanjay.
Thank you. The next question is from the line of Anshooman Atri from PringyInvest. Please go ahead.
Sir, my question is regarding the ramp up of EBITDA on Century. Sir, we have seen very sharp ramp up on Bemani, almost INR500 on realization and INR200 on cost. And Century is doing up INR500 of EBITDA. So within a quarter or two of consolidation, can we see INR1000 EBITDA from Century? Very nice question.
That's all I can say. I cannot give any guidance. Okay. But is it feasible? Yes, you are asking the same thing in a different manner.
Okay. Sir, secondly But obviously, efforts will be to improve the performance from where they are. Sir. Sir, secondly, on the North market. So the utilization is significantly higher compared to other regions and no new major capacity has been announced.
So, Farley versus Nardwara, what would be a priority if Nardwara? Nardwara. Okay. And and will it be expanded on the lines of Dhar in a year's time if we announced? I I'm sorry.
I missed you. What? The way we had announced, had expanded Dhar in one year's time. Yes. Now I think our team will get kind of live if they don't deliver in one year.
Thank you, sir. All that. You.
The next question is from the line of Duresh Bhattar from Goldman Sachs. Sir, you mentioned $8.30 crores EBITDA for UNCL. How much would be captured in undrawn
None, none. It's everything is UNCL.
Okay. All right, sir. Thank
you. Thank you.
Thank you. The next question is from the line of Ashish Jain from Morgan Stanley. Please go ahead. Hi, sir. Good evening.
So first on that on a breakup number.
Ashish, this PBT breakeven that you're
talking for Najwara, this is on a cash basis, I hope?
PBT is after depreciation. Cash basis, obviously, I would achieve earlier.
And secondly, on other expenses, another point that you made earlier. So I understand this quarter had much lower maintenance expenses. But on a more on a run rate basis, how should we think about other expense? Because that number, because of the one off in 3Q,
has dipped quite slightly this quarter.
So the most sustainable basis, how
So April, June should replicate. Again, July, September will be high. July, September and October, December will be high because our maintenance will be spread in those two quarters. Sir, this quarter had any maintenance or it was like close to zero kind of a number or is it? This quarter had any maintenance at all?
It's always there. So when we talk about maintenance shutdown, which has to be a long tenor shutdown taken for work. So
small maintenance is going on, but major shutdowns are not there in Q4.
And not in Q1 either, that's not? Hardly.
Yes. So shutdown or major maintenance when we call is when the kiln is taken for a shutdown for five, seven, ten or even twenty days, that's a major shutdown. So there can always be a breakdown for a day or for a few hours, that is routine opening cost.
Got it, sir. Thank you.
Thank you.
Ladies and gentlemen, that was the last question. On behalf of Alzair and Cement, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.