FY24 earnings conference call. We must remind you, discussion on today's call may include certain forward-looking statements and must therefore be 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 participants and clients will be in the listen-only mode, and there will be an opportunity to ask questions after the presentation concludes. If you need assistance during the conference, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Atul Daga, Executive Director and CFO of the company. Thank you, and over to you, Mr. Daga.
Thank you so much. Good evening, everyone, and welcome to the Q1 FY24 earnings call for UltraTech. This is the third year in the running, seeing a high consumption of cement. Going by the positive movement seen in the first quarter, we are excited to see a double-digit growth in volumes this year as well. We are aware of the erratic heavy monsoons that we have seen earlier on during the last couple of months and have hit almost all season in the country, resulting in disruption of patches early on. The good part is that this year of El Niño seems to be subsiding, going well for our economy. FDI is gaining momentum, inflation seems to be under control, fuel costs are on the decline, interest rates rate hikes have taken a course. Infrastructure in India is improving rapidly.
What I can quote as one of my friends said, "Gods are blessing to the Indians." I want to share some more data points on road infra in particular. The government has given a directive to spend almost 80% of the budgeted allocation of INR 2.7 lakh crore by FY23. Almost INR 1 lakh crore has been spent by mid-June. Balance spending of INR 1.2 lakh crore, as was advised by the ministry, will be completed on schedule. We want to achieve a speed of 40 kilometers per day of road construction this year. There will most likely be a targeted kilometer per day going by the speed at which the execution is taking place. This quarter was the highest road execution progress.
New orders were less, we don't get bogged down by slowdown of project, which is, to my mind, very concerned. It's not just the roads, it is the good infrastructure has a cascading effect on overall economic activity in the country, cement gets to participate in the growth story. Let's talk about our own work. We have commissioned 4.3 million tons of capacity till now, beyond and including beyond June as well, our cash flow is in good shape. These new capacities will further strengthen our presence in the Northeast and western markets. As for our cash flows, after the cash spend of INR 1,596 crores on our ongoing capital in this quarter, we have further reduced our net debt by INR 233 crores, which I think is a fabulous achievement.
We have completed the first wave of our expansion plan, which was announced in December 20, taking our annual capacity to 131.25 million tons. During the course of various expansion programs, we have identified some debottlenecking opportunities which will be completed during this year, giving us an incremental capacity of 4 million tons. This is spread in 4 or 5 locations as we complete, we will keep on announcing them. We expect, as I mentioned, we should be able to complete all these programs within this financial year, taking our overall capacity from 131.25 million tons to 135.25 million tons in India. Another very important point to note is the improvement we have made in our clinker conversion factors, as we included a chart in our presentation.
An improvement of 0.04 will generate an additional volume on an annual basis of 2 million tons. Let me now talk about our sustainability agenda, and we take it very seriously. We are fast-tracking our green energy program. For that, we are participating in a hybrid solar wind project of 638 megawatts, taking our total renewable energy targets to 1.25 gigawatts by the end the program is completed. Also, we have the intent to increase the print of our WHRS to reach another 25 megawatts from 1,532 megawatts that we ended Q1 FY24 with. These programs will be completed by the end of fiscal 2026. When all these projects are completed, I'm happy to tell you that we will have more than 60% of energy as green energy on our expanded base....
WHR accounting for more than 25%, around 25%, and renewable energy, which is solar and wind, accounting for more than 35%. Depending upon the prevailing cost structures at that point in time, it will still be a sustainable addition to our bottom line. Some two points which I want to bring to your notice, more from academic interest point of view. Firstly, on fuel prices. Today, petcoke is trading around $115 per ton after a short fling, $10 level for a very few days. Most of the time, the spot prices are for ship loading, which is 2 months time, average 2 months later.
This 35-60 day shipping time are not days of inland movement and existing inventories of anywhere between 45-60 days, you get into consumption maybe around 5 or 6 months later on the date you are talking about seeing the contract. Second important point to keep in mind is the moisture loss. For us, the landed cost is almost 10% higher on account of moisture losses, which is what we consume and what we report. Last quarter, on a net basis, our cost was $194 per metric ton, which has reduced to $178 per metric ton for this quarter. Depending on the availability of petcoke, if you can optimize in the fuel mix, this quarter, this quarter our petcoke mix was about 42%.
Another point for your academic interest, we all hear about lead distance. At UltraTech, you would have heard our lead distance to be more than 400 kilometers, whereas last quarter we were at 710 kilometers. An important point to note is that this lead distance includes lead distance for movement of clinker from the integrated plant to the grinding unit. More important to keep in mind is our ability to serve our customers.
With the current network of our grinding units, our terminals across the country, more than 120,000 channel partners, and a dense network of warehouses that we have, our lead distance from the point when cement is available to serve the customer is only 270 kilometers. It has come down from 281 km last quarter, and I think this is a real lead distance for our customers. We are practically able to serve any customer around the country within 300 km of our service point. That's why I say we continue to lead by a mile. Thank you, ladies and gentlemen, and over to you for questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Amit Murarka from Axis Capital. Please go ahead.
Yeah. Hi, good afternoon, Mr. Daga. Thanks for the opportunity. The first question is around the new tax regime. Have you moved to the new tax regime for all entities, like including Nathdwara?
Yes.
Okay. On the fuel cost, like by the consumption cost was $128 in Q1, and what you said is $115. By Q3, we should expect, like assuming $115 continues, we are sure assume $115 to flow through by Q3, right?
Yes. $115 is the price you would mark it up for moisture losses. Consumption will be $125-$130.
Okay. Okay. fortunately, today already-
One twenty, one twenty-five dollars, so.
Understood. What would it mean directionally for your current fuel cost, let's say, you had in Q2, these kCal curves or as a percentage?
2.34 was our kcal cost this quarter.
Okay. Assuming like that of $115, like, should it go down to, like, $107, $108?
Downwards, I haven't done the math because the mix will also have a play.
I would like to add here, this is our comment. It's, see the availability of petcoke is also not too high because $115-$125 per ton, they happen within an extended time. As you all know, the availability of the petcoke is very limited actually, and it's coming, larger part of the petcoke is coming from US. Again, there is a time of cycle time of about 60-65 days or so. It's all depend how much what kind of prices comes out with.
No, I'm just to add further, it's a very dynamic situation. I had seen one data point, which I can share with everybody. The heat wave, which is going on in China and most parts of Europe, the coal consumption is going up. Last year, China generated the highest ever power from its coal sources. They are still consuming only captive coal. Our philosophy, our hypothesis is that as and when China opens up, they will start importing sometime soon, cost may not remain at these levels.
Okay, understood, sure. Currently on this blending ratio of 1.44x that you achieved, can we now expect like 1.5x, maybe a year and a half?
It will improve. I'm not able to quantify, but it will improve further.
Also Infra is taking now blended cement.
Very minuscule.
Okay, understood. This is the last one from me. Like, you've already achieved 90% capacity utilization in Q1. Like as you gradually get into Q4, which is down the line, but commissionings achieved mostly are happening later in 2025 and on. Could for some capacity tightness or unavailability of some capacity you mean?
No, I think, as I also mentioned, there will be surplus cement available from our increase in clinker conversion ratio, the debottlenecking, which will give me additional 4 million tons of capacity, and we will try and bring in some more capacity at a much faster pace. As and when we are ready, we will let you guys know. I don't think we will fall short of capacity. We will not lose a single customer.
All right. Thanks. I'll come back to you.
Thanks.
Thank you. We have the next question from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Yeah, good afternoon. Thank you for the opportunity. My first question is overall, I mean, a very strong growth in this quarter. If you could just share, what is the trend, what would have been the market growth, and actually it looks like a gain share. In case you can add some regional color as to which region, we have performed quite substantially versus peers or the industry.
I think we would have done pretty well across the country, because, again, 89%, 90% capacity utilization, which means average 85% plus utilization in most markets. The only market like South, where we are, our base is small, so we would have lesser impact. Aside to that, practically everywhere, we would have outperformed by a mile.
Okay. What would be the industry growth at plus?
Too early to comment. I would wait for some more results, but certainly, like last quarter, there would be a wide gap between us and the industry.
Okay, given current year's 50% growth, in some region we would have grown 15%, 18%, some 20%, 24%. Some regional color you can share?
I just told you. You benchmark me with my capacity utilization everywhere. We are more than 85% capacity utilization. The bigger point is that the entire country, all regions in the country, east, south, north, south, central, are seeing huge demand.
Okay. Got it. Second question on the prices. I mean, do we expect the cost even to drive margins or, I mean, we are entering a seasonally weak period, how should we see margins shaping up for next month quarters, given some pressure on prices should be?
We have seen marginal increase in the price, not to rejoice or party, but we've seen price increases in north and west?
Some parts.
Some increases in the month of July. South and east are still not showing traction in prices. From our perspective, when we don't have capacity available, our efforts would be to service our customers who are paying the maximum price.
Got it. If I can just ask one more question, overall cement growth for the next 5 odd years. If we look at last 10 years, inorganic has been a substantial part of the growth, now we don't see our name participating in the ongoing acquisition opportunities. Is it, that inorganic is largely behind us, our growth is concerned in future, next 3, 5 years, should be largely dominated by organic? Is that the right way to think?
No, you know, one of one or two places, if you don't see a name, that doesn't mean that you can say UltraTech is not interested. We evaluate opportunities, and of course, given the network that we have, network as in our physical plan network, unless an opportunity is value-adding, value-adding from both growth and profitability, we will not deploy capital in those assets. Yes, we will keep growing, so if not inorganic, organic will lead the way.
In terms of market share, there is no constraint, and if we can still grow inorganically, there is no-
Yes. Barring, I would imagine west, no, not west, sorry, east, where because the inorganic target sizes will be large, we will be hitting some roadblocks in east. Barring that, I don't see a challenge anywhere in the country.
Got it. That's very helpful. All the best.
Thank you.
Thank you. The next question is from the line of Pinakin Parekh from JPMorgan. Please go ahead.
Yeah. Thank you very much, sir. My first question is on pricing. Now, earlier in the morning, one of your competitors highlighted that Eastern India, they have lost market share, and they want to prioritize volumes over there. East India is also seeing a lot of new capacity come through. In terms of pricing, particularly for East India, what is the company's outlook for the same for the remainder of the year?
I think we have mentioned earlier also, East, with the kind of growth the eastern markets had and the new capacities coming in, East will continue to remain a very tight market in terms of prices.
Understood. My second question is that I'm just trying to understand the energy cost math better? Slide mentions $178 as the consumption cost in Q1, which at petcoke prices works out to around $125, a lot 30% decline. Now petcoke is 40%-50% in terms of the overall energy basket. If petcoke prices were to sustain at today's level for the remainder of FY24, should we assume a 30% energy cost decline, or will the overall energy cost decline be lower than the headline petcoke cost decline because of the other fuels?
Yeah, she saw if everything remains status quo, and let's say today's petcoke prices are at $125 and that prevails throughout, then obviously you would see it translating into a 30%, 20%-30% decline in energy costs.
Understood.
Again, Pinakin, now instead of me, I try to explain the math around it. Spot means two months forward loading, blah, blah. Today's spot, which is what July end, will come into consumption only by January. That's how the math stack up.
Understood. Understood. This is very helpful. Thank you very much for the clarity.
All right.
Thank you. The next question from the line of Prateek Kumar from Jefferies. Please go ahead.
Good evening. My first question is on your, on recent news flow around some change in dynamics, from gas, composite, and then there's also your journey on LC3 as a acceptable product.
You are not very clear and audible. Can you speak a little louder?
Yeah. Is it audible now?
Yeah, better.
Yeah. I was asking regarding recent change in regulation or modification regulation on Composite Cement and then acceptance of LC3 as a product. How does that impact industry and ourselves, sir?
we are growing big in composite cement. Now, composite cement requires 45% clinker. There are some players who are doing much lower clinker, which they will get impacted negatively. We have started with 45% clinker, we are pretty bullish about it. Composite cement is getting very well accepted in the market. This is one reason why one of the factors driving our improvement in our clinker factor. Also, composite cement is still not settled down across the country. As it settles down, you could see a further improvement in clinker factor.
Coming to, Yeah, coming to the LC3 cement, I think it's a long story because one as of now, there is no identified large deposits where the cement plant can be set up based on the LC3 deposits, actually. Obviously, it requires a little high investment compared to the normal conventional cement plant. Yes, it is good for future, but I don't think anything is likely-
Four, five years, I think?
Yeah. Yes.
No, you might not see anything for the next four, five years.
Sure. Just a quick question on other expense. There were some increase in other expense on a quarter-to-quarter basis, while volumes were actually lower. Is there any one-off expense which was part of this quarter and was not part of last quarter?
Advertisements were a bit higher. Anything else?
Maintenance.
And-
Q4 maintenance
Q4 maintenance was lower, and this quarter, the advertisement and maintenance costs were higher. Nothing, so nothing, no one-off. These are routine expenses.
On trade expense, you mentioned, you know, had an impact because of the cyclone in west market. Is this just only which is even for QSM current basis or?
Yeah. Yeah, yeah. That was one-off impact. I think before Joy would not have been there, we would have rocked the market with another 30 million tons of sales.
Sure. These are my questions, sir. Thank you.
Thank you.
Thank you. The next question is from the line of Ashish Jain from Macquarie. Please go ahead.
Sir, my first question is.
Sorry to interrupt, sir, but the line for you is not loud enough. If you could please use the handset, closer to the mic, it would help.
Ashish, you're not very clear. There's a lot of static noise.
I'll just dial back.
All right.
Thank you. The next question is from the line of Indrajit from CLSA. Please go ahead.
Hi. Good evening, sir. A few questions from my side. We have reduced our usage of pet coke. Is it just because of availability or on landing they said coal is now cheaper than pet coke for us?
Availability. Look, a landed versus petcoke is much cheaper in energy terms, which is, usually it's more about availability of petcoke.
What would have been our alternate fuel usage in this quarter?
Alternate fuel was how much? 5%. 5%.
How do you see that, you know, progressing?
Yeah, we have taken a target to go up to 9%-10% by the end of next fiscal year. A lot of investment was required, which we have taken up in this financial year, close to INR 250 crores. Yeah, close to INR 250 crores of investment is happening in this financial year for shredders and feeding systems, handling systems for alternate fuel. Accordingly, we are tying up also for alternate fuel.
Sure.
If we look at it in volume terms, you know, More than 1.2 million tons of alternate fuel that we are already handling on an annual basis. That's huge volume. Anyway, as a percentage, it's what it is.
Yeah, no, that's okay. Given that we have now embarked on small 4 million ton debottlenecking, any change in our CapEx plan or what would we are expecting?
No, no, we did not have too much of CapEx, so it's all within my CapEx plan.
All right. Thanks. Thank you.
Thank you.
Thank you. The next question is from the line of Satyadeep Jain from Ambit Private . Please go ahead.
Hi, sir. Thank you. Just a couple of questions. One on the entire renewable energy mix to understand, would UltraTech, I know this is a subsidiary of renewable energy, but would the growth of UltraTech be putting capital on this, or would you buy it from outside? Based on where we are, is what is the cost difference between the power you get from these renewable assets versus your own CPP? I'm not sure these would affect CPP or any difference in costing.
Yeah. First and foremost, we will do a group capital scheme, so we have to participate with about INR 297 crore of equity into the SPV. And the second question that you asked was about pricing. Effectively, and because we are supplying power to multiple states, average landed cost, you know, because there are transmission losses, open access charges, average landed cost would be around 5.25 per unit. As compared to that, the cost of power currently would be around INR 7-8 per unit.
Today is, both CPP in it?
Yeah, I'm talking about average cost of power for our individual units.
Okay. Got it. In the capacity expansion, one of the peers has talked about accelerating their target that they had earlier for capacity. You know, UltraTech has also mentioned there are some time targets wanted to get started. Nowadays, you're, you have this basically for the next couple of years. Would you also look to accelerate, given all the volume growth, market share gain, those targets, beyond the current one that you have?
As we mentioned, we are reaching 155 plus 4 more, let's say 159 already. We will announce perhaps this, maybe if not September, then June, September Quarter or December Quarter for sure, our next phase of growth, which will take us further up from 155 upwards. We are not going by what peers are doing. We are, this plan is very clear. We see India as a growth market, and we are investing behind growth.
Okay. Thank you so much. Sure.
Thank you.
Thank you. We have the next question from the line of Sanjay Nandi from VC Capital. Please go ahead.
Yeah. Good evening, sir. I've got a set of numbers. Hello?
Yes, please.
Yeah, sir, can you please guide us what kind of drop in like petcoke prices we can visualize in the coming quarters? Just a kind of guidance.
Very difficult. Very difficult. If you can tell me what the index will be 2 days ahead, I will tell you what the price will be. Can you? It's very volatile. To be honest, it's very volatile.
Got it. Got it.
In 10 days, the prices have galloped from INR 110-INR 125. It can come down also, it can go up also. I have no idea.
Okay. Thank you, sir. Thank you for so much.
Thank you.
Thank you very much.
Thank you. The next question is from the line of Amit Murarka from Axis Capital. Please go ahead.
Yeah, hi, thanks for the opportunity again. First on this next phase of expansion, like, in the last two phases that you've announced, we've seen that the CapEx cost per ton has been quite low at $65-$70 per ton on average. Is it fair to say that the next phase of expansion could be, like, more greenfield and, therefore, the cost could be a bit higher?
No, it will be continue to remain a mix. If I look at my next phase, which one is green? One. I think, you know, I'll just doing a mental math on what is happening. It will still be a mix of green and brown. Cost will be very competitive.
Got it. Okay. I think earlier you had mentioned that, you have a target of 200 million ton capacity, of which you are at 185. That number still holds or?
Yes, absolutely. Absolutely. Hang on. We will, clearly, you know, by 2030, we will surely anywhere between 20 to 30, we will reach a 200 million ton mark. As I mentioned, the blueprint of our next phase of growth, of phase three, if I were to call, is almost ready. It will go to our board perhaps next quarter. We are just giving it, you know, final touches. Hopefully, it goes to the board next quarter, and I can announce it next quarter.
No worries. That's it. Thank you. Also, on Super Sala, is there any update or timeline for the arbitration?
Arbitrations never have timelines. It can go on for pretty long.
Okay, understood. Lastly, on the FY24 CapEx, like, can you just have a refresh on that number or you'd like to provide it?
it will be anywhere between INR 6,000 crore-INR 7,000 crore.
Okay, that's all. Thank you.
Thank you. The next question is from the line of Pulkit Patni from Goldman Sachs. Please go ahead.
Thank you for taking my question. You had to explain some time back how we are running at high capacity utilizations, and we would endeavor not to lose out on customers, and that's not a bad problem to have if the demand is so strong. Now, given the fact that, you know, you are at such high capacity utilization, can you give us 12-18 months roadmap of how prices are going to head? I understand it's difficult to predict in the near term, but any sense on.
It will change then, Pulkit.
Mm-hmm.
It will change.
Okay.
I have seen... the undercurrent, if I can be candid, the undercurrent in the heavy monsoon months, we have seen price increases happening, which is never heard of. I should say where it's like INR 2-INR 200 or INR 5 increases have happened in certain geographies, and they are sticking, so which is good enough. It's, it's all I'm saying. The undercurrent is very strong, and you are talking about 18 months, I am talking about 9 months. January, March will 2024. The election, new capacities available, we are, we will ramp up, and we'll bring in some more capacity. I already told you about 4 million tons coming in this year. For more capacity, we are working breakneck speed. We might try and commission some of our capacities earlier.
Markets will be very strong, which will entail price improvements.
Got it. Let's hope for that. My second question.
Don't hope. I'm telling you, it's gonna happen.
Okay. That's reassuring. My second question is, if you look at your presentation, is it fair to say this quarter you've seen that this has grown faster than non-trade?
I don't know how you are saying that.
I think 26% growth, I think, non-trade.
Yeah, yeah. I mentioned that statement, and I've given you an additional data point, that rural markets. Yes, trade market, rural is 65% of trade, and that is growing at 24%. Yeah, trade is growing at a much faster pace.
Okay. Thank you. Thank you for both those answers.
You're sky sir.
Sure. Thanks.
Thank you. The next question is from the line of Ashish Jain from Macquarie. Please go ahead.
Hi, sir. Good evening. My first question is, you know, on the FY26 green power number that you gave of 12 gigawatt. As you said, is not on operational basis, right? That is more on the, your capacity share, I think.
I didn't understand. You see, if I am consuming 1,000, I require 1,000 megawatts of power, I will have 60% as green power.
Okay. Based upon this 1.2 GW satisfied you?
Yes. We will reach 1.2 gigawatt of renewable energy and 425 megawatts of WHRS. Both are green.
For 155 million tons, how much power will be required?
About 1,200 megawatts of power will be required, so 720 megawatts will be green energy.
Got it. Got it.
That will be highly remunerated. Nobody asked a question, which is very good, that-
Right.
Yeah.
Can we, in terms of CapEx, what is the CapEx you will need for this? Is it just INR 61 million growth that you get the green method or?
Yeah, that will be our participation.
Okay. Okay, got it. Secondly, in terms of, you know, on clinker, are we operating close to 100% utilization now, given, you know, on cement itself, we are at 90% for the quarter? Can you give some sense of our clinker utilization?
It's more than 90% for sure. I think it's more than 90%.
Okay. Got it, sir. Lastly, on power, I just wanted to ask, sir, like, given our view on power, are we today, you know, heavily buying, petro prices available, given it is fairly attractive pricing, or we are still sticking to whatever strategy we have in place?
No, no. We are also dynamic. I have increased my inventories. March quarter, we were at the end of March quarter, we were 38 days of stock. Today, we are at 58 days of, we ended the quarter with 58 days of stock. As I mentioned, if you heard me about China, I still feel China might start importing.
Right.
Prices could rise in the near future.
Sir, for the balance, 58% of our fuel outlet at Coke, what is the price trend there? Because I think that is mostly imported coal, right? Or is it?
Maximum is imported coal. Maximum is imported coal. We also have our FSA, which is, you know, the linkage coal. The maximum is imported coal. If I were to look at percentages, just one second. Where is koila? Fuel, mix, TPP. Just one second. Where is it? 36% is imported coal, 7% indigenous coal, 42% pet coke, 5% alternate fuel, and lignite.
Got it. Okay, great. Thank you so much.
Thank you.
Thank you. The next question is from the line of Shravan Shah from Dolat Capital. Please go ahead.
Hi, sir. Most of the question has been answered. Just a couple of things. First, in terms of the WHRS, currently, 232, and we say 425 by FY26. By FY24, by FY25, if you can help us, how much more we will be adding?
Yes, sir.
What will be the year end of WHRS, this year?
FY24, we will reach 300, and I think between 25 and 26, the remaining obviously.
Okay. Same way in terms of the solar and other.
Yeah, yeah. Maximum will come by end of 2025.
Sorry, sir. By end of FY24, how much more.
By end of 2024, which project? There is maybe 100 megawatts more is in pipeline. 60 to 100 megawatts is in pipeline before March 2024.
Okay. Okay. For this WHRS, when we say INR 6,000 crore-INR 7,000 crore CapEx for this year and next year also, I believe, this also includes the CapEx of the WHRS?
Yes, absolutely. It includes my expansion CapEx, modernization, routine CapEx, WHRS CapEx, alternate fuel and everything.
Okay, okay. Sir, when you say, we are looking at double-digit volume growth, is it fair to say that it should be middle, mid-teen kind of a number that one can look at?
I will not comment on that, so I'm only giving you a guidance that industry will definitely see more than 10%.
Okay. But in terms of the broader cost savings, including the lead distance reduction, everything, on broadly and the plus now the foreign fuel. Broadly, from now onwards, we should be seeing an improvement in EBITDA first on two businesses.
Yes. Most certainly.
Okay.
I hope in spite of monsoon maintenance cost, I think we should do well in EBITDA.
Okay. This quarter till now, for the since June, in terms of the blended realization for us, still we haven't. You mentioned that we have seen a INR 2, INR 5 high fees from places, but on overall blended basis, till now, we haven't seen any decline in prices for us.
No, no decline.
Okay, that's great. Thank you, sir. All the best.
Next question is from the line of Navin Sahadeo, from ICICI Securities. Please go ahead.
Yeah, hi, Yeah, Naveen. Hello? Are you there?
Sir, the current participant seems to have dropped from the question.
Yeah, yeah, he'll come back. Okay. Take the next one.
The next question is from the line of Raghav Maheshwari from Asian Markets Securities. Please go ahead.
Sir, can you please break down the 648, the renewable power into the what is the solar and wind power in this?
200 is wind and 400 is solar, if I remember right. Just give me 1 minute, I'll tell you. If you have any other questions, then I can come back and tell you this.
Yes, sir. Sure. Sir, what is the blended mix for this annual power item, blended level for this 6.8 MW? We are looking for CLF utilization for this, particularly.
About 40%, 40%, 45%. come there. 200 megawatt is. Wind is 368, solar is 260.
Okay. The last question is from my side. For the next 1 and 2 year, where we are seeing the very infrastructure demand, primarily the non-trade in the OPC segment, how will you see the price difference between the trade and non-trade versus PCC, OPC? Primarily non-trade and trade.
Non-trade is stronger in prices.
Any prices you will see for the gap between the non-trade and trade?
Trade prices will go up. Yes, non-trade is already high. The trade prices will go up.
Okay. No further increase in the non-trade is the typical? I will say non-trade.
No, I don't really know that. You know, it's always depends upon how the projects are coming up and how we negotiate. Obviously, aim will be to realize more.
Got it, sir. Okay, sir. Thank you.
Thank you.
Thank you. The next question is from the line of Jyoti Gupta from Nirmal Bang. Please go ahead.
Good evening, sir, and thank you for the good set of numbers. I only had one primary question to ask, that is, we have reduced on our lead distance. Would there be a schedule which could have been reflected this quarter? Second is, you do have the benefit in terms of the clinker conversion, because I've seen the presentations is something like 1.44. While I was expecting, you know, that the few next impact, reduction of the cost will actually be reflected this quarter. Currently, it's not to the extent that they expected. Even if the prices have gone by 100%, the impact of the fuel reduction would have offset the reduction in the prices. The second quarter, obviously, you are saying that we will see improvement in the return. What more, what all factors will actually contribute in the improvement of a return?
First question was about lead distance. The benefits that we accrue because of efficiency improvement are eroded by the busy season surcharge was one, and any particular Adil case? That was one major item, because busy season surcharge has been eating away most of the improvements.
Is it, are we not having a railroad next of 70, 30? I'm correct me if I'm wrong. Busy season surcharge has, earlier it used to be on a, seasonal basis, but now it's full year around the year.
It is full year, yeah.
Will that actually, I mean, will that not be negated? I mean, like, this must have been factored in the trade cost.
It adds on to my 30% road, and it's pretty high, I think INR 9. 30%, 30% rail, sorry. On a 30% rail network, that adds on to my overall costs, which negates the benefits that we are able to achieve on efficiency improvement. Luckily, fuel prices or diesel prices have not hardened over last quarter. Your last question, which I remember, was about what will be the drivers for profitability improvement. Of course, other than prices, you will have the benefit of fuel price reduction, logistics cost improvement, and the increasing green energy share, which helps my bottom line.
Will that really reflect in the second quarter number this time?
No, no, no, not second quarter. The green energy projects are coming up by 25. The big project which we spoke about on this call, will come up by June 25. That is where it will reflect. Second quarter or third quarter. Second quarter, I would not want to comment because it's rail. Third quarter, you will see the benefit of improvement in prices, followed by fuel price gain. Logistics, if there are some other levies which kick in or anything else, logistics will also drive home the benefit.
I do, I believe I've been actually balancing with a lot of DNC players actually supplying, you know, movement of a lot of cement across the region. I don't know. I mean, I'm sure you are that positive about the price improvement. We are after festivities, I'm sure there will be some improvement in the price.
Yes, yes.
I don't think that's more than INR 5 per bag, if at all that happens.
If it is INR 5 per bag, on 100 million tons, we are selling INR 2,000 crore bags. INR 200 crore bags, sorry, INR 200 crore bags. That's a huge amount of money.
It will be negated by more improvement in your cost, because you said that the green power will actually come by.
The big project of 648 megawatt will commission by June 25. There are several small projects which are getting commissioned. As I said, about 100 megawatts is another project. Multiple small projects which are coming in during this year.
Effectively, we will not see much gain coming from the fuel price impact. I mean, just like my calculation on the composition, where, as you said, I have something like 46% on the coking side, 35%, 85% on the air side. Looks like there is no improvement as such that we'll be seeing in the third quarter on the fuel side, isn't it? If you just.
No, we will see a significant improvement in fuel.
Hmm? Oh, yeah.
We will see an improvement in fuel because of fuel.
Okay.
Fuel prices or the power and fuel chart that you see will be a declining chart in UltraTech.
Yeah, because power, I believe, I mean, if it is a 20 unit and at 0.5, and it goes steadily, increases by 30 peso or 40 peso, in some way you should be, there should be a gain, significant gain of the team.
Yes, absolutely. Absolutely.
That does not seem.
... Could I ask you to please rejoin the queue for follow-up questions?
Yeah.
Yes, thank you.
Thank you. The next question is on the line of Uttam Kumar Srimal from Axis Securities.
Yeah, thanks for the opportunity, sir. My question pertains to your RMC business. This quarter we have grown by 37%. This growth will continue for the remaining of the year?
I hope so, and I think it will.
Sir, how much currently RMC plants were operating, and what would be our target for addition of RMC plant in next two years?
232 plants are in operation. We hope to reach a milestone of about 300 plus plants by the end of this year. Yeah.
Okay. Okay. Okay, sir. Okay, sir. That's all for my end. Thanks a lot.
Mm-hmm.
Thank you. The next question is from the line of Navin Sahadeo from ICICI Securities. Please go ahead.
Yeah. Am I audible now?
Yes, please.
Yeah, thank you for the opportunity. Sir, a couple of questions. One, on the debottlenecking of 4 million tons. Is that got to do with the increase in blending ratio or gives you an opportunity, or we are having a committed clinker debottlenecking of roughly around 3 or, I mean, around 2.5, 3 million tons, which will help get those volumes?
We have sufficient clinker, Naveen, and the 4 million ton is all grinding. These are all grinding capacities.
Okay. Primarily, the dewatering machine is largely on the grinding side?
Grinding side, yes.
The other thing I just wanted to ask was about this other operating income. I see in this quarter, it has gone up by almost INR 92 crore on a sequential, basis. Just wanted to get some color. Is there any more booking of incentives that has happened this quarter or is it?
These are normally consistent. There's nothing on income tax. There's no abnormal incentive, but my colleagues are just checking on it.
Okay, meanwhile, you said what?
Pali as a unit, started getting its incentives, but that was INR 14 crores or something. That was only INR 14 crores.
Yeah. Yeah.
Okay. I think nothing. Again, so it's volume link, maybe. I don't really have an answer.
Sure, sure. I just wanted to get a sense because-
Yeah, there's nothing abnormal. Nothing abnormal.
Sure. I was just seeing that March volumes were higher and June was sequentially a little lower, but.
Yeah, yeah. Actually lower, but, nothing that comes to my mind, which is abnormal, but I will just get the team double-check, and I will get back to you later.
Sure. Sir, just one last thing you said, pricing, of course, is healthy in current market. In fact, some markets you said have seen an increase. After fuel cost benefits, demand continues to grow. Very broadly, for an exit FY24 Q4, last quarter of this fiscal, the EBITDA per ton that we could look at should be, would you guide something like INR 1,400-1,500 kind of a number for that March quarter? If, of course, things remaining same, the pricing and cost and everything.
Yeah, everything remaining same, it will improve. I will not guide to a number, but it will be significantly higher from this quarter.
Great. Great. Please set us a goal.
Naveen, the point is everything remaining equal. Yeah, it's not, and it's not a static world.
Yeah, of course, I understand that. Like I said.
Yeah.
Assuming-
Things are looking positive. Things are looking positive. That's the most important element. Yeah. I think Naveen, my colleague, clarified it's generally incentives which have started kicking in the other operating incomes that you were asking.
Sure. From an annualize, so let's say from a quarterly run rate.
Yeah, yeah.
INR 100 crore kind of a run rate going ahead.
It should be possible apart from it.
Sure. Just one last bit, if I may, repeat. In the pricing, of course, in current environment, the demand being strong is of course, looking good, and it should pick up coming quarters. Next year, which is like, you know, after the elections next year, typically demand may get a little soft like it happened in FY20. The FY19 saw 13%+ kind of a growth, but 20 was just flat. If that happens, even in that scenario, would you be confident on pricing or it's too far to talk about?
It's too far to talk about, but yes, I think it, the market generally softening also for a few months after elections. Yeah.
Fair. Thank you so much for the opportunity, sir. Thanks.
Thank you, Naveen.
Thank you. Ladies and gentlemen, we will take that as the last question. On behalf of UltraTech Cement, I conclude this conference. Thank you for joining us. You may now disconnect your lines.