ACC Limited (ACC) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Ambuja Cement and ACC Limited FY '23 Earnings Conference Call hosted by ICICI Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Navin Sahadeo from ICICI Securities Limited. Thank you, and over to you, sir.

Good evening, everyone. On behalf of ICICI Securities, I welcome you all to the FY '23 earnings call of Ambuja Cement and ACC Limited. From the management, we have with us CEO; Mr. Ajay Kapur, CFO; Mr. Vinod Bahety and Head Investor Relations, Mr. Charanjit Singh. So without any further ado, I hand over the call to Mr. Charanjit Singh for his opening comments. Over to you, Mr. Singh.

Thank you, Naveen. Good evening, everyone, and thank you for taking out the time to join our FY '23 full year results call. As you very well know, this is our second results call after the change in ownership. And much like the previous call, we'll focus on the performance of our Adani Cement business, particularly Ambuja and ACC. Hoping that we have downloaded a copy of the results presentation, that has been released and are back. Some of the slides from that deck will be referred during the briefing session, which -- in the next few minutes. For any queries and questions relating to promoters or another company of the Adani Group, you can separately reach out to me, and I'll schedule a call with the group CFO or with the family office as maybe required. So with this, I will now hand over to Mr. Ajay Kapur for his comments regarding the performance of the 2 companies. Over to you, Ajay Ji.

Thank you, Charanjit. Warm greetings to everyone. Thank you for joining us today for the operational and financial performance of the Cement business of Adani Group, namely Ambuja Cements and ACC Cements for the quarter ended March '23. This is the second quarter post the change in management, and we are happy to share that the efforts taken to improve the overall performance of our business have started to yield results. It has been another exciting quarter to see our progress on various initiatives such as operational efficiencies, synergy and business excellence, which have resulted into substantial improvement in business parameters. Last quarter, we set out on a challenge to redefine the supply chain and logistics for our business. We are happy that we reached a positive outcome in the state of Himachal Pradesh to address the logistic challenge faced by our company. To perseverance, hard work and steadfast commitment to our values, we have emerged stronger than ever before. Let me provide some highlights of this quarter and some insights on the way forward. Starting with the revenue. The revenue for the quarter came in at INR 7,966 crores, up 1% quarter-on-quarter. The growth in revenues despite the adverse impact on volumes from halting of operations at our HP plants for both Ambuja and ACC for 50 days in the current quarter and also a small breakdown, which we suffered in one of our grinding units in Eastern region. The share of blended cements has increased to 92% versus 91% quarter-on-quarter. And the share of premium products as a percentage to trade sales and volume is maintained at 22%. Now coming on the cost. Operating cost for the quarter is INR [ 4,764 ] per tonne, which is 5% lower quarter-on-quarter. This is attributable to 18% decline quarter-to-quarter in power and fuel cost, mainly driven by the [ kill fuel ] basket where the reduction is 10% from INR 2.45 per 1,000 K cans to INR 2.21 per 1,000 K can. The share of direct sales has increased from 50% in the quarter to 54% in the current quarter. The rail coefficient increased from 26% to 30% Q-o-Q. Other expenses is at INR 702 per tonne, which is 8% lower quarter-on-quarter on account of resource optimization. With the mentioned improvements on both revenue and cost, EBITDA for the quarter came in at INR 1,523 crores, which is a jump of 34% quarter-to-quarter. EBITDA per tonne for the quarter was INR 1,079 implying a jump of 30%. EBITDA margin too expanded by 470 bps to 19.1%. The total fund flow from operations during the quarter was INR 1,571 crores, which was negative INR 627 crores last quarter. Basically implying an increase of INR 2,198 crores quarter-on-quarter. Working capital remains a key focus, and there has been an improvement in the working capital management during the quarter. And the working capital turnover has improved by 8 days. On 31st March, the consolidated cash and cash equivalent in the company's book is INR 11,530 crores which is an increase of INR 2,076 crores quarter-on-quarter. Talking about the ESG highlights for the quarter. We expanded our green portfolio by launching 2 new products in our ready-mix portfolio. ACC AEROMaxX and ACC Coolcrete in addition to ACC ECOMaxX that was launched in the previous quarter. Now coming to stand-alone results for Ambuja Cements, we recorded substantial jump in sequential EBITDA by 35% at INR 962 crores. Net revenue sequentially up by 3% and up by 8% Y-o-Y. at INR 4,256 crores in line with the volume growth of 8% Y-o-Y. Overall sequential PAT growth by 36% and Y-o-Y growth 2% to INR 502 crores. EBITDA sequentially rose by 35% and grew 17% Y-o-Y at INR 962 crores as already mentioned. And sequentially, EBITDA margin has expanded from 17.3% to 22.6%. Treasury gain has improved by INR 25 crores quarter-on-quarter on account of efficient treasury management. With this stellar performance and considering our growth plan, Board has recommended a dividend of INR 2.50 per share, which is 125%. Ambuja and ACC together are symbiotic with strength meeting legacy. And with our strong CapEx program under the Adani Group, we will position the business as a strong course to recommit. Moving to our long-term strategy for which you can also refer to our March '23 presentation uploaded both on the company and exchange websites. Many of you would be aware, but I'm just repeating the strategy because it's very critical. It has 3 levers. Doubling the plant capacity. Number two, reduction in operating costs to become lowest cost player in the industry; and number three, enhancing our branding and marketing strategy. First, talking about capacity expansion. We are targeting doubling of capacity in 5 years to 140 million tonnes from 70 million currently. This will require about 40 million additional clinker capacity. We already provided a plan of 12 million capacity in our March strategy presentation, which is spread across several locations. For this new capacity addition, we are solving a cookie cutter approach with most of the clinker line having capacity of around 4 million tonnes and grinding facilities of around 2 million tonnes. We have shortlisted a set of equivalent suppliers to whom the orders will be placed on an ongoing basis. We also revisited our EPC strategy to E, P and C because we relied that by breaking in parts we will end up having more savings, and that will also be recalibrated in our strategy of expansion going forward. Now the pillar, the second pillar on the cost reduction. We are targeting cost reduction of about INR 302 crore per tonne from these broad categories, which essentially will have energy costs, freight and forwarding costs and other costs. For the energy costs, we are taking calling actions. We're going to increase the waste heat capacity from 70 megawatts currently to 175 megawatts by quarter 2 FY '25. Increase the share of AFR from 8.8% to 30% over a midterm with a target of 15% by the end of the current fiscal year. RE capacity addition of 200 megawatts is being targeted by FY '24 end. Long-term tie-ups for domestic coal suppliers. Currently, we have a captive coal mine Gare Palma having a capacity of 1.2 million tonnes per annum. We have won the bid for the coal mine Dahegaon Gowari, having a capacity of 2 million tonnes. These 2 mines together cater for roughly about 50% of our current demand of [indiscernible] coal specially. Initiatives on waste heat recovery systems, alternate fuels and raw materials and RE capacity additions will substitute 30% of our current coal requirement. However, given our expansion plans, we are targeting some more mines and long-term coal supply arrangements. Other focus area for cost reduction is Fly Ash sourcing. For current requirement of around 14 million, we are considering long-term supply arrangements with power plants, including the Adani power plants. These initiatives on cost reduction in energy, coupled with the long-term tie-up of Fly Ash would result in a per tonne cost reduction of around [ INR 250. ] The second set of focus on cost is freight and forward. Here, we have 3 focus areas: First is to reduce the lead distance. Second, optimize the warehouse between ACC and Ambuja. And third is rail and road mix optimization. On top, we are also going to expand capacity and most of the grinding will go through grinding units. So the doubling of the count of grinding facilities from current 30 to 70. We are targeting for average lead distance of around 150 kilometers. Since the time of takeover, we have managed to reduce the load lead distance from [ 177 ] to [ 173 ] for Ambuja and [ 165 to 161 ] for ACC. For warehouse optimization, we're targeting increasing the share of direct dispatch from the grinding units. For our current operations, we have managed to reduce our warehouse count from 943 to 670 and increased the volume share of direct dispatches from 50% to 54%. Support from Adani Logistics, we are reviewing not only our own rail growth strategy, but also exploring sea transportation options. We have already taken strides in this direction by ordering 10 rakes, first of which has already come in. These rakes will also enable safe and cost-effective transportation of clinker and fly ash from the power plants. These optimization expected to yield a cost reduction of around INR 100 per tonne. Now the third pillar on the cost reduction is other costs. The cement business is being run as a single entity, with a single executive team, unlike previously, where there were 2 separate businesses with each having its own set of people across functions. For example, a lot of work is being done on streamlining the employee hierarchy under the new operating model. Revolving roll redundancy fees between ACC and Ambuja. Company now has a common regional heads between Ambuja ACC who are incentivized to push overall volumes, reduce costs and also optimize logistics. Additionally, the debottlenecking initiatives would also enable unlocking potential for our existing infrastructure. This, I believe, will give us additional INR 50 per tonne. Now coming on the third lever, which is the sales and marketing. Our product portfolio continues to remain strong on the back of legacy brands, along with premium products in our core markets. While ACC has pioneered product development, Ambuja has pioneered brand building and technical services, our strategy to increase the sales has 4 key aspects: number one, redefining catchment areas for market reach. We have identified 10 growth states to focus where we aim to do either the #1 or #2 in the segment. Increasing the share of B2B segment overall from current 21% to 25% by FY '27. This segment is growing at a faster rate than the trade segment. Increase in share of premium products from current 22 to high 29, 30 and maintain the leadership in individual homebuyer segment. These initiatives would enable us to move more than double our top line from around INR 31,000 crores to around INR 70,000 crores, while EBITDA will move up -- will more than triple to INR 17,500 crores, with an expansion of EBITDA margin to 25% from the current average of 19% over the last 3 years. Let me conclude by saying that our performance during the quarter was strong with clear quarter-on-quarter improvement in both operational as well as financial parameters. We continue to generate significant cash to finance our expansion and pay dividends to our shareholders. I thank you for cementing our bond with us, which reinforces us with Virat Compressive Strength. Thank you.

Let me just now hand over to Mr. Vinod Bahety for his comments.

Yes. Thank you, Charanjit. Good evening, ladies and gentlemen. While Ajay has in detail, cover the performance highlights. I will cover briefly the overview of the business, which we have highlighted in the presentation, which we have uploaded. The first few slides are about the group, so I will quickly move on that, and I will say we come on the cement overview, Slide #8. As we have highlighted, the key pillars of our cement business is focus on costs, grow the capacities, grow market leadership with utmost focus on ESG. So we have a well-articulated ESG plan 2030. And as you would go through the presentation, we are substantially achieving the target, and we are confident we will be assuming well on time. A notable area to highlight is about the quarter positivity, which we already have substantially progressed over here. Slide #9. In terms of diversification, we are very well geographically diversified business with pan India presence covering almost 70% plus of India. Slide #10, we have 2 strong iconic brands, Ambuja resembling strength and ACC resembling legacy. This helps us in higher direct customer business, which we are at 80% as compared to industry, which is at 65%. So we are a market leader in terms of direct customer business. On Slide #12, I am at -- we are regaining our financial spend, our EBITDA improvement quarter-on-quarter and in profitability. Our net worth stands at INR 38,757 crores, and we remain a 0 debt company. We hold cash and cash equivalents of INR 11,530 crores, which is up as compared to in December, I reported to you INR 9,454 crores. In terms of Slide #14, I'm at, the ESG performance, I have presented to you the various indicators, and we are well on the path, and we will assume much ahead of time. On Slide #14, some of the various KPIs for the ESG are indicated. Then I come to Slide #16 on the governance framework. We have a robust governance framework if you see the -- some of the important committees, like Audit Committee, the NRC, the CRC, the public consumer committee, they all comprise of 100% of independent directors. On this, I will rest myself. A detailed presentation is available with you, which covers much more insight of the business. Thank you. Now we open up on.

We can open the floor for Q&A.

[Operator Instructions] the first question is from the line of Shyam Sundar Sriram from Franklin Templeton.

Very good operating performance at Ambuja. My question is largely, if you look at ACC and Ambuja standalone, we see a lot of divergence in terms of the operating performance. Firstly, if you look at the realization on a per tonne basis, ACC realization seems to have declined 3% sequentially, whereas Ambuja decline is much more muted there. And second point on the EBITDA per tonne improvement in Ambuja stand-alone, if you look at it, it is quite healthy at INR 265 per tonne as per the presentation, whereas in ACC, INR 150 per tonne. Now what explains the gap in terms of EBITDA improvement between ACC and Ambuja. And lastly, when we talk of an F '24 EBITDA per tonne being 1,200 to 1,400, we see there is a INR 500 per tonne gap between ACC and Ambuja as on as of this quarter, will this gap continue to prevail as we go into F '24 as well?

So Shyam, thank you. Good question. Traditionally, ACC Ambuja had a gap of 3% to 4% on EBITDA. Our endeavor is to, going forward, improve both the companies. The guidance that we have given is for a consol basis, both Ambuja, ACC taken together as a cement -- basically Ambuja consol at 1,200 to 1,400 in the guidance. That will only happen when ACC also goes up. As you know, in this quarter, we also had a shutdown of Gagal in ACC in Darlaghat, which was a very important plant for ACC's Northern operations. And that plant remains shut, whereas Ambuja still has a big presence in North through its Rajasthan plant. So while endeavor was made to shift as much as we could from Rajasthan into Punjab, I guess that's where ACC suffered. And also then it's a geo mix issue, sometimes other than that, there are no major concern structurally between the 2 companies. The waste heat recovery programs are equally being driven in both the companies. The alternate fuel initiatives are equally driven in both the companies. The sales and market optimization issues are also driven in both the company. It's basically the planned shutdown of the northern plants. That's the key factor.

Sure. Understood, sir. The other point is just a bookkeeping question on the balance sheet. We see the other financial assets substantially has increased from the December balance sheet. So is this largely bank fixed deposits or any other intercorporate deposits per say, if you can please help us understand that?

Sure. Vinod will take it.

So Shyam, this is -- you're right, absolutely, in the accounting treatment on the balance sheet classification in the FD, which is more than one year that falls under the bracket of other financial assets, the FD, which is less than 90 days, that comes under the current assets and the FD, which is between 90 to 365 days, that falls under noncurrent assets. So these are like more of the classification in the balance sheet. But absolutely, you're right. The other financial asset is essentially, we fixed deposits, which is more than one year.

Mr. Sriram, may we request that you return to the question queue for follow-up questions. We take the next question from the line of Sumangal Nevatia from Kotak Securities.

My first question is, overall, if you look at EBITDA to operating cash flow conversion, it's deteriorated very significantly to almost 60% in the last 15 months versus almost 75%, 80% in the FY '21 and over 90% over the last 5 years on an average. So is there any one-off here? Or I mean, what would you guide for this going forward?

So in terms of EBITDA to operating cash conversion, we have an estimate of almost 50%, balance 50% both in terms of our CapEx program as well as the tax liabilities. But in terms of cash accruals, it will generate almost 50% of that.

Sir, in terms of CapEx in the last 15 months, has there been any reclassification because the data, I mean, say for standalone Ambuja, we are seeing around INR 2,100 crores of CapEx versus the December balance sheet, which it was shared, it was around INR 2,600 crores. So has there been any reclassification of the cash flow, if you could clarify that?

So basically, what we have also done is -- it's a good question. I also mentioned in the opening, as we are now embarking on a growth journey, which is also mentioned in our road map for expansion loaded on the website in March. We have decided to not go EPC route, but we want to go separate the E, P and C elements. -- we finalized most of the contracts now. So some contracts were canceled, which we thought were on EPC basis and working on separately on services and equipment and civil that is giving us a much better savings. And when we did the entire cookie cutter that I mentioned. So we are actually recasting it downwards from maybe earlier $85, $90 per tonne. To now lower of $80 per tonne. So that's the reason you see some contracts canceled and as we go into the new growth phase.

Mr. Nevatia, may we request that you return to the question queue for follow-up questions. The next question is from the line of Indrajit Agarwal from CLSA.

First, continuing on Shyam's question on dividing within ACC and Ambuja, you have highlighted INR 7,000 crores of CapEx, 11 million tonnes of clinker and 15 million tonnes of cement. So how do we divide it between the 2 companies, given that both of them are listed entities?

So if you can see, I think, in our growth map, which is on the side, and I'm actually referring to Slide 32 of the deck also which has been loaded. You find on one hand, we have clinker expansion lines. So we have a brownfield coming at Bhatapara. This is Ambuja, and there's also brownfield coming in Chandrapur, which is also Ambuja. Ametha, which is an ongoing one, 3.3 is ACC greenfield, which is getting commissioned now, as I talked to you in this quarter, actually beginning of quarter 2. On the left-hand side are the associated grinding stations so Sankrail the existing Ambuja side. Kharagpur is ACC site. Hoshiyarpur is a new site in north. Bhatinda is an existing Ambuja site, Farakka is an existing Ambuja site. Mirzapur is a new site. On the right-hand side, waste heat recovery, this is all broken up plant by plant. So [ 75.6 ] is what we are spending, but it is more or less 50-50 between ACC and Ambuja. All the other projects, Green Power, for example, 200 megawatts, 100 will come in ACC, 100 will come in Ambuja, cooler upgradation and all other initiatives on the ongoing CapEx, which I think is a large part of this program because this ongoing program is more or less split 50-50. On expansion, currently, the new kilns are in Ambuja because that's where the limestone priority in terms also of starting and kicking off permits availability. But going forward, you'll find investments in both the companies depending upon where we have the right limestone where we have the right readiness to go to the market.

Sure. My second question is on freight cost cut Ambuja standalone, which has increased quarter-over-quarter. So if you can highlight how much was per 10 kilometer cost and what has led to this increase?

So I would -- I can take a per tonne off-line separately, maybe Charanjit has taken a note, he will come back to you. But I'll give you basically what the reason is what I also mentioned, I think, in the first question, our 50-day shutdown in Himachal meant that we had to still serve the markets. While we lost some volume, and that's also reflected in the volume opening comments, which I made, but we had to shift clinker from Rajasthan plants into our grinding stations in North. So that, of course, added some costs. Had we not taken other initiatives which I also mentioned in terms of going direct percentage going up 50% to 54%, shutting down of the warehouses from 677-- 900-odd to 677. So and also increasing the railway coefficient. I think all that helped us to curtail a cost, which otherwise would have gone very high. We had a small incident at our Farakka unit, grinding unit in Eastern India, which was under shutdown for about 15 to 20 days. Also during that time, we had to cover that market from a little farther distance. I think those are the reasons you find that INR 30 crores, INR 40 crores, I believe it is not -- I think that's the number it is increase in the cost for Ambuja standalone.

The next question is from the line of Satyadeep Jain from Ambit Capital.

First on the near-term CapEx trajectory that you've outlined. I think you mentioned Chandrapur would be Ambuja. This is not [ Chandra Cement ], which is ACC I'm guessing this in the refence. So given you have a lot of capacity -- capacity coming up in Ambuja, are you counting on the exercise of warrants to be able to fund the CapEx at Ambuja level in the next 1 or 2 years. And tied to that is you have a lot of clinker coming up in West, but correspondingly, between Chandrapur and Mundra. Correspondingly, we won't see a lot of GU coming online in West in the near term. What is the thought process on that regional capacity expansion that you're looking at?

Thank you, Satyadeep . As I said, this is just what we have approved for the current financial year. But as I talk to you, we are on the drying done. When you look at our midterm 5-year plan, we have a plan of adding 40 million, which largely means 10 clinker lines of 4 million each. Right now, we have come out with 2, one in both brownfield in East and Northern West. I have not yet announced the guiding rates for West. Very soon, I will come back with next set of announcements, and you will hear that, but very much brown work and plan and sites have been identified. I also indicated we'll go up from 30 to 70 locations. So these all been part -- follow a part of that. At the moment, however, I would only stick to what we have approved and put out in the public space.

So you're counting on some exercise of warrants from Ambuja to be able file in the near term and when you look at the capacity expansion of 40 million tonnes, is it largely going to be downstream or maybe a 50-50 expecting brownfield...

Okay. So to answer your question on -- let's put warrants issue aside for a while. That's on top of whatever we do. If you refer to Slide 33 of the presentation today's presentation and also, I think it's Slide 28 or 26 of the investor deck, which had loaded in March and I have done our roadshow meeting a cross-section of investors. We have made it very clear there that our plan is to go from '23 68 million to 140 million. And we said that all this will entail a total investment of about INR 46,000 crores. We're starting on a cash balance of INR 11,300 crores in our books. We have an ambition -- a real ambition to be INR 17,500 crores EBITDA generating company by FY '28. If you did the math and what we also said that after putting these investments, we'll leave aside the sufficient cash for the distribution of dividend and also paying taxes. Now whether everything will be brownfield or whether we'll also have one or 2 greenfield opportunities and/or I'm not getting into that zone. But of course, if there's any other acquisition opportunities, this cash is part of that whole strategic road map. Now this -- I've planned without warrants by the way. So this is purely on our internal accruals. Warrants is on top. But for that, I would not comment at the moment. I would comment purely what the business is generating, and I believe the business will generate robust cash on top of what we're already starting off at INR 11,500 crore and we generate INR 46,000 over this period. So I think that's what we need INR 46,000 crores to more or less give shape to this sort of the investment.

Okay. Second question is on the RPTs. So we see the transactions between ACC and Ambuja have increased significantly under the new ownership compared to the previous ownership. Are there any -- given we're also seeing some realization gap between ACC and Ambuja is there are there any particular markets where you're seeing is it across the board that you're maybe seeing more MSAs and new management compared to previous or is there any regional differences? And this is in the context of that widening of that realization gap also that we see. And secondly, the RPTs between -- with other companies, we've not seen increase to the extent maybe we would have expected. Has it been in line with your own expectations with the other entities? Or do you see a more gradual ramp-up in those RPTs as you look at utilizing the entire integrated asset base for the group?

So first question, RPT between ACC and Ambuja as you know, it's now getting into the maturity phase, it was started in the wholesome management. It was one of the hot topics in most of our calls where we were asked why are you guys not getting the full synergy benefits. So I would say we have now taken it to a very advanced stage where all the synergies on working together as one management team, which I also mentioned in the opening, is already in place. Common procurement and therefore, whatever we buy by together and get the volume and benefits of scale. Here, we also use Adani adjacencies. It keeps showing in every quarter, you'll find our cost performance, procurement performance. procurement KPIs and also adjacencies across the group helps us. And then third is what we try to do is we have 35 locations. We optimized go-to-market strategy. and we run it through a program. That program then gives out an output every month. And we are improving every day. I would say now we have almost reached a level where we've actually taken out a lot of juice between the 2 companies. Leaving that aside, yes, ACC performance needs to be further improved. And I can assure you in days ahead you will see that.

We'll take the next question from the line of Amit Murarka from Axis Capital.

Just firstly, on coal advances. Last quarter, you had disclosed about INR 1,200 crores for ACC and INR 600 crores for Ambuja, what's the status as of now and also March end?

Amit, the contract is performing well. As we speak, we have been getting deliveries on the coal trade. And I also want to highlight that this rate has actually helped us in terms of the reduction of the fuel cost, wherein when I look at the other comparisons, we have got the benefit of at least 2% to 5% extra for this quarter from this period. The current outstanding is almost like INR 1,400-odd crores, which it will get completed in a couple of months' time, which we have informed to the investors in the last call as well. Essentially, this trade has held in the overall performance, as Ajay Ji highlighted on the overall fuel and power cost, which has come down substantially.

And also on the CapEx plan, the Mundra 3.7 MT is in the listed entity? Or is it the Adani unlisted cement business?

No, no. Mundra will be set up by Ambuja, and this is a greenfield project. It will be set up on -- the location is very nice once we get this position we can very, very smartly service the Western corridor markets where we already have adjacencies within Ambuja and also within Adani to use our own port, use our receiving terminals and right up to [ coach ] in Bangalore, Mumbai, Surat. So I think it is a very good fit. It's a very high IRR project for us.

And the limestone will come from where for this?

This is part also of the 2 options there. One is the limestone, which is in Mundra, we have our own milestone mine there. Two, we are also looking at receiving the limestone sludge from a sister entity within the group. They are going for coal to PVC plant. And that byproduct is as good as limestone. It has been done very successfully over the many parts of the world, especially China, Russia, and we have studied those technologies. And that's where the project becomes a very, very smart project because it gives us raw material it gives us coal rejects. It gives us power from our own plant, and it gives us flash right where our power plants are -- so the location is right on. Sitting on top of the port from which I can service our Western markets and of course, interline of Gujrat, especially the North Gujrat.

Mr. Murarka, maybe we request that you returns to question queue for follow-up questions. We will take the next question from the line of Pinakin Parekh from JPMorgan.

My first question is, if I look at Ambuja's consol balance sheet, the other financial assets stands at INR 3,100 crores in the long-term assets and INR 7,900 crores in current assets. So of that INR 11,000 crores of other financial assets, how much is fixed deposits and what would be the other than fixed deposits?

Sorry, may I know your name, please?

Pinakin.

Yes, Pinakin. So in terms of the overall amount of fixed deposit, if I had to break the component of my INR 11,530 crores of cash and cash equivalents close to INR 8,000 crores will be sitting under the head of -- under the current assets. And below 90 days, it will be close to another it's INR 500-odd crores. And between 90 to 365 days, it is close to about INR 1,800 crores. So that is the numbers which we have on the balance sheet.

Sure, sir. So is it fair to say that the other income of -- so in the P&L, the interest income is recognized as other income in the current quarter? Or is there an accrual basis that it will be recognized later.

No, no, no. We recognize on accrual basis every quarter. It is not on [indiscernible] basis, it is on accrual basis.

Sure. My second question is just trying to understand CapEx better because it's a bit confusing. So what is the CapEx guidance for FY '24 and '25 for ACC and Ambuja at this point of time?

So the total CapEx guidance is INR 7,000 crores for Ambuja consol, broken up into 3 parts, grinding units, integrated lines and current ongoing CapEx. In the new integrated units, as I mentioned, there are 2 integrated units being proposed to be set up, one in Bhatapara one in Chandrapur in Maharashtra, both in Ambuja. Ambuja ACC is currently setting up Ametha. ACC will set up another 1 or 2 grinding units in UP, which will serve Ametha. The waste heat recovery projects are all combined for both Ambuja ACCs, at respective locations. We are also procuring 10 rakes, which are going to help us optimize our railway footprint, especially bringing in clinker to our grinding stations in the East and also bringing Fly Ash from our plants, especially some of our group plants where we have assured availability to both plants of ACC and Ambuja. If you want any more breakup, I think Charanjit can separately call you and we can have a discussion.

Can I give you more specific numbers, which I have now -- so more than. More than 12 months, the amount is INR 8,600 crores between 90 days to 12 months, it is INR 2,400 crores and below 90 days, it is almost like INR 540-odd crores.

The next question is from the line of Ashish Jain from Macquarie.

Sir, just to continue with that CapEx argument, this journey from 70 to 140 that you have spoken about and we understand that it will depend upon multiple factors. But can you give some outlay on -- at a company level, what is the brownfield potential or greenfield potential based upon the land and mining resources you have in each of these entities? And how much will depend upon either acquisition or new mines that you may acquire in future. Just want to understand the readiness based upon current resources to go to that 140. And if you can break it down between ACC and Ambuja as well.

Sure. Ashish, first of all, thanks for the very good question. I would only say it's not an argument. It's an assurance that this is what we're going to do it, and it's there in our investor deck, right in the public place, number one. Number two, I will right now only speak at Ambuja and Ambuja consol. And any questions you have on ACC, happy to discuss separately since today's earnings call for Ambuja and Ambuja consol. So at Ambuja consol level what our cement business is all about. Our CapEx program is clearly putting 40 million of clinker. I would say nine lines of this are going to be brownfield. One line, the Mundra is going to be a greenfield. All the 9 lines have adequate limestone, all 9 lines will have land and requisite permits. As I speak to you, what is going on across all sites. We have identified multiple locations for grinding units. Land acquisition is in advanced stages. Public hearings are being arranged at various sites detailed programs are being planned. We have a full-fledged procurement. Sorry, projects division, which has been set up. The business development team is already working. So everything is going as per plan. What was ready is already out in the public space, where we already launched this first set of investments, and we will start seeing progress on those. The next set of even more concrete announcements, which is what you're asking, we will also come in, in due course. Allow us some time for that. Now to answer your third question about limestone deposits. All these lines, which have already put in the public space, we have limestone for that. In addition, we have recently on limestone mine in Orissa, as you know. We also have been recognized as a winning bidder in a mine in Maharashtra. On top, I've already mentioned 1 coal mine, we have already mentioned 1, which is also Maharashtra. And we are always counting for coal -- limestone mines as and when they come up. Some of our sites have adequate limestone to put up not one, but 3 more lines in a very attractive market. You'll hear that in time to come. So far, we have not gone deep south. We are also examining those areas where we also have deposits. So I think there's a complete detailed plan, and this the presentation which I had set out in the month of March, after which I met some of you was only done after a lot of detailed homework and right up to the L5 detailing. Anything more you need, we're more than happy to connect with you and Charanjit is here. He will be also happy to circle back with you and provide you details. Today, I cannot give you off-line breakup right to the specific last price but we will, in due course, keep coming out with the next set of investments.

But sir, just as a follow-up, if it's possible for you to comment. So out of the 9 lines that you said, which seem to be well identified and resourced back, can you at least talk about how much potentially could be under Ambuja out of that? But it seems to be land back and the source back. So maybe we'll have some more visibility on just random basis at least.

Yes. So basically, if you ask me some sites where we're going to put an expansion [indiscernible] which is ACC side. As I said, I'll not give you more detailing at this moment but more than happy to connect with you.

Ashish, I think, we'll -- once the plan is ready, we will put that in the public domain, but there is some more homework to be done, which we are currently doing. We broadly know that with 9 sites, but let us complete the plan, and then we will come to the market and we'll make a proper disclosure to the exchange, and you can also have that as the presentation.

Sir, secondly, in the RPT disclosures of ACC, we see certain transactions with entities like Adani sportsline, Adani property, Adani estate management. Is it -- which includes long-term security deposit? Is it possible to give some color on the nature of this? And what is the time frame? Is it something we should see on a recurring basis? Or this was like a onetime thing and it may not recur going ahead?

So Ashish, I will take that question. In terms of the sports line, as you would have seen, ACC has been sponsored for the UAE league and also, they are the -- so we have entered into a 5-year sponsorship agreement with Adani sportsline, which is the franchise owner of the UAE League and also for the Kabaddi. Likewise, for example, in the same as I can highlight instead of Ambuja we have taken for the women's IPL and the Kho-Kho League. So these are the 4 important franchises, and we see a very good business engagement given that we have a large dealership network, we have a large customer base, and this gives a very good connect the customers. So that -- basically, for the 5 years long term, branding arrangement, we have entered into with sportsmen business and transaction. So far as you highlighted the second question about the property -- so we are setting up a full-fledged office for the cement business in the hub for which we have taken the land on lease from the group company and the work has already commenced over here. Hopefully, next 12 to 15 months, we will see the office space available for us to occupy. Ajay Ji highlighted that both the businesses are now working very symmetrically, and we have moved our head office to -- from Bombay to Ahmedabad, and that is essentially where we are moving into Shantigram, Adani Group's core office setup. So that is the structure of the building this year to set up here.

Thank you. Ladies and gentlemen, please limit your questions to 1 per participant. [Operator Instructions] The next question is from the line of Rahul Gupta from Morgan Stanley.

I just need one clarification. If I sum the ACC and Ambuja standalone volume numbers, the delta has increased for the consol number from 1.7 million tonnes last quarter to 2.5 million tonnes this quarter. Anything specific over here? Or is there some higher sales of to and fro. Can you please explain this number?

Are you referring to the total volume increase from 13.7% to 14.1%. Is that what you're saying? Or are you...

So the 13.7% to 14.1% versus if I sum the standalone numbers for ACC and Ambuja, the delta for the sum and the reported number has moved from 1.7 million to 2.5 million tonnes.

Yes. I got your point now. So as I was mentioning, we are working on a master supply agreement. What it does is it close the lowest cost for each plant. So one is your sales and one is your trading, which you do through this MSA using each other's footprint. Idea is to maximize your absolute number. And I think that's the reason. And also, as I mentioned, our Himachal plants was shut down. So in order to ensure that the brands remain relevant in the market, we were pushing more and more, for example ACC from Ambuja plant in North, while Gagal was shut down. As you know, Gagal's grinding is 100% located in Himachal, whereas Ambuja has grinding stations in the plains in Punjab and also in Himachal. So that's also some of the reasons for a bit of that.

We'll take the next question from the line of Ritesh Shah from Investec.

Couple of questions. First is for Vinod Ji. Sir, how should we look at the capital structure of the company, say, 3 years out, 5 years out, taking into account 1 is warrant infusion, which I presume it's April next year and potential requirement of CapEx for the growth that we are looking at.

Thanks, Ritesh. So a good question again. In terms of our overall CapEx structure. As of now, we are sitting on a net worth, as I mentioned, almost INR 35,000 crores. We are expecting to add accruals to EBITDA, which we are ambitiously looking at almost INR 8,000 crores to INR 9,000 crores as we improve on our cost and journey of growth. On top of it, the existing cash balance of INR 11,500 crores only the single balance sheet. As of now, we are not looking for any debt, the entire CapEx program is going to be supported from the existing cash and cash equivalents and the accruals. So essentially, it is equity structure with no plans of debt at this stage. And as Ajay Ji mentioned, any -- this INR 15,000 crores of warrant is only an add-on, which is not in the base number, and that will only further help us for both the organic and the inorganic opportunities.

We'll take the next question from the line of Prateek Kumar from Jefferies.

Firstly on this -- in both ACC and Ambuja, we have reported this restructuring cost. What is this related to? And the question is on the -- what would be our year-ending capacity for FY '24 consolidated operations?

So the restructuring costs as an exceptional item is more on the VRS, which is onetime and it is only therefore nonrecurring of nature. What is your second question?

What is the capacity year ending, so let me take it Prateek. So one is Ametha which is coming in, Ametha will act frequent -- 1 million of clinker and it will also had 1 million of cement so on cement, you'll see additional 1 million coming in into the system. There may be some debottlenecking, which we are also doing at some of the ongoing locations. You can expect another 1 million to 2 million coming out of that. But you see a large chunk of this coming in the early part of because some of the grinding stations, which we're working on, you will find in, let's say, quarter 1 or quarter 2 of FY '25. And then, of course, before that, we had already come out and also announce next set of CapEx. So it will take some time to get this pipeline warmed up. And after that, you'll start seeing every 6 months a substantial amount of capacity being capitalized.

Right. So FY '24, we have this on clinker line on a consolidated basis and on a couple of branding units, 2 million tonnes? FY '25 will have maybe couple of interline and much more mining units.

Yes. And by then, some other clinker lines would have already been announced and start building and more grinding station also would have been announced and where land banks are currently being bought and permits are being actively pursued. So the next set of investments will then tell you what happens in '25, '26, '27, '28.

The next question is from the line of Raashi Chopra from Citi Group.

Just on the cost savings that you mentioned about INR 300 crores to INR 400 crores that are expected in FY '24. How much of this is attributed to the Petcoke prices falling? Or is that over and above this INR 300 million.

I would say the total INR 400 crores is largely restructuring, optimizing our -- the way we are running business, increasing our waste heat, which should go up -- even in last quarter, it's gone up from 6% to 9% improving the performance of the kilns. So petcoke, of course, has been there, I would say, but it's not largely petcoke. It's also all other initiatives that we have taken. I think our slide has a fair detailing about -- and I can just help you with that. So the levers we are using is this. This is basically talking about 80 to 175 journey on waste heat. But obviously, this journey will go through 2 years. So some part of it, you will see current year, some you will see next year. Next then we are increasing our AFR, so you'll also see a sizable jump. I already mentioned, we're targeting 15%, 16% this year as an exit and average would be slightly lower than that. more coal from our current mine and also trying to bring the new mine, the Dahegaon Gowari a little faster. Of course, it still takes 24 months, but we're trying to see what better we can do. Already advanced stage of getting on to our green portfolio. This can happen fairly fast given the [ existancy ] of the group and also the expertise available within. We expect this might actually happen well before 31st March '25 -- '24, sorry, my bad -- '24. So that's something which will happen. But I think that savings will accrue more next year. Fly Ash, we're already working on various contracts, rail load optimization, 10 rakes are being bought this year, first of which has already come in successfully running its first pick. Every month, we expect a rake. So I think as it comes in, it also improves performance. Logistics initiatives are already underway. Manpower streamlining a single entities already happening. As I speak, debottlenecking initiatives are also happening. So I think some part of petcoke what everybody else gain, I'll also gain, our gain will be on top of it INR 300 crores to INR 400 crores.

The next question is from the line of Rakesh Vyas of HDFC Mutual Fund.

Two questions from my side, if I may. First one is on the clinker line expansion. The 3 new lines, which are SSG Bhatapara, Chandrapur and Mundra, if I'm right, we haven't yet placed the order. So if you can -- and these are the priority projects for FY '24. So if you can just highlight on the time lines for ordering and lead time lines for eventual commissioning because if I heard you right, you are talking about FY '25 operationalization of these, so you can clarify that. And the second question is essentially around the coal procurement agreement that we signed. At that point of time, it was at a reasonable discount to the ongoing fuel prices. But as fuel prices have now come down significantly, how does that contract like -- are we still getting discount to the current prices or the price at which we entered still holds true.

Yes. Thank you, Rakesh. First, let me address your CapEx questions. The ordering is at a very advanced stage. And very soon, you would also have it in the press. So I'll stop there because it's also we're very keen to start very fast. We're always negotiating, negotiating, negotiating to the last towns and that's where the team is there right now, number one. Number two, in terms of coal advances, the good part of this deal was it capped us at a higher end of $157 at a time when it was upwards of [ $200, $220, ] it was -- we've actually seen a very bad performance in September quarter when we took over the business. So to that extent, it has given us the insurance, at the same time, it also has a plan wherein we also getting the lowest of the rest of the market. So it's not that while capping is $157 of the market is $120 we very well try and get a price which is better than [ $120 or at least at $120. ] So I think both the parts of the strategy for which this deal was made are very much intact. Last quarter, I think you've seen about our saving of 2022 [ paisa ] I would say about 50% of that which has come from this coal rate. So it's actually paid off very well.

Got it. And just for clarity, the ordering that you are highlighting, which you'll probably hear out soon is on the 3 new clinker lines, which is [indiscernible] line that you have put in the presentation.

Absolutely. Not only you will hear for say, I can't say more, you'll hear it in any case in the press. You will hear more than 2, you will hear a good package of a couple of lines in the press very soon. Plus more, plus more, plus more on some of the areas, but we must have some more conversation outside the call also, right? But we are working on it. I can assure you that.

We take the next question from the line of Pulkit Patni from Goldman Sachs.

Sir, first is a clarification. So combined as an entity, we've sold 14.1 million tonnes in the quarter versus 14.4 million tonnes same quarter last year. There's a decline in volumes. Is that understanding right based on your presentation?

Absolutely all right. On a sequential basis, we went up from [ 13.7% ] to 14.1%. And on a yearly basis, we are down from 14.4% to 14.1%. First quarter, we had 50 days of shutdown of [indiscernible] wherein we were working with the unions, as I also mentioned in the opening, that impact is visible here. We also had a small shutdown in our [indiscernible] grinding unit, there was an incident there. The plant remained close to about 15, 20 days. It's also sold out plants. So therefore, some part of market we covered, some we could not. Those are the 2 principal reasons why you find this gap.

Thank you. Ladies and gentlemen, we'll take the last question from the line of Bhavin Chheda from Enam Holdings.

Yes. The question on the CapEx, sir, what you have highlighted INR 7,000 crores. Is it that you're going to spend this entire in FY '24 because the slide also says that it is over 2, 3 years. So what actually would be a cash outflow because FY '24 has just one line of Ametha and couple of million grinding the rate. So if you can write something or what would be on a cash outflow basis?

I've got your question in the interest of time, let me give a very clear answer. It is INR 7,200 crores cash outflow planned for the current financial year.

Okay. And sir, you gave that clinker units would be ordered too. What about the grinding units? What's the ordering space in the slide, you have mentioned close to 11 million expansion on the grinding unit, out of that which are ordered and which are pending to the ordered?

If you followed -- I'm sorry, the previous question from Pulkit was not -- from Rakesh or one of the previous...

From Rakesh market. You mentioned clinker and I heard that.

So I think he was pushing me to tell me by when I can come in the press, and I mentioned that just give me some time. And I did not restrict myself to the 2 or 3 kiln lines you think. I said you'll hear a little more. So when I announced, you will also hear grinding units because obviously grinding also has to be done. You will hear it very soon, sir. It is being considered.

And sir, last one, on the FY '24 volume growth, if it can give something, you will be in line with the industry, you're looking to outperform industry volume growth, some guidance of FY '24 volume growth as a consolidated NPV?

We're looking at essentially industry growth of about 6% to 7%. We are in the right traction to deliver our numbers from current sales of 51 million average over the past 3 years to -- sorry, 54 million to 119 million tonnes by FY '28. That is a CAGR of 17% to reach that CAGR, we'll have to also show performance in the near term. So we are totally cognizant of that, rather giving you a firm number, I would only tell you that this guidance which we have provided from 54 million tonnes to 119 million tonnes traverses through FY '23, '24 also, and AAA, as we call ourselves, is very much aware of its responsibility to travel this part. But by doing it, making sure that we are creating value and also creating realizations. So it's a balanced part, we'll go with that.

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.

Thank you, everyone, for taking out the time to attend this call. For any questions which have not been answered, you can reach out directly to me. And for any other group questions which were missing, happy to arrange this. Thank you.

Thank you. Ladies and gentlemen, on behalf of ICICI Securities Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.