Sagar Cements Limited (502090) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome you to the Sagar Cements Q4 FY '25 and FY '25 Earnings Conference Call. Please note that this conference call is being recorded. We have with us today Mr. Sreekanth Reddy, Joint Managing Director; Mr. K. Prasad, Chief Financial Officer; Mr. Rajesh Singh, Chief Marketing Officer; and Mr. J. Raja Reddy, the Company Secretary. We will begin this conference call with the opening remarks from the management, following which we will have the floor open for the interactive Q&A session. I would now like to hand over the call to Gavin Desa of CDR. Over to you, Gavin.

Thank you, Manish. I'd just like to point out that some statements made in today's discussions may be forward-looking in nature, and a note to this effect was stated in the con call invite sent to you earlier. We trust you have also had a chance to go through the result communications and documents. I would now like to hand over to Mr. Sreekanth Reddy for his opening remarks. Over to you, Sreekanth.

Thank you, Gavin. Good morning, everyone, and welcome to Sagar Cements Earnings Call for the quarter and the year ended March 31, 2025. Let me begin the discussions with a brief overview of the market in terms of demand and pricing, post which I will move on to Sagar-specific developments. Overall, the industry witnessed good volume momentum as demand picked up pace amidst a rebound in construction and increased government spending. As far as pricing is concerned, while it remained flat during the Q4 FY '25, it has started to move higher in our core markets from the second week of April 2025 onwards. Operational profits for the quarter benefited from the better volume growth and benign input prices on the sequential Q-o-Q basis. Let me now move on to our quarterly performance. As indicated earlier, Q4 registered a volume growth of 5% over the previous year as the demand momentum remained firm during the quarter. For FY '26, we expect our volumes to be around 6 million tonnes. Moving to the headline numbers. Our revenue for the quarter stood at INR 658 crores as against INR 709 crores during Q4 FY '24, lower by around 7%. EBITDA for the quarter stood at INR 37 crores as against INR 68 crores generated during Q4 FY '24. Margins for the quarter stood at 6% as against 10% in Q4 FY '24. EBITDA per tonne stood at INR 218 during the quarter. Going ahead, as mentioned in our earlier call, we expect EBITDA per tonne to improve on account of lower energy prices and a better pricing. We also foresee the business benefiting from the operating leverage as our utilization rates are climbing across our units. We are also optimistic that our initiatives to optimize the freight costs, including minimizing lead distances, lowering the clinker factor along with upgrading our Andhra Cement plant and increasing the proportion of renewable energy in our mix will significantly enhance our cost efficiencies and overall profitability. The exceptional item recognized during the Q4 FY '25 is towards the recovery of true-up of fuel and power purchase cost adjustment in Andhra government -- done by Andhra government pertaining to FY '23 and '24, amounting to INR 27 crores. Loss after tax for the quarter stood at INR 73 crores. In terms of key operational activities, expansion at Andhra Cement is progressing very well and is ahead of schedule. The likely target is slightly ahead of December '25. From an operational point of view, Mattampally plant operated at 52% utilization, while Gudipadu, Bayyavaram, Jeerabad, Jajpur and Dachepalli plants operated at 88%, 65%, 79%, 38% and 31%, respectively, during the quarter. As far as the key balance sheet items are concerned, the gross debt as on 31st of March 2025 stood at INR 1,428 crores, out of which INR 1,135 crores as long-term debt and the remaining constitutes the working capital. The net worth of the company on a consolidated basis as on 31st of March 2025 stood at INR 1,794 crores. Debt equity ratio stands at 0.63:1. Cash and bank balances were at INR 164 crores as on 31st of March 2025. To summarize, our expanded capacities strategically position us to capitalize on the anticipated growth in infrastructure and real estate development in the years ahead. Moreover, our ongoing initiatives to broaden revenue streams and strengthen our regional presence are expected to enhance the company's overall profitability. That concludes my opening remarks. We would now be glad to take any questions that you may have. Thank you.

[Operator Instructions] We'll take the first question from Shravan Shah.

Sir, just to understand first on the volume front. So obviously, we are now looking at a slightly lower volume in FY '26, 6-odd million tonnes, so which is a kind of a 6-odd percent growth versus FY '25. Does that mean that despite even the Andhra Cement, utilization should be picking up, despite that, why are we giving a lower number on the volume front?

Shravan, the overall idea is to ensure that we do not want to compromise on the pricing vis-a-vis to volume. So that is the current stance that we have taken. So what we are trying to align ourselves is with the industry growth of 6% to 8%. So basis that, we believe that from a 5.5 million tonnes that we have done in the last year, we should be very close to 6 million tonnes to 6.1 million tonnes. So that's the alignment that we are trying to do. We are very clear that we would not like to compromise on the pricing that we need to get. That's the only small change. The ramp-up at Andhra anyhow is expected to happen. I think the entire growth we expect it to happen here in Andhra itself for us.

Okay. And then in terms of the -- for FY '27, then we can see a significant pickup in the volume?

I think let us take 1 year at a time. I think the alignment is very pure from a fact that we are looking at a very steep price increase for ourselves. So given that scenario, we believe that we will not put additional volumes from our end, Mr. Shravan. So I think at the end of the day, it's more to do with the margin rather than to do with the volume.

So now on the margin and the pricing, so if you can help us versus maybe a March exit or maybe average of fourth quarter. So currently, the prices, if the state-wise also, if possible, how much they are? So our understanding is close to INR 40, INR 50 hike has happened in South, so just trying to get your sense. And do we believe now that these kind of prices will sustain and, whatever, because of the consolidation and now the normal -- even in the monsoon, the normal price decline whatever is happening, but structurally, we would be seeing a price increase.

So Shravan, let me address the first question that you have about the entry -- exit prices to the current prices. Yes, the exit was one of the lowest that we have seen historically, which I don't think I have to repeat that again. March 31st prices were absolutely in tight across some of the markets that we have been servicing. From there, we have seen almost INR 55 to INR 60 increase in most of the markets that we service. At some markets, it is anywhere between INR 35 to INR 40. AP, Telangana is in the range of around INR 55 to INR 60 for ourselves. Again, non-trade has been a much sharper increase compared to the trade. But on an average, I think we -- I can keep my neck out for INR 60 increase per bag across AP and Telangana markets. Tamil Nadu markets for us, it is anywhere between INR 50 to INR 55. Karnataka is anywhere between INR 45 to INR 50. Maharashtra, yes, we have not seen significant increase, but we have seen around INR 10 to INR 15, same is the case with Odisha, Mr. Shravan.

Okay. Got it. So now considering this the significant hike that we have seen -- so also just to -- your thought now, do we believe that these prices are likely to kind of structurally to remain and maybe start improving further?

I can comment for myself. As I mentioned to you, we have -- from an earlier outlook in terms of volumes, we ourselves believe that chasing the volumes would not give us the margin that is required. And there are some volumes that have come up you know in the market with the ramp-up. Given that scenario, we are aligning ourselves with the more market growth. I think given the situation and the demand from the government, as we have seen, Andhra government has already initiated the tender process, which are in finalization stages. We believe prices should sustain at the current levels, if not be higher. Just to give you a background, Mr. Shravan, the current prices are not anywhere close to the highest that we have seen historically. So these prices are even close to around 15% to 20% lower than the historical high numbers that we have seen close to 8 to 9 years ago. So these prices should not give too much comfort to too many people, assuming that it will slide down. I think these are the prices which should survive is what we strongly think, but only time will tell. But last 1.5 months is already passed by. So far, they have been holding up well.

Great, great. So considering that, so last time, we were looking at more than INR 500 kind of EBITDA per tonne in FY '26. So given the sharp increase, close to a kind of a INR 40, INR 50 plus kind of a price hike...

Shravan, I think at the end of Q1, we will be in a much better situation to talk about the entire FY '26. Let us take one step at a time. I think achieving 500 to -- INR 500 plus to INR 750 for Q1 definitely is a possibility. For the full year, I think let us wait for the Q1 results to pass by, then I'll be in a much better situation to put the commentary. See, there are 2 aspects that we have to remember in Sagar's case. I think the EBITDA per tonne should naturally move to INR 500 because Andhra's upgrade is likely to get completed, especially the clinker -- up to clinker side before September. So given that scenario, we expect some amount of cost saving. So I think INR 500 EBITDA per tonne is given irrespective of price increases, Mr. Shravan, for the current year.

Okay. So that's what actually I wanted to understand. So -- because the operating leverage will also play in terms of the cost reduction and given the price increase, so we should be seeing a much higher number on the profitability. So that's the only thing I wanted to understand in detail.

I think you are right. From an operating leverage perspective, again, we are not talking of a big number. We are only talking of on an average at 55% to 57% capacity utilization at the consol level. But the reality for us is that the upgrade in Andhra should significantly reduce our cost. So that from the exit EBITDA was close to around INR 300 per tonne. That should naturally move to INR 500 per tonne. So whatever price increases, if they sustain, I think we should look at a much bigger number.

Great. Great. And last, sir, 2 data points. The CapEx for FY '26 and '27. So I was just going through the presentation. So left CapEx for Andhra is close to INR 395-odd crores and plus WHRS and all this. So around INR 500-odd crores is left for distribution.

Our plan for the CapEx for the current year is around INR 360 crores because out of INR 360 crores, INR 250-odd crores would be in Andhra. The balance in Andhra would be spent you know over next year, okay? So it might roll over the next year in terms of the actual payouts. So we expect another INR 140 crores -- INR 145 crores should be paid out from Andhra for the next year. But for this year, the entire CapEx at a group level is close to around INR 350 crores to INR 360 crores. The maintenance CapEx is around INR 30-odd crores. And at Sagar end, we are talking of INR 80 crores because we got the MOEF approval for upgrading the plant from 1 million tonnes to 1.5 million tonnes. Out of INR 130-odd crores that needs to be spent, the current year, I think we should spend close to INR 80-odd crores, Mr. Shravan. So that takes us anywhere between INR 350 crores to INR 360 crores for the current year.

Okay. And last, sir, the Gudipadu and Jeerabad, the small expansion in the capacity...

That's what I told you. Yes, the Jeerabad itself, we are talking of INR 80 crores for expanding the plant from 1 million tonnes to 1.5 million tonnes. Gudipadu, we want to take it slightly later in the second half of this year. So CapEx may not be very significant in the current year, Mr. Shravan.

Okay. So in terms of the time line, the Gudipadu, when it will come and Jeerabad, whether the new extra capacity...

We expect Jeerabad in terms of the grinding unit to be commissioned by end of this current financial year to early part of next financial year. Gudipadu should be in the Q2 of next year, Mr. Shravan.

We'll take the next question from Moksh Ranka.

I wanted to understand what is the structural reason behind this sudden price increase because considering the oversupply, the price increase should have been gradual, right?

Mr. Moksh, I don't know how much you track of our sector, but I think the prices have been absolutely in its status for the last 18 months. So it's not that prices have moved sharply. It only looks in relative terms because last 18 months was very, very difficult on the pricing scenario. It has been gradual, I would put it, because the gap between the historical high to now still around 15% to 20% exists. So we believe that those are the prices which are required with the inflation. The historical peaks that we have hit is close to 8 to 9 years ago, sir. So even if I have to factor in the inflation kind of a thing, this is still gradual, Mr. Moksh.

Okay. So the price increase which we have seen, we are not -- it won't be rolled back like previous instances.

See, it's a good question. I wish I had a very firm answer. We are assuming that the entire industry was losing the price regime that we've had for the last 15 to 18 months. The current pricing should allow us to breathe some air, not that these margins would be extremely high. So at this level, it should sustain is what we think Mr. Moksh.

Okay. And my last question is, I know we are -- geographically, we are more -- we have more presence in the South India as compared to other players. But still, our results are much below par compared to other cement companies. So could you just provide some color on that?

See, I cannot comment much on the other results, sir. Our results are more pertaining to the market exposure that we have. At the same time, please understand that Andhra ramp-up and Andhra Cements performance also has contributed to our -- I would not say negative kind of a thing. Yes, this is something which we have to keep in mind. Yes, it is not comparable with the others because we have this Andhra Cement, which is ramping up at this point of time Mr. Moksh.

We'll take the next question from Parth Bhavsar. We cannot hear you actually. Parth, go ahead, please.

Sir, I have 2 questions. Sir, one is on pricing that when we say there was a INR 50 to INR 60 per bag price hike, so how should we look at discounts? Is this net of discounts? Has there been any movement in discounts while the price hikes were taken? Was this...

Mr. Parth, I think, yes, the price hike, what I mentioned is a grossed up one, sir. That includes GST, that includes the relevant kind of a discount structure. But what you have to remember from a discount perspective, it is not on a percentage basis, it's on a fixed basis, so that may not have any impact. The only thing that you have to see on a net basis is to net off the GST element on the overall kind of thing if you want to add up to the net realization, Mr. Parth.

Fair enough. To understand basically, your fixed discount per tonne didn't like change from Q4 to this month?

Discounts may not be significantly different, Mr. Parth. Only you have to remove the GST on those incremental kind of a gross price hike. You have to remove 30% of it, you will get the net price realization increase for us.

Fair enough. And sir, one more thing that you mentioned that there would be players who have been -- assets that were acquired and that would also start showing up as they ramp up capacity. So what sort of number do we see in your region of operation, like do we see in some...

As I mentioned, sir, I think the ramp-up is from the earlier years when those volumes were missing, I think those volumes might get aligned. South, in general, historically, has been hovering around 55% to 60%, sir. We don't expect that number to be significantly higher even for the current year in spite of having a better demand. So the demand what we are projecting for the region in general is at 6% to 8%. So that is what we need to pencil in.

Sir, can we like put in a number that incrementally from FY '25 to '26, maybe roughly we expect like these capacities to throw a particular number in terms of supply? Is it possible?

Mr. Parth, I'm sure -- I wish I had the answer for the question that you asked. I have no idea about how they are going to ramp up, so I cannot comment. This is something what we have penciled in. So we believe that market is going to grow at 6% to 8% except for Andhra ramp-up, right, like some of the other ramp-ups, we also believe because Andhra average capacity utilization has been sub-30% for whole of last year. So we expect it to get aligned. With that alignment, we expect it to come back. At a consol level, we should operate anywhere between 55% to 57%. That's what I can comment. I believe most of the players should also come back and align itself with what the market has to offer, unless somebody is trying to squeeze more volumes.

Fair enough. And sir, is there anything where we are basically trying to realign our brands? Or are we selling the cement of Andhra under their own brand name? Or have we...

Sir, it is almost close to 2 years since Andhra has come into Sagar's fold, sir. The only brand that we sell from there is Sagar basically.

Perfect. Is there any delta in terms of the brand realignment in terms of what realization they used to sell? Or is it already done? It's in the base?

Only one brand, sir. So from a brand perspective, there cannot be realignment, except for some freight optimizations.

We'll take the next question from Vibha Jain.

Sir, just wanted to know the status on the sale of Vizag land. We were awaiting some approvals in last quarter. So what is the status?

Vibha, we are very close, but government has been busy with the capital formation. So we expect most of these approvals, everything to be in order. I think by the time we reach to the Q1 results, I think we would be having much clearer news, but I think we are very close is what we are -- we did indicate end of Q1 to early part of Q2. I think that remains for getting the approvals.

Okay. And sir, also just wanted your view on the pet coke and coal prices. In coming time, what we are expecting the trend?

Vibha, I think the good news is that from $107, $108, it dropped to $100, as we speak, sub-$100, but we have to see. It has been volatile. But the good news what we see is it is not going up to the old numbers that we have seen almost 2 years ago. So it's in the same $100 to $110 kind of a range. I think the next few weeks, we should have a lot more clarity because things looks to be settling well. So with that, we should have a lot more clarity from a pet coke pricing perspective. The coming price, as we speak, is around $100. The last that we have placed order is at $107, which was close to 20, 25 days back. Right now, the offers that we have received yesterday and today is hovering around $95 to $100, Vibha. But they are talking of only holding these prices for the next 15 days to a month because they are also not very sure how the geopolitics is going to play out.

Okay. And sir, lastly, on the capacity addition side, like what kind of capacity addition we are expecting in our core operating regions?

For the current financial year, we don't expect any major capacities to come, but we do expect some amount of ramp-up from units, which have been operating less or got commissioned last year, like the one at Deccan, My Home as well as Andhra Cement. These are ramp-ups that we are expecting, but we are not expecting any new capacity to come.

We'll take the next question from Navin Sahadeo.

Sir, on your volumes front, you gave a guidance of around 10%, 11% growth. So here, I just wanted to check because we are, let's say, halfway into the quarter. So has April like trend being any similar in kind of like double digit or high single digit? And is there any base element there? Or how should one read, let's say, this growth of 10% to 11% for you and then the industry as well?

Mr. Navin, I think what we are penciling is around 6% to 8% for the industry and a similar growth for ourselves, sir. It is not 10% to 11%. From a 5.5 million tonnes, we are expected to be around 6 million. I think what we have seen in April vis-a-vis to last April, of course, there is a base effect one has to remember because in the earlier April, it was election time. So from that to this, there has been a growth. The exact numbers, again, we are still compiling. So we do expect it to be somewhere in the same range as what I mentioned anywhere between 6% to 8%. But this is more to do with the base effect rather than the growth itself, Mr. Navin. And the tempo, as you have seen during the Q4, it was positive. So the same tempo has continued, but may not be a very big kind of a number.

Yes. No, sure. Because base effect was there, I'm saying for the entire first half of FY '25.

Almost the first 3 quarters, Mr. Navin. So there has been a catch-up that was done during the Q4 -- or from the middle of Q3 all the way up to Q4. So that momentum is continuing, but not in the same pace as it has been before. So April month is very specific. You could take 6% to 8% growth year-on-year number. This is purely on account of -- last year, April was very, very subdued.

Fair point. But net-net, we are in sort of some growth zone only or high single-digit growth...

Yes, sir. I think if you look at last year number, it was exactly flat to a year before number. From there, we are talking of 6% to 8% growth, Mr. Navin. So it's definitely growing.

Okay. Great. My second question then was on your green power, so I think we exited the year with about 13% green power share, right?

Yes, sir.

But I believe we had a target of reaching up to 20% by '25. So just wanted to get a sense how do we make up? And then in, let's say, '26 or '27...

Mr. Navin, we had target to reach to 50% by '30. There has been a miss in '25 because the capacity utilization itself was lower. So some of the waste heat recoveries did not fully optimally function. So I think we are on our way to achieve that number because we could commission a 6-megawatt solar in Gudipadu during the Q4. And likely that we would be commissioning before the end of Q1 itself or to the early part of Q2, another 6-megawatt solar at Andhra. We started work in the waste heat recovery at Gudipadu, which is likely to get commissioned by either end of Q4 or to the Q1 of next year. So given the scenario, I think we should be very close to 50% or slightly more than 50% by FY '30. Few quarters, there could be a gap because we are implementing these projects. Given the difficult market scenario, there have been some slippages, but I think we should be in a situation to do the catch-up over the next few quarters, Mr. Navin. So we should cross the 25% threshold, if not in '26, but I'm sure by '27, we should be very close to 30%, 35%.

Okay. And exit for '26 can be around 20%, 25% and exit for '27...

Yes, if you look at last year, it was slightly difficult for us because even hydro generation was caught up only during the fag end of the year. So we expect hydro generation also to be very healthy. So we should be in a very, very good number, Mr. Navin.

Understood. And sir, just my last question, you mentioned prices improved from second week of April. So I'll just request you to kindly just repeat the initial comments in the sense you said non-trade was much higher. But on an average, AP, Telangana has still seen an increase of INR 55 to INR 60 trade, non-trade put together. Is that correct?

Yes, sir. Average is around that.

And non-trade could be a little higher, right?

Yes, sir.

And similarly, what was that for Tamil Nadu, you said for us?

INR 50 to INR 55, sir.

Both trade and non-trade put together?

Yes, sir. It's average, sir.

Yes, INR 50, INR 55. And Karnataka? Sorry, I am just being...

Around INR 40, INR 45.

INR 40, INR 45 in Karnataka. And Maharashtra, as you said, INR 10 to INR 15?

Yes, sir.

We'll take the next question from Sumangal Nevatia.

Sir, a couple of clarifications. First is on the land sale. Could you share what is the latest, I mean, assessment of the value we could realize, any ballpark, because it's been, I think, 2 years now since we have it? So there must be some change towards that.

No, I think at this point of time, still, we have not been on the ground. The Vizag prices have remained very flat from then to now, not much of change. Likely that prices might move up with some amount of development activities that are happening even in Vizag. But I think the real pricing scenario, we'll start assessing once we get the approval, Mr. Sumangal. As stated before, just for the convenience, let me repeat, the market reckoner rate is at close to INR 400 crores odd. We expected around INR 350 crores. Out of that, INR 350 crores, we expect it to be spent over 2 years, that is this year, and the next year. So that's what we have stated. That remains as we speak. I think once we get the approval, that is when we would start reaching out to the buyers. That's when the real discovery would happen. At this point of time, we are still banking on the reckoner rate. There has not been a big change on that reckoner rate since last we have interacted around 6 months.

Got it. So in the next couple of months, we are expecting the approval and then the sale process maybe another 1 or 2 quarters. Is that the right way to understand?

Yes. Mr. Sumangal, I think the sale process probably should be longer because it's 100-odd acres. So we believe Vizag, it's a big land. You cannot target to sell the entire thing in a short period of time. So internally, what we have factored is close to around 30% sale to happen in the first year and the rest to be sold over 6 to 8 months following that time, Mr. Sumangal. It needs to be broken into manageable parts, not into small fractions. So that's what we have been informed by our advisers. So that's what we believe is going likely to happen. There are a few parties which have reached out, but we thought it's too soon for us to comment unless we get the approval, we thought we will not engage in any price discussions, Mr. Sumangal.

Understood. And sir, largely, those proceeds will be used towards deleveraging, right? Is that a safe assumption?

Yes, that's a very safe assumption, Mr. Sumangal. But we did indicate in our presentation, in our investor presentation about the evolution of the debt. So we would definitely use most of it for deleveraging.

Okay. And sir, with respect to Andhra Cement, we are having 90% holding. Can you just update us as to what is our plan to move towards 75%? And how much time do we have?

Yes. March '26 is the time line by which we need to reach to 75%. We already got the approval for the rights issue, Mr. Sumangal. We are also seeking some clarity because it's -- so we are awaiting for that clarity to come. Before December, I think rights issue should have been completed, Mr. Sumangal.

Okay. Understood. And just one last thing, sir. Recently, Tamil Nadu, as we discussed, had imposed INR 160 royalty charge. What is our read with respect to other states also doing that, which will then eventually directly impact us?

At this point of time, except for Karnataka and Tamil Nadu, Andhra and Telangana are yet to start discussions. We believe that they will not start. That's our hope. But the only information we have is that these are the 2 states which have engaged and Tamil Nadu went ahead and Karnataka is still awaiting for certain clearances.

We'll take the next question from Rajesh Ravi. We'll take the next question from Moksh Ranka. Moksh, please go ahead.

My question was regarding our pledge. I understand we have a pledge because it gives us a lower interest rate on our debt, and we aim on continuing keeping that pledge. But considering we are planning the sale of land and with the price increases, we are going to get good cash flows. So do we plan to remove that pledge in the coming years?

Mr. Moksh, there are multiple aspects you have to remember. One is the pledge of Andhra shares to the lender, SBI that has been part of the terms, so that has no bearing. The overall promoter pledge is not a promoter pledge, sir. It is more an undertaking for commitment to stay in the same percentage. So unfortunately, in the SEBI disclosure, it reflects as if it's a pledge. It's not a pledge, sir. Yes, it's more an encumbrance, Mr. Moksh.

We'll take the next question from Mangesh Bhadang.

Sir, so firstly, just wanted to understand for different states in South, what would have been the demand growth in FY '25? And you mentioned only 30% utilization for all the AP players for the year, means we are looking at a significant cut in demand for AP, Telangana in this year. So I just wanted to understand any numbers that you can share?

AP, Telangana together were flat to kind of -- our reading is, it's minus 2%. Karnataka was almost close to 5% plus. Tamil Nadu was minus 5%. Kerala was minus 2.5%. That leaves the overall South number was flat year-on-year number, Mr. Mangesh. Except for Karnataka, all the other states have been either negative or flat. On an average, the overall South number for last year was flat year-on-year kind of a number. That we expect it to grow to 6% to 8% for the current year, Mr. Mangesh.

If you look at the state finances of most of the states in South and the central government also does not share the government in many -- I think barring only one, they don't share there. You think state governments have the ability to spend there and that should drive or you are more reliant on central government as well as the rest of the CapEx?

Mr. Mangesh, I wish there was some correlation. Historically, there was never a correlation. So our belief remains very same, sir. If you have seen a couple of years back, pre-election, do you think the state finances were any different than what they are right now for the growth to happen? So I think there has never been a correlation, sir. Though logically, there should be, but it again depends on the government focus areas. So they keep flipping from one to the other. They end up implementing their pet projects. So fortunately, the pet projects for most of the governments remains either low-cost housing or some amount of infrastructure build. Fortunately, both are cement consuming, sir. So given that scenario, we expect cement demand more from a government-led kind of a demand to be robust for the coming years, Mr. Mangesh, especially if you look at Andhra, I think the Amaravati capital is the key focus. And it is reasonably -- I mean, as you have seen, a lot of financial tie-ups are happening each project by project. And some of the projects have actually reached to beyond tendering stage. So given that scenario, we expect the government demand to be robust, especially in Andhra. And low-cost housing in Telangana remains a focus area. And fortunately, that also is driving some amount of cement demand in Telangana.

We'll take the next question from Rajesh Ravi. We are not able to hear Rajesh. The next question we'll take from Shravan Shah.

Sir, just 2 small clarification. TSR for fourth quarter of FY '25 was how much?

We'll update you on that, Shravan.

Okay. And second, sir, this INR 23-odd crores kind of an incentive for MP, so that now most likely will be coming in the Q2 or Q3?

Last year, we received one in Q2 and one in Q3, sir, because it was 2 years that we received. Likely that we expect it to happen before end of Q2.

[Operator Instructions]

Manish, I think there is a question which came up in the chat, Manish, from Mr. Krunal Balpande. His question was pertaining to, sir, what is the rationale and factors for higher operating EBITDA per tonne for SCMPL versus SCL stand-alone, which has declined significantly. Is it a factor of net realization more than cost? What are the plans to improve SCL stand-alone offering? I think, yes, it is more to do with the markets that we service, sir. SCMPL is more or less aligned with the industry players because it is mostly to servicing Madhya Pradesh. Yes, Sagar did suffer on stand-alone as well as with Andhra, the primary reason being Andhra and the market realization itself. On the cost front, I think we are reasonably there, sir. I don't think cost was an element here. It was mostly to do with the realization.

We'll take the next question from Soham.

You said our EBITDA per tonne has a potential to rise to INR 500 a tonne. So how do you see it increasing? Like can you guide me on the fuel cost and price per tonne going forward? And by when this can be achieved?

I think Mr. Soham, we are talking of this to go up in Q1 itself. The reason, the exit EBITDA per tonne was at INR 291, that is for the Q4 March number. This is during the time when Andhra was under ramp-up. So there were frequent start-stops, and we were upgrading the plant. That definitely put a lot of impact on the overall kind of cost structure at Andhra. So that dragged down the overall kind of EBITDA and EBITDA per tonne, sir. That itself should give us comfort because more or less, the ramp-up is taking a better share. The cost element in Andhra has come down quite significantly. So that in itself should contribute for the EBITDA to reach to INR 500 level, Mr. Soham.

And we expect this to maintain for the whole year, INR 500?

I think with the better pricing, we should be higher than that number, Mr. Soham.

We'll take the next question from Jayesh Gandhi.

Sir, can you throw some light on our limestone security? When are our leases expiring and reserves?

Mr. Jayesh, I think we would be happy to share that because except for one mine in Mattampally, rest of all are beyond 2050, reaching all the way up to 2060, sir. We'll exactly give you the breakup. We'll be happy to share it. In fact, our integrated report, which is due for release by end of June, should give you absolute detail, but we would be happy sharing that table immediately after this call, Mr. Jayesh. We'll reach out and we'll share that number.

Sure. And sir, one more question. Sir, in case if the mining leases are expiring and we go for renewing them, what is the excess royalty or something that we have to pay? Or is it a lump sum amount? How does that work?

Mr. Jayesh, in our case, the first mine should expire in somewhere around 2031 or '32. The procedure what has been indicated at this point of time is that we have to go for an auction. And what government has indicated is that the plant with a mine -- the operating plant with that mine could be given preference. But at this point of time, the mode and method is not yet clear for us. But I think we have to go for an auction, sir. So the general belief is that the way auctions are happening, I think this also should reflect in a similar way. The mine is in big demand, I think the premiums may be up of 100%. In a normal course, it should be anywhere between 10% to 15% premium, Mr. Jayesh. I've given you a very generic answer, sir. It is not specific to Sagar, please remember that point.

I understand, sir. And my question was, will that attract excess, I mean, royalty over and above that reserve price also?

It is actually pertaining to the royalty itself. If you are talking of 100%, you're paying 100% of incremental royalties, sir, royalty plus 100% of royalty. If you are paying 10%, it is royalty plus 10% of royalties.

We will take a follow-up question from Moksh Ranka.

Just one more question. At Andhra Cement, we are planning a rights issue there. So are we not planning to merge Andhra Cement with ourselves or we are planning to keep it as a separate entity?

Mr. Moksh, we are waiting for regulatory clarity because it's -- as you know, that we have taken it from NCLT. There were some accumulated losses and some land-related issues did not help us do the merger during the last 2 years. But we would be more than happy doing it as and when we get the regulatory kind of clarity and we would have crossed the milestone. From a land perspective, I believe we have crossed the milestone because that has fairly limited kind of a thing. That was not the case a few months back, Mr. Moksh. Now that we have crossed some of the critical approval process, land is no more an hindrance, but accumulated losses and all we need to get the tax authorities approval for us to get if we were to merge. So there were a few other regulatory hurdles that did not prompt us to merge, but we would be more than happy doing it as and when we get the regulatory kind of clearances.

Okay. And what would be the quantum of accumulated losses, which we could benefit when we merge Andhra Cement with us? And also our actual pledging would be how much? Should it be less than 20% or 15%?

You're talking of promoter pledge, Mr. Moksh?

Yes, at Sagar Cement. So the actual pledge should be...

Yes, it should be less than 15%, Mr. Moksh, at the promoter level. The first question that you asked about the accumulated losses to Andhra, they are around INR 1,200 crores.

We have a question from Rajesh Ravi. How much is the cost saving will come from Andhra plant stabilization? That is his first question.

See, I think at this point of time, the heat rate alone at a clinker level should contribute around INR 200-odd per tonne, Mr. Manish. Rest everything is kind of ramp up and the grinding plant, once it is done, we would definitely save another INR 50 to INR 75 on the electrical side. So all in all, we expect around INR 250 to INR 300 per tonne kind of a saving once the Andhra upgrade is completed in its full shape.

Okay. And his next question is on, net cement prices are higher by INR 25 to INR 30 per bag in Q1 across South. As per the stated pricing for Q1. Given the discounts...

No, it is logical, Mr. Manish, that the EBITDA per tonne should be very high because the exit price is at INR 300. The average realization -- see, I think it's a forward statement. So I'm not in a position to give a comfortable answer to -- specific answer to that. But it's logical when price has gone up, it should add up to the previous EBITDA what we have -- EBITDA per tonne what we were doing.

We have a last follow-up question from Moksh Ranka.

This INR 1,200 crores accumulated losses, we can take the benefit of it even if we merge with Sagar, right?

Yes, sir. I think it might get fine-tuned, but most of it should be available for Sagar.

Sir, as there are no further questions, we will request you to give the closing comments.

Yes. We would once again like to thank each one of you for joining us on the call. I hope you got all the answers you are looking for. Please feel free to contact our team at Sagar or CDR, should you need any further information or have any further queries. We'll be more than happy to discuss them with you. Thank you. Have a good day.

Thank you. And we will now conclude the call. Thank you, everyone. Have a good day.

Thank you, Manish.

Thank you.