Dalmia Bharat Limited (DALBHARAT) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Earnings Conference Call of Dalmia Bharat Limited for the Quarter and Year Ended 31st March 2025. Please note that this conference call will be for 60 minutes. [Operator Instructions] This conference call is being recorded and the transcription may be put on the website of the company. [Operator Instructions] Before I hand over the conference to the management, I would like to remind you all that certain statements made during the course of this call may not be based on historical information or facts and may be forward-looking statements. These statements are based on the expectations and projections and may involve a number of risks and uncertainties such that the actual outcome may differ materially from suggested by such statements. On the call, we have with us today, Mr. Puneet Dalmia, Managing Director and Chief Executive Officer, Dalmia Bharat Limited; Mr. Dharmender Tuteja, Chief Financial Officer, Dalmia Bharat Limited; and other management of the company. I would now like to hand the conference over to Ms. Aditi Mittal, Head, Investor Relations. Thank you, and over to you, ma'am.

Good morning. Welcome to Dalmia Bharat's earnings call for quarter 4 and full year FY '25. Our results have been uploaded on the website along with the press release and the earnings presentation. Hope you've been able to download and go through the same. With this, I will hand over the call to Mr. Dalmia for his opening remarks. Thank you.

Thank you, Aditi. Before I start, I want to say that we strongly condemn the terrorist attack in Phalagam. Our hearts go out to the victims and their families during this very difficult time. May God give them strength and courage to face this very difficult moment, the entire country is standing with them. Now I want to get to our earnings call and results for this year and this quarter. Based on the key indicators, the economic activity seems to have picked up in Q4 of FY '25, following a relatively muted first half. This momentum has supported the overall economic performance for FY '25 and it is believed that the full year GDP growth should be around 6.5%. While the global macro situation is facing some uncertainty, India seems to be relatively better placed considering that it has its own large captive consumption base and a reasonably strong manufacturing base within the country. The likely bilateral trade agreement will also be an added cushion. As per the RBI's recent estimate, India could still achieve its projected growth of 6.5% for FY '26. In this context, the cement demand is unlikely to be affected majorly by these global disruptions. I continue to believe that India is a multi-decade story and short-term disruptions should not deviate the focus. Looking ahead, a sustained rise in investments, both government and private, robust job creation and improved consumption will be the key growth drivers for our country. During Q4 of financial year '25, I believe that the cement demand grew at 7% to 8% on the back of increased government spending and pent-up demand following the festive season in November. As you are aware, the first 9 months of the year were relatively slow with the growth in demand being around 3% to 3.5% and the full year cement demand will be around 4% to 5% Y-o-Y growth. The GDP growth is projected at around 6.5% for financial year '26 and the cement demand is anticipated to grow by around 7% to 8% during the next year. Now coming to the industry supply side. Over the past 3 years, the capacity share of the top 4 companies has grown from approximately 47.5% in financial year '22 to nearly 57% in financial year '25. In financial year '25 alone, we witnessed 52 million tonnes of capacity changing hands. Looking ahead, I expect consolidation to continue, driven not only by acquisitions, but also by organic expansion as larger players scale up capacity more rapidly than the other smaller companies. Over the next 2 years, the top 4 companies are likely to account for approximately 60% of the industry's total capacity. In this backdrop, we have commissioned a Phase 1 of expansion milestone of 49.5 million tonnes per annum with the commissioning of 2.5 -- 2.4 million tonnes per annum grinding unit at Lanka, Assam and 0.5 million tonnes grinding unit in Bihar during Q4. We have recently announced capacity expansion of 3 million tonnes per annum at our existing plant in Belgaum, Karnataka, along with a new greenfield 3 million tonne per annum grinding unit in Pune, Maharashtra, which is expected to be commissioned by end of financial year '27. This 6 million tonnes per annum expansion will cater primarily to newer markets in Maharashtra, in line with our vision to build a pan-India cement company. Coming to business performance. In the last few quarters, we have been actively strengthening our dealer network and distribution channels, while investing in brand-building initiatives. Some of our key initiatives included the rebranding of Dalmia Cement as RCF Expert, rolling out new cement packaging across all locations and enhancement of multiple reward and incentive schemes for our dealer network. These strategic investments are being done for the future and will help us in delivering strong growth in the years to come with a healthy balance between volume and profitability. Speaking for the year gone by, while our overall sales volume for financial year '25 improved by 2% on a Y-o-Y basis, if you look at the volume growth from Dalmia plants, the volume growth came in at 6% as against the industry growth of around 4% to 5%. In financial year '26, we will be working towards delivering a more consistent and sustainable profitable growth. A quick comment on pricing. We have seen an improvement in prices this quarter. We remain reasonably optimistic about the stickiness of the recent price hikes and believe that the absolute level of consolidation should eventually aid in better pricing. On the cost side, Dalmia is one of the lowest cost cement producers and we are working to deepen this position further. In order to reduce our cost by INR 150 to INR 200 per tonne over the next 2 years period, we are working on different strategies, including consuming more renewable energy, improving our heat and power consumption rate and optimizing our logistics. During the current year, we should be able to realize around half of the above efficiency gains. Before I hand over the call to Dharmender, I want to mention that as a part of our commitment to continuously strengthen workplace safety and foster a safer working environment, we are undertaking a safety excellence program across our operations. This initiative is aimed to further enhance the effectiveness of our current safety SOPs, reduce unsafe practices and embed a stronger safety culture across all sites. Ensuring the safety and well-being of our employees remains a top priority and we are fully committed to continuously improving the quality of life at our plants. Thank you, and over to you, Dharmender.

Thank you, Puneetji. Let me give an overview of our performance. During the quarter, our sales volumes de-grew by 3% Y-o-Y to 8.6 million tonnes, while if you look at the sales from Dalmia plants, that is excluding the tolling volumes from Jaypee last year, our volumes grew 4% Y-o-Y in Q4 FY '25. On a full year basis, our volumes grew by 6% Y-o-Y overall and 6% Y-o-Y if we consider sales from Dalmia plants only. [ Revenues ] declined by 5% Y-o-Y to INR 4,091 crores in Q4 due to softening of cement prices on a Y-o-Y basis and lower volumes. However, on a Q-o-Q basis, our revenues improved by 8.6%, supported by both volume and price increases. For the full year, softness in prices during FY '25 led to our revenues declining by 4.8% Y-o-Y to INR 13,980 crores. As Puneetji mentioned, we have taken a lot of initiatives for improving the quality of sales for our company. During the quarter, our premium product mix improved to 24% from 21% in Q4 FY '24 and the trade mix improved to 67% from 65% last year. Moving on to the cost line items. Our raw material cost per tonne of cement production declined by 4% Y-o-Y to INR 743, primarily due to reduction in fly ash and limestone raising costs. Going forward, raw material cost will see an additional impact of tax on minerals as has been imposed by the state in Tamil Nadu. This is the notification. The impact is [ INR 168 ] per tonne on the limestone that is mined in the state of Tamil Nadu and which translates to about INR 130 crores annually for the company. Power and fuel cost per tonne of cement production also declined by 7% Y-o-Y during the quarter to INR 945 per tonne, primarily due to decline in fuel consumption cost from $114 per tonne in Q4 FY '24 to about $95 per tonne in this quarter and also improvement in RE from 34% to 39% during the quarter. The blended fuel cost during the quarter declined to INR 1.30 on Kcal basis. Our CC ratio also improved from 1.67x in Q4 FY '24 to 1.69x in Q4 FY '25. Fuel prices have started inching up in the last couple of months. While the Q4 consumption rate stood at $95 per tonne, the spot prices are very volatile amidst the ongoing global macroeconomic uncertainties. We continue to add renewable power capacity through both captive and group captive methods. During the quarter, we have commissioned 2.2 megawatt of solar power capacity at Lanka, Assam. Besides this, 13 megawatt of RE capacity is also commissioned under group captive arrangement during the quarter. This takes our total operational RE capacity to 267 megawatt. We expect to reach 595 megawatt of operational RE capacity by end of FY '26. Coming to the logistic cost during the quarter, our logistic cost declined by about 2% Y-o-Y to INR 1,135 per tonne. This is due to increase in direct dispatch from 56% in Q4 FY '24 to 61% in Q4 FY '25 and reduction in lead distance from 289 kilometers in Q4 FY '24 to 277 kilometers in the preceding quarter. However, some benefit of it is offset by higher amount of clinker movement to the Northeast region due to unplanned shutdown. During the quarter, our EBITDA improved by 21% Y-o-Y to INR 793 crores as the impact of lower prices and volumes was offset by better cost management. The EBITDA works out to INR 926 on per tonne basis. This translated to an EBITDA margin expansion of 420 basis points on a Y-o-Y basis to 19.4% in Q4 FY '25. On a full year basis, EBITDA declined by 9% Y-o-Y to INR 2,407 crores, which is INR 820 per tonne. Our profit after tax stands at INR 699 crores during the quarter against INR 853 crores in FY '24. During the quarter, we accrued INR 99 crores in incentives with collections totaling INR 119 crores. Total accrual during FY '25 was INR 336 crores and collections against the same were about INR 307 crores. During FY '26, we expect total incentive accruals will be about INR 300 crores. Incentive outstanding at the end of the year was INR 743 crores. Depreciation for the quarter declined by 4% Y-o-Y and 14% Q-o-Q to INR 314 crores, primarily due to the full amortization of goodwill last quarter which was previously recorded at INR 51 crores per quarter. The full year depreciation for FY '26 is expected to be around INR 1,300 crores. Coming to the ongoing projects. We have commissioned our 2.4 million tonnes grinding unit in Northeast. This makes us the largest cement producer in the fast-growing Northeast region. The clinker unit at Umrangso is also near completion and expected to commission in quarter 2 of FY '26. We have also commissioned 0.5 million tonnes of grinding capacity at Bihar, which is lucrative market in terms of profitability. With this, our closing capacity now stands at 49.5 million tonnes. During the year, we have incurred CapEx of approximately INR 2,664 crores with majority of being spent on the before mentioned projects. Besides this, INR 98 crores investment has been done in equity SPVs of group captive RE projects. As Puneetji mentioned, we have embarked on the next phase of expansion with the announcement of Belgaum and Pune expansion of 3 million tonnes each. We expect FY '26 CapEx to be about INR 3,500 crores, which will largely be spent on expansion at Belgaum, Pune, clinker line at Umrangso and some land for the future projects, besides some cost efficiency investments and maintenance CapEx. We closed the year FY '25 with gross debt at INR 5,279 crores. That is an increase of INR 629 crores as compared to March '24. Net debt as on 31st March was INR 716 crores and the resultant net debt to EBITDA is at 0.3x. I also wanted to share an update on one of our legal matters. In April 2025, ED has issued a provisional attachment order amounting to INR 793 crores. This emanates from a case originally registered by the CBI in 2011, which involved certain allegations relating to company's investments in Bharti Cement. We would like to clarify that this order does not impact the company's running operations. We will take appropriate legal steps to defend our position. In our opinion and basis legal advice, no offense is made out against DCBL and we do not expect adverse outcome for the case. Lastly, in line with the capital allocation framework, the Board has proposed a final dividend of INR 5 per share, which is subject to the approval of the shareholders in the ensuing AGM. This is in addition to the interim dividend of INR 4 per share. Our total dividend declared for the year, including interim, is INR 9 per share. With this, now I open the floor for questions. Thank you very much.

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Rajesh Ravi from HDFC Securities.

Sir, first question pertains to first on the housekeeping. Could you share what was the per kilo cal costing in Q4 and the blended cement mix in this quarter?

Yes. Per kcal cost last quarter was INR 1.30 and the blended percentage is 84.3% -- 84%.

84%. And sir, these pet coke prices, which have gone up recently, what sort of impact you're looking at? What is the pet coke share in the fuel mix?

See, the world economic scenario is in front of everybody. Nobody is aware of how the economy impact will be there because the tariff today is up, today's war is down. So with these changes, nobody can predict what scenario will be there. So there could be some upward price increase, but it's difficult to gauge as of now.

Basis the current price increase in the December -- January, February, March, we have seen pet coke prices going up by 20%. So what sort of impact -- because -- so first, what is the pet coke share in the mix?

See, the prices have gone up, and we expect some marginal increase in the per kcal cost, blended cost, which I had mentioned. But I think difficult to quantify the impact as of now because the situation remains volatile. Every week, prices are going up or down.

Sir, does that answer your question?

Sorry. I'm seeing the group captive power, which you have announced, what would be the landed cost from the group captive power cost?

Yes, it varies from about INR 3 to INR 4 depending on the areas of operations and depending on the levies of these respective states.

Okay. And lastly, in terms of your volume growth outlook, any guidance for FY '26, what sort of number you're looking at given that you're looking at industry to grow to 7% to 8%.

We'll be putting our house in order, and I think we expect to give a good performance, but I think it doesn't make sense to give a hard number, which in the past, we have seen that [ cement industry ] remains volatile. Our focus will remain how to ensure balance of profitability and the volume growth, which Puneetji covered in his opening remarks.

Okay. Last question on the expansion plans. You have announced -- see the Northeast you will be completing in Q2, and you have recently announced INR 3,500 crores for the South expansion. So for FY '26-'27 together, what is the total CapEx outgo one should look at?

The total range I've given is INR 3,500 crores, which should take care of all majority growth.

Okay. Full year basis, FY '26, INR 3,500 crores.

Yes.

Okay. And this tax notice which you have received for the Northeast plants, how do you look at them?

Yes, it is not good in loss. So I think it should get quashed in due course.

[Operator Instructions] The next question is from the line of Devesh Agarwal from IIFL Capital.

Sir, my first question is basically on pricing. So on a Q-o-Q basis, we -- basis my calculation, I think we had seen a lower increase in the prices versus what we were seeing for the regions. So could you share how much was your pure cement realization growth on a Q-o-Q basis? And how did this stack up versus the regional hikes that you have seen in your core regions?

See, the prices have marginally improved in Eastern region and while in the South, they remain low. On an average, I think they remain flattish and maybe very, very minor uptick. But we are hopeful that in the current quarter, prices should improve. But of course, we remain cautiously optimistic and the situation remains volatile on the prices.

And what has been the current price increase versus 4Q average?

It varies from region to region, but it's too early to say. It has increased by about INR 10 to INR 15 on average. But whether they'll stick or not, we need to see. I think the trade channel checks every month, I think that will give a better picture because we'll discover it month-to-month.

Right. And again, you mentioned adjusting for Jaypee tolling volumes, your volume growth was 4% on a Y-o-Y basis. This again seems to be lower than the industry volume growth. So is it because of the regional mix that your volume growth is lower? And -- or is it that you have lost market share in your core markets?

I think quarter-to-quarter, things change a little bit. But if I look at the whole year, our growth has been 6% as against the industry growth rate of 4% to 5%.

Right, sir. And sir, finally, on this, what would be your total clinker capacity at the end of FY '25? How much are you targeting to add in FY '26? And how do you see the ramp-up in your Northeast recently commissioned capacity?

Right now, we are at 23.5 and we've closed the year at 23.5. Now 3.6 will get commissioned in Northeast during quarter 2 of FY '26. So then next year, we'll close at 23.5 plus 3.6, which is 27.1.

And the ramp-up in the Northeast plant?

So the grinding unit just got commissioned this quarter, the quarter that has just gone by. So I think -- and Northeast is a great market for us. We are one of the leading producers of cement and the largest cement company now. So I think we'll be able to ramp it up pretty comfortably.

The next question is from the line of Rahul Gupta from Morgan Stanley.

Two questions. I know you don't want to discuss what ailed volumes growth during the quarter. But can you please help us understand from the context of how to look over the next couple of quarters, number one. Number two, now that you are moving away from guiding on volumes for full year, how should we look at earnings trajectory on back of, let's say, INR 75 to INR 100 cost improvement that you have guided for next year?

See, the reason for not giving a firm guidance on the volume for the next year was that we'll try to balance the objectives of the growth as well as the profitability. And of course, considering the backdrop of the industry volume growth and the leading players' growth, maybe you can have your own estimate about our volume growth. And in terms of margins, of course, INR 75 guidance we have given in terms of the cost reduction. And whatever price improvement comes, that can be added on top.

And what about any specific reasons of relatively weaker volumes during the quarter? I'm asking this question more from the context of if consolidation is the theme for the near future, then how should we think about your volumes?

As Puneetji said that quarter-to-quarter situation may change. But overall, we should be able to show a respectable growth in line with or better than the industry growth, which remains volatile.

The next question is from the line of Amit Murarka from Axis Capital.

Sir, my first question was on volume again. But actually, I had a different take on volume because I see that your volume has grown 28% Q-o-Q, which is the same thing last year Q4 as well. So like is it that there was some volume push in the quarter? And I also see that your realization was flat Q-o-Q, whereas the East saw a 3% price hike. So just wanted to understand why was realization flat and was there some volume push that was done in the quarter?

See, realizations have been flat because the markets which we operate in, South practically didn't see any price increase rather some erosion also happened. But whether any volume push was there, I don't think it was at the cost of profitability because the margins have improved. Unlike the previous year same quarter, we had increased the volume significantly, but it was at the cost of the margins. So this time, you can see that the quality of sales has also been kept in review.

No. But even this time, the realization is flat, but East saw a decent price hike actually in March, I believe, like end of February, early March, but that's not reflecting in the realization and the margin has improved largely, I think, because of the overheads and operating leverage gains. So I just wanted to understand why was realization flat basically Q-o-Q.

Yes, the prices have improved in North region where we are not present and East.

Even in East...

Yes, but it was negative by the price drops in the South also. South had a very, very competitive environment during the quarter. So overall, practically, it was flattish in terms of price rise.

Got it. And the CapEx of INR 3,500 crores that you mentioned, would you be able to give some breakup as to how much of it will go to Northeast and how much to Belgaum and other projects?

I think consolidated number I've given. So it's majority towards the growth CapEx, which is Belgaum as well as Northeast. The real breakup, I would like to -- would not like to give.

Okay, sure. And would you stick with your guidance of coming back with the plans, the bigger capacity expansion plans in like June-July is what you have been mentioning. So...

Yes, definitely. So next quarter, we'll fully detail out our plan of capacity creation till FY '28, along with the balance sheet impact of that.

The next question is from the line of Sumangal Nevatia from Kotak Securities.

First question is on the P&L. The other expense on a per tonne basis has dropped quite significantly. So anything to note here or any one-off, write-back or anything?

No. Sumangal, basically, it is on account of the operating leverage as the volume jumped up by about 28%. So this is reflected in the per tonne drop. And of course, Q2 and Q3 are normally the quarters where some shutdowns take place and the cost goes up. And Q4 is normally you don't have a shutdown. So naturally, the cost comes down.

Understood. Understood. Second question is overall on the next 2 years cost saving, which we are spelling out at around INR 150 to INR 200, is it possible to share what is the breakup? I mean how much is led by RE and a few other heads?

Sorry, Sumangal, can you repeat the question? I missed it initially.

Yes. So my question is on the cost efficiency and cost saving, which we are guiding at around INR 200 per tonne over the next 2 years, is it possible to share some breakup in terms of how much is RE and other heads?

I think in my earlier call, I had mentioned that roughly 50%, 50% you can assume from VC and the logistic cost. There are multiple variables working at play. Of course, RE will be one of them, but I think specific numbers are not important right now.

Okay. Okay. And half of it is what we are expecting to realize in FY '26 itself, right?

Yes.

Okay. I understand. And just one last question on overall utilization. So if you see in the last few years, our utilizations have dropped from 70% to currently around 60-odd percent. So do we -- I mean, just strategically, do we have an eye on this metrics as well? I mean, going forward, our expansions, I mean, are we looking to tie it up with, I mean, utilizations and eventually getting into some sweet spot of 70%, 75% levels? Or should we expect this level of utilization and maybe growth and expansions to kind of tie up?

Sumangal, I have said this earlier also. I think we will focus on capacity creation where we think our utilizations are higher. And we will balance profitability and volume growth as we go forward. Market by market, the situation is very different. And we will take a balanced view in every market depending upon what our immediate objectives are and what our long-term objectives are. So I think there is no sense in creating capacity where you already have unsold capacity. I think we are very clear about that. We will create capacity where we think we have a cost competitive position and where we have a better cost structure to serve the market and we have a more reliable service that we can provide to our customers. So I think given all of this, you will see a very balanced approach in terms of capacity creation and very balanced approach in terms of profitability and volume growth.

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

First question on the investigation. I just wanted to understand, I think from the commentary also it's clear on what Dalmia stand is. We've also heard the investigation is going on for a long time. When you look at the investment Dalmia made, just wanted to understand, get more clarity on the stand there was an investment in Raghuram Cements. What was the rationale that you are pitching for that investment? So overall rationale and where we are in the process because the CBI hearing is going on for a long time. Where do you think we are and how long will it take? Just from a risk standpoint, I just want to understand more granular details on this.

I think we have a very simple position on this. We had invested INR 95 crores in Raghuram Cement, which is now Bharti Cement and we sold our shares at INR 145 crores to a French company called Vicat and we made a INR 50 crore profit. So I think we are very clear based on the legal opinions and based on our own understanding of the law that there is no criminal offense made against the company. And these things take time in India. This is a 14-year-old case. And I'm unable to say how long this is going to take. But this is -- even today, the process in the CBI court has taken a very long time and it continues to go on a slow pace. So it's hard for me to give a time line. But I think we are very clear that these are all bonafide transactions and there is just no case and offense against the company.

And on this provisional attachment, was this Kadapa mine -- is this Kadapa mine also a part of your 75 million tonne expansion that you're looking at? And does this provisional attachment of land limit your borrowing, obviously, against that land and also any future limestone expansion till this is settled?

Based on the overall size of the balance sheet, this number is very miniscule. So I don't think it's going to affect the operations of the company in any manner.

The Kadapa expansion could still happen if you're looking at 75 million tonne expansion that you announced. Thanks for the clarification. Secondly, on the -- just in the context of all these expansions you're looking at, there have been too many management changes in the recent 1 year. Do you think now given all these changes, which for us also becomes difficult to track, I'm not sure compared to the history, this is more attrition than you've personally seen. But now you think you have the entire team in place as you embark on this entire expansion plan that you're looking at? And what would you look to do to have the team in place through this entire journey?

I think I have said this earlier also, and I will repeat it on this call. There is -- we want to build a young team. We want to build a team which is grown from within. In the long term, our leadership has to come from within. And with these 2 objectives, I think we are trying to prepare a succession plan for all critical roles in the company. The second thing is we are also looking at where we can improve efficiency and reduce layers in the company so that we can become more agile and more efficient in terms of our speed of decision-making and quality of decision-making. So I think based on this, some changes have been made, partly due to reducing the number of layers and partly also because of succession planning. We will continue to go on this path as a normal company. I don't think these changes are anything major. And I think they are not going to impact the company in any way whatsoever. If at all, we are stronger, leaner and more efficient.

The next question is from the line of Indrajit Agarwal from CLSA.

Most of my questions are answered. I have 2 questions. First, on the Belgaum or Pune expansion, what is the limestone availability and visibility over there, the kind of quality and life of limestone mine that we have?

I think I've already said that we have sufficient limestone and I think we have -- we are serving a market which we think is very attractive. We are serving the western part of the country where a lot of investments and growth is there. It's a place where we are underrepresented. It's a place where we have a very cost competitive position. And we think this is a project which will deliver very good returns in the years to come. But I cannot comment on the limestone reserves individually plant by plant. All I can say is we have sufficient limestone to support this expansion and more.

Sure. Secondly, even if you can't give like absolute numbers, can you broadly split the growth trajectory in each of the 3 geographies that you are in for fourth quarter and also for FY '25?

No, I will not be able to do that. I'm sorry, we've said that we don't give breakup by geography, and we don't.

I'm asking more like a trend like would you say that one region has grown much faster or it was broad-based across regions?

I think we will not be able to share that.

Okay. Lastly, on tax rate, how should we look at both P&L tax and cash tax for FY '26?

See on the cash tax next year also, you can expect, I think, high single-digit tax rate. And beside after that, it should be normal tax rates.

The next question is from the line of Navin Sahadeo from ICICI Securities.

I had 2 questions for Puneetji. So Puneetji, until the [ fifth ] quarter, every single time in your opening comments, you always gave a little bit of a cautious outlook on the pricing, even if there is some improvement, but you said that a major upside is capped because of increased competitive intensity and that was a pretty consistent commentary in the past couple of quarters. But in your comments now, you did mention about optimism on the stickiness of this price. So just wanted to understand, is it that are you seeing the consolidation actually play out? Or is it so that the price has gone so low and then the mineral tax just comes in, which helps the overall pricing momentum just to improve a little bit? How should one look at it?

I mean it's a great question. I think both the points that you mentioned are impacting this in some way or form. I think in the Southern region, prices had gone to a level which was unsustainable for many players. And it had remained there for a fairly long period of time of almost 12 to 15 months -- 12 months, actually. And I think the second thing is that during this period of pain, some consolidation also happened. So I think it's a combination of both factors. Prices were at an unsustainably low level and also consolidation happened during this time. So a combination of both these factors has caused a price increase in South in April. Whether it will sustain or not, I am reasonably optimistic right now that it may be the same low level which we have experienced in the last 12 months may not remain. But it will be at a slightly higher level. Now how high and for how long is hard for me to comment. That's why I'm a little bit more optimistic, but I'm also cautious in terms of where it can go because there is still oversupply in the region. And there is fragmentation in -- at least Andhra Pradesh is still quite fragmented. It is definitely more consolidated, but still the level of fragmentation is quite high. Tamil Nadu and Kerala consolidation level has become very high now. But Andhra Pradesh is still -- Andhra Pradesh and Telangana are still quite fragmented.

That's really helpful. And my second question then was on your capacity expansion plan. So of course, in February, you announced 6 million tonne expansion. But here, the first line itself of that press release says towards meeting the 75 MTPA objective for '28, which also means another 20 million tonnes of capacity. And even if it's a mix of greenfield, brownfield at $85 comes to almost INR 14,000 crores of additional CapEx. So my only request in this question is how much should investors be prepared for debt to come on? Or is it also a function of overall profitability being at higher level to meet this objective? Can it be a little fluid subject to profitability? How -- how should one look at this overall CapEx that is planned from a 3-year perspective?

I request if you can just hold on for one more quarter for this. I can only say one thing that we will be -- while we want to grow, we also want to be prudent. We will look at the competitive landscape of the industry. We will look at our own ability and cost competitiveness in markets that we are present in. We will also look at diversification to new geographies. So we have to keep some multiple factors in mind before we can give you a very clear answer on this. And I know you asked a very specific question and I'm giving a slightly more generic answer, but please wait for one more quarter. I can only say that we will be prudent, and we will grow with prudence.

Yes. And just related to this, is IEX-related monetization, I understand net debt is fairly comfortable now, but that is mark-to-market the IEX value. So I hope that clarity over monetization of this IEX also will come in by next quarter.

Well, I think we have already said that it's a short-term investment that we are holding and we are going to monetize it soon, but it's a listed company. So I cannot give an exact time frame. But this is something which is I've committed to the markets and we will stand by our commitment.

[Operator Instructions] The next question is from the line of Shravan Shah from Dolat Capital.

Sir, a couple of questions. Just first a clarity, when we say that we are looking at a INR 75 to maybe INR 100-odd reduction this year and next year. So combined put together kind of a INR 200 -- INR 150, INR 200 cost reduction. So this is from FY '25 average or from Q4 FY '25 because Q4 FY '25 itself is close to INR 80 to INR 90 lower versus the FY '25. So from FY '25, if we are looking at a reduction, then actually there is no reduction from current fourth quarter number.

This we had called in the July call. So basically, you can consider Q1 of FY '25 as the base.

Q1 FY '25. Okay. Q1 FY '25 would be the base. Okay. Got it. Okay. But there also the number is -- the current quarter number itself is a kind of INR 125 lower versus that. So that means even if we reduce by INR 75, it would be still higher than the current quarter Q4 cost. So that's the way one should look at. Okay. Got it. Second, sir, is it possible also to share just a data point on the road rail mix and the blending ratio, which is at 84-odd percent. But in the April presentation, we said that we will be looking at 100% blended cement by FY -- by 2026. So does that mean FY '26 or calendar year 2026? And if that is the case, how do one look at in terms of whatever the OPC we have currently 15%, 16%. So obviously, it should be on the higher side. So if it goes away, how one can look at in terms of the kind of pricing impact for us?

Directionally, we would like to move towards 100% blended. But of course, these things may not be possible to achieve in 1-year time frame. But directionally, our commitment remains. So we'll try to see market by market balancing the growth and the profitability point of view and try to move towards that direction. But it can't be a hard coated number, which has to be achieved quarter-by-quarter or year-by-year. Other aspect you asked about the road mix, it is 84%.

84%. And sir, is it possible to share the current -- whatever -- I understand the next expansion we will tell in the next quarter. But whatever the given is INR 3,500 crores CapEx for FY '26, for FY '27 would be how much based on the current things. Obviously, it will increase once we announce the next expansion.

Yes, better to wait for one more quarter, you'll get complete clarity on that.

But our stand still will remain that net debt EBITDA will not cross 2x to reach a 75 million tonne?

Yes, please.

Sorry to interrupt, sir. The next question is from the line of Prateek Kumar from Jefferies Group.

My first question is on Tamil Nadu land mining tax. So what is the status there? Has it got implemented? Or we heard that there is some lobbying for reduction of that tax. Can you update us on the same?

Yes, this has become operative from first week of April. And of course, industry would like the rates to be much, much lower. This rate is quite high. But for the time being, I think best for us and you to assume that this stays.

Okay. And one clarification on the pricing. You said INR 10 to INR 15 price hike. We understand the price hike in South are much higher at like INR 40, INR 50. So are you talking about other regions of price hike or...

What I've given is on an average basis. Other regions have not seen that kind of price hikes.

Okay. And lastly, on Jaypee, you're bidding for Jaypee assets under the new consortium that includes like a whole host of other businesses. What is the idea about bidding such -- for bidding such businesses?

We have given our expression of interest. And after a thorough review of the position, we'll take a prudent call on that. But that includes like...

Sorry to interrupt. I would request you to rejoin the queue for your follow-up question. The next question is from the line of Patanjali Srinivasan from Sundaram Mutual Fund.

I just wanted to get some clarity on the...

Sorry to interrupt. I would request you to please use your handset.

I wanted to know what the incentives for the quarter was? And also what about the receivables for incentives? How has it been moving in the current year?

So current year accrual, as I mentioned, was about INR 99 crores. And next year, we are expecting about INR 300 crores. So receivables, INR 743 crores in the current year and they should remain around the same level or maybe slightly go up because the current year receivables may take slightly longer to realize. So on an average...

This accrual you're saying for the current quarter is INR 99 crores, is it?

INR 99 crores is for the Q4, which just went by.

Understood.

And next full year, it's about INR 300 crores.

Okay. Sir, generally, like our share of profits, if you look at subsidies or grants, it seems to be fairly high. So will this be recurring for the long term? Or will a large part of this go away in a few years down the line? Could you give some color on this?

Yes, we are operating in the Northeast region where this is likely to continue for a very long period because this is for 15 to 20 years time frame. And Bihar is the one which will expire in the current year. But for the small unit, which we have added 0.5 billion, that will continue for another 5 years. [indiscernible] also will go up for about 15 years. And Jharkhand also will continue for a couple of years. So I think next couple of years, we don't foresee any reduction on this.

Okay. And just one last question, sir. So this capacity expansion that we announced for grinding unit in Pune and expansion in Belgaum, how are we planning to service the grinding unit in Pune because the lead distance is almost 400 kilometers.

It will be by rail.

The next question is from the line of Jyoti Gupta from Nirmal Bang Securities Private Limited.

I'll start with, as I understand, the industry should grow by 7% Y-o-Y this year -- this quarter, however, we have seen a decline on a Y-o-Y basis. Realizations would be flat. However, the players in the regions in the East have actually benefited from the increase in realizations while we have not. Third is we have moved clinker, as we have already mentioned in the commentary. However, your overall cost seems to have declined. Now how do we should we see -- and of course, the benefit of increase in price in the East will be reflected with a couple of companies. And fourth, in the first quarter itself, we've seen almost like INR 60 gross level increase in price in the South region with a net impact of at least INR 30 absorbed already. How should we see Dalmia's performance in the first quarter of FY '26? And second is on the limestone reserves, I believe Rajgangpur has been almost like a 70-year-old reserve mine. Is it not expected to exhaust by '32 or something? Any comments on that, please?

I think let me take the comment on limestone reserves first. I've already said in many statements during the earlier calls that we have sufficient reserves in Rajgangpur. They were in our own mining lease area. There was some land that we had to buy, which is in process and which is going to get concluded -- a large part of it will get concluded within this year. So we see no challenge in reserves over there. The second part is that while we have -- Dharmender already mentioned that there were some price increase in East, but there was erosion of prices in South, which kept our realizations flat for the quarter. And I think in the coming quarter, currently, in the first fortnight, we have seen a significant increase in South. which could be in the range of INR 30 to INR 40. But on a blended basis, it is at about INR 10 to INR 15, as Dharmender has said. So if these prices sustain, profitability should be better. And I have already said that we are going to balance our volume and profitability targets and estimates market by market. And in terms of quarterly guidance, I apologize, we will not give any quarterly guidance. Thank you.

Can I just get in terms of price increase regional breakup between North and South because that should have actually offset decline in price in the South. And at the same time, I would also like to understand, I mean, the kind of volume decline realization reliance, the cost structure has actually declined quite significantly and we paid only 6% tax in this quarter compared to 20% in the last quarter. Any specific reason for that?

See, if you see there are prior period adjustments for the tax write-backs. So that you can consider as a one-off items. So if you remove that, our effective tax rate is still 24%. Our cash tax rate remains low because we have brought forward losses from the past acquisitions.

But I have many questions Mr. Dalmia. I hope to get all of them answered in the future.

The next question is from the line of Jashandeep Singh from Nomura.

Most of the questions have been asked by my fellow analyst. But just wanted to concentrate on the Northeast region. So a lot of investment has gone from Dalmia to Northeast and I understand this is a very lucrative region for Dalmia. But I just wanted to understand what's the -- if you can give me a rough market size of that Northeast and what's the growth trajectory you believe the market will see? Because if I'm not wrong, the top 2 players hold more than 50% of the market share. Just wanted to understand is Northeast is going on the same trajectory as East where capacity growth might outpace demand and hence, there will be pressure on margins. So if I can just get the management view on that, that would be great.

See, not giving the regional data, but all I can say is that Northeast is growing faster than the Indian average and that is likely to continue.

Sir, I understand I'm just asking about the market and not Dalmia specifically, but even if you say Northeast is growing at a faster rate -- even demand is growing at a faster rate in India, its capacity growth is also growing at a faster rate in India. So I just want to understand, do you think the margins will sustain for the next couple of years despite all the capacity that's coming here?

Look, when we make CapEx decisions, we take a very long-term view to take CapEx to make investments because it takes around 2 to 2.5 years to create new capacity. I think the way we look at the Northeast region is as follows. I think one, from a demand perspective, Indian government is very focused on investing in the Northeast region. And in this last decade, the number of visits by the Prime Minister and also the union ministers has been pretty phenomenal over there. There is huge commitment to creating infrastructure. And even in Assam, there is a very, very aggressive plan to increase industrialization and make huge investments in the economy. This was highlighted in the Advantage Assam Summit recently, where a lot of investors have committed significant capital. There's semiconductor facilities being built. We are building the largest cement plant over there. We've already almost completed. So I think huge investments are happening there in infrastructure as well as industrialization. So we think demand growth here is going to be very strong, point number one. Point number two, from a supply side perspective, it's a fairly consolidated market. And it's a market where people who have local presence have ability to serve the market in a more reliable manner. So I think from a market structure point of view also, we find this market quite attractive. Now having said this, whenever new capacity comes, there could be turbulence in terms of prices and capacity comes in steps and demand grows over time. So there could be a little bit of turbulence whenever new capacity gets commissioned in any market. And I personally think that we make investments from a long-term perspective. And long term, we find this market quite an attractive market to be. That's all I can say.

No, I completely understand. Just if I can squeeze in one more. What will be the average utilization for that region? If you can, on the market basis, if not particularly Dalmia.

We don't share region by region.

Not for Dalmia, but for the market itself. If you can give us a sense, that would be great.

Jashandeep, the utilization for the region should be in the ballpark range of about 65% because the market is a 14 million to 15 million tonne of volume that is [indiscernible].

The last question is from the line of Pulkit Patni from Goldman Sachs.

Sir, my questions are already answered.

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

I once again want to express my deepest condolences for the victims of Pahalgam and pray for peace and strength in their families. I once again thank you all for your interest in Dalmia and we will see you again next quarter. Thank you very much.

Thank you. On behalf of Dalmia Bharat, that concludes this conference. Thank you for joining us and you may now disconnect your lines.