Dalmia Bharat Limited ($DALBHARAT)

Ladies and gentlemen, good day, and welcome to the earnings conference call of Dalmia Bharat Limited for the quarter ended 31st March 2026. Please note that this conference call will be for 60 minutes and for the duration of this conference call [Operator Instructions] this conference call is being recorded, and the transcript will 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 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 expectations and projections and may involve a number of risks and uncertainties such that the actual outcome may differ materially from those suggested by such statements. On the call, we have with us Mr. Puneet Dalmia, Managing Director and CEO of Dalmia Bharat Limited; Mr. Dharmender Tuteja, CFO of Dalmia Bharat Limited; Mr. Yatin Malhotra CFO of Dalmia Cement Bharat Limited; and the other management of the company. I would now like to hand the conference call over to Mr. Prassan Goyal, Investor Relations Lead. Thank you, and over to you.

[indiscernible] Good evening, everyone. We're happy to welcome all of you to the FY '26 [indiscernible] results investor call. As you would have taken note of [indiscernible] this time we have made a change in the way we are holding our investor call. The purpose of this change is to present our investor deck during the call and share our perspectives and insights in an endeavor to make the overall interaction richer. Looking forward to a good discussion, handing over to Puneet sir to take this forward. Thank you.

Thank you, Prassan, and good evening, everyone. Happy to be back with all of you. Let me start with some thoughts about the Indian economy. As we all know, the India growth story remains strong, and we continue to be one of the fastest-growing major economy in the world, marching forward to become the third largest economy in a few years. During the year, India's macroeconomic fundamentals have demonstrated confidence, driven by robust consumption and investment demand. At the same time, supportive fiscal deficit and robust ForEx reserve put India on a strong footing to navigate through any of the geopolitical geoeconomic headwinds. As India progresses to become a $5 trillion economy by 2028 and achieve the vision of Viksit Bharat by 2047, we will need substantial investments in infrastructure, and we are already beginning to see strong traction on this front. From industrial corridors and affordable housing, to high-speed rail and smart cities, progress is visible across the country. Central and state CapEx has also been increasing year-on-year. We strongly believe that this momentum is going to accelerate in the years ahead. As India grows, so does the Cement sector. I expect the cement demand to grow at a CAGR of 7% to 8% in the medium term. Let me now touch upon costs and cement prices. As mentioned in our earlier calls, the cost trends for the cement industry were largely flattish in the recent past. However, this situation has changed due to the West Asia conflict. The industry is seeing cost impact in 3 key areas: power and fuel, packing bags and both inbound and outbound logistics. Pet coke prices have sold to about $160 per tonne and rupee depreciation is an added impact. Supply crunch of bags and rising cost of PP granule has led to increase in packing costs. Fuel costs have also gone up, and there might be some more increases in the pipeline. Having said that, we are taking various measures internally to mitigate the impact of rising costs to the maximum extent possible. On the price side, we have seen improvements in the month of April in most of our key markets. We are optimistic that this positive momentum on prices will continue in the near term and could may well mitigate the impact of the cost increase. Moving on to the company overview. As you are all aware, we are the fourth largest cement player in India with almost 50 million tonnes of cement capacity. In financial year '26, we delivered our best-ever EBITDA of INR 3,083 crores and a PAT of INR 1,157 crores. We have a diverse product offering catering to all consumer segments. And I'm happy to share that we are adding a new premium product to our lineup called Weather365. With this new addition, we are confident of strengthening our premium product offering to the end consumers and our channel partners. We take pride in the journey of Dalmia over decades. We began our operations in 1939 with just 250 tonnes per day of cement capacity in the state of Tamil Nadu. And today, we serve over 23 states with our cement capacity close to 50 million tonnes. As you are all familiar with our geographical footprint, I will not go deep into that. But in this slide, we have included the status of our limestone reserves. As can be seen, we have sufficient reserves across all our regions. In totality, we have 2.7 billion tonnes of limestone reserves at our operational plants. In addition to this, we have [ virgin ] mines across the country, which will support our future expansion into new geographies. And we are progressively augmenting our reserves as we go along. I want to now spend some time on our strategic priorities. Maximizing ROCE from all our assets has been one of the top agenda items for the company. And most of this -- and most of the management bandwidth is being deployed to drive this. Capacity expansion and becoming a pan-India player is a key strategic priority. All our announced projects in South and West are progressing well. We are now working on new projects to reach the 75 million tonne capacity milestone. We will share details of the same with all of you in the near future. Our balance sheet is our strength. And as we pursue our capacity expansion journey, we would be extremely mindful of continuing to maintain a healthy balance sheet in future as well. We are committed to have the highest corporate governance and a strong organization culture. Both of these will continue to guide our actions as we take Dalmia from strength-to-strength. I will now hand it over to Dharmender to take you through the progress on our operating parameters. Thank you.

Thank you, Puneetji. Good evening, everyone. Please pardon me for my sore throat today. Just to reemphasize what Puneetji just mentioned, delivering high returns on capital employed is a key strategic priority for us, and we are addressing this on multiple fronts. Delivering industry-leading volume growth backed up by strong value proposition for our channel partners and customers is the key to higher capacity utilization. We have recently refreshed our brand identity and have adopted a new logo, keeping pace with the new Bharat of today and tomorrow. We are doubling down on our efforts towards premiumization at both product and price level. Various initiatives are being taken for better channel engagement and offering reliable delivery to our partners. We have also made positive stride on our cost leadership. In this quarter, we delivered the lowest quarterly total cost per tonne in the last 5 years, which demonstrates our unwavering commitment to be one of the lowest cost producers. We'll talk a bit more about cost in the coming slides. Now let me give you a brief snapshot of our ROCE performance. For ease of understanding the numbers, we have categorized our capital employed into core cement operations and noncore line items. The key components of noncore line items are CWIP of about INR [ 2,500 ] crores, intangibles arising out of group restructuring [ another ] about INR [ 2,100 ] crores and rest is largely treasury investments, partially mitigated by deferred tax liabilities. In financial year '26, we have been able to improve our ROCE from core cement assets by more than 200 basis points, going up from 9.9% to 12.1%. As more of our projects get commissioned, the CWIP value will keep getting converted into core cement assets and start generating strong returns. Our ongoing expansion projects at Belgaum and Pune as well as Kadapa will take our cement capacity to 61.5 million tonnes per annum in the next 18 to 20 months. Civil work at Belgaum project is complete, while E&I work has started. We are actually expecting commissioning a little ahead of our earlier announced schedule. Ordering for all key equipments at Kadapa project is already done. There have been some minor delays in Q4 '26, which have also resulted in lower than planned cash outflows during the quarter. Things are now back on track, and we are confident that we will be able to commission this project somewhere between Q2 to Q3 of FY '28. Progress on Pune GU and Chennai Bulk terminal are also progressing satisfactorily. Total cash outflow on account of project CapEx has been about INR 3,200 crores in the last 2 financial years. With all projects picking up pace, we expect the expansion cash outflow in FY '27 to be in the range of INR 2,200 crores with the total CapEx outlook for FY '27 being INR 3,200 crores to INR 3,400 crores. Moving to our performance for the year. We have closed the year with 2% volume growth and 6% revenue growth. We delivered ever highest EBITDA of INR 3,083 crores, up 28% versus previous year. Our PAT in FY '26 was INR 1,157 crores, which is a jump of 65% versus previous year. Let me now cover each metric in the following slides. During the quarter, our sales volume grew 3% Y-o-Y to 8.8 million tonnes. Trade percentage for the quarter was 67% and our premium product share was 24%. We'll continue to drive the agenda of premiumization aggressively in FY '27 as well. Revenue from operations improved driven by both realizations and volume growth. Although our realizations appear flattish, it has actually improved by about 1.7% on a Q-o-Q basis if we adjust the one-off incentive accrued last quarter amounting to INR 46 crores. Our incentive accruals during the quarter were INR 45 crores. Total incentives outstanding at year-end has increased to INR 839 crores as collections for the quarter were subdued at just INR 14 crores. This was due to delays in payouts by a few trade [indiscernible] on account of elections. We expect this to normalize [indiscernible]. Raw material cost per tonne of production reduced by 1% Y-o-Y to INR 734 per tonne. This is despite the additional levy of [ mineral ] tax in Tamil Nadu at INR 160 per tonne. Compared to previous quarter, raw material cost has come down by 6%. Our blended ratio has improved to 83% during the quarter, which led to margin improvement in CC ratio as well. The power and fuel cost per tonne of production has reduced 6% versus previous quarter despite cost headwinds. We have been able to mitigate inflationary pressures with mix optimization and other initiatives. On a full year basis, our cost per tonne is flat. Share of renewable energy jumped from 39% in Q4 last year to 47% this quarter, while fuel cost stood at INR 1.36 per [indiscernible] given the volatile environment, we will continue to focus on all big and small initiatives to keep power and fuel cost in check to the extent possible. We continue to deliver from the lowest logistic costs in the industry and have further improved on that. During the quarter, our cost declined 6% Y-o-Y to INR 1,064 per tonne, driven by multiple initiatives. We achieved highest ever direct dispatch share during the quarter at 65%. As we move forward, we'll continue to balance the twin objectives of reliable service to our customers and cost excellence. During the quarter, other expenses increased by 4% Y-o-Y to INR 694 per tonne, primarily due to increase in packing cost towards the end of the quarter. If you look at the total cost level, we have continued to deepen our position as one of the lowest cost cement producers. Happy to share that Q4 per tonne cost is the lowest quarterly cost in the last 5 years for Dalmia. At reported cost basis, our cost per tonne since Q1 FY '25 has come down by INR 183 per tonne from INR 3,973 to INR 3,790. If we see on an adjusted basis, that is after moving impact of Tamil Nadu minerals and fuel prices, the fall is even steeper. That is INR 211 per tonne. On a full year basis, FY '26 adjusted cost is lower by INR 100 versus FY '25. This decline is in line with the guidance we had given a few years back. And as we look forward, we are confident of further improving on our cost trajectory. Since cost reduction is a continuous journey in a very dynamic environment, we don't want to guide the speed. However, internally, we will always keep looking to deliver INR 50 to INR 100 [indiscernible] cost takeout on an annual basis going forward. Our EBITDA has grown to INR 902 crores, driven by all key levers, that is volume, realization and cost. The jump in EBITDA is 14% versus previous year and 50% versus previous quarter. EBITDA per tonne was INR 1,023 crores against the reported Q3 number of INR 823 crores. However, adjusted for the one-off incentives of INR 46 crores last quarter, our EBITDA has improved by INR 260 per tonne on a sequential basis. As Puneetji mentioned, balance sheet health is a key priority. Our net worth -- our net debt stands at INR 1,428 crores, translating to a net debt to EBITDA of 0.46x, which is well below the threshold level of 2x as per our capital allocation framework. Sustainability is central to how we operate and grow as a company. Our net emissions has been one of the lowest among the cement companies globally at 471 kg. Our DJSI score has also significantly improved to 70 this year. We continue to scale up our renewable power capacity at a strong pace, adding around 180 million megawatts this year. We will also be commissioning 128 megawatt of RE capacity soon, which will take us to 576-megawatt renewable energy capacity. This will further increase our share of renewable power consumption and reinforce our commitment to sustainability. This is just a glimpse of some of the CSR interventions across our locations. We take immense pride in the impact we bring to the lives of people we touch, and we'll continue our relentless focus in this area. Talking about governance, we have a strong Board construct at the company, which brings diverse expertise and reputation. The layer below the board is the Executive Committee with seasoned professionals, bringing together diverse industry expertise and functional strengths. And some of the best names in the industry are engaged with us either as auditors for giving us assurances and ratings on [ various parameters. ] Talking about contingent liabilities. Our tax-related liabilities have come down drastically in FY '26. There was increase in mining and mineral related matters, details of which will be covered in our annual report. Our total contingent liability as a percentage of equity is 6%, which is amongst the best in the industry. Last, on the key legal matters, one of the key positives this quarter has been the progress in the ED-land attachment case. Alleged proceeds of crime have been substantially reduced from INR 793 crores to INR 93 crores, which is nearly a 90% reduction. The ED has also ordered for the release of the entire land parcels by substituting the same with the bank guarantee of equivalent amount of INR 93 crores. With this, I open the floor for question and answers. Thank you.

[Operator Instructions] We'll take our first question from Amit Murarka from Axis Capital.

So just firstly, on the volumes, like this quarter, you had some impact of the capacity, the [ kiln ] shutdown. But generally speaking, also in the last couple of years, there has been a continued market share loss. So what is the outlook that we can expect on volume and market share, let's say, in the coming couple of years?

I think, as I've said earlier, we want to look at profitable volume growth. This quarter, we had an unexpected breakdown in East India, and we lost some volume on account of that. But we have commissioned new lines in Northeast, and we are also going to commission our line in Belgaum this year. For all these new investments, our priority remains to increase capacity utilization as fast as possible. And I think we will continue to ensure that we are able to scale up the utilizations in the right markets. And as I said, in some markets, we have to improve the quality of sales, which we have been doing. And you've seen that in our profitability. So it's a work in process. And overall, I think we are pretty happy with the progress that we are making.

Okay. Just one more question on capacity. Like usually, like there was a chart talking about 70 million tonnes and 110, 115. So this time, it's missing. So how to read that? And what's the current targets on capacity now?

As I said, I think our first milestone is by financial year '28, we want to be 75 million tonnes. So we are continuing to work on that. And our long-term target also remains the same as we had outlined earlier. There's no change.

Just to add on [indiscernible] I think Puneetji covered in his opening remarks that we are pretty much on a way to chase 72 million to 75 million tonnes in the next 2 years by FY '28. So that is pretty much a milestone that we are achieving. So it's not missing. 110 million, 130 million tonnes milestone, we will be declaring more as we go along. So even that destination as a part of being a pan-India player is pretty much...

And just a last question, if I may. So there has been a lot of cost inflation due to the West Asia crisis. How are you placed to combat that? And if you could give like some guidance on the cost inflation that you expect in Q1 and Q2?

So I mean, we have done this assessment. Actually, as you have seen, our cost numbers for the quarter have been really good. I think we -- there are challenges. There are headwinds, as Puneetji mentioned, on power and fuel, on packing and a little bit on logistics also. Overall, if you were to see versus Q4 to Q1, we are expecting an impact of somewhere between INR 125 to INR 150 per tonne. But that is what's coming and something we have to handle. We are working on ways and means to mitigate this in terms of our fuel mix, in terms of our other initiatives in the logistics to mitigate these impacts. So we will see how the quarter pans out. Right now, we are looking at a risk of INR 125 to INR 150 per tonne on the horizon, and we are in the process of mitigating this.

Our next question is from Rajesh Ravi from HDFC Securities.

Am I audible?

Yes.

Yes.

Sir, I wanted to ask in the presentation, you have mentioned the like-to-like cost, OpEx-led efficiencies, that's INR 100 per tonne, which is achieved in FY '26. Is this reading correct?

Sorry, is...

Cost reduction in FY '26 on the efficiency basis, we have achieved INR 100 per tonne cost reduction, right?

Yes, yes, on an annualized basis, year-to-year, INR 100 per tonne is the reduction.

Yes, yes, annual basis. And what more is expected or targeted for FY '27?

Actually, we guided roughly, I think, 8 quarters ago on the path we had [ to. ] We have lived that journey as we have shown, if you were to look at Q4 to Q4 on an adjusted basis, we are looking at INR 125, INR 130. As an organization, we are chasing cost reduction, I would say, on a continuous basis. Internally, we are targeting, as Puneetji mentioned, somewhere between INR 50 to INR 100 takeout every year. So I think that's the way we want to see it. We don't want to see it like a permanent milestone. It's a moving target, and we need to keep chasing more and more as we go...

Understood. And the INR 125 to INR 150 cost increase expected in Q1 over Q4, could you break it up between packaging and fuel cost, what sort of numbers you're looking at?

I can give you an indication. I think the entire industry will give you the same numbers. Packing would be somewhere between [ INR 80 to INR 90 ] and the balance would be split between logistics and power and fuel.

So this power and fuel, the current inflated 30% odd or factoring in the rupee depreciation, some 40% increase, if suppose the prices were to hold on at the current level, since when would that start hitting numbers?

So a part of it has already started hitting, but the question is how do we respond to those increases. I think we have been able to optimize our fuel mix to make sure the impact is mitigated, and that is exactly what we are looking at quarter 1. So it is not that the high costs have not started to impact us. These are alternative ways of sourcing and the fuel mix that is basically the lever to mitigate the impact.

So can you work out the -- what was the fuel mix in Q4? And what is the -- at least Q4 and how you are looking to...

We can speak offline and I can give you those numbers.

Sure, sure. Next question comes on the CapEx. You have spelled out INR 2,200 crores CapEx for FY '27. So incremental -- this is only for the ongoing projects. So for full year, what sort of number -- total CapEx for FY '27 we are looking at?

INR 3,200 crores to INR 3,400 crores.

Sorry.

INR 3,200 crores to INR 3,400 crores...

Okay, okay.

This is all the announced project, INR 3,200 crores to 3,400 crores. But as we mentioned, we will be coming out with more announcement...

Okay. And one last question.

Rajesh, I request you to join back the queue, please, as we have participants waiting for their turn. Next question is from Satyadeep Jain from AMBIT Capital.

Can you hear me?

Yes, please go ahead.

So first question is on that 75 million tonnes that you mentioned. Can you maybe coming -- in the next 2 years, can you talk about what options you're looking at? Where are you in the ordering stage?

I think we can't talk right now. We'll share with you whenever we are ready.

But you expect -- by the end of...

Sorry, we are getting some disturbance on the call.

Just confirming that 75 million target by the end of FY '28, right, that target?

Yes. We are pretty much chasing that, Puneetji mentioned that. We will take a quarter here and there, give or take a few million here and there. That is what we are looking...

Okay. And sir, just on the [indiscernible] investment, I know the shape has also been dogged down by all these news around market coupling. What's your expectation on the remaining stake that you have?

We have said that [indiscernible] is a noncore asset for us and we have [indiscernible] today I have said we are waiting for the right opportunity to do that and we will do.

We've already liquidated half our position. And I think the balance position also we will liquidate as and when we find the time...

Next question is from Prateek Kumar from Jefferies.

Congrats for good numbers. My first question is on your clinker utilization. Can you give clinker utilization for the year and if clinker utilization in specific regions impacted volume growth for the quarter?

Prateekji, we don't share the capacity utilization for clinker and -- we will not go there. I think we have made quite a lot of additional disclosures this time at our Investor Day, but this is something that you...

I think we do share a CC ratio. I think that can give you an indication of it.

But that is not a factor which impacted your volume growth this quarter?

Sorry, can you repeat your question please?

But is this not a factor which would have impacted your volume growth in peak quarter, which is this quarter?

Yes, we've already said that in our slides that there was about an unexpected one-off breakdown, which has resulted in a 3% Y-o-Y growth lower.

Prateek, in quarter 3, we registered a 10% volume growth. I think we were able to exhibit performance a little ahead of the industry. Quarter 4 started on a high note. In the month of March, as you would have seen in intimation to stock exchange, we actually had a breakdown. We lost roughly 1.5 lakh tonnes of clinker and [ 300,000 ] of cement, and that is the reason that you see subdued growth in quarter 4. I think in the long-term basis, I think we are very optimistic that we'll get back to our sales growth momentum and outperforming the industry in the coming quarters.

Sure. Other question is on pricing. We talked about price increases in the month of April. So it is enough to cover the cost inflation expected over the next 2 quarters? How do you think about that?

Look, we are in a dynamic world and nobody knows what the cost inflation will be. But if I look at the first fortnight of April, so far, whatever are the cost increases, we've been able to pass on through the price increase. And we are quite hopeful that this will sustain. So largely, hopefully, we should be able to protect the margins. But again, it's a dynamic world. We'll have to see how the prices behave and will the energy prices cool off, Will the supply chains become more reliable. We have to see all of that. But as of now, I think the impact of cost has been passed.

Next question is from Shravan Shah from Dolat Capital.

Sir, is it possible to quantify both trade, non-trade hike in your core operations of the regions in April?

Do you want us to share what?

Cement price hike taken by you or the industry in April in your core regions.

I think it's a moving number. It's not that one market, one price is stable. So -- but overall, as -- it is mentioned, the price increases have happened, and we are looking at recovering more than the cost but that will be absolute.

Okay. And sir, given that now for the expansion of Kadapa that previously we are looking at Q2 FY '28 that now we are saying it would be a Q3 FY '28 also. And at the same time, we have still not announced the next expansion to reach a 75 million tonne, but still we are sticking to it. So what gives the confidence because that's the one thing which is not -- even if when you announce and whether it will be -- we will be able to reach a 75 million tonne, can you help us more there?

I would just say that you have to take confidence from our confidence to do this. As I said, this could be a couple of quarters here and there, a couple of million tonnes here and there. But just wait for us to come up with more announcement and then we'll be able to share more details. But as of now, I think, in Kadapa, 1 quarter, we also said Belgaum is a little ahead...

Shravan, can you please mute your connection? There's a lot of background noise from your line. Yes. sorry, sir, please go ahead.

As I said, Kadapa, might be a little delayed. Belgaum a little ahead of time. By and large, the story is intact. In the next 8 to 9 quarters, we are looking forward to reach somewhere between 72 million to 75 million tonnes of...

And sir, on the volume growth, I understand in last 2 years also, just a 2% kind of a growth. Sir, is it possible to say that we are saying 7%, 8% kind of industry growth for a couple of years for us for FY '27, '28, how one can look at? Will it be still lower than the industry growth or at par or better than industry growth?

We are aiming to deliver better than industry growth.

Okay. And the CapEx for FY '28 would be -- once we announce, so broader would be the -- last time we said '27, '28 put together would be close to INR 9,000-odd crores. So that way one can look at?

Last time, we said that for the next 2 years, we're looking at INR 3,000 crores to INR 3,500 crores every year. So I think that's pretty much what we are seeing today also, 3 new announcements.

Because that math will not tell you if you want to reach -- add another 10-odd million tonnes to reach that, we need to do a decent CapEx. So at least INR 6,000 crores, INR 7,000 crores to reach that. So...

Let's wait for the next announcement...

We have said this is the CapEx without any new announcement.

The next question is from [ Siddharth Malhotra Kotak Securities. ]

Sir, I just wanted some sense of the breakup of this CapEx guidance for 2027. So roughly this INR 3,200 crores, INR 3,400-odd crores, if you could help me understand different projects, maintenance CapEx, any other CapEx such as renewables, that would be very helpful, sir. That's my first question.

So I think in the -- I think [indiscernible] covered that INR [ 3,200 crores to INR 3,400 crores is the overall guidance, ] roughly INR 2,200 crores to INR 2,300 crores would be on account of the expansion projects underway. So I think balance is, by and large, our [indiscernible] CapEx in advance, that's the way it is. And any further details, we would rather avoid. I think our balance sheet will keep talking as and when we spend those...

Okay. So basically, the INR 1,000 crores, which is over and above the projects announced, basically, maybe we can split them half into maintenance CapEx and half into efficiency projects. Is that the correct way to think about it?

Also some lag...

This 50-50 is not the right way, but I think we can keep it at that and the INR 1,000 crores would be for our regular operations.

This will be a mix. This is a moving thing. There are return CapEx expansion, some small futuristic CapEx and maintenance CapEx. We don't want to split here beyond...

Understood, sir. And out of this total CapEx of like INR 6,800-odd crores for the 2 announced projects already, roughly what proportion of CapEx is the spending?

CapEx is spending?

Yes. What proportion of this INR 6,800 crores of CapEx is spending for us pertaining to these projects, which have already been announced?

We won't have that percentage handy. The way we -- the projects keep running and the payment cycles keep coming after a while. So what cash outflow has happened versus what is the progress done on the project are 2 different numbers. We won't have that handy, but I don't think you should worry about that. Just look at the commissioning outlook for the organization. We are on track, as we have said, and that's where we would want to leave it.

Got it. Just one small sort of query. Do we sort of expect any meaningful change in fuel mix to happen over the next, say, 2 or 3 quarters? Like is that something which is possible? And if yes, what would be the possible quantum of this shift?

Can you repeat the question, please?

Sir, are we expecting a meaningful change in the fuel mix to happen, say, away from pet coal, maybe higher coal mix, higher AFR? And if that is the case, maybe can we sort of quantify what sort of change in mix will happen, the fuel mix?

Situation is quite dynamic region-to-region, plant-to-plant, so I think any kind of guidance may not hold true after that...

But directionally, as pet coke get more expensive, we have to look at alternate cheaper and that's what we are doing was coal and pet cokes and alternate. That's directionally what we achieve.

[Operator Instructions] Next question is from Jainam Shah from Indsec Securities. Since there is no response, we'll move on to our next question from Saket Kapoor from Kapoor & Company.

Hope I am audible?

Yes.

Yes.

Sir, firstly, if you could give some color on the capacity addition for the industry as a whole for the year ending March '26. And what is envisage as the capacity addition for the current year in the pipeline, yes.

Saket, Prassan here. So if I just broadly talk about the entire industry, I think the cement industry is adding somewhere around 160 million to 170 million tonnes of capacity...

Sorry, sir, your audio is not very clear.

Saket, just to repeat again, I'm saying that for the industry as a whole, the cement industry is expected to add somewhere around 160 million to 170 million tonnes of capacity between '26 to '28. And out of that, around 40-odd million tonnes has been commissioned in FY '26 so far. So somewhere the balance of around 110 million to 120-odd million tonnes of the capacity is expected in the next 2 years.

And sir, in terms of the average utilization, if you could just give some color on how the utilization for the industry has been for year ending March '26?

So as of now, most of the companies are yet to announce the results. So it would be a little difficult to estimate that. But if I can state broadly, we have seen as a trend industry somewhere operates between 65% to 70% of utilization. And we believe that can be on a similar ballpark number this year as well.

And sir, as you alluded in your presentation about the benefits that we have garnered out of the cost reduction exercise. But now with the inflationary trends in pet coke prices and even industrial diesel prices being hiked earlier. So are these gains will be waned out in the times to come? Or what should be our trajectory in terms of cost reduction per tonne? I think so we did some very good numbers last year. So where do you see ourselves placed for the current year in terms of the inflationary trends which we are witnessing currently?

I don't know, Saket, how to answer this question. We have said we are chasing INR 50 to INR 100 reduction internally. This is our initiative. What happens externally is something that you will have to see and breaking our numbers as and when they come. So that's where we'll have to leave it for any modeling that we want to do. I think both these line items have to be modeled.

Sir, I didn't understand. Come again, sir.

I'm saying we are chasing internally, as we said, INR 50 to INR 100 cost takeout every year. That's internally what we want to chase. What happens as an external impact in terms of inflation and headwinds, you will have to factor in as and when they come in...

You are correct there. But what I was trying to make sense is how have the inflationary trend affected our gains that we have booked last time because of the cost reduction exercise with the type of inflationary trends currently we have, how much have that being mitigated?

I think you can look at the right-hand side of the chart where you have shown adjusted numbers for the Tamil Nadu sales and pet coke. I think that is the right way for you to understand our [indiscernible] performance.

And as [indiscernible] covered in the remarks [indiscernible] that we expect about INR 120 to INR 150 increase in the coming quarter, which is imposed on us by the...

Next question is from Indrajit Agarwal from CLSA.

I have one question -- actually 2 questions. One, how has the demand trend been in April so far? I know it's too early, but given the price hikes across commodities, are you seeing any weakening of mainly ISB demand?

I think demand in April seems to be holding up. In cement, we have usually seen based on our past experience that even if there is a slowdown, it takes some time to [indiscernible] the slowdown in the industry. [Foreign Language] because existing projects keep getting completed, the new projects could get deferred. And similarly, when the economy picks up for acceleration maybe that, I think it's too early to decide whether there's a slowdown or not in April. I think the effects in my view, will get visible in probably a couple of quarters. So in month-to-month [Foreign Language] I don't think we can conclude any. I think maybe H2 will be the real test of what's going to happen. It's too early to say right now.

But as Puneetji mentioned, for the full year, we are looking at a decent demand. So we are hopeful. And anyhow, we had a little lower -- lesser base also last year in quarter 1 and quarter 2 on account of high -- let's see. We are optimistic on the demand scenario.

Sure. And we are confident of growing ahead of the industry for F '27, right?

Yes.

My second question is on availability of key raw materials like, let's say, pet coke, which is imported or PVC granules. Are you seeing any issues with that pricing aside, but is availability of some of these raw materials are concern now?

The cost has gone up and supply disruptions we have been able to overcome through timely interventions. We have not faced issues in terms of availability. I don't foresee that problem to come, but cost cannot be controlled at this.

Sure. And one more, if I may. What would be the sensitivity of freight cost to diesel price increase? Let's say, if there's a 5% diesel price increase, pump price increase, how much could the freight cost go up?

Typically, I think you have to use the formula, every 5% jump is INR 15 per tonne cost roughly. That's the ballpark.

So 5% rise in diesel price is INR 50 per tonne in cost.

INR 15.

And just to your first point, what Dharmenderji said, I think the situation in March was a little tough for the industry. I think we take a lot of pride in the way we have been able to navigate the month of March and without taking too much pressure on cost, at the same time ensuring regular supply. I think we have played this game well, and we are confident we will continue to do...

Next question is from Harsh Mittal from Emkay Global.

First question is that in the Slide #11, we have mentioned that our limestone reserve is more than 48 years in the Southern region. So sir, as per public data, we have seen that Dalmia has been selected as the preferred bidder in multiple mines in Tamil Nadu in the month of February this year. So does these reserves include the reserves won recently?

Yes...

So what would be the quantum of the reserves which we have added, if you can share that data?

Quantum. I don't have it offhand, Harsh, maybe we can share with you separately.

Okay. Second question, sir, our cement and clinker, there is a mismatch in the -- particularly in the Northeast region. So do we expect any grinding capacity addition in the east region as part of your 72 million to 75 million tonne plan?

Yes, Harsh, I think you can expect that. But let us wait for more announcement. But yes, you are right, and we might be looking at a grinding capacity...

Any -- the size of the grinding capacity, sir, if you can -- will it be 2 million tonnes, 3 million, 4 million, any capacity if you can just share?

I would suggest let's wait for the opportune time to have a chat.

Next question is from Rajesh Ravi from HDFC Securities.

Two questions. One, if I -- am I audible?

Yes.

So if I look at the change in the assets on the annual basis, I see a number of much higher number of around INR 3,500 crores whereas the CapEx outflow has been close to INR 2,000 crores for the full year. Could you reconcile why there is a sharp difference of INR 1,500 crores between the 2 numbers?

Rajesh, I think there is one more line item that you need to look at, the other financial liabilities. A lot of CWIP that we have incurred during the year is still standing as payable in our books. And that is actually one reason that the guidance we gave earlier in terms of the cash outflow on CapEx is much lower in this quarter. And as we were -- we all know towards the end of this entire geopolitical situation started. So I think we have just deferred our cash flows a bit, and that is sitting in our liabilities, and that should get sorted in the next couple of -- a few months and quarters.

Understood. So this INR 3,300 crore CapEx outflow which you are targeting for FY '27, that includes this one or this will be over and above the INR 1,000 crore odd whatever number? Which is sitting as liabilities in FY '26?

Actual number includes the liability of this year, which will get paid up next year.

Okay. So fresh CapEx amount would be much lower. Is this understanding correct for FY '27?

This would be slightly. So you might -- we would actually see the opening closure in a similar rate?

Okay. Okay. And last question from my end would be on the recent news going on, that is [indiscernible] has filed -- has tried to reopen the mutual fund case. And I think [ MCA ] has initiated or have instructed relevant bodies to reinvestigate. Could you please throw some light if there is any progress or you have, as a company, received any notice from the relevant authorities?

Yes, we can't be responding to rumors. If there is anything that has to be reported, we will report it in the proper manner. Right now, we...

So nothing will come at the company level?

Cannot receive any committee...

Next question is from [indiscernible] from [ Sequent Investment. ]

Am I audible now?

Yes. Please go ahead.

Sorry, I was on mute. So I have only one question. Most of the questions have been answered. So sir, you mentioned we have took a price hike in April, which all the cost has been passed on. So if you can quantify what is the total price hike we have took in April so far?

We are still in the middle of April. I think we have already said that so far, we have been able to pass on the cost increase through price hikes. And hopefully, we should be able to maintain it and there should be no margin compression.

[Operator Instructions] Next question is from Shravan Shah from Dolat Capital.

Sir, our CC ratio, if I look at last 2 years, almost it has declined from 1.7% to now 1.6%. So any specific reason? And will it remain here or we will try to increase...

I think, again, it's a dynamic situation. We will take a call market-to-market. But our long-term goal is to increase the CC ratio and [ decrease our CC. ] So quarter-on-quarter, I don't think we can look at this over a 3- to 5-year period. And our endeavor will be to improve it over a medium.

Yes, because I look at over last 2 years. So in 2 years, it has -- from FY '24 till FY '26 in almost 3 years, it has declined. That's what I asked you. I am not looking at on Q-o-Q. No issues. Last, sir, incentive for FY '27 in terms of booking would be around INR 200-odd crores?

Yes.

Ladies and gentlemen, we'll take that as the last question for today. I now hand the conference over to Mr. Puneet Dalmia for closing comments. Over to you.

Thank you. I think we've had a very good year in terms of profitability and a good quarter also. We've done the highest ever EBITDA over INR 900 crores this quarter, and we've crossed INR 3,000 crores for the first time. Our CapEx is ongoing. We are very optimistic about the future of the Indian economy, and we will continue to invest behind the growth in India. There will be headwinds along the way, and I've always said that this is not a straight go to paradise. There will be bumps along the way. We will navigate those bumps as we've shown resilience over the last 8 years. We've never been more excited about the future as we are now. And I'm also very happy that our executive committee and our team is coming together very well. So thank you for your interest, and I look forward to continuing this conversation in the coming quarters. Thank you.

Thank you, members of the management team. On behalf of Dalmia Bharat Limited, that concludes this conference. Thank you for joining us, and you may now exit the meeting. Thank you.