HeidelbergCement India Limited (500292) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Heidelberg Cement India Limited Earnings Call for Quarter and Year Ended 31st March 2025, hosted by PhillipCapital India Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vaibhav Agarwal from PhillipCapital India Private Limited. Thank you, and over to you, Mr. Agarwal.

Yes. Thank you, Michelle. Good afternoon, everyone. On behalf of PhillipCapital India Private Limited, we welcome you to the earnings call for the quarter and year ended 31st March 2025 of Heidelberg Cement India Limited. On the call, we have with us Mr. Joydeep Mukherjee, Managing Director; Mr. Anil Sharma, Chief Financial Officer; and Mr. Amit Angra, Head, Investor Relations and Vice President Finance of Heidelberg Cement India Limited. I would like to mention on behalf of Heidelberg Cement India Limited and its management that certain statements that we made or discussed on today's conference call may be forward-looking statements related to future developments and which are based on current management expectations. These statements are subject to a number of risks, uncertainties and other important factors, which may cause the actual developments and the results to differ materially from the statements made. Heidelberg Cement India Limited and management of the company assumes no obligation to publicly alter or update this forward-looking statement whether as a result of new information or future events or otherwise. Also, Heidelberg Cement India Limited has uploaded a copy of the FY '25 presentation -- investor presentation on their website and stock exchanges. Participants may download a copy of the presentation from these websites. I will now hand over the floor to the management of Heidelberg Cement India Limited for their opening remarks, which will be followed by interactive Q&A. Thank you, and over to you, sir.

All right. Good afternoon. I'm Joydeep Mukherjee, and I welcome everyone to this annual investor call of Heidelberg. I'll start off with the FY '25 key messages. Heidelberg Cement India Limited continues to produce mainly blended cement in its operations as a testament to our commitment to the environment and producing low-carbon cement. Our alternate fuel usage has increased to about 8%. It would have been higher if not for the main kiln, which was down for a month as it was being upgraded, and that's the kiln, which takes all the alternative fuel that we use in our plant. We have signed a long-term wind solar hybrid PPA for 5.5 megawatts in this period. Our share of non-grid power has increased to 45%. The EBITDA was INR 530 a tonne, which was down 20% year-on-year. We have been able to repay interest free loan of INR 694 million. Our bank balance and cash exceeds our borrowings as of now, and we continue to operate on a negative net operating working capital. And the Heidelberg Board has recommended a dividend of INR 7 per share after the Board meeting. On the ESG overview, 98%, as I said, our cement continues to be blended cement. On our CO2 footprint, our score is 507 kilos per tonne of cement that we produce. We are 4.4x water positive in our plants. As part of our CSR activities, we have improved 22,000-plus lives in this period. And green power constitutes more than 1/3 of our total power consumed. So we have the green power PPAs supporting increase in our green power share. On Jhansi, we have a long-term solar PPA for 15 megawatts. Narsingarh operation, we are operating on 12-megawatt waste heat recovery and a 5.5 megawatt solar project. And Narsingarh & Imlai, we have a long-term hybrid PPA for 13.5 megawatt wind and 13.5 megawatts solar. And our factory in South India, Ammasandra, we are consistently operating there at more than 90% green power. Our income statement, the notable thing to see here is that our quarter ended PAT is up hugely over the last quarter, last quarter was bad, but quarter ending March, profit after tax stood at INR 504 million, which has been a fairly good performance. Sales volume has been down this year, and it's directly ascribable to -- we have had an exceptional year in terms of the elections, and also a little bit because of our expansion and little volume was impacted, but mainly the elections followed by severe monsoon in the area that we operate led to a decline in volumes. If we look at our quarter -- March '25 quarter, EBITDA bridge, March '24, the number was INR 721 per tonne. And March '25, it is flat at 722. And while our gross sales revenue increased, we had a little bit of a negative impact because in raw material, we have had an increase in cost of INR 41 a tonne, but this is a onetime impact because it was -- during this time, for almost a month in this quarter that our main kiln, which contributes to more than 60% of our total volume was down and this was because there is an expansion project, which was going on. And we are still executing the project, and it's going to be fully over by the month of June, and that will give us around 200,000 tonnes of cement extra in a year. And it was because of this shutdown that we had to buy as a onetime exception some clinker from the market, which has contributed to this increase in raw material. And otherwise, we would have had definitely higher EBITDA in this quarter per tonne as compared to the last quarter. In April '24 to March '25, EBITDA decreased from INR 659 to INR 530 a tonne. This was mainly due to decrease in prices on the pressure period of -- which started from April, May and continued until November. So there was INR 163 per tonne dilution in prices. And though we had an upside of INR 79 in raw material and INR 58 in power and fuel, overall, we did end up with a lower EBITDA of around 20%. The balance sheet continues to be healthy, and we continue to work on negative working capital, which is a very good sign for us. On cash and bank balances, our net cash far exceeds our debt. So this also is a very healthy situation. We have INR 687 million of debt and INR 3,849 million as net cash. So it's a very comfortable position. Nothing to comment there. The dividend payout has been consistent, and it has been driven by operational cash flow. And as we have already mentioned, the proposed dividend is 70% of face value of INR 10 per share. In April '24 to March '25 share of volume. If we look at -- if we split the pattern -- the sales pattern, we'll have 44% of our total sales has happened by road. This was flat year-on-year. 43% of our trade volume has come from premium products. This is almost 9% up from last year. On alternative fuels, we are at 8%. This was flat, but then again, during this entire period, almost 2.5 months, April '24 to March '25, the kiln, which actually uses AFR, our main kiln was being upgraded and was not operational. So the AFR number looks flat, but we could have done much better because the supply side is completely tied up and we are -- we hope to have a significantly higher number next year. 80% of our trade sales is -- percentage of trade is 80%, is down 1.8% year-on-year. But we are continuously increasing our premiumization and optimizing appropriate product mix in the market. On the Indian cement demand, here are my comments. We have significant tailwinds. GDP forecast -- growth forecast indicates 6.3% to 6.8%, and this means that India still will continue to be one of the fastest-growing economies. Domestic demand shall remain the primary engine of growth. And with a rebound in private consumption and capital expenditure, we are pretty confident that the demand shall be good. At the same time, the housing and infra, the major consumers of cement are anticipated to continue driving demand. The monetary easing and capital focused fiscal policy are -- we expect that it will sustain momentum. And inflation is expected to stay within a manageable range supporting macroeconomic stability. On headwinds, we do have geopolitical uncertainty, ongoing global conflicts. We have recently come out of a near conflict, which got resolved pretty quickly, but all this could create tensions and create volatility. There is also some indication of a global economic slowdown. So softer global growth could impact India's exports and investment inflows. And of course, the cement capacity expansion, where we operate, could further intensify competition because we've just seen Shree Cement starting off their project at Etah and UltraTech also 5 million tonnes in Katni, very near where we operate. So near term, we see intensification of competition. But thankfully, the markets in which we operate are good consumers of cement, and there is a consistent growth. Over the last 10, 12 years, 15 years, this area has seen very steady growth in demand driven by rural consumption. So over the mid and the long term, I would say that this remains healthy and is a good news for us. So that's all from my side in terms of my opening comments. And I will now open the floor to questions that we have from the audience. Thank you.

[Operator Instructions] The first question is from the line of Rajesh Ravi from HDFC Securities.

Yes. Sir, could you throw some light on the -- what is the progress on expansions and also the status of the clinker and cement debottlenecking, which was scheduled to happen in FY '25?

I just commented, this is why our main kiln was shut down. This project is well under its way and expected to be over -- completely over by June.

Okay. And what will be the expanded clinker capacity? Or what is the debottlenecking which is happening?

This will lead to 200,000 tonnes of extra cement in a year, in 12 months.

Okay. Cement or clinker, debottlenecking?

It's a clinker debottlenecking, which shall result in additional 200,000 tonnes of PPC cement in 12 months.

Right. So clinker capacity would go up by how much, sir?

130,000 tonnes of clinker will increase.

Okay. And sir, what are the plans on future expansions? We haven't seen any progress for the last 2 to 3 years on the same for the western market. Would you...

We have -- we definitely have plans. We have acquired new mines in Sukha Satpara, and work is now going on, on identifying on the proper project site. So yes, that is very much on the anvil.

And in addition to that also in Gujarat, environmental clearance is also going on. I think there is good progress and maybe we will have some positive news from the government of Gujarat.

So on both accounts in Central India, we have acquired new mines, and we are right now undertaking a study on the correct location for the new line. And on Gujarat, we are following up with the government on quick resolution on the environmental clearance issue.

So by when and by what size capacity additions you're looking at in Gujarat? This is the current development?

I will not be able to make a comment on that right now. It will all depend -- after we get the EC only, we'll make an announcement.

Okay. But post EC, how much time it would take you? I understand EC is not in your hand, by when it can come through. But whatever is within the company's control, at least you can guide on that?

I've not understood your question. Post EC, it normally takes anywhere between 26 to 30 months to build a project.

Right. Okay. And you have not finalized on the CapEx size?

No, not as yet.

Okay. And secondly, you mentioned there's a central market you're expecting more competition to intensify. So could you first elaborate what is the price improvement that we have seen in Q1 versus Q4? And what is the impact you're looking at, at a company level? Or what are the cost levers you are looking to mitigate the impact?

No, we are currently running at a net sales realization, which is about INR 100 up from the average of Q1. But what will be the impact of these expansions, that's crystal ball gazing. I would not like to make comment on that. It will all depend on how quickly the competition decides to ramp up, and how is the demand-supply situation -- fundamentally how is the demand driven by government policies and the rural demand, et cetera. So hazarding a guess on what will be the impact on pricing in the market is not something that we are in a position to do.

Okay. And any thoughts on the volume growth for FY '26?

When you say cement volume growth?

Your company sales volume growth for FY '26, what sort of a number you're looking at?

Well, we are certainly looking at -- because we are almost sold out in the sense that our capacity utilization is running around 85%, 86% already. So till the time we have additional, what you call, clinker capacity, I would say around 6% to 7% is definitely what we are targeting as a growth in line with the cement -- with the GDP growth and overall cement growth in India.

Because Rajesh, you know we confirmed that this -- our additional cement of around 2 lakh tonnes that is going to come in the current fiscal year.

Yes, that will get absorbed.

It will get absorbed and it is around 4% to 5% of our existing volumes. So we expect that we will be able to sell out that segment in the market.

So the guidance would be anywhere between 6% to 7%.

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

Yes, sir. So just continuing the previous question. Sir, you mentioned that you have acquired a mine in Central India. So is it in MP or UP?

It's in MP.

Okay. So are we -- in terms of giving a preference, in terms of the expansion, will it be a Gujarat first or the central first?

Both will happen concurrently. Gujarat is dependent on the EC that we are still awaiting from the government.

Okay. But do we see that EC can come in next 6 months, that's the likely scenario?

It's completely speculation. We will not be able to comment on this because it's on the government. We are doing our best. We are following up hard, but unfortunately, things in the government department in India take their own sweet time.

Okay. And for Central India also, if we want to go ahead with the expansion, any rough idea? Will it be a kind of a 1 million tonne or 2 million or it can be -- how much size one can look at in terms of expansion?

Again, we have not been -- we have not finalized the project. Right now, we are looking at an ideal project site. That site has to be ideally placed for good access to railways, et cetera, evacuation. But any modern clinker plant could be anywhere between 2 million to 3 million, 3.5 million tonnes. But right now, I would not be able to hazard an exact number. It will all depend on the location and the kind of land that we can get.

Yes, but the Central [Technical Difficulty] let's say, if we have to actually start and broadly if somebody wants to look at in terms of when it can start, at least one can say that minimum 3 years, it will take to start the actual production in terms of the cement?

Yes, that's right.

Okay. Got it. And sir, you mentioned that the INR 100 realization is increased versus March exit or fourth quarter average.

Right now, we are running at a price which is up by INR 100 over the average of first quarter.

Okay. Got it. And lead distance for fourth quarter and for FY '25 and maybe possible for FY '24 is how much?

I'll have to have a look at that number. Just hold on. Do you have the number? How much is it? Tell me?

367 for quarter 4. And for the full year, 362.

For quarter 4, it was 367 and for the full year, it was 362.

There is no major change in the region. More or less, we are working in same geography of the Central India.

Okay. And in terms of the kcal cost for fourth quarter, what was the kcal cost and possibly for FY '24 and '25, what was the average kcal cost?

It is actually -- kcal cost, it is around INR 1.75 per kcal in this year. And this is also more or less similar to the full year. Pet coke prices starting will be higher, then it reduces, now it is again further hardening. So our fuel cost, if you see the entire year slightly better than the financial year '24, but it is more or less steady.

Okay. So for full year, FY '25 , it is INR 1.75 and even for fourth quarter FY '25 also, it is the similar, INR 1.75.

Yes, that's correct.

Okay. In terms of the green share, if you can -- I understand we have given the individual plant level. But in terms of the overall share perspective, if you look at for fourth quarter and FY '25, what was the green share and how much now one can look at this green share can go up?

We have given here is the non-grid power which is full year, it is 45%, and for the fourth quarter, it was slightly higher, it was 46%. But when we talk about the green power, fourth quarter it was 38%. So we purchased little power from the open market. So that's why in the presentation, you find that there is one data for the green power and one data for the non-grid power.

But when we say it is a non-grid, does that mean the entire -- non-grid 45%, so this entire is a green or something -- we also have some TPP plant or thermal power plant?

45% out of that, it includes the green power and the power purchase from the third party open market, but the pure green power is 38% out of 45%.

Okay. And lastly, two things. CapEx for FY '26, how much are we looking at? And also on the employee cost, which has significantly increased, INR 32-odd crores was there in third quarter and the fourth quarter was INR 48-odd crores. So how one can look at from -- is this the quarterly run rate? Is this the sustainable run rate that one can look at?

No, no. That's okay. Anil responds.

On the CapEx side -- actually, annual CapEx for the financial year 2026, we estimated around INR 60 crore, which includes a little bit on account of debottlenecking because most of the debottlenecking CapEx already we did in -- by March 2025. Part amount will come in the financial 2026. The rest is the replacement CapEx. And this amount, it is more or less sustained if you compare our CapEx total amount incurred during the last 2 to 3 years. Your specific question on the staff cost. Year-on-year, it is more or less the same line, the amount increase in the financial year 2025 last quarter is on account of increments when we compare with the March 2024 quarter. But there is the increase as compared to December because 2 reasons are there. One is the actual valuation. When we do the annual actual valuation end of the fiscal year, depends on the discount rate, the gratuity and the leave encashment, the accounting amount -- accrue amount increases. So earlier the discounting rate was higher. Now it is reduced because of the G-Sec return reduces. And second thing is that in the March quarter, when we calculate the variable pay amount, then the amount is slightly higher than the December quarter.

So to summarize the full year number for employee cost is INR 157-odd crores. So is it fair to assume that on a yearly basis, for FY '26, one can see a INR 170 crore kind of a number?

It could be slightly lower than that.

[Operator Instructions] The next question is from the line of [ Alok Shah ] from [ SRE PMS ].

Yes. So my first question is that can you quantify that each and every megawatt of green power we increase, that will result in increasing the EBITDA per tonne going forward? And second question is there any plans for FY '26 for increasing the green power energies?

Green power, you know that, okay, we have the cost arbitrage when we compare with our grid power because whatever the green power we are purchasing, that we are replacing with our grid power and generally it is 25% cheaper than the grid power. And you are right that with every increase in green power, our EBITDA directly -- we benefited and EBITDA will increase. You have also asked the second question, how much in green power you are going to make in the financial year 2026? So we expect that maybe around 2% to 3% increase in financial year 2026 because we have recently entered into this 5.5-megawatt further green power and that benefit will come in the financial year 2026.

Yes, but sir, can you quantify the EBITDA per tonne that can increase per megawatt?

You'll see that, okay, once we start receiving the additional power, but we can confirm that it will improve the EBITDA per tonne.

[Operator Instructions] The next question is from the line of Rajesh Ravi from HDFC Securities.

A follow-up question. Could you share what was the clinker production for full year FY '25 and '24?

You want to know the total quantity?

'24, '25?

Yes.

Our total clinker in the 2025 fiscal year is 2.7 million tonnes. And last year, for '24, it was 3 million tonnes.

Sorry, 2-point?

2.7 million tonnes in the current financial year ended financial year 2025. And last year, it was 3.0 million tonnes.

And sir, when you mentioned your per kcal cost was INR 1.75 and this was flat throughout the year, Q4 as well as FY '25. I was just wondering, because for all players, we have seen this cost to be trending lower versus Q1 to Q4. Most players are now reporting close to INR 1.5. So do we have a different type of fuel mix, whereby the cost was flattish throughout the year and also on the higher side?

No. That is not the reason actually. We use 3 type of the fuel: pet coke, coal and the alternative fuel. So pet coke prices started with the higher prices in the fiscal year, then start reducing and thereafter end of the year, they will start again hardening in the market. So that's why our -- the last quarter, the fuel was slightly higher. And the coal depends upon whether you receive from the collieries or whether we buy from the open market. The start of the year, we purchased the coal from the open market as well. And thereafter last quarter, we received some amount of the coal and that is applicable for most of the Central India players that receive the coal under the fuel supply agreement from the collieries. So the March quarter was more or less similar to the full year. But yes, in the December quarter and in the September quarter, fuel prices -- our fuel prices also were lower.

Sorry, I missed the last sentence. In December and September quarter, you fuel costs were?

That we will check and let you know.

Okay. And also, if you could share what was the fuel mix for the quarter and year, pet coke domestic linkage coal or...

Our alternative fuel mix is around 8%, rest is pet coke and coal. And generally, we consume pet coke around 60% to 70% and the remaining will be our coal.

And when you say collieries, everything is linkage or it's an e-auction coal, sir, for you, the 20%, 30% mix?

It is auction coal, but under the fuel supply agreement -- long-term fuel supply agreement.

[Operator Instructions] The next question is from the line of [ Alok Shah ] from [ SRE PMS ].

Sir, just a follow-up question on green power. So I just want to understand that generally, cement companies do CapEx in the green power, and we are doing for power purchase agreements. So any reason behind that?

We are talking the same thing, the green power purchase agreement is the green power.

What is the question? I didn't understand. Our purchase agreement is green power. So you have 2 choices. You can either set up your own plant or you can participate in equity and purchase.

So my question is that we are purchasing rather than investing in green power. So any reason behind that?

[ Alok ], just to maybe clarify. We are investing under the long-term power purchase agreement, and we get the green power. It is not like that we are purchasing power from the open market, which is the -- which is not the green. So we are talking about this power purchase agreement, which is the green power only.

Alok, what we're trying to say is full CapEx. So we are -- you can say, on a little bit of asset-light model, which gives us a better capital allocation, number one; and a lot of flexibilities when you are in a larger, let's say, special purpose vehicle to kind of increase your offtakes and mitigate your risk as well and a lot of banking possibilities, which comes through when you are doing a PPA route versus your own CapEx, on-site CapEx, if you are referring to that.

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

Sir, for entire FY '25 in terms of the thermal energy, that is a kcal per kg of clinker, is this how much, 740-odd?

What is the number?

It will be less than that.

Any idea of where it could be 720, 730?

726.

726.

Okay. And then in terms of the power requirement per tonne of cement would be how much? 66, 68?

Total power consumption per tonne of cement?

Yes.

Yes. So per tonne, roughly the range is from 62 to 72. So I just wanted...

72.6 will be our power consumption per tonne of cement.

Okay. And then for us in terms of the grid power, cost would be INR 6 currently?

Slightly higher. Grid power, now it is around INR 7.

Okay. And then the PPA that we are doing would be closer to or INR 4 odd.

Yes, you can say total blended cost is around INR 4.5.

INR 4.5. And sir, we used to be 100% blended cement. But this year, we are at 98%. So have you started the OPC cement now again?

Yes, we have. Not again, we have started for the first time. But yes, we have.

Yes. So any specific reason to start OPC?

Yes, because there are a lot of road projects, which are happening around our plants, and we wanted to participate in that.

So will this 2% can inch up to 5%, 10%?

I would not like to hazard a guess on that right now. OPC is not our core strategy. That's all I can comment. It's a purely situational play.

The next question is from the line of Harsh Mittal from Emkay Global.

Sir, my first question is, how has been the demand faring in the first 2 months of quarter 1 compared to the quarter 4 given that there has been a lot of -- the monsoon has been a bit unfair in many parts of India. Can you give some color?

Your voice was not clear. Can you repeat your question once again, please?

Sir, I request you to use your handset, please?

Yes, it's a little clearer. Yes, you can tell me now.

Is it clear now?

Yes.

Sir, my question being that how has been the demand faring in quarter 1 FY '26 in the first 2 months of the quarter 1, given that many of the regions in India have been facing a lot of heavy rainfall. So can you give some color on that demand scenario?

Well, the demand is still muted. The demand as compared to March is muted because there was a season for marriages, et cetera, and labor was not available and there were unseasonal rains. So I wouldn't say the demand is extremely bad, but it's muted.

So you see -- so is it lower than what it was previous -- same quarter previous year or higher than that?

I would say, at the same level. April was lower, May would be at the same level than last year.

And second question, sir, what is the current difference between the trade and non-trade prices in Central India, if you can throw some light on that?

No, there's -- I can't give you a number because that varies from place to place. Somewhere, it is -- it could be as low as INR 15 a bag and other places, it could be as high as INR 60, INR 70 a bag. It depends on which location. And since I do not know how -- what is the footprint of my competitors' non-trade sales, it would be very, very unfair for me to hazard a number as a guess. But as a guideline, I can tell you, it differs -- it varies from INR 50 to INR 60, INR 70 per bag.

And sir, last question, can you give me the current clinker and cement capacity for Heidelberg?

Clinker capacity at this moment is 3.1 million tonnes and cement capacity is 6.25 million tonnes.

Clinker, I could not hear, sir.

3.1 million tonnes, which is now going to be expanded, and that project will be over in June.

[Operator Instructions] The next question is from the line of [ Dhiraj Dave ] from Samvad Financial Services LLP.

So my question is, in the past, there was a discussion that Heidelberg Group wanted to add up Zuari and also trying to kind of restructure the companies -- various companies which they have in India. Any update you would like to give -- update to us about what is your thought process now and where we stand?

No, we are still evaluating. And though it's not part of this particular call and it's not related to our listed entity in India, I am happy to announce that the group has invested in a 2 million tonne clinker expansion at Gulbarga. And that project is well underway right now. And we are considering various options of how to do the structuring. I mean, that will involve merger of -- potential merger of that company with either Zuari or with Heidelberg or it could be a 3-way merger, we are still working it out. It's only -- we'll have to see how that -- we haven't decided. But it's a timing issue. Eventually, we will have to do it. But with this expansion, the entire process will get accelerated.

Okay. So any time line, kind of a year or so or it can take longer than that?

I think by the time it is over, it should be at least 24 months from now, but the process is already on.

And the second part is, this time, our dividend payout has already been higher than kind of full year EPS. So shall we assume -- I mean, any idea on what is going to be our dividend payout policy when we are looking at expansion? We have sufficient liquidity, but any thought of amendment of this?

I didn't understand your question. Can you repeat your question once again?

The dividend payout of INR 7, basically is higher than our EPS. Payout is almost more than 100%. So any thoughts -- should we expect same kind of dividend distribution? Or we should see a decline given that we are going for expansion end of it?

No, no. The dividend payout is a decision which is taken before the Board meeting at the relevant time. It also depends on what is the kind of earnings or what is the cash that you need to retain for expansion projects and what you can pay out. We can't comment on what is going to be the dividend payout in the future. But if you look at it, roughly, we have been navigating between 70% to 90% levels over the last 3 to 4 years. So you can expect that it will remain in the same range unless and until there is a very, very significant requirement of cash for expansions.

Ladies and gentlemen, we will be taking last 2 questions, which is from the line of Shravan Shah from Dolat Capital.

Yes. Sir, the AFR, you though mentioned that it was -- it could have been higher because of the clean expansion. How one can look at where we can increase this AFR in, let's say, FY '26, '27?

Well, I can't give you a number right now. But the strategy of the company is very definitely centered around AFR. A very large portion of our CapEx allocation goes behind increasing alternative fuels and specifically increasing usage of biomass because that directly impacts the carbon per tonne of cement. But if you -- if I were to hazard a guess, maybe this year, we are going to finish with around 1.5% to 2% higher numbers than what we have done, that 8%. So we should be ending this year at about 10%.

Got it. And then in terms of the premiums, that currently we have 43%, where we want to increase and also the -- in terms of the price gap between the premium cement and the rest of the products for us is how much?

INR 40 to INR 50 a bag.

Okay. And this 43% premium, sir, can go how much?

Can go up to 47% this year.

Okay. And just a rough idea, I understand you mentioned that we do not want to specify in terms of how much expansion we want to do in terms of the size. But any broad idea in terms of the -- obviously, this would be -- need a decent CapEx, whatever we will be doing, 2 million to 5 million tonnes, whatever expansion. So in terms of the currently that we have the net cash, obviously, most likely to become a net debt company. So any idea where we can have an upper limit in terms of the net debt-to-EBITDA or any other parameters?

No, no, we don't look at it like that. It will depend on the size of the project that we announced. And I think I already answered the question. You could expect anywhere between 2.5 million to 3 million tonne kind of a project. And then you can calculate what is the cash required. But we don't have a problem with cash at all. We are virtually a debt-free company. So we have no issues with funding the project.

And you also recall that in the past, when we did the Damoh expansion, that time also we were the net cash balance and we borrowed money for the expansion and then we paid it. And the same situation -- same thing we can follow. So money should not be any issue. We are carrying at this moment, INR 400 crore, INR 500 core bank balance. And once we announce the expansion, then accordingly, that money will be utilized and further accrual also will go to the project. And remaining amount, we can borrow from the market, we can borrow from the group.

No. So I was -- why I was wondering is because the -- as we mentioned, that we can simultaneously do the central and the Gujarat one. So put together, it would be a 4 million to 5 million tonne kind of expansion. So roughly, if I put a number close to INR 700 crores, INR 600 crores, so kind of INR 2,500-odd crores kind of a number would be there, CapEx. So that's why I was trying to understand.

No. Both projects are very different. It will be obviously phased out in terms of timing because in Gujarat, you also have -- the evacuation is very different. It's not road. It's primarily by sea. So we will have to see how we schedule both the projects. But as Anil said, source of fund is not a problem. We can have investments from the group. We can raise debt. We have a very good balance sheet. So I don't foresee any problems with that at all.

Also, this CapEx is required during next 3 to 4 years.

Yes. So it will be phased out also. It's not at the same time.

This will be the last question for today, which is from the line of Rajesh Ravi from HDFC Securities.

Just one strategic question. We were among the pioneers in terms of margins or rather one of the leaders in terms of our margin profile. When we go into FY 2021, more than INR 1,000. Now we have gradually -- this is almost half to INR 500-odd in FY '25, a decade low. So what has actually gone wrong? You are already very decent on your green power, on your cost metrics. You have 40% plus of your sales coming in from premium cement. So where is this margin getting significant beating? I understand this year, there has been a like-to-like pressure on the -- because of the realization. But even on a small base, a lower base, the margin has come off. So any larger picture thought and how we are looking to correct this?

Well, it is structural. If you look at it, there are 2 big impacts that have happened in the market. One is when you look at the 2 biggest cement players in the market, the premiums over us have come down from INR 30 to INR 5, INR 10 at places, and in certain places, they are actually equal to or even lower than us. So this is a huge pricing pressure in the market and the pricing has got diluted. Secondly, when you compare, it's very difficult to compare us with other players because every player virtually when you speak of, it has the advantage of a geographical arbitrage across India. We don't have that. So it's not a like-for-like comparison. And the third reason that I can speak of is when you again compare, most of the new plants -- when they set up the plants, they have a huge amount of government SOPs. We have not announced any new projects as of now. So when you look at anywhere between INR 500 to INR 600 SOP coming in from the government on per tonne on new investments, which is capital linked, that definitely helps to bolster the EBITDA at a company level, which is not the case in our case. So I would just leave your question with these 3 answers.

And maybe, Rajesh, I can add one thing. When you see the result of most of the cement companies during the fiscal year 2005 (sic) [ 2025 ] as compared to 2024, the reduction in the EBITDA per tonne is more or less in the same range for all cement companies. And obviously, the reason everybody knows that, okay, prices have been -- because of the intensified competition, prices have reduced.

If you take the 4 quarters of 2024 calendar year and you take our EBITDA per tonne and compare it with the biggest companies of India, and I'm not talking about UltraTech, you will be pleasantly surprised. You shall be very pleasantly surprised.

Okay. Sure sir. We'll do that evaluation also.

Thank you. Thank you very much. I think with that, we'll conclude the call, and all the best.

Ladies and gentlemen, I will now request Vaibhav Agarwal to give us closing comments. Thank you and over to you, sir.

Yes. Sir, before I conclude, I also had one question, if I may. Sir, it's an extension of what Rajesh actually just asked you. So sir, if I look at our realization picture...

Vaibhav, I'm sorry to interrupt you. The management has already disconnected.

Okay, no problem. Thank you. I will connect with them separately. No problem. Thank you. They are out of time. Okay, no problem. On behalf of PhillipCapital, you may conclude the call. Thanks very much, everyone, for joining the call. Thank you.

Thank you very much. Ladies and gentlemen, on behalf of PhillipCapital India Private Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.