Nuvoco Vistas Corporation Limited (NUVOCO.BO) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Nuvoco Vistas Corporation Limited Q3 FY '26 Earnings Conference Call. [Operator Instructions] I now hand the conference over to Mr. Bishnu Sharma, Head of Investor Relations from Nuvoco. Thank you, and over to you.

Thank you, Gracy. Good evening, everyone, and warm welcome to Nuvoco's Q3 FY '26 Earnings Call. The results along with the earnings presentation has been uploaded to the stock exchange website yesterday, and I hope you had a chance to review the key numbers. Let me first share the key highlights for Q3 FY '26, after which we will open the floor for questions. The quarter began on a challenging note, but as we progressed, we started to see encouraging signs of recovery in overall demand. This improvement was particularly visible in the latter part of the quarter as the impact of earlier macro headwinds begin to subside. Encouragingly, capital expenditure by both central and state government seems to have gained momentum, supporting infra activity and cement demand. With this gradual pickup, the broader demand environment appears to be strengthening, setting a constructive tone for the quarters ahead. That said, a significant portion of the plant spending is yet to be executed, around 45% of central CapEx and nearly about 61% of state CapEx remains spending as of November 2025. The healthy pipeline of pending projects gives us comfort that this traction could continue in the coming months. Additionally, as an above normal monsoon, a softer interest rate environment and growing consumer confidence, particularly in rural areas, further reinforce our outlook for sustained demand growth going forward. Now turning to our performance for the quarter. We delivered robust results despite the early challenges from macro headwinds, as mentioned earlier. Volumes grew 7% year-on-year to 5 million tonnes, the highest Q3 volumes ever recorded in our company's history. December was particularly strong with volume growth of 20%, demonstrating our strong execution capabilities and the resilience of underlying demand. EBITDA for the quarter rose approximately 50% year-over-year to INR 386 crores, even as price moderated more than the benefit pass-through following the revised GST rate, coupled with macro headwinds. Our emphasis remains squarely on premiumization, cost efficiency, which significantly lowered the impact of the price moderation. We are pleased to report that the premium products sustained their share of trade volumes at a historic high of 44%, marking the consecutive quarter at this elevated level. We have consistently expanded our premium base over time. For the 9 months of FY '26, premiumization stood at 43%, reflecting a steady uplift of nearly 300 basis points over the FY '25 baseline of 40%. This establishes new stronger base for us going forward and will continue to support our performance. On the cost front, we continue to efficiently manage our operational costs as we achieved the lowest blended cost in the last 17 quarters at INR 1.41 per Mcal despite the recent uptick in pet coke prices. Raw material cost per tonne, distribution cost per tonne also declined quarter-on-quarter, supported by operational efficiency gains. Coming to cement prices, given the improvement in demand conditions and positive outlook, the company undertook a price increase in January, which is expected to further improve our performance going forward. Let me now turn to the balance sheet. During the quarter, we raised INR 600 crores through CCD issuances, which were utilized to replace an equivalent amount of short-term bridge financing, thereby reducing overall debt levels. We expect to complete an additional INR 600 crores including CCD issuances in the near term to substitute the remaining INR 600 crores of short-term bridge financing. Our continued focus on a disciplined approach to debt management reflects prudent capital allocation and will support the company's growth agenda going forward. Let me briefly touch upon the Vadraj cement plant. The refurbishment and project execution remains on schedule with operationalization of clinker unit and grinding unit planned in phases from Q3 FY '27 to Q1 FY '28. To give you a quick update on our project execution, we have made steady progress in both Kutch and Surat. At this site, key equipment is undergoing extensive overhaul. The engineering, tendering and ordering of all goods and service packages at Surat are now complete, while activities at Kutch are progressing as per schedule. Deliveries on the electrical and instrumentation front remain on track for both locations and mechanical supplies have already started arriving at site. We've also applied for all the required permits to operationalize these plant in line with our planned time lines. On the logistic front, the engineering scale plan and detailed project report for the Kutch Railway line have been submitted to Indian Railways and the execution order is now at an advanced stage of processing. By the first half of FY '27, we expect to complete the overhauling work and equipment installation, followed by trial runs in accordance with OEM protocols. We will subsequently establish operations from the control room. Accordingly, during FY '27, Surat grinding unit and Kutch clinker unit will become operational, while in H1 FY '28, Kutch grinding unit will get commissioned. The East expansion projects of adding 4 million tonnes per annum in phases also remains on target. With the East expansion and commissioning of Vadraj plant, the company's total cement capacity will scale up to 35 million tonnes per annum. Post the ongoing expansion at Vadraj and the East expansion, the company's growth agenda will continue with a firm focus on balance sheet discipline. We have several strategic options ahead, including expanding our presence in the North through a brownfield project or pursuing a greenfield development in the Gulbarga region aimed at strengthening our position in the Western and Central markets. Furthermore, our recent preferred bid status for the JMKR2 limestone block in Jodhpur and Pali enhances our mining reserve base, providing a strong platform for future expansion. Lastly, to briefly highlight our ongoing digitization efforts, we have further strengthened efficiency and transparency throughout the operation. Our customer portal now handles approximately 99% of the total orders, offering real-time control and precision in order management. Following its success in cement, we launched customer portal for our MBM business, too. During the quarter, we introduced Nuvoco Zero M Unnati App under MBM to digitize influencer loyalty, driving higher engagement, greater transparency, efficiency and data powered channel growth. On logistics, the transporter portal now covers inbound and outbound logistics across all plants, delivering end-to-end visibility while minimizing manual interventions. That concludes my opening remarks. I'm here with Mr. Jayakumar Krishnaswamy, Managing Director of Nuvoco Vistas; Mr. Maneesh Agrawal, Chief Financial Officer. We are happy to answer any questions. Over to you, Gracy.

[Operator Instructions] We take our first question from the line of Jashandeep Singh Chadha from Nomura.

Am I audible?.

Can you use your handset mode please? Your line is not very clear.

Yes. Is it better now?

Please go ahead.

Congratulations on a good set of numbers, despite weaker pricing. Just wanted to understand a couple of things. Firstly, you mentioned that Nuvoco took a price hike in this month. So I wanted to understand when did you take that price hike and how much was the price hike? And is the price hike sustained in the market? First question was that. If you can clarify that, then I'll proceed with my next question.

Yes. I guess after quarter 3 in terms of pricing, January -- December onward demand improved and then sustained demand continues in January as well. So around 10th to 12th around that time, we have taken a price rise in non-trade across the geographies in the month where we operate and also in trade channel, we've attempted a price increase in East as well as North. We'll have to wait for a week or so to see whether the price rise, which we have taken sustain. But as of now, things look positive.

Okay. Good to know. And has the demand tapered off after the price hike or the momentum continues, which you saw in the first 10 days.

Other than the 14, 15, these are festive times. So I guess, I'll have to discount 2 days before and today. I guess demand good in the first 10, 12 days of the month. So give or take, I think, typically after Sankranti, demand improves in all the regions. So that's been the past trend. So it should continue to improve going forward as well.

Okay. My second question is on cost. Nuvoco has been giving impressive cost numbers. Now recently, we have seen pet coke prices are going up. So I wanted to understand in the fourth quarter, what will be the impact of that and going forward as well? And also, if you can shed some light on your CapEx plan, the amount for next year, FY '27 and '28? And how should we look at this?

Yes. As Bishnu mentioned in his initial comment, our fuel cost per million cal trended at INR 1.41 in Q3, which if you could have seen in the last many quarters, we have come to around thereabout kind of a number for a few quarters now. We will continue this trend. Already pet coke prices have gone up in the month of December and including -- I'm talking about the current trend of pricing. I guess in Q4, I'm still looking at a similar kind of number, give or take, a little bit of 0.01 or something like that, but that's all insignificant changes that may happen. These are basically backed up by 2, 3 aspects of the company. One is to work on our AFR agenda in North, the 2 plants as well as in [indiscernible]. The second one is using domestic open market coal. For the first time in the last many years, in the preceding quarter, we have started using a good amount of domestic open market coal in our North plants. And that's kind of helped us so over the cost lines of fuel in North as well as increase our domestic open market coal as in our East plant. And last but not the least, our focus has been to kind of reduce the pet coke consumption from high of 48% all the way it's come down to 41% now, which is an impressive number. With this kind of pet coke production, we would be able to offset the rise in pet coke prices, if any. And also, our teams have been very innovative in trying to use what they call power plant reject coal and as well as coal washery reject coal for our CPV plants, bringing down the power cost of CPP from close to about INR 0.9, INR 0.95 per million cal to as low as INR 0.78, INR 0.8 per million cal. So basically, substitute reduce pet coke consumption. Second is get increased focus on AFR and last one is to kind of work on CPP coal. With all these 3 initiatives, I think we should be able to delay the potential increase in pet coke prices at prevalent levels. In the unlikely event of a big time increase, I guess that's going to be a challenge for the entire industry. But as we see today, we have fuel stocks for a month or 2 right now. And with the fuel stocks which we have, we should be able to sail through quarter 4. And on the second point about CapEx plans, in the previous call, we had spoken about the overall CapEx outlay for the company. Obviously, we have the CapEx for the existing operations as well as CapEx for the Vadraj. So overall, this year, as of 9 months, we have spent close to about INR 320 crores of CapEx as of December. And the balance 3 months, we should be able to -- we should be spending close to about INR 200-odd crores. So for the full year, the CapEx outlook is coming anywhere between INR 620 crores to INR 670 crores.

Okay. And then if I can squeeze in one last question. A lot of advantages that you mentioned from low cost especially on cost front are in the Eastern assets. But when we start -- start Vadraj, a lot of these advantages will not be there. So in the initial years, can you give me sense of how much the cost might increase as capacity ramps up at Vadraj?

You're talking about what happens when Vadraj starts. Okay so Vadraj, look, anyway, Vadraj is going to be run on pet coke fuel for kiln similar to our Nimbol and Chittor. So the ballpark number will be same as what Chittor and Nimbol numbers in terms of fuel cost per kiln. The other advantage is Vadraj in that area, we have lignite. So the captive power plant is going to be based on lignite as a fuel. So when we have done the initial calculation, our energy cost for Vadraj plant other than the start-up challenge of starting a new plant, other than that, I guess, in terms of a somewhat steady state, our fuel cost, energy cost, it will also have a CPP similar to what we have in Chittor and Nimbol. So it's kind of a copy of our operations. So the cost lines of Vadraj in terms of power and fuel will be more or less same as what we get in Nimbol and Chittor as we start the plant.

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

So just a question on leverage. So in the presentation, I think you see you've shown debt at INR 42.7 crores and plus INR 600 crores as short-term bridge done in CCD. So just wanted to understand a bit more about the CCDs as to what are the conversion terms and by when does it come up for conversion?

During the last call and the one before, we have already said that now with -- no reach INR 3,500 crores to INR 4,000 crores that's when we kind of start our next expansion, which that's how we started the entire Vadraj process. And the entire fundraising bit for Vadraj was we had to pay INR 1,800 crores as an acquisition cost to Vadraj. So get that INR 1,800 crores funding, so we have started with INR 600 crores of long-term debt and another INR 1,200 crores of bridge financing till the CCD route was decided by the organization. So first, I'll explain the INR 600 crores. The INR 600 crores sits in this INR 4,217 crores as mentioned to in our investor presentation. The INR 4,217 crores debt level at December '25 has built-in number of INR 600 crores. So if you have to do a like-to-like comparison of our past periods, this number is INR 3,617 crores. And compared to December last year, it was INR 4,350 crores. That's the kind of debt reduction, deleveraging company has been able to do in the last few years. So INR 3,617 crores, add INR 600 crores, INR 4,217 crores and that INR 600 crores sits in our books as a long-term debt for Vadraj acquisition. We mentioned that the INR 1,200 crores will be in the form of a CCD. I will ask Maneesh to explain how we have gone about doing the INR 1,200 crores in two INR 600 crore tranches.

So in terms of the specific terms of the CCD, which is the tranche that has been done in the month of November as one of the queries. So basically, there is a call option and a put option as the part of the CCD. So Nuvoco will have the call option and we will have the right, though it's not an obligation to buy out the investor depending upon our balance sheet position at that point in time and the market condition. So basically, this call option is exercisable at the end of the fifth year, at the end of 5.5 years and at the end of the sixth year. So the CCDs are for a period of 7 years. And as I said, the call option is after 5.5, 6 years. So the INR 600 crores CCD Series A, this is into 3 tranches of INR 200 crores each that I've talked about, and it is mandatory. It gets converted into equity at the end of 7 years and it carries a coupon rate of 0.1% in the books.

Yes, INR 600 crores, just to pick up from Maneesh. So it gets consummated at 5 years plus. At that time, Nuvoco's balance sheet will be much stronger than where we are currently. So we have the call option at the time. And as Maneesh said, thing of INR 200 crores, INR 200 crores, INR 200 crores. The second INR 600 crores, we have still not completed the long-term -- short-term debt into CCD, I guess, due to year-end holidays in the market. So we are still under discussion, should be concluded in the coming days.

Okay. Okay. So what I understood is that it is compulsorily convertible into equity at the end of the seventh year?

That's right.

And what would be the price at which it gets converted?

So I think you can take these things offline or separately from the Investor Relations department. So as I said, it is a call option at the end of fifth year, 5.5, 6 years from the focus perspective. So the intent would be depending on the market conditions.

I think at that time, we should have a pretty strong balance sheet to kind of use the call option and repay the CCD. That's the idea which we have. In the most unlikely event, that's when I guess the put option will be exercised on the promoter group company.

Understood. So you are basically -- the idea is to essentially repay off this in the fifth year itself and through the cash flows that you will generate in this period? And not able to get the conversion into equity?

No, absolutely. That's the intention. I guess, as we speak, we would be 3 years from now at a CAGR of 7%. Obviously, the business will grow to a much higher volume and also with the volumes coming from Vadraj and with the overall what you call market opportunity, we should be able to generate much more cash and our balance sheet should be much stronger. And as I mentioned, with the kind of business projections which we have in place, we should also be able to fund the Vadraj CapEx through internal accruals, and then we should be able to retire this CCD. But I just want to mention one other point to you is many times I mentioned in our calls, almost all times I mentioned this particular point in the call, stating that as a company, we are comfortable operating the company with the debt levels of INR 3,500 crores to INR 4,000 crores. That won't continue to be -- we are not going to be going into the path of retiring all the debt. I'm sure if really business scales up to that level, this debt level also should come down, but we should also -- we would be able to -- we would be -- we have the ambition of growing the company beyond Vadraj as well. So I guess we are comfortable with the debt level of about INR 3,500 crores. And at the time with EBITDA coming, we should meet our covenant. And so we're targeting EBITDA to debt level around 2-ish at the time as well. So comfortable cushion to retire this CCD on a call option and still grow the company.

Sure. Just on the last question on the CCD bid. So in the fifth year, when you have the call option to buy the debt out, will it be bought out at INR 600 crores? Or will there be something additional that are required to be paid?

It has to be additional because that's how the whole structuring is done because all the so-called interest adjustment will happen into the principle of INR 600 crores, which is in the form of CCD. And then the payout will be happening on top of all the yearly compounded number when it comes to fifth year.

What is the implied interest? I just want to understand while I understand that this is a structured transaction debt?

No, what we'll do is to share this. So this should get into a long discussion. So may I request you to reach out to us, come over to our office or let's set up a call. We'll explain all of it in complete detail in -- because obviously, all of it is in the public domain. So we should be able to give you all details. So anything that is needed, reach out to us, we should give you every bit of detail.

We will take our next question from the line of Satyadeep Jain from AMBIT Capital.

Just a follow-up to the CCD question. The remaining INR 600 crores [indiscernible] tie-up, is that -- have you locked in -- basically, the investors are more or less identified? Is it the same set of investors? Is it just some procedural delay? Just wanted to understand where are you in the process? It's been a while since that Vadraj deal happened. Obviously, you've closed INR 600 crores. The remaining INR 600 crores, I was trying to find out similar investors, different. The structuring is also going to be similar as we look at that INR 600 crores.

Yes. Satyadeep, the structuring is more or less going to be the same. Maybe the numbers could be slightly different because it's not going to be exactly the same set of people who will do. We are more or less at the final stage of discussion. So it is nothing to do with any challenge or anything which we have faced, just that year-end happened and then the thing markets to the people with whom we are working have just come back. So it should happen. I can't give you a time line whether it will happen in a week or 10 days or 2 weeks. But suffice to say that we are on top of it, and this should happen pretty much in the near future.

Okay. And on this Vadraj asset, just maybe an update on the rail line. I know it had already reached Naliya. What is the status for last mile connectivity from Naliya to your plant? And then from there also, have you seen other players start basically transporting from that particular stretch? Or is it still in future?

That's kind of more or less stitched up. The railway survey is already completed within Naliya into a place called Wagad. Wagad is a station which is about 4.5 kilometers from our plant. So the survey of railways has started working on that, and I think the land acquisition railways that is going to be done by railways. I think their initial project report says that they should be ready completing this -- up to this Wagad station by end of this year, December, January, they should be able to complete. In parallel, the whole distance for us is there are obviously other than that, there are 2 other plants. I think they're also kind of pursuing from the same workout shop and then that's when the line branches out to us as well as to the other 2 players. For us from that station to our plant outside our plant boundaries about [Technical Difficulty] boundaries our land. So we already started completing -- completed the land survey, the railway route finalization, the DPR and ESP is all done. Only on last week, Wednesday, I have kind of approved the purchase order for the party to work on the railway siding as well. So it all happen parallelly. So our plan is to start work from inside the plant. Already we have control over the land. So the work will start from inside our plant compound all the way to the place where the siding comes inside our plant. And in parallel, I guess, land acquisition, a lot of patches of land is government land. So we're already working with government of Gujarat. So by the time work starts, we should have completed the acquisition of the land. And when railways is ready by end of this year, we should also -- we won't be able to complete the project by end of this year. It should take longer than that. Our target is June FY '28 is when the siding is going to be completed. So we are on top of it on course to complete our stuff. The other 2 guys, I guess, they should also be working on the same lines.

So as of now, the other 2 guys, their plants are operational. Are they -- have they -- just wanted to understand because the line is there till Naliya. So have other players started shipping? And when you look at the last mile connectivity and assuming some delays you were mentioning June 28. But for at least the monsoon period, it's a fair weather port, should we assume lower utilization for the first year till this last mile connectivity is there? Just maybe an update on are other people using that line as well.

Yes. The Naliya siding has already been used by other companies. So I guess the Naliya siding is anyway operational though it doesn't have any handling, obviously, it's a manual handling loading into end box and moving the material. So that one is operational. So push comes to, we will start with Naliya, not a problem at all. And by the time June of next year, monsoon, July or something, I guess, we should be ready by then. In the unlikely when Naliya is always there and a little bit additional cost to move material. Other than that the Jetty route is already there -- with Jetty route will also be there, then the Naliya route will always be there. But I think beyond June FY '28, we should have the railways heading operating out of the plant and dispatches should happen within the plant. So as I see today, we are on top of things. Obviously, in a big project like this, there could always be small delays here and there. But I don't foresee any major stumbling block in this because, I guess, backup in Naliya is there. Jetty is -- we have already done the bathymetric survey, and then we know how to kind of ferry material out of the Jetty cut Jetty as well. So Jetty route is also going to be operational around the time the clinker starts production. Naliya will be ready when the clinker production starts. Surat would be operational before that. So by the time signing comes by Q1 end, we should be fully in business moving material. As regards to your second question of whether it -- whether it will meet the scale up of the company, so as I have mentioned before, our overall scaleup is 1, 2, 3, 4. That's the kind of number which we had in mind, INR 1 million in FY '26, which is -- we will exit the year at INR 1 million kind of annualized million sale in Gujarat. Next year, we should be going into -- by end of the year, we should get into INR 2 million sale in FY '28 will be INR 3 million and FY '29 will be INR 4 million. So that's the broad plan which we have. We are close to achieving and delivering those 1, 2, 3, 4 agenda.

Lastly, on Gujarat specifically because you're entering -- expanding there in a big way, I know you're catering to that market right now with the 1 million tonnes that you mentioned through North. But would you have to as you look at bringing more volumes, when should we look at maybe upscaling your branding team before that capacity comes online? Is there something you need to do to strengthen your position of branding or team there in the future? And when would you start to do that?

I guess it's all about timing because I spend -- start spending money right now, I'll be wasting money. If I don't spend late, I'll be losing the opportunity. So we have a clear blueprint in place when to kind of get into an investment mode in terms of market investment and media investment. But what are the things which we've already done, we have a full-fledged sales force in place. We have the sales offices in place. We have the market study done and then the dealer appointments are started happening. So by the time even in month of December, we already sold in the state of Gujarat, INR 1.2 lakhs and our target in Q4 is going to be similar kind of numbers every month. So we have kind of scaled up to this kind of INR 1.2 lakhs would already mean more than 1 million tonne of sales will happen in the first year itself. So that will not -- that sale cannot happen unless until you appoint dealer network, which is already there. But as regards advertisement, marketing and other spend, so I guess we have a blueprint in place. But in this call, I won't be able to tell when I'm going to break. But certainly, on top of things and by the time our solo grinding unit is operational, we should be having all this in place in the market.

Next question is from the line of Rajesh Ravi from HDFC Securities.

My question pertains to the fuel and power cost. This INR 1.41 per million call, this is inclusive of your thermal CPP power cost or this is only kiln fuel cost?

This is kiln fuel cost.

This is kiln fuel cost. Okay. And what would be your -- in the kiln fuel, what would be the linkage and pet coke and other coal mix?

Pet coke on the kiln, as we mentioned, is Q3 FY '26, we have delivered 41% pet coke is the pet coke usage in our kiln. This has got a higher load in North and a lower load in East. This is a blended load for the company has fall at 41%. We were at a similar time last year, Q3 FY '25, we were at 48% pet coke. We are at 41% pet coke. Linkage coal is 34%, non-linkage domestic coal is 15%.

Okay. And AFR would be the remaining.

AFR 10% this Q3 FY '26. Here, we should improve because last 1.5 months, we had 2 main plants, Risda and Nimbol under shutdown. So both these plants have the AFR facility, so the number is slightly low. Our target -- before shutdown of these plants, Nimbol was already at 15% and Chittor was already at 15%. So I guess some ramp-up time will take in the next 3 months. By Q1 FY '27, we should be able to get this number to anywhere between 13% to 15% at a company level.

Understood. And sir, on logistics cost this quarter has come down. So there is any reduction in lead distance? Or what specifically has led to correction in your logistics costs?

Our lead distance in Q2 was 331. We are at 326 kilometers this quarter. Good reduction of 5 kilometers, most of the reduction has come in the secondary side and impact is due to the secondary side reduction, where the PTPK is more than the primary PTPK. And that's one reason why our logistics cost has become efficient in Q3 FY '26.

Because if I look at from Q1, Q2 level, it is down almost by INR 70, INR 80 per tonne. If I look at the average of H1, it was INR 15, INR 25. Now it is INR 100 lower in Q3. So what explains this?

Three things. One is lead distance, which I mentioned. The second one is all our primary freight has got GPS fitted now. So we are running a very tight system to ensure that any potential leakages in primary is put to -- reduced to a big extent. And third most important thing, you would have also -- we have mentioned in a year ago, 2 years ago, we started the Sonadih and Jajpur railway siding. And for the Jajpur plant by road, that's totally eliminated now. All clinker movement in East is happening only by rail. So that's a big savings in terms of clinker distribution cost has come down, which is -- we have all gone time, we had mentioned in the previous call that the distribution -- clinker distribution cost should -- clinker movement cost should come down anywhere between INR 25 to INR 35 kind of a number. That added to lead distance reduction, GPS implementation and last but not the least, increased focus in Chhattisgarh sales and Rajasthan sales has also reduced the overall lead distance, which is composite multiple reasons to explain the reduction in distribution cost.

So how much is the rail share now, which was 40% in Q2?

I can give rail share for the country as whole, just give me a second.

Yes, yes, total on a total basis.

Our rail share is 37% and road share is 63% 9 months FY '26. And at Q3 also 63% and 37%.

Okay. Understood. Okay. And sir, lastly, on the power cost, your green power mix is holding up around close to 20%. Okay. What is the opportunity there to increase this? Because most of your peers, they're all inching up to 40%, 50%. So can you give me a breakup of your power usage, grid, CPP and renewable power? And what is your thought there?

Currently, our CPP is 150 megawatt and WHR is close to about 43 megawatts. Put together, we are at 195, 196 megawatts. Our plan is to debottleneck all the WHR to get another 3.5 megawatts in the next 6 to 8 months. That's the #1 way to increase the green power. We also have very small solar power in Chittor factory and which is a very small one. Along with that, we have a 1-megawatt solar power in Bhiwani and a 1-megawatt solar power in Jajpur factory. So these 2 are the current initiatives. But in the last 1 month, we have signed an LOI with the company to set up a hybrid power plant in Rajasthan, and that should be operational in the next 12 to 18 months, which should be a big -- which should give us a big boost to power cost in Nimbol plant. And that's a 50-megawatt hybrid model, which we are working, which should be one of the large investments which we are making going forward. It will not be a CapEx model. It's going to be a group captive model, which we have concluded very recently, and that work should start very soon.

So 50 megawatt will be the installed capacity and it is solar, right?

It is a hybrid, solar plus wind.

Okay. No, I just want to -- why my question is, most people are doing this RE power through JV mode to reduce their landed power costs. So what sort of power cost reduction? And given that many companies, if you see your few competitors have recently invested INR 45 crores with a payback period of what we understand, these JV projects have a payback period of less than 2 years. So is this not an opportunity for you to invest into -- invest say, INR 100-odd crores through JV models and increase your green mix from 20% to 40% plus and in turn, also reduce your blended power cost by, say, INR 1 odd?

Very much. I think, Rajesh, it's very clear. If you really look at where all we operate, we operate in Rajasthan, that's a big cluster for us. Chhattisgarh is the second biggest power consuming place. And the third one is West Bengal, where we have 2 GOs. So our highest power cost for the company comes from Rajasthan, both because of pet coke cost as well as the overall power cost in the place is high. And the rules of Rajasthan got changed only recently. As soon as the group captive and the banking model came into economically right strain, we have gone ahead with this group captive model of putting up a plant exclusively for Nimbol. What we do is the second plant is based on our experience of Nimbol. That's the first thing. When it comes to Chhattisgarh, the first thing which is important for us is we run on a -- what you call linkage coal is a big component in Chhattisgarh. And the second one also is all the 3 plants grid integration in Chittor -- not Chittor, sorry, Risda, Arasmeta. So what we run is all these 3 plants run on a grid and we -- many times, we shut the CPP to use the grid or we shut the grid and use power from one factory to the other factory. It's a common grid. And we have got a solid benefit out of it. The payback was close to only 7, 8 months and more or less the job is done. We will hope for a captive plant in Chhattisgarh once the economics of captive plant outweighs the savings which you are making out of our current model. So it's very much in our agenda. It is economics which will drive at this point of time. Lastly is Bengal. Bengal, still the group captive model is not working because the rules of place does not facilitate what we have in Rajasthan. We don't have proper banking arrangement there. So once that happens, that's the place where we'll go for.

Understood. Understood. And what is your blended power cost currently, 9 months and Q3?

Blended power cost for the company is -- just a second, please. The blended power cost for the company is close to about INR 335 per tonne.

INR 325 ?

INR 335.

[Operator Instructions] We'll take our next question from the line of Prateek Kumar from Jefferies.

Congrats for great results. A couple of questions. Firstly, on your premiumization mix and increasing rate over the last few years, how do you think your gap has closed versus -- gap has closed or increased versus other best brands in the market? And how does increasing premium mix contributes to your EBITDA per tonne?

Just -- I've got some -- we've got some bragging rights on this. So certainly, from FY '22 till FY '26, 9 months, our premiumization percentage as a percentage of trade volumes have moved from 34% to 36% to 37% to 40% to 43%. And Q3, we had 44% of premiumization. We have Concreto, which is a flagship premium brand. We also successfully launched Concreto UNO in Bihar, Bengal and Jharkhand. And the Duraguard Microfiber is sold in Chhattisgarh, Odisha, Rajasthan, Western MP, Haryana, other North markets and also in Gujarat. So that's something which -- and if you really look at rest of the other companies, I can't -- I'm not going to rat load other companies, I think we are at a different level. We are at a different level. Certainly, going forward, this will be a source of strength for us. We will further strengthen in FY '27 and beyond, certainly to increase this number. We are really looking at increasing this number certainly at 200 basis points every year in the next 2 to 3 years.

Sorry, my question was regarding how your net realizations or market pricing would be -- have increased or gap on a better side versus your competition during this period and contribution of better premiumization on EBITDA per tonne?

Yes. At the premiumization level, we have to -- we can't look at an all-India level because premiumization has to be calculated of the base product in the state and the premium in the state. Contribution changes from state to state. Suffice to say that at a premiumization level, we can get anywhere between INR 150 to INR 200 increased contribution per tonne of cement sold. So that's a big boost. And as we go forward, this will provide us leverage to overall improve the realization for the company.

Okay. And my other question is on your 4Q. So we have seen like acceleration in demand growth for your company. Based on current trends, because we had like a very high performance base in Q4 last year, we look volume growth accelerating from 7% this quarter. And also a related question on pricing, how is your pricing undertaken on 10, 12 January compares to the exit price of December quarter?

Yes. I guess first one is in terms of Q4, obviously, our base was high last year. We sold 5.7 million tonnes in Q4. So I'm really looking at good growth. If you remember my previous call in Q3, I mentioned that demand for the industry should be anywhere between 7% to 8% kind of a number. So we hope to kind of hit that number or cross that number certainly going forward. That's on the demand side, wage side. But I guess Q4 overall, the cement industry also peaks and then we will certainly ride the demand perking up. Second, in terms of the price increase and the impact of price increase, as I said, as an answer to the first question, pricing corrections we took around 10th, 11th of January. So non-trade prices have moved in most markets. Trade prices also have moved in certain markets. I'll have to wait for the next week or 10 days to see whether these prices continue to remain where it is their. I see no reason why prices coming down from where we have taken them because these prices have to sustain going forward and also in a quarter where demand is going to be pretty robust.

We'll take our next question from the line of Tejas Pradhan from Citi.

So you had mentioned that you will be expecting 7% to 8% demand growth in fourth quarter. Now from fourth quarter last year, if I'm not wrong, we operated at 90% plus capacity utilization, and I assume there will be a regional skew over there. So how are we placed in terms of having capacity available both from grinding and clinker capacity perspective to sort of meet this demand growth that could be there?

Yes, we want to divide our market between East and North Stroke West. Certainly, in the North markets sourced from Chittor, Nimbol, Bhiwani, we would be operating at near capacity utilization in Q4. That's very clear. The only way we can get more volumes is to go more and more into blended cement even in non-trade category, and that's our goal in Q4 to kind of get our 6 million tonnes of capacity in North, we will set ourselves to come very close to that number. However, in East, we still have a lot of headroom. Our installed capacity in East is close to clinker capacity -- not installed capacity. Clinker capacity is close to about 20 million tonnes at CK ratio of 2.1. So one of the goals here again is taper down the OPC levels in non-trade and go hammering downs on trade levels. We have sufficient headroom in East to kind of get the growth this year, even next year at double-digit growth and year after also a double-digit growth. So certainly, suffice to say for the next 2.5 years, we have adequate capacity in East to kind of sweat the assets and get the volume growth going. The other one which we will certainly work on is get into more and more blended cement, get into more and more slag cement. Also Concreto UNO is a composite cement. It's a premium composite. So we'll more and more switch over from playing PPC or playing PSC into composite to do clinker release. So clinker release will be an agenda, moving from OPC to blended cement, whatever little we do will be the second agenda, sufficient headroom to grow, certainly in Q4 and beyond FY '27 and '28 also, we have adequate capacity in the East. North will be a tight scenario. After this quarter, we'll continue to operate at near capacity utilization in North. And that's one of the reasons Vadraj will come into play. Once Vadraj capacity comes into play, we release close to about the current 1 million tonne sale in Gujarat into North markets and certainly get Vadraj to serve Gujarat as well as West Maharashtra or also some bordering portion of West MP also will happen from Surat factory. So all in all, the entire Vadraj expansion strategy is to release capacity in North and East, we are self-contained for the next 2 to 3 years.

Okay. Sir, just to add on to that. So if I look at the presentation, the cement to clinker ratio for 9 months is mentioned at 1.72x at the company level. Could you break this down into East and North? What would be the CK ratio in those regions certainly because...

East will be close to about 1.95 to 2. North will be about 1.3 to 1.35. So we'll have to further improve north from -- move away from OPC to PPC. I guess that's going to be the focus in the coming 2 quarters to release cement and because there's growth in the market, we'll have to move away from non-trade into trade and move away from OPC to PPC. We hardly sell any OPC in trade. So whatever little non-trade OPC will move from -- based on contribution, of course, into PPC. East certainly at 2, we still have headroom to go to 2.1 in certain -- we have done 2.1 in the past as well. We should go to 2.1 very soon. So there, again, I think we will curtail the OPC sales in non-trade and go out and out into PPC or move from PSC into composite cement.

Okay. And in the interim, do we have any scope for any debottlenecking or we have already sort of exhausted the likely sort of limit?

As we speak right now, I don't -- we don't have any debottlenecking plan in East. However, the cement capacity increase of 4 million tonnes grinding will help us more grinding capacity closer to the market to get this capacity going in the market and also the Chhattisgarh GST benefit will help us garner a little bit more money by the debottlenecking in Arasmeta. The entire composite cement agenda, blended cement agenda for the company is the reason for doing the expansion of grinding units in East.

Clinker perspective. I was checking from a clinker perpective...

I am talking about that. Hold on for a second. East, we have debottlenecked. Our installed clinker capacity is close to 9.5 million tonnes. So we can always get the squeezing down to 0.5. At this point of time, I'm not focused too much on increasing clinker capacity from 9.5 million beyond simply because I have headroom even in 9.5 at 2.1 CK ratio, I can go more than 20 million tonnes on East. And I have adequate cement at 2 million, 10% growth for the next 3 years, I have adequate cement capacity unlocked for East. Maybe same time next year, we can think about debottlenecking. We don't have plans to put a full-fledged clinker line in East at this point of time. But maybe I think as the year progresses and we come into next year, we can look at that. In North, debottlenecking, certainly, we will do. We already debottlenecked Nimbol from 4,500 to 6,100. That's a big debottlenecked exercise we did. Chittor factory used to be 5,000, we went to 6,100. But right now, I don't have any plans to increase the clinker capacity in North from 6,250, 6,250 is 12,500. Vadraj will be the one which will come and help my clinker capacity in North.

Sure. And just one last question from my side. What would be the like cost of borrowing for the company as of now?

So it is currently in the range of around 8%.

8% okay.

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

Sir, just to summarize, so at a blended level and given the 3 million tonne capacity that will come up, particularly in this East one, so 11 million tonnes, I hope will be coming by March in Jojobera and Jajpur. Jojobera and Panagarh will be coming by this March and maybe 1 million tonne in Jajpur by 1Q FY '27 and plus 2 million tonne Surat also will be coming up and will be available for the second half of FY '27. So at a broader level, this fourth quarter, at least we should be doing 7%, 8% growth. And for next 2 to 3 years, as you are highlighting at a blended level, closer to a double-digit growth is doable.

Absolutely. I guess you say you summarized everything what I wanted to tell. Certainly, in Q4, our target should be what you mentioned. And next year and beyond, we are targeting a CAGR of 10% volume growth, at least for the next 2 years, if not more, Surat will give us -- Gujarat will give us benefit at East -- in North and East with the Jojobera debottlenecking, more or less it is going to be ready. I guess in the next 2 months, we should have Jojobera expansion completed. Jajpur expansion, Panagarh expansion work has started. We have the -- there is something called NIU approval. So we are working with the governments for getting the no road increase approval, which is happening currently. And side-by-ide, the modifications are happening in this plant. Arasmeta debottlenecking it will be a little bit longer because it involves putting up a totally new mill. That should be available in FY '28. FY '27, certainly, Jojobera expansion will be completed early part of FY '27. And even Panagarh and Jajpur, I guess, we should be ready by max, max Q2, but certainly end of Q1.

Okay. Okay. Okay. Got it. Second, sir, to summarize in terms of the cost, including the even the start-up cost for the Vadraj. So from here on in terms of the -- at the company level in terms of the cost savings, how one can look at?

This is our annual operating plan time. I guess, when we meet in 4Q numbers, I'll be able to share the next 2 to 3 years cost saving agenda for the company. We are on the -- we are currently working. So next time when we meet, I will be able to share with you the next 2 to 3 years cost saving agenda for the company.

Okay. And sir, CapEx, you have mentioned for the fourth quarter for FY '27 and '28, if you can -- because I think the Vadraj CapEx was slightly getting postponed to FY '27. So for FY '27, '28, if you can spell the CapEx number?

FY '27, I'm looking at the overall CapEx of close to about INR 1,000 crores and FY '28 close to INR 700 crores. '26 will be INR 650 crores to INR 650 crores is what I mentioned, INR 620 crores to INR 670 crores, let's take INR 650 crores in FY '26. FY '27 should be anywhere between INR 1,000 crores to INR 1,150 crores and FY '27 will be anywhere between INR 650 crores to INR 700 crores. This will have Vadraj CapEx, which will come. We already spent close to about INR 200 crores in Vadraj by December. We should have another INR 300 crores -- INR 250 crores, which will happen in the next 2 to 3 months. Then on next year about INR 800 crores and the year next, another INR 500 crores for Vadraj. That will be routine CapEx. So overall, summing up, FY '26, our CapEx will be INR 620 crores to INR 670 crores, give or take INR 50 crores here and there. FY '27 will be INR 1,000 crores to INR 1,100 crores. FY '28 will be INR 650 crores to INR 700 crores.

Shravan, I am sorry to interrupt, I request you to join back the queue.

I'm just completing that. So does that mean that we are not factoring any kind of a CapEx for Chittorgarh expansion. So that should be happening in the FY '28 at least. So...

At this point of time, it's too early for me to say when we will start -- either we'll start in FY '28 or FY '29. It could be, give or take, 1 year here and there. But I think let's get into FY '27, H2 of FY '27, we will have give you clarity on when do we start because we've got still -- like Bishnu mentioned in his opening remarks, we have options with Gulbarga. We have options with Chittorgarh. We have the Nimbahera mine. We also have the JMK mine in Jodhpur and also have the Gulbarga mine. So we will decide closer to the date where we will expand either a greenfield expansion or a brownfield expansion. FY '28 onwards, it will start. But it's too early for me to say when I'm going to put money. It could be H2 FY '28 or Q1 FY '29.

We take our next question from the line of Navin Sahadeo from ICICI Securities.

So two questions. One was on the industry-wide pricing. So as you said, you've taken some price hikes in January. Now -- and you also mentioned that December as a month, not just -- I mean, it witnessed a double-digit kind of a growth. And I think our channel checks are also indicating both North and East witnessed a very decent or may I say very bumper sort of a rebound volumes in the month of December. Typically, January volumes are at par to what they are in December. So my question was that if December as a month, which witnessed such a sharp recovery could not give any prices, rather prices continue to reel under pressure, what gives the confidence that January would see some better pricing, please?

Volume certainly from the first 14 days of the month, I guess, we are tracking decent volumes. I'm sure industry also is -- demand for cement in general is pretty good in the market as January has started. So I'm not going to qualify any -- put any objective to the past month. But certainly, I think December was a good month for us and maybe for industry once the results are published. But certainly, in January, I see a demand sustained -- sustaining from December 20 levels, December 20 to 30 levels. And that's the reason why we have gone ahead and made these changes in pricing. So as I said earlier, this is just 1 week into price increase time. So I will wait and watch going forward, whether we're able to sustain these prices. So my gut sense is the prices had fallen below to GST levels because we have passed on all the benefits of GST and we continued with the quarter. But with a little bit of a cost inflation, we had to do some adjustment, and that's how we took this correction. Non-trade prices had gone quite below trade prices, and that's the reason why we took the correction in non-trade first.

Understood. Helpful. Second is a slightly long-term or a midterm question. This is in with respect to the CapEx plans that you have mentioned. So historically, you always mentioned that whenever the net debt of the company comes to in the range of INR 3,500 crores to INR 4,000 crores, you will pursue the next CapEx, which you are doing in the form of Vadraj. So now since the last 2 quarters, you have been mentioning medium-term growth plans of Chittorgarh plant and a greenfield optionality for Gulbarga. So is there any thought process as to when -- at what levels of debt will the company then again, net debt or net debt to EBITDA, will the company look to pursue these CapEx?

I still continue to say that we will pursue our growth at this kind of numbers in future as well. But with this kind of CapEx spend in the last year with Vadraj acquisition and going forward in the next 2 years, certainly, we need to have the next set of expansion moment we complete Vadraj but the current focus is going to be getting Vadraj right. So we are a company which goes 100x company. So that's how we will progress on this. When we reach FY '28, I guess, as I answered the previous question, sometime in FY '28, either H2 or Q1 FY '29 is when we will start the next phase of expansion. But as I build the business plan for the company from current year to the next 2 to 3 years, we should be in a pretty favorable position at similar kind of debt levels 2 years from now for us to kick start the next expansion.

Noted. One question, if I can squeeze in. Sorry. So very quickly, your freight cost tends to be very volatile. I mean, it's heartening to see a decline, but then it also tends to bounce back. For example, in Q4 of '25, it had fallen on a per tonne basis as low as INR 1,401. But suddenly, in Q1, we saw a jump to INR 1,550. So I'm just trying to understand, it's good to see the current quarter's outstanding like reduction in the freight, but how sustainable is this is my only limited question.

To keep the freight cost under control, I think there are 2, 3 levers which we have done. Certainly, I think the railway siding in Sonadih and Jajpur has been instrumental in reducing the clinker movement freight, which is important. The second one is with the starting of our Bhiwani factory, the lead distance of Haryana cement plant has got positively impacted. As regards to your question about erratic behavior of our freight cost. So I would say that certainly from FY '25, Q2 onwards still as we speak, I think gradually, we are chipping away the freight cost mainly due to 3 reasons. One is focusing on home markets and reducing the lead distance. Second one is what you call the railway siding in Sonadih as well as Jajpur. But one of the principal reasons is we are a company which is on 37% rail share and 63% road share. As you would have seen, post COVID for the next 2 years, the government did not levy the -- what we call freight subsidy for lean season. They delivered freight subsidy for lean season and suddenly, they went back again 2 years -- 1.5 years last year, I guess, this FY '26 and FY '25, the freight subsidy got canceled. Hence, the freight cost increased because we have a certain big amount of rail share and the overall freight cost increased due to subsidy going away. From now on, from last year, which is FY '25 to FY '26, I guess, it's a steady-state period. You will see us progressing continuously on sustained reduction in freight cost, mainly through home market sales, increased home market sales, reducing leakages through GPS, getting the clinker distribution cost between Jajpur and Sonadih. And last but not the least, one of the things which also came as a what we call a fluctuation in -- for 2, 3 -- for 2 quarters was also in certain markets, we moved from [indiscernible]. But then I think the entire industry works on a particular practice and then we had to change the model, and that's the reason where you would have seen some spikes on the freight cost. All that is behind us now. We now have a steady-state market with sustained railway with all the costs which are built going forward contains the what you call main season discount not happening during the period. Number two being Sonadih, Jajpur siding is completed. Number three being increased focus on home markets in Rajasthan, Chhattisgarh, where the distribution cost should -- Haryana, distribution cost should come down. So suffice to say, as we go forward, we should be able to have efficiency improvement in logistics costs to get the maximum savings in the coming quarters.

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

Thank you for all your thoughtful and insightful questions. We hope your questions have been addressed. The Investor Relations team is ready to provide any additional clarifications you might need post the call. Before we wrap up today's call, let me affirm our resolute commitment to driving sustained growth and strengthening our market positions. Vadraj cement plant project execution remains on track with phased commissioning targeted from Q3 FY '27 to strengthen our Western region presence. Our Eastern expansion, fueled by strong demand for blended cement under Concreto and Duraguard will further enhance our leadership position in the region. Looking ahead, we will continue to drive premiumization an area where we have consistently expanded our base and set new benchmarks while maintaining our focus on geographical optimization and cost discipline to enhance profitability and create sustained shareholder value. Thank you for being with us today. Thank you.

Thank you. On behalf of Nuvoco Vistas Corporation Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.