Nuvoco Vistas Corporation Limited (NUVOCO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q4 and FY '24 Earnings Conference Call of Nuvoco Vistas Corporation Limited. We must remind you that the discussion on today's call may include certain forward-looking statements and must be, therefore, viewed in conjunction with the risk that the company faces. The company assumes no responsibility to publicly amend, modify or revise any forward-looking statement on the basis of any subsequent development, information or events or otherwise. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Madhumita Basu, Chief Marketing, Innovation, North Sales and Business Development of the company. Thank you, and over to you.

Thank you Yashasvi. Good afternoon, everyone, and thank you for joining us to discuss our fourth quarter and full fiscal year 2024 results. Before we delve into our performance details and look ahead with optimism, let me briefly address the broader macroeconomic environment. The recently released GDP numbers surprised strongly on that side. Year's GDP expanded at a 6-quarter high rate in Q3 FY '24 at 8.4%. Economic activity gained momentum in February 2024 after witnessing a slight moderation in January. GDP growth for Q4 FY '24 is expected at 7.2%. It is not the least that estimates for FY '24 will be exceeding and the rate closer to 8% maybe clawed. GDP growth is likely to remain robust at 7.4% during FY '25. Bank credit to the agriculture sector continued to register double-digit growth, reaching its highest level since the COVID-19 pandemic during Q3 FY '24. Bank credit to housing sector continued to grow in double digits. India is likely to experience above normal rainfall in 2024. A good and normal monsoon should significantly address inflation and stimulate farming. All these factors auger well for the cement demand. Looking internally now at Nuvoco's performance for the year ended 31st March 2024. We are delighted to report a strong performance in FY '24 amidst volatile demand environment. The company recorded an EBITDA of INR 1,657 crores and a profit after tax of INR 147 crores, marking the highest levels of profitability since FY '22 the same year we launched our IPO. This clearly underlines the effectiveness of our strategic initiatives and operational efficiencies. Despite demand challenges, we stuck to our strategy of value over volume, premiumization, geo mix optimization, brand strengthening and cost optimization. Reconstructing the realization and EBITDA per ton further, it is important to note that the accrual of incentives from Panagarh facility was stopped from April 2023, while incentives from Rajasthan plant ended in June 2023. These plants have contributed approximately INR 60 per ton as incentive in FY '23. The cession of East incentives makes the quality of our EBITDA growth and margin expansion even more commendable. Needless to say, our robust EBITDA growth in FY '24 is a clear indicator of our operational excellence and unwavering commitment to cost efficiency and strategic intent of value-led growth. The company's robust EBITDA performance paired with a notable reduction in debt by INR 384 crores Y-o-Y to INR 4,030 crores has resulted in a significant achievement, bringing the net debt-to-EBITDA ratio to 2.4x. Furthermore, this reduction in debt aligns with our historical trend of net debt reduction, emphasizing our continuous focus on deleveraging. When it comes to cost efficiency, we are happy to report significant reductions in operating costs, particularly in the areas of power and fuel and raw materials. Our strategic initiative, Project BRIDGE 1.0 aimed at enhancing efficiency has yielded a notable reduction of INR 30 per ton in operating costs since its implementation in Q2 FY '24. At this juncture, let me also read through on quarter performance related to the 3 major cement cost elements. Power and fuel costs reduced 4% quarter-on-quarter due to efficient sourcing and optimization of fuel and power mix, coupled with decline in pet coke and coal cost. Raw material cost per ton decreased 2% quarter-on-quarter mainly due to decline in slag cost. On the flat front, I would like to reiterate that Nuvoco continues to be better placed due to its long-term supply agreement. Distribution cost per ton declined quarter-on-quarter due to operational efficiencies in logistics. In our ongoing commitment to premiumization, premium products have maintained a critical role within our portfolio. significantly contributing to 37% of the company's cement rate volumes in FY '24, registering an increase from 36% in FY '23. To further enhance brand equity, we unveiled various marketing campaigns during the year, such as Seedhi Baat Hai Duraguard Khaas Hai and Concreto naam hi Kaafi hai. As part of RHP driven rural reach program, we introduced engaging brand activation activity, Sabse Khaas Sarpanch, showcasing the impact from stories of Sarpanches contributing to village development. We introduced Duraguard F2F, a premium composite cement into the markets of West Bengal and Jharkhand. In addition to this, we extended our premium cement variants, Concreto UNO to the Jharkhand market. We also rolled out the new cement packaging design with Nuvoco logo prominently placed on the front side of the cement bags. The new designs will highlight a much stronger bond between the company and its brand, reinforcing confidence in all our partners and customers. Moving on to the cement demand. I will now focus a little more on the 2 markets, North and East, which are relevant for us. During the year, North region showed strong demand, and we grew ahead of the industry in the region. In contrast, the East region faced challenges throughout the year particularly in our core markets of West Bengal, Bihar and Jharkhand, where demand was notably subdued. Within East, Chhattisgarh and Odisha demand surged ahead showing significant improvement in the year FY '24. However, towards the end of FY '24, our core markets witnessed some recovery in demand. While the union elections is a key [indiscernible] in the near term. We are poised to take advantage of demand resurgence in our core markets where we have a lower network and a redoubtable premium position. Furthermore, we have launched new programs in the states of Chhattisgarh and Odisha with specific focus on volumes in FY '25. With an industry best trade share of 74%, we also see opportunity to improve volumes in the non-trade segment. Our optimism on the demand prospects in the region is driven by a confluence of factors, mainly thrust on infrastructure development, including the construction of highways, railways and affordable housing. As we speak, 27 lakh houses under PMAY program are pending for completion in the East. And out of this 14 lakh houses are only in the state of West Bengal. Union government in the interim budget announced that 2 crore more houses would be taken up to meet the housing requirement. Approximately 19,000 kilometers of roads under Bharatmala Pariyojana Phase 1 is yet to be constructed. And out of this, 3,500 kilometers is in East alone. Additionally, the rising urbanization, growth in the real estate sector and increased spending on commercial and industrial projects is expected to support the demand for cement. Just to close, in North, we will continue to drive volumes as we ramp up operations at our Haryana Cement plant. I will now briefly touch upon the ready-mix and APM businesses, both businesses are performing well. On the ready-mix concrete business, we have commissioned 7 new plants in the current fiscal, bringing the total number of plants to 58 pan India. Given our continuous thrust on premiumization, value-added product mix stood at 31% of total sales volume in FY '24. In MBM business, Tile Adhesive and Cover Blocks segments continued to witness sales improvement. During the year, we expanded our Tile Adhesive reach aligned with market requirements. Now coming to sustainability. At the core of our operations is our commitment to sustainability. We recognize that as a major player in the cement industry, we have a responsibility to minimize our environmental impact and meet the way in sustainable practices. Our focused investment has yielded significant value and sustainability with emphasis on blended cement and optimization of power and fuel mix between traditional fossil fuel, alternatives, renewable energy sources, we have been able to significantly lower the carbon intensity of our cement manufacturing. Touching on some sustainability parameters. The carbon emissions reduced by 2% year-on-year to 454 kg per CO2 per ton of cementitious material, which reaffirms our position as one of the industry leaders in low carbon emissions. I'm sorry, I'll just repeat the figures again, 2% Y-o-Y to 454 kg CO2 per ton of cementitious materials. [indiscernible] saw an impressive improvement from 9% in FY '23 to 13% in FY '24, amongst the best in the industry. A quick update now on our growth projects. Redefining projects at Odisha and Sonadih are at an advanced stage of completion. As you are aware, we successfully commissioned a 1.2 million ton mining unit at Haryana Cement plant, elevating the overall cement capacity to 25 million tons per annum. Within a quarter of commissioning, the plant utilization has been brought up to over 60%. Strategies for FY '25. As we embark on financial year FY '25, I will briefly touch on the comprehensive strategies across pillars of revenue, profitability, process and culture to drive growth and achieve our organizational objectives. On the revenue front, our focus will remain on enhancing realization per ton by prioritizing premiumization. We will work on expanding our presence in key markets of North, Central and West regions, capitalizing on their growth potential. We will work on boosting sales within home market defined as an area of up to 200 kilometers from our manufacturing plant, thereby consolidating our value leadership and optimizing logistics costs. On the profitability front, building on the success of Project BRIDGE 1.0, we are embarking on Project BRIDGE 2.0 in FY '25, with an aim to further our cost efficiency efforts targeting cost savings of up to INR 50 per ton. On the process-related strategies for FY '25 we will be launching the customer portal and initiating AI-enabled projects in specific areas, primarily to drive efficiency. Our culture, building on our brand value and lower network, we will reemphasize customer centricity, delivering accuracy, speed and delight through a company-wide program. Last year, we made good progress with the launch of our leadership development programs. Following through on this, this year, we'll be launching academies across functional areas to build and nurture talent. With this, I conclude my opening remarks. I'm joined here by Mr. Jayakumar Krishnaswamy Managing Director, Nuvoco Vistas; and Mr. Maneesh Agrawal, Chief Financial Officer of the company. We are here together to answer your questions. Thank you.

[Operator Instructions] We'll take our first question from the line of Keshav Vijay Ratan Lahoti from HDFC Securities.

As you highlighted in the call that North has done pretty well compared to East, some fins on....

Speak a little bit louder, Keshav.

Is it better now?

Yes.

So just want to get a sense on how has been the growth in North and East in FY '24? And how is the current mix of North and East?

So Keshav with -- our investment is 1.2 million tons in Haryana cement facility, our mix of North business has gone up from 20% to 24%. Our full capacity is 25 million tons. That makes 6 million tons in North, 19 million tons in East. In North, we have seen growth ahead of the industry. We are focused on further volume growth in this region as we ramp up our capacity utilization in the new Haryana cement plant. In East our strategic intent till the year FY '24 was driving value over volume, and I have touched on our specific actions in my opening call remarks.

The question is more on the side in FY '24, what has been the volume growth in North and how has been the East market? And how is the current volume mix for North and East in FY '24?

So the current mix is, as I mentioned, of the order of 22%, 23% of North to East. Keshav, a more detailed growth of the regional split between North and East would be sensitive for this call. You have to excuse us. Needless to say that our Eastern region strategy has remained on value over volume. And in North, we have been taking roughly a 3% to 4% growth over and above the industry growth rate.

Just to add to you guys, it will not be right for us to give a region wise split because every company operates in one region and we are a company that operates in more than one region. And so growth is a mixture of both East, North and Center. And hence we would not be able to exactly extend which is in the market growth. But as Madhumita said, very clearly in North and Center, we grew ahead of the industry, it is because value over volume strategy, more over at a company level, the figures are there for all of us to see we could get just about flat and a little bit higher growth over last year in terms of volume. However, there are so many other parameters which are there in the overall performance in the company. And we're very proud of what we have been able to deploy and drive the strategy for FY '24.

Okay. Understood. That is helpful. How has been fuel cost going to hover in the next 1 or 2 quarters? And what was the fuel cost kcal basis in Q4?

Moving from Q4 of last year all the way to Q4 of this year rupees per million Kcal for the company has come down all the way from 2.31, all the way to about -- we ended the year at 1.65. So that's 1.63 was the full quarter and March delivered the lowest power and fuel costs in the last 8 quarters. That's the kind of progress in power and fuel cost. You will know very clearly our fuel strategy is based on a blend of pet coke, linkage coal, domestic open market coal and AFR. The 3 strategies for the company are very clearly focus on linkage coal. Number 2 would be to get a maximum throughput out of the WHR and CPP and certainly a huge focus on AFR installed on 4 of our plants. We have reached a stage of about INR 1.63, INR 1.64 per million Kcal. And going forward in the near 1 or 2 quarters, I don't see major volatility in fuel prices, understanding something dramatic happens in the external world pet coke prices are trending at about $112, $113 per ton. Our view is to continue the same number going forward. We've got linkage coal lined up for next 5 years, domestic open market coal is trending at close to about INR 1.5, INR 1.6 per million Kcal, [indiscernible] content is a little bit low, which is good for us. AFR strategy of the company is to move from current 15% all the way to 16%, 17% going forward. All this would result in power and fuel costs trending at around 1.6, 1.62 for the coming 2 quarters. I think changes -- the whole number will continue for the balance period of the year, something favorably happens or adversely happens, we will update you in the next quarter results.

One last question from my side. What is the blended cement share for FY '24?

I'm sorry, you're not audible?

Blended cement share for FY '24?

No. I mean the management line is not audible.

Yes. Blended cement for the company came at...

80-20.

80-20. OPC is about 19%, 20% and other cement about 80%.

Yes. We actually measure it more by CYK, Keshav and our CYK was 1.77.

So while blended cement is the strength of Nuvoco which was black cement and fly ash cement and their sorts of. But we also see in certain markets in India, the country is also going towards OPC markets actually. So I guess going forward, all the cement players will be very clear that we have to also find a way to cater to the OPC market. While our core strength of the company is to make changes in the consumer buying behavior and trade segment to move from regular cement or OPC cement to blended cement. But it will be a journey with all the cement industries we have today keeping sustainability in mind. It's one of the huge sustainability goal for the entire cement industry in India. So more and more players are moving away from the normal OPC cement and blended cement. As you would have seen from Madhumita speech, our carbon footprint has come at 454 kgs of CO2 per ton of cement, which indeed is the almost the lowest level of numbers which are happening in India, certain wise, internationally also, there is a kind of number which is extremely -- all India level at 580, India average is 507, Nuvoco average is 454. I guess little bit of free from blended cement, regular further improvement will bring it below 450.

We will take our next question from the line of Sumangal Nevatia from Kotak Securities.

First question is on our expansion plans. In the past, you've kind of alluded to a range of INR 3,500 crores to INR 4,000-odd crores of net debt to kind of start working on expansion, we've almost touching that range. So just want to know what is the status, how prepared we are? And when are we kind of looking to explore brownfield expansion opportunity?

We all would appreciate the consistency of leadership is to kind of demonstrate sustained performance over a period of time. So while we're very proud at reaching [ 40 34 ] INR 30 crores of debt as we committed in each of the calls in the last 2 years. We just want to be very clear that we should not be selling [indiscernible], but certainly, it has to be somewhat sustained. So we are in no hurry to kind of expand in the next 1 month because we've got headroom of close to about 7 million tons. So we've got adequate -- even if we have adequate growth in the industry we should be able to grow in line with the industry in the coming 2 years. So we just want to wait and watch in the coming quarter or so? And once we are very confident with the stable prices and market uptake and the overall debt levels of the company are sustained at this level will come up with the expansion plan. Needless to say that at the back end, we're already working on identifying what are the design, what should be the capacity, which is the location, what is the ballpark number, what should be design criteria. Those works are all happening. There are appropriate time, we'll come back to -- come and make an announcement on what's the exact timeframe and we do prospecting.

Okay. Understood. Understood. Sir, in terms of our North capacity, we've been I mean consistently maintaining that we are gaining market share there. And if I look at few of the peers, a few companies are reporting upwards of 90% utilization. So is it possible to share what sort of utilization did we run the plant on an average for FY '24?

North, if you see, we have to really look at it full year because our new capacities came in December, Jan. But if I were to kind of extrapolate the overall not number without taking the Bhiwani plant into consideration where we are operating close to about 90% capacity utilization. But with the Bhiwani firstly coming in, as Mita said in her speech within a very short period of time, capacity utilization increased to 60% of the name plate capacity. At the full year, we are operating north of about 80%, but still we have headroom. In terms of capacity terms, we have 6 million tons of capacity few months of this year, we already touched 4 lakh tons, 4.2 lakh tons per month. So I guess, during the course of FY '25, we should be very close to 6 million tons at over 90% capacity utilization in 1, 2 quarters.

Okay. Understood. And sir, with respect to the East.

Sumangal, Q4, let's say North capacity utilization was 89%. So there is an upward trend there.

Okay. On the expanded capacity, 89%. Okay. Okay. I just -- can I have 1 last question on the East?

Yes, go ahead.

Yes. I just want to understand, I mean, at least, I mean, from the numbers it appears that we have been losing market share because full year, if you've been growing in North. And if you look at other peers, anecdotally, everyone sharing that the market has been growing. I know there could be some issues in particular states where we have high exposure. I mean is it possible to share some more state-wise color just to appreciate or understand better what is the issue with Eastern demand for us versus a few peers, I mean in terms of different state-wide exposures.

Yes. First of all, there is no issue in East, very clear. As far as Nuvoco is concerned, we are clear about what we wanted to do, what our plans are, what is the execution needs. We are very satisfied with the approach we took and the results we achieved in the East region. If you then look at the whole year in East, we got to really look at 12 months and come into some kind of judgment and interest. The prices in the East was tepid at the beginning of the year. And one of the primary objective for Nuvoco is to kind of debt leverage, improved realization, get the EBITDA ranged up. And in all the past calls, the professed strategy for the company is value over growth. That was a cornerstone of what we were doing. Having said that, even in this, if you see at the beginning of the year, April FY '24 when it came to October, price rise happened, come January price ended and kind of end of the year, exit price in East was almost less than the entry price in the fiscal year. That's how the price movement happened. But even in the price moment, East has be divided into 2 parts: the core demand consuming states of Bihar, Bengal and Jharkhand and the less in the past, realization states of Chhattisgarh and Odisha. What happened in East is somewhat unique. The states of Chhattisgarh and Odisha saw a handsome growth and we participated in the growth and got good growth in this state. But the 3 states of Bihar, Bengal and Jharkhand where the 3 states where growth was somewhat muted. But more important was the pricing in those states was really at, I won't say historical low, but certainly, in the last 24 months, the prices prevailed in these 3 states are very low. We are very clear of contribution margin improvement of the strategy for the company so we focused on these 2 states to kind of mop up maximum contribution, but did not want to give up volumes on the other 3 states, so we kind of ensure that we fed the market, retained our loyal customers, ensured that the trade benefits of working with Nuvoco. That's been the overall deployment plan last year. Having said that, things in March look different. Growth somewhat happened in Bengal, Bihar and Jharkhand. And going forward in FY '25, post elections, we see an uptick of demand -- overall demand and prices to be okayed. Cost has more or less bottomed out and softened, so it's no longer going to be a difficult scenario. And financially, debt-wise, leverage-wise, we are also in a comfortable position. So we have no other leverage as well as the elbow room to kind of maneuver the market where we want to maneuver. You will see us participating a little bit more aggressiveness in the next year to get growth going for the company in East as well.

Got it. Just 1 last question. Do we work with exclusive dealers? And if yes, I mean, what sort of numbers do we have?

Very difficult for me to [indiscernible] exclusive dealers in this call. But may I request you to reach out to Investor Relations, they will give you all the details on state-wise dealer profile exclusive multi-brand outlets, all those data are available. I won't be able to explain to you in this call.

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

Sir, am I audible?

Yes, please go ahead. Can you use your handset mode, please?

Yes. Could you just speak a little more loudly?

Yes. Is it better now, sir?

Yes.

Yes.

Sir, on the pricing front, our realizations got hit by over 8% sequentially. I wanted to understand if the current prices are in April month gone by, did we see any improvement or because I would like to believe exit for March would have been lower versus the quarter average. So if you could just give us some color as to directionally how are we into this -- into the fiscal FY '25 so far in terms of pricing versus the March quarter that is reported.

Hardly 30 days since we started the quarter, but all the same price rise did happen in the month and quarter. North has been more or less same as Q4, but East is, we're seeing close to about INR 810 per bag improvement in price in gross and GST in the East. So things are improving in the East. We expect things will further improve going forward.

Helpful. Sir, you clearly mentioned about the fuel cost sustaining at these levels for the company. But on the freight cost per ton, is that also a sustainable number? Or with the railway rates coming in, we could see further improvement.

Little while ago in the call, we spoke about our BRIDGE 2.0. BRIDGE 2.0 covers 3, 4 key agendas for the company, which is into cost efficiency program, second one is power and fuel cost optimization, third one is distribution cost reduction and last one is overall productivity improvement through extra volume growth in the organization. All these, we're targeting close to about INR 50 per ton next year over this year. So one of the key focus areas is to reduce or sustain the current distribution cost. There are 2, 3 projects, which we are currently working. If you recall, our CapEx last year had railway sidings at Sonadih and Jajpur and we would also know that we were moving clinker out of Risda into a third-party unit and then from there load into [indiscernible]. Starting April, we have stopped -- April 1, we stopped the outside clicker loading because our Sonadih siding is almost ready.and in the next -- in the -- by the end of Q1, early H -- sorry, Q2, we will have 100% commissioning of the second railway siding at Sonadih. All our clinker movement will be rectified and all the road movement will go away. In addition to that Jajpur siding should also come up in H1 and this year. So once the Jajpur siding and Sonadih siding happens, all our movement of clinker will happen only by rail. So that indeed should reduce the overall distribution cost by a substantial amount in H2 onwards. Added to that is that in the speech, Mita covered that our focus is going to be on maximizing sales in 4 markets, try and sell cement and 150-kilometer radius in the East and 250-kilometer radius in the North. I mean this would basically be a key thrust area. And the third thrust area is to increase the direct discussions in the company, improve it by 5% to 8% over this year's actual. All this has an end objective of either reducing distribution costs over last year's actual, or at best neutralize if at all any potential increase in fuel rates happen going forward. But as of now, we are targeting decent kind of savings in distribution costs in FY '23 over FY '24.

Great, sir, very encouraging. Just a confirmation, rather a clarification to the previous participant's question about CapEx. So did you mention that you will be like watchful or the company will be watchful of the debt situation for a couple of more months before committing to any other CapEx or a couple of more quarters?

I never mentioned a couple of quarters or couple of months. All I said was in the coming future, I would like to be confident that the debt numbers and the overall operating numbers, which delivered, we want to sustain it. So it could be a quarter or 2 quarters, but once we are confident that the system is oiled and demand in the market is also sustaining the overall appetite for the company, we should come up and make announcement. Overall, if you see all these plants will be set up in 18, 24 months. So a quarter here and there is not going to change the overall performance of the company. But certainly, what we -- if the capacity coming up is going to hamper the growth of the company, your point is valid, but we still have improved in North as well as East kind of -- out of 25 million tons, we did 8.8 million tons. So even a double-digit growth for the next 2 years, we should be able to have capacity well into FY '27. Certainly by the time our plant will come. And in the previous calls, I've been speaking about the location of the plant. We are gravitating towards North, brownfield capacity coming up in North India with adequate limestone available with us. So the focus will be to grow in North and West, and that's how the company's future expansion plan is started.

Great, sir. All the best. And also let me congratulate you for the excellent working capital management at all rates. Great.

Thank you.

We will take our next question from the line of Shravan Shah from Dolat Capital.

Yes. So my first question is when we are saying that we have got enough headroom for the growth and North -- Ma'am has mentioned that 89% utilization in fourth quarter, including the Bhiwani. So in FY '25, and also we mentioned that we want to grow at 7% in FY '25. So clarify if I'm making a mistake. So how much volume growth are we looking at? And from where it can come? North is already at 89%. So incremental, whatever the 5%, 7%, 8% volume growth that we are looking at, is it more from the East? And if we have -- which states would be more to contribute the growth?

Yes, Shravan, very nice question, mathematically, you've asked us [ EBITDA is 200 ] how will the growth happen. So let me give you a little bit more detail to the statement, which Mita made. So capacity is blending capacity and clinker capacity. And when the 89% is coming out of overall clinker capacity utilization in the company, and you would know, in FY '24, Nimbol factory got commissioned in Q2 end and then we had a [indiscernible] Nimbol capacity. But Bhiwani has got into full mode. Nimbol has got a 6,000 TPD line, the expansion plan of 6,000 TPD and Chittor is 6,000 TPD, both put together is about 4 million tons, at C/K ratio of 1.5, we have 6 million tons. So there will be sufficient headroom for us to grow in line with the market, assuming the general industry view us -- GDP at 7%, industry is likely to grow 7% to 8%. So we also will be participating in this industry GDP ratio growth in North, certainly in the East. So we don't see a major challenge in getting the growth. Last but not the least, there was a question about what is obviously mix in the blended cement mix? We always have a lever to shift from OTC to blended cement to maximize the volume numbers. So that's been the DNA of the company. So going forward as well to get the adequate revenue growth, if real estate is very good with non-blended cement, we'll go get more money. If blended cement is selling and we're able to get volume growth, EBITDA will come through volume growth as well. So that's how we will participate in the market, but the strategy will be to get highest capacity utilization. Tactics will always be quarter-to-quarter based on the market and the portfolio will be decided by the management team on how to participate in the market based on the actual happenings in the marketplace. So we are pretty confident to hit equal or more than industry level growth in FY '25.

Okay. And just to clarify, this INR 50 cost savings in FY '25, this is from the Q4 FY '24 number or from FY '24 number?

You should have been running your company because this -- you said the best quarter -- the best quarter will be INR 50, but we are very realistic here. It is average FY '24 versus average FY '25. This is a cost improvement exercise on a Y-o-Y basis for the full year.

Okay. Okay. Got it. Second, on the expansion and then the CapEx. So by next, let's say -- I put the question another way. Till what max -- how many quarters can we wait to announce the expansion at the North? Next 2, 3 quarters, can we wait? So ultimately, are we looking at the COB to be happening in FY '27 and not in FY '26? And if so, broadly the previously, we talked about closer to INR 1,400 crore kind of a CapEx for this. So that number remains the same?

Yes, the number remains the same. Size of the line will have a little bit of a change based on our final strategy and market growth and where the split grinding unit will come. So we are really looking at either a 6,000 TPD line or the 7,000 TPD line. That's where it is gravitating. So the overall CapEx outlay may undergo a change based on the size of the line we are now putting in. But overall, we are looking at anywhere between $70 to $85 per ton CapEx cost. In terms of how many quarters, I need to wait. I will -- they ask you -- I will comment when it happens. Give me time. As I said very clearly, we want to be very comfortable with the numbers at the full year level. We have got whether in terms of realization or in terms of EBITDA or in terms of debt levels or in terms of regulatory number of agendas, which we have. Having said that, I'm not going to set a time limit for myself and say, a quarter from now or 2 quarters from now, I will compensate. But suffice to say, during the course of this year, we would certainly come up with an expansion plan.

So without this, our CapEx, absolute CapEx for FY '25 and '26 will be how much?

I think we are going to be very clear because right now, the big projects, which we started last year, if you remember in the last call, you were asking about what were the FY '24 CapEx numbers. Last year, we ended CapEx at INR 579 crores. But out of those, the big projects were basically Nimbol expansion, Risda expansion, Sonadih siding, Jajpur siding and Bhiwani expansion. All of them -- Nimbol is completed, Risda is completed, Bhiwani is completed, the siding of Sonadih and Jajpur are underway. So by the end of Q1, latest by Q2, all this ensuring projects -- ongoing projects will be completed. So technically speaking, we don't have big expansion CapEx in the first 6 to 8 months of the company. And whenever we announce the plan, that's when the CapEx are flowing up. So really targeting anywhere CapEx between INR 300 crores to INR 400 crores in pursue of things which come from, unspent CapEx really comes from the previous year as the overall CapEx outlay for FY '25 at this point of time.

Great. Last the data point, sir, our lead distance for fourth quarter, CC ratio for fourth quarter and AFR say for fourth quarter for FY '24?

Lead distance is a magic of 340 kilometers, both primary and secondary put together. And in terms of AFR percentage in Q4, we did 12% and in the coming year, we are targeting a little bit more -- couple of kilns were under refurbishment shutdown in Q4 and AFR percentage came down to 12%. Otherwise, in Q3, we were at [ 50% ]. We expect to increase this number by 2%, 3% full year average this year. And the third question of...

CC ratio for fourth quarter?

CK ratio at Q4 came at 1.74%. And FY '25, we are really looking at anywhere between 1.76%, 1.8%.

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

The value over volume strategy appears to have paid off this year. So congratulations to the management team on that. Just wanted to dig deeper into that strategy, I had a few questions on that. So it seems like if I understand correctly, the pricing environment was better in certain micro markets like Odisha, Chhattisgarh and not so much in other markets like Jharkhand and West Bengal. And the intent of the company is to maximize the contribution margin. Overall, it does appear to me from the outside that you're indicating, if you had sold in some of these micro markets, your contribution margin would have been negative if the intent is to maximize overall contribution margin. Is that clear? So that I had a few questions on that. I just wanted to understand if my understanding is correct.

So certainly not negative contribution because if you really run the business, you're really looking at our EBITDA comes at INR 853 for the year and over -- and added to that the way these numbers are looking at a contribution of INR 1500, INR 1,450, INR 1600 kind of number at different markets, so a different parts of portfolio. But contribution margin will never -- we can't get contribution margin zero at any point of time. Contribution margin can be INR 700, INR 800. But I think by selling a INR 700 and resultant EBITDA coming to INR 100 or INR 120, doesn't make any profit in our point of view. We do not take it to something which is accretive to the overall strategy of the company. But certainly, I think it's not a one quarter gain for us. Certainly, it's a long-term objective. We also don't want to kind of push bottom end product. We want to continue to have our premiumization. We don't want to tick around the discount levels kind of -- to get additional sales. So those have been the various levers we have. And also certain states, the overall pricing came very low. We really didn't want to kind of compete with other players to get by dropping price and getting volume. So we have to maintain our brand equity. So our product still continues to hold a premium over the next best player in the industry. Our base product is still top end product in the Eastern category. So we don't want to dilute our pricing position in the market.

Okay. Just say, I had a couple of questions on that. So fundamentally, first, I wanted to understand, my understanding was that basically these are all fungible markets, let's say your margin is higher in one market over other, everybody would move volumes to that higher margin market. So overall, it would come to a balance. So is that something that has not been playing out in this year? That's the first question. That shift of volume happened only for you, but otherwise for everybody else, they were not moving that incremental volume to this higher-margin market. Secondly, it would be that it seems like the intent was to operate at a bare minimum level in these markets, which had lower margin, whereas it seems like others were operating, we're trying to take that market share, even operate at lower margin. When the volume comes back, let's say, if you see the margin coming back this year, those players are already serving those customers. Would it be -- when you go back into the market and try to get back some of these volumes that you decided to walk away in this year. How do you in that kind of scenario go back and take that share at, fundamentally strategically I wanted to understand how these things play out?

Look, it's very -- I don't want to comment on what other companies are doing and what is their plan and how are they working on this because it's a national market and whatever growth numbers people declare are our blended growth numbers for all the regions in the country. In our case also, since we have only 2 regions we participate. So we're very clear about what we did in our Northern sector and what we did Northeast. So we kind of have a majority in East. So overall exposure in East is high, so the numbers came out -- they just come out in terms of volumes. So the companies have probably have an all India presence with similar capacities or substantial capacities that's what the reason for them to get an all India number. That's the first factor for not kind of comparing us with other companies and what they are planning to do. As regards to the question where you said that if we decide not to sell what will happen to trade and they walk away from the trade. In this industry, there is always an influx of new dealers who get appointed, dealers who move away from the fold, and there is a constant churn which happens in the industry, people who work with me today work with some other company, people who work with some other company come to us at some stage. So losing a channel, in my opinion, is not something which will -- is a long-term stuff, we'll always go with the channel whenever we want to do. So in FY '25, the goal for all our sales guys is to go get conquer channels at the appropriate markets to get presence of Nuvoco in almost all the markets. As regards to promoting our products and our brand, I guess, our brand pool is equally strong. Consumers want our products and then things have got off the shelf by the name of our brand in most of the states indeed. So it's a strategy which we deployed in FY '24. In FY '25, we still want to be a little bit more aggressive in the market to get volumes, and you will see it play out in the market going forward.

We have our next question from the line of Sanjay Nandi from VT Capital.

Hello?

Mr. Nandi, my I request you to use the handset, please?

Am I audible.

Yes, please go ahead.

Yes. Sir, my most of the questions got answered. Okay.

Do you want to ask any additional question or you're through?

No.

We'll take our next question from the line of Shravan Shah from Dolat Capital.

Yes. Sir, what was of fuel mix pet coke, imported coal and domestic sales for this quarter?

Yes. Just a second. You're asking for the quarter or the full year?

Quarter, quarter, Q4 FY '24.

Q4 overall linkage coal came at 23% and non-linkage domestic open market at 11%, imported coal 1%, pet coke at 52% and then AFR at 12%.

Okay. Got it. Second, sir, I just wanted to clarify, when we said INR 8 to INR 10 price improvement in East in April. So is this across 5 states of East or it is more like a -- only Bihar has seen a sizable hike in April?

It's a broad-based price increase in East.

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Ms. Madhumita Basu for closing comments. Over to you, ma'am.

Thank you, Yashasvi. As we move forward, we remain optimistic on the demand outlook as a significant portion of infrastructure programs are under execution by the government. We will continue to focus on premiumization, geo-optimization, fuel mix optimization, brand strengthening and cost efficiency. By executing on these strategic focus areas, Nuvoco is poised to deliver sustained growth and value creation for its shareholders and stakeholders in the year to come. We will remain available for any clarification required, do please reach out to our investor management's help. Thank you for joining us today.

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