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

Ladies and gentlemen, good day, and welcome to Q1 FY '25 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 risks 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 Investor Relations. Thank you, and over to you, Ms. Basu.

Thank you, Michelle. Good afternoon, everyone, and thank you for joining our First Quarter of Fiscal 2025 Earnings Conference Call. To begin with, let me briefly address the broader macroeconomic environment, after which, I will provide an overview of our performance for the quarter. The Indian economic signals a stable outlook as indicated by several economic indicator. Manufacturing is gaining pace with the PMI having exceeded its [ long-term ] average in June on the back of new orders. The timely arrival of monsoon is promising for agriculture and the rural economy. The IMD forecast above-normal southwest monsoon rainfall. The improvement in the outlook for agriculture augurs well for the further revival in rural spending that is already outpacing urban segments. Now let's turn our attention to our performance for the quarter. Firstly, let me spend some time on prices, a much discussed topic. Over the past year, the industry has experienced a downward trajectory in prices, which is not a positive sign. Q1 FY '25, too, was particularly challenging in terms of pricing. However, the company weathered the headwinds by effectively managing revenue per tonne, driven primarily by our continuous focus on value optimization, trade share, premiumization and geo optimization. In our ongoing commitment to premiumization, premium products have maintained a critical role within our portfolio. During the quarter under consideration, premiumization recorded a high of 40% of trade volumes, registering an increase of 37% in the previous period. Given the headwinds, the company remains focused on cost optimization. At this juncture, let me also brief you on quarter performance related to key cement cost elements. Power and fuel costs reduced 1% quarter-on-quarter. The company has reached the lowest blended fuel cost in the last 11 quarters at INR 1.57 per Mcal. It gives me much pleasure to state that Nuvoco's power and fuel cost continues to be amongst the lowest in the industry. On the raw material side, Nuvoco continues to be better placed due to its long-term slag supply agreement. Distribution cost per tonne declined by 4% quarter-on-quarter due to improvement in lead distance and no road movement of clinker in the East. Of course, efficiency, we are happy to report that Project Bridge 2.0 is on track. Railway siding projects in Sonadih and Odisha are at an advanced stage of completion which will further add to efficiency. Project at Sonadih is expected to be completed by Q2 FY '25 and Odisha by Q3 FY '25. I would like to reiterate that despite the volatile demand environment over the past 1.5 years, we kept a strict control on our cost lines. Coming to volume. The company navigated a quarter characterized by soft demand mainly due to elections and weather-related factors. We delivered a volume of 4.8 million tonnes. Some part of volume moderation was on account of our internal program with respect to upgradation of SAP across the organization. This was in line with our digital transformation journey. I shall touch upon this in more detail later in my speech. In Q1 FY '25, the company recorded revenue and EBITDA of INR 2,636 crores and INR 348 crores, respectively. As stated earlier, our blended revenue per tonne dropped marginally quarter-on-quarter even amidst weakness in all India cement prices. Our results should be viewed in light of the fact that effective 1st April 2024, as a conservative accounting practice, we have decided to book the incentive income on a realization basis. Accordingly, revenue and EBITDA for the quarter does not include any incentive income. On the marketing front, to enhance brand equity, we launched an innovative campaign for Duraguard Microfiber Cement, the only patented product with unique microfiber technology. Additionally, the company introduced Concreto UNO, a premium cement variant in West Bengal catering to the growing demand for high-quality construction materials in the region. During the quarter, we successfully completed the SAP upgradation across organization to facilitate the company's digital transformation journey. The upgradation project was undertaken with the objective of bringing entities under unified infrastructure and streamlining the processes across the organization. Moving on to cement demand. In Q1 FY '25, industry faced challenges due to factors associated with the general election, such as the scarcity of labor and additional restrictions related to the moral code of conduct. Furthermore, demand was impacted by extreme heatwave conditions across some regions and the early onset of monsoon in the East. Looking ahead, the near-term demand outlook remains uncertain. We believe recovery in demand changes upon spending on infrastructure and housing. Key drivers to watch out for include: Acceleration of infrastructure spending, as we all know, the government has budgeted INR 11 lakh crores for infrastructure CapEx under the union budget in FY '25. And the pace of these infrastructure-led spendings on the ground will be crucial. Pick up in housing spend. The government has increased the budget allocation for PMAY by 57% in FY '25, and traction in housing as a result will be a significant driver. Regarding industry prices. We believe that cement prices will remain under pressure and the near-term outlook appears challenging. However, we are optimistic that players like us, who have demonstrated the ability to optimize value in a challenging environment, will benefit the most when the demand and pricing cycle picks up. With regard to ready-mix concrete and MBM businesses, both are continuing to perform well. In ready-mix content business, we are currently operating 56 plants across India. During the quarter, we launched two innovative products. First, Concreto UNO concrete, which is India's first-ever hydrophobic concrete that repels water, setting a new benchmark in construction technology. Secondly, Ecodure Thermal Insulated Concrete, which is an eco-friendly product designed to keep spaces cooler, offering a sustainable solutions for temperature management. These advances highlight our commitment to innovation and our ability to adapt to market demand. On sustainability, the company's commitment to sustainability, a crucial element in today's business landscape, is highlighted by the fact that we are among the lowest carbon emission companies in the industry. To confirm, our audited figure for FY '24 stands at 457 KG CO2 per tonne of cementitious material. We believe that our sustainable practices will continue to add value for our stakeholders, including the communities we serve. With this, I conclude my opening remarks. I'm joined here by Mr. Jayakumar Krishnaswamy, Managing Director, Nuvoco Vistas; and Mr. Maneesh Agarwal, Chief Financial Officer of the company. We are here together to answer your questions. Thank you. Over to you, Michelle.

[Operator Instructions] The first question is from the line of Jashandeep Singh Chadha from Nomura.

Before I ask my question, can I have two bookkeeping numbers? Firstly, what is the RMC revenue? And also what was the net debt for this quarter, first quarter?

You're asking about the RMX revenue?

Yes, sir. And the net debt for the quarter.

For the quarterly numbers for RMX. So we can say our Q1 FY '25 volumes is to the tune of [ 580,000k ] cubic meters. As regards to your second question in terms of net debt. As we ended June 30, it was INR 4,358 crores.

Sir, I was asking the revenue number for RMX.

So we're not doing segmental reporting for revenue.

Okay. Understood, sir. So coming to the first question, I just wanted to understand what's the plan for CapEx? I understand last time also, we had a discussion when you said around INR 3,500 crores, INR 3,000 to INR 3,500 crores is the mark you would like to touch before going on expansion. So any update on that? And which region will be up in the pecking order? Just wanted to get your view on that.

Just give me a second. Yes. mentioning that the plan for Nuvoco is to kick-start the investment the moment we hit a range of INR 3,500 crore, INR 4,000 crores. And this quarter, we are at INR 4,358. But it's not -- it's in line with our plan. If you really look at our June ending net debt for the last 4 years, it's been: June '21, it was INR 6,885 crore; June '22, INR 5,347 crores; June '23, INR 4,506 crores; and June '24, INR 4,358 crores. Always, June-end numbers are slightly higher than the March-end numbers. So we are in on course by the end of the year to be better than our March-end numbers, which we reported, around INR 4,030 crores end of month. And by the time we hit FY '25, March 31, we should be well and truly in line to better these numbers. So we are on course through our debt-reduction program. As regards what is our plan for expansion. Happy to report, together by the end -- we would just want a stability in the industry as well a stability in the overall performance, as I mentioned in my previous call. By the end of this fiscal year, we should be ready to start our expansion plan.

By end of this FY '25, right?

Yes, end of this fiscal.

Okay. And my second question is regarding East industry. So for the last couple of quarters, we've been seeing that Nuvoco has been underperforming its East peers and also as an industry as a whole. So is Nuvoco losing market share in the East? And what are your thoughts about demand recovery in that region?

I will just give you a qualitative response, trade, because industry doesn't report data region-wise. But having -- we are a majority East player, so we know what's happening in the region when compared to our peers. So we are more or less equal to all our peers in the Eastern region. Certainly, East is extremely competitive as we speak. But more than the competitive nature, it is all about pricing, which is happening in these switches, not improving, as Mita explained in her opening speech. And since the price is not improving quarter-on-quarter, Y-o-Y, one of the important things which we have been deploying in our company is the value over volume strategy, and so that our realization has to be in line with our objectives, since our main objective is to pare the debt and keep the company ready for expansion going forward. So the single biggest agenda for the company is to get the operational numbers on bottom line right to ensure that we are fit to grow going forward. So that's the strategy the company has been practicing 3 quarters now. And then even in this quarter, we practice the same strategy. How we would like to answer your question is looking at the comparison. All India numbers or every company in terms of revenue per tonne vis-a-vis our revenue per tonne changes from Q1 last year to Q1 this year and Q4 last year to Q1 this year. I'm very pleased to report that, in terms of the realization per tonne -- mind you, as Mita mentioned in her call, we don't have incentives either in the top line or in the EBITDA line anymore from 1st of April. So if you knock off, account for that number, our realization per tonne drop has been the lowest when compared to all peer group companies on Y-o-Y basis and on a Q-o-Q basis. Suffice to say that all of the majors have dropped realizations in the tune of INR 250 to INR 390 on a Y-o-Y basis. On the Q-o-Q business, all of the peer group companies have dropped to the tune of INR 100 to INR 160. Nuvoco is a company where, on a Y-o-Y basis, our realization per tonne has dropped by INR 90, on Q-on-Q basis of INR 41 -- INR 40. This clearly gives us confidence that the value over volume strategy is indeed working for us. But to your question that, with this kind of approach, are we losing market share or not? In this quarter, one of the principal events that happened in the company was the SAP migration. And because of which, we had a disruption of close to 6 days in the month of April. If I then account for the disruption to SAP, and I'm not saying that whatever we lost were a converted share, certainly, I think a large proportion of the gap would have been accommodated in sales because sales, once we lost, doesn't come back in this industry. So if I were to account for it, we would have certainly got flattish growth at an all-India level. So it's not kind of something which is worrisome for us. You will see us getting the volume numbers as we go forward.

Understood, sir. If I can squeeze one more. Nuvoco has reached such low blended fuel cost. So is there a room for further reduction in the coming quarters? Just your thoughts on that last one.

Yes. Actually, if you look at our fuel costs starting from Q3 FY '22, when mayhem hit the Indian fuel industry, we were trending at INR 2.05. And then went all the way, peaked at Q3 FY '23 at INR 2.74. And then on, it's been dipping down to INR 1.57. What makes us do well on this power and fuel is, as we have mentioned before, all our factories have WHR. We have blended cement, maximum percentage of blended cement, all our factories have got AFR consumption, and we have linkage times in all our main markets. At INR 1.57, there is certainly some headroom to improve for that. How do we improve it further? It will happen through two levers. One is, because of this little bit of a low-volume scenario, all our kilns are not running to full capacity. The moment our kilns run at full capacity, our WHR generation will increase. And then the fuel cost and our coal power cost will come down further. And secondly, all the new linkages for us have materialized now. One from the Eastern coaleries in Bangalore, from Southeastern coaleries in Chhattisgarh, and Western coaleries from Maharashtra. All linkage coal contracts have been signed. And currently, the linkage coal rates are trending anywhere between INR 1.4 to INR 1.43 million cal. Slightly higher than our best period of INR 1.3, but certainly better than the number which was 1.5 years ago at INR 1.6, INR 1.65 per million cal. And our AFR journey is also improving. In this quarter, AFR percentage was close to about 9%, but we were 12% in Q4. And once the kilns run, certainly AFR percentage will go to 16%, 17%. With improvement in AFR, increased WHR generation, maximizing linkage coal, there is good headroom to reduce this INR 1.57 per million cal to around INR 1.50. That's the opportunity we see for ourselves, and I'm pretty confident that, with the efficiency factors which we are talking, this number should be possible.

We'll take the next question from the line of Aman Agarwal from Equirus Securities.

First off, on adding on the situation in the core markets of Bihar, West Bengal and Jharkhand, the last thing we mentioned, we have started pave improving -- been improving since March. But the end market has actually kind of degrown. So I wanted to understand, how is the situation right now? And on the volumes front, do we see a degrowth again in the second quarter?

Okay. So if we look at our markets, certainly, Bengal has not shown any great [ majors ] in Q1. So I think, as Mita mentioned, the two things which will improve demand uptick in Bengal is about infrastructure spending and the individual home vendors. If the INR 3 crore program of the government fructifies in the near future, more houses will be built, and we are individual trade-centric player, that's where the improvement will happen. Bihar, we have done quite okay in Q1. We have not ceded territory in Bihar. In fact, all our premium growth, Concreto growth, is close to about 18% NPR, and overall revenue percentage happen in Bihar. So we're not worried about Bihar. Such as the increase we recorded in the quarter of 4% volume growth, which is also positive. Jharkhand, we again grew quite well at 3% in the quarter. The performance concern for us was Odisha. I think it took -- bore the brunt of attack due to the SAP down. And Odisha should be back in the coming quarter or 2. So overall, instead of looking at our outlook for Q2, I will look at the outlook for the 3 Qs going forward. We should be able to do a catch-up in the balancing quarters.

Understood. Just secondly, on the capacity front, if we dissect more into the state-wise, is it a case -- or maybe, is it a case that we are facing shortages, capacity constraints in any of the regions on the Eastern side?

No. Currently, I guess, we've got close to 9.5 million tonnes of clinker and 19 million tonnes of cement capacity and yield. And there is sufficient headroom for Nuvoco to growing in yields for at least 2 years from now. Still 2 years from now.

Understood, sir. And sir, lastly, if I may. On the breaker availability, where you mentioned, highlighted at issue in the past. So I just wanted to understand, how is the scenario currently?

I think April was a tough month, but I think this time around, the challenges was cement break rather than the clinker break. But as we entered May and June, breaker availability indeed improved. In fact, one of the reasons for our overall better performance in the distribution cost is largely coming out of elimination of road movement of clinker. In fact, entire quarter, we have not moved clinker by road and everything has happened by rail, and this is reflected our rupees per tonne distribution cost, which is a favorable result. So I think our availability has improved. And the fact that our Sonadih siding as well is more going to be commissioned, will -- it augurs well for us in terms of overall rail movement of clinkers. So quarter 1, not too much of issues due to breaker availability, but indeed was impacted due to the two rail accidents which happened. So rail accidents are only temporary phenomenon. They take immediate availability of breakers that are not available or restrictions were imposed on many lines when the accident happened. But I don't think that can be a reason for the industry. In general, availability was okay in Q1.

We'll take the next question from the line of Mangesh Bhadang from Centrum Broking.

Sir, a couple of questions. Firstly, on the demand side. So I just wanted to understand that post 1Q in the month of July, how the demand has been. Is it more compared to expectations? And given the recent announcements in the budget regarding all the projects in Bihar, when do you expect that demand to start kicking in?

Okay. Right question for the wrong guy. About the number two question, I don't think -- I cannot know the crystal ball when the government will sign a check to the Bihar government. I think I can only hope that they sign this check very quickly and things kick off very fast. As regards to the overall demand pickup in the month of July, it's still sluggish. I think monsoon has come -- unseasonal or early monsoon has happened almost everywhere in the core markets. It is -- July has started a little bit, but I think it could happen in the monsoon quarter. And considering the monsoon quarter, still able to move month-to-month, it should only improve.

Understood. Sir, second, on pricing. So we've been hearing and have seen on the channel sector, the prices in [indiscernible] are at multiyear lows, and similar situation happening around the rest of the region. So basically, after 1Q, how that pricing has changed in the month of July? And again, the same question, that where do you see this stop? Where will the bottom be for these prices, given the competitive intensity?

I have not been in industry for many few decades as many of other industry champions or the captains of them. But certainly, I've been long enough to observe the industry. One of the things I have noticed -- noticing in the industry, is I think that the current pricing, not only in East, in North and rest of the region, we don't participate. But in general, we operate in some parts of central, east, north and parts of west. Pricing is not increasing at all. It is kind of -- some of the price lines are pretty low when compared to historical numbers. But this is not a sustainable model at all, actually. And this kind of prices, overall profitability numbers of the entire sector is a little bit low. It should improve. I think demand should improve going forward and prices will automatically follow the demand in the -- even though monsoon is a little bit of a reset for cement industry. I think post-monsoon and into October, Puja and then into year-end and Q4, I'm expecting an improvement in prices.

The next question is from the line of Shravan Shah from Dolat Capital.

Sir, a couple of questions. First, in terms of the -- we -- in the last quarter, we were looking at the volume growth for ourself in line with the industry growth of 7% to 8%. But given the kind of our degrowth, now how do we look at it in terms of the volume growth for FY '25?

Yes. I think if you really look at the results published by all companies, the industry itself has grown close to about 1% to 2% number. So in light of that, our numbers, as I said before, got impacted due to SAP stuff. But certainly, in the near term, at least in the monsoon period, demand is not going to accelerate. But I think post-monsoon and come October, when the government proposes reach the ground and things start happening in infrastructure and housing, demand should pick up. GDP continues to be at 7%, 7.2%, so technically, demand should increase going forward. And if not in the coming 2 quarters, certainly, I'm confident in Q3 and Q4 and beyond, that it should improve in terms of uptake, and we should be there to ensure that we participate in the growth. Suffice to say that in Chhattisgarh, Bihar, Maharashtra, MP, we indeed are getting numbers in just much more than the previous quarters in the previous year. We are indeed growing as a company. The challenge has been Bengal. And Odisha I also mentioned, but Odisha should get sorted out in the next month or quarters. Bengal, we have to see overall uptick in the industry. Bihar seems to be okay as of now, but that should also improve in the coming 3 to 4 months.

We are seeing a good H1 results.

In Jharkhand, that's what I understood. Jharkhand, most of the things are okay. But Jharkhand is never one of those double-digit growth market. It's kind of a low to mid-single-digit growth market, and we continue to maintain our market share. Chhattisgarh, we have indeed grown with the kind of volume numbers which we are doing. MP, we have done a much better job in the last 2 quarters. So there are areas we are doing pretty well. Bengal is a large market for us. That's for other people. That's where I think the challenge is there for the entire industry because overall demand is not picking up in Bengal.

Just sir to harp on in terms of the pricing, just if I get the number. So in July month, on an average in east and north where we operate, how much our prices would have declined?

It will be very difficult to comment on July because we are in the quarter. So in this call, it will be difficult for me to tell what's the kind of numbers which are prevailing in the market as we speak. But I can only tell in this call that not much of movement in prices.

Okay. I need a couple of data points. What was the C/K ratio? Lead distance? OPC share? And the fuel mix for this quarter?

Okay. Let me just comment on the fuel mix first. The blended fuel mix, the INR 1.57, I mentioned. Out of which, coal was 42%. And in 42%, linkage coal was 23% and non-linkage coal was 18%. A small bit of 1% of imported coal. Then coke came at 49%, which was 3% lower than Q4. And AFR slightly reduced, it should improve. AFR of Q4 was 12%, we were 9% in Q1. So that's the kind of coal breakdown we had in the quarter. Lead distance reduced from 340 to 332 in Q1, result in Q4. And road share, 60% and rail share became 40%. C/K ratio for the quarter was 1.75.

And OPC was how much in Q1?

Shravan, we will give you the data points.

We will give you the data points. If you can reach out to investor relations team, we will give you the OPC data presently.

But we've given you the [indiscernible] ratio. That's the data on the table at the moment.

Yes. And lastly on the CapEx front, so how much we have done in Q1? And last time, we said INR 300 crores to INR 400 crores CapEx for this year, FY '25. So if you can help me with the revised number. And probably, once we start doing the CapEx, expansion CapEx by end of FY '25, how much one can look at for FY '26 in terms of the CapEx?

Certainly, I think, this year, as I said in the previous call, INR 300 crores to INR 400 crores, that's the kind of ballpark number which we have. Most of it is all completing the brownfield expansion we started last year, and rest could be sustenance CapEx and land CapEx. So in Q1, we have spent close to about INR 100 crores, which was a little bit of the brownfield projects which we spent in Q1. Other than that, I think quarter-end, we'll do about INR 200 crores to INR 300 crores. When we reach Q4 is when we look at expansion. And in FY '26, the sustaining CapEx was close to about INR 200 crores, will always happen to run the company. But we're looking at close to about INR 700-odd crores of development CapEx or new factory CapEx coming FY '26. So CapEx could be in the tune of INR 900 crores to INR 1,000 crores next year.

Okay. And if possible, in terms of the bridge to how much of cost saving out of INR 50 we have done. And INR 50 will be -- are we on track in terms of reaching by end of FY '25?

I think we -- during the course of this year, we will be able to deliver INR 50 per tonne at an annualized level, clearly. So we are well on our course. I'll just give a little bit of outlook on the key projects on the distributions. On the distribution side, the first one will happen from the railway siding in Sonadih and the Jajpur railway siding to be phased. The second big project could be in home markets as well as increasing [ SO ] dispatchers. Those are the two big projects on the distribution side. On the manufacturing cost side, it will be increasing alternate slag in case of most of slag. We also have a new sourcing model for bags. The other raw materials would be to get conditioned fire action, get [ peer ] gypsum in somewhat small project. And in the ready-mix side, we will have alternative raw materials. The big component in this is going to be optimization of power and fuel cost. The first one will be the grid integration in Chhattisgarh. I guess we are just a week or 10 days to complete it. So we will surrender the last bits of MD during this month. And then from September onwards, the full benefit will come out of the grid integration. And the second one will be to increase the alternate fuel in all the kilns. And last but not the least, this year, it may not fully fructify, but we will get the full benefit of the solar project in Nimbol, Bhiwani -- or the Bhiwani, Chittor and Jajpur. The other projects will kick-start in during the course of the year, but the benefits of that will not happen during the course of this year.

[Operator Instructions] The next question is from the line of Parth Bhavsar from Investec.

Can you hear me? I have two questions. The first one is, when we say that we might take up a CapEx in '26. So what is the line of priority? Which project will come in first? And after that quarter, what is our ambition like?

Yes. I guess we have been speaking about our priority for expansion in all our costs. Our initial -- the first priority will be to expand in north/west, which will be an additional line brownfield expansion coming in our Chittorgarh plant. That's going to be the #1 priority. But we have limestone reserves in Rajasthan, in Nagaur, in Gujarat, [indiscernible]. Other reserves are there, but priority is going to get really second line going in Chittor.

Okay. And what would be the capacity like? Or have we not yet finalized that yet?

No, there are various scenarios working, but it should be in the tune, between 2 million to 2.5 million tonne clinker, with split griding unit as well.

Okay. And sir, when we look -- when I look at your cash flows, like I think throughout the year, we can approximately make anywhere here between INR 700 crores to INR 1,000 crores of cash flows. And we know -- and we see that, if we take out -- we do take out the maintenance CapEx, the CapEx of INR 300 crores to INR 400 crores, we're still left the INR 500 to INR 600 crores, and that would be used to bring down debt. So is that -- are we fixated on that you have to bring down debt below INR 3,500 crores? Or even like INR 3,700 crores, INR 3,800 crores will be fine? And we'll go ahead with the CapEx?

So I think we've always been saying that to -- for us in this industry, we are comfortable with debt anywhere between INR 3,500 crores to INR 4,000 crores. So beyond that, to be able to fund our growth, hence, I think operating with a debt of INR 3,500 crore to INR 4,000 crore is fine, which would be kind of 2x our EBITDA, which is quite okay. And that's our intention and ambition, and it should be possible to fund the CapEx with this kind of debt levels.

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

Just one question. We've not had a great quarter 1, possibly quarter 2 will not be great either. And the entire industry is expecting quarter 3 is going to be good, the prices will mirror the demand. What if that doesn't happen? And the other thing is the huge government investment which is likely to happen in Bihar and some extend in northeast, when you think that is going to materialize? During which time frame are we looking or expecting that to happen? Maybe some visibility on those -- on that.

I guess, performance is all in the eyes of the beholder, actually. So I guess the big things which we have delivered. And first of all, we have stayed our course in what we have been committing to all the investors and shareholders. The things which have worked for us in this difficult situation outside of realization drop is lowest. So that's, again, relative. Some people have realization reduced, our realization has reduced less. So for us, I think that's a positive win. We are a strong company. We are trade-centric player, we are a company with premiumization, those are two levers that work for us at 40% premiumization, 73% rate. Our power fuel cost is one of the best in the industry at INR 1.57. As I said a little while earlier, there is some headroom to improve, which should be around INR 1.5. If I were to get into INR 1.5 per million cal and all but WHR is one, I still can squeeze out about INR 50 per tonne in power and fuel cost in the overall performance of the company. That's an agenda which we are pursuing. Logistic costs with all these projects of Sonadih siding and Jajpur siding, and also focusing on home markets and SOs, our distribution cost has come down Q4 to Q1, full year to Q1. And that's a number which I think has worked very well for us in Q1. We have been working on deleveraging the company for -- 13 quarters of our debt levels are in line with what we informed all of you during our calls. And I think we are very mindful of paring the debt to prepare the company for future growth. The digitalization of the company of -- journey of the company is already happening. And in the coming 1, 2 quarters, we'll have a customer-facing app working, we'll have a vendor-facing app working, and SAP model -- of the SAP system are all unified. So those are all positive stuff. In the sustainability front, our company has delivered 457 kgs of CO2 per tonne of cement, which is the almost -- not almost, others' audited numbers are not public. But certainly, this is a better number in the history of Nuvoco and probably in the entire cement industry. So these things are indeed working for us. So we'll pursue this, and we will see improvement in overall volume uptake once the outside market improves. And certainly, the bottom line numbers will improve with all the cost initiatives which we have taken, and certainly, the pricing returns to the industry. Yet, in that regards, what happens to the industry when the government investments are going to happen? I think that's a billion dollar question, and I'm not going to hazard any guess when the on the ground changes will happen. But having seen the industry and also been in India for many years now, I think any announcement in budget will take 1 to 2 quarters for firm things to change. By the time Q3, Q4 happens, I think the more will improve and things on the ground will happen. But certainly, all the big improvements the government has made will happen in fiscal '26.

Thank you. Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Ms. Madhumita Basu for closing comments. Over to you, ma'am.

Thank you, Michelle. In my closing remarks, I would like to summarize that as we look ahead, we remain cautious about the demand outlook and pricing dynamics in the cement industry. Despite the challenges, our strategic priorities: We'll continue to focus on premiumization, optimizing geographic presence, enhancing fuel mix efficiency, brand strengthening, along with a strong emphasis on cost optimization. I trust we have been able to answer your queries satisfactorily in this afternoon's call. Our Investor Relations team will remain available for any clarifications you may require. Thank you once again for joining us today.

Thank you, members of the management. Ladies and gentlemen, on behalf of Nuvoco Vistas Corporation Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.