Orient Cement Limited (ORIENTCEM.BO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Ambuja Cements Limited Q3 FY '26 Earnings Conference Call hosted by Antique Stockbroking. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. [ Krupal Manier ] from Antique Stockbroking. Thank you, and over to you.

Thank you, Iqra. Good evening, and a warm welcome to everyone. On behalf of Antique Stockbroking, we welcome you all to the Third Quarter FY '26 Earnings Call of Ambuja Cements Limited. I will now hand over the call to Mr. Deepak Balwani, Head of Investor Relations. Thanks, and over to you, sir.

Thank you. On behalf of Ambuja Cement, I'm pleased to welcome all the participants to our quarter 3 FY '26 earnings call. Ambuja Cement Limited is part of the diversified Adani portfolio and the world's ninth largest building material solutions company. Before we start, please note that this call may include forward-looking statements based on our current beliefs and expectations. These are not guarantees of future performance and may involve unforeseen risks and uncertainty. We are pleased to have with us on the call Mr. Vinod Bahety, Chief Executive Officer; and Mr. Rohit Soni, Chief Financial Officer. Now I invite Mr. Vinod Bahety to provide his valuable insights on the quarterly performance.

Thank you, Deepak. Good evening, and a warm welcome to everyone joining us for the third quarter results of FY '26. This has been a decisive and strategically important quarter for Ambuja Cement. We delivered industry-leading performance, growing our volumes at 2x the industry average. This was supported by stronger market execution, improved availability across both trade and non-trade channels and higher base capacity utilization. Our actions on premiumization and mix improvement helped us capture significantly higher market share, better realization than the peers and thereby reinforcing our leadership position. The operating environment remained favorable throughout the quarter. Cement demand growth was driven by infrastructure activity, sustained housing demand and a recovery in the rural construction after a favorable monsoon. A defining development this quarter has been the proposed amalgamation of ACC and Orient Cement with Ambuja Cements. This marks the beginning of a unified One Cement platform that will accelerate our growth trajectory, support EBITDA expansion, strengthen operational excellence leverage, improve logistics density and enhance capital efficiency. We see this driving long-term value creation over the next 24 to 36 months. Regulatory approvals are progressing quite well. We are seeing an early operational success across the acquired assets. The capacity utilization for the quarter improved meaningfully for the acquired assets at 58%, improvement of 21% compared to the previous -- to the last year's Y-o-Y, which was at 37%. Utilization had further improved. The exit of December, by the way, is 65%, although my quarter average is 58% for the acquired assets, but the exit is at 65%. And we are confident and looking forward to achieve almost 80% on these acquired assets. These outcomes reflect disciplined execution of our integration and optimization playbook. Pricing has entered January on firmer ground as we are seeing a similar uptick in price in January, along with double-digit volume growth. Southern markets are leading increases in the range of INR 15 to INR 20 for non-trade, while the Northern market has witnessed price increase in the range of INR 5 to INR 10 in non-trade range. Importantly, these hikes have held making a departure from the rollback-prone patterns of the previous years. With a comprehensive focus on value and market share, realizations improved INR 5 per bag as compared to last year. Trade pricing continues to outperform non-trade with gaps widening up to INR 31 per bag as non-trade remains more sensitive to the infra-led offtake and seasonal disruptions. On capacity, we commissioned 2.4 million tones of Marwar grinding unit ahead of the schedule. With this addition, our total capacity now stands at 109 million tones per annum. We were looking earlier at 120 million tones in FY '26. 2 million tones of Sindri and Jamul has also been included here in addition to our 118 million tones of target, but the Warisaliganj commissioning is now scheduled for first quarter of '27. So there is a delay of 3 months in Warisaliganj, such that now we will be exiting March at 115 million tones as compared to earlier 118 million. Alongside this, we are unlocking an additional 15 million tones of debottlenecking capacity at lower CapEx cost. These initiatives will provide a clear and capital-efficient pathway to reach our aim of hitting 155 million tones by March of '28, which will position us strongly for sustained growth. Premiumization continues to be a powerful value driver for us. Premium cement volumes accounted for 35% of the trade sales. And in absolute terms, it increased 31% compared to last year, amongst the highest in the industry. Ambuja Kawach and ACC Gold, they remain our blockbuster premium cement products under the super premium segment. And GST reduction only has helped in terms of shifting of the consumer preference towards the higher-quality performance-driven products. Cost leadership remains a key strategic advantage, although I'm sure you have seen that in this quarter, my costs have gone up, and you would be keen to know about the reasons, but I can only give in more details when I come to the cost part. But we have delivered visible Y-o-Y reductions across the value chain. Kiln fuel cost declined by 6%. Power cost reduced 15%, green power share increased by 15% to now 37% and logistics costs reduced by 1%. Our narrative on reaching INR 3,650 per ton of cost by March '28 continues. A little bit more on the cost so that while our December quarter comes at INR 4,500 a ton as compared to our September quarter, it is almost INR 250 hike -- in the -- right in the beginning, I can highlight that these are like specific onetime expenses because my exit of December is below INR 4,000 -- December month. So that this INR 4,500 crores, I would say, is an aberration of one of these initiatives, for example, the brand transition, the B2B and the B2C segment. As you know, that we have introduced and more larger amplification of Adani Cement brand. We have also done a substantial overhauling of the assets of Sanghi, Penna, which has seen a significant capacity improvement. I must also tell you that Sanghi is now operating the December month exit is almost at for clinker, 80% and for cement, 65%. Penna is also showing a very healthy improvement in the capacity utilization. There were one or two plants which had some unfortunate equipment failures and one of them was Sanghi for the Penna and Jamur for ACC. But these are like under now going to be operational very soon. So these are like expenditures which have come in terms of the quarter, but this will not be there for the March quarter. Therefore, exit of December already, as I said, we are below INR 4,000 a ton. Coming back to my commentary, our renewable energy footprint now stands at almost 900 megawatts strengthening both sustainability and cost resilience. The real benefits of this 900-megawatt trends will come in coming quarters because many of this power as of now, I'm selling in the market because it will require certain approvals in terms of consumption at my site, but that will happen very soon. And therefore, the benefit will significantly come in the coming quarters. But the good thing is these assets are operational, and I'm able to sell this power in the market. We expect to reach 1,122 megawatts by FY '27, providing this long-term insulation in terms of the energy price volatility. This green power, when I consume captively, as I said, it will significantly improve my overall power cost per unit. As of now, I can tell you it is almost closer to INR 6.1 per unit. When I look at the competition, they have an advantage over there, but that advantage will sooner come to Adani Cement once this is fully operational and we are able to consume it. Digital intelligence continues to be central to our operating model. We have launched CINOC Cement Intelligence Network Operating Center, which is AI-enabled central control system. Lots of applications, user interfaces, simplified apps and smart tabs have been given to our people. And I strongly believe that this will be a game changer and will bring substantial efficiency and productivity with power of analytics to the cement business. Both IT and OT will have a significant improvement. Our ecosystem continues to deepen our execution advantage. We expanded engagement across the priority industry platforms. You are all aware of our engagement with CRI, BAI, Nareeco, Institute of Town Planning, amongst many. These are like first of its kind institutional partnerships, which we have initiated in the last 9 months, and they are giving us significant results. On-ground programs and brand activations continue to build trust in our product quality and services. FutureX, which now engages almost 750-plus institutions. Some of you would know that we launched this program on 15th of September, which is turned out to be the largest industry academia initiative. Almost now it encompasses 1.3 million students, which will give us a significant advantage to bring the synergies of academia with the industry apart from getting the mind share and market share. In terms of the consolidated financial performance, we delivered a strong performance this quarter, supported by higher volumes, improved realizations and discipline on the cost, although as I said, the December month has been a significant improvement and which will percolate down to March quarter as well. We reported our highest ever quarterly sales volume at almost 18.9 million tones, up 17% and the market share improved to 16.6%. By the way, we have been giving a consistent double-digit volume growth for the last 9 months. So even if you look at my 9-months volume growth, it is in the range of almost 19%. On a normalized basis, we achieved the highest quarterly revenue at INR 10,277 crores in the third series of the year, Q3, up 20%, supported by INR 5 per bag improvement in realizations. I think you will find some of the industry players have seen a decline in the prices Y-on-Y. But our focus on market, our focus on premium cement, our focus on blended cement, and you will see more accelerated focus, it is now giving us a delta improvement in the realization, which in this case has improved by INR 5 per bag Y-on-Y. PAT for the quarter was INR 378 crores, a jump of 258%. Again, for the sake of clarification, we have put an entire table on the one-off exceptional items so that PAT is apple-to-apple comparable. Unlike if you go with the reported numbers, you will find a steep fall, but that is incorrect because there are exceptional items sitting in terms of the income tax refunds and onetime of the items or the excise duty drawback for Himachal, which I have clarified in my IR deck also in my reported numbers also in press release. So that is -- for apple-to-apple comparison, PAT is up 58%. Operating EBITDA was INR 1,353 crores, up 53%. And again, I've given a clarification that the Himachal excise drawback is a one-off item. Last time also, you all had suggested the same thing, INR 675-odd crores. So when you remove that, my EBITDA is up 53% Y-o-Y and the per metric ton EBITDA is closer to INR 718 per ton, up 31%. I have given you some explanation of earlier when in second quarter, September, when my EBITDA was almost INR 1,020 per ton, the delta of INR 250 per ton ballpark, for example, is what I told you in the element of cost, which is slightly higher as compared to last quarter. But as I said, December exit is phenomenally below INR 4,000. The EBITDA performance was supported by a Y-on-Y basis, 2% cost improvement. Kiln cost declined 6%. Of course, I can tell you that the kiln rate is better for me, but the kiln efficiency, I'm still -- when I look at some benchmarks, I'm still at 25 to 30 kilocalorie heat consumption higher, which is an area -- which is clearly earmarked for us to run down. Power cost reduced by 15% on back of the green power share, which is increased by almost 15% and my logistics costs, and there's a good scope for me to further reduce my logistics cost. But as of now, it is reduced by 7%. The diluted earnings per share for the quarter is INR 0.82. Net worth is almost at INR 70,000 crores, to be precise, INR 69,854 crores, and it increased by INR 361 crores, which is equal to closer to the PAT which we have made for the quarter. Company remains debt-free, CRISIL and CARE AAA stable and A1+ ratings, which are the highest in the country. From the operational excellence trends, our operations have strengthened on back of disciplined execution, capacity expansion and network optimization. And in terms of the low CapEx logistics initiatives, which, for example, are on the track, some of them, for example, so we have already ordered the vessels, almost 7 of them, which will be delivered to us by somewhere like mid of '27. We also are working right now in terms of the EV for which we already have given some orders. So you will see more of this. We also are putting the blenders at the plants. We are also debottlenecking on the logistics. We are also putting a sharp increase in terms of the production of the premium cement. All of this, for example, will bring a substantial improvement in the overall plant efficiency. By the way, we have substantially run down the SKUs and which used to be multiple SKUs from a plant, almost 30%, 40% of that efficiency has also been brought-in. On the digitalization, I have covered it, so I won't repeat more. But on the ESG and sustainability, this quarter marked another step forward in strengthening our climate and sustainability leadership, efficiency improvement from the modern assets. And by the way, more and more modern assets because this March quarter itself, we will have almost around 8 million tones of cement, which will be up and running and commissioned. So this efficient new assets will help to average out the overall efficiency factors. It will help me to bring down the lead distances. As of now, I see that my lead is relatively higher compared to the -- some of the peers, but that is obviously in terms of the location advantage what others have since they have a number of GUs. But in my case, as we move with new assets, it will come down. We accelerated our breakthrough on decarbonization pathways, while we have been the first in the universe in terms of the commercial scale installation of Coolbrook RDH, which is root dynamic heater technology for the kiln electrification. This will help me substantially to improve my AFR. As you know, that we are doing it in Banganapalle plant in Andhra. Additionally, the Indo-Swedish carbon capture unit pilot project in partnership with IIT Bombay and the government of Sweden is already in the process. And we have become the first Indian cement company to adopt the TNFD framework, bringing our nature-related disclosures in line with the global benchmark. So on the ESG fronts, I can assure you that we are front runners, and we will not leave any stone unturned to achieve the ESG desired parameters. On people, community and capability building, our organization is becoming younger. As I told you last time also, my plants are becoming younger. We are becoming more digital savvy, and we are more focusing on smart execution. Across the communities, we are expanding access to future-ready skills through robotics, drone labs, rural KPOs, so on and so forth, I think so in terms of our community engagement, it is on a very strong footing. And therefore, you will see more -- like approvals coming on the -- at the various public hearings and all. Brand customer and stakeholder engagement has been very strong. Our presence across the 29 high-impact industry platforms enable us directly engage with more than 38,000 key stakeholders, including builders, developers, engineers, architects and policymakers, which I mentioned to some of the great institutions like CI, BI and [indiscernible] and so forth. It is giving us a direct interface. Brand visibility remains widespread with outreach and activations touching over 300 million individuals across the cinema, OTT, digital and so forth. I think our team is very forward in terms of using the digital media. In terms of the technical services, which is the -- one of the key strengths of Adani Cement, and I have a very sizable team on technical services. We have strengthened considerably. We what we call it as ACT, Adani Certified Technology side, which are like the houses which are built by our premium cement, this is growing every quarter. And this quarter, we had almost 36,000 ACT sites. We have a network of 70-plus thousand contractors, influencers. We have almost like 400 workshops and so on and so forth. So on the technical engagement also, we are on a very strong footing. Now friends, on the last concluding from my opening speech in terms of industry, I'm very positive. I've been positive for last 4 quarters. When I -- at the beginning of this financial year, in the first quarter itself, I told I see a demand growth of almost 8%. And in between, there were headwinds of the war and monsoon and seasonal dynamics and so on and so forth, but you are seeing a strong revival coming back. And therefore, FY '26, I strongly believe the industry will close at almost 8% growth of demand, which resembles also like 1.1x of the GDP of almost 7.5%. So demand comes around 8%. Exit of trend of December was robust and with demand strengthening from early December and going into January also, I mentioned to you that even in January, you have seen a good level of price improvements, and we are also seeing a similar trend expected in February. So the overall revenue are going to improve. It is expected almost, as I said, 8% demand growth and almost 2% to 3% improvement, another improvement in the quarter -- coming quarter, which will be a healthy finish for the year. Against this backdrop, our R&D bagged customized cement solutions, you will hear it very soon that we are also doing some specific R&D bagged customized cements, and that is going to strengthen my value-added products of cement and thereby the weighted average realization. Institutional demand is very healthy, but growing focus is on the blended cement and which will consume lots of, say, fly ash or slags. So that is what, for example, will be a key driver for me. Currently, my share of trade and non-trade is almost 65% is trade and non-trade is 35%. Down the line, it will be moving towards 70-30. By the way, end of December, exit of December, we are seeing this trend of 67%, 33%. And January already, we are at 70-30. So that is, for example, what we are focusing more on the trade channels, which is going to give healthy kind of say, realizations. Overall, strategies are working very well on the market-led leadership and the cost leadership is going to unfold in quarters to come as already started with December at almost below INR 4,000. And I'm seeing the same trend, which will follow through in the March quarter. And needless to mention that all the benefits of AFR, WHRS, green power, new cement capacities gives me lots of confidence that our journey to achieve INR 3,800 per ton of cost by March '27, INR 3,650 by March '28, that conviction and confidence continues. Thank you, although it was a little longer, but I thought I will go into more details, but now back to the moderator.

[Operator Instructions] The first question is from the line of Navin Sahadeo from ICICI Securities.

So two questions. One is on your volumes. So in the quarter, you have reported about 17% growth. But if I were to just exclude Orient from it, which you have reported -- I mean, first of all, congratulations for the transparent like kind of entity-wise reporting, which helps us really understand and even pose this question in the first place. So congratulations on that. My question was, if I exclude Orient, from the total volumes, then the volume growth comes to more like 6%. And even I'm assuming Penna would have ramped up. My question was that if the realization decline, as I see, is much less than peers. So is it that in Q3, we were focusing more on premiumization or on pricing or value versus volume, which is why we saw a slightly lesser growth in other regions, if I may think it that way. And how should one look at them incrementally going ahead about volumes ex of South from a market share and growth point of view?

Okay. So you had two questions, Navin, you're through with both the questions?

My second question then was on the renewable energy. So 898 megawatt out of 1,122 megawatt is already commissioned, which is nearly 80%. But in your opening comments, you also said that you're not able to utilize it fully pending approval. So you're selling it in the market. So is it that this -- whatever you're selling in the market is -- how is that reported in the first place? And then what kind of savings by when can we expect and how much savings in the renewable space?

Okay, Navin. So let's come to the most important question is in terms of the volume growth. I think 17%, which includes all the entities Ambuja as a consol, right, Y-on-Y. So you're right that in the previous year quarter, Orient was not there. I can do the math and Orient, if I exclude, that would come somewhere like 8%. And if I completely remove all the acquired assets and then if I go with the base capacities, Navin, that comes to -- in fact, that is a tad better than the industry. It comes to closer to around 6%, yes. Now which would mean the base capacities of Ambuja and ACC, right? Now if you do a similar theme for other companies, you will find that those companies are at somewhere like 3% to 4%. I'm not naming anyone, but generally, like that is the trend, but we are actually better than that. Second question. So second point, you're right that in terms of the gear shift, of course, now the strong brand of Ambuja and ACC and now with the loaded power of Adani and therefore, now it's like Adani, Ambuja, Adani ACC, our whole larger drive is to regain the market share on the trade side. So many companies will end up doing a larger share of volume because they will end up doing on the non-trade side and all. Our focus will be to regain the leadership position of Adani Cement on the trade side on back of the strong brand equity, what we have. So therefore, forward-looking, I can say 70-30, I mentioned in my opening remarks, 65-35 to now the exit of December 67% to 33%. And then in March, already, although in the month of January, I'm seeing 70-30 and gradually down the line, 75-25, for example. So that is like our wish list and are working to achieve. So that will definitely help me to improve my realization. It will help me to penetrate more premiumization. And therefore, the NSP will be better than the industry peers. This is a clear earmarked strategy and which is played in the month of -- in the quarter of December. And more so you will see it actively being played in the month of January as well as coming quarters, which also brings another point that the digital strength will help me more in direct engagement with the -- and simplified working with the dealers and therefore, the retailers and therefore, the end customer. Therefore, I'm very confident the whole logistics and the technology optimizers and the algorithms will help me on a speed of orders and all. So therefore, the blended cement and the trade will be a higher growth percentage. Coming back to your question on the renewable energy. As of now, renewable energy, there are two factors. One is certain government approval. Second is also that my capacities when they when they come up and running. But I told you like 8 million of the grinding units, then also the clinker in Bhatapara Line 3, the clinker in Maratha, which is expected in first quarter of the next year. Clinker facilities obviously consumes more power. So as things move forward and when my new capacities come fully operational, they will be able to draw more power. Pending that, therefore, you can say that I'm ahead in terms of power, and therefore, I'm also able to sell those power in the market. And I have a combination of both wind power and solar power. As of now, this income of power, it resides under the other operating income in the P&L. Yes. So that is how it is. If I net it off in my power cost, then it will be much lower. But from an accounting perspective, right now, this third-party sale is residing under the other operating income.

The next question is from the line of Ritesh Shah from Investec.

A couple of questions. Sir, first is, how are we looking at the JP assets, which are now sitting at AEL? Would it make logical sense for Ambuja to digest it based on what the AEL decides upon? That's the first question, sir.

Yes, you complete, Ritesh, and then I can -- in one time I can...

Yes, sir. And sir, second question is more on accounting. In ACC press release, we have written that planned maintenance from next fiscal will be amortized over 12 months. Just wanted to understand the rationale for it? And the other accounting-related question was in the notes to accounts, again, we have indicated that with respect to coal sales as other operating income, now basically, we net it off under power and fuel. In the earlier quarters, we have seen something similar for sales promotion expense. So I just wanted to understand the thought process for the all three line items. One was maintenance, second is coal sales and third is promotion expense?

Yes, Ritesh, thank you. Good observations. First, Ritesh, on the JP asset -- last time also, I think a similar question would have -- had come rather, and I said that AEL is a separately listed company, and it would be better that this question is asked to them. As of now, I will keep it on an arm's length basis. And therefore, I would say, no comment right now from Adani Cement from Ambuja on this. Second is in terms of the accounting of the plant maintenance, this is like very important, Ritesh, because otherwise, what happens is so far, as of now, the accounting has been done, for example, say December quarter, the accounting results into distorted sometimes picture of a quarter because the cost gets booked on an actual basis when the maintenance happens. What now we want to bring it, which is more logically to all of you also that this amortization will happen over 12 months so that the quarters don't get distorted with the scheduled plant maintenances. Right now, the accounting policy has been to book it in the quarter when the maintenance activity actually happens, yes. So that is like a very proactive step so that all of you are able to then properly look at the quarter in a real sense. So far as your third question is in terms of the coal sales and the -- which is like whether it is netting off my other OpEx, I will just like want some details from my CFO.

Yes. So in ACC, because of the MSA, what we have between the One Cement platform, so the coal sale, which happens earlier, we were netting it off on the expenditure, given the discussions which we had with our auditors, we have shown it a gross at both the ends. So that is going under the revenue from operations instead of netting it off on the power and fuel, the value was INR 315 crores for the period.

Sure. Sir, can I just squeeze in one more question?

But Ritesh, I think the moot point here is I just want to again check that there is no impact -- It is only the grossing. No impact on the P&L item, -- no impact on the EBITDA, right? So yes, so Ritesh, over to you again.

Yes. And sir, last question was basically, how should we understand the change in inventory on a sequential basis at Ambuja consol level?

Change in inventory, like what is your question specifically?

It's moved from minus 30 to minus 84. The swing is quite substantial.

Yes. So okay, Rohit, do you want to add to that?

So Ritesh, if I can answer here. I mean, if you take in quarter 2, that's where we have a big swing, and that's predominantly on account of the stock buildup, which happens in the quarter. That's the seasonality of the business, which is a low quarter sale from that perspective. So you'll have buildup on the cement stocks. You also have a buildup on the clinker stocks, which gets pushed out in quarter 3, quarter 4 and quarter 1, but it gets smoother now. So you see in this current quarter, we don't have much of it reflecting it. It's predominantly on buildup of the quarter 2, which we have. Otherwise, it's a seasonality which impacts. So there is nothing more to add.

The next question is from the line of Rahul Gupta from Morgan Stanley.

My first question is, in the September quarter, you had mentioned that a majority of consolidation of Orient and Sanghi-related costs were largely behind. In fact, there was around INR 42 per tonne of maintenance-related cost in September, which should have subsided in this quarter. So can you help us understand what exactly is driving OpEx higher Q-on-Q? Any quantification over here would be helpful. And my another question is, by when can we expect clarity on the expansion? You gave us the 15 million tonne debottlenecking breakdown, but what about the rest on your road map to 155 million tonne?

Rahul, I think if you go back to Slide #38, so while it captures broadly the overall phasing of the expansion plan, so FY '26 exit is 115. Actually, it is 117, but then I'm also going to do mothballing of 2 unviable and economically unviable units basically. So therefore, I'm seeing 115 on a net basis. And then on top of it, the overall phasing of FY '27 and '28, that will cover balance almost -- so it will have a combination of both the new dues and the debottlenecking also. Ballpark around 130 to 32 will come by exit of March '27 and the balance will then come to me at exit of March '28.

What I was looking for was breakdown asset-wise, when can we expect details around that?

Breakdown of the capacity or what breakdown? Capacity?

Yes.

Okay. That we can -- so as things -- first, let's achieve the end of March so that we are happy at, say, 118 million tones -- 117 million, and minus 2 of the mothballing, so 115 million, for example, let's achieve that. Then as things progress, we will keep giving you further details because the blueprint is ready. But as things progress, we also want to go progressively with the quarters.

Got it. And my -- the earlier question on OpEx.

The earlier question was on cost of what? Penna and Sanghi? Debottlenecking. I think in the last previous analyst call also, I told the debottlenecking comes below $50. So I was at, say, $48 per tonne.

No, no, that's not what I was looking for. The last quarter, you had mentioned that Sanghi and Orient were largely fully transitioned.

The O&M cost. No, no. I think the O&M cost, for example, Rahul, of course, like that point of time, Sanghi and Penna are through. But now for you to have a substantially more capacity utilization, there were some items which were left. And then as I said that for Penna, there were a couple of these plants like mostly like Tangur was down. And in case of ACC, a couple of old assets were down on certain equipment. So that is where, for example, some of the scheduled maintenance, which was supposed to happen in, say, January, February got preponed in December itself, and that results into -- and which is precisely my point when Ritesh asked that how you want to schedule is in terms of the overall maintenance cost. And I told that from coming financial year, we will have a proper amortization of the O&M cost over the quarters in terms of spread over the month as part of the budget to that, there is no per se distortion of the cost on the actual basis, yes, unless there is any other breakdown. Otherwise, it will be like scheduled over the 4 quarters.

So let me ask this question differently. So how much of your OpEx was one-off during the quarter?

No. So like a good level of, for example, almost like in terms of my branding and my repairs, for example, almost INR 125 is sort of like one-off. In terms of my higher freight because sometimes you then go with a larger lead, and it is almost like INR 25 to INR 35 higher per tonne. In terms of my -- some of the legal costs, onetime in terms of some of the legal cases, which we have won by the way, but then this adds to the cost. So ballpark around, say, INR 150-odd is, say, on time. And therefore, like when I look at now my December exit, my December exit is clearly below INR 4,000, while compared to -- which was almost like INR 4,500 a tonne for the quarter, yes. So with every passing month, with every better utilization of green power, with every better utilization of the WHRS capacities and the alternate fuels, these costs are going to come down. So therefore, in terms of giving you an estimate, I can only give you an estimate ballpark, but the actuals will be positively surprising to all of us.

[Operator Instructions] The next question is from the line of Siddharth Mehrotra from Kotak Securities.

Sir, just to sort of elaborate on the previous participants questions. Could you perhaps give us some breakdown in terms of direction for each of the cost line items, say, for example, in terms of power and fuel costs, how much do you expect them to trend downwards, upwards, same for other costs, so on and so forth?

Yes, Siddharth, good point. I can give you a ballpark. I think in the initial commentary also, I mentioned, let us say, for example, my overall, say, power consumption per tonne of cement, which I find there's a scope for me to reduce by almost 10 to 12 units per tonne. And in terms of rupees per unit, almost INR 1.5 to INR 2, which is like although end objective, but INR 1 immediately. So ballpark, INR 100 to INR 125 a tonne, I see improvement possible quickly on the power. While my end target is by FY '28, INR 4.5 per unit as compared to INR 6.1 in terms of my power cost and my consumption almost which is from here, I can improve by almost minimum 15 units. But as of now, I'm saying the 10 units is quite possible in the coming quarters and this INR 1 reduction. So like let us say, around INR 150 -- INR 100 to INR 125 reduction on the power cost. On the fuel, almost like power -- the fuel is almost INR 150 reduction is what, for example, we would like to peg ourselves. And back on the strength -- on the strength of the new assets, which will come to us, which will reduce my overall, say, fuel -- the heat consumption. And with every passing quarter, my fuel cost is coming down and that you will see further trend. Look at the raw material, like now fly ash and all with the group synergies, we will be benefiting on the fly ash. We are putting up the BCFC rates all across the major centers of consumption, which will bring me benefits of logistics. So on logistics part, for example, when I look at it, almost INR 150 reduction is what we are targeting to. And on the raw material, almost INR 100. So plus/minus around say, INR 300 to INR 350 is what, for example, will come, and that should come to bring it down my cost to almost INR 3,800, again, as I'm saying, exit of 27 of March and INR 3,650. But this is like, for example, as I said, positively, we'll surprise with every passing quarter. But the blueprint is very clearly laid down.

So these are basically longer-term goals, not exactly visible, say, over 1 or 2 quarters, right?

No, they will come down because, as I said, like the moment my line is ready for commissioning, Matapara, for example, Line 3 is commissioned and it is ramping up. Maratha will come in Q1. This quarter, 8 million tonnes of cement will come. They will all be geared up to consume green power, which is right now, for example, which we are selling in the market. So like it's not like long -- mid- to long term, it will be possible to consume as they start to ramp up on an immediate basis also, number one. The moment they commission and get giving commercial production, this 8 million and all, the efficiency immediately improves because these are all efficient new kilns as compared to my almost the existing old assets. So like this combination will give you quick returns on a quarterly basis. So every parking quarter, will give you the improvements. Needless to say that, as I mentioned, the revenue pattern also will keep improving because all these new assets and all will be focused on premium and trade sales focus, blended cement focus. Many of my rigs, BCFC rigs are getting delivered. So like typically, once in -- almost 3 to 4 rigs gets delivered a quarter. The moment they get delivered a quarter, it straight away helps me to deploy for movement of flyers on railway logistics and therefore, the blended cement portion will go up. So I think don't look at as a long term, look at it as every passing quarter kind of action.

Got it, sir. Just one bookkeeping question, sir. What would be your guidance for CapEx, say, the next couple of years?

So CapEx, Siddharth, as I have also highlighted in the investor deck around ballpark for the growth part, say, ballpark, INR 8,000-odd crores and for the efficiencies and all, another, say, INR 2,000-odd crores. So I would peg it, but this is like a modular kind of CapEx because this is the various opportunities. My foremost focus remains and continues on capacity utilization of my existing assets. So that is like straightaway helps me to bring substantial KPI improvement. And therefore, this CapEx, when I indicate to you, it also will be a factor of how the existing assets also spans out in terms of utilization of the capacity and all. But ballpark, yes, INR 10,000-odd crores, you can consider.

Over 2 years, 3 years?

No, no, this is like I'm saying yearly CapEx. Annual CapEx.

The next question is from the line of Amit Murarka from Axis Capital.

Just on your expansions, while you have put out the numbers, but specifically on the clinker unit, which is Maratha and the Rajasthan clinker unit and Penna, by when is that expected to commission now?

Good. So Amit, thank you. Penna is expected in this quarter itself. It's been targeted somewhere like third week of February, but hopefully, like mid of February, yes. So this quarter itself, the commissioning will happen. And so far as Maratha is concerned, I mentioned earlier, it is expected somewhere like in Q1 to Q2. I would just keep a buffer of 1 quarter. So Q1 to -- let us say Q2. But -- so Bhatapara and Penna Marwar. Bhatapara is commissioned, Penna Marwar in February, then Maratha somewhere like in Q2 kind of scenario.

Sure. Understood. And beyond these then which are the other clinker units that you plan to take up in order to reach that 155 million of grinding?

Again, good question, Amit. Thank you. See, primarily for me, the engines of growth in terms of clinkering, Bhatapara remains my engine of growth so far as East is concerned. Sanghi is my engine of growth so far as West is concerned. And in terms of South, we have Vadi and Chittapur basically. But primarily, Sanghi is where we will grow. Mundra, we are already expanding in terms of the calcium sludge-based cement basically. You're aware of that. And Bhatapara, which I mentioned. So -- and another important thing is for North Marwar. Marwar remains my major, for example, mother unit in terms of the expansion. So the clinkering lines will be more primarily as a brownfield expansion. And therefore, the benefit of brownfield CapEx and therefore, the economies of scale and all will come. That's how, for example, our whole blueprint will emerge and all the dues are therefore -- and BCTs and all. A good thing is railways have also come out with the bulk movement discount policies, our tie-up with [indiscernible]. So in fact, my CapEx actually will be a tad lower because now instead of GU, you can also very well plan BCT and the advantage of flyers which the group has. So this will get -- the model is getting now reemerging because of these various dynamics, which are positive for the industry. Yes. But as I said, Bhatapara, then Marwar, then Sanghi are our mother mills for these three locations. And in South, I have Chittapur and Wadi, which are like primarily our growth engines in South.

That's very helpful. And also on grinding, when will you be coming out with more details from the 24 million tones, which you have mentioned for '27 and '28?

I will go back to what I think Rahul had asked this question or Siddharth would have asked this question, Amit. I think give me time that with every passing quarter, I'm going to keep you posted because as I said, the industry is in a very interesting, very supportive of policies by government. And therefore, instead of saying you that grinding units, I will rather put a blend of BCTs and grinding and container movements and so on and so forth. Therefore, like the models are reemerging. And therefore, like I will keep updating you all in terms of the footprints with every passing quarter.

Just a last question, if I may. So you were earlier also contemplating giving out the operations on a contracting basis. So has there been any progress on that attempt that you're making?

I must appreciate, Amit, you have been keeping so close track. Of course, yes, whatever we are discussing with you on every investor call, we are moving our journey on that. So in terms of the outsourcing also, I must compliment my team and the efforts which has been coming out that we are in a good momentum on that, and you will hear positive things on that part as well.

The next question is from the line of Raashi from Citibank.

My first question is on cost. Sorry to -- and you had several questions on costs. But just to understand that you mentioned that in the second quarter, the cost was INR 4,250 and that's gone to about INR 4,500. And as of the close of the quarter, you are at INR 4,000. Are these numbers correct?

That is true, Raashi.

Okay. So then -- and you also mentioned that the one-off expenses in the quarter were about INR 150 or so. So from INR 4,500, if I remove INR 150, I come to INR 4,350. But that INR 350 is such a fast decline. Like how did that quick decline come from like the quarter to current?

No. So Raashi, like I gave you some quick headlines when it was asked, like what are the items which are like one-off and I explained. But I explained in terms of broadly the branding, the O&M, the logistics costs, for example, which came in and some of the legal costs, which additionally came in and all. In terms of this delta INR 250, which was there as compared to September quarter, ballpark INR 250 resides in some of these items. But primarily, the first 2 months have seen -- it's more on the maintenance and all. December was lean and clean, and therefore, December is almost like below INR 4,000. And as I progress in January also, it is actually below INR 4,000. Therefore, my confidence to circle back to you on March exit at below INR 4,000 is very high. I can share further to you details more if you require, but this is like ballpark what I have been explaining right from my initial commentary to now. And as I said, with every passing month, the benefits of green power, the benefits and all of that, I won't repeat are actually coming in. So therefore, like some of these items get stayed off also, yes. So these are like ballpark my answers to that.

Okay. And on pricing, you mentioned that in the South, non-trade prices are INR 15 to INR 20 a bag in the North, INR 5 to INR 10 a bag. Are there any incremental trade as well? Or it's just only the non-trade segment?

So there is an improvement on trade also, but the level of speed of growth is more on non-trade and as compared to trade because the downfall also was much accelerated for non-trade and therefore, the corrective action happened. But of course, yes, even in the trade segment, it has improved, yes. And good thing is now, again, for South also, for example, our focus on the blended cement, and I'm happy to share that the -- some of the first kind of initiatives in terms of Penna where the blended cements are now moving out from the factories, just like 2 days back, that started. I'm also happy to share with you that in Bombay, the blended cement in form of premium cement. Otherwise, Bombay is more of an OPC market. But Bombay also, for example, we have launched our premium cement and it has got a huge response for the [indiscernible]. So yes, so I think coming back to South has seen trade also improvement and South will see more of our blended share of cement improvement in an accelerated manner.

Would you be able to quantify on average where your realizations today are versus the last quarter?

Raashi, that would be too much of details, but basically, what I can ballpark tell you that, yes, things are improving, I think, all clusters, all zones. And good thing is like the brand equity is now pulling a good level of demand from the customers. And the Adani added advantage of brand actually is bringing lots of positive euphoria and the supply chain partners. So you will find the benefits coming in every passing quarter in terms of market realizations.

Got it. And just one last question for me. Your balance sheet has suggested there's a slight decline in the cash quarter-on-quarter. Could you explain that, please?

No. Like Raashi, when you operate -- when you are looking at commissioning 8 million tones of cement, obviously, it will have a CapEx outgo all your clinkering of 8 million tones, which will be coming right now from Penna to Bhatapara, for example, to the commissioning of Maratha. All of this is a plant scheduled CapEx. And therefore, primarily, but if you look at -- like obviously, you know that from March to June and from June to September, there has been this acquisition of Orient and all. So Orient, if you keep it aside, which was almost like outgo of INR 6,000-odd crores. But if you keep that aside, huge CapEx, which is there in terms of the capacities which are getting added and the volumes growth will come in coming quarters.

Understood. So CapEx in 9 months is how much? Total growth and efficiency?

So in terms of CapEx for the 9-months, it is ballpark around INR 6,000-odd crores. And I would put the run rate, therefore, I've given initially that almost INR 10,000 crores is what we are expecting between growth and efficiency. And for the next 3 months also, for example, another INR 3,000-odd crores. So this will be ballpark INR 9,000-odd crores for this year and the same plus/minus a 10% run rate, we will follow -- passing years also.

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

My question is on your Slide #10, where you have said that the cost reduction would be INR 4,000 per metric ton March '26 exit. 9 months, we are averaging around INR 4,000 -- roughly INR 4,300. So do you -- can I assume that last year's fourth quarter, I did INR 900-odd EBITDA per ton and with the improved conditions in the first 2 months of this quarter, can I see that improvement reflected in the EBITDA per ton, so maybe INR 900 plus INR 300 or maybe anywhere close to it could be the EBITDA per ton for fourth quarter? And can we end the full year with something like INR 1,000 plus EBITDA per ton?

So Jyoti, I can give you commentary on cost. So far as EBITDA has two elements. Therefore, like, of course, I've hinted that and informed basically that January price momentum is very positive. And therefore, you will see that upside in terms of price also. And of course, on the cost, which I mentioned that exit of March, it will be below INR 4,000. So you will -- definitely, you can expect improvement overall. But what would be 4 digits or 3 digits, I would not give a forward-looking EBITDA.