Orient Cement Limited ($ORIENTCEM)

Ladies and gentlemen, good day, and welcome to the Ambuja Cement Limited Q4 FY '26 Earnings Call hosted by JM Financial Institutional Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. [indiscernible] from JM Financial. Thank you, and over to you.

Thank you, everyone. Without much delay, I will transfer the call to Mr. Deepak Balwani, Head of Investor Relations. Mr. So over to you.

Thank you, [indiscernible]. On behalf of Ambuja Cements, I'm pleased to welcome all the participants to our earnings call for the fourth quarter of FY '26. Ambuja Cements is the ninth largest building material solutions company globally and part of the diversified Adani portfolio. 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 artisan uncertainties. We remain committed to further strengthening our disclosure standards and improving the quality of our capital market compensation to the best in the industry. 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. Bahety to provide his relevance insight on the quarterly performance.

Yes. Thank you, Deepak. Thanks, Dharmesh. Good evening, everyone. FY '26 was a year of resilience for the Indian cement sector marked by industry consolidation and the GST 2.0 reforms on 1 side, while the adverse and the extended weather conditions, global geopolitical factors and the various state elections also affected the industry and demand in some of the other ways. Against this backdrop, Ambuja delivered a resilient performance for the year achieving its highest ever annual sales volume of 73.7 million tonnes, up 16% Y-on-Y, year-on-year, in that manner. And on a normalized basis, the EBITDA of INR 6,539 crores, up 31% at INR 887 per metric tonne, which is on a PMC basis of 12% and the PAT of INR 2,647 crores, up 17%. The company continues to remain debt free and its highest credit rating. Annual volumes grew well ahead of the industry. Trade sales volume grew steady at 10%, while the premium cement accounted for 35% of the trade sales during the year, reflecting sustained progress on premiumization. During the year, company cement capacity increased to 109 million tonnes, supported by commissioning of 10.7 million tonnes of new branding capacity at various locations like Marwa, Parisa, Santel, [indiscernible], Krishnapatnam and the additional center capacity of 7 million tonnes at [indiscernible] and Bhatapara. During financial year '26, we also made meaningful progress on the portfolio integration, successful amalgamation of Sani industries and [indiscernible] cement with Ambuja Cement is now completed while ACC and Orient Cement is under surface. The One Cement platform is a strategic initiative and will help to bring sharper focus on the operational performance, business synergies and the overall higher degree of compliances. Therefore, this time, the balance sheet of Ambuja Control now has finalized purchase price allocation of Orient and [indiscernible] till December, it was on a provisional basis. The numbers you'll find marginally changes in the balance sheet that is the classification of goodwill and the other intangible assets. While in the P&L, we will find some changes in terms of amount for depreciation and the deferred tax accounting treatment. Further trends, you will see most of the accounts, you will see various tax-rated provisions north with respect to reversal. Details are there in the published financials. Please also note, financial '25 and financial year '26 are not comparable like-to-like since FY '25 does not have Orient while Penna was acquired and consolidated from 6 weeks of August '25, that is only 7.5 months for the FY '25 as against 12 months for FY '26 and while Orient is only for 11 months in FY '26 and was not during FY '25. Targets again come back to the business part my [indiscernible] power share increased almost 32% now in Q4 compared to 26% before. The newly acquired assets, particularly Sani and Kenna, they witnessed lower [indiscernible] levels [indiscernible] remains at around for the full year at 57% on cement capacity utilization while [indiscernible] is 46%. However, last time I mentioned to you that in December quarter, we have seen a good improvement, especially for Sandi. The turnaround initiatives have taken little longer than the expected timelines. And some of these plants, especially of Penna, we did higher than expected time for maintenance CapEx and overall upkeep of the assets. So on the cost front, we have seen a bit of higher cost compared to our own expectations and therefore some disappointments. Primarily, if I have to look at the results, higher crate costs due to increasing the overall sale need primarily in secondary both, increasing some of the states like the additional good tax, especially in [indiscernible]. Then in terms of the higher cutting costs, which we also have seen that in the month of March, we have seen some abruption given the West [indiscernible] war, the [indiscernible] fuel cost on account of a little higher-than-expected heat consumption, what we have and most of for the acquired assets, the higher branding costs now that we have focused more on trade sales coming from the Q4. And while we have also improved our [indiscernible] to 74% compared to December quarter of '25, it was 68%, which would clearly mean we are focusing on blended cement. And if you also see [indiscernible] has improved from 67% in December quarter to now 65%. This has also the cost, which is the pending cost in the sales permission costs have gone up. And some of the other issues like the raw material costs, which we could have into in terms of the [indiscernible], but pending some of the raining prefecture, which will be completed in the coming months, and you will see a good level of improvement on that. But pending that, we have not been able to meet our some of the raw material costs to our desired levels. [indiscernible], there is a 3 to 6 months delay on some of the efficiency [indiscernible] that has happened. And hopefully, like in coming quarters, we should be gaining momentum to complete and give the benefit of [indiscernible]. So therefore, in FY '27, our focus firmly remains on streamlining the operations and margin expansion. So we will continue to focus on trade sales and more so on the premium product sales, which we have a huge leadership, almost 36% of my trade sales has been premium cement sales for Q4. We will continue to improve the reliability at [indiscernible] the overall asset utilization. Together, they have 19 million tonnes of capacity and the target is to increase utilization by at least 5% to 10% for [indiscernible]. In terms of the cost, while we are cognizant of the overall ongoing global geopolitical situation, and we have already seen cost escalation in Q4, more so in the month of March, almost by INR 25 a bag [indiscernible] bad costs ballpark INR 400 to INR 500 if I have to go on a full basis. Our cost increase is there in the industry, and so it's to our company. So we are recalibrating our cost for this financial year. I have mentioned earlier about us cost of almost INR 4,000 a tonne by March '26 exit. Meanwhile, in terms of the full year we have given a figure. We have achieved a figure of INR 4,400 return, which is almost 10% higher to our own target for the reasons that I mentioned before. Although in the month of March, we are closer to INR 4,100 a tonne. Since there are -- these are like fast-moving global situations and dynamics over the energy cost and other basically expected heights in the fuel and give [indiscernible] and all. Therefore, it will be very difficult to provide any long-term estimate for right now till the time things stabilize over the next 2, 3 quarters. Therefore, I would say that on song conviction on certain components of costs, for example, which I have: a, in terms of the overall raw material cost led by clients and in terms of the green energy costs, for example, which is going to be a substantial improvement fervor in our overall [indiscernible]. Therefore, I strongly believe INR 150 to INR 200 will savings will come from this component. On the overall control volumes, we are expecting it to grow in FY '28 -- '27 by almost 8% to around 80 million-odd tonnes. And we are cognizant of the fact that we'll focus on value with trade volumes and premium cement and therefore, we are keeping it to moderate the overall sales like growth in the volumes part. At an industry level, we believe that given the headlines of inflation and weak monsoon, the industry may grow at around 5.5%. We continue to remain committed to our end state sales when the targeted, supported by shaper focus on higher utilization of the [indiscernible] capacity. And while operating the new [indiscernible] and stabilizing them. Therefore, we propose ongoing addition of 10 million tonnes of [indiscernible], which you are aware of, have only shared with you in the Investor Day. Some of them, for example, and as [indiscernible] and so and so forth. We are expecting to read capacity of almost 1.9 million tonnes by end of FY '27. Capacity expansion plans, we are recalibrating in 9 interval approach to take the advantage of the recent [indiscernible] policies on element terminals addition pursue more gradual in terms of first focusing on optimizing the current capacities in hand. This will also help in terms of a very disciplined allocation of capital and a commitment to maximizing the returns on the capital [indiscernible]. So looking ahead, India's long-term infrastructure story remains fundamentally very strong in particular. However, with the expected inflationary pressure, weak monsoon and [indiscernible] demand is expected to remain soft against this backdrop, Ambuja focus on disciplined execution, spending brand penetration, selling trade sales, selling premium cement sales and maintaining the cost and capital discipline. Thank you, and I will now hand it back to the moderator back.

[Operator Instructions] We'll take our first question from the line of Navin Sahadeo from ICICI Securities.

So [indiscernible], also just to inform you that we also have our [indiscernible] Director and Mr. [indiscernible] also on the call. He has just joined us. So I welcome [indiscernible] and I just basically by with opening remarks, and we are now on the Q&A. So over back to the moderator, please.

We have a question from Navin Sahadeo, Navin?

My first question was on the volume growth front. So in this quarter, as per the investor debt volumes have grown by about 10 odd percent. But if I adjust them to the Orient Cement volumes, they are more like flattish on a Y-o-Y basis. And here, my question is that if we are seeing some pressure on volume because for FY '27, we have given a guidance of 18 million tonnes, which is roughly a growth of against the backdrop that we are expecting a much softer industry growth of 5%. So I'm just wanting to request the overall color on your volumes, please.

So Navin, so you're right, absolutely. In terms of the volume, especially for this March quarter, it has been muted. But now for the FY '27, when I gave you an indication of 80 million, which is around closer 2% to 8%. We have the visibility in terms of a stabilizing the acquired assets of [indiscernible] and [indiscernible] the ongoing expansion, which will get commissioned in the next few months like we can play now to September, we will see the capacity will be a commission and we'll also unstabilize them. So I have the incremental volume also coming from these capacity cement almost around 10 million tonnes and of course, stabilizing the apologies of [indiscernible] and Sandy. Yes. So on that basis, basically, we are expecting all those with a softer demand for the year. Did I answer your question, Navin?

Yes, yes. My second question then was on the overall CapEx plan. So as mentioned in this presentation, we are recalibrating our entire growth plan. We have visibility of taking that overall capacity to 119. But I'm just trying to understand by when will -- like we get color on the next leg of a the first day when the asset was acquired. The Vision was to like, I think, double the capacity and take it to 140, increase it to 155, and now we are picking a slightly a set back. So my question was from a growth point of view, is there a -- by then, first of all, can we get a color of the big picture or the next longer-term plan? And in the same deck, is it that we are more open to pursue inorganic growth, which helps us catapult that overall growth target? Or you still believe organic will be a [indiscernible] go.

So I mean, our primary focus remains organic in terms of stabilizing our ongoing expansions and also already acquired [indiscernible] therefore, I would say that, that remains the primary focus. I think we have a good headroom to improve our overall same market share by improving the capacity utilization of these plants. And therefore, as I said, we are going to follow quite a disciplined capital allocation and given the headwinds right now for the industry, it made sense to us [indiscernible] of the CapEx, but without losing eyesight on the overall same market share and the old volume improvement from the existing assets and the ongoing expansion. To answer your question, I think maybe what I would say is that the target plan of FY '28, it could move a year or 2, let's say, on a site side, I would say that FY '30. But as I said, it doesn't really matter. What matters is how you are able to ramp up the volume on your overall agency use. And I have a substantial good headroom to ramp up [indiscernible] even if I hit 120 million tonnes by the end of '27. It will give me a good leverage of the overall market opportunity.

Next question is from the line of Raashi Chopra from Citi.

Just on the -- continuing on the previous question, what is the same capacity as of now?

So Raashi, as of now, we are sitting on 73 million tonnes of [indiscernible] capacity.

And you will be adding another 5 million this year?

Yes. So at Marata and at like Panna Marat, we will be adding up almost like 5 million. So [indiscernible] is 2 million and [indiscernible] is up 4 million.

Yes. Okay. And you mentioned earlier on, lastly, 56% utilization was for only for the year and then our 47, is that correct?

That is true. That is true.

Okay. And next question is on cost. Now for the full year, the cost is INR 4,400. For the quarter, what was the average cost, INR 4,500?

[indiscernible] Raashi Russ, we are sitting at almost INR 4,250 for the overall same quarter. And plus, some of these increases what we have seen from the overall escalation. So I would let us say that our normalized was almost 40 to 50 and it was another INR 250 which we have seen [indiscernible]. So almost we are at now INR 4,500 a turn for the quarter of March.

Right. And you were saying lastly, the industry costs have gone down by anywhere [indiscernible] INR 400 to INR 500. So is it safe to assume that because of the crisis, you will see another to INR 200, INR 250 increase in costs, which will get offset by your lyase energy, et cetera? Is that impact how we should be thinking about it? You indicated that -- so we had a INR 4,500 cost, your -- you said INR 150 cost INR 200 a reduction that you're expecting because of [indiscernible], so that INR 150 to INR 200, but the overall industry costs have gone up by more, right, because of the West Asia crisis. So is that INR 150 to INR 200 already capturing the increase in industry cost for this INR 150 to INR 200 decline in your internal cost and then as an increase in cost because of the war beyond this?

So I think, like as I said, the INR 4,500 crore, which is for the March quarter, has already taken the hit of existing increases of almost INR 650. So I would say that I INR 4,500, I would say, is on a peak basis that is a higher base which we have seen giving like any aberration of plus minus INR 50. But otherwise, we will see a journey which actually start coming down in passing quarters. So although like, for example, with the overall situation, how the overall MG situation emerges, I would not give it commission, but I strongly believe that, yes, this is like the peak which we have hit and so see progress improvement.

So if I can just reiterate this, if nothing increases further in terms of global prices, you will see a decline of [indiscernible] to 2 years?

Absolutely well summarized. Absolutely.

Okay. And on the printing, what has happened to offset these cost pressures cementing.

So that's interesting, Raashi. We are reading on both right questions. On the pricing, like industry has been modest improvement of, I would say, INR 10 in Q4, let's say, INR 15, INR 30, less like selected area of geographies. Otherwise, ballpark for the quarter of March, it is around ballpark INR 10. Now with the demand getting still softer -- the pressure on pricing definitely is higher. And despite the circumstances of costs gone up, unfortunately, industry still under the relentless pressure and not able to pass on the price.

Got it. And just last question, what is the CapEx for the year?

So CapEx for the year, we are keeping a little moderate and ballpark when you say this -- so you are seeing for FY '26. FY '26 is closer to about INR 7500-odd crores and I will just answer because there will be another question. So for FY '27, we are in estimate of almost INR 6,000 crores to INR 6,500 crores and there will also be is how things pan out. It may change a couple of hundred crores here and there. So that's the estimate that we have.

Next question is from the line of Indrajit Agarwal from CLSA.

Congratulations on increasing both trade sales and premium it. But on that note, if I look at Slide 27, the realization has hardly moved Q-o-Q versus peers, it is up somewhere between 1.5% to 2%. So is it mainly because of [indiscernible] or what is driving the [indiscernible].

So Indrajit, absolutely, you're right. I think the journey has just begun when we change the gear and therefore, you will see it more differentiated benefit coming in the subsequent quarters. What we have done is we have sustained the price level at INR 254 of that compared to in December. So from our own December quarter, we are up by, say, modestly I'd say INR 1. And compared to last year, we are at INR 55. So yes, there would further see improvements with higher investment and more premium cement sales. So it is just begun.

Secondly, if I look at your blended utilization for next year, would we add with 21%, 22% on your expanded awaited average capacity on that note, probably you will not need additional capacity in FY '28 as well. Is that what is driving a more calibrated CapEx approach.

So I have [indiscernible] to answer this question.

So I think the way we are looking at this -- how we would look at CapEx is 2, 3 things. One is -- when we look at our performance, we need to -- we know where are the places we need to improve on. There are certain capacity, which is which is there, which is in the wrong places. And we -- and so we will be adding a few capacity in places which will help us in terms of reducing our costs, logistics costs, especially as well as help us improve our penetration into those markets. I'm talking specifically into the markets where we have where we have high market share and high recall value. So those are the places that we would definitely look at expanding our our capacity over there. The second thing is as we -- we would be looking at it -- as we are expanding our clinker capacity, the correspondingly geo capacity will also increase. And this year, we are -- apart from Rajasthan and Maharashtra, as you know that we have won a limestone block in [indiscernible]. I think that's a completely new territory for us. So that is 1 new area which we will start in maybe end of this year, -- and the second new area that we will be starting is in Mundra, which is, again, completely new clinker line. So these are the 2 new projects apart from the new gels that will help us in terms of reducing our costs.

One last one, if I may. In light of this, how would we see any inorganic opportunity that comes up? Would you be interested or the focus is squarely beyond organic growth rate?

Inorganically, we keep evaluating, but our focus right now is on the -- on organic development and greenfield expansion. That is our #1 priority.

[Operator Instructions] We'll take our next question from the line of Kishan [indiscernible] from Nomura.

Sir, my first question is regarding the cost structure, especially in the fourth quarter also, we saw that the fixed cost, which is employed on the call, has increased significantly Y-o-Y versus competitive year also. I just wanted to understand, when you say we have got some patient conflicts that impacted because, however, the conflict started towards the end of February and the packaging cost was also in the mid of March, which impacted the industry. I want to understand why among all your peers, but is seeing such an increase in the cost structure? And secondly, in your presentation, you also also mentioned the freight cost was high because of some planned shutdowns because I'm not wrong, in third quarter also, you took plant shutdown. Normally, the industry take shutdowns in the second quarter. So in quarter 3 and quarter 4, where the volume growth was really strong, the management decided to take plant shutdowns which resulted in higher costs. So I just want to understand what is the rationale behind taking plant shutdowns in volume this quarter? And why are bigger fixed cost is increasing way higher than peer. That's my first question.

So let me I think when Raashi asked is and we have tried this plan. So in terms of picking out on our cost at INR 4,500 which I mentioned. And from here, you will see improvements. But yes, your question is in terms of -- compared to the competition buy. Now a few components which are relevant to my business, I mentioned about higher focus now on the branding, advertisement to promote the trade sales and premium cement. Second is in terms of higher repairs and maintenance costs. And you're right that annually, 1 should do it during the of seasons like monsoons, but not all the things can be done during that period. And there have been a few breakdowns also of the [indiscernible] states of [indiscernible]. So under under the planning and also under out of planning, we'll do it. So therefore, there have been those additional expenses of requiring maintenance. Then in terms of the back cost, which although we have came in the last week of February to the full month of March. When you promote and sell more premium cement, then there are also some management costs of logistics and handling is also hit into increase your cost. I also mentioned to you [indiscernible], which we want to achieve in terms of improved consumption, it is still not coming in the range. And therefore, we still have a higher speed consumption, and I would say [indiscernible] minimum which we have to improve. Again, I will attribute to some of the assets. Actually, when I look at the EBITDA of Ambuja and [indiscernible] minus of the acquire assets [indiscernible] actually higher by INR 70, INR n80. So it would be almost like INR 800 and actually more than I normalize it, but it is at least INR 800. So I would say that the acquired assets still are not basically coming in a range to our desired level and for which I mentioned that the first strategy is to stabilize the overall operations achieved a good level of performance improvement. Hence, in the -- I think maybe a couple of months, we had taken the entire investor community to [indiscernible] plant, just to coat that how [indiscernible] is now instead of readiness and you hire improved volume improvement, which actually we did in somewhere like March itself, right? Okay, March itself. That is like, for example, we want to focus [indiscernible] some of your assets have taken time, but now [indiscernible] then the state of readiness sooner that I will think you take all of you to [indiscernible] also, but before that we put to [indiscernible]. So the journey is known -- the issues are known and therefore, in my opening remarks also, I mentioned about certain disappoints to us also where we think that INR 4,500 is on the higher side, and we are basically in a position to bring it down in coming quarters. So therefore, like you will see this is taked out and you will see an improvement prospectively from there.

My next question is largely taking forward Navin's question. So first of all, we [indiscernible] company, which has given such a [indiscernible] scenario for FY '27, and I understand the rationale that you have given behind it. But with upon industry growth and expecting 8% growth, there are certain capacity which are coming. I completely understand that. But what is your target utilization from the assets of [indiscernible] Orient and [indiscernible] for FY'27. And I understand there are some challenges. So will there be additional CapEx required to bring the acquired assets to Ambuja to set a standard. I just want to understand this.

Thank you, [indiscernible]. Like Orient, for example, is operating at full capacity. So far as [indiscernible] is concerned, I will set myself at almost like 65% to 70%. And so far as [indiscernible] is concerned, I will consider around 55% to 60% in terms of the late factors. And the existing assets of Ambuja and [indiscernible], I would peg it to close to around 75% to 80%. So on an overall basis at the Ambuja concern level, average in the situation -- the scenario which I mentioned to you, I would say 70%, 75% ballpark utilization and you're right, like we have. We anticipate the software demand and therefore, we would go with this belief is for any subscribers positive in the industry. and which we would all wish to, this number will definitely look positive. But as of now, situation is softer.

And sir, any further CapEx to bring these assets to Ambuja standard.

So as mentioned by [indiscernible], the overall trade disciplined approach of CapEx, where we want to now set up in the high prevention market, which we have now completely going to mapping where we have market leadership, so which we will so we have already indicated a few of the assets in narrative. But progressively now, for example, let me first commission the missing [indiscernible] in hand, which are ongoing and basically this 10 million and come to you all with stabilizing and achievement of the capacity for them. But taking quarters, then we will also highlight to you the CapEx program as it forms up. I understand [indiscernible] is very much now in the pipeline. And so we are a few assets which you mentioned.

We will take our next question from the line of Manish Somaiya from Cantor.

I just wanted to ask, we have talked quite a bit about fiscal '27 outlook. But what I'm trying to reconcile is how should we reconcile between the improvements that you're planning in fiscal '27? In fact, dependent -- how much of that is dependent on internal execution versus external normalization? Maybe if you can just help us understand that.

I would say, Manish. Thank you. A very good question. I would say that the external factors will affect most of the industry players. Therefore, I will give more weightages on the internal factors and the execution of the same, which will bring the overall differentiation and leadership leverage on that. So that I would I would put it in this manner.

So Manish, if I may just come here current year. I think if you look at our performance, we realized that where the gaps are and that's exactly where we are hyper focused on and improving on those performance. And based on whatever guidance we are giving, this is 100%, which is controllable, which is controllable by us. And if you are not able to achieve the guidance, it's purely because of our internal execution and not any other factor. And that's where the whole team is really focused on and delivering on the numbers now that we are talking about. And we are --And we are very confident that this year, we will be able to take the numbers that we are talking about.

The other -- my second follow-up is on the premium products now that constitute about [ 33% ] to 36% of trade. What should be the realistic target that should -- that we should have in our models as we go out to fiscal '27 and maybe even beyond? What's the upside to that 35% to 36%.

So Manish, right now, for example, I would say that typically is a good number for us to sustain. And therefore, that is what, for example, can we consider in terms of the share of premium segment as a percentage of trade sales.

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

My question is on cost again. Yes. So in the last third quarter on fall, which happened like on part of the February management talked about like cost of INR 4,000, we're talking about INR 4,100 -- INR 4,000 in January. We're talking about INR 4,100 in exit of this quarter. So how the quarter cost is INR 4,500 I'm able to understand. The other question is on the balance sheet. So your SCC's operating cash flows are negative, sharply negative for the year, and your overall consolidated Aura's cash flows also were like magnificently impacted by negative working capital. Can you throw some light on this?

I will take the second question first. In terms of the ACC Ambuja. ACC has seen from Ambuja Energy [indiscernible] and you also would be aware that we have taken shareholders' approval in terms of the ICD, where in receivables will get paid also like you'll find in the in the coming quarter, this will be a part of with the [indiscernible] #1. So it's a 1 console business, under the MSP receivables are there. Therefore, [indiscernible] will find a negative operating cash flow. So as far as Ambuja is concerned, I think you would have seen, we have a good level of inventory which is higher, but when it comes to receivables, these are under good control with the higher day of trade sales and therefore, on our overall working capital of Ambuja, you will see only improvement for the March quarter compared to December quarter. Your question about the cost. So Prateek, I think what we had and we asked to what is the reality. Yes, there are different is because of the overall acquire situations. And many times, those anticipations for example, have not worked upon. And then suddenly, the tracking like situation, which have come up and we also, for example, when Navin mentioned about 10% growth, we also lost a good level of volume because of the packing issues and all. So there are situations which will if you have to be debit lately now, at least we know that this is the peak level of [indiscernible] which we have hit. And from here, for example, as [indiscernible] also mentioned that the number will be tapping down with every parting quarter. So reasons I've already explained right on lending to repair and maintenance to the higher freight cost, the higher need, for example, the [indiscernible] or the -- for example, when it comes to EBITDA, the lower government incentives, we are now -- that also, for example, we have a lower dormant incentive because of the rates, which have come down, we also exhausted some of these plants, which were giving having the incentives and third, in some of the [indiscernible] are now acting on incentive on virtual visibility as basically certainly as basically so that we don't want to have a pending long-term approvals and all. So there are a combination of these accounting policies and the situation of some of the plants, which have not mature to what we thought also for the acquirer states.

Sure. Just some clarification in.

Yes, go ahead, please.

Yes. One clarification. In the opening remarks people said that you had INR 4,100 of cost. Is it just a day cost or a month cost for last year like what is that cost?

We had basically hit it 4,100 for the month of March, Prateek. But then -- but as I said, except those -- the escalations of wars, for example, almost INR 250, which affected us -- so on a normalized basis, I was saying INR 4,100 for the month of March.

Next question is from the line of Amber Singhania from Nippon India AMC.

Just my question is also following up with the question on the cost front. So if you see on the first week of February when we had the last call, and if I may [indiscernible] the average was for the quarter was INR 4,500 along with [indiscernible], whereas we had exited the interquarter when below INR 4,000 of cost. That is the community on the first week of February. I understand we do carry the amount of inventory as well. We see some month on what the confirmed raw material and imput [indiscernible]. Furthermore, we had some one-off in the Q3, we have increased or enhanced our from the innate. Pricing was slightly better than the previous quarter. [indiscernible] was [indiscernible] contribute to profitability. Despite everything and also with the previous answer that margin on INR 4,100, which is cost. So trying to understand how could add 1 out of the entire cost for the quarter on the life of the [indiscernible] of December INR 4,000 that was driven on profit of February if the inventory in the along with your [indiscernible] and currently on the March INR 4,100 average cost, also the [indiscernible] which mentioned most of them are a matter which would impact every player for most of the players in the industry. So for whatever from the large size of the [indiscernible]. These factors are not as much in totality in this quarter in Q2. So wanted to understand how should we retender last commentary on that voted along with your peers who are on how do you look at maybe never out on that. [indiscernible].

I think see, basically, when -- in December, for example, we have been very upbeat in terms of some of the turndowns which you will see in some of our acquired assets of a [indiscernible] for example not [indiscernible]. And as you know, [indiscernible] is geographically more South. And if you actually look at the numbers and South, for example, has been 1 of the most affected devote for the March quarter, therefore we have taken some of the machines on shutdown. And basically, there have been a couple of breakdowns also. And therefore, it has increased my higher repairs and maintenance for the quarter of March, number one. Number two, in terms of some of the acceleration that we have to give to our sales and branding and advertisement is what we have given. And the results of the sale, we will get actually as an investment on our supply chain, but this will more be accounted as operating cost. So that is where, for example, branding and advertisement costs are higher. Then, of course, for the month of March, there have been this abnormal cost for the packing, for example, and we have also seen a higher fuel cost and higher fuel consumption also, for example, [indiscernible], you don't have the right blend of [indiscernible]. The convention of the -- clearly, the feet [indiscernible] is also higher. So those also, for example, technically, the technical KPIs have got affected. Now that was when we also in December, our quarter was at INR 4,500 of cost for this quarter, INR 4,500. And March also, for example, we are almost at a INR 4,500. Yes. I think it in this manner that certain planned movements for the March could not if or we could not also fulfill. And therefore, we have basically been at the same level to what we were in December '25.

Just understand the start of INR 4,500 versus INR 4,500. I'm just trying to reconcile the commentary mid-quarter of INR 4,000 exit in December is starting to maintain our 4,100 for the month of March, just because 1 month in February that I'm just trying to understand how the entire cost in because of that, when we look at inventory gets carried on for a couple of months, which is there. I'll appreciate if you can share us quantification of media cost item, large cost item, along with the benefit also which is coming from exit of INR 4,000 now exit of -- in March [indiscernible] now, but later on also if you can release that.

So I don't -- if you look at the commentary, I think, again, you will also remember the last call, I had always said that the exit month of March. So while you are considering for the whole March quarter of '26, no, that was not [indiscernible]. The commentary was more about our aspiration and our plan to get closer to INR 4,000 by month of March. Now basically, therefore, while the average will still be higher than not at INR 4,000, the [indiscernible] don't mistake it at INR 4,000 as of for the March quarter, number one. Number two, of course, like therefore, I was highlighting that month of March, for example, barring this aberration of the prices and you might say that we would have [indiscernible] be affected more compared to [indiscernible] as compared to others could be. But yes, we have -- we got affected with the overall talking back than all and therefore, the pressure of volume and therefore the pressure on sales and hence, the higher advertisement bending or sales promotions have been there. So therefore, like we unfortunately could not come below INR 4,500 for this entire quarter of March '26.

We'll take our next question from the line of Punit Patni from Goldman Sachs.

I have a couple of them. One is for the [indiscernible] plant, which is operating at 57% utilization. How important is for the [indiscernible] line to be ready? And how far do you see [indiscernible] being connected and ramp-up in volumes at [indiscernible]? That's question number one.

So Pulkit, our base model is not linked to [indiscernible] and railway line. It is more with the -- our [indiscernible], for example, and therefore, as you would know that we have only ordered 7 vessels, which will be delivered -- progress in [indiscernible] starting next year. So that is what, for example, [indiscernible] bring these trends. And then otherwise, we are counting on the good movement from [indiscernible]. The railway line only will be an add-on but not being considered in the base model.

Sure. So the plan is to ramp up even if [indiscernible] takes a little longer to be ready? Is that the right way to look at it?

Yes, yes. But right now, all those in Sangli, we don't have a ramp-up per day of capacity expansion, but the ramp-up of the existing capacity, the [indiscernible] link. Correct.

Absolutely, sir. Sir, my second question is, is it fair to assume that as and when there is a final resolution on the JP assets that those assets would come to us? Or is there a possibility given that we already have our own organic growth plan a lot of work to do on increasing capacity utilization that we could also not be considering having those assets. How should we look at it?

[indiscernible] I will still consider that for JP, the RP is another listed company, and therefore, it would be inappropriate from my side to enter anything on that. But as things progress, whatever development happens, we'll come to now.

We take our next question from the line of [indiscernible] from [ HSBC ].

I have two questions. My first question is, given Ambuja is the fourth company to have reported earnings and the EBITDA per tonne is the lowest to its high cost inflation. Do you see the industry and the company raising cement prices in the next few months to pass on to full cost inflation? Or can we expect further margin deterioration with the inability to risk [indiscernible].

So [indiscernible], I would say that given the scenario of demand will be very important to basically see the price being passed on to the customers. And as of now, I anticipate the overall demand looks to be for right now, when I look at the April and now in May, it was subdued and soft. Therefore, for example, when you attempt for say X, I would be happy even if the industry gets half of the same. So that is like, for example, right now, the situation is. But yes, cost on the other side has gone up by at least INR 25. So that is like the only way then to evolve and protect the margin to focus on our own cost of production. And that is, therefore, I was highlighting, the internal factor will be playing a more important what Manish Somaiya had asked. The [indiscernible] factor will be more important compared to the external factor.

Sure. My second question is given Ambuja's cost delivery has been all over the place over the last few quarters. Can you give us some guidance where you move away from cost to EBITDA per tonne by FY '28? Given that EBITDA per tonne is today and over the next 2 years, where do you see the EBITDA per tonne reach and what are the building blocks of that margin? What kind of price increases, what kind of cost savings, what kind of turnaround do you want to see or do you expect in the next few years?

So Pinakin, I think it will be -- will enter for any industry person to you any estimate of EBITDA per tonne at this stage. I would rather still continue my efforts on pause and differ, for example, one thing is like INR 4,500 a turn, whether it takes out and then it starts on [indiscernible] To what journey will go, I think progressively, we'll keep you posted. And especially in next 2, 3 quarters, we have seen -- move some more brighter than peers. But for right now, [indiscernible] is a key focus area. Obviously, like when you focus on trade sales and then we focus on premium [indiscernible] will keep giving you more mitigation, but I think any guidance on EBITDA will be difficult at this stage. Let me just add that cost, we are looking at roughly INR 250 a tonne reduction this year and then another reduction of INR 250 next year as well. That is only one reduction that we are looking at.

[Operator Instructions] Next question is from the line of Rahul Gupta from Morgan Stanley.

My first question is now that you have talked about cumulatively say INR 500 per tonne of cost improvement over the next couple of years. Are we shying away from the earlier target of INR 3,650 that you had shared earlier. That is my question one.

So we are not shying away from our target. I think as we told earlier also, you need to focus on our execution. We still have -- there are multiple steps on the cost that we need to pay. We've been manufacturing between raw material and between logistics. And we are confident that we will be able to achieve that number. I think it's just -- we are giving you a realistic in terms of where we will be able to achieve in the next 2 years' time. But that does not mean that we don't have the runway to go to the earlier target that we have said. We know what are the steps we need to take. We know where we need to -- where we need to improve in terms of our efficiency, and that's where we are focused on. But this is something. 500 is what we can commit right now for the next 2 years.

Got it. Got it. So I have 1 more clarification that I want, Karan is you talked about shifting away from 155 million tonne capacity. So just the clarification that the company has already guided for 15 million-tonne of debottlenecking exercises across assets. So does that stay? Or there will be some change on that as well?

So those still continues. I think it's the timing which we will defer based on where we get the maximum return on the investment.

Got it. One final question. I remember in second quarter and third quarter, the company was already accelerating our branding and advertisement cost. So it would be helpful if you can help us understand what would be overall branding and equipment cost for full fiscal '26?

So for the full fiscal year '26, we are closer to almost like INR 700 tonne basically. INR 70 a tonne basically. Yes, INR 70 a tonne difficulty on the full year, which is up [ 26 ].

Next question is from the line of Ritesh Shah from Investec.

One question for Karan and one for [indiscernible]. Karan, one Question, what prompted us for reset right now. If you could highlight 5 monitorables that probably separate us for last [indiscernible] next year. And how does expect [indiscernible] of them up and after [indiscernible].

Sorry, can you repeat that question? I don't hear you properly.

So the first question what prompted us for a reset right now. Second, what are the [indiscernible] that you have paid out for yourself? And third, how does SLAs in overall scheme of things after the reset?

Yes. So I think why the reset and it's quite evident our performance has not been great. We've not been able to -- we've not been able to deliver what we have promised to our shareholders. And so that is number one. I think if we have to assess ourselves, we really need to improve on our cost. That is number one. I think the key KPIs that we are putting for ourselves is we need to reduce. We need to -- I would say 5 things that we need to focus on. One is on plants delivering to the market, the discipline on [indiscernible] plants delivering to the respective market. Second discipline is on trade versus non-trade sales. Number 3 is on our raw material consumption, reducing our costs from raw materials as well as on the electricity front, energy consumption. And number 4 is improving our improving our, I would say, channel network in terms of to help us increase our increase our sales. So I think these are the pricing. But predominantly, if I would say, 80% of it is to do with the cost, and we really need to -- we really need to get our act in order in terms of to make sure that we are able to reduce our cost. And so -- so that is what we are looking at. And till the time we are not able to deliver on what we are promising. I don't think it makes sense to make more -- make more capital investment because you don't get the returns on this capital industry as well. You had a second question?

On SLA -- service agreement, I think a few of the plants that we have [indiscernible]. How should we look at overall...

Yes, SLA there's contracts, this is something that -- it's part of these initiatives because we do believe that what we need to -- what we need our teams to focus on and what -- where do they need to put their energy on. We do believe that there is -- at least in India now there are enough competent partners after who can run -- who can run the plants at the efficiency level that we would aspire to. And that's how we are looking at. And second, obviously, given the history of Ambuja and ACC. I think the SLA partners help us in terms of cleaning up all the past union issues and all of that. So from that perspective, it really helps us in terms of reducing our cost and improving our efficiency.

Next question is from the line of Ashish Jain from Macquarie.

Sir, it is great to see exclusive capital discipline. But in that context, I just want to understand this INR 65 billion to INR 70 billion of annual CapEx for the next few years that we're talking about, can you break it down ballpark in terms of growth versus cost efficiency versus any other initiative that it includes.

Yes. So roughly INR 4 billion is what is already the CapEx, which is already under execution, and it is implementation of that, which includes capacity, which includes WHRS, which includes your flash transportation system that we need -- and the balance is, I would say, debottlenecking plus maintenance CapEx. Yes.

Basically, I hope that answers your question.

Next question is from the line of Amit Murarka from Axis Capital.

I just wanted to understand more from a strategy perspective that when Adani had acquired these cement assets. You have [indiscernible] ambition to kind of become the industry leader and double capacity. So in that context, the current guidance seems to be quite subdued. So is it fair to say that there is a reset in ambition kind of from the earlier part that was there at the time of acquisition.

So -- we'll be honest with you. Yes, partially, there is a reset. We are not moving out from the target. Yes, we are moving away from the time line. That is to do with the -- we know that we are not delivering in terms of what we had committed and so it definitely makes sense to step back to look back and to see where we are going wrong and to course correct. And then to -- that's where we are -- and that's why we're giving you the new guidance in terms of where -- what is the capacity -- revise capacity enhancement that we're looking at and the time frame that we are looking at.

Sure. And is there a target IRR in mind when you're doing the [indiscernible] now?

It's CapEx -- I mean, the project [indiscernible] to be 18%, you have told you -- this is all equity money. So you have to look at equity return gaining per year.

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

Thanks to the opportunity and happy to know that the main focus is more greater on CapEx and also focus on [indiscernible] cost execution. My only question while we have been [indiscernible] on the guidance, this when you say INR 250 cost reduction, you're looking for FY '27 over FY '26 and at the same time, from [indiscernible] before, we are seeing around INR 250 to INR 300 cost inflation because of the packaging and [indiscernible]. So is a INR 250 net or net-net, we will see 300 increase at INR 250. So from current level, you will still see our cost going up by INR 50 to INR 100 in Q1 for FY '27.

So Rajesh, what we would put these INR 4,500 and these INR 250 reductions from here. So any [indiscernible] at INR 4,250 at the target for '27.

This is factoring in the cost increase that we have already [indiscernible].

Yes. That is true.

Okay. And in Q1 also, you're looking at business cross struture?

In Q1?

Q4 versus Q1. What sort of cost you're looking at basing the current cost inflation?

So right now, for example, the headwind still continues and therefore, it could be flattish for Q1. And as it comes out better that it will start [indiscernible].

Sorry, just the flattish means your current cost, which is some of the cost inflation is structured in Q4 in energy in the packaging?

Almost like INR 4,500, I would peg it for, say, Q1. And then from there, we will have the reduction [indiscernible] continue. And for the year, therefore, we are targeting to have reduction of INR 250.

Right, right. And on the non-term working capital, if I look at your core working capital has come down year-on-year from 30 days to 20 days. But if I look at your noncore working capital ex cash, that seems to have gone up significantly. So is there any strategy [indiscernible] from our 14 days, it is now going up to 49 days in your total noncash working capital since you have shot up significantly from [indiscernible].

Rajesh, for example, some of the -- some of the points I mentioned that on certain incentives and now we looking to it [indiscernible] on an actual basis when received, then the [indiscernible] business, for example. So that was non-core working company operating working capital can be controlled. Second is, I think some of these are -- which we are referring to would be purely accounting working capital. So maybe separately, we can connect. But generally, the core working capital, as we also mentioned, has come down and that efficiency of working capital will continue with specific non-core you're referring to, for example, you can connect to me offline and [indiscernible].

[indiscernible] plants which you are looking for, one was [indiscernible]. And what is the other [indiscernible] what is getting condition right now?

So the one which I mentioned was -- one was -- so in our [ 73 ], for example, the 4 million, and just to correct to what Raashi asked me in the first question, my current capacity say 59 and the 4 million tonne will have 1 million [indiscernible] and 2 million at [indiscernible], that would be like 73. Now on to top of it, the upcoming Mundra will be another 2 million of [indiscernible], so that will be over and above these 4 million I mentioned. And then the [indiscernible] one, which will be another 2 million. So that will be a payer of additional new assets.

And that would say 3 years from now.

That's on a 24 to 28 years -- 28 months is what we are targeting.

Next question is from the line of Shravan Shah from Dolat Capital.

Yes. Sir, just to clarify this INR 2 to INR 3 cost reduction, this is on a full year average FY '27 that we are seeing.

Yes. So thanks, [indiscernible]. This is for the full year FY '21 as an average. And therefore, for example, when I said that June quarter will be flat from the March quarter. then the delivery of excellence will have to be more for the next 3 quarters. So you're right, the INR 250 will be average for the year.

Got it. Second, when you mentioned about the prices. Was it INR 10 and INR 15, INR 20 hike that you mentioned, this was for the April you wanted to say? Or this is for March. So currently on an average from the exit of March, have the prices for us have increased by INR 10 odd that's what we are trying to say?

Yes. Basically, I was hinting on that only. So April over in March as a trend for the high cost.

Okay. And lastly, for full year FY '26 RMC EBITDA in Q4, you mentioned INR 102 crore. But for full year FY '26, what would be the number?

Just big on this number. So full year RMS EBITDA you are asking, right?

Yes, sir.

Okay. Around 311 [indiscernible]. So full year, RMS EBITDA is a number of INR 300 crores basically for the FY '26.

Yes. But it's a tank and I hope we will be achieving our cost reduction targets and maybe revisiting and upgrading the original target.

Next question is from the line of Raghav Maheshwari from [ Asian ] Securities.

Sir, just one question from the CapEx side. Our CapEx is continuously getting delayed as any standard, we are known for a pro CapEx and a very fast execution, but in the cement side, we are continuously delayed especially like Marata plant, we have already delayed plus our earlier plant also got delayed for this one. What is the issue behind the continued and then continuously, we are getting some breakdowns at our bigger plants. Is it the maintenance-related issue on what we are facing currently right now?

So you're right, your observation is right that CapEx has not been up to the mark, and that's 1 of the reasons why we are pausing and collecting ourselves, and we want to first complete our projects that we have taken in our hands before we start any new projects. The main reasons why we have not been able to deliver as per what what our standards are is 2, 3 things. I think 1 is we did not use the right contractor when execute -- for execution. Number 2 is we started these projects when we acquired Ambuja and ACC. And at that time, there was no team. So it took us time to build up that team as well and we are confident that at least now we will be able to complete these projects in the timeline that we're on. And number 3 is a lot of these projects were started without full engineering being done in play. So we are using the 6 months to complete all our engineering for the new projects that we are thinking of starting and once that is in place, then we will be looking at starting the project. So that's where you're right, that's the correct observation that we've not been able to deliver projects in the speculated time. Number two, I think the breakdown, I would say it is predominantly in the acquisition assets where we have seen major breakdowns happening, especially [indiscernible]. And that's where the problem media has been for us, and that's where the team is focused on in terms of improving the reliability of the plant. And that's one of the reasons why you are seeing higher R&M costs in this year, partially because a lot of the repairs and maintenance, which was which was supposed to be done was not done and which is why we are -- why 1 of the reasons for this breakdown as well.

[Operator Instructions] Next question is from the line of Harsh Mittal from Emkay Global.

My first question is, I think [indiscernible] to focus on premium again. What is the current average gap between ab brand. Was it the competitor currently? And what do you see target to narrow further [indiscernible].

So you are referring to premium cement, and I can say that the gap between my base products and premium cement product is closer to, let us say, INR 50, INR 55 for the super premium and INR 20, INR 25 for the premium one. I think that was like first. Then second, your question is about the gap between our price and compared to that competition. I think everyone looks to is price better than others. And therefore, every time when we invest people try and compare away different opinions. I would say that the the [indiscernible] like us and basically the other player, #1 [indiscernible]. I think the pressures are more or less in a similar range in [indiscernible] INR 5, INR 10 here and there, either they are higher or we are lower or whatever reverse way. But that's how the trend has been. And that is also reflected in the overall density of the quarter, which is in the far [indiscernible].

[Operator Instructions] Next question is from the line of [indiscernible] Jain from Ambit Capital.

This question is for current time just for to understand the comment you made about retaliating capacities that earlier, the capacities were not in the right location now the capacity we're looking at the right position. So where will you initially looking at these capacities, I believe [indiscernible] was also there in terms of its consolation. So maybe could you discuss where the recalibration coming from in terms of capacity.

Yes. So the recalibration is coming, basically, especially where we have the integrated units, those are the locations where we are recalibrating because we find that the branding units, the operating cost, the logistics cost -- 1 of the reasons for the logistics cost being so high compared to competition is because the distance traveled by the integrated units is quite higher than what it should be. So one of the things that we are working towards is shutting down the grinding units in a lot of these spaces and moving them closer to the market. So that is a recalibration we are looking at. I don't think we are looking at recalibration of let's say final units. The second is we have [indiscernible] is predominantly a linker plus net we are moving towards in the next years, you will see some moving predominantly into clinker, and you will see new capacities coming up on the coastal region of [indiscernible] and [indiscernible] Line 2 is one of the classic examples of that, where we would look at [indiscernible] supply of clinker and moving and cement being supplied from these deals. So some of these recalibration is happening. Majority of the recalibration is happening in the North, UP and Bihar region and Southern Gujarat -- Southern Gujarat and Mahrashtra.

So this is Mark something if you see specific. I believe [indiscernible] had more integrated it. But you're mentioning [indiscernible].

It's ACC and Ambuja. Both of them had issue. So I'll give you an example that today we move, we supply our Bihar market to [indiscernible] and though we get the EBITDA, but it is not the optimal movement of the cement that we are seeing. So that's where we are looking at. We need to set up branding units in to serve the Bihar market and test units should be just the clinker unit.

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

Yes. Thank you, [indiscernible] for joining the call and sharing your insight. Thank you [indiscernible] have been answered. You have contact numbers, please feel free to call me. Thank you.

On behalf of JM Financial Institution Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.