Sagar Cements Limited (502090) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Sagar Cements' Q3 and 9M FY '20 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Gavin Desa of CDR India. Thank you. And over to you, sir.

Thank you. Good day, everyone, and a warm welcome to Sagar Cements' Q3 FY '20 Analyst and Investor Conference Call. We have with us today Mr. Sreekanth Reddy, the Joint Managing Director; Mr. K. Prasad, the Chief Financial Officer; Mr. P.S. Prasad, President, Marketing; Mr. Rajesh Singh, Vice President, Marketing; and Mr. R. Soundararajan, Company Secretary. We will begin this call with opening remarks from the management, following which we will have the floor open for an interactive Q&A session. Before we begin, I would like to point out that some statements made in today's discussions may be forward looking in nature, and a note to that effect was stated in the con call invite sent to you earlier. We trust you've had a chance to go through the result communications and documents. I would now like to hand over to Mr. Reddy for his opening remarks. Over to you, Sreekanth.

Thank you. Good morning, everyone, and welcome to Sagar Cements' earnings conference call for the quarter and 9 months ended December 31, 2019. I will begin the call by briefly discussing key demand and pricing scenario across our markets, post which I will move on to Sagar-specific developments. Starting with the demand. While slow paced, cancel of infrastructure activities impacted the demand in South. State elections in Maharashtra weighed on the demand in the West. Prices too continued to be weak, in line with the demand across both Andhra Pradesh and Telangana. Prices in the East remained soft on the back of higher competitive intensity and weak demand. The pricing environment has improved marginally at the end of the quarter, with better price realizations witnessed across most markets, after being under pressure for the major part of the year following a slowdown in the government projects, the prolonged monsoon and the liquidity crunch, where we expect the demand as well to pick up in the coming months. Moving on to Sagar-specific developments. While the challenging environment during the current quarter did negate our overall good start to the year, we still managed to deliver a healthy growth during the first 9 months of the fiscal. On a year-on-year basis, revenue and EBITDA grew by 2% and 59%, respectively, during the associate period. Further, despite the muted top line growth for the quarter, we have been able to maintain overall operational profitability, partly owing to lower input costs and partly owing to our recent strategic cost rationalization initiatives, where we expect cost efficiencies to further improve on back of optimization of the CPP and also of logistics, enabling -- improved the alignment with the market. Lastly, the completion of the ongoing projects in the company subsidiaries Satguru Cement and Jajpur should help us further improve our efficiency. Moving on to our financial performance for the quarter. On a consolidated basis, revenue from the operations for the quarter stood at INR 262 crore, as against INR 319 crore generated during the corresponding quarter last year. EBITDA for the quarter stood at INR 20 crore against INR 31 crore reported during Q3 FY '19, owing to lower sales realization. Average fuel cost stood at INR 797 per tonne, as against INR 920 per tonne reported during Q3 FY '19. Optimization of thermal efficiency has resulted in lower per-tonne cost of fuel. Freight cost for the quarter on a consolidated basis moderated at INR 714 per tonne, as against INR 733 per tonne during Q3 FY '19, owing to better optimization of the lead distance. Loss for the quarter stood at INR 9 crores, as against loss of INR 3 crores reported during the Q3 FY '19. From an operational point of view, Mattampally plant operated at 44% utilization level, while Gudipadu and Bayyavaram plants operated at 66% and 50%, respectively, during the quarter. As far as the key balance sheet items are concerned. The gross debt of -- as of 31st of December 2019 on a stand-alone basis stood at INR 281 crores, out of which INR 150 crore as a long-term debt and the remaining constitutes the working capital, while on a consolidated basis debt stood at INR 489 crores, out of which INR 324 crores is long-term debt. The net worth of the company on a consolidated basis as of 31st December 2019 stood at INR 1,002 crores. Debt-equity ratio stands at 0.321. Cash and bank balances were at INR 15 crores as of 31st December. That concludes my opening remarks. We would now be glad to take any questions that you may have. Thank you.

[Operator Instructions] The first question is from the line of Sumangal Nevatia from Kotak Securities.

Yes. The first question is with respect to some specific color on demand trends which you shared. I wanted to understand. I mean, is there any green shoots visible in Andhra or Telengana or it continues to be a drag on the overall South India demand? More specifically, how you see next coming quarter shaping up. And with respect to Maharashtra, I mean, do we expect it to continue to grow at, say, mid-single digit, what has been the case in the last few quarters? Or any growing concern with the change in government there?

Yes. See, I have to talk about the demand in AP and Telangana. If I have to compare with the last year, the demand so far degrew by almost close to 17%, but there has been an improvement, if I have to see on a month-on-month, starting from September. September was the lowest that we have seen, which actually was 50% of what it was during the last previous September. From September, which was close to around 1.4 million, which came down from close to 2.6 million the earlier year, from 1.6 million, it gradually moved all the way up to December to 2.5 million. Having said that -- but the earlier year, the demand was reasonably close to around 3 million for each of the months previously. So there has been an improvement month-on-month, but on a year-on-year basis the overall market actually degrew by 17%. But if we have to compare with a year earlier to the previous year, I think more or less the demand is slightly better, but if I have to compare with the previous year, it has actually grown -- degrown by 17%. Coming to Maharashtra. Yes, the elections did take -- did impact the demand on a year-on-year kind of a basis, but so far year-to-date, yes, the growth, what we have noticed in Maharashtra, is close to 5%, yes. We believe that the election part is behind, and probably we should achieve a -- close to 5% kind of a demand is what we believe in Maharashtra. Now going to the South. The other places like Karnataka, more or less, is flat. Tamil Nadu has grown at close to 3%. Kerala is minus by almost, close to 5% to 7%. So the overall south number is close to minus 7%. I think the AP and Telangana demand actually dragged up the overall South demand because the other 3 states, more or less, have remained [ positive ] or above the flattish kind of a trend. But I think Andhra and Telengana demand did drag the overall South demand. The current -- our assessment is that it is close to minus 7%, 7.5%. Now would the same trend continue? At the start of the year, we had indicated that the market to remain -- the overall South market to be positive. We believe that -- given the demand scenario in Andhra and Telangana, I think overall South probably could be flat to close to minus 5%. This is primarily because of the Andhra and Telangana demand, sir.

Understood. So sir, I mean, so this year, we -- let's say around 25 million tonnes in Andhra and Telangana. Or can we -- is it safe to assume that this will be the bottom? And on this base, we should expect some mid-single-digit growth from this region next year?

That was the assumption that we have set, but I would still be cautious. I think we would like to wait until middle of February to see if the governments -- both the governments would start paying out the contractors, then I -- we don't see it as a challenge for us to start growing at least to a reasonable single-digit kind of a number. But the key factor there is that, usually the growth for Q1, you see that in the Q4, that has been the historical kind of an issue. Unless we see a reasonably sharp U-turn during the current quarter, talking of good growth for the next quarter would still be a challenging kind of a take. So I would still wait for somewhere around middle of February. The state governments have been promising the payouts which has been long overdue. Once that happens -- we don't see it as a challenge, but first, that has to happen. So I'll keep my fingers crossed, until such time, I will go on a very cautious tone, as far as AP and Telangana are concerned.

Understood. Sir, second question, with respect to cost. I mean we have seen almost INR 2,000 cost reduction on pet coke getting factored in our 3Q numbers from, say, last year. So is there any further benefit on spot basis which you can see which will flow in the coming quarters?

See, as narrated earlier, sir, we generally don't take a spot call because ours is a weighted average kind of a thing. So they will -- started trickling in. We do not expect any major kind of a cost saving, but we are good all the way up to middle of May. So until middle of May, I think we are reasonably stocked up with a reasonably good pricing, pet coke with us. And we have also started seeing a few dollar price increases on the pet coke, so I would be cautious to take a further reduction on pet coke. I think only during the month of December we started seeing the low-cost pet coke started kicking in our accounts. So I think this trend should continue all the way up to middle of Q1, sir.

[Operator Instructions] The next question is from the line of Indrajit Agarwal from Goldman Sachs.

Two questions. One, you touched upon the pricing trends. While we -- when we look at your realization, it has fallen 8% sequentially. That is on a quarter-on-quarter basis. Do you think this broadly reflects the trend in the region as well, or are you slightly worse off than the region as a whole? And as a follow-up to that, when you mentioned the prices have increased since the end of December, how do you see the spot prices versus the quarter average?

Yes. See, I would not like to comment on the overall kind of all the regional players having a similar impact, sir, because our product mix in terms of the geography mix is slightly away from most of the regional players because we do service Maharashtra. We also service Odisha. And you look at the position of our assets are slightly away from most of the other regional players, so I would not like to -- are we worse off? Are we better off? I think I would wait for the -- all the results to come. So I would not like to paint the same color across all the regional players but Andhra and Telangana, I think the price impact has been fairly high. So whoever is primarily focused on Andhra should have a similar kind of an impact is what we believe. Now coming to the pricing, sir. Starting from October, that is the exit of Q2 to the entry of Q1, yes, October started typically anywhere between 215 to 240 kind of a price bucket to Hyderabad where it slipped to [ INR 200 ] in December, which in our view on a relative scale is probably [ indicative of ] low pricing in December if we had to normalize to the inflationary kind of an impact. January -- we have seen an increase of close to around INR 10 to INR 15 increase across the months, but bulk of the increase has happened only during the middle to the end of January, sir. That is a trend, but if I have to talk about Chennai and Bangalore, the increase is not as much because it did not slide as much. So there is a -- on an average for our market footprint areas, we are counting a INR 10 per bag increase on an average from previous quarter to the whole of January. But bulk of this impact, we felt only during the second half of January.

Sure. This is helpful, sir. And specifically for Sagar, if you look at the other expenses line item. So from here, what are the avenues we have to reduce this cost, the other costs line item? I understand power and fuel, freight is more external factors driven, but any -- what are the controllable cost factors we have here?

The other -- in others, it also involves the marketing-related costs, sir. So we -- it's a variable cost. I don't think that's something which we have control on. It is more to do with the discount structures and everything added up. On a cost side on a variable side, I think scope always exists, but I don't think there is a huge scope on that particular account.

Next question is from the line of Manish Valecha from Anand Rathi.

Sir, I just wanted to understand the status of the CapEx both at Satguru and Jajpur now. So I believe we have already plants. Are we on schedule for March '21, sir?

Yes. The -- both the subsidiaries, the order placement is complete. The civil works, we are more or less completed with [ 20% ] at Satguru. Jajpur, I would count only 5% to 10%, but Jajpur is relatively a small infrastructure project because it's just a grinding station. Right now, our assessment is that Jajpur would be on schedule by March '21 for commissioning. Satguru, right now, we are running a couple of months behind schedule, so we would be reasonably confident of achieving the commissioning by June of '21 as we speak.

In June '21, okay. Fair enough, sir. And so we'll be having at least 1.5 [ Vicat ], 1.5 [ Jagpur ] and 1 million tonne of [indiscernible], which will be non-AP servicing market, apart from [ Bayyavaram ], right? So that reduces our [ AP share ] to how much? Post monthly commissioning [indiscernible].

I would [ keep safe at ] 6 months to 9 months for the ramp-up at both locations at Jajpur as well as Satguru, yes. These are exactly outside South. So it's not just AP and South issue. It is -- I think AP will come down from close to 50%, 52% right now on an average. I think it should push us down to less than 40% to 45%...

In terms of volumes?

Complete ramp-up -- when we complete ramp-ups -- ramp-up happens, I think we would -- AP and Telangana will be less than 40% of our overall kind of a market mix.

Fair enough, sir. And sir, the next question was on peak debt. We will be hitting peak debt next year, right? What will that level be?

I think we will be hitting the peak debt probably not the next year but the year after. We are assuming the net debt to be close to around INR 800 crores, on the higher side.

Okay. This will include CapEx from both these plants?

Yes, this includes the CapEx, and this also includes the working capital.

Sure, okay, sir. Sir, one last question, on fuel consumption, right? On -- with this [indiscernible] on that?

Yes. Sorry, Mr. Manish. Can you repeat the question? Sorry. We missed that. I think the voice was very feeble. Can you repeat the last question, please?

On waste heat recovery, are we running it at full capacity? So savings from there are completely invested. Or is there some more scope?

Yes, I think, as commissioned, it was at 6.5. Subsequently, we ramped it up to 8.4, yes. Right now, we are running close to 8.6, so we believe that technically we have reached the roof, except for the running hours. We don't expect any other saving in any other form from the waste heat recovery. Yes, the other potential saving that we have yet to realize is the CPP. CPP is being ramped up. The only problem is the capacity utilization. I think we went through a rough patch over last 2 quarters. So we could not get -- we could not run the CPP at its full potential. I think, going forward, that should help us with additional savings as and when the CPP starts running at a much higher capacity utilization.

The next question is from the line of Andrey Purushottam from Cogito Advisors.

Actually, most of my questions have been answered. I just wanted to -- you to elaborate on the trends that you see going forward behind an expected price realization improvement. What are the factors that might cause that? Just elaborate on the previous answer.

I think we have seen the current low pricing, sir. I think, at this point of time, most of the industry is below water. When we are talking of below water, I think some other players did lose -- did not get even EBITDA during current pricing. So that should push the prices up. And from a demand perspective, sir, I think we've had an extremely good monsoon. Coupled with that, the historical trends always point out, the first 6 to 9 months, post election, yes, the demand to take a backseat slightly because most of the governments would -- even if -- the government which comes back, usually tries to take the time to recuperate and come back into the infrastructure buildup mode. That also should help us try to look at some demand recovery. And at the same time, if you look at the market, sir, the bulk of the government spend was missing, other nongovernmental spend has been growing. Is it healthy? I think it is reasonably healthy, with almost a 15% to 20% drop in overall kind of a demand. Without any government spend, my belief is that nongovernmental spend probably would have grown. That is the only reason why the demand did not collapse completely. Those trends typically point out to 2 things. One, most of the demand is behind us. And potentially the price war should take a better shape. Because probably the industry players panicked but the -- it did not behave in line with their expectation. So, the demand from 50% or average capacity utilization is only close to 40% but probably people panicked because they were expecting the demand to go up from 50% to probably 60%, 65%. It stopped going up. When it started coming down, I think people panicked in the marketplace.

Right, right, right. Okay. And that's true for North as well, sir?

The North is too far [indiscernible]. That may not be true because North probably is a better position. I think the demand trends there, they are still growing. I mean I don't think there was a negative growth in any of the regions, except for South. So the trends probably could be different, but I think, that market for us, we don't track as much as we generally do in the [indiscernible].

The next question is from the line of Girija Ray from Dolat Capital.

Yes. So just wanted to know. The raw material cost has been increased. I just wanted to know, like, is there any impact? Is this because volume has grown? Or any slight price increased, or...

Well, it is more than the price, sir. If you have noticed, the blended material percentage as the overall kind of a product mix has gone up, so the relevant correction in raw material has happened. We have not seen any major price changes in any of the products over last couple of quarters, sir. So the rise in the raw material is primarily on the account of change in the product mix, sir, other increase to blended material has passed through. So that has impacted 2 things. One, the -- overall our actual costs it helped us slightly reduce. I would not call it matching impact in the raw material, but relevant correction in raw material price has improved. It's mostly to do with the slag -- increased slag usage as well as the fly ash usage...

Slag price. What is the price right now, slag and fly ash?

We would be happy to share that, sir, if you could -- because again it's we have 3 locations. And for each location, the fly ash and as well as slag price landings are different. So we will be more than happy to share that, yes. If you could send an e-mail, we would be extremely happy to share that.

But comparatively, slag and fly ash price has been increased, right, you are saying...

No, sir. Slag and fly ash landed costs have not changed. The -- only the usage has gone up. The percentage of material that we have consumed has gone up. Price has not changed at all in last 2 quarters.

The next question is from the line of Sanjay Nandi from Ratnabali Capital.

Sir, just wanted to know a few things. Like you just mentioned in the first answer a few -- just on a call, like, the demand over in Andhra and Telangana region which was roughly 2.6 in the month of September '18. Right, sir?

Yes, yes, yes. One second, sir -- meaning September 2018. You are talking of September 2018.

Right, sir. In September '18, it was roughly 2.6, right?

No, sir. It was close to 1.6 million in '18. It was 2.6 in '19, sir.

2.6 in '19, okay...

Yes. And it was close to 1.3 million in '20, September month.

Okay, for September month. So sir, this decline is mainly because of the government, like, drop in the government projects mainly?

I think, during that month, monsoon was still active, sir. So we don't know what was responsible, but during the same time, yes, most of the -- there is a slowdown in the government projects. The regulatory -- at this time, regulatory issues was able to get resolved, but still it was in that midst of those issues. And more than these 2 issues, sir, even the monsoon was very, very active. So we don't know what percentage of each of it has impacted, but it was impactful, sir...

Sir, this is your industry demand on a month-on-month basis, right?

Yes, sir. This is the demand of the states, sir, both the states of AP and Telangana.

Okay. And sir, in the con call [indiscernible ] also guided like the [ Polavaram ] dam project just kicked off in the recent months. So can you just update on that thing, sir? Any update from your end, sir?

Yes. I think the realignment in terms of the contractor is complete, sir. The cement demand just started off probably in the late end of December, but we expect some offtake to start happening only from middle to end of February in a significant volume. Sir, the contractor has changed, so he tends to realign the entire thing to his requirements. So we believe that, the real offtakes, those -- there are some small quantities that have started trickling in, but I think the real volume offtake will start probably from middle to end of February, sir.

Okay. And sir, also you mentioned that pet coke prices increased a bit from the exit of FY -- like Q3 FY '20. So what is the current pet coke price, sir, as of now? Like what quantum the increase happened. We just wanted to track that, sir.

Yes. The spot is -- yes. This -- from $69, I think we are talking of $74 for the end of February landing prices, sir.

The U.S. pet coke price...

U.S. pet coke price...

Okay. So currently, it's $74. [indiscernible], right, $74 [indiscernible].

That is for the February receipts, sir. That's for the February receipts [ at customer count ], yes. There's been a $4 to $5 kind of an increase from the earlier quarter to the current spot price.

Okay. And sir, the last question is basically the Satguru and Jajpur plants, as roughly the cost of the project is roughly INR 800 crores. So what will be the quantum of, like, funding from debt of these projects?

It's 50-50, sir. I think the both -- it's on a "one is to one" kind of debt equity, sir. So if -- roughly around INR 400 crore to INR 450 crore will be debt, and the rest is the equity, sir. It could [indiscernible].

Okay. And sir, what are your current pricing, sir, in the eastern part of the country, sir? There, prices are literally better than -- so do you feel like one of these things comes into project? Because a Jajpur thing, it will be mainly catering to the eastern markets. So do you feel with that low pricing scenario, with this kind of debt comes -- coming into the books, we'll be able to sustain our bottom line?

What we have factored is the current pricing scenario is not a very healthy one, sir. So we did not factor any differently, yes. We did not factor any differently. We expected 2 things to happen there, yes. The current operational capacities for most recent players is up of 85%. So in our own case we are factoring close to around 70% to 75% capacity utilization. On a pricing front, we don't expect it to be any better, sir. So these are the 2 issues that we have factored in our business plan. So this is that we went ahead. The price is a INR 310 crore project, sir. And we are expecting close to around 70% capacity utilization. On that front, we are expecting an EBITDA contribution of anywhere between 35 to [indiscernible] per year, not more. So this is that we feel the project should be viable on its own.

So sir, the [indiscernible] will be placed from the Jajpur thing.

Yes, sir. We are talking of Jajpur EBITDA.

For this, okay.

Yes.

The next question is from the line of Swagato Ghosh from Franklin Templeton.

Yes. Sir, I wanted to understand. In a scenario where AP and Telangana demand remain subdued, which of states can be disrupted from AP and Telangana supplies?

See, I think the historical alignment in terms of what we call as the interregional movement is more or less fixed. So just because the prices in Andhra and Telangana are subdued, I don't expect a major disruption to happen to the other states, sir. If you have noticed, the Hyderabad price inflates more than Bangalore and Chennai. So that is a reflection that the impact will be there, but it may not be something which will be so impactful that it will start impacting the other states. But the usual connected states are Karnataka and Tamil Nadu and to a certain extent Odisha, South Odisha. I mean these are the more connected states with Andhra and Telangana, sir. But for us, for some of the trusted players, like Nalgonda trusted player, obviously we'd not move out significant volume just to service the other better markets because it's too far for them to move and start servicing the far-up markets. Yes, it could be a very opportunistic kind of a thing, but it may not be very, very impactful. It could be very, very marginal impact could happen to those places where the prices are relatively better or there's a margin on a related scale to Andhra and Telangana. That impact could be only marginal, sir. I don't think it is something which -- is the other regions. More or less, that interregional movement is established over quite some time. We don't expect anything new to happen. I mean, if you have seen the Q3, sir, the December pricing is currently the lowest that we have seen. So with that, still the other places, there is not much of a change. Or they did not get as impacted as Andhra and Telangana prices have been.

Right, right, right. Okay, but you're saying that the states like, say, Maharashtra or slightly on the northern side, the central market, they have never been disrupted from AP and Telangana supplies.

See, I think the -- it's too far. I mean, see, if you look from a Nalgonda transfer to move even to Maharashtra, you have to cross one more cement cluster where the prices are already established for them. So if you have to really go and compete, which is reasonably lower price now, if you have to go cross that and try to go and service them, I think you would still lose more margin than what you are already losing in Andhra and Telangana. So that's one of the reasons why it may not be as impactful as what people generally think. See, even in Andhra and Telangana prices, most of the industry players during the [ Q3 ] probably would have lost EBITDA, who were purely servicing the Andhra markets. If they further wants to lose money, only then they will be crossing all these cluster sets. So in our experience, that people usually don't be -- would not be going into this, sir People don't try to -- in margin, they might want to lose some margin, but in losses nobody wants to make a loss, sir. I mean, but I think [indiscernible].

No, fair, fair. And sir, on ground, AP and Telangana, are there smaller players who are currently, like, not operational because of the cash losses they are making? Like I'm talking about, say, in the third quarter...

I think we have been as well -- as [ mad ] as we have been in the past, sir, nobody shuts down because, see, it's not a transactional kind of a market, sir. It's more a relationship, see, especially when nontrade is not doing well. And you have to service the trade market. And trade market, you cannot switch off just because you are making losses. Because it's more to do with the relationship. So you would not want to antagonize the dealer who has been dealing your product. And you switching it off at this point of time would not make commercial sense or business sense. What we have seen is they probably would slow down, but I don't think they would completely switch off.

Okay, okay, got it. And sir, one last question is the pet coke price increases that you spoke about. So is it already factoring in the freight increase because of the low-sulfur fuel usage by the shipping companies? Or do you...

So we are talking of the same. We are again talking of the U.S. pet coke on a landed basis, sir. So I'm assuming that they would have already factored most of these Baltic sea freights and the associated low-sulfur fuel usage for the transportation and all, yes, though in our case we don't really monitor so granularly to each of those cost elements. But probably it should have impacted to that extent.

The next question is from the line of Jigar Shah from Maybank.

My question pertains to the sustainability practices implementation in cement sector and for your company. So what are your thoughts on this? Because there are a lot of discussions going around, at least globally on the climate change and the carbon reduction, and cement industry has an important job to do over there. So if you can give an idea into what you are doing about it. And what are your thoughts in general?

Yes. I think it's a very ongoing kind of a topic, sir, though -- the marketplace people keep speaking to them on and off, yes. If you look at the Kyoto Protocol, which the government of India signed quite some time back, part of that scheme, there is something called PAT scheme, sir. It's called perform, achieve and trade scheme, where each big to large players have already gone through a couple of cycles in the past cycle. Each PAT cycle is a 3-year cycle, sir. For each of the cycles, we have to demonstrate the efforts, beyond doubt, about cutting the overall energy metrics, be it the transportation fuels, be it the thermal energy in form of coal or pet coke or in terms of electricity, yes. Each of the industry has to demonstrate a 5% reduction for each of the cycle ends. Like from 1 cycle to the other cycle, yes, we should have put effort and demonstrated beyond doubt the reduction in terms of 5%. And the energy is measured in terms of MT volume, sir. Everything is converted into ton equivalent of oil. In this scheme, if you are better than what you are supposed to be, you have an option for a trade. If you are more than what you are supposed to be, you are supposed to buy the credit, sir. So this platform is being monitored by BEE. And part of the IEH trading platform, you are supposed to trade neither positively or negatively. Those are the guiding principles, though the trading is not very, very active, but the -- in general, cement industry in India has made a huge, huge progress on the total account. But that's only a measure on the energy, sir. On the CO2, yes, the cement industry is one of the -- I would not call the largest but one of the large emitter of CO2. The technology to capture this CO2 and put it to use is still in its infancy, but the Indian cement industry probably is making a lot more strides than any of the major other cement industry in trying to offset the CO2 by aggressively adopting the alternate fuel usage. Some of the companies have already signed up towards technologies which would help for a capture, but the reuse of CO2 is still [ advanced ], sir. I mean it is still at the last phase on the global front, so not much of progress is being made. So some of these technologies were extremely expensive. So over last couple of years, we have seen the overall cost, the CapEx and the OpEx that are associated with CO2, have been coming down. Now this is in general, sir. Coming back to Sagar very specifically. Yes, we have been one of those very few companies in India which have adopted the technologies as they come. We have made significant progress in terms of the capture, from identifying the technologies which are likely that we will start getting the things done, but internally there is a target by 2030 that we are hoping to cut 20% CO2 per tonne of cement, yet we would want to cut by 20%, sir. And I think, over the next few months, we should be ready to sign on and start probably 15 to 18 months from then on, yes, we would have implemented a project to show the most definitive 20% reduction in the CO2. Over the next 18 months, we are reasonably sure that we should have signed up and started implementing the project. We -- what we are also doing internally to get the company ratings done. So we have done our product ratings on the [ accordingly ]. And at the same time, yes, we have also done the green certification for our units. One of our units, we already received gold, yes, which is being done by CII. That, it still reflects that, yes, the efforts that we have been putting are progressing very well. And at the same time, we are working towards disclosure on what we have done on this particular front. So for the 2020 year, that is the current financial year, yes, we will be publishing the integrated report from our company, sir, which also has the sustainabilities in it. We have made tremendous progress from where we were to where we are going to be. And at the same time, there is an aggressive road map for us to be one of the strong green companies where emissions and the energy management and everything is going to be on a [ well sharp ] kind of a level. We are partly looking on companies, sir, so we are obligated not just for our society here, but we are also clearly committed towards the investments which are coming to Sagar. So there is a clear-set road map, yes. We have been working on this over last 7 years, sir, so it's not something which we started last year. Our assets at each of the locations that we have, they are world class not only from an efficiency perspective, even from a green perspective, yes. We have become water positive 2 years ahead of schedule. So we don't draw any water from the ground, sir. In fact, we actually have more water than what we consume. We have been extremely efficient in terms of the fuel usage. We are slightly behind on the alternate fuel usage, but there is a road map that we should start reaching to the best of the number in India. We are not far from being one of the greenest cement plant in the country. That is the road map we have. And there is a large team, ecological team, which is working on the technical options that are available across the world. They have been evaluating, and we are not far from firming up on one of them. And probably we are only 18 months away from implementing the -- such solution so that we could demonstrate the cutting the CO2 emissions. Probably we'll be one among the first in India to reach to those numbers, sir, but that's what I would like to highlight at this point of time, sir.

That was very useful. I just want to have one more thing -- understand one more thing on this. So whatever you mentioned in terms of the carbon capture and other activities, what kind of additional costs you are incurring for that?