Shree Cement Limited (SHREECEM) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Shree Cement Limited Q3 FY '26 Earnings Call hosted by ICICI Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Navin Sahadeo from ICICI Securities. Thank you, and over to you, Mr. Navin.

On behalf of ICICI Securities -- hello?

Yes, sir, you can go ahead.

Thank you. Good evening, everyone. On behalf of ICICI Securities, I welcome you all to the Q3 FY '26 earnings call of Shree Cement Limited. Today, we have with us Mr. Ashok Bhandari, Senior Advisor of Shree Cement; Mr. Subhash Jajoo, CFO; Mr. S.S. Khandelwal, Company Secretary; and Mr. K. K. Jain, who is Head of Finance and Accounts. So without any further ado, I hand over the call to the management for their opening comments. Over to you, sir.

I had been following the practice of not making an opening statement because it unnecessary repeats all the numbers, which are already in your hands. So to utilize the time...

Sorry to interrupt you sir. We miss the opening.

Good evening, everybody. This is Ashok Bhandari. As per my past practice, I shall not be making an opening statement as all the numbers are with you in the form of results. We may start the Q&A to use the time more efficiently. Thank you.

Yes, sir. Should I open for the Q&A.?

Yes. Yes. Yes.

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

A couple of questions. First, given you are prioritizing absolute earnings, your volumes have lagged the overall industry to some extent. Now in fact, your operating rates would be more like mid-50 utilizations. Now how should we think about your capacity expansion plans and target of 80 million tonnes from the next 2 years' perspective? How should we look at your volumes from the next 2 years' perspective? That's my first question.

Mr. Gupta, thank you for your question. Now please understand that since October '24, I had been maintaining that we will be concentrating on -- for value over volumes. That was with a purpose. The purpose was very simple. We had a large divergence between our sales price and sales price of competitors like UltraTech. If you will notice, by restraining our volumes, we have narrowed the gap from about INR 30 a bag to about INR 15 a bag. Now naturally, if you want to maintain discipline on pricing and narrow down the gap, you had to take the pain of sacrificing volumes. That is what we did. And I'm very happy to report that the December growth, though aided by additional demand over November, volume-wise, November, we sold about 27 million tonnes, December, we sold 33 million -- sorry, 2.7 million and 3.3 million tonnes. And January is more or less in line with December '25. We expect the same momentum to continue with a much higher realization, and it should automatically improve our capacity utilization. On the other hand, the capacity utilization will further be augmented by our concentrating more and more on RMC plants, which shall give me a better geographical reach, a more logistical cost optimization and increase the volumes as well. Now coming to your second question of our declared capacity of 80 by '29, '29 is still far off. We are still sitting in '26. We shall get back to you in due course.

Got it. Got it. So 2 follow-ups, sir. One, given you have narrowed the gap from INR 30 to INR 15, is it fair to say that you would continue to focus on reducing this further? And my second question is what would be the absolute revenues of the RMC business and how much cement your RMC would be using internally?

My dear friend, your first question is infructuous. You are saying that will you keep on reducing the gap? It is obvious. I'll keep on increasing my profits. So that is one part. The increase in profit mainly in cement is because of top line. The cost is more or less the same for the industry, except in a few factors. Point number 2, as on date, we have 19 RMC plants. We intend to take it to 45 within next 6 to 8 months. Means you can easily assume that by September '26, the number of plants will increase to 45 from 19. We started RMC about 2 years back. And in 3, 3.5 years, we will be achieving 45 plants, whereas leading players in RMC like UltraTech has, over the last 25 years setup only 100 plants. So we are on track. It is very difficult for me because much depends on how the demand scenario emerges. But certainly, all my RMC plants will be using my cement and it will aid the cement quantity and capacity utilization.

Just what would be the revenues from RMC as of now? And what share of -- how much is the payment?

One second, I'll ask Mr. K.K. Jain to give the answer.

It is INR 71 crores for the quarter.

INR 71 crore.

Right.

For the quarter, we did INR 71 crore, my friend, on 19 plants.

Got it. And how much captive consumption of cement is going into RMC?

So 45% is the captive consumption for RMC plant for the quarter.

The next question is from the line of Pinakin from HSBC.

Sir, what -- in the September quarter, the sales volume was 7.9 million tonnes. What would be the comparable sales volume in the December quarter?

8.7.

That would imply a roughly 7% decline in blended realization, which seems to be higher than what the peers have reported. What would be driving this decline in realization sir?

No, no, no, no, no. You have to do your math correctly. Please understand that my per tonne realization has gone up. The blended realization, I don't know how you are calculating. If you want, we will give you a detailed calculation sheet. Mr. Jajoo, CFO of the company, will send you a mail or you can send him a mail asking precise question. I think you are mistaken somewhere.

Got it. So we were just basically dividing net revenues by...

So that is the point. You have to be slightly careful my friend. You write a mail to Mr. Jajoo and Mr. Jajoo will give you the reply.

So sir, what would be the comparable Q-on-Q change in pricing for the company?

One second. December '24, realization. December '24, it was INR 4,652, December '25. September '25 -- and December '24 is INR 4,554. I don't have the September '25 numbers.

Got it. Sir, any color on the CapEx for next year at this point of time? How much will the company be spending?

As I said, we will be adding about 26 to 30 RMC plants. And the CapEx expected is about INR 500 crores in FY '26.

Sure. And sir, my last question that it looks on a per tonne basis, there is a decline in power and fuel costs.

Obviously, there are 2 reasons. One is that per kilocalorie cost is lowest in the industry is sitting at 1.56. And my renewable energy has kept on increasing, and it has crossed almost 60% -- it has reached almost 61%.

Okay. Okay. Could this trend should continue, right?

This trend, why it should not improve, my friend? You see, as far as the per kilocalorie cost is concerned, you have to understand that it is the function of international coal prices or pet coke prices. I cannot take a call there. What I can say is over the 40-year existence of this company we have always been the lowest price procurer of fuel. And that is why my fuel cost is lower. My renewable energy portfolio has kept on increasing. We are having the highest renewable portfolio today, and we have reached almost 61%, and we are trying to add what, 2% or 3% more. As far as Kodla, the new unit, which is due to be commissioned by March, I'll be having a waste heat recovery system there, which will add up to my renewable or alternative energy. So the energy cost should logically come down if the coal and pet coke prices do not go up.

The next question is from the line of Rajesh Ravi from HDFC Securities.

Yes, am I audible?

Yes, you are.

Sir, just a few housekeeping questions. What were the trade, non trade -- trade and blended cement share in this quarter and the distance?

I will give the line to Mr. Subhash Jajoo, he will give you the answer.

The lead distance for the quarter is 446 kilometer and the trade sale is 65%. What else you want?

Blended cement?

Blended is also 65%.

Okay. And if I look at your fuel costs sequentially, this has come down by around INR 0.10. So there is a INR 50 per tonne saving and your green power mix remains similar. So how is the power cost per tonne at a company level? Power cost per unit. Average power blended.

Yes, 1 second, 1 second. Means bought out and renewable and waste heat recovery and everything?

Yes, yes.

I may not be having that data immediately. I will send you...

We will get back to you, Rajesh, on this.

Yes, certainly. And the realization for the quarter you mentioned was INR 4,625 , right? Gray cement.

INR 4,652. Yes.

INR 4,652. So which is almost 3% -- 4% decline quarter-on-quarter.

That is what I'm trying to figure out. The earlier, somebody had asked a similar question.

No, on a blended basis, because you don't disclose the power revenues, that is why the blended number.

[Foreign Language] What I'm saying is that we can -- we will -- you write a mail to us. We will reconcile the numbers and get back to you.

Understood. And just wanted to understand, you mentioned that the -- you'll be focused more on bridging the gap and getting a better price and realization. So at least on the volume, what sort of growth one should build in for this year because earlier we were looking at 37 million to 38 million tonnes for this year, which seems there could be a slip of 1 million to 1 million to 2 million tonne on the volumes.

So I explained. I already explained what was the rationale.

Right, understood.

Mr. Ravi, please here me out fully. Number one, the demand in October and November was low that you know, which I had no control. December, the demand picked up, we have picked up more. January, the trend likely -- is similar to December. We don't find any let up in February and March because you -- the central government budget has to be spent by 31st March, so I don't think there will be any let up in volumes. I can easily and with a great deal of confidence, say that within this quarter, we will do 9 million to 9.5 million tonnes. In total, yes, I will not be growing at 7% to 8%. But then that was a function of low demand, what to do. But going forward, I'm confident that we should do. You see today, the RBI governor has pointed out to a 7.4% GDP growth rate for '26-'27 in his MPC. And I have been maintaining that cement generally grows at 1 to 1.1x national GDP. So next year, I expect the demand to be around 7.5% to 8%.

Great. Great, sir. And lastly, if you could share the UAE performance, which you did in last quarter?

It is getting better by the day.

Okay. Possible to share the volume revenue and EBITDA number?

I will not -- I don't have the UAE numbers with me at the moment. We'll share with you.

The next question is from the line of Indrajit Agarwal from CLSA.

Couple of questions. First...

I'm sorry I missed your name. I missed your name.

Indrajit Agarwal from CLSA. Sir first, on pricing, can you indicate how the trends have been so far in January and heading into February, both on the...

As I said, the December pricing was much better, and the same trend is continuing. We don't see any letup in demand because of the central government compulsion of completing the -- exhausting the budget within this quarter. So if demand is good, the pricing will remain good. As a matter of fact, as we have been focusing and we have been achieving convergence in -- or reducing the delta between our price and UltraTech price. I expect the same trend to maintain maybe at a slower pace because I'll be doing volumes now also.

And sir, secondly, do you think that from now on, we will continue to grow ahead of industry or largely in line with industry at least?

Let us say, if I want to push volume, then I have to sacrifice price, isn't it? Both don't go hand in hand. So it is a calculated equilibrium game, which we have to play. And as the scenario emerges, we'll keep on updating you. As on date, I expect no letup in demand and no letup in pricing.

The next question is from the line of Jashandeep Singh Chadha from Nomura.

[Foreign Language] Why are you troubling me?

Won't trouble you much, sir. Just a couple of quick questions. Firstly, sir, Shree Cement has been operating in multiple regions. I wanted to understand the basic understanding of how all these regions are performing? Not necessarily from Shree perspective, but from industry perspective...

One second. One second. Can we be a divergence with the industry region-wise? So we will be in line with the industry only exactly how much fee has sold in reach reason of its capacity, the number I'm asking Mr. K.K. Jain to share with you. That in this region, we say Shree's capacity is 100, then region-wise, how much we have sold in this quarter and that should be roughly the line of operation of all pan-India cement companies. Regional companies, it's not comparable. So I'm asking Mr. Jain to give you the reply.

Yes. In North region, the sale is 53 lakh tonnes, 5.3 million -- sorry, lakh tonnes and East 23 and South 11. And in percentage term, it is 51% in North, East 26% and South 13%.

This is very valuable information. But I was also looking from January and going ahead, which region you are seeing uptick coming in volume demand?

What is the date today my friend? It is 6th of February.

January onwards...

Let the January numbers come to me.

I'll maybe once they are out, I'll reach out. Sir, second question was on the -- I understand on per kilocalorie value, Shree Cement has been the lowest and will continue to be the lowest. But with pet coke international prices going on, what kind of impact will be on the cost for fourth quarter, if you any sense can give us?

Please understand that nothing stops me from changing from coal to pet coke or pet coke to coal. I have multi-fuel burners. This is a constant exercise which is why purchase people do that which mix gives them the best landed fuel cost. I am not at all concerned with international prices. I am concerned with landed cost of fuel because that is the actual cost to me. So this is a constant exercise. As on date, we are at INR 1.56 per kilo calorie, it may remain same for January, but it will go up in February and March. In any case, I don't think it should increase INR 1.80, which is my peer group fuel cost.

Understood sir. Understood. Just one last, more of a clarification. If I can understand from your previous answer to the previous question, we are expecting 7% to 8% Y-o-Y growth for the industry and Shree Cement will largely be in line with the industry. Is my understanding right, sir?

Your understanding is correct with the caveat that we had generally grown better than the industry. Last 1 year, you leave because that was with the strategy of narrowing the gap between the selling prices. But once we have achieved that, then probably we may grow better than the industry also, but let the time tell its own story.

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

Yes. Sir, 2 questions. First, in the last con call, Q2, you highlighted that investors should look at the Shree Cement from the consol perspective, but -- and in the last 2 quarters, you have said the UAE volume. And this time, this is not part of the press release and also post the call when we tried to connect with the CFO, sir, Mr. Jajoo, he is not ready to share the numbers. So how one can look at these things? This is first part. Second...

Let me stop you here. One second. Do you mean to say that we have not published consolidated numbers?

No, volume. I'm asking a volume.

So please go through the results. I don't think you have gone through the results. Please go through the results. Stand-alone is there, consolidated is there. And you very well know how to calculate UAE from the 2 numbers. So what are we trying to say, you try to make the simple things difficult at all the times whenever we receive your call.

Sorry, sir, when did I make it difficult?

Let us not argue on this. You ask your second question.

Yes. Sir, what's our clarification on the MCA investigation that is on under Section 210?

There is no investigation. It is a routine inquiry. They have asked for information. The information has been shared. They have not come up with any report. So what do I do?

No issue sir. Sir, road rail mix for this quarter and this quarter...

Mr. Jajoo will give you.

Road/rail is 88% and 12%.

And our fuel mix, pet coke and coal and...

It's 76% pet coke, 6% coal and balance is alternative fuels.

And CapEx till now, how much we have done in 4F?

Till now, we have done around INR 1,500 crores. And another INR 400 crores, INR 500 crores is to be done in this quarter.

May we request that you return to the question queue for a follow-up question. The next question is from the line of Satyadeep Jain from Ambit Capital.

Just a first question on the strategy on pricing versus utilization. You've added capacity in North and South in the past few quarters. How do you look at an ideal utilization given these capacities have been added, but overall volume increase is not there? So is there an ideal utilization you look at when starting an asset to optimize the operating leverage, fixed cost there?

Please appreciate that I had always been maintaining when demand is not in the hand of any cement manufacturer. Demand emanates from overall growth within the economy. We do -- we are not happy with our current capacity utilization. We are taking steps to correct it. We have corrected it largely to some extent in January. I have also pointed out that we are concentrating on setting up more and more RMC plant which should give me a fillip in capacity utilization. But at this point of time, especially in this quarter because this quarter, maybe the demand may be abnormally high due to pull from the central agencies, we may better answer this question in the first quarter of '26-'27.

Sure. Sir, in that context, the focus on utilization, how do we look at the 80 million tonnes? Would you rather wait to improve utilization? And what's the progress on Jaisalmer...

Generally, your thinking is correct that we are not announcing specific sites and specific plants only because we want the capacity utilization to increase. I had hinted that 80 by '29 may get deferred or may culminate is completely dependent on how the demand comes out in '26-'27. So this is a question for which I don't have a ready answer. I would like to expand. please understand that Shree Cement has increased its capacity 110x from 1985. Since the last 40 years, we have grown 110x in capacity. So our growth has not been lagging. Our CAGR for growth is 12.5% plus. And we expect to do it better. But then you must setup capacity, not for idle capital but for productive capital, which is a function of demand. If the demand doesn't have the necessary leverage what is the point in setting up capacity and operate -- keep on operating at 56%, 60% ,62%. Ideally, we should reach 70% kind of a capacity utilization. Now whether it takes place in 1 year or in 1.5 years, time can only tell.

The next question is from the line of Siddharth Mehrotra from Kotak Securities.

Sorry if I missed this number. So what is the CapEx we are expecting for, say, 2027?

Look, my major focus is going to be 26 RMC plants, 26 or 30. Per RMC plant, it costs about INR 5 crores. So INR 150 crore visibility I have. Balance is completely dependent on how I try to attain like June '26 -- sorry, March '26, we will be completing Kodla plant. We have spent about INR 2,000 crores of CapEx in this financial year. Next financial year, I'm giving you INR 150 crores CapEx. I am also working on railway sidings which should be about how many crores per kilometer?

Around INR 150 crores, INR 200 crores.

About INR 200 crores to INR 250 crores on railway siding. So INR 400 crores to INR 500 crores of CapEx visibility is clearly there. Balanced visibility, I'll be able to give you once I start planning my further capacity addition. So you will have to give me 1 more quarter to give you more clarity on this. However, you are fully -- you may be fully aware that we are completely debt free, and we have about INR 6,000 crores of free cash sitting in our balance sheet. So we are not worried about the quantum of CapEx we can -- we need to spend. We would like to be watchful of the demand and the potential capacity utilization.

Understood, sir. So essentially, that means we are planning to put at least 2 railway sidings approximately INR 150 crores to INR 200 crores per siding as well as the RMC plant, INR 500 crores, we have clarity and maybe some additional CapEx basis, whatever your capacities you sort of decide. Is that correct?

Which I'll be able to tell you, either in next con call or in the June con call, I don't know. You will have to give us time.

Okay. Second, sir, could you sort of quantify what sort of industry growth was prevalent in 3Q for the industry sir, some ballpark number?

Like Q3, you see it is not comparable. I had a different strategy of operating my plants. The industry has a different strategy. So they are not apple-to-apple comparison. I was concentrating more on value, less on volume. So obviously, my growth was lower than the industry. If you want, we can share those numbers or those numbers will be available elsewhere also. But you can write a mail either to Mr. Subhash Jajoo or to me, and we will give you the reply. We have not gone to our fullest capacity -- to our fullest -- what should I say, potential by design. Now we will see how it goes.

Got it sir. Got it sir. Sir can I just please get the power mix split sir if possible? If 34 megawatts was the total green power mix there should also be additional captive power. So could you just lay out what are the individual components, the solar, WHR?

Wait a minute. Mr. Jajoo will give you exact power plant capacities of various kinds.

See, our total power capacity is currently 1,137 megawatts, out of which 503 is the thermal power capacity and balance is all green. WHR is 265-megawatt, solar is 314 and wind is 56. So 64 megawatts of green capacity, 503 of thermal, total 1,137.

Understood, sir. Just 1 last question sir, if I could squeeze in. So a couple of your peers have sort of sounded out that this is a very interesting and exciting opportunity in UAE to either sort of increase their stake in subsidiaries there or expand their capacity there in additional grinding units. So sir, given the fact that you already have a long-standing exposure to that geography...

Let me stop you here, my dear friend. Do you think that if there is a profit opportunity, Shree Cement will let it go bagging? If there is potential, if there is real demand per cap, if it is -- if the operations are profitable or good enough profitable. We'll certainly do whatever is required to be done. We have the largest cement plant in UAE today in our control.

So nothing has changed at least from our perspective in terms of the market opportunity, sir?

I would not like to comment on that as of yet. I'll comment in March.

The next question is from the line of Tushar Chaudhari from Prabhudas Lilladher P Limited.

First of all, please do me a favor. If you meet Amisha Ben tomorrow, please give my regards to her.

Sure sir. Just wanted to know this employee cost is a little bit higher this quarter. Is it because of Baloda Bazar?

Read Note #3 of the results.

Okay. I missed that. Impact, so volume actually I wanted to know how much is the...

Listen, the new labor code has made we provide for all back liabilities which is amounting to INR 56 crores. We do not show any expense as an exceptional expense because it is all in routine course of business. So we have additionally provided INR 56 crores as required by the law, and we have disclosed this by way of a note in Note #3. This is all employee cost. Now what is the second question?

Volume, 2% growth is written. Last year, it was 8.77%.

So last year, what had happened, my dear friend? Last year, what was my realization. This year, what is my realization?

Blended realization.

December '24, my realization was 4 -- INR 4,554, is it correct? Yes. And December '25, my realization is INR 4,652. So you sell to lose money or you sell to make money. We have deliberately constrained our volumes to decrease the delta between other selling price and my selling price. We have reduced it by 50% [Foreign Language]. We will see what to do.

Then no, no, I understood that, sir. You had explained it pretty well earlier. 2% volume growth is then -- is including clinker?

That I don't remember it often. I will get back to you. You send a mail to Jajoo, and Jajoo will get back to you with the exact numbers.

The next question is from the line of Navin Sahadeo.

Am I audible?

How can you not be audible? You are the host today.

So my question was on this value versus volume strategy. In the context of market share as well as industry superior profitability. Like past 4 quarters, as you mentioned in your opening comments, since October '24, the strategy of value over volume was clearly, I think, rewarding us in terms of significantly higher EBITDA per tonne or margins versus the peers. In this quarter, it is a bit of a dampener and also, of course, the volumes are also like some maybe, if I may say, some loss of market share...

Navin, Navin, Navin, slow down, slow down, slow down. Hear me out. There were 2 major changes in our sales strategy in last 1 year. One was that we had made our rebate and discount policy so transparent and nonnegotiable and nondiscretionary that the favored dealers were getting pissed off. So it took some time for them to realize that this is a nonnegotiable policy, and now they have fallen in line. And number 2 is that in November, we have inducted a new President, Marketing, and he has shown good results in the last 1 month, 1.5 months. So I expect that the things should be better in coming times. Now of course, I can say anything. I cannot be but be bullish on cement. So I will keep on talking bullish sentiment on cement, but please understand that demand is not in my hand. If demand is there, you will not find us wanting.

Helpful. Helpful. My second question then was on realizations. So in -- I think in Q3, we have sequentially, I think realization drop is about 4-odd percent...

Yes, look, all of you are saying this. Unfortunately, I don't have this number [Foreign Language], maybe this is correct. Maybe there was a drop in realization or whatever. But you asked me a pointed question on come -- you keep on coming to Calcutta, come one day. I give you a good tea. You have nice tea and I will give you a good lunch also, if you want. It is better. [Foreign Language], we talk more freely and with all the data.

The next question is from the line of Indrajit Agarwal from CLSA.

Sorry, I missed one. I just want to clarify one number. Did you say fourth quarter run rate to be similar as December and 9 million to 9.5 million tonnes volume in fourth quarter?

Yes, I did.

So that would imply more or less flattish Y-o-Y number? Is that understanding correct?

Maybe 1 or 2% growth, I don't know. I have not done the math.

The next question is from the line of Harsh Mittal from Emkay Global.

Sir, just one question. So given that our cash levels as of December ending is INR 6,000 crores, and we are expecting a healthy cash flow in the coming years with a limited CapEx. So sir, can we expect a material upside in the dividend outlay going ahead?

Let us understand. Material is a relative deflation. So let me assure you that, yes, the dividend payout will be better. It is not my prerogative to say how much better, how much not better that is up to the wisdom of the Board. But I expect the dividend payout toward '26-'27 -- sorry, for '25-'26 to be better than '24-'25. And I -- well, it is not a differential of INR 5 kind of a thing. We may give you a better one.

The next question is from the line of Lakshminarayanan from Tunga Investments.

Sir, on the return metrics for the company, we see that it's currently trending downward predominantly because of lower profitability?

No, no, no. Please let me correct you. The profitability absolute number has gone down because we had, by choice taken a value over volume path, please understand. We have achieved the convergence in vis-a-vis, say, UltraTech on per bag prices. So it is not that the capacity utilization was substantially affected by profitability. It was my design that it had of lower volumes to better my prices, which had affected the profitability.

Got it. Sir, my question is slightly different. I mean I understand your point. Now our ROCE or ROEs are trending downwards over a period of time. Given this strength, what is the primary metric the company prefers to evaluate its long-term performance?

One second my dear friend. Let us understand. If I keep on making profit, my capital employed keeps on going up. If the additional profit I am not distributing or I'm not utilizing for CapEx, then it is giving me a 4% to 5% treasury return. So if you combine everything, you find that the ROCE or the ROE is going down. On the other hand, I'm committed to add on capacity to 80 million tonnes. So what do I do? I have to bear the pain of a rather inefficient cash utilization in the form of treasury till I finalize my plan to have major CapEx. For the first time in my career, I think I have spoken of a INR 400 crores to INR 500 crores CapEx visibility in next financial year. We have never done that. But then the demand scenario is such that I cannot give you a firm commitment on when my capacities will come up. As soon as the capacities come up, the 4% return cash on cash -- the return on cash of 4% will extrapolate into 20%, which will automatically jack up the ROCE and ROE. So you will have to bear with me.

[Operator Instructions] The next question is from the line of with Uttam Srimal from Axis Securities Limited.

Sir, my question pertains to premium cement. So we have made a really good progress from 15% last year to 22% -- 10% last year to 22%. So where do we see this number going forward in next year?

Can you -- have you read any cement research report, which has talked of anything else about premium cement? So if everybody is going to make premium cement, then where is the premium here? The premium cement becomes the normal cement, number one. Number two, the brand belongs to the company. The classification of brand also belongs to the company. There is no standard, which defines premium event. So it is your 10 brands. It is your pen and it is your pencil. And whatever you want to put, you put it as a premium brand and sell it because there is no yardstick to define what a premium cement is. So please understand, we are at about 21%, 22%. We are -- we have defined our premium brands, and we are sticking to it. We are not changing the mix of my total cement as for my convenience. And at the moment, with the current demand scenario, we are at 21%, 22% and we expect to maintain the same run rate for this financial year. Next year, what will happen let us see.

And sir, next year, what would be our depreciation cost?

What will be our?

Depreciation.

Depreciation should be about INR 1,600 crores.

1,600? Sir, you said INR 1,600?

Yes, I said INR 1,600 crores. INR 1,600 crores, INR 1,700 crores, please don't hold me to the number, but it will as high as it had been.

[Operator Instructions] The next question is from the line of Rajesh Ravi from HDFC Securities.

Sir, just a follow-up question. On the realization, which you explained that you have bridged the gap with UltraTech, and I believe that is visual in numbers when I compare you with the like-to-like numbers of UltraTech in last 1 year, while your competitor has shown a INR 50 decline, yours realization has gone up by INR 100. And similarly, the trend in for the last 2 years, there is a sharp swing upward on your numbers. However, if I look at the margin front, your margins have been more or less flattish year-on-year while the competitor has seen a margin upswing both on a year-on-year basis on a 2-year basis. So is it like you have maintained your pricing?

Ravi, one second. Fixed cost recovery is completely dependent on capacity utilization that you appreciate. To catch up on the value terms, I had sacrificed volumes. So my fixed cost recovery was less. So margins dropped. Now if I play intelligently, my fixed cost recovery will improve and my margins will also improve. Since the first time in the history of this company that I have reported a more or less equal EBITDA per tonne net of labor code expenses vis-a-vis UltraTech. Otherwise, we had always maintained INR 100 to INR 150 delta plus side. And I expect to catch that up.

Great. That's happening. And sir, just on the adjusted for the labor cost, still your employee cost is higher by INR 20 crores quarter-on-quarter versus INR 250-odd crore?

My dear friend, what happens if I increase my capacity?

Okay. This is with regard to the new plant ramp-up.

Exactly.

Okay. So we should factor in this number as a recurring number and accordingly. And sir, lastly, just on the UAE business, you would wonder -- could you make it a practice in the press release only to share the volume metric and the numbers in AED would that be more useful for us?

I will certainly give a thought to this. Give me 1 quarter. Let us see what I can do in next quarter. I will certainly do that.

And sir, lastly, could you repeat the CapEx number for full year and next year? What are you targeting?

This year, I'll be doing INR 2000 CR. I have already done -- I have already completed INR 1500 crores. I'll be doing about INR 500 CR in next -- in this quarter, means January, March. Next year I have -- one second. Next year, I have not firmed up my plan on further cement capacity addition. We have frozen the plan to setup about 30 RMC plants. One RMC plant costs roughly INR 5 crores to INR 6 crores. So you take about INR 200 crores for RMC, INR 200 crore for my railway sidings, and 50 crores to INR 100 crores, you have normal routine CapEx [Foreign Language]. So I'm giving a guidance of next year CapEx at INR 500 CR. But I'm putting a caveat that this is only because I'm not firmed up my plan of adding up further capacity. If that gets fructified, the number will substantially change. But you will have to wait for that.

So just to confirm on -- that's clear, sir. That is clear. So there are no capacities which will come onstream next financial year, at least because nothing is -- no concrete work is going on as per...

I don't think we will go beyond 72 million tonnes, which we will achieve by March '26.

The next question is from the line of Navin Sahadeo from ICICI Securities.

Yes, I'll take the last question, sir. So in the -- like you mentioned that we have narrowed the price gap versus the industry leader from INR 30 to INR 15. So what is then the next milestone? Is it coming at par? Or is it like how should one benchmark that at that point of time onwards then we can start chasing volume?

Navin, hear me out. I don't have the capacity or capability or even the enthusiasm of saying, I will sell at par with UltraTech. If I say that, you will not believe it. But on the other hand, I -- with full confidence, I can say that I'll maintain the delta on EBITDA per tonne basis, vis-a-vis the competition, which I had been doing except in this quarter. I've been doing it for 40 years, that you know. This quarter, we lost out on volumes that's all right. It was calculated.

Sir, on the staff cost, I just wanted to know what would be the normalized cost. I mean, this quarter...

You ask this to Jajoo. I don't know.

Last question to you, sir. Last question. At a broader industry level, do you think non-trade share or non-trade exposure is rising because everybody is chasing those bulk volume, RMC units. Is that a fair thing to observe?

No, no, no. I think you have -- as I told you, my dear friend, this quarter becomes very typical. Non-trade is basically the large purchases by infrastructure projects. This quarter, the government has to finish the budget allocated in '25-'26. So this quarter, you may have a trend where non-trade may be more. But I don't think that is a sustainable trend. We will go back to 75%, 25% kind of a level. We have today at 65%, 35%. Is your last question finished?

Yes, yes, I'm done. There are no more questions.

So why are always the last one to shaft me?

Over to you, we'll discuss this. [indiscernible], you can go ahead and conclude the call, please.

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