UltraTech Cement Limited (ULTRACEMCO) Earnings Call Transcript & Summary

[Audio Gap] capacity, taking our total capacity in the eastern zone to 26.2 million tonnes. Central will see an addition of 5.1 million tonnes, taking us to 28.4 million tonnes of capacity. West, a small 1.8 million tonnes of capacity taking up to -- taking us to 29.5 million tonnes. North; Pali, which was long overdue, will see light of day by end of December '22 and adding 2.5 million tonnes of capacity in North, taking us to a total of 26.3 million tonnes. South remains the same as 20.5 million tonnes of capacity. We will close financial year '23 with a capacity of 130.9 million tonnes in India and 5.4 million tonnes in the UAE, thus taking us to 136.3 million tonnes. This capacity is clinker backed with 11.4 million tonnes of additional clinker coming up, 2.7 million tonnes in each in North, Central and East; 1 million tonnes in Maihar, which is again Central; and Dalla Super, which is part of UP and part of Central will hopefully -- and we are confident, it will -- its 2.3 million tonnes clinker capacity will get commissioned during the next financial year after resolution of all the pending legal issues. Pali integrated plant with an integrated -- with a grinding capacity of 1.9 million tonnes. And Cuttack grinding unit of 2.2 million tonnes along with a small grinding unit at Dhule in Maharashtra of 1.8 million tonnes are the 3 greenfield projects and the remaining capacity is all brownfield. This will help us keeping the overall project cost at well less than $60 per tonne as total capital cost, reducing our overall fixed cost and generating higher returns. One more point that I must mention is our focus on green energy. We are investing in WHRS in all the clinkerization units. 40% of the power requirement of this expansion will be through WHRS. At the end of this phase of expansion, our green energy is likely to be 34% of the total power consumption as against 30% target that we have pre expansion. Another important point in our focus on sustainability is that 85% of the output will be blended cement, thus improving our overall blending ratios and reducing carbon emissions for them. Needless to mention, we are fully secured for limestone post expansion. As far as cash flows are concerned, the revised CapEx estimates, CapEx cash flows are INR 2,500 crores per year going forward. This would include the CapEx for the expansion as well as ongoing maintenance CapEx that the company would have year-on-year. With this CapEx spend, we are not changing our goalpost of deleveraging. We will be debt-free company by FY '20 -- by the end of fiscal year '23. This is all, I think I had to tell you about the expansion plan. Wishing all of you a very safe journey through COVID. And with that, I will hand over for questions, if any.

[Operator Instructions] The first question is from the line of Indrajit Agarwal from CLSA.

I have a couple of questions. First, on the balance sheet strategy. We have maintained we are comfortable with 1x net debt-to-EBITDA. So how should we look at that over the next -- both in the near term and also in the medium term? Does it mean that we will be looking at more greenfield/brownfield expansion much more than what we have announced now because we'll end up being net cash by FY '23?

Indrajit as I -- I told in the past that we have a game plan of about 50 million tonnes of expansion -- organic expansion. We are ready with it. However, this expansion will be focused on -- the timing will be focused on the right opportunity being there as in demand -- sufficient demand being there, and we don't have enough capacity. So we are geared up for the remaining 30 million tonnes in the year -- by the year ending 2030. That's clearly on the radar. Second point, I think you mentioned about leverage. Leverage is a very comfortable position. Last quarter, we ended with 1.22x. It will be below 1x by the end of March '21. And taking on the additional CapEx spend in the next 2 years, which is fiscal '22 and fiscal '23 in spite of taking on the additional CapEx, we will be debt-free by the end of fiscal '23.

Sure. That's helpful. My second question is on the CapEx per tonne. Now if you just do a simple math of INR 6,500 crores CapEx on 19.5, it comes to less than $50 [ instead ]. So when you calculate, are we assuming or incorporating some of the land cost that we have already incurred in the past when we say less than $60?

No. So the land cost, which has already been incurred, has got factored in the original cost of expansion. But this is the incremental cash flow, which will take place, except for Pali where we have factored in the land cost. And Cuttack, where -- these are greenfield projects. Hirmi, which is the other brownfield expansion; Maihar, which is the brownfield expansion; Dhar, which is the brownfield expansion, the land cost got factored in the original project itself. If we were factoring in land again, then it no longer remains a brownfield.

That's helpful. And 1 more, if I may. Other than WHRS, any other power capacity you are adding in the existing thermal power capacity, if you can quantify that?

No, only WHRS. Only WHRS. About -- yes 57 megawatts of -- [ Ankit ], 57, right?

Yes.

57 megawatts of WHRS. And we have our thermal power available -- thermal power capacity available, which will if any shortages there will be supplied to these units by way of power wheeling within the states.

So we will not depend on grid power or outside sources of power at all for these expansions?

No, no, no. So we maintain a grid connection for the purpose of emergency.

The next question is from the line of Gunjan Prithyani from JPMorgan.

Just 2 questions from my side. So firstly, what made you press the start button now? Is it you're feeling so confident about the demand that we had to go ahead with these expansions right now? Or is there a capacity share target in your mind that in 5 years or in 10 years, we want to get to this much capacity share. We've clearly had a great journey going from 10% to 22% odd capacity share. So how should we think about the top-down approach on capacity expansion from your side?

Capacity share is never a target. It's a profitable growth, profitable growth, profitable growth, profitable growth, the target. And we will put up capacity if we start falling short of capacity in a particular region because the question comes back, that overall capacity utilization is only 75%, then why are we adding capacity. However, India cannot be looked at as 1 single market. It has to be looked at state-wise or region-wise, depending upon which region we are falling short of capacity. Today, we are falling short of capacity in the East, and I think I must have definitely told all of you in the past that we move material from South. We move material from -- in peak times, we move material from Maharashtra right up to Orissa or from UP to the eastern markets. So now that we are falling short of capacity, we had decided to go ahead and press the button on expansion because this will also take every year -- whilst FY '23 end will be the completion of the expansion program, but every year, we'll have some amount of capacity going onstream. And yes, we are very confident of a 8% CAGR growth in the next 10 years or so. Definitely, things are changing in the country. Government is getting more serious. Today, I have reasons to believe that payments to contractors are bang on time. All the infra projects are going through the roof. You are seeing lots of projects getting initiated, work commencing. And once this momentum picks up, there is no looking back. Aided by the fact that fiscal '21 is -- in the first quarter, Gunjan, if you had asked me, we were looking at a de-growth for this year, second quarter the degrowth became smaller -- the expectation of degrowth became smaller. And by the time we are reaching third quarter, I think we will have a growth in this financial year, which should be looked at along with the 2 months which were washed out. So effectively 10 months of sales and the third month of the year was also a ramp-up month, which is June '20. So in this kind of mode that we are -- the country is in, we are seeing opportunities of rapid growth in the coming years.

Has there been any change on the urban housing side in the last couple of months?

Urban housing side -- urban housing is improving. Except for luxury housing, I see the urban markets also coming back on stream. There's a lot of demand which we are seeing in Tier 2 towns finally waking up, which had died post demonetization. It's finally starting to revive now. The need for space is becoming more urgent and decisions are being preponed, partly because of COVID, also aided by the fact that there are brilliant opportunities as in there are good offers being driven by real estate players. There are housing loans at record low cost. Government is also getting a lot of SOPs for reviving the demand for urban housing.

Okay. The second question I had was on the CapEx in East. Now I understand this shortage that is there in that market from your perspective. But it's also been a market where pricing has been very, very volatile [indiscernible]? The ROEs that a lot of people make in East are still not -- are not attractive enough. So I'm just thinking the thought process in East. I mean given the pricing pressure, do we -- is that the expansion there also fit the IRR or ROE criteria that you have in mind? I mean I'm just -- just trying to understand your thought process on East because it's been 1 market, which is continuing to see a lot of pricing pressure.

Yes. Pricing pressures do exist, but it's a very stable earnings market. I have seen earnings of INR 900 or INR 1,000 EBITDA per tonne on a consistent basis. Chhattisgarh state, by the way, is the lowest priced market across the country. But yes, we are not dependent on Chhattisgarh. Bihar, Orissa are very good margin markets. That's where the focus will be and to your other point, our ROCEs, I think I have included a chart in the presentation. The ROCE or a projected IRR from this expansion is upwards of 15% barring Pali, which is -- barring Pali, which is a greenfield project, so because costs are higher. Others being greenfield -- or others being brownfields, and more than 70% of this expansion is brownfield. So you can do your math, 15% is on your average. So the other projects are phenomenally higher on ROCE. This will help improve overall returns on the company balance sheet.

Okay. Got it. Just 1 clarification, I'll move back in the queue. This INR 6,500 crores, if I just take on 19.5 million tonne grinding capacity that you're talking about, it's about $50 a tonne. So and you mentioned $60. So I'm just trying to think what is the $60 number that there in the...

I said less than $60.

Okay. Got it.

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

Couple of questions. First is, would we have any targets in mind, specifically for Birla White, RMC and UBS? I think it's for the first time we have detailed out the specifics. Specifically, on Birla White, are we looking to double capacity? How should I look at the market share over here? That's on Birla White. And likewise for RMC and UBS? That's the first question.

Okay. So all the 3 segments and the fourth one, which is building products or construction business. All the 4 segments are highly profitable, high ROCE and, Ritesh, you have always talked about Birla White, yes, we are looking at expanding our presence in white cement and putty. We will come up with a plan shortly. I know the shortly has been quite long. But yes, we take time. But once we -- once we get going, we really get going. So white cement is going to expand. RMC business. Currently, we have about 102 plants. By the end of this fiscal, I will add at least 20 more plants. RMC is becoming a very big opportunity. By the way, it is an incremental margin over what gray cement earns. So it's not a dilution in margin for the company. And I think I have given the numbers, it must have consumed more than 1.3 million tonnes of cement. So it is our customers who are bracing it. So it's a very attractive proposition. The country is changing -- moving towards RMC, but there's a long way to go to emulate the western world. UBS, we are at about 2,300 stores. The plans are, of course, to double the size -- more than double the size in the next 3 or 4 years. Construction chemicals, wherever we have -- what we started doing is the investment requirement is insignificant. We are now tapping into opportunities available within our existing manufacturing plant facilities where -- where we can add on a separate section to develop the construction chemicals and give a run for the money for other players.

That's encouraging. Sir, would you like to put some numbers over here given UBS is a big growth option that we have, and we haven't -- I think street hasn't appreciated that. You did indicate like probably you're hinting towards captive manufacturing on construction chemicals, which is quite positive. Sir, would it be possible for you to quantify some numbers over here because it is a big optionality, which as a company UltraTech has, how should one look at it?

So one is the gray cement sale itself, which takes -- gray cement and white cement sale itself, which takes place from the UBS network today. As I mentioned, from the current 2,300 stores, we will be galloping towards doubling the size in the next 3 or 4 years. That will be a critical mass and a force to recon with. And I think UBS is doing a fabulous job. The kind of services -- the features, that even parcel service is available there for individual homebuilders or paint gallery option. I was also not aware, in fact paint gallery is an option or the various [indiscernible]. As far as financial numbers, not yet, I will, once we are ready, we will detail out the financial numbers as well.

Great. Sir, just 2 more questions. We have -- you did indicate WHRS to address 40% of the power requirement on incremental expansions, and you did emphasize on blended cement. Sir, would you like to qualify any emission targets? I know that we have it, but -- but would you like to revise those milestones that we already published specifically given our incremental [indiscernible]?

This is, let's say, give or take 18% of our existing capacity. And we -- given the blending ratio -- improvement in blending ratios, improvement in the power -- green power, earlier, we were looking at 30%, now it goes up to 34% on 130 million tonnes capacity. The emission norms will strengthen further. I don't have a number. It might be in decimals only, obviously. Once the sustainability report is finalized, that number will be tabled. You should expect that in the next annual meeting.

Great. And sir, just last question. You have indicated like 22.3% is a market share. Sir, any sense on how much will be our market share on FY '23 basis, looking at the industry capacity additions?

So this is a -- this is not market share, this is capacity share.

Yes, sorry.

There's a big difference between market share and capacity share. Yes, we will -- the capacity share basis the announced plans and this is my reading of what will actually come. We should be upwards of anywhere between 23% and 23.5% capacity share. Market share will be higher.

Correct. Sir, any targeted number over here?

There is no target.

The next question is from Gaurav Rateria from Morgan Stanley.

Sir, 2 questions. Firstly, if I look at the current profitability of the company, my assumption is the brownfield projects will have even higher profitability given the lower overhead expenses. So on those profitability metrics and the CapEx cost per tonne, the pretax ROCE comes around 25% plus. So I'm just trying to understand what is the entry barriers for the industry? Because a lot of companies can actually add capacity on brownfield basis. The ROCE pretax basis is 20%, 25% plus. So what really are the entry barriers, which can stop other players to add capacity and spoil the whole pricing scenario for the market?

The entry barriers are readiness. It's -- we have been investing in land and mines over the years on a consistent basis. Everybody does not do that. People are shortsighted as compared to being longsighted. So shortsighted decisions are never thought through and have resulted into disasters in the past. There are only a few companies who have been -- who have the preparedness and who have limestone. And we have -- we are aware that limestone post expansion is not available with all the players. So that becomes a big entry barrier or any brownfield expansion.

Got it. Sir secondly, on East market, per se, how is our cost competitiveness versus peers? Because I think the clinker transportation cost is still pretty high for us. And there are some players where the clinker transportation cost will be very low for some of them. So they can always afford to be much more competitive and try to gain market share, which is why pricing can always be a problem in East market. So how are you thinking about it?

So for example, we are adding 10 million tonnes in the East and another 5 million tonnes in Central. Out of that 5 million tonnes, -[ Ankit ], Maihar is how much?

[ 1 million].

So out of this 19.5 million tonnes, 11 million tonnes will -- is in the Eastern markets, which derisks us on profitability because of high logistics cost.

Okay. Sir, last question on your assumption of ROCE 15% plus. You would have baked the current profitability to sustain throughout, or what's the sensitivity one should kind of think about with respect to current profitability sustaining or not sustaining and you're still achieving your targets of 15% plus ROCE on these projects?

My expectation is that the profitability will improve for us. Yes. As I mentioned, there's a chart in the presentation, Ankit, showing the existing ROCE and the projected IRR. So I am conservative in giving my numbers.

The next question is from Amit Murarka from Motilal Oswal.

Just a few questions. Firstly, after 2023, there's a 30 million tonne expansion, which is showing until 2030. So that seems to be a low CAGR of 3%. So how should we read it? Like is it like the 30 million tonnes is on the drawing board, and there could be more coming up til 2030? Or is it like a 30 -- it will not exceed 30, so how should we read this?

So this 30 million tonnes is -- we are prepared with it -- in terms of land and mines, we are prepared with it. This -- our growth -- hunger for growth will also be met by inorganic opportunities, which could come up in the next few years. And it's not -- we are not stopping at 30 million tonnes. India is a high-growth market, the highest -- I would say, India is the highest growth market and UltraTech seize of that opportunity, I think, ready for the next-generation also.

Sure. And on the northern market, like Pali, grinding seems to have been scaled down. When it was announced earlier, it was a 3.5 million tonnes grinding and now it seems like 1.9 million tonnes.

Yes. I have surplus grinding capacity. So basically, we wanted to see how we improve returns on Pali, so it's reducing the investment a bit at Pali and the surplus -- the clinker that is being generated at Pali, we have surplus capacity in other northern grinding units. So we'll use that as an opportunity to improve the overall returns of Pali. Earlier, the plan was envisaged as 3.5 million tonnes. It has been scaled down to 1.9 -- 1.9 [ million ]. Correct, [ Ankit ]?

Yes.

1.9.

And also in the same context, like UNCL, there was expected to be a brownfield expansion. So is it beyond -- is it in that 30 million tonnes beyond '23?

The 30 million tonnes, yes.

Okay. And in the existing expansions, which are there in East, like Dalla, you mentioned as 1.3. So there is no mention of the clinker at Super Dalla. So I believe that's also coming through, right?

I did mention about the clinkerization capacity, which is coming through. We will finally see light of day on the Dalla Super 2.3 million tonnes clinker.

Okay. And the time line, I think in the last call, you mentioned as -- yes, it was mentioned as June '23 -- yes, please go ahead.

June '23, it can be touch and go. June '23? No, no.

Sorry. '22, '22.

No, no, no. '22 is too far. We would look at it before December '21. Just to give you how things are bad because of COVID, the MoEF meeting, which was scheduled in last month was canceled because 4 out of the -- I mean quorum was not there because members were down with COVID. These are unfortunate times, but everything is under control now and very relaxed about Dalla Super. Now it's going to see through.

The next question is from the line of Vivek Maheshwari from Jefferies.

Sir, a few questions. You gave numbers on the national market share. Is it possible to get the regional -- the East and the Central targeted market shares in 2023? And what those are currently?

I never gave market share, no.

Capacity share, my bad.

Capacity share?

Yes, my bad.

It becomes unnecessary complications in market share. I have given the capacities that we will reach, I can offline give you the estimates on the overall industry. I don't have it readily. That's why I give you offline the overall industry -- expected industry by FY '23 so that you can calculate the number. We will be reaching -- on a capacity share, we will be reaching close to 30%, for sure -- average across. I'll give you offline [indiscernible].

Sure, sure. And I know this question has been asked a few times on this call, but I'm still -- I still want to ask the same one, which is the announcement timing and the fact that we have seen a similar thing from, let's say, Shree, JK Cement, a bit from Birla Corp and JSW. There are quite a few players we have spoken about it and have hinted that there are a few more coming in foreseeable future. Does that not worry you from a margin? So if you're saying that profitability will keep improving. But the issue that I see is if your CapEx cost itself is like $55 or thereabout, the hurdle rate from a return perspective is even lower than what it is for, let's say, so to speak, existing capacity. Is that not a worry, because obviously, as a leader, you can always get aggressive and -- a bit to gain market share and there are capacities coming up from competition as well.

Yes. So it is not a worry, Vivek, as I mentioned, limestone will be a constraint for several players. Either you buy limestone under auction. Existing limestone mines -- I'm sure everybody has that data on existing limestone mines of each and every player. People might not take risk of brownfield expansion and reducing the longevity of life of mines and putting the entire project at risk. So everybody will not be able to expand. Everybody will not expand.

So, but Atul, sir, I mean, the point is that you don't need everybody to expand, right? It's just -- in every cycle, we have seen it just the, let's say, depending on the region and the concentration or fragmentation, we need, let's say, between 2 and 7 players to basically -- if it is South, it is 7 and for other markets, it can be just 2 players adding capacity aggressively. For example, East, there are a number of players who are adding capacity, and now you will also add quite a bit to that. Wouldn't there be a big issue from a competition perspective because the players will want to ramp up capacities and so on and so forth, right?

Yes. But we should have lime stone, my friend, and the leader rules.

Leader rules -- there can be only 1 lion in the jungle. Leader rules in terms of ramping up, right? That doesn't guarantee the pricing bit, right? I mean -- I just bring back that JP Associate ramp-up, which you did a few years back, right? That can create a bit of an uncertainty in those markets, right, at least for a couple of years as you ramp up. And obviously, there is Dalmia, which is ramping up. There is Ramco, which is -- or rather Dalmia, which is adding Ramco, which is adding so on and so forth, right? Sir, my only point is that you're -- please go on, sir.

Yes. So East is a market, Vivek, which is growing very fast and will keep on seeing growth. The kind of numbers that I've seen on the potential -- the per capita consumption in the country has risen from 190 kgs to about 227 kgs over the last 3 to 5 years. And Eastern zone is way below. There are -- this is an average number. Obviously, the Gujarat and Maharashtra market is higher. But Eastern market is -- [ Ankit ], you remember the number?

Yes.

Tell me.

Yes. So Eastern is around 200.

200 kilos is East, which is their lowest. Central is also as low. There's a huge amount of consumption possible. So the market will absorb cement. So one doesn't have to play the price game to absorb. Today, I have to -- as I mentioned earlier, we transport -- we incurred maybe INR 400-odd a tonne additional logistics cost to service the market. That cost will not be required. There will be a realignment of capacity so that I can focus my South capacity on South or Maharashtra capacity on the Samruddhi Expressway only instead of moving material to East. I don't foresee a challenge.

Right. Right. I mean, on 1 side, your cost will be more optimized. On another side, the CapEx cost is so low. So my only worry, as I said, is maybe the prices are kind of peaking now and -- peaking in the medium term because the hurdle rate for you to generate returns is far lower because $55 is a very attractive price, right? So even if you take a current EBITDA per tonne of, let's say, 1,100, that is a huge return on the incremental capacity. So that's the worry, but I hear you. Thank you and wish you all the best.

So, no, no. so Vivek, you'll have to...

Yes, yes, please sir.

$55 for us, it is because it's all brownfield. Everybody will not be able to do brownfield. Greenfield, the cost of greenfield is going up because cost of mines is going up because of auction and the moment the cost -- so that has an impact on the operating cost, but it's the royalty cost -- annual royalty cost that goes up. And because of auctioned mines, land is just not available. Or land cost has gone up. So it -- everybody will do their math, right? I hope they do their maths right to get into an expansion decision.

The next question is from the line of Ashish Jain from Macquarie.

I had 2 questions. One is -- sir, in terms of the clinker capacity, so if I take out the new expansion that we are seeing, you are anyways well balanced on clinker capacity at least at a company level. Now going ahead, at one end, we are looking at increasing our blended cement ratio. And if I look at the incremental clinker and incremental cement, it is pretty much implying a very high clinker factor. Like against 11.4 million tonnes clinker, you have effectively announced 12 million tonnes, 12.5 million tonnes of cement. So what is the thought process?

No, it is 19.5 million tonnes.

Sir, out of this 19.5 million tonnes, large part of it was anyway, work in progress, for which we were like we already...

Yes, you're right. You're right. Yes, Ashish.

So what is the thought process behind this? So that was my first question. And secondly, while I understand clinker brownfield is a great thing, very cost effective and all. But on the grinding side also, do you think that we have exhausted opportunity to expand more in terms of geographical footprint because most of our grinding is also brownfield. So we are not kind of diversifying in terms of our locations, which could have been more logistic friendly and all. So I don't know, I mean -- have you kind of exhausted that opportunity or...

No. So it's, within the state also, we have to cater to a market. Now if in and around Calcutta and what is it called -- [indiscernible] the names are not ringing in my mind, the geography that is a core market, Patna is a core market in Bihar. We have to address Patna as a market. And if I'm able to cater to Patna by expanding my Patliputra capacity and being fully sold out, there's nothing wrong in it instead of doing completely greenfield capacity and trying to create a new market. So we are -- Cuttack, Orissa, we did -- we have -- [ Ankit ], we have Jharsuguda as 1 location in Orissa?

Yes, yes.

Yes. So, we have only 1 location in Orissa. We are putting up Cuttack as a new location, and that is a happening place as far as cement consumption is concerned, that district -- those bunch of districts in and around Cuttack. Dhule, for example, in Maharashtra, there is no cement unit within a radius of 400 kilometers if I stand -- if I am right. It gives us a golden opportunity to again rebalance the material for us, which was coming from Awarpur, which is a -- Chandrapur, which is closer to Nagpur, it reduces the lead distance. All these are depreciated plants. It reduces the lead distance, and I'm able to cater to the market, reducing my overall lead distance.

Okay. And sir, the first question on clinker versus cement, if I look at it on an incremental basis, are we -- will we be short on clinker in East, that's a point I wanted to understand. Because if I see here, we are adding around 3.7 clinker in East, if I put Maihar and Hirmi together and grinding is way more than that, is in multiple times of that, even though as a starting point, we have been highlighting that East, we are bringing clinker from peripheral markets and all. So are we like comfortable in terms of clinker cement ratio particularly for East?

Yes. One is East will be a composite cement market. So it's not a -- our average is 1.34 or 1.33. This will go up to 1.8 or slightly higher. And Dalla Super, which is closer to Bihar. So Dalla Super will supply -- Maihar will supply to -- Maihar is pegged to Patliputra unit. Dalla super 2.3 million tonnes will again cater to the Eastern markets. More to Eastern markets than to Central markets. Central is self-sufficient in clinker. So clinker which is total clinker coming onstream is 12 million tonnes. Major portion of that clinker will be used for the Asian markets. And UltraTech has always played the game of having clinker in hand as compared to having an empty grinding capacity.

Right. And sir, just my last question on WHRS is...

Ashish, just to explain this point. If you have clinker, there are several small private players, you can take capacities on tooling, take over that plant on lease, grinding plant on lease. We have done that in the past. Take the grinding capacity on lease and use your own clinker. Clinker is the heart of cement, all of you know that.

And sir, just lastly, on WHRS, are we kind of -- is 40% the best ratio possible for the incremental capacity that you highlighted? Or there is headroom to add more eventually?

On the incremental capacity, this is the maximum possibility.

It is the maximum, okay.

We are not waiting for a later point in time to do additional WHRS.

Okay. So this 57 that you said is over and above the 245 that's always there in pipeline for us?

Absolutely. Absolutely. And that is how -- that is how the overall percentages will improve for us of green power.

The next question is from the line of Rajesh Kumar from HDFC.

Yes. While a few of the questions have been answered, I had 2 further questions. First, if you could share your regional utilization, even some ballpark number, that would help us understand the current business dynamics. And second, out of the INR 6,500 crore CapEx, WHRS 57-megawatt cost is also included in that? Or is it separate?

Yes. No, no, everything is all included. It's a complete package. And as far as capacity utilization are concerned, I think we had given it at the end of last quarter. We will talk about this quarter at the end of December.

For FY '20 also, if you could share those numbers on FY '20 versus regional utilization?

Sure. I don't have it immediately. I'll ask [ Ankit ] to connect with you and...

Sure, sure. And on the WHRS, again, on the -- sorry, CapEx cost. So ex of WHRS, your CapEx cost is less than INR 6,000 crores.

Give or take, yes.

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

Sir, couple of questions. I wanted to, first of all, ask, just regarding the time of the completion, again, towards end of FY '23, essentially when it ramp up and all that...

Navin, I'm not able to hear you clearly.

[Operator Instructions]

Okay. Can you hear me now? Hello?

No.

No, it's not very clear.

One second. Is it better now, please?

[Operator Instructions] The next question is from the line of Milind Raginwar from Centrum Broking.

Yes. In the presentation, the clinker that we are talking of is including the Dalla Super, right, the Slide 21?

Yes.

So the new capacity clinker would be 9.1?

No, no, no, no. Slide 21, I think it is the expansion only. Dalla Super is not a part of my expansion, but it has not yet got commissioned. That's why that's an additional capacity.

No, sir, if you add the total 4; Pali, Maihar, Dhar and Hirmi, the clinker addition is 9.1 million tonnes, so 2.3 million tonnes is Dalla Super.

Plus 2.3 million tonnes of Dalla Super. Yes.

Yes, so, okay, okay. Just wanted 1 thing. Second -- the second thing is, sir, on the slide -- earlier slide, we are seeing that power utilization is coming down to 80 as of FY '20.

Not 80. Now which slide are you referring to? Which index number?

Understood. I understood. Sir, in terms of -- if now we calculate this 9.1 million tonnes of clinker -- yes, 9.1 million -- so the total mix of 11.4 million tonnes to 20 million tonnes of cement. Sir, we will be able to balance this clinker-cement ratio or we may have -- we are still excess in -- I mean, this is going to be balanced within the interim. That's what I wanted to understand.

Yes, we are fully balanced. We always carry surplus clinker. We are fully balanced.

Okay. Okay. And sir, Dalla Super.

Milind, the East market, the market that we are looking at -- can you hear me?

Yes sir.

The market that we are looking at are composite cement, value-added cement. So the ratios are far respective in terms of clinker consumption.

Okay. And just recent for Dalla Super, we said third quarter of FY '22, is that a safe assumption? December '21 is what you said, earlier mentioned.

December '21 will be Bara, 2 million tonnes. December [Foreign Language], FY '21?

Yes. FY '21?

Sorry. First one will be Bara to get commissioned. Bara 92 will get commissioned. That's FY '21. Yes. By March end, it should be there.

And Dalla Super, sir, I'm more interested in the clinker part, 2.3 clinker at Dalla Super.

Yes. The clinker -- Dalla Super will start production in fiscal '22. It's government formalities. There's nothing to do with the project work, it's government formalities. And as I was mentioning, one meeting got canceled because of COVID. We're just waiting for completing the government approvals, any time in FY '22.

The next question is from the line of Prateek Kumar from Antique Stockbroking.

My first question is, so I mean, when we say that we expect long-term demand CAGR of 8%. With the current set of expansions and capacities, do we expect to grow in line with industry? Or like we expect to grow like 10% versus industry?

We grow better -- we always grow better than the industry. If you look at the data in the charts also that I have presented, UltraTech has grown much better than the industry. We'll continue to do so. And this is -- it's not odd times, it's more because of our diverse presence that we are able to catch opportunities in all parts of the country, unlike a regional player.

Okay. And just on the time line, which you have given for 12.8 expansion, all of them mentioned that Q4 '23 or Q3 '23. In another slide, you have mentioned FY '24, which means that these expansion can spill over to '24? I mean because all these are like -- given like back-ended '23. So this can spill over to '24 as well?

If there is some setback, some strike or anything like that, then that could be pushed.

Okay. And 1 question on your Dalla grinding unit...

There is no guarantee -- Dalla grinding unit as in?

Sorry. I mean my question was, it cannot be preponed from here. Is that a safe assumption? Or I mean it will be either this or later date?

I keep -- always keep something in the pocket, something to surprise you in.

And on your -- this ongoing expansion of 6.7. This Dalla 1.3 million tonnes is an additional number, right? It was not communicated earlier -- this is an additional number as well.

Actually, it's more -- yes, yes. It was not communicated earlier. We have started work. It's more debottlenecking, I thought, might as well communicated.

Okay. One last question on your profitability. When we say that we are looking to improve from here, so I mean, over the past 6, 7 quarters, we have done profitability in the range of 100 to 1,400 with very strong numbers in past 2 quarters. So what are we looking at in terms of like 1,200 as a base case and like looking to improve from there?

I could go with you on that.

Sure.

We'll be able to take the last 2 questions. We take the next question from the line of Navin Sahadeo from Edelweiss Securities.

Sir, my question first was just on the timing of these CapEx completions in the sense that if it's coming towards end of FY '23, which means the ramp-up and bulk of the volume benefits start accruing in FY '24. Ex of South, like, it can be because since this expansion is largely -- I mean, it's not at all in South, it's in largely in North, Center and East. So for these markets put together, of the incremental FY '24 demand, assuming 6%, 7% kind of a continuous growth year on, again, of course, next year will be a much better growth because of the base effect. So '23 onwards, if I'm assuming a simple 6%, 7% kind of a growth, that comes to over 70% of the incremental demand. So my question is could these capacity time lines be a little more staggered too so as not to impact the -- not just our -- but overall industry profitability? Or how -- what is the thinking on that front, sir?

So if you were to exclude South, then you will be pleasantly surprised that you are underestimating the industry. I'm looking at 8% CAGR for all India and South grows at -- South and West grows the least. East, Central and North, you look at what Mr. Yogi Adityanath has announced, it's all in the papers. And I had the privilege of attending some meetings with the bureaucrats. The kind of things that are happening in the country in terms of development are fabulous. So Central, East will pave the way for much higher growth for cement industry for the Indian economy. North is already a flourishing market. [indiscernible] upwards.

Okay. No, my point was that, let's say, with ACC and JK coming in in Central India around the same time, is that likely to create some pricing headwinds for that industry in FY '24?

Will you ask them to stop? Now, why are you asking me to stop?

No, I'm not asking you to stop. I'm simply just trying to get your view that since you said that demand can surprise. So great. I mean we look forward to that thing. Sir, just a second question. On this UltraTech Building Solutions, so what is the vision there in the sense, how big can it be as an overall percentage of revenue, EBITDA? If you can throw some color there because this is the first time it has been explained in great detail in the current presentation. So what is the vision there from a 3 to 5-year or longer view is in terms of revenue share or EBITDA share?

So it will occupy a very small share of EBITDA because the bulk of EBITDA for the company will be driven by gray cement. It will definitely help achieve higher throughput for gray cement because today also huge amount of cement is sold through the UBS network. And it's a -- we are doubling the network from here in the next 3 to 5 years. And as I had mentioned on the call, we will announce a blueprint on the -- of the UBS plant as well as white cement plant in next couple of quarters, for sure. I don't want to give you an [ orbit ] number or the [indiscernible].

Okay. Yes. Because I was only saying, is there a plan to enter into, let's say, allied sectors or industries related to building materials in a material -- in a big way. Since we are already selling some of these products to our channels, is there a plan that we get into, let's say, tiles or a paint kind of a thing?

Not at the moment. I think we -- our expertise is in gray cement. We tested our hands with aggregates, burnt our figures and walked out of aggregates, because India is not a market for corporates to play aggregates, unlike the western world. We tried sand. There were UltraTech sand by the way, but it came and it went without a whim. So gray cement, white will remain the core, RMC, which is -- which is, I would say, which is a variation of cement and UBS network or building products are closer to the heart for the individual homebuilder. And that is why those products become important. Tiles and paint, et cetera, that you talk about, that's not our core competency.

Sure. So just 1 last question, if I may. Can we say that with like UltraTech, the industry leader coming forward, in terms of such a material CapEx and then also these like smaller like Ramco, JK, each of these smaller players also looking to come forward, is it safe to say that the optimism in the industry in terms of demand is really within just 2 quarters has taken like a full 360-degree turn, and then we are looking at a revival of the overall CapEx cycle for the industry?

Yes. You are looking at revival of demand, and the optimism is genuine.

We'll take the last question from the line of Swagato Ghosh from Franklin Templeton.

Yes. 2 quick ones. Sir, firstly, a clarification. If the demand surprises, say in the next 12 months, can there be preponing of some of the capacity plans that we have for beyond FY '23?

So beyond FY '23, yes, we could. But our focus primarily is to first execute this 20 million tonnes and put it out in the market.

Okay, sure. And next thing is...

And there won't be that much that one can handle at in a plate at 1.9. So let us execute this first before we get onto the next phase of growth. There will be next phase of growth for UltraTech for sure.

Right, yes, that's good to know. And a related question is, so in the, say, next 1 to 2 years, if there is any inorganic opportunity because you already would be having these executions like on your plate, would you still be interested in those?

It all depends upon how it fits into our overall network and how profitable it is. Balance sheet is geared up. Balance sheet is [indiscernible]. So we'll have to examine each and every opportunity.

We'll take that as the last question. Ladies and gentlemen...

Thank you so much.

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

Thank you.