UltraTech Cement Limited (ULTRACEMCO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the UltraTech Cement Limited Q1 Earnings Conference Call. We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore reviewed in conjunction with the risk that the company faces. The company assumes no responsibility to publicly amend, modify or reverse any forward-looking statement on the basis of any subsequent development, information or events or otherwise. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Atul Daga, Executive Director and CFO of the company. Thank you, and over to you, Mr. Daga.

Thank you. Good evening, ladies and gentlemen, and welcome to this call of UltraTech for our results for April-June quarter. I think I will focus on 3 issues today: demand, costs and our growth plans. Demand is good. Costs, as you all know, have not been very good, and I don't know how things will pan out in future. And growth prospects, as we see, are very good. We are happy to see the cement consumption in this current quarter -- the reported quarter, April-June quarter, continuing the momentum after a strong performance in Q4. Month after month, we saw improvement in demand in cement consumption. The good part about this cement cycle is that urban housing has picked up in the last few quarters. The unsold housing inventory is at its record low. They are coming into effect. There has been a reduction in number of unorganized real estate players, clearing the path for time-bound completion of residential projects. The number of new project launches has also been on the rise, which will benefit cement, of course. Mind you, these are announcements in real estate projects. After the announcement of real estate projects, there is still lead time before cement actually starts consumption -- cement consumption actually starts on each project side. There is a negative impact on the purchasing power to invest in housing, but I believe demand is resilient. Large infrastructure projects like high-speed Mumbai-Ahmedabad train, coastal roads, Jewar Airport, Mumbai Airport, to name some of them, leading to an overall growth in cement demand in the infrastructure space. With a lot of ancillary projects getting seeded, which generate employment, income generation and of course, housing growth, the government's trust on infrastructure growth is very much there and most welcome. Prices have been good, but like anyone else, we would also want them to be better, given the inflationary trend in costs. Now let me talk about the not so good news, which is input costs. Costs have been rising continuously, fuel and energy costs have been a matter of concern for all players. Production costs have risen about 7% this quarter. The effect of driving costs have been mitigated by improvement in procurement prices, improvement in efficiency and better planning. Everyone knows that China has a significant improvement on most of the commodity prices. Good news is that China's domestic coal production at a high of 395 million metric tonnes in March before slipping to 362 million metric tonnes in April. The average monthly production is trending 12% higher year-on-year. However, I understand that China has cut import tariffs for all types of coal to zero from May 1, '22 to March '23 as compared to the tariffs of 3% to 6% on imported coal, depending on its quality. This might still lead to a jump in exports to China, thereby leaving prices inflated for some more time. Good news is that pet coke prices have started softening. We have seen maybe about 10% reduction in the prices over the last month or so. Hopefully, coal will also follow suit. On an average, UltraTech would require about 13 million to 15 million tonnes of fuel per annum from FY '24. With that kind of requirement, obviously, we are planning our procurement strategies, inventory management plans, alternate fuel plans, WHRS efficiency improvement plans as best as we can to soften the impact of rising costs. I would want to clarify on the news flow around Dalla Super, the JP unit, which we had acquired in 2016. It was in -- it stopped in entity issues. It is the last leg of ForEx clearances. You will recall, we have held back to INR 1,000 crores from the original consideration paid in June 16. After settling all these costs pertaining to ForEx clearances, land acquisitions, the converged monies will be released to the sellers at the time of taking over the asset. I realize this has got delayed. It's almost been 5 years. But trust me, we are clearing all the hurdles step-by-step. At this point in time, I don't want to give you any time line on final clearance because every time I have committed, I have not been able to deliver on those time lines. These things are not in our control. There are lots of government or regulatory clearances that have to be taken. But I am hopeful that we should be able to clear everything and the asset should start production before the end of this calendar. There have been several theories during the rounds on our 22.6 million tonne expansion announced last month. I must tell you that this is a very well thought out plan step. It is part of the earlier announced 50 million tonne growth plan. The news announcement of the 22.6 million tonne expansion was perhaps delayed by a month. We were contemplating the go ahead as part of our Q4 board meeting -- Q4 results Board meeting. But we went slow on it since there was news about [ Ultimatix ] being -- [ Ultimatix ] that can happen, and we were also interested in looking at those assets. Anyway, that is history now, and we have got back into our stride. The delayed cost in announcing the plans will not be a bottleneck to meeting our overall time lines to commission housing projects by '25, '26. Work is in full swing on the ordering process. In fact, lots of orders have already been -- our project items have already been ordered, advanced payments are being released. All these expansions are predicated on our fundamental philosophy of profitable growth. Expansions are not just -- not done just to add capacity, but to generate profits. These investments are targeting an IRR in excess of 15% as and when -- from '26 onwards when they start delivering production, thus helping the overall balance sheet also improve its return ratios. The internal accruals will be sufficient to meet all the CapEx requirements. At this juncture, my colleagues are reminding me of a unique and a creditable achievement of the company. The growth since inception have all been funded through internal accruals. Why this expansion? India will remain a strong market -- growth market for a long time to come and after completing this expansion. We will chart down out our road map to rise from 153 million tonnes to about 200 million tonne mark through organic and inorganic routes. Don't ask these questions now. It's work in progress. And we'll come back to you with details in due course of time and tell you all about it where, when and how. That's all from my side for this quarter results. Over to you for questions.

[Operator Instructions] The first question is from the line of Pinakin Parekh from JPMorgan.

Sure, sir. Three quick questions. My first is that you mentioned 153 million to 200 million tonnes. Now obviously, that -- we don't expect any details, but is this part of the 2030 time line?

Yes.

Or is this something which can be preponed even before 2030?

It can be preponed or -- whether it is '28, '27-'28, '28-'29, somewhere around those time lines, so -- because after completing our '26 -- the current expansion of '26, we will see how the markets are shaping up. We start preparing for that plan for '28 now and decide on the next steps somewhere around '26.

Okay. Because I'm just trying to put the numbers in context, 153 million to 200 million is 47 million tonnes, right? If you're thinking to add by '28 or '29, you would have to start -- if it's -- a large part of it is organic, you will have to start the process of land acquisition mines, ordering and stuff like...

So land acquisition is a continuous process, Pinakin, which keeps on happening, and that's why we are able to cut short the project execution time. When we announce our expansion plan, we would have completed our mines land acquisition environment approvals already.

Sure. My second question is, sir, on the Phase 2 expansion, Slide 28, which gives a breakup between integrated unit, grinding units and bulk terminals.

Yes.

Now it's mentioned that bulk terminals is not additional capacity, but bulk terminals is around 2 million tonnes of just 22.7%, so how...

No, no, no. If you sum up all these 4.4%, 5.7%, 5.2% and 7.3%, that's 22.6%. But if you look at, let's say, South sum up all the 4 line items, it's much more.

Okay. Okay. Fair enough. And can you give us, lastly, a breakup of this 22.6% in terms of what is the clinker capacity of this?

It's backed by full clinker. That's all I can say right now.

The next question is from the line of Sumangal Nevatia from Kotak Securities.

Congratulations on a good set of numbers, notwithstanding the cost pressure. Sir, first question is on the cost. A bit surprised to see only a 10% becomes the increase in the coal cost this quarter, so -- and great level on the cost management. Given the inventory and the coking visibility we have, is it possible to give some guidance on the coming quarter? How do we see the energy cost moving and the mix of coal?

I find it very difficult. It was, I think, last quarter, I gave a guidance of 10% increase, and I barely managed to be there. Becomes very difficult to predict cost. Of course, the costs will get locked for the quarter in the next few days. But at this point, I would rather avoid doing forecasting and let me stick to the results.

Okay, sir. But just for understanding, I mean what part of inventory and the lag is there in pet coke and international...

We have 50-plus days of inventory at the close of the quarter -- close of June. And sorry, what was the next part of your question?

Yes. So 50 days, right? And it would be same?

Yes.

And would same for pet coke and thermal coal as...

Fuel. Fuel. Fuel mix is what I'm talking about.

Okay. Okay. Understood.

As always, sir, all our plants a multi-fuel, so we can fire anything.

Got it. Second question is more broadly on the industry supply dynamic. So -- I mean, the reason the new entrant and also many other players might be a bit aggressive on the growth given the balance sheet across is in good shape for the sector. But do we see a risk of increasing supply pressures and low utilization?

No, I don't think so, Sumangal, because you will have to wait and watch for the next few quarters to see how the balance sheet shape up, given the cost pressures that are being placed. As also even if new capacities are added, I believe that new demand will continue to surpass the new capacity addition.

Understood. And then just last thing. I mean, are there any upside to come up? Anything on the block for an organic opportunity?

There must be.

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

So just a few questions. Firstly, in this capacity, like, why -- it has come up...

I'm losing you, Amit.

I'm sorry to interrupt. Mr. Murarka, we cannot hear you, sir.

Can you hear me now?

Yes.

Yes, sorry. Sir, like on the time lines, I just wanted to check, like, by -- what is the phaseout of the sales tool? Like, will it be all at the end of the period mentioned? Or will it come during -- like a spread out during this period?

Which one? The Phase 2 expansion will be spread out. It'll be spread out. It cannot be 1 quarter.

Okay. So is there any breakup as of now available? Or we'll have to work at that then?

I think late project work start. Right now, in the ordering state, because main equipment, all main equipment have got ordered or will get ordered by the end of this month for all the plant locations. So in the next couple of quarters, we should be -- start growing time lines as well.

Okay. Okay. And what will be the revised FY '20 CapEx number now?

I'm sorry?

The FY '23 CapEx guidance. That must be revised now, right?

Yes. If you go up, I think plus/minus INR 6,000 crores, I would say.

Right. And what would be the trade mix in the quarter?

Trade mix, 57%. Blended ratio is 70%.

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

Congratulations for a great set of numbers. I have a couple of questions. First on the expansion...

For us, a [indiscernible] following a great set of numbers.

Sir, amazing set of numbers.

Go ahead. Go ahead. Go ahead.

So the numbers -- so your CapEx is at $75 per tonne. We have seen some of the players doing at a much higher number. So what do you think the replacement cost for industry now is? I understand part of your land acquisition is done, part of it is brownfield. So how do you see the replacement cost?

I would -- if you have to start from scratch today and on the current prevailing prices, I would peg it anywhere between $100 -- plus/minus $110 to $120.

Sure. That helps. And secondly, as we are already planning for 2030, we will also have some limestone mines expiring by that period. So how are we planning for that? Any thought process? Any strategy we are adopting?

So I have 2 mines expiring and they will be -- are -- we're par, obviously, with the existing players. So we will secure those mines. What is required for us is to get more mines in the locations that we are blueprinting now. It's too early, but I thought -- the importance of tabling our growth plans 2030 was -- so that you are not caught by surprise later on that. It was not talked about. So anyway, limestone is secured. There are 2 mines which expire, which we'll have ROFRs 2030. Cost of operations for every player will go up to -- you were asking about our preparedness -- sorry, we talked about cost of a greenfield and our preparedness, so we will be prepared as and when time comes.

Sure. One last question. We generally see a bump up in demand in the pre-election year. So are you getting some kind of sense of that already? Or too soon to tell?

I have reasons to believe that the 20 months left pre-election and there is a huge amount of tailwinds for demand.

The next question is from the line of Prateek Kumar from Jefferies.

Let me add [ my ] congratulations. And first question is on -- you have mentioned about overall utilization of 83%. And I believe your quarter-on-quarter gray realizations are up 7%. Can you split this region-wise? Utilizations and realizing of...

If you'll -- North and Central would have gone up in double digits, West and East might be 5%, 6%. South was flat.

Sir and our realizations would be like better than industry group? Because a couple of peers of yours reported like 4%, 4.5% sequential growth this quarter.

My peers, okay? I don't know who my peers are. But yes, I think we should report good numbers.

Sure. And secondly, when we say, on these expansions, we have a 15% IRR post FY '26. What kind of unit EBITDA we are, like, assuming for these expansions responding to the volume...

I think you can do your back calculation, INR 12,866 crores delivering a ROCE of 15% plus, would generate our INR 1,500 or thereabout INR 1,400, INR 1,500 EBITDA.

Sure, sir. And last question is on...

Yes, we are looking at that number for '26.

Right. All right. And lastly, on realizations, while we had a very strong Q1, how would the exit realizations of June quarter versus average for the quarter?

June was -- June exit was slightly less. I think, yes, when monsoon starts kicking in, realization start dropping, maybe 3% to 5% lower what you get from the chart. Anything else?

So 3% to 5% versus average, that's what you said?.

Yes, yes.

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

Firstly, on expansion. So now I just want to understand, like, earlier when in December, we had announced the expansion. We had spoken about 160 million tonnes by 2030. And now we have, in a way, that is a major increase.

Yes. Because we are seeing -- see, we don't want to fall short of capacity, and we are seeing -- I've also given a demand outlook. So if that demand outlook is there on a CAGR, we will not have capacity to service if we don't expand.

Sir, what headroom we have on brownfield or greenfield based upon limestone mines that we own?

We will share that offline.

Okay. Okay. Got it. Got it. And sir, lastly, on cost. I mean, I understand you don't want to give a forward number, but where would our cost be, let's say, for June month or the first month -- the first 3 weeks of July in terms of the energy cost versus what we were consuming in June 1 [ with the ] increases?

Daily, it is going out for...

Okay, sir. Let me double check this.

Here, you --I think let's stick to a quarter instead of the month or the day or the week.

It is volatile.

Yes, it's very volatile.

Okay. Okay. Got it. And just one housekeeping question. Where are the -- what is the net debt at the end of this quarter, we haven't shared it...

I think there were too many slides. Net debt has gone up slightly. We are at INR 5,561 on a consolidated basis and India is INR 4,670.

Next question is from the line of Satyadeep Jain from AMBIT Capital.

A couple of questions on the Slide 28. On the -- some details on the expansion. In South, you're adding GUs, especially -- some of the GUs -- one of the GUs is actually far from under the Andhra Pradesh. Are you looking to add clinker in Tamil Nadu investment? Or is the -- are the new -- do you -- you're going to be served some Andhra Pradesh?

We will serve it from APCW, the IO, which Andhra. We are also participating in auctions and mine auctions in Tamil Nadu.

Okay. So the -- one of the GUs currently is actually sort of 600 kilometers from APCW.

I know, I know. I am fully aware and our plan is that we'll have the bulk terminal at Bangalore from there. It can service. Directly also, it can service.

Okay. And you're also banking on possible auction wins also to support some of the deals?

I'm sorry, banking on?

Possible auctions, then in the auctions...

Certainly. Certainly.

Okay. Next question, just a couple of questions on the entire CapEx. One is somewhat surprising to see a greenfield. Are you in certain -- were the -- given you already have -- do you -- clinker plants in within 10, 15 kilometers of that current plant?

It helps me leverage on economies of scale, big time. And we will -- if you look at the next chart, which is Page 29, the focus is now how will the O.S., the Northeast market. So the extreme East plant, which is our Bengal plant, will start catering to Northeast, so that capacity is available from here to service the other markets.

And moreover, if I may add, actually. The limestone is ownable only in the Chhattisgarh. So people have no choice other than to put up the clinker...

Clinker and it should be in Chhattisgarh...

Chhattisgarh only. There is no limestone we have that can -- Bengal, Puri-side, we have a very limited quantity only. So Chhattisgarh is a reservoir, actually, for clinkers and units.

We have similar concentration in Satna. We have 3 units there. So it also has economies of scale.

My question was why not do a downstream in Hirmi or the other...

We are completing a brownfield in Hirmi. The clinkerization got commissioned, I think, last month. And cement will get commissioned this month or next month perhaps.

Along that event, one should not also complicate 1 particular side. So if we have other options, we might not go and pursue those options other than making 1 particular location vulnerable from multiple point of use.

Lastly on -- you've done, in this round of expansion, core firstly, but I guess the Nawalgarh, there, the land acquisition is also complete. Can we -- is that going to be part of the...

So Nawalgarh will form part of my next phase of growth. There are some issues on mines, which we are sorting out.

On the mine side? Lands or mine?

Mine. On mines.

Mines and land, both.

The next question is from the line of Girish Choudhary from Spark Capital.

So there was this recent news flow that you bought this Russian coal at $164. So just on this, what would be the longer cost and incrementally, how much more of this low-cost fuel can be replaced with other high cost fuel?

So $164 is what the cost is and $168, if I remember it right. And we keep on scouting for opportunities. So there's nothing inside. It was opportunistic transaction. If something more surfaces, we'll pick it up.

Okay. So as of now, you have just bought this, this month.

157,000 tonnes.

Yes. Yes. Okay. And secondly, if you can just guide us on the -- for the Phase 2 expansion, what would be the CapEx to be spent over '23, '24, '25?

We have the phasing as yet. I think give me next quarter because we are just in the ordering phase right now. So hopefully, we'll give clarity on cash flows next quarter.

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

A couple of questions. So first, I would request some more details or color about the Slide 8, wherein you're talking about electrification of cement kiln heating process. So I just wanted to understand, is this -- like, can this be a big opportunity in the sense, can we really go in for instead of...

Yes, it can be. So technical discussions have just started. It's not happening in the next couple of years. It's a long-term plan, but the emphasis is that we are making all efforts possible on reducing emissions.

The next phase of -- if at all, there is a next phase of evolution. This can be one of...

Yes. This will be a game changer.

Okay. Okay. Second then, I just wanted to request your views on the overall pricing power in the sense that off-late, what we see is that despite the cost rising, we have not really been able to, like, pass on prices commensurate to the way the cost is. Also understand then, focus on inflation, when diesel prices were reduced, there was also an industry reciprocation of passing it on to consumers. So is it safe to say that till such time the inflation stays firm, we should be more looking at cost because prices may not really go up in [ WSPs ].

So Navin, as is now, I think we would want to balance the cost pressure with prices. And if you look at the current quarter's performance, the reported quarter's performance also, it's been all right. And I've always maintained that the price increases will always be with a lag effect. They don't happen immediately. The efforts will be, at the moment, to cover cost increases -- cost pressures with prices.

Understood. Sir, just one bit on the costing part. Because the prices have been volatile, but of late, we have also seen global prices seeing a fair amount of drop. So would you -- would it be safe to comment that whatever cost of, like, fuel that we saw in the quarter, is that very much the peak? Or no, we can still see some decent increase coming into...

Can -- keeping our fingers crossed that we have passed the hump. But as of now, at least in the next 2 or 3 quarters, we would still see price increases -- cost pressures continue.

For 2, 3 quarters because, as you said, in just a few weeks, we would have -- in just a couple of days, maybe our cost for Q1 gets locked because of that inventory aspect.

Yes.

So -- but would still be on a rising trend for at least 1 to 2 quarters?

I think for sure, it is a rising trend.

The next question is from the line of Kamlesh Bagmar from Prabhudas Lilladher Limited.

First of all, great set of numbers so -- and congratulations on that. Sir, one question on the part of let's say, Phase 2 expansion. So how much is your waste heat recovery capacity included in that?

In the expansion?

Yes.

In about 50 to 60 megawatts.

50 to 60 megawatts. And would that be sufficient to reach our target of 45% [ release ]?

Yes. No, along with that, we will be doing solar as well.

Okay. And so specially on part of...

Most -- the important aspect to note is that we are not putting up any thermal power.

And sir, on the part of your existing expansion, this is Phase 1. So some like say in Qatar, we have reduced -- that we have revised the capacity. So that is coming up to the -- a slight disaster that were in it. So what has been the reason behind that? Because those capacity expansions have been going for long in Qatar, particularly in Qatar.

So Qatar, for example, the plan was 2 lines of 2 million tonnes, 2.2 million tonnes each. After looking at the market and opportunities available, I think the team decided that we should restrict ourselves, at the moment, to 2.2 million tonnes only at Qatar.

2.8 million.

2.8 million, sorry. 2.8 million.

And sir, lastly, the way Phase 2 expansion is like there is going to be a far higher level of land mine issues as compared to what we are at currently, because, like, we are coming up with units in power, where brand new units would be in Tamil Nadu even in Chhattisgarh and -- as your few. So would it be like say, how much blending ratio or blended ratio can we presume or give us a conversion ratio in this space being [ potential ]...

So currently, we are already reaching 70%. On a consolidated basis, we might see a percentage improvement further.

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

My question pertains to first, on the Phase 2 expansion of 23 million tonnes. So is it fair to assume that it would be back to its 50-odd million tonne clinker capacity?

Yes, plus or minus.

Plus or minus, okay. Second, the blended fuel costs, which you have mentioned, on a per kilocal for Q1, where would that stand?

Per kilocal. So we've given the pure cost, not 1,500...

I think 200, because we didn't...

We didn't and, see. How much? Do we have it?

3,200.

3,200.

Sorry?

3,200 million.

3,200 million.

3,200 million kCal.

Okay. INR 2.2 is sort of the number you are talking, right?

Yes.

Yes.

So why I'm asking this is that given that imported coal prices are currently hovering at north of INR 4 and even pet coke prices are INR 2.5 after falling off recently. So is it fair to assume that we could see a sustained and sharp hardening in Q2 numbers from INR 2.2, north of INR 3?

Yes. So as I've mentioned in the previous question also, costs for Q2 will go up. I don't want to give any guidance on the number, but it will go up.

Because you already have 50 days of inventory, almost closer to that. So for most of your Q2, your cost will be secured.

It is secured. It will go up. The reported cost will go up.

Okay. Okay. And sir, your net debt number on a Q-on-Q basis would have gone up by INR 2,000 crores?

No, no, no. About -- okay. You're very close and INR 1,600 crores has gone up on a consolidated basis, but India has gone up by INR 900 crores.

Okay. And last question, is the overseas operations -- if I back calculate the India operations and consolidated, the numbers look quite depressed. What would that be on account of?

So what has happened is we have operations in Sri Lanka where we had to take a rupee depreciation in -- the currency depreciation impact of about INR 38 crores. Other than that, what...

[indiscernible]

No, no, no. Sorry, you are asking about on operating cost, right?

At EBITDA level, the margin would be not more than INR 150 per tonne for the overseas operation.

Overall, because of Sri Lanka is what we have suffered on the P&L.

Okay. So you INR 28-odd crores for the quarter is set.

It's provided for currency.

Okay. And the expenses only? Other expenses or...

Yes, yes, yes.

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

Take the next one. He is gone.

There is no -- Ritesh Shah, a can you hear me?

Yes. Sorry, I was on mute. So first, congratulations for a good set of numbers. So I wanted to understand the price growth. I think it's pretty stunning, your point, compared it with the other listed companies which have reported so far. Anything specific that you would like to highlight? I think -- would love to hear thoughts here. That's the first question.

About what? Numbers peak?

Yes. But sir, how -- basically, was it more premium, say -- I think that number is something that has been quantified. It's a direct, just like as to dealers or anything different on discounting or anything about...

Ritesh, look at the number. Let us do the business.

That is a...

You enjoy the numbers, you -- by exposing the goodly.

Okay. Okay. So has there been any shift in the sales mix with the region wise, wherein pricing was more conducive to us, which would have helped us?

No. So I think there was a question which was asked earlier. North and Central, we were able to get better price improvement as compared to the other markets.

Okay. That's fair. Sir, second question is, we have announced incremental Phase 2 of growth CapEx, 22 million tonnes, what sort of growth opportunity do we have after this?

I think you joined in slightly late. I talked about the next phase of growth will take us to 200 million tonnes. Now somebody had asked a question whether we'll do 40 million tonnes in 2 years. It's too early to talk about phasing of that, but that is the game plan that we have in place now going to 2030.

Okay. That's it. And sir, just last question, given we have outlaid our plans on the capacity side. We also indicated CapEx intensity, which is great. Anything which can actually influence into our positioning on the cost curve as we expand into -- as you continue to expand? Anything on the logistics side, anything that one can look at, like, DFC? Any other variables?

I think as far as DFC is concerned, UltraTech is very well positioned to take advantage. Today, we run more than 260 odd rail heads in the country, I think, after Coal India. I think we might be having the highest number of -- in the private sector, railway sidings. So we will definitely get the benefit of lower cost in terms of movement through railway corridor. Economies of scale will always be a plus point for a large operation like ours, whether economies of buying, economies of logistics.

Mr. Shah, does that answer your question?

Yes.

The next question is from the line of Pulkit Patni from Goldman Sachs.

Just one question. What I derive looking at the realization is that clearly, the gap between trade and nontrade is much lesser in the particular...

Yes. Absolutely right. Absolutely right.

Anything structural there for us to...

Structural efforts. Structural efforts.

Structural efforts. Okay. Okay. Any sense on what that gap would be right now?

$15, $20.

The next question is from the line of Bhavin Chheda from Enam Holdings.

Yes. So congrats on excellent set of numbers. It surprised the Street all the estimates. Sir, just 1 question. If you can share the coal mix in the quarter, how much was pet coke, linkage coal, which normally shared in the quarter?

Just one second. 52% is pet coke, is what my colleagues are telling me. And no, 52% is pet coke and 37% is imported coal and 5% is the domestic coal...

Okay. Sir, is this being -- comparing to quarter 4, the linkage coal was close to 17%, 18%. So it's gone down further?

Indigenous coal is more at the same level.

It's the same level.

Yes.

And sir, are you getting any imported coal under long-term contracts? Because it looks like you're saving a lot on power and fuel as compared to some peers.

Yes. So we have -- I was emphatic about our strategies on fuel management, given the quantum of fuel that we consume. So there are lots of efforts which we go -- which we're putting, whether long-term contracts, whether it's sources of supplies, mix, everything goes on.

Sure. And what would be the lead distance in the quarter, sir, average for the company?

About INR 430, INR 429.

INR 429.

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

First of all, congratulations on a great set of numbers. Most of the questions has been answered. A couple of things, sir. Sir, in terms of the CapEx, the already ongoing 19.9 MTPA. So when we announced, the CapEx was around INR 6,500 crores. So has that number increased? Or...

No. It might increase by INR 100 crores here or there, but that's all.

So broadly, you mentioned INR 6,000 crores CapEx for this FY '23. So '24, the numbers would be INR 7,000, INR 8,000-odd crores?

I think the ability to spread also is -- the capability exists, but the ability to spend will also be there on the ground execution. So INR 6,000 plus/minus should be an annual spend.

Okay. And this entire 22.6 million, when we say '25, but I think in your comments you mentioned maybe by FY '26.

'25-'26 because -- as we progress, we will have more clarity on the exact dates.

Okay. Okay. And the other is the -- already, the clinker that we announced in the 19.9 MTPA expansion, so we have given the branding expansion time line, but clinker, if you can help me out, out of that 11.4 MTPA that -- what we announced previously.

The upward example, Hirmi, if you look at -- the clinker has already got commissioned. Now there is Pali, which is clinker then -- which is in Q3. Dhar is in Q3, others are all branding units. It's there in the chart, Page 23, Q3 '23 is what the other clinkerization commissioning is.

Okay. Okay. And just the last, you mentioned that the pricing has gone down 3% to 5% in June versus the average for this quarter. Has it also further reduced the realization in the first 15 or 20 days of July?

That is always -- the way the margins have been progressing in the country, I think, I -- generally, the prices soften a bit.

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

Congratulations for the set of numbers. Sir, just 1, 2 questions. Like, you mentioned, like, the trade -- on-trade cap is currently INR 15, INR 20 per bag. What was the thing, like, previous, before of this, like...

Higher than INR 20.

Higher than INR 20. And just a long-term question, sir. Like, in China, the pocket of the consumption is 1,500 kg per person. And in India, we are heading to 200 kg.

No, we're closer to 300 now. It's improved, but way, way behind China.

Yes. I think...

If you exclude China -- China is high on everything. If you exclude China, then the average per capita of the globe will be 500 to 600 kgs per capita.

Right, sir. So sir, do you think, like, in next 10 years' time, we will be able to, like, touch the...

It's improving. So when -- 5 years ago, it was closer to 200. Now it's reaching about 290, 300, so it's improving.

The next question is from the line of Akshata Telisara from SBI General Insurance.

Congratulations on great quarter. So over the last decade, we did see a lot of capacities come in, in anticipation of demand, but the demand did not materialize enough, so therefore, we kind of entered a focused environment. Today, a lot of capacities have been announced by you and your peers. So my question is, how do you see the large players like you and others interact with the large players in regions like the North and Central? And how do you see the small players interact with other small players as they scout? Or how do you see the large and the small talk to each other in JV planning? Could you elaborate a little on that?

First and all is we don't have to interact with other players. So that's the shortest answer I can give you. Unless you have something else to add or I didn't understand your question.

No. I was just wanting to understand how would the pricing stay within the player given that there is a demand/supply mismatch here.

Every market, prices are clearly driven by demand/supply. And I -- if you're tracking the cement market for a longer history, the moment any market crosses 85% capacity utilized, capacity utilization, there's a very strong uptick in prices. So that is how the markets behaves.

But on an aggregate level, we are announcing 70%, right, so.

I am sorry, what?

On an aggregate level, we are at around 70%.

The capacity utilization at an all -- the country level, 70%, yes. But this is -- again, to caution you, one should never look at all India full year capacity utilization, you will never reach a high number because cement is seasonal, July, September and the peak summer months do pull down the cement consumption. So you will never have all India number to go by. You have to test waters for January-March. January-March, we operated -- last year, we operated 93%. 93% capacity utilization we operated. In fact, for the month of March, we operated at close to 100%. And I would want you to imagine 55 physical plant locations operating at 100% capacity utilization. Railway sidings operating 100%. No strike happening anywhere, railway sidings available. Everything is moving smoothly. That requires -- if that happens, then you have 100% capacity utilization.

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

So, yes. So actually, on Slide 30, you have mentioned about improving the blending ratio, which actually is quite an interesting comment given that you have one of the lower blending ratios actually amongst the players. So how will that be achieved? Will it also mean like you will focus more on the trade markets and hence maybe see lower OPC? Or how do we think about that?

OPC will -- with infrastructures going up, OPC consumption will go up. Large infra projects require -- tend to consume OPC, and that is where UltraTech stands out in supporting the infra growth, unlike any other player in the country. What we are also engaging in is advocacy with the infrastructure players to do blending and reduce OPC consumption. That is what will help us improve the overall blending ratio. Besides, there are markets like Eastern markets are competent cement markets, which the highly sales mix in the -- in those markets or Southern markets will improve the overall blending ratio.

Okay. So is there any number you have in mind like going up to 1.4, 1.5?

We're already at 1.4 today.

Yes, you used to be slightly lower than that so...

We were 1.34 in maybe a year or 2 years ago. But we're already reaching 1.4. And obviously, the ambition will be to improve it further.

The next question is from the line of Prateek Kumar from Jefferies.

Just one question, bookkeeping question on Slide 13 of your presentation. There is a line item under others. It says that INR 291 crore of revenues and corresponding that there's no volumes. We used to give this Export and Other volumes in this head. So firstly, why is there no volume there? Also this INR 291 crore is to -- is corresponding to what exactly?

So the Others is actually an intracompany sales, which we have removed from this quarter. If you add up for all these numbers -- this cement are the white and red cement, it will add to the consolidated number. It was only an intracompany sale, so.

Volume has not been shown on that account.

And INR 291 crores revenue, which is on other businesses, UBS, BPD and others.

Yes. So UBS sales or our building construction chemical sales or other income or other miscellaneous sales that might be there.

So last quarter, that number was...

We are trying to improve the disclosures, simplify your life. What perhaps you might want is export volumes. Export volumes were dismal. Our exports are largely to Sri Lanka and Sri Lanka was virtually low exports. Just 1,00,000 tonnes of export to Sri Lanka.

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

Sir, one follow-up bookkeeping question. Any ballpark number on how much CapEx is remaining in Phase 1 for '22?

We should complete everything this year and maybe INR 2,000 crores, INR 3,000 crores of spending might be pending, might be pending. If I'm wrong, then Ankit will revert to you.

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

Two questions. First is National made an announcement of INR 2,000 crores on the B2B side, online portal. We have a solid UBS franchise. Any pillar if both the variables can actually marry into each other for the entities to realize the gains.

It should be. I think they will evaluate how to synergize because that's B2B e-comm. That's what I believe. Our UBS is hard for -- it's B2C. Yes. I don't have too much more insight on what Grasim is doing.

Sir, any growth numbers -- target numbers on UBS stores, say, 3 years out and your target revenues over there?

We are, today, reaching about 3,000-odd stores, UBS, from cement perspective. Because it's an important channel partner for us, I would think 10% revenue -- quantity, one second. Today, 15%. Double check. Just today, about 15% of our cement volumes -- yes, 15% of our cement volumes are through UBS outlets. So we will continue to grow the UBS channel.

Sure. And sir, on RMC, there are a few players who are going super aggressive in the market. Any plans over here to up the game? And...

We are expanding pretty rapidly. Today, we have the -- maybe a year ago or 6 quarters ago, we were static around 100 plants today, we have reached almost 171 plants. Y-o-Y, 35 plant growth has happened. So it's -- if I look at the revenue numbers on that same chart, 77% growth in revenue. And mind you, these generate incremental EBITDA over the cement EBITDA. So it's not just a channel, but it generates its own P&L.

Right. Sir, last question, I'm not sure should I ask one out, but still -- I'll go ahead with it. Sir, at what point do you think that adding capacity beyond a particular point could actually be detrimental to us? What is the variable that you would look at and say, I do not want to be...

I will -- in the lighter way, if I look right, I see my plan and if I look left, I see my plan, that is when we will stop adding capacity. But to be honest, this question will get -- it's a brilliant question, Ritesh. The answer to this would be defined by lead distance. How much lead I am generating maybe today? We're at 439 kilometers. Maybe average of 300 kilometers might be a good lead to operate on. To that extent, we'll keep on expanding. Because there will be opportunity to expand, let me put it this way. There will be opportunity to expand. But there is no -- this is off-the-cuff answer. There's no scientific work that I've done in giving this answer.

Right. Sir, if I just try to push you a little bit, we have given numbers say, 2025, probably something by 2030. Any specific number in market share that we would be looking at given you would have...

Define market share, because we don't get any market data. We don't know how the capacity will be there, how the growth will be there. So it's -- it's difficult. You asked me a difficult question, I'll give you a difficult answer.

Ladies and gentlemen, that was the last question. On behalf of UltraTech Cement, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.