UltraTech Cement Limited (ULTRACEMCO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the UltraTech Cement Limited Q4 FY '23 Earnings Conference Call. We must remind you that the discussion on today's call may include certain forward-looking statements and must be, therefore, viewed in conjunction with the risks that the company faces. The company assumes no responsibility to publicly amend, modify or revise any forward-looking statement on the basis of any subsequent development, information or events or otherwise. [Operator Instructions] I now hand the conference over to Mr. Atul Daga, Executive Director and CFO of the company. Thank you, and over to you, sir.

Thank you so much. Good evening, friends, and a very warm welcome to you on this earnings call for UltraTech for our quarter 4 FY '23 earnings. First and foremost, my apologies for the last-minute delay in the time for the call. But I guess nobody has worked from home these days. So you will be attending this call from office and hopefully have a good evening after the call. I don't have too many comments today, and we'll be more than happy to rather engage with you and answer as many questions as possible because performance speaks louder than words. And if there's any further clarification needed beyond our numbers, more than happy to answer. But a few quick highlights for this quarter. We sold -- this quarter and this year in particular, we sold 100 million tons of grey cement from India in the last 12 months, which is a very unique feet. It's just -- it's not just a number because it requires collaborative effort, synergies from all angles from all sections of the company, which encompasses almost 55 physical plant locations, manufacturing plant locations, then 235 RMC plant locations, 50 rigs being dispatched every day, more than 12,000 trucks being dispatched every day and more than 100,000 channel partners supporting this network, along with, of course, the employees who've toiled day in, day out to make this happen. And it has been a consistent performance. It's not that last-minute thought process or last month effort. Month-after-month, quarter-after-quarter, I think the company has done -- put in a fabulous effort to deliver this 100 million tons. I think we feel tremendously proud about it, and I thought of sharing my sentiments with you. Talking about our expansion, the Phase 1 of expansion is almost complete. The 2 plant, 2 or 3 smaller upgradations and brownfield expansions, which are under trial and will get completed before the end of this quarter. We have till April '23, we have commissioned 17.8 million tons of capacity. That's a number to reckon with. Phase 2 expansion of 22.6 million tons is in progress. And as of now, we expect to reach our next milestone of 156 million tons by June '25 or before the close of '25-'26. Talking about cement prices because last time everybody was inquiring about prices, we did not see too much movement in prices in this quarter. And rightly so because this quarter is all about volume, and you saw a huge amount of growth. We have delivered a 15% growth overall in this quarter. Fuel prices is the next big element to talk about. Fuel prices have been softening. Pet coke has been softening. Coal continues to be pretty strong, still pretty strong. In spite of whatever softening is happening, we are not yet celebrating because coal is trend -- still trending high and China, to my mind, has still not started importing. China, as and when -- it all depends on how the global markets perform with China coming into operation. One more highlight is about our cash flows. We spent almost INR 6,000 crores on CapEx this year. This kind of trend is expected to continue in the next 2, 3 years. Most important and interesting aspect about our cash flow generation has been that we have had a positive cash flow after meeting all CapEx requirements, working capital requirements, dividend payments as well and yet we have deleveraged. Small bit, but that goes a long way to tell how powerful and how diligently we manage our cash flows. With regards to green energy, we have ended this year with 210 megawatts of WHRS and 345 megawatts of renewable energy. We are on track on our ESG targets having reached 557 kgs per metric -- per -- 557 kgs per ton of cement as compared to when we started this year, we were at 582 kgs per ton of cement. Last point, which I would want to talk about is demand. Demand in the country seems to be very strong. We ourselves ended the year with 84% capacity utilization the quarter at 95% and the month of March was a record-breaking 100% capacity utilization. I'm glad to tell you that the momentum has been maintained in the current financial year in the first month, which means that the opening batting has been good, and I hope the middle order and the tail will also perform equally well. With that, I would hand over to you for questions. Thank you so much.

[Operator Instructions] The first question is from the line of Shravan Shah from Dolat Capital.

Congratulations on achieving the 100 million plus volume for this year. Sir, a couple of data points and the questions to in terms of the data points, the lead distance for this quarter and [ KKL ] cost for this quarter? And how do we see this KKL cost in the first quarter of this year and the second quarter.

So lead distance, we have given in the presentation was about 413 and 2.5 KKL is what we have reached in this quarter. Let me not go into the next quarter because the quarter is still going on.

But in terms of the -- but broadly, how do we see in terms of the further reduction in power and fuel cost?

Yes, it should be softening.

And any number we want to put?

We will not be able to give any numbers.

On the, sir, capacity front, so you have already mentioned that remaining 2.1 million tons will be commissioned in this quarter. So out of the next phase, 22.6 million tons, how much will be added in FY '24? And how much in FY '25?

Let's stick to the results for the quarter, please? And we will update as and when we make significant progress on our projects. We will update everybody.

Okay. And in terms of broadly, if I look at so this close to 14.4, we have already added, including this April. So in terms of the growth in volume for FY '24, is it fair to assume that 50%, even if I assume the utilization for these new capacities for this year, so 7 million, 8 million tons from here end up deals [ 5, 7 ]. So easily, we should be seeing a 12% plus kind of a volume growth for this year.

K. C. Jhanwar here. So first of all, I think the volume growth has linkages not only with the plant, but it's a overall market dynamics, supply-demand kind of situation. So even if the plant is ready to produce, ready to fire, but it has to be an economical market to service. So it's a very volatile and very, I would say, beyond prediction that what kind of volumes would be able to sold in the marketplace, either from existing or from the new capacity.

We'll move on to the next question from the line of Pinakin Parekh from JPMorgan.

So very strong operating performance, 15% year-on-year volume growth. So far, it seems that UltraTech has massively outperformed the peers in terms of volume growth. Given that UltraTech has added a lot of new capacity, is it fair to say at this point of time that the growth differential of 400 to 500 basis points over industry would continue in FY '24 for UltraTech in terms of sales volume?

Yes, Pinakin, I believe so.

Okay. Second question is, sir, you mentioned at the beginning of the call, INR 6,000 crores CapEx for the next 3 years broadly. So that INR 18,000 crores CapEx from '24 to '26, is it only on existing capacity of Phase 2? Or does that include some of the next phase of expansion?

I think 2, 3 years got spoken in the casual flow. But our 22 million tons of CapEx is about INR 12,800 crores, that's what I was referring to.

Okay. So at this point of time, FY '26, the third year of CapEx does not include...

But as we had announced by the time we complete this phase of growth, we would have announced during this year the next phase of growth, wherein we would have CapEx cash flows also. I don't have a number on that, so I don't want to comment on that.

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

First question on the volume growth. Now the strong volume growth, if you could just share what would be the industry growth in your sense? And is it particular region where we gain market share? Or is it across regions?

Sumangal we have operated at 95% capacity utilization on a base of 120-odd million tons, then we have grown -- performed uniformly across the length and breadth of the country. So we've done uniformly well plus here or a minus here tolerance level of 3% plus/minus might be there.

Understood. So it's not just because of North region where because of some plant closures we would have had...

No, no, no, no. So that's very small capacity, and I'm talking about 126 million tons of capacity and not 5 million tons of capacity now.

Got it. Sir, second question, this Nathdwara merger, I mean is it possible to quantify what could be the benefit of merger in terms of accumulated losses and also in an operating...

No. I think it is more of consolidation that we want to carry out and have one single set of book. They were -- we were waiting for a cleanup of all the noncore assets, which we have completed. There were a few past legal cases, which we have completed, and now it's a clean set of books ready to get merged with UltraTech.

Okay. Okay. So no meaningful I mean benefit on...

No. Because -- no, synergies we have already tapped into. It was for all invent purposes, working as a single between Nathdwara management team was common, brand common. Wherever synergies had to be drawn out, we have drawn out. So it's more consolidation of numbers. In my presentation, when you see our India operations, I think the only change might happened at the terminology India operations might undergo with change. No, you still continue calling it India operations, sorry. So there's no change. It's a legal consolidation that we are going through. Next question, please.

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

Sir, given the fact that our utilizations are very high already. And if my understanding is right, the bulk of your new capacity now is going to come in FY '25. FY '24, there's not much capacity addition. How -- what would your view be on pricing in that backdrop for us and for the industry?

Thank you, Pulkit. K. C. Jhanwar, this side actually. So yes, our capacity in FY '24 definitely would not be -- may not be that substantial. But let's see because how it's about ultimately. But some other players are obviously adding the capacity. But Pulkit, as you know, in our industry, it is very difficult to predict the demand actually, say, I'll give a live example, 15 days back, we were hoping [Foreign Language]. But one time morning, you start some slowdown and kind of thing, but that's not a permanent feature actually. So it all depends actually. But holistically, I would say it's likely to have the good demand, maybe anything between 7 to 8 kind of percent thing. So obviously, I don't think there will be strong pricing power would be in the hands actually. So -- but it all depends actually how the capacity utilization set out actually.

Sure, sir. So cost is going to be our friend for the next 6 months is the way you look at it?

Yes. Pulkit, costs will definitely be a friend, and I believe just adding further to what Jhanwar Ji mentioned, if capacity -- see, what is happening is whilst we are doing a capacity utilization of 90%, 95%, all India capacity utilization is still not rising to a meaningful level. All India, all industry capacity. And my firm belief is that and I've mentioned it on several occasions, when all India capacity utilization starts going around 85%, then you see a different kind of performance level. So yes, there is still some time.

Sure, sir. And any indication on costs in terms of spot fuel prices, how should we look at the next couple of quarters in terms of power and fuel cost?

They are volatile whilst they are in the downward trajectory. But suddenly, there could be a spike also as I was specifically mentioning about fuel costs, which pet coke has been softening, pet coke has reached almost $150 or $160. Coal on a same calorific value basis, coal still continues to trend around $170 to $180. The gas prices have softened globally. The atomic power generation has gone up in certain parts of Europe, which is easing the pressures on fuel prices also. But when -- as and when China starts importing and -- they will open up. They are opening up already. March was a phenomenal performance in China. They started importing -- sucking out coal supplies from Australia, from New Zealand already, but we have not yet seen a big impact on the overall fuel prices. I will not start celebrating yet, as I mentioned earlier, on fuel prices. They are softening but they could -- they would make a reverse trend also.

Sure. That's useful. You've been the most guarded in terms of any comment on fuel prices versus your competition. But that's it from my side.

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

A couple of questions from my side. First, again, going back to coal and fuel cost. Have we been changing our strategy at all in the sense of sourcing? Have we changed our mix meaningfully? Or like coal, are we sourcing more from U.S. rather than Australia right now or it broadly remains the same that it was maybe a couple of quarters back?

Australia for us has never been the main source of coal. It becomes uneconomical being the distance and U.S. has been always the main source of imported coal. Yes, we switch between pet coke and coal depending upon pricing. But spot prices cannot determine that at the moment we are able to cite some trends. We try to tilt the balance towards either of the fuel, whichever makes economic sense. Last quarter, for that matter, we were 52% -- 52% pet coke, and we can go up further depending upon how the prices behave.

Now as we are seeing prices declining, are we looking to reduce our inventory of coal pet coke? Or we still want to be well prepared for any production update that we...

No, no, no, no. Irrespective of prices, inventories have to be carried. We do a thumb rule of 40, 45 days, 45 days of inventories can't take a risk or suddenly, if there is some mine shutdown or anything. Suddenly, if supplies are not available, then our operations will suffer. So -- this is a long distance, long lead item. So we can't compromise on inventory levels. That will be very speculative.

Sure. And a couple of questions on the waste heat side. So we had a target of 318 megawatts by end of FY '24. Are we still on track for that? Can we...

Yes, we'll exceed that, I think so. '24? We'll exceed that.

This fiscal. So we will be like 34% green share that we are guided.

Yes, yes, that we are very confident. We would -- because see green share, the noninvestment base is alternate fuel. We are continuously ramping up our alternate fuel, which ultimately forms part of my guidance on 34%. So it could -- we will definitely meet our targets, for sure.

Sure. My last question is on the clinker conversion ratio. We are at about 1.41x. So not just in the near term, maybe a 5-, 7-year horizon, do you see this moving more towards 1.6x, 1.7x where the industry accepts more blended cement? Or you think there will be a sharp distinction between the infrastructure projects, which will continue to have higher OPC? Do you signed anything...

There are 2 sides of the coin to this. One is with infrastructure continuously being a bellwether of demand, demand, the consumption of OPC will continue to remain high, which means the conversion ratios cannot improve dramatically. However, there is a lot of advocacy, which is happening around blended cement usage in infrastructure projects. It depends on how successful the industry is to circulate that message down. And we could see improvement in overall conversion norms. 1.6x, I can't do the math around 1.6x. 1. -- this quarter ended 1.41x was average, but quarter ending was 1.42x. We have once in a while touch higher than 1.42x also. And in the near future, maybe 1.5x could happen.

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

A couple of questions. Sir, first one is on the legal side. Sir, how should we read 0.8 notes to accounts pertaining to the Dalla asset?

The Dalla asset, it's under arbitration, let that process get completed, we'll then take over that asset.

Sir, can you specify how much is the cement and clinker over the asset which is under artificial?

Sorry, 2.3 million ton clinker only. No grinding capacity at that location.

And sir, corresponding limestone?

The limestone mines would be about 100 million tons over there.

Okay. Perfect. Sir, you wouldn't like to comment anything on the course of actions incrementally or possibly how it landed in arbitration.

It's good point, Ritesh. Next question, please.

Sir, next question, any specific cost initiatives besides the green power and AFR that we are working on, either on lead or moving from road to rail or exploring more of coast line, DFC, I mean anything...

I think it's -- this topic might take half an hour of discussion by itself, but there are lots of initiatives that the organization is taking whether it's on digital ways of working, which is helping reduce our operation cost or optimizing my lead distance or optimizing my freight costs, there are lots of initiatives. I think the leading question would be you might ask me what is the target number? I don't have a target number because these are continuous improvement programs. So we have improvement programs happening in our maintenance cost, in our power consumption. Some are investment-led, some are improvement in efficiency, mining operations for that matter. There are dedicated specific task force and actions being taken to improve the cost of mining. So you name the field, work is continuously on. There's never a status quo that we would reach.

Correct. Sir, just last question. You indicated we are positive on demand. You also indicated I think batting order, middle order and tail will follow and we are [ uplift ] on volumes. So my question is -- and you also indicated at the India level utilization level is still not at the desired level. Sir, what would be the probability for the cement prices to remain at the current level if the cost curve goes down and what you indicated utilization at the India level is not at the desired level.

You would tell me, you are there in the field, what will happen?

So pricing should go down logically, but I would like to have your thoughts, sir.

No, I think there would not be too much pressure on prices. I don't believe so. We have seen in the heat of the January- March quarter. If volumes are so high, then prices should have corrected, prices did not correct. We have maintained our prices as we were in the last quarter. So nobody wants to just crash prices for volumes.

Sure. Adjusted for seasonality, automatically it will come off.

Sorry?

Sir, adjusting for seasonality, technically, it has to come off because volumes will dip.

July-September quarter is always a weak quarter, but my sense is, otherwise, prices should remain stable.

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

Just a couple of questions. Sir, firstly, on demand slide around the various demand drivers that you present shows a relatively weak performance by the Infra and Commercial segment, whereas the housing segment is what is driving the demand. So with the healthy budget, which is seen for FY '24, like are you already seeing infra segment also picking up or still sluggish as of now?

Yes, yes. So one important aspect, which -- and I've mentioned it in the comments also is when the harvest time happens, the normally labor availability goes down for the infra projects, and that's where new projects taking off also is slow. So it's about new projects not taking off at a point in time, which results in a mild slowdown. I think as [ needs ] should not be considered as a flu. So it's a very mild thing. But given the impetus on infrastructure that the government has, given the fact that this is election year, I believe demand will continue to grow very strong.

Okay. Understood. And also on exports, like this quarter, you've shown a higher export volume and so has the Sri Lanka situation fully normalized now? Or how are we placed?

Yes, yes. I think it's almost normalized, and we have started getting back our volumes. We've -- at the peak of the problem time, we had almost INR 250 crores outstanding from Lanka, everything, the last penny has been received, volumes have started picking up. The economies started picking up. So we -- our exports are also going up.

And the subsidiary financials, in the presentation, you've disclosed other expenses have actually almost come down to 0 in Lanka. Is there any major change in the like operating structure, which you have made there?

No, no, no. What is this, Ankit?

The other expenses line item, this is in [ 534 ] it shows that it was [ INR 8 ] crore last year, it is INR 6 crores this year.

No. I'll ask Ankit to get back to you on this, Amit.

Okay. Okay, sure. And just last question, like on the fuel cost, you mentioned $194 consumption cost right now. What we understand is on the spot level, the pet coke costs have dropped to like around $140, $145 per ton. So like by when will these current spot prices start reflecting? Generally like it's 45 days that you take to consume the fuel...

I would give about 2 months. Just one second, the clarification.

Amit, that other expenses include expenses because last year in Lanka, there was a currency depreciation, which was very high.

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

[Technical Difficulty]

Sorry to interrupt you, Mr. Kumar. The audio is unclear from your line. Please use the handset mode.

Yes. So my question is on pricing.

Yes, please.

The line for the current participant has got disconnected. [Operator Instructions] The next question is from the line of Raashi Chopra from Citigroup.

At the last quarter, you had mentioned that fourth quarter the EBITDA per ton will cross INR 1,000 and then more medium term, you are expecting INR 1,000 to INR 1,200. So obviously, you've delivered on the fourth quarter number. But what are the thoughts on the INR 1,000 to INR 1,200 medium term given the way costs have come up?

I believe we deliver on what we commit.

So I think my question is, is there upside to that?

Upside to what?

INR 1,000 to INR 1,200 medium term?

Well, I wouldn't want to count it so soon. Let Q1 play out, we'll see then.

Okay. Also, the green power in this quarter, was it 20%?

15% -- no, sorry, 21% total team power. 25%, sorry, my bad, sorry, 25%. Which includes WHRS plus renewables plus AFR.

Right. And what was the working capital release in the quarter?

In the quarter -- how much is the working capital release? INR 2,300 crores.

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

Sir, 2 good questions. One, are there any efficiency measures or any other special initiatives the company is taking on other expenses front because on an absolute basis, even at, let's say, volumes of nearly 32 million ton, the total amount is actually less than what we saw even when the volumes were just 23 million ton. So I understand it is partly fixed, partly variable. So I'm just trying to understand, are there any initiatives or any efficiency gains, which have been factored here?

No. Navin, there's nothing extraordinary. I think I would say it's an operating leverage play. And if I'm trying to think, the biggest other expenses would be something like advertisements. Yes. So that, I really cannot predict or cannot have a standard flow depending upon events when campaigns are run. So that would be a bit of a yo-yo. You might see in this quarter, the other expenses are slightly higher because there will be a huge amount of ad spend, could be. Other than that, there's nothing abnormal, which comes to my mind.

Sure, sure. And sir, just directionally, while, of course, previous participants did ask you about pricing and fuel cost. My just one question directionally. April as a month in terms of realizations would be better versus the March quarter? Or would be a tad lower? How would you look at it directionally?

Directionally good.

Sorry, I didn't get you.

[ Does mic ] didn't get me. It's positive direction. It's not declining, so.

The next question is from the line of Rahul Gupta from Morgan Stanley.

Daga sir, I have a couple of questions. Sir, if I do back of the envelope math, it suggests that fuel cost would come down by around 15% over the next 2 quarters, of course, assuming everything remains same. Is that a fair understanding? And secondly, given fuel costs have surprised positively on spot basis over the past few months, is it fair to expect that the focus would be, again, on volumes and are the positives that one would get from fuel prices would be offset by the cement prices during the year?

I lost your first question. What was the first question?

Sorry, what I was alluding to was when I do my back of the envelope math, your fuel cost should decline by around 15% over the next couple of quarters. But of course, this is assuming everything remains same.

Yes, I think everything remains the same, then the math would work. But spot prices are never on the spot, they are changing on a daily basis. If the trend is continuously down south, then yes, you will be proven right.

Yes. And just to take this point forward, does that mean we get more leeway to play on or focus on volumes or -- sorry for the work at the expense of cement prices during the year, given we have a...

Rahul, ultimately, we play for EBITDA per ton and not for a single lever. And nobody in the right sense and the right mind frame would want to lose on EBITDA per ton.

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

I got disconnected. Sir, first question on the capital structure over the medium term. We've deleveraged quite impressively without compromising on growth. So now as we're approaching net cash, should we expect a higher payout or we will look to accumulate cash on books over the next 2, 3 years?

One is, this year, our dividend payout is almost 22% of profit. We -- it will keep on going up steadily as a percentage of profit in my view. Of course, the Board will take a final call. But the reading that I have is it will keep on improving.

Okay. Okay. Sir, over the last several years, we've been quite active on M&A. I mean how is the landscape now? Are there meaningful assets still on the block or it's largely going to be organic going forward?

See, we believe in India growth story, and we want to continue to participate in India growth story. So we will grow, whether organic or inorganic is a second thing. And inorganic is always opportunistic. It also has to -- in my definition, it has to give us a profitable growth opportunity in that scenario, we will examine it. If it does not make sense, we'll drop it.

Okay. And just one last thing on April prices is not very clear. I mean since the month is almost over, is it possible to share some regional sense on how the prices have moved versus March?

I don't want to comment on month-to-month numbers.

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

Sorry, my call got Disconnected. My question is on clinker capacity. So you were quoting like 84% utilization for cement for FY '23. What would be your clinker utilization for the year? And what is your clinker capacity post this first days of expansion.

Just one second. You asked difficult question, so we have to -- what is the clinker capacity? So clinker capacity utilization was about 91% Q4 FY '23.

So what would be that for full year? You said 84% for full year for cement, right?

Yes, yes. So what are you asking?

83%.

For what?

Full year.

Cement is 84% full year. Clinker is 83% full year.

And what could be our clinker capacity?

Clinker capacity, do you have a number guys? Surprisingly, we don't have a clinker capacity number immediately. I'll give it to you separately.

Okay. So second question is on pricing. So last quarter, was there a material difference in regional pricing trend?

No, no, it almost remained flat, a rupee here or a rupee there within regions.

Okay. So there is no change in competitive intensity in any region specifically...

No, no. no.

And lastly, on other expense. So other expense growth seems lower on an year-on-year basis versus volumes. That's largely related to -- I mean, as you comment on operating leverage benefit, but is there some expense which is missing this quarter?

No, nothing is missing. Nothing has been stopped. It's purely operating leverage.

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

Sir, my first question is on this 25% green power that you said, can you break it up between how much is AFR and how much is WHRS?

6% was renewable energy, 15% was WHRS and balance would be alternate fuel. No, sorry.

RE power in the grid correction.

So RE is renewable energy is higher -- 15% is WHRS and balance is renewable energy.

Okay. And sir, AFR, is it even cheaper on a calorific value basis or whichever ways you measure is more about attending the green target.

No. We take calorific value basis. [Foreign Language].

Sir, secondly, on WHRS, like you had this target of 324, which you said you might exceed. But once we go to INR 150 crores, what is the potential on WHRS we have because it should be increased substantially with the kind of clinker we are adding. Is that right? Because the reason I'm saying otherwise, your share on green could decline in case we don't match it with incremental WHRS. Just want to understand where we stand on that.

Yes. Ashish, actually I would put this. And now all the new plants are done with WHRS actually. And as far as new plants are concerned on a -- about 55% power can get generated from WHRS for the new plants. So average obviously certain old plants where there is no possibility or layout does not permit or there are other challenges. But new plants can give up to 55% of value.

Further to that, Ashish, we are not adding any thermal power capacity. So balance, we are depending on grid as India improves in terms of power supply and PLF grid supply is becoming a safer way of supplying -- absorbing power in our units. So irrespective of organic capacity going up or WHRS maturing on our current capacity, future capacity will remain balanced with green par.

Sir, if I ask this a differently, so the 324 number, if my understanding was right, it was based on the 111 million ton capacity basis. And -- is that right? Or this included this -- or is it based on 134 million ton? I'm not clear about that, so.

So on 130 million ton, it was around 303 megawatts.

Right. So once we go from 130 to 155 or 154, we should be adding roughly another 100 megawatts, is that right?

Around 60, 65 megawatts, which will take us to [ 360, 370 ] megawatts.

The next question is from the line of Devesh Agarwal from IIFL Securities.

You did mention that probably pricing may not go up, but given your high utilization, do you think that the share of premium product in your overall mix can go off and that can support the pricing?

Yes, it is already going up. We have crossed 20% in terms of premium products and which also directly indirectly help absolute realization -- average realization.

Any target sir, for FY '24?

Yes, I'll tell you at the end of '24.

And sir, on a net basis, how much more do we earn out of premium products?

Incremental margin on premium product, we have multiple -- do we have an average number? Just one second.

Around INR 10 a bag.

So my colleague tells me INR 10 a bag, would be an average earnings. There are multiple products. So that clearly is [ $200 ] per ton.

The next question is from the line of Keshav Lahoti from HDFC Securities.

Congrats on great set of numbers. I just want to understand one thing. If I look back your [ KKL ] costing, you are industry leader on many operating fronts, but KKL their value add is picking about 2.06 in this quarter and you are at 2.5 KKL. So will this difference narrow down in upcoming 2, 3 quarters with the corporate understanding?

Some mysteries can never be solved. Having said that, our largest footprint is in all the infrastructure projects. You name a infrastructure project where UltraTech is not present. And that is where the whole tilt is because we are supplying OPC as compared to other players who are not supplying so much of OPC. Everything has a challenge.

Okay. Got it. As you again reiterated your stand at once the industry capacity utilization, which is 85%, we get a pricing power, but somewhere that thing does not play out in quarter 4.

So you see only 3 or 4 results have been published. You'll have to wait for other results to come out, then you'll know what the average capacity utilization of the industry is. Clearly, we operating at a significantly higher base and higher capacity utilization, we would have gained -- I believe we would have gained -- we would have made significant inroads in the market.

Yes. Like if you operated at, let's say, near 100% in March, obviously, I believe industry might be above 85% in March, but that play is still missing. That's what I'm trying to understand.

So but I don't think India is operating at 85% plus as yet.

Okay. Got it. One last question from my side. You are talking about 34% build power. Can you give a ballpark number? How much is by WHRS and how much will be green power?

26% was our target on WHRS and 9% or 10% was our target on renewable energy.

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

Quick 3 questions. First is where are the on RAK. Post RAK, how has the mix shifted top 2 volumes versus what we source from RAK and has our market strategy changed specific to White Cement and Wall Care Putty? So that's the first question. Second is on Construction Chemicals what was...

I will forget, let me just take one by one question. So you said, where are we on RAK. RAK is in Ras Al Khaimah and it's very much there. So we have -- sorry, that was a bad joke. But I think the operations are now coming under control. We started -- we have started rebranding the entire RAK output into Birla White. Birla White bags are already in place at RAK White. And they are shipping Birla White as a product from there. Prices for white cement have seen a consequent improvement in the country. There is a consequent improvement in our market share as well in the white cement space. This was a strategic investment, which, to my mind, is playing right at the moment. Yes. Sorry, what?

Right. Sir, I think we were just at about 50%, and we had indicated we could increase the stake further. So any time lines on going to 80% or 100%? That is one. And you indicated on market shares, so is that possible for us to quantify something?

Going to -- sorry, what?

Sir, RAK stake. Capacity utilization, okay. Sir, economic interest.

Stake. So we are working on it. Hopefully, in this financial year, we'll be able to consolidate, make it our subsidiary.

Okay. And sir, on market share, you indicated that market share has increased. Possible for us to quantify?

No, I don't have that data. But very -- the very fact that I'm importing that RAK White product as our product name is out of the market and it got replaced by Birla White, clearly, there is a market share gain.

Sure. Sir, construction chemicals, any headline numbers for the fiscal revenue and EBITDA and any target?

The EBITDA is not measurable. We have clocked about INR 550 crores of revenues in Construction Chemicals this year.

Sure. And sir, we had plans on capital manufacturing over here, any updates over there?

So there is a lot of captive manufacturing happening in all our construction chemicals.

Sir, you had indicated we'll put up more plants across our factories.

That's what I meant by captive manufacturing, we have both models, a lot of places we are using because it doesn't require so much of space. We are using space available in our factory premises depending upon the closest to the market or doing contract manufacturing outside. Do you have a number of locations that we are present in today with our contract manufacturing plants? How many plants we have? Ritesh, I'll announce on the call if your questions are over. Just one second, Ritesh. Just one second. What's the number of plants ballpark? Just one second, sorry. I'll let you know, Ritesh. Let's not waste time.

Just a quick data point, sir. Same thing on RMC, any change in strategy. We have the numbers for the full year, but are we upping the number of accounts that we should look at...

We are going full steam ahead on RMC. We have already reached 235 plants. March, we ended with 231 plants and further few more plants would have got added in April. We will continue to grow and hope to double this number very soon. And 39 physical locations that our contract construction chemical manufacturing is happening.

Sir, just 2 quick ones. Bulk cement terminals and railway sidings, what's the number right now? And do we have any numbers targeted for the next 2 years?

What was the first one you asked?

Bulk cement terminal and railway sidings.

Bulk terminals is 7 and railway [ heads ] almost 300.

Sir, targeted numbers for next year?

I don't have a target number. And bulk terminals are as part of our 22.6 million ton, there are 2 more bulk terminals planned, one in UP and -- one in Karnataka and one in UP.

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

Amit is not there. Let's take the last couple of questions, please.

As there is no response, we'll move on to the next question from the line of Anupama Prakash Bhootra from Arihant Capital.

So I have a specific question on Eastern regions. So I wanted to understand your perspective as far as East India markets are concerned and the company's plans in Eastern region for coming years.

We will continue to grow in the Eastern markets. Eastern markets were one of the most deep markets in terms of growth potential, highest density of population, lowest level of development that still continues to plague that market. So there's a huge amount of opportunity that we see in the Eastern markets.

So like what kind of capacity expansions are -- is the company planning the coming years?

Out of the 22 million tons that we have announced, close to 5 million or 6 million ton is coming up in the Eastern markets. We are today present with almost 22 million tons of capacity in the East, which will go up by 5 million more tons in the next 2 years.

And how much like clinker backing for the team?

We are always clinker backed.

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

Sir, in your presentation, in Slide 24, you have given breakup of CapEx under various heads. Can you give some color on what is included in ESG, other CapEx and strategic investments?

So strategic investment was RAK White, ESG, largely is WHRS and all the CapExs, which are power-saving related, which help me reduce our AFR investments.

And others?

Others will be balanced modernization, there is a huge amount of stuff which would keep happening in our live operation. It could be some building also or some plant modernization, anything is possible. Various infrastructures will be there.

Okay. So WHRS is part of ESG and not in those CapEx?

Yes, absolutely. Absolutely.

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