UltraTech Cement Limited (ULTRACEMCO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the UltraTech Cement Limited Q3 FY '25 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 risk 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] Please note that this conference is being recorded. I now hand the conference over to Mr. Atul Daga, Chief Financial Officer of the company. Thank you, and over to you, sir.

Good afternoon, and welcome all of you to our earnings call for Q3 FY '25. First and foremost, wishing you all a very successful and happy 2025. We often talk about a lull before the storm. Most part of the calendar '24 was a lull for cement industry for multiple reasons known to all of you, which we have been discussing from time to time. The lull ended somewhere in December. On a positive note, the storm is a positive storm. And we have benefited from a continuous increase in demand, which has also boosted the sentiments on cement prices. We have seen a movement in realizations. Q3 averaged 1.4%, this was Q-o-Q. North and West saw the best performance in terms of price improvement, which was more than 3%. January, we have further seen improvement in prices in Central and West. North remains the star performer, as I said, increasing prices and profitability to the highest. And talking about star, well, this was an offer on the table which we chose to invest into. I'm talking about our investment in Star Cement. As you know, it's only a noncontrolling financial investment. We have been trying to identify opportunities to deepen our presence in the Northeastern markets. Hopefully, this investment will help us understand the markets better and what are the opportunities in those markets for us to grow. When we had done the transaction, there were lots of different numbers floating in the market. I want to clarify, we have purchased 8.42% in the company at a total investment of INR 776 crores. Let me now touch upon India Cements. Open offer was subscribed 110%, concluded on 21st of Jan, at a price of INR 3.90 per share. We will now hold about 81.49% equity in the company, and there are regulatory processes to be followed to bring it down to 75%, which we will be doing in as per time lines allowed. This will result into our average cost of equity at INR 3.59 per share. Net debt in the company as at 31st December '24 is INR 877 crores. Thus, the EV of the company at our acquisition cost works out to about INR 12,075 crores for a capacity of 14.45 million tonnes. I leave it to your calculators and your exchange rate interpretations to derive the dollar per tonne cost of this acquisition, which is not -- certainly not $120, it's way below. But it's below $100 per tonne. Further adding to that, the debt will get reduced with cash generation from noncore assets, which the company has. We have started engaging with our team at ICL and studying the opportunities that lie before us. The initial review gives us an opportunity of debottlenecking some of capacities, 2 or 3 plants, there is a debottlenecking opportunity as well as some brownfield expansion opportunities exist in another set of 2 or 3 plants, which will help us in our growth journey in years to come. Our focus is to turn around the performance of ICL in less than 12 months, starting January '25. There will be some return-based CapEx plans, which are being worked upon. As you know, we entered the company only on 25th of December and have not even -- not spent even a month studying their operations. Allow us 1 quarter to revert with our full plans. Kesoram. We are awaiting the last of the approvals for transfer of mines in Telangana and Karnataka. And we are tracking every step. There are multiple steps within the transfer formalities. We are tracking all these steps, and we expect to consolidate the assets of Kesoram within this financial year. Organic CapEx. All our project sites are progressing well. We target closing this year at 185 million tonnes of capacity. This includes the 2 acquisitions of Kesoram as well as India Cement. Let's talk about demand. Demand seems to be opening up, which is good for the industry. We are seeing it across all sectors, pent-up IHB demand, infra growth, urban housing growth. Urban housing growth is maturing or slightly slow, but still continues to consume cement. Rural markets are, of course, driven by the housing demand and continue to grow strong. A point worth mentioning here is that rural demand should be positive with the good monsoons that we have seen, good crops and good harvest, which will generate good cash flows for the rural markets. CapEx programs have been gaining momentum from the end of Q3, but it is still a long way to go. There are stimulus for mass housing programs which are coming back. Cement demand clocked an improvement in December '24 after being subdued in October and November and is likely to further increase as we speak, in the current quarter, quarter 4 FY '25, with a pickup in government CapEx and demand overall. Central government CapEx, which clocked 20% plus -- 20%-plus Y-o-Y growth in '24, was down about 12% in April to November '24. State government CapExes were also down. CapExes by PSUs were also not growing very strong. We believe that the government CapEx will start improving, and consequently cement demand shall start improving from January '25 onwards. Whilst April to November was a slow period for cement industry -- cement demand in India, I believe that the demand momentum is picking up, and it will remain strong in the years to come. And India cement industry is gearing up to meet the surge in demand in the coming years. At UltraTech, work is in full swing for adding additional 10 million to 15 million tonnes of organic capacity in the year 2026. This will take us to 211 million, 212 million tonnes of capacity at the end of our expansion program. Talking about our efficiency improvement programs, which are also on course. Clinker conversion ratio of 1.45 for this quarter as compared to 1.44 in Q4 last year. Lead distance is at 377 kilometers this quarter as compared to 400 kilometers when we started this journey on efficiency improvement program. WHRS was at 324 megawatts, up from 278 megawatts at the end of Q4 '24. As far as WHRS is concerned, we had spelled out our targets to reach 450 megawatts for UltraTech capacities. This target will go up to 511 megawatts of capacity, taking into account the additional WHRS expansion which will be done at India Cement and Kesoram. 511 megawatts of WHRS, which will be completed by FY '27, on our 211 million tonnes of capacity at that point in time will account for 24% of our power requirement. Similarly, renewable energy is up from -- at 752 megawatt at the end of this quarter from 612 megawatts. And as for targets, we had given out a target of 1.8 gigawatts by the end of FY '27, taking into account the requirements and opportunities thrown up by ICEM and Kesoram. This target is now standing at upwards of 2 gigawatts, about 2.1 gigawatts is what we are looking at to complete. And this will support about 30% of our power requirements on the 211 million metric tonnes of capacity. Lastly, about fuel. At our size of operations, we don't have too much of a choice but to use coal also as a fuel given the overall global supply situation for pet coke. However, we have been continuously increasing our pet coke consumption, with the fuel mix reaching about 58% of pet coke this quarter. Our fuel costs have come down accordingly to about 1.76 kcal from 1.84 per kcal in last quarter. Based on current spot prices, we expect our fuel costs to be around 1.7 kcal in the near future. And to conclude, we achieved an EBITDA per metric tonne of INR 964 Q4 this quarter, which jumped more than 30% over Q2, and we expect further improvements going forward. Thank you. Over to you for questions.

[Operator Instructions] We'll take the first question from the line of Sumangal Nevatia from Kotak Securities.

Congratulations for a great set of numbers. Sir, first on the volume growth, is it possible to share what would be the contribution of whatever, 6, 7 days of India Cements in the results? Number one. And if you could give some more regional color as to which other regions? I mean, this 10%-odd growth there, which region we've grown versus the industry higher or lower? Yes. I mean that's my first question. I'll ask the second one later.

[indiscernible] I'll forget your question. Sumangal, so we haven't taken into account the volumes of India Cement in those last 7 days for reporting our growth number. It does not make any sense. So this is only the UltraTech organic growth. I've already forgotten your second part of your question.

I just wanted some regional color, which regions have done better than the other regions and where we think we've gained market share?

North and West continue to do well. I would imagine East was at the lowest run as compared to the other regions.

And South will be the lowest or the weakest?

East, I would imagine would be the lowest and South. Then you climb up to Central, North and West.

Okay. And what is our sense of industry growth in this quarter?

Industry growth, I think we'll have to wait and watch for some more numbers, but my sense is we should be looking at somewhere around 5%.

Okay. Okay. That's quite heartening to see, every quarter we manage to beat the industry. So great work, sir.

We are the leaders of the pack.

Yes, clearly. Sir, my second question is more on the South region. Now we've seen 4 acquisitions in the last year, 2 where we're involved. I mean what would be our strategy? I mean, whatever you can share with respect to South over the coming year with respect to our brand penetration, use of India Cement, Kesoram brands. And then any market share target versus where we are today?

So there are no market share targets. That's an easiest one to answer [indiscernible] without having a target. But yes, we would definitely want to keep growing. If I look at the capacity utilization of India Cement, they were at about 57% for the quarter. Certainly, there is an opportunity for improving the capacity utilization from that target entity. Out of that 14.45 million tonnes, how much is -- 13 million tonnes is in the South. About 1.5 is in North and 13 million tonnes in South. So there is the opportunity to increase capacity utilization. Second point, Kesoram, yes, they are slightly better off in terms of capacity utilization, they are operating at about 70%. I don't remember last quarter. 70% is what they were operating at. So there might not be too much of headroom to improve, but maybe 4%, 5%, we could improve capacity utilization in the Southern markets for the Kesoram set of operations. As for brands, all our powerful brands, we will wait and watch. It's too early to say how we will look at the various multiple brands of India Cement. Kesoram brand is also equally powerful. So it's more about -- there's no rush to change the brand, but at the same time, brand transitions will happen at the right time.

Yes. And just a follow-up, sir. I mean, last time [ I think ] the profitability of these assets are quite low even in terms of efficiency, et cetera. So earlier also, when we had merged JPA, there was some dilution on the blended debt, which eventually got transited to our levels of margins and efficiency. So what should we expect when we start reporting all these consolidated and blended numbers? What is the transition time you are looking at to bring these assets to our level of efficiency and margin?

We look at least 12 months to improve the performance of India Cement to bring it up to a reasonable level. And as I mentioned that there are WHRS investments which have to be done for India Cements also, which is a return by itself. So WHRS investments would typically take -- if I'm counting work starts from January '25, we would start seeing the benefits of that only towards October, December '26 quarter. So there will be 1 leg of improvement that you will see towards the end of '25 and then further improvement after efficiency improvement base CapEx programs get completed. Similarly, on Kesoram, there are opportunities to improve the cost of production as well as realization. There's a lot of opportunity that exists to improve our logistics cost on a consolidated basis. Now from a '25, we have how many -- how much capacity? We'll now reach about 60 million tonnes of capacity in South from 20 million tonnes -- from 20 million tonnes of capacity. So obviously, the density of our network increasing will help us reduce the logistics cost significantly. So there are lots of opportunities that lie ahead of us.

Next question is from the line of Amit Murarka from Axis Capital.

My first question is on India Cements. So is there any thought around like any brand transition or tolling arrangement for India Cements as well? Or would it be sold in the [ quarter 1 ] [indiscernible]?

Yes. I think give us some time, Amit. We are studying the opportunity. We've just entered the company from 25th of December. So perhaps next quarter results, we'll be in a better position to give more clarity.

Sure. And like CapEx, I think you had earlier guided for a number, but including the Kesoram and India Cements, is there -- I think you had guided INR 8,000 crore to INR 9,000 crores earlier for '26 as well. So what would it go to now?

No. So INR 8,000 crores to INR 9,000 crores of CapEx is on our UltraTech balance sheet. India Cements' balance sheet needs to be studied, and it has to be -- it has to have its cash flows to meet those CapEx requirements also. As for Kesoram, I think we were looking at INR 400 crores, INR 500 crores of CapEx for Kesoram, which gets baked into my overall numbers of plus/minus INR 9,000 crores for next year, because Kesoram will -- these are the units which we are acquiring which will get absorbed in UltraTech from day 1. India Cements is a separate listed entity.

And just lastly on fuel cost. You had earlier mentioned that by December all your higher-priced contracts will get over. So is that done now?

Yes. That's done.

Okay. But I think you said INR 1.7 kcal, that would still be higher than, I think -- market price is INR 1.4, INR 1.5, I think, for pet coke.

What I'm saying -- that's why I qualified that statement by saying that we will have a fuel mix of coal as well as pet coke. We will not be able to do only pet coke. Had I been in a situation to do only pet coke, the cost could come down dramatically since we'll be using a mix. We will remain slightly higher. And if it is INR 1.7, it could become INR 1.6, depending upon spot market. My colleagues were telling me between 2 days, the spot prices of pet coke have gone up by $4. So this is -- it's a continuously moving target.

Got it. And lastly for Kesoram, could you provide 9-month financials as well?

We haven't seen that yet. It would be there on their own website.

No. I think they're not showing cement business.

It's there as part of North's.

It's there. Anyways, I'm asking Ankit to share that with you separately.

Next question is from the line of Rahul Gupta from Morgan Stanley.

Atul, sir, I understand, like you said, utilization rates for Kesoram and India Cements will improve over a period of time. Can you help us understand how to look at the overall volumes for next year? How does Kesoram and India Cements' higher utilization rate help you gain further market share on volumes? So that's the first question.

Okay. So we will go into the next financial year with about 185 million tonnes of capacity. It's in decimal, but I'm just using a rounded of 185 million tonnes. We would look at a double-digit growth next year on our expanded availability. And I would assume a capacity utilization of anywhere around 80% to 85%.

Okay. That's heartening to hear. My second and last question is, I remember until last quarter, you used to give a comparison of fuel cost on a consumption basis and fuel price. So I see fuel cost has come off by 6% sequentially. Can you help us understand where the price are on a blended basis?

$125. $125 per tonne. It's not mentioned?

Next in line is Prateek Kumar from Jefferies.

Congrats for a great results. My first question is on your leverage. We have not been given consolidated net debt. That was last reported for 2Q at INR 8,800 crores. Including India Cement now open offer, where are we looking at our current net debt? Also, another related question.

Let me just pause there, Prateek, let me just show this to you first. I'll give it to you first. So INR 3,142 crores is the cost of open offer. India net debt was INR 12,141 crores December. I'll request you to do the math, note down the number and do the math. INR 877 crores is India Cement, that takes us to INR 13,018 crores. Open offer will be about INR 3,142 crores, that would be the consolidated net debt INR 16,160 crores at the end of open offer.

Sure. Okay. And why do you say India Cement net debt at like INR 877 crores and not like -- they used to have like INR 2,500 crores on net debt? Just a clarification there.

INR 877 crores only, that's the magic of UltraTech Cement. That's why I -- sorry, that was in the lighter vein. As I said, the earlier expectation was that the EV per tonne we have paid is $120. It's not $120, it's about $97 or $98 per tonne. The debt actually as of December is INR 877 crores.

Okay. So they will be still publishing their financials, right? So that will now reflect a lower number versus...

Two days ago, they had their Board meeting. They have published their results. They haven't published their balance sheet, but their press release carried -- I have seen their press release, which carried the debt numbers.

Okay. I'll see that. And just one question on this, again, India Cement. Is there also evaluation of potential merger between 2 companies, and you like sort of issuing, like in case of Kesoram, a share swap likewise can happen in India Cement?

Too premature, too early to comment on that. We have to evaluate the assets and how do we operate them, what is the profitability that we can bring it up to. There are lots of litigation that need to be resolved from that company. As I mentioned, there are a lot of noncore assets which we will want to sell. There's no point in transferring those noncore assets onto the UltraTech balance sheet. So as of now, I think, give us some time before we can spell out clear plans.

And then last question, on your realization, you reported 1.5% for the quarter average. How is the exit pricing versus the quarter average for third quarter?

Sorry, exit -- there are too many -- exit December?

Exit December pricing?

Exit December over.

3Q average?

Over Q3 average. So it was marginally up, a percentage up.

Next in line is Jashandeep from Nomura.

Congratulations on a good set of numbers. Sir, my first question is on limestone, especially in Tamil Nadu. Even if we look at India Cement, I think most of their limestone reserves are in Andhra Pradesh, Telangana region. How is both UltraTech and India Cement placed on longevity and brownfield optionality in Tamil Nadu? Is there enough limestone in Tamil Nadu with India Cement?

Yes. As of now, we have availability of more than 25 years of life on the India Cement. They are old plants. So Sankar Nagar and -- what are the other names, the 2 plants? [ Sankari ]. The 2 plants, which are old plants, and they have a visibility of more than 25 years of life.

Okay. That's good to know, sir. And my second question is largely on operating cost, that -- I understand that on an organic basis, UltraTech has set a target of reducing it by INR 300 per tonne. But on a consol level, will the FY '26 will see a significant increase in operating costs given that India Cement is on the highest end of the cost curve? And since before acquiring this asset also you would have this asset you would have studied. So any idea of how much CapEx or a ballpark figure would be required to bring it to the efficiency level of UltraTech? That's my second question.

Yes. So the second part of the question, we entered the assets only on the 25th of December we are studying. There will be CapExes. The no-brainers are the WHRS renewable energy, which are return based. But there will be some upgradation CapEx also, which the team is studying, and we will revert back on their CapEx -- the CapEx that we want to do. As far as operating costs are concerned, I think we have started seeing a reduction in their operating costs in the first month itself. But I don't have an exact date or exact period by which the costs will align, but you will have -- end '26 December -- October, December '26 is when the WHRS implementation, that's a long-lead CapEx project, which will get completed. So by that time, you would see an alignment of their costs with our costs.

Okay. Understood, sir. And just last thing on the Shankar Nagar plant. If I'm not wrong, there was some -- I think they had applied for an EC extension or something. Have -- so they are sorted on that front? Just a clarity on that.

I'll have to study it to find that out myself. I'm not aware.

We'll take our next question from the line of Pulkit Patni from Goldman Sachs.

Sir, in the previous acquisitions that we've made, rebranding has been a very big kicker in terms of the differential realization that UltraTech gets versus other brands. Now in this case, if rebranding is going to happen over time, at least not immediately, what are the levers where you can see such a significant cost cut that we can -- we'll be able to improve profitability? So first of all, what today is the realization differential between UltraTech and India Cement in the same micro market?

Just one second. How much is the difference? Selling price basis about INR 20 to INR 25 a bag is the difference. And we are -- as I said, we are evaluating. There are low-hanging fruits in rebranding at the ICL units. We will start seeing rebranding as we progress. So day 1, we will not have 100% rebranding, but in due course of time, maybe 9 months, 12 months, you will have a rebranding effort. But first quarter, also, we will start seeing some plants doing rebranding.

And also, [ at Sanghi ], you used to give a quarterly road map of when your EBITDA per tonne would actually merge with the main brand. Any sense on how that will be for Kesoram and India Cement, 8 quarters, 10 quarters?

[indiscernible] call of UltraTech cement.

Yes, sir, we are trying to project profitability of UltraTech Cement only.

So don't ask me questions about Sanghi Cement.

No, no, I'm just saying that in terms of projecting that improvement in EBITDA per tonne, is there a road map whether we'll be able to do it in 6 quarters, 8 quarters, 10 quarters earlier? I mean, just a sense of that?

Also I would say -- I don't know why you mentioned Sanghi cement in our call. That's what...

No, no. I'm so sorry. No, no, I meant Binani.

All right. So we are looking at at least 12 months to turn around the performance of the India Cement assets.

And when you say turn around, you mean the same profitability that our mother brand gets or...?

No, not the same, maybe INR 200, INR 300 lower.

We'll take our next question from the line of Ritesh Shah from Investec Capital.

Sir, first one, are we looking at any contingent liabilities specifically after the Supreme Court judgment which has allowed states to levy taxes on minerals, including limestone?

So first and foremost, that we also hear that the -- there is thinking within the central government to do something about this judgment because there are a lot of PSUs getting impacted in a far significant way. Secondly, we are impacted by the levy only in the state of Chhattisgarh and Rajasthan. We are not impacted; however, India Cement had a liability. So we are not looking at any adverse liability. However, now you would have read about Tamil Nadu wanting to levy a new tax, Karnataka wanting to levy a new tax. So these things will surface for the future periods.

Okay. So nothing adverse?

No, nothing adverse. Nothing adverse.

Okay. Great. Sir, second is at industry level, what is the sort of supply that we are looking at based on your estimates for, say, FY '25, FY '26, FY '27? Broad numbers would be quite useful.

So as I mentioned, we would do about 15 million tonnes of capacity. And taking other bigger players, we would see about 50 million tonnes of capacity getting added in FY '26.

Okay. That's helpful. And sir, you have given separately a revenue number for UPS on Slide #26. Is it possible to quantify the number for 9 months and also EBITDA and PAT numbers and if there is an incremental game plan over there?

I don't have it immediately. I'll share it with you, Ritesh.

Sure. And sir, what's the game plan on UBS stores, the count has increased. I think one of the slides mentioned the significant contribution of gray cement sales via UBS. So are we looking to monetize this? How should one understand that?

This is the way we are monetizing it. It is helping us sell big volumes of cement in the retail market. [ If ] you're asking about listing it as a separate entity, no, that's -- there's no plan like that.

We'll take our next question from the line of Rajesh Ravi from HDFC Securities. If there is no response, we'll move on to the next question from the line of Navin Sahadeo from ICICI Securities.

Indeed, a great set of numbers. My question was first on this Northeast plan. So I think a year back, we had floated this -- or incorporated this company by the name [indiscernible] [ Valley ], if I'm not wrong. So what is the progress there? Is there like -- I mean, since you incorporated, I believe could have been with a local partner and land and like the location is identified, but we haven't heard anything there specifically.

Yes. So because mines is required and Northeast is seemingly a complicated market with involvement of tribal in land ownership, mine ownership. So we haven't been able to identify a clean mines land as yet. And as soon as we do that, we could -- you will hear from us.

My second question was then on the outlook for pricing in South. One of your peer in South mentioned of expectation of huge, like, intense competition or competition further rising with the ramp-up of Penna and India Cement and even Kesoram to some extent. So would you concur with that, that pricing in South could continue to remain subdued despite demand picking up? Or how should one look at it?

If demand picks up, my guess is prices will also improve.

Understood. And my last question, sir. Can you just mention what is the consol net debt?

I just gave that number a minute ago. I'll go back to it again.

It was the enterprise value calculation, I think.

INR 16,160 crores after taking into account the money required for open offer.

Okay. INR 16,000 is the current net debt. Understood.

We'll take our next question from the line of Pathanjali Srinivasan from Sundaram Mutual Fund.

One thing I noticed in our presentation. So our power cost per tonne has actually stayed more or less flat like over a year, whereas our share of green energy has gone up from 24% to 33%. Can you tell me like why the drop in costs has not really happened here?

Okay. So yes, from INR 424 to INR 402, that's the drop that has happened. And if I were to, I think, index it with the coal cost, coal cost might have gone up. So it's relatively lower. So the delta will be small between solar power generation cost versus landed cost. There is about 40% -- 35% to 40% difference between renewable energy and the thermal power cost. So this is what it is. I will, in any case, deep dive and revert to you.

Sure, sir. And just one last question on CapEx numbers for '26 and '27?

So '26 will be around INR 9,000 crores and '27 will taper down, maybe INR 7,000 crores -- INR 6,000 crores, INR 7,000 crores, to complete our expansion program.

Next question is from the line of Bhavin Chheda from Enam Holdings.

Very good set of numbers across. So a few questions. One on the consolidated debt, which you mentioned INR 16,160 crores. That includes the number of what you said, India Cement INR 877 crores?

Yes, please. And the open offer money, which will get paid on the 4th or 5th of February.

Sure. But sir, when I'm seeing the India Cement numbers which were available for September '24, their debt was roughly about INR 2,000 crores. So what has happened in last 3 months? Or is there some different calculation what must have happened between these 3 months? How could India Cement debt come down so sharply in 3 months?

They have announced December number. I don't know what was the September number.

So December, the balance sheet was not disclosed. So that's the reason.

I'm sure they should be heard. They have mentioned in their press release, and we have taken over a debt of INR 877 crores.

That's roughly a net debt number.

Yes, net debt number.

And the additional question on that press release itself is what I was going to [indiscernible], the press release with the revalued assets which you will be consolidating. So there is a revaluation of roughly INR 5,300-odd crores where the land -- mining land and plant and machinery was revalued before the UltraTech taking over consolidation. So can we assume that the large part of revaluation has happened on the land part?

Mainly on land.

So we should assume that could be the unlocking potential when it comes under our fold?

As I mentioned, there are lots of assets, noncore, which I count. So land, large part of the land is required because that's the mines land and the plant land. Besides those, they have lots of land which are not fit for a cement grinding unit or an integrated plant or a bulk terminal. So those who would want to monetize.

Sure. And then the last question on the lead distance. Very good to see you have reduced lead distance in the quarter, which was -- I think you mentioned the number of 377 kilometers. And now with new acquisition coming into fold, so you have much more capacity where you can service the market from nearby plants. So would there be enough space to again reduce this lead distance when you look at your overall portfolio?

Certainly, certainly. We would look at this number dropping down further, 5%, 6%. Before we take the next question, I wanted to clarify about the question which was asked previously on the power cost. There was a one-time charge, which was levied by Andhra Pradesh government, which amounted to about INR 47 crores, INR 48 crores, which we had to account for in the December quarter. And that is why the December quarter number is looking slightly higher. The impact of INR 15. So INR 402 would drop down to 387.

We'll take our next question from the line of Raashi Chopra from Citigroup.

Just continuing on the costs. So from here on, like how much more improvement can we see? I think earlier on, you were mentioning about INR 300 by September '26. So how much of that is already done and how much can come?

I haven't calculated. You have a calculation. Okay. So let me complete it in the March quarter, Raashi, we'll revert -- we'll give it in the presentation.

Okay. That's fine. Then on the realizations, you mentioned that the December exit is about 1% higher than the 3Q average, right?

Yes, please.

And January there were further increases in Central and Western India?

We were at about 1.5%, yes.

1.5%.

Yes, as of now.

Got it. And what are the expectations? I mean for the remaining quarter?

Yes. We definitely want prices to go up further. That's our expectation.

Got it. And then lastly, on the CapEx, so this year, what would be the full year CapEx? Next year, you said the INR 9,000 crores per...

Also, we should cross INR 9,000, touch on wood, we are already at INR 6,300 crores. We have already completed INR 6,300 crores. January, March should be doing INR 3,000 crores more.

This doesn't include Kesoram, right, this INR 9,000 crores?

Yes, this does not include Kesoram.

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

Just one question on coastal transport. You already have Sevagram. So I just wanted to understand, there was obviously another asset in play in the vicinity, but it didn't seem UltraTech was looking. Maybe competition, CCI, since you're already there. I just wanted to understand what's your experience been -- is that plant would be similar in utilization and profitability to other plants you have. And when you look at the overall mix in transport for you going forward, do you see higher share of coastal transport in the mix?

Yes, we will see an increase. But in the overall ratio, today it's about 3%, will not go beyond 5% of the overall mix. As far as the Sevagram plant, the Kutch plant is concerned, it's a low draft area, which has made it challenging to -- for berthing bigger vessels. So my belief is rail is becoming available in that market very soon. So rail network will start improving the capacity utilization from that market.

So even for Sevagram you would see -- so currently, utilization level you're indicating for that plant would be lower, but with the Indian railway line coming up, utilization [indiscernible]?

It will pick up. It's a hot market. It will pick up.

We'll take our next question from the line of Shravan Shah from Dolat Capital.

Most of questions have been answered. Just a couple of things, sir. In the fourth quarter, how much demand at India level we are looking at, and if possible for FY '26, how much are we looking at cement demand growth?

FY '26, it will definitely be a double-digit growth. And quarter 4, generally it's a very high quarter. What is the base that you are comparing it with? Over Q3, obviously, it will be a growth over Q3 easily.

No. Sir, Y-o-Y. I'm looking for -- from an industry perspective and not from your -- definitely you have said you will be growing double digits.

I was talking about industry perspective. Industry will definitely achieve a double-digit growth next year, given the fact -- you're asking about industry. Industry would do about 6%, 7% growth. We will do about 10%-plus growth is what our game plan is for next year also.

And for this quarter, fourth quarter at industry level, 6%, 7%, that's the number one can look at, or it will be much higher?

Easily, it should be higher, I think, the way January-March quarter is, it should be higher.

Okay. Got it. And sir, what was our clinker utilization in the third quarter? And if it's possible, how much of clinker capacity we would have added in these 9 months? And what is more are we planning to add?

So clinker added during this period is 6.7 million tonnes of clinker was added, another 3.35 million tonnes is about to get launched in this quarter, clinker capacity. And the next question that you asked was about 76% is the capacity utilization.

Okay. And in FY '26 also will be a close to 10 million tonne kind of clinker capacity we will be adding?

So yes, 10 million tonnes, exactly 10 million tonnes.

Okay. And sir, you mentioned that the cost reduction plan previously, you said INR 300-odd that we were looking at by FY '27. That now we will be disclosing this number after the fourth quarter results. That's what you mentioned?

Yes, sir.

We'll take our next question from the line of Anuj Jain from Globe Capital.

Congratulations on the good set of numbers. I just wanted to understand, I mean in today's presentation you have mentioned that for the merger of Kesoram will take -- require additional approvals of those 2 mines, Telangana and Karnataka. And in your opening remarks, you have said that by financial year end, you will integrate all the Kesoram with UltraTech. I just want to understand, generally these states take much longer time than we anticipated, so how much will one -- can expect for the integration?

Sir, so I have kept a sufficient buffer in my hand before telling you the end of the year. So as I mentioned, these are at the last stages. There are 2 or 3 approvals pending within the authorities, which should get completed very soon. And we are very confident there will be no slippages beyond March '25.

Next question is from the line of Raji Tandon from Ventura Securities.

Yes. So the first question I had was, for the INR 8,000 crores to INR 9,000 crores CapEx that you are planning, will you be taking any additional debt for that?

No. This can be funded by internal accruals. We expect our debt to start going down from next financial year in small steps. Next year, because CapEx plan is big, so you will not see too much of debt reduction, but it will not go up.

So this INR 8,000 crores to INR 9,000 crores figure is for how many years?

For next year.

Okay. So can you give an estimate?

No. The CapEx, if you're asking, INR 8,000 crores, INR 9,000 crores is next year and the year '27 will be much lesser. There will be the remaining elements of our organic growth plans, which has to be -- the completion stages. So INR 6,000 crores, plus/minus, is what they're looking at.

All right. So my second question was, do you see the EBITDA per tonne figures for India Cement and Kesoram to reach the levels of UltraTech by FY '27?

Yes, please.

Next question is from the line of Sanjay Nandi from VT Capital.

Congrats on a good set of numbers. Like most of the questions are answered, sir, can you please help us with the regional utilization levels if possible, sir?

I think I had answered that question, and we had East, which was below 70%, and other regions were in the plus/minus 75%.

Next question is from the line of Prateek Kumar from Jefferies.

I have just a couple of clarifications. Firstly, on FY '27 CapEx of INR 7,000 crores, so that would be excluding India Cement-related upgradation?

Yes. This is only on our expansion program which was going on -- which is going on, sorry.

So including CapEx on -- which you said Kesoram is like not so material, but India Cement CapEx included, your CapEx may again, like sort of, still be INR 8,000 crores, INR 9,000 crores, kind of, sir.

Yes, if you have to count the CapEx of India Cement, I don't know how much will it be. It will be certainly more than INR 500 crores, because INR 500 crores was what is being earmarked for Kesoram.

All right. And one clarification on branding. So India Cement has a host of brands, and then obviously they have associations like [ IPL ], et cetera. So when we integrate these brands, we will like sort of migrate to UltraTech. You said that there's INR 20, INR 25 gap there. And then all these other associations like IPL also like sort of moves to you. Are there some royalty fees there? How does that [ work ]?

IPL, no, there's no cricket with us. So that company CSK has already been hived off long ago. And there's no IPL as in cricket IPL, right?

No, no. So that was the branding partner, right? The India Cement is used as a branding partner for CSK?

No, no, we will not be. No, we will not be. We will not be branding partners for cricket. That is one. And you asked something else also.

And the various brands of India Cement moves to UltraTech?

So all the various brands are part of India Cement, owned by -- the brands are owned by India Cement as a legal entity. They continue with -- to be with that company. So CSK as a cement brand exists, which will be owned by us. There's no association with cricket.

Next question is from the line of Kamlesh Jain from Lotus Asset Managers.

Just 1 question on the part of -- sir, are there any loans and advances which have been given to India Cement which has resulted in lower net debt? Just a bookkeeping question on that.

I'm sorry, what?

Have we given any loans and advances to India Cement?

No, no, UltraTech has not given any loans and advances.

Okay. So can you summarize like what was the reason for the debt to go down? Has there any been land sale there? Because I believe in such a short period, such deals can't happen at, like, say...

We have monetized assets, which has helped release cash flows to reduce debt.

Next question is from the line of Ishwar Arumugam from [indiscernible].

So the first question I had was the -- [ South ] cement prices, sir, it has been very dull this quarter and the price increases have not able to stick much. Moreover, there used to be a disparity between the [ team ] Kerala prices and the Andhra and Karnataka prices. [ Team ] Kerala used to be a better price than Andhra and Karnataka. So the prices are converging now. Is it because players are fighting to gain market share? Is it just because of the demand [ scenario ]?

We really won't be able to comment on that microanalysis that you're doing. But my belief is Andhra Pradesh is going to improve demand sentiment and it will benefit the entire South, which will help improve prices in the respective markets.

You've said that you've grown from 20 million tonnes to 60 million tonnes in South, sir. So what would be the approximate market share gain for the company in terms of volumes?

In terms of capacity, I believe South is 180 million tonnes. 196 million tonnes of capacity. So we are very close to 30% capacity share.

Okay. Right. Right. And what is the outlook and the future plans for UBS sir? Is there an increasing trend you see of people in the urban areas preferring building material solutions instead of cement? What is the outlook there?

Outlook is very bright in -- especially in Tier 2 towns and Tier 3 towns. UBS as a platform is convenient for individual homebuilders. It becomes a one-stop shop for the homebuilder to get all his needs, and our interest, obviously, remains while to service the customer as also to increase the throughput of our sales.

And one question I had was on the -- India's waterways, the national waterway you used for the grinding unit in [indiscernible]. So is there any plans to ramp up the capacity? And if we do ramp up, how much logistic cost [ average ] can we look at?

So it's too early. I think we will definitely want to ramp it up. It is eco-friendly, cost-effective, a high-volume opportunity. It will be definitely of big benefit.

So this was more of a test run?

Yes, please. And there were a couple of questions asked about the -- how much have we completed on our efficiency improvement program. And the reason I'm not able to comment on that, because quarter-to-quarter, it will vary. The monsoon quarter is a depressed quarter; January, March will throw up another number. And hence, it is better to look at the efficiency improvement program deliveries at the end of the year. Having said that, we have already quantified the lead distance. the implementation of renewable energy and implementation of WHRS, which are very, very measurable. And from 400 that we started and we reached 377, 23 kilometer. 23 kilometers is almost -- 23 kilometers is almost INR 70 benefit, which is available as part of the efficiency program. Similarly, WHRS implementation. On the increase in the capacity of WHRS, the power cost keeps dropping by almost 90% on the incremental capacity. These are measurable numbers, but I would still want to reserve my comments for the end of the year. Thank you so much.

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