Ultratech Cement S/Gdr

Ladies and gentlemen, good day and welcome to the Ultratech Cement Limited Q3 FY24 earnings conference call. We must remind you that the discussion on today's call may include certain forward-looking statements and must therefore be 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. As a reminder, all participant lines will be in the listen only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star and then zero on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Atul Dada, Executive Director and CFO of the company. Thank you, and over to you, sir. Thank you so much. Good evening, everybody, and welcome to the earnings call for Quarter 3, SI24 for Altratex Cement Limited. I will try and keep myself brief today and giving more opportunity for questions. One of the most critical points which has been doing the rounds is about demand, whether there's a slowdown, et cetera. We believe that this quarter, the industry should grow somewhere around 3% to 4%, not more than that. And there are several reasons around it. And I should clarify it up front before too many charities start doing the rounds. Q3 is a fiscal season which is generally subdued due to absenteeism of workers from project sites. And this has been a routine phenomenon year after year. Besides, a large country like ours will have something or the other going on. Such issues do hamper the movement of goods. Specifically in this quarter, we had election in four major states, Chhattisgarh, Madhya Pradesh, Telangana, Rajasthan. Fiscal challenges in the states of Bihar, Jharkhand, West Bengal. There were floods in Tamil Nadu, cyclone in Andhra, sand and aggregate shortages in some parts of the country, NGP-related construction ban in NCR since last quarter, which still continues, and severe weather as we speak. We also had rains in Himachal which impacted the movement of goods. You must already be aware that the first two days of January were also impacted by the trucker strike, which would impact not just us, but the entire economy, let's say. So one should not panic because of such situations. There have been news items like government orders have slowed down. I believe if so, it is only temporary. India is fundamentally poised for a huge infrastructure growth, which will benefit all the cement players alike. The bigger point is that any project that has been initiated will go on, and we are seeing substantial construction activities across the country. So, long story short, fundamentals around growth for cement in the country continue to be the same. We have already started seeing improvement in demand since the middle of December. Slower demand leads to correction in prices, and most of the gains achieved initially have been surrendered. While QOQ and YOY, there has been an improvement in prices for the quarter, but towards the end of December exit, prices had corrected largely. You are all monitoring daily prices, but I wish to reiterate that prices are always guided by demand. As and when demand improves, prices are bound to improve. It's a pure economic phenomenon. Jumping on to our expansion plans, I think we are happy to tell you that all our expansion plans are on schedule, and in fact, some of them are ahead of schedule. Given the way we are seeing things going up in the country, we are quite satisfied with the way our expansion plans are panning out. On the last announcement made for 21.9 million tons of capacity, which we call internally phase three, orders have already been placed for critical technology items. Civil work has commenced on a few sites. We are confident that the plans will be commissioned as per schedule. This year our CapEx cash flow will exceed our initial plans, which we have outlined. and we will spend around 9,000 crores. Next year also, we could see our cash flows on CapEx being around 9,000 crores. Working capital has taken up some opportunistic bets on purchase of coal and petco, because of which our working capital is slightly extended. Both of these elements added to a marginal increase in our debt position at the end of December 23. And given our belief that Q4 will be a high throughput quarter, we should be seeing a further improvement in our cash flows and shrinking net debt. Everything else remaining the same, we are working towards reaching a zero net debt position by the end of March 25. Going forward, we keep seeing an improvement in costs. As per current data, imported coal and pet coal do not seem to be spiking up, albeit the ocean freight flare-up due to the war issues. We achieved a fuel cost of 2.048 per kcal this quarter against 2.184 per kcal last quarter. Blended cost of fuel consumed net of moisture in dollar terms was $1.50. We use very limited domestic fuel, which is around 6% of our total fuel consumption, and maximum energy is from imported coal and pet coal. We expect to see a further reduction in our fuel costs in the foreseeable future. With 455 megawatt of renewable energy and 264 megawatts of WHRS, we are now at about 24% of non-fossil fuel-based power. and work is in progress to nearly double this percentage by the end of FI25. To give you some more numbers, we today in all have 44 kills in operation out of which 29 kills have already been covered by WHRS. Work is further in progress on five more kills. The ongoing expansions by the, which is at the end of completion of phase three by fiscal 27, we will have in all 48 kilns and 41 kilns will be covered with WHRS. All future expansions, current and further, will always be with WHRS and zero thermal power. That is our commitment to sustainability. I have covered briefly upon costs, demand, and our expansion plans. Last but not the least, I must communicate about the recent acquisition that we have announced of cement assets of Kesaram Industries. We have already filed a team of stock exchanges. CCI applications should be filed shortly, perhaps by the end of this month. And after that, there will be an NCLT process. Two NCLTs will be involved, which is namely Mumbai for us and Kolkata for Kesaram. The effective date of merger has been kept as 1st April 24. Hence, as and when the merger gets completed, the numbers will be consolidated with retrospective effect once all regulatory approvals are in place. That's all I had to share with you today from my side and look forward to questions from you and any more inputs that you may have. Thank you and over to you. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch tone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Amit Murarka from Axis Capital. Please go ahead.

Yeah, hi. Thanks for the opportunity. The first question is on other expenses. Q2 has higher other expenses, which we saw, and Q3 simply witnesses a drop, but this time that drop is not visible. The first thing I wanted to highlight was, I wanted to check was, was there any one-off in other expenses?

It's not a one-off, but when we saw the slowdown or lukewarm response in the markets during October-November, we did some preemptive or early pre-ponement of some maintenance costs, which would have become part of the overall costs during this quarter.