Ultratech Cement S/Gdr

Ladies and gentlemen, good day and welcome to the Ultratech Cement Limited Q1 FY25 earnings conference call. We must remind you that the decisions on today's call may include certain forward-looking statements and must be therefore reviewed in conjunction with the risk that the company faces. The company assumes no responsibility to publicly amend, modify, or revise any forward-looking statement on the basis of any subsequent development, information at events, or otherwise. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Atul Daga, Business Head and Chief Financial Officer of the company. Thank you and over to you, Mr. Daga.

Thank you so much. Good afternoon, good evening, and welcome to everybody on this call for the earnings of Azotec Cement for Q1 FY25. Let me begin by talking a bit about demand and how we perceive it. I believe that the fundamentals, the foundations of our growth story remain unchanged. Because we believe that incremental supply will always chase incremental demand. In this quarter, rural demand gained significant momentum, rightly so. For Altratech Q1, rural grew about 9%. Infra was a bit slow, but is expected to pick up in the coming quarters. At a state level, we are seeing new or resurgence of construction activities in the states of Bihar and Andhra Pradesh. Andhra Pradesh obviously with Yamravati city kicking in, coming back for its growth story. The older projects which were halted will start and resume work. New projects are being launched. So all in all, it sounds like a good story for the future. One aspect which I want to talk about is capacity utilization in the country. This financial year, we started with, sorry, FY24, we started with a capacity of 585 million tons in the country, and the country ended with an overall capacity of 626 million tons installed. The estimated demand for the last financial year was about 425 million tons. That's on an average about 70% capacity utilization. However, we all know that there are capacities which are operational or shut down or inefficient. To my best estimate, there might be about 50 million tons of inefficient capacity in the system. Eliminating that, the capacity utilization for the country would be hovering around 76%. The country saw new capacity addition of 41 million tons during the last financial year. 32% of this belongs to Altertech. And we ended last financial year with a capacity utilization of 85% on an increased base. For the current year, we shall be adding almost 15 million tons which seems to be approximately 40% of the new capacities getting commissioned in the country this year. In spite of our growth remaining unsatiated, we continue to grow and it's also evident from the fact that this quarter also on a higher base, our capacity utilization is around 85%. We are big and continue to grow bigger Let me share some other dimensions about our scale of operations. Alternate fuel to speak about. As a percentage for us, it might look small. But last year, we consumed almost one and a half million tons of alternate fuel in 14 kilns out of the 47 kilns under operation. In some plants, AFR is more than 35% already. This is indeed a game changer towards reducing our carbon footprint. The calorific value of alternate fuel would be almost 50% of the imported fuel, yet it is value accretive and reduces carbon emissions. This quarter, our alternate fuel consumption was close to 6%, was about 6.5% and will keep growing, 6.5% of the overall fuel. Another dimension would be fly ash and slag. We consumed 33.6 million tons of fly ash and slag. It is a common industrial waste being used by the cement industry. I don't have to mention it, but this consumption itself is significantly larger than overall capacity of some players in the country. Let's get into the draft tags of Q1. Q1 has been eventful for us. Firstly, we concluded an open offer for rack-white cement in the UAE, consolidating our position at 54% in the company. The UAE economy is booming and provides us an opportunity to increase our footprint in the space of white cement and putty in that area, in those markets. Our staff cement operations in the UAE are also continue to do very well and are the largest or the leader in gray cement in the UAE. From next quarter onwards, Rack White Cement will also become a subsidiary of Ultratech. An update on the Kesaram Cement transaction. We have received the CJI approvals. The courts have also approved the shareholders and the creditors meeting to be held in due course. After approvals from these meetings, the final scheme for amalgamation of the cement assets of KSORAM with us will be filed with the NCLT of Kolkata and Mumbai. The effective date for merger has been set as 1st April 24, depending upon the receipt of the actual order for the consummation of the scheme. The accounts of KSORAM with respect to its cement division will be consolidated with retrospective effect with our results. Kesaram has already declared its Q1 results and you would have noticed a significant drop in their interest burden, which they have been able to demonstrate by refinancing their high cost borrowings scheme. During this quarter, we also received the order for amalgamation of our fully owned subsidiary somebody said that we had already anticipated the T20 World Cup victory for India which let us doing several one time expenses during this quarter reflects in our higher other expenses and impacting our TNF but this is a one time effort and our expenses should normalize like any other normal quarter going forward We had in the last call mentioned about efficiency improvement program that we have undertaken. It is not a segment of imagination but absolutely real with 100% touch and feel available on what is happening on the ground. The first of the programs to kick off is our logistics cost. Our lead distance has already shrunk from 400 kilometers to about 385 kilometers during this quarter. It saves almost 45 rupees per ton of cement. You'll all recognize that logistics is the largest cost driver for cement and this is an important milestone. And we expect our lead distance to go down further as The network of our plants increases from current 59 locations to more than 70 locations by the end of our current phase of growth. WHRS is worth mentioning about. We are continuously ramping up our capacity of WHRS. This quarter, 23 megawatts of WHRS was commissioned, ending the quarter with 301 megawatts of WHRS. you're all aware that the average cost of WHRS power would be almost 85 to 95, say, per unit compared to our average cost of power around seven per unit. On a production of 30 million tons average per quarter, our approximate power consumption through WHRS has been 80.2%, balancing made up by thermal and grid power and renewable power. Talking about renewable power, we now have 650 megawatts of renewable power and growing. Again, the average landed cost of renewable energy is around four per unit, resulting in substantial savings in our power costs. This year, we are witnessing good monsoons almost across most parts of the country, though I hear that northern parts are again facing some challenges. However, given the overall sentiment, I believe that the rural markets and the overall cement demand will remain strong going forward. Q2 will be typical of monsoon quarter, not so much growth that we could expect, but Q3 onwards, the momentum will start picking up. With that, I end my commentary for this quarter and over to you for questions. Thank you so much.

Thank you very much. So we'll now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to limit their questions to two per participant. and use headsets 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 Madarka from Access Capital. Please go ahead.