Ultratech Cement S/Gdr

Ladies and gentlemen, good day and welcome to the Ultra Tech Cement Limited Q2 S525 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. 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 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, CFO of the company. Thank you, and over to you, Mr. Daga.

Thank you. Good evening, everybody, and welcome to this earnings call today. This quarter, I believe, has turned out as expected. Pre-election slowdown, followed by a slowdown in April, June, with elections, and then monsoons, which have been intense in most parts of the country and also the longer duration of monsoons this season. Some parts of the country have been witnessing rains as of now also. All of this put together has resulted into ultra-tech capacity utilization at 68%, delivering a 3% growth in volume terms. Good monsoons is not just not good for the short term, but results in a good season for rural markets in the long run with improved cash flows. Thus, we envisage and expect good rural demands in the coming seasons. Agricultural production for both summer and winter crops likely to be higher, as reflected by the sowing activities during summers and increasing water reservoir levels, which bode well for the winter season. We have to also keep in mind global events which have an impact, which do not directly impact our business because it's domestic, but global events being of the nature that they are, can always have an indirect impact. Ocean trades, to name one of the key elements, which can go up and impact our input costs. China has introduced a stimulus package. We have not yet seen the big impact on the global market, but I'm sure there will be some positive, some negative out of that. Let me come to the burning question of all quarters fuel costs. Our high cost fuel contracts have almost come to an end with a very small impact left in Q3. You would have noticed petco ratios have gone up 54% this quarter. And rupees per kcal has dropped to 1.84 from about two rupees in the last quarter, a decline of almost 8% QOQ. The most important factor would be demand, which we need to keep an eye on. Urban housing has been doing well so far as is being visible from the growing number of registered projects across the country. We believe that new infrastructure projects orders will start gaining momentum. Although it has been a subdued start from Q1 and during the quarter and the reporting, we believe that things have started moving and awards have started picking up. 589 kilometers of projects have been, road projects have been awarded by NHAI and MOTS. though lower on a year-to-year basis. During the quarter, various projects approved to improve countries' infrastructure have come to light. Some of them are Chennai Metro, 63,000 crores, Mumbai Ring Roads, 58,000 crores, Pune Ring Roads, another 42,000 crores, the PMGSY fall, 70,000 crores, or with 15,000 crores for roads. Central government approval for Bangalore Metro Phase 3, approval for Thane Integrated Metro Rail Project, and so on and so forth. So the list will keep on increasing. We are very confident that there is not going to be a slowdown. We have just few announcements, as I mentioned. With government's continuous stress on infrastructure, investment outlay is estimated to increase to about 75 trillion INR over the next five years, increasing to 1.6x from investments of 47 trillion over the last five years. Housing launches are continuously growing at double digits since last few years. Urban population in the country has increased, from 26% in 1990 to about 36% in 2024. And we believe that the pace of urbanization will continuously accelerate further. Urbanization is currently to increase in demand for housing across all categories, affordable, mid-level, luxury, ultra-luxury. Also, we have to keep in mind that This is forming a low base. This quarter is forming a low base, which will generate good growth in percentage terms. We are also seeing improvement in demand in the commercial space, which is represented by commercial offices, warehouses, data centers, and the likes. Talking about our own growth plans, our expansion projects are on track. and we will commission another 8 million tons of capacity in H2, taking us to 157 million tons of capacity by the end of fiscal 25. And as per our announced organic growth plans, we should be reaching 184 million tons of capacity by FY27 in India.

On to the acquisitions.

Rackwhite, a white cement company which we had invested in a couple of years ago, became a subsidiary with effect on 10th of July this year. The results of Rackwhite have been incorporated in our consolidated financial statements. The cement business of Kesaram that is under acquisition, the transaction is in its last phases with the NCLT hearings scheduled on 25th October and 12th November for KSORAM and AltaTech respectively. We hope that there are no delays in these processes. And this being the last step, the transaction should see a conclusion in Q4 FY25. With respect to the acquisition that we had announced for India Cements, we are awaiting CCI approvals for the transaction. after which the open offer will be lost. Let me come back to the efficiency improvement program that we had talked about, I think, a couple of quarters ago. Our efficiency improvement program is very specific, precise, and measurable. We started tracking this program from the close of fiscal 24. And let me reiterate the various line items included therein. WHRS capacity, we had ended the financial year with 278 megawatts. Currently, we are at 308 megawatts and will reach 450 megawatts by fiscal 27 end. Renewable energy capacity, we were at 612 megawatts at the beginning of the year. We have reached 681 megawatts as of now, and we will be reaching 1.8 gigawatts by fiscal 27. Blinker conversion ratio is again on track from 1.44 to 1.54 by FY27. Alternate fuel mix is set to rise from 5% at the end of fiscal 24 to 15% at the end of fiscal 27. Lead distance, as already we have spoken about, has started dropping, and we will see further drop and definitely reach about 360 kilometers by fiscal 27. Over and above that, there are smaller areas like power consumption reduction, efficiency improvement in operations, operating leverage. All of them will be delivered in each year step by step. And to summarize, UltraTech today is at 150.66 million tons of capacity. March 25, we should be reaching about 159 million tons of capacity. By the end of Q2 fiscal 27, we should be touching around 180 million tons of capacity, wherein I'm not including the acquisitions in progress and anything in future. All the efficiency improvement programs that I've talked about will be delivering delta gains on the expanded base, and this is what, to my mind, is a sustainability agenda for us. With that, I don't have anything else to add further in this commentary, and I hand it over for questions.

Thank you very much. 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 remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question It's from Amit Muraka from Axis Capital. Please go ahead.

Good evening, Mr. Raghavan. It's a great opportunity. So the first question is on the fuel cost. So you had guided for normalization of fuel cost by the Q3, and it's good to see a sharp drop in Q2 itself. Could you help understand by Q3 or by Q4 what could be the expected fuel cost when you kind of normalize back to the spot cost level?

It should drop further, Amit. And as I mentioned, on an average, we would have a consumption of give or take 3 million tons of fuel between coal and pet coal. It's not just the cost of purchase, but the fuel mix also is equally important. And you would have noticed that we have gone up on petcoke significantly, which will keep on going up further. What will the number be like? Difficult for me to give you an exact estimate, but we will be going down south only.

Okay. and also on your costs. So I see that there's a sharp jump in employee costs. I know you do annual increments from Q2, but it's almost a 24% QOQ jump. So is there any one-off, one-time bonus, or anything like that?

Yeah, there have been one-time bonus or extra bonuses which were given during this period. So our average increase should be around 9%, 10%. And over and above that would be one-off.

Okay. And lastly, on other expenses as well, like last quarter you had said that you had higher market expense. Correct. But the other expenses, at least on a pertinent basis, have gone up another 100 rupees. So how do we think about other expenses now?

Other expenses. Right. So no, okay, in the printed account, because all the maintenance costs are included in other expenses, this being the quarter for maintenance, that is where you will see other expenses always being higher as compared to remaining quarters.

Yeah, no, I know, but I thought that Q1 was a bit elevated because of one-off marketing.

Q1 had that one-off, you know, expense. which will not be there now or in future. This quarter we had maintenance shutdown costs, which are part of my other expenses.

Thank you.

The next question is from Rashi Chopra from Citigroup. Please go ahead.

Thank you. So could you just tell us a little bit on pricing in the sense that what happened after the quarter?

Oh, how come I missed on the favorite question for everybody? Prices have been improving. Why is, you know, the average for the quarter will be a misrepresentation of things going forward. From August, sorry, from September to, no, August to September also we saw improvement in prices, and September to October also the prices have been steady. So we have seen an improvement of from 347 was August exit to about 354 currently.

And on average versus the Tokyo?

So, one sec. There is the Q2 average was about 348, which is now 354. Got it.

Thank you. And in this quarter, the other operating income seems to have moved up sequentially. What is that?

There were incentives. Yeah, there was a plant incentive which kicked in. Long overdue.

So this should continue?

No, this was again, there will be small portions left, but not forever. Maybe one or two more quarters, we might see a decent incentive income.

Okay. And on the last question, on India Cements, the CCI approval is repeated. Is there any sort of delay?

No, no, no. It's a normal process. So There was first query list which was received, which we responded to on the 12th of October. There might be one more list of queries if it comes in. Otherwise, nothing else. So there are a lot of questions around details of markets and where we are selling, where India Cement is selling, etc.

So likely closure within this fiscal?

Yes, within this fiscal, the confidence level is very high.

Okay. Okay. Thank you.

Thank you. The next question is from Pratik Kumar from Jefferies. Please go ahead.

Yeah, my first question is on pricing versus profitability versus volumes. So our current quarter EBITDA per ton is like sort of probably four, five years low on a quarterly basis at least. So is there a point where you as a company or industry probably like look at the profitability versus volumes or how should we look at going forward?

Demand is the key for any industry. So if demand is good, everything falls in line. So we would fundamentally focus on how India is shaping, how India is growing in the next few years. And I guess the hypothesis of 7% to 8% growth is still there, will be there, and India will deliver that growth, which means we will deliver that growth higher than that. So maybe I have not answered your question fully. If there is growth, obviously there will be profitability.

Yeah, of course, growth will be – in their profitability, but, uh, like your whole cost setting initiatives, industry cost, table cost coming down seems to already more than, more than passed to the consumer. Uh, historically we have as an industry, like looked at better profits generally. It seems, uh, uh, there is a significant deviation from there. And even like for second half, uh, not sure how much, uh, we are looking for improvement overall. Uh, but, um, Maybe a related question, like if there is a prolonged slowdown in demand, do we really re-look at our organic expansion plans at all or like how should we look at capacity expansion?

So, you know, these one-quarter, two-quarter slowdowns will not impact our underlying hypothesis of growth. We are not slowing down on our growth agenda. That's very clear because we don't get disturbed by these one-quarter, two-quarter, you know, upsets. Fundamentally, we need to believe that India will deliver a 7-8% CAGR growth. That is happening, and that is why I downloaded some data which I read out just now on various projects which the government has started announcing. Rural markets have started growing. Rural housing has started growing. If you're looking at a short-term window, then good monsoons which have depressed cement sector this quarter will be a positive gain for April-June quarter when crop harvesting takes place. And which we are already seeing right now, rural demand, the FMCG sector is positive about rural demand. We are seeing positive trajectory in rural demand also.

Okay. And the other question is on wide segment revenues, which like sort of split 10% year on year this quarter. Any specific reason there?

I'm sorry, what?

Some wide segment revenues, wide segment revenues was like lower year on year.

Prices were depressed. Putty prices are taking a beating this quarter.

Okay, is that continuing or like they expected to revise?

No, no, I think they have stabilized. We have not seen decrease in prices as of now.

Sure, thank you. Thank you.

Thank you. Thank you. The next question is from Rahul Gupta from Morgan Stanley. Please go ahead.

Hi, thank you for taking my question. Atul sir, I have one broad question which may which may not be a near-term thing, just want to understand one thing. You have been continuously surprising positively on realization versus what we see on pan-India prices. If I compare numbers versus last quarter, your trade segment has not changed much. So what drives AltaTech's continued delivery on realization versus the industry? Just to understand this better. Thank you. So I think this is a compliment for us. Thank you for that. It all boils down to us being a building solutions provider, us being top-notch in quality, us being able to meet our customer requirements with a strong dealer network footprint, and being consistently focused Brand A player, we have maintained our positioning, brand positioning, our quality parameters, never compromising over there, which is helping us deliver whatever we are delivering. Thank you, sir. Just to follow up on this, is it fair to say that apart from being a preferred brand, you being a pan-India player, helps you cushion some of the regional disturbances on prices, or is it a more multiple? You know, parity of presence, the diversity of our physical presence comes to our advantage as well as disadvantage. So when, let's say, there is an imbalanced movement in one particular region, that will have an overhang on our results. But luckily, as we are growing forward, our own capacity would be balanced across all regions. That will help us to be a really diversified player and will not get impacted by any regional imbalances. That's very clear, and thank you so much.

Next question. Thank you. The next question is from Sumangal Nivesha from Kotak Securities. Please go ahead.

Yeah, good evening, everyone. Thanks for the chance. So my first question is on industry demand. Is it possible to share your sense what would have been the industry demand growth in second quarter? And in your presentation, we see a lot of down arrows across regions. Is it possible to give some color as to some regional color and what In our growth, I mean, it looks like we would have grown in some region and we would have seen some decline. So, some region-wise color specifics will be very helpful.

So, Mangal, on India, I believe the demand would be negative or zero or, you know, between minus 0.5 to 1%. As for specific regions, I won't have exact percentage colors, but the direction which we have indicated, our basis, whatever information we have, but till we have competition results declared, we will not be able to comment on that.

Okay, okay. But just east and south, I mean, there are a lot of down arrows. I mean, is it a firm decline on R volumes in these two regions or...

We have grown.

Okay. Okay, got it, got it.

So, second question on the fuel cost versus what we are doing at around 1.85. I mean, I understand that trajectory is downwards and difficult to say, guide on the timeline.

But just for our understanding, at the spot level of Petco, say around 95 odd dollars, what would be the cost? I mean, of course, timeline will depend on inventory, but some No, so, you know, from our 1.84, we could drop 10 points further. As for current prices, I think it has plateaued. We'll have to wait and watch the global events on how markets shape up. Not seeing too much of volume in terms of supplies. taking place at these levels. Okay. I understand. I understand. And just the last one, I mean, for India cement, we are expecting the CGI by November end or December. Oh, it's, you know, it's difficult for us to comment. Typically after we have responded to their queries, it could take two months. It could take three months depending upon any further queries.

Okay, but based on the queries, do we see any risk?

It's only a matter of time. These are, I would say, statistical questions which CCI also needs to be sure about by analyzing the way they ask questions that there's no consolidation or there's no monopolistic situation in any micro market. That is what they analyze. So we don't foresee any challenge in getting the approvals. it's a process one has to follow.

I understand. Got it, sir. That's all from my side. All the best.

Thank you. Thank you. The next question is from Parth Bhav, sir, from Investec. Please go ahead.

Hi, sir. Thank you for the opportunity. So I have one question. So we are adding approximately 15 million tons this year and we have, you know, acquired KSO Ram and India Cement. So going ahead in a situation where, you know, the demand is not strong. So would we go after market share gains or would we, you know, like how would we, you know, go about the market share?

So our game plan, long-term game plan is always profitable growth. I think these two words sum up what we want to do. We want to grow. We want to deliver profitability also.

Okay, so you would like hold up your price just in case and you won't go after market share?

I would drop prices. It's day-to-day business. So whether tomorrow, if God forbid, if there is a war, then anything could happen. So as of now, given the status quo, we expect the demand should start rising. And I'm still looking at double-digit growth for H2, which will deliver our numbers. And you will see improvement in profitability.

Okay. Okay. Thank you so much.

Thank you. Thank you. The next question is from Shravan Shah from Dollars Capital. Please go ahead.

Yeah, so double digit growth for us for H2 and for industry, how much we are looking at for H2?

I think we will deliver better than the industry. OK, OK, got it. And is it possible, sir, in terms of 68% utilization for second quarter, can you break it down region-wise for us?

How was the utilization?

Would be average plus minus here or there, yeah. Okay, and capex for full year now, last time we said 8 to 9,000 crore. We will spend that money. We are on track. We will spend that money. For next year also, the similar run rate one can look at? Yes, because after this, concluding this year, we would have almost 20 million times of expansion to complete, which will see its regular outflow. okay and in terms of the cost saving that previously we have talked about around 300 odd rupees per ton uh definitely we have also given the in terms of the line uh item wise but uh how much uh uh uh we have already uh have achieved and this year and next year possible if you can share how much more cost reduction from here on we can look at Yeah, so instead of doing on a quarter-to-quarter basis, it is not logical, and I'll explain that to you. We will definitely showcase at the end of the year what the achievement has been. Now, to come to the point why each quarter is not relevant, because, for example, lead substantially, but being monsoon, lead distance went up a kilometer or two. Does that mean that I've lost? No. The downward movement in lead distance is ongoing and we will reach targets. So at the end of the year, we will publish the performance against the target which I spoke about. I was vocal about each and every number. We will publish our performance at the end of the year.

Okay, okay. Thank you, sir, and all the best.

Thank you.

Thank you. Next question is from Naveen Sadeo from ICICI Securities. Please go ahead.

Yeah, good evening, sir, and thank you for the opportunity. Two questions. So while we are awaiting the regulatory clearances at both KSRAM and India Cement Deals, Is there any initial assessment done as to the CAPEX that may be required at both these entities to bring the quality of the plant at par to our operating standards?

So after CJ approval for KSORAM was received, we have done our deep dive and we will invest in WHRS for KSORAM. and there will be other minor CapEx program which will be undertaken. Rupee terms might be 400, 500 crores over a period of two years to bring it up to the level of performance of Ultratech. As for India's image, nothing as yet. We will await. We will follow the law. We will await CCI approval before we start engaging with them.

Understood. And I'm assuming that the yearly targets that you have given, and thank you so much for giving that because it gives us more conviction to build in those kinds of cost savings. So the yearly targets that you have given for waste heat recovery, I'm assuming they are not... Let me preempt you, does not include the acquisitions. Understood. Understood. And sir... that the current low levels of petcoke prices, not much transactions are happening? Correct. So is it because the seller is not willing to or they are expecting for a decline?

How should one look at it? If the seller was waiting for a decline, there will be a problem. We won't because we are regular consumers. So we will keep buying. So there seems to be a possibility that prices might go up. That is why sellers might be holding onto their inventories and offers.

But that's very, very thankful. Thank you so much.

Thank you. The next question is from Ritesh Shah from Investec. Please go ahead.

Hi, sir. Thanks for the opportunity. A couple of questions. First, at industry-wide, what is the sort of capacity additions that we are expecting for this fiscal and next two fiscals?

For the year, we will see about 30 million tons of capacity this year, out of which Ultratech would be 50%. Next year, again, there should be 30 million tons and Ultratech being... a main driver for that growth. Sir, earlier you had given a number of 35 to 40. So is it a few companies are scaling back to your knowledge? How should one read into this? No, not scaling back. There are delays. Hello? Okay. So it might not get commissioned on time is what I meant, Ritesh. That's why the numbers get scaled out. Okay. That's helpful. So my second question is, you have indicated on sustainability bond. I think the prior one, the coupon was at around 2.8. Is it possible that you can break up that number of less than 7.25 into hedging costs and that coupon?

Sure. Sorry, you want to give that? Yeah. The cost of the bond is, the hedging cost is up to the same. The total cost of the bond including the spread is up to that.

Sorry, I could not hear. Sorry.

So the spread, including the software, is around 4%. The heading cost is around 3%.

That helps. And the last question. Since you touched upon it, you know, I feel so glad or thrilled about it that the domestic market borrowing cost would be about 7.5%.

Yes.

I also think it's capable of raising dollar denominated debt fully hedged at very competitive price.

Yes, sir.

Okay. Yep. So last question, you emphasize a lot on cost. My, my basic question was, do you consider discount as a cost or, And the reason to ask is if I look at that number over a five year CAGR, the number has increased very, very steeply at almost 19% CAGR, which probably is a reflection of competitive intensity in the marketplace. Sir, any thoughts on this particular variable and would you not consider it as a cost as well? Discounts normally get netted off from selling prices and there are some promotion expenses, which would be in other expenses. I don't know where you're, where are you picking this number up from, but it would be good if you can catch up with Ankit separately to, you know, and while you can do that, but I can assure everybody that our sales promotion spends or discounts will not vary, would not have varied over a longer period of time.

Sure, sir. And I'll connect with you on this separately. Thank you so much for the answers. Thank you.

All right. All right. Thank you. The next question is from the line of Sanjay Nandi from VT Capital. Please go ahead.

Hello. Hello. Yes, please. Yeah, thank you for watching the show. Sir, can you please share the regional utilization for our company across different regions? Yes.

I had mentioned earlier with an average of 68%, almost all locations would either be at 75% or 55% in that range only.

Okay, got it. And what has been the clinker utilization for a company for this quarter, sir?

Clinker utilization, I think it remains strong. Just one second. Do we have it here? 70%. 70%, yeah, 73%. 73%.

Okay, so that's it from my side. I'm coming back in the queue, sir. Wish you a very happy re-run in advance.

Thank you. Thank you.

Thank you.

Next question is from Sukant Karg from Equivalent Research. Please go ahead.

Hi. So my question is regarding, you know, a guidance on the further acquisitions that the company is in plan with. So after indefinite what kind of acquisitions are coming looking into as of now acquisitions are always opportunistic so i really cannot comment on uh that no uh i need to say are there any in the pipeline as of now currently i i really can't comment on that okay okay good ones thank you um thank you

Next question is from Prateek Maheshwari from HSBC. Please go ahead. Thank you for the opportunity, sir.

Sir, just wanted to ask you if there is anything to call out in your cash conversion.

So just saw that your year versus last year, your cash conversion has dropped to some 65%. And I think the main reason has been the decrease in your trade papers and other liabilities.

So is it a seasonal thing or is there anything in terms of I just wanted to understand that. Cash conversion means operating cash flow. Yeah, operating cash flow. Yeah, operating cash flow was lower because of July, September. We have built our inventory. Slightly receivables go up. It's typical of July, September quarter, and you will start seeing positive OCF going forward.

And so anything on the trade people's decline and the liability resource, similar thing, similar trend with the other peer as well. Is it related to your fuel as well?

One second, I'm just checking.

Yeah. It's not a reaction to the trade issue.

It's normal, I think, so there's no abnormal trend. I think this question was asked earlier also by somebody. Has my credit terms changed? No. We are having our credit terms are standard. There might be some payments for CapEx creditors which might have increased, but I don't see any adverse situation in our OCR. Okay. I just wanted to understand the second half demand drivers. So would you see that the infra increasing and so the non-trade share increasing? You see H2, you will see infra, you will see rural growing, infra growing, urban markets continue to grow. So very similar to your 1H drivers in terms of trade, non-trade.

Yes, yes. Okay. Very good. Thank you so much for the opportunity.

Thank you. Next question is from Amit Morata from Axis Capital. Please go ahead.

Hi, hi. Thanks for the opportunity again. So given that we are very close to now KSORAM integration, could you provide a brief overview of 1H Financials for KSORAM?

1H Financials. I think the declarative results...

Yeah, but they didn't have the cement in that.

I'll share with you. They delivered volumes of about 1.7 million tons. EBITDA per ton on cement was 264 per ton. On a capacity utilization of 74%.

EBITDA per ton was only 264.

264.

Okay, okay. And also, what is the rebranding strategy there now?

I think once we step into that asset, then only we will want to move forward on rebranding, if at all. We will, you know, tell you about it as and when we step into it.

Sure. So I believe by Q3, I think we should be able to kind of include that in our numbers also. Yeah, sure.

NCLT hearings, I told you about the dates. It all depends upon NCLT hearings taking place. The processes, once a hearing is done, order is passed, might take 15, 20 days to get the printed order, which has to be filed with the registrar of companies to conclude, and then we step in, you know, big bang. It could happen in October, December quarter. Training with January, March seems to be definitely happening.

All right. That's all I was asking for. Thank you.

Thank you. The next question is from Rajesh Ravi from HDFC Securities. Please go ahead.

Hi, Dr. Gurin. My question pertains to these cementation margins. If I look at the blended reported number, 725 is already multi-year low performance. If I exclude the contribution from RMC, White Cement and the other operating income, this number would be closer to 600 rupees. So, you know, as an industry leader, if that is operating at close to 600 rupees, where do we see a bottom in terms of the pricing and Because why I'm talking about this, everyone, including you and other major players, we're all talking about 200 to 400 rupees cost reduction happening over the next two years. In that context, what is the certainty of this crisis recovering to a respectable level of, say, the margins on the cement business turns up north of 1,000 rupees?

First and foremost, 600 is a wrong analysis. So from a 732, it might come down to somewhere around 700 if you are to all 710, 720, not more than that. Because if you look at the percentages, the overall percentage of RMC or anything else is very small. And as far as other incomes is concerned, that's part and parcel of the business. Correct, correct. It is, you know, for example, fiscal incentive. It's a regular phenomena for cement industry. It will be there. It's regular. I wouldn't want to say to call it out as one-off.

Agree. My point is, you know, for you, we are one of the most efficient players with better brand positioning, if we have to update at such low levels, you know, why should the prices not go up? And obviously, when you are giving those numbers, other will also be reporting similar numbers. So, you know, where we were looking at 1300-1400 margins of industry, you know, how should that shape up?

Tajesh, we will talk about the same thing. I'm noting down your questions and we'll talk about it at the end of next quarter in hours. then your question will change totally. So the point is, cement industry, you cannot measure on a quarter-to-quarter basis. It's a long-term play. When an asset is being built, it does not get built in one quarter. This quarter, and I have been telling all investors that not to plan in advance before this quarter started also, that this quarter is going to be depressing. How depressing or how low, that I would not be able to gauge by the beginning of the quarter. But yes, it was, everybody knows the way the monsoons have been this quarter, it impacts dispatches. It has been the intensity of monsoons has been highest this year as compared to several years, which for us, it was impacting dispatches, it was increasing our costs which will not be there in Q3, Q4, and Q1 next fiscal. And both parties, we are already seeing positive traction from rural markets, which should be very positive in the coming months. So my guess is, whilst we have looked at 732 as a bottom this quarter, we'll bounce back. Very confident.

Okay. Great, sir. Best of luck on my end. All the best.

Thank you. Thank you. Next question is from Archie Shane from Macquarie. Please go ahead. Hi, sir.

Good evening. So my first question is on your capacity addition. So, you know, if I look at the general breakup of the capacity addition, it's heavily skewed in favor of... South and Eastern India, and some of the acquisitions which we will do, which are not factored there, are also, you know, South-West centric. So how do we plan to grow market share or volumes in North and Central, where I guess we're operating at very high utilization and not much capacity is there in terms of the current pipeline at least?

So for North, you will see organic capacity addition as part of our Phase 4 in future years. And Central, being Central by itself, and I'm seeing a chart that you've already seen, we have got about 5.7 million tons getting added in the next couple of years in Northern markets. And this is what I, in fact, in one question I clarified, Ashish, our diversity is our strongest strength, biggest strength. You know, if you look at it, 35 million tons average we will have in all the regions. South was having a low age in terms of our overall capacity balance, roughly 20 million tons. And if I go back in history, we were at 20 million tons of capacity for a very long time. Yes, the two acquisitions, India Cements, as and when it gets completed, is south dominant. It has a small capacity which will get added in the north. And PSRAM is south and west. So, we are balanced.

I completely get that. My only point was that while we are getting balanced, the mix from capacity point of view is in my view, worsening because the share of weaker profit markets is actually going up based upon this number at least.

I was coming up with that. No, but I used to look at the announcement by the CM of Andhra Pradesh. Within three years, he wants to complete Amravati City, the kind of development which is taking place, I heard from my marketing colleagues, the kind of development of new townships and cities that are still in place, you'll have a huge amount of demand growth in south markets also.

Secondly, some of the optimism you shared for, let's say, second half profitability, is it fair to assume that a large part of it, if it comes through, will be price-led? And normalization of seasonal cost? Because normalization of seasonal cost is well understood. Coal and all is not a major tailwind, I guess, from, you know.

So, Ashish, pricing is, if I look at, as I mentioned, August to September, September to October, I already see a delta of 200 bucks a ton. Minimum.

Right. Yeah, so basically it's price-led, right? Because on coal side... Okay, got it.

Thank you, sir. Thanks so much and best of luck. Thank you. The next question is from the line of Sanyam Changani from J.P. Morgan.

Please go ahead. Hi. Yes, please. I just wanted to ask what is the current limestone capacity for Ultratech and what is the expiry schedule in the next two to five years? How many

No expiry. FY30, there will be a couple of mines which will expire. Our limestone reserves are long-ended. We have more than around 10 billion tons of reserves all over India. We're not really worried about it.

And what kind of bids do we expect to place in the coming years?

coming two years to three years, let's say, for further additions in limestone reserves?

It all depends on where the limestone mine auction is taking place, what is the reserve, what is the market potential, what is our intention of growth in that marketplace. Accordingly, we'll make our bidding strategy. It cannot be done... at this time because the government has also not announced long-term or let's say three-year, four-year plans of mine auctions. They happen on a day-to-day basis.

Okay. Thank you. Thank you. The next question is from Rahul Gupta from Morgan Stanley. Please go ahead. All right. Thank you very much.

Hello? Can't hear you.

Rahul, we can't hear you. If you're in a headset, we request you to use the headset.

Can't hear you at all. Hello, can you hear me? Yeah, there's better. Sorry about it. Thank you for giving me a chance again. You mentioned that 30 million ton capacity would get added to each in this year and next year. And you also mentioned that there have been some delays. I just want to understand, are there structural issues? No, no, I understand that. I'm asking more from the industry perspective. And the reason I ask this question is because if I look at industry outside large players, even normalized profitability levels would make almost impractical to add capacity. So does this mean that you will see accelerated market share gains in even on organic capacity addition basis, or how should we look at the industry dynamics from the next two, three years perspective, given how profitability levels are? Thank you. You ask the question and answer it yourself. What can I say? So let me ask this question differently, sir. Is there a risk that capacity expansion delays may happen structurally for the industry over the next two years? really cannot comment about the capability and ability of competition to execute their expansion. But whatever I knew from ground realities, I told the forum.

Okay, great. Thank you so much.

Thank you. The next question is from Phulkit Patni from Goldman Sachs. Please go ahead.

Most of my questions are answered.

If you could just give a sense for the first 20 days of October, what has been the kind of demand pickup that will be helpful for us to get confidence in third quarter demand number, please. Like several other industries, cement also plays up big time in the third quarter. quartile of the month. The last 10 days is bigger. And as of now, it's not a decline or dramatic improvement. It is steady build-up. Sure, sir. But the last couple of weeks will be impacted by Diwali. So it looks like it will be only post-Diwali. Sorry, I should have mentioned that, that you did that. October month will be a slow month because Diwali is also happening here. Diwali is a Shara, Durga Puja, this Puja, that Puja, all Puja is happening here. So this month will be slow. But which creates a pent-up demand, which creates a backlog.

Sure, sir.

November, December onwards, it should be very buoyant.

Got it. Thank you, sir.

Thanks.

Thank you. The next question is from Jasandeep Singh Janda from Nomura. Please go ahead.

Hello. Hi, sir. Thank you for the opportunity. Sir, most of my questions are answered. Just, you know, one question before that, a clarification. You said that in this quarter, Alta Tech also paid... one-time bonuses over and above the usual bonus that you pay in a second quarter and excluding that, the employee cost would have increased 10% quarter in quarter. Is that understanding right, sir?

Yes.

Okay. And so my question is largely on the Tamil Nadu, you know, line selling options. Has there been any update and so much to do? No update.

Okay. Thank you, sir. Most of my questions are answered. Thank you very much.

Thank you. Thank you very much. We'll take that as the last question. On behalf of Ultratech Cement, that concludes this conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.