Ultratech Cement S/Gdr

ladies and gentlemen good day and welcome to the ultra tech cement limited q4fi 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. 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 touchtone phone. 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, Mr. Daga.

Thank you so much, Michelle. And good evening and a very warm welcome to all of you for this earnings call for quarter four FI25 for AlterTech. It's a maze of numbers which we'll try and help you decipher. I believe the world is redefining its ways of working. The uncertainties around the U.S. tariffs are making people wonder what to do next. I believe investors and industry captains globally must be revisiting their business strategies. But we in cement in India continue our work with a renewed focus on the growth opportunities that are unfolding in the country. To give you a heads up, this year we have ended, the cement industry has ended with a capacity of about 655 million tons, up from 625 million tons. And at Ultratech, out of this 30 million ton of new capacity addition, almost 57% has been added by Ultratech. However, our overall capacity share in the country has gone up from 140 million tons to 184 million tons, an addition of 42.6 million tons under our fold with the two acquisitions that we had done. We believe that this quarter, cement demand overall for the country would have grown around 4%. And in that backdrop, Ultratech has done close to 10% volume growth. Last quarter of fiscal 25 was very eventful for us at Ultratech. After a tedious, long drawn process, we successfully completed the transfer and registration of mines in Telangana and Karnataka for the cement units that we acquired from Kesaram. With effect from 1st of March 2025, we have fully taken charge of these units. After obtaining an unconditional CCI approval, we had started working with these units earlier on, helping them improve their performance. Happy to inform that our efforts have been reflected in their performance in the first month of operating control that we took charge. We started operating these assets from the first of March 25, though as per NCLT approval, the financial performance of KSORAM with effect from 1-4-24 has to be consolidated with the financials of AlterTech. As a result, in the quarter ended March 25, Whilst effectively we were managing the operations from first March 25, the results for the quarter are a mix of performance by old management and the new management. India Cements, we took over the company from the Christmas of December 24. I'm delighted to inform you that the company has achieved an EBITDA break even in the first quarter after the takeover. Second case of sweet success was sales of more than a million metric tons in the month of March by India Cements. With prices improving in the south markets from April, this will only reflect in further improvement in the company's performance. During this year, we target to cross an EBITDA per metric ton of 500. FI27 should be crossing 800 and thereafter a four digit mark. The team has chalked out a key fix plan of about 1500 crores for India Cements out of which 1000 crores towards WHRS and other profit improvement opportunities with a payback period of less than three years. These monies will be spent in fiscal 26 and 27 and the benefits will start reflecting in the performance of the company in the quarter of Jan, March 27. We have also identified brownfield expansion opportunities in the network of India Cements for future. And also that we never have a dull moment. We grab the small opportunity to strengthen our position in the white cement business with the acquisition of cement putty manufacturing facility. This is a small transaction which should get concluded in the next few days. Good things have a cost. Yes, we have leveraged our balance sheet, but are not alarmed at all with the current position. Net debt to EBITDA is what we ended with 1.16x at the end of March 25. With the sales volumes continuously increasing, performance of the company continuously improving, EBITDA profile improving, the debt will start receding rapidly. To tell you about CAPEX plans, we spent about 9,000 crores on our organic CAPEX this year. FI26 also would amount to about 9,000 to 10,000 crores of CAPEX, out of which 7,000 crores is towards strategic investments, the ongoing expansion program, which will take us from the current capacity of 184 million tons. 184 includes India's immense and Kesaram capacities also. From 184 to take us to close to 212 million tons of capacity in India. Yeah, 527, 212 million tons of capacity in India. Cost improvements, we are on course to deliver the overall plan in the three year time window. Last quarter, several questions had been asked and I promised to present to you the annual performance because quarter to quarter measurement might not be meaningful. Since we have disclosed a detailed calculation of the cost improvements, efficiency improvement that we have achieved already. by the end of fiscal 25. This program will continue as promised. We will deliver upwards of 300 rupees per ton in efficiency improvement. As for demand, we are seeing positive movement in government spending. Several new projects have been contemplated which will assist in a steady cement consumption year on year. The beginning of the year is slightly weak because of very heavy heat or high heat that is prevailing, the heat wave that is prevailing in the country which slows down the construction activity in a bit. States like Andhra and Bihar in particular are seeing renewed focus in terms of spending on roads and other infrastructure growth. I believe once this heat subsides, in fact Bihar I understand rains have already come in and temperatures are coming down, we should start seeing improvement in sales performance or volume uptake in all the parts of the country. Urban real estate has shown some signs of slowdown, but this I believe as per experts is only temporary and we will start seeing urban housing demand to go up further. As for costs, Fuel prices, as you're all aware, increased during the early days of the quarter. However, it seems to be in check with the continuous increase in oil output of the U.S. refineries and softening global crude prices. The overall costs of coal, petcoke have not seen too much of movement. We've also seen the various initiatives or various announcements which the U.S. government has made about the tariffs which are having an indirect impact on ocean freight also. But we'll have to wait and watch on how things settle down and how the costs behave. As for prices, the quarter and the current month saw some improvement in prices, but I'm sure you are all very aware of how things are moving, and you have more information around that. To conclude, this quarter, our organic capacities, if I were to measure like for like, we did an EBITDA per ton of 1270 per ton. With the performance of Kesoram added for full quarter, January, February, March 25, This 1270 drops down to 1238 per metric ton. I think the going is good. The capacity utilization that we achieved was 79% on an effective capacity available for the year of 150 million tons. Mind you, the effective capacity is important to know why it's our year-ending capacity was significantly higher the effective available capacity weeds out the impact of non-availability of capacity through the 12 months. New capacity that were added have already given us a head start. This 150 million tons becomes about 158 million tons of capacity available. And further to that, the 25 million tons of the acquisitions, that is what makes up our available capacity to take advantage of the growth opportunities that will be available in the country. Thank you, and over to you for questions.

Thank you very much, sir. We will now begin with the question and answer session. Anyone who wishes to ask questions may press star and one on their touch-tone phone. If you wish to withdraw yourself from the question queue, you may press star and two. participants are requested to use only 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 Pratik Kumar from Jefferies. Please go ahead.