Ultratech Cement S/Gdr

Ladies and gentlemen, good day and welcome to the Ultra Tech Summit Limited Q1 FY26 Earnings Conference Call. As a reminder, all participants' 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 touchtone phone. I now hand the conference over to Mr. Atul Daga, Chief Financial Officer of the company. Thank you, and over to you, sir.

Thank you so much, Ayo. Good morning, good afternoon and good evening to everyone and welcome to our Q1 fiscal 26 earnings call. Let me straight away dive into burning issues with demand. We believe that the markets have been steady to say the least. Fundamentally, the government spends on roads continues with announcements of some new projects and push for expediting land acquisitions. The government traffic program has shown a marked improvement in the first two months of this quarter on the low base of April 8, 2014. We are seeing rising state government spends statewide Bihar, Andhra, Gujarat, Maharashtra are doing much better than the other states YOY. The country has already built 2,108 kilometers of highways in the first quarter of the current financial year, marking an 8.9% increase YOY. Mega projects like Vadawan Port, some dams, Maharashtra-Shaktipeet, Shaktipeet Expressway, the 802-kilometre expressway between Maharashtra and South Konkan are starting off. On a full year basis, we believe that the government CAPEX will generate a good growth marked by a low base of 525. This should be, all in all, very good for cement demand. Diving into my focus, our current quarter in the report. Actually, we have got used to double-digit growth till fiscal 24, year after year, quarter after quarter, and anything less seems to be slow. Consolidated ultratech cement has grown at 9.7% YOY, including KSORAM in both the periods, though for all engine purposes, Kesaram cement business got consolidated with us or we started managing the operations effectively from 1st of March 2025 it's been just 4 months but as per the NCLT scheme we have consolidated the financials of Kesaram in the last reported quarter which is April, June 24 also has been recast to include it in our results of Weather gods, as usual, have been generous this quarter, giving the country a relief from the heat waves, but the heat waves caused a lot of turmoil in the initial part of the quarter. The monsoons now having spread across the country will be good for the rural markets. Rural markets continue to be doing this hands-on and we expect them to grow favorably in the future months and future quarters. Urban housing, as per some ITC reports, first half of the calendar has been slow, but the number of deals being signed up, land purchases already registered, and transactions being undertaken clearly speak about a rebound which should be visible in the future quarters in the development market. The redevelopment market remains strong for Mumbai and Pune and we are seeing continuous launches of new projects. These new projects which get launched would see cement consumption commencing only after 12 months to 18 months of their launch. This is very important to mention because Mumbai as a city might be close to 3% of all India's cement demand. One more important point that I want to make at this juncture. We had stated during the last quarter, and this is just anecdotal, we have stated in the last quarter that cement demand in the country was around 4% for January, March 25, and there were talks and reports of the growth being actually 6.5 to 7% from various quarters. Well, I admit I was wrong because Considering the performance of 90% of the installed capacity of 655 million tons in the country, Q4-25 was not 4%, but 4.3% growth. This is just to set the record straight about Ultratech and its analysis of the cement market. I want to talk about India Cements now, the company that we are acquired on, concluded the transaction on 25th of December, 2024, it's been six months or two quarters that we have been in charge of that company and the companies on our recovery path, going and working to the plan. The team has done a full assessment, as mentioned earlier, and we will be undertaking a case plan for efficiency improvement, efficiency and productivity improvement going forward. Most of these projects will have an attractive payback period and will generate positive returns. Projects would include WHRS speed or modification, cooler upgrades, alternate fuel technologies, to name just a few. Today, the cost of production is higher than average, but fiscal 28 will see substantial improvements in operating costs as we complete the KFIX program. We are increasing the renewable energy quotient with 219 megawatts of WHRS and, sorry, 21 megawatts of WHRS and 219 megawatts of renewable energy, thus taking the green power quotient for India's cement from 3% to 86% of their power requirement in fiscal 28, helping us reduce its carbon footprint. The CAPEX program, the details of which we will definitely share in the next quarter, will be all funded with debt and internal accruals and we expect to reach a debt level of under 50 crores by the end of the program. And thus reaching almost a net debt positive, net cash on the balance sheet. Fuel costs, as you have always been tracking, have been in control, which will also help the India Cement, the operations of India Cement. This performance of India Cement, which recorded about operating EBITDA of 400 rupees per ton, was after taking into account the introduction of line zone royalty of 150 rupees per metric ton in the state of Tamil Nadu. we are rapidly integrating the operations of India Cements with that of Ultratech, getting the advantage of brand Ultratech as we move along, and we are confident of reaching an EBITDA per metric turn in excess of thousand rupees by fiscal 20 at all. Yeah. Beyond that, we have already started integrating the, we are nearly, completing the integration of Kesaran assets, which have blended in very smoothly with our operations and are on a course for capacity expansion in terms of capacity utilization and improving their efficiency further with WHRS installation. Costs have had some impact. There were global price volatilities. Fuel costs have been higher. In fact, they went up. Petco prices consumed during the quarter were slightly higher as compared to previous periods, which is reflected in the overall fuel cost. Other than that, there is nothing much that we are concerned about. In conclusion, I would like to reiterate that alphatex cement continues to be well positioned in the Indian cement market. Our strategic investments in new capacities, cost optimization initiatives, and commitment to green technologies position us for continued growth in a competitive environment. We believe our results this quarter demonstrate our ability to adapt to the changing market scenario whilst we deliver on our financial commitments. I'd like to thank all of you for joining us today and look forward to taking your questions now. Thank you so much.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and 1 on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. 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 is from Rahul Gupta from Morgan Stanley. Please go ahead.