Ultratech Cement S/Gdr

Ladies and gentlemen, good day and welcome to the Ultratech Cement Limited Q1 FY27 earnings conference call. 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. I now hand the conference over to our CFO, Mr. Atul Daga, Thank you, and over to you, sir.

Thank you, Reo. Good afternoon, ladies and gentlemen, and a very warm welcome to this earnings call. The one big theme for us, quarter after quarter, is demand. If the demand is good, everything falls in line, and I'm delighted to report that the first quarter of fiscal 27 has reaffirmed that conviction emphatically. The quarter began with the shadows of West Asia conflict, ended with a de-escalation, and now we know where we are. The situation is still fluid. But with a double-digit volume growth and a demand pipeline across infrastructure, housing, and urban real estate, it is as rich as it can be. Altisync has kicked off fiscal 2017 with a very strong capacity base ready to serve the country and we intend to grow like a challenger and not an incumbent. India's macroeconomic engines continue to demonstrate remarkable resilience. Even as global energy market endured one of the most disruptive supply cycles, India's domestic consumption and investment flywheel kept turning. Indian government is managing and planning its strategies supporting the industry at large in the country. Benchmark lending rates have remained attractive, improving housing affordability and lowering the cost of capital for infrastructure developers like us. There are near-term data points we watch very candidly. Core sector growth slowing down in the month of May Lower coal and refinery output and aggregate state capex in April-May growing a modest 2% year-on-year. These are, I believe, timing effect and not any change in trends. To give you a perspective of what is being announced and executed across the country, because that is tomorrow's cement demand, The first and foremost, if I were to call out, Maharashtra is planning a core 20,000 crore greenfield shipbuilding cluster anchored around Mazagon Dock. Orissa has announced a deep-sea port at a place called Ganjam shipbuilding cluster at Paradeep with investment of over 50,000 crores. Tamil Nadu has signed 18,000 crores MOU for data centers and shipbuilding projects, ports, shipyards, data centers are among the most cement-intensive asset classes in the economy. The cabinet has approved 20,000 crore plus Ahmedabad-Dholera semi-high-speed rail corridor. Metro programs continue to expand across Ahmedabad, Bangalore, Mumbai, Pune, and Uttar Pradesh. There is additional 30,000 crore infusion into NIF with private capital across roads, ports and urban infrastructure. India's capric revival is also being propelled by power and data centers, both concrete hungry sectors. Housing and urban real estate, roughly 55 to 60% of India's cement consumption, has a very strong start to calendar 26. Mumbai, the heart of construction activity in India, The property registrations grew about 6%. Across India's top eight cities, the quarter one 2026 saw a very big growth in the number of units sold as per the data available from registry records. Prices have remained strong for the real estate market, which means it's a structurally mature end user driven market, where the adoption is keeping pace with supply. Bangalore, stood out on the strength of GCC and technology sector employment. Redevelopment space is equally significant for cement industry. Mumbai's slum rehabilitation authorities had to redevelop about 850 acres of land. Developers are still land banking aggressively. Private sector real estate companies continue to acquire land parcels in various cities across the country. Commercial real estate is not getting left behind. India's graded office market opened up with a very strong first quarter I understand. Net-net, premium housing, redevelopment, office towers, hotels, this is urban India building upwards and outwards simultaneously and every square foot of it is built on cement. That gives us the confidence for cement demand growth. Let me now turn to our own scorecard. Q1 was the highest ever first quarter performance for Ultratech across volumes, revenues, EBITDA, and profit. In volumes, you'll see in our presentation, we grew about 13.1% in volume terms for the domestic markets. Capacity utilization was stronger at 81% as compared to 76%. EBITDA, 5,146 crores. and pad of 2604 crores which was up 17.2% over the last year same period. Interestingly and very proud to tell you, we have converted the Kesoram and India Cement brands to 100% Ultratech. They were operating in B or C category space. We did not vacate that space. Post brand conversion, the true performance of Ultratech is visible In fact, if you look at the brand growth, the brand has grown 21% over the same period last year. Our team has been successful in converting the customers who were buying a B or C category brand of cement into an A category brand of cement, willing to pay a price premium. Our domestic gray cement volumes growth of 13.1%. I believe will be well ahead of industry's growth, translating directly into market share gains. Capacity utilization of 81% in a seasonally transitioning quarter on an enlarged 200 million ton base speaks to the depth of our demand pipeline. This is the most important feature of Ultratech, the power of our brand. Revenues grew 16%, EBITDA rose 12%, and ever highest, you know, 5,000 crore plus EBITDA for April-June quarter. Profits were about 17%. Operating EBITDA per ton has been steady above 1,200 this quarter as well. I want you to appreciate the stability that it represents. We have absorbed and are absorbing the sharpest imported fuel cost shock in recent memory during the quarter. on a volume base enlarged by acquired assets that are still ramping up to system profitability. And we held per turn earnings essentially flat while growing absolute EBITDA 12%. That is cost discipline and operating leverage working exactly as designed. We hope that fuel prices will normalize in the near future. The acquired assets improvement, improvement CAPEX-led cash flows through the P&L over fiscal 27 and 28, which will result in the per ton EBITDA trajectory only moving in one way in a sustainable direction upwards. The discussion will not be complete if we don't talk about prices. Cement prices have been constructive during the last quarter, the quarter in the report. Our All India Exit prices improved through June even as the monsoon now sets in. East and South led price improvements. Central and West were steady and North was more or less a consistent performer. Industry expects prices to hold broadly steady through the monsoon quarter due to the impact of increase in costs which frankly is a constructive outcome for this time of year. with cost escalations of the past two quarters still to be fully passed through and demand momentum of the kind we are witnessing, we see a supportive price environment as a busy season approaches. Our premiumization engine and blended cement in the trade mix continues to do quite a compounding work on blended realizations regardless of headline price movements. This is why our retail focus matters so deeply to us. The retail market is built around the individual customer, IHP, the person who decides what their house will be built with. For that customer, a home is a once in a lifetime investment, representing a large part of their life's wealth. Hence, I believe cement is not just a commodity purchase. The customer does not shop for the cheapest bag, They reach for the brand they trust, the quality they can stake their family's future on. That is the premium and that is why it endures. As India urbanizes, last data I have is about 35% of India is urban. We will reach about 39% by 2030. This compares to In countries like Indonesia, which are already 59% urbanized, there's a long way to go for construction, development, and urbanization. We should quickly touch upon the West Asia crisis. Q127 opened with the most destructive situation, the state of Hormuz effectively closed. Nobody knew what state of, at least I did not know what state of Hormuz was before the war. crude cross $100 and our coal cost hit the roof. Things are still uncertain, but we are focused on achieving our targets. Through the crisis, our structural buffers did their job pretty well. Structural buffers, what I mean is our green power of about 1.897 megawatts met about 47% of our total power requirements at the end of this quarter. For the quarter it was a lower number but we have exited the quarter with 47% of our power being met by renewable sources which are cheaper also. We continue to ramp up our AIFR substitution and cement lead distance for this quarter has come down to 360 kilometers. We absorb the shock better than any pair and we will harvest the relief faster than any pair. Permit me briefly to be slightly modest because the data that I want to talk about clearly shows Ultratex power. Ultratex volume and profitability trajectory over the past few quarters have consistently outpaced the industry. June 2022 quarter, AlterTech grew 17.7% in volume terms, EBITDA of 1230, whereas rest of the industry, cement industry grew about 15.5% and 800 EBITDA per ton. The numbers continued like this, June 23, 20% volume growth and 15.4% volume growth for rest of the industry. Our EBITDA was higher by 25%. June 24, 6.5% volume growth and rest of the industry de-grew. Our EBITDA was 26% higher. June 25 and September 25, we had a bit of a shock in our volumes where we de-grew, but we came back with a bang December 25 quarter we grew 15% industry growing less than half our growth. March 26 we grew 9% industry growing again less than half our growth. June 26 we have grown 13% wait for the results to come out for us of the industry and we know where the market share gains are. Capix is something which is at the heart of our growth story. Pistol 26 we completed the year with about 9,500 crores deployed on the Capix program. This journey will continue in April 26 or in this quarter around 12 million tons of new capacity has got commissioned in the country out of which 8.7 million tons is by Ultratech. Shahjampur 2.7, Vishakapatnam, Patratu, which is Jharkhand. Jharkhand tweaking our domestic capacity to 200.1 million tons and total capacity to 205.5 million tons. Projects under execution for capacity growth are backed by a capex of about 17,000 crores in the next two, two and a half years. will take our consolidated capacity beyond 242 million tons with gray cement capacity to reach 212.7 million tons by the end of fiscal 27 and further balance to be completed in the next year. Every ton of committed expansion at Ultratech is fully backed by secured limestone. There is no raw material constraint anywhere on this growth trajectory. Alongside capacity, we continue to invest in structural cost advantages. Green power, which now stands at 1.897, close to two gigawatts of renewable green power. Out of this, 71 megawatts was of renewables and 19 megawatt of WSRS was commissioned in this quarter. We believe we will reach anywhere between two and a half to three gigawatts very shortly. All these growths, capexes, the cost improvement initiatives are all being funded with internal accruals. We have started the year with a net debt EBITDA of 0.94 and the quarter we have ended with 0.87x net debt to EBITDA. Our belief is and we are confident that this year also will end in net EBITDA below 1x. The call will not be complete if I don't speak about India Cements. What a turnaround story it has been for us. There has been small murmur around the revenue numbers. Let me clarify. While the printed number speaks about 1013 crores of revenues, as compared to 1,021 crores of revenue same period last year, but there's an accounting adjustment because if you look at net of freight cost, since we have started the reporting ex-factory sales from Q1 27, knocking off the freight costs, the revenues were 993 crores as compared to 821 crores on a like for like basis, which is a 21% growth in revenues. backed by a 19% growth in their volumes. This is a clear illustration of a principle this management, Ultratex management's whole secret. We deliver what we commit. When we acquired ICL, we told you it was a turnaround waiting to be unlocked. Found assets in strong markets, held back only by years of underinvestment and subscale operating discipline. One year in, That turnaround is no longer a promise on the slide. It is a trajectory you can read in the numbers. The improvement has been sequential and unbroken. India Cements EBITDA per tonne has climbed from roughly 386 per tonne in Q226 to 400 to 509 and 603 this quarter. Gain which is quarter after quarter exactly as we said it would be. and every lever behind that number is one we own. Brand migration to Altertech is 100% complete. Premium and trade volumes are rising. Cost improvement capex of about 2000 crores is being deployed into waste heat recovery, preheater upgradation, cooler upgradation, et cetera. And the step change in the green power trajectory from around 3% of their power requirements to about 86% of their power requirements by the end of fiscal 28. You should also notice the rapid improvement in conversion ratio for India Cements. Today we are already at 1.5x conversion ratio for India Cement production also. Q2 fiscal 27 may look optically softer as the seasonal monsoon slowdown and the cost effects of West Asia disruption way on the quarter. But I would like you to look through that noise. The direction of travel is unmistakable and the destination is unchanged. An EBITDA of 1000 per ton for India Cement remains very much in sight with the full benefit of the CAPEX program flowing through the P&L from Q4 fiscal 28.

Tables and Wires

The project is on schedule, on budget. We had approved an investment program of 1800 crores. Till the last quarter, 888 crores has been spent or committed. Channel partners onboarding is rapidly moving at a frantic pace. Fertility setup is complete. Trial runs have commenced. Key regulatory approvals are in place. Leadership team is on board. SAP systems ERP systems are in place CRM will be live and is under testing and will be live before the launch we reaffirm commissioning and product launch in Q3 fiscal 27 October December 26th quarter precisely as committed to you when we announce this investment and we are not spending we will be within our CAPEX program which we had announced earlier Let me close where I began. Demand is strong and broadening. Fuel cost, storm is a yo-yo. We have to keep an eye on and wait through it. The West Asia crisis, I don't know when it will end. Our acquired assets are turning from integration effort into earning engines. Our growth to 240 million tons is funded and under construction. and this year we launched a new growth business in terms of cables and wires. We said we would come, we will cross 100 million times, we did a year early. We said we would complete brand migration of India Cement and Case Alarm, we did a quarter early. We said cables and wires would launch in QC fiscal 27 and it will. That consistency of delivery, quarter after quarter, is our foundation and commitment. We remain very confident of a very bright future for the next quarter, the quarter after that, and the quarter after that. Thank you for your continued trust in Altratech. And with that, I hand over the call for questions.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, they 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 Amit Muraka from Axis Capital. Please go ahead.

Hi, thanks for the opportunity. Congratulations on a great result. My question is now on capital allocation. Actually, you seem to be well on track to exceed 20,000 crores OCS maybe next year. And you mentioned that the CAPEX plan is like 17,000 crores over the next two, two and a half years. How do you think this growing cash flow will get utilized across dividend cement CAPEX and is there any plan to scale up the cables and wires building material CAPEX further?

Amit, as of now we are fully booked in terms of our cash flows. All the operating cash flows will get plowed back into growth and beyond that also there is dividends for shareholders. As of now, I don't foresee any requirement for further investment in cables and wires. They will now first mature and milk the investment that they have done. To get capital allocation to conclude, remains very committed to cement and shareholders.

Sure, sure, thank you. And just a second question on GSMN, so I believe most of the targets you had in mind when you acquired the business is now nearing completion. Just wanted to understand, like, what are the steps that remain before you contemplate, let's say, merging the business into a standalone entity itself?

There is a CapEx program underway, which we mentioned has to get completed. there are some non-core assets in terms of land which we need to dispose of which before so Q4 28 or maybe a quarter earlier we expect to complete our journey so there's a lot of work still happening when we look at operating parameter there are certain operating parameters which we still need to bring under control or in line with Ultratech's standalone performance.

Thank you. And this fair to assume this time is not reporting the standalone volumes in the presentation of press release, so fair to assume that the entire volume that is mentioned over there is basically standalone in terms of grey cement?

Yes, as in India Cement. Next question is from Rahul Gupta from Morgan Stanley.

Please go ahead.

Hi, thank you for taking my question. So a couple of questions. One, you have talked about you growing faster than industry over the past few years.

Now, not just in volumes, you have been outperforming

on cement pricing as well. Now, if we look at other large players, they are able to either prioritize volumes or they prioritize pricing.

But in your case, despite your base, you have been gaining share on both sides. Can you please help us understand what is working for you and not for others? That's my first question. Thank you.

Thank you, Rahul. I think you already spoke for us. You gave the answer. But nonetheless, how should I begin? Let me, I think Ultratech is a brand that customers trust. Decades of consistent delivery, bag after bag, site after site, which has made Ultratech synonymous with reliability. Quality that we swear by. Every ton that goes out has to meet our quality standards. It's not that there are no complaints. If there are complaints, product complaints, they have to get resolved ASAP. Our complete network of plants, whether it's integrated plant, grinding plant, grinding units, or bioterminals, everything is focused on meeting the customer's requirements. At Ajit Kapila Group and as much as at, same as at Ultratech, the legacy of governance and ethical conduct is at its highest pecking order. Dealers, institutional buyers, they know when they're dealing with Ultratech, that certainly is assurance for them and it requires and commands a premium. We are able to meet our customers' requirements wherever we are present with today almost 76 operating facilities. 76 operating facilities spread across the country. We are within the reach of a customer with a network of over or nearly 2,000 warehouses, Neeraj? Two and a half thousand? 2000 plus minus warehouses 150,000 channel partners across the country are dedicated transporters almost 50% plus of our transport service providers are dedicated to ultra tech all these things put together bring forward a power which is very unique to Ultratech. I don't know whether, I think Rahul it can be a commentary or a story which I can tell you over a cup of coffee which might extend for a couple of hours but my story will not be complete. But Ultratech today is in a position with more than what 16,000 employees across the country. And the network that I spoke about, our RMC plant network which has been rapidly growing 477 RMC plants, 5,000 plus UBS stores which are dedicated dealers, if I can call them, dedicated outlets for Altertech Cement besides any other building material clearly brings out a respect for Ultratech as a brand which nobody else can come any close to.

Got it. That's reassuring. Thank you so much. My second question is partly data keeping.

The last quarter you mentioned that around 20 rupees per ton impact came in from the West Asia crisis. What would be that number for this quarter? And I know things are still volatile, but any guidance for the next quarter that may come up in terms of cost? Thank you so much.

Yeah, so next quarter which is July-September quarter will have a full impact of the war because we'll have all costs coming to our head from 1st of July plus monsoons and monsoons are doing alright if not too bad but I know there are some pockets in the country which are staring at a very dry spell. But generally, if monsoons are doing all right, maintenance, we would have a large number of kilns undergoing maintenance. So maintenance costs will be there. Fuel is expensive. We have stocked up. But the cost of fuel will go up. I would expect the cost to go up by 130 to 140 rupees per ton. all put together. I can't associate one line item with war and other with something else but all put together we should be going up around 130-140 per tonne.

Got it and what would be one-off cost inflation in the first quarter?

In the first quarter was fuel cost largely. and packing bags. Why am I forgetting packing bags? Packing bags was the biggest cost impact and fuel.

Any way that you can quantify what that number would be overall?

Fuel cost if you look at it's given in the presentation from $874 it went to $915 per ton which is a 5% increase

40 Rupees per ton.

That's a yeah 25-40 Rupees per ton was increased in fuel cost alone. Packing bags was quarter basis but we had seen packing bags from an average cost of 9 Rupees plus minus going up to 14-15 Rupees also before settling down somewhere around 10 Rupees a bag so you still see an average increase from 9 rupees per bag to 12 rupees per bag average for the quarter. These two elements, so 40 bucks was on fuel and 20 bucks on give or take on bags.

Thank you so much and wish you all the best.

Thank you. Thank you. The next question is from Indrajit Agarwal from CLSA. Please go ahead.

Hi. Thanks for the chance and congratulations on a good set of numbers. I have two questions. My first question has two parts on demand. Part of the part of the demand has been helped by a dryer weather particularly in the month of June. Do you think that impacts demand negatively in second half particularly in rural areas?

There are still some dry states as I was speaking today. For example, I was speaking to somebody in the morning. Rajasthan is going through a very dry patch right now. So that demand impact will be felt next year because they will have water crisis. The usual slowdown in monsoon quarters, June was, of course, as you said, dry, but July onwards, we have started seeing wet spells across various parts of the country. Good thing is that, barring one or two states, every state has experienced rains, so it's not that bad, but it's still the first month of monsoons, we'll have to wait for August and September to tell us how the weather progresses and what is the impact of the dry stroke red spell.

And second part of the same question, do you see a step change in demand in east which has been so far east in the past?

Yes, yes, very much. Multiple states which have gone through elections, the land reforms which is about to, Cement Cement Cement Cement Cement Cement Cement Cement Cement Cement Cement Cement Cement Cement Cement Cement Cement Cement Cement Cement Cement Cement Cement Cement Cement Cement Cement Cement Cement No, pet coke is now expensive, no? Pet coke has become more expensive in energy terms than coal. So, yeah, coal becomes more attractive to buy. Domestic coal becomes more attractive to buy.

Sure. And lastly, the 130 to 145 ton impact that you mentioned, does it also improve the impact of operating deal of rates given that 2Q is generally low volume water?

Yeah, all in I am looking at. Maintenance costs, operating deleverage if you want to call it, fuel costs, packing back luckily is not moving haywire. So, it's a usual July-September quarter impact. We cannot really say it's happening because of the war. Let's be honest with ourselves. It's a usual July-September quarter.

Yeah, because the quantum looks much lower than the seasonality. So congratulations on that as well. Thank you.

That's for you, my friend. Thank you.

Thank you. Thank you.

Thank you. The next question is from Prateek Kumar from Jeffery. Please go ahead.

Hi, good afternoon sir. My first question is on, can you revisit your cost saving numbers?

I think the last quarter, for the next two years, we had like talking about first of 200.

How do you see that number? What I had said also, instead of looking at it quarter by quarter, we should look at it on an annual basis because This quarter I'll show you something and I'll have to show a negative performance in July-September quarter. Lead distance has come down further from 316... So, 7 kilometers of lead has come down. If you analyze it at least 2.5 to 3 rupees per ton per kilometer, that's a saving which is visible up front. The... What is it? conversion clinker conversion has improved to 1.5 that's a small improvement other than that I think we would want to call the number power consumption has gone down which is visible in my presentation power rate has gone down because of our power mix changes which is visible in our presentation but at the end of the year we will give a comprehensive number that will make more sense to do a comparison

Sure, thank you. And on more impact on cost curve, so it was like expected that the impact of cost would be, and you also I think presented in a slide like last time, for the 250 to maybe a high number. So including this 130, 140 cost impact next quarter, all of it is in the cost now by the end of 2Q for the company.

So I think what I talked about 250 would be Expecting for the industry generally was not a very thorough number, but as I mentioned now, from where we are, we might see 130 to 140, now I'm thinking about Alta Tech, 130 to 140 rupees further increase in cost, and we would trigger measures to absorb these costs. So we'll see what we can achieve. Cost increases could be anywhere between 130 to 140 per ton in the July-September quarter and I cannot alienate what is because of war and what is the normal maintenance quarter.

Last question on your capacity utilization of 81%. Can we like split it region wise and you said East region is intersecting but any specific demand trend on regional basis?

One second. So, if I look at my, is this the growth number? So, yeah, 3.1% growth that we talk about. East was the slowest in April-June quarter, partly because of the elections, labor availability. Central was the highest, growing above 15%. South and North were shade below 15%. West and Central were above 15%.

Sure, thank you. I'll get back to you.

Thanks, Pradeek.

Thank you. The next question is from Siddharth Merotra from Kotak Securities. Please go ahead.

Thank you for the opportunity and congratulations on a good set up on this thing. Given the backdrop in which we are now almost 20% of the overall market and we seem to put no foot wrong, just wanted to know what do you think are the top three challenges for a company from a Pfizer horizon?

Oh, the challenge? I'm trying to think. I will think and come back in the queue. So I really don't know. I'm not being hoity-toity over here, but the biggest challenge for the industry and for us would be if demand slows down, which I don't foresee happening. So from that point of view, I think we are in a very good situation where we have 200 million tons of capacity operating at, utilized at 81% this quarter, 200 going to 240, and further, there will be growth further, very soon we'll come back with our growth plans. As long as, I think fundamentally we believe as long as demand is there, everything else is immaterial. And as I mentioned, The urbanization factor, which is 35% in India, might reach about 39% by 2030, which is still way below as compared to most of the other markets. So if something were to happen structurally to demand growth and currently People are not buying houses and industrialization is not happening. Data centers start vanishing from India and being done in Pakistan or anywhere else. That could be an issue which I don't think is gonna happen. So demand remains strong. The challenge will be that we don't have capacity. We have to expand.

I don't know what kind of vehicle you drive petrol or diesel

and you didn't pay any higher price for fuel but industry, industrial diesel went up almost 50% from Rs.100 per liter to Rs.157 is what it had peaked at, right? It peaked at Rs.150.

Rs.150. It was Rs.78 to Rs.80.

Oh, from Rs.78 to Rs.80, my colleagues correct me, from Rs.78 to Rs.80 pre-war, it went up to Rs.150 during the war period. They have They had reduced it, but now I believe again prices are going up. So again, it's an upward movement. So this diesel is a very big component and limestone raising cost which impacted our raw material costs.

Understood. So this is essentially industrial diesel which is being used.

Yes, industrial diesel.

Just for one last question, is there any guidance or projections or any aspirations we have say for example in the wires and cable segment which is about to come online next quarter?

Sky is the limit so we don't give any guidance. So we would like to be profitable, grounded and grow with the market.

Thank you.

Thank you.

Thank you. Before we take the next question, a request to participants, so please limit your questions to two per participant. The next question is from Raghav Maheshwari from Equus Securities. Please go ahead.

Congratulations, sirs, on the excellent results. Sir, just one thing I want to understand. As you mentioned in your opening remarks about brand power and premiumization, my question is regarding that how do you see Indian cement industry as a brand product play versus right now just going into the market as a commodity product play? And what is your view on a brand power role in the trade market today and its importance evolving over the medium to long term? Thanks, Raghav.

I think India is a retail market. From any wise stretch of imagination, if you look at the urbanization level in the country, the demand potential that exists, the RMC mix in the country, RMC as a percentage of overall business might not be more than 20%. That clearly says that where is the remaining cement getting sold? It's in the retail market. So as long as cement or India is a retail market for cement, it will remain a branded cement play is my view, my personal opinion. And there is enough data available for you. As I told you, RMC for us, it's about 3.5%. 3.5% of our sale is RMC. Our institutional customers would be 35% or thereabouts. give or take 67, 65 to 66% would be retail. If I marry this data points to India as a whole, as the demography of India, the spending habits of India, if you look at the number of cities which are more than a million population, today we have 50 something cities which will reach to 71 cities by 2030 sorry 63 today 63 cities today which will reach about 71 cities by 2030 the point is there is a huge amount of urbanization required if you look at cities with vertical housing there are not too many you can count them on your fingertips and now India Indian housing is verticalizing, where corporate real estate is happening, but large part of the country remains to be individual home builder. As long as India is an individual home builder market, it's a retail market, and that's where the retail markets bring the requirement of brand. Very unique market, India. Not just cement. Steel is also branded. there are several other commodities which if you step outside India and you know look at those those are commodities but India for example TMT my colleague is selling me TMT rebar Tata have a steel which is a branded product JSW has a retail brand on steel paints in India is a big brand cement because it's a retail market Why are they banned? Because it's a retail market and that's where cement also is in the same story. So India is a retail market and that's where brand play comes into picture and I believe given the timeline that we look at, at least, I don't know, very long number of years before India is fully urbanized. So till then you will have a brand play. I hope I have answered your question.

There is a fair understanding that till the market level we will not achieve almost 70% 80% sales of cements via RMC or for the key customers till the brand power will remain in the key focus, right?

Yes, and if I were to correlate this with Ultratech out of our total sale of 40 million tons or Last year, total sales of 145 million tons, 3.5% was RMC sales. This is in spite of the fact that we have the largest number of RMC plants in the country. We have today 477 plants. So RMC will be a surrogate. You go to any other market, you step to the neighboring UAE, where RMC is the biggest customer for cement, and there we don't have a brand play. As long as India is still very in its nascent stages in RMC, India will remain a branded cement play. Thank you all the best.

Thank you.

Thank you. The next question is from Rashi from Citigroup. Please go ahead.

Thank you. My first question is on pricing. mentioned that the June exit prices were higher in the South and the East. So you're expecting like the overall monsoon quarter to average slightly higher than the prior quarter or that is?

Expecting higher is definitely everybody's desire. We will attempt it. We'll see where we land.

Okay, understood. Then, industry volume growth would be how much during this quarter?

Too early, but anywhere between 7-8%. We want to see some more results, but our marketing intel says it should be around 7-8%.

And on the capital expenditure, the bulk of your expansion is getting concluded in FY28. So beyond that, is there anything on the drawing board yet organic or is it going to be inorganic if the role opportunities come up?

So inorganic, obviously if there are opportunities, we will examine them. And we have, our team has already got onto the drawing board to take us beyond 240. Once the plans are ready, we will come back with absolute micro details.

Got it. And just one last question for me. The blended coal cost was how much during the quarter and how much is it now?

Coal... Coal cost?

Fuel cost is... 9.5, right?

1.9. 1.9, yeah. That you are asking was 1.9.

On a coal cost basis, like on a dollar basis, you have... 134.

$134 per ton. And where are we at now? It would be around 2 rupees per kcal. Yeah, 2 rupees per kcal. Got it.

Okay, thank you.

Next quarter, current quarter, yeah.

Okay, thank you.

And Arashi, 2 rupees, I think we won't go beyond that because they are fully inventory loaded. Got it.

Okay, thank you. Thanks, Arshi.

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

Sir, thank you for taking my question. Sir, my first question is more a clarification to the question Indrajit had asked. Typically, between first and second quarter, just because of negative operating leverage, you have about a 200 rupees increase in cost per ton. Cement Cement Cement Cement Cement Cement Cement

so whatever volumes we sell will be significantly higher than earlier periods which will give us still some advantage but still it's a lot I mean so it will be 200 decline plus the increase in fuel cost so that should be in the range of 320-330 overall right is that no no no I am looking at not 200 decline I am looking at 149 in terms of my 130 to 140 decline because of costs.

Okay, okay, maybe I'll take it offline just to understand a little better. My second question is on the on the river linking.

One second, one second. What I was talking about is from the previous quarter.

Sequentially.

Sequentially, yeah, yeah. I was not commenting on YOY because I think nobody looks at YOY these days.

No, no, absolutely. My question was also only sequentially. Okay, okay. But I'll need to get the better understanding. So my second question is on river linking. You mentioned Ken Betwa, which is the first project which is underway. Just to understand, is river linking a very cement intensive project? Because there could be more coming in India in the next few years. So just wanted to get a broad understanding of how cement intensive, similar to a hydropower plant would it be?

Well, I don't have a comparison with hydropower plants, but riverbanks have to be done, tilting has to be done, and I don't know whether dams are required or not required but river banks have to be built which is concrete. And with the river banks being built you have concrete structures on the either sides as well. So we expect it to be very cement happy situation. But our import I forgot to mention I should have mentioned how I think multiple packages have already been awarded which means that that work will also commence for the country. So, lot of positivity.

Absolutely. No, thank you. Thank you so much.

Thanks, Pulkit. Thank you.

The next question is from Ashish Jain from Macquarie, India. Please go ahead.

Hello. Hi, sir. Good afternoon. Sir, my first question is on dividend. How should we think about dividend because last year what we paid had a one-off. Should we think it is more per share basis or you know as a percentage of profits? How should we think about it?

Percentage of profits that's the way our board is looking at it.

But X of one-off is the most sustainable one to three.

I'm sorry?

X of the one-off that we paid like the hundred special that we paid there.

To call it special, be happy with it, but I am expecting good dividends. I am holding my stock.

Secondly, in terms of pricing, let's say in the short term, which is Q2, I understand pricing, we are hoping it to be resilient, but is there something for us to believe is a more structural change and shift on profitability focus at least for us and hope that even if the input cost goes down in the later part, pricing and margins should structurally remain higher or there could be a focus shift to market share much faster with all the capacities that we are adding.

I don't know, you went too long. I've lost track of what you were saying. Can you repeat?

Sir, so what I am saying is near term the cost inflation will support pricing is the hope or expectation at least that we have but in the later part but in the later part if input cost goes down is will should we think that pricing will be at risk or you know given I feel I feel Ashish prices move with demand

If demand is strong, all India basis, then prices can go up. And if cost curve comes down, then obviously not necessary to prices to reduce.

Okay. Okay.

Thanks a lot.

Thank you.

Thank you. The next question is from from HSBC. Please go ahead.

Thank you sir. Two questions. If I look at the grey cement volume growth, in the fourth quarter it was 9.3% year-on-year, in the first quarter is 13.1%. So clearly the market is increasing up. If the industry environment remains as it is, can we expect double-digit volume growth for grey cements for the company?

Yes, we are targeting double-digit volume growth this year.

Okay, and what will you attribute to this acceleration in market share gains quarter on quarter?

We spoke about it. I think the fundamentals of our brand are very strong. Our distribution network, our reach to the market, our people, our quality, the brand which people trust, everything adds up to, you know, I mentioned about the whatever category you might want to call the old India Cement and Kesaram brands, they were certainly not A category brands. From their own B or C category markets, we have not lost a market share. What does it mean that we have converted that market who, the customer who was happy buying a BNC category at a particular price point now has got convinced to buy Ultratech at a higher price. That's where our strength lies and that is where the whole growth trajectory is. That is where we are able to do better than the industry.

Sure, thanks. Just on the variable cost, especially packaging and energy, now we understand Q2 will have a delayed flow through of the prices that are prevailing in April and May. But if we take the spot prices of pet coke, of packaging, should we expect second half variable cost to be lowered on a per turn basis versus the first half?

Yes, logically yes. Now war has to go out of the way so that oil subsides and coal and pet coke because ocean freight, my colleague was telling me just today, insurance premiums have gone up to 4-5% for the ocean route as compared to less than 1%. So that is one of the differences which the war is creating. Once the war is out of the way, things should stabilize and H2, hopefully, God willing, should be a better place in terms of costs.

Thank you very much, sir.

Thank you.

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

Hi, sir. Thanks for the opportunity.

Congratulations for good set of numbers. So, three quick questions. Sir, first on buyers and cable, what is the sort of working capital days that we are looking at?

Working capital days. So, initially we will have a higher working capital because we have to pile up, ramp up inventories. But going forward and structurally we are working on We are working on financing our suppliers on cables and wires which should release working capital so excuse me for having a higher working capital for the next six months after which we start stabilizing and coming down to 30 days plus minus of working capital. I don't have a number readily but that's the intent.

Right, but sir specifically on the inventory days, I think again we will be procuring from Indalco given the lead distance is quite low.

4 hours, 4 hours, 4 hours.

Sir, there should be a tangible benefit on the denominator on working capital over here, right?

Yes, yes please. That's what I am saying. So, I don't have a Sir, my second question is we have already commissioned 55% of what we are supposed to commission for the food here.

We are adding almost 45 million tons FI 2728. Would you like to put a certain number say for our capacity addition FI 2728? This is like what percentage of the market? Probably you can qualify it from a capacity share or a market share either of it will help.

I think you will have to work out and give it to you but March 28 we should exit with 235 million tons in India 237 million tons in India we will end 212 million tons March 27th so that's the balance coming up to 25 million tons the next year sir as per your estimates how much is the industry capacity addition in 27-28 we will have to again recalibrate it Ritesh because whatever I hear people are some industry players are wanting to revisit their expansion plans so when we have a firm number there then only I think you would be in a better position to tell me what is the industry growth expected you know my number we will reach at 235 million tons to that number 237 million tons to end of March 28 from 200 and where are we today 200 point something today So, we have 37 million tons coming in 27 and 28.

Perfect. As of this last question, you covered most of the variables. We didn't hear magical 1400 rupees per ton number from you. Would you like to qualify timelines over here?

I have already called it out n number of times with no point in repeating it January, March 28th quarter without any war.

Okay, cool. Thank you. Thank you, sir.

Thank you very much.

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