Orient Cement Limited (ORIENTCEM) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Ambuja Cements Limited Q1 FY '27 Earnings Conference Call hosted by Nomura. [Operator Instructions] Please note that this conference is being recorded. I will now hand the conference over to Mr. Jashandeep Chadha from Nomura for opening remarks. Thank you, and over to you.

Yes. Thank you, everyone. Without much delay, I will transfer the call to Mr. Deepak Balwani, Head of Investor Relations. Mr. Deepak, over to you.

Yes. Thank you, Jashandeep. On behalf of Ambuja Cements, it is my pleasure to welcome all participants to our earnings call for quarter 1 FY '27. Ambuja Cements is the ninth largest cement company globally, a key part of diversified Adani portfolio, the country's fastest-growing portfolio of sustainable businesses. Before we begin, I would like to remind everyone that today's discussion may contain certain forward-looking statements based on our current expectations and assumptions. These statements are subject to various risks and uncertainties, and actual results may vary materially. At Ambuja, we remain committed to enhancing transparency, strengthening disclosures and continuously elevating our capital market communication standards in line with the global best practices. We are pleased to have with us today Mr. Karan Adani, Director; Mr. Vinod Bahety, Chief Executive Officer; and Mr. Rohit Soni, Chief Financial Officer. With that, I would now like to invite Mr. Vinod Bahety to share his perspective on the quarterly performance and the company's strategic outlook.

Thank you, Deepak. Thanks, Jashandeep. Good afternoon, everyone, and thank you for joining us. We have started our financial year '27 with a disciplined and sustainable performance, reflecting the continued execution of our strategy despite a challenging operating environment. The quarter was characterized by stable cement demand supported by infrastructure, housing and construction activity, while profitability across the industry remained under pressure from the higher imported fuel prices, elevated freight cost and geopolitical developments in West Asia. Against this backdrop, Ambuja Cements delivered stronger profitability, improved operating efficiency and continued strategic execution. Our strategy remains clear and consistent, creating sustainable value ahead of volume. We used this as an opportunity to perform scheduled maintenance for almost 12% of our kilns, absorbing additional cost of INR 50 per metric ton this quarter, while we built up clinker inventory of 1 month and coal inventory of around 3 months, giving us a competitive edge in second quarter. We continue to execute against these 4 strategic priorities that will define the next phase of our growth. First, profitable growth. Our focus remains firmly on value creation. We continue to improve the quality of our revenue through a higher share of trade sales, including premiumization, discipline in pricing, market-specific commercial strategies. Trade sales has actually improved from 74% to now 78% of our overall sales. Our premium strategy continued to gain traction with premium products comprising 34% of our trade sales. Cluster-wise, if I were to highlight, north continued with its leadership in terms of giving highest EBITDA in my books. We grew 2% of our trade volumes Y-o-Y in north, while we had a much sharper reduction in the lower margin non-trade volumes. Central cluster, it remained a stronger market for us with higher proportion of premium cement, enabling higher EBITDA margins, and we improved our share of blended cement in this cluster. So far as West is concerned, it's well balanced between trade and non-trade since the key markets of Mumbai, Gujarat are stronger on higher margins of non-trade volumes. We have grown positively, both in terms of trade as well as non-trade in West. East is concerned, we have sustained on the trade volumes, and we maintained healthy EBITDA margins. So far as South is concerned, we have consciously reduced our lower margin volumes, while we continue to increase our channel network and focus on trade volumes as we move on the coming quarters. In all, we have a 2% negative Y-o-Y growth on the trade and a 21% Y-o-Y negative growth on non-trade. The second on the track -- in terms of our core strategic priorities, I would highlight is the structural cost leadership. Operational excellence continues to strengthen our competitive advantage. During the quarter, our clinker factor improved by 3% from 67% to now 64%, while share of blended cement increased 85%, improving both profitability and sustainability. Net operating cost reduced to INR 4,241 per metric ton, a reduction of INR 206 PMT from the previous quarter. Thus, it puts us firmly in terms of our guidance to achieve INR 4,250 per ton for this financial year. Importantly, these gains were achieved despite the inflationary pressures. Productivity initiatives enabled us to maintain manpower cost at INR 222 PMT, while optimization of our manufacturing footprint reduced the primary distance by 20 kilometers, lowering our logistics cost by another INR 10 per metric ton. Across the value chain, we continue to build structural advantages through raw material optimization, higher renewable energy utilization, better use of domestic fuel, enhanced capacity, enhanced captive core integration, improved kiln efficiency, logistics optimization and expanded rail infra. Our RE power capacity is now at 973 megawatts, up almost 500 megawatts over past 1 year. WHRS capacity stands at 228 megawatts and this has helped us to reduce our unit of power cost from INR 5.9 per kWh to almost INR 4.9. So by INR 1 actually, it has come down with this improvement. This is in line with our other guidance. Our cost transformation journey for this year remains firmly on track, as I mentioned earlier, supported by a series of structural efficiency initiatives. One of them, for example, reduction in the lead distance, we are expecting another 15 kilometers, which will deliver additional INR 35 per ton of savings. Raw material logistics optimize through greater use of the BCFC rates and the fly-ash sorting initiatives is expected to contribute additional INR 30 per ton. On the energy front, increased RE power consumption backed by commissioning of additional 75 megawatt of the new green power capacity, along with the targeted reduction of the heat consumption, which on a conservative estimate, I consider 5 calories from the existing levels per kg of clinker. And on the power consumption, which will come down by almost 2 to 3 units per ton of cement. This is all expected to generate additional savings of say, INR 50 on these initiatives and the other expenses, for example, there's a headroom of improving it by INR 10 to INR 15. In all, these initiatives are expected to deliver savings of almost INR 130 to INR 150 per ton, providing a strong visibility towards our cost reduction target and enhancing long-term competitiveness. It also mitigates any pressures on cost from the geopolitical tensions. I again reemphasize all these initiatives are fundamentally reshaping our cost curve and reinforce our confidence in achieving total cost of 4 to 50 PMT by end of '27. The third factor in our strategic approach is the disciplined capital allocation. Today, Ambuja has evolved into a 109 million tons of capacity integrated cement platform. Our priority is no longer simply adding the capacity, but it is converting scale into higher productivity, superior profitability and stronger returns on capital. Our expansion program remains firmly on schedule. To highlight, trial runs have already commenced at Dahej, which is the expansion of 1.2 million tons of cement capacity. Salai Banwa in UP has already started with 2.4 million tons of capacity. Bhatinda in Punjab, 1.2 million tons and Jodhpur, which was, if you remember, we had acquired from Penna as an overall company. So this Jodhpur was under construction at that point. It has already also commissioned at 2 million tons of capacity. Kalamboli in Mumbai, basically 1 million tons of expansion that is expected in Q2 and so is Warisaliganj in Bihar 2.4 million tons expected in Q2. Maratha is a clinker line, which we are expecting it to commission next year. These projects will increase our installed capacity to 119 million tons by end of this financial year, and it will also help us to improve on our efficiency and overall costs. At the same time, our focus extends well beyond capacity creation, the debottlenecking, the asset reliability, the operational stabilization and the productivity enhancement remains equally important to maximize the returns from every amount of capital invested. Fourth in the pillar of the strategy, which we are focusing is to build a future-ready enterprise. Technology and sustainability are increasingly becoming enduring competitive differentiators. Importantly, at Ambuja, sustainability is not merely an ESG commitment. It is a driver of innovation, efficiency and long-term shareholder value creation. Let me now briefly summarize our financial performance, revenue of INR 9,500 crores, operating EBITDA of INR 1,589 crores. EBITDA margin which has improved 331 basis points to now 16.7%. EBITDA per ton of INR 931. Net cost reduced by INR 206 per metric ton sequentially. PAT of INR 660 crores and net worth of almost INR 72,000 crores. Looking ahead, trends, India's long-term demand fundamentals remains compelling. Infrastructure development, urbanization, industrialization, logistics investments and housing demand continues to support sustained growth in cement consumption. While near-term demand may remain influenced by monsoon and input cost volatility, our priorities remain unchanged. We remain well positioned to outperform industry growth, expanding installed capacity to 119 million tons with the addition of 10.2 million tons, which I mentioned before. We also target approximately INR 250 per ton of additional cost savings, which I mentioned to INR 450 now by the end of -- for the full year of FY '27 and continuing to improve returns through disciplined execution, premiumization, operational excellence and digital transformation. With industry scale, leading structural cost leadership, disciplined capital allocation and technology-enabled execution and a stronger balance sheet, Ambuja Cement is uniquely positioned to create superior long-term value for all the stakeholders. I thank you again. I will now hand over the call to the moderator.

[Operator Instructions] We take the first question from the line of Navin Sahadeo from ICICI Securities. Please go ahead.

Also congrats on the sequential improvement that we have seen in the profitability. I had 2 questions. One is on volumes. Now volumes, you'll appreciate that yours is the only company to have seen at least so far in the listed entity space, Ambuja is the only company to have lost volumes and you explained trade, there is a decline and a much higher decline in the nontrade. This is in the quest to chase value over volume, which is now very apparent and also mentioned in the PPT. So I wanted to just understand then is it fair then that for full year FY '27, if this strategy maintains, we will have a very muted kind of a volume growth because we'll be focusing more on maximizing value in the backdrop of the previous quarter's guidance that we were chasing around 80 million tons or so.

Thank you, Navin. Thank you very much. I think this question may be also echoing from some of the other analyst fraternity. So let me explain this in more detail. First, I want to assure you all, I think the whole focus on the trade volume, and therefore, this improvement in the percentage of trade volume from 74% to 78% sequentially as you rightly said, has actually given us a good bump in the EBITDA by almost INR 206 a metric ton. Now from here onwards, on back of our brand equity, Ambuja, ACC, with the parent brand Adani Cement, we are riding quite well in terms of the volume growth. As we speak in the month of July, and I would not shy highlighting that we are already seeing an 8% improvement on the trade volumes. And therefore, it gives me a good level of confidence to continue with our estimation and guidance of 8% growth, which we are targeting for this financial year. And therefore, like more the way we focus on value terms, I think in terms of overall revenue, it will commensurate and keep us giving an elbow advantage compared to the competition. It doesn't mean that we are not focusing on the non-trade. We are. And in my commentary, I highlighted that some of the markets of West and a few of say North, which provides a great opportunity on the non-trade, which remains our key focus area. And what we are also doing is many of the markets in Central and East, for example, they are also moving blended cement in the non-trade, which actually becomes an advantage and therefore, has helped us to improve our overall, say, share of blended cement to 85%. So the track is to, one is improve the blended share of sales to the non-trade institutional segment and keep focusing on trade with the brand equity and the excitement which we see now with the channel partners, the dealers, the contractors, the retailers and the whole positive momentum, which is now coming in. I think this definitely bodes very well for the coming quarters and which is reflected in July also. So I think we are quite positive towards the volume growth for the year.

So we'll gain the lost -- I mean, just like part of this question is, so whatever market share loss we have had in Q1, we'll be able to recoup that in the balance 9 months. Is that a safe understanding?

Navin, I would say that market share has to be looked upon on an overall basis. Again, for example, I would say that we have sustained and rather only improved in terms of the market share on the trade segment. And so far as you may say that we have reduced our market share on the nontrade, which is like a very well calculated though upon basically action plan. So -- but on the trade side, we have sustained and improved only.

Understood. Understood. Sir, my second question then was on the green power. And as you reported that out of the 1,122 megawatts, 973 is already commissioned, which is 87%. Now my question was that by FY '28, the target is to take it to the double one, double two megawatt, which is just 13% incremental, but the share of green power is then going from 34% to 60%. So 2 parts of the question is what major difference will the incremental 13% do to take the overall share to 60% and if company is selling some green power because not able to utilize at the plant, does it also mean that the benefits of this green power are largely captured. The only difference being they are in revenues right now and will come to cost later. Thank you.

Very good question again, Navin. I must appreciate. I think this is like a very interesting point. What we have done is like we have set up the capacity. And just to put some more specific numbers, 45 crores units, right, has been sold in first quarter out of our operating assets. And the question would be, are we basically inclined to a sale or inclined towards consumption, actually the inclination towards consumption, but there are always initial tailing issues, the transmission infrastructure, some of the quality initiatives. So it takes time. But this quarter, which is Q2, we are expecting to consume almost like 50% of this, so almost like 20 crore units out of the sold units, number one. Now your question is very interesting that 34%. Actually, if I consider the sold units, this 34% is actually reported on a consumption basis. I would have actually shared on a overall revenue plus consumption, then my green power share is almost 48%. Now the journey is then from 48% to 60%, and that is quite basically enabled through the capacity which you highlighted up from 1,122, for example, and also the WHS capacity which are getting set up from some 230-odd megawatt as of now. So we are absolutely well on our plan in terms of green power to achieve 60% by FY '28.

We take the next question from the line of Manish Somaiya from Cantor Fitzgerald & Company.

I have a couple of questions. First, it's on Sanghi, Penna, Orient. When do we expect normalized utilization and EBITDA per ton levels? And how much CapEx do you think you need to spend to achieve that?

So far as the acquired assets of -- your question is Manish about Orient, Penna and Sanghi, right, if I understood it correctly? Orient, for example, is quite well in terms of its capacity utilization as well as margin. And therefore, for example, from prospectively here onwards, I only see an improvement in Orient with minimum of investment. So far as -- because we have 87% utilization of capacity in Orient. So far as Penna is concerned, that remains an area in terms of improving the capacity utilization. One is the investment part. Investment is lesser, but I think what we have to do investment is more on the channel network and increasing the whole focus in terms of the trade sales, which will be the key driving factor for improving our overall, say, penetration of utilization of capacity of Penna. Sanghi is quite moving well. And Sanghi, for example, we have seen an improvement in the capacity utilization, both clinker as well as cement. And Sanghi, for example, what we are doing is an investment of closer to, say, INR 600-odd crores, which is planned in terms of the [indiscernible] expansion. But that's more for the clinker basically utilization, which will augment and support the planned grinding units in the -- on the port. But otherwise, Sanghi has taken up the investment. We have, for example, we are already investing into WHRS line in Sanghi. And what we have done is also shutdown of -- plant shutdown of one of the kilns, which is in a normal course of the investment. Nothing special. So I think Penna is what, for example, requires some of the AFR investments and WHRS investments. I would take it, the investment is less than, let's say, INR 100 crores to INR 150 crores altogether, but the more important is the whole improvement in terms of the channel development for South to enable and facilitate margin expansion of the Penna assets. And as I said Sanghi is now doing well, and you will see every prospective quarter better utilization and improved margins coming from Sanghi.

Okay. That's super helpful. And then you mentioned in the press release that you expect sequential cost pressure in fiscal second quarter. When should we expect those costs to normalize?

So basically, I would say that this cost increase is -- basically, more about the geopolitical escalation if at all it happens. Therefore, for example, normalization would all depend on how that deescalates. But what we are doing is, because those are beyond your control. What is in your control is how you can further optimize the cost. I gave a narrative of almost INR 150 a ton in my initial remarks, whether it is logistics, whether it is green power, whether it is basically efficiency consumption -- efficiency of the heat consumption or the power consumption and also the clinker factor, very important because in the industry, for example, among the peers, I probably say that Adani Cement is the one which has actually reduced the clinker factor by 3-odd percent. So every 1% clinker factor has a good savings also. So I think we are expecting almost INR 130 to INR 150 a ton basically cushion available, which we are focusing to have any kind of -- and we are expecting, if at all, this kind of, say, geopolitical situation continues, ballpark about INR 100, for example, potential rise in the cost. But I mentioned to you, I'm holding an inventory of clinker of almost a month, and I'm holding coal inventory of almost 3 months. So I'm very well mitigated from that perspective. And on top of it, the initiatives to bring down the cost by INR 100 to INR 150, which will be a good mitigation to absorb any kind of surprises from any external factors.

Okay. That's helpful. And then just lastly, if I were to look at demand -- industry demand and pricing, can you just give us a flavor for what you're seeing across some of your key regions?

Yes. Yes, Manish. So in terms of our key regions, I think we are seeing a good momentum coming in terms of, say, East is doing well. So is like West, we are seeing now where we have grown positively also both on the trade and on the B2B side. So for me, the key market remains, Manish, North, West, Center and East, all of them, for example, we are seeing a good traction. And that's how confidence I mentioned to Navin also in terms of our estimates of guidance on the volume growth. So I think there is now a stronger excitement within the channel and in terms of a pool -- demand pool what also is coming for our premium cement and our overall brand equity pool. So we are seeing a good momentum across this. On South, I have to invest on the channel network, which we will do, which we are doing, it's a lots of focus and you will see a good improvement on that part as well. Meanwhile, we are also putting efforts in terms of doing some further improvision on the product with some R&D and all on certain product segment, which, for example, down the line, you will know how things are shaping on that. Essentially, the idea is to improve the share of blended cement, which we are. As of now, we are at 85%, and we want to further improve down the line.

We take the next question from the line of Indrajit Agarwal from CLSA.

A couple of questions. Despite improvement in trade sales, our ASP increased on a sequential basis has been one of the lowest in the industry. So is it more geographical mix or what exactly is driving this?

[ Rajiv ], thank you. In terms of the growth, I think we have achieved, say, 2% sequential growth, while Y-on-Y there is a decline. But if I have to put some factors, which gets -- there are like different ways how you calculate the NSP. So I won't go exact accounting treatment, but one should consider that also because there are [ inco ] terms, for example, some companies actually net off on certain expenditures. And so we actually put certain expenditures which are netting of the NSP compared to some of the other industry players who may not do it, number one. And in terms of the -- sometimes the ex work, which is in the inco terms, the commercial terms, when it increases, it impacts your NSP also. So one would look at those factors and therefore, for example, the NSP gets impacted. But from here onwards, I think what we are confident is the -- that the whole brand pool and the trade segment and the premium actually is going to differentiate our price movement also. And I think price is all market focused, which is well appreciated, but I would still bring the focus back to cost and which is something which is absolutely in our control, and we want to deliver most efficiently there and which will be a determining factor in our delta improvement vis-a-vis last year. And you will see the journey of NSP also will improve in line with the industry.

Sure. Actually, on that note, given that you already have substantial coal and clinker inventory versus the comments of some of the other players of, let's say, INR 80, INR 100 kind of cost increase sequentially in 2Q. Can we assume at least on the variable cost basis, you are unlikely to have any cost increase in 2Q?

No, I would say that we will still have some impact, but I have given you the mitigation of that. Therefore, for example, on a net basis, we will be -- we will be well in our line with the June quarter estimate and slightly better only. On a full year, we are anyways giving a guidance of INR 4 to INR 5 a ton. So while I mentioned that there will be some element of surprise coming from the geopolitical tensions and all, and we are well mitigated with the overall, say, raw material and the other factors which I have highlighted.

Sure. And what would be the CapEx number for FY '27 and '28?

So CapEx is overall, say, closer to INR 6,500 crores and which is well by the growth and the efficiency CapEx, but that's like we are working on.

We take the next question from the line of Rajesh Ravi from HDFC Securities.

So first question, I think you have partly covered that on the volume growth for full year when you maintaining 8% and first quarter, we have seen a sharp decline. So what gives you confidence that on a total basis, you would be able to deliver 8%, which would mean more than 10% growth in the remaining 9 months?

So, Rajesh, I think the confidence is on the overall investment which we are now putting in terms of the focus on trade, the channel, the brand, the support coming from the whole network, and that is what was what we wanted. And therefore, like even for the B2B, we are focusing on the key markets, which are high-margin B2B business. And it is, therefore, important that we are there in terms of the new capacity also, for example, which I mentioned to you, almost 10 million tons is coming, which will come in, say, different staggered manner, but those are also like going to improve the volumes. And the improvement also comes when I have a source of flyers, which I have a long-term agreement, and it comes at a very competitive costing and the infrastructure of railway, which we have created, the BCFC rate, which we have invested, all of this basically helps us to bring and move the material in a most efficient manner and get the volume share, more so on the trade side.

Great. And sir, this trade, nontrade mix 75% or what we have achieved 78%. So can we expect that in subsequent quarters it would be north of 75% trade sales that will be the focus?

Absolutely, Rajesh, you hit the point. It is going to be upwards of 75%.

Okay. And sir, we hear in the channel that there is a lot of talks of merging ACC Ambuja brand into an Adani Cement brand. So could you throw some light on that? And what is the thought process behind that effort?

So Rajesh, no such plan for the brand merger. Whatever the plan is for the company merger, which we have announced.

Okay. Understood. And on the RMC, could you share what is the EBITDA number for the RMC segment in Q1?

Okay. In terms of the RMC EBITDA for the quarter, we are at about INR 35-odd crores. Yeah? So which is -- this will -- yes.

Okay. No, why I'm asking because the last whole of 4 quarters of last year, this segment reported margins of close to 14% to 15%. And this quarter, this has fallen down sharply to 7%. So any change in strategy?

No specific reasons, but this is like still a smaller segment. So I would say that I can spend time on that, but maybe we will discuss more. There are specific in terms of the overall, say, the raw material pricing and certain, say, financial accounting, for example, in terms of the lease accounting and all. But I think then here and all here and there, for example, we can spend more time on this separately.

No issues, sir. And lastly, of the total INR 6,500 crores earmarked for this year CapEx, how much we would have spent in Q1?

So I would say that we are well in terms of almost closer to 25%, which is like -- it's balancing out for me for the year actually. So 25% is there around closer to INR 1,500 crores to INR 1,600 crores, which we have invested.

We take the next question from the line of Raashi from Citigroup.

I may have missed some of the initial points, did you mentioned that the trade volume decline was 2% and nontrade was 21%?

Yes, Raashi, you're right. This is Y-on-Y.

Why -- given that there's so much focus on trade, why do you still witness a decline? Like could you give us a regional -- like regionally, what was the dynamic across...

Yes, sorry. So Raashi, basically, Y-on-Y, for example, this quarter had the seasonal most impact of all the geopolitical tensions in terms of the diesel availability, in terms of the issues on -- interim issues on the packing bag availability and so and so forth. So this was the one part. And I think when you change your gears, there are certain disruptions which happen. So I think now I mentioned to you in July, we are already seeing a 8% Y-o-Y growth. But I think I would repeat from here that how things are moving. So that's the recalibration which we have done.

Okay. And the 8% that you mentioned was only trade, right, nontrade would still be negative?

So yes, again, the whole focus of our -- basically, let's say, on trade, yes, absolutely you're right. And even going with the Y-o-Y of the previous -- of this quarter vis-a-vis the earlier year on some of the -- some of the clusters I mentioned to you, like North we have grown 2%, on West and these are like high EBITDA market. West also we have grown, say, 2%. So selectively we have grown. Selectively, we have degrown. Some of them is well calculated because of the low EBITDA margins and all, which I mentioned now and we are focusing absolutely on value terms. 8% for trade and trade remains a high degree of my overall, say, sales, it will be, I told upwards of 75%, and then you can calculate and calibrate the overall volume growth.

Understood. And within the -- I mean, just on a regional basis, like your overall volume, either overall or on the trade basis, like regionally, did you basically witness a decline across in all regions on a year-on-year basis?

On the -- you are saying about the B2B, Raashi?

I'm talking on either total or the trade. I mean, total actually, on the total volume, which was down 7% year-on-year.

No, in fact, we have seen a good growth, as I mentioned, like, for example, even in B2B in the West side, we have grown both in trade and the nontrade. On the North, we have grown basically in North and East, we have sustained. So it is like selective. I mentioned that South is where, for example, we have consciously the low margin we have, we have degrown basically, which is the highest degrown in that cluster. And Center, for example, more we have degrown because we have moved into the blended cement as an offering and which has actually helped us to actually improve our margins. So we have been selective cluster by cluster.

Got it. And what was capacity utilization for you overall?

On an overall basis, if I say, 65%. But if I look at -- I think -- so yes, ballpark 65% on a totality basis.

Got it. Second question is on costs. I was just trying to understand in this quarter, you witnessed a INR 206 decline sequentially on your cost. But where exactly is this decline showing up? Because when I read the various heads as per your presentation, then like power and fuel costs have actually moved up sequentially. I know that there's like a whole stock change impact. But if I were to look specifically, where all have you got this INR 206 saving?

So if you look at in terms of the raw material, so we have got the savings in fly ash in terms of efficient sourcing of the fly ash. In terms of the power, we have the RE power, which has benefited and the overall, say, price per unit of the power rate has come down. These are like 2 primarily factors. Apart from that, my clinker factor, which has come down by 3%, that has been also a good improvement of my overall, say, power -- overall, say, cost reduction. So this INR 206 improvement has come from a combination of efficiency, the clinker factor, logistics marginally, I mentioned INR 10 per ton, but RE power and fly ash has also given me a good advantage. And prospectively also, they will keep giving advantage. Now -- so far as my -- so far as -- also what we are doing, Raashi, is the optimization of the fixed cost, for example. And you will say that it is commendable that despite the capacity utilization being lower, but still we are able to optimize my fixed cost as well and a good speed of acceleration you will see on this front as well. So various factors, I can actually give a bridge on that. But I think suffice to say, this INR 206 has many good factors to sustain further and further improve from there.

Understood. You had given at the beginning...

By the way is after absorbing the INR 110, which -- ballpark, which we believe also has hit us from the West Asia escalation. So this INR 206 plus INR 110, if I have to gross it up, actually, my savings is INR 316 actually on the cost side. I have digested that INR 110. And after that, our cost has come down by INR 206 per ton.

Okay. You were giving some numbers on waste heat recovery, renewable energy. What was the total capacity now and what will it go to? I missed that earlier on.

It is 228 megawatts. And this will go further to almost 376. So almost like another 100 mega, about, say, 70 -- 140 megawatt, which will improve from here, basically. So all my new kilns, whichever it comes to, it will have WHRS and will further add up to, as I mentioned, Sanghi and Penna and all.

Okay. And RE?

RE, Navin mentioned. So we are, say, 1,132 megawatt in terms of -- 1,122 basically for the RE. And we are from the current 975-odd megawatt. So almost closer to 150 megawatt there.

We take the next question from the line of Ashish Jain from Macquarie India.

Sir, my first question is on capacity. While you have given a roadmap for fiscal '27, there are two parts. One is, how do we see growth or capacity in, let's say, '28, '29? That is one. And secondly, out of this 119 million tons, which includes some of the old capacities, especially of ACC, is there something that we plan to permanently mothball? And how should we think about that?

Ashish, I will answer your second question first. In terms of the one which you mentioned about the mothballing, answer is no. In fact, we are evaluating and we are working to see how they are optimized. Therefore, that's like a temporary suspension. So far as the capacity for '28, '29 is concerned, I would say that now I want to just give you this confidence that by end of this year we should be hitting 119 million tons. And for '28, '29, work in progress. Generally, we expect every year, 8 million to 10 million tons of capacity addition, and that's like how we will plan it out.

Right. No, sir, I'm not looking for like numbers as of now. But we will be adding something or the other, organic, I mean, in '28, '29 also, or given our shift to profitability -- yeah.

Organic only. So like whatever we are discussing now is purely organic, and yeah. So anything more, Ashish?

Yeah. Sir, second, I wanted to understand the cost impact a bit better. Like this -- the incremental number that we are talking about. From the breakup which you kind of alluded to, looks like the large part of the incremental savings is coming from RE. Is that the right interpretation?

Well, I think you have all the engines on fire on the cost. One is the efficiency, second is the raw material, third is the overall -- so, of course, RE power also, and the fixed cost optimization. Yeah, I think all of them, for example, we have a good focus on them and there's a good visibility also because we have invested, right? When I say raw material, we have invested into the BCFC infrastructure and the fly ash, for example, when it comes to recently, like 10 days back, there was this policy from railways which actually further improvises the logistics cost when you move by BCFC. We have made those investments. And therefore, the incremental savings are coming from those investment, whether it is RE power, whether it is in railway, so on and so forth. But more importantly is the efficiencies also, which are now coming on our plants. Further though like, if you want some specific, I can share the numbers also, for example. In terms of, let us say, the efficiency factor, it is almost like INR 30 to INR 50. When it comes to the input material and logistics, it becomes almost, say, INR 50 a ton. The clinker factor itself brings another INR 50 a ton. And the fixed cost, for example, optimization, will help me another INR 80 a ton. So this journey, for example, from the INR 4,447 which we had reported in Q4 of FY '26 to coming to INR 4,250 or INR 4,241 for the first quarter of '27, I think these are broad heads in terms of specific numbers also. As I said, this is after digesting the INR 110 West Asia war escalations.

We take the next question from the line of Ritesh Shah from Investec.

A couple of questions. First one, sir, how should we look at the ICD, which has actually come through via ACC and Orient? How should one read into that? That's the first question.

Ritesh, we are in the advanced stages of now merger. I think, so these ICDs are well within the approved limits of the shareholder and carries a coupon of 8%. But now, practically, it's like a one platform, and I think that's what the whole idea was to merge together all of this. So I would say that these are all within the compliances.

Sir, I appreciate it's under compliance. It's all legit. But any specific reason of not raising debt at Ambuja level or if I have to put it the other way around, if I look at the debt maturity profile for Ambuja, we have almost like INR 22,000 crores, INR 23,000 crores, which matures in FY '27. So should one link both the variables or how should we read into it?

So the operating company, Ambuja, has no debt and so far as the -- if you are alluding to the parent company debt, I would not be the right person to answer on that. Coming to the Ambuja level, as I mentioned, zero debt and I think we are managing our cash flow from the operating cash flows and we have a good plan to sustain on that.

Okay. Sir, would it be possible for you to reflect upon the SLAs that we have done for a few plants, how the experience has been? And I understand we are also looking to expand it to logistics as well. Is this for a particular market or is it on a pan-India basis? If you can give some numbers around CapEx, OpEx, cost benefits that we already derived or what we expect out of SLAs?

So, Ritesh, we have begun on this. It's little early to come to you on it. But I think let us mature on this. But things are quite positive and I must say that the overall vision of our Chairman and supported by Karan bhai, I think things are moving well in the direction on this.

Sure. Sir, I'll just squeeze in one more. With respect to power and fuel, sir, our stated goal for 2030 with respect to TSR is 23%. We are somewhere at 5.7%. How do we plan to achieve this roadmap? That's one. And the second question, I think we have four coal blocks right now. One of it is operational. How should we look at the potential cost savings from both PSR as well as the coal blocks?

AFR, basically it is the overall, say, utilization of the AFR, for example. That's what you are highlighting, right, Ritesh?

Yes, sir.

AFR, for example, while we are -- I agree with you that we are on a lower side at, say, 7%, and that is one of our key focus area to improve this component of KPI, and you will see a good progress in coming quarters. We have highlighted to you before that our target is to achieve 25% of the AFR down the line, and right now we are little behind on that schedule, but every passing quarter you will see an improvement.

Right. But sir, is there a roadmap to go till the stated number? Because the number is quite steep and the incremental cost savings can be huge over here.

So, to immediately right now, for example, in this fiscal year, we are targeting to hit almost, say, 12% to 15%. Because see, when it comes to AFR, it's all a combination of how much is the basically cost of the fuel, how much you want to basically save on the AFR versus the overall CCOL and blah, blah. Now, as a rule, basically we want to maximize this, and this improves to 10% to 15% in this fiscal year.

And sir, on coal blocks?

The coal cost. What it is? The coal cost.

Sir, coal blocks, sir. I think one of the coal blocks are operational. What is the status of the other ones?

There are like three coal blocks which we are focusing. The first one will be operationalized in, say, two to two and a half years' time. And just to circle back on the AFR, I think needful investments have already been made, therefore, the confidence to hit, say, 15% is high. Yeah, to coal block, the first one gets operationalized in, say, about 30 months from now.

Okay. Sir, would you like to give some numbers on tonnage savings?

No. I think it's too early. But the investments are all have a good payback, therefore, you can basically understand these are five to six years payback.

We take the next question from the line of Amit Murarka from Axis Capital.

Would you be able to share the regional volume mix in the quarter?

So in terms of the overall volume mix, that is like for overall, say, I am saying this for the trade and non-trade, ballpark I am going to highlight to you. Let us say, the North is almost like closer to 25% for me. West is a tad higher to 30-odd percent. East is also like 25-odd percent. This becomes almost 80%. And then 10% is the Center and 10% is the South. Ballpark will be breakup.

Sure. So would the share of South be lower in Q1, given what you just mentioned earlier in the opening remarks?

Yes. I mean, like you mean to say Q1 or Q2?

Q1, so you mentioned that in South basically you have degrown in both trade, non-trade.

Yes, yes. Absolutely. Absolutely. So like therefore, compared to, say, last quarter and also last year, South my percentage is low at this time.

Got it. So seems like that is one of the reasons as well for better cost performance, right? Because we know that South is a higher clinker factor market as well as a higher cost market in that sense to service, particularly in a quarter where fuel costs are high.

That is true. That is the whole focus. Absolutely right.

Got it. And secondly, on green power. Sorry, the sales you mentioned, right? 44 crore, 45 crore units sales of power. What is the EBITDA number of that?

The sales revenue, I can say. For example, ballpark around INR 140-odd crores is the sale number for the quarter.

Right. And most of this will be EBITDA, fair to say, because these are all your own units, right?

Yes, yes. These are all because these are all like business by investments made. Absolutely right. So very much part and parcel of the business.

Yes, what I mean to say, the OpEx will not be too high for this INR 140 crores, right?

Hardly 5%. I mean, otherwise, this is all adding to the bottom line.

Got it. And lastly, like when I look at your -- the mix of trade, non-trade, like last year Q2 it was actually pretty high. It seemed that 32%, 33% was non-trade actually, and trade was a bit low at 67%. So when you say that the trade is growing 7% or so in July, the non-trade is continuing to be a big decline because that would imply that the overall volumes would still be low in Q2 given that last year...

I think we are strategically handling non-trade also. So it's not going to be that big decline, for example. So, overall, we will be able to manage our volumes in line with the guidance which we have given.

Sure. Sure. And just lastly, if I may ask, so while you mentioned the cement cost number, which is obviously different from the overall cost pattern when we calculate it. Similarly, like for cement realization as well, could you provide a number just to get a like-to-like comparison? Because EBITDA is blended, right? When you report EBITDA per ton in the PPT. So similarly, if you want to just calculate what was the cement EBITDA per ton, could you give a clean realization for cement as well?

Cement EBITDA per ton for the gray cement is INR 911 per ton. Yeah. That's the number I have. See, I have told basically RMC and gray cement. So like gray cement is INR 911.

That is the overall EBITDA, right? Which includes EBITDA for RM...

Basically.

Okay, sure. Maybe connect on this a bit later. Yes.

We take the next question from the line of Pinakin from HSBC.

My first question is that, the filing mentions that some manufacturing operations have been shut down. So can you just highlight what are the manufacturing operations, what capacity has been shut down? And my second question is that, there seems to be some ICDs from ACC Orient to the parent. So any particular reason for the ICDs, given that the company already has access at a group level at that cash entity at the Ambuja Group level?

So, basically, in terms of the temporary closure of the plants, basically this is like temporary because we are anyways working on optimizing it. The capacities are closer to about, say, around, say, 3.5-odd million tons of annual capacity. Number one. What was your second question?

The ICDs from the subsidiaries to the parent.

The ICDs? Sorry, can you repeat?

Yes. See, the ICDs from, I think, ACC and Orient Cement to the parent, what is the particular requirement for it at this point of time at the Ambuja level?

No. So, like as part of the whole MSA commitments, because Ambuja has the higher share of the capacity and therefore, like Ambuja is supplying the material. This time you have seen that almost 1.6 million to 2 million tons of cement has been supplied. How much? 3 million? 3 million has been supplied to ACC by Ambuja. I think this is part of the whole MSA arrangement, Pinakin, wherein the investments which have been made by Ambuja, the benefits are also being received in terms of volume by ACC, Orient, and everyone within the cement pack, and that's how the MSAs are ensuring the proper payouts also to the respective companies.

We take the next question from the line of Prateek Kumar from Jefferies.

Firstly, can you discuss the timelines of -- the quarter timeline of this 3 million tons Jodhpur clinker and 4 million tons Maratha clinker?

See, Maratha, we are expecting to commission next year. And that is what, for example, we have planned. So far as Jodhpur is concerned, we already have seen trials started. And in Q2, which is in this current quarter, it will start stabilizing and supplying to my grinding units.

Next year, do you mean Maratha is next financial year, FY '28?

Yes. So like absolutely, first quarter of next year.

Okay. The other question is on your cost again. You have done this quarter INR 4 to INR 40 kind of cost, a full year INR 4 to INR 50 expectation. So basically incremental cost impact of inflation will be absorbed by incremental savings, so your full year cost remains same what you reported in Q1. Is that correct?

Absolutely. Well summarized by you, Prateek.

Okay. Last question, can you -- because your PPT first time mention of fly ash sale and power sale, can we get the cumulative revenue and cost of fly ash and power sales in 1Q and 4Q to get an exact calculation of cost per ton?

So, Prateek, I mentioned to you that these two components basically, which are basically closer to 45 crores of unit which we have sold in RE power and fly ash, I don't have right now with me, but I can circle back to you in terms of what tons of fly ash being sold.

No, I'm looking for revenue and cost for these two line items cumulatively. I don't require like separately.

Let me -- on this point, let me just circle back once I have the details on this call or maybe separately.

[Operator Instructions] We take the next question from the line of Pulkit Patni from Goldman Sachs.

I don't know if this has already been asked, but my first question is, the plants that have been suspended, any time duration for which they have been put under suspension?

So around, say, six months, basically.

Okay. So we should not expect any volume throughput coming from those plants for the next six months, or it's in total six months?

Total six months, basically.

Total six months. And sir, my second question is more bookkeeping. The depreciation number is much lower in the quarter. Any specific reason, and what's the run rate that we should keep for the next few quarters?

Yes, I will request Rohit, my CFO, to answer on this.

Sir, if I can add to here, the depreciation run rate would stay at the similar level. In the last quarter, due to the true-up entries which were taken on account of the merger of Sanghi and Penna, the depreciation was higher Q-on-Q. Otherwise, it's going to be at the similar levels at this point.

We take the next question from the line of Rahul Gupta from Morgan Stanley.

So 2 questions. First, with data keeping, you mentioned that power revenues were around INR 140 crores in the first quarter. Can you give us the comparable number for fourth quarter?

So for the fourth quarter, the question was about the power revenue? In terms of the million units, I can highlight that in the fourth quarter, which is March '26, and over here, just give me a second, almost 70-odd crores is the number for power.

And this was 45 crores units this quarter, right?

No. For fourth quarter, the units would be lesser. So in terms of the overall sale, this was around 24 crores of units for the fourth quarter.

Versus 45 crores in this quarter?

Versus 45 crores in this quarter.

Got it. My second question is a bit towards understanding your strategy in South. Now you said that you cut off some of the volumes in the region. Can you please help us understand what kind of volumes were being cut off and how much of that would be from Penna and Orient?