Ladies and gentlemen, good day and welcome to the HeidelbergCement India Limited Q2 FY23 and H1 FY23 earnings conference call hosted by PhillipCapital (India) Private Limited. As a reminder, all participant lines will be in listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please press star, then zero, on your touch-tone phone. Please note that this conference is being recorded. Now hand the conference over to Mr. Vaibhav Agarwal from PhillipCapital (India) Private Limited. Thank you and over to you, sir. Yeah, thank you, Steven. Good afternoon, everyone. On behalf of PhillipCapital (India) Private Limited, we welcome you to the Q2 FY23 and H1 FY23 call of HeidelbergCement India Limited. On the call, we have with us Mr. Jamshed Naval Cooper, Managing Director, and Mr. Anil Sharma, Chief Financial Officer of HeidelbergCement India Limited. I would like to mention on behalf of HeidelbergCement India Limited and its management that certain statements that we made or discussed on this conference call may be forward-looking statements related to future developments and the current performance. These statements may be subject to a number of risks, uncertainties, and other important factors which may cause the actual developments and results to differ materially from the statements made. HeidelbergCement India Limited and the management of the company exhibits no obligation to update or alter these forward-looking statements, whether as a result of new information or future events or otherwise. Also, HeidelbergCement India Limited has uploaded a copy of the Q2 FY23 presentation on the stock exchanges and its website. Participants are requested to download a copy of the presentation from these websites. I will now hand over the floor to the management of HeidelbergCement India Limited for their opening remarks followed by an interactive Q&A. Thank you and over to you, Cooper, sir. Thank you, Vaibhav, for this organization. Thank you, all the people who have attended this for our investors call. Taking you, I suppose you have received all the presentation, the entire presentation, and you have gone through it. I'll run through it. For us, the September quarter has some of the highlights which I should express to you and mention to you. For the first time, our share of green power has increased to 34%, greater than 34%. In the future, we are trying to see that this is maintained and increased further. In terms of our future security on power, we are working on this so that the company remains on a strong foothold on power because nowadays, power and fuel is a very high element of as a share of the total variable cost, which is one of the highest today. We continue to produce 100% blended cement, which is, again, a very clear message that we want to remain green and we want to remain clean. In terms of volume, yes, we have slipped on the volume by 19% on year-over-year basis and 10% on quarter-over-quarter basis. This is mainly it is not a it should not have happened, but we were unfortunate that in central India, in the month of July, we had problems in the weather related to weather-related conditions once in one month in UP and one month in MP when there was, again, incessant rains and the crop has got spoiled. There was a flood-like situation. So it is unfortunate that we had to suffer because we are focused more on central India. At this point of time, we possibly think that had we had some market share in Bihar, probably we would have done better. But anyway, these are one-off effects, nothing to which are not going to have a permanent impact on our results. So we suffered because of this. Prices have increased by 8% and a little bit down on the quarter-over-quarter basis. But the trend seems to be now that the prices seem to be will increase. And there are reasons for it to increase. We can discuss this later on. There is a significant increase in fuel costs. We all know that the fuel has gone through the roof. Power has not gone so much. In fact, we have been able to save on our power costs because we are now sourcing third-party power and green power. So that makes us a little cost-efficient on power. But fuel is something which we have to source from outside, and we are a little disturbed because of the fuel also. But anyway, in the future, we see that the prices of fuel may come down. We delivered an EBITDA of 476 per ton, which is 50% lower. So I think this is the bottom what we would have touched. And quarter going forward, we should be able to recover that bounce back. And the prices seem to be supporting that in the months to come. We paid a dividend of nine per share, which has already been distributed. And another highlight is that we continue to operate on net operating working capital. And our net debt stands at about INR 109 million as of date. Taking you to the next slide, as we show you the whole chart, today, we are at 34% as of September quarter. You can see the graph which is there, which is moving in the positive direction. The trajectory is good. And I think this weekend continue. And as time passes and I think at least this is somewhere sustainable, we try to sustain it at this level. Very happy to inform you that Ammasandra plant operates mostly on green power, which is more than 90% of the data green power. And it has worked out very well in our favor at Ammasandra. Similarly, we put up a power plant with thermal solar power plant in our Narsingarh plant, which we have already informed to you in the past. Coming to the next slide, while we also make cement, we also continuously engage with the local society because we believe that corporates cannot succeed where societies fail. So believing in this, we do a lot of CSR activities. These CSR activities, a glimpse of that is shown here. We are doing classrooms, okay, for children's development of Anganwadi. We are digitizing the classrooms of government schools. We are also trying to see that we can provide an additional income, generate additional income because by cattle breeding and cattle farming and a little bit of helping the villagers to improve their tertiary or a third income or a secondary income to support them. So this is what we are trying to do. Coming to the results, which is on slide number 6, you can see the results. The biggest impact for us is the volume, which is negative. The impact of it is significant impact of that happens on the EBITDA also. On cost side, we are not so bad, but it is basically the fuel which has killed us at this point of time. Despite the efforts what we made to reduce our fuel consumption, today, we are quite low on fuel. But yes, now this gives us one more thought process that there is further room for improvement, which will help to really take up and reduce our fuel consumption further. And for that, we are working on a little bit of de-bottlenecking of our plant, which will happen in the next year. We will do a de-bottlenecking of line 2 and line 3, both starting with line 3 first and then go to line 2. So that is what we call for that. And now we have taken it on a card. The waterfall bridge, what you can see on slide 7, compared with the September quarter of last year, we delivered an EBITDA per ton of INR 946. This time, we add INR 381 per ton in terms of GSR is concerned. But you can see the entire whole benefit is taken away by the INR 670 50% increase in the power and fuel cost, which really takes us downhill and lands us at INR 476. Other costs and freight costs are okay, but I think this is one of the elements we have to really work on now. Next is our as we said, we are operating on a negative working capital. But if you look at our balance sheet size, it is hovering now around INR 266.77. And I think this is a more reasonable place where we will stay. We are around this place. Until such time, we start doing some investments, which will come in the next year. Some of you people might want to know what is our working capital situation and the cash and bank balances. So we have provided this slide on slide number 9. You can see that INR 2.37 billion as of September 22. Out of it, the debt is INR 2,346. So there is a minor net debt lower of INR 109, which I mentioned it on the first slide. The repayment schedule, how it will happen. And this would have not occurred had we not paid the dividend, okay? So there's a dividend flowout has taken us the net debt to a little lower level. But this is a very temporary phenomenon. This will, again, pull up on the positive side. And as we make the payments, by that time, we would have significant amount of cash surplus also sitting on the book. Going to slide 10, happy to inform you that 55% of our premium products is now in the freight segment. And this is a significant improvement. We were hovering around 22 to 25. We introduced another brand which is called Mycem Primo, which is the mix between the power and the basic bag. And that has got good traction. So the market is accepting it very well. Coming to our sales volumes in terms of rail and road, it is 50/50. Coal is 31%. That is 70 to 69, 70% is our petcoke consumption. And this blend of petcoke consumption has changed because the petcoke now is cheaper, was cheaper than as compared to coal. So we have switched over. In the previous quarter, in the last September quarter, you would have found the reverse of it. So the situation is reversed thanks to our technical team, which is adapted to changing the fuel mix at a very rapid scale. So they respond to these changes very frequently. 83% of our trade sales is there. So that continues between 80 and 85, which remains. When the markets are soft, we have more little bit non-trade we can pump. But non-trade also, this time, we were not able to push because of the sites of the monsoon, because of the unseasonal monsoon, sites have also closed many places. So our traditional loyal parties were also not picking cement. So the feather in the cap is on slide number 11 where, again, time and again, we have been given the five-star rating. And this time, it was for our mines' development by Honorable Minister Shri Pralhad Joshi. He has given us this award. And Jhansi, again, on the second consecutive APEX India Safety Award because we believe safety is our foremost priority. We want every person who comes to Hyderabad to work goes back smiling home because someone is waiting for them at home. This slogan drives us to ensure that we achieve the highest level of safety and move towards zero harm. We are happy to announce that as of today in the last 2 years, we are almost there at a zero harm level, excepting for some dispensable minor injuries, which don't require but they require first aid. We want to ensure that even the first aid part is totally eliminated so people go absolutely scratchless in our company while working. Now, how does the outlook look like? So the GDP, the forecast which has been made is 6.8. And I don't know. But as of now, it seems to be a good rate of still a good rate of GDP because if you compare it with the any other part of the international arena, this is one of the best GDP country which has the highest growth rate. So we should be proud that our India is delivering this sort of growth in an environment which is geopolitically very sensitive. It is in a turbulent state where many countries are under recession. The heart of India continues to throb and move forward in a positive manner. Rising inflation, yes, major concern. We can see the record rates going up. The government is trying to contain inflation. But it seems to be a little difficult at this point of time. It affects consumer sentiments. We will see this impact with the coming onset of Diwali, how the Diwali pans out, if the demand for other products does not seem to be low or the footfall in the retail counters and the retail malls are going to be strong. We are not too much of a concern to worry that people are worried about recession. That means we have enough cash flow to continue. And housing being one of the important segments where 80% of our markets. So this should give continuously good traction to the housing construction needs also of the rural India and the tier two and tier three cities. Tier one may be a little surplus, but tier two and tier three cities will be the engines for demand growth. So recession fears are there. I think this will remain. We cannot do too much about it. This is another part where I'm a little bit concerned. We are concerned about it. We don't sell so much to government under infrastructure. We are running very low under non-trade. But yes, those companies who are supplying to government departments, their share could be as high as 40% in the non-trade segment once they find that the demand is not there in the government segment, okay? The government demand is pushing down. I can tell you from the figures of government investments in infrastructure, you can see it tapering down very steeply. If that happens, then this other material which is of our competitors which was going into the market will find its way into the retail segment. There could be a little bit of a pushback. But to enter retail market is not easy. Your company has got a very strong foothold in the retail segment. So we will be able to safeguard our shelf space and continue to deliver positive results. Mentioned about to you, uneven rainfall has affected kharif crops. So this is concern for us. In Central India, it is more of an agriculture economy. We are dependent quite a lot on this. But we will come to know just after Diwali how the market pans out in the coming 15 days. And then we will be able to figure out how the October and November and December look like. I'm not too much worried about this because there is spending happening in the rural area. So people will continue to put money onto the housing sector. And another thing is post-Diwali, we always expect some good demand. October month, we saw both festivals fall in the month of October. Chhath is also there on the 30th. So there will be three festivals almost in one month, starting with Dussehra in the beginning first week, then now coming Diwali, the third week, and then the fourth week, we are into Chhath Puja. So labor is a problem at the construction site. But let us see how things move forward. This is all from my side. We have sent you this soft copy of our presentation. Along with it is a next also our digital annual report, which you can have a look at it. These are some of the rare occasions. I don't think anybody is producing a digital annual report. It is a snapshot. This is a summary of it. So you can have a look at it. This is the second digital annual report which we have sent. I hope you appreciate. If there are any comments, we are happy to take. We can improve on this further. Thank you very much for your support. Any questions on that, we're happy to answer. Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Thank you. The first question is from the line of Shravan Shah from Dolat Capital. Please go ahead. Shravan Shah, your line is in talk mode. Kindly go ahead with your question, please. As there is no response from the current participant, we move to the next question from the line of Rajesh Kumar Ravi from HDFC Securities. Please go ahead. Yeah. Hi, sir. Am I audible? Yes. Yeah. Thanks for the detailed presentation. Sir, I have a housekeeping number first. I see that the last year trade sales number has been restated from 83% declared earlier to 86% for last year Q2. And also, you mentioned that the premium share, cement share, has gone up. So what exactly went into increasing this, almost doubling the premium cement share number? And third, landed fuel cost, can you talk on a per-kiloton basis the consumption cost in Q2 and how it changed versus Q1? Yeah. Let me put it as a non-trade component. You are talking about it has dropped from 86. Okay. So there is a little bit of change here. What we did earlier, what we were doing when we were doing free bags of cement, full sales bags, that time, we were capturing it as non-trade supplies. Now, what we have done is we have regularized it because we are supplying MRP bags, okay? Non-trade material by nomenclature is a bag which goes not for resale. It goes in a separate type of a bag. It is a very distinct bag. So that does not penetrate into the local market. So we have a system of giving non-trade bags as a separate bag. And this trade bag is a totally separate bag. Now, we have reclassified this and corrected in our system that any material which is going under an MRP bag will be considered as trade sales. So whether it goes in bulk or whether it goes in anything which is not for resale, it is not in resale, and it is going to be resold, it will be classified. So that is why the difference is coming there, number one. Okay, sir. Number two, premium segment, you are saying the premium sales have gone up. Yes, as I mentioned to you that we have launched a new product which is called Mycem Primo. That has caught up very well in the market because of its pricing segment also, because Mycem Power is close to about INR 40 to INR 45 higher than the normal bag. And this bag is close to about INR 15 higher or INR 15 to INR 20 higher. So it is priced in between. So there was an aspiration of many customers who wanted a box-bottom bag, but they did not want to pay this INR 40 a bag higher for better quality packaging and better quality product or much more which was managed better. So they are now more going for this. So this intermediary segment combined together has helped us push this volume into this segment. Gradually, this medium segment will keep moving towards the top segment. And the top one is the power will keep moving up. So our target is to increase the price of each of these bags by INR 5 to INR 7 every year. Minimum INR 5 every year, this price should go up. So we started with a very low base of INR 20. Today, we are at INR 40 in 4 years. Now, next year, it will go to 45. And this will go from 15 to 20 and 25 and then forward. So this is the strategy for us to put our premium. And another thing which you asked, fuel consumption and per kilotel. Fuel consumption and fuel fuels. The fuel consumption cost for us is INR 714, about INR 700 odd is the cost of fuel per gigajoule for us. And per kilotel is per kilotel. INR 3.13 per kilo. INR 3.13 per kilo. As compared to June quarter, there is slight reduction or softening of the coal costs as well as the petcoke prices. We considered it a little bit now stable. We are hopeful that the fuel cost should a little bit reduce in the coming months. So do we expect this to fall much below INR 3 in Q3? Are we seeing that trend because petcoke prices have cooled off considerably? Petcoke prices, yes, a little bit reduced during this quarter. But also in the last one month, we have seen further it is becoming a little bit increased by the domestic peers. We will see. We are hopeful that there should be a little bit softening in the coming months. Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity, sir. Three questions. First is, sir, at the parent level, the name has moved from HeidelbergCement to Heidelberg Materials. How should we read what it means for the India operations? So that's the first question. Okay. So, Ritesh, this is a global thought process which the group is pursuing. We are HeidelbergCement. Basically, we are not only alone in cement. We are into building materials. And we are into concrete and every sort of possible you can name it under the sun, it is there. So the group decided that it is high time that we are pushing the agenda of green. So they said, "Let us make it more consumer-oriented company name, group name." And that is why they are right now also, the HeidelbergCement as a group remains till there is no change in the name of the company at the group level also. But Heidelberg Materials is one of the umbrella which they have created for future and to promote an image of a green company and a green product. So when you see the logo itself, there is an element of green which has been brought into it, of leaf has been brought into it. So it is a way of altering our, I should say, perception and image and to build an image of a clean and green company and more to do with as materials. And one of the slogans is also there, "Material to build our future," which we brought in last year, year and a half back almost, two years it is now. So it is in line with that. In terms of our India operations, we continue as HeidelbergCement India Limited. There is no change. And I don't think there is any plans to change it. But maybe our logo on top, which you see HeidelbergCement, we will start putting from 2023 onward. We may bring in this logo for India also. But as a company, the answer is that it will continue to remain as HeidelbergCement India Limited. All right. Sir, my question was more from an angle that the promoters or the parents' commitment to India remains very much given. We are cement, and we are the greenest cement mills in the country. So that focus, that commitment is very much there, right? Yes. Okay. And, sir, over here, is diversification something that we are looking at given moving from cement to materials? Should we expect that the company will spread its wings under different product categories? Or is it we stick with cement, what is core to us? Ritesh, that this is already on discussion that we will have to look at not only this. But yes, there are avenues. But again, like in a country where aggregates, RMC, it's a low entry barrier. And there is a high level of competition. Nobody understands the technology of aggregates. Nobody understands for people, it is where it is which is cheaper to buy. Nobody buys things on a scientific basis. So this makes one of the reasons pushes us back that in a country where people are not buying cement or aggregates or materials on an engineered concept. So from a they buy more of as a commodity. Then it does not really make sense for the company to start that business at the moment. But yes, I would say that yes, the time will get matured soon because this will enable there is nobody there is no standard for these materials in our country also today. Today, you can produce an RMC without any BIS specifications of anything. It is a performance-based product which delivers and the customer accepts it. Aggregates, there is no there is no specification on Aggregates. So there is a time India has to start thinking on bringing specifications. And then it will be the right time for Heidelberg to enter these markets. Or maybe Heidelberg enters, I can say that it can create a standard for India to follow. But this can be because we are the number one worldwide on Aggregates. It makes sense. But I think right now, let us focus on cement and expansion on cement. Right. Perfect. Sir, quickly, two more questions. One is update on Gujarat expansion plans. Secondly, we have Gulbarga optionality under Zuari. Are you doing anything about it? And third, simplification of structure between Heidelberg and Zuari. Sir, that's the second question in three parts. And the third question, sir, are there any changes to the discount structure in the marketplace given the conditions that we are in right now? Thank you, sir. Okay. So three things you asked. One is Gujarat, okay? So the Gujarat now, people have moved. And we are in the process of getting in environmental work has started on this. So this will take another, I think, at least till next May, May, June. So it will take next May, June. By that time, we'll have the environmental report. So this is on Gujarat is concerned. And then we take this further, the next step after that. Coming to what you asked about Gulbarga, which is in Zuari. Yes, Zuari is working on that particular thing of putting up a plant there. So Zuari is working on that. Coming to what you said, the third point, you said between the unification of these two companies is concerned. Yes, that is also on the card. We are working on it with the group. And the last thing you said was about the discount structure. Let me stress here that we have a very, very, very, very transparent discount structure. Probably, you won't find this with any other anyone in the country. We, on 1st of January, issue a discount policy, giving each and every discount in writing to the dealer. And the dealer acknowledges, signs a copy of it, and hands it over to us, which is put into our system for future. So it is fully compliant. We don't change these discount structures. Then once it's for the one year, it stays there till 31st of December. It is no change in that scheme. So we have a very, very transparent discount structure. So I can only say that much. Sure, sir. Thank you so much. I have more questions. I'll jump back. Thank you so much. Thank you. I just remember there is no change. So there is nothing to think about it that we are yes, I understand that you are referring to some news in the market about some PD given or some discounts given. That is not on our card. We don't believe in that. Absolutely don't believe in this of giving PD. Our pricing is whatever we tell today is the price to the dealer. If there is any discount today, if suppose tomorrow some discount is to be given for a suppose a seasonal discount is to be given in case if it is demand to boost the demand, that also circular will go to the dealer. Proper communication will go to a dealer in writing. It will be acknowledged by the dealer and kept in our records. Thank you. The next question is from the line of Sandesh Barmecha from Haitong. Please go ahead. Thank you, sir. I have two questions for you, sir. Given that demand in Central Region got impacted by a heavy monsoon in Q2, whether pent-up demand is expected in Q3, sir? Okay. So, Sandesh, the message is clearly that cement industry always sees a pent-up demand. And then it comes all of a sudden, it blasts into the market. If that has happened in the past on several occasions, I will say that there is no reason why it should not repeat in the months of November and December. And I am expecting that November and December should be really good months for cement because we have seen July bad, August bad, September, a lot of holidays. I think October, November, December should be better. Great, sir. Sir, how much GST incentive amount have we booked in Q2, sir? GST incentive in Q2. One second. It is normal. I think it will not be significant amount. Every quarter, we have around INR 50 million GST incentive. And it is a normal amount in this quarter. In normal years. It's about INR 5 crores. Around INR 5 crores, sir? Yes. Yes. Okay. So, okay. Sir, and what is our CapEx outlook for FY23 and FY24, sir? The same thing. We always say replacement CapEx is 50% of our costs and our depreciation. And it will be over INR 50 crores. And then we will take up another CapEx for our line two. And then line three, I would say line three, de-bottlenecking. That will be there in this. And I think that is very normal for us. So around INR 50 crores in FY23. And FY24 will depend upon the cost for the line. That's right, sir? Yes. Okay. Sir, any approximate you can give for FY24, sir? You can consider a thought of a job. 50, 50, 50% will go ahead. Okay. Got it, sir. Thank you so much, sir. Good day. Thank you. Thank you. The next question is from the line of Aman Agarwal from Equirus Securities. Please go ahead. Thanks for the opportunity, sir. So firstly, on the quarterly performance, I just want to ensure that the timing is correct. Our realization has dropped around 3.3% on a sequential basis. So how do we stand versus other peers in the central market? Have we fared better because our premium product share has drastically increased during the quarter? Is this understanding correct, sir? No, I think let me clarify here. Sir, we were about 25% to 30%, close to 30%, 25% to 30% previously also on the premium products, okay? The premium products, the blend, it has nothing to do with the premium products, okay? The price what we are getting, this will continue. This premium product, the premium will continue. I don't think that the whole benefit which has come to us is because of the premium products purely. There is a price increase we have taken from time to time. There is a branding exercise what we did. We have taken a little bit of premiumization in terms of pushing the prices other than for even the lower-end products also. So it is not purely because of premium products. Okay. Okay, sir. Yeah, same thing. Actually, his question was also with respect to comparison of realization on quarter-on-quarter basis. So quarter-on-quarter basis, I think, Aman, which is also appreciated, this is the quarter where the impact is coming on account of monsoon. And then the monsoon, we see a little bit dip. And during this quarter, this dip is not to that extent which we have seen last year, September. So we can say that the company has done good job, fairly good job with respect to pricing during this quarter despite all, I think, maybe the problem on account of flood and heavy monsoon in the state of MP and UP. Yes, sir. Definitely, that was our understanding too. And sir, secondly, if we see in the RM cost, we see a good rise or a healthy rise of around 11% on a quarter-on-quarter basis which is sequentially. So is it because of operating deleverage that we face because of sales volumes? Or was there any pressure point that we witnessed during the quarter in RM cost? I think, Aman, when you see the RM cost, I think you should also factor this increase and decrease in the inventory. In the same quarter, the inventory increase was good because during that quarter, we tried to build up more inventory of clinker and cement as a preparation of pre-monsoon work. And dur ing the September quarter, the inventory increase is not for that account. It is only INR 89 million. So if we factor those two, I think, inventory increase decrease in these two quarters, there should not be significant increase in the raw material. That is my understanding. Okay. But essentially, the effect of inventory increase or decrease is already captured in the cost of material consumed. And so anyways, not an issue with that. And lastly, sir, on a broad company-level question, if we see volumes for Heidelberg, we have not essentially grown much since FY15 at a time where the industry has grown at minimum 45% level. So if we can maybe understand where have we lost the market share in the overall scenario, sir? It's not a market share loss, I would say. It is a temporary phase. As I said, this quarter is a temporary phase. We will come back on this. See, what has happened over a period of time, we have tried to sell a little bit of premium products, tried to build up a brand. As I said, sometimes, you have to bargain. You have to settle for certain things on a long-term strategic basis. So if you have created a premium at a point of time and some volume has been lost, this volume is not going to be lost forever. It can be got back because the customers prefer nowadays certain behavior of customer behavior is inclining towards a certain method. We know that we are moving with the consumer trend. I think the volume will come back, not a problem at all for me. I think the next quarter, we will be able to get this volume back. Yes, sir. Actually, I see more from a multiyear perspective. It was not on a quarterly basis. We see from FY15 through FY22, there's not seen much of a volume growth. I agree with you. For us, it was a question of that for some time, we agreed that market share is not lost, okay? Let me tell you, the market has also in 2020, the market had decreased. We have to take that also into consideration. It's not a market has not been a standard growth rate. We have tried to beat the market growth rate. Markets have also been a little sluggish. And another, yes, a little bit of volume displacement has also taken place because another two to three brands from outside have started coming in. So everybody has got the pinch of it. But we will get it back. Sure, sir. Sure. And sir, lastly, just if you can chip in one other question. In terms of power and fuel cost, it was very happening to see that we have not registered much of a hike during this quarter on a certain basis. Going forward, based on the current inventory levels and current fuel prices, where do we see this power and fuel cost moving for Heidelberg in the second half of this year, sir? We expect a little bit of tapering down a little bit. I don't know. But even if it does not taper down, at least it is not seen to be shooting up sharply. We forecast that it should come down marginally or it should stay at least at this level. That's my reading about it. But now, today, you are going to see the results of corporates which come in one after the other. You will see the stretch which we are already seeing. And I'm sure with the drop of EBITDA with this type of thing, the industry will have lost its absorption ability to continue with selling at these prices. Cost has to go now to the customer. This has been the biggest pitfall of the industry for not having paid attention to the price and continued to sell volumes. The volume game is fine, okay? Ultimately, it is the profit which you earn out of the business, sustainability of the cash flows. Today, we are not understanding this very simple thing that compliances will grow, okay? Compliances will require CapExes. These CapExes, when you will have totally dried out on your cash reserves, then where will you go for this? It is high time the industry wakes up to this point. And Aman, just to add two specific features for our company, especially on power and fuel, one is that we are now less dependency only outside power. 34% to 35%, we are our in-house of giving power. So we can say that any price hike in the power will not have much impact on us. And second thing, with respect to fuel, we don't carry significant inventory. So whenever price increases, we are impacted a lot. And whenever the price drops in, we will get the benefit. So we are hopeful that maybe the price will slightly reduce. And since we don't carry significant inventory on account of coal and Petcoke, so we could get some benefit in the coming 2 quarters. Sure, sir. But let's wait to hear. Thanks for the opportunity. Thank you. The next question is from the line of Prateek Kumar from Jefferies. Please go ahead. Yeah, ask that one, sir. My first question is on pricing. You mentioned about it. But some of the other regions have seen some improvement in pricing since September and October. How are the prices changed since bottoming out in October, September in your region, Central? If you look at it on the GSR side, there is a dip over the previous quarter of June, okay? And we are back to our March quarter prices, GSR. So I don't think in Central India, there was a movement which really helped us the price in improvement. I doubt very much the Central India players who have been playing in this market have seen any betterment on prices. Maybe on all India basis, maybe I don't know, some players from south, yes, little bit of improvement. But I'm not very sure that the market has given us an opportunity to increase prices significantly. Not in October, but after Diwali, we will. After Diwali, so we will definitely look up. The prices have already; we have increased the prices. Last Sunday also, we have increased the prices on 22nd of last month. We took up to INR 1, INR 1, or INR 2 rupees increase on first also. So INR 4 to INR 5 rupees have come into the quantity today as of now, okay, in these last 10 to 15 days, 20 days. I think more will come. I think in the near future, I am expecting that after Diwali, there should be some good price increases we should be able to push through. It all depends on the order books. When we see the order books getting a little overflowing, we immediately increase the prices. Sir, a follow-up question there. Some of the new capacities might be commissioning towards second half of FY23. Have they started to have an impact on pricing in your region? Yes, definitely. They will impact the pricing in whatever manner they are there. Any new company comes into the market, it causes disturbance, it rocks the boat. We should expect that we should not close our eyes and say that nothing will happen to it. We should be prepared for that. We are prepared for that, not a problem. But I always say that let us not be apprehensive that the competitor is always wanting to burn money, okay? Competitors put up a plan to earn money. So I'm sure they came to, they saw that Central India was a lucrative market, and that's why they have come here. And they definitely want to make money out of it. They will not be that aggressive or funny or stupid to bring down the prices, okay? Everybody will lose if that's the approach. But I think let me say that as seasoned players on the market, the responsibility is more on the shoulders of the players who have been present and with a good foothold in the market to hold the market rather than get swayed away by chasing a dream of somebody else at your cost. I think, sir, we should also appreciate one more point in Central India. The total demand or market size is not less than maybe 55 million or 60 million. 50, 50, 50, 50. And the particular our assessment that next year, there should not be demand growth less than 8% or 8.5%. So if you go by that thing and one more thing that 2023 is maybe the last year before the election in 2024 first half. So we are hopeful that there should be some good demand growth. And even if we take the 8%, we are talking about 5 million growth in the cement in Central India alone. So that 5 million is sufficient to appetite the whatever we need capacity coming as well as to consider the reasonable growth for our company. Thank you, sir. These are my questions. Thank you. The next question is from the line of Hiten Boricha from Joindre Capital. Please go ahead. Hello? Hello? Yeah. Oh, yeah, yeah. Thank you for the opportunity, sir. So my question is more on the longer-term view. So as we are seeing in the cement industry, most of the players mid to larger players are into expansion more for, let's say, five to seven years or 10 years. So do we have any plans to expand capacity, let's say, from 6 million currently to 10 or 12 million next seven to 10 years or five to seven y ears? Anything on that, sir? So yes, you are right that people are expanding. We also are working on the de-bottlenecking and other things. Today, also, our capacity utilization is close to about 80%, 78% to 79%. And we are working towards to see that first, let us consume. But also, the de-bottlenecking project, once it comes in, it will add some good amount of cement and clinker to our capacity. Plus, it will reduce our fuel consumption and other things. So we are operating also working on both sides. Another side is the Gujarat project, which we are working on. So the Gujarat project will be there in the long run. We are looking at also possible acquisitions if they come our way. And in the future, we want to merge these two companies to make a bigger capacity and a bigger program so that financial fungibility also occurs with us. So benefits will come into that. So we are looking at that. All options are in front of us. We are looking at whatever possible. Even when there is a mines auction, we are present in those mine auctions. We try to see that we can get some new mines also in different regions. Also, we would participate and try to put our foot there. Okay, okay. So just a clarity on this. We are expanding in Gujarat. So what is the capacity there and how much we are spending there? So that will be about 3.5 million tons of capacity in the first phase. First phase. And what about phase two, sir? And if we add another 3 million, it is always in the multiples of 3, 3. Okay, okay. 3 million in phase two. And what would be the CapEx, total spending? About EUR 200 million. EUR 200 million. 200 million. A little more than that. For this total 6.5 capacity, right? No, no, no. Only for two, for three. Okay. EUR 200 million only for phase one? Yes, yes. Okay, okay, sir. Yeah. I have questions. I'll get back in a few, sir. Thank you. Thank you. Ladies and gentlemen, you may enter star and one to ask a question. Please note, this is a final reminder for questions, and no further reminders will be placed after this. Thank you. The next question is from the line of Navin Sahadeo from Nuvama. Please go ahead. Yeah. Good afternoon, sir. Yes, Navin. Good afternoon. Good afternoon. Sir, just one follow-up question to the one which was previously asked about the outlook for the pricing in the region. So will the dynamics tend to change if JP assets were to be acquired or the deal around the JP assets tend to happen? Because as I see it, all these plants are really close to each other, largely in and around the Panna district. So with, I think, two capacities, ACC and JK coming up, and then if JP Associates plant also gets sold for some reason, do you think the dynamics will change or it would still largely remain the same? Cement availability, Navin, it is the same, no? Even if JP goes, the operator has changed. Cement availability remains the same. Clinker availability remains the same. Maybe a different brand will come. And that's it. Just a little bit. Again, because they have limitations of their mines and things like that. So anyway, I cannot say how much of the difference will it make. What Mr. Sharma told you, he told you earlier that if you look at a market of about 60 million tons and grow at a rate of 8%, 5 million tons of capacity, it will absorb every year. So not to worry about it. I would say for me, competition is not a question of worry. Okay? For me, the worry is that how the competition sells its products in the market, and does it sell it at a throwaway price or does it believe in competing or does it believe in the brand creation? Does it believe in value creation? For me, my neighbor's mentality is more important than the market size. Understood, understood. And would we also be interested because there was obviously this news of those assets being on the block. So would we also be interested, of course, at a price? But you think primarily because we have been looking to expand in the central region for a long time, and that's where I think since there was no opportunity, we are now focusing on Gujarat. But will we be interested at a price for these assets? With Gujarat? For JP Assets? Yes, yes. No, I don't think so. Okay. Again, any specific reason that you want to say that these assets are not good quality? Limestone is not there or? I would refrain from saying anything else. Okay, okay. And second then, just a question just on the deals because suddenly the central region is bargaining with deals. So there was this deal about Springway Mining being acquired by JSW. Again, is it because I'm sure since it's part of the same region, that mine being on the block could have come to us as a deal. So you think you could have bought it and looked at as a growth opportunity? Your questions are a little sensitive in nature. And I seek for your pardon to not being able to answer to that. But I can talk to you on one-to-one basis, of course. Okay, okay. Right, sir. Thank you. Thank you so much. Thank you. Bye. Thank you. The next question is from the line of Parth Bhavsar from Investec India. Please go ahead. Hi. Can I hear you? No, sir. If you can change your to answer to. Is this good? Yes, sir. Just a second. Hello? Yeah. Is this better now? Yes, sir. If you can speak a little closer to the device. Yes. So thank you for the opportunity. So wanted to understand, this is Zuari Gulbarga plant. So what would be the size of the expansion and also what would be the cost of the same? I don't think we should discuss Gulbarga and Zuari here because it is not a part of HCIL. Okay, okay. And sir, just one other question. So basically, sir, wanted to have your take on LC3 cement and how far is it before it sees light of the day? Where is it stuck? When can we expect LC3 to materialize? So LC3 is a product where you require calcined clay or a clay of a certain nature. Now, these clay reserves are not available easily, okay? They are available in places at a very different location. And bringing this clay here into such long distances and processing in LC3 is not a viable solution. To me, at least, I can say that it does not make commercial sense. If you want to put up these clay mounds where somebody puts up a kiln or anything and wants to make calcined clay, cement, fine. LC3, you can make, but you have to put up a plant closer to those clay reserves. You cannot unless you bring it to long distances. Again, in a clinker plant and an LC3, you have to have a lot of customer education where it can be used, the product can be used. Otherwise, you will in a country like us where the mason takes the call, they will put something or the other, and then you will reap the disasters of that later on. It will be a disaster. LC3 cement has its application also differently. Right, right. Perfect, sir. Thank you so much for your take on this. Thank you. Thank you. The next question is from the line of Sriram from India Ratings and Research. Please go ahead. So first of all, congratulations with a good set of numbers is good. Good ratings are put in place. I just want to understand a couple of things. With respect to the interest expenses which has been reported in the numbers, okay, it was almost close to as much as INR 20.6 crores, right? As against INR 8.2 crores. So there isn't provisions provided against interest. If you can provide some colors on that, it will be helpful for us to take it further. So Sriram, we have also given one note in our public results because there is significant increase in interest expenses during this quarter as compared to last year as well as the June quarter. So we have taken provision of around INR 10 crore during this quarter on account of one of litigations. And this is the provision. And we will also appropriate account for this interest amount depending upon outcome of such matters in the court of appeals. Okay. So whether do we expect that this provision is likely to continue for upcoming quarters or else in the. When does the judgment be held upon, sir? Judgment came during this quarter. So that's why we have taken the provision. And this has been going on for many years. This is our case. Okay. Thank you, thank you. So with respect to demand, sir, okay, here we have reported as much as about 2.1 million tons for H1 FY23. So for coming next half of the year, shall we expect that things should cross about as much as about 2.5 to 2.7 million tons of sales volume can we expect? You want to say the total in the second question? Right now, I would prefer not to give you any guidance on this. Okay, okay. Thanks, sir. Thanks, sir. Thanks. That's all from my side. Thank you. The next question is from the line of Debath Rosinna from ICICI Securities Limited. Please go ahead. Sir, what would be the lead distance for this quarter? Distance is close to about 350. 350 only. Same. It remains same, consistent. Okay. Thank you, sir. Thank you. The next question is from the line of Uttam Kumar Srimal from Axis Securities. Please go ahead. Yes, sir. Thanks for the opportunity. Sir, you talked about de-bottlenecking line two first. So what would be the capacity that will be de-bottlenecked? It will be around about 300,000 tons of clinker. Okay. And how much cement that will be able to produce from this? 0.5 to 0.6 million? Factor of clinker is factor of 1.6. 1.6 around 450,000. 450,000. 450,000. Okay, okay. Okay, sir. That's all from us. Thanks. Thank you. The next question is from the line of Rajesh Kumar Ravi from HDFC Securities. Please go ahead. Yeah. Hi, sir. I have a follow-up question. If you look at the central region, you mentioned that the current demand size is close to 60 million tons. This year alone, we would be seeing UltraTech 2.7 million ton clinker in Bihar, JK Cement adding 4 million ton, and ACC adding another 2 to 3 million ton capacity in that market. So don't you think that would have an impact for companies like you on volume growth? Will it impact your volume growth in addition to the regional pricing? I don't think there is so much of a concern because with all these capacities, you take it at one stage. Somebody says 3 million tons. 3 million tons does not come on the first day. Okay? First year, the capacity comes is about 40%. Next time, it comes to 60%, 65%, 70%, and then it goes to 70% to 80%. Okay? At best, you can't operate a cement plant unless the market is really buying more than 80% normally under normal circumstances. Okay. It would be not correct to assume that all these capacities will stand carrying in our safe from day one. No. Even if I take 40% utilization, there would be close to 4-5 million. So all of the incremental demand, even if it grows 7% to 8%, would be consumed by these three capacities. Yeah. They will consume this vacuum which is created by the demand. They will fill up that vacuum. And second, JP Assets, what we understand currently, they are operating at 25% utilization. If it were to be acquired by some of the big names, would it be that the RAMFA could create surplus capacities and hence further pressure in the central market? Why are they operating first? I will ask. Why are they operating at 25%? So I don't think they are operating at 25%. It could be a total misnomer. I don't believe that anybody can operate a plant at 25% when the break-even of the best plant in this country is covered 34%. Okay. So what is your understanding, sir, to what level they can ramp up if it is well-funded in terms of working capital and other financial constraints are removed for these assets? I think you can't make a cash loss. Break-even below you operate day two and at 25, you will keep making cash loss. It is better to close down the plant. I don't think somebody talks about this. No plant would be able to operate less than 50% utilization. Okay. And lastly, in terms of. Yes, sir. Absolutely. Somebody in the market, these type of rumors go on without even thinking that people say that they are operating at 20%. I can't believe it. No, no. So from their annual report of April 2022, JP's assets 2.5 million tons volume on what we understand is having a 10 million tons capacity. So that is our basis of saying that the plants are operating at 25%. Sorry, I missed your last statement. I said capacity could be long. They are not capable of doing that. Okay, okay. No issue, sir. Last question. With Adani's entry and aggressive expansion plans and even the other majors and big companies announcing large expansions, how does Heidelberg look forward to protecting market share, particularly in the central region? Without saying too much on this, I would say that it's just only a change of entrepreneurs from moving from a multinational to a local entrepreneur. And I would say that it will add value to the country. I can only say that much. So knowing the business locally and doing things locally, the amount of money they have given and the shelled out Adani Enterprises have shelled out for this is significant money. It's not small money. And they would like to while they are their volume will stay there. But I'm sure with the results once they come in the market, they would like to make some money out of it. I think the current methods of working will change significantly. That's my feeling about it because they are entrepreneurs. Adani family is totally pure to B2B. B2B businesses, most of their businesses, their DNA, as I understand, okay? I may be wrong totally. Their DNA in most of their businesses, their margins, they are operating on products where the margins are more than 50%. How will they be satisfied with margins of 16% and 18% here? I don't think they would like to be in such a state. Great. Thank you for yeah. I can only say this much as of now. I don't know the organization. I don't know their behavior in other industries. So I prefer that I'm just making a small understanding of my own thought process I'm placing before you. I'm sure that the Adani Group could look at really stepping up steam to make money here. It's a very good price they are paying. Thank you. The next question is from the line of Shravan Shah from Dolat Capital. Please go ahead. Yeah. Thank you. Sir, just to clarify, last time we said that for FY23, we were expecting 6% to 7% volume growth, but this first half, we have already declined by 12.5%. So for the full FY23, can we see a 2% to 4% kind of volume decline? Let us wait and watch for the full year. Financial year, I am not yet clear how the demand stands from October, November onwards. So I think there is upside. We will be able to pull up volumes in these coming two quarters significantly. That's my belief. So not ending on a negative note. Okay. Secondly, just to clarify on the de-bottlenecking, you said the 300,000 clinker and 450,000 cement we can add. So this is just from the one line or you mentioned line 2 and 3. So both put together, this is the extra capacity that we will get? Both put together. And this will be done in FY24? Yes. You can see that. It will be in two phases. So we will start with the first phase in this FY24 and then followed by the second phase in FY25. Okay. And for the Gujarat plant, you said by May, we will have an environmental clearance. So just to clarify, last time you said it will take one to 1.5 years from that we will order the plant. So just to simplify from here on, if things move as what we are expecting, when the plant will start in FY26 or FY27? 27, you can see. Okay, okay, okay. Thank you, sir. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Vaibhav Agarwal for closing comments. Over to you, sir. Yeah. Thank you. On behalf of PhillipCapital (India) Private Limited, I would like to thank the management of HeidelbergCement for the call. And many thanks to the participants for joining the call. Thank you very much, sir. See you in a minute after the call. Thank you. Thank you. Thank you. Thank you. Ladies and gentlemen, on behalf of PhillipCapital (India) Private Limited, that concludes this conference. We thank you all for joining us, and you may now disconnect your line.