Ladies and gentlemen, good day and welcome to the UltraTech Cement Limited Q3 FY 2022 Earnings Conference Call. We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore viewed in conjunction with the risk that the company faces. The company assumes no responsibility to publicly amend, modify or revise any forward-looking statement on the basis of any subsequent development, information or events or otherwise. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Atul Daga, Executive Director and CFO of the company. Thank you, and over to you, sir. Thank you. Good evening, everybody, and welcome to this call for UltraTech's Q3 performance. First and foremost, I hope, wish and pray that all of you and your families are safe from COVID. This has been a difficult quarter, with costs going up, a sudden and unexpected decline in demand in the month of November, and consequent pressures on selling prices. India is a very regional market, and each region, as usual, has performed at different levels. Demand slump was the maximum in the eastern corridor, which I'm sure you would have heard already from the market sources. North continued to be relatively strong and growing consistently, performing better than other markets in terms of volumes and prices. At UltraTech, despite a degrowth in domestic volumes this quarter, we have achieved a 13% growth in the nine-month period. In spite of a high base for Q4, our aim is to achieve a growth in Q4 also. As for Q3, we believe there were multiple factors leading to the demand slump in November. First and foremost, unexpected rains in several parts of the country, construction ban in NCR, labor availability at several places, sand shortages in eastern side, were just a few reasons which can be assigned to why November fell. December was back on track. On an average, for the quarter, our capacity utilization was 75%, but December had already inched up to 80%+. Utilizations across the country are improving, and so are prices. Let me first give you an update on our expansion program. As part of our growth plans, we are putting up additional 19.5 million tons of capacity. 1.2 million tons greenfield was already commissioned last quarter in east, and 2 million tons brownfield Bara grinding unit has been commissioned in the current quarter, in the month of January, taking our total India operating capacity to 114.55 million tons. The balance 16.3 million tons of capacity will be commissioned during FY 2023 at different points in time. Barring a few small delays due to the pandemic, we don't anticipate any bottlenecks in project commissioning schedule. This becomes very important because we believe that demand will see a surge given the general elections in 2024. To brief you about the other non-core assets which we had inherited as part of the acquisition of Nathdwara Cement, definitive agreements have been signed to sell off the fiberglass business in Europe. We expect to close the transaction in the current quarter. This quarter we have spent INR 159 crores on expansion and other CapEx, reaching a total of close to INR 4,000 crores. The pace at which the project execution is going on, we may spend about INR 5,000 crores on overall CapEx in FY 2022. I'm happy to share with you that the board has approved an expansion of our white cement capacity. It will be undertaken in a phased manner from our current 6.5 lakh tons to about 10.5 lakh tons. The current putty capacity is 8.2 lakh tons split at two locations. We are in the midst of completing a greenfield expansion of putty capacity by about 4.4 lakh tons. The project is expected to go on schedule in Q2 FY 2023. On the debt front, we paid down our treasury, prepaid our loans to the extent of INR 3,459 crore. This was a very planned, very well-planned move with the hardening of interest rates and falling treasury yields. Going forward, the gap between our operating EBITDA and total EBITDA will narrow down due to lower treasury operations. On the cost front, fuel costs have softened a bit from the peak, but still strong. As we had told you during the last quarter, fuel consumption costs for UTCL are up by roughly INR 250 per ton for cement. During the ongoing quarter, we don't expect any more surprises, but the costs will remain elevated at the current levels. There is a reasonable possibility as of now for prices to soften post the Winter Olympics of China. Logistics costs this quarter were almost at the same level as the previous quarter, despite reduction in cost of diesel in the month of November. Exit September cost of fuel was higher than the average of quarter two. This is another reason for not a very visible impact on average logistics cost for Q3. The benefit, big or small, of reduction in diesel cost will be visible in Q4. We have begun the current quarter on a very positive note with improvement in demand sentiments and improvement in prices as well. Next year seems to be poised for a good growth for the industry. General elections, as I mentioned in the beginning, are around the corner, which always spur demand. Urban housing has started seeing rapid improvement, thus helping cement industry. New norms under the CRZs will open new vistas of growth for redevelopment of several old constructions. New infrastructure projects are in pipeline. We believe that the project announcements and issuance of new orders will start picking up pace. Government Gati Shakti initiative is a transparent mechanism of tracking all the projects, and this will further strengthen the intent of timely execution of infra projects. We continue our efforts on sustainability. This quarter again, we have commissioned increased our capacity of WHRS as well as solar. This quarter, we ended our WHRS capacity at 156 MW and solar capacity at 221 MW. On our current scale of operations, we are now at close to 16% green energy on our path to achieve a 34% green energy by the end of 2024. With that good note, I hand over the session for questions. Thank you. Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. The first question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead. Yeah, thank you, sir, for the opportunity. My first question is on the cost front. Just to understand your comment, opening remarks a bit better. On a full overall cost basis, we expect, if I understand correctly, from fourth quarter some tailwinds to start reflecting or given the consumption lag in the fuel, et cetera, we will see some bit of a fuel cost increase and then maybe from 2021-2023 some cost benefits. Just if you could just share some more details, sir, it will be very helpful. Sumangal. The big benefit or the delta movement would be visible only in Q1 next year. Q4 this year, as I mentioned, the costs will remain elevated and not too much of difference is expected. Given that, spot prices, say, pet coke around $170-$175 and even thermal coal, our sense was that there will be some bit of a lag and inflation further in fourth quarter and then a dip in 1Q. Is that understanding not correct? Your understanding is also correct. My understanding is also correct. Let's wait for Q4 results. Okay. Okay, that's fine. Understood. Second on the demand, sir. I mean, 3Q of course at the start of the quarter, no one expected such weak demand in the quarter. Will you still term it as an aberration and some external factors or, and is your medium-term demand estimates and outlook still intact in terms of strong recovery in demand? Yes. Sumangal, as I mentioned, November was an aberration. December was back on track. January continues to be strong. To give you a precise number from UltraTech's perspective, average capacity utilization for the quarter was 75%. December was 84%. Okay. That gives you that this was one freak month, everything pointing in the opposite direction, in an unfavorable direction. Understood. Just one last question on the exit prices of 3Q. Any sense from what it was versus 3Q average prices and, very early days in January, but any direction sense on how we are seeing prices? Because we do hear some price hikes in few pockets of the country. If you could just share some details. I think you already get the sense about price hikes before I do. The undercurrent is strong because the demand is strong, so we expect price hikes to take place. As far as Q3 is concerned, Q3 over Q2 was almost flat. There were price hikes which were taken in the month of October, which had to be given up or rolled back. Okay. January we expect price hikes, but as of now nothing is reflected, right? No, there have been price hikes in a few pockets in the country already. You see, don't multiply it by 365. We have to wait and watch for prices to stabilize. I won't get the benefit for the entire month, but February and March should get the benefit. Again, I say cement market is no less than the stock market. Today it's up, tomorrow it's down. Nobody can predict what exactly will happen. Yes. Got it. Thank you so much, sir, and all the very best. The bigger point, Sumangal, the bigger point is the undercurrent is very strong. Okay. Appreciate that. Thanks. Thank you, sir. Thank you. All the best. Thank you. The next question is from the line of Pinakin from JP Morgan. Please go ahead. Thank you very much, sir. Just trying to understand the cost item better. Can you give us a sense versus the $150 per ton of P&L cost in the third quarter, what will broadly be your blended purchase cost at this point of time? Because we have seen thermal coal prices again surge after the Indonesian ban and they've not come off materially. The Indonesian, sorry, Indonesian coal price hike apparently might stay for a short period of time. Currently the prices are elevated. Our expectation is March, April onwards, we should start seeing some softening trends. Do you want to add? Yeah. Just to add upon, this is K. C. Jhanwar here. Yes, you are right because Indonesia imposed the ban on export of coal. Now we understand that there is some relaxations are being announced. I mean, particularly the people who have fulfilled their domestic quota for servicing to the local power plant would be allowed to export actually. Yes, it is to be seen in the next fortnight or in a month how it gets settled down. There may be some impact here and there if this ban continues. Sure. Just to continue. Q4 costs might still be elevated. There will be some positive, some negative. There's an inventory effect. Spot prices have no relevance for the current consumption, current quarter consumption because the time lag in delivery is a minimum 45-50 days. The newer purchases will impact the next quarter only. Understood. Sir, just trying to move beyond thermal coal and pet coke. Crude Brent prices are near five-year highs. The outlook is that crude prices further move higher. If crude prices do move higher, then would it be fair to say that the cost deflation, that disinflation that the company is expecting in first quarter may not take place because you will still have continued all around cost inflation from higher crude indirectly? Yes, that's a possibility. Understood. If you've seen the way gas behaved, coal will not lose the opportunity in case. Oh, sorry, I had gone on mute. Pinakin, you are absolutely right. I don't know when did I go on mute. No worries. Okay. If crude will behave then there will be a dilemma for cement industry also. Understood. Sir, lastly, because of the latest COVID wave, would any of the project commissioning timelines get pushed out because if any work has been impacted? Not at the moment. We don't see any slowdown. Yeah, because the project, obviously with the COVID there may be some small here and there, but I don't think, as Atul said, there is any worry on the schedule commissioning time actually. We are very much on track. At this juncture, we don't know whether Omicron [Non-English content]. Yeah. Whatever is coming, how does that impact. So as of today, with the current state of affairs of Omicron, and the current state of affairs of the COVID wave, things are under absolute control. Understood. Thank you very much, sir. Thank you. The next question is from the line of Raashi Chopra from Citigroup. Please go ahead. Thank you. Atul, just firstly on price hike, you mentioned that price hikes have come through in some of the regions. Which regions have still not come through? Is there just a delay or, I mean, is there a reason why they haven't come through? It's a matter of time, Raashi. Step by step, things are done. Let's discuss it offline instead of. East has happened. Some parts of Maharashtra I know. Some parts of South, yes, price hikes have been done. Kerala has been done, for example. Fundamentally, it also depends when the level is to be. If the levels are too low, but as just now said by Atul, once you have a price hike, it will be known only maybe after a week, 10 days time. The real reflection would come after 10 days because there is a lot of inventory in the pipeline. The different people may have different sort of pressure. Yes, I would say holistically, since the demand has improved in the month of January, logically the price improvement must happen. Actually, again, I'm repeating, we are operating at 85% capacity utilization now. Okay. Same scale is operating above 90%. Mm-hmm. be enough indication of how strong the market is. Right. Okay. Okay, that's helpful. Thank you. Just can you talk a little bit more upon the white cement expansion plan and the thought process behind that? Yeah. White cement right now, first and foremost, white cement market has already been growing. Better late than never that we decided to start our expansion. We were meeting our requirement with imports, which is not as remunerative as our domestic supplies. That is the whole purpose of getting into an expansion mode, increasing our capacity on white cement. Okay. I think I missed the number. What did you say about the expansion? What was that number? About 12.5 lakh tons. Doubling the capacity more or less from 6.5 lakh tons to 12.5 lakh tons. No. Okay. Fine. Okay. Thank you. All right. Thank you. The next question is from the line of Girish Choudhary from Spark Capital Advisors. Please go ahead. Yeah. Thank you, sir, for taking my question. Two questions. Firstly, if I look at your slide on the region-wide demand performance, East is the only region which has seen two consecutive quarters of decline in demand on a year-over-year basis. How much of this would you attribute to one-off reasons, and how much is due to actual slowdown in the region, if at all? Your thought process or your thoughts on this. The one-off reasons were the sand shortage, rains, and labor movement. These three are one-off movements. My expectation is that now onwards you will start seeing improvement in eastern corridor also. Jhanwar, would you like to add something? Yes, definitely. Because the sand was one of the major issues. Number two, because the state supported scheme, especially in Odisha, that also little bit got slowed down post the elections of Bengal and kind of thing. Now things are getting stabilized and we are pretty confident that demand should come back at the normal. Okay, got it. On the white cement expansion, if you can give us some little more on the timelines, and also on the white cement grade limestone reserves post the expansion. Some more details on this expansion. On the reserves, post-expansion also we would have reserves of 40-50 years. That is, one. We would look at anywhere around 2026 to commission the white cement expansion. Okay. Because that acquisition is something which is not complete, and that is what will take a bit of time. Okay. The issue, the full slide is there in the presentation also. Okay. Just to finish this off on white cement, one of the reasons you mentioned is that to reduce the high cost import. Just to understand this, how much is this imported and versus how much you are using it or managing using from the- This year the plan was to import 200,000 tons of white cement. Okay. Basically by Till we commission our expansion, we expect the way the market is growing that our requirement will keep on growing. Got it. Thank you, sir. Thank you. Thank you. The next question is from the line of Amit Murarka from Axis Capital. Please go ahead. Yeah, hi all. Good afternoon, sir. I just have a couple of questions. Firstly on other operating income. Last quarter, I remember you mentioned there was some incentive there. This quarter also that number is a bit elevated. Is there some one-off this quarter there as well? You know, there will be something which comes in, something which goes out. Last quarter, we had Dhar incentive coming in as a block. It has got stabilized now as a regular inflow. This quarter, we had Rajashree Cement's long-pending incentive, Rajashree Cement line four, which got disbursed. I would expect our incentive and related other incomes to be in and around INR 125 crore-INR 150 crore per quarter. Right. This quarter it was more or less INR 270 crores. Like, then what the Rajashree one would be, what, INR 120-INR 130 crores? No, no. What is 270? The difference between, I mean, the sales and the total revenue. Sorry, Amit. Just one second. Mukesh, will you answer? The Rajashree Cement is INR 50 crore. No, no. INR 270 crore, what is the breakup? Okay. Yeah. This is including other income also, like scrap sale and miscellaneous write back also. Okay. No, no. I would say we have a stable, you know, incentive related classes do take place every quarter. Any write back might be there on a regular basis. INR 150 crore is an average number for our size of operations. Sure, sure. Just one more question on the capacity utilization. Like, you mentioned that FY 2023, 2024 should be strong growth year due to pre-elections, and you're already at 85% utilization. But pipeline, capacity pipeline is there till March 2023 largely. Is there a new pipeline also firmed up, and by when can we expect that the same thing to be known? We'll come back to you. You know, our board has to approve. Once the board approves, we can tell you about it. Sure. Lastly, what was trade non-trade sales this quarter? 64%, trade. Okay, thanks. I'll come back in the queue. Yeah. Thank you. The next question is from the line of Pritesh Shah from Investec. Please go ahead. Hi, sir. Thanks for the opportunity. Couple of questions. Sir, how are you looking at industry-level capacity additions this fiscal and next fiscal? Factoring the demand scenario that you're looking at, how should one look into UltraTech's market share given the incremental capacity additions we will have, which will be significant in FY 2023? Yeah. Each year you should look at ±20 million tons of new capacity. FY 2023 bulk will be coming from UltraTech. Next year, the year after also you could see ±20 million tons. Our market share will grow with this 20 million tons of 16 million tons coming in FY 2023. Market share is bound to grow. Okay. Okay. Sir, would it be possible for you to give a regional flavor over here? Regional flavor as in? On market share, sir. Because 16% and 20% is a big number. Is it something? Market share, you know, very difficult to quantify because that data, comparable data is never available. When I talked about market share increase the percent, my analysis is that new capacity which will come in, we will sell it out without competition being there. Obviously our presence in the market will grow further. Sure, sir. Sir, my second question is on construction chemicals. It was good to see the white cement announcement actually coming through this quarter. We haven't heard anything from you on construction chemicals. We understand that we have started manufacturing at few of our plants. We just wanted to understand our thoughts on construction chemicals and basically how is it going along with Grasim, given they have highlighted significant plans on the paint side. The question is more with reference to any changes on the distribution side synergies, whether in UltraTech is actually benefiting out of it. We are gradually growing our construction chemicals business. It should be reaching maybe INR 500 crores per annum on an annualized basis by the end of this year. We would look at acquiring good quality assets to grow this business further. The bigger point that you asked about whether in Grasim or in UltraTech will do this line of business in the construction stage and not in the finishing stage. Now, there are sealants, waterproofing agent. Sir, lost you. Stuff like that, which is totally. Excuse me. This is the operator. Participants, the line for the management has dropped. We request you all to please stay connected while we reconnect the management. Ladies and gentlemen, thank you for patiently waiting. The line is reconnected, so you may go ahead. We have Mr. Pritesh online. Hi Pritesh. Hi, sir. We lost you. Where I lost the connection. We lost you. Yeah, I know. I know. know. I know. We lost you at construction stage and not finishing stage. Yes, we will remain in the construction stage and finishing materials. Anything that has to be done would be with. We are not getting into that space. There is a lot of opportunity, you know, so waterproofing agents, sealants, mortar, dry mix, then some amount of admixtures also. Admixtures will become our captive product used for captive consumption also because we have a big RMC as well. Ready mix. For our RMC also. Lots of areas that are growing steadily. What is the end game plan over here? I also mentioned. I don't know whether I lost connection or not. We should be annualized about INR 500 crore this year. Multiple plants have already been put up. We would look at, you know, interesting opportunities to consolidate with us. Sure, sir. That's quite encouraging. Sir, where do we see this business three years out? Last question. Three years down the road, if today I am INR 500 crores, I would target INR 2,500 crores at least. Yeah, because once we have started in this line of business, obviously, we would like to double year after year actually fundamentally, because there is enough opportunity for growth in this particular segment, right from waterproofing, sealant, mortar, grouting. There will be enough opportunity. Sure, sir. That's quite encouraging. Thank you so much for the answers. I'll join back with you. Thank you. Thank you. The next question is from the line of Indrajit from CLSA. Please go ahead. Hi, sir. Congratulations on UltraTech. Thank you for the opportunity. Hi, Indrajit. Hi, sir. On the same vein actually to Pritesh's question. Going forward, given the amount of cash you will end up generating in the next 2-3 years, and given the expansion plan that you have, any indication on annual CapEx, and would it be more heavily biased towards non-cement or allied segments like construction chemicals, white cement, et cetera? Or we will continue to see a higher proportion of it sort of cement-based? The proportion of CapEx will be higher on gray. Construction chemical is a very small cost operation. Even if we expand, acquire, it'll not be a big portion. White cement it will be spread over the next 2 or 3 years, the big spend. Maximum spend you will see on gray cement. This year, as I mentioned, we might exceed our initial forecast. We might reach close to INR 5,000 crore of CapEx spends. Next year could be close to INR 4,000 crore of cash outflow on CapEx, which would complete our the current phase of CapEx plan, the capacity expansion plan. INR 4,000 crore would include the capacity expansion also, as well as the routine CapEx, what we call maintenance CapEx, which is anywhere around- Maintenance CapEx. Maintenance CapEx, which is around anywhere between INR 1,000-INR 1,500 crores. Sure. Thank you. I think we have lost sound. Okay. Yeah. No. On the construction chemical, if you can help us understand the industry better, is there a brand consciousness or is it mostly an unorganized sector? Do we have to spend a lot on A&P, getting people conscious about the brand? Or do you think we have reasonable mind share? There is an effort which has to be put in place to get people to buy a product that we are selling, and it will be an UltraTech brand, to command a premium and to attract to have a sticky customer. Jhanwar ji, would you like to add? Yeah. The major strength with UltraTech is because our vast network in terms of dealers and the retailers network actually, because we have a huge network for dealer as well as the retailers. We would like to make full use of this network actually. Yes, the brand will definitely play a role. Yes, already we have started putting some efforts on branding of these products actually. Yes, in time to come once now we are moving from one level to another level. The brand will play again major role. The dominant brand is going to be under the UltraTech brand. Sure. Thank you so much. That's all from my side. Thank you. The next question is from the line of Pulkit Patni from Goldman Sachs. Please go ahead. Hi. Excuse me. This is the operator. Mr. Patni, we can't hear you. Is this better? Yes. Now we can. Thank you. Yeah. Clear, clear. Okay, great. Sir, just one question. You know, taking a slightly longer-term view, if we look at the last few years because of COVID, other disruptions, while growth rates look good, but broadly there's not been a significant growth in terms of volume if I look at a two to three-year CAGR. Whereas in the same period, we've seen capacity getting added at a reasonably, you know, strong pace last few years. Are you worried that maybe next 12-18 months, the pricing environment might not be as conducive as we are used to seeing in the last two years? First and foremost, on the sales volumes, I think we have been continuously growing from 70 million tons to crossing a 90 million tons mark and jumping over 100 million tons of sales. So it is growing at a steady pace, I would say. Capacity expansion, yes, over the last five years has grown roughly 11%. We have always invested ahead of the demand curve in time to meet the rising demand. So we don't see a challenge to sell this capacity. Next point that you mentioned is on pricing. Given our consolidated strength or position in any market, we are able. It's a rule of the game, not just UltraTech. Anywhere where there is a consolidation of the market, pricing discipline is far better. Take the case of Gujarat market. We were not present at one point in time. 2014 onwards, we came in, and today Gujarat markets are one of the best priced markets. Similar phenomena we are seeing in the central markets. North is where similar thing has happened in the north market. East is a market where what you are talking about is a fierce market. Lot of new capacity getting added, so we might see some pricing pressures. But the consumption in east market will keep going up. Whatever data are available, I think that despite the new capacity additions, overall capacity utilization of the industry is likely to improve in the next 18-24 months period. Pulkit, I'm just looking at my data. From 2016, where we sold about 48 million tons, crossing 80 million tons now, this year, and then jumping on to a three-digit mark very soon. We are steadily growing at about a CAGR of 10-11%. No, I mean, my question was more from an industry. No doubt you've done pretty well in the last few years. As an industry, we were at about 335-340 million tons in FY 2019. FY 2022 we'll finish at about 350-352. On a CAGR basis it's not that exciting, but I understand what you are saying, that consolidation should likely help drive. Okay. Unfortunate instances that have happened. Now COVID was most unthinkable thing that has happened. For all you know, it might continue for a couple of more years. As you read, [Non-English content]. Somewhere new variant has already been discovered. Delmicron or something is being talked about. I don't know the disruptions which the world will see, which India will see going forward. We've had several instances. There was demonetization in 2016 which broke our back. GST introduction, there was so much of confusion with GST introduction. That's a new system which came into play, took time to stabilize. I think we have to take all these events as part of in our stride and move on. As UltraTech, I think we will keep consolidating the industry and grow from strength to strength. Sure, sir. Sir, and a second one quick question. Any sense of what could be the realization from this, Belgium sale? Any rough cut number that we can... EUR 94 million. I think EUR 90 million, EUR 90 million-EUR 94 million, depending on working capital adjustments. I would safely put a number at EUR 90 million. Sure. That's very useful. Thank you so much. Thank you. The next question is from the line of Navin Sahadeo from Edelweiss. Please go ahead. Hello? Hello? Yeah, hello. Yeah, yeah. Thank you for the opportunity. First of all, I just want a small clarification on this, fuel cost that we report in the presentation. When we say average fuel consumption cost in dollar terms, which is about $151, that is the, let's say you're referring to the pet coke price, the imported coal price, or it is the blended cost of all the- Blended cost of consumption in UltraTech. That includes the domestic fuel also. Yeah. It's total fuel, including domestic. Correct. Can you give me a broad break-up as to what it was for the quarter, as in terms of how much is pet coke, how much is, let's say, imported coal and domestic coal? Is it possible to share that? 193. pet coke $193 and coal at around $137. Imported coal. Yeah, correct. I was talking about overall, in terms of the breakup in terms of usage, in the sense, let's say pet coke is, let's say 50% of fuel. I'll tell you. We have reduced the dependence on- pet coke. Pet coke. This quarter, the pet coke consumption was 25%. 25%. Okay. If pet coke is 25%, imported coal would be broadly 50%? Could be a larger chunk. Okay. Just to set off the calorific value, we have gone for the high calorific value imported coal. Yeah. High caloric value imported coal. No, fair point. Sir, my second question was about the white cement expansion, which you talked about. From 6.5 lakhs to over 12.5 lakhs. If I understand correctly, white cement per se is not a you know growing industry as such. It is the putty which is growing. Is that understanding correct? You are rightly putting up a four- Putty is growing at a faster pace. I am putting about INR 4.4 lakhs on putty expansion also. White cement is also growing. Bulk of the expansion will get consumed into putty, yes, but white cement growth is also there. Correct. Putty post-expansion are current. If I'm not wrong, putty capacity is 8.5 lakhs? Yes. Correct. 8.5 lakh putty, we are adding roughly around 4.5 lakhs to it. 4 lakh tons. Yeah. Yeah. Yeah. If I understand, to make putty, requirement of white cement is only 20%. For 4.5 lakh of putty, all you need is 90,000 tons of white cement. I agree. That is why I already told you that white cement, we see a huge potential in pure white cement sales as well. Understood. The fact that currently we are importing also. Correct. Largely import substitution to begin with, which you said is about 2 lakh tons. Yes. Yeah. That will happen straightaway and thereafter the growth part of it. Just one follow-up here. By when? Because it said the expansion will happen in phases. I think I missed that you answered this, but by when is this capacity likely to come on board? You know, it sounds a very long timeframe, but we are looking at 26 to commission our line three. The biggest portion of time spent will be in land. Land acquisition is not completed, so we would now once today the board has finally approved the expansion. We'll start putting pressure on working on our land acquisition and perhaps over the next three or four quarters, I'll have a clarity on how the timelines are getting crunched. Okay. Okay. Fair. Just one last question, sir, if I may. Demand of course, as you said, is strong and December also I think saw reasonable, like, you know, recovery. You also said utilizations were upwards of 80%. With the coal prices going down, we again saw a lot of fight for market share coming back, and that's where exit December particularly or most of the December, the prices were under pressure. In the same light, if we- I mean, there are some companies who have year-ending December. Hello? Yeah, but in East, I'm saying we are seeing a different fight for market share altogether, right? I am not aware of any fight. Yeah, okay. Fair point. I, my simple question on a broader perspective was with coal prices or in general fuel prices easing, do you see headwinds to these price rise or you think, no, as long as demand is good, pricing should just be, good enough and margin- My belief, and again, I'll repeat, cement prices with capacity utilizations, and in my time, I've seen two or three cycles where all-India capacity utilizations have gone above 85%. Margins, you know, hit the ceiling. Because what happens is when all the regions are having a good capacity utilization, there is no export of material from one region to the other. Every region is able to enjoy a good pricing environment. Agree. Let's really hope for that at in Q4 now. Thank you. Thank you so much and all the very best. Yeah. Thank you. The next question is from the line of Swagato Ghosh from Franklin Templeton. Please go ahead. Hi, Daga, sir. Good afternoon. I had a very simple question that consolidation helps in passing on some of the cost pressures in difficult times like we have seen in the last 2-3 quarters. While the industry is consolidated versus say what it was 5 years back, still it's probably not consolidated enough. I just want to get a view on what might happen to the industry in say 4-5 years' time. Can we reach a level of consolidation when like even in weak demand scenario we are able to successfully pass on say any major cost headroom? I'm asking you this because you can be a driver of the consolidation either through acquisition or by pushing out marginal players by selling higher volumes, et cetera. You know, that scenario which you're looking at, I don't expect in the next 4-5 years. There are global markets which, you know, which are in that phenomenon. Consolidation will take place. There will be people who will want to cash out in a good cycle. UltraTech as a company believes very strongly in cement growth in the country over the next decade. We are seeing at least a CAGR of 6%-8% growth. We are all very aggressive. We will evaluate every opportunity to keep growing. Okay. Sir, one other follow-up is going forward, if east is a weaker, say, profitability market with a higher competition, will we be able to successfully pivot our volumes to other regions? I'm sorry. Can we shift our volume mix to other regions if and when needed from east and south to, say, the other regions? Do we have that flexibility? Yeah, we have that flexibility. The reason, in fact, we move material from across the country. That's the advantage of diversity of our existence. Today, with 53 odd locations, we are able to move material crisscross in any direction. That's the one of the big flexibility UltraTech enjoys because we have never seen, practically, I would say, that kind of servicing problem to the customer. At times, we have said sometimes the demand is high, and we may have to move from another zone to another plant, maybe with some additional cost. The servicing is done on a positive contribution. That's the- You know, Swagato, UltraTech is able to operate more than 250 railheads across the country. That helps move, and rail freight cost would be 50% of the road freight cost. That is the kind of advantage which we enjoy. In times of what should I say, restriction in supply in one particular market, we are able to meet the customer obligations from other markets also. Right. Basically, these levers should help us outperform the market over the long run. Is that, Yeah. The right assumption? Yes, absolutely. I will share with you offline data which shows clearly period after period, UltraTech has been able to outperform in volume terms. Because, you know, what happens is, when a new capacity gets added in a particular company, they will have artificial growth, I would say. But if I look at an industry level number, we would have achieved growth quarter-on-quarter higher than the industry. Okay. Sure. Thanks, sir. Yeah. Go ahead. Thank you. The next question is from the line of Ashish Jain from Macquarie. Please go ahead. Hello. Hi, sir. Good evening. Sir, firstly on the. Hi, Ashish. Hi, sir. Sir, firstly on the construction chemical business, can you give some idea in terms of the margins we are making there and where those margins could head? Also any meaningful CapEx and all, if we may incur on that in less than the next 12-18 months. I think as of now we are investing in the business, so it's an insignificant margin. Currently, we are building the business. Building the business right now. Building the business at this stage. Right. Obviously, we have to do a lot of activities. [audio distortion]. piloting certain things to [audio distortion]. get the right product and kind of thing. Obviously, once we reach a reasonable size, actually, I'm sure, it will definitely generate Right now we are not focusing on the margin, we are investing in the business. It can be a healthy 15%-18% EBITDA for sure. Okay. Sir, just to understand. As far as CapEx, you asked about CapEx. No, it does not, it's a capital light business. The other advantage that we have is we are able to take advantage of our existing plant infrastructure to add to the construction chemical opportunity. Right. Sir, just to understand, you know, the main idea behind this is that either you think it's going to be a huge opportunity because, you know, even at INR 25 billion doesn't seem to be the case, you know, in a 2-3-year timeframe, or, you know, it's just about leveraging the supply chain or the distribution that we have much better, or is it like some of the input costs and all, you know, could be much cheaper for us because of the whole value chain that we have? What's the thought process, you know, behind investing in this business? The distribution. First and foremost, it synergizes with our vision of being building solution provider. Mm-hmm. Right? Right. With instead of getting a third party to come in and apply something on the construction site, we would have a product of UltraTech being used to complete the project. Take the case of our UBS model. Right. The advantage of that model is that when our individual home builder visits the store, he's not just buying cement, but he also sees the pipes he needs. He also needs the white cement that he needs or a Vastu service or an architect that he requires, services that he requires. He gets everything under a single window, under a single roof. Similar is the concept that when UltraTech is being approached by a developer, by an infra company for any project, they get everything that is required to build a bridge or build a high rise. Right. That's the bigger theme. The advantages that we have is our strong distribution network, the brand equity that we have, the quality of the product that we deliver, the logistics network that we have. It goes hand in hand. There's no extra effort that we will require to scale up. Right. Right. Hello? Sir, the only thought, you know, which I had, you know, just because the customer still comes to the UB to the store to buy UltraTech Cement, and some of these products are like additive, which even if it's third party, still kind of serves the purpose of, you know, making it more comfortable for the customer, was my initial thought at least. Fine, I get the point that you're saying. Sir, secondly, on pricing, can you just share how the exit prices were versus average for the quarter? I'm sorry, what? December exit prices. What the December exit prices were versus the average for the December quarter. December average. Just one second. Prices corrected. December would have exited lower only. Or almost flat. I'm looking at the data. September and December end was flat. Average to be exact, INR 348 a bag versus INR 350 a bag. Okay. 348 is the exit and 350 is the average for the quarter? Did I hear that right? No, 348 was exit September. 350 was exit December. Sir, what is the average for December, if you can share, please, if it's possible? INR 350. Okay. Okay. Got it. Average for the month. Got it. Sir, lastly, on utilization, can you just indicate how low did November drop for us? You gave the quarter and December month number. How low did the November drop for us? It had gone below 70%, if I remember it right. Around 70%. Yeah. It had gone below 70%. Okay. Got it, sir. Thank you so much, sir. Thank you. Ladies and gentlemen, we'll take the last question from the line of Prateek Kumar from Antique Stock Broking. Please go ahead. Hello. Yeah, good evening, sir. Thanks for the opportunity. First question is, can you highlight a bit on rural demand trends? Peer sector, which is FMCG, we've heard like industry talking about some kind of slowdown there, which may be due to high base or some kind of transient slowdown. How do we see that for cement? And is it something which is contributing to negative growth for the quarter? Could be because, you know, the rural markets, largely of the eastern corridor, suffered because of rains and sand shortage and labor movement. I think things are coming back on track when the labor supply settles and availability has settled. December, we are seeing good traction. December and January, we are seeing good traction across all segments. The most important thing, I don't want to be sadistic, but the benefit of COVID has been revival of urban housing demand. You know, everybody knows the pillars of cement consumption, which is urban and rural housing, infrastructure, industrial and commercial. All along, infrastructure and rural housing were supporting the growth. Now, urban housing has also started growing. This is what I would want to conclude with, that three of the four levers have started firing very well for cement. Sure. Okay. I mean, rural, these rains and sand shortage would be something which would impact probably FMCG. Which will probably impact only- As I see now, December and January continuing, the capacity utilization is good across the country. Sure, sir. That was the only question. Thank you. Thank you. Thank you. Ladies and gentlemen, that was the last question. On behalf of UltraTech Cement, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines. Thank you.