Ladies and gentlemen, good day, and welcome to the Q2 FY23 earnings conference call of UltraTech Cement Limited. 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 update, 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 listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. If 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. We now hand the conference over to Mr. Atul Daga, Executive Director and CFO of the company. Thank you, and over to you, Mr. Daga. Thank you so much. Good evening and a very warm welcome to all of you to this earnings call of UltraTech Cement. As was expected, this quarter has not been good for the industry as well as ourselves alike. Lots of things happened which went not in favor of the industry, which are clearly reflected in our numbers as well. Let me talk about all the negatives first, and there is lots of good things also to talk about. Firstly, the monsoons. As you are already seeing, everybody is aware, monsoons have been so erratic. It seems to be a dramatic ecological change that is taking place in the country. Excessive monsoons have been there almost all parts of the country except maybe some areas like Tamil Nadu or Assam and Meghalaya, which saw lesser rains. Delayed exit of monsoons has been causing some amount of pressure on cement consumption and construction activity. It remains to be seen how the delayed exit of monsoons will impact the crops. We'll have to wait and watch. Cost is the next item which I would want to touch upon. As I had mentioned in the call during the last quarter, the costs are still elevated and continue to remain high, primarily driven by the rising prices of fuel. There was a brief period of merriment when petcoke prices dropped to $170, and everybody thought that this reduction is permanent. I'm sure many players interested in petcoke would have booked some contracts between $170-$190. Today, as of yesterday, in fact, the prices of petcoke are back to $205+. There was some news about Venezuelan supply as well. However, we were advised not to venture into Venezuela supplies due to the U.S. sanctions. Coal is stuck around $300-$350. Softened up a bit, but still very high. Not yet worth buying for most of the cement players as there is significant arbitrage in petcoke. A few years ago it used to be opposite. Petcoke was expensive as compared to coal. In our analysis, the geopolitical situation continues to be the driver for determining the costs or the trends or the direction in which the fuel costs will move. China is always the sleeping giant. Today the Chinese economy is down, but I'm sure China will revive open up at some point or the other. Europe has started its coal-fired engines because of the ongoing war in Europe, in the Russia-Ukraine war, which is also sucking up a lot of coal supplies. Our view is that fuel costs will remain high due to the ongoing geopolitical scenario. Albeit, we have seen the worst on coal and petcoke prices. Hopefully, they should not go up further. Crude has softened a bit, but we'll have to wait till the government decides to pass on the benefit to industrial consumers. We have to wait and see if the manner in which it is passed on and how much is passed on. During this quarter, UltraTech has completed shutdown work on almost 19 of its kilns out of the total 43. 40 kilns? Forty-three. Out of the total 43 kilns. Maintenance costs have been higher because of inflationary pressure on refractory brick costs and other maintenance costs. Prices were under pressure towards the end of May 2022, and they saw a continuous slide. Monsoons don't see any opportunity in increasing prices. However, the first available opportunity that the industry saw, I believe, in pockets where demand has been good, price increase will have been attempted. Some price increases have settled, some have not settled in the country. Typical of the Indian cyclical cement industry, the season for cement starts after the festive season is over, which is after Diwali. Diwali ends 24th and maybe 25th of this month, and you should start seeing improvement in the market sentiment on all factors after that only. One negative aspect about the rising prices of fuel is large cash flows are getting blocked in costlier working capital. After enjoying a long run of negative working capital, we had no choice but to give up the gains with rising costs and identifying pockets of opportunities to buy cheaper fuel. We have consciously increased our inventories, which has resulted in increase in our working capital. However, I am confident that in the next months as volumes go up, as the cost of purchase of fuel stabilizes, our working capital will go back into the negative working capital zone before the end of this fiscal year. There is no reason why the industry will not take prices up since the margins are continuously under pressure. Let me now talk about the positive side. Demand has been good, and that is the most important factor, most heartwarming factor from our perspective. On an increased capacity, we increased about 4.5 million tons of capacity Y-o-Y. On an increased capacity, our domestic volumes have grown about 10%. This could have been higher, but for the heavy monsoons. Improvement in capacities bodes well for profitability and cash flows. Good capacity utilization is the key. Good capacity utilization would easily help increase prices. This year and the next year definitely can be delivering a double-digit growth. Why? Well, because the first half itself, at UltraTech, we have recorded about an average of 14% growth despite a weak monsoon quarter. As you are all aware, demand starts picking up post-November and March is a peak period. Definitely we should be able to deliver double-digit growth this year and next year as well. During the quarter, we have commissioned about 32 megawatts of renewable energy, taking the total to 318 megawatts, which makes it 5.6% of our total power consumption. An additional five-megawatt WHRS was also commissioned. Birla White continues to strengthen its position in the industry. Pudi expansion plan, Pudi expansion that we had undertaken from 6.8. What was our capacity? four lakh tons of additional capacity has been commissioned. It's under trial runs now. four lakh has been commissioned. It's under trial production. We hope to commercialize the plant before the end of this month or mid-November. Can I ask one thing? Imports from Ras Al Khaimah Co. for White Cement & Construction Materials will further strengthen the brand presence in the country. I believe the first shipment will happen during this quarter. We have been steadily growing our construction chemicals business, which recorded revenues of about INR 132 crore, up from INR 82 crore last year. On our growth plans, we are again ready to ride the high demand cycle with additional capacity getting commissioned. During the reported period, we commissioned Dalla brownfield expansion of 1.3 million tons, ending this quarter at 115.85 million tons of capacity. Pali greenfield plant and Dhar brownfield expansion is almost ready to roll out production, and we should see commissioning of these plants in the October-December quarter. We are on course, on track with 131.25 million tons of capacity by the end of March 2022, which will be fully available for the next fiscal year to meet the rising demand and generate additional cash flows for the company and the shareholders. All this capacity expansion is being met out of internal accruals, and this year we expect cash outflow on CapEx of anywhere between INR 6,000 crores-INR 7,000 crores. We have already spent in the first half what I think INR 2,900-INR 3,000 crores on CapEx. The phase two expansion of 22.6 million tons, which was announced last quarter. Work has commenced. Almost INR 500 crores of spending has taken place on advanced payments, labor mobilization. Some sites civil work has already started. This is going to take us to our next milestone of 153 million tons of capacity by 2025-2026. A quick update on ESG. We continue to focus on reducing CO2 emissions with several collaborations and global ties. Four of our key cement products have been granted environmental product declaration. It's called EPD. This is a key step in our endeavor to drive sustainability in our business with a life cycle approach. With this, UltraTech's green product portfolio includes more than 70 GreenPro certified products. We continue our focus on improving our blending ratios. This quarter, yet again, we have gone up to 1.42-43? One. Well, 1.41 as our conversion ratio. Blended cement continues to rise. Blended cement has reached about 71%, which helps us meet our carbon emission targets to reduce our carbon emissions. In the end, I'll conclude by saying that I believe cement is going to see a good time in the next few years, and for which UltraTech is very well prepared. Thank you, and over to you for questions. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are encouraged to use handsets when asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead. Yeah. Thank you for the opportunity. My first question is with respect to the energy cost. I missed the opening remarks. If you see both the coal and petcoke have been quite volatile and corrected from the peak sharply but again has started increasing. If you could just elaborate, I mean, how do we see on consumption basis, are power and fuel costs shaping up in the next two quarters? Well, we believe that this quarter, the July-September quarter was a peak cost, and we should start seeing marginal reduction in our consumption costs in the next two quarters. Okay. I mean, okay. Is it possible to quantify, sir? No. Okay. Generally, I mean, how many days of inventory are we carrying? I mean, are we Normal norm is about 45 days. This time we have consciously gone up to 55 days. That is why I had spelled out our working capital increase also taking place. Understood. That's helpful. On the iron cost, we recommend and also the index you've shared on the fly ash, it's up by 9% quarter-on-quarter, which is unusual. Is it possible to share, I mean, what sort of inflation are you seeing in other items like slag, gypsum, and also is this seasonal one-off spike or- Sumangal, this is one-off. What happens is that if there is a power plant shutdown, then you have to source our fly ash from a next available power plant which will be obviously further away. So the transportation cost goes up. There is no pattern that you can establish accordingly on fly ash costs. Okay. Understood. Just one last broad question on the overall M&A. There are a lot of media reports on the JSW, India Cements and few regional players in east and west. I mean, how do we see, sir, the M&A activity shaping up in the sector? Given your market share, what sort of inorganic growth appetite do you see for UltraTech? All I can share with you is to allay the confusion in minds of several people that given our size, we will get restricted on consolidation. The geography is wide open for UltraTech to consolidate through inorganic routes also. We, as and when the opportunity surfaces in any part of the country, we will examine it. Okay. All right. Thank you, Mr. Daga, and all the best. Thank you. Thank you. Next question is from the line of Amit Murarka from Axis Capital Limited. Please go ahead. Yeah. Hi. Good afternoon, Mr. Daga. Just on the cost side, like, in the presentation, it's mentioned that power fuel cost was $200. The fuel was $200 per ton. This includes the domestic coal sourcing as well, or this is the imported fuel cost? This is imported fuel cost. Okay. Coal for us is a very small percentage. 7%-8%. 7%-8% only. Okay. Last time in the last call, you had mentioned that there were some cargos of Russian coal and all which you've taken. Was that there in this quarter and the sourcing is continuing as of now? Yes. It has started getting into consumption in this quarter. It was an opportunistic trade, so in case something again surfaces, we will examine it. Okay. Now, like, the spot prices, could you just shed some light on that? Like, what is the spot price of coke? Is it closer to, like, $200 or it's gone beyond that also then? It's beyond $200 now. I mentioned on the call around $205. Okay. I missed that. Okay, fine. That's all. Yeah. I'll come back in touch. Thank you. 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. Couple of questions. Sir, first one is, you indicated you are open to inorganic growth. Sir, how should we look at it? What are the things that you look at, which will make us attract the... It is a very weird question. Our fundamental premise for evaluating any asset is a profitable growth opportunity. I'll pay a price on which I am able to generate return for shareholders. We will buy an asset where we can increase our market presence. I also had mentioned that India is a wide open geography for us as well. All right. Sir, if I have to dig one step over here, sir, how would you look at versus the expansion optionality that we have on the table, you have indicated like we are absolutely going full throttle and we have a pipeline which is actually workable. If you look at the incremental ROC versus the optionality that we have on the table, how should one look at that comparative math on incremental ROC? Incremental ROC on organic, obviously it is time value of money, and you get an organic, inorganic opportunity. You hit the ball, hit the road running. That is the advantage that one would have on inorganic versus organic. It depends on the price that you are paying. Today, organic would be costing a greenfield. Where you start acquiring land also, it will cost $110-$120, give or take. That is how, and if you start investing today, it will take you seven years to put up that capacity. As compared to that, you might pay some premium. You will have to pay a premium over replacement cost, but you also get advantage of seven years of market share and cash flows. Sure. Sir, my second question is, we have indicated our How many? Third. Sir, I have four total, so third question. Sir, we have indicated incremental expansion plans on the capacity side. Just wanted to have your thoughts on what are our plans on distribution, basically incremental railway heads, bulk cement terminals, optimizing fleet to DFC. How should we look at all these 4 variables? You know, fleet expansion, we don't own fleet. Our transporters continuously add fleet as and when, wherever it is required. Our transporters who are associated with the organization or with the group for maybe four decades, they will expand their fleet as and when required. Our endeavor is to continuously improve, increase the penetration in terms of dealer network. Today, our channel partners strength would be upwards of 100,000, close to 110,000 channel partners and a continuously increasing number. DFC is opening up. I saw Rajasthan has already started double-stack wagons. Of course, they have not yet been made available for cement, but I think things are opening up. As for bulk terminal, our expansion footprint is always planned in a manner where if a bulk terminal is required, we will take it into account upfront instead of you know, waiting. For example, in the second phase of growth, we have two bulk terminals already planned. Any future requirement also, bulk terminals will be planned, Grinding Unit. So it will be a split Grinding Unit composition that will come into play. The last point that you mentioned about railway sidings. Sea freight. There's no- Railway siding and sea freight. And? Sea freight. See what? See. Sea. Sea route. Ocean route. As far as railway sidings are concerned, I think on adding wherever available, whenever available, large number of 260 odd railheads. Yeah, 260. Yeah, 260+ railheads. It is not top-down target, but operational efficiency improvement plan with which we keep on adding railway sidings. As far as ocean route is concerned, we have our own jetty at our Gujarat plant. So- Bulk terminals, 279 railway sidings as of now. Bulk terminals along the coastline, there is Mumbai, that is JNPT, then it goes down to Mangalore. Mangalore also, right? Bulk terminal? Yes. Mangalore, Cochin. This is on the coastline. We will look at expanding our network on the eastern side as well. We don't have bulk terminals at the moment, but we look at expanding that network in our II, III phase of growth. Okay. Sir, just one last question. We have an interesting launch on white cement-based liquid primer. Yes. Wanted to understand, what is the rationale for it to be in UltraTech and why not Grasim, given the limited understanding it is better, to bundle it with in-house putty. Please correct if I'm wrong. Thank you so much. Yeah, because the raw material is white cement, and all the primer and putty-based products are done by UltraTech, that's why it's here. Sure, sir. Thank you so much. Wish you good night. Thank you. Thank you. The next question is from the line of Prateek Kumar from Jefferies. Please go ahead. Hello. Yeah. Good afternoon, sir. My first question is on utilization. You mentioned your overall utilization is around 76%. Can you throw some light on regional utilization? I'm sorry? On regional utilizations, region-wide utilizations. Region-wide utilization. North was nearly 85%, Central was 70%, East was 90%, West was more than 60%, South was more than 75%. How much you said for Central? For? Central region, how much you said? 70%. 70. Okay. On pricing, overall it appears that we had like around a 2.5% cement realization decline or 2%-3% decline, on a sequential basis. How would that be region-wide? Region-wise, I think East was the least impacted. North saw a decline. North and Central were the leaders in decline. East was better placed. West was neutral. Sure. In the presentation you mentioned that there's a postponement of the tenant shutdown. Yeah. Does that have any specific impact on cost? It's like sort of one-off or? The cost, I think my maintenance costs were higher than planned by about INR 80. Cool. By about INR 80 crore. I think it was INR 80 crore, yeah. I mean, when you say the like for like, basically last year. What I mean was that we had planned, original plan as per our annual budget, X number of kilns were planned. We did three more kilns than that in this period. The spending was also higher, partly because of cost of procurement going higher and partly because of additional work that was done. Last question on your logistics cost. In your presentation you mentioned, diesel price are lower like 4%-5%, but, like for like logistics cost is around 1%. Any change in distance is resulting in lower decline in logistics cost? 1% impact to 1% only. Yeah. You know, a diesel cost is not 100% logistics cost. 50% only. Yeah. Road. Quarter-over-quarter. Anything else? Sure, sir. These are enough questions. Thank you. Thank you. Thank you. The next question is from the line of Pinakin Parekh from JPMorgan. Please go ahead. Yeah. Thank you, sir. I just wanted to cover on east market. You did mention- Yeah. I can't hear you. I can't hear I can't hear you. Sorry to interrupt, but may I request you to move to headset. Yeah. Okay. You mentioned that East prices have relatively held up better than the other regions. This is also a region where we would see maximum capacity addition over the next few quarters. The presentation highlights that Chhattisgarh and Odisha had seen de-growth due to sand mining bans. Given this context, how do you see the East market at this point of time? Is demand going to get further impacted because of what's happening in Chhattisgarh and Odisha? I believe in East will be the best performing market in terms of demand. That is why, I think nobody is a fool to add additional capacity in that market. There is a big size or big rationale which each player is having to add capacity in that market. This additional capacity will get absorbed in East. Demand will continue to support. I don't want to get into comments on individual states for a point in time because, you know, sand issues are here today, then something else will happen tomorrow. If you look at the underlying demand, underlying capacity utilization in this quarter also, in fact, we had the highest within our regional spread. Our capacity utilization in the East was the highest. I believe the industry, not just UltraTech, industry players will continue to enjoy a good capacity utilization in East. Sure. Yes. My second question is basically, this is the Q2 where UltraTech's Indian realization seems to have outperformed the peers. We have seen a larger than peer group increase in Q1, and we have seen a smaller than peer group decline in the second quarter. In your sense, is this because of higher non-trade mix, more premium products or specific regions, you know, aiding this performance? Should I reveal all my trade secrets to you? Sorry. Value-added products is continuously going up. It's reached more than 18% now. That is one area. We are increasing our blended cement ratios, increasing our trade ratios as well. Everything, and plus there has to be some respect that you should give to UltraTech as a brand. We have historically commanded superior pricing as compared to the other players. I believe UltraTech will continue to do so. Understood. Thank you very much, sir. Thank you. The next question is from the line of Pulkit from Goldman Sachs. Please go ahead. Sir, thank you for taking my question. Just one question. You mentioned that it is because of you know monsoon having a prolonged impact that demand got impacted. Now, our understanding was that July and August were weak months and September is actually a relatively stronger month. Would that be correct that we have exited September at a much stronger volume print, or is it the other way around based on what you just said? Just to confirm. If I remember it right, Pulkit, all the months have shown growth. Yes, I think my colleague confirms September was higher growth as compared to the other months. Each month, we have seen growth. Okay. We can expect that since September it was a stronger month and now that we are off monsoon, hopefully this momentum should continue for us. Sure. I will just not go with that statement of yours that we are off monsoon. I don't know whether the monsoons are off now or not. Sure, sure. Okay. That was it from my side. Thank you, sir. Thank you. The next question is from the line of Indrajit Agarwal from CLSA. Please go ahead. Hi, good afternoon. I have two questions. First was on capital allocation going ahead, right? Assuming at 130, 131 million ton capacity, we will be able to sell close to 100 million ton, if not more, and should generate close to INR 10,000 crore of EBITDA annually. Even with INR 6,000 crore of CapEx, we'll have significant amount of free cash flow to make it net cash positive in two years at best go. Any thoughts on other than, you know, organic expansion, return of cash to shareholders or any- That is always there. I think we increased our dividend allocation to the share. Dividend allocation was increased to 20%, year before last. Now we are again looking at growth. As I said, this quarter, whilst we had positive operating cash flow, but net cash after CapEx was negative. We have CapEx happening in 2024, 2025 as well. And a shade of a part of 2026 will also see an extra amount of CapEx. You know, if you'll recall, two years ago or three years ago, our average annual CapEx would be plus minus INR 2,000 crores, and now we are gonna see plus minus INR 6,000 crores for the next two or three years. Having said that, we are still on course to be, or we are delayed as of now, because of the cash flow being used for CapEx. Otherwise we would have been in a net cash already in this year. I expect net cash to be on the balance sheet towards the end of March 2024. Sure. This is helpful. Second, like, calendar 2023 will be pre-election year, and if there has to be any, like, significant push up on infra, heavy demand from infra government spending, we should have seen some bit of pre-ordering already. Are you seeing any signs of that yet? Not yet. I think we expect more than what is happening. I think the good part is that demand is. We have recorded 10% growth in domestic sales in this monsoon, heavier monsoon quarter. Obviously there is a positive direction in which the orders are flowing and cement consumption is happening. I expect it should go up further. That buoyancy you see in the rural residential part as well or. Yes. Yes. All right. Thank you. Thank you so much for the answers. Thank you. Thank you. The next question is from the line of Navin Sahadeo from Edelweiss Securities. Please go ahead. Yeah, good evening, sir. Hi. Yeah. Can you hear me? Am I audible? Yes. Yes. Loud and clear. Right. Thank you so much. The previous questions, thank you for giving the region-wide color on utilization as well as realization. Is it possible to get some comment on profitability? For example, your average per ton was more like INR 800. Mm-hmm. Is it possible to get which regions are a little more profitable than these and others lag around? I don't have that at the moment. Very broadly. I know numbers. You know, if I look at the prices, so then obviously South would be the leader in profitability followed by West and North catches up along with East is of course yeah yeah at the last step in terms of profitability. Central and North would be up behind South and West. Got it. Thank you. This is helpful. Sir, my second question then was about your fuel mix. Presentation says 40% petcoke. I think you also mentioned imported coal is 7%-8%, if I heard that correctly. Domestic coal is 7%-8%. Okay. If you could just give me the overall fuel mix, please, both in the kilns and power plants. Just one second. Power. What number? Indigenous coal 15%, imported coal 46%. Okay. Okay, I get it. One second. TPP versus kiln. Yeah. I should look at kiln separately. Kiln, indigenous coal in kiln was 5%, imported coal was 50%, petcoke was 3%, alternate fuel was about 5.2%. That's in the kiln. Understood. The earlier number was for TPP, the 46%? We don't have TPP separately. The hybrid number with TPP plus kiln. Is there TPP? One second, it is there. TPP, indigenous coal 56%, imported coal 29%, petcoke 5%, others 10%. Midnight, which is essentially an alternate fuel. Sir, just staying on this kiln bit, because you mentioned that petcoke is far more like, you know, favorable in terms of cost. The imported coal that you are using is at par to that cost because of better sourcing or is it conscious that we don't want to go higher on the petcoke consumption front? No, we have to balance the petcoke coal mix and our coal procurement is far more efficient than anybody else's. Yeah, it still is higher than petcoke on a landed basis, even now, right? Are we looking at increasing petcoke considerably from 40% currently or it will still this is what max it is? It can go up to 50%-60%. Okay. Which basically then means that if this mix is changing, Q3 can see a very meaningful decline in the cost? I mean, of course, spot prices are higher. Cost will come down for Q3. Before it takes up again because. Huh? Before it takes up again because spot prices are. Navin, we cannot really start annualizing spot prices. On our game plan, we will deliver lower costs this quarter and lower costs next quarter. Understood. Just my last question. You mentioned working capital as the prime reason. If, I mean, you know, for that increase in debt, net debt position. Given that these fuel prices are again sort of flattening out maybe say or going up, is it fair to say that this working capital funds will stay locked even for March or that would still, No, I think again, I had mentioned. I would have requested you to listen to my commentary more carefully. We would get into a negative working capital zone before the end of March. With volumes going up, will be one big driver for more cash collections takes place with higher volumes. Inventories we have now reached about 54 days, 54 or 55 days. By the end of March, we will come down to our normal level of 45 days. That will release cash. Cost of purchase will be lower as of now. Nobody knows how prices will actually pan out. Our planning is to release working capital cash by March for sure. No, great. I did hear your comment. I was just confirming because fuel prices are wherever they are today. I mean, that's today, yeah. Right. There was a time when petcoke was $170, and everybody started analyzing it. That was not the right thing to do. Right. We'll have to re- Right. This is the most unpredictable times that we are going through. Sure, sure. Just one last confirmation. Would you think you have spent about close to INR 3,000 crore in CapEx so far in three years? First half, yes. Because I'm just looking at your balance sheet and the capital work in progress or even total property, plant, and equipment. These numbers are up like INR 800 crore odd each, which is INR 1,600 crore. Just trying to understand. lot of advance would be there. That is one point which I can think of. Advance also will be CWIP, right? Yes. No, capital advances are reported separately. Capital advances also you need to add, but I don't know what the accounting issue is. I can get an explanation sent to you separately. Sure. That would be really helpful. Thank you so much for answering and all the best. Thanks, Navin. Thank you. Thank you. The next question is from the line of Ashish Jain from Macquarie. Please go ahead. Hi, sir. Good evening. Firstly, on coal, I mean, you made a comment that, you know, petcoke will go to like 50-60%. You know, given the current petcoke and coal prices, ideally we should be going to 70-80% petcoke, right? Is there anything constraining us on that front? There are technical constraints. That's all I know, that there are technical constraints. In the earlier days when petcoke was, you know, darling of the industry, those days also we had tested and we reached about 70%-78% peak. There is some issue with blending. You know, limestone from mine to mine has different qualities because of which you cannot mix 100% petcoke. Second point would be availability. As and when petcoke is available, one would pick up shipments of petcoke. Right. Okay. Got it. Secondly, you know, in terms of the from let's say growth plans outside, you know, the organic plans that we have, if we have to explore M&A, like any specific region, you know, where both we are interested and we will not even face regulatory issues in terms of, you know, our market share and those kind of stuff, can you point where are strategic- I'm interested in India for organic opportunities. I will not have regulatory issues in any geography in the country. Okay. Got it. As of, at this stage, where we are, I don't know. Right. five years, six years later. Right. Okay. Got it. Lastly, just a housekeeping question. I think we have evaluated through all the lenses that the regulators look at and what is the requirement. We are well within the norms. Right. Just a couple of operational questions. One, what was the share of blended cement this quarter, sorry, trade cement this quarter? Trade was 68%. Okay. Secondly, you know, spoke about the chemical business revenues, which is crossed INR 100 crore this time. In our segmentation, where do we put that? Is it in gray cement or it's in others? Very small, less than 10%. It has not less than 1%. Yeah. There's no segmentation. No, no. We don't get. Yeah. I know that. It is part of cement. What I meant was. Part of cement only, Ashish. Part of cement. Okay. Got it. Thank you so much, sir. Thank you, Ashish. Thank you. The next question is from the line of Girish Choudhary from Spark Capital. Please go ahead. Yeah. Hi. Thanks for taking my question. Firstly, would like to get your sense on the industry's supply dynamics. Are you worried of a potential buildup or a surprise in the overall supply? With also the new entrants infusing significant amount of money and some of the other larger players having a strong balance sheet. Just wanted to get your sense on the supply dynamics. That's the first one. My guess is that all the supply which comes in easily. Okay. Because you see India as a story will show you much higher growth as compared to any other market because there's a huge amount of development required. There's huge amount of housing required. That's, you know, it's a no-brainer statement which I'm making. Yeah, India will see a huge amount of cement consumption happening for a few years you know in the next few years. Few years can be 10 years, more than 10 years. That I don't know. As of now, it's still a very long distance away when India also reaches a saturation point and growth tapers down. As long as there's growth potential, additional capacity will get absorbed. One more point one needs to keep in mind that total capacity that one looks at is a myth because there are lots of capacities which are non-operational, lots of capacities which are inefficient or shut. Effective capacity, available capacity is lower than the nameplate capacity that you might be tracking. Got it. Fair enough. Secondly, if I look at your phase one and phase two capacity addition can roughly still appear around 50% in terms of addition. West is a region which is seeing very low capacity, roughly around 1.8. Any reasons why a lower addition here? Is it to do with reserves or utilizations? Or you're looking at inorganic- I'm not able to hear you clearly. Which region you picked up as low addition? I think west. If you look at west, you're adding only 1.8 million tons. Between phase one and phase II. West is more GU, no? Yeah. You're just adding, yeah. Yeah. Mine is not a constraint and, you know, west luckily we have coastal plants so I can bring limestone from the Middle East in case of. Limestone as a resource is not a constraint in the western market. West we have enough capacity available, and we don't put surplus capacity, you know, and create problems for us. We'll put a capacity where we feel that we need additional volumes right now. Got it. Thank you, sir. Thank you. Thank you. The next question is from the line of Rajesh Kumar Ravi from HDFC Securities. Please go ahead. Yeah. Hi, sir. I don't know if you have already answered this. I haven't. Hi, sir. Can you talk on the fuel cost on a per kilo cal basis? How was it in Q2 and versus Q1? INR 2,489 per million kcal was the cost in Q2. Okay. as compared to 2,215 in the previous quarter. Okay. If I go back one year, so Q1, Q2 FY 2022 it was 1,427. Okay. INR 1,427 has come up to INR 2,489. 2,489. Okay. Sir, in this quarter, how are the numbers currently in October? We'll talk in January. That's okay. Directionally, is it coming off? What? What is coming off? Quarter-on-quarter, do you see this number coming off versus what you saw in Q2? You mean fuel cost? Yeah, yeah. Fuel cost per kcal. Yeah, yeah. Fuel yeah. Fuel cost will come off. Okay. I think that is all from my end. Thank you. Thanks, Rajesh. Thank you. The next question is from the line of Kamlesh Bagmar from Lotus Asset Managers. Please go ahead. Thanks for the opportunity, sir. Just one question on the cost side. Like say going forward, like say in couple of years, what content of cost reduction do you see, like say be it freight side or power and fuel cost? About INR 100 a ton would definitely come out of cost reductions minimum. On the variable side. On the? Variable side. Yes. Yes. Okay. Sir, like say in the presentation we have mentioned 19.5% as the mix of the renewable power. So is it in terms of the capacity or in terms of the power usage in this quarter? Consumption. Okay. Actual generation or actual consumption, whatever you wanna call it. Okay. Sir, lastly, like, you have 40-odd% share of pet coke. Vis-à-vis imported coal, because this $2,489 looks to be very competitive as compared to what thermal coal prices are. Is it the case that the grade of the imported coal which we are using is also equally competitive as compared to the pet coke? Yeah. Yeah. Because like say if it's, Because when you get, U.S. coal is very high grade coal. 6,900, no? Uh. 6,900 kcal. Normally we are not buying RB1. Okay. That would be RB2 overall. That's why that is also competitive as compared to. Okay. Great, sir. Thanks a lot. Thank you. Thank you. The next question is from the line of Shravan Shah from Dolat Capital. Please go ahead. Yeah. Thank you, sir. Sir, what was the lead distance in this quarter? What was the lead distance, guys? 428. 428 km. Okay. Sir, you mentioned that a regulatory issue will not be there. You have taken care of that in terms of the inorganic expansion. Just trying to further understand for my understanding, in terms of let's say, if you go for let's say Nuvoco acquisition, I'm just giving an example. How do the CCI look at- I don't look at specifics. You can ask a general question if you have. I'm asking in general in terms of the market share, how the CCI looks at any percentage. What are the broad criteria that the CCI looks at post the acquisition? 10, 15, 20% market share should not be there. I think that I will not be able to answer. Third, just trying to understand in terms of the second phase of expansion in 22.6. How much broadly from that would we be commissioning in FY 2024? Maybe INR 3 million or INR 4 million. Okay. Raised mostly by March of FY 2025. five. Some might go into 2026 also. Fiscal 2026. Okay. Between first half of 25, 26. Okay. Got it. Thank you. Thank you. The next question is from the line of Sanjay Nandi from Ratnabali Investment. Please go ahead. Yeah. Good evening, sir. Thank you for the opportunity. We have seen some spike in employee cost in this quarter. Can you throw some colors on that, sir? Spike in. Annual increment. Annual increments. We follow an increment cycle from first July. Okay. Our increments are, you know, evaluation done in March, given effect in July. July, June is our annual cycle. Okay. Thank you so much, sir, for the opportunity. Happy Diwali, sir. Thank you. Thank you. The next question is from the line of Amit Murarka from Axis Capital Limited. Please go ahead. Yeah. Hi. Thanks for the opportunity again, Nazu. Just on the white cement entity like RAK acquisition which you had made that is supposed to kind of flow in additional volumes into India. By when is it expected to start? This quarter, they will start. October, December quarter should be starting volumes. Packing material has already reached there, quality, et cetera, all settled. Logistics tied up. This quarter shipment should happen. Start happening. Okay. Exports to Sri Lanka, like, is there anything happening or it's completely stopped? Very marginal. Only in case we have secured rupee LC available which is opening up. Against those LCs only we are exporting. Exports have dropped down dramatically from maybe 1.5 lakh tons per month. Give or take 1.5 lakh to- 30,000-40,000. To 30,000 or 40,000, two shipments only. One more reason, I'm glad you asked about Sri Lanka. Our working capital. We have close to INR 200 crores due from our Sri Lanka operation. The money is lying there. Government is releasing money gradually. We received about INR 40 crores last quarter, in the reported quarter. I believe that money will get regularized, in the next two quarters or three quarters. Got it. What was the export volume in Q2, absolute number? 100,000 tons. Okay. Got it. Thanks. Wishing you happy Diwali. Happy Diwali to you. Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead. Sir, two quick questions. First is, sir, if I heard it right, you indicated on CPP, we have 5% petcoke and 6% local coal. So my question is why petcoke is at only 5%? I remember like 2017 something there was a court judgment. So, uh- Yeah. What was the court judgment? I think it did restrict the usage of petcoke when it comes to power plants. Before then it was allowed because of Okay. The quality of limestone and limestone saturation factor. Yeah. Question is, can this number of 5% petcoke when it comes to CPP increase and can it be a cost saving lever? In CPP we use domestic coal which is far more cheaper. Right. Sir, you said 29% is imported and 5% is petcoke. Is there room for substitution? Yeah, there is. One is in the NCR and the related markets, petcoke is not allowed in power plants, that you are aware. Sure. It's opportunity wherever we find financial economics working in favor of petcoke, we use that. sir, if my memory serves me right, it's only in three cases wherein petcoke in CPP is not allowed. I'm sorry. Yeah, you're right. NCR, which is, that is the market. Okay. Can this number move and surprise? Could be. Given- I don't have a ready answer actually, Ritesh. Okay. Fine. Sir, second quick question. Is there any changes which one can expect on the discounting trends in the marketplace? Is there some stability over here? I have no idea about that. No. No worries. Thank you so much, sir. Thank you. Thank you. Thank you. Ladies and gentlemen, that was the last question for today. On behalf of UltraTech Cement, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.