Ambuja Cements Limited (AMBUJACEM) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Amruja SimS Ltd. Q4-F526 Earnings Call hosted by JM Financial Institutional Securities Ltd. As a reminder, all participant lines will be on 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 touch-tone phone. Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Dharmesh Shah from JM Financial. Thank you and over to you.

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

Thank you. On behalf of Ambuja Cement, I am pleased to welcome all the participants to our earnings call for the fourth quarter of FY26. Ambuja Cement is the ninth largest building materials solution company globally and part of the diversified Adani portfolio. Before we start, please note that this call may include forward-looking statements based on our current beliefs and expectations. These are not guarantees of future performance and may involve unforeseen risk and uncertainty. We remain committed to further strengthening our disclosure standards and improving the quality of our capital market communication to the best in the industry. We are pleased to have with us on the call Mr. Vinod Bhaiety, Chief Executive Officer, and Mr. Roy Stoney, Chief Financial Officer. Now I invite Mr. Bhaiety to provide his valuable insight on the quarterly performance.

Thank you, Deepak. Thanks, Dharmesh. Good evening. Everyone, FY26 was a year of resilience for the Indian cement sector, marked by industry consolidation and the GST 2.0 reforms on one side, while the adverse and the extended weather conditions, global geopolitical factors, and the various state elections also affected the industry and demand in some or the other way. Against this backdrop, Ambuja delivered a resilient performance for the year, achieving its highest annual sales volume of 73.7 million tons, up 16% Y-on-Y, year-on-year in that manner, and on a normalized basis, the EBITDA of Rs. 6539 crores, up 31%. At Rs.887 per metric ton, which is on a PMT basis, up 12%, and the PAT of Rs.2647 crore, up 17%. The company continues to remain debt-free and with highest credit rating. Annual volumes grew well ahead of the industry. Trade sales volume grew steady at 10%, while the premium cement accounted for 35% of the trade sales during the year, reflecting sustained progress on premiumization. During the year, company's cement capacity increased to 109 million tons, supported by commissioning of 10.7 million tons of new grinding capacity at various locations like Marwa, Farakka, Sankrail, Sundari, Krishnapasnam, and the additional clinical capacity of 7 million tons at Jodhpur and Bhattapara. During financial year 26, we also made meaningful progress on the portfolio integration. Successful amalgamation of Shangi Industries and Penna Cement with Ambuja Cement is now completed, while ACC and Orient Cement is under process. The One Cement platform is a strategic initiative and will help to bring sharper focus on the operational performance, business synergies, and the overall higher degree of compliances. Therefore, this time, The balance sheet of Ambuja Consol now has finalized purchase price allocation of Orient and Penna. Till December, it was on a provisional basis. The numbers, you will find marginally changes in the balance sheet, which is the classification of goodwill and the other intangible assets, while in the C&L, you will find some changes in terms of amounts for depreciation and the deferred tax accounting treatments. Further friends, you will see in the notes of the accounts, you will see various tax related provisional notes with respect to reversal. Details are there in the published financials. Please also note financial year 25 and financial year 26 are not comparable like to like since FY25 does not have Orient Cement, while Penna was acquired and consolidated from 16th of August 25, that is only seven and a half months for the FY25, as against 12 months for FY26, and while Orient is only for 11 months in FY26 and was not there in FY25. Now, let's again come back to the business part. My green power share increased almost 32% now in Q4 compared to 26% before. The newly acquired assets, particularly Sanghi and Penna, they witnessed lower utilization levels. Sanghi still remains at around safe for the full year at 57% on cement capacity utilization, while Penna is 46%. However, last time I mentioned to you that in December quarter, we have seen a good improvement, especially for Sanghi. The turnaround initiatives have taken a little longer than the expected timelines. And some of these plants, especially of penna, needed higher than expected time for maintenance capex and overall upkeep of the assets. So on a cost front, we have seen a bit of higher cost compared to our own expectations and therefore some disappointments. Primarily, if I have to look at the reasons, higher freight cost due to increase in the overall, say, lead, primary and secondary both. In terms of the higher packing cost, we more so have seen that in the month of March, we have seen some abruptions given the West Asia war. The higher fuel cost on account of a little higher than expected heat consumption what we have, and more so for the acquired assets. The higher branding cost, now that we have focused more on trade sales, starting from the Q4, and while we have also improved our trade sales to 74% compared to in December quarter of 25, it was 68%, so which would clearly mean we are focusing on blended cement. And if you also see, my cleanser factor has improved from 67% in December quarter to now 65%. This has also one of the costs, which is the banding costs and the sales promotion costs have gone up. And some of the other issues like the raw material costs, which we could have improved in terms of the fly ash, but pending some of the railway infrastructure, which will be completed in the coming months, and you will see a good level of improvement on that. But pending that, we have not been able to meet some of the raw material costs to our desired levels. Essentially, there is a three to six months delay on some of the efficiency capabilities which have happened, and hopefully, like in the coming quarter, we should be gaining momentum to complete and get the benefits of it. So, therefore, in F527, our focus firmly remains on streamlining the operations and margin expansion. So, we will continue to focus on trade sales. And more so on the premium product sales, which we have a huge leadership. Almost 36% of my trade sales has been premium cement sales for Q4. We will continue to improve the reliability at Penna and Sanghi and the overall asset utilization. Together, they have 19 million tons of capacity, and the target is to increase the utilization by at least 5 to 10% for these assets. In terms of the cost, so while we are cognizant of the overall ongoing global geopolitical situation, and we have already seen a cost escalation in Q4, more so in the month of March, almost by 25 rupees a bag, closer to, let us say, ballpark, 400 to 500 rupees if I have to go on a full-blown basis. This cost increase is there in the industry, and so it's to our company. So, we are recalibrating our cost for this financial year. I have mentioned earlier about our journey to achieve cost of almost 4,000 rupees a ton by March 26 exit. Meanwhile, in terms of the full year of 26, we have given a figure, we have achieved a We have a figure of 4,400 rupees a ton, which is almost 10% higher to our own target for the reasons which I mentioned before. Although in the month of March, we are closer to at 4,100 rupees a ton. Since these are like fast-moving global situations and dynamisms over the energy costs and other basically expected heights in the fuel and diesel and all, Therefore, it will be very difficult to provide any long-term estimates for right now till the time things stabilizing over the next two, three quarters. Therefore, I would say that on strong conviction, on certain components of costs, for example, which I have, A is in terms of the overall, say, raw material cost led by fly ash, and in terms of the green energy cost, for example, which is going to see a substantial improvement further in our overall situation. Therefore, I strongly believe 150 to 200 rupees savings will come from these components. On our overall control volumes, we are expecting it to grow in FY27 by almost, say, 8% to around 80 million odd turns, and we are cognizant of the fact that we will focus on value with trade volumes and premium cement, and therefore, we are keeping it until moderate overall, say, growth in the volumes part. At an industry level, we believe that given the headlines of inflation and weak monsoon, the industry may grow at around, say, 5 to 5.5%. We continue to remain committed to our end-stage sales volumes targeted, supported by our sharper focus on higher utilization of the existing capacities, and while operationalizing the new capacities and stabilizing them. Therefore, with this proposed... We have ongoing additions of 10 million tons of GU, which you are aware of, which I have already shared with you in the investor day, some of them, for example, Salai Banwa, and Kursa Ligand, and so and so forth. We are expecting to hit capacity of almost 119 million tons by end of FY27. Capacity expansion plans, we are recalibrating in line with our approach to take the advantages of the recent railway policies on government terminals, with additions pursued more gradual in terms of first focusing on optimizing the current capacities in hand. This will also help in terms of a very disciplined allocation of capital and a straight-fast commitment to maximizing the returns on the capital employed. Looking ahead, India's long-term infrastructure story remains fundamentally very strong and However, with the expected insulation pressure, weak monsoon, And the cement demand is expected to remain little soft. Against this backdrop, Amuja remains focused on discipline execution, strengthening brand penetration, scaling trade sales, driving premium cement sales, and maintaining the cost and capital discipline. Thank you. And I will now hand it back to the moderator back.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take our first question from the line of Naveen Sahadev from ICSA Securities. Please go ahead.

So, friends, also just to inform you that we also have our four-time director and senior Mr. Karan Adani also on the call. He has just joined us. So, I welcome Karan Bhai. And, yeah, I just basically did the opening remark. And we are now on the Q&A. So, back to the moderator, please.

Yes, we have a question from Naveen Saradev. Naveen?

Yeah, yeah, hi.

Thank you for the opportunity. My first question was on the volume growth front. So in this quarter, as per the investor deck, volumes have grown by about 10 odd percent. But if I adjust them to the orient cement volumes, they are more like flattish on a YOI basis. And here my question is, That if we are seeing some pressure on volumes, because for FY27, we have given a guidance of 80 million tons, which is roughly a growth of 9 to 10 percent, against the backdrop that we are expecting a much softer industry growth of 5 percent. So I'm just wanting to request an overall color on your volumes.

Hello.

Yeah, sorry for the snag. So, Naveen, so you're right, absolutely, in terms of the volume, especially for this March quarter, it has been a little muted. But now, for the F527, when I given you indication of 80 million, which is around closer to, say, 8%, we have the visibility in terms of, A, stabilizing the acquired assets of Thank you. So, on that basis, basically, we are accepting the... Although with the software demand for the year. Did I answer your question, Naveen?

Yeah, yeah, thank you. My second question then was on the overall CapEx plan. So, as mentioned in this presentation, we are recalibrating our entire growth plan. We have visibility of taking that overall capacity to 119, but I'm just trying to understand by when will, like, you know, we get a color on the next leg of CapEx because the first day when the asset was acquired, the vision was to, like, you know, I think double the capacity and take it to 140 in the interim, we will increase it to 155. And now we are taking a slightly a step back. So my question was, from a growth point of view, is there a, by then, first of all, can we get a color of the big picture or the next longer term plan? And in the same breath, is it that we are more open to pursue inorganic growth, which helps us catapult to that overall growth target? Or we still believe organic is the way to go? That's it. Thank you.

So, Naveen, our primary focus remains organic in terms of stabilizing our ongoing expansions and also already acquired assets, so therefore I would say that that remains the primary focus. I think we have a good headroom to improve our overall, say, market share by improving the capacity utilization of these plants, and therefore, as I said, we are going to follow a quite disciplined capital allocation, and given the headwinds right now for the industry, it makes sense to push a little bit of the capex, but without losing eyesight on the overall, say, market share and the volume improvement from the existing asset and the ongoing expansions. To answer your question, I think maybe what I would say that the target plans of FI28, it could move a year or two, let us say on a safer side, I would say that FI30, but as I said, it doesn't really matter. What matters is how you are able to ramp up the volume from your overall existing assets, and I have a substantial good headroom to ramp up over there. Even if I hit 120 million tons by end of 27, it will give me a good leverage of the overall market opportunity. Thank you so much.

Thank you. Next question is from the line of Rashi Chopra from Citi. Please go ahead.

Thank you. Just only continue on the previous question. What is the clinker capacity as of now?

So, Rashi, as of now, we are sitting on 73 million tons of clinker capacity.

And you will be adding another 4 million this year.

Yes, so at Maratha and at like Penna Marwad, we will be adding up almost like 5 million. So Penna Marwad is 3 million, sorry, 2 million, and Maratha is another 2 million, so we have 4 million. Yeah. Okay.

And you mentioned earlier on that the 56% utilization was for Sangee for the year and Penna was 47, is that correct?

That is true. That is true.

Okay. And the next question on cost, now for the full year the cost is $4,400. For the quarter, what was the average cost? $4,500?

We are sitting at almost 4,250 rupees for the overall quarter, and plus some of these increases what we have seen from the overall escalation. So I would like, let us say that a normalized was almost 42.50 and it was another 250 rupees, which we have seen increases. So almost we are at now 4,500 rupees a turn for the quarter of March.

Right. And you were saying that the industry costs have gone up by anywhere in the range of 400 to 500. So is it safe to assume that because of the crisis, you will see another 250, 200, 250 rupees increase in costs, which will get offset by your fly ash, green energy, etc.? Is that how we should be thinking about it?

So you indicated

that, so we're at 4,500 now on cost. You said 150 to 200 is a reduction that you're expecting because of fly ash green energy, right? So, that's 150 to 200, but the overall industry cost has gone up by more, right, because of the West Asia crisis. So, is that 150 to 200 already capturing the increase in industry cost, or is 150 to 200 decline in your internal cost, and then there is an increase in cost because of the war beyond this?

So, actually, like I said, the 4500, which is for the March quarter, has already So, I would say that 4500 safely, I would say, is on a peak basis, let us say on a higher basis, which we have seen, varying like any aberration of plus minus 50 rupees. But otherwise, you will see a journey which will actually start coming down in passing quarters. Of course. Although, like, for example, with the overall situation, how the overall energy situation emerges, I would not give with conviction, but I strongly believe that, yeah, this is like the peak which we have hit, and should see a progressive improvement.

So, if I can just rephrase this, if nothing increases further in terms of global prices, you will see a decline of at least 130 to 200.

Absolutely. Well summarized. Absolutely.

Okay, and on the pricing, what has happened to offset these cost pressures, cement pricing?

So, that's interesting, Rashi. We are reading on both the right questions. On the pricing, like, industry has seen a modest improvement of, I would say, 10 rupees in few pockets, let us say, 15, 20 rupees, but that's, like, in a very... Selected area geographies, otherwise ballpark for the quarter of March, it's around ballpark to 10 rupees. Now, With the demand getting a little softer, the pressure on pricing definitely is higher, and despite the circumstances of cost gone up, unfortunately, industry is still under the relentless pressure and not able to pass on the price.

Got it. And this last question, what was the K-PES for the year?

So CAPEX for the year, we are keeping it little moderate, and ballpark, when you say this, so you are seeing for FY26, FY26 is closer to about 7,500 or crores, and I will just answer, because there would be another question, so for FY27, we are keeping estimate of almost 6,000 to 6,500 CR, and that too will also, which is how things pan out, it may change a couple of hundred CR here and there, But that's the estimate what we have.

Thank you. Thank you. Next question is from the line of Indrajit Agarwal from CLSA. Please go ahead.

Hi, thank you for the opportunity. Congratulations on increasing both trade sales and premium mix. But on that note, if I look at slide 27, the realization has hardly moved QoQ versus appears it is up somewhere between 1.5% to 2%. So is it mainly because of mix or what is driving this weaker relationship?

So Inderjit, absolutely you are right. I think the journey has just begun when we change the year, and therefore you will see more differentiated benefits coming in the subsequent quarters. What we have done is we have sustained the price levels at 254 rupees a bag compared to in December. So, from our own December quarter, we are up by, say, modestly at, say, 1 rupee, and compared to, say, last year, we were at, say, 255. So, yes, the journey would further see improvements with higher blended cement and more premium cement sales.

Thank you. Second, if I look at your blended utilization for next year, would we add with 71-72% on your expanded, let's say, weighted average capacity? So on that note, probably you will not need additional capacity in FI28 as well. Is that what is driving a more calibrated CAPEX approach?

So I have also to answer this question.

So I think the way we are looking at this, how we would look at CapEx is two, three things. One is, when we look at our performance, we know where are the places we need to improve on. There are certain capacity which is there, which is in the wrong places, and so we will be adding few capacity in places which will help us in terms of reducing our cost, logistics cost especially, as well as help us improve our penetration into those markets. I'm talking specifically into the markets where we have high market share and high recall value. So those are the places that we would definitely look at expanding our capacity over there. The second thing is, as we would be looking at... As we are expanding our clinker capacity, the corresponding geocapacity will also increase. And this year, apart from Rajasthan and Maharashtra, as you know that we have won a limestone block in Assam. Again, that's a completely new territory for us. So that is one new area which we will start in maybe end of this year. And the second new area that we will be starting is in Munra, which is again a completely new clinker line. So these are the two new projects apart from the new geos that will help us in terms of reducing our costs.

Thanks so much for the last answer. One last one, if I may. In light of this, how would you see any inorganic opportunity that comes up? Would you be interested or the focus would squarely be on organic growth right now?

Inorganically, we keep evaluating, but our focus right now is on organic development and greenfield expansion. That is our number one priority.

Sure. Thanks a lot.

Thank you. Ladies and gentlemen, in order to ensure that management is able to answer queries from all participants, kindly restrict your questions to two at a time. You may join back the queue for follow-up questions. We'll take our next question from the line of Jashandeep Singh Chadda from Nomura. Please go ahead.

Hello. Thank you for the opportunity. So my first question is regarding the cost structure, especially in the fourth quarter also we saw that the fixed cost, which is employee plus other costs, has increased significantly while versus, you know, when we compare it to your peers also. I just wanted to understand why you say there were some, you know, vestation conflicts that impacted the cost. However, the conflict started during the end of February, and the packaging cost was also in the mid of March, which impacted the industry. I want to understand why, you know, among all your peers, Ambuja is seeing such an increase in, you know, its cost success. Secondly, in your presentation, you also mentioned that the freight cost was high because of some planned shutdowns. If I'm not wrong, in third quarter also, you took planned shutdowns. Normally, the industry takes shutdowns in the second quarter. So in quarter three and quarter four, where the volume growth was really strong, the management decided to take planned shutdowns, which resulted in higher costs. So I just want to understand what is the, you know, rationale behind taking client shutdowns in volume push quarters, and why are, you know, Ambuja's fixed cost is increasing way higher than its peers. My first question is regarding this.

So, Jasandip, I think when Rashi asked this and we have tried to explain, so in terms of picking out on our cost at $4,500, which I mentioned, and from here you will see improvements, but, yeah, your question is in terms of compared to the competition, why? Now, few components which are relevant to my business. I mentioned about higher focus now on the branding, the advertisement to promote the trade sales and premium cement. Second is in terms of... Higher repairs and maintenance costs. And you're right that ideally one should do it during the off seasons like monsoons. But not all the machines can be done during that period. And there have been a few breakdowns also of the acquired assets of pennas and all. So under the planning and also under out of planning, you will do it. So therefore, there have been those additional expenses of repairs and maintenance. Then, in terms of the back cost, which although came in the last week of February to the full month of March, when you promote and sell more premium cement, then there are also some additional costs of logistics and handling, which also ships into to increase your cost. I also mentioned to you the journey which we want to achieve in terms of improved heat consumption. It is still not coming in the range, and therefore, we still have a higher heat consumption, and I would say ballpark 35-40 kilocalories minimum, which we have to improve. Again, I will attribute to some of the acquired assets. Actually, when I look at the video of... Muja and ACC, minus of the acquired assets, Tabitha is actually higher by 70, 80 rupees, so it will be almost like 800 rupees, and actually more than I normalize it, but it is at least 800 rupees. So, I would say that the acquired assets still are not basically coming in the range to our desired level, and for which I had mentioned that the first priority is stabilize the overall operations, achieve a good level of performance improvement. And hence, in the, I think, maybe a couple of months, we had taken the entire investor community to Sangee plant just to showcase that how Sangee is now in state of readiness and give higher improved volume improvement. This, I think, we did in somewhere like March itself, right? Okay, March itself. Now, that is like, for example, we want to showcase earlier. Some of the assets have taken time, but now they are in the state of readiness. Sooner that, I will take all of you to Penna assets also, but before that, we took you to Marwa. So, the journey is known, the issues are known, and therefore, in my opening remarks also, I mentioned about certain disappointments to us also, where we think that 4,500 is on a higher side, and we are basically in a position to bring it down in coming quarters. So, therefore, like you will see, this is picked out, and you will see an improvement prospectively from here.

Thank you for the detailed answer. My next question is, you know, largely taking forward Naveen's question only. So, you know, first of all, Ambuja is the only company which has given such a bearish scenario for FY27, and I understand will be rational that you have given behind it. But, you know, with 5% industry growth and Ambuja expecting an 8% growth, there are certain capacities which are coming. I completely, you know, understand that. But what is your target utilization from the assets of Shangi, Orient, and Penna for FY27? And I understand there are some challenges. So, will there be additional capex required to bring the acquired assets to Ambuja's set of standards? I just want to understand this.

Thank you, Jadid. So like Orient, for example, is operating at full capacity. So far as Sangee is concerned, I will peg myself at almost like 65 to 70 percent. And so far as Penna is concerned, I will consider around 55 to 60 percent in terms of the utilization factors. And the existing assets of Ambuja and SEC, I would peg it to closer to around 75% to 80%. So on an overall basis, at the Ambuja console level, average in the situation, the scenario which I have mentioned to you, I would say 70%, 75% wall-park utilization. And you're right, we anticipate the software demand, and therefore we would go with this belief, but if for any surprises positive in the industry, and which we would all wish to, this number will definitely look positive, but as of now, the situation is softer.

And, sir, any further capex to bring these assets to our Ambusha Senate?

So, as mentioned by Karan Rai, the overall, say, disciplined approach of CapEx, where we want to now set up in the high potential market, which we have now completely done a mapping, where we have market leadership. So he has already indicated a few of the assets in his narrative. But progressively now, for example, let me first commission the existing assets in hand, which are ongoing, basically this 10 million, and come to you all with stabilizing and achievement of the capacities for them. But passing quarters, then we will also highlight to you the APEX program as it forms up. Sure, Mundra is very much now in the pipeline, and so are the few assets which he mentioned.

Thank you.

Thank you so much.

We will take our next question from the line of Manish Sumaiya from Kantor. Please go ahead.

Good evening, and thank you for taking my questions. I just wanted to ask, we have talked quite a bit about fiscal 27 and outlook, but what I'm trying to reconcile is how should we reconcile between the improvements that you're planning Is that dependent, how much of that is dependent on internal execution versus external normalization? Maybe if you can just help us understand that.

I would say, Manish Bhai, thank you. A very good question. I would say that the external factors will affect... Most of the industry clear. Therefore, I will give more weightages on the internal factors and the execution of the same, which will bring the overall differentiation and leadership leverage on that. So that I would put it in this manner.

So Manish, if I may just come here, Karan here. I think if you look at our performance, you know, we realize that where the gaps are. And, and that's exactly where we are hyper focused on and improving on those performance. And, you know, based on what whatever guidance we are giving, this is 100%, which is controllable, which is controllable by us. And if you're not able to achieve the guidance, it's purely because of our internal execution and not, not any other factor. And that's where the whole team is really focused on and delivering on the numbers now that we are talking about. And we are very confident that this year we will be able to hit the numbers that we are talking about. Thank you, Karanand.

My second follow-up is on the premium products. Now they constitute about 35% to 36% of trade. What should be the realistic target that we should have in our models as we go out to fiscal 27 and maybe even beyond? You know, what's the upside to that 35 to 36 percent?

So, Manish, right now, for example, I would say that 36 is a good number for us to sustain, and therefore, that is what, for example, can be considered in terms of the share of premium cement as percentage of trade sales.

Okay. Wonderful. Thank you so much. I'll get back in the queue.

Thank you.

Thank you. We request participants to restrict to one question at a time, please. We'll take our next question from the line of Pradeek Kumar from Jefferies. Please go ahead.

Yeah, good evening. My question is on cost again. Yeah, so in the last third quarter con call, which happened like around start of the February, management talked about like cost of 4000 rupees. Yes, we're talking about 4100 rupees, 4000 rupees in January. We're talking about 4100 rupees in exit of this quarter. So, how the quarter cost is 4500 and I'm able to understand, the question is on the balance sheet. So, your ACC is operating cash flows are negative, sharply negative for the year. And your overall consolidated Ambuja's cash flows also like negatively impacted by negative working capital. Can you throw some light on this?

Thanks, Prati. I will take the second question first. In terms of the ACC, Amboja, if you see, ACC has residual from Amboja under the NSA. And you also would be aware that you have taken shareholders approval in terms of the ICD, wherein these receivables will get paid. Also, like you will find in the coming quarter, this will get knocked off with the ICD, number one. So it's like as one consult business, under the MSC, the receivables are there. Therefore, ACC will find negative operating cash flow. So, as Ambusha is concerned, I think if you would have seen, we have a good level of inventory which is higher, but when it comes to receivables, these are under good control with the higher degree of trade sales, and therefore, on an overall working capital of Ambusha, you will see only improvement for the March quarter compared to December quarter. Your question about the cost, so, Pratik, I think what we had envisaged to what is the reality, yes, there are differences because of the overall acquired or safe situations, and many times those anticipations. For example, have not worked upon, and then suddenly the packing back situations which have come up, and which also, for example, when Naveen mentioned about 10% growth, we also lost a good level of volume because of the packing back issues and all. So there are these situations which will have to be dealt with, but luckily now, at least we know that this is the peak level of, say, cost which we have hit, and from here, for example, as Karma also mentioned, that the numbers will be tapering down with every passing quarter. So, reasons I have already explained, right from branding to repairs and maintenance to the higher freight costs, the higher LEED, for example, the AGTs, or the, for example, when it comes to EBITDA, the lower government incentives, which we are now, that also, for example, we have a lower government incentive, A, because of the DST rates which have come down, B, we also exhausted some of the plants which were giving, having the incentives, and third, in some of the We are now accruing on virtual visibility basis, basically certainty basis, basically, so that we don't want to have pending long-term accruals and all. So there are combinations of these accounting policies and the situation of some of the plants, which have not matured to what we thought, more so for the acquired assets.

Just one clarification.

Go ahead, please.

Yeah, one clarification. In the opening remarks, it was said that you had like 4,100 rupees of cost. Is it just a day cost or a month cost or a last batch?

No, that was, we had basically hit it 4,100 for the month of March Prateek, but then, but as I said that, except those, the escalations of war, for example, almost 250 rupees, which, which affected us, so on a normalized basis, I was saying 4,100. What do you want to talk about?

Thank you. Next question is from the line of Ambar Singh Rania from Nippon India AMC. Please go ahead.

Yeah.

Hi gentlemen. Thanks for taking my question. Thank you. My question is also following up with the question on the cost front. So if you see on the first week of February when we had the last control and if I may quote the average cost for the quarter was 4,500 rupees along with the one-off whereas we have educated December quarter when we go 4,000 rupees of cost. That was the commentary on the first week of February. I understand these do carry a good amount of inventory as well, at least a month on Unrathercon for most of the ROM travel and the inputs as far. Furthermore, we had some one-off in the few three. We have increased or enhanced our season contribution in this quarter. Pricing was slightly better than the previous quarter. Seasonally, this is a better quarter. This was logically contributed towards the better profit in the year. Despite everything, and also with the just previous answer that March month was 4,100, which is Of course. I'm trying to understand how to add one add of the entire cost for the quarter on the light of the commentary of the summer of 4,000 pieces that was given on 1st of February with the inventory which generally the people shall, along with your commentary currently on the March 4,100 rupees average cost. Also, most of them are external macro factors. This should impact every player or most of the players in the industry. So far, whatever results we have seen from the large guys or smaller guys, these factors are not affecting too much of ordinary totality in this quarter in June 4th. I just wanted to understand, how should we reconcile your last thoughts commentary along with the exact many researches what we reported,

along with the peers who have reported numbers,

then how should we look at late in our outlook on that. Let us help us understand. Thank you very much. Okay, thank you.

I think, see, basically, in December, for example, we have been very upbeat in terms of some of the turn rounds, which you will see in some of our acquired assets of Penna, for example, more so especially. And as you know, Penna is geographically more in the south. And if you actually look at the numbers, and south, for example, has been one of the most affected geography for the March quarter. Therefore, we have taken some of the machines on shutdown, and basically, there have been a couple of breakdowns also, and therefore, which has increased my higher repairs and maintenance for the quarter of March, number one. Number two, in terms of some of the acceleration which we have to give to our sales and branding and advertisement is what we have given, and the results of the same we will get actually as an investment on our supply chain, but this will more be accounted as an operating cost. So that is where, for example, the branding and advertisement costs are higher. Then, of course, for the month of March, there have been this abnormal cost for the packing, for example, and we have also... We've seen a higher fuel cost and higher fuel consumption also. For example, if you don't have a right blend of fuel, the heat consumption is also higher. So those also, for example, technically, the technical KPIs have got affected. That was when we also, in December, our quarter was at 4,500 rupees cost for the quarter, 4,500. And March also, for example, we are almost at, say, 4,500.

Yeah.

So I think look it in this manner that certain planned movements for the March could not rectify or we could not also fulfill. And therefore, we have basically been at the same level to what we were in December 25.

Thank you. I understand that part of 4,500 versus 4,500. I'm just trying to reconcile the commentary gate quarter of 4,000 exit in December. This is a sudden commentary of 4,100 for the month of March. Just because it's one month in February, I'm just trying to understand how the entire cost fits up because of that. I will appreciate if you can share us quantification of various cost items, large cost items, along with the benefits also which is common,

from exit of 4000 rupees to

now exit of in March, may not be now, but later on also if you can release that.

So, the commentary, I think, again, even if you remember the last call, I had always said that the exit month of March, so while you are considering for the whole March quarter of 26, no, that was not the, the commentary was more about our aspiration and our plan to get closer to 4,000 by month of March. Now, basically, therefore, while the average would still be higher than not at 4,000, therefore, please don't mistaken with 4,000 as average for the March quarter.

Number one.

Number two, of course, like, therefore, I was highlighting that month of March, for example, bearing this aberration of the West Asia prices, and you might say that we would have got a little bit affected more compared to degree as compared to others could be, but yes, we have, we got affected with the overall packing bags and all, and therefore, the pressure of volumes and therefore, the pressure on Sales, and hence the higher advertisement, branding, or sales promotion have been there. So therefore, we unfortunately could not come below 4,500 for this entire quarter of March 26.

Thank you.

But, yeah, yeah.

Amba, I request you to join back the Q&A.

No, no, I will take it over.

Thank you. We will take our next question from the line of Pulkit Patnik from Goldman Sachs. Please go ahead.

Sir, thank you for taking my questions. I have a couple of them. One is, sir, for the Sanghi plant, which is operating at 57% utilization, how important is for the Naliya railway line to be ready, and how far do you see Naliya being connected and ramp up in volumes at Sanghi? That's question number one, sir.

So, Pulkit, our base model is not linked to Nadia and Railway Line. It is more with the overall, our marine infrastructure, for example, and therefore, I would know that we have already ordered seven vessels, which will be delivered in a progressive manner starting from next year. So, that is what, for example, Sanghi will bring the strength. And then, otherwise, we are counting on the road movement from Sanghi. The railway line only will be an add-on, but not being considered in the base model.

Sure. So the plan is to ramp up even if NALIA takes a little longer to be ready. Is that the right way to look at it?

Yes, yes. For right now, although in Sangee, we don't have a ramp up per day of capacity expansion, but yes, ramp up of the existing capacity, the utilization part. Correct.

Absolutely, sir. My second question is, is it fair to assume that as and when there is a final resolution on the JP assets, that those assets would come to us? Or is there a possibility, given that we already have our own organic growth plan, a lot of work to do on increasing capacity utilization, that we could also not be considering having those assets? How should we look at it?

I will still consider that for JP, the RP is another listed company and therefore it would be inappropriate from my side to answer anything on that. But as things progress, whatever development happens will come to know.

Thank you. We'll take our next question from the line of Pinatian from HOMBC. Please go ahead.

Thank you, sir. I have two questions. My first question is, given Ambuja is the fourth company to have reported earnings, and the EBITDA button is the lowest with high-cost inflation, do you see the industry and the company raising cement prices in the next few months to pass on to the full-cost inflation, or can we expect further margin deterioration with the inability to raise cement prices?

So, Penakin, I would say that given the scenario of demand will be very important to basically see the price being passed on to the customers, and as of now, I anticipate the overall demand looks to be for right now when I look at, say, April and now in May, a little subdued and swapped. Therefore, for example, when you attempt for, say, X, I would be happy even if the industry gets half of the same. So that is like, for example, right now the situation is. But yes, cost on the other side has gone up by at least 25 rupees. So that is like the only way then to resolve and protect the margin is to focus on our own cost of production. And that is therefore I was highlighting the internal factor will The internal factor will be more important compared to the external factor.

Sure. My second question is, given Ambusha's cost delivery has been all over the place over the last few quarters, can you give us some guidance when you move away from cost to EBITDA Pertan, you know, by FY28? Given where your EBITDA Pertan is today and over the next two years, where do you see the EBITDA Pertan reach? And what are the building blocks of that margin? What kind of price increases? What kind of cost savings? What kind of turnaround do you want to see or do you expect in the next two years?

So, Penarkin, I think it will be a herculean task for any industry person to give any estimate of EBITDA per turn at this stage. I would rather still continue my efforts on cost and therefore, for example, one thing is like 4,500 rupees a turn, let us say, it takes out and then it starts coming down from To what journey we will go, I think progressively we will keep you posted and especially next 2-3 quarters as things look some more brighter and clear. But for right now, Cost remains the key focus area. Obviously, like when you focus on trade sales and when you focus on premium cement, this will keep giving you more mitigations, but I think any guidance on EBITDA will be difficult at this stage.

Let me just add that cost, we are looking at roughly 250 rupees a ton reduction this year, and then another reduction of 250 rupees next year as well. That is the minimum reduction that we are looking at. Okay.

Thank you. Thank you very much.

Thank you. Participants are requested to do, requested to restrict to one question at a time, please. Next question is from the line of Rahul Gupta from Morgan Stanley. Please go ahead.

Yeah, hi. Thank you for taking my question. My first question is, now that you have talked about relatively 500 rupees per ton of cost improvement over the next couple of years, are we shying away from the earlier target of rupees 3650 that you had shared earlier? That is my question number one.

So we are not shying away from our target. I think as we told earlier also, we need to focus on our execution. We still have, there are multiple steps on the cost that we need to take between manufacturing, between raw material, and between logistics, and we are confident that we will be able to achieve that number. I think it's just we are giving you a realistic in terms of where we will be able to achieve in next two years' time. But that does not mean that we don't have the runway to go to the earlier target that we have set. We know what are the steps we need to take. We know where we need to improve in terms of our efficiency, and that's where we are focused on. But this is something 500 is what we can commit right now for the next two years.

Got it, got it. So I have one more clarification that I want, Karan, is you talked about shifting away from 155 million ton capacity. So just a clarification that the company had earlier guided for 15 million ton of deep water licking exercises across assets. So does that stay or there will be some change on that as well?

So, those still continues. I think it's just timing which will differ based on where we get the maximum return on the investment.

Got it. Thank you. One final question. I remember in second quarter and third quarter, the company was already accelerating your branding and advertisement cost. So it would be helpful if you can help us understand what would be overall branding and advertisement cost for full fiscal 26. Thank you.

So, for the full fiscal year, 26, we are closer to almost like 700 rupees a ton, basically, 70 rupees a ton, basically, yeah, 70 rupees a ton, basically, on the full year basis of 26.

Thank you. Next question is from the line of Ritesh Shah from Investec. Please go ahead.

Yeah, thanks for the opportunity. One question for Karanvai, one for Vinodji. Karanvai, one question. What prompted us for a reset right now? If you could highlight five key monitorables that probably are set for yourself for next one year, and how does SBA fit in in one of the scheme of things after the reset?

Sorry, can you repeat the question? I couldn't hear you properly.

Yeah, so the first question is, what prompted us for a reset right now? Second, what are the five key monitorables that you have laid out for yourself? And third, how does SLA fit in overall scheme of things after the reset?

Yeah, so I think why the reset, I mean, it's quite evident our performance has not been great. We've not been able to… We deliver what we have promised to our shareholders, and so that is number one. I think if we have to assess ourselves, we really need to improve on our cost. That is number one. I think the key KPIs that we are putting for ourselves is we need to reduce – we need to – I would say five things that we need to focus on. One is L1 plants delivering to the market, the discipline on L1 plants delivering to the respective market. Second discipline is on... On trade versus non-trade sales. Number three is on our raw material consumption, reducing our cost on raw material as well as on the electricity front, energy consumption. And number four is improving our, I would say, channel network in terms of to help us increase our sales. So I think these are the five things, but predominantly, if I would say, 80% of it is to do with the cost, and we really need to get our act in order in terms of to make sure that we are able to reduce our cost. And so that is what we are looking at, and until the time we are not able to deliver on what we are promising, I don't think it makes sense to make more capital investment, because you don't get the returns on those capital invested as well. And on time, thank you. Sorry, you had a second question?

Yeah, on SLA, service agreements, I think for a few of the plans that we have tied up with, how should we look at that on overall?

Yeah, so SLA-based contracts, this is something that is part of these initiatives because we do believe that what we need our teams to focus on and where do they need to put their energy on. We do believe that there are, at least in India now, there are enough competent partners out there who can run the plants at the efficiency level that we would aspire to, and that's how we are looking at it. And second, obviously, given the history of Ambuja in ACC, I think the SLA partners help us in terms of cleaning up all the past union issues and all of that. So from that perspective, it really helps us in terms of reducing our costs and improving our efficiency.

Thank you.

Thank you.

Thank you so much. Next question is from the line of Ashish Jain from Macquarie. Please go ahead.

Hi, sir. Good evening, sir. It is great to see explicit capital discipline. But in that context, I just want to understand this 65 to 70 billion rupees of annual capex for the next two years that we're talking about. Can you break it down ballpark in terms of growth versus cost efficiency versus any other initiative that it includes?

Yes, so roughly 4 billion is what is already the CapEx, which is already under execution, and it is implementation of that, which includes capacity, which includes WHRS, which includes your fly ash transportation system that we need. And the balance is, I would say, de-bottlenecking plus maintenance kickbacks. Yeah.

So, yeah, yeah. So, yeah, Ashish, basically, I hope that answers your question.

Yeah, Ashish.

Yeah, yeah.

Thank you. Next question is from the line of Amit Muralka from Axis Capital. Please go ahead.

Hi, thanks for the opportunity. I just wanted to understand more from a strategy perspective, like when Adani had acquired these cement assets, you had voiced out an ambition to kind of become the industry leader and double capacity and volume. So in that context, the current guidance seems to be quite subdued. So is it fair to say that there is a reset in ambition kind of from the earlier thought that was there at the time of acquisition?

We'll be honest with you. Yes, partially there is a reset. We are not moving away from the target. Yes, we are moving away from the timeline. That is to do with the – we know that we are not delivering in terms of what we have – what we had committed, and so it definitely makes sense to step back, to look back, and to see where we are going wrong, and to course correct, And that's where we are. And that's why we are giving you the new guidance in terms of what is the capacity, revised capacity enhancement that we are looking at and the timeframe that we are looking at.

Sure, thanks. And is there a target IRR in mind when you are doing your CAPEX program now?

It's, it's, CAPEX, I mean, the project IRR has to be 18%. You have pulled, this is all equity money. So you have to look at the equity return, like anybody has. Sure.

Thanks a lot.

Thank you. Next question is from the line of Rajesh Ravi from HDFC Securities. Please go ahead.

Hi, good evening, everyone, welcome.

Yes, Ajish, please go ahead.

Yeah, thanks for the opportunity and I'm happy to know that the management focus is more graded on capex and also focused on cost execution. My only question while you have been candid on the guidance, when you say 250 rupees cost reduction, you're looking for FY27 over FY26, Thanks. And at the same time, from exit to port, we are seeing around 250 to 300 rupees cost inflation because of the packaging and fuel rise increase. So, is this 250 net-off or, you know, net-net, we will see 300 of rupees increase and 250 decline. So, from current level, we will still see our cost going up by 50 to 100 rupees in Q1 or in F527.

So, Rajesh, thank you. What we would put it is 4,500 is the peak and this 250 reduction is from here. So, essentially, then it would mean to 4,250 as the target for 27.

Right. This is factoring in the cost inflation that we have already in place. Yes. Yes. That is true. Okay. And in Q1 also, you are looking at similar cost structure. Q4 versus Q1, what sort of cost you are looking at, basically the current cost inflation and your cost savings?

So right now, for example, the headwind still continues, and therefore it could be flattish for Q1, and as things comes out better, that it will start tapering.

Sir, sorry for the clarity. Flattish means your current cost, which is some of the cost inflation is factored in Q4, you know, the energy and the packaging.

Almost like $4,500, I would pay it for, say, Q1, and then from there, we will have the reduction journey continue, and for the year, therefore, we are targeting to have reduction of 250 rupees. Right, right.

And on the non-core working capital, if I look at your core working capital has come down year on year from 30 days to 20 days. But if I look at your non-core working capital, it's cash, that seems to have gone up significantly. So is there any strategic reasons from what 14 days it has now gone up to 49 days? You know, that is where your total non-cash working capital seems to have shot up significantly, you know, from 30 days to 55 days.

Rajesh, therefore, like, for example, some of the points which I mentioned that on certain incentives and all, now we will be looking to book it on an actual basis when received, then the actual basis, for example, so that this non-core working capital or operating working capital can be controlled. Second is, I think some of these which you are referring to could be purely accounting working capital, so maybe separately we can connect, but generally, the core working capital, as you also mentioned, has come down, and that efficiency of working capital will continue. Which specific non-core you are referring to, for example, you can connect to me offline.

Sure, too, sir. Thank you. And two clinker plants which you are looking for.

One was Milra, not clinker but quasi-clinker. And what was the other beyond what is getting conditioned right now?

So, the one which I mentioned was, one was, so in our 73, for example, the 4 million, and just to correct you what Rashi asked me the first question, my current capacity is 369, and this 4 million ton will have one at Penna, Jodhpur, 2 million, and 2 million at Maratha, that would be like 73. Now, on top of it, the upcoming Moondra will be another 2 million of Klinko. So, that will be over and above this 4 million which I mentioned. And then the Assam one which will be another 2 million. So, that will be a pair of additional new assets.

And that would actually take 3 years from now.

That's only, let us say, 24 to 28 years, 28 months is what we are targeting.

Okay. That's all from my side. Thank you in all the way.

Thank you.

Thank you. Next question is from the line of Shravan Shah from Dalit Capital. Please go ahead.

Yeah, thank you. Sir, just to clarify this 250 rupees cost reduction, this is on a full year average FY27 that we are seeing.

Yeah, so thanks, everyone. This is for the full year F527 as an average, and therefore, for example, when I said that June quarter will be flat from the March quarter, then the degree of acceleration will have to be more for the rest three quarters. So you're right, the 250 will be average for the year.

Got it. Second, when you mentioned about the prices, was it 10 rupees on the 15-20 rupees hike that you mentioned? This was for the April year, wanted to say, or this is for March? So, currently, on an average, from the exit of March, have the prices for us have increased by 10 odd rupees? That's what we are trying to say.

Yes, basically, I was hinting on that only. So, April over March as a trend for the high cost.

Okay. And lastly, for full year FR26 RMC EBITDA in Q4, you mentioned 102 crore, but for full year FR26, what could be the number?

Just a sec, I have to just dig on this number. So, full Here, RMX EBITDA, you are asking, right? Yes, sir. Okay, around 300 CR, so full year RMX EBITDA is a number of 300 CR basically for the F526.

Yeah, about it, sir. Thank you, and I hope we will be achieving our cost reduction targets and maybe revisiting and upgrading the original target. Thank you. Yes, Devan, thank you very much.

Thank you. Next question is from the line of Raghav Maheshwari from Equal Securities. Please go ahead.

Yeah. Hi, sir. Good afternoon. Sir, just one question from the capex side. Our capex is continuously getting delayed. As an Adani standard, we are known for pro-capex and the very fast execution. But in the cement side, we are continuously getting delayed, especially like Maratha plant, we have already delayed. Plus, our earlier plant also got delayed for this one, Chattisgarh one. What is the issue behind the continuum? And the continuously we are getting some breakdowns at our bigger plants. Is it the maintenance-related issue or what we are facing currently right now?

So, you're right. Your observation is right that CapEx has not been up to the mark, and that's one of the reasons why we are pausing and correcting ourselves, and we want to first complete our projects that we have taken in our hand before we start any new projects. One of the main reasons why we have not been able to deliver as per what our standards are is two or three things. I think one is we did not choose the right contractor for execution. Number two is we started these projects when we acquired Ambuja and ACC, and at that time there was no team, so it took us time to build up that team as well. And we are confident that at least now we will be able to complete these projects in the timeline that we're given. And number three is a lot of these projects were started without full engineering being done in place. So we are using this six months to complete all our engineering for the new projects that we are thinking of starting. And once that is in place, then we will be looking at starting the project. So that's where you are, but you're right. That's the correct observation that we've not been able to develop projects in the stipulated time. Number two, I think the breakdown, I would say it is predominantly in the acquisition assets where we have seen major breakdowns happening, especially PENNA and SANGI. And that's where the problem area has been for us, and that's where the team is focused on in terms of improving the reliability of the plants. And that's one of the reasons why you are seeing higher R&M costs in this year, partially because a lot of the repairs and maintenance, which was... Which was supposed to be done was not done, and which is why one of the reasons for this breakdown as well.

Thank you. Raghur, I request you to join back, please, as we have other participants waiting for their turn. Next question is from the line of Harish Mittal from MK Global. Please go ahead.

Thank you for the opportunity. My first question is, in your pursuit to focus on premiumization, what is the current average gap between Ambuja brands versus the nearest competitor currently, and what is the target to narrow it further? That's my first question.

So, you are referring to premium cement, and I can highlight that the gap between my base product and the premium cement product is closer to, let us say, 50-55 rupees for the super premium and 20-25 rupees for the premium one. I think that was like first. Then, secondly, your question is about the gap between our price and compared to that competition. I think, see, everyone looks to his price better than others, and therefore, every time when the industry people try and compare, there's always different opinions. I would say that the Pan-India players like us and basically the other players, number one, Ultra Tech, I think the prices are more or less in the similar range in two districts, 5, 10 rupees here and there. Either they are higher or we are lower or whatever reverse way. But that's how the trend has been. And that is also reflected in the overall, say, NSP of each quarter, which is close to each other for the number one and number two.

Thank you. Harish, I request you to join back, please, as we have participants waiting for their turn. Thank you. Next question is from the line of Satyadeep Jain from Ambit Capital. Please go ahead.

Hi, thank you. This question is for Karim. I just want to understand the comment you made about recalibrating capacity, that earlier the capacities were not in the right location, now the capacities are in the right location. So where were you initially looking at these capacities? I believe Fungi was also there in terms of expansion initially. So maybe could you just discuss where is this recalibration coming from in terms of capacities?

So, the recalibration is coming, basically, you know, especially where we have the integrated units. Those are the locations where we are recalibrating because we find that the grinding units, the operating cost, the logistics cost, one of the reasons for the logistics cost being so high compared to competition is because the distance traveled by the integrated units is quite higher than what it should be. So one of the things that we are working towards is, you know, shutting down the grinding units in a lot of these places and moving them closer to the market. So that is the recalibration we are looking at. I don't think that we are looking at recalibration of, let's say, tinker units. The second is VIA's... Sangee is predominantly a plinker plus cement. We are moving towards in the next three years, you will see Sangee moving predominantly into plinker, and you will see new capacities coming up on the coastal region of Pujra, and the H-Line 2 is one of the classic examples of that, where we would look at Sangee supplying plinker and cement being supplied from these views. So, some of these recalibration is happening. Majority of the recalibration is happening in the North, UP, and Bihar region, and Southern Gujarat and Maharashtra.

So, this is not something ACC-specific, but I believe ACC had more integrated in it. Were you mentioning?

It's both ACC and Ambuja. Both of them had issues. So I'll give you an example. Like today we move, we supply our Bihar market through Chhattisgarh. And though we get the EBITDA, but it is not the optimal movement of the cement that we are seeing. So that's where we are looking at we need to set up grinding units in Bihar to serve the Bihar market, and Chhattisgarh unit should be just a clinker unit.

Thank you. Ladies and gentlemen, we'll take that as the last question for today. I now hand the conference over to Mr. Deepak Balwani for closing comments. Over to you, sir.

Yes, thank you, Saranvai, for joining the call and sharing your insights. Thank you. All right, sir. Most questions have been answered. You have my contact number. Please feel free to call me. Thank you.

Thank you. On behalf of JM Financial Institutional Securities Limited, that concludes this conference. Thank you for joining us. Anima, now disconnect your lines.