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Edited Transcript of ULTRACEMCO.NSE earnings conference call or presentation 20-May-20 10:30am GMT

Q4 2020 UltraTech Cement Ltd Earnings Call

Mumbai Jun 6, 2020 (Thomson StreetEvents) -- Edited Transcript of UltraTech Cement Ltd earnings conference call or presentation Wednesday, May 20, 2020 at 10:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Atul Daga

UltraTech Cement Limited - CFO & Wholetime Director

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Conference Call Participants

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* Amit Murarka

Motilal Oswal Securities Limited, Research Division - Research Analyst

* Gunjan Prithyani

JP Morgan Chase & Co, Research Division - Analyst

* Indrajit Agarwal

CLSA Limited, Research Division - Research Analyst

* Navin R. Sahadeo

Edelweiss Securities Ltd., Research Division - Research Analyst

* Nitin Arora

Axis Asset Management Company Limited - Equity Research Analyst

* Pulkit Patni

Goldman Sachs Group Inc., Research Division - Equity Analyst

* Raashi Chopra

Citigroup Inc, Research Division - Director & Analyst

* Ritesh Shah

Investec Bank plc, Research Division - Analyst

* Saumil Mehta

BNPP Asset Management India Private Ltd - Senior Research Analyst

* Sumangal Nevatia

Kotak Securities (Institutional Equities) - SVP

* Swagato Ghosh;Franklin Templeton;Investment Analyst

* Vivek Ramakrishnan;DSP Mutual Fund;Vice President, Investments

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Presentation

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Operator [1]

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Ladies and gentlemen, good day. And welcome to the UltraTech Cement Limited Q4 FY '20 Earnings Conference Call. We must remind you that the discussion on today's call will include certain forward-looking statements and must be, therefore, viewed in conjunction with the risks that the company faces. The company assumes no responsibility to publicly amend, modify or revise any forward-looking statement on the basis of any subsequent development, information or events or otherwise. (Operator Instructions) Please note that this conference is being recorded.

I would now like to hand the conference over to Mr. Atul Daga, Executive Director and CFO of the company. Thank you, and over to you, Mr. Daga.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [2]

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Thank you so much, Janice. Good evening, ladies and gentlemen. And welcome to this call to discuss our results for Q4 FY '20. First of -- first and foremost, we apologize for the delay in announcing the results, which in normal circumstances should have got done in the third week of April. The delay is all due to COVID, which created obstacles for completing the statutory audit. And well, we are absolutely law-abiding corporate citizens, so we have completed the audit, all kinds of physical verifications with various ways and means to the satisfaction of statutory auditors. And that's why the delay in the results.

This quarter is not a representative quarter to benchmark or measure performance. We or the industry or the economy saw a heightened pullback across all fronts in the month of March due to the ongoing pandemic. Businesses started slowing down region by region, I believe, since late February until things came to a grinding halt in -- towards the end of March. It is worthwhile to mention that we have been seeing improving demand sentiments in Jan over the previous month and in Feb over -- and Feb over the Jan. That's the positive part.

Henry Ford said, "A business that makes nothing but money is a poor business." Let me talk about, first, what we have been doing besides cement, especially in times of this pandemic. During the current quarter, we have almost committed INR 75 crores, helping our country fight the pandemic. We are helping the authorities by arranging PPEs, N95 masks, surgical gowns, et cetera. At the local level, across our plant locations, food packets, sanitizers, soaps, bleaching powder, disinfectants, et cetera, are being distributed to the needy people around -- in and around the villages surrounding our plant locations. We are arranging proactive awareness programs amongst the local communities. We have also readied 2 quarantine centers with a facility of 30 beds in the state of Madhya Pradesh and Rajasthan. When the last count was taken, more than 0.5 million people have benefited by the company's efforts.

Let me now talk about the operations and firstly must tell you about our plans during COVID. We started off this year with enough inventories. By the end of third week of April, we received approvals to start manufacturing activities at all the plants as well as approvals to dispatch cement. Both these approvals are independent of each other. Dispatches have continuously been going up, and all the plants are continuing to sell -- or dispatch and sell cement. Sales have been improving. Clinker feeds to the grinding units is also stabilizing. For your information, UltraTech has a network of 22 operational integrated plants, 23 grinding units and 6 bulk terminals. We are dispatching cement from almost all the locations, barring 1 or 2 where there might be a situation, but 52 locations are today dispatching cement. We have the unique advantage of being able to cater to demand in different parts of the country.

The question is, where is this demand coming from? Larger part of demand is from the retail market, the rural markets, where we believe that the pending work is being completed pre-monsoon. Some of the infrastructure projects have commenced construction activities, and with this demand surge, few of the plants are already operating at 70% capacity, few of the plants. In the urban real estate markets, we understand that large, organized real estate players have accommodated labor on their sites and can commence work, some have started work wherever there is an improvement. However, as everybody knows, there has been and there will be exodus of labor from the city work sites at the earliest available opportunity, and this could lead to a potential slowdown in construction activities and demand during the next 2, 3 months, which otherwise also will be a lean season. If I name few of the infrastructure projects where work has commenced, almost all major national highway projects like Samruddhi Expressway, Delhi-Baroda -- Vadodara, Greenfield Corridor, Aligarh-Kanpur, Char Dham project, Mumbai-Goa Expressway, metro networks across various cities, modernization of Bengaluru Airport, DFC, Polavaram Dam, lot of PMAY work is going on in Madhya Pradesh. Government authorities, I believe, are monitoring the project progress, social distancing and other aspects with respect to COVID remotely through cameras at these project sites, and this is work progress -- and payments are being released promptly to the contractors. The idea is to expedite completion of concreting work before monsoons.

Let me now talk about debt on our balance sheet. Our net debt at the end of fiscal '20 is INR 15,096 crores. Nearly 60% of our loans are variable rate loans, which is helping us get the advantage of the reducing interest rate regime. Our gross debt is about INR 18,280 crores plus with a treasury surplus of INR 5,882 crores that we ended the fiscal year '20. All our treasury surplus is deployed in AAA liquid debt schemes. For your information, in the recent debt debacles like Franklin Templeton, Zee, IL&FS, DHFL, we had 0 exposure. All our treasury operations generate a positive carry compared to the borrowing costs, and these monies are available at any point in time should there be a need for the business. During the year, we have reduced our net debt by about more than INR 5,000 crores for India. Happy to share with you that we have achieved a net debt-to-EBITDA ratio of 1.55x on our India balance sheet for the trailing 12 months as compared to 2.64x March '19. ROE for the company has improved to 10% from 7% last year. I must remind you that 10% -- while 10% does not sound a very nice number, but we have invested in excess of INR 36,000 crores in the last 3 years, full benefit of which have not yet been realized. Over the next few years, depreciation and improvement in operations and realization of cash flows from the noncore assets will only improve the ROE for future.

Conserving cash is the biggest motto for us this year. Running a negative working capital cycle has been the key. Our net operating working capital -- I'm differentiating here. Operating working capital, which is pure inventories and receivables and payables, stood at a negative of INR 700 crores. Our suppliers, both domestic and international, continue to partner with us, extending credit. They fully realize the benefits of long-term relationships with UltraTech, and we are equally committed to all our business partners. Luckily, input costs have also been low on account of coal and pet coke, and we are carrying sufficient inventories across all our plants to meet the production requirements.

Having said this, let me now quickly touch upon our CapEx plans. We had started planning big CapEx spends, 3.4 million tonnes of expansion had also been announced, which would require cash during this financial year. However, due to COVID, we have restricted our CapEx plans to an amount of around INR 1,000 crores. We have slowed down the work on the 2.2 million tonne Cuttack grinding unit, which was scheduled for commissioning in March '21. This project will now get pushed to the next financial year depending on when we are actually able to start work. Brownfield capacity expansion work at the West Bengal and the Bihar grinding unit is almost coming to a close and should get commissioned by March '21. Bicharpur coal block would also get commissioned by March '21, as most of the work is over. The coal supplies from this will meet the requirements of Maihar plant in MP. We have restricted the work on new WHRS plants for the moment. However, the last one to get completed will be WHRS at Nathdwara plant within this financial year, at the end of which we will have 145 megawatts of WHRS power, about 12.5% of our total power requirements. There are no other major CapExs which are being undertaken as in new WHRS or any major modernization projects. All maintenance CapEx and other routine -- ongoing CapEx, which I just spoke about, would consume about INR 1,000 crores.

Fixed cost cannot be left out of the purview. We, as a business team, have looked at our business continuity plans and taken various initiatives to reduce overheads during the current financial year. We have targeted a reduction of around 10% of our overheads during '21 as compared to FY '22 (sic) [FY '20].

Let me share the work done on Century assets. We're happy to inform you that the assets were operating at more than 80% -- to be exact, 83% for this quarter in spite of the COVID impact. I guess if we were operating full steam, we would have been operating at 90% plus for -- from the Century assets. Nearly 65% of the brand conversion has already been completed as compared to 55% in the last quarter. Supplies in West and North markets from these plants are 100% UltraTech brand. This has resulted in increase in realizations for the Century plants by about INR 160 per tonne over the last quarter. Cost improvement programs have also been at play, and we have reduced costs by about INR 200 per tonne. There might be a small delay in rebranding program because of COVID, which we wanted to complete by June '20, might get pushed depending upon how the markets open up. During this quarter, I must mention that we have accounted for onetime improvement cost of INR 40 crores. I had told you all about it last quarter also. All the onetime costs with this have got over, and now the operations should be on stream -- at par with our other plants.

Talking about Q4 '20. Cement prices remained firm in major part of the country and in fact, we saw some increases in North, Central and Western markets. At an all-India level, the company saw an increase of about 2% in realizations over Q3. March exit prices have been higher than the quarter average. Costs have been under control with reduced fuel prices. Pet coke consumption for this quarter was at an average of $70, $10 lower than the consumption rate of Q3. The purchase prices of pet coke touched a high of $78 but now are hovering around $60. I guess the benefit of these purchases will be visible in second quarter -- towards the end of second quarter this financial year. Crude prices have been at historical low, but all of us know that the benefit of crude prices has not been passed on yet to the industry.

The company has achieved an operating EBITDA of INR 1,146 as compared to INR 1,000 for last quarter, which is about 14% improvement despite the slowdown in the month of March '20. For the full year, I'm happy to share that we have achieved an EBITDA per tonne of INR 1,154 per tonne. This is a very unique feat because of it being an average across the country, we all know how the prices and operating margins performed in different parts of the country. INR 1,154 per tonne for the year is the highest so far in last several years. In fact, since inception, since 2004, this is the highest, and I think there is lot more to come. One more point, there are so many adjustments which have to be done to the accounts, one more point I should tell you about accounting standards on leasing. Interest cost looks higher because of an additional noncash impact of INR 48 crores, as required by accounting standards in this quarter. Otherwise, our profits would have been, to that extent, higher.

Thank you, ladies and gentlemen, for patiently listening to me. And I must conclude by saying when the going gets tough, the tough get going. That's UltraTech for you. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We take the first question from the line of Indrajit Agarwal from CLSA.

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Indrajit Agarwal, CLSA Limited, Research Division - Research Analyst [2]

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Two questions. First on demand, we had a volume decline of 16% Y-o-Y. Based on your best understanding, do you think this replicates the industry volume or we would have underperformed the industry demand?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [3]

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Being pan-India, I think this should be -- this is the industry norm, I would say. And you will not see this number, this kind of a number anywhere else. The other challenge that you might see is Century numbers of last quarter have been added to our volumes as is where we did not have any role to play.

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Indrajit Agarwal, CLSA Limited, Research Division - Research Analyst [4]

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Sure. So on the erstwhile, your like-for-like, what would have been the volume decline in that case?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [5]

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I'm sorry?

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Indrajit Agarwal, CLSA Limited, Research Division - Research Analyst [6]

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So on a like-for-like basis, if I take out Century, then the volume decline would have been slightly lower than that. Is that a fair understanding?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [7]

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Slightly lower, yes, yes, or maybe a percentage or 2, not too different, but a percentage or so.

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Indrajit Agarwal, CLSA Limited, Research Division - Research Analyst [8]

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Sure. That's helpful. The second question, like you mentioned you have delayed your CapEx plan. Given the kind of volume or demand disruption that you could see, do you think the industry will now have a much lower capacity additions scheduled over the next 2 years than what was earlier envisaged?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [9]

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I think so. Any prudent balance sheet management and financial planning would want to really look at CapEx plans. I can't comment about how others think though. So that's my view.

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Operator [10]

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We take the next question from the line of Gunjan Prithyani from JPMorgan.

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Gunjan Prithyani, JP Morgan Chase & Co, Research Division - Analyst [11]

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Two questions. Firstly, on the Century, really good to see the ramp-up coming through. Now if you could just talk about the EBITDA per tonne, is it somewhere in the range of INR 650, INR 700? Is that assessment correct?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [12]

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This quarter, if I were to exclude the onetime costs, then we would be somewhere around INR 575.

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Gunjan Prithyani, JP Morgan Chase & Co, Research Division - Analyst [13]

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Okay. INR 575. And now if I look at the next couple of quarters with the cost, it can shift...

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [14]

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It will go up.

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Gunjan Prithyani, JP Morgan Chase & Co, Research Division - Analyst [15]

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Yes. So I mean, just keeping the pricing flattish, what is the kind of improvement we can see from the brand transition and the cost levers which are still there?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [16]

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It should go up to -- difficult to give a number, but anywhere between INR 800 and INR 900.

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Gunjan Prithyani, JP Morgan Chase & Co, Research Division - Analyst [17]

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Okay. Got it. And the second question I had was on this deleveraging. Now good to see the reduction coming through consecutively for the last couple of quarters. Now how should we think about the target in mind from your perspective? I do understand there's a focus. But is it -- do we have some number in mind that we are looking to bring down the debt to this level? And in the same backdrop, given where we are in the market right now, there could be possibilities of some stressed assets. I don't know. I'm not sure if anything comes up. What is your thought process in terms of balancing M&A versus the deleveraging that we are pursuing right now?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [18]

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As of now, we are not looking -- we have been conserving cash. However, I don't rule out the possibility if something attractive turns up, we will examine it. I had already mentioned earlier that our target is to go to 1x net debt to EBITDA and then maintain the balance sheet at that level. It would be possible because the cash flows from this large operation. As you saw, we knocked off nearly INR 5,000 crores of debt in 1 single year where CapEx was -- normal CapEx. I think we spent INR 1,600 crores or INR 1,700 crores on CapEx. So we should be aiming towards a net debt-to-EBITDA of 1x. That's number one. As you know, revenue will...

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Gunjan Prithyani, JP Morgan Chase & Co, Research Division - Analyst [19]

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At the consol level?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [20]

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At a consol level, yes. Keeping our eyes and ears open for any opportunity that comes by. But we are -- I've told you in the past also that we are very well prepared for organic expansion should the situation arise, could the demand be there. This quarter, we had a capacity utilization of 74%, so there is enough headroom that we have in individual markets for servicing the market should there be a demand. So plenty of headroom to think.

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Gunjan Prithyani, JP Morgan Chase & Co, Research Division - Analyst [21]

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Okay. And just one clarification on your initial comments. You had mentioned that your plants are ramping up. If you -- and I'm not sure if you mentioned a number where the dispatches levels are versus the pre-COVID, what we were seeing in Feb. If you can just talk about that.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [22]

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So we have not reached the same levels. I would -- as I said, if I were to look at last few days, which is not the correct way to look at it because ultimately, average full quarter is what matters. We are already reaching around 65%, 70% capacity utilization in the last few days. We started off 1st of April or 2nd of April with a 0, and gradually ramp-up has been taking place. So we are almost there. If I were to look at some plants, in fact, in East, we are running full capacity right now. So it's a mixed bag. Things are going on well. Personally, I don't think that it will last too long. Monsoons will be there. COVID -- there's still no sign of COVID going out. Migrant labor problem continues to be there. So this might slow down. Keeping fingers crossed, crossing each day, living each day as of now.

Hello? [Nilesh], what happened? Can't hear anything.

(technical difficulty)

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Operator [23]

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I'm sorry, sir, I'm back. We take the next question. It's from the line of Ritesh Shah from Investec Capital.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [24]

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Sir, my first question is on the distribution side. Sir, given 1 in every 4 bags of UltraTech in India, now this is a challenge and it's also a blessing. Sir, so wanted to understand how different is our distribution strategy as compared to its peers basically when it comes to last-mile connectivity. Anything specifically on having warehouses in each district, which probably is a blessing for us. Can you give some color here on road/rail mix. You can drill a bit down into how we look at our distribution strategy.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [25]

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Right now, the road/rail mix, road would be about 70%, 27% would be rail and 3% ocean route. Our distribution strategy during these times, with the dedicated fleet that we have, we have transporters who deploy their trucks exclusively for UltraTech. I think the last number I remember -- I think 53% of our fleet was a dedicated fleet. So that is where the biggest advantage which UltraTech would have to manage distribution in these COVID times. I think that's what you were asking -- calling about.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [26]

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Correct. Sir, this is one thing. Secondly, sir, when we look at on the distribution, we typically talk about silos and warehouses. Sir, how would you phrase -- if you can quantify the numbers basically over here, it will be quite useful. So this is very useful, 53% of fleet. That's very useful. But sir, something on the warehouses go down, which enhances our last-mile connectivity given these difficult times of finding labor and trucks.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [27]

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So there is a concept of temporary warehouse, which can be hired depending upon market requirement. That is what is at play right now. And we would -- we have, at any point in time, 900 to 1,000 distribution points at play. I am not updated today as of how many are shut down because they might be near a red zone, but in a good, normal situation, 1,000-odd distribution points, SLOCs are available.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [28]

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Okay. This is helpful. Sir, my second question is specifically on the mining regulation...

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [29]

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Third question, Ritesh. Ritesh, this is your third question.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [30]

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Noted, noted, sir.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [31]

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Yes. Sorry. Go ahead.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [32]

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Yes, yes. Sir, I wanted to know what quantum of our resources is currently placed under saved leases. The reason I'm asking is, there can be some like durations which can come around this. So just wanted to understand if you can quantify what is our risk basket? And how do we look at it in RP, PL and ML. I'm trying to understand the incremental...

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [33]

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You are speaking in Greek and Latin for me. I don't know what your question is.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [34]

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Sir, I'm asking what is the reconnaissance permits that we have at UltraTech level. I'm trying to understand the incremental...

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [35]

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What permit? Sorry, what permit you asked? What permit?

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [36]

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RPs. Sir, probably I'll call you after the call for this particular question.

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Operator [37]

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Well, ladies and gentlemen, requesting you all to please stay connected. We've just lost the line for the management.

(technical difficulty)

We also have -- we also take the next question from the line of Raashi Chopra from Citigroup.

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Raashi Chopra, Citigroup Inc, Research Division - Director & Analyst [38]

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Can you hear me?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [39]

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Yes, Raashi.

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Raashi Chopra, Citigroup Inc, Research Division - Director & Analyst [40]

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So Atul, just quickly I wanted to check this. You mentioned that -- so one is, of course, your volumes were down around 16% for the quarter. And is there any region which has a more extreme variation? One.

And second is that you said that 65% to -- your plants are operating at 65% to 70%. Again, regionally, is there anything which is disconnected on the 65%? Like, is the South also around that level or is the South low and some other region higher? Historically and currently both.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [41]

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First question on 16%. Let me see if I can give you some color around that. But on the second question, whilst it's more current, East is operating at much higher capacity -- East and some plants in Central are operating at much higher capacity. West is the lowest today because that is the most impacted region in terms of COVID, whether it is Ahmedabad and surrounding markets, Mumbai and its surrounding markets, where the impact is higher. So if you were to look at -- then North is doing well, East is doing very well, West is the weakest today and South is coming up, Telangana, Andhra, Tamil Nadu, almost the entire South, in fact, Karnataka. We are all aware Karnataka has, in fact, now started almost all the activities. And talking about last quarter, if I were to look at our capacity utilization, I think East was again rocking at 95% to 100%. Central was weak -- was the weakest, would be -- would have been operating below 60%, and all other regions were 65% to 80%.

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Raashi Chopra, Citigroup Inc, Research Division - Director & Analyst [42]

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Okay. So Central was weak, but Central is picking up now, you're saying?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [43]

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Central is now picking up, yes.

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Raashi Chopra, Citigroup Inc, Research Division - Director & Analyst [44]

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Okay, okay. Then the second thing I wanted to check was, on Century, you mentioned that the variable cost is down by INR 200 and realization up by INR 160. So firstly, on the realization, I wanted to check that how much of this would be rebranding? I mean, say, about INR 100 would be rebranding? I mean there is a natural increase in realization...

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [45]

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Yes, yes. No, I don't have a breakup. West, for example, West markets and South markets, we had 100% branded to UltraTech. East as we have already mentioned, in fact, is not branded. And Central is the weakest in prices, current -- Chhattisgarh, not Central. I would say Chhattisgarh as a market is the weakest in prices on an all-India basis. And I don't have an answer how much is due to rebranding and how much is due to natural price increases. Natural price increases -- a surrogate, if I were to use, we -- on an all-India basis, we saw 2% increase in prices over the last quarter. So there will be a small component of natural price increases, maximum benefit of rebranding. That's just a surrogate, which I could use to explain.

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Raashi Chopra, Citigroup Inc, Research Division - Director & Analyst [46]

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Okay. Got it. And for the cost side, you mentioned variable costs are down again. I'm sure part of it is due to the pet coke prices benefit kicking in and part of it is due to efficiency parameters. So going forward, again, how much benefit can one assume on the cost side on efficiency for Century? I know you mentioned the EBITDA can go up.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [47]

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Yes. So let me give it another way. We have reached a normative EBITDA per tonne of INR 575, excluding that onetime cost. This INR 575 will go up anywhere between INR 800 to INR 900. So let me be conservative. Let's say, we -- our first target is to touch INR 800 a tonne. That's where the game lies. 65% of the produce of Century assets has been branded UltraTech. Our target, excluding the Chhattisgarh plant because Chhattisgarh plant will not be rebranding, so 84% or 85% of the total produce from Century plants will be UltraTech. So there is room for price advantage in Century assets. So I guess large benefit will come from price improvement. We are implementing -- we will take on implementation of WHRS at these locations, which will give cost improvement, but that is, I think, Phase 2 now. The immediate one will come from price improvements. And to help you analyze it, Chhattisgarh, since we are not doing it, all other plants are in high-priced zones, will give us the bulk of the benefits. So from INR 575 to INR 800 [2 7 2 25], bulk of the gain will come from prices. Pet coke consumption has reached 68%, 69% in a mix of all plants. It can go to 75% that has been -- that -- or 80%. So that, over a period of time, might not have too much of juice left over there.

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Raashi Chopra, Citigroup Inc, Research Division - Director & Analyst [48]

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Got it. Okay. And what were the trade volumes percentage during the quarter and for the full year?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [49]

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Trade volume? Trade percentage is what I will try.

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Raashi Chopra, Citigroup Inc, Research Division - Director & Analyst [50]

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Yes.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [51]

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Yes, yes. So blended, we are at 68% for this quarter. And interestingly, I must share with you -- all of you that post COVID, all these ratios, whether blended of 68% or trade of 68%, look so ridiculous because now these ratios have been 90%. Maximum sale is happening in the trade market.

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Raashi Chopra, Citigroup Inc, Research Division - Director & Analyst [52]

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So currently, you're saying trade is around 90%. And what was it last year for you in the fourth quarter?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [53]

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58%, 59% maybe.

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Raashi Chopra, Citigroup Inc, Research Division - Director & Analyst [54]

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Sorry, can you say that again?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [55]

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[Nilesh], you have the exact number?

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Unidentified Company Representative, [56]

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66%, Raashi.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [57]

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66%. Yes.

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Raashi Chopra, Citigroup Inc, Research Division - Director & Analyst [58]

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66% is for the full year?

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Unidentified Company Representative, [59]

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This is fourth quarter.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [60]

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For the quarter.

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Raashi Chopra, Citigroup Inc, Research Division - Director & Analyst [61]

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Fourth quarter. Okay. And just one bookkeeping question. If we can just get the revenue breakdown for RMC and white cement and putty and the -- white cement and putty volumes.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [62]

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RMC was about INR 555 crores. White cement was INR 421 crores.

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Raashi Chopra, Citigroup Inc, Research Division - Director & Analyst [63]

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Okay. And do you have the white cement and putty...

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [64]

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I'm sorry. What did you ask?

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Raashi Chopra, Citigroup Inc, Research Division - Director & Analyst [65]

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White cement and putty volumes together.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [66]

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About 3,20,000 tonnes.

--------------------------------------------------------------------------------

Raashi Chopra, Citigroup Inc, Research Division - Director & Analyst [67]

--------------------------------------------------------------------------------

3,20,000, you said?

--------------------------------------------------------------------------------

Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [68]

--------------------------------------------------------------------------------

Yes.

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Unidentified Company Representative, [69]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Raashi Chopra, Citigroup Inc, Research Division - Director & Analyst [70]

--------------------------------------------------------------------------------

Okay. Sorry, just one last question. The Bara, the remaining 2 million is still on track?

--------------------------------------------------------------------------------

Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [71]

--------------------------------------------------------------------------------

Yes. So no. On track? No. I'm assuming a quarter delay further because of COVID, but June earlier, we would have expected it in April-June. It could get pushed to July-September period.

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Raashi Chopra, Citigroup Inc, Research Division - Director & Analyst [72]

--------------------------------------------------------------------------------

Got it. Okay. That's it from me.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [73]

--------------------------------------------------------------------------------

And since you asked about Bara. Before the next question, let me also tell the audience about the Dalla Super, the NGT (inaudible) plant. I think that approvals are moving on track, and we should be seeing light of day for that plant by March '21.

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Operator [74]

--------------------------------------------------------------------------------

Next question is from the line of Saumil Mehta from BNP Capital.

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Saumil Mehta, BNPP Asset Management India Private Ltd - Senior Research Analyst [75]

--------------------------------------------------------------------------------

Sir, over a period of time, is it fair to assume that the EBITDA per tonne difference, what you said, Century versus the blended, which is about INR 300 assuming Century goes to INR 900, that will remain partly because of Chhattisgarh unit and some bit of regional mix or that gap can narrow further with cost efficiencies? At least some of them, I'm assuming, would be pending.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [76]

--------------------------------------------------------------------------------

So it will be regional dynamic. So if I have achieved, let's say, for full year INR 1,154; Century, obviously, will not achieve INR 1,154. It will perform according to its regions.

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Saumil Mehta, BNPP Asset Management India Private Ltd - Senior Research Analyst [77]

--------------------------------------------------------------------------------

Sure. So to that extent, on a steady state (inaudible) 1.5, 2 years down the line, assuming utilizations are at optimal levels, you will continue to still achieve that INR 200, INR 250 per tonne of gap. That's a fair assumption, right?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [78]

--------------------------------------------------------------------------------

From an all-India average?

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Saumil Mehta, BNPP Asset Management India Private Ltd - Senior Research Analyst [79]

--------------------------------------------------------------------------------

Yes.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [80]

--------------------------------------------------------------------------------

No, it could shrink because we will be investing behind improvement in the Century plant, which has already been done in other plants. So that could give -- for example, WHRS has to be done across all locations. It's an investment of, give or take, INR 300 crores between Maihar and Manikgarh. So there will be -- there's a gap, which could reduce over a longer period of time, not in this financial year.

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Saumil Mehta, BNPP Asset Management India Private Ltd - Senior Research Analyst [81]

--------------------------------------------------------------------------------

Okay, okay. And second, for the quarter, what was the lead distance and how it has changed Q-on-Q? Because on a per tonne basis, the freight cost actually has moved up. So just wanted to check.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [82]

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Yes. The lead has gone up because we've been crisscrossing flows across the country. I think we were around 440 -- sorry, we were around 440 kilometers. That's what I remember.

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Saumil Mehta, BNPP Asset Management India Private Ltd - Senior Research Analyst [83]

--------------------------------------------------------------------------------

Okay. And my last question is when you said that the West market seems to have been more impacted, so is it April and May onwards? Or you saw that impact even in Q4 numbers?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [84]

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No, I was talking about post COVID.

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Saumil Mehta, BNPP Asset Management India Private Ltd - Senior Research Analyst [85]

--------------------------------------------------------------------------------

Okay. So because...

--------------------------------------------------------------------------------

Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [86]

--------------------------------------------------------------------------------

The pickup that we are seeing today -- for example, Eastern markets, as I mentioned, plants are operating at 90%, which is back to normal, near normal. West has not come back. West, all the cities are more impacted than any other states. We haven't been able to get control of COVID.

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Saumil Mehta, BNPP Asset Management India Private Ltd - Senior Research Analyst [87]

--------------------------------------------------------------------------------

Sure. And last question is, what could be the possibility of a pent-up in the nontrade demand because as you said, the trade mix has gone up significantly. So once assuming government spending starts in second half of this fiscal year -- again, that's a hope, do you see a lot of pent-up demand coming in?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [88]

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It could. It could. Then I won't have capacity.

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Operator [89]

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We take the next question from the line of Vivek Ramakrishnan from DSP Mutual Fund.

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Vivek Ramakrishnan;DSP Mutual Fund;Vice President, Investments, [90]

--------------------------------------------------------------------------------

Mr. Daga, excellent performance. I just have one question. With such weakness in demand and cash flow strains which we see across the economy, do you expect that excellent improvement in working capital cycle to be distorted either in terms of buildup of some amount of inventories or in terms of needing to give more receivables period for your customers?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [91]

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My receivables are at the lowest as we speak. Inventory buildup could happen because today, we plan on a particular trajectory of performance as in -- of demand and the long lead items, which is coal, pet coke is procured. And god forbid, if demand collapses, then we will have higher inventory to carry. Otherwise, we intend to work with negative working capital.

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Operator [92]

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We take the next question from the line of Swagato Ghosh from Franklin Templeton.

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Swagato Ghosh;Franklin Templeton;Investment Analyst, [93]

--------------------------------------------------------------------------------

Yes. Sir, for the fourth quarter for Nathdwara, what was the utilization?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [94]

--------------------------------------------------------------------------------

About 57%.

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Swagato Ghosh;Franklin Templeton;Investment Analyst, [95]

--------------------------------------------------------------------------------

Okay. And the profitability for the quarter?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [96]

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No. Hang on, hang on, hang on. No, just hang on, Swagato. For UltraTech, you guys should not look at Nathdwara's capacity utilization stand-alone because we need -- we pool all our capacity, and then the distribution is managed. Just because Nathdwara capacity utilization is low does not reflect -- does not say that it is a poor performing asset. It's an optimization of the overall capacities within the network.

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Swagato Ghosh;Franklin Templeton;Investment Analyst, [97]

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Yes, yes. That's fair. I understand that, yes. And profitability for the quarter for Nathdwara?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [98]

--------------------------------------------------------------------------------

Oh, here it's eye-popping, INR 1,600 plus.

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Swagato Ghosh;Franklin Templeton;Investment Analyst, [99]

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Okay. But in the slide, in the earlier quarter slides, you generally have mentioned that INR 1,500 kind of number. Now this quarter's slide, you have mentioned for the full year it's INR 1,250. Although it says exceeds INR 1,250, but that kind of gives an indication that the fourth quarter number is lower, but that is not the case.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [100]

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No. No. [Nilesh], will you explain what was this INR 1,250?

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Unidentified Company Representative, [101]

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INR 1,250 is more of operating EBITDA. Hello?

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Swagato Ghosh;Franklin Templeton;Investment Analyst, [102]

--------------------------------------------------------------------------------

Right. Yes.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [103]

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So we were asking for operating EBITDA only. So we have, this quarter, at least about INR 1,600 per tonne. On an average basis, I don't know why -- maybe because of the first couple of quarters where we might have had lower performance. That's why the average is dropping.

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Unidentified Company Representative, [104]

--------------------------------------------------------------------------------

So this quarter, operating is about somewhere INR 1,400.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [105]

--------------------------------------------------------------------------------

Okay.

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Swagato Ghosh;Franklin Templeton;Investment Analyst, [106]

--------------------------------------------------------------------------------

INR 1,400. Okay. And sir, one other question. Do you see going forward in the medium term, lead distance to be slightly higher because of how maybe chunky demand centers can get?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [107]

--------------------------------------------------------------------------------

Yes, yes. It could be higher in the short term.

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Swagato Ghosh;Franklin Templeton;Investment Analyst, [108]

--------------------------------------------------------------------------------

Okay. So from...

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [109]

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Because to manage distribution to not to lose our customer, wherever we can supply from, we will do that.

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Swagato Ghosh;Franklin Templeton;Investment Analyst, [110]

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Okay, okay, okay. I'm sorry, one last question. On the pet coke prices, did you say that the benefits of the current spot prices can come in from second quarter of this financial year?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [111]

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Yes, yes, yes. In July-September too and -- yes, July-September.

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Operator [112]

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Next question is from the line of Nitin Arora from Axis Mutual Fund.

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Nitin Arora, Axis Asset Management Company Limited - Equity Research Analyst [113]

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Sorry, I missed your opening remarks. Just one question. You have delivered a net debt closer to what you guided. Any sense, any direction for this year given the constraint of direction in volumes, depending on what the situation pans out on the COVID -- post COVID rather. Any direction can you give on that?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [114]

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Nitin, very difficult to give any guidance or how things will pan out. Nobody knows whether there could be Phase 2. I'm being extremely pessimistic, whether there could be Phase 2 or Phase 3 or how fast the recovery is, how soon the economy opens. It's a million-dollar question. So I'm not able to give you a clear answer.

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Operator [115]

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Next question is from the line of Pulkit Patni from Goldman Sachs.

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Pulkit Patni, Goldman Sachs Group Inc., Research Division - Equity Analyst [116]

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Sir, my first question is, again, on demand but not the near-term demand. What I'm trying to understand is that once we come out of COVID, clearly, the government's fiscal numbers are not going to look very good. And that's why the fact that you mentioned that there's been a significant surge in trade percentage recently. What I'm trying to understand is what is giving you confidence that even over a 12-, 18-month period, volumes could likely come back to what you've seen in the past? That would be my question number one.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [117]

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All along, Pulkit, in the last 2 years or 3 years, rural and infra has been driving growth. Whilst you're right government will have fiscal pressures, I don't know where they will bring the money from, but there are lots of avenues we can discuss off-line, which the government could tap into. The other sector which is more promising remains to be rural markets. Now they are not dependent on MSP alone. The average prices have actually gone up on rural produce. Both the crops, the winter crop, the summer crop, have been good, which improved the cash flows in the rural markets, pumping up rural demand. So if -- and unfortunately, India is so circumspect and so much dependent on the vagaries of weather. If the crops remain good again for a longer period of time, we would see rural demand continue to surge. Government spending, I don't know how they are managing, but we are seeing huge amount of demand or consumption pickup. I'm talking about post COVID. I'm not -- I shouldn't say post COVID, but April onwards, whatever you want to call it. Wherever possible, the government has started work on its existing infra projects. Today, you step out, if you want to step out on Mumbai roads, you will see the metro work has started. So government is having some thought process on expediting infrastructure and all those commitments which were made when -- in the last budget and subsequently also millions of dollars being -- billions of dollars being committed for infrastructure. In spite of these dark skies looming over the economy, I'm sure there will be some mechanism that they are thinking about.

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Pulkit Patni, Goldman Sachs Group Inc., Research Division - Equity Analyst [118]

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So we are all hoping that government has some money to spend on this. My second question is assuming that there are constraints in government spending, you did talk about 10% reduction in discretionary spend that we could do. Any specific heads that you could highlight where this fixed cost reduction could come through?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [119]

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So we've put a manpower freeze. That is one. Second, with -- ad spends will go down, which was a big bucket of cost. Third is the declining costs at plants will go down because plants have remained shut for, let's say, a month or so, gives me an extension of life on the plants, so plant maintenance costs without compromising on the quality of the plant at all. The shutdowns, which hit a cement company, will go down -- will reduce. Travel expenses, all admin-related stuff will go down. That's the plan that we have. These are the high, big-ticket items. Manpower cost, maintenance spends, ad spends, admin-related costs will see a reduction.

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Pulkit Patni, Goldman Sachs Group Inc., Research Division - Equity Analyst [120]

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Okay. One more question, very basic. For a normal cement plant, at what percentage capacity utilization does it breakeven?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [121]

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It depends upon the profitability of that particular plant or that particular company because every company has a different level of efficiency, but I would peg it anywhere between 30% and 40% where it's a breakeven capacity.

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Operator [122]

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Next question is from the line of Amit Murarka from Motilal Oswal.

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Amit Murarka, Motilal Oswal Securities Limited, Research Division - Research Analyst [123]

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So on the current situation where (inaudible) the industry utilization clearly is close to 40% to 50%. But talking about a more practical point of view because remember, supply side (inaudible)

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Operator [124]

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Mr. Murarka, I'm so sorry to interrupt, sir, but...

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [125]

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You're not audible.

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Operator [126]

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You're not audible. Sir, your voice is breaking up. If you can hear us, you may please dial back and rejoin the queue.

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Amit Murarka, Motilal Oswal Securities Limited, Research Division - Research Analyst [127]

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Is it better now?

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Operator [128]

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Yes, yes. Now it's better.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [129]

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Yes, yes.

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Amit Murarka, Motilal Oswal Securities Limited, Research Division - Research Analyst [130]

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So I was saying that while the -- on a nameplate basis, the capacity utilizations are at 40% to 50%, but there are supply constraints as well like labor availability or logistics and others. So like, one, if we, let's say, forget about demand right now, in the current scheme of things, how -- what could be the -- I mean the utilization levels with the plants you think given these constraints around the factors of production?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [131]

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As I said, today, we are operating anywhere between 65% and 70%.

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Amit Murarka, Motilal Oswal Securities Limited, Research Division - Research Analyst [132]

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Okay. But could it go to like a higher number if there was no demand constraint?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [133]

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Yes, why not, if there was no -- sorry, if there was no demand constraint. As of today, I don't have any challenge across the network. No, there's no challenge. So in case required, we can produce more.

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Amit Murarka, Motilal Oswal Securities Limited, Research Division - Research Analyst [134]

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Okay. And also about...

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [135]

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There's one plant -- one grinding unit which has been kept shut because of demand not being there. That is near Delhi, yes. So Delhi is, in any case, a shutdown area, and we have a grinding unit close by. One of the grinding units has been -- has not been started. So that's demand-led.

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Amit Murarka, Motilal Oswal Securities Limited, Research Division - Research Analyst [136]

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Understood. And on the cost side, I believe the logistics cost have also moved up, particularly the road logistics. And similarly, I'm not sure how would be the raw material availability of pricing be on fly ash and other things. So could you comment a bit on those factors, the variable cost side?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [137]

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So fly ash costs -- in any case, this quarter, raw material costs went up this quarter, largely driven by fly ash. Fly ash availability is not a problem because power plants in the country are not shutting down. Transportation of fly ash could become a problem at some point in time. Today, it is not a problem. Other than that, I think from the raw materials perspective, this is the biggest thing, domestic. Internationally, coal, pet coke is available. That's not a problem.

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Amit Murarka, Motilal Oswal Securities Limited, Research Division - Research Analyst [138]

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And is the road freight up like 10% or so? It's what I understand because the return load is not available for a lot of truckers.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [139]

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Road freight, no, it's almost flat over last year. As of -- as I see the data, there is no change.

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Amit Murarka, Motilal Oswal Securities Limited, Research Division - Research Analyst [140]

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Even post COVID...

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [141]

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Sorry. We're talking about current -- sorry, sorry. I have...

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Amit Murarka, Motilal Oswal Securities Limited, Research Division - Research Analyst [142]

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Yes, yes. In the post COVID -- yes, yes. In the current post COVID situation.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [143]

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Post COVID, I don't have the number immediately.

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Operator [144]

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We take the next question from the line of Navin Sahadeo from Edelweiss.

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Navin R. Sahadeo, Edelweiss Securities Ltd., Research Division - Research Analyst [145]

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Hello? Can you hear me?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [146]

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Yes, yes.

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Navin R. Sahadeo, Edelweiss Securities Ltd., Research Division - Research Analyst [147]

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So just a couple of questions. You mentioned 65% to 70% kind of utilization for our plants. I just wanted to confirm this. Is it for the plants that are operating? Or is it at the company level that you are talking about because...

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [148]

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At the company level. Operating plants, again, they are much higher.

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Navin R. Sahadeo, Edelweiss Securities Ltd., Research Division - Research Analyst [149]

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So all plants are operating except for that Delhi unit which you said?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [150]

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Yes. So Delhi (inaudible) grinding unit has still not started. East plants are operating 90% already. West might be -- the Manikgarh, Awarpur cluster has begun because their suppliers are going to that expressway project big way. South plants have begun. Central plants are operating, yes.

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Navin R. Sahadeo, Edelweiss Securities Ltd., Research Division - Research Analyst [151]

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Okay. That's encouraging to know. And related to this is, is it coming at a higher cost? In the sense, the previous question was also that since there is no return load, also the fact that the driver also -- obviously, there is -- there was a scarcity, so to say, what we are hearing from channel checks or media, and also since social distancing as a norm has to be practiced. So is this a utilization ramp-up coming at a higher cost to us?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [152]

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From a distribution point of view, I haven't heard anything otherwise. See, what happens on the ground, there are -- the same driver is not necessarily coming back, but the transporter is able to find some alternate driver. My rates are not for the driver. My rates are with the transporter, the number of trucks that he deploys with us. As long as he is deploying those trucks, it's in his interest also for his own business. He has to deploy as many trucks. So rates are not being increased for that. The reverse logistics, if something is not -- if the reverse logistics have gone down, I don't have a ready number on how it is impacting currently. Yes, [Mukesh], you want to say something?

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Unidentified Company Representative, [153]

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Yes. Overall, logistic cost has not increased in current position. In fact, in some of the destination, cost has reduced also.

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Navin R. Sahadeo, Edelweiss Securities Ltd., Research Division - Research Analyst [154]

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Okay. That's nice to know. Because in general, what you're hearing is there is scarcity of labor. I mean apart from labor migration, there is also this driver -- set of drivers who are unwilling to come to work, and that's where they were paid or...

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [155]

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The driver issue, I am fully aware of, tracking it, but alternate drivers are coming. Earlier (inaudible) same driver would do a day trip and come back, but we are finding a frequent change in drivers, the way the transporters are managing it. That is their headache as long as they are bringing trucks across.

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Navin R. Sahadeo, Edelweiss Securities Ltd., Research Division - Research Analyst [156]

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Okay. And are you also seeing some demand since you said, infra, some of the projects like work in progress like constructions or government projects have started. But also, are you seeing -- because since you said it's also the trade demand, which is seeing a very high percentage, are you also seeing some sort of channel filling or dealers carrying in higher inventory, so to say, given there is a bit of uncertainty in the near term, which could get again -- like disrupt the supply or something like that?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [157]

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Navin, dealer community is a high ROCE business. They don't carry inventory. They don't have stock point. They will give instructions to deliver -- dispatch and unload at a location. They don't carry inventory. They don't invest so much. So chances of their building inventory is highly unlikely. Right now, the demand is good.

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Navin R. Sahadeo, Edelweiss Securities Ltd., Research Division - Research Analyst [158]

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Sure. And just like related to this COVID thing and since it's so new and got -- caught everybody of us unguarded, the -- in general, the changes that has to probably come to the business because even at the plant, you cannot have, let's say, your loading division or some functions where there is potential crowding of labors. How do you address that? In the sense, is there more CapEx that you are planning towards having more automation at the plants or anything like that?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [159]

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So while there is a lot of work in parallel happening, studies being done across the network, inter-unit comparisons to see whoever is the most optimal and then replicate, this is a new normal that we are seeing. Today, we are running the plant at 30% to 35%, and the plant is operating, right, without any handicap. So it's a discovery that is happening. I cannot invest overnight in automation and reduce labor. So my labor cost is not going down because I'm paying everybody, but the plant is operating with lesser number of technical people on the shop floor.

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Navin R. Sahadeo, Edelweiss Securities Ltd., Research Division - Research Analyst [160]

--------------------------------------------------------------------------------

Understood. Understood. And just one last question, if I may...

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [161]

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Because our operation -- let's say, it has just given us an opportunity to test new ways of working.

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Navin R. Sahadeo, Edelweiss Securities Ltd., Research Division - Research Analyst [162]

--------------------------------------------------------------------------------

Yes. That's precisely my question was. So when you test new ways of working, 2 things can happen. Either it can improve the efficiency and we realize some cost of the lesser number of people or some people become redundant that can be a cost saving from a longer-term perspective. Or in general, there could be automation. I was just trying to understand that.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [163]

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Yes, yes. As of today, we realize that we are able to operate a plant at 35%, 40% of the normal manpower also.

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Navin R. Sahadeo, Edelweiss Securities Ltd., Research Division - Research Analyst [164]

--------------------------------------------------------------------------------

Sorry, I missed that. Can you repeat that?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [165]

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We have realized when we planned, all of our SOPs were done on manning norms, et cetera, where people are required. We're now operating at maybe 35% or 40% of normal manpower. So that will prove to be a benefit in the longer term where we -- for the new expansion in Pali comes up or the new grinding unit comes up. It will be manned differently, for sure.

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Navin R. Sahadeo, Edelweiss Securities Ltd., Research Division - Research Analyst [166]

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Okay. And just one last question, if I may slip in. You said in the previous quarter, the Central utilization were the lowest. When you say Central, is it also Chhattisgarh that you include in that? Or how do we look at it? Or is it only the Satna cluster we're talking about?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [167]

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Central is Satna, MP and -- the way we look at Central is the West UP and West MP.

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Unidentified Company Representative, [168]

--------------------------------------------------------------------------------

East.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [169]

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Sorry, East, not West, sorry. Satna is East. East MP and East UP.

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Navin R. Sahadeo, Edelweiss Securities Ltd., Research Division - Research Analyst [170]

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Right. But some of the peers in that region, like typically, Birla Corp or let's say Heidelberg for that matter, they report of a very high utilization, so to say. So that's where I was somehow, I thought -- is there a disconnect? Just wanted to clarify. Our utilizations are low.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [171]

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Satna cluster is low for us as compared to somebody else because they are absolutely local player. Look at their distribution. They are very small market that they are catering to as compared to our raw material also flowing from Satna plants to the more lucrative Bihar market, which is quite close.

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Operator [172]

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We take the next question from the line of Sumangal Nevatia from Kotak Securities.

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Sumangal Nevatia, Kotak Securities (Institutional Equities) - SVP [173]

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First question is with respect to the reversal of deferred taxes. I mean, any particular year as per our assessment when we would be moving to the new tax regime in future?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [174]

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If I were to let out that secret, then you would know the EPS bump up which year it would take place. So I'm not going to tell you that.

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Sumangal Nevatia, Kotak Securities (Institutional Equities) - SVP [175]

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Okay.

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [176]

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Minimum -- [it's okay partly]. Minimum 2 to 3 years.

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Sumangal Nevatia, Kotak Securities (Institutional Equities) - SVP [177]

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Okay. Understood. Okay. And sir, with respect to CapEx of around INR 1,000 crores, I mean what part of that is going towards completion of Bara and the Super Dalla grinding unit? And what would be maintenance?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [178]

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Bara has -- [Niraj], you remember what is left on Bara?

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Unidentified Company Representative, [179]

--------------------------------------------------------------------------------

Bara would be about INR 120...

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [180]

--------------------------------------------------------------------------------

Bara has INR 120 crores left, which would get spent this year. Bicharpur coal block also had somewhere around that number only. Dalla Super, we have not factored in any spend as of now because when we get the plant -- and the plant is available. It's more of a maintenance and oiling the plant that will have to be done. So it's not too big a CapEx to my knowledge.

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Sumangal Nevatia, Kotak Securities (Institutional Equities) - SVP [181]

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Okay. So INR 600 crores, INR 700 crores could be maintenance?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [182]

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CapEx, INR 600 crores -- plus/minus INR 600 crores will go on maintenance CapEx.

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Sumangal Nevatia, Kotak Securities (Institutional Equities) - SVP [183]

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Okay. And is this a reduced maintenance run rate given the challenges this year? Or this is something which is a normal run rate to assume in future as well?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [184]

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INR 100 crores, INR 200 crores would have got reduced on a current network. Otherwise, we're not compromising on maintenance costs.

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Sumangal Nevatia, Kotak Securities (Institutional Equities) - SVP [185]

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Understand. Okay. Next question. I mean we're quite optimistic on the rural demand. Sir, any assessment as to what the portion of the rural demand is driven by government role in terms of, say, housing scheme subsidies, et cetera, and what is then in self-reliant? Any broad intelligence on the industry?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [186]

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It does seem to be self-reliant or non-government because everything is going in trade. And other than that, I don't have any data source to split the demand between government support and private.

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Sumangal Nevatia, Kotak Securities (Institutional Equities) - SVP [187]

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And in a normal year, what would be the total rural demand as a percentage of total mix, around 30%, 40%?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [188]

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Sorry, what?

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Sumangal Nevatia, Kotak Securities (Institutional Equities) - SVP [189]

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In a normal year, what would be the rural demand mix in the overall cement industry demand?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [190]

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35% or thereabouts.

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Sumangal Nevatia, Kotak Securities (Institutional Equities) - SVP [191]

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Okay. And just one last clarification, you said 35% to 70% utilization in May. April would be -- I mean I missed that. April would be what percentage utilization?

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Atul Daga, UltraTech Cement Limited - CFO & Wholetime Director [192]

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It would be lower, it would be lower. April is not a month to talk about because you started around 20th of April.

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Operator [193]

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Thank you. Well, ladies and gentlemen, due to paucity of time, this was the last question for today. On behalf of UltraTech Cement, that concludes this conference. Thank you all for joining, you may now disconnect your lines. Thank you very much.